Shawn Ryan Show - #209 Erik Prince & Erik Bethel - The China / Taiwan Conflict

Episode Date: June 16, 2025

Erik Prince is an American businessman, former U.S. Navy SEAL, and the founder of Blackwater, a private military company established in 1997. A graduate of Hillsdale College, Prince heads Frontier Resource Group, a private equity firm, and promotes economic development in emerging markets. He hosts the podcast Off Leash with Erik Prince, launched in 2023, and founded Unplugged, a privacy-focused smartphone company. Prince, a vocal advocate for privatizing military operations and deregulation, has been linked to controversial arms deals and Trump-era political operations.  Erik Bethel is a General Partner at Mare Liberum, a fund focused on sustainability and national security in the maritime domain. He is a global finance professional with experience in the private and public sectors. In 2020, he was nominated to serve as the U.S. Ambassador to the Republic of Panama. Previously, he was nominated by the President and confirmed unanimously by the Senate to represent the United States at the World Bank. At the World Bank, Erik participated in the analysis and deployment of over $100 billion of capital in the developing world through grants, loans, equity investments, and other financial products. Previously, Erik spent over twenty years working as an investment banker and private equity professional at Franklin Templeton Investments, J.P. Morgan, and Morgan Stanley. Erik earned a BS in economics and political science from the United States Naval Academy in Annapolis and an MBA from the Wharton School of Business at the University of Pennsylvania. He serves on several Boards, including the United States Naval War College Foundation, is a Fellow at the Center for Strategic and International Studies (CSIS), and is an Advisor to Oxford Analytica - a geopolitical think tank. He speaks Spanish, Portuguese, and Mandarin. Shawn Ryan Show Sponsors: https://www.roka.com - USE CODE SRS ⁠https://www.betterhelp.com/srs⁠ This episode is sponsored. Give online therapy a try at betterhelp.com/srs and get on your way to being your best self. ⁠https://www.bubsnaturals.com/shawn⁠ ⁠https://www.meetfabric.com/shawn⁠ ⁠https://www.shawnlikesgold.com⁠ ⁠https://www.helixsleep.com/srs⁠ ⁠https://hexclad.com/srs⁠Find your forever cookware @hexclad and get 10% off at hexclad.com/srs! #hexcladpartner ⁠https://www.moinkbox.com/srs⁠ ⁠https://www.paladinpower.com/srs⁠ ⁠https://uscca.com/srs⁠ Guest Links: Erik Prince X - https://x.com/therealErikP  LinkedIn - https://www.linkedin.com/in/erik-prince   Podcast - https://podcasts.apple.com/us/podcast/off-leash-with-erik-prince Frontier Resource Group - https://www.frgroup.com Unplugged Phone - https://unplugged.com Erik Bethel LinkedIn - https://www.linkedin.com/in/erik-bethel-692604Mare Liberum - https://www.mareliberumcapital.com Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Eric's with a cake. Yeah. Truly an anomaly. Three of them in the building right now. But just thank you guys for coming, both of your repeat guests, former ambassador to World Bank, Eric Prince, former CEO of Blackwater Navy Seal. So I wanted to get you- Ambassador of happiness.

Ambassador of happiness. I wanted to get you guys in here about this Taiwan stuff that's going on. So the timing couldn't really be better for me. I got the vice president of Taiwan coming on here pretty soon and so everything just lined up perfectly and I want to use this interview to kind of educate the audience and not only the audience but myself on on why this why Taiwan is such a strategic location and why it's so important in the world.

And when it comes to chip manufacturing, all this stuff, but, you know, I did not realize how delicate that situation was due to its history with China until I started prepping for this interview. And I mean, I knew, you know, the semiconductors and it's been terrifying to me to think that China might take them and they say they will by 2027. But when you look at the history, it's, it's pretty dicey and so Eric Bethel, if you don't mind giving us a brief history on Taiwan and China and, and how

delicate the situation actually is. I'm not a historian, but I'll give you a rough outline. We got to go back way, way, way early. The Portuguese discovered Taiwan. They called it Ilha Formosa, which means beautiful island. The Dutch arrived in the 1620s or so and formed little villages of sorts. The people that were living in Taiwan

were Austronesian tribes. There were no ethnic Han Chinese living there at the time. And the Dutch were, at the time, competing with the Spaniards. The Spaniards had a settlement in one part of the island, the Dutch had a the time competing with the Spaniards. The Spaniards had a settlement in one part of the island. The Dutch had a settlement in the other. And it was ironically the Dutch that began bringing in folks from mainland China into Taiwan.

Typically they were typically from Fujian province, but some came from the South. And over time it was Taiwan was essentially a backwater. Neither the Ming dynasty nor the Qing dynasty gave a rip about Taiwan. And in, I wanna say 1895, somebody will correct me on this, I'm sure, the Japanese took it over. And it was a part of Japan until after World War II. Never in Taiwan's history was it a part of the Chinese Communist Party.

And so after the Chinese Revolution, as Chiang Kai-shek and the Nationalists were losing, they fled and they started the Republic of China in Taiwan. So there were two Chinas. There was a communist China and then there's the nationalist China. But there has never been any Chinese Communist Party presence or any history linking it to the current Chinese government. That pretty much sums it up. But it's gone back and forth and back and forth a couple of times since 1949, correct?

Nope. Never been ruled by Beijing. No. Never been ruled by Beijing. Not since 49, like you said, Chiang Kai-shek fled there with the nationalist leadership. And there's been serious fighting, artillery duels. I mean, there's islands that belong to Taiwan that are within five kilometers of the Chinese mainland.

Yeah. Puey Mui, Matsu, I think it's called Kinmen now. Yeah, Kinmen. Right up, like I said, an hour and a half swim from the Chinese mainland. Wow. And so how does the rest of the world view Taiwan? Do they view it as part of China, part of the communist China? As the Chinese communist economy has grown, Beijing has used that economic leverage to twist countries into

not recognizing Taiwan and to only recognizing Beijing. In the 70s, Taiwan was China and we did the switcheroo and we gave PRC China the seat that Taiwan used to have in the United Nations. But as Eric mentioned- Nixon did that. Yeah. Every country has, with the exception of a handful, have switched diplomatic recognition from Taiwan to mainland China. This is a function of the fact that China's economy is so important that it uses it as a leverage point.

But Nixon also did it back then because, you know, the Soviet Union and communist China used to be very, very closely aligned. And then in the sixties, they started having a bit of a falling out and border disputes. And Nixon kind of used that outreach from China because they were afraid of getting run over by the Soviet Union to kind of put a wedge between the Soviet Union, the USSR, and the Chinese Communist Party. And you look at the history of China then, they were still under Mao. Mao died in 75 or 76.

Mainland China had some massive problems in the Great Leap Forward in the 50s, which was probably the single greatest terrible decision by a political leader where they forcibly- Collectivized. Collectivized land. And then on top of that, believed all the lies of the local communist officials as to how much each of these fields, each of these farms was producing.

And it led to massive starvation. Like 40, 50 million Chinese died at the hands of their own government because of this forced collectivization of agriculture. And then they start recovering from that and then they get what's called the cultural revolution in the late sixties, which kind of started at the university level. And if you see woke culture in America, imagine that, but now you have armed woke gangs that are arresting people writ large and taking any of the intelligentsia professors, mid-level professionals that are not sufficiently communist and manic getting sent away or executed or worse. And that finally dies down in the 70s and Mao is still

alive. Deng Xiaoping took over after Mao dies. And Deng Xiaoping, so there was kind of a buffer period of about two years, I think. And Deng is the one that started opening up China. And the first trip was to Singapore, which is basically Han Chinese, but on freedom in Singapore, because Singapore went from a lousy fishing village in the 1940s right at the tip of the Malay Peninsula, right next to the Straits of Malacca, a natural shipping choke point. And they went from, like I said, a lousy fishing village to having enormous economic development. Deng said, we want to be like that. And so that leads to the opening up of China for business.

And I think he called it communism or socialism with Chinese characteristics. So that leads to this massive development of the economy of China, and they use that leverage to pivot countries away from recognizing Taiwan to recognizing the CCP. Where we are today is a full 180 from where Deng Xiaoping was, and the 180 is the Chinese government has asserted control over every aspect of society. the Chinese government has asserted control over every aspect of society. So back when I lived in China, you know, the Communist Party really didn't factor into people's lives in any meaningful way compared to say Jack Ma or Tencent or Taobao

or a zillion of these companies that were radically transforming the country. And when Xi Jinping took over, he said, hey, wait a second, we're an empire, just like the Qing dynasty and the Ming dynasty before that. We are at risk of losing our empire to these oligarchs. And something's got to change. And he began reasserting control in the same way Mao did over every aspect of the economy. And today you're basically dealing with a techno surveillance state where dissent isn't tolerated.

People have to read Xi Jinping thought and it's kind of strangely done a full circle. Deng Xiaoping opened everything up and now he's closing things back. When he's talking about Jack Ma was a high school English teacher and he builds this company called Alibaba, which becomes the Amazon market, massively successful all across China, a true unicorn. And to give you an idea of Xi clamping down, Jack Ma, so it's almost like a Jeff Bezos type figure who's disappeared from public life for almost a year and then he reappears lecturing at a kindergarten in rural China. And the official press said he had embraced supervision. That's the level of

reassertion of control. So all the growth and the openness that happened in the late 70s, 80s, 90s, early 2000s, really clamped down by Xi and he has really consolidated control. He is the most powerful Chinese leader since Mao. In the latest, I think it was a year and a half ago, he basically at the Chinese, at the party conference, he made it possible for him to stay on effectively emperor for life. Because normally they had stayed for five or 10 year terms and he is now for life. To the point of Jiang Zemin, his predecessor, had him arrested publicly, dragged off the stage at the party conference, kind of a F you, I'm in charge, a real consolidation. And there's three factions of the Chinese

Communist Party. There's young princelings. Xi is a young princeling. So his father literally did the long march with Mao back in the 30s when they escaped fighting against the nationalists and goes all the way up almost to Xinjiang in the northwest of the country. So that's the lineage. The Shanghai faction, which was another, that's kind of the business faction of the Chinese Communist Party. Yep. And the Communist Youth League, both the Shanghai faction and the Youth League have been smashed by his anti-corruption campaign to really consolidate control. What I found super interesting, Eric mentioned that Xi Jinping's predecessor, Hu Jintao, was taken off the stage. That's right. I know what you meant. So he's taken off the stage and in a very

embarrassing sort of way, sort of cringe-worthy. But what I noticed wasn't necessarily the spectacle that was going on between Hu Jintao and Xi Jinping. I was looking at the hundreds of other faces around this spectacle looking literally straight ahead. They were scared to look down. And to me, it's kind of emblematic of where things are in China. No one dares do anything that isn't in conformance with what the government wants because you can get disappeared, you go to jail, you get exiled, you get your fortune taken from you. So everyone lives in this sort of state of abject fear. And I mentioned, techno authoritarianism,

you literally have surveillance cameras everywhere. And- Facial recognition, yeah. Facial recognition. So as you are crossing, if you're jaywalking, I'm not sure if I mentioned this in our last podcast, but as you're walking across the street, if you're jaywalking, your phone is geolocating you. It knows that you're jaywalking.

