The Great Simplification with Nate Hagens - Could the West Lose the Resource Wars? AI, Rare Earths, and Economic Statecraft with Michael Every & Craig Tindale | RR 22

Episode Date: March 4, 2026

As our governments, institutions, and the public become more aware of the increasing pressures on material and energy availability, we've simultaneously seen powerful ripple effects for industrial policy, economic planning, and geopolitical dynamics. Parallel to this story are evolving strategies unique to each nation as new lines of power emerge alongside the trends of artificial intelligence, competing demands for rare earth metals, and an increasingly unstable global power balance that underpins all of it. How have these seemingly disparate factors combined to influence recent international events – and how can understanding them help us forecast the future of global governance and power?  In this episode, Nate is joined by financial and economic analysts, Craig Tindale and Michael Every, to discuss the widespread implications of growing geopolitical tensions over scarce resources and the rapidly changing foreign policy and economic statecraft that countries are implementing in response. Importantly, Craig and Michael emphasize the centrality of China and the U.S. as the two superpowers reshaping global alliances, and how industrial capacity and material constraints underpin each move made in their pursuit for dominance. Ultimately, they emphasize the need for clarity and realignment of the goals for economic and industrial policy as we leave behind the era of growth and grapple with a simplifying world. What can the long overlooked story of rare earth metals, energy resources, and industrial capacity tell us about ongoing geopolitical events? How might continued AI development play a key role in the future of economic statecraft and the international balance of power? And finally, how should we re-think what economic growth actually serves in an era of resource constraints, geopolitical competition, and ecological crisis? In other words, what is GDP truly for? (And what is GPT really for?)   About Craig Tindale: Craig Tindale is a private investor who has spent nearly four decades working in software development, business strategy, and infrastructure planning, including in leadership positions at Telstra, Oracle, and IBM. Additionally, he has direct experience working in East-to-West supply chains, including as the CEO and Asia Regional Director for DataDirect Technologies.  He's now pivoted to investing in groundbreaking ideas such as drone reforestation through Air Seed Technologies, and uses his knowledge of Chinese industrial strategy and Western tech demand to identify the choke points in Critical Metals markets. Most recently he released the white paper, Critical Materials: A Strategic Analysis, which offers a systems synthesis on how the race for rare earths and the return of material constraints is shaping geopolitical relationships.    About Michael Every: Michael Every is Global Strategist at Rabobank Singapore analyzing major developments and key thematic trends, especially on the intersection of geopolitics, economics, and markets. He is frequently published and quoted in financial media, is a regular conference keynote speaker, and was invited to present to the 2022 G-20 on the current global crisis.  Michael has over two decades of experience working as an Economist and Strategist. Before Rabobank, he was a Director at Silk Road Associates in Bangkok, Senior Economist and Fixed Income Strategist at the Royal Bank of Canada in both London and Sydney, and an Economist for Dun & Bradstreet in London.   Show Notes and More   Watch this video episode on YouTube   Want to learn the broad overview of The Great Simplification in 30 minutes? Watch our Animated Movie.   ---   Support The Institute for the Study of Energy and Our Future   Join our Substack newsletter   Join our Hylo channel and connect with other listeners  

How is it possible to do what we would need to do in the West in terms of building refineries, etc? If you're looking at it from a financial market perspective, they'll go, aha, well, markets will work it out. Well, no, they won't. Markets won't work this out because market forces, the way that we understand them, are not at play. Even if you talk to generals, they say, okay, well, look at all the opportunities in this sector to try and leverage private capital in. You're talking to a room full of people who want to make a 20 or 30% return, and you're dealing with an other side, which is prepared to produce everything at a loss in perpetuity in order to achieve that control. How do you possibly think that is going to allow you to win? You're listening to the

great simplification. I'm Nate Hagen's. On this show, we describe how energy, the economy, the environment and human behavior all fit together and what it might mean for our future. By sharing insights from global thinkers, we hope to inform and inspire more humans to play emergent roles in the coming great simplification. Today I'm joined by two former TGS guests Craig Tyndale and Michael Evry to discuss their financial analyses of the growing tensions between critical materials, industrial capacity, and geopolitical power, and to take a deeper dive on what these trends say about the stability or instability of our current economic and political systems.

Craig Tyndell is a private investor who spent nearly four decades working in business strategy and infrastructure planning, including direct experience working in east-to-west supply chains as the CEO and Asia Director for Data Direct Technologies. He now uses his knowledge of Chinese industrial strategy and Western tech demand to identify the choke points in the markets for critical metals. Michael Evry is global strategist at Ribobank, Singapore, analyzing major developments and key thematic trends, especially on the intersection of geopolitics, economics, and markets. With over two decades of experience working as an economist and strategist, he analyzes major financial developments and contributes to various economic research publications. In this conversation, it was my hope to give Craig and Michael the opportunity

to merge the parallel stories that they've both been telling about the restructuring of global power amidst rapidly changing industrial, technological, and geopolitical landscapes. And I was not disappointed. To put it bluntly, this was probably one of the most intense conversations I've had on this platform in the four years of doing this podcast. And the implications of what we covered, I had previously known or felt a looming sense of, but this conversation made them more real. I understand this episode may not be everyone's cup of tea, but I think it's an extremely important conversation nonetheless,

especially because it demonstrates a wide boundary, cross-disciplinary approach to these topics that I think is vital in understanding the full picture of our unfolding more than human predicament. Please welcome Craig Tyndale and Michael Every. Michael Every, Craig Tyndale, welcome back. both of you to the podcast. Thank you. Great to be here.

When I found out that you two knew each other, I just had to get you in the same conversation. So I used to say this a lot, and I will start the podcast by saying this. I have so many questions for the two of you. This conversation could go in multiple directions. I'll start by saying this. You're in Thailand and Australia, respectively, and it's Thursday night here in Minnesota. anything important to happen overnight that I'm unaware of. When didn't it?

It would be, I think, the most appropriate answer. Well, I think, look, speaking from the Asian Times zone, Craig, you were probably the same few hours ahead of me. You know, we all woke up and just immediately checked our phones to see if the war with Iran had started. And as of now, our time of speaking, not yet, but we've got the typical flow of headlines with some of them saying,

everything is going wonderfully and we're about to get a new, new agreement struck and others saying things are actually falling apart and Iran isn't moving one inch and, you know, buckle up for when market closes at the end of Friday. We're going to have to talk about Iran. As a podcast host, it's difficult because I'm not really a journalist. I'm kind of an analyst who cares about these things, but there's a lead time, right? We're going to have to air this episode a couple weeks after it's recorded and a lot can happen in the world. So I will. time stamp. This is Thursday, February 26, 615 U.S. Central Time. Let's dive into it. Craig Tyndale, in your recent episode a couple months ago here, you laid out how and why rare earth metals and other critical materials are increasingly defining our global economic and financial landscape. When we recorded that podcast, silver was like $58 an ounce. It then went to $120 an counts back down to 65 or something, and I think it's at $88 or $90 as of this recording. So, you know, specifically, not just whether the United States and other Western nations have

the reserves of these metals and minerals or not, but whether they also have the production and refining capacity to meet their own consumptive needs. And Michael, I understand that you are aligned with Craig's analysis and have been telling a parallel story regarding economic state craft for many years, including multiple episodes on this platform. So let's start there. As governments, investors, and markets have been catching on to the story you've both been telling. How have you seen them starting to respond to these issues?

Craig, start with you. Well, I guess it's a form of unrestricted warfare. And I mean that in the context of the book that was written by the two Chinese generals in 1999, whose names I can't pronounce. Now, the reality is there's an old saying that old generals fight the last war, and, you know, that was, I guess, diagnostic of some of the issues that the Allies had in Europe and both World War I and World War II. They'd prepared for old wars and they weren't ready for the new wars. And I think we're under siege at the moment through, you know, I guess some fairly thought-out rivalry.

Now, we've gone through that most of the rare earth metals and most of the chemicals, you know, 50 to 100% produced in China and that forms a choke point. Then we go to the contractual level, which is, you know, most of the off-takes are channeled to China as well. So the mine might be in Australia or Canada or the US, or even Brazil, but the contractual. but the contractually configured to send all their ore to the refineries. And we haven't got the refineries anyway because we haven't got the financial capital or the models under our existing system to make them sustainable. Now, you know, if the realities, I think Canada, through Glencourt,

cancelled the idea of a copper refinery because the ESG cost was, I think, near 9. percent or something ridiculous. And that's 9% of the existing capital. The problem there, you know, fundamentally okay. They didn't want sulfur released into the atmosphere in large amounts. They weren't 99% reduced and arsenic doesn't sound like it's good to anyone. So they wanted that, I guess, through a process, you know, they basically spray the arsenic fumes with water and they return it into a solid and buried in concrete or something like that.

