The Joe Rogan Experience - #1921 - Peter Zeihan

Episode Date: January 7, 2023

Peter Zeihan is a geopolitical strategist, speaker, and author. His latest book is "The End of the World is Just the Beginning: Mapping the Collapse of Globalization." www.zeihan.com

The Joe Rogan Experience. Train by day, Joe Rogan podcast by night, all day. Hello, Peter. What's going on, man? Nice to meet you. Right back at you. It has been a crazy year. Yeah, it's been a crazy year for everything, right? Yeah, it's one thing when you talk about how the world's going to be coming to an end. It's quite another when it's like here and now. Yeah. Well, you've been working on this

type of material, this subject matter for quite a long time. So tell everybody your background. Let's see. My background is in economic development. It's all about figuring out what works where and why, and why if you try the same policies in the next town over, it's usually a disaster. And then I worked actually here in Austin at a company called Stratfor for 12 years, and I was their sole generalist. So it was my idea to kind of plug everything together and figure out what the map of the world looks like and have you pull a string on one side of the world, something changes on the other side. Well, your perspective on sort of global interactions with China and Russia and the United States and the

energy supply and the food supply, I have not heard before. I haven't heard it as comprehensively as I've seen you put it together. So I'm kind of excited to talk to you about this. So I guess we should start it with Russia. When Russia invaded Ukraine, you were not surprised. Not even a little. No. You expected this. And you felt like this is inevitable. And this is just something that was always going to happen. And it's not going to just stop at Ukraine. No, not even remotely. The Russian space is among the worst farmland in the world. And so they've never been able to generate enough income to have a road network. Everything has to be moved by rail. And their frontiers are just huge and they're open. And if you've got a force that can't maneuver itself, your only reasonable

defense strategy is to be forward positioned and use geography to help you out. So you expand until you reach mountains or oceans or deserts, and then you anchor on either side of those and plug the access points. Unfortunately for Ukraine, there are two of those access points on the other side of Ukraine. So the Russians were always, always, always going to try to push through and retake that territory, territory that they had controlled for most of the last 350 years. Unfortunately for them, in the 30, 35 years since the Soviet system collapsed, the Ukrainians have developed an identity. And now they would like to be something other than a road bump. So one of the narratives that was going around was that the reason why Russia was pushing into Ukraine is because NATO was moving their arms closer to the border of Russia.

There is something to be said for that. You just have to put it into context to really understand it. So the Russian point of view is for us to be secure, we need to expand until we reach a point where invaders cannot overwhelm us. We have to be able to plug those access points. But to give the Russians what they want, you have to sign over the future of Estonia, Latvia, Lithuania, Poland, Finland, the Czech Republic, Hungary, Slovakia, Romania, Belarus, Ukraine. Oh, let's go on. Azerbaijan, Armenia, Georgia, Kazakhstan, all the stands. Basically, the Russians, in order to feel safe, they have to be able to occupy total populations that are twice of their own. And I'm sorry, but that's just not feasible. So, you know, technically, the people who claim that NATO provoked this are correct. NATO can't have what it wants in Russia in order for Russia to feel safe. But for Russia to feel safe, they've got to occupy over 180 million people. And that was never part of the game. So what do you think they anticipated was going to happen when they started the war?

Well, I don't think it was just the Russians who anticipated it. Ukraine, the last war in 2014, basically rolled over. They proved to be militarily incompetent. They were corrupt. They couldn't put up any sort of resistance. Crimea fell in just a matter of a couple of days. And I think a lot of us who are in the security side of things thought that this was going to be to a degree a bit of repeat. Now, excuse me, I was probably one of the more optimistic people for Ukraine because I had seen them develop a culture and seen them arm and train and had seen it be meaningful. But Ukraine is still a flat country and the Russians are still one of the largest militaries in the world.

So even I was saying that within six months to a year, this was all going to be over. But the Ukrainians have surprised to the upside. And probably most importantly, the Europeans didn't just roll over and let this happen like they did the last seven times that the Russians have gone on the warpath since 1999. And that's changed the game fundamentally. And when you look at it going forward, if people didn't anticipate that the Ukrainians were going to be able to fight back as well as they have, and then you look at it going forward, like, where does this go? Well, there's two paths here. And the problem is we haven't seen either side fight in their full glory yet. And until we have that fight, we really can't judge. In their full glory, like meaning? Well, the Ukrainians are the underdog, but they're in the process of rapidly arming with more and more sophisticated equipment. And by the time we get to May,

