TFTC: A Bitcoin Podcast - #659: Why America Gets China Wrong with Peter Alexander

Episode Date: September 10, 2025

Marty sits down with Peter Alexander, an American consultant who has lived in China for 30 years, to discuss why the US fundamentally misunderstands Chinese culture and strategy, how America's supply chain dependency has eliminated its negotiating leverage, and what both countries need to do to avoid a destructive economic confrontation. Peter on LinkedIn: https://www.linkedin.com/in/peter-alexander-97630910 Peter on Nostr: https://primal.net/p/nprofile1qqszzg7v0zr6y7nz2v8qr5602jx7cez660qlpjm4zdlm80nd0sn56kggyqpte STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Opportunity Cost Extension: https://www.opportunitycost.app/ Shoutout to our sponsors: Bitkey https://bit.ly/TFTCBitkey20 Unchained https://unchained.com/tftc/ Obscura https://obscura.net/ SLNT https://slnt.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean And that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. Peter, welcome to the show. Thank you for joining me.

Marty, I got to do this. And this is going to demonstrate just how long I've been following you guys. The mandibles. The mandibles. um i mean i'll leave that to matt to to highlight and let him continue to beat you with a sock full of quarters every week because you haven't read it but uh no i was i was um i i just started laughing because i'm like oh after we went back and forth last night i thought to myself oh i'm gonna i'm gonna have to bum rush him at the beginning with the mandibles book i don't have

it on my bookshelf i don't have it on my on my uh kindle either it's a book i'll get to it i think eventually i will get to the mandibles okay but as i've said many times a rabbit hole recap it's essentially been read to me uh on air over the course of seven years from that yeah and and to answer your question yeah i i'm of the mind that we are in the middle of the mandibles right now lovely yeah lovely well let's uh let's set the stage for this conversation i wrote a newsletter earlier this week we talked about um talked about a rabbit hole recap yesterday there was a chart of china gold stock on warrant at the shanghai gold exchange and if you see the chart it is straight up and to the right uh just a crazy step function growth over the course of the last

year and a half really and that's in a signal to me like what's going on seems like china's preparing for something wrote the newsletter you responded on noster um saying that i need to get the full picture of china you have been living in china for 30 years correct 30 years correct So maybe we maybe we start there. How did you end up in China and deciding to stay for for 30 years? I'll give you the the abridged version. Number one, it's always great to be young and dumb. So I was working on Wall Street back in the middle, early, mid 90s. And that was the first time China sort of landed on the sort of Wall Street radar. And so I was dabbling in, you know, what was going on in China, you know, working as an analyst, so on and so forth.

And ultimately, I decided rather than to get my MBA, I was studying a little bit of Chinese in New York and thought, you know what, I'll go to China for a couple of years. I'll teach English, get a lay of the land, firm up my language capabilities, and then I'll just circle back and come to New York and start a whole new career. And, you know, what's the old saying? You know, life is what happens when you're busy making plans. And so one thing after another just happened. You know, I did the teaching gig and then I got a job working as an analyst for a UK investment bank in Hong Kong. That lasted about four months. And then the Asian financial crisis hit, got married, had a couple of kids, you know, became what's called a chief rep,

which is a glorified sort of secretary for a handful of American companies. you know did all that and then um right after wto was working for prudential financial of lovely newark new jersey and uh you know set up a joint venture for them in the finance space and thought you know maybe there's a maybe there's an opportunity here for me to become sort of a consultant rather than work for one company or work for a bunch so i went out and set up this company called Zebit Advisors in 2004. And, you know, it's sort of 20, 21 years later, I've been doing that. Just basically a consultant helping, you know, predominantly European, American financial firms navigate what the possibilities are in China. And it's not,

it's not that easy, not simply because China is a different market, but because especially the American organizations, they're just so tied to how they do business globally and just an unwillingness to adapt to the local market so yeah it's you know 30 years just happens overnight you know and here I am yeah and as I was saying before we hit record I'm very excited for this conversation I've had Balaji on the podcast he's got a perspective that China's going to eat the U.S.'s lunch if we don't really light a fire under our proverbial asses to to compete um in many different aspects of the economy and i was also telling you that my interaction with the chinese uh over the last seven years has been via the bitcoin mining

industry and from what i've observed these individuals are incredibly ruthlessly capitalistic in a way that surprised me to the upside considering what i've been taught about the uh chinese system of control uh over the course of my life and the chinese i've interacted with in the mining industry are incredibly impressive in many ways but to your point they do business in a different way that is uh literally foreign to um the new western way of doing business and i think to start off this conversation you sent an email with incredible detail about different things we could cover today and you started with a quote which i think is a good setting of the stage to really dive into the differences between the western

eastern way of doing business and and politic really and that is a quote from lucian pie china is a civilization pretending to be a nation state and you were explaining in the email if you don't understand this sort of core concept you're not really going to understand this this whole situation. I mean, if you consider the concept of a nation state itself, I mean, it's only a couple hundred years old. It's not really some sort of ancient governance system. And even China didn't have this sort of nation state governance system until 1912, when the last formal dynasty and of the Qing Dynasty. So when you're trying to look at navigating the entirety that is China, I mean, I've been here 30 years. And I'll tell you this, I'll always be a foreigner. Like,

there's no way that you can be here for any period of time and, you know, not get to a point where you think that, okay, the expression is be jungler and high jungler, like more Chinese than the Chinese. And there's actually an inverse relationship with regards to the time you're here, which is the longer you're here, the less you actually figure out you know. It just continues to expand with regard to the uncertainty and the unknowns. But when you take, I think it's fascinating, and we can get into the SCO, because I think genuinely this past week has been what maybe, I don't know if I want to say will be, but potentially could be a real turning point because you've got really a group of nations coming together saying, we're done with the

international rules-based order and we're going to move in this direction. And China continues to operate as a nation state, but at its core, at its DNA, Xi Jinping is just another emperor of another dynasty. It just happens to be called the Chinese Communist Party. So you, I think, have to, and this is, I think, something I really need to stress, which is take the 20th century Western G7 lens off and try to be more open to how it is that the Chinese are going to operate. And I think one of the other comments that I made to you in that lengthy email was, we're also talking about things like judeo-christian ethos like i'll have people say to me well the chinese have no morals and my immediate reaction to that is okay but by whose standards

i i understand if you're coming at it and saying they have no morals based on you know how we do business in the west you know my word is my bond a handshake you know written contract the chinese play that game, but ultimately, it's much deeper. It's much more about what is in it for various parties. I'm going off a little bit here, but I think it's important. One of the key pieces of advice that I'll give to clients is if you're teamed up with a Chinese as a counterparty, whether it's a joint venture or you have some sort of distribution agreement, whatever, you need to keep in mind that the moment the Chinese think that they no longer need or find value in this partnership, they're going to cut you off. And it's the perception, not even the

reality of the need for the foreign technology, the foreign expertise, whatever the case might be. The Chinese want to be able to endeavor, gather the information all they want, and then move on. So this gets into things like international or intellectual property theft and the like, and we can, of course, parse through that. But yeah, it's just a completely different environment to be able to operate in yeah the and how do you think how maybe this is the best part best place to start like how wide is the divergence between the perceived understanding from westerners of how china does business and the actual understanding of how the chinese do business particularly at the nation-state level um with the trump administration all these tariffs and

everything going on you mentioned the seo all the so how even at the highest level so do you think they're still in a fundamental misunderstanding of the different sort of cultural way of approaching business deals oh without without question and it's not even just business deals i think it's it goes all the way up to you know all relationships like trade negotiations geopolitical communication, whatever the case might be. And again, I'll reiterate a point that I made just a few minutes ago, which is you have this hegemonic, if you will, perspective of, you know, this is how we do things and this is how we've done things since 1945.

Some would argue this is how we've done things since, you know, 1910, whatever the case might be. What is missing from that calculus is throughout that whole period of time, China really wasn't a player on the stage. So the manners in which their cultural approach being included into these negotiations, what have you, just doesn't enter that calculus, doesn't enter the thinking about how we're going to go about adjusting for all of this. So, you know, I'm watching it play out on a daily basis, doubly so. I mean, it wasn't just current Trump administration, the Biden administration, you know, they thought that they were dealing with, you know, a normal counterparty as though they were talking to France or Japan or somewhere else. China was like, no, we're changing the tune and we're going to see how that dance is going to go. And the Biden administration just tripped over their feet, you know, basically to mix all my metaphors. So the U.S. right now is nowhere near having the ability to understand how to navigate it.