So, you know, they've canceled that. There's one was just canceled in Western Australia and because it wasn't profitable, because we're under economic war. And so it's a form of state capitalism. Recapping on that, there's also all kinds of nuances, like the golden, I call the golden screw. And that's named after one of my car parts

were failed to be obtainable, you know, during COVID. And I couldn't drive the car for an illegal. 12 months. You know, do you, if you have to, talium, sorry, that's a rare earth, and gallium, if you're missing scandium, does that break you down because you've got a mixture problem then, because you, you, you lack the main thing. So what is the, back to your question, what is, what is being done? There's a lot being done, but not enough. I would characterize it. You know, there's a recent tender by, as an example, Department of Energy, $355 million.

Let's get all that coal dust that billions of tons are laying around because they're rich in minerals. And let's see if we can refine that coal dust and, you know, we can mine our tailings, so to speak. There's all different versions of that for aluminium and all kinds of things. There's lots of, for instance, in the tailings of aluminium smelters, there's lots of gallium. and we need gallium to knock down the drones and the hypersonic missiles. So we've got a metabolic system. Everyone thinks it's a cloud and it just appears on our screen, but it's a melabolic industrial system.

It's probably the heaviest metabolism in any industrial system ever created. And it snuck up on us because it needs energy. It needs parts, you know, from people like, like Siemens for Transformance. It needs an ESG environment that actually allows it. And it needs the rare earth metals that China is walled up and put in prison and is licensed to us only in ways that they decide. Well, I want to follow up on the golden screw concept because I think that is going

to apply in many different aspects of. our society in the coming decade. But let me bring Michael in here. Michael, as previously mentioned, a key focus of yours in your work on podcasts is the importance of distinguishing economic policy from economic statecraft. Could you give us a very brief refresher on what statecraft is and how you currently see it intersecting with the framework on critical minerals and materials that Craig just opineals. on and usually presents.

Yeah, sure. First of all, it's a real pleasure, not just to be bagged, but to have the chance to talk to Craig on camera, you know, live rather than chatting, because his work is just so staggeringly important to be able to underline all the nuances that they just did. And obviously, there's a lot more we're going to unpack. But to address your point, what I've been saying for the past couple of years, over and over and I'm sure people are kind of getting bored hearing me say it and I get bored saying it. But to try and break it down to its simplest component part, the golden screw of that is what is GDP for?

That's what economic statecraft really begins with making you ask that simple question of what do you think you should be doing with it. And the idiot answer that we've had via economic policy for like 45 years has been because markets. just let the market do everything. Well, what if the other team isn't doing that? What if the other team is using state capitalism, neo-mechanalism, whatever you want to call it? Again, we can unpack all those terms, but I'm hoping we don't have to for this particular audience.

And you're using the opposite free market strategy. That just means that they take the high ground on everything. They end up with control of all the choke points, you know, upstream, midstream, downstream, downstream that we've been talking about. So economic statecraft is, is attempting to grapple with that very uncomfortable reality and say, what do we do? But specifically to what you ask me, Nate, which is what am I seeing people do in response to what Craig has been raising? Like specifically, here are the chug points.

Specifically, here we have the shortages, X, Y, Z. There's a very, very split reaction. Because on one hand, after a short delay, there'll be a, ah, and a nod and a recognition that there's been an enormous error made. And then not a lot happens generally because you have a cascading domino effect of policies, many of which are absolutely sacred cows, which all have to be slaughtered all at once in order to actually achieve the outcome that you want because you are having to deal with free markets, free trade,

ESG, pricing, vested interests, labour markets, infrastructure, budgets and budgetary rules, even interest rates. All of them, many of which have been segmented into independent circles where one person isn't responsible, all of them have to change, or how we use all of them have to change. And everyone has to be singing from the same hymn sheet

and all agreeing what GDP is for. And as a result, the people who built this fragmented, atomised efficient, bloody stupid system around us now tend to look rather panicked and then just say, we'll get back to you. And with the exception of America, that's pretty much what's happening. So let me ask you this, Michael, because you talked to a lot of investors and VIPs around the world. When people first learn about material and energy constraints that technology and money alone can't solve, you said they first have an aha and they're like oh that makes sense that makes sense

until the implications of what it means start to encroach on their job description or their identity or their plans and then they kind of revert to denial or just I better keep my mouth shut and not dig further is it that sort of cognitive dissonance going on? Very much. I mean let me give you some examples.

obviously on the ESG front, how is it possible to do what we would need to do in the West in terms of building refineries, etc.? And again, Craig can speak to this infinitely better than me. But how is it possible to maintain that with the ESG agenda? I don't have the answer for that. But if you don't, you just say, well, okay, so we're sticking to the ESG agenda. Well, that doesn't solve the problem, but there you go. If you're looking at it from a financial market perspective, which a lot of the people I talk to, they'll go, aha, well, markets. will work it out. Well, no, they won't. Markets won't work this out because market forces the way that

we understand them are not at play. Politicians just stare blankly and central bankers just say, well, interest rates, you know, maybe the base rate needs to go up or the base rate needs to go down. And I've been saying loudly for years, maybe you need multiple interest rates. Maybe some sectors are going to have to have very, very low costs of borrowing and others are going to have to have high ones. And then everyone, of course, gets very confused because that breaks every single central rule of our system. So those are the kind of individual experiences you have. But collectively, everyone's in a model. And one more just to add, sorry, just for another 30 seconds, even if you talk to generals, which, you know, I have done a bit recently at some interesting events, they say,

okay, well look at all the opportunities in this sector to try and leverage private capital in. And I say, yeah, absolutely. But if you're talking about rearmament, so in other words, upstream, midstream, here are your bullets, you know, here are your widgets. etc. Here you're at drones. You're talking to a room full of people who want to make a 20 or 30% return because, you know, their private capital or investors,

et cetera. And you're dealing with another side, which is prepared to produce everything at a loss in perpetuity in order to achieve that control. How do you possibly think that, which is the equivalent of an ESG system, is going to allow you to win, you know? Wars are one with bullets,

not profits. And individually, each one of those interest groups would just go quiet and then wander off and just trying to keep doing what they were doing. What you just said reminded me of the frankly that I did last week, and I put some conceptual graphics in it that there's really three pricing models. There's one which is no frills, no externalities at all. There's another that puts a green wedge.

You might say ESG or something to account for the externalities on the global biosphere. And then there's another maybe Europe that has a little. large gasoline tax that puts some reflection of the finiteness of the non-renewable inputs to our system like a depletion wedge. And in our current world, what we're doing is we're having different people with different value systems express these, this is how we want to live. We want to have solar and we want to have renewables because we care about climate. But they're going to be outcompeted by the pricing model number one that has no frills. And so this gets kind of back to your, what is GDP?

and so there's competing value systems embedded in these pricing models, but our current global metabolic superorganism cares about cheap energy and cheap access to all the stuff, so that pricing model is going to win. Do either of you want to follow up on that? I think the whole pricing model is the problem. Okay, your pricing is basically a lagging indicator. It's like a, you know, if you use the metaphor of a dashboard,

it's like a dashboard that tells you the speed you were going 30 kilometers, sorry, 10 minutes ago. And so what it is is a lagging indicator. So I'll give you an indication, you know, the exact one that Michael was talking about. That is, you know, we go by consumption inflation. We go by the indicators that that dashboard tells us about consumption. But we totally ignore the industrial sector. And I've actually got a theory that they've totally ignore it because they're boffins and they live in weird rooms inside the Federal Reserve.