they will have been able to do a lot of deferred maintenance on the equipment they captured from the Russians, which was more equipment than they started the war with. And there will be 60,000 Ukrainian troops that have trained in NATO countries with more advanced equipment back in the field. So, you know, we get our Athens, if you will. On the other side, the Russians will finish their second mobilization, and they will. On the other side, the Russians will finish their second mobilization and they will have at least another half a million men in the field. Now, they will be badly trained and badly equipped and badly led with low morale, but troops like that have a technical term attached to them. Russian. There's nothing about this war that is unique in Russian

history. The first year is always an absolute shit show. And then the Russians throw bodies at the problem until it goes away. And in half of those wars, the Russians ultimately win. So by the time we get to May and the mud season is over, we'll have a more advanced Ukrainian force fighting a much larger Russian force. And we will get our first real glimpse at how this is going to go. And we should know which way it's going to break. Now, it'll still take time, because if the Russians are going to win, it's going to take them a year to overwhelm Ukrainian defenses, and then they have to occupy the country, and that's going to kill a couple million people. Or the Russians

are going to be able to completely break the logistical supply chains that allow the Russian troops to even exist, and we'll have a half a million dead Russians. And the Ukrainians will be able to push the Russians out of Crimea in the east. And then we get to talk about the next stage, because this is just the opening phase of what is going to be a multi-year and perhaps even multi-decade conflict. Jesus. Yeah. Welcome to Russia. So how do you think it goes? When May rolls around? clear that they were going to do a second mobilization. That seemed to have broken the log jam in a lot of countries, most notably Germany. And we now have armored vehicles up to and including some light battle tanks, which I know all the tankies out there are going to hate

that term. But anyway, armored vehicles that have some serious firepower are going to be coming now. The Bradleys from the United States specifically. And that is a tool that the Ukrainians have not had. So every time the Ukrainians have achieved a tactical breakthrough, they can only push as far as their infantry can run. Now their infantry is going to be mobile. And in a war of movement to this point, the Russians have proven that they're absolutely incompetent. And why is that? Part of its graft, the guy who is the defense minister, Shoigu, is he's arguably one of the least competent people on the planet. But he's a friend of Putin. And so he's been able to milk the Defense Department for everything.

Best guess is that he has taken a third of the budget himself for procurement and his flunkies have taken another third. So very little gets to the military itself. So it's corruption. Huge corruption. And that means no training. Or if there is training, it's basically a parade. And when you're using a force that can only supply by rail, you're completely dependent upon trucks for local distribution. And that's why the Ukrainians went after the trucks with all the javelins that they got early in the war. They didn't really go after tanks. They went after the trucks. And they've destroyed roughly 2,000, maybe 2,500 of them. And that has

reduced the Russian military to going back to Russia, confiscating city buses and literally Scooby-Doo vans and bringing them back to the front. And think of a Scooby-Doo van. Now fill it full of artillery shells. Every time you hit a bump, and that is their primary ammo supply system now. Because the rail system into Crimea got blown up, the Kerch Bridge, and what's going into the east is all under artillery range. So they have to use truck, and they're just not very good at it. Now, for a lot of people, the big fear is that if Russia starts really getting desperate, then they use nukes. Scenario one is the Russians consider throwing one against the United States. But we've made it very clear from our intercepts and our sharing of information with the media that we know exactly where Putin is at any time. We're listening to his phone calls. We're reading his emails.

And so he now knows very clearly that if he throws a nuke at the United States, we're going to throw one not at Russia. We're going to throw one at him. And there's no version of this where he survives. So he has tamped down the rhetoric quite a bit since last March. Option number two, nuking Ukraine. That doesn't make sense. They want to occupy Ukraine. You don't want to have your troops in a place that's a radioactive wasteland. There may have been a case last year for nuking Poland and Berlin and Stockholm in order to disrupt the weapons flows into Ukraine.

But after the battles of Izium and Kyrgyzstan, the Ukrainians have more Russian gear now than they know what to do with. It's going to take them months to bring that all online. There's a lot of deferred maintenance that needs to be done. And so disrupting the weapons flows no longer is a critical issue because the weapons are already there. So the only scenario I can see where the Russians would seriously consider nukes is if Ukraine doesn't simply win, but decides to carry the fight across the border into Russia proper. In that scenario where the very existence of the Russian government is threatened, that would probably change the math. But I don't find that

likely without a significant shift in mindset in Washington, because we're not just providing the Ukrainians with the weaponry and the ammo, we're providing them with the intelligence and most of the steps of the kill chain. Without that, the weapons are of limited usefulness, especially at long range. And the Ukrainians have no desire to rupture that relationship. So we're talking about a theoretical that is at a minimum seven months away, probably further. I mean, there's such a long history of sacrifice and death. And they have, it's like they're accustomed to it in a way. Oh, we can do better than that. We can make you a lot more depressed.

