Welcome to this curated educational transcript of the Joe Rogan Experience. In this session, we provide a deep-dive examination of the critical perspectives and historical dialogues presented in Episode #1921. Our mission is to offer a high-fidelity, searchable research resource for students of cultural history, emerging technology, and global discourse. This transcript has been specifically optimized for academic reference, linguistic study, and archival preservation regarding Geopolitics, Global Demographics, and the Future of Energy Markets. Joe Rogan Podcast, check it out. The Joe Rogan
Experience. Train by day, Joe Rogan Podcast by
night, all day. Hello, Peter. What's going on,
man? Nice to meet you. Right back at you. It
has been a crazy year. Yeah, it's been a crazy
year for everything, right? Yeah, it's one thing
when you talk about how the world's going to
be coming to an end. It's quite another when
it's like here and now. Yeah. Well, you've been
working on this. type of material, this subject
matter for quite a long time. So tell everybody
your background. Let's see. My background is
in economic development. It's all about figuring
out what works where and why, and why if you
try the same policies in the next town over,
it's usually a disaster. And then I worked actually
here in Austin at a company called Stratfor for
12 years, and I was their sole generalist. So
it was my idea to kind of plug everything together
and figure out what the map of the world looks
like and how if you pull a string on one side
of the world, something changes on the other
side. Well, your perspective on sort of global
interactions with China and Russia and the United
States and the energy supply and the food supply,
I have not heard before. I haven't heard it as
comprehensively as I've seen you put it together.
So I'm kind of excited to talk to you about this.
So I guess we should start it with Russia. When
Russia invaded Ukraine, you were not surprised.
Not even a little. No. You expected this and
you felt like this is inevitable and this is
just something that was always going to happen
and it's not going to just stop at Ukraine. No,
not even remotely. The Russian space is among
the worst farmland in the world. And so they've
never been able to generate enough income to
have a road network. Everything has to be moved
by rail. And their frontiers are just huge and
they're open. And if you've got a force that
can't maneuver itself, your only reasonable defense
strategy is to be forward positioned and use
geography to help you out. So you expand until
you reach mountains or oceans or deserts, and
then you anchor on either side of those and plug
the access points. Unfortunately for Ukraine,
There are two of those access points on the other
side of Ukraine. So the Russians were always,
always, always going to try to push through and
retake that territory, territory that they had
controlled for most of the last 350 years. Unfortunately
for them, in the 30, 35 years since the Soviet
system collapsed, the Ukrainians have developed
an identity. And now they would like to be something
other than a road bump. So one of the narratives
that was going around was that the reason why
Russia was pushing into Ukraine is because NATO
was moving their arms closer to the border of
Russia. There is something to be said for that.
You just have to put it into context to really
understand it. So the Russian point of view is
for us to be secure, we need to expand until
we reach a point where invaders cannot overwhelm
us. We have to be able to plug those access points.
But to give the Russians what they want, you
have to sign over the future of Estonia, Latvia,
Lithuania, Poland, Finland, the Czech Republic,
Hungary, Slovakia, Romania. Belarus, Ukraine.
Oh, let's go on. Azerbaijan, Armenia, Georgia,
Kazakhstan, all the stands. Basically, the Russians,
in order to feel safe, they have to be able to
occupy total populations that are twice of their
own. And I'm sorry, but that's just not feasible.
So, you know, technically, the people who claim
that NATO provoked this are correct. NATO can't
have what it wants in Russia. in order for Russia
to feel safe. But for Russia to feel safe, they've
got to occupy over 180 million people. And that
was never part of the game. So what do you think
they anticipated was going to happen when they
started the war? Well, I don't think it was just
the Russians who anticipated it. Ukraine, the
last war in 2014, basically rolled over. They
proved to be militarily incompetent. They were
corrupt. They couldn't put up any sort of resistance.
Crimea fell in just a matter of a couple of days.
And I think a lot of us who were in the security
side of things thought that this was going to
be to a degree a bit of repeat. I was probably
one of the more optimistic people for Ukraine
because I had seen them develop a culture and
seen them arm and train and seen it be meaningful.
But Ukraine is still a flat country and the Russians
are still one of the largest militaries in the
world. So even I was saying that within six months
to a year, this was all going to be over. But
the Ukrainians have surprised to the upside and
– Probably most importantly, the Europeans didn't
just roll over and let this happen like they
did the last seven times that the Russians have
gone on the warpath since 1999. And that's changed
the game fundamentally. And when you look at
it going forward, if people didn't anticipate
that the Ukrainians were going to be able to
fight back as well as they have, and then you
look at it going forward, like, where does this
go? Well, there's two paths here. And the problem
is we haven't seen either side fight in their
full glory yet. And until we have that fight,
we really can't judge. In their full glory, like
meaning? Well, the Ukrainians are the underdog,
but they're in the process of rapidly arming
with more and more sophisticated equipment. And
by the time we get to May, they will have been
able to do a lot of deferred maintenance on the
equipment they captured from the Russians, which
was more equipment than they started the war
with. And there will be 60 ,000 Ukrainian troops
that have trained in NATO countries with more
advanced equipment back in the field. So, you
know, we get our Athens, if you will. On the
other side, the Russians will finish their second
mobilization and they will have at least another
half a million men in the field. Now, they will
be badly trained and badly equipped and badly
led with low morale. But troops like that have
a technical term attached to them. Russian. There's
nothing about this war. that is unique in Russian
history. The first year is always an absolute
shit show. And then the Russians throw bodies
at the problem until it goes away. And in half
of those wars, the Russians ultimately win. So
by the time we get to May and the mud season
is over, we'll have a more advanced Ukrainian
force fighting a much larger Russian force. And
we will get our first real... glimpse at how
this is going to go, and we should know which
way it's going to break. Now, it'll still take
time, because if the Russians are going to win,
it's going to take them a year to overwhelm Ukrainian
defenses, and then they have to occupy the country,
and that's going to kill a couple million people.
or the Russians are going to be able to completely
break the logistical supply chains that allow
the Russian troops to even exist, and we'll have
a half a million dead Russians, and the Ukrainians
will be able to push the Russians out of Crimea
in the east. And then we get to talk about the
next stage, because this is just the opening
phase of what is going to be a multi -year and
perhaps even multi -decade conflict. Jesus. Yeah.
Welcome to Russia. How do you think it goes when
May rolls around? Yeah, ask me again in May.
Right now, the balance of forces clearly are
edging more and more towards the Ukrainians.
They've proven to be more adaptable. When the
Russians made it clear that they were going to
do a second mobilization, that seemed to have
broken the log jam in a lot of countries, most
notably Germany. And we now have armored vehicles
up to and including some light battle tanks,
which I know all the tankies out there are going
to hate that term. But anyway, armored vehicles
that have some serious firepower are going to
be coming. now. The Bradley's from the United
States specifically. And that is a tool that
the Ukrainians have not had. So every time the
Ukrainians have achieved a tactical breakthrough,
they can only push as far as their infantry can
run. Now their infantry is going to be mobile.
And in a war of movement to this point, the Russians
have proven that they're absolutely incompetent.
And why is that? Part of its graft The guy who
is the defense minister, Shoigu, is he's arguably
one of the least competent people on the planet.
But he's a friend of Putin. And so he's been
able to milk the Defense Department for everything.
Best guess is that he has taken a third of the
budget himself for procurement and his flunkies
have taken another third. So very little gets
to the military itself. So it's corruption. Huge
corruption. And that means no training. Or if
there is training, it's basically a parade. When
you're using a force that can only supply by
rail, you're completely dependent upon trucks
for local distribution. And that's why the Ukrainians
went after the trucks with all the javelins that
they got early in the war. They didn't really
go after tanks. They went after the trucks. And
they've destroyed roughly 2 ,000, maybe 2 ,500
of them. And that has reduced the Russian military
to going back to Russia, confiscating city buses
and literally Scooby -Doo vans and bringing them
back to the front. Think of a Scooby -Doo van,
now filled full of artillery shells. You know,
every time you hit a bump, and that is their
primary ammo supply system now. Because the rail
system into Crimea got blown up, the Kerch Bridge,
and what's going into the east is all under artillery
range. So they have to use truck, and they're
just not very good at it. Now, for a lot of people,
the big fear is that if Russia starts really
getting desperate. Then they use nukes. Sure.
And it would have to be very desperate. I have
never – I've not been as concerned about the
nuclear question as some folks because there's
really only four scenarios. Scenario one is the
Russians consider throwing one against the United
States. But we've made it very clear from our
intercepts and our sharing of information with
the media that we know exactly where Putin is
at any time. We're listening to his phone calls.
We're reading his emails. And so – He now knows
very clearly that if he throws a nuke at the
United States, we're going to throw one not at
Russia, we're going to throw one at him. And
there's no version of this where he survives.
So he has tamped down the rhetoric quite a bit
since last March. Option number two, nuking Ukraine.
That doesn't make sense. They want to occupy
Ukraine. You don't want to have your troops in
a place that's a radioactive wasteland. There
may have been a case last year for nuking Poland
and Berlin and Stockholm. in order to disrupt
the weapons flows into Ukraine. But after the
battles of Izium and Kherson, the Ukrainians
have more Russian gear now than they know what
to do with. It's going to take them months to
bring that all online. There's a lot of deferred
maintenance that needs to be done. And so disrupting
the weapons flows no longer is a critical issue
because the weapons are already there. So the
only scenario I can see where the Russians would
seriously consider nukes is if Ukraine doesn't
simply win. but decides to carry the fight across
the border into Russia proper. In that scenario,
where the very existence of the Russian government
is threatened, that would probably change the
math. But I don't find that likely without a
significant shift in mindset in Washington. We're
not just providing the Ukrainians with the weaponry
and the ammo. We're providing them with the intelligence
and most of the steps of the kill chain. Without
that, the weapons are of limited usefulness,
especially at long range. And the Ukrainians
have no desire to rupture that relationship.
So we're talking about a theoretical that is
at a minimum seven months away, probably further.
This whole thing is such a terrifying conflict.
Being that Russia is a nuclear superpower and
the history of Russian wars, I mean, it's such
a long history. of sacrifice and death. And they
have, it's like they're accustomed to it in a
way. Oh, we can do better than that. We can make
you a lot more depressed. Okay. So let me give
you two things. Number one, the Russians are
relatively casualty immune. They fight in an
area where they fight with numbers. They've never
been technologically advanced versus their peers.
They've always just thrown bodies at it. So there
has never been a conflict in Russian history
where they have backed out without first losing
a half a million men. We're at about 100 ,000
now. We have a long way to go before the Russian
military breaks. So the Russians have lost roughly
100 ,000? That's the best guess. How many Ukrainians
have been lost? Probably about a third of that.
But that is a third in terms of military forces.
In terms of civilians, we really don't know.
It could be as much as 250 ,000 at this point.
We just don't know. Really? Well, the data exists
on the other side of the front line. All we know
are about what has happened in the territories
that have been liberated. And if you think of
things like Bucha and Izium, German radio intercepts
told us as far back as May that there were at
least 70 places behind Russian lines that had
suffered massacres like Izium. I'm sorry, like
Bucha. And when we've had additional liberation
since then, it corroborates that general assessment.
So that's piece one you can be a little depressed
about. The piece two, the Russians see this as
an existential fight for their survival. They
feel if they don't get those blocking positions,
they're doomed. And they're probably right. But
we now know that the Russians are fighting so
badly. They're doing much worse than the Iraqis
did in 1992. Really? Oh, yeah. If we had a direct
fight now between NATO and Russia, it would be
a thousand one casualties. And I don't know anyone
at the Defense Department who's happy about that.