And they, they, they, it's all been math to them. They haven't noticed the industrialization hollowing out. And so it hasn't been alarming. I said to somebody the other day that, you know, there's probably one lobbyist for mining and manufacturing versus, you know, every hundred lobbyists for the banking sector, especially with the Federal Reserve. registered lobbyists for the Federal Reserve. I actually couldn't find one for the mineral sector. And so, you know, maybe it may be just as simple as an angle that they never spoke up for themselves as well, because there's always this kind of contrarian idea as well that it's

happening for a reason. And I don't think, you know, one of the things that I think brings a bit of sanity to this is I think the period of AI has worried a lot of us, you know, we're going to. with respect to privacy and individuals and things like that. I think the next foot to drop is that the amount of granularity, the lens that we can put on government and the system, you know, the whole economic system, is going to be exponentially greater,

and that lens is going to be exponentially finer, that clarity itself, being able to see the mechanics of what's happening economy in such detail, and also anyone can put it through their aeon and ask themselves what's going to happen, is going to change it. So let me just summarize that. There's a lot of risks to AI, which we don't have to get into here. But what you're saying is one possible benefit is it is going to allow the material reality

and the biophysical substrusting. that underpins our financial and technology narrative to be clearly understood by a lot more people faster and that that might change decisions. Yeah, it's an evolutionary single signal to us, okay, that we're evolving and the world's become too complex to be compartmentalized. And, you know, we used to have legal and accounting and this and that because we had to compartmentalize information. And we never integrated it. We never orchestrated it, right? And so the next era, will be about going horizontally, so to speak, rather than vertically. And, you know, all the vertical specializations, when we look at all of them put together

horizontally, we'll get some surprises, and that clarity will give us insight into how to change it. But that clarity still will come from underneath the hierarchy of GDP, more GDP for growth and the metabolism of more energy and materials. That's the goal. No, that has to change too. That has to change too. Like, if you haven't got materiality, right,

in the of my two ledger concept where you've got financial ledger and a material ledger, if you haven't got materiality built into it, what happens is your financial ledger or your paper-on-paper economy eventually destroys your currency and destroys your entire system. And so when that,

You know, we've got to assume that the clarity of showing people that will actually move to politicians, which it will, and will evolve into a new error because we won't be able to stand those frictions. Human beings move because of frictions and pain, not because of great ideas. Michael, please follow up to any of the nine points Craig just raised. I'm trying to remember all of them. Obviously, look, I concur on many of them. What I would just say is this. I've been arguing alongside the what is GDP4 question for for for years now, that what's going to have to change isn't just the technology, which has.

And I'm no expert on AI, but I believe we need to discuss it conceptually much more in a moment. It needs to be the ideology. So that's what you were just alluding to, Nate. as in what are we trying to do, but it needs to be linked to physicality, as Craig was just saying, on materiality. And ecological reality as well, I think. Okay, so lots of why words or words ending in why, which are all important here. If you think of it like this, I mean, I just said, look, war is the one with bullets, not profits. I'm not any kind of militarist.

But military is another word that ends in why, which is obviously in the background of the discussion right now, and will remain so for many, many years. you can have the most efficient system in the world, but if, for example, your entire population or all the decision makers in your particular polity, there you go, there's another white word, are all deciding that they are, you know, incredibly pacifist Christians or Buddhists or even Jains, so, you know, completely opposed to the taking of life,

you could be producing Berettas and Kalashnikovs and M16s or whatever. No one would use them. So you have to also have a polity and an ideology beside that materiality which can understand what are we willing to actually do with everything at the end

and what are we doing it for and where that flows back to the argument I was making a moment ago and it's not even an argument it's an observation dealing with people is that the compartmentalization

that we have intellectually and functionally is only going to be removed I think with a revolution because I can assure you the repeated conversations with people it's the old adage

it's very hard to get a person to understand something when their job depends on them not understanding it. You are talking about removing vested interest after vested interest, profession after profession. For example, if you say to an economist, you have to now understand things military, political and ecological. They're just going to get furious. If you say to an ecologist, you need to understand war. They're just going to get furious. If you say to a politician, you need to understand the economy. They're going to get furious. If you say to people in financial markets, you need to understand the material. They

it furious. Everyone says, yeah, yeah, and they don't do it. You're asking someone to retrain. Very often after decades of experience, because they're at the top of the ladder, obviously. And they're just simply not going to do it. As they say, progress in science comes one funeral at a time. Well, unfortunately, from an ideological perspective, we need the equivalent of the black death rapidly, because we just need to see a rearrangement and a reshuffling of what people do and don't see within their discipline. or to expand their disciplines to take a more holistic view of everything. But where's that going to be studied?

Who's going to teach that? And I mean, AI is a tool which can allow us to do it, but it can't even operate through traditional educational channels. Because in kindergarten upwards, you're channeled into this extra specialized and increasingly useless, you know, channel. So it's such a broad-reaching issue. It rings true to me. So we have the material.

constraints. We have the complexity constraints in the analogy of the golden screw that Craig said. And then we have something like the Upton-Sinclair quote of retraining your status and life identity as technology changes. And those are all kind of hurdles. And we haven't mentioned the biophysical decoupling of our financial claims on reality. the flat to maybe eventually declining actual reality and the first step is a doozy. So I know you guys generally agree with me that that doozy of a step is likely or probable in the next decade or so. So I always come back to that and how we're going to manage it. But let's maybe cover some other topics before we get there. Craig, did you want to reply to anything Michael said? No, I think we covered it. Yeah. So back to the initial few questions. Michael, how are the

rapidly changing dynamics from your statecraft position affecting the position since you've been last on the show of the hard and soft power for the major global superpowers, U.S., Russia, Europe, how do you see the regional dynamics changing? Sure. Well, look, in a nutshell, the U.S. now gets it. And I believe part of that is due to Craig's good work, which is, you know, to be applauded. But there's a very big difference between getting it and doing it. And again, there's just a sea of vested interests to swim your way across with sharks in it to try and actually achieve something. I've been making the argument in the past couple of months that Trump is effectively a reverse Gorbachev,

who's trying to bring in a reverse perestroika. So he's attempting to reform an entire system. I mean, that's a parallel to what I was just saying effectively. What would happen if all the countries get it? Well, if all the countries get it simultaneously, you either have a kumbaya moment where everyone understands that there's only one planet, one humanity, we all need to understand this is silly and I don't believe for a second that will happen and just sit around the campfire and it wouldn't be a campfire because that's probably not environmentally friendly but sit around some kind of environmentally friendly heat source and have some kind of environmentally friendly marshmallow together but that's simply not going to happen I think almost immediately

what you will have instead is a zero-sum scramble for you know the remaining resources to make sure that at least one policy or one civilization has the whip hand over the other and that's that's exactly what you see. So you can decry it, but I think it's a very, very understandable reaction, which anyone looking at history would have said is more likely to occur. So America gets it, but it's very hard to implement. And there are lots of questions that flow on from that. Europe is talking a hell of a lot and doing very little, because it's incredibly hard to get 27 countries to actually operate as one, when they each has their own vested interests, and often they run in different directions. And when you are, you all, you are in, you, or not, you are,

are died in the world believers in the power of rules and regulations and markets which is a bit of a contradiction in terms but regulated markets shall we say when actually you have to start ripping up all of the

base assumptions that you thought you were building your union on and they recognise that now but then doing something about it I don't know if they can catch up in time optimists will say they can pessimists will say they can't again that's a whole different discussion discussion, China just carries on carrying on. You know, they already have a winning formula for

themselves. But to kind of open up the discussion more broadly and show how it all links in, and there are so many things that I'm sure all of us are going to throw in. We spoke about Iran at the beginning. And even things like this are linked, because I would argue that while China still has the whip hand on materiality in terms of rare earths, for example, and just overnight, we were seeing that once again critical rare earths, that the US needs for manufacturing microchips, and for jet engines, well, I mean, that includes military jet engines, by the way, are suddenly in very, very short supply,

which means production will have to drop off fairly soon. China has that whip hand, which effectively limits how much the US and the at US allies can rearm even if they want to. And the time window within which you need to rearm is not one that you get to set by market forces or at leisure, or in accordance with budget schedules when it needs to be done, it needs to be done. We all understand that, and that's national security.

So I've been arguing for a while what the US is going to do, and I think we're already seeing this play out, is explain to China, okay, we can't match you on that, even if we now get it, and start using economic statecraft, for example, to have more state ownership of firms in the US or golden shares or price controls and tariffs and various different measures,

the US is putting in place. That will still take years to get something rolling out on the other end. In the interim, we are going to make sure that you are aware you won't get raw materials from the parts of the world that you rely on if you're going to play that game with us. So, for example, we don't get rare earths. You might find you can't get oil from Venezuela and Iran. And understand that we can make that a lot more painful for you if you want to keep playing that game. And that, I believe, is part of what's driving the agenda right now in Iran, not just that Trump is trying to distract from other headlines, as someone said to me yesterday. I think it's a very, very focused strategy, which is incredibly high risk, can go wrong in all kinds of different ways. But from the U.S. perspective, there's not really any alternative. I happen to agree with all of that. And I personally think oil is, for now, not necessarily forever, the master resource, even more important than some of the rare earth's. and the U.S., at least for now, is independent in a way that China is not.