Okay. So let me give you two things. Number one, the Russians are relatively casualty immune. They fight in an area where they fight with numbers. They've never been technologically advanced versus their peers. They've always just thrown bodies at it. So there has never been a conflict in Russian history where they have backed out without first losing a half a million men. We're at about 100,000 now. We have a long way to go before the Russian military breaks. So the Russians have lost roughly 100,000?

That's the best guess. How many Ukrainians have been lost? Probably about a third of that. But that is a third in terms of military forces. In terms of civilians, we really don't know. It could be as much as 250,000 at this point. We just don't know. Well, the data exists on the other side of the front line. All we know are about what has happened in the territories that have been liberated. And if you think of things like Bucha and Izium, German radio intercepts told us as far back as May that there were at least 70 places behind Russian lines that had suffered massacres like Izium, I'm sorry, like Bucha. And when we've

had additional liberation since then, it corroborates that general assessment. So that's piece one that you can be a little depressed about. The piece two, the Russians see this as an existential fight for their survival. They feel if they don't get those blocking positions, they're doomed and they're probably right. But we now know that the Russians are fighting so badly. They're doing much worse than the Iraqis did in 1992. Really? Oh, yeah. If we had a direct fight now between NATO and Russia, it would be 1,000-1 casualties. And I don't know anyone at the Defense Department who's happy about that.

Because if the Russians see this as an existential conflict, and they know they can't hold a match to NATO, the nukes are their only option. So the primary reason why everyone in the West has gotten shoulder to shoulder on this is they know that if Ukraine falls and Poland's next, there will be a direct fight. The Russians will lose and then there will be a general nuclear exchange. So there's plenty of really solid reasons to root for the Ukrainians on this one. Trevor Burrus Jesus Christ. Now when this whole thing broke out, what do you think the Russians expected Ukraine to just give up?

David Schoenbrod Absolutely. That's what happened in 2014 for the most part. Trevor Burrus And what are the possible scenarios for Russia? I mean, it seems like they're completely committed to this. They are. And if they don't win it? The Russian position is that our demographic structure is in such diseased and aged and terminal decline that the Russian state will be turning the lights off sometime between 2050 and 2070 anyway. Anyway? Yeah.

They've had a series of big melon scoops out of their birth rate throughout the history, World War I, World War II, the collectivizations under Stalin, Brezhnev's mismanagement, Khrushchev's mismanagement, the post-Cold War collapse. And a lot of these stack on top of each other. And the biggest one stacked on top, the post-Cold War collapse. And a lot of these stack on top of each other. And the biggest one stacked on top of the post-Cold War collapse. So there are more Russians in their 50s than their 40s than their 30s than their 20s than teens. And then they lie about the data of the teenagers on down. Which means that there aren't enough Russians that have been born in the last 30 years to carry the ethnicity forward much farther.

that have been born in the last 30 years to carry the ethnicity forward much farther. And so they're thinking if they can forward position their military and plug those gaps now with their last generation of young people, then they can kind of die on their own terms 50 years from now. Have they really thought about this in that term? Yeah. One way or another, this is the end of Russia. The question is whether it dies in the long term on their terms or in the shorter term when they're completely unmoored. Because if they fail to secure those borders, then they've got a 2,000-mile open border with countries they consider to be hostile.

And they have no way of moving troops around in a way that would allow them to defend it. They'd just be waiting for somebody to come over and knock them over. And you believe that they're aware of this, that they can't survive past 2050, 2070, whatever it is? I think that's what's been driving them because 2022 was the last year where they had a sufficient number of people in their 20s to even attempt this. So from my point of view, not only did the war always have to happen, it always had to happen by now. It always had to happen by now.

Jesus. Now, is this just because of the nature of a dictatorship that's run by someone like Putin, that it's just completely mismanaged because he's just dominated the power structure and made sure that everybody falls in line with his ideology and his reign? Like what caused all this to be so poorly managed? Well, Russia has always been poorly managed and authoritarian. But under Putin, it's taken a much darker turn because of the nature of the end of the Cold War. If you remember back to 1982, there was a coup in the Soviet Union. back to 1982, there was a coup in the Soviet Union. And Chernomyrdin and Drobov and Gorbachev were FSB, then KGB agents who basically overthrew the old system of Brezhnev and took over. Because they were the only ones who really had a full understanding of what was going on. They controlled the information. They were not able to save the system. and so it broke. And Putin is the successor to that legacy because he was also in the KGB.