Because if the Russians see this as an existential
conflict and they know they can't hold a match
to NATO, the nukes are their only option. So
the primary reason why everyone in the West has
gotten shoulder to shoulder on this is they know
that if Ukraine falls and Poland's next. There
will be a direct fight. The Russians will lose,
and then there will be a general nuclear exchange.
So there's plenty of really solid reasons to
root for the Ukrainians on this one. Jesus Christ.
Now, when this whole thing broke out, what do
you think the Russians expected Ukraine to do?
to just give up. Absolutely. That's what happened
in 2014 for the most part. And what are the possible
scenarios for Russia? I mean, it seems like they're
completely committed to this. They are. And if
they don't win it? The Russian position is that
our demographic structure is in such diseased
and aged and terminal decline that the Russian
state will be turning the lights off sometime
between 2050 and 2070 anyway. Anyway. Yeah. They've
had a series of big melon scoops out of their
birth rate throughout the history, World War
I, World War II, the collectivizations under
Stalin, Brezhnev's mismanagement, Khrushchev's
mismanagement, the post -Cold War collapse. And
a lot of these stack on top of each other. And
the biggest one stacked on top of the post -Cold
War collapse. So there are more Russians in their
50s and their 40s and their 30s and their 20s
than teens. And then they lie about the data
of the teenagers on down. Which means that there
aren't enough Russians that have been born in
the last 30 years to carry the ethnicity forward
much farther. And so they're thinking if they
can forward position their military and plug
those gaps now with their last generation of
young people, then they can kind of die on their
own terms 50 years from now. Have they really
thought about this in that term? Yeah. One way
or another, this is the end of Russia. The question
is whether it dies in the long term on their
terms or in the shorter term when they're completely
unmoored. Because if they fail to secure those
borders, then they've got a 2 ,000 -mile open
border with countries they consider to be hostile.
And they have no way of moving troops around
in a way that would allow them to defend it.
They'd just be waiting for somebody to come over
and knock them over. And you believe that they're
aware of this, that they can't survive past 2050,
2070, whatever it is? I think that's what's been
driving them because 2022 was the last year.
they had a sufficient number of people in their
20s to even attempt this. So from my point of
view, not only did the war always have to happen,
it always had to happen by now. Jesus. Now, is
this just because of the nature of a dictatorship
that's run by someone like Putin, that it's just
completely mismanaged because he's just dominated
the power structure and made sure that everybody...
falls in line with his ideology and his reign?
Like what caused all this to be so poorly managed?
Well, Russia has always been poorly managed and
authoritarian. But under Putin, it's taken a
much darker turn because of the nature of...
the end of the Cold War. If you remember back
to 1982, there was a coup in the Soviet Union.
And Chernomyrdin and Dropov and Gorbachev were
FSB, well, then KGB agents who basically overthrew
the old system of Brezhnev and took over. Because
they were the only ones who really had a full
understanding of what was going on. They controlled
the information. They were not able to save the
system. And so it broke. And Putin is the...
successor to that legacy because he was also
in the KGB. And we're now in an environment that
between the terminal demographic structure of
the Soviet slash Russian system and Putin's personal
paranoia, so he's gone through and purged what
was left of the KGB FSB of anyone who has personal
ambitions to succeed him, we're left with an
entire political elite of only about 130 people.
And Putin has removed anyone who has leadership
ambitions. Now, they all see the world the same
way. They all kind of agree with Putin on what's
at stake here. But it does mean that when this
generation is gone, this is it. This is all the
leadership talent that the country has. So because
of his sort of top -down approach, he's eliminated...
all the possibility of future leaders in some
way. Even if Russia did have a replacement generation
coming up, and it doesn't, he's taken steps to
make sure that they can't challenge him. And
so any sort of leadership talent has left or
been killed. What do they hope happens? I mean,
when everything's going so poorly? Like, what
do we know about how they're assessing things?
Well, they're obviously not thrilled with the
way the things are. They're using one bit of
propaganda after another to justify it, saying
that, you know, we're fighting all of NATO or
like, you know, demons are involved. That was
my personal favorite. Oh, yeah. You know, when
it came to the Kyrsten offensive and it became
clear that there was more going on than just
NATO weapons, the Ukrainians actually knew what
they were doing. They changed the line from that
these are all Nazis to these are actually gay
demons. Gay? Gay demons, yes. What? Yeah, Russian
propaganda is a hoot. Please explain the gay
demons. Oh, I don't know if I can explain it.
I'm just saying that this is the official line
right now, that we have homosexual demons fighting
us in Ukraine. But why gay demons? Is there a
mythology to that? Not really. The guy who's
in charge of the Orthodox Church is a Putin crony.
Kirill is his name. He's kind of like the Eastern
Orthodox Pope, if you will. And he has been a
partner with organized crime and with Putin since
the beginning. And so he is coming up with ever
more creative approaches to the propaganda. And
so this is a way of – how can I say this without
pissing off half of the people listening? Imagine
Trump using his influence with evangelical Christians
to come up with a theological reason why something
didn't go his way. It's kind of the equivalent
of that. And so gay demons is what he came up
with. Gay demons. Yes. And they ran with it.
So that's on state propaganda now. Really? Yeah.
It's wild. And what's the epicenter of the gay
demons? Oh, Kiev, obviously. Kiev. Yeah. So we've
got a Jewish Nazi gay demon. Wow. Truth is always
weirder than fiction. And the scary rumor is
that Putin has cancer. Or Parkinson's is one
I've heard as well. Oh, really? Yeah, I don't
know what it is. He's clearly on steroids, but
that could mean a whole lot of things. Like prednisone
or something along those lines. And you say that
because of his appearance? Yeah, he looks very,
not just flushed, but puffy. And that's kind
of a classic, too many steroids in your system.
And this puffiness, these steroids are to battle
this cancer somehow? In theory. You know, steroids
keep you going in a time when you should probably
be laying down is really kind of the bottom line.
Whether he's medicated, over -medicated, or medicated
because of medical reasons, we really don't know.
He's not in great health. That is obvious. And
for someone who has been the... the shirtless
horseback rider in the propaganda videos, that's
a real problem. He's visibly wearing... Bulletproof
or bullet -resistant vests even around his own
propaganda people. There was this great piece
that came out that I saw last week where it was
all the propaganda shots that he's taken with
the soldiers' mothers and on the front and with
the tech people and in the intelligence. And
it was like the same 12 people were in every
single shot just in different outfits. And even
with those people, he's wearing his ballistic
vest. You talk about his appearance that he's
clearly unhealthy. Can you demonstrate that?
Are there images that show him a couple of years
ago versus now where you could see his appearance?
Yeah, it's not much of a reach. Like I said,
he likes to pose shirtless on horseback to show
how virile he is. He didn't look good shirtless
on horseback. Yeah, I know. You got to look at
it from the Russian point of view. I mean, the
standards are a little different. Are they? Oh,
yeah. And he's got the shakes. That's one of
the reasons why the Parkinson's analysis, I guess,
has come out. I've never seen any of this. So
there's video of him shaking? See if you can
find any of that, Jim. See if you can find a
comparison. Yeah, I got an article on like a
timeline of his health. Here's the shakes part.
He used to be a fairly animated speaker. Boy,
he does look puffy. Now, whether or not he's
actually sick or not, I have no idea. Could it
just be that he's just drinking a lot? Technically,
he says he's a teetotaler. Really? Which is pretty
rare in Russian society. But, you know, he's
still alive. And a lot of Russians make it to
his age. How old is he now? Mid -60s. And...
So it's just an appearance thing. We don't have
any like real hard data that he's sick. Well,
the folks in the intelligence world who are listening
to his phone calls and reading his email might,
but that has not been made public to my knowledge
from the American side. So Ukrainian military
intelligence chief claims Putin is very sick
and a coup is underway. Yeah, but Donov has been
saying that there's a coup underway since March.
So he's kind of the Ukrainian propaganda guy.
I wouldn't put too much. But what would even
happen there? What if a coup did take place?
Putin has so thoroughly purged what's left of
the intelligentsia. There's only 130 of them.
And there's probably only one of them who would
have the guts to throw a coup. That's the Rosneft
CEO. Rosneft is their oil monopoly. Igor Sechin
is his name. He used to be a gunrunner during
the Soviet period. He's got the guts to pull
it off. But if there's anything that the other
129 agree is that Sechin's an asshole and he
should be shot on sight. if he kills Putin. Oh,
Jesus. So there's no immediate pretender to the
throne here. What a fucked up situation. Well,
for the Europeans who have been dealing with
the Russians for three centuries, this is kind
of par for the course. It's just a modern version
of it. Yeah. The Soviet period was kind of a
relief because we actually had an institution
that pushed their weird religion to the side
and actually worked on technocracy and technology.
And from the European point of view, that was
a huge improvement. The belief in the post -Soviet
period was that they would start from that and
move forward and modernize and maybe even democratize.
And people believed that for far too long, even
when it was clear that Russia was degenerating
rather than advancing itself. Now, the title
of your book is The End of the World is Just
the Beginning. That's the one. Why that? We are
dealing with the end of the world that we know.
Russia is more of a symptom of this than a cause.
So to go back a little bit. In the world before
World War II, if you had coal, oil, food, and
iron ore, you could industrialize and try to
make something of yourself. But if you failed
to have one of those, you were probably a colony.
At the end of the war, the Americans abolished
the imperial system and patrolled the global
oceans for everyone. And as a result, now you
only needed one of those four and you could trade
for the others. And so for the first time in
human history, we were all on the same path,
you know, from different starting points and
going at different speeds. But we were all industrializing
and we were all urbanizing. The problem, well,
let's start with the opportunity. When you urbanize,
you move from the farm and into town to take
an industrial job. When you live on the farm,
you have a lot of kids because they're free labor.
You move into the city, you have a lot fewer
kids because kids are no longer free. They're
really expensive and noisy and annoying and dirty
pieces of furniture. And you have fewer of them.
And so your population starts to shift. It used
to be that you have loads of children, a few
young adults, fewer retirees. It's kind of a
pyramid. But as you urbanize, your pyramid opens
up into a column. because you have fewer kids,
but everyone's living longer. And as long as
your population is a column, economic growth
is spectacular, because you don't have to spend
a lot of money on your kids. You're not old enough
that you have a lot of retirees, but you got
a lot of people in their 20s and 30s to build
things and buy things, and then a lot of people
in their 40s and 50s to do the investing. And
the rich world was a population column from 1945
to 1992. And with the end of the Cold War, the
developing world became a column in 1992 until
now. The problem is that this is all temporary
because birth rate keeps dropping, people keep
living older, and your column eventually inverts
into an open pyramid upside down. And now you
no longer have children. You no longer have a
replacement generation at all. And there aren't
enough people in their 20s and 30s to buy everything.
And there aren't enough people in their 40s and
50s to pay for the retirees. So this decade was
always going to be the decade that most of the
advanced world moves into mass retirement and
the economic model collapses. And next decade
was always going to be the decade that that happened
to the developing world. And we find out recently
that the Chinese have jumped the ship, and this
is their last decade too. So all of the globalized
connections and consumptions that create the
world we know, we are at the end of it. And we
have to go back to a world where trade is more
focused on the countries that have a better demographic
and security infrastructure because the Americans
are no longer patrolling the global oceans anymore.
So we're losing the security ramifications of
an open system. At the same time, we're losing
the demographic capacity to support it in the
first place. And that's all going down right
now. So when you're saying that China has 10
years to go. At most. What do you mean by that?
Well, we now know that they've lied about their
population statistics and they overcounted their
population by over 100 million people, all of
whom would have been born since the one -child
policy was adopted. So this is one of those places
where they've got more people in their 60s and
their 50s and their 40s and their 30s and their
20s. What was the logic behind the one child?