Craig, please jump in and give me your thoughts on what Michael just said. Do you remember Chinese burns when you were a kid where they grabbed your arm and they twisted your arm? Yes. We've got two conjoined twins giving each other Chinese burns. Well, it's also a Chinese finger trap, and we keep going farther in. Yeah, and the finger trap, but what they don't, realizes, I think the old term was Siamese twins, wasn't it? They don't realize they're conjoined twins, and you can only do this to some extent work before, you know, you get to the precipice

of something you don't want to get to, and then you pull back. And, you know, oil's one of them. You know, when I saw Venezuela unfold, I thought, yeah, okay, Iran has to go. Somebody said to me that, oh, you know, we know how regime change works, and we know how, you know, that's never work before. Look at Iraq and look at Vietnam. I said, but you've never been in an existential situation before. You know, at the first tier of hierarchy as far as the decision-making, yeah, you probably ruled yourself out of any more, you know, regime change. But at the second tier, it might become a really easy decision. And so Iran, I think, is a must. I don't think there's any arguments there. They need to control Iran to balance the world power. That's the incentive.

and whether you agree or not, it's immaterial. And so where I think we get to is this kind of multiple Chinese burns trying to work out. There's ultra-fine quartz that, you know, it comes from, I think, lone pine or something pine, spruce pine from... In North Carolina.

In North Carolina, that's a... You've got their software, which they controls all their fabs, you've got the, you know, you've got a multiple things. It's not, it's not, it's not, it's not, it's not all one-sided. And so what happens over time is, you know, will come to some consensus and the system will change. But, you know, I think some states will become Chinese vassalage. You know, Canada, for instance, are not interested in their own independence. They're interested in, I guess, genuflecting to Trump and, sorry, Xi, and, and, and, and, and, and,

and tearing Trump apart. And to me, that's all kind of theatre. It's posturing. And it doesn't get at the bottom problem, you know. He let in 48,000 cars without restrictions that are subsidised. And, you know, the reality is, what did he get for that? He got to export, I think it was $2 billion worth of grain. So he's basically taken the decision to undermine his industrial economy.

in order to sell some grains today, and he's going to go and sign up agreements. And I don't think these people are self-aware about what's happening. I agree with that. Michael. Yeah, on that point, I completely agree. And I think we're all in agreement on what's happening on an underlying basis between the US and China. And I think if you don't start seeing everything through that lens, you desperately misread what's going on, which feeds back to what Craig was just saying. because obviously my role as global strategist, you have to look at a lot of different countries,

and I'm lucky enough over my life to have lived in nine, including Australia, which is a wonderful place. And wherever you live, of course, that's the center of your outward concentric circles. That's natural. But that doesn't mean you are actually the center. If you live in Micronesia, lovely as Micronesia is,

you don't, you know, you're not the fulcrum around which everything else and the world pivers. So as an example of that, I will come back to Canada in just a second. When you talk to the Europeans at the moment, which obviously I do regularly, working for a European bank,

they were obsessed with Europe versus Russia, vis-a-vis Ukraine, which has kind of dropped off the radar, even though it's still very important in the background. And since the Greenland affair, they're now absolutely rapidly focused on the US, and for good reason, but they regard this entire struggle

as Europe versus the US, and what should we do versus the US, How should we deal with the US? And I keep trying to explain to them. You do understand this is the US versus China, in which Russia is completely secondary to China, but China is happy to use it towards its particular goals. And Europe is incredibly secondary to the US.

So the US is attempting to treat Europe roughly to get a certain outcome, which it wants vis-a-vis its relationship to China. China is using Russia in a very different, way in order to get an outcome vis-a-vis the US and Europe to an extent. And if you don't understand that, if you think it's all about you, you get things wrong. So Europe is thinking, okay, well, we can push back against the US. You know, we can we can use this pressure point, this chode point here, blah, blah, blah, blah, blah. And I keep saying, no, if you look at the

totality of power across the spectrum, across different disciplines, every single time you try and play that game, you just lose. You end off worse than you are now, even if it, you know, emotionally feels good. And the same is true for Canada. That's where I want to link it to, that Kani, for example, really seems to see himself as the elected representative of like the anti-Trump forces behind the quote-unquote rules-based order. This is the same rules-based order we're all agreeing, doesn't understand how the world really works. And the irony being that Kani, of course, Davos gave that speech in which he had the temerity. I'm not trying to attack the man personally, but he had the temerity to quote Vatslav Harville, you know, the great,

anti-communist dissident. And he and he's the short book, The Power of the Powerless, which I have read by the way, is a wonderful, wonderful piece of work. And saying, you know, the old rules-based order was completely hypocritical. Well, yes, and you were neck deep in it, mate. And, you know, we have to accept that, you know, it never really worked the way we wanted. And now we have to create something new. And they seem to think there's going to be a new rules-based order that you can create whilst ignoring all the factors we've just mentioned. You know, those material factors, those real politic factors, et cetera, et cetera.

So the Europe's of this world, not everyone in Europe, but Europe collectively, the Canada, the Australia for that matter, too, and New Zealand are all somehow thinking that we can continue to just rebuild what was not working up until recently without the one economy that was the prop for the entire thing, which was the US, while ignoring the larger existential struggle that we're seeing across different disciplines by the US versus China, which of course is playing out in places as disparate as Venezuela and Iran. I have a very serious question to ask about China, but I want to follow up. I'll let you both follow up with this. Given what you just said, what would you recommend countries in Europe or Canada or Australia or Brazil or India do,

given that a new rules-based order is unlikely and the rules that we currently have are not really being followed? Like what advice do you have with this exercise? existential material energy ecological backdrop to these other countries. Economic statecraft and pick aside, that's ultimately all it comes down to. Pick aside, what do you mean? Well, ultimately, you're going to have just, it's the US versus China with two very different models, even if they're starting to look more like each other. Craig.

We go back on the same pressure points. Like, I've got the benefit of writing a 27-page essay at the moment on India because I've got some Indian readers who have talked me into it. And I was a bit resistant because I always had this idea in my mind that India was the emerging industrial economy. And, you know, now I've mostly written it. I'm just agonizing over terms and words and, you know, those types of things. I realize, because the essay is brutal. It's way more brutal than it was for the US.

How so? Yeah, I'll give you one snapshot. it. If you list all the industrial metals that are required to defend yourself, all the defense metals, right, all the rareos, all the coppers and all this kind of stuff, and then you look at their reliance on them. It's overwhelmingly Russia and China that provides all these metals, right? There's a few exceptions. Thailand comes into it occasionally and things like that. Now, but it's 100% reliance. Now, you know, I've looked at. at all sources and tried to estimate the amount of munitions supplier India has.

And I came up with a number between 14 and 30 days depending on the munitions category. Now, if, you know, I'm a student of history, I was that kid that had Jane's Weekly in magazine every copy, right? So it's not hard to work out. Anyone could work out if you want to attack India, you just attack them for 30, one days, and it's obviously more complex than that. And they can't defend themselves because they haven't got the medals and they haven't got the manufacturing.

And so they're even more reliant on China than the republic is than the U.S. is. And the same goes from all. Here's a difficult question, and I'm going to ask you both to speculate on this. I understand what you're saying, Michael, that you choose aside. And with the population, the resources, the size of the economy, the industrial capacity, the military, all the things, it's China and the U.S. ultimately. What will we have to do? Paint a benign path that we make it through the next 15 years without a giant war between the U.S. and China. What would have to happen generally? I'll ask both of you, Michael.

Well, I think the clearest path towards that is, to, in the short term, pivot very, very aggressively towards economic statecraft, as I said, which is more state involvement, breaking the because markets, holy rule. And alongside that, doing exactly what the US is doing, which is using its legacy military power, which is massive in terms of the stock and very low in terms of the flow, vis-a-vis China. Like India. Like India. Yeah.

to take over slash flip, shall we say, a more neutral term, flip pressure points such as Venezuela, which was, of course, in the China-Russia camp, such as Iran, etc. As they say in French, Paul encourage the other, basically to encourage the others in the region because the Middle East is full of countries who like to follow a strong leader rather than saying, you know, ideologically we're going to stick to this. So that then allows them to explain to China, look, we had this Chinese burn situation, which we were talking about, and you gradually, gradually build up your strength whilst working with China to the extent you can to explain to them you need to change your economic model

because it's not just that China is doing this in things like critical minerals to be at a and rare earths to be able to coerce people, although that's a happy byproduct for them as far as they're concerned. Their entire industrial economy is overly slanted towards manufacturing in the way that it was overly slanted towards real estate for a while. And shifting away from that model, which is the inverse of what we have in most of the West, which is we just consume, sit on the sofa watching Netflix and expect the rest of the world to provide us with stuff because we're Western. You know, they have the complete inverse. We have to start making stuff again and they have to start consuming more. Now, you can consume environmentally well or

badly, but the proportion of GDP has to move much, much more towards consumption. So that's only going to happen from a position of strength where basically you can say we're on this particular the path. We are going to go from here to here. It will mean your relative coercion power declines, but we can make sure that it will hurt you very badly if you try and do anything about that on the way. But we don't mean war and we don't want to try and crush you on the other side of it. We just want something that's more like a stable equilibrium. And I tell you, honestly, talking to many different people from many different sectors, obviously people in the finance don't get that. Obviously people in economics don't get that. Most politicians don't

it. Some in the military do, but I genuinely think that that is what a lot of the overarching US strategy is about at the moment. It's not we want to try and crush China. It's we want to try and make sure that we can rebalance versus them, but that needs to come from a much more evident position of strength. You know, I'll put it bluntly, you have to capture Africa, you have to catch South America. Think of it as a game of risk. You have to capture all the aligned parties because, you know, obviously there's an access here. There's an access of all versus finished material. And then you've got to make space for all that finished material capability to catch up in the West. You know, I think they're making investments there. I'm sure they'll

make some more. And then you've got to make yourself, I think Parmalucky calls it porcupining. You've got to make all their military adventures that they might consider. of. So damn difficult. Taiwan obviously is the first. Well, Philippines is probably, because I think Taiwan and Philippines are kind of joined together at the hip, to be honest. I don't think you can attack Taiwan without attacking them in Philippines. And so you've got to make it adversarial. You've got to make it brutal to contemplate that kind of thing. And you keep them, you keep their art, you know, it's that fend that you use in rugby league and NFL is you, you shove your hand in their face and you run as hard as you can.