And we're now in an environment that between the terminal demographic structure of the Soviet slash Russian system and Putin's personal paranoia. purged what was left of the KGB FSB of anyone who has personal ambitions to succeed him, we're left with an entire political elite of only about 130 people. And Putin has removed anyone who has leadership ambitions. Now, they all see the world the same way. They all kind of agree with Putin on what's at stake here. But it does mean that when this generation is gone, this is it. This is all the leadership talent that the country has.

So because of his sort of top-down approach, he's eliminated all the possibility of future leaders in some way. Even if Russia did have a replacement generation coming up, and it doesn't, he's taken steps to make sure that they can't challenge him. And so any sort of leadership talent has left or been killed. What do they hope happens? And how, I mean, when everything's going so poorly, like what do we know about how they're assessing things? Well, they're obviously not thrilled with the way the things are. They're using one bit of propaganda after another to justify it saying that, you know, we're fighting all that we're fighting all of NATO or demons are involved. That was my personal favorite. Demons? Oh, yeah. When it came to the Kyrsten offensive and it became clear that there was more going on

than just NATO weapons, the Ukrainians actually knew what they were doing. They changed the line from that these are all Nazis to these are actually gay demons. Gay? Gay demons, yes. What? Yeah, Russian propaganda is a hoot. these are actually gay demons. Gay? Gay demons, yes. What? Yeah, Russian propaganda is a hoot. Please explain the gay demons. Oh, I don't know if I can explain it.

I'm just saying that this is the official line right now, that we have homosexual demons fighting us in Ukraine. But why gay demons? Like, is there a mythology to that? Not really. The guy who's in charge of the Orthodox Church is a Putin crony. Kirill is his name. He's kind of like the Eastern Orthodox Pope, if you will.

And he has been a partner with organized crime and with Putin since the beginning. And so he is coming up with ever more creative approaches to the propaganda. And so this is a way of how can I say this without pissing off half of the people listening? Imagine Trump using his influence with evangelical Christians to come up with a theological reason why something didn't go his way. It's kind of the equivalent of that. And so gay demons is what he came up with. Gay demons. Yes.

And they ran with it. So that's on state propaganda now. Really? Yeah. It's wild. And what's the epicenter of the gay demons? Oh, Kiev, obviously. Yeah.

So we've got a Jewish Nazi gay demon. Wow. Yeah. And. Truth is always weirder than fiction. And. Truth is always weirder than fiction. And the scary rumor is that Putin has cancer and that. Or Parkinson's is one I've heard as well. Oh, really?

Yeah. I don't know what it is. He's clearly on steroids, but you know, that could mean a whole lot of things. Like prednisone or something along those lines. And you say that because of his appearance. Yeah. He looks very, not just flushed, but puffy. And that's kind of a classic too many steroids in your system issue. And this puffiness, these steroids are to battle this cancer somehow? In theory. Steroids keep you

going in a time when you should probably be laying down is really the kind of the bottom line. Whether he's medicated, over-medicated, or medicated because of medical reasons, we really don't know. He's not in great health. That is obvious. And for someone who has been the shirtless horseback rider in the propaganda videos, that's a real problem. He's visibly wearing bulletproof or bullet-resistant v, even around his own propaganda people. There was this great piece that came out that I saw last week where it was all the propaganda shots that he's taken with like with the soldiers' mothers and on the front and with the tech people and in the intelligence. And it was like the same 12 people were in every single shot,

just in different outfits. And even with those people, he's wearing his ballistic vest. Now, when you say, when you talk about his appearance, that he's clearly unhealthy, is there, can you demonstrate that? Are there images that show him a couple of years ago versus now where you could see his appearance? Yeah, it's not much of a reach. Like I said, he likes to pose shirtless on horseback to show how virile he is. He didn't look good shirtless on horseback. Yeah, I know. You got to look at it from the Russian point of view.

I mean, the standards are a little different. Are they? Oh, yeah. And he's got the shakes. That's one of the reasons why the Parkinson's analysis, I guess, has come out. I've never seen any of this. Yeah. So there's video of him shaking?

See if you can find any of that, Jim. See if you can find a comparison. Yeah, I got an article on a timeline of his health. Here's the shakes part. He used to be a fairly animated speaker. Boy, he does look puffy. Now, whether or not

he's actually sick or not, I have no idea. Could it just be that he's just drinking a lot? Technically, he says he's a teetotaler. Really? Which is pretty rare in Russian society. But, you know, he's still alive. And a lot of Russians make it to his age. How old is he now?