The cameras are recognizing that it's you, and your phone, your Alipay connected to your bank account is deducting money from your bank account as you're jaywalking across the street Are you serious? Yeah, I mean it's it's pretty bad Shit, I didn't realize it and so, you know all part of the social credit score spitting Saying something tell them about the social credit score Yeah, if you don't behave exactly as the Xi Jinping thought specifies, you get banned from public transportation or from going to the school you want to or getting the housing that you want.

You literally have no rights. And it is, when we see elements of this in woke culture in America with being canceled for speaking out on social media or whatever, they've perfected it at industrial scale in China. Isn't there a Black Mirror episode on this? I'm trying to remember. But yeah, it's real. It's a real version of this where every facet of your life is monitored and tracked. If you're in a rural highway, they're timing the distances between two points

and they will flash on the board, on a board alongside the road, your license plate, your name, that you're speeding, also being deducted. Hey everybody, I'm in Taipei, Taiwan right now, the street market, and tomorrow I am interviewing the vice president of Taiwan. You guys know, I've been talking for a couple years now about the potential invasion of China taking Taiwan. So we came here to interview the vice president about it. Took us about six months to get this in the re-lined up. It's all going down

tomorrow. Should be out in a week or two. It's gonna be a fascinating interview. Hope you all enjoy it. See you soon. Cheers. I've spent years on this show pulling back the curtain and trying to reveal Cheers. and then the judicial system goes after him. It's a double standard. If you don't believe me, check out episode number three with Don Bradley. That is a perfect example of what I'm talking about. Because it's not just about what you did, believe it or not, it's how the legal system interprets it. And that's why I'm a USCCA member. The USCCA has over 860,000 members because they know the reality is, after you stop the threat, the real fight begins. Your membership gives you the education, elite training, and self-defense liability insurance you

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So for people to say, there's a fundamental difference in governance between a constitutional republic that we live in where we're supposed to have rights, where the government mandate is limited to that and the consent of the governed, it is the exact opposite in China. So yes, it is a fundamental difference in governance between a state that has total, unbelievable, unequivocal control over not citizens, but the serfs that reside there versus citizens. And a republic might be dirty and messy and imperfect and efficient, but at least you have rights. Yeah, no kidding.

I think that's a really good point. I mean, there's a narrative battle going on, right? Our narrative is that the way to govern society is through individual agency, freedom, free markets, where it's the battle of ideas that wins. So, you know, I was coming, I was flying into Memphis last night, and you can see that the Memphis airport, you know, you've got people singing songs. And I thought to myself, Memphis is competing with, to some degree, with Austin. Austin is competing with Miami. And so cities compete with each other for talent, for companies. Similarly, corporations compete with each other, ideas compete with each other, and the best ideas rise to the surface.

And that's our idea, whether it's free markets, individual agency, democracy, these are how the values that underpin, plus our Judeo-Christian value system, this is what we believe is the right way to govern society. Over here, it's authoritarianism, state-driven capital, and surveillance, right? And autocracy. Ours is, as Eric mentioned, a lot messier.

Theirs is a lot more efficient, but ultimately when the state directs the, I don't know, you've got 200 million empty houses in China and apartments, to me that's economic foolishness. When you kill 50 million people through the great leap forward, that's just, it's awful. But the narrative battle is happening today. And in the short term, it looks like they're winning, right? Because they're more efficient. They can build trains like look at California, you can't build a train from San Francisco to LA.

It takes, you know, 20 years and billions of dollars. In the short term, it looks like they're winning. But I think long-term we prevail. Why do you think that? As long as we allow the private sector to do what it does best. Because if it's all government all the time, that it's going to be our solution in America, we're screwed. That's true.

I mean- That's the only advantage I see that we have is the innovators and the economy to reward massive innovation where they don't have that. Am I missing anything else? Entrepreneurship is by definition the creative destruction of the old order. And if we get away from that, then we have a also ran version of statism where you get the great leap forward and that kind of stupidity. Imagine a nationwide, imagine 50 million people starving to death in America, not likely to happen because we have, I mean, the idea of empowered citizens, First Amendment, free

speech, freedom of religion, freedom of association backed up by a Second Amendment, that is so antithetical to how the Chinese government is and even how Chinese citizens view government. So it is a 180 out governance view. But let's not think China isn't trying to export their system overseas. Mm-hmm. Oh yeah. You've got places from small islands in the Pacific, like the Solomon islands that have just done a security treaty with the Chinese to their security apparatus in airports all over the world

to port scanning equipment to the port cranes, like 75% of the world's cranes or ZPMC cranes with very likely, uh, I'll qualify that, qualify that with back doors that can stop working. And so China is exporting its techno authoritarianism around the world. And for some governments, it's like catnip, right? If you want to stay in power forever, if you're a random dictator somewhere, China can help enable that. a random dictator somewhere, China can help enable that. They do black bag diplomacy really well. When you're a head of state, foreign minister,

mining minister, energy minister, whatever China where they want to get their hooks in, on your trip to Beijing, they take you to the Chinese foreign ministry, take you to the basement, and there's a long series of safe deposit boxes, one of them with your name on it, filled with gold, diamonds, cash, whatever. And they say, this is yours for when you retire, as long as you play ball with us. Wow. Or why not just give you, why not give every politician in the country a Bank of China debit card and, hey, buddy, it's on us. You want to buy a Lamborghini, invite your family to a trip to Europe, come to Beijing. It's on us.

Don't worry about it. I don't understand how you combat that. In Africa, China has made themselves exceedingly unpopular with the vast majority of people. The few government officials that are getting paid off, great, but all the big Chinese infrastructure, the mines, the energy, the roads, the bridges, when China goes and does that, they provide capital, they provide a loan and they charge about three times what market rate should be because they're the only lender. They take everything with them from China to do that.

Every worker, the noodle maker, the barber, everything to a little Chinese enclave. In a lot of cases, they're even exporting Chinese convict labor. You got 10 to 20 years of hard labor on your sentence in China. Mm-hmm. They send you to do an infrastructure project in Angola. And when you've completed that job, you're free to stay. So that has completely alienated the average African because the Chinese the average African because the Chinese treat them terribly as workers, very abusive. That's the one thing about Western capital and there's more accountability through Western capital markets, et cetera, and governments that expect Western companies that are operating there to

behave and there's a court system back in the West to hold them accountable, non-existent in the China African nexus. So China created 10 or 12, 13 years ago, something called the One Belt One Road Initiative. And the premise was to build arteries to and from China, physical arteries like highways, airports, infrastructure, maritime ports, and the like. And railways. Railways. Especially railways. Telecom infrastructure.

And the way it works is, I think of it as predatory lending. So they'll go to a given country and say, hey, we'll lend you China, we'll graciously lend you whatever, a billion dollars to do whatever. But the fine print says if you can't pay, well we'll take your port. And clearly that has met with a significant amount of resistance. So in the case of, I'll give you a few examples, one is Djibouti where the Chinese lent a very

large amount of money and now China has a military base there. The second place that comes to mind is- Right across from the US base actually. Right across from the US base. Is it really? Yeah. The next is Sri Lanka where they built a port.

Now they have a 99 year lease, the Chinese, on this port. It's called Hambantota. The list goes on, but this is what makes them very unpopular. And they're also just, as Eric mentioned, not very nice. And they don't treat people with the same levels of decency that we would. Look, again, nobody's perfect. I mean, we're also very unpopular in the world, correct? No, I don't think so. What about in Europe? Exceedingly popular yet.

Popular. Not with the elites. Look, Europe's been having a free ride for decades on their defense spending. That's a whole other topic we can dig into, but you have, when Trump 45 took over, there was, I think, five of 28 countries that were paying 2% of their defense budgets, 2% of their GDPs in defense. That's a not serious alliance.

We want alliances, not protectorates, and that's, I think, the point that President Trump's been making. Look, I'm not an expert in European politics, but something struck me recently, I saw a map of a recent French election and Marianne Le Pen, it's like the entire country is hers voting wise, except for small isolated pockets like Paris, Paris, Marseille, Toulon. Uh, you know, and it reminds me of the electoral map of California, right? It's a, it's a giant, you know, red state with deep blue San Francisco, deep blue Los Angeles, et cetera.

So, um, whether or not we are popular or unpopular in Europe, I don't know. The headline is that we're not, but the reality, I don't know. So why, why, why is China, when are they going to make a move on Taiwan? I mean, this is from May 7th from Xi, no matter how the situation on the Taiwan islands evolve or what trouble or what troubles external forces may make, the historical trend toward China's ultimate and inevitable reunification is unstoppable." That was on May 7th. Yeah.

And that's the one in accuracy. As Eric was explaining, Formosa was never part of mainland China, ever. Ever. But it is such an irritant because you have what? 1.4 billion mainland Chinese and you have 24 million, largely, well, maybe half, 60, 70% Han Chinese in Taiwan, but you have Han Chinese culture on freedom, which has been enormously successful, enormous wealth generation. And the fact that Taiwan is the size of one large Chinese city, but it is such an irritant because it's the antithesis to the monolithic Chinese communist party where what they say goes with no question.

100%. Here's another quote for you. This is Xi Jinping's New Year address. As compatriots on both sides of the Taiwan Straits are one family, no one can sever our bloodline affinity and no one can block the historical momentum of the unification of the motherland. Look, there are, I don't know how many different ways

they can say this, but they want to take Taiwan. And Eric mentioned earlier that Xi Jinping got a third term and he's gonna be emperor for life. One of the justifications for that was that he's gonna take Taiwan. And so the narrative in China and the narrative of the Chinese Communist Party is there is no other way to govern China. Historically the historical precedent is that in millennia we've always been governed by

authoritarians. Because it's just impossible to govern the Chinese people any other way. And over here, you've got Taiwan in a thriving, messy democracy where the GDP per capita is higher than it is in mainland China. Now, again, small place with a lot of wealth,

with a relatively small population. But the point is, the fact that Taiwan exists is a loss of face to the Chinese Communist Party. It must go. Does that make sense? Makes sense. On top of the fact that China was not always ruled by emperors over the last couple of millennia,

they would come together under a dictator. And then they would, after a couple hundred years, they would fragment apart, and there's what? 54 different ethnicities residing within China, different languages, different faiths even, and Confucianism, Buddhism, and Islam. I'd say it's in our interest to help them go back to a bit more of a fractious, less consolidated entity. How important is Taiwan to the rest of the world?