But there are other components, you know, like what is GPT for? GPT. What, yeah, what is GPT for? Yeah, well, that's a good question. But it's also, what's electricity for, you know? Comfort, convenience, status, lots of things. And security and intelligence. It's the substrate of intelligence now.

It's, you know, whoever might be the most intelligent nation might be the one with the best electrification. And on that basis, China's three times bigger than the U.S. And cheaper. I want to get to that. I want to get to AI in a second. But, Craig, I know you, in some private conversations, you deeply understand and care about our ecological crisis, especially global heating and the trajectories that we're and the new highs because of the removal of the sulfur emissions. And we talked about a little on our first podcast.

To someone whose primary concern is climate change and the ecological pending six-maths extinction and all the exceeding of seven or nine planetary boundaries who just listened to the last 10 minutes about choose aside and Russia and China and military and materials and everything, what would you say to them? I'd say that we're going to go through a very difficult time. I think that's fairly obvious.

I think we need to embrace that. You know, they've got those five stages of grieving and everybody seems to be in denial or, you know, sadness or whatever. You know, we've got to move to acceptance that there's going to be a big change and we can't stop it. And yet, you also are investing in and doing philanthropy on regenerative agriculture and you have some ideas on how to use renewable energy as a wedge in the future. Can you say a few words on that? I think one of the key things to say on that is that

when, you know, there seems to be an axis on climate change where you, if you don't subscribe to the existing system, you know, the existing system formula of renewables and carbon taxes and all kinds of things, you must be a skeptic. And I'm far from a skeptic. I've actually got a great model of all the IPC models. I spent, you know, a lot of COVID going into it. And I understand what all the flaws in the models are and where the models of the models come from, et cetera, like that. And I think it's much worse than anyone thinks. And I think there's some, now some scientists aligning with that belief, because who's Craig, he's just a kind of boffin that likes to look at models. Well, James Hanson is certainly... Yeah, James Hanson, Leon Simms. And so, you know, it goes back to that old Stephen

Wolfram's idea of computationary reducibility. We like to think our Fed models and our climate models are capable of understanding things. They're just not capable of understanding. And so if it's much worse, you know, like if we go down to 500 million people or 250 million people before we solve it, I don't think the Earth or the evolution or anyone cares about it. You know, we might care about it, but, you know, we'll be probably too old by the time it happens. And that's what makes the difficulty of the problem because, you know, I really want to do something about it. And I'm trying to figure that out.

But how you get a self-interested population with a limited lifespan interested in something that we can't prove that unfolds in a way that we don't really understand coming back to Wolfram's idea of it's the model. The model is just a map. It's not the territory. You know, it's a difficult problem. We may have to go into this dystopian hole and put up with all these radical different climates. And people will say, in no way that's not going to happen.

You can't prove it's not going to happen right up until it happens. Yeah. I mean, where I was going with that is even if everyone cared about that and you just described why they wouldn't, we still have this war resource energy constraint and statecraft issue that seems to be much more prominent in all the way. Michael, do you have any thoughts on this? Well, just one kind of addendum. I think, you know, Craig hits the nail on head yet again. It's very difficult to get people to deal with this as we've underlined.

But where I see people are reaching for, you know, what the Germans call Gestalt, you know, to look at the thing in its entirety. Obviously, you end up in very different places. You know, I think what I call grand macro strategy, you know, what are self-titled that is one way to go. But frankly, you're not going to get the man on the street interested in grand macro strategy. It's very hard to get experts interested in it. And what worries me personally, as much as professionally, is that people can kind of pick up on the confusion around us.

They can pick up on a lot of the questions that are being raised in various different ways, just in their day-to-day life. But if you're looking for a Gestalt answer, you're going to get some very, very worrying ones. like right across the political spectrum from the far left to the far right to just the far out and I think you can already see that in Western political systems that our democracies based on a post-World War II assumption of a you know a comfortable middle class with a you know a tolerably sized working class it wasn't going to get too balshy you know can all somehow regularly just shift right a little bit left a little bit and the technocrats will guide us in the direction that we need to go

I don't think that's the case. I think we are getting some absolutely radically transformative for the better and worse. And I don't want to get specific on that because everyone's entitled to their own opinion. But we've got some, you know, the Overton window no longer exists. We basically now have wall-to-wall, floor-to-ceiling glass, like in some of these fancy new apartments that, you know, people can't afford to buy anywhere. As our Overton window. And that basis, one can be infused that, yeah, okay, grand macro strategy might now be. possible. But you're dealing with a population that's going to be prepared to vote for a lot of

really, really wild ideas in lots of different directions. And you've got to try and make them all stick to one path against that backdrop. And that should be a concern to everybody listening. And probably the people that are listening to this show, it is a concern. So let's move to AI. I know you guys have busy Fridays. So I want to be respectful. of your time, but I mean, I could literally have hours of questions for you. My understanding is AI is the single largest new driver of critical materials demand, and so has suddenly become a central component of all the analysis of economic, financial, geopolitical landscapes. But one thing I don't see discussed as much, with the possible exception of Secretary Hegseth's

challenge to anthropic and changing Claude to remove some of the security protocols which is supposed to be by tomorrow. I don't know what's going on there is the impact in the AI race as the biggest accelerant of defense spending.

So how does AI's increasing ties to defense change the competitive hierarchy for critical materials for both private companies interested in these things and government economic and military strategy. Is that something that people should be paying more attention to?

Craig, we'll start with you. Yeah, I think there's a hierarchy develops. You know, whether there's a shortage of something, when we can't produce things, you know, in order to satisfy a need, there has to be a hierarchy emerge of, you know, people who can pay more, people who need it more, you know, as in defense,

you know, pay more is probably AI. And some people in the hierarchy miss out because they can't either afford it or they can't obtain it. And so what happens is you end up with all the things that we care about, you know, all the renewable energy, the solar panels, the wind power, all those things end up at the bottom of the hierarchy. And it's because we built the hierarchy the wrong way in the first place. Like how, I think, you know, Lutnik said what something.

I don't normally quote Lutnik, but he said to the European Union, you're trying to build a climate change engine, you know, all these batteries and all these windmills, but you haven't got any materials to do it with. You're going to import all that stuff yourself, and it doesn't economically work. It's a price signaling idea that you can, you know, you can price your way into this.

And the way that built the economic system is that it, you know, the things like carbon pricing, for instance, lay on the top of deindustrialization and make it worse. They accelerate deindustrialization because, you know, for instance, in Canada, I was talking to some of yesterday, ESG is about 5 to 7% of a project. Now, that's being landed on a more expensive capital source anyway, so all of a sudden you're pricing yourself out of the whole thing, and you accelerate the deindustrialization with carbon pricing. And so we need capacity first. Like, you know, defense requires search capacity.

And, you know, I've got a model that I'm developing that I've been talking to off-screen that basically models a new economy, you know, a materials economy that takes the whole FMOC framework. And I've actually got down to two pages of calculus. And you can put it in an AI engine and you can tell which, you know, you can put it under a rivalry scenario or a climate change scenario. And you discover that materiality is actually called to addressing the climate change issue anyway. You could not address it the other way. You know, it's a flawed system. You never have enough copper and all that kind of stuff.

