Pomp Podcast #284: Peter Zeihan Explains The Geopolitical Landscape

guys bang-bang I've got Peter here with me I'm super excited to do this you were probably one of the most educated and thoughtful people when it comes to the geopolitical world and obviously this is like your Super Bowl so thanks for doing this for those that don't know who you are maybe let's just start with your background and kind of the work that you've done up until maybe it's six months ago sure so I'm the technical term is geopolitical strategist I help people figure out what the world is bringing their way and how they might be able to deal with it a little bit more constructively or at least allow them to make some informed decisions my background I've worked for think-tanks I did a quick stint for the US State Department worked for a company called Stratfor for a decade but for the last nine years I've been specifically helping clients whether associations or branches of the military or specific companies wrestle with the changes the world is going through got it and so make talk us through just like the body of work you do right so like where are you consuming information how do you kind of work through that information to make some of the analysis and like the actual process of your work and then we can get into kind of what's happening now but just so people have that context sure so for process to be perfectly blunt I cheat most let me kind of tell a tech story so back in the 1980s we figured out this little thing called fax machines which meant that instead of every newspaper of size in the United States needing to have multiple overseas bureaus what they really only needed is two or three people to send the information back and forth then we got email which meant that you really only did one person in fact your editing staff didn't have to be abroad at all then we got file attachments and all of a sudden you could have roving reporters that you could dispatch to areas where there were stories and everyone else you could just kind of close down well now we've got algorithms that are actually writing stories so we've seen this narrowing of capacity in the press not just in the United States but around the world to the point that unless you're a national government putting out propaganda you don't perceive a need for having an international news presence and as this was going on back when I was at Stratfor in the 2000s we had to develop our own and so we started working with local reporters and local sources all over the world and I still deal with knocked over my computer and we still deal with a lot of those sources and the the cheat is that we built this model of how the world works with economics and finance and demographics and energy and structures and military geography and all of it and we spend most of our time now looking for things that prove us wrong it's not nearly as healthy for the ego but wow it's a lot it's a big time saver in fact I've got a staffer whose primary job every day is to prove me wrong and Wow I love it and I think one of the big takeaways from your work it coincides very well with the investing world you know the best investors in the world say demographics leave a lot of trends and the demographics can tell you a lot about kind of where the world is going and you've given a number of presentations now and spend a lot of time analyzing that so maybe just give us kind of the summary of how demographics around the world look differently and kind of what that led you to believe was going to happen over some period of time before the virus really kicked in so let me do a little it's okay if I do a little screen share here of course all right let me pull this no car so this is what we would call a standard demographic profile this is Mexico lots of children fewer young adults fewer mature adults retirees at the top and mortality builds it into a pyramid and when you look at this something like this you're gonna have a very different economic structure than what you have might have or a country say let's here's Germany are you seeing Germany there are you still in Italy I am still seeing Mexico you're still the same sorry it's been a nuts sort of experience here for the last month as opposed to Germany so here's Germany very heavy in the middle age moving towards retiree and the difference between the two here is that in Mexico you're gonna have a consumption led system because young people do most of the spending and in Germany you're an have an investment led system because when you're in your 40s and your 50s your saving for retirement that simple dichotomy is kind of what drives most of what's going on in the global economy and has been driving the global economy for the last thirty years what that means is we've been in this world where most of the developing world has been the consumption base and most of the developed world has been the investment base and that means the propensity for trade between the two is extreme because the poorer countries need the cash the more advanced countries need the consumption and so you can have things going back and forth the Germans are good at high-end stuff the Mexicans tend to be good at low-end stuff and some version of this is replicated around the world so in an environment since the end of the Cold War when you've got global security provided by the Americans but no real global security challenges everybody pours money into economic development and so from 1990 until roughly 2017 we had the greatest economic boom in human history and I dare say for most people in the investment world this is the world that they think is normal it's not normal it's the most historically a tip period we have ever known as a species and it was always going to end because the developing world is aging rapidly far more rapidly than the rich world ever did and so they're becoming Germany but without the infrastructure without the institutions without the respect for democracy without the capital structure without the industrial base as well but Germans and other countries like them are aging into mass retirement so instead of a world where we got propensity for growth and cooperation and trade we're moving into a world where the rich world is all retired they're not either producing or consuming and the developing world is becoming aged and losing that consumption edge but without building the capacity to move up the value-added chain you would call this an economic dislocation which is very nice way to say global collapse and depression there are a few countries that stand out as exceptions to that the United States is at the top of the list we have the youngest demography in the rich world and we already have a demography that he's younger than China's and will be younger than Brazil's within 20 years so the United States is slipping into kind of this pocket reality where it builds its own stuff trades with itself and maybe a select group of other countries and say what you will about the trump administration and there are so many things that we can say about the Trump administration one of the things they got right is picking out specific countries that they wanted to have relationships with after this transition so we've had four big successes in trade negotiations Japan Korea Mexico Canada and we're probably going to have a fifth one with the United Kingdom this year that's the majority of the American trade relationship so the United States under normal circumstances given three four five years could have transitioned from where we are right now to that sort of friends and family trading plan without suffering a recession what coronavirus has done is knock everything off the table and force the Americans to bring out kind of fire hoses of stimulus and monetary push in order to keep their system more or less in place so we've thrown a bottomless supply of money at this three trillion dollars in just the last six weeks that's twice as much as the rest of the world combined they don't have the kind of capacity that we have which means that price is no object for the Americans suddenly making this transition in a matter of a few months instead of a few years and when we emerge on the other side of this we're gonna have American security but not global security an American trade network but not a global trade network American reindustrialization and global deindustrialization and the demographic collapse in most of the world I know it's going to be a completely new system but historically speaking it's a lot more normal than what we've been in for the last thirty years yeah one of the things that's really interesting as I kind of hear you describe this is there's this weird weird world where when Trump took office kind of this America first type mentality I don't think that it had anything obviously to do with coronavirus or anything that's transpired since he took office but in some way we're almost backing into that out of necessity so you see things like let's bring all of our supply chains back to the US a lot of this trade talk right is the virus is almost forcing that narrative now and it's becoming more accepted it seemed less as kind of you know either racist or someway discriminatory but one of the things that you said in a recent presentation things at the up-front summit is the Americans strategic order that helped them win the Cold War that's not the strategic order that they're gonna need to be successful in the future right like that the important thing here is there is a necessity of change because the world is changing and the countries that you describe kind of recognize that what happens to the countries that don't recognize this right today yeah some of them won't be countries much longer a little backstory so the core idea that drives a lot of what I do is why the United States did what it did during the 