Not just with some of the conductors, but the location? Well, look, I think it's important for us. And I'll give you a few reasons. The day Taiwan goes is the day that the CCP tells everyone the emperor has no clothes. The United States military might could not hold Taiwan. And if we pretend that we are beacons of freedom, I mean, if we want to be beacons of freedom, you know, we can't just pretend that, you know, we're going to let this island of 25 million people

become absorbed by communist China. But there are going to be there are a lot of implications, and we can talk a little bit about those. But for me, aside from the fact that TSMC that produces 60% of the world's chips and I guess 90% of the high-end ones, that is either going to go to the Chinese or all of those fabricator, all the fabs are going to basically get blown up and all the engineers moved to the U S in either of those two cases. You have to ask yourself, well, gosh, if the semiconductor manufacturing isn't being done by TSMC, what does that mean for Nvidia?

Wait, what does that mean for, uh, uh, you know, AI, what does this mean for, you know, grok or chat GPT or, and, and the NASDAQ, what does it mean for AI? What does this mean for GROK or chat GPT or the NASDAQ? What does it mean for the chips in your F-250 pickup truck or phones or anything? Everything. As important as the Arab oil embargo was to the world market in the 70s. Gas lines in the United States, remember when they shut it off after the 73 war. Imagine that level of hegemony times five. Stuff they don't think about, your washing machine has chips in it.

Where are you gonna get a new washing machine? And everything goes up in price. Not to mention- If you can get it at to mention if you can get it at all. If you can get it at all. So chips are important, but I would also make the argument that if China takes Taiwan, it's going to have massive implications for the US economy economy. Um, extreme amounts of inflation, high interest rates, job losses. Because of the chips? No, no. Um, it's actually, you're going to have to bear with me, indulge me for a second, but I'll take you through like a, a meandering, you know, journey of, of, of

economics, I'm sure that there are going to be some macro economists out there that are going to try and shoot holes in my argument, but bear with me, here goes. Let's begin with, let's take stock and understand where we are in our economy. We've got $37 trillion in debt. We've got insane and unsustainable budget deficits. So the US government makes money by taking in taxes and we spend money on the military, Medicare, Medicare, whatever. Right.

The deficits are in the trillions. And when we can't, um, finance those deficits with tax revenue, what do we do? Well, we issue bonds, right? Treasury bonds and bills and so forth. Printing money. Print. Well, see the way it works is, um, treasury will issue bonds. They have treasury auctions.

We had one in fact, last Wednesday, we did a $16 billion auction. And, but the bidders said, well, gosh, we want, we want the rate to be higher. We won't buy your treasuries unless you're 20 years. This is a 20 year auction, uh, we want the rate to be higher. We won't buy your treasuries unless your 20, this is a 20 year auction, are high enough. And they hit a five handle or five and change percent. Why? Well, for many reasons. In part, it's because the big, beautiful bill

adds $4 trillion of debt over the next 10 years, which seems financially illiterate because members of Congress just added on a bunch of pork to it. The rating agencies, you know, jumped on the bandwagon. Bond yields fell. But look, we're, you know, like those Mission Impossible movies where, you know, there's a train that's lurching off a cliff and Tom Cruise is trying to escape and it's like the train is being held by a wire that's starting to fray. We're not there yet, but we're approaching that.

And so that's the context. Back to treasuries. When people don't buy our treasuries, when large institutions and sovereign wealth funds and, you know, the whatever Wall Street doesn't buy it, the Fed becomes a buyer of last resort. How does the Fed do this? Well, as Eric mentioned crazy amounts of money, you have to ask yourself, why don't we look like Zimbabwe or Argentina in the hyperinflationary days? And the reason for that is there's an artificial demand for dollars around the world because the dollar is used in almost everything. Every commodity is priced in dollars. The world's reserve currency. The world's reserve currency. Every FX settlement is done in dollar foreign exchange is done in dollars.

So everyone needs to use dollars in the world so we can print for a period of time and the world needs to use it. Okay. Let's go. Let's take this back to Taiwan. In a Taiwan scenario, if China takes Taiwan, uh, every country in Asia is going to be told, Hey guys, there's a, there's a new sheriff in town. Why should we trade, you know, Malaysian palm oil in dollars?

Why shouldn't it be in Rem and B? And China has been trying to erode and chip away at the dollars reserve currency status in many, many different ways because they, well, we can talk about that later. So this is BRICS. Yes. This is partially BRICS. It's partially the ECNY. Now, if they did take Taiwan, why would they be the new sheriff in town?

Here's the easy corollary. You done? No. Okay. I went on too long anyway. No, it was great. No, no. It was a great thought.

I don't want to interrupt it. 1804, 1805, Britain defeats Napoleon's Navy during the Napoleonic Wars. And Britain rules the seas for all the 1800s. The British pound was the world's reserve currency. Britain started to lose that at the Battle of Jutland, big naval battle against a rising continental industrial power, Germany. They didn't lose, but they definitely didn't win. I would say that marked a pivot in the beginning of the end of the British Empire, which you see collapsing, really

ending in the 40s and 50s as all their colonies go away, they lose India. I see the world's reserve currency as the dollar losing that if there is a significant naval loss or even a draw over Taiwan. I agree. I mean, if you look at... And that literally cuts off. So that would be why they're the new sheriff of town because they have defeated. Well, if they're the new...

Look, if they're able to take Taiwan and the United States leaves, which they want us to leave Asia, just leave. Uh, we, this is our pole of influence. Uh, the South China sea is ours. Taiwan is ours. The yellow sea is ours. Uh, we have the largest economy and let's go back to the way things should be in their mind.

The way things should be is China is the center of everything and countries around China are vassal states that pay homage to the emperor every year. That's the way it was 200 years ago. 100 years ago. But they called themselves the Middle Kingdom. All maps produced in China show China as the exact middle of the world. So they have the economic, military, uh, and cultural might to basically be the sheriff in town. Uh, and it's not unreasonable.

Look, I'm trying not to catastrophize this too much, uh, but it's not unreasonable for them to push countries in their orbit orbit to use the Chinese renminbi as opposed to the dollar as the currency of trade in Asia. Assuming that happens, you have to ask yourself what happens to the dollar and does it cause inflation back here? And if it does and the Fed's job other things, is to counter inflation, what does the Fed do? It has to jack up interest rates.

So imagine a world, again, look, I may be going out on a limb here, but imagine a world in which the, you know, your mortgage rate, you know, spikes to double or triple what it is today. Or if you're going to finance your car, how much does it cost? So there's a reason. Like economics does play into all of this. Currencies play a role. Treasuries play a role. I think unchecked spending as a US government plays a role in this.

I think it's very foolish. I don't think it just plays a role. It's the fundamental underpinning. If the dollar is not the world's reserve currency and the idiots in Washington can't continue to deficit spend because no one's going to buy, no one's going to use those dollars, it forces the US government to actually have a balanced budget and cut deeper. Already the interest payments on the existing debt,

interest payments alone in the debt, exceed the defense budget. Yep, which is already too big. Now you start to literally constrict all aspects of American government spending because of, military victories have very economic realities. So it is a cascading effect that's catalyzed by a embarrassing loss, unnecessary loss of Taiwan.

Now is China's economy just as fragile? It's bad. Yep. It's bad. And one could make the argument that, you know, when you have massive youth unemployment, uh, an insane amount of real estate defaults, uh, and debt to GDP levels that are really bad and unsustainable, what does one do to deflect from, uh from domestic problems?

You point to the West, you point to Taiwan, and I think this is a time of maximum peril. 10 years from now, I'm not as concerned, but the next couple of years, I think are pretty bad. Yes, I fully agree with that. But just to double click on something Eric said, right now we're spending a trillion dollars in servicing interest on our debt.

Imagine like your credit card, all you're paying is interest on your credit card and that's what we're doing. Furthermore, we have to refinance something close to $10 trillion worth of short-term debt, government debt, uh, at higher rates. Uh, so the rates are going to be at, you know, somewhere between four and 5%, which is going to exacerbate the interest that we're paying. Not the two and 3% that it has been at.

Right. And so it's kind of like there's, there's this show. And we have a bill that just went up. And Bill, yeah, that's another four trillion deeper in. Yeah. Look, I think, um, you know, does anybody, does anybody look at this shit that's on the inside? Of course they do.

Um, look, look, man, don't blame the player, blame the game. There is not a single member of Congress that's gonna win an election by saying, hey, I'm gonna provide less benefits to my constituents. Just doesn't work that way. We've allowed the US government to just become so much of a sugar daddy to all aspects of society. And no one has ever forced the guns or butter decision, it's guns and butter.

Because the dollar's the world's reserve currency, it's gotten us into the habit of spending anything and everything all the time. The Fed becomes the buyer of last resort for a lot of things, at least it has over the last 20 years, colloquially known as the Fed put. The Fed will provide a backstop to anything going wrong with the economy. Now, there comes a point where- So we just watch it go off the cliff. Well, we got to stop. We got to do something. But we don't want elections if you try to do something. That is the disadvantage to a republic.

Yeah. I have a collection of German marks from the 1920s, the currency of Germany. This is the Weimar marks? Exactly. And the first ones, the one, five, 10, 50, beautifully done, very well printed. You definitely see some effort went into making those bills, but then you get to 20,000, 50,000, a million. And then they just took the million ones and re-stamped them one billion marks. Okay?

And you see the destruction of a currency and the destruction of a society because you took very normal, very orderly Prussian German society and they elected Adolf Hitler because of that economic destruction. So we ignore that kind of debt insanity at our own peril. Yep. You can go back to the Roman denarius, little by little you started seeing the silver content get smaller and smaller and smaller. So there's been, this isn't something that we haven't seen before. But it never ends well. It never ends well.

But let's understand this, right? So the big, beautiful bill passed the house, it's going to go through reconciliation. Hopefully members of the Senate will take a more thoughtful approach and remove the extraneous things that we don't need. I'm hoping. But let's also understand that the Republicans have, you know, what, like a two-vote majority or a three-or-something vote majority. I'm sure that there were members of the Republican Party that said, look, oh, by the way, the Democrats all voted against it. Right? So it's basically along party lines.

And so to win over a certain number of Republicans, we had to offer them some concessions. This is how, you know, this is just, I'm not saying it's awesome, on the contrary, I'm just saying it is what it is. What do you do? So it's gonna go through the Senate. Hopefully they go through a thoughtful reworking of this

and it's not another four trillion on our debt. It's a lot of money. That's another 10%. Jeez. All right, let's get back to Taiwan. On that happy note. Yeah. Wow.

