The Great Simplification with Nate Hagens - This Week's Learnings: Gold Holdings, Political Divides, and the DOE Climate Report | Frankly 107

Episode Date: September 12, 2025

In this week's Frankly, in a continuation of his 'This Week's Learnings' series, Nate  updates viewers on things he learned in the past week, and the implications for our sociocultural trajectory. This edition focuses on recent financial and political headlines – global gold holdings, shifting geopolitical energy deals, and new U.S. Department of Energy reports – and explains their relevance to our biophysical reality and broader geopolitical landscape. Through this exercise, Nate invites podcast viewers to use a systems lens to integrate the wide array of news we are bombarded with into the large evolving story of The Human Predicament. Why does it matter that central banks now hold more gold than the U.S. treasuries? How might expanding energy collaborations between Russia and China shift the global political power of the United States and Europe?  How do current economic and political incentives affect the nature of energy science, and what we consider to be 'truth' itself? (Recorded September 9th, 2025) 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  

Good morning. I should put an under construction sign here because my office, my podcast studio is being upgraded. It is a rainy allergy-laden Minnesota September Day, and I wanted to do a brief update. Lots of, frankly, is coming soon. Next week's is going to be on psychopathy because next week's podcast episode is a on psychopaths in human culture. And I hope everyone can watch that. I have some follow-up thoughts. Paradoxically, I was in a very good mood after that podcast, despite the depressing subject.

So here are a few things that have come across my feed in the last week, and I'm just going to comment briefly on them, things in the news. One is my friend Tavi Costa, who works with my former business school colleague, Kevin Smith, posted this graph showing that recently this last month, central banks hold more gold than U.S. Treasuries, and this is the first time this has happened in 30 years. There's something biophysically ginormous afoot in the world. Even if you're not paying attention, you can feel it. Gold is at $3,600-odd dollars per Troy ounce.

People sense that the biophysical gauntlet of creating more and more financial claims on a finite amount of ecology and natural resources is problematic. And so why would I want to hold something by an entity that is printing more and more of that thing when I could hold. something physical that holds value over time. So this trend is continuing and I often use the word for the phrase, bend, not break. This isn't, the origin of that isn't about society. It was about my work with the financial credit system. Over 10 years ago, I worked with two US government agencies looking at what would happen if the credit mechanism in the world seized up and we would have to look at more local and regional

supply chains and paradoxically we looked at fertilizer because most of the U.S. fertilizer is not made in the U.S. but in Trinidad and Tobago and surgical gloves and things like that. But this story of really a musical chair situation where we paper over more and more claims on a finite amount of resources with bonds and bills and stable coin and other things. This is the core of the great simplification. Everything else is downstream from that. So it's why I watch this story quite closely. Related to that in the news is interest rates in the major countries in the world are bumping up against 20-year highs. And for the longest time, countries like Germany and Japan had close to zero or even negative interest rates. Think about

what that means is you get paid to borrow money at a negative interest rate. But if you think that money is a claim on future energy and resources, higher interest rates make sense, but too high of interest rates and it breaks the system because we have to finance our mortgages and take out loans. So this is really a seismic event, especially in Europe and Japan that don't have their own energy sources. There was collapse in the French government yesterday and French bonds are also higher in rates. Like, how do we finance future things? We can print money, but we can't print energy or ecosystem stability. Longtime followers of this show know this is a core theme, but interest rates naturally are going up. Another thing came across my feed last week was this almost hard to believe

Gallup poll showing the percent of Americans satisfied with the direction of the U.S., but broken out by political affiliation. And you can see that historically there has been a divergence between Republicans and Democrats, but now it's an all-time high. 76% of people who vote Republican think the U.S. is headed in the right direction, whereas 0%, at least in this statistical survey of people that voted Democrat, think we're headed in the right direction. What a bizarre statistic.

Like 76 to zero. It just goes to show the different narratives, the different news sources, the different boundaries of analysis, the different values, the different conversations that are happening in this country and probably around the world. One thing that happened last week, not much in the US media, was the SCO in Asia, the Shanghai cooperation organization meeting with about 20 countries, not the United States. Lots of announcements there that also makes sense with this biophysical gauntlet that we're discussing. One of the announcements was new energy collaboration between Russia and China.

And they're discussing the power of Siberia two pipeline in addition to the existing power of Siberia 1, Power of Siberia 2 represents a major redirection of flows away from Europe to China and the East. The West Siberia fields were the major source of energy for Europe for decades. And while in theory some flows could be restored, the 30-year deal between China and Russia represents a major break with Europe and the West. And it's hard to overest to estimate the importance of the 30-year deal. these agreements for global energy politics, because when completed, the power of Siberia

system and interconnection could deliver over 100 billion cubic meters of natural gas to China. This is half of natural gas exports for Russia and around 10% of global exports. And given the fact that transactions will be conducted outside the Western financial system, the The deal further strengthens the move away from the US dollar, which is a key goal both of Russia and China. Not too much about it in the US media, but history will probably view the 2025 SCO summit as another watershed in the shifting balance of power between the East and the West. Back in the West, there was also quite a bit of news about a Department of Energy report

on climate change and rebuttals of such. Before I get to that, let me briefly mention the Secretary of Energy today is a guy named Chris Wright. I have several friends of mine who are friends of him. Say he's very bright, a good guy, incredibly competent. And I looked up his top 10 energy truths. And with the exception of a couple of them, which really don't have to do with energy, they have to do with his opinion on climate and the environment. I agree with almost all of them.