20th century so we're pulling into western Germany during World War two and we're looking on the horizon we see the Soviet war machine to be perfectly blunt that's you know that's kind of scary so we were like okay this is in a different hemisphere from us we cannot with sea lift capacity fight the Soviets in Europe we will lose that fight we need everyone in Europe to be on our side so we basically bribed them we rebuilt their countries we provided them with security overwatch we provided them with the nuclear umbrella we opened our market so they could export the way back to being first world countries if in exchange they allowed us to write their security policies and that trade that guns for butter trade is what enabled the United States to ultimately prevail in the Cold War the big problem however is when we got to 1990 and the Cold War was over we voted out of office the president who has figured out what was next and then voted in four successive presidents who didn't care about foreign affairs much at all and so we've just kind of been on drifts now for 30 years and by providing global security but not asking for anything in return Americans became steadily more disenchanted with the world we know Trump is that not simply the natural progression of that he's just kind of the next step on the road whoever comes after Trump is likely to be less inclusive and less internationalist than he is because the economic structure will demand that whoever is next go that direction so if you look at say the the Democratic grip yeah the Democratic primaries when we had like a hundred and ninety five thousand people trying to be president all of them said that Trump was being too soft on China and the trade talks Trump is not nationalist by American standards on trade he's claimed a middle in the road and the next phase of this is gonna be far more mercantil than anything that we've seen in the last 80 years as a speaking of China you've pretty much said that they won't be a unified or industrial country in the next decade or so which I think kind of shocks people but that's true talk a little bit just about why you believe that and then what does the world look like if you were right in that prediction sure so China is one of the fastest aging societies in the world you hold a one-child policy for 35 years you run out of 30 year-olds I mean that's how math works the Chinese cannot interact economically rent the rest of the world without a global security paradigm in place they don't have a long-range Navy in fact 90% of their firepower can't sail more than about a thousand miles from the shore so that doesn't get into port to any major consumption clusters they import pretty much all of the raw commodities that allow them to function that's everything from corn on one side to oil on the other so if they don't control the sea lanes which they can't they're completely dependent upon American security largesse just to exist and if you look past back at the long stretch of the history of the Han Chinese 3500 years they very very rarely been unified they're usually engaged in some sort of civil war or fighting off some sort of invasion neither of those goes well in fact they're only period of peace and prosperity and unity in their entire history is under the american-led order since 1946 specifically since 1990 and if you look back to look simply achieve political unity in the past most of that period was under the Mongol occupation this is not a place that holds together well so they don't have the demography they don't have the resources they don't have the financial model they don't know the physical access they don't know the military capacity this only works when someone from the outside forces everyone to be on the same side that was the american-led global order and that is now over so the Chinese today with this propaganda push on Co vid it's not to convince the world that the virus didn't come from China no one believes that it's to force a nationalist uprising in China itself so that people are willing to side with the Chinese Communist Party in a period of extreme political and economic stress because that's what's coming for them and if that doesn't work China simply implodes yeah I read them the book I think it was a Paulson wrote back in my chest of 15,000 16 and he was talking all about China and kind of his experience there but one of the things that really stuck out to me was the whole idea like that entire political system and social structure is built on there being a lack of social unrest right that the second that people see unrest like this thing could flip very quickly and so a lot of what they do is you know core code taking care of the people I guess how much of the narrative around their driving manufacturing their driving you know technological advancement artificial intelligence kind of leaps and stuff coming out of China how much of that can save them or maybe prolong what you're talking about versus like that the trends are just too powerful and it won't really actually matter the trend that matters is their social control program they've basically blocked off the Chinese internet from the rest of the world and they're using it in other data management tools some proto AI stuff in order to manage their population so that whenever you do have to be perfectly blunt three people getting together in the same room to talk about the government the government knows and can use its army of sensors and thugs to basically break it up it's never been tried before it's very Orwellian we're now actually having a situation where the Chinese government is installing monitors in people's apartments if they're suspected of maybe having kovat in order to have enforced quarantine so you know things that in this country are in the realm of fiction are are now being implemented on a regular basis ethnic cleansing is being done this way forced sterilizations what they're doing with the Weezer's out in Shang you know million people in concentration camps they're trying to take the best data management tools available and use it to force the unity of the Han identity as defined by the CCP you know can you imagine what Milosevic would have done with these technologies and now we're seeing it done on a scale that's like what two orders of magnitude larger that's the only way that this works and even for that to work the United States still has to keep providing global security and asking for nothing in return because the only way they can keep that going is if they can continue to access resources and export markets so the the most likely future here were China holds is the u.s. stops doing what it's doing the lights go out in China because the power goes out because they can't import their materials anymore the export markets disappear and we drop into kind of a neo Maoist tyranny where the standard of living in China just absolutely plummets and they just kind of become completely inward focused in the few chapters of Chinese history where the center has held its kind of looked like that they'll just be doing it with you know webcams as opposed to monitors on every corner it's not a pretty fit picture and almost all the other scenarios are worse so I totally understand why they're willing to denigrate their own population to that degree to mean to remain in control because the alternative is implosion in chaos and you know that's the hardly a friendly version at all that but Chinese are fairly a student students of their own history they understand what's at stake here yeah before we move on to another part of the world what would have to change or what data would you have to see to kind of change your mind as to like this is where we're headed if I saw X my mind would actually turn happen we would have to have a significant change in technology that allows people over age 65 to commute to continue to work and pay taxes coupled with a social change that forces them to continue to work and pay taxes most of our medical breakthroughs when it comes to people aged 55 and over is about extending life not extending working life and that mindset has to changed radically for us to go in a different direction and I guess part of that is a technological change is the type of work could also change right so just because you're getting older you may not be able to go into the field or go into the factory and kind of do more of the manual labor but if there was even something that could change the way that people work itself that also is part of that you know that would be one way but I think we all know that convincing our parents to use Skype has been a bit of a challenge these last couple of weeks and trying to train people who thought they were going to retire in an entirely new industry and that's that's a reach yeah for sure let's switch gears and and go to the Middle East obviously there's a cheery topic yeah it was complete chaos right now everything from oil to a lot of kind of the the geopolitical relations they're just what's kind of your general view of that region itself and kind of how you look at the demographics and what you expect to happen there well you're gonna have to break it up it's you know there's a lot of different sub regions so let's just kind of go through them Saudi Arabia Kuwait Qatar UAE those countries the very rich countries of the Arab side of the Persian Gulf they're involved in a global price war primarily with the Russians but not exclusively anymore they are deliberately trying to drive oil prices as low as possible negative if they can and I think the key in and if they pull this off I'd say even odds at present it's going to take about 20 million barrels of crude production globally offline for years and they will finally have what they wanted which is a crude a crude market where they can set the price and set the volume over the