I think Besson has a decent understanding of leverage and where the United States finds itself right now with regard to China. We saw the whole thing with rare earths for chips, you name it. But ultimately, there has to be a sort of a meeting of the minds, a recognition of what exactly is China, what is their history, what drives them. And that's still missing as far as I can see. Yeah, I had a conversation with Mel Madison yesterday on the show that will be posted tomorrow. But I actually told him, I've been so excited for this conversation, I told him I'm speaking to you. um we covered the military parade and that's one point we brought up is i think particularly here in the united states which you've sort of touched on a little bit but i think we should

really expand on is america's going to be 250 years old next year and china has been around for millennia and to think that five thousand years five thousand years i think that five 000 years of history and developing and building a culture is going to be materially perturbed by 250 years of history i think is a bit naive there are definitely deeply rooted sort of cultural practices and understandings that i think many people just just like we're fish in water i'm 34 years old and trying to put trying to put some sort of cultural dna in a 5 000 year context is hard for people right yeah absolutely yeah no i think look i'm oh god sorry no you go ahead no what what i was just going to sort of highlight is one of the bigger issues that's occurred of

late, is how many so-called China experts are there today? I mean, it's shocked me that over the last five years, everybody is weighing in on China. There's podcasts about China and so on and so forth. And that's great. The more engagement, the better. But one of the first questions I'll talk to people and when they're coming to me especially is I'll ask them, well, when was the last time you were in China? And, you know, they get a little bit, I think, and there's no judgment, I'm not judging, I'm just curious. And their predominant answer is always 2018, 2019, you know, pre-COVID times. And I tell them, I'm like, look, you have to get on a plane and come out. I said, number one is things here have changed dramatically over a six-year period. I

mean, six years in China is a lifetime. But number two is, over that six-year period, there has been an absolute cacophony of headlines and framing and conversations. I mean, remember the spy balloon. I mean, it goes on and on and on. And it has been a just onslaught of negative headlines. So I will talk to people and that's their entire framing. And yet they're listening to people who've never been to China or haven't been to China in five, six, seven years. So I'm really trying to press people to say, look, it's fine if you're out there looking for insights and I think everybody should be questioning. I think Matt today, or yesterday, I guess, did your weekly recap. I busted out laughing because he was like, oh, he's got a pretty positive outlook on

things. Yes, you could frame it that way, but there's enough negativity being discussed on China that the way that I phrased it, and I think I phrased it to you, is it's not that China shouldn't be critiqued. There's a ton of areas that you can critique China. But the critiques are very narrowly defined, and I think miss an enormity of what else is going on and the fuller picture. So I think that's kind of emblematic of what I've been witnessing, especially coming out of the US over the course of the last several years.

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step to self-custody. If you have friends and family on the exchanges who haven't moved it off, tell them to pick up a BitKey. Go to bitkey.world. Use the key TFTC20 at checkout for 20% off your order. That's bitkey.world, code TFTC20. Over 10,000 investors downloaded the original how to position for the Bitcoin boom when Bitcoin was just 27K and it called for 120K plus. That target's now hit. So what's next? Tour de Meester is back with the 2025 edition, refreshed for the mid-cycle moment packed with new data, new insights, and TUR's latest price outlook. Plus, you'll get exclusive access to Charting Our Way Through Chaos, TUR's new 30-minute Q3 2025 presentation explaining why this bull run might be only just beginning and what forces

could push it to the next level. Read the first ever mid-cycle report from Adamant Research at unchained.com slash tftc. That's unchained.com slash tftc. And also, if you're using Unchained, You can use the code TFTC for $50 off any of their services. Go check it out. As an American looking out at the world right now, as it seems to be going in this more multi-polar direction, geopolitical tensions rising, high war breaking out different parts of the world, economic stress on top of everybody's mind, I think it's important to try to make sure that we're making the right critiques and understand the full breadth of the situation so

that we can make the best decisions and especially after reading your email i mean the first bullet point you have is america versus china um saying it's not a new cold war for you it's far more concerning which yeah i imagine is driven by the fact that there's a fundamental misunderstanding And people in the West don't even know how to properly critique what's happening. Well, I think on that point, so you would have seen over the course of the last, I don't know, year that there's been this like, oh, this is Cold War 2.0. You know, Niall Ferguson, Sir Niall, right? He's come up with this and he's been making the rounds and talking about it. And look, it's easy to package.

We have recency bias. We want to look back to the Soviet Union. For me, it's been really about the UK and Germany back in around 1905 when you had the UK, which was at that point even a power that was maybe in the early stages of decline. The colonies and the empire, you know, had sprawled so far that it was difficult to maintain. And critical, I think, is this was around the time that you really had petroleum becoming an essential component for things like ships. and the UK Navy was all coal-driven or steam-driven and it was moving over to oil. And the Germans were rising. And the Germans, if you look at a lot of the history

and a lot of the research, the Germans recognized. And here's what's critical, by the way. The UK, Germany, and Russia at this time were basically run by cousins, grandkids of Queen Victoria. And these were all relations and they still couldn't get along. and you know germany i think recognized if you look at a lot of the research that

okay we can't go head to head with you know the uk we have to try to play nice with them and the brits in their own typical british fashion were they would placate the germans yes yes let's talk about this let's get a memo sit down for a meeting and they just kind of slow roll the Germans. And this, for me, all came to a head when Germany wanted to build a railway from Berlin to Baghdad for the purpose of moving oil from the Middle East up to Germany. And they went to the British and said, look, let's do this as a joint venture. The British said, sure, but then they dragged their feet. And then Germany finally was like, look, we're just going to go do this. And there were a host of these issues that you had this power at the time that rather than address the issues that they had at home, they were more inclined to look at things like tariffs.

They tried to create this tariff regime where if you were part of the colonial empire, the Commonwealth, you'd get a better deal. They tried to contain Germany with regard to economic sanctions. And for me, ultimately, you can draw a line between that action of the UK to the start of World War I. You know, you could talk about Ferdinand down in the Balkans and what have you. But I'm seeing so many similarities between how the United States is operating with regard to China right now that it is concerning, more concerning than is this a capitalist versus a communist Cold War comparison with the Soviet Union. i think the latter can certainly be thrown out in the window because if you're trying to say that the chinese communist party i think you put it correctly like xi is just a dynastic ruler and his dynasty is just called the ccp if you compare it to um soviet russia like it's

completely different i've been listening to a lot of um bill gurley's comments on china he's one of the few americans that seems to get over to china a lot and really understand what's happening and the way he describes how they invest in companies and try to ensure that there is um there is sort of a free market for ideas to be built and companies to be built and they steward it with capital and then have a filtering system that lets the cream rise to the top it's very clear that they're not in the soviet russia form of communism um and so i think a lot of the saber rattling and positioning particularly from the united states is just using your uk germany analogy is like the u.s um sort of on the brink of

do we go down the road of empire or try to um revert to our our sort of democratic republic and get back to the roots of being non-interventionist is is where we stand if we go down the route of empire if we want to go down the route of empire a lot of the positioning towards china makes sense to me um because it just seems like hey we want to keep control of this sort of massive footprint we have over the world um to do that we need to play hardball with china well and you can you can also, I've made the argument that while the British back in previous empire days had their colonies, the United States has their own colonies. They're just called military bases. You know, I think, and again, I haven't said this yet. So let me, I mentioned this in a note

earlier today on Noster. I'm a red-blooded fucking American, right? I need to stress that. And the commentary that I make about China is with regard to trying to get this ridiculous beltway consensus, as I call it, to understand what the issues are. And it's frustrating as all hell, because most will look at it and say, oh, we don't need to worry, because the coping mechanism for almost everybody is, don't worry about it, the Chinese economy is going to collapse. Marty, I've been hearing China's economy is going to collapse for the last 25 years. Like, what's the joke? Hope is not a strategy.

If you're waiting on you don't need to change because your mortal enemy is going to collapse, yeah, that's a recipe for disaster. So, you know, when I look around the region and I see things like 50,000 troops in Korea or 20-odd thousand troops in Japan, the United States last year put a high-end typhoon missile system on the northern end of the Philippines. They just announced two days ago that they're putting another one down in the Okinawa region. I mean, if I'm sitting back as China, and again, being a realist, you've got to say, look, we're going to have to at least start trying to project some degree of power as a defensive mode. And that's not me saying I'm supporting the CCP and I think everything is China is great. It's more about just looking at it from a realistic standpoint.