Was it that they were overpopulating? Mao was
concerned that as the country was modernizing,
the birth rate wasn't dropping fast enough and
that the young generation was literally going
to eat the country alive. a breakneck urbanization
program, which destroyed the birth rate. At the
same time, they penalized anyone who wanted to
have kids. And both of those at the same time
have generated the demographic collapse we're
in now. And the problem with that also was that
they wanted male children. Yeah, there's a cultural
aspect to that too. And obviously, men can't
have kids on their own. And what is the ratio
to men to women in the younger people in China
now? Before the data revision with the last set
of lies, it was about 1 to 1 .2. It was the most
distorted in the world, even more than Sri Lanka
where there had been a civil war for 30 years.
Since then, we don't have good sex -by -sex data,
but it's undoubtedly worse. And so what are the
other problems that they're encountering that
leads you to believe that they only have 10 years
left? Well, without young people, we've seen
their labor costs increased by a factor of 14
since the year 2000. So Mexican labor is now
one third the cost of Chinese labor. Their educational
system focuses on memorization over skills. So
despite a trillion dollars of investment in a...
bottomless supply of intellectual property theft.
They really haven't advanced technologically
in the last 15 years. Mexican labor is probably
about twice as skilled as Chinese labor now,
even though it's one -third the cost. They've
consolidated into an ethnic -based... paranoid,
nationalistic cult of personality. And it's very
difficult for the Xi administration to even run
it because it's not an administration anymore.
No one wants to bring Xi information on anything.
So like Putin lied to his face, for example,
last February about the war saying, why would
I invade Ukraine? And you can see in some of
the presses, the defense guys in the back of
the room, like, they didn't want to say anything
because Xi has a history of shooting people he
doesn't like. And so the Chinese were the only
country that was caught with their pants down
when this all went down. The Biden administration
is basically taking the trade policy of Donald
Trump and running it through a grammar checker
and putting it into institutions. So we now have
tech barricades that prevent the Chinese from
buying the equipment, the tools, or the software
that's necessary to make semiconductors. In fact,
he went so far as to say any Americans working
in the sector have to either quit or give up
their American citizenship. Every single one
of them either quit or was transferred abroad
within 24 hours. So the tech system is stalled.
They don't have the young people to go consumption
-led. They're completely dependent on the U .S.
Navy to access international trade. They are
the most vulnerable country in the world right
now. And based on how things go with Russia,
we're looking at a significant amount of raw
materials falling off the map, specifically food
and energy. And the Chinese are the world's largest
importer of both of those things. So there's
no version of this where China comes through
looking good. And the challenge for the rest
of us is to figure out how do we, in as smooth
and quick as a process as possible, figure out
how we can get along without them. Because they
are going away. And they're going away this decade
for certain. Well, if you say they're going away,
clearly they're not just going to lay down. No,
they'll die. They're going to try to adjust.
Yeah, they'll die. But how so? Do you think this
is because, like, what is, other than, well,
here would be a big problem, right? Taiwan. Like,
if we impose the kind of sanctions that we've
imposed on Russia, if China decides to invade
Taiwan and the world stands up and the world
imposes sanctions on China, how does that go?
Very ugly for the Chinese. So, you know, say
what you will about the Russian economy. It's
corrupt. It's inefficient. It's not very high
value add. But it's a massive producer and exporter
of food and energy. You put the sanctions that
are on the Russians on Beijing and you get a
deindustrialization collapse and a famine that
kills 500 million people in under a year. And
the Chinese know this. They can only push so
hard. If the Russians succeed, they actually
solve or at least address some of their problems.
Even if the Chinese were able to capture Taiwan
without firing a shot, it doesn't solve anything
for them. They're still food importers. They're
still dependent on the United States. They're
still energy importers. And even if they take
every single one of those semiconductor fab facilities
intact, they don't know how to operate them because
they can't operate their own. And their own are
among the worst in the world, not the best. The
only reason, in my opinion, to be concerned about
a Taiwan war is because Xi is so isolated himself
that when one person is making all the decisions
and that one person refuses to access information
to make the decisions, strange stuff happens.
And when you say refuses to access, what do you
mean by that? does not have normal information
flows anymore. Like even at the height of the
Trump administration, when Trump was basically
isolated himself from the entire intelligence
community, he was still getting the daily briefing.
There was still information being put in front
of him. But Xi is so isolated himself. He doesn't
want to hear anything except for what he wants
to hear. And since no one knows what the status
of the conversation with the voices in his head
in on any given day, no one wants to bring him
anything unless they're ordered to. How do we
know this about him? Because there's no one to
listen to anymore. That's one of the fun things
about Russia versus China right now is that the
Russian information security is so poor that
American intelligence is literally listening
in on everything. But in China, we can hear into
the office, but there are no conversations happening.
What do you mean by that? What do you mean? So
no one talks to him about anything? Anything.
So he's just terrifying to people. Yeah, exactly.
Because he murders dissidents. He murders anybody
that— He doesn't murder everyone, but there's
a lot of people in prison. Well, there's also
a lot of billionaires that got disappeared, right?
And any dissent. Yeah. You're either executed
or exiled, intimidated into silence. There's
a variety of options. And if you look at the
third -party Congress that we had late last year,
that's when they select the Politburo. Everyone
on the Politburo now is a personal flunky. There
is no one from a different faction. There is
no one that has a history of being incompetent.
And what is their plan? The Chinese? Yeah. Do
we have any idea of what their plan to get out
of this is? Nationalism. If you know that the
economic situation is going to go to pot. then
you have a couple of options. Option one is you
try to cut a deal with a country that can help
you out, but the only country that could do that
is the United States. And the sort of strategic
surrender that the Americans would require is
not something that the Chinese would accept.
So think about Germany in 1946. That's the scale
of support and control that the Americans would
insist upon for giving the Chinese a lease on
life. But if you go with nationalism, give people
a non -economic reason to support the state.
So even if you lose your job, even if you can't
feed your family, I'm Chinese, I'm Han, that's
enough. That has been the strategy for the last
couple of years. Will it be enough to preserve
the CCP? Too soon to know. They're in the middle
of the worst aspect of the pandemic for them
ever, which is very strange for us because we're
on the other end of it. Right. So what happened
over there? Well, let me start by saying I think
it's safe to say that no country has really figured
out how to handle this well. Right. Second, I
will say there are seven different variants circulated
in Beijing right now or in China right now. Three
of them did not exist two or three months ago.
And it takes about six months of data for you
to get good information on the are not and the
lethality. So we just don't know. And then third,
in part because of Xi, when you're a one -man
state, all policy and all authority starts and
stops with you. And unless you're providing very
clear guidance on everything, which is impossible
for one person to do for a whole country, especially
one the size of China, the bureaucracy either
goes into automatic or does nothing. Well, right
now it's doing nothing. So the data decisions
in China are not to gather data and figure out
what we can do. It's to instead of gathering
data and lying about it, we're just not going
to gather any data at all. So we're not going
to know how bad these strains are until they
get out of China and circulate in the rest of
the world for six months. So the lowest fatality
estimate that I have seen that I consider credible
is that they're going to lose a million and a
half people. Just from COVID. Just from COVID.
That assumes no broader breakdown in the health
system, which we are already seeing. And is this
because they don't have natural immunity because
of the rigid lockdowns that they encountered?
Yeah. From a plus point of view, they did keep
the virus out of the population for almost three
years. So no one has natural immunity. But we
also know that their domestically generated vaccines
aren't great. And most of the countries that
used them in order to get their kind of first
batch then moved on to a Western model that worked
better. So they had a twofold problem. They did
not have vaccines and they didn't develop natural
immunity. And now everyone's getting hit all
at once with a virus that has at least 50 % more
communicability than the measles. And their overall
health. is worse than ours. Diabetes as a percentage
of the population is higher. They don't have
a critical care system like we have. And their
hospitals are really their only line of defense.
They don't have a clinic and a doctor system
in the towns like we do. And what about nutrition
education and the understanding of - Yeah. When
you industrialize very, very quickly, especially
in a culture like China, where food is considered
a sign of wealth, getting fat is the thing to
do. So we've got a lot of diabetes, a lot of
hypertension, a lot of overweight people, and
over two -thirds of the population lives in the
metro region and their air quality sucks too.
So we're kind of seeing like the worst aspects
of the Indian system and the American system
all in one. So obviously the United States government
is aware of all these things, correct? Well,
let's not oversell it, but broadly. Broadly.
Have you been brought in to talk to people? Because
you have a very comprehensive view of this that
includes energy and nitrogen, fertilizers, everything.
Has anybody ever brought you in and said, Peter,
can you give us an assessment of what we're really
dealing with versus what each individual expert
has to contribute to it? Because you're giving
an overhaul. an overall sort of comprehensive
view of this? I'm happy to say that I am doing
some work with the Defense Department. I can't
talk about the details, obviously, but I think
it's... I think it's good to give credit where
it's due. One of the many, many things about
the war on terror that reshaped the US government
is that we focus all of our intelligence apparatus
on supporting the troops, which is reasonable.
So instead of thinking, you know, it's 2045 and
you're thinking over the horizon, who's our foe
going to be and what kind of tank are they going
to use so that we can start preparing, which
is what we used to do. It instead became there's
someone in the other side of this door. and the
third floor of this building at the edge of town
in Fallujah. What side of the door the hinges
are, because we need to know if we need to blow
it off the hinges or kick it in. So we focused
all on that second thing for 20 years, which
meant not only did we lose all the analysts who
knew how to think forward, we lost all the people
who trained them. 20 years is a long time. So
even if everyone in DOD or the intelligence community
disagrees with everything I have to say, and
I have some friends, I have some colleagues,
I have some non -friends who listen, the fact
that they're trying to rebuild that capacity
is a really good sign. And the fact that they
started rebuilding that capacity so soon after
the war on terror ended means that they recognize
the hole in the system. This is a good sign.
So if you play out China's collapse, how do you
anticipate that that goes? First of all, what
do you think is the first piece to drop? Well,
Chinese history is rich with examples of how
it all falls apart in a short period of time.
If I were a betting man, I think that the two
most vulnerable parts of the international system
right now are energy transport and food production.
About 80 % of the calories that humans produce
are produced with at least one imported input,
whether it's, you know, pesticide, fertilizer,
fuel, tractors, whatever. And with the Chinese,
it's more like 90%. 90 % is imported? Yeah. Well,
no, no, not their food is imported, the inputs.
The inputs. The input strain. And 90 % of the
calories they produce are dependent upon a foreign
support system. In the United States, it's less
than 10. We produce most of what we need locally
and most of the rest comes from Canada. But you
interrupt the food supply chain in any meaningful
way. And China is only one of a host of countries
that has some very real problems. Now, China
faces the biggest one in absolute terms because
of the size of their population. But with the
Russians having their problems, the Russian space
is the world's largest single supplier fertilizer
of all types. So we are already knee deep in
a fertilizer crisis globally. And we're seeing
industrial accidents in the Russian space that
are so big you can see them from orbit because,
you know, a lot of petroleum stuff explodes if
it doesn't go right. And the Russian facility
has been held together with duct tape and Western
tech for a while now. That's all gone now. So,
China being kind of the last man in line to get
a lot of this stuff is in a very vulnerable position.
We're probably going to see about a million barrels
a day of Russian crude fall offline within the
next few weeks as part of the price cap that
the Europeans are putting into place. But more
important, all the insurance firms have said
they're not going to deal with Russia anymore.
So, you're not supposed to sail at all with your
ship if you don't have an insurance policy. So
countries like China and India are stepping in
and offering sovereign indemnifications, but
that's something they've never done before. And
so if there's ever a case where a ship, for whatever
reason, needs to file a claim, it's going to
immediately go to international arbitration because
they have no method for the payout. As soon as
that happens, no one's going to take an Indian
insurance policy again. That's another million
to two million barrels a day that goes offline.