And you end up in rivalry anyway, and that diverts half of the stuff to the other place, the AI engines and the energy engines. And so you end up in a, you know, you need to change the whole economic system into one that facilitates your goals and the current one doesn't facilitate our goals. And as we provide clarity to this, and I think I can play a role in providing clarity to that in a way that I don't think's been contemplated before, you enable that visibility, that ability to see things. you know, let's go back to your accountants and your lawyers and everything like that. Rather than all this specialist knowledge, we join them all together and we create orchestrated insight into these things so that everyone can go, oh my God, look what we've done to ourselves cross-functionally, and that drives change. I guess the second part of that is that controls AI too, which, you know, I might flag as something

than we should talk about because, you know, there's a lot of controversial around AI at the moment, and I've got a model of how that, how we solve that and how it's solved. I want to have a second question on AI, but I'm going to let Michael respond to what you just said. Well, all I'm going to say is it's a great pleasure to be doing this podcast, because just to reiterate, for years now, I've been looking at balance sheets in a much more simplistic way than Craig is, using, you know, godly Minsky models, which themselves based on Marx and, you know, but no one really understands that in markets, but it's true. Wait, the Godfrey and Minsky models are based on Marx?

Yeah. I didn't know that. Intellectually, you can't, godly, GOD, E, Y, you can't possibly understand them without having seen Marx's views on how capitalism actually works and what financialization is. But, of course, no one ever reads the originals anymore, so why would they understand that, right? But you look at these particular, you use these lenses to see the world. With others too, there are lots of other ideas in the mix there. And you turn around and you say, look, the way we do things now is just not going to work.

As I said, most simply and most crucially, given eye working markets, you can't have one interest rate. You can't have an overnight cash rate in Australia of X. And when it goes down, everyone running into housing. And when it goes up, housing crash. But as a result, no one can go into industry because the interest rate has gone out. up, which is, of course, you know, something that Australians talk about 24-7. I know having lived there, right? You can't have one Fed funds rate, which is the base rate for the entire world where everyone is then free to lend on the back of that, you know, with a credit spread

on top, into whatever they want in a free economy, because that's, hey, capitalism, because markets, just do whatever you want, because people will make stupid choices. I mean, equally, you can say the state isn't the best arbiter of what is a good or a bad choice. And that's also true, heuristically, but neither are individuals if they're not thinking in terms of the totality that Craig is just pointing to. Craig, you're on you're on the spot. So let's, I mean, I'm, I've been trying to do this for 15 years with politicians and such. And I've learned that there's, there's, in the moment, there's an understanding. And then when you leave the room, there's a rapid decay in the next three days.

And a week later, they're with all their buddies and peers that didn't get exposed to that. And it's forgotten. Number one. And number two, it's the Upton Sinclair thing. It's like, oh, I understand this. This makes sense. But I don't want to say this stuff in front of my constituents, which is why we need some version of advanced policy. People like understanding this stuff and designing plans.

And, you know, my whole thing is that first step is a doozy once people understand it. But that's a deeper discussion. Let me get back to AI because there's so many things about AI. Given both of your economic financial acumen, what is your opinion about, I think, Mustafa Suleiman and others in the news have said that there's a possibility of 80% of white-collar jobs, might be gone in the next 18 months. What are your, both of your takes, both from an economic and governance perspective. Craig, start with you. I spent most of my life implementing systems in the enterprises, and I think I understand

the metabolic system how they work, all right? And I think that all these AI gurus don't understand how the metabolic system of enterprise works. So I think they understand the functional bit. You know, what is an accountant to do? That's pretty easy to understand. consumer an accounting book, and, you know, that's what an accountant does. But so I think they've made a misjudgment.

The other part of it is that they've just, you know, I think from, they've just raised $600 billion or $700 billion. And in order to do that, you know, can you imagine the decks? We need $100 billion, and this is what we're going to do with it, and we're going to drive revenue in three years. All these decks look the same. They don't look any different. And their decks that are going to the most senior, um,

businessmen in the world. So they have to be, you know, robust. And so, you know, in one office, before they go on the podcast, they're saying, yeah, $100 billion rather than we're going to replace accountants or whatever we're going to do. And so they get on to the podcast and they've got to say the same thing. And the reality is they haven't got, you know, I wrote a little past yesterday. I gave them like 50 questions that would normally have to be asked by an enterprise to work out the viability of a system replacement. I've also talked to the CTOs in the SASSPlace, the SaaS software companies.

And, you know, the accounting software companies have already introduced AI, and they've built themselves, and they're never going to pay, you know, any of these big frontier models to use AI because they've got their own computers and they've got their own software developers. So your take is that before we,

lose 80% of white-collar jobs, the AI won't be able to sustain itself due to lack of funds? Oh, yeah, and they'll run out of funds. They'll run out of metals. But most importantly, there's a, you know, the cash, I think Darius said, you know, if the cash arrive, if the revenue rise a year late, we're done for, I think the revenue is going to arrive many years late, right? And the other thing, the other aspect I'd include is, hey, how are we going to introduce this? We're the humans. We're in charge. You know, are we children?

Like, these idiots are threatening us, right? And I'm not a blood light, but I think it's the worst marketing campaign ever invented. Go out and tell everybody how they're going to become redundant, especially when you have not working models about how to make them actually redundant and you can't actually deliver. And then at the middle of it, they're missing the golden key, which is, you know, you're Our aging demographics means that, you know, somebody's going to have to look after me in 25 years, and we're not going to have the people to do it.

So we better have the robots because we're not going to have enough people. Like, white-collar retirements from boomers is spiking higher than it's ever done, and everyone's worried about white-collar redundancies from AI, and they haven't measured one against the other. The second part of that is, hey, I outsource. a whole bunch of Indian, sorry, Australian call centers to the Philippines, you know, going back into the 90s. And I also outsourced a whole bunch of application developed software and all the other stuff

that goes with it, including mainframe, to India. Right. So if it, if, I suggest to you that the white collar jobs actually that we're going to lose aren't going to happen in the West to the extent that they predict. It's going to happen in other countries. I feel sorry for the Philippines. The third part of that is that we're going to have to have somebody to help look after all these old people because, you know, people are over the age of 85 doubles in the next five years.

You know, depending on which country you look at, obviously demographics are different. Who's going to wipe all those bumps? And no one has the answer to that. We can't build a nursing home infrastructure. You know, because we literally haven't got the time, nor that we have the capital. So who's going to do all that? While you were speaking, I'll just be totally honest. My mind went to the text I just got before our podcast where my girlfriend sent me a picture of a puppy that she wants us to adopt tomorrow.

That's where my mind went, Craig. That was pretty heavy. Michael, do you have anything to add? Yeah, I'm very glad that's what the picture was sent after Craig had been talking about wiping bums because I just couldn't see where you were going with that. So that was a great relief to hear you come out with that statement. But no, in terms of the arguments, I think there's an awful lot of truth there. I don't buy the 80% in 18 months. I also completely see a lot of the potential upside. I do.

What I can say, and I think this is the first time I, you know, differ from Craig at all, is that within the very polarized, increasingly radicalized polity that we already exist within, you know, with rising geopolitical pressures which are potentially going to make it worse imminently. And if they don't, you know, just after we stop talking, they may have already started to by the time people, you know, see this particular podcast. it doesn't take 80% of white-collar workers losing their jobs to radicalize things even further. It takes 8%. If we lose 8% of our white-collar jobs,

what about the mortgage payments and the trips to Disneyland and all the things? Exactly. So what I'm seeing around me in terms of what exists in AI today, like what a $20 a month subscription can already do, it can gut the functionality of a lot of investment banking. For example, you can get data feeds fed into a laptop now with all the live data coming in,

which is cheaper than going through platforms like Bloomberg, by the way. That's already Exhibit A. But then for a couple of bucks a month on top, it can then automatically write all the reports for you, create all the graphs and charts, and create the PowerPoint presentations. Now, if you've got something really original to say and you think cross-disciplinary,

so you know, you're aware of the facts that Minsky and Godley were based on Marx, et cetera, et cetera, and you can add nuance to everything you're saying and you can link up across disciplines, that can't possibly replace you now and it may never be able to. But if your job, and a vast number of them are in the industry, is basically to say the data came out,

it was 0.2, everyone expected 0.1.1.1. one, assets moved exactly in line with how we thought they would do when they did that. Here's the, you know, here's the text, here's the graph, here's the chart, send it to someone who sends it onto someone, you know, in the sales team to a client who themselves is a CFO who's managing interest rate and FX rate risk, but can also be replaced with a $20 a month subscription, which is automatically linked to the marketplace to buy and sell FX or interest rates futures based within a certain risk parameter. The entire industry is gutted and you will lose more than 8% of jobs that are well paid.