Mid-60s. And so it's just an appearance thing. We don't have any like real hard data that he's sick. No, no, we do. Well, the folks in the intelligence world who are listening to his phone calls and reading his email might. But that has not been made public to my knowledge from the American side. So Ukrainian military intelligence chief claims Putin is very sick and a coup is underway. Yeah, but Donov has been saying that there's a coup underway since March.

So he's kind of the Ukrainian propaganda guy. I wouldn't put too much credence on that. But what would even happen there if a coup did take place? Putin has so thoroughly purged what's left of the intelligentsia. There's only 130 of them. And there's probably only one of them who would have the guts to throw a coup. That's the Rosneft CEO. Rosneft is their oil monopoly. Igor Sechin is his name. He used to be a gun runner during the Soviet period. He's got the guts to pull it off. But if there's anything that the other 129 agree is that Sechin's an asshole

and he should be shot on sight if he kills Putin. So there's no immediate pretender to the throne here. What a fucked up situation. Well, for. So there's no immediate pretender to the throne here. What a fucked up situation. Well, for the Europeans who have been dealing with the Russians for three centuries, this is kind of par for the course. It's just a modern version of it. Yeah. The Soviet period was kind of a relief because we actually had an institution that pushed their weird religion to the side and actually worked on technocracy and

technology. And from the European point of view, that was a huge improvement. And the belief in the post-Soviet period was that they would start from that and move forward and modernize and maybe even democratize. And people believed that for far too long, even when it was clear that Russia was degenerating rather than advancing itself. Now, the title of your book is The End of the World is Just the Beginning. That's the one. Why that? We are dealing with the end of the world that we know. Russia is more of a symptom of this than a cause. So to go back a little bit, in the world before World War II, if you had coal, oil, food, and iron ore, you could industrialize and try to make something of yourself. But if you failed to have one of those, you were probably a colony. At the end of the war, the Americans abolished the imperial system and patrolled the global oceans for everyone. And as a result, now you only needed one of those four and you could trade for the others.

And so for the first time in human history, we were all on the same path, you know, from different starting points and going at different speeds, but we were all industrializing and we were all urbanizing. The problem, well, let's start with the opportunity. When you urbanize, you move from the farm and into town to take an industrial job. When you live on the farm, you have a lot of kids because they're free labor. You move into the city, you have a lot fewer kids because kids are no longer free. They're really expensive and noisy and annoying and dirty pieces of furniture. And you have fewer of them. And so your population starts to shift. It used to be that you have loads of children, a few young adults, fewer retirees. It's kind of a pyramid. But as you urbanize, your pyramid opens

up into a column because you have fewer kids, but everyone's living longer. And as long as your population is a column, economic growth is spectacular because you don't have to spend a lot of money on your kids. You're not old enough that you have a lot of retirees, but you got a lot of people in their 20s and 30s to build things and buy things. And then a lot of people in their 40s and 50s to do the investing. And the rich world was a population column from 1945 to 1992. And with the end of the Cold War, the developing world became a column in 1992 until now. The problem is that this is all temporary because birth rate keeps dropping, people keep living older, and your column eventually inverts into an open pyramid upside

down. And now you no longer have children, you no longer have a replacement generation at all. And there aren't enough people in their 20s and 30s to buy everything. And there aren't enough people in their 40s and 50s to pay for the retirees. So this decade was always going to be the decade that most of the advanced world moves into mass retirement and the economic model collapses. And next decade was always going to be the decade that that happened to the developing world. And we find out recently that the Chinese have jumped the ship and this is their last decade too. So all of the globalized connections and consumptions that create the world we know, we are at the end of it. And we have to go back to a world where trade is more focused on the countries that have a better demographic and security infrastructure

because the Americans are no longer patrolling the global oceans anymore. So we're losing the security ramifications of an open system. At the same time, we're losing the demographic capacity to support it in the first place. And that's all going down right now. So when you're saying that China has 10 years to go- At most. What do you mean by that? Well, we now know that they've lied about their population statistics. And they overcounted their population by over 100 million people, all of whom would have been born since the one-child policy was adopted.

So this is one of those places where they've got more people in their 60s and their 50s and their 40s and their 30s and their 20s. What was the logic behind the one child? Was it that they were overpopulating? Mao was concerned that as the country was modernizing, the birth rate wasn't dropping fast enough and that the young generation was literally going to eat the country alive. So they went through a breakneck urbanization program, which destroyed the birth rate. At the same time, they penalized anyone who wanted to have kids. And both of those at the same time have generated the demographic collapse we're in now. And the problem with that also was that they wanted male children. Yeah, there's a cultural aspect to that too. And obviously men can't have kids on their own.