mid term looks broadly like they're gonna be able to pull that off how explain this more because I think one of the things that you had previously said was around these negative prices in oil but what occurred was the last week or two weeks ago when the may contract that they physically set up futures contracts what Nathan that's not what you're talking about right though the may contract was in the United States one participant exploded Cushing ran out of future leased storage the storage wasn't actually fully yet well you know four to six weeks from now it really will be full and it won't just be a what the Saudis are doing is any place they see a competitor first and foremost the Russians where they've got a pipeline that empties out into a populated area or a pipeline that end hits a port they are sending super tankers of crude to super saturate demand in those locations specifically going after things like Rotterdam or Suez or Korea that are popular transshipment points for Russian crude making sure that the tanks are completely full so the Russian crude has nowhere to go they're doing a this to a slightly less intense degree wherever all their other competitors are so for example slightly tense slice' the slightly less intense there's 50 million barrels of crude from Saudi Arabia coming to the American Gulf Coast to try to knock shale out that's nothing compared to what they're doing to Europe Asia and the goal is just to fill up all the tanks so that the producers have nowhere to sell their crude whatsoever so they have to shut down their pipelines and they have to shut down their wells now in a place like the United States if you do this and the wells get it shut in they can be turned back on later and from the point that you start drilling a shale well to the day you get first crude is only about six weeks so US shale is gonna take a hell of a hit there's probably about a million barrels per day of production already offline probably another two million are gonna happen before the end of the year that's probably gonna be front loaded you know that's a 25% reduction in shell out but that's a big deal but it'll be back in a couple of years but if you shut in wells in Nigeria and Siberia they're gone it's gonna be years if not a decade before you see those producing again so the Saudis are taking a long haul here taking a big economic hit on the front side they can afford it across the Gulf Iran say what you will about the Trump administration he won Iran is no longer a net oil exporter they're gonna actually be importing over the summer which is something they have not had to do in over a century I don't think that this is gonna cause regime change anytime you've got a hundred thousand people in your elite it takes a really big stick to move that but this is the end of Iran having cash which means Iran in Lebanon and in Gaza and Iraq and Syria and all the other place that the Iranians have had their fingers all of a sudden have any money to back it up they're massively overextended which raises the opportunity for countries like Turkey or Saudi Arabia to turn the tide in their favor so expect a lot more nutsoid violence in this region because the Iranians everyone forgets the Iranians are not the violent actors here that's the Saudis Isis came from Saudi Arabia al Qaeda came from Saudi Arabia and we should expect to see a lot more groups like that boiling up throughout this entire region just burning down everything the Iranians think that they have achieved in the last 10 years it's gonna be wretchedly awful what other countries you're concerned about let's go Saudi Arabia for a second just the oil playbook that they're playing out right now where they're trying to literally saturate these areas how much of that is opportunistic because it was presented by the virus driving down the consumption of oil versus this was like some playbook that they had ready and waiting and they were gonna execute it with with or without the virus occurring the Saudis have tried something like this three or four times in the last 15 years but the market has never been right now the totally the markets right the the emotion and the leadership are also kind of lined up the Saudis originally went to the Russians with a deal for a preemptive cut to manage the oil market back in January February and and the Russians said no so the Saudis got pissed off this wouldn't have worked without global oil demand being down by 2030 million barrels a day second leadership we got a new guy in charge Mohammed bin Salman if you've seen my readings writings you know that he's not my favorite person he kind of makes Putin look like a kinder gentler kind of gentleman but he's young and he's taken in the institutions of Saudi Arabia by storm he's consolidating power and honestly this is what a king does and if this works for him he will have consolidated his person as the most powerful person in the region for at least the next couple of decades I think he's aware of that this is this is his proving ground and so far in my opinion it's going really well for him yeah it's absolutely fascinating when you start to get into this game of it almost feels like a perfect storm right literally when oil production goes down they start to flood the market you know the piece to me that I don't understand is what can Russia or other players in the market what can they do right or do they just kind of have to take it on the chin and say look we we just gotta hope that your consumption you know sure yeah most countries have nothing they can do there's not a damn thing the Nigerians can do for example Venezuela is out of the picture already Brazil's probably gonna have some shut-ins I'm gonna damage him for years shales offline for a year or two there's really not a lot of things Russia's different Russia has always been a master of linkage whether it's something that is earned or deserved or not and Russia's abilities dabbled a lot of different theaters if it's some things that it couldn't do that other countries couldn't do so low hanging fruit Kazakhstan Azerbaijan both of them oil exporting former Soviet republics a lot of that oil either transits Russia directly or transits territory that the Russians could shut down if they wanted to there's a million barrels per day easily if you go offline just by flipping a couple of switches the Russians also can use how should we shoot you say this non-conventional means of limiting competitors output we saw back in I think it was October just how vulnerable some of the Saudi oil facilities could be it's entirely possible that the Russians could stoke some unrest and this or that country in order to take some oil infrastructure offline and considering the current price environment there would not be a huge rush to restart that that brings risks so for example if the Saudis got caught doing that in Saudi Arabia you can guarantee that the sort of tender murder that the Saudis have unleashed upon their own region groups like Isis and al-qaeda will then be visited upon the Muslim regions in Russia itself remember that the Saudis were one of the big sponsors of the Chechen Wars back in the 1990s and it doesn't take much of a reach for them to extend further into Russia to places like Qatar Stan or Bosch Kurdistan which are big oil transshipment points within Russia so Saudi can play that game as well and when the Saudis play that game it has a lot longer lasting effects I mean look at look at Afghanistan today you know that's largely because of policies the Saudis had in place back in the 80s I can you imagine if that crept four or five North to get into the Muslim belt in Russia itself so yes the Russians do have tools and yes the Russians do look for the long game but that does not mean they're immune to the tools that they would be using yeah I guess as part of this analysis I continue to hear most people talk about either the increase or kind of the rally back of consumption there being some sort of production cuts or manipulation of how much production one of the things I haven't heard people talk a lot about is the potential to actually build out more storage and I'm assuming that's because it would take too long yeah exactly is that what they challenge there is yeah the the most natural most stable storage supply in the world is the American strategic preserves Strategic Petroleum Reserve how that works is we drill down into a salt formation we inject water and then we put a second pipe down that basically pulls it out and so you inject the water dissolve some salt some ultra brine comes back up and then when you're done hollowing out your cavern you put in crude and because of the natural temperature gradient in this bulb-shaped dissolved storage facility it circulates itself so it's cheap there's no chance of oxygen getting in there's no chance of a leak there's no chance of an explosion if you want to do above-ground storage you constantly have to turn that stuff where it starts to separate or you get Associated gases that bubble out you get an explosion danger it's not that it can't be done it's not that it's technologically complicated but it's expensive and it's time-consuming so we might see storage this year expand by three four or five percent that would be a huge build-out for one year but honestly anything more than that it's not not in the cards yeah it's pretty crazy to kind of think about three to four percent would be big right yeah it's such a small number of that still would be big historically what about India that obviously is a country that's got a massive population I think a lot of people especially the tech community are talking about kind of all of the advancements that are going there and kind of you know how quickly they are growing with internet and adoption and all that but what's your thoughts there from a demographic standpoint