And then all the crude that the Chinese get from
eastern Siberia is from fields that the Russians
never developed themselves. That was all BP.
BP is gone. So we don't know how long the Russians
can keep it operating, but we know it's going
to go to zero. We just don't know how long it's
going to take. And the Chinese are the last in
line for all of this stuff. And if you have a
food or an energy crisis, or God forbid, both
at the same time, on top of a health crisis,
on top of government incompetence, there is no
way a central government holds together in that
sort of environment. Like I said, Chinese history
is rich with ways that can all fall apart. Oftentimes
it's based on having this hyper centralization
and an incompetent leader or an incompetent leader
cadre maybe is a better way to phrase that. But
how it usually goes is that the north kind of
falls in on itself. It falls into famine. It
falls into tyranny. You get hundreds of millions
of people suffering from malnutrition and then
ultimately dying. The coast. goes one way, the
interior kind of breaks off and shatters. And
then the cities of the coast in the south, your
Shanghai, your Fujian, your Guangzhou, your Hong
Kong, they basically become independent city
-states and integrate with foreign powers primarily
in order to get food. And if you look back at
the last 14 centuries, for almost that entire
period until 1945, the city -states have been
dependent upon foreigners to keep themselves
alive. So we're really just reverting to a historical
mean here. Now, one of the things that's really
disturbing to the West is watching what's happened
to Hong Kong. Sure. That Hong Kong has essentially
been taken over by the CCP and they've imposed
their rule of law on people that had existed
in more or less a westernized democracy. Right.
Like, how do they control that? The Chinese?
Well, Hong Kong would probably be one of those
cities that splits off. But for that to happen,
you first have to have the northern section basically
fall in on itself. As long as there are security
services, these southern cities can't go their
own way. But as soon as something happens to
those security services and they're focused on
the homeland in the north, then the southern
cities are going to bolt. Now, what does China
think about? Did they have an understanding of
this collapse or is it just because of Xi's power
over everyone that none of this gets discussed?
This is one of the beautiful things about authoritarianism
is they start telling stories and eventually
they believe them. It happened in Russia. It's
happening in China. Chinese academics as recently
as 10 years ago were very… very aware of this,
and it shaped government policy. They wanted
to make sure that the Democrats, little d, in
Hong Kong didn't get too uppity. They tried to
make sure that there were people from the South
on the Politburo. But as we've gotten into a
more ossified and centralized decision -making
system, all of the lessons of the past are going
away, and it's all about central control. And
once again, because this is another trend that
pops up in China over and over again, they're
forgetting their own history. But China has always
been thought of as a country, at least the narrative
has always been that they plan long game. Yeah,
it's a bunch of crap. Is it? Yeah. No, the Chinese
are just as bad as everyone when it comes to
ideological blinders and short -term decision
-making. And the more isolated and concentrated
the decisions – I'm sorry, the tools of power
become. The more problematic that becomes. So
what is their plan on getting through what you
think is a 10 -year timeline for their demise?
Beat the nationalist drum so that when the food
and the energy run out, everyone is banding together
simply because they're Han Chinese. That's it?
That's as good as it's going to get because there
is no trade option out of this without the United
States. What do you think the world looks like
in 10 years? I think we'll have a system of regional
trade where you've got certain regional powers
who have actually benefit from the environment.
So one of the fun things about the United States
is that we've got more navigable waterways than
everyone else in the world put together, about
13 ,000 miles. And it's about one -tenth the
cost to move things by water as it is to move
it by truck. So with that sort of environment
and ocean moats, the United States is an economic
power, whoever is in charge. I mean, we've had
decades of bipartisan effort to try to screw
this up, and we haven't pulled it off yet. We're
not going to do it under Biden. He doesn't have
the energy. Which means that globalization from
our point of view, from an economic point of
view, was a problem. Because we had one of the
world's best geographies. And we deliberately
sublimated that in order to support our allies
against the Soviets in the Cold War. We basically
paid people with globalization to be on our side.
And it worked. But we're getting away from that.
And now geography is going to have a much bigger
role to play. And if you layer demographics on
top of that, if you have a country with a decent
geography and a decent demography, they can kind
of write their own ticket in the world we're
going to. And there are... A few of those. The
United States is at the top of the list. Argentina
looks really good. France and Turkey look great.
And then Japan is kind of a consolation prize
because they've managed to cut a deal with both
the American right and the American left and
get themselves invited into kind of an American
friends and family plan. So you get these spheres
of influence that don't necessarily cooperate
or compete with one another but are kind of in
their own little worlds. And anything outside
of those spheres of influence is probably a territory
that is not very economically viable. And most
of them don't have demographic structures that
are sustainable at all. This really is the end
of the world. The end of the world we understand,
yeah. We're going back to something that's a
lot more similar to the world as it existed in
the early 1900s. How does China come through
this, though? They don't. So what happens to
them if they don't? Well, I mean, this is one
of the wild things and the hard parts of my job
is we have never faced a demographic collapse
that wasn't caused by war. The closest would
be the Black Plague. But the Chinese are going
to lose a greater percentage of their population
in the next 20 years than Europe did during the
Black Plague. And you think by famine? This assumes
no famine. This is just aging. Just aging. Yeah.
If you have an energy breakdown or a food breakdown,
it happens a lot faster. And they have energy
issues and they have food issues. They are the
world's largest importer of energy, about 14
million barrels a day. Remember, we're a net
exporter. And they are the world's largest importer
of food and food inputs. And are we the only
major superpower that can generate its own natural
resources in terms of natural gas, shale oil?
We're the only ones that can do it at scale.
I would argue that Argentina can do a pretty
good job of it by Argentine standards. So we're
fairly safe in that regard? Yeah. I mean, we'll
always find things to stress about. I don't mean
to suggest that the next five years are just
going to be a picnic. We're going to have to
double the size of the industrial plant as the
Chinese system and the German system both fall
offline. But that's an opportunity. You double
the size of the industrial plant. Obviously,
that's inflationary. But at the other side, you're
building things at home using local resources
and local workers. You're using less energy and
less water. It's cleaner. You're selling to locals.
And your supply chains are simpler and safer
and shorter. And you're largely become immune
to shocks beyond the horizon. This is a good
challenge. It won't be easy. But to be perfectly
blunt, we've done it before. We can do it again.
Well, one of the things that came up during COVID
was our understanding, really for the first time,
of the supply chain and what happens when it
gets cut off. When medicine, so much medicine
is produced in China, so many computer chips,
so many different things are made over there,
that there's been a real conversation about the
need to have all that stuff here and for the
United States to be self -sustaining. With the
inflation, I mean, I don't want to come across
as a partisan here, but the Inflation Reduction
Act, while from an inflation point of view, is
ridiculous. There's nothing about that that addresses
inflation. It did put together a nationalist
economic policy that we probably did need in
terms of pushing the reindustrialization on some
specific sectors. It'll probably be the first
of a series of things that are coming. And a
lot of this stuff is not particularly complicated.
So take the medication issue. It's 1950s technology
for the most part. The medicines that we import
from China and India are not the biologics or
the cutting edge stuff or the cancer drugs. maintenance
things that a lot of us use. And it is not particularly
expensive or time -consuming to build out the
capacity here. It's basic chemistry. But there
has not been an economic incentive to do it yet.
So you get one act of Congress and splash a little
cash on it, and it might cost us $0 .08 for a
pill instead of $0 .04. But we can argue whether
or not that is worth the price. You get into
more sophisticated manufacturing, and it kind
of does this weird split. So the United States
is a world leader at the very high end, whether
it's semiconductors or vehicles or machinery
or software. But we're also a world leader on
the low end if it's input intensive. So energy
products and food products, fuel, processed foods.
Our problem is in the middle, places where it's
not the natural bounty of North America that
helps us out, and it's not the ingenuity and
the skill of the American workforce that helps
us out. The stuff in the middle. To be perfectly
blunt, for that, we've got Mexico, and they're
great at it. The American -Mexican trade relationship
is already the largest in the world, and they're
going to be our largest trading partner moving
forward for at least the next 30 years, probably
a lot more. Are there hiccups? Oh, yeah. Plenty
of hiccups. Well, I'm sure you're paying attention
to the cartel wars that are going on right now.
Yeah, it would be so much better if Americans
did not like cocaine. I would just solve half
of this overnight. Or if cocaine was legal. The
health studies that I have seen suggest that
that is not the way forward. But do you really
think that it would change the consumption? Oh,
it would definitely alter the consumption. How,
I don't know. This is not something I'm an expert
at. But most of the people that I've seen who
have done the assessments suggest that any gain
in terms of law enforcement and criminal activity
would be lost in terms of work days and sickness.
So from a purely economic point of view, at best,
it looks like it might be a wash. So the legalization
of cocaine, in your opinion, would cause more
use and more problems. Probably. Just different
ones. But wouldn't it stop? all these fentanyl
overdose? Because this is an issue with the illegalization.
See, that's the problem. We ask people why they're
taking what drug. To say that if cocaine was
immediately available that they'd stop taking
fentanyl, I don't know. But they're not taking
fentanyl on purpose. Oh, you're talking about
the stuff that's cut in. A lot of the fentanyl
deaths is cut. Like cocaine fentanyl deaths are
very high. Well, then you're talking about a
regulatory issue. And just keep in mind that
whenever you move something in from an illegal
to a regulatory point of view, there is a, how
should we call this, an adjustment process. So
I live in Colorado now, which was the first state
to legalize pot. And what we discovered was that,
yes, you solve some problems and you bring a
lot of money in for the government, but it has
criminalized a lot of economic activity in Colorado.
Because think about what happened with pot. It's
still controlled from a financial point of view
at the federal level. So banks won't touch it.
So all the pot dispensaries have a walk -in safe
where they keep all the cash. So the Federal
Reserve is like, this is a theft issue. This
is a security issue. We can't allow this to happen.
So what we're going to do is we're going to hire
out a bunch of armored cars and trucks. And we're
going to send these to these pot dispensaries
after hours. And with armored guards, we're going
to come in and we're going to take all your cash.
We're going to spray a lot of Febreze on it.
We're going to take it back to the Federal Reserve
building. We're going to count it and give you
a digital deposit. The Sinaloa cartel is like,
whoa, whoa, whoa, whoa, whoa. Let me get this
right. The Federal Reserve of the United States
of America is now in the business of money laundering.
Count us in. And so now they are laundering their
money through the pot industry of Colorado. And
it's generated just a different problem. This
is a gentleman named John Norris, and he started
out his career as a game warden, a guy who checks
fishing licenses and stuff. And along the way,
he discovered that because of the legalization
of marijuana in California, they decriminalize
it to the point where growing it is a misdemeanor.
And so people are growing it on federal land,
on state land. And so these state forests. in
federal forests in California are filled with
cartels. They're growing marijuana. So he had
to form a tactical unit. To combat these cartels.
So they're wearing tactical gear. And this guy
was a game warden. And now they've got Belgian
Malinois and fucking machine guns. And they're
going in there and they're fighting off cartels.
And he wrote this book called Hidden Wars. It's
fucking crazy. There's rarely a silver bullet,
unfortunately. But this is the problem that you
have when you have it illegal. I mean this is
literally what propped up organized crime during
the prohibition. This is what funded the mafia.
They ran booze illegally because it was illegal.
So criminals are going to be in charge of things
that there's a demand for when there's an enormous
economic incentive. I think the mafia is a great
example for why you shouldn't look for the silver
bullet. Because, yes, that in the 1920s during
Prohibition was one of the big reasons it got
going. But the mafia didn't waste any time in
diversifying and neither of the cartels. So one
of the many problems in Mexico today is that
the cartels have diversified. They've gotten
into cargo theft and kidnapping and avocados
and limes and real estate and local government.
And criminality is always going to exist. The
attractiveness of gutting them of some of their
primary income, should we look at that? Of course.