And what is the ratio to men to women in the younger people in China now? Before the data revision with the last set of lies, it was about 1 to 1.2. It was the most distorted in the world, even more than Sri Lanka, where there had been a civil war for 30 years. It was the most distorted in the world, even more than Sri Lanka, where there had been a civil war for 30 years. Since then, we don't have good sex-by-sex data, but it's undoubtedly worse. And so what are the other problems that they're encountering that leads you to believe that they only have 10 years left? Well, without young people, we've seen their labor costs increase by a factor of 14 since the year 2000. So Mexican labor is now one-third the cost of Chinese labor. Their educational system focuses on memorization over skills.

So despite a trillion dollars of investment and a bottomless supply of intellectual property theft, they really haven't advanced technologically in the last 15 years. Mexican labor is probably about twice as skilled as Chinese labor now, even though it's one-third the cost. Mexican labor is probably about twice as skilled as Chinese labor now, even though it's one-third the cost. They've consolidated into an ethnic-based, paranoid, nationalistic cult of personality. And it's very difficult for the Xi administration to even run it because it's not an administration anymore. No one wants to bring Xi information on anything. So like Putin lied to his face, for example, last February about the war saying, why would I invade Ukraine? And you can see in some of the presses, the defense guys in the back of the room, like they didn't want to say anything because he has a history of shooting

people he doesn't like. And so the Chinese were the only country that was caught with their pants down when this all went down. The Biden administration is basically taking the trade policy of Donald Trump and running it through a grammar checker and putting it into institutions. So we now have tech barricades that prevent the Chinese from buying the equipment, the tools, or the software that's necessary to make semiconductors. In fact, he went so far as to say any Americans working in the sector have to either quit or give up their American citizenship. Every single one of them either quit or was transferred abroad within 24 hours. So the tech system is stalled. They don't have the young people to go consumption-led. They're completely dependent on the U.S. Navy to access international trade. They are the most vulnerable country in the world right now. And based on how things go

with Russia, we're looking at a significant amount of raw materials falling off the map, specifically food and energy. And the Chinese are the world's largest importer of both of those things. So there's no version of this where China comes through looking good. And the challenge for the rest of us is to figure out how do we, in as smooth and quick as a process as possible, figure out how we can get along without them because they are going away. And they're going away this decade for certain. Well, if you say they're going away, clearly they're not just going to lay down. No, they'll die.

They're going to try to adjust. Yeah, they'll die. But how so? Do you think this is because, like, what is, other than, well, here would be a big problem, right? Taiwan. Like, if we impose the kind of sanctions that we've imposed on Russia, if China decides to invade Taiwan and the world stands up and the world imposes sanctions on China, how does that go? Very ugly for the Chinese. So, you know, say what you will about the Russian economy. It's corrupt. It's inefficient.

It's not very high value add. But it's a massive producer and exporter of food and energy. You put the sanctions that are on the Russians on Beijing, and you get a deindustrialization collapse and a famine that kills 500 million people in under a year. And the Chinese know this. They can only push so hard. Also, you know, you can make the argument that if the Russians succeed, they actually solve or at least address some of their problems. Even if the Chinese were able to capture Taiwan without firing a shot, it doesn't solve anything for them. They're still food importers.

They're still dependent upon the United States. They're still energy importers. And even if they take every single one of those semiconductor fab facilities intact, they don't know how to operate them because they can't operate their own. And their own are among the worst in the world, not the best. They operate their own and their own are among the worst in the world, not the best. Now, the only reason, in my opinion, to be concerned about a Taiwan war is because Xi is so isolated himself that when one person is making all the decisions and that one person refuses to access information to make the decisions, strange stuff happens. And when you say refuses to access, what do you mean by that? He does not have normal information flows anymore.

Like even at the height of the Trump administration, when Trump was basically isolated himself from the entire intelligence community, he was still getting the daily briefing. There was still information being put in front of him. But Xi is so isolated himself. He doesn't want to hear anything except for what he wants to hear. And since no one knows what the status of the conversation with the voices in his head in on any given day, no one wants to bring him anything unless they're ordered to. How do we know this about him? Because there's no one to listen to anymore. That's one of the fun things about Russia versus China right now is that the Russian information security is so poor that American intelligence is literally listening in on everything.

But in China, we can hear into the office, but there are no conversations happening. What do you mean by that? What do you mean? So no one talks to him about anything? If you look at the— So he's just terrifying to people. Yeah, exactly. Because he murders dissidents.