I had been, to be quite frank, shocked at the level of restraint that the Chinese have demonstrated over the last several years with the various military exercises the US has taken right outside their doorstep. yeah i mean we do have uh and this is a very controversial um take for many people many of my listeners but i think we do have recent evidence that um when the u.s medals in foreign affairs particularly of countries that there are other superpowers and in the case of russia and ukraine with the encroachment of nato um around their borders and um the conversation of letting ukraine and the nato and putting military bases and everything around russia i'm a strong believer and that is one of the the driving catalyst of the war between russia and ukraine right now and to think that we're not going to learn the lessons of that which has turned into

an absolute catastrophe and turn it up to another level with um arguably a stronger superpower in china just seems suicidal to me it's not it's and it's funny it's not just a stronger superpower i think one of the most fascinating developments over the course of the last six months has been oh wait we we corporate america entered a faustian bargain over the last 30 years to produce everything that we potentially need in the mainland. And then we wake up one day and Walmart is going in with Costco into the Oval Office saying, hey, look, man, our shelves are going to be bare in two weeks because of these 145% tariffs. And Trump folded like a lawn chair. And I don't think he wanted to. He just simply had no choice.

So, you know, what I have found is very endemic by American policymakers has been this, look, this is what we think is right, and we're going to go in this direction. And then second order effects come back and beat you over the head. And I'll give you a fantastic anecdote. So back in October of last year, there was this literally week in Congress that was called the China Week. And it was all of these bills that were being passed about targeting China and they were going to stop them doing this and that. And one of the bills basically was called the Anti-China Drone Act. And essentially what it was, was a law that has been passed or a bill that's been passed into law that made it illegal for a company called DJI to sell their drones into the US. DJI is not just the largest. And it's I'm telling you, it is an amazing company, an absolutely amazing company. But here's the funny part.

And the bill was jokingly referred to as the Skydio bill, because Skydio is a California company that makes drones and was getting its ass kicked. So, you know, let's go with a little regulatory capture, which is the flavor of the day in the United States, right? And they were like, this is great. Two weeks later, Skydio was still sourcing all of the batteries for their drones from China. And guess what happened? The battery supply got cut off. so skydio literally had to go with their point of sale documents to their buyers and say look we're going to sell you the drone but you need to go on amazon to buy the battery

like okay that is a microcosm of the cancer quite frankly that is you know just all through the united states when it comes to sourcing it's not sourcing just of end goods you've got inputs that need to go into manufacturing in the united states it's again like i said it was the faustian bargain that to this day tim cook as another example i'm sure he lays awake at night going why did i make this deal 15 years ago well i think that's the big question on many americans minds is how because i think it's become very clear um to many americans that we have made this faustian bargain and we have become wholly beholden to the chinese supply chain just due to the way we've built our economy over the last

five decades more acutely the last three decades specifically and how do we fix that problem and not only how do we fix that problem and obviously the the answer from the trump administration is let's reshore as much as possible but how do you do that in the least disruptive way while maintaining sort of good relationships with china and maybe not even maintaining building back good relationships with china because at the end of the day as american i was talking about this with mel yesterday too like i don't want to be an empire i don't want to be in all these parts of the world I think I'm MAGA in the sense of like, I think we have a lot of problems here at home. We should fix our problems here.

I am very aligned with George Washington and the founding fathers. And let's not be interventionist. Let's just build a strong country, a strong economy and engage in free trade. And I am a true believer in the Austrian view of free market economics. If you have free trade and peace and you sort of leave everybody to do their own thing. and then engage in trade when it makes sense that's that's the optimal outcome i don't think we need to be the world police or have this hegemonic control over the world which is massive and filled with cultures that are truly different and as we're really digging into are completely misunderstood and it just seems impractical and from a systems perspective it we've learned time

and time again throughout history. It just doesn't scale. It can't scale. You can't coordinate at that scale. No, no. And again, here's the kicker. China actually gets that. And people will always ask me, because there's this projection by the power base in Washington that because we are a hegemonic power, China wants to replace us, ergo China wants to be a hegemonic power. In my humble opinion, I don't see that. Look at all the hegemons over the last, I don't know, 200 years, right? Hasn't really turned out well for any of them in the end. There's been a period of like, okay, this was great. China wants regional hegemony in Asia. They want to be able to say, this is our sphere of influence. Look, the United States,

you want to go with your Monroe Doctrine. You want North and South America, we get it. You know, let's let Europe do what Europe's going to do. But ultimately, their attitude is just let us have Asia. And even for the United States, I think that that is a that's non-negotiable. For whatever reason, I can understand that they want to maintain the power projection that they have as the United States hegemon. But that's kind of where I think things are heading at this point in time. But China has, again, my opinion, has no desire to be a hegemon. They don't want allies. Think of it this way. They don't want allies. They want counterparties. They want to be able to just build and sell and make money and prosper economically.

And that is a very both unpopular and very minority held opinion. Well, let's get into this, like diving into what China actually wants and how our policy is being enacted because you're saying china wants this regional hegemony but then we have like the belt and road initiative where they're they have inroads in to africa in latin america i think a big topic in pretty niche circles in the u.s right now is the chinese shipping boats going around the world and really cleaning up the oceans of all the fish and i believe right now they're off the coast of ecuador so how does the belt and road compute with that idea that asia or excuse me china just wants asian hegemony uh there's a there's a couple of answers to it

number one is um dollar diversification let's call it that uh if you look at when what was originally called the one belt one road program now bri this was really launched in in earnest around 2012. And if you look at a lot of the events that sort of transpired in the 2012-2014 period, you started to see China begin to limit the amount of US Treasuries it was going to take on to its foreign currency reserves. You started to have a little bit of dabbling in other areas as well with regard to foreign currency. But One Belt, One Road, or BRI, this was the perfect way to deploy foreign capital, dollars, in a way that was going to be able to secure hard resources, be able to provide, you know, there's a joke, you know, when the Americans were before them,

the British would go to some developing nation, they would always come with a lecture, right? And the Chinese come with a hospital or a road. Now, don't get me wrong, they're not doing this out of the goodness of their heart. They're doing it for two reasons. One, there's typically loans involved. So there is this issue of how much is China sort of creating this indentured servitude situation by other nations. But above all else, it's about the resources. They want to be able to build the roads. They want to have the energy that's necessary, all of that, to extract minerals, gold, oil, energy, whatever the case might be. So it has clearly been positioned in a way that it is China's attempt to try to strong arm other nations into its orbit.

But I think, as I mentioned to you in the email I sent to you, for me, this is the Marshall Plan in a different guise. When the United States, in their benevolent wisdom, came in to help save the world, both the Marshall and the Dodge Plan, in fact, two things people tend to leave out of that, again, benevolent strategy, which was the United States gave loans in U.S. dollars, which helped to push the U.S. dollars into the global system. And at the same time, they were loans, and those loans had to be used to hire Caterpillar and all of these American companies to come in. And that's where the first expats post-World War II sort of went around the world all through Asia. So it was also in the United States' interest to be able to push forward with the Marshall and the Dodge plan. China basically saw this as being something similar and said, this is a great way for us to diversify and move out. Plus, we're going to be able to extract a ton of different resources to help us back at home. So I don't think really this has much at all to do with hegemony.

And I would say the interesting footnote to this whole point is how many bases, military bases do the Chinese have? They have one. And it's in Djibouti in Africa. Now, granted, it's near the Red Sea, I believe. Or not the Red Sea. I can't remember. Maybe the Red Sea. But that's it. So they're not looking in any way to try to project their military power in this regard. So, Freaks, this report was brought to you by our good friends at Obscura. Obscura is the first VPN that can't log your activity by design. Instead of empty promises, Obscura fully embraces the Bitcoin or don't trust verify mantra. They can't log your traffic even if they tried. Obscura believes that user data is toxic waste. In addition to private payments via lightning,

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15% and get free shipping on qualifying orders. That's slmt.com slash tftc. Protect your future, secure your data, and stay one step ahead. I've got this sleeve bag. I keep my Q in it. I've also got this wallet. I was using Ridge Wallet for a while because of the RFID protection. that are provided this is way thinner fits just as many cards uh and has a better design no more clunky wallet in my pocket the silent card holder is what they call it i'm loving this so far i've been using it for about a week very sleek you can see here i've got my tap signer i could tap my phone on it it's not picking up the nfc it works it works go to slnt.com slash tftc well let's let's pull it forward to recent events and really dive into what people are probably most interested in

which is the military parade that happened. Bricks, SEO and the Global South getting together. Donald Trump tweeting, retracing, sending a truth out. I hate saying that, but it is what it is. It's obviously seeming like he's missing out on the party. It was very obvious to me, at least a sort of geopolitical flexing.