That's great. What other countries are concerned with the potential of China taking Taiwan? Are we the only ones that are really that concerned? Us, Japan? I mean, Australia's got to be. Japan is very concerned. Is anybody doing anything? Because Taiwan was a Japanese colony before the war, right? And if the president, I think I was told this,

the president of Taiwan, when they visit Japan, they speak Japanese. There's a lot of Japanese spoken in rural Taiwan to this day. The one country in the Pacific Rim that China fears is Japan. Because Japan, or you have Han China, that's a race of people. Japan is different. Japan is Mongols on an island. If it's one thing that terrifies all Han Chinese is Mongols. Mongols on a peninsula, Korea, Mongols on an Island, Japan. And the fact that Japan has woken up and is starting to spend serious money now and with the magnificent efficiency,

magnificent efficiency, right? Toyota level production efficiency of Japanese made weapons. Japan can be a significant deterring force and we should let them be. We should not expect it to be all US Navy all the time. At a recent exercise, Japan showed up with their flagship, I think it was the Kaga, which was the old command ship of the Imperial Japanese Navy. It's good to let a little bit of that Japanese warrior tradition return. return? Korea, Japan, Australia, and the Philippines are the ones that we should most closely follow. I'm concerned politically about where we are with the exception of the Philippines, and I'll explain. I'll begin with Japan. Japan's prime minister, well, he's part of a political party. They're called the LDP, and for the first time in quite a while, they don part of a political party, they're called the LDP. And for the first time in quite a while, they don't have a majority in parliament.

The second party that's there is called the CDP, and they are much more conciliatory toward China. They're not necessarily in favor of growing the defense budget. And so, Ishiba the current prime minister has to sort of appease the various constituencies in Parliament so he's not a strong prime minister like Prime Minister Abe was several years ago. That's Japan. Korea is a disaster right now. Former President Moon had martial law. He's in jail. He may face many years in jail,

up to potentially the death penalty. There's a snap election that's being held next week. Why is he in jail? Go ahead. Because China works on their neighbors. Massive political subversion in all these countries. You see it in Japan and it was especially the case in Korea. And the reason that prime minister tried to act was to cut off that subversion. And North Korean as well. Correct. And in that case, you see China, North Korea very much cooperating to undermine South Korea politically. That's the vulnerability of a democratically elected government is the ability for outside forces to screw with it. That's very much the case in Korea. For the first time we've

seen in many, many decades, where that goes, you might see a devolution of democracy in Korea where another right-wing strongman takes over to say, we're not going to live with left-wing subversion of the country. And right now, the left-wing guy, there's an election next week, and the left-wing candidate whose name is Lee is favored to win. And this candidate is considerably more sympathetic toward China than his predecessor. So you've got Korea in a state of political turmoil. You've got a relatively weak Japanese prime minister because he's got to balance the different factions. And in Australia, you have a prime minister, Albanese,

who again is much more conciliatory. He's from the left wing sort of labor party side of the equation, who values non-interference in Taiwan and, you know, non-interference. Well, nobody wants to get into World War III. Like, I certainly don't. I don't think anybody does. But you can't sort of signal that you're not going to interfere. Now, I'm not saying he has, but he comes from the political party that has been,

you know, again, much more conciliatory. Let's not, you know, let's not muddy the waters with China. Let's just keep things on an even keel basis. Summers here, and if you're anything like me, you didn't spend the winter just sitting around. You stayed sharp and kept moving. And now it's time your gear caught up. And that's why I want to introduce you to Roka. I've been looking for eyewear that can handle any situation with performance and style.

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A lot from China. Chinese and Indians, which don't really subscribe to the same old Aussie values that you would imagine and especially the Chinese business class. It's been both sides of the party, both sides of politics. The right wing has been sellouts to corporatists and low labor cost, importing of labor. Yeah, Australia is also in bad shape that way politically. So Australia's economy is very dependent on selling iron ore to China, selling natural gas to China, selling agricultural products to China. I mean, it's a giant continent with very few people

that has a lot of natural resources with pretty much one buyer, right? And so I think the business community says, hey, look, let's not create waves here. So I'm not sure that you can count on 100%. So it's us. It's basically us. And the Filipinos.

The Filipinos are awesome. Yes, but there's no there there. They have no ability to project power. I mean, I'd say the only good thing I've seen the Filipinos do is they actually bought a Russian Indian hypersonic anti-ship missile called the Brahmos, which if they roll it out will actually provide some deterrence because that is a missile that would smoke a Chinese warship.

My biggest hope or confidence in an ally that would come if Taiwan goes is Japan still. So if you look at the map, have you seen this map here of this is, here's China, here's this line where they basically claimed pretty much all of this territory. It's very far away from China. This is Palawan and over here, there are a bunch of little islands. Not even islands, they were just reefs. At low tide, you'd see one foot of reef or sand sticking out of the ocean and then at high tide, it goes away. Then all of a sudden, the Chinese said, oh, let's build something here. This is China. And they blew up a millennia's worth of coral reef to build islands.

And you see these islands, you can Google them. They are incredible. With runways, you can land a 747 on, missile defenses. Naval bases. Basically, they built full-on military bases all through the South China Sea. And in my travels in China, I met the CEO, I was drinking with him one night, of China Harbor and Dredge, the state owned enterprise that built most of those islands.

And he admitted, he said, it was never in our grand plan to be able to do these islands, but we found the Obama administration to be so vapid, so useless that we just said, go. And they did. And they built now dozens of bases claiming tens of thousands of square miles of territory now as Chinese territory to the detriment of- The Philippines, Vietnam. Philippines, Vietnam, Malaysia, all these guys. And so here you have little Filipino fishing vessels trying to do their thing.

And then the Chinese Coast Guard comes in and literally shoots lasers at their eyes or water boards them or rams them and in Philippine territorial water. And I say it's Philippine territorial water because in 2016, the United Nations proclaimed an edict saying that, yeah, this is- It was a law of the sea trial based on 500 years of admiralty law. Clearly it was Filipino territory. Yeah. And so China says that because an admiral in the Ming dynasty named Zheng He traveled

there that this is all belongs to China, which is complete nonsense. So, we could- So they're not only building these islands just for the militaristic advantage, they're also, they're expanding the borders. Of course. 100%. And in that, they're doing geoscience exploration-

They're actually playing by the rules. For drilling. Playing by what rules? Playing by the rules. We're drilling. Playing by what rules? Playing by the rules? No. The rules say that- Who's recognizing these borders then?

The border gave- so the UN said that the border belongs to the Philippines. China said, oh no, it does and it belongs to us. We don't care what the UN says. So China lost their case. What matters is- There's no consequences for them, are there? Correct. Correct. And it started with the Obama administration not delivering any consequences because China first said, because Washington believed the lie when China said, oh, these are just going to be

weather stations or search and rescue locations. Yeah, no, they were full on military bases. And now they're even pushing into Korean waters. Just two weeks ago, they plunked down a used oil rig saying, well, it's just a fishing station. And of course, I'm sure within months, you'll see missiles, radars, all the rest on this jackup rig just off the coast of Korea. So they are expansionist, it's called salami slicing. They take very thin slices and they just keep moving the fence. Trump in the first administration, China was like the neighbor that builds their fence into your yard and moves it a foot a year. And Trump's the first one that said, get the hell back on your side of the line. And so what he's been doing on trade negotiations, all the rest, has definitely

put them a bit on their back foot. I think one of the heroes in the Trump administration, the Trump 45 administration was Matt Pottinger, who was a former Marine, lived in China for many years and ran the China team at the National Security Council and then became the Deputy National Security Advisor. He's now with an outfit called Garno Global and they write lots of research pieces on what they expect to happen in Asia. And Matt thinks that we're, I'll quote actually Admiral Paparo here,

who runs the Indo Pacific command. Uh, you know, we've heard of the boiling frog analogy, but this is boiling at a pretty rapid rate. And that's sort of Matt Pottinger's conjecture as well. Things are going to get heated very quickly. Uh, and we should get our game on. We should be preparing as if something really bad is going to happen soon. Hopefully it doesn't. Nobody wants to be in another forever war, but we should be preparing as if something may happen.

And the Chinese government is making some very unmarketed decisions in preparing for war. And if you look at Xi's speeches, not the ones that they're necessarily public, but the ones that are eventually located and translated when he's speaking to the Standing Committee or the Politburo, he says, prepare for a great conflict. This is gonna happen, very obvious. And things like Chinese state-owned enterprise, if they have land holdings in the United States, a lot of real estate stuff, yes, there's problems with Chinese owning land in the United States.

In a lot of cases, they're dumping it for pennies on the dollar. Their banks are dumping their aircraft holdings for their leasing companies. They are taking all kinds of steps to make them not exposed to dollar sanctions and to having any of those assets seized in the United States. So those are the things that a country does if they're preparing not for economic war, but for actual kinetic war. Yeah. And we can double click on that because there's a lot to unpack. Here's the Chinese embassy in the US right around the time when we were

starting to talk about tariffs. Quote from the Chinese embassy in the US, if war is what the US wants, be it a tariff war, a trade war, or any other type of war, we're ready to fight to the end. It's pretty self-explanatory. Um, so, um, there are, there are many, there are many vectors, uh, that we

need to deal with, but when you've stored 70% of the world's corn, uh, as they have. Why do you do that? When you've built enormous hospitals in Fujian province across from Taiwan, why do you do that? When you have increasing, you know, you're tightening the noose in these military exercises. What began in 2021 with one brigade has now reached 42 brigades in these military exercises over time.

Exercising logistics. Like a rehearsal for D-Day. That's exactly right. These are rehearsals. These are not military exercises. And what's happening is a communist Goliath, right? Is taking over like a small little David who is democratic. And, you know, we're sort of in a quandary because if we step in, whether it's a blockade, a cyber attack, internal strife, a full-on invasion, whatever it is, and I don't pretend to know, I can see different sides of this equation. If we don't step in and we allow China to take over,

there are consequences to, as I mentioned earlier, for our economy, for semiconductors, and frankly for our standing in the world. People are going to say, you see, China's going to say certainly, look, the United States is a paper tiger. If we do step in and they sink in Arleigh Burke, gloves come off and it's game time. That's bad too. So any way you look at it, it doesn't seem good.

What do you guys think? Well, actually- Porcupine. Finish up. What should we do? Porcupine. Don't give them the playbook they're expecting. The one, the terrible thing about the Pentagon

is they are very predictable. They're predictable in their acquisitions, in their exercises, and all the rest. The whole PACOM strategy about carrier air wings and long range bombers out of two or three locations in the Pacific, all of which, if it's one lesson people should learn from Ukraine is anything that's located can be targeted by not a few, but by hundreds of precision weapons almost instantly. Yeah. Okinawa and Guam get smoked. Yes. And what are those? The key bases. I mean, Okinawa is Japanese territory.