And that's what I think could start to happen within 18 months. That could. Well, for the record, if that does happen in your industry, Michael, I think you would be an excellent podcast host. Not that the runway for that is that long. Anyways. But on that trajectory, Craig, let me ask you this. What happens if a scenario where more and more people take advantage of the $20 a month,

you know, chat box? and advanced feeds that Michael was just describing. And there's a productivity boost like that, and it sucks 20% of the population in, and they get super productive. And then there is an AI winter where that $20 a month doesn't pay for all the materials and minerals and electricity prices get too high,

and there's an economic crash. And that AI, that people just added their cognitive laborers to the fossil laborers that we've been, become accustomed to, you know, 500 billion strong in the world, then what happens? Like, we got used to that thing and then it's not available. Is that plausible? Evolution has friction. All evolution has friction. Who are we to think that our evolution won't have friction as a culture as a individual? You know, we've all had friction in our own lives. So, you know, the idea that we can bright side this thing at some point, and we can actually navigate this through

because we're navigating better than anyone else and we've got AI to navigate us, these changes, you know, take pressure and stress. And we're just going to own up to that. You're not going to avoid that. You're actually going to, it's the friction that makes you change. So you can't avoid it because you won't change. And, you know, one of the positives of circular economy, you know, we've got, I think, $10 billion worth of 10 billion tons of fly ash sitting around the place and they're full of minerals. We'll learn how to reclaim that and they'll lower the cost.

You know, we may have no developers. All the guys that went to learn to code may have no jobs and may have to work in nursing homes or something like that, you know, those kind of compromises, you know, they're right through history. And the idea that we won't have a setback, I think we've got to go to our philosophical roots and learn how to look at ourselves individually within that setback. Because some of the greatest philosophy was written in hard times, and some of the worst economist's work was doing good times. you know, there's a natural physics to that, and we have to accept that, and we have to accept the frictions, and then we have to take advantage of the things we're doing. Like I said, I think we can provide a way more clarity, you know, at the moment, everything's hidden behind complexity, what the government's doing, you know, none of us realize that the broad population level goes back to your point about revolution. What the hell's going on? If you go around all your friends and say, what are you things going on? I'll give you a special

answer because that's what they know, you know, that's their natural propensity. So what we need to do is provide those horizontal lenses, you know, to provide clarity to create electoral pressure to change it. And so if all the, if AI is going to put all the people out of work, you say bugger off AI, you can work, I'm going to, I'm going to give you a licensing model inside aged care because that makes sense. It's like a skilled migration thing. But, you know, as far as far as. as, you know, white-collar workers in investment banks, we, you know, we might preserve them because they're rare people. You know, we're going to have to come through a kind of ready reckoner of what our priorities are, because at the end of the day, where the humans were in charge,

I want to slap everyone over the face and say, you don't have to let the things that the AI people are slapping us with happen. And that's not a lud-like thing. That's just an order thing, a common sense, let's do things in an orderly way and not cause suffering. And that'll go to the top. I know it doesn't feel like in that moment. But as this gets worse, you know, you'll have a politician elected in the US that says, I'm going to lower the pressure on the population considerably by doing X, Y, Z. Well, we already have that.

Trump is trying to lower gas prices and highlight how inflation is. down. And on the other side, you've got Bernie Sanders trying to sign petitions to not have data centers built because he rightly points out that electricity prices are going up for people that have nothing to do with AI. I mean, that's another challenge. Well, they've got the architecture wrong as well. You know, any metabolic system that takes 30 percent, I think it's in Sydney, 28 percent of our water by 2035. What takes 28 percent? the data says, right? So if you look at the electricity in Sydney, I may have these numbers wrong, so people will tell me. By 20,000 of electricity, and some ridiculous number above 25%

of our order. Now, there's an architecture that solves that, and that's edge computing, because you don't need, you know, as much copper, these monolith constructions. It's like mainframe versus distributed systems. You know, these SaaS companies aren't using the, frontier models that sit in massive data centers, they're going to use their own boxes. You'll have an AI in your desk in 10 years, and you won't have to go out to the thing. So I think they've made a god awful mistake. I think they've gone for a model, and the Chinese have been forced into the model that I think will ultimately win, where they go much lower footprint on energy, much lower footprint on water,

a much lower footprint on community fatigue for a number of reasons. You saw that thing that happened in, where was it, New York somewhere, where they kicked the data center out. You know, people want to burn them down by the time we finish this. And we've got, you know, they're on the spectrum, these AI gurus. There's no doubt that they're bright, but they understand, you know, we're talking about narrow intelligence. They're geniuses.

What's the model that would work? I think what we move to is a post-capitalist world, and not in a socialist sense too. I think this is something entirely new. I think AI has an ability to join the horizontals across the place and give us a different view of things. And I don't think they'll be allowed to replace all the humans and make us obsolete because we've got a democratic system. They might be able to do it in China or whatever. and so there'll be a forced evolution because they will force an evolutionary impulse back on these crazy AI people and they'll go oh god now I've got to build it without all the all the energy and they'll build it

another way and that points to innovation and then you've got mineral innovation you've got you've got materials innovation and so you eventually get through there I'm not saying it's not going to be painful it's not you know I'm talking about utopia you eventually get to the next level that's what evolution tells us, doesn't it? That we'll get to the next level and we'll have a provocative amount of stress put on us to evolve that system. And we've got the tools to do it. Well, so much to say. I guess one starting point would be that if we do, and I think we're all in agreement, need to move away from financialization back towards, you know, some form of industrialization as green as possible or materiality, as Craig puts it, I don't think actually,

investment bank workers are very, very, very high on that list because, you know, that's, that's, that's not a reserve profession. But I completely agree. If you're going to ask what is GDP for, you have to ask what is AI for. Absolutely. And it's not making, you know, videos of Brad Pitt and Tom Cruise driving down the road in a sports car and then having fistfights on a roof. I mean, that's a fantastic technical achievement. But, you know, there are better things environmentally and politically to be doing than than that. But I was just going to say, I think it's ironic that the drivers of so much of this, these tech lords who are pushing for it. Yeah, there are very many of them are on the spectrum.

Most of them grew up reading a lot of science fiction, which I'm guessing you two did the same as myself when we were young. So therefore, a lot of these concepts around AI are things that are actually been in the literature in fantasy future scientific worlds, you know, that I've been reading since I was a boy. but they seem to be pushing for something without having remembered the butlerian jihad from June so you know I'm wondering when you first get the I'm not just for jihad

I'm from the butlerian jihad candidate running for election somewhere because frankly I don't think that's too far away what do you both of you really see as outcomes that should actually have individuals and societies be striving for

in terms of well-being of humanity and beyond in an ideal world, how should our economic, financial, and geopolitical strategies, policies, conversations be serving that to those listening

and to the people that they can influence? I think these podcasts are possibly not trying to be self-aggrandizing for us three here, but I think there's some of the most important for doing exactly that because the over

specialization and the institutionalization of, you know, bad ideas that we've already addressed mean that there are very few spaces where you can think this creatively, where ideas that are as radical and important as what Craig was just saying are being publicly announced. And so we need a lot more of these because if you take it to the, you know, the more macro level, it isn't something that's going to be just purely top down. It can't work there, even though it needs to be part of that. But neither do I believe, given the scale and the enormity of the challenges around us, that it can be something that can just be community-driven. You can't just say, well, you start with your own family and start with your own community.

That doesn't really address the fact that, you know, realpolitik points to severe disruption and, you know, lots of locales around the world and existential changes to the parameters within which we, you know, we like to think we've lived as permanent, you know, for the past 45 years. I think the best thing you can do is to be informed, to listen to this kind of debate, to glean from it, you know, the best that you can, to share those ideas with others, so horizontally, but to make sure you transmit them vertically to your elected representatives as often and as frequently and as powerfully as possible. Because I think only that combination of top down and bottom up is going to get any change affected and it needs to be affected. I agree with that. Craig, you have a thought? Clarity. I think if you provide the same clarity, a mechanistic lens over the entire society,

and we talk off camera and in Holonic senses, you've got this hierarchy of individual, family, community, and, you know, in the Holland sense, we're a whole in ourselves, but we're part of a family and the family is part of a community. I think what you do is you, I guess, use LeveryJ.I. to provide greater clarity because what's happening is the politicians are seeing something and the individuals are seeing something else and they're not, they haven't got the same picture. And so we can change that.