We're going to have this massive military parade and we're going to invite all these world leaders and we're going to keep out the G7. and the u.s and um how would you describe the land like going back to the newsletter and comments on rabbit hole recap yesterday both the the gold that is on warrant it seems like they've been building up this gold inventory for the better part of two decades now um by putting in on warrant registering it with the shanghai gold exchange that's a signal to me like hey we do have this gold and we're putting it on wire we're willing to use it um in international trade or whenever

we want to they have optionality by doing that and then you have yes this military parade and this sort of fading of the western hegemon hegemony by keeping them out of of the guest list keeping them off the guest list and it just seems like very overt explicit geopolitical posturing on the stage sort of a chess move uh two chess moves there with the gold and this military parade um what is what is this well what are these moves in your mind well first of all and i think you guys talked about it on rabble recap look i'm never a believer in coincidences like the the chinese have a tendency of i find them and it's funny because i've seen a lot more people talking about this. They are the consummate trolls. They know how to use what they have

and be able to sort of just, hey, whoa, what are you talking about? They're just brilliant at playing this game. So a couple of things. I'll start with the SEO meeting at the beginning of the week and then the military parade, and then I'll jump into the gold issue. First and foremost, I mean, we do have to be mindful that this parade was planned months in advance and the guest list was planned months in advance. So it really wasn't, in terms of the parade and the attendees, it wasn't all that much of a surprise. Now, that's not to say that there was coordination that was going on behind the scenes and there were separate meetings that were taking place with regard to, call it the broader global financial system. But the only,

I think, real fly in the ointment was the moody participation in the SEO on the weekend. And you would have seen all the pictures holding hands with Putin, the whole lot. You know, look, I've been watching, you know, Donald Trump, the man and his sort of approach to, if you want to call it an approach, the sort of geopolitics. And it's, you know, I'm a degree of buffoonery that is even surprising to me. This is on a whole different level. The antagonizing of India, I just don't get it. There's no there's no material upside to it.

And then he doubles down on it, not but a day after the SCO meeting saying, oh, it's a one sided relationship, what have you. And look, China and India, they're no close bedfellows. They've had issues for years. In fact, Russia and China have had issues for years. The way that I've sort of tried to describe this to various groups that I've spoken to is, and I wrote this to you as well, the enemy of my enemy theory. You know, how long can that center hold? Well, it's going to hold as long as the United States continues to be belligerent on the global stage.

But. I'll just quickly say with regard to the military parade, you know, been there, done that, I think that was my I don't know, they do one every 10 years for this anniversary, but then they also do one every 10 years for the anniversary of the Chinese Communist Party. So I've seen more than my fair share. It's very staged. And it's interesting to see what kind of toys they put out. But on the gold issue, this has been something that I've been focused on for years. And the most interesting element is the Shanghai Gold Exchange, which I think you highlighted. They have sort of a subsidiary called the Shanghai International Gold Exchange, which was created in 2014.

and that was the first time they opened up the local market to offshore participation, to be able to trade and to be able to settle. Going all the way back to 2014, you did have physical settlement if needed with different counterparties. Now, for the first number of years, there wasn't a lot of volume or activity at that point. But I find it fascinating because 2014, you're talking about was like a year or so after Iran got sanctioned and kicked off the SWIFT system. It was the year in which Russia essentially went in and annexed Crimea. It was also just so happened the year that I think Chinese treasury holdings peaked. So you look at sort of the trend over the last decade, and it's very clear that there has been a progression, very slow,

no pun intended, but a little bit, Chinese water torture, to be able to move this forward. And I think this is the important part. And this is perhaps where I'll have a disagreement with you on some sort of impending development is China's trying to work at the margins to sort of undermine the American geopolitical position, but not in such a blatant way that causes an overreaction. And I think we can both agree that American foreign policy has a tendency to overreact. I mean, there were a lot of rumors that, you know, Gaddafi got taken out because he wanted to start pricing oil in euros. So, you know, China has been at the margins selling a, or I should say buying a truck ton of energy using renminbi. So you've had an increase in

volume. And I think more importantly, just I want to say last month, the Chinese went and opened up a new gold vault in Hong Kong, because I think that there is increasing demand. And I think this is where your issue that you raised with regard to the warrants is there's probably more demand coming in that you had all of this gold that was probably sitting privately in Bank of China, most likely, that was then moved to the gold exchange with the warrants being issued. What, in my opinion, China has been doing and will continue to do is demarcate between a foreign currency asset and a foreign currency. They don't want to replace the dollar. You want to use the dollar to knock yourself out. But they want the optionality to be able to say, we're going to go

to different counterparties, and they're going to use the renminbi. But again, as you both rightly pointed out on your weekly show, nobody wants to hold the renminbi. And the Chinese don't want people holding renminbi in their bond market either. They like their closed capital. So what you do is you create the ability over a period of time that if you want, you can settle in gold. And I'm aware of numerous events where settlement has taken place. And some of it stays here, as you guys point out, but some of it does get transported elsewhere. And that is undermining the pure bedrock of the reserve asset, the U.S. Treasury, because the U.S. Treasury has only been really a requirement, if you will, if you have excess savings, if you will, from your trade

surplus. Where do the Chinese have a trade surplus? Predominantly from those exporters of energy and minerals and other inputs, if you will, food, potash, you name it. And those countries are like, look, we'll take your renminbi and we know that we can come in and we can just settle in gold. We're fine with that. And that's going to continue to move on. Taking that next step to create a gold-backed BRICS or a gold-backed yuan, I personally think that would be viewed as an act of war by the US government, honestly and the chinese know that there's no reason for them to take that what would be viewed as a natural step forward um if they already get 90 of the benefits of just allowing for settlement

in gold so freaks guess what we launched a browser extension it's called opportunity cost and it helps you see the true cost of everything in bitcoin convert prices to bitcoin as you browse the web opportunity cost automatically displays fiat prices in bitcoin or sats helping you think in a bitcoin standard it works on amazon zillow x your bank account quickbooks you can convert everything to bitcoin it's really cool it's also 100 open source mit license we don't collect any data all of the conversions happen in your browser on your local device it's a great way to recalibrate your life and begin thinking in sats go check it out at opportunitycost.app that's opportunitycost.app And again, going back to not only misunderstanding a culture that is five millennia old, but it's just reverting to how they probably settled trade for millennia with gold.

And that's the other thing is fish and water, not understanding we live in an anomalous time, whether it be the use of our nation in the nation-state model or the fact that we're using this fiat currency. It's – to your point, like why even do a gold-backed yuan? We could just settle on gold itself. Right. And China has all the gold right now. I mean, this is the reason, in my opinion, why they have been so aggressive in buying as much gold as they've had is because they want to be able to demonstrate that they're able to settle for anybody on any trade surplus that might exist. And just quickly, can we touch on this? Because I'm sure there's a number of listeners who were sort of using Yuan and RenNimby interchangeably.

Can you describe the dynamics of like the onshore, offshore and how these two currencies actually work? Well, so there's first of all, the yuan is sort of like, say, the buck, right? The U.S. dollar, the equivalent in China is the renminbi, the people's currency. So they're interchangeable, but there is an offshore renminbi or yuan that's traded in Hong Kong. um it's to be honest with you it's more about the chinese sort of trying to create this dual system of we have both our onshore market and our offshore market and what i've always found fascinating and i'll ask you this question because i think it's it can be quite enlightening if i were to ask you from the chinese perspective from beijing's perspective is hong kong

foreign or domestic i would um i would say they think it's domestic and the right answer is both um when i go to the airport in shanghai and i'm traveling anywhere and i go i have to fly through the international terminal to get to hong kong and it says in chinese international hong kong Taiwan, Macau. So what China's been able to brilliantly do is they've had their cake and eat it too with regard to Hong Kong. They're able to say, oh, this is an international city, so we can do things differently down there. But if we want to, we can come down and we can bring the hammer of Thor on to Hong Kong as well and say, no, you're actually ours as well. So whatever the sort of flavor of the day might be in terms of what's going on in Beijing,

They can basically just go and say it's one or the other. But in terms of the financial service industry, I mean, look at the crypto space, right? I mean, if it was domestic, they wouldn't be having some massive conference or letting Bitcoin ETFs or anything else trade. It's just the ability to say we're going to do it down here because it's not really China. But deep down, everybody knows it is China. That makes sense. I'm trying to think of like an analog. I was going to say like the Virgin Islands of Puerto Rico, but they're not really financial hubs or powerhouses.