But it's not so simple as removing one and it
just all stops. Because of the limes and avocados
and all these other things. These are things
that are obviously legal. But the cartels have
found a way to take it over and make it their
own. The problem was initially because of illegal
drugs. So that's where they got their enormous
resources. And then that allowed them to expand
into other semi -legal or legal. I'd say the
problem was lack of rule of law. And that goes
to Chicago as well. And the way we ultimately
got past that is after Prohibition ended, it
still took 20 to 30 years to kind of ground down
the mob. And we welcomed them into politics to
normalize it. So careful what you wish for. So
do you anticipate that happening with Mexico?
Mexico is, to be perfectly honest, really early
in this process. The challenge we're seeing in
Mexico right now is that the... air quotes, good
cartel, the one that saw drugs as a business,
is being broken up. If you remember El Chapo.
That's the good cartel? Yeah. Remember El Chapo,
Sinaloa cartel? Yeah. He thought of himself as
a Korean conglomerate president. So it's like,
we smuggle drugs. That's our business. You don't
mess with things that mess with the business.
So you don't trip the old lady. You don't steal
her purse. You don't shoot at the cops. These
are people who live where we operate. We want
them to be on our side. So maybe even throw a
party every once in a while. You focus on the
business. We got El Chapo. We removed him from
circulation. The guy who died or got captured
yesterday was his son, one of the Los Tepitos.
And his cartel as a result is fracturing because
his leadership's gone. The replacement cartel
is Jalisco New Generation. They're led by a former
Mexican military officer who thinks that rather
than don't shit where you sleep so that the people
on your side, whenever you move into a town,
you shoot it up. You do kick over the old lady.
You do take her purse. You make the people scared
of you. That's the point of this. Drug running
is a side gig. We are here to be powerful. And
drug running is just one of the ways we make
that happen. And he has taken the fight to every
cartel and the Mexican government. And they're
in the process of trying to break into the United
States. Break in in what? Economically? Yeah.
El Chapo and the Sinaloa became the largest drug
trafficking organization in America under the
Obama administration. And one of the reasons
our birth rate went down so far so fast is they
basically either co -opted or killed American
gangs. So they killed the people who were doing
the killing. Not a lot of Americans got killed
after that. All of the other cartels control
the access points in the United States, but Jalisco
New Generation now is challenging every single
one of them, trying to break through. And if
they do, and they bring their business acumen,
if you will, north of the border, they're going
to start killing white chicks named Sheila in
Phoenix, and then we're going to have a very
different conversation in this country about
the drug war and about trade with Mexico. So
when you say that they've killed the gangs, in
what way? Because that is an interesting thing
that you don't hear a lot about American gangs
anymore. Well, that's because they're not there
to the same degree. So the Sinaloa, they co -opted
the Hispanic gangs, especially the Mexican gangs,
because there wasn't a language barrier there.
And they really targeted and gutted a lot of
the African -American gangs. They took over drug
smuggling and distribution from them to deny
them income. And then they just shot a lot of
people. And when did this take place? That happened
during the 2000s. It was pretty much completed
by the time we got to 2013. But we weren't really
kind of – this narrative didn't really go around.
This is not something that I've heard before.
Oh, yeah. Look at the murder. It's making sense
when you're saying it. Look at the violent crime
rates in the United States. They've been trending
down really significantly since about 2004. And
the drop from 2004 to roughly 2014 was amazing.
That's largely Sinaloa. So they have silently
sort of invaded and taken over the distribution
and taken over the gang activity. Right. And
this is El Chapo's cartel that is now getting
broken up. And as soon as you have more players,
more violence is going to happen, especially
against one another. And that's one of the reasons
that the murder rate in Mexico has skyrocketed
in the last three years. Do you know who Ed Calderon?
Have you ever followed Ed Manifesto on Instagram?
He used to work. For the government in Mexico
and, you know, to fight off the cartels. And
now he's made his way to America. And he just
does a great job of highlighting all this stuff.
But one of the things he was showing is they
were using .50 caliber rifles to try to shoot
down planes yesterday. Yeah. Have you seen that?
I have. I mean, what the fuck is going on over
there? I mean, it seems like. We concentrate
so much on these conflicts that are happening
all around the world. And there's a massive one
happening in a place where we could walk to.
It's the disintegration of the Sinaloa cartel.
So back in 2019, the Los Chapitos, I can't remember
his name. I keep wanting to say Octavian. That's
not it because that's a girl's name. Anyway,
it begins with an O. He was captured in 2019.
And they weren't able to get him out of town
fast enough. So all of his homies basically got
together with assault weapons and descended upon
the police units that did it, and they were forced
to let the guy go. Yeah, I remember that. This
time, they were able to get him to the airport
fast enough, and he's already in Mexico City.
So there was a clash, but not nearly to the degree
that we had a couple years back. Look at this
here. Oh, yeah. One of the things, this is a
guy shooting at airplanes. Which is fucking bonkers.
I mean, what kind of airplanes are those? Those
are probably civilian. And why is he doing this?
We're seeing a change in heart of the administration
in Mexico. Lopez Obrador, for the first couple
of years of his presidency, followed what he
called hugs, not drugs. The idea that if we don't
bother the cartels, they'll just be nice. Yeah,
so that didn't work out. And now he's taken a
much more direct approach. And since most of
the security services at the local level have
been infiltrated by the cartels, he's tapped
the military to do it. So the military is now
taking active steps against the cartels. cartels.
And if you are in a cartel, that means you need
heavier weaponry to fight back. And that's why
the 50 cals and things like them are starting
to pop up a lot more. And so what is the Mexican
strategy in terms of utilizing the military and
dealing with the cartels? What are they trying
to do? I would argue that the AMLO administration
isn't to the point yet that they have a strategy.
But they realize that the murder rate has reached
the point that Hugs Not Drugs is no longer a
viable option. And so they're trying to militarize
the equation in the hopes that the Mexican military
is more capable than this or that cartel. You
can kind of break the cartel world into three
groups. You've got Jalisco New Generation, the
hyper -violent ones. You've got... The Los Chapitos
and the associated groups that are what's left
of Sinaloa, they're the most capable ones for
smuggling drugs. That's where the money is. And
so that is where AMLO seems to be focusing his
efforts. And then you've got what's left of the
Zetas and the Gulf cartels, which is a very twilight
2000 dog -eat -dog world out in eastern Mexico,
which everyone's just kind of ignoring because
it's not strategic. It's just violent. But it
appears, and I don't want to oversell this because
AMLO is clearly making this up as he goes. It
appears that they think if they can put a pinch
in the income, that maybe they can turn Sinaloa
into the next Zetas and just break it apart.
I don't think that's a very good plan, but it's
better than what they've been doing for the last
two and a half years. And what's worst case scenario
with Mexico? Worst case scenario would be if
Jalisco New Generation penetrates north of the
border and it changes our political discussion
to be very anti -Mexico. One of the great achievements,
in my opinion, of the Trump administration is
convincing America's hard right that Mexicans
are part of the family and taking one of the
biggest looming racial issues in the United States
and just dissolving it. If Americans start to
think of Mexicans as drug runners again, regardless
of why, that damages our most productive trading
relationship and our most brilliant opportunity
for our future right out of the gate. But what
is the worst case scenario in terms of the cartels
overwhelming the Mexican military? Because it
does seem they have unlimited— You're asking
all the fun, cheery questions. Well, that's why
you're here, bro. I'm here to get freaked out.
Our advantage with Mexico so far is because they
haven't had to fight a war in a long time, that
the military is not particularly competent, but
it's still armed. And so when you bring it into
the system, they hit with a punch that compared
to the normal local security services is really
impressive. But every time a armed group of the
state has been brought into the fight, the cartels
have found a way to corrupt it. And if you do
that to the military. we could have a very real
problem here. Think Chicago at the height of
Al Capone, but on a national scale. Jesus Christ.
We're not there yet, but that would be the concern.
Now, how much effort is the United States putting
to mitigate this? How much policy is directed
towards trying to steer this in the right direction?
This is one of those where being a border country
is a negative because, you know, we may be great
trading partners and to a degree friends and
integrated economically and demographically.
But we're always going to be titchy about the
other one telling us what to do. Trump and AMLO
got along great because Trump really never asked
anything of AMLO. He said, like, as long as you
take steps to limit Central American immigration
into the United States, I'm going to be hands
off on everything else. And so relations were
pretty warm. Biden comes in and takes a much
more traditional American approach. So it's about
immigration. It's about drugs. It's about rule
of law. It's about investment. And AMLO is like
a really, really angry Trump. And he sees this
all as unnecessary challenges to him personally.
So the relationship between Biden and AMLO is
really poor. And in that sort of environment,
it's been very, very difficult for anyone in
the U .S. bureaucracy to have a productive relationship
with anyone south of the border. So most drug
extraditions have stopped. Most law enforcement
cooperation has stopped. Most intelligence sharing
has stopped. So we're just leaving that and watching
it play out. Well, because the Mexicans shut
the door on us. Yeah. Well, AMLO specifically.
I don't want to put credit for that anywhere
but on him. What's the best case scenario? Well,
there's term limits in Mexico. AMLO will be gone
in a year and a half. So we will get a new person.
Now, who will that person be? Way too soon to
know. But you can only serve for five years as
president of Mexico. That's it? Yeah. So they've
got a very, very bad one right now. We'll see
who's next. Oh, Jesus. And that's right there.
Yep. So the whole world's fucked. That's a bit
of an overstatement, but we've got some challenges.
But it's making me more optimistic about America.
Yeah. I mean, our economic system is broadly
positive. We've got a great partner for the most
part. Energy. A great partner? Mexico's got our
largest trading partner, and they have what we
need. So this is a relationship of partners that's
facing challenges. I think we'll get through
this. Remember that one in every six Americans
now has genetic links into Mexico. So this is
a family argument. This is a good argument, believe
it or not. We're never going to have a food crisis.
We're the world's largest food exporter. We're
never going to have an energy crisis. We're the
world's largest energy producer. And we're bit
by bit by bit bringing in countries to our kind
of a friends and family plan. So Japan is already
on board. Hopefully the Brits will be there before
long. How do you sleep at night? Easily. But
do you really with all this information? I would
imagine that this would keep me up. I imagine
it'll keep me up tonight. yeah just thinking
about if you focus on the negative you're never
gonna sleep um How do you manage? Are you medicated?
Oh, well, I get migraines. There's no doubt there.
But I focus on the fact that we've got the greatest
opportunity for economic expansion in the history
of our country. And it's not just us. It's Canada
and it's Mexico as well. This is going to be
a great story. We're going to emerge from this
in 10 years in so much of a better place. And
we're hopefully within 10 years, probably more
like 15 or 20, be able to then go back and reintegrate
with the world. and, you know, share what we've
learned and remake the human condition. This
is a once, not in a generation, this is a once
in a century opportunity to overhaul what being
human means. And I'm really excited about where
this leads us. I just wish we could bring more
countries with us. Now, is there any possibility
of regime change in China that would facilitate
this in a more peaceful way? I mean, when you've
got a one -man government, you're talking a popular
uprising with leaders that don't exist to displace
an old paranoid guy who has all the guns. That's
a tall order. I don't think so. And how strong
is his control over there? I mean, how much dissent
is there against Xi? There's definitely a lot
of unhappiness with the system. But because Xi
has systematically removed everyone with an opinion
or competence, if Xi were to die tomorrow, I
don't think there is a replacement system in
the wings. It's basically a system of cronies.
So if you look back to what happened after Mao
died, you had the Gang of Four and you had a
period of just absolute chaos until Ding Xiaoping
took over. But Ding Xiaoping was part of the
system. Xi is far more paranoid and far more
isolated and far more consolidated than Mao ever
was. Jesus. So how old is he now? He's also late
60s, I believe. Yeah, most of the people in the
New Pollard Bureau technically aren't supposed
to serve because they're too old. He waived that
rule. What is their requirement before that?