Does that automatically trigger Japan to raise that battle flag? I don't know. But the one thing that China can't necessarily account for, and I really hope they do this, the Taiwanese leadership deludes themselves in thinking Big Uncle Sam has all the solutions and the US Navy is going to come to the rescue. Is that their plan? I think so. Have they got an idea?

You should ask any Taiwanese official, what is their plan? In the American Revolution, where you had 13 colonies, farmers with no standing army took on what was then the most powerful military in the world. They did it not really by conventional, but they started with a guerrilla war. 30% of America in 1776 was in favor of the crown, loyalists. 40% were in the middle, didn't really care, just trying to survive. 30% were pro-liberty. 10% of that 30% or 3% are the ones that took up arms against the British Empire. 3%. So if we took, and I'm confident we can find 3% of Taiwanese society that is willing

to defend the status quo, meaning Taiwan continues as it is, not an independent country, but they're not going to be ruled by the CCP. And you can find those by either a few motivated policemen, firemen, reservists, the CrossFitters, the marathoners, the Boy Scout leaders. It doesn't take that many, 3% of that society. So that's, I think the standing Taiwanese army is like 150,000, largely worthless, very soft, very woke. Any significant weapon system they have has already been targeted by probably a dozen or pre-registered by a dozen Chinese precision weapons because it's only what 70, 80 miles from the mainland to Taiwan. But what they can account for is 720,000, right?

Three percent of 24 million that show up, that step outside their house and say, get off my yard. And if they're equipped, if they have access to small arms, EFPs, a very potent roadside bomb- Emergency comms. Emergency comms, drones, fiber optic drones, which can't be jammed, RPGs, and the innovation and the basic skill sets to make every street corner, every intersection, every neighborhood, another fortified urban hellhole for the PLA to have to push through, or even if the first

wave comes through and now they're getting lit up from behind, that is not something the PLA can plan for. Because if China's going to go for this, they have to make it quick, they have to own Taiwan in a matter of days or weeks. They cannot accept the blockade or the embargoes that would happen and the videos of Taiwanese people being slaughtered by this terrible occupation that inevitably would happen. Another side to this coin is the headline numbers. Taiwan spends around 2% of GDP on defense. They're trying to increase it. I think the Trump administration is saying, hey, get it to 10%. The problem is that the current political leadership in Taiwan is hampered by the fact that Congress is controlled by the opposing party.

And the opposing party is kind of sort of in bed with China. And they're resisting any attempt to grow the military budget. Now, for years, Taiwan has bought things that don't make sense, like tanks and, you know, advanced aircraft. I think Eric's exactly right. They should focus on a domestic defense. And there's a guy. Switzerland on steroids. Yeah. There's a guy named Robert Tsao, who is I think an octogenarian billionaire, United Semiconductor, if memory serves with his company,

is trying to stand up a homegrown militia outside of the government. But that's exactly what they need. Be a porcupine and give China pause. So China says, gosh, do I ingest this or am I going to get heartburn if I do? And that's the only thing that's going to save us. Because China is also not immune. You have a huge amount of one child policy families. They're not immune to losing lots of casualties. And they aborted all the girls. Correct. The females. There's 40 million males of marriage age with no prospects of marrying a female. So here's the thing, it's really about increasing the pain calculus for Xi. All the generals around him have all bought those positions because they buy those positions

for corruption because they get to pocket. That's why there's been a significant turnover of a lot of those generals of the strategic rocket forces and those Eastern commands because of those high level corruption stuff. But still, every general there saying, yes, boss, we can do this. We've got all this new tech. We've got this great capability. Go, go, go. Let's go flex our muscle

and take back Taiwan. But the injecting that uncertainty of a few hundred thousand, possibly really pissed off Taiwanese that have the basics of arms, the basic of skill sets and the will to defend their status quo freedom, that is a very, very difficult thing for him to look past. It doesn't involve American soldiers. It doesn't involve American carriers. That should be the United States government's policy to arm twist Taiwan into doing that because this is a matter of political will.

We're not looking for the government Taiwan, Taiwanese political leadership to do this. It's really about empowering the rank and file people that say, yep, this I will defend. Well, let's add to that. How do you strengthen your cyber defenses? Taiwan imports pretty much like 98% of its fuel. When the sea lanes are cut, what do you do? Well, you need to have storage. Can that storage get cyber attacked? Can your electricity grid, can your water systems, can they get attacked? The short answer is of course they can.

They import how much of their fuel? Well, I mean, they did they close their last nuclear plant? I don't understand that. Why would they have done that if they're importing 90% of their fuel? Because they worship the green God more than they worship any other common sense. This is the current political party. The DPP is very green. Very woke. But we're trying to understand them in American terms. They're green and woke, but they're also pro-Taiwan and anti-China. The other party is pro-military and more conservative, but they're like kind of in bed with China.

So it's a very strange and fluid situation. So even the Taiwanese are split. It's a democracy. Oh yeah. Yeah, Taiwanese are split. It's a democracy. Oh yeah. Yeah, yeah, sure. It's a democracy. I mean, when it comes to China. Some of them are pro-China.

But here's the thing. And I have to segue here a minute. Where's the last place Gavin Newsom visited? China. When you see Trump taking a hard line against the Chinese Communist Party, the Democrat Party of the United States will adopt a much more pro-China policy and you will see more illicit money flowing to Democratic candidates.

If Gavin Newsom is their candidate, you can expect a very pro-China friendly politics. Like we said, the Chinese political subversion that you see in Japan, in Korea, in Australia, believe me, it's in the United States as well. The Thousand Talents Program, Massive Intelligence Collection, the United Front Work Program, again, Chinese subversion at the university level and through thousands of American corporations, that is a deliberate, it's an ancient society. They understand how to shift that fence six inches a year. Yeah.

Elite capture, you may recall Eric Swalwell, a member of Congress who was- On the Intel committee. On the Intel committee who allegedly had a relationship with a Chinese spy. You had Dianne Feinstein's driver for 20 something years was a spy. You've had a series of allegations in New York, various members of Congress, various important political figures. McConnell. Oh, McConnell's- McConnell's wife.

And so, elite capture is very important. Now, it doesn't only happen in politics, but also on Wall Street. Hedge funds. Hedge funds, Silicon Valley, major corporations. I've been trying to think about this. What large American company can you think of that neither sells a product to China or imports a product from China? It's hard, right? You have to really sort of scratch your head and think about it. Look at the stink China made about the last Top Gun movie

because on Tom Cruise's deployment jacket- He had a Taiwan flag. Was a Taiwan patch. Good on Tom Cruise for leaving it in the movie. Yeah. But that speaks to that level of institutional capture of Hollywood funding, hedge fund of Hollywood funding hedge fund dominance when you have Ray Dalio saying that, being making totally apologist statements for China during COVID, it's because he has billions of dollars that are managed from China.

So Ray Dalio runs an outfit called Bridgewater. Bridgewater is one of the largest hedge funds in the world. And in my opinion, and I think you sympathize, he's like an apologist for China. So you have elite capture politically, Wall Street, Silicon Valley. Now that's changing, and it's changing very quickly. Some of the sort of points of light that I'm seeing

is foreign direct investment that was being deployed into China is now leaving. Wall Street fund managers are starting to pull their money out. And certainly, whether the taxes are 145% today or 20% tomorrow, whatever the case may be, I'm fairly certain that in every corporate boardroom in America, the risk officer is telling the board, hey, listen, we should probably think of how to move ourselves quietly out of China to India, to Mexico,

or Abu Dhabi elsewhere, or certainly back to the United States. So these are some bright points that I'm seeing. And we do need to detangle and we can't have important parts of our economy held hostage to an adversarial nation. We just can't do that. The national debt is spiraling out of control. Trade wars are causing record volatility and inflation continues to rise. Are you prepared for what might be coming in the rest of 2025?

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No. Or any of these key components? On the defense side, there's a lot of defense tech going into, or VC money going into defense tech, but the fact is all the rare earth elements, all the minerals mined around the world, 90 to 95% of them are processed in China. The only functioning rare earth mine in the United States, it's called Mountain Pass, California. MP materials, yeah.

That offtake goes to China for processing. Because we don't do processing in the United States. Processing is dirty, not so environmentally friendly. It's difficult and the China has subsidized and built to dominance in that space. That's something where the USG should, they should take a section of Dugway Proving Ground in Utah where they used to do chemical weapons testing. Never going to build condos there. Let that be a free zone for processing rare earth elements where you can do the processing

of dirty, environmentally unfriendly things, but let it be in America in a friendly place that we control. That should be a, I'm all in favor of the free market, but the free market only works if it's actually a free market. You have state-sponsored controlled capitalism coming from China where they predatory land and they subsidize to the point of destroying Western competition. There has to be some level of state-level pushback in the West to counter that. And it's happening in everything. Solar panels. It's hard for us to compete in this solar panel

world when to understand how solar panels are made, you use huge amounts of silicon, tetrafluoride and hydrofluoric acid, right? So again, similar to processing of rare earth elements, it's not a very clean industry. Now, obviously, we can do it in a much cleaner way than China can, but they subsidize their solar industry. Was it last week or the week before? I think it was last week, a series of articles came out saying that China has put back doors, kill switches, and all the solar panels they're sending to the US. I believe that. Just makes you scratch your head and say, why? Why do we depend on China for things that are

very critical to our survival? I think, as Eric mentioned, pharmaceuticals, antibiotics, penicillin, these are things that we should not outsource. It's ridiculous. Telcom. Phones. Yeah. With, oh, it's a great, uh, not a great, scary conversation at breakfast. Do you want to go into that? Oh, salt typhoon.

I mean, I can like very briefly, this is all, it's all out in the open. You know, uh, FBI director, Chris Ray was it last year mentioned that, um, well, let me provide a little bit of background. After nine 11, um, uh, we needed to find bad guys. Um, and so we created the Patriot act and we asked the telco carriers to put in back doors so that we could listen in to bad guys wanting to blow stuff up.

Now, we can't access the phone conversations without a FISA warrant because we have the Fourth Amendment and we have rules and regulations that stipulate what we can and can't do. But the back door has existed for decades. Guess what? China hacked into the back door. Guess who doesn't need a FISA warrant

to listen into your phone conversations? And so that's when the FBI, and you can look it up, the hack is called Salt Typhoon. And we- Salt Typhoon. Salt, you know, like you salt and pepper, you know, salt Typhoon. So, um, yeah, uh, it's very, very well known. At least maybe to me or to us, but to most Americans, you know, they, they, I don't know.