But well, I mean, it's it's it's essentially what Hong Kong was under British rule for 150 years. The same kind of thing. Yeah, that all I mean, we don't have to dive down that rabbit hole. But the fact that Hong Kong was leased to the British Empire for 100 years is. Is insane to me. But let's let's reorient this back to the current day and the. U.S.-China relationship, particularly Trump and Xi, you have it in the email that you sent that Trump is being outplayed. I mean, you mentioned it earlier, but you think the cent understands the lack of leverage the U.S. has in these negotiations and this sort of chess match that we find ourselves in. Yeah. Well, let me give you the perfect sort of evidence of how

things have changed. You've had three meetings over the course of this year. There was one in Geneva, I think one in the UK. I forget where they were. But you had the Geneva meeting happen, and there was kind of this armistice, okay, everything's fine. And then all of a sudden, you had rare earths come into the equation. And you had, I don't know, The U.S. was talking about jet parts and a whole bunch of different things. And for the first time, finally, Xi Jinping gets on the phone, talks to Trump, and they all agree, we're going to meet in Stockholm. We're going to iron the shelf. A couple of things.

Number one, that call had happened supposedly on a Friday, and it was agreed that the parties would meet on a Monday. And then they met on a Monday, and then they came to what – and I still can't believe this is being debated throughout the United States. this was a quid pro quo trade china was like look we know you need the rare earths you're still playing you guys are being dicks so we'll give you the rare earths and access to all of this but you have to give us the h20 that's what we want you've got to stop you weaponize trade first we're just reciprocating that deal was essentially um agreed to in a matter of a day and a half Now, what's with the recap? In the entire time I've been here, number one, no meeting happens in 48 hours from the time some senior official says we should get this done. There's going to be talks and what are we going to do it? And it gets dragged out. The Chinese love the delay aspect of negotiations. And they know that the Americans, not even if they really are up against the wall, but Americans have had a tendency, from my experience, of being extremely impatient to do things.

And the Chinese use that to their advantage. And then you have a deal that is agreed to in 72 hours, essentially, 48 hours maybe. That never happens, except when the Chinese get everything they want. The Chinese would typically walk away and just see how things go. So as soon as that meeting was over, I laughed and I thought, I think I even put something up on Nostra where I said, yeah, I know how this is going to play out. You know, and he had no cards. And in fact, they wrote, the US side wrote in their communique, and we will deliver what

we promised to deliver with no details of what that was. They said the Chinese were going to deliver rare earths and the batteries and all that, but they didn't say what they were going to deliver. And then lo and behold, I think it was Siemens and somebody else was able to start selling their chip related equipment back into China. And then next, you know, it was the H-20 and everybody in Washington lost their collective shit. Right. It was all about, oh, Trump is selling national security. Here's the thing. The amount of rare earths required for the defense industry in the United States never gets discussed. This was as much, if not more, about national security because of the limited access to rare earths than it was about giving China the H-20. And nobody talks about that. So it's, you know, that's just one example. And this is why India exports – imports less oil from Russia than China does.

China is still on the sidelines. Like all of this just demonstrates that Besant is sitting there going, I need to keep the wheels on this bus and the last thing that I need to do is have something in the supply chain go off the rails. well and again like you can i don't think it bears repeating and i think you're you can repeat it too much like we are wholly dependent on this supply chain rare earths for the defense industry antibiotics consumer goods um like i'll give you the i'll give you the classic example so everybody everybody's talking about ai chips we control ai chips you know we china doesn't have access. Nobody asks, what is the primary ingredient or ingredients that go into high-end AI chips? Polysilicon. It's like the most purest silicon out there. It's sourced from China.

The majority of it is sourced from China. So I try and say to people that, look, Nvidia doesn't make chips. TSMC makes chips. Apple doesn't make iPhones. Foxconn makes iPhones. You have all of this focus on IP, and I think the IP is great. But if you don't control or have a dominant position in how that supply chain is actually going to work, what do you actually have and what is the actual solution to this i mean this is what people aren't really asking because okay here's another anecdote this and this one so the biden administration i think it was is able to convince taiwan semi to come and build in arizona right fantastic give them a bunch of money and it's supposed to be a fantastic fantastic facility great

Three months ago, Taiwan's Senate gets served a class action suit for discrimination because a whole bunch of people that came in for job interviews who were nowhere near qualified basically were like, oh, they didn't want to hire us because we're Americans and they want to just bring in all of their own Taiwanese to do the jobs. and the courts took it they didn't say okay we're going to dismiss this they were like okay we should look into this how are you going to build anything if you're not able to i mean we can go down the rabbit hole that is are there enough people to do the jobs that need to be done in this whole this whole ecosystem but here we have something that is desperately needed and you have you know the litigious nature of the american society going to tsmc and say yeah we're just gonna we're gonna target you because we didn't get a job yeah and if i remember correctly too there was some like dei influence on on that litigiousness as well and i mean it goes in whether

it's polysilicon being the raw input of the chips and then the the tsmc arizona boundary question like the intellectual capital that goes into building the building the foundry that makes the chips that's right raw input doesn't exist over here either because we hollow out a manufacturing base and deprioritize that education and it is uh it is extremely disheartening that yeah america has let itself and that's i think what i'd really like to get out of this conversation um too is like what is the best path forward because to your point we don't have a lot of leverage i think it's pretty obvious we are completely beholden to the chinese supply chain right now it is clear that the administration and many americans myself included would like to

de-risk that that dependency by building um building our own manufacturing base here in the united states building up the industrial base um as best that we can while maintaining i would like i'll speak for myself while maintaining an amicable relationship with our trade counterparts around the world that we are sort of diversifying away from and so what i'd love to get out of this conversation is your mind like what is the best path forward to make this happen like what what needs to happen from a posturing perspective a blocking and tackling policy decision making perspective and how can we sort of get on a playing field like hey let's put the cards on the table we understand that we're beholden to you to

a certain degree we know the reserve system is out of favor we want to rebuild our manufacturing base What can we do to work together to make this happen? So there's really two complementary solutions that solve it. And here's the thing. You take a page out of the Chinese playbook. I tell people all the time, the Chinese playbook is pretty thin. There's not a lot of plays in there, but they're masterful at how they apply them. So you just do this, massive deregulation in joint ventures.

You basically say to the Chinese, look, BYD, we love your cars. your cars are great. We want you to come here and we're going to do a 51-49 joint venture. We're going to have a bunch of rights and waivers. You're going to be able to run it and we're going to put our own people in there and you're going to train them up and you're going to be able to sell your cars into our market. Or you got DJI, let them do the same thing. All of the goods that are needed. Now, you can't go across the board, but you can be very smart about how you do this, but you have to have the deregulation element involved as well because you cannot continue to get bogged down with all of the issues on, I don't know, OSHA or

liability and discrimination and all of this. And I'm sure that sounds extremely heartless. Hey, we're in this situation. We need to come up with solutions. You need the Chinese to invest. You need to lower the regulation, and then you'll train up a ton of people. That's how the Chinese got trained. The Chinese got trained through all of these joint ventures that got set up over the last 30 years. So ultimately, that is probably the best way forward. But I think the first step that would need to be taken by the United States would be for there to be some big coming together with the Chinese president and a sit down where the United States says, we recognize that our two countries are equals.

And I think that that's going to be a very difficult ask of the United States government. And that's really what the Chinese want is just give us the face, give us the means. Tell us that we're equals and we're good to go. And I think that that would work. And we've been running, another thing I want to touch on, We've been running under the assumption that we have zero leverage. I think, as a matter of fact, what leverage do we have? I find it hard to believe that it's exactly zero.

Like what leverage do we have? Is it our consumer base? Is it the entrepreneurial spirit? Oh, okay. Now you're talking about something different. Now we're talking about DNA. I mean, there's a couple of things. Number one, what leverage right now does the United States have?

And very simply, it would be the market. even though China has very meticulously reduced its dependency on exports to the United States over the last six years, I mean, as a quick aside, I think one of the biggest tactical mistakes that Donald Trump made in his first term was very loudly proclaiming all of the various target vectors that were present in China, you know, talking about, oh, you know, they need us for our capital markets, you know, they need us for our market, so on and so forth. And the Chinese kind of, from the conversations I had, the Chinese were like, he's not wrong. And once he was out of office, they spent four or five years addressing the vast majority of those issues, which put them in a much stronger position going into Trump 2.0.