He murders anybody that... He doesn't murder everyone, but there's a lot of people in prison. And there was also a lot of billionaires that got disappeared, right? And any dissent. Yeah. You're either executed or exiled, intimidated into silence. There's a variety of options. And if you look at the third party Congress that we had late last year, that's when they select the Politburo. Everyone on the Politburo now is a personal flunky. There is no one from a different faction. There is no one that has a history of being incompetent.

And what is their plan? The Chinese? Yeah. Do we have any idea of what their plan to get out of this is? Nationalism. If you know that the economic situation is going to go to pot, then you have a couple of options. Option one is you try to cut a deal with a country that can help you out, but the only country that could do that is the United States. And the sort of strategic surrender that the Americans would require is not something that the Chinese would accept. So think about Germany in 1946. That's the scale of support and control that the Americans would insist upon for giving the Chinese a lease on life.

But if you go with nationalism, give people a non-economic reason to support the state. So even if you lose your job, even if you can't feed your family, I'm Chinese, I'm Han, that's enough. That has been the strategy for the last couple of years. Will it be enough to preserve the CCP? Too soon to know. And they're also in, they're in the middle of the worst aspect of the pandemic for them ever. Yeah. Which is very strange for us because we're on the other end of it, right? So what happened over there? Well, let me start by saying, I think it's safe to say that no country has really figured out how to handle this well. Second, I will say there are seven different variants circulated in Beijing right now or in China right now. Three of them did not exist two or three months ago.

And it takes about six months of data for you to get good information on the R-naught and the lethality. So we just don't know. And then third, in part because of Xi, when you're a one man state, all policy and all authority starts and stops with you. And unless you're providing very clear guidance on everything, which is impossible for one person to do for a whole country, especially one the size of China. The bureaucracy either goes into automatic or does nothing. Well, right now it's doing nothing. So the data decisions in China are not to gather data and figure out what we can do. It's to, instead of gathering data and lying about it, we're just not going to gather any data at all. So we're not going to know how bad these strains are until they get out of China and circulate in the rest of the world for six months. So the lowest fatality estimate that I have seen that I consider credible is that they're going to lose a million and a half people.

Just from COVID. Just from COVID. That assumes no broader breakdown in the health system, which we are already seeing. And is this because they don't have natural immunity because of the rigid lockdowns that they encountered? Yeah. You know, from a plus point of view, they did keep the virus out of the population for almost three years.

So no one has natural immunity. But we also know that their domestically generated vaccines aren't great. And most of the countries that used them in order to get their kind of first batch then moved on to a Western model that worked better. So they had a twofold problem. They did not have vaccines and they didn't develop natural immunity. And now everyone's getting hit all at once with a virus that has at least 50% more communicability than the measles. And their overall health is worse than ours. Diabetes as a percentage of the population is higher. They don't have a critical care system like we have. And their hospitals are really their only

line of defense. They don't have a clinic and a doctor system in the towns like we do. And what about nutrition education and the understanding of- Yeah. When you industrialize very, very quickly, especially in a culture like China where food is considered a sign of wealth, getting fat is the thing to do. So we've got a lot of diabetes, a lot of hypertension, a lot of overweight people, and over two-thirds of the population lives in the metro region and their air quality sucks too. So we're kind of seeing like the worst aspects of the Indian system and the American system all in one. So obviously the United States government is aware of all these things, correct? Well, let's not oversell it, but broadly. Broadly. Have you been brought in to talk to people? Because you have a very comprehensive view of this that includes energy and nitrogen, fertilizers, everything. Has anybody ever brought you in and said,

Peter, can you give us an assessment of what we're really dealing with versus what each individual expert has to contribute to it? Because you're giving an overall sort of comprehensive view of this. I'm happy to say that I am doing some work with the Defense Department. I can't talk about the details, obviously, but I think it's good to give credit where it's due. One of the many, many things about the war on terror that reshaped the US government is that we focus all of our intelligence apparatus on supporting the troops, which is reasonable. So instead of thinking, you know, it's 2045 and you're thinking over the horizon, who's our foe going to be and what kind of tank are they going to use so that we can

start preparing, which is what we used to do. It instead became there's someone in the other side of this door and the third floor of this building at the edge of town in Fallujah. What side of the door the hinges are, because we need to know if we need to blow it off the hinges or kick it in. hinges are, because we need to know if we need to blow it off the hinges or kick it in. So we focused all on that second thing for 20 years, which meant not only did we lose all the analysts who knew how to think forward, we lost all the people who trained them. 20 years is a long time. So even if everyone in DOD or the intelligence community disagrees with everything

I have to say, and I have some friends, I have some colleagues, I have some non-friends who listen. The fact that they're trying to rebuild that capacity is a really good sign. And the fact that they started rebuilding that capacity so soon after the war on terror ended means that they recognize the hole in the system. means that they recognize the hole in the system. This is a good sign. So if you play out China's collapse, how do you anticipate that that goes?