I'm not positive. I want to say it was 66. And
so he is at the... He's right at that age, I
believe. And there's no threat to his reign.
None. Well, none within the system. And as long
as he stays alive, he will maintain power. Right.
And he'll be constantly surrounded by cronies.
And he has insulated himself from any criticism
or any bad news. We've been going this way for
a while. So when Ding took over, he realized
that one -man government was awful. So he worked
out a series of secession and 10 -year increments
that different parts of the country, different
factions would have time in government and rule.
And then when they were not the ones who were
making the big decisions, they'd still be in
the Politburo. So we got our third generation
and our fourth generation in the form of Jiang
Zemin and Hu Jintao. But Ding realized when he
set the system up around 1980 that he wasn't
going to be there forever and he wasn't going
to be able to predict what was going to happen
in the 2000s. So he told these two factions,
you then have to pick a compromise candidate
for who comes next. And they went with Xi because
he's from the South, but his family is with the
Maoists and he had a foot in all camps. Well,
Xi spent his first five years purging the system
of all the other factions. And then the second
five years of his reign and making sure that
everyone realized it was him and him only who
was in charge. After 10 years of that, there's
no one left. And so there is no secession plan
post -Xi. There is no one waiting in the wings.
And the old factions as they once existed have
basically been sledgehammered. This is such a
wild perspective on world economics and international
relations. Welcome to my world. But do you feel
isolated in that? You're the guy who's like explaining
it this way? I'm adopted. That's not new. What
led you down this road to sort of developing
this comprehensive view of the future of the
world? Well, I'm adopted, so I really have always
been on the outside looking in. That is definitely
a part of my worldview. But my background is
in economic development. So figuring out what
works where and why. And once you kind of get
the ideology out of it, you can look for patterns.
And that took me to Stratfor and that took me
to geography. And so just combining the data
patterns with the American strategy for World
War II and beyond with the demographic. developments
that have happened because of that strategy,
it leads you some pretty unavoidable conclusions.
And then it's merely an issue of filling in the
blanks. And most of my career now has been filling
in the blanks for the last 10 years. Do you have
dissenters? How much pushback do you have about
these ideas? Do people think you're full of shit?
All kinds of people think I'm full of shit. I
am very sector and goal agnostic in my work,
which means I don't really care what your investment
strategy is. If it doesn't play against demography
and geography in a comprehensive way, at best
you're hoping that everyone just kind of sways
in your general direction. And so there's no
shortage of people in a room when I'm speaking
who get really upset because they have an investment
thesis or maybe they've bet their company on
something that. I just see as a non -issue. So,
you know, obviously the folks in the crypto world
have never liked me. And I dropped a video last
night about how EVs are just a disaster that
aren't going to be with us very much longer.
And I got some... I've gotten some interesting
communications because of that one. Things like
this happen with me with almost every presentation,
and last year I gave 179 presentations. What
is your perspective on EVs? They're not nearly
as good on carbon as people think. Most of the
data that exists doesn't take into the fact that
most of this stuff is processed in China where
it's all coal -driven, and it does not take into
account the fact that most grids that they run
on are also majority -fired. fossil fuels. And
that extends the break -even time for carbon
from one year to either five or 10 based on what
model you're talking in. Cybertruck's far worse
than EVs. But the bigger problem is we're just
not going to be able to make it much longer.
If we really do want to electrify everything,
that doesn't just mean EVs. That means the entire
system that feeds into the EVs. We need twice
as much copper and four times as much chromium
and four times as much nickel and 10 times as
much lithium and so on. in any decade in human
history, doubled the amount of a mainline material
production in 10 years ever. And we need all
of this by 2030? No. It's just not technically
possible. So how does the government, say, of
California justify these mandates when they're
saying something like by 2035? All combustion
vehicles must stop being sold in the state of
California. Let's put the ideology to the side
because I'm not going to try to explain that.
I will give a little bit of defense for California,
though, because I do consider myself a green.
I just think of myself as a green who can do
math. So I don't get invited to any of the parties.
California's state legislature gives a lot of
authority to their state bureaucracy. So the
bureaucracy will set. the goalposts, no ICEs
by 2035, knowing that the technology doesn't
exist, knowing that the supply chains don't exist,
but they will set the goalposts. If we get closer
to that date, say 2027, and it's... apparent
that the technology is not proceeding at a pace
that will allow that target to be reached. They
have the authority already to move the goalposts.
And they do this on clean air issues. They do
this on toxicity. They've done it on nuclear
power. They undoubtedly will end up doing it
on EVs. So do you think it's one of those things
where there's a bunch of green people who don't
do the math? Oh, yeah. And it just sounds great.
It falls in line with the progressive ideology.
We need to, you know, carbon neutral. We can
do this. Everyone goes. electric. Yeah. And there's
going to be, well, there is a fascinating discussion
happening in the environmental community right
now because they're being confronted with reality.
So California and Germany have very similar green
tech policies, but the Germans have spent three
times as much as California, but are only getting
about a fifth as much power. Because I don't
know if you've ever been to Germany, but the
sun doesn't shine in Germany. And now with the
Russians on the warpath and their clean -ish
energy from natural gas going away, they're going
back to lignite coal in force. It was already
their number one source of power. The idea that
Germany is green is ridiculous because they rely
on really, really dirty coal now especially.
But there's now a conversation going on between
the German environmentalists and the Californian
environmentalists about why California in relative
terms is doing so well at this while Germany
is not. And the answer is simple geography. But
that's never been part of the conversation in
the environmental community before. Now it is.
They should have had this conversation 15, 20
years ago. But they're having it now. And as
soon as they come to the conclusion, unwillingly,
but they'll get there, that we have to choose
where we put our copper and our lithium and our
nickel, EVs are not going to make the cut at
all. Where will the copper and the nickel and
where will all that go? It'll be focused on the
green techs that actually work in the geographic
areas where it can be applied. So you put solar
panels outside of Tucson. You put wind turbines
outside of Tulsa. That works with the technology
we have now. You do not put solar panels in Connecticut.
That's stupid. That actually increases your carbon
footprint. Because there's no sun. There's not
enough sun to generate enough electricity to
pay down the carbon debt that it took to build
the stuff in the first place. There's an ideology
in this country that is we must act against climate
change or we will die. And there's a lot of people
that haven't done the research and haven't really
looked into this and really don't know what the
numbers are. And they repeat that over and over
again like it's a mantra. It's become a new religion.
Yeah. Like I said, I'm a Green, so I broadly
believe in the science. When you say you're a
Green, what do you mean by that? Well, I believe
that climate change is real, and I believe it's
caused by human action. Some of it, right? The
bulk of it. The bulk? Oh, yeah. The bulk of climate
change you think is caused by humans? Yeah, I
know. I mean, the science of it was settled in
the 1890s. It's not particularly crazy. Different
gases have different albedos and absorption rates.
To think that we can predict on a local level
what that looks like, we don't have the math
for that. We don't have the case studies for
that. We do have weather data going back 130
years, which shows some pretty clear trends.
We've heated up by about 1 .1 degrees Celsius
over that time frame. But that has different
impacts based on where you are. If you're in
the upper Midwest, it's extended growing seasons
and gotten rid of some frost. So pretty soon
we're going to be double cropping. But if you're
in a drier climate like, say, Phoenix or Australia,
it's led to wildfires and a breakdown of the
agricultural system. So climate change is change.
It's not a disaster. It depends on where you
are. So why do you think this ideology has been
so pervasive, this ideology that it is a disaster,
we're all going to die? Well, now we're getting
into cultural debates. One of the many, many,
many aspects of modernization is that people
become more connected but live in smaller units.
As you urbanize, you have fewer kids. And that
means that people are looking for other ways
to belong because the old traditional methods
of family and farm aren't as tight as they used
to be. And so this is much more further advanced
in places like Japan or Europe than it is in
the United States. But it's happening here too.
Social opportunities, politics are a way that
can reach across the geographic distances no
matter where you happen to be. And you can use
social media and tech to communicate with people
who have a belief system that you find attractive
for whatever reason. And so the same thing that
makes the environmental community more potent,
if less informed, is exactly the same thing that
brought Donald Trump to power. Because you got
people who felt like they were on the outside
of a society who all of a sudden could link into
one another. Technology conversation from my
point of view. So do you drive an electric vehicle?
No. God, no. I live at 7 ,500 feet in Colorado.
That would be suicide. Why is it bad up there
at 7 ,500 feet? They don't deal well with inclement
weather. They don't deal well with cold. Right.
Yeah. It's fun to drive, though. No. For people
who enjoy it for the driving experience. Go for
it. Just don't pretend that you're being an environmentalist.
What do you think? Have you paid attention to
Porsche's, what they're trying to do now with
hydrogen? They're trying to build a new type
of carbon neutral fuel. I don't want to condemn
any technology that has not been through its
development process. But what I have seen from
hydrogen at the moment suggests that it is far
dirtier than gasoline. In what way? You have
to get the hydrogen from somewhere. And right
now we pluck it from natural gas. So you've got
a carbon input there. Then you have to build
out a transmission system for it. And the hydrogen
molecules are tiny. They're the smallest molecules
that we have. And the seals have to be perfect.
Otherwise, you're just hemorrhaging the stuff.
So you're generating something from fossil fuels
and they're hemorrhaging it all along the way.
And I got to say, if they don't do it right,
a car accident where hydrogen is involved is
really exciting. Oh, Jesus. You got a Hindenburg
type situation. Yeah. No, I'm not saying they
can't make it work. I'm saying they haven't made
it work. Is that what Porsche is using? Do they
have some sort of experimental fuel that they
have in production? I don't know. But I know
that they're, I mean, obviously they've created
electric vehicles. They call it e -fuel. Act
like gasoline. It could provide gas alternative
amid EV push. Porsche said Tuesday that a pilot
plant in Chile started production of an alternative
fuel as it aims to produce millions of gallons
by mid -decade. Officials say e -fuels act like
gasoline, allowing vehicle owners a more environmentally
friendly way to drive. Porsche officials celebrated
the beginning of the e -fuel production with
the filling of a Porsche 911 with the first synthetic
fuel produced at the site. I am unfamiliar with
the chemistry for this one. Portia and several
partners have started production of a climate
neutral. Do you believe that? Not really. E -fuel
aimed at replacing gasoline in vehicles with
traditional internal combustion engines. The
German automaker owned by Volkswagen said Tuesday
that a pilot plant in Chile started commercial
production of the alternative fuel by mid -decade.
Porsche is planning on producing millions of
gallons. We already said that. Yeah, there are
some versions of this technology where they're
hoping they can get... Here it is. Yeah, so e
-fuels are a type of synthetic methanol produced
by a complex process using water, hydrogen, and
carbon dioxide. Companies say they enable the
nearly CO2 neutral operation of a gas -powered
engine. Vehicles would still need to use oil
to lubricate the engine. In the pilot phase,
Porsche expects to produce around 130 ,000 liters.
of e -fuel. Plans are to expand that to almost
55 million liters by mid -decade, around 550
million liters roughly two years later. The Chilean
plant was initially announced with Porsche in
late 2020 when the automaker said it would invest
$24 million in the development of the plant and
the e -fuel's partners include Chilean operating
company, highly innovative fuels, renewable energies.
Let me slap some science on that real quick.