But the market, if there was a significant reduction in access to the United States market, it would have a tremendous, tremendous negative effect on the Chinese economy. No question. it would also though leave so many shelves empty in the united states so it becomes this battle of attrition who can suffer the pain the most but the market's still i think super important um i mean leverage wise the united states has the biggest military the united states has access to i mean to financial markets i mean there are what i refer to as nuclear options. And I don't think Besson wants to go down that route. But I would argue geopolitically, the most leverage, and I put this in the email,

because this is going to, people's heads are going to explode later this year when this comes out, is Taiwan. Like, a bit of history, just bear with me for a second. In 1999, The United States accidentally bombed the Chinese embassy in Belgrade. It was Mother's Day in 1999. I'll never forget it. And it was a bit dodgy here. There was a lot of a lot of anger. And Bill Clinton. Oh, no, I'm sorry. I take that back. I won't go into the details. Long story short, Bill Clinton owed Jiang Zemin, President of China, a favor. Jiang Zemin had done something for Bill Clinton in terms of making sure he could get reelected so he wasn't causing problems in the East China Sea. Bill Clinton came out here in 1998 and he has this infamous three no's speech. And the three no's were basically President Clinton reaffirming, essentially, the American one China policy of saying there's only one China.

Taiwan and China are both the same one China. And the United States does not support independence. And that was it. The Chinese were super happy. They were like, OK, we're good to go. Just verbal. And I think when President Trump comes out here, part of the negotiations, he's going to do something similar. And the quid pro quo that he wants from this And I kid you not, TikTok. He wants TikTok. And he's going to say, I'll come out and talk about how there's only one China, and you're going to give me TikTok. And then, you know, this is a little bit for us on this call. TikTok, once Trump owns it or his buddies own it, becomes essentially a poison chalice. How many people in the United States are going to want to use TikTok if Trump's buddies own it, right? so where are they going to go well some of them are going to come here and they're going to go to red note

but most likely a lot of people are going to all of a sudden learn about Nostra real quick yeah so there's so that's I think the Taiwan issue is really where the most leverage lies and you have it in

the email too if you look at the map the US had China cut off across the east from japan and south korea to the philippines and australia and so there's this perception that china is really close but it seems like the the u.s has allies in the region that that create this sort of stalemate in terms of preventing china from trying to take it over and the whole meme of china trying to take it over and literally having a kinetic war around taiwan just makes no sense, considering the strategic importance of the foundries that are housed there.

So let me, just bear with me. I know it's a bit off topic, but I think it's important maybe for you, but also for your audience. Allow me to sort of state with a pretty emphatic level of confidence. China's not going to be invading Taiwan anytime in the near future, no matter what you read or hear on social media or elsewhere. You know, China's going to invade by 2027 because Xi Jinping said so. No, he didn't. He said for the military to be prepared for what needs to be done. Jiang Zemin said that. Wu Jintao said that. They've all said it's the same thing. But okay, let's ignore what these communist leaders say. They're politicians. We don't listen to politicians. Here's an interesting fun fact. China never really wins wars.

If you look over the last seven, eight hundred years, better part of a thousand years, China was taken over first by the Mongolians and then by the Manchurians. And this is when you get the Yuan Dynasty. Then the Ming Dynasty came in and was like, OK, we're going to be Han Chinese again. And then you had the Manchurians come in and it was the last dynasty, the Qing Dynasty. The reason I bring that up is China has learned that the way in which they exert control as the ethnic Han Chinese, which 95% of all Chinese are, is through what I refer to politely and diplomatically as assimilation, meaning you over time, over generations through marriage and family and whatnot, you end up all becoming Han Chinese again. and it's like okay we lost the war we're not going to try to have this resistance or anything else we're just gonna you know we're gonna intermarry and whatnot and you know give us a couple hundred years and we'll be back in power the reason i bring that up is this is what happened in hong

kong and it's hong kong that i think is extremely important as a uh as a case for what is going to be what is going on with regard to taiwan and when i first came to china and the first time i went to Hong Kong was in 1994, and Hong Kong was British. Everybody spoke Cantonese, completely British. Over the course of 20-odd years, Hong Kong became nothing but another Chinese city. The majority of people who were living in Hong Kong were from the mainland. So when China decided – and by the way, I should mention, in terms of all the things that China has done, This was, I think, the dumbest geopolitical mistake under Xi Jinping since he's been here, was taking over Hong Kong in the way that he did.

Basically, putting the stamp on it, saying we're going to make this a real province, if you will. But the reason it was so relatively successful with limited violence, there was violence, but nowhere near to the extent of, say, Tiananmen Square, was because everybody down there was already Chinese and they were like, yeah, we're used to this. Okay, whatever. compare that example with taiwan even if china was able to go in they wouldn't be able to so-called win the peace there's no assimilation everybody in taiwan are essentially taiwanese and the taiwanese because they are han chinese and they understand this it's the reason why they have been so reluctant to allow for any mainland Chinese to come and reside in Taiwan, because they know that this is how you can play. What's it called? The fifth, I don't know. It's the fifth column

approach. And the Chinese have been brilliant at that. So because there's an inability to win the peace and especially there's no assimilation. China's not going to risk doing anything at this stage. They're just going to play for time. And this, I just continue to see not being addressed anywhere. People just want to focus on the United States. We're going to be there. They're going to attack by 2020. So what happens when 2027 comes and go? You're just going to move to goalposts? yeah probably i mean that's it's the that's the modus operandi for politics at least here sorry about that sorry about that i went rogue i'm not sure if you want to talk about i think that i think that assimilation context is very important as especially as it pertains to taiwan

i was completely unaware of that context and it makes sense um again as in this i think it's important i want to surface many of these fundamental misunderstandings as possible because again going back to and matt alluded to he's like be careful like this guy's very pro-china and i don't want anybody here to think that i'm pro-china i've had bellagio on he's put a very pro-china um bullish china bearish future of the united states thesis out there and as an american like i as somebody who wants to get to the truth of things truth for the commoner is what this what this company is called tftc and i think we should explore both sides of the argument try to better understand with the intent of getting to a point where if you have better

understanding you can actually get things done to that point like i worry that we're spending years with all this jockeying and moving pieces on the chessboard with fundamental misunderstandings that don't actually allow us to get to a point where we can have productive outcomes and so like how much time are we wasting what is the opportunity cost of doing all this posturing and sable rattling from a position of misunderstanding that just forces us down a path of delayed productive um outcomes yeah and i'm an agreement and i do want to circle back to a point you made which is look i want like i'm i'm a child i'm a child of the reagan revolution like my most formative years were from 1980 to 1988 and you know as someone who's lived out of the country

travels back a couple times a year you know just the snapshots each year when i go i'm i'm i'm just shocked at how you know the stripping away of freedom you know as i wrote today it's like the sovereignty of it all like the independence like go out and and make it happen for yourself um and there are just so many gatekeepers across the board all over the place um and it just seems as though there's this this this element of fear that exists throughout the United States of, you know, I don't want to sound like all hokey, right? Like scarcity mentality. The United States is still the greatest, easily greatest country on earth, all of it. It just needs to go back to what it used to be. And I don't mean, you know, the 1950s and all that

horrible stuff. I'm just talking about, hey, let's get on with the business of doing business. and let's get a regulatory capture for me it just drives me insane like that that has got to be you saw that picture all the tech titans having dinner with trump i mean that's about as chinese as china gets yeah it's a moth and it's becoming like a thing particularly with the trump administration where it is it there's a lot of sycophants who just want to be seen next time the lead up to the election was like we've got the tech the tech right the tech people are all right now they they're absolving themselves of the sins of dei and what politics and bending the knee to the progressive left and now it's cool to be conservative and

free market oriented but it's all it's all about who can be seen in the picture with trump which and like literally they're i've got invited to meetings with trump or so you pay a hundred grand to get a picture with them when they were leading up to the campaign it's like it's uh it's a lot of um a lot of sizzle no steak in terms of substance it's it's really um it's really like a social posturing and sort of hierarchy game that's being played where it's like i let's actually get some shit done here and i with that being said like i'd much prefer trump in office than kamala but like going back to um there's so many just idiotic mistakes like in our space like launching world liberty financial launching the trump meme coin like just idiot like no like no

reason to do it but it's just idiotic mistake right and you bring up a really good point i think there's a couple of points where i think you know if you look at biology i think it's i always find it fascinating because it's like okay dude number one enough with the slideshows we get right china produces everything um but what he never really addresses and i think this is an important point is China right now is attempting to traverse from one economic model to the next. We're trying to move from growth model that was driven by real estate, infrastructure, a little bit of exports, if you will, to one that is going to be high-end manufacturing, more consumption, still exports, but on the higher end. And I'll be honest with you,

I have no idea if it's going to work. Nobody does. Because you also have, on top of all of this, gobs of debt. I mean, the local governments are just absolutely getting themselves, you know, they can't pay bills. So, you know, you can look at all of the, oh, look, they're building this or building that. And I think that's fantastic. I think there has been an enormous amount of positive momentum there. But much like the G7, you have tremendous, tremendous debt.