It's like, I feel like people live in the matrix or something. Oblivious. If we do go to, if, if, if China does take Taiwan by 2027, like he says, what is our response going to be? How does this go down? How does China take it? They've been practicing, you talked about one brigade, now 42 brigades. They have been practicing a quarantine first, so a surrounding of the

island to make a resupply naval visit, whatever, cutting off the energy and basically laying siege to it. I can see them doing that to the point of forcing some kind of capitulation or is there a way to break that siege with naval vessels or with subsurface resupply, lots of creative ways? Or I would argue that immediately there's a lot of other things that should happen to China's global supply chain, whether it's all the gas pipelines flowing in from Kazakhstan, Turkmenistan, Burma, Eastern Mongolia or Eastern Russia, obviously full-on blockade of the Straits of Malacca so that nothing goes in or out of China and dial up consequences for any of the Chinese assets anywhere in the world almost simultaneously. That is not a normal conventional military response.

I can see China trying to do a massive decapitation strike of hundreds of helicopters flying into Taipei, seizing their White House and trying to do it that way on top of a quarantine. There's been pictures published of them building very long range or very long reach barges, like floating piers that they could offload multiple row-row type vessels that they would use in amphibious assault. There's an old frog man friend, mentor of mine, Tad Devine, may he rest in peace.

He surveyed all the beaches in Taiwan in 1959 as a UDT before even the seals existed. He said, there are no good beaches for amphibious assaults. So China has been building these very long barges right out in the open, able to, you can buy commercial imagery of them. There's no other earthly reason for those to exist other than to seize Taiwan. Full stop. So if we delude ourselves into thinking, wow, it's not going to happen, not going to happen, that is visual proof. It's almost like the mulberries that were used in Aramantras to build the portable harbor that we used in World War II at D-Day. That's what China is doing right now. Well, last month I had an exercise. It was called Straits Thunder. Why is it called Straits?

Hmm, maybe it's because of the Taiwan Strait. I mean, give me a break. I mean, it's obvious that they're planning for something and they want Taiwan. There is no place in my universe where China does not want to take Taiwan. I wish it weren't so. Do you think they would use a bioweapon

and create another global pandemic? It's possible. I can see some kind of other financial massive shorting of the financial system with the debt crisis. We're kind of doing that to ourselves now by adding more and more trillions of debt. If they can cause that level of financial pain and chaos. What's not gonna happen is, if it is to be, it's up to we,

it's gonna be the US government. Because the Australians are not gonna do much. Maybe Japan, probably not Korea. Because Koreans and Japanese, they hate each other. As much as Korea should be involved in that fight, because they're either join or get squeezed off on their own, NATO, Britain, France, totally useless, which is why it is so important. It is in the interests of the United States government to end the debacle that is Ukraine and pull Russia away from the orbit of China. Because right now, I talked to one head of state that had been at every BRICS meeting, every BRICS summit. And the previous ones were

always very equal footing between Xi and Putin. The last one, Xi was definitely ascendant. And for a hundred plus years, it was a policy of the United States to keep German industry from combining with Russian natural resources. Now, all we've done, all this stupid Ukraine War has done is push Russia, all those Russian resources into a subservient role to the Chinese Communist Party and their massive, massive industry. That is not in our strategic interest. We do not want to tangle if China is going to go for it. We don't want Russia on the side of China in any way, shape or form.

That we cannot handle. Well, you asked how could it go down or when would it go down? These are, I guess, two different questions. The latter question, I don't know. Nobody knows. It can happen next week. It could happen five years from now, but it's going to happen at some point. How it happens?

I suspect that a full-on Invasion would be very difficult If you go back to World War two, we had something called Operation Causeway Which was a an invasion of Taiwan and our military leader said you know what this is way too hard So let's go to the Philippines instead Taiwan is a hard nut to crack could it happen with a combination of cyber influence operations? Eric mentioned very briefly, you know, United Front and Thousand Talents. You may want to explain what those are, but these are

basically spies. Massive spy network infrastructure all through American companies, infrastructure, all the rest, the ability to really cause mayhem in the United States at the behest of Beijing. But the thousand talents and United Front work doesn't just leave the United States. You also have United Front spies in Taiwan. What I'm seeing is that these exercises are getting, they're slowly tightening the noose to the point where it's becoming demoralizing for the Taiwanese and what I would hate is for them to see this, to resign themselves to say, well, to the inevitability of it, right? It's inevitable anyway.

We may as well just give up. And so they become despondent. And I 100% agree with taking 3% of the Taiwanese population, arming them to the gills and creating a real insurgency that gives China pause. As to our response, I don't know. And that's a really tough one because if there's a blockade, the international community is going to want attribution. Well, who started this? Right? Well, if they started it, then there's an appropriate response. But I don't think we want to start anything.

Uh, and I don't think we want to put ourselves in the position of having sailors and soldiers die. I mean, look, let's face it. Many Americans can't tell the difference between Taiwan and Thailand. And like, why should we care? That the narrative, the high level narrative is why should we care? And you explained it at the beginning, both of you guys did. We lose our economy.

Chips. Chips, our economy. US dollars no longer are standing in the world. Hard for most voters to understand that. They win the tech war and become the global leader. Agree with all that. But you're right about the salami slicing that you've seen them do with the South China Sea,

building islands where there are no islands, moving boundaries. Now with an oil rig just off of Korea, maybe Indonesia, those waters are next. The amount of air incursions where they fly Chinese aircraft, PLA Air Force aircraft into Taiwanese airspace, fly around, it's very hard to even intercept them. That's my frustration with Indopecom or the Taiwanese leadership.

Be innovative, okay? Clack off an IED in front of that Chinese, that squadron of aircraft. Not shoot it down, but there's a way you could build effectively an airborne IED and put a cloud of grit up in front of those engines so that every one of those engines of those Chinese fighters has to be overhauled and replaced by the time they make it home. You can really up the cost of their nonsense if you're innovative, but if you depend on Raytheon, Lockheed, Northrop, Boeing, you're screwed and you're going to pay a hundred times as much and not have the effectiveness.

Pete I agree with that. Look, I'm probably talking my own book here, but we have a fund, it's called Mari Libram, which means freedom of the sea in Latin. And what we do is we invest in technologies in the maritime space that can help move the needle. So you might say, gosh, is an aircraft carrier gonna be really effective against a Chinese hypersonic missile? Maybe, maybe not, but can you put drones,

let's call them, you know, raceboat drones in the water that are autonomous, that can carry kinetic payloads? Could that move the needle? So, you know, we have to think creatively, as Eric mentioned, and sort of holistically, but what we certainly need to do is we need to prepare as if this is happening yesterday, right? But what I see is a lot of threat de-escalation. Like, to give you an example, a month and a half ago, what's his name? He Weidong, the guy that the Chinese military leader that runs the Eastern

Theater Command was demoted and he was sort of removed from office. He was actually pretty good. And so the China scholars are like, okay, good, they're not ready for Taiwan because Ho Weidong is gone. And so let's just deescalate things. And it's just so foolish. Let's plan as if this is going to happen and be prepared for it, both as a whole of society, our cyber, Taiwan's cyber. Our infrastructure is not immune, by the way, from cyber attacks, to say the least. Are you talking about our power grid? 100%. Yeah.

Power grid, telecom grid, banking. Oh. Yeah. I mentioned salt. If it involves moving ones and zeros, it's vulnerable. I mentioned salt typhoon. You could probably Google volt typhoon and the Chinese are embedded in our grid already. So I think we just, my point is- Oh shit, they built half of it.

Yeah. I mean the large transformers in our country. So let's just prepare. So we have to think about how do we prepare for this economically? What are defensive and offensive things we can do? How do we prepare for this militarily? How do we prepare for this socially, medically, right? Pharmaceuticals and so forth. How do we decouple and start thinking through the range of options that exist, but actually prepare? You know as if we're in La La Land and focusing on silly things. Remember when we were banning gas stoves two years ago? You guys remember that? Like, nonsense. And the Pentagon was spending all kinds of money on green, environmentally friendly jet fuel. So kudos to Secretary Hegseth for focusing on merit and lethality.

That's all the Pentagon needs to be focused on. We have an extremely convoluted, ineffective defense industrial base, which has largely been cartelized by way over consolidation and really bad, really dumb Pentagon procurement processes. So what they should do on the shipbuilding side, we have, there's lots of family owned small and medium enterprises that build ships for oil and gas space, for the exploration space, for servicing lots of remote islands. So there's lots of companies they could go to with three or five designs of autonomous underwater vessels or very low profile, stealthy, unmanned vessels so that instead of what,

a hundred Burke class destroyers, a hundred Burke class destroyers could have a thousand or 5,000 autonomous unmanned other weapons platforms that you have a massive swarm. P for plenty. America, America's main contribution in World War II was our industrial base, was innovation pivoting from making cars and refrigerators to making weapons, making a major combat aircraft every six minutes, making a Liberty ship in a week was the record for assembly. That is what the Pentagon should pivot to now and to do anything through the existing Boeing, Lockheed, Northrop, Raytheon, General Dynamics cartel is a massive

mistake. Now again, they are incented to do things based on the game that they have to play. Right now we have cost plus accounting and the way, cost plus contracting and the way it works is it's the way the system is set up and we may hate it, but it is the system, like in their defense. And by the way, I'm as opposed to them as you are, but in their defense, and by the way, I'm as opposed to them as you are, but in their defense, the cost of a missile is, let's say, a million dollars. And so they charge a markup. It's cost plus a little markup. The next year, what are they going to charge? Well gosh, I got to grow my stock price.

So I guess my costs went up to $2 million plus the markup. They're incentivized to raise cost every year. Right. And I'm sorry, I don't hold them blameless at all because they employ, effectively, a brigade's thousands of lawyers and lobbyists in Washington DC. They do. To change the law to their benefit. Yeah, yeah, they do. To get Congress to appropriate way too much money to the Pentagon that spends it on that

cartel who then take some of that money and pays the politicians to rinse and repeat. They are a huge part of the problem. What do you think is going to happen here with all these newer tech companies, these new innovators coming in like Palmer Lucky with Enduro and- I think it's wonderful in theory, but the fact is there's 800,000 Pentagon's in the civilian. As much as Pete Hegseth and team wants to change the culture, you still have a horrifically awful procurement culture.

There's a lot of great defense tech that's starting and innovating and have a great product. Getting them to production, getting them to production, getting them to a DOD sale, not going to be nearly as often as it should be. I think a lot of great ideas are going to die on the vine. There's some great companies. You mentioned Ceronic, which we invested in. There's a company called Regent that makes a sea glider that flies below radar and above sonar with a very, very long range, essentially invisible.