the demographics are weird I mean overall they're very similar to Mexico they're on the young side but there's a huge split between the north and the south of the country the north of the country is practically pre-industrial when it comes to demographic structure lots and lots of children and young people the southern half is almost like Germany its aging into mass retirement incredibly quickly most of the excellent educational opportunities are in the south and most of the call centers are in the south it's not that the north is a lost cause it is that this really is not one country it's more kind of like the Holy Roman Empire where there are little pockets to do different things now in the world that I see coming India's likely to do pretty well they never really joined the american-led Order they never became an export-led economy they're the first place outside of the Persian Gulf so they're never gonna have a true energy crisis the problem is is that northern section that is just horrendously overpopulated and horrendously underdeveloped has been horrendously overpopulated and horrendously over developed for 1,500 years now there is no way that it's going to turn the corner in the next ten if it hasn't in the last 1500 so India is stable but I don't think it's about to become a superpower in any stretch of the imagination in addition that northern section you want talk about Co vid that just absolutely terrifies me one of the reasons why the Spanish flu hit India so much harder than it hit Europe or the United States back in the 1918 epidemic is because of that density of population it's far more densely populated now and this new virus is far more communicable than the Spanish flu was so India by the numbers seems to be doing okay but that's because India doesn't test so we're just gonna see the death rates skyrocket which is gonna unwind a lot of the gains also come the core industry that India uses to fuel its tech second the center is call centers so you know you work in a call center for a while you build up your expertise and then you move into software well they're losing that completely the reason why everyone moved for call centers to the Philippines in India is you could build a pocket that had a good power connection good internet connection good phone connections you build a sir a server farm you put in a lot of hard wired desktops that have the capacity that you need and then you have three and four shifts of people that cycle through the same hardware well you can't do that with Kovan so they all had to go home and not everybody has a power at home no but not everybody has internet at home so we're seeing companies in the United States who had off out sourced all of their call centers and tech support to India in the Philippines having to bring that back because in the United States that sort of technical support can work from home and for every day that this continues India is seeing the bedrock staff development of the call centers erode away which means the next step up is gonna be that much harder moving forward doesn't mean the end of Indian tech but it does mean the end of cost-effective Indian tech and that has always been their big selling point so they'll still have some stuff at the top end you know the top 1% in India that's still 15 million people you know that's not insignificant but this big institutional boost that they had that gave them scads of program at a low cost that's probably over and what is the second and third order effects of that right if those us-based companies are kind of international companies shy away from that model given what they're seeing right now like that capital obviously doesn't go into that economy and kind of how do you see that rippling through the Indian economy I mean we're seeing like things like that a number of manufacturing sectors right now already I'd say the big ones are wiring textiles automotive electronics and white goods these are all sectors that aren't particularly technologically advanced they've always relied on multiple price points for labor for a distributed supply chains and none of them work in this environment so Americans are discovering that if they want to wash any machine they might have to build it themselves if they want textiles they might have to weave them themselves and the technology has advanced to the point that in most of these sectors if not all of them once you've paid for the industrial plant operating it is actually cheaper in North America than it is in Easter South Asia and so we're gonna see this huge scale just pick up of industries relocation and into North America in shorter simpler supply chains that are closer to the end consumer and what gets left behind it really depends upon where you are if you're in Thailand or Malaysia the semiconductor supply chain system is a lot stickier usually the crystals are grown sliced cut doped cooked and built into chips all the same facilities you don't just pick that up and move it but textiles you know you can have a facility that's one acre in North Carolina with a staff of two that is cheaper to operate than a facility in India with the staff of 2,000 people at looms that's not going to come back for it to come back the global security situation would have to not change and if the Americans are going home they have no reason to have a supply chain system in South and Southeast Asia so you will still have some of this for Indians who want to supply themselves but the idea that call centers and textiles can be kind of that first step towards more towards a deeper development experience moving up the value-added chain building an infrastructure expanding actually you know that but that model is over the rules of how we've operated for the last 70 years are changing right now in countries like India are gonna have to find a completely new model to take advantage of it or pioneer their own to move forward and if you look at the last 1,500 years of Indian history there's not a particularly robust historical analog that they can draw from here stagnation is by far the most likely outcome and especially if you keep that 1% at the top that's still value-added the degree of inequality you're going to see in any is going to be huge and that will absolutely have political connotations would it be fair to say that a lot of this is also accelerated by technology so the us-based companies you know by pulling back some of those call centers things like hey people can do this from home we can you know kind of cut costs but also other parts of manufacturing the US companies are now getting more kind of adept at actually doing this here in America because they can replace that worker with a piece of technology and that drives down costs as well and makes it more cost efficient the sort of jobs that are coming back from south and southeast and East Asia to the United States are not going to look the same here they're gonna be far more technologically driven but maybe not as much as you think remember we all of a sudden have 25 million unemployed people in this country that we didn't have a month ago so labor shortages simply aren't a concern right now so on our side of the pond what's gonna be happening over the next three months is our metro regions are gonna start to open up they're gonna be forced to reindustrialize if they want these products some states are gonna be able to take advantage that better than others because they either have a better health care system or a better testing regime or a better infrastructure and cheaper electricity or a population that's more willing to work in a slightly higher risk environment I mean Texas has been a boom state for a while now but in the environment that we're moving into Texas has the interface between the Texas Triangle cities and the Gulf Coast and between the United States and Mexico so it's got that multi-tiered wage strategy that has been familiar to us it's a tech center especially Dallas Fort Worth it's an energy sector especi especially Houston and it's a cutting-edge tech opera zatia opera with operationalization facility in the case of Austin so it's all in one place in a state that has no income tax so I suspect Texas is gonna kind of have outsize performance for the next couple of years that doesn't mean other places aren't going to be taking advantage of this just that's kind of where I think it's gonna happen first one of the things to keep in mind is that because of the physical and demographic structure of the United States we will have secondary epidemics from this but they won't be nationwide they'll hit Denver it'll hit Fort Lauderdale whatever and you can lock those cities down our mass transit system particularly among our cities is awful and right now that's a good thing because it means it limits the capacity of the virus to jump from city to city to city you don't have that in China you don't have that any minis you certainly don't have that in India or Perry or France there once you get an epidemic it's going to go national very very quickly and that is going to provide Americans with a bit of a leg up in this process we will in time evolve in the technological direction that you're pointed out absolutely but it probably isn't gonna start out that way yeah it's really interesting to kind of think through it's almost like there's a psychological shift that happens right and the short term solution is like you said just putting the people to work and then over time you've already shifted your mindset you know you're not going back to these other areas of the world and so then building the technology would make sense one of the areas that I went about three years ago four years ago now was Nigeria and when I was there I was blown away by a lot of the demographics and in both in growth and kind of things that people there were talking about and how