What I will say, and as I commented to you, my catchphrase has been, Keynes is dead in China. And what I mean by that is you would have seen a lot of headlines saying, oh, look, China's issuing tons and tons of bonds. They have. But the majority of those bonds are actually being used to go restructure local government debt in a way that is more transparent. Now, left pocket, right pocket, it's still a mound of debt, and you're trying to move to a whole new economic model.

I will certainly give the Chinese credit for rolling the dice, but you're talking 1.4 billion people. Property values are still underwater. Stock market is finally starting to catch up. There's been a bit of a renaissance in terms of sentiment over the course of the last six or seven months. But this is not a foregone conclusion. China is going to have to – I mean there's a lot of luck involved. If the United States didn't go to war for 20 years, would China be where it is? Probably not.

If the United States didn't focus on a lot more of these social issues that were nonsense, DEI and what have you, would China have been able to progress as far as they have? Probably not. What's the joke, Marty? When you're digging a hole and you're trying to get out, the first thing you need to do is stop digging. The United States needs to stop digging. What would be the first step to stop digging in your mind? What's the first thing to do? It's a sit down in Beijing between Trump and Xi where they say, OK, we're going to figure this out.

And we want to make sure that we're working together, that we're peers. We're going to try to figure out a way that we can share the sphere of influence throughout Asia. I don't think China would even ask for it, let alone would the Trump administration even say things like, oh, you know, Japan's here, Korea's there, what have you. It's just, look, we respect you. We want to try to find ways to work together. We've had 30 years, 30 years of collaboration that has led to prosperity and to peace. Now, granted, that prosperity has not been all that well received by lower income levels throughout the United States, the working class. That's something the United States is going to have to try to figure out, whether it's a UBI or whatever they're going to try to do. But the very first step is to just sit down and say, okay, the world is big enough for these two nations to be able to get along. And again, the degree of – and I hate this word, so please, I apologize.

I just – it's the only one I can think about. The synergy that exists between these two nations economically, there's a reason why it worked so well for so long. It just needs to be adjusted to come up with a way that all of the identified problems, let's say, the United States has with regard to manufacturing can get addressed. That's where I was talking about joint ventures and the like. Let China invest in the United States. Stop freaking out about farmland. I mean you're just – guys, like you're making a big deal over something that might have an issue, but the Chinese are just looking to figure out a way. How can we take our hard currency, get it out of the country, and put it somewhere in the United States that's still the best place in town?

Yeah, I mean that's a very controversial one. And one, I'll admit that does give me pause, particularly if they're buying around military bases. I mean that was a big thing in Texas specifically. i think texas outlawed it um outright last year and i think that's i think if there are strategic areas that you shouldn't absolutely that makes sense the united states has got a lot of farmland you don't have to buy it right next to you know fort bragg yeah well that's the other thing i i wonder about maybe i'm extremely naive i did idolistic but to me i mean we saw there was the two chinese researchers in michigan who were arrested for bringing in that fungus that could

kill crops we've seen obviously the the whole covet thing with the wuhan lab but there was some internet like nih was funding the lab and the chinese were running it and so there is this there is this sort of um you do have to have your guards up to a certain degree but maybe i'm naive maybe i'm idealist but uh i think if you can get to a point where the relationship is on good footing and you have free equal fair trade between the countries it's a good deal like the incentive to play these war games and um these spy games if you will is decreased a it and then the incentive is to cooperate and not try to sabotage each other yeah and and again i think this is a this is a good point and and i will stress this china is a an absolute lover of

the word asymmetry it's all they're looking for is how can they do little things that have bigger impacts so do i think that you know you've got people coming into the united states that are trying to find ways to be able to you know undermine systems you know the electrical grid and everything else i absolutely do i mean when you're what did i write to you right if you go for the king you better not miss and so there's going to be a lot of things that are going to be going on that we don't we're not aware of a lot of um nefarious actions i wouldn't put it past the chinese to do it this is kind of their modus operandi um but at the same time is you know Sometimes a cigar is just a cigar.

So you have to find a way, I think, to be a little bit judicious in how you go and target it. And by the way, if you want my sort of – my point of view on COVID because COVID here was – well, that's a whole different story. I guarantee you this was literally somebody who was somewhere, dropped something, and it escaped. Like it's as simple as that. Now, the Chinese are not going to admit that. Like, that's a huge loss of face, right? So what do they do? They're like, oh, it came from the United States.

Come on, man. Nobody believes that. I mean, I know there's some supposed incredible theories coming up. But as I see it, they took the SAR and the original SARS from 2003, where I was here, and they were fucking around with it, getting some funding from the United States, for God knows what reason. Some guy's having lunch one day, and he's handling a petri dish and he trips. like i've seen things like this happen not to that extent i might mind you but i've seen

big things happen over very trivial catalysts no no and then like two other things what i thought like the um again it seems to me that china thinks in centuries not quarters which is very important for westerners to understand and i was brought up in the discussion yesterday like how much um the how much of like the outcome of the opium wars and um the century between like 19 1850 and 1950 is seeped in the psyche of the chinese uh to the to the extent where they have it internally like we never want that to happen again we don't want to get owned by foreigners to that extent ever again.

It's called the 200 years of humiliation, whatever it's called. Yeah, that is front and center. It's taught in schools. The whole drug culture here, zero tolerance, man.

Do not get caught with drugs in China. Full stop. There's zero tolerance for DWI. You get caught drinking and driving here, you're in jail for 10 days. No questions asked. So that's definitely in the back of their minds. But it's not what I would consider to be a driving motivation. I mean, the driving motivation is chaos. Meaning what transpired during that 100 years is you have warlords, you had civil war. I mean, it was pure chaos.

And over that 5,000 years, if you go through the Chinese history, you find that typically this is when there's always a turnover in dynasties is things get so chaotic and the country breaks apart that you have to have somebody as a new strongman come in and try to keep it together. Um, so that is a number one priority is making sure that there is stability as best as possible throughout the system. Um, now the opium wars and being owned by any, I mean, even being owned on a diplomatic level is viewed as being like, you know, the opium wars, you know, you want to make sure that you're being viewed as an equal. And right now, I keep coming back to this. Most of the countries around the world will sort of tacitly view China as an equal, the large G7 nations.

The US is the only one that does not. So, yeah, I think it's stability more than anything else. Yeah, that's another big topic here. Like, is the fentanyl crisis a reverse opium war tactic to destabilize what's happening? domestically here in the united yeah oh i think so yeah i mean it's again it goes back to my issue about asymmetry um and i think the the way in which the chinese are doing i think is again it goes to the brilliance i mean i don't mean to sound callous with regard to the outcome but you know they can they can honestly say hey look we're doing what we can we're not actually sending

the fentanyl we're just sending the precursors and those precursors can be used for a whole bunch of different things. Just so happens that it's being sold to Mexico. But the Chinese will also look at it and say, hey, you need to close your borders and you need to get this drug issue under control. And as much as I think that there is a driving element with regard to the Chinese using asymmetry in their tactics to be able to exploit this, no doubt. I also think that this is what it should be within the power of the American government to stop it. It's a supply and demand issue i'm not saying oh the war on drugs and but you know i think there's a lot of money being made by a lot of groups across the whole border um so if you were to stop the demand

issue of it um i think there would be you know china be like all right we're out of here we'll figure something else out but um yeah i'm not going to sit here and say oh no it's just a coincidence it's not it's not a coincidence no yeah there was just a book written apparently there's u.s military uh personnel that were that were working with the cartels to move all this stuff in it is uh are you optimistic or worried about this the future state of the relationship between the united states and china do you think that trump probably via the behest of scott percent and the advice of scott percent can come to recognize the this sort of way the best way to do business with the chinese and um swallow his pride a bit and actually get something productive

done or do you think we're destined to continue down this sort of saber rattling um uh sort of uh very uh what's the word i'm looking for confrontational relationship yeah so in my own dna i'm a raging optimist uh probably much to uh my and probably not too healthy but i i just i i'll always have an optimistic perspective on things and on the point of the relationship between china and the united states i am too grateful that Trump has assumed power. It wasn't a redo of the Biden administration, because I think there were very clear signs in that sort of side of the political party that, you know, let's try to push the buttons. Like Nancy Pelosi flew out to Taiwan. There was a lot of events

that, again, that's why I said the degree of restraint of China, I don't think really gets appreciated. But Trump came in and my immediate reaction was, oh, this is not going to be good, Because if you looked across his, you know, Hegseth, Rubio, I mean, guys in Congress, I mean, China is the most bipartisan issue where there's agreement like we all hate China. Great. Like, how's that going to help? And Trump has been able to keep that whole sort of group in check so far. So that allows me, that provides me with an enormous amount of comfort. um how it goes forward i think is going to be open to things like the midterms i mean china

understands by the way how the american political system operates they learned this the hard way back in 96 so you know they're they're just sitting there saying look we're just going to kick the can until november 26 because in november 26 everybody in the united states turns the brain off it's thanksgiving they go to the end of the year next thing you know it's January 4th. And what is it? It's midterms. Everybody's talking about midterms. Everybody's energy is either on trying to maintain power or trying to reassume power. So the political capital and the ability to sort of have the bandwidth to deal with China is going to be very minimal. And I think the next two months are going to be very telling because they've got a lot of

wood to chop between now and call it the middle of November. If there are issues, they'll probably pop up Q1 of next year. But like you and like many people on this who are viewing or listening to this podcast, it's quite possible over that period of time that the United States may have a few houses that are burning that they need to focus on. China is not going to be the priority. So the financial situation, as I call it, the United States is absolutely unquestionably fiscally boxed in.