But also make a great long range cruise missile. Exactly. Or logistics platform. But consider, if you're a founder, you're a startup founder and somebody says, hey, sell to the Defense Department. It's so overwhelming. The ultimate, the desired end state is to get to what's known as a POR, a program of record. So the Navy or the Army will give you a 10 year contract for a hundred million dollars each, whatever, each year.

To get there though, you have to navigate through this very complex world, and you never know how you're gonna get there. So maybe there's a Navy group out of Jacksonville that can give you a CBER. Well, what's a CBER? It's basically a small grant. Oh, DIU, the Defense Innovation Unit, might be able to fund you over here.

And so they're living on nickels and dimes to ultimately get to program of- They're living on R&D money. I would argue the explosion of drone technology has been so pervasive in air, ground, and even maritime, lessons learned from the Ukraine war. The real ninja move would be to push procurement decisions down to the destroyer squadron level or to the brigade level. Even to the combatant commander. Yes. Like, fine.

Again with that. Because what we have now is a super hierarchical, talk about a program of record, that is a super kind of socialist bureaucratic hell in Washington that takes forever for them to decide. And instead, if you give it to the brigade commander or combatant commander to say, here's money, we're entrusting these 10,000 or 50,000 American lives to your responsibility. Oh, by the way, now you can buy their stuff

that they're gonna use. Great. The 25th Infantry Division in Hawaii is probably not going to go appear on the same battlefield that the 1st Armored Division is from Texas. Fine. Let them buy different stuff. Yes, it will cause permutations of hell for resupply, but the half-life of this kind of innovation is so much faster than what we want to believe that you can buy it cheaper if you buy it at a lower level faster versus these program of records, which add so much cost and so much nonsense. You need that kind of speed. The innovation speed in Ukraine is a guy

gets an idea because they're getting their ass kicked in the battlefield. He comes up with a prototype in their garage, tests it in the battle space over the next two weeks. If it works, they get a contract. That is the shortest compression of flash to bang in warfare today. And we're a thousand times that long on the best day now. And thus a thousand or 10,000 times the cost. If it takes 10 years to get to a program of record and the program of record folks say, well, gosh, we can't give you a program of record

unless you can scale, but you can't scale unless you've got like a contract with the government, right? It becomes this crazy catch 22. What you're suggesting, Eric, is that we democratize- Purchasing. Purchasing. Yep.

And you allow these individual units to buy exactly what they need. How does the Pentagon, how does a bureaucrat in the Pentagon know what need. So I think that's a thoughtful approach. It's controversial, it's necessary because the current paradigm is not it. It was absolutely destined to fail. If we get into a conventional conflict with China right now, we will suffer calamitous levels of casualties. We can't build stuff anymore. You've had for all the talk of naval greatness and precision targeting all the rest, you lost the war to the Houthis.

The Houthis shut down, right? It's a Iranian-backed faction in Yemen, Shia-based, that closed off the Red Sea for navigation because of Israel and Gaza. The president, I think they called it Operation Rough Rider, which is an insult to Teddy Roosevelt because it did not affect the change they wanted. They went full, hot and hard. All the power of CENTCOM, US Navy, Air Force bombers, all the rest, they were still clacking off and attacking ships. And true asymmetry, the Houthis would launch a In true asymmetry, the Houthis would launch a $20,000 to $40,000 shot head 136 drone against a ship. And we'd shoot it down with a missile, million dollar missile.

Not one, but two, okay? Because they'd have to double tap it. To the point, and obviously they were shooting at aircraft carriers and shooting at them effectively enough that they had to do high speed maneuvers. Why? Because they lost not one, but two ships, two aircraft, okay, at $80 million F-18 over the side because it was not dogged down, it was being towed across and the aircraft literally skidded off the deck. Not once, but twice.

You raise a super interesting point. We talk about near peer adversaries and we tend to think of China and that, well, guess what? The Houthis are peer adversaries in the sense that- They're threatening ships. For a month, we rained a billion dollars of firepower literally on the Houthis in Yemen and they were like, okay, you stopped? Good. And they came out like cockroaches and started attacking ships again. So I guess the question then becomes- How good is our shit?

Yeah. Because we know it costs a lot. Thanks to Raytheon and Lockheed and Northrop, yeah, problem children. They need to be smashed, broken up. You had a massive over consolidation. You used to have a hundred plus major defense contractors. The Clinton administration really pushed a consolidation in the late nineties and we have been suffering ever since from that. Bargain of five. There's a good graph of that and you could see like on the left, you know, there are like a hundred and then they start like whittling down to like five or six. And it's basically a small oligopoly of defense primes.

And I don't know how that's not great for America. Let's just say. I mean, what do you see in venture capital? Well, what I said earlier, right? I mean, Serana, they're doing both. They're correct. They're also building for the civilian market that can just be modified. That the exact same product can be modified for the military. Look, you have some companies like Sail Drone that, you know, they make autonomous sailboats that can collect information for civilian use for NOAA and so forth, but then you can also make a

kinetic version of that. You know, others do the same thing. But what am I seeing? I'm seeing the same thing I mentioned earlier, which is you're a founder, you've got this amazing technology, and then when you get to the Pentagon, the Pentagon is a big black box, and you say, where do I even start? It's so overwhelming. Now, I think DIU is making great strides. They're gonna probably amplify their budget.

But the system itself, as Eric mentioned, the system is broken. And so something has to be done to reform procurement wholesale. Take it down to the studs and rebuild it because it's so broken. The secretary, the SECDF has to take it down to the studs as much as he can with hiring and firing people because people has policy, but then there's underlying law that has to be changed. Really the last time Congress did a big change on creating a service was I think it was MFP 11, so 85 or 86 when SOCOM was created.

Why did you want SOCOM? They wanted unique spending authorities outside of the major services so that SOF could have the right equipment, the right aircraft, the right boats, whatever, for the unique needs of special operations forces. And the right authorities. And the right authorities. 1985 or six, 40 odd years.

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leaked CCP memo, if it's fact or fiction about the Five Point Plan. Do you know anything about that, either one of you guys? I mean, I've heard about it, but anything leaked from the CCP is quite inevitable. I think it's, it could be fictional. I'm not going to, I don't spend a lot of time on leaked memos. Okay. Well, is there anything that we haven't covered that we should have? I think it's important. There was a couple of Chinese colonels, PLA colonels it's important. There was a couple of Chinese colonels, PLA colonels, that wrote a book called Unrestricted Warfare. And after Gulf War I, seeing all the precision strike capability, the air, all that, and then even after the 2003 Iraq invasion, seeing the level of precision energy that the US can deliver,

I think it made China take a step back and say, if we're going to take on this hegemon, we have to do it in an unconventional, unpredictable way. My worry is that Pentagon leadership My worry is that Pentagon leadership likes to fight in their box of the rules-based order. All the people in Washington DC also always talk about the rules-based order. Well, you know what? The first rule in a street fight is there are no rules. And unserious people that delude themselves lead us down a kind of a blind path of stupidity if we think that China is going to follow all the rules to achieve their goals. So when I think of the rules based order, I think of the British redcoats who would

stand in like two or three lines and say ready aim fire. And we were taking pot shots at them from the trees and they would say, that's not gentlemanly. And we're like, so what? We just want to win, guys. But this book is actually, it's very important because when China thinks of war, they think that everything becomes an artifact of war. In other words, we think in terms of war is kinetic, but diplomatic stuff is diplomatic stuff.

And climate change is that, but diplomatic stuff is diplomatic stuff. Climate change is that and data is that. But what if everything were an artifact of war? In other words- Everything is weaponized. ... smuggling fentanyl in the United States, where 90% of the precursors of fentanyl obviously come from China. By the way, happy Memorial Day. I did some math and in the Pacific theater alone 110,000 soldiers died in World War Two

plus add another 60 for Vietnam another 40 for the Korean War and Another roughly, you know seven to ten from random things that happened in the Pacific, the Philippines and so forth. It's about, let's call it 200 plus thousand deaths. In fentanyl over the last four years, we've had something like, you know, 70,000 people die of fentanyl every single year. Many of them are veterans. Much bigger numbers than that. I think it's over 100,000 a year. Let's assume it's 100,000 a year.

That's 400,000 over the last four years. A lot of them are veterans. Guess what? That's coming from China. That's a weapon. It's a weapon to hurt Americans. It's an intentionally funded, organized, facilitated by the Chinese Communist Party, Chinese nationals in Mexico teaching the cartels how to cook fentanyl. And it's a payback for the opium wars of 150 years ago, which the US was not even really part of, that was the Brits,

but they see it as a way to corrode our society. I think it's very important to remember we fought a war against China when, 1952, 53, when a million Chinese volunteers came mooring across the Yalu River and attacked the US forces in Korea. MacArthur wanted to bomb them properly, and he was relieved. And we basically fought for two more years to a stalemate, again, ending up on the 38th parallel. But we fought a very hot war against China. We haven't fought one against the Soviet Union. And their ability to project tens, hundreds of thousands of people,

their tolerance for pain is much, much, much higher than ours is. Yep. What edge do, I just don't understand what edge we have on them. Innovation. They have infiltrated our power grid, our communications, the fentanyl crisis, they're buying our land. I

Mean the medical supplies the whole supply chain Elite capture our what the fuck are we doing? our sergeants our 03 captain Bricks that fine. Militarily, our middle management and NCOs are way better. It is not something that- I'm not going to argue that, but they get so frustrated with the bureaucrats up top that they leave.

Correct. Fair. But there's still a lot of them serving. The decision-making of a Chinese communist party, one state rule where no one questions, no one questions the boss, no one calls bullshit on bad decisions, where every decision is not made by the people here, where it should be, it's always kicked upstairs waiting for someone senior to them to make that decision really paralyzes their decision making. And you even see that, I remember probably eight years ago, there was a knife attack from some Uyghurs, okay, which is a ethnic Turkic Muslim part of China from Xinjiang

province. And they did a knife attack in a major Chinese city. It was so bad, so bureaucratic, the controls that the police that responded, one guy could carry the pistol, another guy had to carry the magazine. They had to call back to headquarters to have permission to hand the magazine to the guy to load the pistol. This is during a full-on knife attack to solve that problem. Amplify that a thousandfold across the Chinese military. Now, autonomy, maybe that accrues back to their benefit because they're not so worried about friendly casualties and friendly fire and

collateral, but we have an innovative populace that will come up with new solutions. Look at Elon Musk, what he's done to space lift and space travel versus the all government, all the time solution. You need to find a hundred more Elon Musk's amongst all these defense innovative companies, give them money, give them leeway and great great things will happen. If we depend on the cartel that is the big five defense industry, we're screwed. I think at a macro level, one of the things that we still have is the ability to attract and retain the best people in the world. Elon Musk is an example, but there are many others.