technologically advanced they were compared to what I thought they were so I was kind of surprised what was kind of your thoughts just kind of in West Africa in general I mean the geography is so Riven in in sub-saharan Africa it's really hard to draw any sort of conclusions my dearie as you pointed out is that the demographic heavyweight both in terms of age structure and just size the biggest problem they're going to be having however is they've never really been able to diversify their economy away from crude and they're more importantly their political system is completely based on the divvied up of the crude resources if you want to go back to like the by Afrin war that was a period where some parts of the country thought that they could deny oil income to other parts of the country and so the by Ephron's tried to leave we had a civil war as a result and now we have a rotating presidential system where every few years a different region of the country has the president in a different region of the country has the Vice President and as long as nobody dies out of order the oil flows and everybody is happily subsidized oil is going to zero so the entire political compromise system that has kept violence in Nigeria to a relatively tolerable level is going away we think economic restructuring in this country is difficult it is they are going to have to deal with the ground-up overhaul of their political system this year I don't see how they do that in a peaceful manner yeah and I guess part of this too is as we see more and more countries get to these levels of social unrest one of the things I've been thinking through is just how technology plays a factor in that right obviously if this was happening thirty years ago it would be much harder for one the government to be much easier for the government to kind of prevent the spread of the bad things they were doing because he didn't have cell phones and couldn't communicate as etc but now it's also much easier for the dissidents or those who are uprising to rally and kind of move resources and communicate and collaborate do you see places like Nigeria where we know that there is a high degree of penetration in mobile phones internet adoption kind of having a higher propensity for the social unrest because of that technology adoption you're simply driven by just that the reworking of the political system and it's gonna happen whether they've got technology or not yeah that's a really messy question in a place like Nigeria it could go either way the problem there is that most of their politics are ethnic and regional based and so it doesn't require a huge technological distribution system in order to get these people riled up it's it's kind of it's not that it's built into their nature I don't mean anything racist like that it's just that you know there are they're very clear dividing lines in Nigeria and some of the big successes they've had in the last 40 years is to think of Nigeria as a country and to think of themselves as Nigerians rather than Igbo or some other Fulani group I'm concerned that that is going to spin apart once the oil stops flowing but remember technology works both ways here if there's anything for the Chinese and the Russians and the Egyptians have shown us in the last 10 years is you can use it just as easy to clamp down so you're familiar with the Twitter revolution in Egypt I'm sure if you remember the first phase of that the military decided they did not like the Mubarak clan so they they were hands-off versus the protesters and the protesters used the internet and Twitter and cell phones to organize and ultimately overthrow the Mubarak regime but then the military decided it didn't like the replacement government that it was elected so what they did is they went and they shut down Twitter and they were able to do their crackdown they arrested the entire government and I mean there was that one horrific trial where they condemned 600 people to death and now it's basically a one-party state with complete information lockdown well the Russians came in and like hey that was really cool you did that how did you do that and so the Egyptian generals showed the Russians well we have these two cables that come into the and that's the entire internet connection to the outside world we just cut them so the Russians went they built kill switches on all the places where the cables came into Russia so they could do the same thing whenever they want and now they've got monitoring centers at those cables so if they see message traffic that they don't like they can go and hunt down the individual people responsible the Chinese of course have amped that up to the next degree where now they've even forced cooperation with companies like Google so that if they see messages they don't like they're automatically tagged by algorithms and sent to the Chinese security services complete with the physical location for where the message was sent from so a team can just go arrest the person so I don't think we're gonna see that kind of thing in Nigeria but the Chinese and the Russians are absolutely exporting these technologies to thugs around the world Nigeria's great hope is that there's a degree of pride in the country that they've overcome some of their past differences I think that's wonderful I hope it's sustainable I fear it's not if we go north to to Europe there's a lot going on there what was kind of the general idea of how that plays out okay so Europe is a site from Japan the oldest part of the world in terms of demographic structure so as a whole the whole continent was going to age into mass retirement this decade for most of them that means that coronavirus has ended any hope they have of economic recovery a country like Germany that was probably gonna hit mass retirement in 2026 just lost a massive amount of time in capital and it's gonna take them to three years to recover from CO vid which puts us within two to three years of their deadline italy's even older had a shorter deadline was in a worse position going in some of these countries will never recover to where they were in February against that backdrop the Americans are removing themselves from the equation and Europe because of their demographic structure doesn't consume enough to absorb their own industrial output they have to export it and if the United States is off the board there is no place to export it to so this entire economic model was going to collapse in the next few years anyway kovat has just moved up the timeframe the poorer countries in Europe the less well run countries in Europe the more indebted countries in the Europe are making a last-ditch plea for Germany to bail them out and the Germans like we only have two years left for us why in the world would we give those two years up in order to salvage you for another two years so we are looking at the end of the European experiment here there is no way that the common currency in the common market survives in this environment because I don't have an export market and I'm running out of finance so we're just kind of seeing Europe and its death throes right now the question is how long can they kind of hang on by their fingernails until we start seeing political and structural breakdowns and honestly if you're in Germany of the Netherlands and you can establish a maybe a quasi independent relationship with the United States there might be a path forward there but there's definitely not a path forward for Europe as all why have more of these countries not tried to create that kind of Ally relationship with the United States and you know is it just they don't see the writing on the wall they are arrogant and think that it's not gonna happen what's going on there well there's all of that I don't mean to suggest that any of that is wrong but I mean ultimately if you're just to pick a couple small countries Slovenia or I or Lander Slovakia you know an independent political and strategic environment where you look after your own interests I'm sorry that doesn't work they're too small these countries only exists because of the american-led order yet the big plowers especially Germany and France are big enough to think of from themselves the Germans aren't supposed to be thinking from themselves on strategic issues and so you get this built-in dye economy of these small countries who can't look for themselves out for themselves and honestly would prefer not to so they just kind of coast along with NATO and the EU doing all the big decisions and they're allowed to exist as independent places while the big countries make the big decisions and then everyone tries to play the Americans in the French off of one another that only works for a little bit longer and so what we're going to be seeing is kind of a Franco centric Western Europe emerge out of this a German centric Central Europe that has to deal with the Russians and the small countries either sign up for one of these smaller what are these two spheres or die there aren't a lot of countries that have the strategic flexibility to do anything else and of those that do they luckily get along pretty well so Britain Norway Sweden Denmark those four specifically maybe maybe toss in the Netherlands their Atlantic facing they have a history of resisting France and Germany they tend to work together pretty well with the exception of the Brits they're all the same genetic pool you know thanks for the Vikings and they all have reasonably positive relationships with the United States so it's entirely possible that that extreme northern chunk ultimately enters into some sort of association with the Americans but that is 100% dependent upon how British American trade talks go this year and what kovat has done is it's forced the Brits to kind of put that off because they're thinking in the short term it's probably best if we don't sever all links