The three basements Water, carbon dioxide, and
oxygen are three of the most stable molecules
in the natural world. And so to break them apart
with electricity to make something else is a
massive power suck. If you're going to do that
with a conventional fuel system like we have
in pretty much every part of the world, you're
talking about a carbon footprint that's at least
triple what we do with gasoline right now. The
idea would be that if we can do it with green
tech, solar in Chile, for example, that maybe
we can make that footprint carbon -free or at
least carbon -neutral and then use the electricity
to generate this stuff in a relatively green
way. That's a lot of solar power. And all of
that to get, in their best -case scenario, 550
million gallons. We use almost 10 million barrels
of liquid fuels in just the United States every
day. So you need to expand that by a factor of
a couple hundred. What about nuclear? I am broadly
pro -nuclear. The problem is time frame. If there
were no regulations at all, it takes seven years
to build one of those suckers. We don't have
that kind of time. honestly. And if we start
right now, we won't see first output this decade.
There are small modular reactors that look really
promising. You can basically put them on the
back of a semi -flatbed, but they don't exist
yet. And once we build one of those, then it's
probably a 10 -year process to build out the
manufacturing supply chain to produce them in
volume. But wouldn't... it be wise to start moving
in that direction now if you're broadly pro -nuclear?
The issue is until we solve the fuel containment
issue on the back end once it's spent. So the
chemistry of taking a spent nuclear rod and refurbishing
it for a new reactor, it's relatively inexpensive.
It's relatively easy. But it has a side effect
of producing weapons -grade plutonium. So to
do this at scale, we have to produce a civilian
plutonium weapons quality plutonium disposal
and management system. We haven't figured out
how to do that. What do they do with it now?
They don't process it. They just leave it in
the spent fuel rods and they put it into a pond
until the end of time. Oh, boy. Yeah. No silver
bullets. So is it just that they don't know how
to do it or do they have theories on how to do
it? Well, you have to basically take the rod.
You go through a chelating dissolving chemistry
process and you separate out the various isotopes
of uranium from the plutonium. But then what
do you do with the plutonium? Because you have
now purified it because of this process. What
do they do? They just put it in a pond. They
don't even separate it. I was reading about some
technology where they think they could take nuclear
waste and convert it into batteries. I have not
heard that one. See if you can find that. There
was a process of processing nuclear waste and
converting it into a renewable resource. That's
a nice thought. Great thought. If the aliens
could come down and give us some new tech. But
as of what we have right now, you're not aware
of anything that could do that? No, no. I mean,
don't get me wrong. I think solar and wind, especially
wind, are great in the places where they work.
Here it says radioactive waste can be recycled
to create diamond batteries. Scientists involved
at American Startup for the Development of Nanodiamond
Batteries are trying to turn radioactive waste
into batteries. NDB is a perpetual green self
-charging battery made from recycled nuclear
waste isotope combined with layers of nanodiamonds
in a battery cell. Extremely good thermal conductivity
of microdiamonds causes heat removal from radioactive
isotopes, so the process of generating electricity
is fast. NDB generates electricity similar to
that obtained from solar panels, but uses radioactive
decay energy instead of sunlight. An NDB battery
usually consists of three main components, an
isotope, a converter, and a storage unit. Due
to the decay, isotope radiation is transformed
into electrical energy in the converter. The
storage unit accumulates energy for future use.
We're problem solved, bro. Yeah, just keep in
mind that this is radioactive decay, and that's
what turns you into goo. So you're not going
to put this in your watch. You're not going to
have it in your car. You're going to have it
at a fixed, secured location. Now, will that
be like a power plant? Maybe, but wow, I hope
nothing goes wrong. So these radioactive diamonds.
It's a diamond layer over the waste, and then
the waste is decaying, and then they conduct
the heat somehow. So the decay is inside the
diamond as long as the diamond doesn't get broken.
I'm guessing that the diamond is there to absorb
things like beta and gamma radiation. Hmm. But
this, you believe, also very dangerous. Well,
it would require some very serious security issues.
But at least from a chemical point of view, it
sounds theoretically possible. The patented NDB
universal self -charging battery provides a charge
of up to 28 ,000 years of battery life. No more
worried about your phones, bro. The half -life
of most of this stuff is in the thousands of
years, so yeah, I guess technically that's true.
Nanodiamond batteries will be able to charge
devices and machines of any size, from aircrafts
and rockets to electric vehicles, hearing aids,
smartphones, sensors, and more. I'm going to
go with a hard no on that one. Really? Why? You're
going to put something that is powered by radioactive
decay in your ear? But is this an oversimplification?
I mean, if you were really well versed in this
technology, do you think there's always a chance
that if you prevent me with the facts, I'm going
to change my mind. But radioactive decay is not
something you fuck with. You're certainly not
going to have it on your person. So you think
this is all just pipe dreams? I think in that
interpretation it's a pipe dream. Because think
about what would happen if this is real. And
you can get a sizable one of these like for a
car. All it takes is a pickaxe and all of a sudden
somebody has a dirty bomb. Jesus. Yeah. Having
it in a secured location where it provides energy
to a grid? Maybe. Maybe. Maybe. Have a good security
system. So you're not a believer. But are you
just basing this on your instincts? I mean, do
you think that you should maybe reserve judgment?
That's fair. But they did say specifically powered
by radioactive decay of spent nuclear fuel. Right.
That's what turns you to goo. And so you just
think just because it's encased, this presents
all sorts of damage if the case is broken. If
the case is broken, anyone locally screwed. Yeah.
So if you drop your smartphone and it starts.
leaking radioactive decay into your pocket. We
all know that smartphones are indestructible,
so I'm not worried about that. Jesus, Peter.
I'm an equal opportunity bubble popper. You must
be a real problem at parties. When someone starts
talking out of school. I bring the bourbon, everybody
gets over it. So if you were the king of the
world, how would you navigate us out of this
situation? Oh, like the whole thing, not just
the nuclear waste issue? Well, let's start with
the nuclear waste issue. We need a central repository
where the stuff can be processed and the plutonium
can be disposed of or at least incarcerated forever.
That is the idea behind Yucca Mountain. But because
the U .S. is a federal system with the state
and the local authorities having as much power
as the federal, it's been locked up in courts
ever since it started. Because nobody wants that
stuff in their neighborhood. Right, which is
why we want to put it in Nevada, because aside
from Vegas, there's nobody in Nevada. Sorry,
Reno. Sorry, Reno. So when you – it's like if
you did – if somebody said, hey, Peter, how do
we handle this? What would be your steps? Well,
if you want to look at American history, we'd
probably put it someplace like Guantanamo where
American federal law doesn't apply. I'm not saying
I recommend that. I'm just saying that's the
easy solution. Really, we need a place like northern
Nevada that the federal government just buys
and shoves it through. And if they did that,
do you think that's feasible? I think that's
what other countries who have experienced this
problem have done. There aren't a lot of them
because most of the nuclear industries of the
world are linked into the American system when
we don't allow it because we don't want the plutonium
processing. So that's not really. That would
be the best approach if you want nuclear power
to be a meaningful part of our future. But it
would take a radical restructuring of law. Right.
And it would probably take Congress literally
ramming it through the courts. They'd have to
change the law so that the states can't fight
it. And that triggers a legal fight, which in
the United States, as we all know, we love to
do. But the conversation about nuclear has not
been very positive in this country. No, it's
not. We've only built one new facility in the
last 45 years. Outside of that, how do you think
we should handle it? Wind, wind, wind. Wind,
really? The new turbines are pushing 1 ,000 feet
tall. And as you go up, you tap stronger and
more reliable wind currents. So right now, our
good wind territory is the Great Plains, so western
Texas up to North Dakota. But as you go higher
and higher and higher, you can spread that out.
And I would argue a third of the population of
the United States can get at least a third of
their electricity from wind if it's done at scale.
And we're moving that direction. subsidies. It's
just that the economics of the turbines as they
go up get better and better. What about the possibility
of solar getting more efficient? It can. The
big problem with solar is not just the efficiency,
though. It's the timing. Peak demand for electricity
in most places is after sunset in the winter.
And solar will never be part of that solution.
Right. Because sun's not out at night. So we
need a lot of money into tertiary education and
research grants to find a better battery than
lithium. Because we don't want something that
can store power for an hour, two, three, four
hours. We need something that can store power
for a week, a month. We're never going to do
that with lithium. And is there anything on the
horizon that holds promise in that regard? There's
nothing that at this point is promising that
has reached the prototype stage. There are things
like flow batteries and iron batteries that,
you know, the chemistry looks intriguing, but
none of it's been tested out in a meaningful
way yet. So if you were going to guide our energy
policy. I would say let's invest a trillion dollars
in material science solutions before we start
applying them at scale and we know already that
they don't work. And would that be effective?
I mean, even if you just throw a lot of money
at it? Until we have the material science breakthroughs,
the rest of it is kind of just spinning in the
mud. So you think that an approach in that regard
would be wise because we're spending a lot of
money on a lot of things anyway. Right. Spending
it on that, at least you have the promise of
possibly coming up with some sort of a feasible
solution. I'd rather see us spend a trillion
dollars on figuring out what might work rather
than us spending a trillion dollars on things
that we know already don't work. Okay. So that's
our energy problem. What about our food problem?
In the United States, we don't have one. We don't.
No. Don't we have a problem with our topsoil
where there's only like 60 seasons left of the
topsoil? Yeah, I've been hearing that for 40
years and it hasn't happened yet. I don't mean
to suggest that soil fertility isn't an issue,
but when it comes to crop rotation and the fact
that your fertilizer is made within North America,
it's a manageable issue. I mean, we're not Brazil
where there's zero soil fertility. And if something
happens to one season of fertilizer supply, you
just don't grow anything. They have zero soil
fertility? Yeah, it's all reclaimed tropics.
So they have to basically rip out the vegetation,
poison the land with lime to get rid of the acid,
and you get left with something like beach sand.
And then you just throw fertilizer on it. And
without the fertilizer, nothing grows. Now, with
the fertilizer, you can get two, maybe even three
crops. So it's not a horrible business model,
or at least it hasn't been to this point. But
that was before the Ukraine War. And Ukraine
is where we get a lot of our fertilizer. Russia
specifically. Russia, yeah. So what would you
advise us to do about that? There's not a lot
we can do about that. There are things that you
can do with genomics and with precision agriculture
to more target the inputs to each individual
plant. That can work with corn and soy. It probably
can't work with wheat because, you know, if you
see a corn stalk, you do a digital photo of it.
The computer decides whether it's hungry or thirsty
or has bugs and it squirts it appropriately.
Stock, stock, stock, stock. But wheat is just
a maze of tiny, tiny little plants. There are
too many of them for you to economically treat
each individual one differently. And unfortunately,
wheat is our number one crop in terms of calories.
So it's genomics or nothing for wheat. And we're
better off than a lot of other countries. We're
the world's largest food producer and exporter.
We are not going to starve. We might have some
problems with out -of -season avocados, but I
think we can live with that. But the rest of
the world, it seems like, according to your model,
is in real dire straits. Over half of the world's
population is food threatened now. And that's
before we have fertilizer shortages. And what
was the cause of this? Like, why has there been
so... Runaway success. Since the Cold War ended,
we've brought huge new swaths of humanity into
the globalized system. And the integration of
Russia and China and Brazil, that is the story
of the post -World War. I'm sorry, of the post
-Cold War era. The reason that these parts of
the world weren't in the first round wasn't just
ideology. It was that their geography isn't as
good. So Brazil's land sucks without fertilizer.
The Russian territories has very low productivity,
and China has some of the worst land in the world.
It took globalization and the access to all of
the resources of the globalized world in order
to make these places do very well from an agricultural
point of view. We're now seeing that unwind.
We're only in the very early stages of this.
And as it unwinds, what can be done to mitigate
this oncoming crisis that you're describing?
Because it sounds quite terrifying. We're going
to have to pick winners and losers, unfortunately.
There's just not enough. if we do start a significant
build -out of the fertilizer system, it takes
about three years to bring new nitrogen or phosphate
systems online, but it takes like 10 years for
potash. Now, the Canadians, after the Russians,
are the world's leader, and they have started.