Energy is the foundation of human progress. Hydrocarbons are essential for the modern world. I agree with those things. The problem is we live in a siloed reductionist system. So the Department of Energy commissions a report on climate change, of course, because some of the energy types are chosen for their low-carbon attributions. So this Department of Energy report on climate has some key findings and headline summaries. I don't have the time or bandwidth to address them all. But if I had to summarize, my take is this report is a bunch of half-truths and narrow boundary conclusions. Take their first point, for instance. This is what the report leads off with, and also the op-ed in the New York Times yesterday by Stephen Coonan, the lead author of this,

also leads, which is things we hear often. Elevated carbon dioxide levels enhance plant growth, contributing to global greening and increased agricultural productivity. So this line is a classic CO2 as plant food argument, which is technically true in a lab sense, but deeply misleading in the real world. And I did some research on this the last few days. And here are five brief wide boundary responses. The CO2 boost is limited and temporary.

And yes, it's true that higher CO2 can stimulate photosynthesis in controlled conditions. But this effect plateaus. Plants need nitrogen, phosphorus, healthy soils, and water. And without those, this fertilizer effect stalls. Many crops lose this benefit within a few growing seasons. This is called Liebig's Law in Chemistry, that there are processes and phenomena in the real world are constrained by their least available input, and CO2 is not least available. Second point, the nutritional quality declines from more CO2.

Elevated CO2 often causes plants to accumulate more starch, but less protein and micronutrients. And studies show reductions in zinc, iron, and protein content in staple crops like wheat and rice when exposed to higher CO2. The implication being possibly more calories, but likely fewer nutrients, which is another hidden public health cost. Third minor point rebuttal here. extremes in the future will cancel out the CO2 gains. Heat stress, droughts, floods, and shifting seasons, all made worse by global heating, reduce yields far more than CO2 boosts them. For

example, corn and wheat yields decline sharply once temperatures pass certain thresholds, regardless of what the CO2 is. Fourth, a little rebuttal point. Global greening does not equal agricultural productivity. Satellite data today shows that global greening is real, but much of this reality is from invasive species, shrub expansion, and CO2-loving weeds. That's not the same as productive farmland or healthy ecosystems. So-called greening can also make biodiversity loss, monoculture of weeds look green, but it's akin to gradual and inexorable ecological collapse. Lastly, the The boundaries are artificially narrow.

The DOA is framing cherry picks one short-term effect while ignoring the larger systemic cost of soil degradation, water scarcity, pollinator decline, and climate instability. Agriculture depends on the whole Earth system. CO2 fertilization is a thin slice that collapses under these real world complexity nuances. You can see why these points weren't highlighted. It's very much like a 1984, Ignorance's Strength, Big Brother sort of language. And the bottom line is the CO2 plant food claim, which is just one of the claims made here. It takes a narrow laboratory truth and stretches it into a misleading soundbite,

which over time in our polarized society becomes a story perceived as reality. But in reality, climate disruption, nutrient dilution, and ecological stress far outweigh any temporary boost in photosynthesis. Much of the rest of this report is similar, narrow boundary truths which miss the important context. It's hard to have an energy department in a government focus on environmental issues when the goal of our economy is growth and consumption, not conservation and protection of our natural resources and stability of the biosphere.

So I can forgive them for this misstep, but this isn't scientifically credible, this report. And this is another kind of slippery slope that much of the science, I also learned this week, that much of the science on plastics is now being done in China because, we've fired all the people in the U.S. to look at toxics and endocrine disrupting chemicals, et cetera. So the U.S. and science is a real thing that is eroding. And this is not a partisan thing exactly, though Republicans are in power now. But it's a little embarrassing. When I did the last what I learned this week, people in the comments section said, Nate, you should, instead of focusing on all the negative news, you should have some positive

news and end with some hopeful good news. And I agree. I should do that. I looked for some good news online and I have a lot of good news actually planned to share with you in upcoming Franklies. But I'm sure by now many of you saw what happened in Carolina. I guess it was last month, but it's out in the news now where a Ukrainian refugee young woman was killed just brutally on a train. And a lot of the news about that today is why isn't this being highlighted on in the news?

My take is different. I watched just a tiny clip of that. And I felt sick to my stomach for hours. And it's actually a day later. I watched it yesterday and I'm still upset by it. And I thought about why that is other than the tragedy and the horror of the situation. But when I talk about the great simplification, I'm not afraid of consuming less and living more locally and having a lot more of my time spent working or doing things. with the community and less consumption and high technology.

I'm worried about the people. The people, you know, like this guy on the train and other people who are mentally unstable. And, you know, the consumption side of the Great Simplification doesn't worry me. It's the human side. And much more to talk about on that, as I'm sure many of you can relate. A lot of Franklies, a lot of podcasts coming. I will be again in New York City in a couple weeks for Climate Week. If any of you are there, please look me up and say hello.

And I hope everyone is well. Talk to you soon.