to continental Europe and that delay may prove fatal for longer-term strategic relations with the United States just physically run out of time yeah I guess that's part of this like go back to France for a second like the yellow vest protests and things that we saw there is that kind of like early signs of some of this order cracking and people basically saying hey we've had enough but minor sayings a lot of that was around like gas taxes and very government driven initiatives or is that something that's so separate and it's more micro and unrelated to the macro environment well I like to draw everything into my big theory I'm afraid that that one doesn't quite fit yellowjackets France has always had a relatively status Toccata me in terms of percent of GDP they're usually up near the top in terms of what the state controls versus the private sector and what McCrone was trying to do was to loosen that up a little bit so that the country could be a little bit more dynamic he looks at what the Germans were able to achieve with labour reforms in the early 2000s anyone to do something similar in France in order to spark more economic activity so that France could be a stronger economic poll in Europe versus Germany specifically and that has not worked out nearly as well as he thought honestly Cove it's kind of a blessing because it's made the protest kind of impossible so the French government is continuing on with the status tradition but it's trying to make a few tweaks on the edges it's kind of like we're seeing the the Keystone pipeline is having to sprint for construction right now because the protesters can't get there the same things going on in France with economic reforms it's the world one last area of the world that we haven't talked about is a South America and Central America as well just kind of thoughts there I know that you've got a lot of thoughts on Mexico but but also maybe South America sure so yeah I'm a big fan of Mexico for demographic and industrial reasons that you know they're the only really there are the only economy a sky is that there's now linked to the United States at the hip and relations between Mexico and City and Washington are actually the best they have ever been in the history of both countries which is kind of crazy when you consider who's in charge in both countries but that's true moving next down next steps Central America these are states that can only succeed if they are completely under the American wing the Trump administration has I don't want to say ruined but certainly complicated relations with all of them and everything the Trump administration has done is has the net effect of basically emptying out these countries and forcing people to go somewhere else for their well-being so say what you will about Trump he has encouraged a migration crisis that he will probably be able to profit from politically for quite some time South once you get in South America Venezuela dies as a country this year it was already collapsing and if oil prices go to zero that's it we're looking at complete state breakdown famines several million people are going to die and the rest were gonna have very little choice to but to relocate this is the end of the country as a country until another power goes in and physically reconstructs it from the ground up that is a decade process that is a thankless task and the only reason anyone would do that is to get the oil and right now one cares about the oil and in fact five years from now when the US refining base is retooled it won't even be able to take them as well and crude so no one will be interested so this is probably the end of Venezuelan culture outside of Miami what happens in that situation right so what you know when we get to the point of kind of no return nobody wants the natural resources that are there there's a complete societal breakdown do other surrounding countries kind of take a piece of the land and incorporate it in is there you know a bunch of different countries that are created out of what used to be Venezuela like what does that look like but we get a political and strategic no-man's land the only country that borders Venezuela that might be able to do anything is Colombia and there's a lot of really rugged terrain between populated Colombia and Venezuela so that would be a big strategic issue the furthest of the Colombians might be able to go is like the Maracaibo basin you know the big golf golf of Venezuela but even that's a bit of a reach but really that's the only player in the game so more likely what we're gonna see we've already seen an 80% reduction in domestic food production production we're looking at a complete collapse as in going 2-0 for oil production and that means all food imports stop so if you have a net reduction in the number of calories that are available by 90 percent or more this is an Ethiopian style famine and state collapse and it will just become a no-man's land that's gonna be awful anyone who had money already got out and most of the people who could walk have left what's left is an impoverished emaciated population that I I hate to say it is just going to die this is the worst humanitarian disaster we will have seen in the last 60 years yes speaking of famine one of the concepts that I've seen you writing about more recently is is the virus driving famine and maybe talk a little bit this is more kind of globally very specific types of countries getting hit it has to do with this food production and kind of changes to consumption so they explain what you mean by in Venezuela we're seeing it because the country is gonna fail but the virus itself may drive famine globally in certain areas as well it's it's it's a messy situation I mean we're used to thinking of manufacturing is really complicated with supply chains honestly we face the same thing in agriculture it's a complicated supply chain of systems that allows countries to grow crops in the first place now in the short term we don't see interrupts any interruption to things like oil or fuel or fertilizer pesticides herbicides you know all these oil derived things we're kind of in surplus right now because oil prices are so inexpensive the problem we see is kind of twofold number one distribution when you've got a robust global trading system you've got containers and cargo ships going back and forth all the time when you drop that collapse it because of economic recession and shut-ins all of a sudden you get container ships that are full of empty containers over here when they're needed to take food over here we've got dislocations throughout the entire logistic system that are not gonna get sorted out in the next three to six months we've got to find entirely way new to new ways of doing things and the country that had faces that in the least extreme is the United States and that's the country with the best capacity to maybe do something so when the country with the least interest has the most capacity you can see where a lot of countries are gonna fall through the cracks second in every country that loses a call center or a manufacturing facility that's less income so we're seeing this disconnect and currency markets with the US dollar going up and everybody else going down every international if traded food product is u.s. dollar denominated so if countries are taking a double hit here they're losing income and they have to pay more to import food this this could become an a deep chronic issue from which a lot of countries will not recover how does that get reversed right that there's a lot of these trends very underway what are the one or two things that could happen that could prevent us from going to that world the United States needs to elect I don't know Gandhi to be President you gotta remember that we're in a very artificial period in history and it's because the United States has provided global security for everybody for 30 years without asking for anything in return when the United States stepped back from that it was always going to be a question of just you know which country collapses in what order and how we're just seeing that in fast-forward now if the United States is not interested in being a global leader and no one else has the capacity to be a global leader then countries and regions have to figure out how to operate on their own a lot of these countries are food importers or they're dependent on exporting manufactured goods that that just goes away in this new disorderly world that we're moving into we're gonna see well we'll get through this as a planet I guess because we will see countries like France that have more independent capacity kind of building their own sphere of influence but if you're not in one of those Syrian influences or god forbid you disagree with the dominant power in your neighborhood this is not something that you're going to be able to bounce back from yeah it's it's pretty crazy to think through this stuff you mentioned these currencies and you know obviously we've got the situation in Lebanon going right on right now where the protesters are seeing currency be devalued away food prices are getting more expensive and literally people are just going into the street and fighting and it's pretty straightforward if you import half your food your currency drops by half yeah and we'll need to take it a step further right I'm literally going in attacking banks cuz the banks won't allow the withdrawals and they will not let them withdrawing other currencies you have to do it in Lebanese pound and then even being smart enough to understand like this is happening at the central bank level and actually going to that point maybe just talk a little bit about on a on a global basis as these economic situations transpire obviously the central banks and governments will say well we have a couple of tools other than the strategic moves of