Everybody knows it. It's the world's worst kept secret. Nobody talks about it outside of this echo chamber, right? And how are they going to square the circle? I just don't see how they're going to be able to do it. So we'll have to wait and see. But I think for the time being, I think I'm overly positive that we're not going to go into anything that's going to be overly nasty. But that could change by the Q1 of next year.

you bring up an interesting point too um maybe a controversial thought experiment but is the nature of the u.s political system particularly elections completely hamstring us in terms of being able to actually get stuff done because people talk about four-year cycles but it's really what we're highlighting here two-year cycles you have presidential election then two years later of midterms and many would argue they're equally as important and so you have and people for the presidential election it's like a year and a half of bandwidth mental bandwidth talking about and focusing on midterms to your point maybe half that or three quarters of that eight months um eight nine months january yeah right and again i mean you can you can see it i mean you're gonna

I mean, look, you're a family man now. You've got three kids. You and your wife are insane. And once Thanksgiving comes, you're mentally going to be checked out until the beginning of January. You're going to be in the family and everything. And you are representative of so many people throughout the country. So, you know, China will use that to its advantage and say, look, okay, we'll just wait for the next guy to come in maybe. Or we'll see.

well and i've learned this through the mining industry too because you have the u.s holiday system that rolls right at the chinese new year where everything shuts down for a month in china and yep so it's like you have even an even smaller window to actually be productive to get stuff done i've got tell me about it and that's that's typically when in january through february anywhere yeah anywhere from the end of January to early February. It's

funny. We always have to prep for Chinese New Year in the mining industry. It's like, okay, if you want to get anything done with the Chinese counterparts, make sure you get it done before the New Year. It's with anything.

It's with anything. Well, Peter, this has been incredibly illuminating what final thoughts were their words of wisdom advice would you give anybody listening to this um yeah yeah we do have some policymakers to listen to this i'm pretty sure so okay um okay number one if you have not been to china i implore of everybody to get on a plane and come out it's actually you can get you don't have to get a visa anymore you can do transit as Americans. It's pretty easy. Come and see for yourself. Now, here may be the more

controversial. Do not go to Beijing. I would even argue, I can't believe I'm saying this, don't even come to Shanghai. If you can land in Shanghai a day, you want to go to Shenzhen, you want to go to Hangzhou and Chongqing. These cities are just, I mean, this is where the excitement is. This is where the energy is. You're seeing real Chinese entrepreneurial real spirit people out having a good just people living their daily lives get on a plane come out and spend some time every person that i have sort of been with that has done this over the last 18 months to the man and to the woman they've said to me this is not at all what i expected and i i just really encourage people to do that um the other the other point that i would make to you is

whatever you see or and i would implore you to be very careful when you go about um you know indulging in certain content that's like china's going to collapse um it could it very well could i'm not going to say it can't uh but again i've been hearing this for two decades so when you when you're hearing input from people talking about china the first question you should ask yourself is, has this person ever been to China? The amount of second sourcing of information of late is frightening. Meaning that people are talking to people who have agendas who are then translating it and saying, oh, this meets my confirmed bias. So I'm going to put this out there. And then finally, and this one is probably, I don't know. We'll see

how it goes. Anybody that wants to have a deeper conversation about any of this stuff, hit me up on Nostra. I will talk to anybody as open as possible. As I said to you in the email, Marty, I'm in Shanghai. I'm in China. I'm talking about Fenton. No one's coming in the door and black bagging me. I have a BPN, as I said. My BPN is from China Telecom. They just want the money. All of these stories that, oh, sorry, you got me going. There's no social credit score. None. I'm done with all this stuff. So be mindful of the messages you get out and just make sure to question who's saying it, what agendas they have, including myself.

I'm glad Matt called me out. Good. Again, yeah, just reach out. Again, love Nostra. I'm still shocked that you guys are talking about it. I'm like, oh, wow, that's pretty cool. Talking about what? Talking about me.

Oh, that you're coming on here? Yeah. I mean, no, I'm not trying to blow smoke up your ass either. I was really happy that you responded to that newsletter. And I'll hand up. I'm probably guilty of hearing information about China from people with an agenda and taking it at face value and sharing it. And I've been, because I've fallen for it before, like Peter Zion, like the whole demographics problem, another one, Kyle Bass, Hong Kong is going to fail and China is going to try to take over America. Like I've definitely fallen for those theses, but they've been around for, at least I've been paying attention to them from those two individuals for the better part of a decade.

And it's like, it hasn't come true as to what's actually happening here. So here, just a quick editorial note on these guys, and there's a host of others. Have the opinion. Keep the opinion. That's fine. If you change your points of view, that should be fine. But when you go on traditional media like CNBC or CNN and you're pitching essentially the same storyline that you've been wrong about for 15 years or 10 years, I would think it would be in the fiduciary duty, let's say, of the anchor to say, okay, we appreciate this perspective you have on China. You've been wrong for a long time. Why should we listen to you now? What's changed? and and yet because of the nature of how media is and everything else i get it that's me being naive but i think that's more my bigger gripe because these same people are on all the time

yeah no we see it i mean it's funny it happens in the bitcoin space too there's like a a carousel of people many who are good but many are like you've been particularly in the cryptosphere you've been consistently wrong for better part of a decade and you're still getting trotted out and uh unable to show your your wares to to the to the retail public it's very disheartening and that's why like i love having this podcast and being able to have we just spoke for an hour and 40 minutes and really diving deep into these topics and i'm curious about and i will admit i've probably spoken out of line on the topic in the past but do earnestly want to learn and try to get to the truth.

And I think someone like yourself who's lived in China for 30 years and definitely has a better perspective than myself and likely others who haven't, but are speaking confidently on the subject is important. Right. No, and again, as I said,

I'm not going anywhere and I'm super ecstatic to be able to talk to anybody and be challenged. I mean, I don't have all the answers, that's for sure. Yeah. Well, hopefully this is the first of many.

I'm sure the U.S.-Chinese relationship is not going to be boring anytime soon. So as things develop, I'll make sure that our conversation is running behind the scenes and if we feel that it's important to get on air again, have a conversation to update the freaks about what's going on. We should definitely do it. Yeah, and I'll be here. Um, and I'll keep, I'll keep doing my, my China morning missives or whatever. I keep calling them.

Um, I have a good time with those and the engagement's been great. I mean, and I am, by the way, Nostra only. Yeah. I was looking for you on, on X. I couldn't find you. So it was very impressive to see that you're Nostra only. I haven't touched him yet. I, it's hard when you have the engagement, but for, for me, it was, you know, look at

the end of the day, I am a, I'm someone who really doesn't like centralized power. uh so ironically that i live in china right um but uh that's why i think noster it was so funny i remember in the very beginning been on two and a half years saying sending a a note to jack and i was like i'll tell you two things the next election meeting 2028 it's going to be only two topics bitcoin and china and he and he wrote back and he was like probably and that's what it was that's what it was and the border the border was a big one but uh peter i know it's getting late where you are appreciate you spending your friday night with me um i feel very fortunate that you were willing to do that and uh until next time i can't wait to do it again always

gonna be around marty i appreciate the invite and uh you be well with your family you as well peace and love freaks if you've made it this far i want to thank you for listening and ask you for a couple of things. Can you subscribe on the platform that you're listening to? Maybe give us a rating and a review that helps the show quite a bit, whether you're listening on Spotify,

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