You go to Silicon Valley and it's really, really smart people that go to Stanford or MIT or whatnot, and they stay here. Plus, we have an enormous appetite for risk-taking. The risk capital that we have in the United States, the venture capitalists and so forth, are able to, they put money into companies because one of them out of their portfolio of whatever, 15 companies, is going to be a unicorn.

And so we have an ecosystem from the capital markets, the IPO markets, the strength of our financial and commercial and private sector infrastructure is so strong that I don't think anybody's going gonna beat it. And I think, as I mentioned at the beginning of this segment, the battle of ideas, competition, ultimately will win the day. And when you have the smartest people in the world competing for the best ideas, the best companies, et cetera,

we're gonna end up winning. When you have the state, in the case of China, directing all elements of economic activity, it's doomed to fail. That's why you have ghost cities of apartments everywhere and things that don't work. Long term we win, short term I'm much more concerned. And it also takes good leadership. If you think about the officers, the senior officers, the naval officers that defeated the Japanese army and Navy in the Pacific theater, they had guys like Admiral Burke. They called him 31 not Burke. Court-martialed as a junior officer

because he ran a couple of his ships ashore, but he was a decisive risk taker. Nimitz, I believe, was also court-martialed as a J.O. for some risky decision. We have a very risk intolerant culture in the military, and we promote bureaucrats that don't make any decisions. Well, at the same time, the lack of accountability, if you think about like 2000, 17, 18, 19, there was three fatal collisions in the Pacific theater between the US Navy warship and a commercial vessel. So you take a Burke class destroyer, which is what, a billion dollars or more with all kinds of high dollar radars and all the rest doing maybe 20 knots, commercial vessel doing 25 knots, and they run into each other. How is that possible? That is the disgusting degradation of the basics of seamanship and accountability

that the military has been allowed to devolve to instead of focusing on merit and lethality. And that's changing. So, um, there are a lot of bright, bright spots on the horizon. I think, uh, focusing on first principles in the military is important. Uh, is an important component of that on the private sector side. I think we need wholesale deregulation. The regulations have, have gotten so out of hand that there's a reason why companies have moved overseas Let's deregulate to the point where things are sensible. I'm not calling for zero regulation But I'm calling this for sensible regulation. Have you seen any signs of that getting ready to happen?

Sure, we're about to you know We're about to unleash nuclear power in the United States Trump signed an executive order and the NRC, the nuclear regulatory commission, I think needs to get, you know, readjusted. It shouldn't take, I mean, 10 years to build a nuclear power plant in America. Or 20 years to get a permit, to get a license to do so.

So deregulation, unleashing the energy supplies that we have here and the mineral supplies. Um, we haven't talked about tariffs if you want to go down, down that rabbit hole. leashing the energy supplies that we have here and the mineral supplies. We haven't talked about tariffs if you want to go down that rabbit hole, but tariffs are a part of not exclusively, but a part of reindustrializing the United States. Where they end up going, nobody knows, but I can tell you that there is a rush for a lot of folks to start doing stuff back in America. The United States government used to be funded off tariffs alone.

It was not until the progressive era and they passed- So the early 1900s, right? Yeah. A bunch of- No kidding. Yeah, that's true. Used to be the sole income of the US government was tariffs, which gave a basic level of protection for domestic industries.

I think that is a very good idea. So what the president's doing on tariffs is right. It is good to incentivize production. The whole US government was financed off tariffs. 100%. Well, keep in mind, the US government was a lot smaller back then than it is today. Yeah, and it should be a lot smaller. It should be massively small than it is today. It's very disappointing they haven't made the Doge cuts permanent in our legislation.

It's disgusting. It speaks really badly to the Republican party, to a huge amount of those Republicans, to not even cut the most egregious, stupid waste. it speaks to the problems of the unit party and why Trump was fighting not just against the Democrats, but against most of the Republican Party because most of the Republican Party is as bad as the Democrats. So voters, when they go to their voting booth in another year and a half, they need to elect somebody that is fiscally responsible, because we have a lot of people that are not. And let's go to, just to pivot back for a second to the reindustrialization of the US,

and why one of the many reasons why Trump won, I think globalization over the last 30 years has benefited the elites living in coastal cities, you know, San Francisco, Palo Alto, Silicon Valley, New York, Wall Street, etc. But what it's done is it's hollowed out the industrial capacity of the middle of the country, and people, there was dignity, and still is, in being a welder, in working in a factory. But we decided that we would get it out of the United States, send it off to China. Hey, I've got to deal with quarterly earning cycles. I'm the CEO. And if it's out of sight, out of mind.

And what you have is a group of people in the United States that, you know, once had jobs and real dignity and now they've got nothing and now they're being fed fentanyl only to die. There's a desperation and a lack of hope. And I think we need to re-industrialize the United States. I mean, is textile manufacturing coming back? Probably not, but there's a whole bunch of stuff that can still come back. But I would even disagree.

Textile manufacturing can even come back with a certain level of automation or robotics. But in the 90s, when NAFTA started and you had a over-financialization, the entire private equity crowd that can buy a business with a lower cost of capital because they can borrow cheap, they consolidate four or five family-owned businesses, they gut the management of it, and then they outsource all the production to China because there's a free trade deal to do that. Yeah, those family businesses, the communities that they're in all suffer because of it, which is why a baseline tariff incentivizes people to make in America. that should be the law of the

land. So looking for hope and optimism on Memorial Day, we will at some point, I think it's baked into the ethos of the administration's, of this administration to re-industrialize. of this administration to re-industrialize. I think that we've opened the eyes of corporate boardrooms in America who now see that their China assets need to get moved. You may have seen Tim Cook made an announcement that we're gonna start moving a lot more Apple production to India.

You're seeing changes in the military focusing, as Eric mentioned mentioned on merit and lethality and first principles. Uh, and so little by little, you're starting to see, you know, the, the, you know, the cruise ship, if you will, if you want to call us a cruise ship, just moving slowly in, I think in the right direction in many respects, like it's not perfect, but, but we're, we're starting to move, but now we need to move faster because we have an adversary that is very formidable and we better wake up.

We're wrapping the interview up. I want to get your guys' opinion on what does the rest of the world look like if China were to take Taiwan? We talked about us. What does it look like for Europe? What does it look like for South America, us. What does it look like for Europe? What does it look like for South America, Africa? What does it look like everywhere else? For immediate Southeast Asia,

you'll see a scenification of meaning a Chinese control and tentacles into a lot of those societies with more social credit score and more of the big government rule of the elite far away from any kind of individual rights. In Africa, you'll see effective economic colonization in control. It depends on what the US role in the world. If it depends on what the US role in the world, if Taiwan being taken causes a massive bankruptcy in America and a complete reversion, that's a problem for the US government. But there's a lot of entrepreneurs in America that don't depend on the US government that

can still take American know-how, capability to go out and do innovative things. Right? American know-how capability to go out and do innovative things. If you think about what SpaceX is now, he's built a global communications platform to provide global internet. Yeah, NASA was his first customer, but SpaceX and that kind of innovation continues on. We still have 50 great states, 50 state governments that are well run. If the US government has to take a massive haircut in a write down,

so it's not all, we have a lot of fundamental elements in our society that will continue on with or without the US government. I've learned that the hard way over the last 20 years, that maybe less federal government is not such a bad thing. 100%. What does the world look like? A less free place. What does Europe look like? Well, Europe has other issues. They've got an imploding demographic.

They've got immigration issues. Many, not all, but many of the immigrants that have gone to Europe don't share, let's just say the European cultural values. I'll say it stronger. They're completely incompatible and don't belong in Europe. All right. And they're suffering from very high energy prices because they had spent decades, depending on Russian natural gas, while focusing on climate change and listening to Greta Thunberg. And now the Chinese electric vehicles, if they're allowed into Europe, are going to

decimate the German automotive industry. Which is already suffering from a much higher cost of electricity because they've embraced the stupid green lie. And for all the noise of Europe, Europe, Europe, Ukraine, the fact is they've continued to buy Russian gas at a dollar figure above any of the military aid that they provided to Ukraine. Come on. Wow. Unserious people. Yeah. So you've got a demographic issue, you've got an energy issue, you've got a manufacturing issue,

and it's unclear how Europe comes out of this. Again, I'm not a European political or economic expert, but you can just sort of read the tea leaves. They all have a demographic issue. Japan not replicating itself. Their population set to collapse. Korea, it's even steeper. China has a population collapse issue.

Taiwan has an even greater population collapse issue. Taiwan has an even greater population collapse issue. That's another reason if you don't believe enough in your society to procreate, to have kids, to leave kids behind, why die defending your Taiwanese society? That's a damn good point. That's a damn good point. So look, I still believe in Western Christian civilization that we've gone through rougher patches throughout 2000 years. And there's a lot of great heroes to look to in the past that can rally the people when necessary. I'm extremely thankful that Trump was elected and not to politicize this.

But again, we've had a very different paradigm of way he has tried to shift the country versus what Kamala Harris did. Elections have consequences and politicians don't last forever, but ideas and values should. And so, you know, this is still the best place on earth, United States. Yeah. And look, I'm a believer in American exceptionalism. We attract and retain

the best people. We've got a very robust capital markets and private sector. All we need to do is tweak a certain number of things to sort of get us all humming and all the pistons firing. And basically, I think we need to be aware. If anything comes out of our discussion, it should be an awareness that we don't live in a peaceful world. The Francis Fukuyama, the famous author who wrote, what know, the end of, what is it, the end of civilization. We won, you know, we're going to democratize the world. We have adversaries

out there and we need to open our eyes. We need to be vigilant. We need to be prepared. And I think if we are able to harness the, you know, the work ethic and the exceptionalism of the American people, we're going to succeed. And this really is a competition of governance philosophies. Chinese Communist Party is state control, rule of the elites with the serfs having no rights. You're but a cog in the machine. Kind of like California. Yeah. Versus the United States, we believe in rights, we have a constitution, we have a bill of rights,

which is supposed to impair and limit the government. And as imperfect as the Republic is, it's an infinitely better place to be than living under a massive statist monolith. Yeah. So vote and defend freedom. Yeah. That's right. Send it. That's right. So, vote and defend freedom. Send it. That's right. Well, gentlemen, I really appreciate your time coming. That was a very eye-opening conversation and I learned a lot. So, thank you so much for being here. Thanks for having us. Thank you.

All right. Thank you. All right. Thank you. The United States Soccer Federation presents the U.S. Soccer Podcast. Inside the opening 45 seconds. What a goal! With that cannon of a left foot. All even at one. Never miss a game. What a start for the United States. Shot from distance.

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