production and things like that we can manipulate interest rates we can participate in quantitative easing that has a lot of different effects on economies both globally and on the national level like how do you think about those central bank actions kind of overlaid on all of this I'd actually argue that most central banks don't have those options anymore okay most of the world never recovered from the 2007 financial crisis the Europeans and the Japanese for example never got their interest rates back above zero so when we went into this crisis there were only a handful of countries it only had some moderate monetary flexibility the United States having more than everybody else put together so I mean if in a if after ten years of recovery you've never had monetary recovery when you went in the next crisis I'm sorry that's that that's it that's the end of your currency is a functional currency especially if it was a hard one the demographic situation those countries don't have consumption the demographic situation those countries don't have a long-range investment type of capacity so what we've seen is the United States was able to put out more stimulus and everybody else put together combined the US Federal Reserve because it is the only hard currency that matters was able to do more than everybody else combined and now countries are coming to the US Fed for swap lines which is basically dollar rising the global system and the more that happens regardless of whether those actions are successful or not the more the United States has the flexibility to do whatever it wants with monetary and fiscal policy so that three trillion dollars no foreigners bought up most of the debt most of it the Fed didn't have to do so we still have the option and take advantage of this later in the year to do another couple of two trillion dollar stimulus is over the course of the summer in order to keep our system moving most countries can't even pretend to do things like that so we haven't honestly really even started a significant QE in this environment the Fed has gone in and you know supported bond markets here and there and I don't mean to suggest that's insignificant but it's nothing on the scale that would need to be done the rest of the world and the Fed just isn't interested yeah it feels very much I think five trillion is kind of a base number that I see thrown around a lot and tends to feel like there's a lot more room to go in this world though as the US continues to do this is this a world where the US dollar just continues to strengthen and we see one currency you know just fail or be devalued materially against that dollar remember there's only eight hard currencies in the world right now so this honestly in my opinion this is not all that vault of a forecast but yeah the US currency has nowhere to go but up for at least a couple of decades probably five let's go through the contenders China wanted to open its system up they did so about three years ago and a trillion a half dollars of Chinese assets fled within six months so they slammed that shut they will never open it again they realize that that's never going to happen you wan will never be a global currency and that assumes China holds which I don't think it will next the N the N tried to do something that is similar to the Chinese back from the 80s it had a similar outcome they're not interested so they print more currency than we do in a regular basis despite the fact their economies less than one-third the size Bureau it's not that they've mismanaged it it's just they failed to take advantage of what time they've had in order to reform their system and to prepare for what a world without favorable demographics is they failed to do that so we are probably looking at the unwinding of the year over the course of the next few years I hope that's not front-loaded I'm losing hope on that when I look at European news these days and that is the second greatest store of value in the world and so as that unwinds even if the deutsche mark proves to be a rock-solid currency everyone from the periphery is going to be going willy nilly and most of that's going to come to the US dollar so that's a big surge after that's the pound you know there's anything that everyone in the world can agree on us that the Brits should never be in charge of anything ever again and the way they handled the brexit negotiations absolutely underlined that so they're gonna get gutted in the United States with the trade talks and that will probably merely end the presence of the British pound in most people's currency baskets they're basically folded into the NAFTA system compared to how the rest of the world is gonna look that's not a bad position to be in you'll be part of the largest market of largest investment pool blah-blah-blah-blah but that does mean they lose monetary autonomy after that you're down to Canada and don't get me wrong the Canadians run a tight ship in terms of monetary policy but a country of thirty five million people cannot direct how the world is going to work after that Chuck in Australia Sweden Denmark New Zealand that's everyone so you know to say that the US dollar is just going to be the only currency of size and that it's only gonna go up it's not a range yeah and I guess as part of that obviously the the Bitcoin community has this whole bent of the separation of state and money right so exactly what you're talking about luck with that that's what I kind of hear your thoughts on in terms of there's two schools of thoughts one is bitcoins gonna go replace everything and be the next global reserve currency and then another school of thought which is as I sit in one of these developing countries my local currency or my national currency fails I want dollars I may not have access to dollars it may be dangerous to get them they may not be readily available so therefore the next best thing is something that's unmanipulated because I don't trust any of these other currencies other than the dollar at the national level like do you put any credence into it's kind of like the best of the worst situations or does that feel like even that's we reach I don't want to suggest for a moment that electronic currencies don't have a place they do Bitcoin specifically I'm a little dubious about just because of the limitations and the mining process you get past that and you deal with other forms electronic here currency I'm a little bit more confident but I think you kind of hit it right there it's never going to be a global currency because you have to have a monetary authority to have a currency currency ultimately is about exchange and bitcoin is just not good at that but the idea that it is a store of value I think needs to evaporate I think you're only setting yourself up for disappointment for that but as a means of transfer of value can totally work so your idea that you've got some local money you need to move you can't get access to the dollar market so you put into Bitcoin as an intermediary sure it's the same thing porn rings do that's the same thing that drug smugglers do keep that in mind if this is something you perceive as an investment vehicle because central banks whether successful or not are going to see this as a problem and we've already seen a significant change in Europe and in East Asia for how they regulate the digital currencies that will only expand and if it gets to the point that the United States is concerned that it's impacting the tech stake you can expect the Federal Reserve and the IRS to act appropriately so careful what you use it for careful how big of your portfolio it is careful what your underlying assumptions for why it exists in the first place because the the people who make the laws and regulate things like this have their own opinions and right now they don't feel like they've been pushed don't push them for sure and I guess as part of that you know a lot of them I believe see the technology as valuable kind of you're talking about you know electronic currencies or digital currencies and so one of the ideas that you know I've got pretty high conviction and is that like every currency is going to be digital in the future and where the competition is gonna be is not a digital currency versus a non digital currency but rather a competition of monetary policy so there's gonna be a digital dollar there'll be a digital one again you know a euro whatever and then obviously you've got the Bitcoin you've got stable coins and all these different things and ultimately where people are going to make decisions is at that monetary policy level the dollar out of all the fiat currency seems to be the strongest and will continue to kind of extend their lead there but but what I wonder is if everything is digitized do you get people who say hey I want the programmatic nature of something like a Bitcoin again it's just it's nearly impossible to tell how this plays out but it feels like we're moving towards all currencies being digital into my three policies were really where that competition occurs well the the digitization of the the financial market is continuing to pace for example the Brits stopped using paper checks like four or five years ago it's like the United States is a roll a grid when it comes to that but you got to keep in mind with the overall environment that you're gonna be swimming in is if we're moving into a world where the US dollar is large and in charge but the US economy is largely restricted to North America the propensity for financial flows into the United States are pretty high basically whenever you have a regional instability of a flow of money even as we saw in the o7 financial crisis the u.s. started that crisis and money flowed to the United States because it was the only store of value so if you've got the United States with this global reach but only a relatively regional