They've seen the writing on the wall, and they're
trying to speed it up however they can, but they
still think they're going to need seven years.
And what is potash? Potash is a mineral that
you mine, and I'm grossly oversimplifying here,
but you basically crush it and dissolve a little
bit of acid and turn it into a pellet form that
you can distribute on a field. It's potassium
fertilizer. And this is just one. It's one of
the three. Potash is potassium and then phosphate
and nitrogen. Nitrogen, as a rule, is made out
of natural gas. And the United States is the
world's largest producer of natural gas. And
we're in the process of building out our nitrogen
capacity in part because of this. And when you
say winners and losers, like what do you anticipate
happens to the losers? Well, I mean, if you only
have enough fertilizer to support a half a billion
people, that means you get to choose who gets
it. Do you let the market do it? Do you pick
your friends? Do you pick yourselves? These are
decisions we're going to have to make in the
not -too -distant future. And when you say we,
you mean globally? Well, it depends upon who
has it in the first place. So the Canadians are
the world's largest single producers of potash.
We are their number one customer. They also supply
potash to Japan and Australia and New Zealand.
After that, they have to make some really hard
choices. Do we try to save just the Chinese or
everyone else? It's really that hard. Yeah. We
can't support our current population without
industrialized inputs for agriculture. And without
those inputs, on average, yields will drop by
more than half. And, like, what kind of time
frame are we talking about until this global
collapse? That, of course, is the billion -dollar
question. Because of what's going on in China,
we don't know because the decision -making process
has become so opaque. But the United States is
pushing the trade dispute issue to the hilt,
which is a really big problem if you're concerned
about global stability. But if you think it was
all going to break down anyway, there's something
to be said for pulling the cord earlier. The
Russian system could break tomorrow. We're at
that point. And that is not just wheat. That
is barley. That is potash. That is nitrogen.
That is ammonia. That is lithium. That is nickel.
That is copper. Pieces are falling out. And the
risk here is that something will fall out that
will then domino. And I think the issue to watch
for that this coming year is the energy question.
Because now that we have insurance companies
saying just no, we're not going anywhere near
the Russian space at all, it doesn't take much
imagination for someone to think that something's
going to go wrong in a war zone where energy
has already been weaponized. And once Russian
stuff goes offline for whatever reason, pressure
builds up back into the pipe all the way to Siberia,
and then the wells freeze shut, and you have
to redrill them. And the last time it took the
Russians 30 years to redrill everything. So when
we lose Russian crude this time, it's gone for
good. Holy shit, dude. So if you look ahead 25
years from now, how do you see the world? 25
years from now, we're going to be on the other
side of this. So we're going to see a significant
breakdown in a lot of systems over the course
of this decade into next. But after that, my
bet is we're going to see a number of technological
advantages be developed in the United States
and within its group that allow us to do more
with less and which transform the economy into
a more sustainable footing. will also have had
30 years, 25 years, for this demographic situation
to play out. And we will find out what is next.
One of the big mysteries right now is we've never,
ever in any era had a country with more retirees
than working age population. We don't know really
what that leads to. We know they're not growing
food. We know they're not producing goods. But
25 years from now, that big retiree class is
mostly gone. And then we get to see, after 25
years of experimentation, what sort of economic
model might replace that. Now, hopefully for
the United States and Mexico and Canada, we're
going to learn something from all these experimentations.
Because the Germans are probably going to be
at the leading edge of this. And they're not
going to go quietly into that good night. They're
going to try to survive. Some countries are going
to pull it off. But I don't think anyone has
an idea of what that system looks like. N equals
zero. We've never been through this before. We're
making it up as we go. And I've heard you talk
about the generations that are upcoming in this
country and not with a very rosy perspective.
You have a lot of concern about just the temperament,
the ideology, the way these kids have been raised
that doesn't lead itself well to adapt to this.
looming future? Well, I'm a Gen Xer, so I'm always
going to belittle and look down on the millennials,
mostly because they deserve it. My big concern
moving forward, though, is not so much the millennials,
because the millennials exist in large number.
They're providing the consumption ballast of
today, the investment ballast of tomorrow. They're,
to be perfectly blunt, going to save us all.
My concern is with the Zoomers, the younger kids,
kids 22 and under. There aren't a lot of them.
They're our smallest generation ever. By what
factor? There are about 30 % fewer of them than
there were millennials at the same age. And what
do you attribute that to? Well, their parents
were Gen X. We were a small generation too. So
a small generation generates a small generation.
And they were raised in an era of digitization.
So an iPad was part of their childhood experience,
which means they're a little bit more socially
awkward and they date less and they are less
comfortable around other people. So they are
likely to also generate very few children. Now,
this is something that the Germans and the Chinese
and the Italians have been dealing with for 70
years, smaller and smaller generations. But this
is new for us. How do you see that playing out?
The technology changes. It changes you. You change
it. And the Zoomers are the generation who's
going to decide what all this interconnectivity
means. And if they can figure out how to do that
and still have families, we'll be fine. And if
they can't, we are starting down the German path.
Now, worst case scenario, we still have another
60 years. Crypto. Yeah, it was always a hot dumpster
fire. Always? Yeah, I'm not going to say that
it was all fraud. Some of it was a pyramid scheme.
There's never been anything there. It serves
no purpose. It's not a store of value. It's not
a medium in exchange. And as we have seen, if
you want it decentralized and not under government
control, it is a haven for fraudsters. And now
it is in the process of going to zero, except
for Bitcoin, which will probably go negative.
Because if we're moving into a world with carbon
taxes, you have to take into account the energy
that it took to produce it in the first place.
Well, that's certainly playing out with like
FTX. Where you're finding out that it's a house
of cards. Do you feel like that's just sort of
opened the door for people to examine all of
crypto now? Oh, yeah. Absolutely. It's like as
soon as you have one of the big ones go down,
it's just a matter of - And just go down catastrophically
within a week. Yeah. I mean, there's no intrinsic
value to this asset. And now it's starting to
be priced appropriately. So it has a, you know,
what's Bitcoin at? 16 ,000? It has another 17
,000 to go down. Duh. Yeah. There's no intrinsic
value to this product. And do you think that
people just inherently lost faith in the idea
behind crypto because of FTX? Well, it became
an ideology. And whenever you invest based on
an ideology, you're going to make some decisions
that are a little divorced from math. And what
do you mean by ideology? Well, the people who
really like crypto are convinced that it's the
currency of the future and that a decentralized
ledger is the way to go and that anything that
is controlled by a government entity is by definition
a negative. And if it's done by the private sector,
freely, it will be better. And that's just not
how currency works. Currency is a method of exchange
and a store of value. And for that, there has
to be a degree of trust and you have to have
it managed in terms of volume. I mean, one of
the craziest things about Bitcoin is that there
will never be more than X number of units of
Bitcoin. Well, by default, that means it can't
be used for trade because the whole idea of economic
activity is that there's expansion. which means
you need more currency to lubricate and manage
that expansion. If currency is locked into a
specific number, you get monetary inflation.
And that is one of the fastest ways to destroy
an economic model. So because of the lack of
Bitcoin, because there's a certain controlled
number, the only thing that can happen is Bitcoin
becomes more expensive. Right. And that means
that the people who hold it are the ones that
make the money, but everyone else suffers. I'm
sorry, that's not viable. The alternative is
you have some private dude out there who generates
the coins on a whim. How is that different from
the monetary reserve or the monetary authorities
that we have at the Federal Reserve, except for
the point that there's no accountability? No,
no. Now, a lot of people have concern that the
United States is trying to generate a centralized
digital currency. They will control. The Federal
Reserve disagrees with that statement. What do
you mean? Well, they don't see a purpose. They
don't see what need it fills. So there may be
an argument for the Chinese doing a digital yuan
so they can monitor each and every transaction.
You know, conspiracy theorists are going to conspiracy.
That's just what they do. No, I was reading like
mainstream articles about the United States confirming
that they're trying to develop a centralized
digital currency. Now, if you're talking about
a digital exchange system, then I can see that.
See if you can find something like that. But
something separate from the USD? No. This is
what – I only looked at the headlines of it because
someone was sending it around and I didn't have
the time because it was yesterday. But this –
The idea of a centralized digital currency is
something that Maxine Waters talked about. She
said that we have to do that in order to compete
with China. Yeah, Maxine Waters is not exactly
the brightest person in Congress. That's not
saying a lot. Yeah, I know it's a low bar, but
she passes it. I don't know if this is a – I'm
just pulling up to see if this is what you're
talking about. Digital dollar is something that
makes sense. The idea of smoothing the connections
within the plumbing of the financial system.
or moving beyond a physical currency at all,
you know, that all makes sense. That's kind of
like the next step. But a separate currency where
everything is mitigated or managed by the Fed,
that's not something the Federal Reserve has
an interest in. Let me go to Tim Kennedy's Instagram
because he was the one who posted it a couple
of days ago. White House releases first ever
comprehensive framework for responsible development
of digital assets. Yeah, this happened right
after Bitcoin really started a nosedive. And
the question is how do you bring crypto into
the regulatory environment? But this is a framework
for responsible development of digital assets.
It doesn't mean a centralized digital currency
the United States creates. If you just go to
Tim Kennedy's, there's an article that describes
it, and he's talking about the dangers of this.
Yeah. You got to go? Yeah, sorry. This is fun,
though. It's been a lot of fun. You scared the
shit out of me. You're welcome. But you're used
to that. Yeah, you throw some bourbon in me,
I get really lively. It's official. The United
States is developing a bank -to -bank digital
currency. Take that headline and just Google
that headline and find out what that means. The
United States is developing a bank -to -bank
digital currency. I'm concerned with the United
States having that along with a social credit
score system. No, we don't have the math for
that. We don't have the math for that. Well,
the Chinese have proven that their social credit
score system broke. They didn't have the processing
capacity to keep track of it. And that is with
a near bottomless supply of resources and full
control. of the political system. So we certainly
don't. For those who thought the United States
was behind the digital currency space race, the
news was welcome. In a subsequent white paper
on the project named Project Cedar, the New York
Fed explained that it has already completed stage
one of testing and proved that international
currency transactions can be done both quickly
and safely through the blockchain. But buried
in the technical details was a revealing line
on the ambitions of the project. The goal of
the new network is to reduce settlement risk
in cross -border, cross -currency transactions.
The message, we see what the world is doing with
CBDCS, and the United States is not going to
be left behind. So the way trade finance works
is if you're in Korea and you want to sell something
to Chile, you sell it in won. It's transferred
into U .S. dollars, and then the U .S. dollars
are transferred into pesos. There's a three -step
process, and each of those requires a transaction.
But if you can digitize it, then it's click,
click, and you're done. That's what that's talking
about. So you don't think that the fear of a
centralized digital currency that the United
States controls, you're not worried about that?
Honestly, the Federal Reserve, that's not what
they're good at, and that's not what they're
trying to do, and it's not what they have an
interest in doing. If they were to inject themselves
into each individual transaction, that would
be a nightmare for them. Well, Peter, I appreciate
your time. I know that you have to get out of
here to catch a flight. And I appreciate you
scaring the shit out of everybody. And this view
of the world and what you've laid out is not
that nice. Well, I'll bring some diapers next
time. How about that? I don't think that's going
to help. But I appreciate all of your research
and your time and your insight. It was very interesting.
Glad you enjoyed yourself. I know I did. If people
want to find out more about your stuff, what
is your social media if you have it? Sure. On
Twitter, I'm at Peter Zion. That's Z -E -I -H
-A -N. Or you can go to Z -E -I -H -A -N .com
and sign up for the newsletter, which is free
and will always be free. Well, thank you very
much. I really appreciate your time. My pleasure.
Bye, everybody.