So most people, I suspect, listening will say, what AI is full of a.I. is full of hallucinations, how can we get clarity from AI? They've sold it as a consumer device. And the reality is it's a programming device. And you actually have to understand how to program it to make it behave properly. You know, and what happens in programming is if you put bad code in and then compile it and get the bad result, you don't blame the software program, you blame your own code. And so there's a lot of people talking to AI like in English, like it's a human being. And then AI is like a really dumb human beings and giving real dumb answers. And so if you know how to use AI, that hallucination and that idiocy disappears because you know how to program it. That's been my experience. Not my personal

experience, but I know some people that are like super, you know, supermen with how they use AI. Let me ask you about this. So, because I have experienced this, attempting to carry all this biophysical macro, wider boundary view is really challenging in the sense that it's almost impossible to encompass all the factors at play in the complex dynamics of even the topics we've lightly covered today. Have either of you experienced any moment where your analytical frameworks felt insufficient or the real-world outcome didn't. track with your model prediction? I'm just curious. Well, yes, because there's always new, you know, new data. But because I don't provide models so much as thought frameworks or logic frameworks,

they tend to be, you know, a little bit more rigid, or not rigid, a bit more stable, shall I say, that so far nothing has come up, which has rocked the questions that I've been putting forward. Like, I don't see someone being out of it, but what's GDP for and saying, well, we don't need to know what GDP is for because AI will decide. I think it will be a while before we get there. Maybe eventually we will. But what I run into instead, again, just to reiterate, is that you have this multi-dimensional view of how everything flows together

and people want it in one bullet point and just don't agree with you because they can't absorb the totality of all the different factors they have to bring in. And so you actually lose a debate with people just because they have an incredibly core argument that just won't shift away from that one thing. So a narrow boundary argument will almost always win a debate against a wide boundary perspective. Yeah, unfortunately. Yeah, that's well said. Craig, you have any experience, thoughts?

That makes me incredibly curious. So I get excited. It's like if I can't understand something, it just makes me chew on it and chew on and chew it and chew it a little bit. If you haven't worked out already, OCD on those types of things. So, you know, anything from biological systems or things like that. I like learning stuff. That's the thrill I get out of things. I spend an order amount of time if I get something wrong trying to work out why I was wrong and not being wrong again.

And so that's how I treat it. It's like a tennis game. That shot, I didn't hit very well and I didn't see it very well. I'm not going to do that. I'm going to practice and practice. I think it's really important. to for us to also recognize that on top of the stack of challenges that we've just presented, people who think like Craig are rare.

Very, very rare. That intellectual curiosity, that constantly asking why. I mean, I like to think I'm a pale echo of that, my pale shadow of that myself. You know, why, why, why, why, why? But with the rollout of AI, what concerns me and many others is that our education systems, such as they are already rubbish. Yeah. To a large extent.

They're either very, very rubbish or not very useful even when they're good. You're training people to be too specialized. If we don't implement AI right from kindergarten up fairly soon, and we already don't do it right with access to screens, etc., etc., which is slowly being reversed, I am desperately concerned that we have a generation rising up who will not even be able to think the way that we are without them. So effectively we have got a very narrow demographic window to understand how to use this and how to apply that downwards for the next generation coming through to make sure that they're then able to pick up the ball and run with it after we've finished with it, which is, you know, demographically only X number of years and then we're done, quite frankly, unless our minds are transplanted onto a chip into a computer as some tech laws might be thinking. But, you know, I don't, you know, I don't plan for that myself. So yeah, I really think this is an existential.

crisis that needs to be addressed rapidly. Like, who's going to be able to do maths? Our maths skills and aggregate are extremely poor now amongst the younger generation. Who's going to be able to write? Who's going to be able to think? Already people just Google for answers rather than understanding how to go and look them up and cross-reference. So that worries me incredibly because I think it's, it just puts extra gravity on the

situation than on the responsibility that we have now as a generation that grew up, not just pre-I-I, but pre-computer. I think all of us wrote essays with pen and paper at one point in our life. I certainly did before moving over to a word processor. And we grew up with books, you know. And so we have to give something back rapidly, I think. I totally agree. And just since my knee surgery, six weeks ago yesterday, I read a book every night. And I didn't do that last year. And it got me back into that habit. And my friend, Zach Stein says, reading is the new gym. And I think that's right.

And I totally agree with you on education. While you were speaking, it just struck me that every single topic we brought up today, Iran and AI and critical minerals and China. And we could have spent two hours just on that one question. The world is so complex and nuanced. That is a segue into me. asking both of you to come back again. I have a couple more closing questions,

but we have a lot more to cover, and I like this dynamic. Of course, we could invite some others to, but there's a lot more here. So this conversation and both of your analyses are very high level and hyper-global in focus. But at the end of the day, each of you and me and our listeners,

lives in a hyper-local context of communities around the world and our ecologies. How might the hyper-global and hyper-local perspectives complement each other going forward? Do you have any thoughts on that? Well, I'll tell you what I do. I grow stuff. I grow food. I get great joy out of that. It gives me a rest from this crazy brain I've got.

I spend time in nature. I build things. I act like a human does. Like I always say to my kids, pretend you're a zoologist and you've got specific needs. You don't give, you know, candy bars to the guerrillas, do you? Yeah, we're humans in that context, in that frame context. We need to be in nature. We need to build things.

We need to cook things. We need to do all those things that humans do. And if we don't, we don't get balanced. And you've got to be resilient. You've got to know how to do things. You know, it's like, if you're not. We don't know where this dystopian world goes to, but like I've got a high level of confidence, you know, other than violent conflict, and I've probably got a fairly big confidence there too,

is I think I could handle anything because I've spent years training to do it because I love doing it, you know? How to grow a field full of vegetables is the funnest thing around. It's a complex matrix type approach of inputs and outputs. And then, you know, one of my favorite things, is to can goods. You can imagine me with an apron, but it's a process. It's a system. And they give you joy, and we have to rediscover those things, and also the ancient philosophers.

You know, there's philosophers, and we can spend a bit of a show on it one day, which predicted all this, and predicted the likely outcome, and predicted the evolution towards a higher state and a higher, I guess, frequency for humanity. And, you know, we should, they were bright guys. They predicted quantum physics and all kinds of things, you know, just by sensing it.

And what we're doing now is Aristotle or, you know, Marx or whoever your favorite philosopher was, they had these big realizations about the world. And now, but they couldn't work out how to distribute that realization. Buddha, you know, the Bible exists, Buddha exists, all this kind of stuff. And they gave you guidebooks, but you had to follow the guidebooks and be pretty pious to get anywhere. I think that opportunity is to distribute that type of mental framework is going to accelerate in the middle of all this. Remember everything's good and bad.

Everything's rough and smooth. Everything's healthy and unhealthy. This is going to involve. in a balanced way between healthy and unhealthy. When we come back in 10 years, hopefully we're all here, and we can do a podcast in 10 years, we can go, God, let's compare that. This conversation feels like one of the last episodes of the series Lost. I don't know if you guys watched that, but I digress.

Michael, how do you answer my recent question? Well, again, I'm just thinking back to Lost now. Who's John Locke? Who's the smoke monster? But, and yeah, does it have a little ending that actually makes sense? I'm not trying to think,

can I add something? Look, what Craig just said was very, very profound. In fact, all I would add to it is that while I'm very bad of many of those things and,

you know, would like to be better, you know, it's important to strive to improve. I think what we all need to be is not just Renaissance man, but increasingly Renaissance man

and feudal man. So ideally, we need to be extremely well versed in things, but actually be able to get out in the field and grow things and Hugh Wood and carry water and actually about to do some practical things too. And we're not taught how to do any of those things anymore. I increasingly think that most of our population is already feudal man. We just don't know it yet. Yeah, that's true. We'll go back to it very quickly. Like, we haven't forgotten. Look at those ancestors we've got. Look at how many people had to die for Rustigee, you know, it's, it's, you know, that's profound in its sense. We stand on the top of

the shoulders, but they knew all that stuff, so it can't be that hard to learn. It wasn't that hard for me to learn. So, it's Friday morning. You guys have full days ahead of you. I really want to thank you for making time for this conversation and for your continued work. We didn't talk a lot about Iran. We'll see what happens there. That's a giant wild card in in the near term window. Do any of you have any closing thoughts or questions that you'd like to leave listeners with? Folks, be kind to yourself. You can't pretend that you know what's going to happen.

So when you create narratives and forecasts about what you think is about to happen and what you fear you're going to happen and then you attach yourself to it, you're doing something that's not possible. You can't predict what's going to happen. You just have to prepare yourself. So take yourself out of the future and bring yourself to the present. Go and walk among the trees and grow some vegetables. Michael.

Amen. Thanks, guys. I will talk to you soon and to be continued and thanks again. If you'd like to learn more about this episode, please visit the great simplification.com for references and show notes. From there, you can also join our Hilo community and subscribe to our substantiable. newsletter. This show is hosted by me, Nate Hagen's, edited by No Troublemakers Media, and produced by Misty Stinnett and Lizzie Siriani. Our production team also includes Leslie Batlutz, Brady Hyann, Julia Maxwell, Gabriella Slayman, and Grace Brunfield. Thank you for listening,

and we'll see you on the next episode.