concern then the United States will be perfectly willing to throw spanners into work for any country for any reason using its monetary policy to do that that's the sort of environment that bitcoin is going to be swimming in and I'm not saying that that's good or I'm not saying that it's bad and I'm not saying there's not opportunity within the volatility but you have to keep in mind that any money that is not domiciled in the United States dollar zone will be seen as a target or an opportunity for you as policymakers moving forward so just be very very careful with that yeah for sure and we've seen that right now you see politicians like brad sherman and stuff right come out you know pretty aggressively against a lot of this stuff in closing here i guess my big question is like the picture you paint of the world one is very rooted in data in demographics and over time we've learned that that is a great way to view the world but what is like the one thing if you said you know what i was wrong ten years from now 20 years from now like what's the one thing where you're like you know what this is probably the thing that i missed or the thing that i have the lowest level of confidence in this kind of view of the world the problem with my world is always time and it's easy for me to look at all the structural factors and and draw a line Ford and tell you where the natural conclusion is going to be but whether that's going to be in twenty years or ten years or Tuesday there's always the problem so the Chinese have proven remarkably adaptive and resilient at learning the lessons of the countries that have collapsed before them and have managed to leverage themselves from honestly a complete backwards pre-industrial disaster to the world's second largest economy you know if you look at their policies you wouldn't have guessed that that's where this would have gone but it took 30 years of the Americans just basically sitting and twiddling their thumbs for that to happen so the problem there is there is agency agency by the Chinese to learn the lessons of the past lack of agency by the Americans and not choosing to act which means that if the Americans all of a sudden use their agency tomorrow China ceases to exist next month that is the challenge when you're doing a structural analysis like that there are decision makers who matter not everybody is the Czech Republic some of these countries really can move the needle and to this point the United States has chosen not to I would argue that coronavirus has pushed the United States to probably move the needle further than it needed to be yeah it's a it's a wild world that we are we are walking further and further into I finished up with two questions and let you ask me one to wrap up what is the most important book you've ever read other than Europe Jared Diamond's Guns Germs and Steel if you want to get an idea of how the world came to be in the shape that it is that's absolutely the best place to start that is a fantastic recommendation I couldn't agree more and then you spent a lot of time thinking about the earth and the global economy and situation aliens are you a believer or non-believer I think they exist yes but I do not understand the transport technology that they use so I don't know what they've been here listen to go as far as I already be thinking about the transport technology you're ahead of the curve no faster than light does that mean time dilation does that mean portals I don't know I love it what one question do you have for me to finish up how do you think this is all gonna work I mean you deal with digital currencies all the time we're seeing changes in policy prerogative the Americans are scared when they tend to be scared they tend to overreact and make adjustments to the system that last for decades in a world where populism and in the country where populism is rising up so strongly you know how do you think this is gonna shake up for your industry yeah I think it's um it's really my view has changed over the last 12 months or so and the reason being I actually am very much convinced of a strong dollar for the foreseeable future and really because of such a deflationary environment and kind of this idea of the relative printing everywhere else in the United States a lot of what you've shared and others that I've gone the podcast I think that that makes a lot of sense to me the one thing that I keep going back to though is around Bitcoin specifically this idea of I don't need a bank account I don't need a kind of interface with the legacy system all I need is an internet connection and I can access this I can use it it's programmatic and it's monetary policy and it's transparent so I actually know the monetary policy decisions that we made in the future because it's just programmatically being done to me it's this weird thing where when you sit like how does it play out that really is kind of three components so the regulatory side the US dollar price kind of value and then three is like the amount of adoption is if you go in Reverse like adoption right now it's probably about 1% of the world you know give or take about 70 million people own or have transacted in Bitcoin I think that will continue to rise just as more people get educated time goes on the rate at which that changes is you know kind of up for debate in terms of the US dollar price like it's just applied to made economics right so as supply continues to get cut kind of programmatically in terms that incoming supply u.s. dollar price should rise how fast you know what timelines people are spending literally you know billions of dollars betting on that in the markets and so we'll kind of see how that plays out and then the regulatory front I think is actually probably the most interesting piece of this and recently a video resurfaced of Vladimir Putin and somebody asked them you know does Russia thinking about creating a cryptocurrency massiveness in 2018 on kind of his uh like national talk show whatever he's got there and and the first thing he said is what we can't because they cryptocurrency is fully decentralized it's not controlled by anyone and he was pretty well versed in his answer and when it got me thinking about is like my guess is that most of the world leaders understand this much better than they let on to they thought more deeply about kind of the repercussions of it you see that again with like the Brad Sherman's who want to just ban ownership and do things like that but three is they haven't really taken extreme measures now and so you could make one argument like it's just not big enough it's kind of a thorn in their side but it's not important enough yet the second camp though would be they realize like you can't shut it down and so you see things like the congressman from North Carolina you know saying in the congressional hearings like hey anyone who try to shut this down has never been successful like it is a decentralized anti fragile system and so like I'm with you on this weird world of like you don't want to have showdowns with governments right like you like people tend to lose those especially developed countries where the most powerful military in the world but at the same time I wrote about a year ago this weird world of every currency that's fallen at some point there's been a change of power when that currency falls either that preceded it or right afterwards and it was all about who had the most powerful military who had the best offense right you would go and take over someone in a cyber world though does that reverse is it almost whoever has the best defense actually is the strongest meaning that you know if we go and we hack into you know China's electrical grid they basically kick us out at some point they fix the you know the patch the hole and they can keep us out they're actually stronger it's not so much about offense it's more about defense and in that world the Bitcoin networks the strongest computing power computing network in the world like does that then all of a sudden mean in some weird way like the strongest quote-unquote military behind a currency is this computer network versus a fiat currency I don't know but like that's a framework that I keep trying to think through that I think just hasn't been discussed enough and like I'm not smart enough to come up with the answer so well there's only one way it's just a theory - exactly and so I don't know it's just I think a lot of bitcoiners specifically like this specific role because it's so multidisciplinary right and obviously the work that you do you have so many different inputs that you've got to analyze to figure out what's going to happen or at least think about that and I think Bitcoin is very similar to that Chuck listen I appreciate you you take the time to do this where oh where can we send people to to read more in and get the books and kind of get everything that that you can crank it out so the website is Zion calm that's z IH am calm you can sign up for the newsletter there it's completely free and you can follow me on twitter at at Peter's I am awesome and you you've been doing a fantastic job so I appreciate you doing this and then hopefully we can drive some people over there and I highly recommend the books the books are fantastic oh yeah this United Nations came just before the the crackdown on transports so it doesn't do Cove it but totally talks about national collapse absolutely alright Peter thanks so much all right take care

Channel: Anthony Pompliano

Views: 261,285

Rating: 4.7885833 out of 5

Keywords: bitcoin, btc, off the chain, podcast, pomp, anthony pompliano, crypto, cryptocurrency, blockchain, finance, investing, fintech, tech, technology, investing news, financial news, btc price, bitcoin price, markets, bitcoin news, media

Id: ygrurjeTfTU

Length: 80min 26sec (4826 seconds)

Published: Fri May 01 2020