What do you think, first of all, what do you think is like the first piece to drop? Well, Chinese history is rich with examples of how it all falls apart in a short period of time. If I were a betting man, I think that the two most vulnerable parts of the international system right now are energy transport and food production. About 80% of the calories that humans produce are produced with at least one imported input, whether it, pesticide, fertilizer, fuel, tractors, whatever. And with the Chinese, it's more like 90%. 90% is imported? Yeah.

Well, no, not their food is imported, the inputs. The inputs. The input strain. And 90% of the calories they produce are dependent upon a foreign support system. In the United States, it's less than 10. We produce most of what we need locally and most of the rest comes from Canada. But you interrupt the food supply chain in any meaningful way. And China is only one of a host of countries that has some very real problems. Now,

China faces the biggest one in absolute terms because of the size of their population. But with the Russians having their problems, the Russian space is the world's largest single supplier fertilizer of all types. So we are already knee deep in a fertilizer crisis globally. And we're seeing industrial accidents in the Russian space that are so big you can see them from orbit because a lot of petroleum stuff explodes if it doesn't go right. And the Russian facility has been held together with duct tape and Western tech for a while now. That's all gone now. So China being kind of the last man in line to get a lot of this stuff is in a very vulnerable position. We're probably going to see about a million barrels a day of Russian crude fall offline within the next few weeks

as part of the price cap that the Europeans are putting into place. But more important, all the insurance firms have said they're not going to deal with Russia anymore. So you're not supposed to sail at all with your ship if you don't have an insurance policy. So countries like China and India are stepping in and offering sovereign indemnifications, but that's something they've never done before. And so if there's ever a case where a ship, for whatever reason, needs to file a claim, it's going to immediately go to international arbitration because they have no method for the payout. As soon as that happens, no one's going to take an Indian insurance policy again. That's another million to 2 million barrels a day that goes offline. And then all the crude that the Chinese get from Eastern Siberia is from fields that the Russians never developed themselves.

That was all BP. BP's gone. So we don't know how long the Russians can keep it operating, but we know it's going to go to zero. We just don't know how long it's going to take. And the Chinese are the last in line for all of this stuff. And if you have a food or an energy crisis, or God forbid, both at the same time, on top of a health crisis, on top of government incompetence, there is no way a central government holds together in that sort of environment. Now, like I said, Chinese history is rich with ways that can all fall apart. Oftentimes, it's based on having this hyper-centralization and an incompetent leader, or an incompetent leader cadre maybe is a better way to phrase that. But how it usually goes is that the North kind of falls in on itself.

It falls into famine. It falls into tyranny. You get hundreds of millions of people suffering from malnutrition and then ultimately dying. The coast goes one way. The interior kind of breaks off and shatters. And then the cities of the coast in the south, your Shanghai, your Fujian, your Guangzhou, your Hong Kong, they basically become independent city-states and integrate with foreign powers primarily in order to get food. And if you look back at the last 14 centuries, for almost that entire period until 1945, the city-states have been dependent upon foreigners to keep themselves alive. So we're really just reverting to a historical mean here.

Now, one of the things that's really disturbing to the West is watching what's happened to Hong Kong. Sure. That Hong Kong has essentially been taken over by the CCP, and they've imposed their rule of law on people that had existed in more or less a westernized democracy. Right. Like, how do they control that? The Chinese? Yeah, I mean...

Well, Hong Kong would probably be one of those cities that splits off. But for that to happen, you first have to have the northern section basically fall in on itself. As long as there are security services, these southern cities can't go their own way. But as soon as something happens to those security services. These southern cities can't go their own way. But as soon as something happens to those security services and they're focused on the homeland in the north, then the southern cities are going to bolt. Now, what does China think about? Did they have an understanding of this collapse or is it just because of Xi's power over everyone that none of this gets discussed so there's no planning? This is one of the beautiful things about authoritarianism is they start telling stories and eventually they believe them.

It happened in Russia. It's happening in China. Chinese academics as recently as 10 years ago were very, very aware of this, and it shaped government policy. They wanted to make sure that the Democrats, little d, in Hong Kong didn't get too uppity. They tried to make sure that there were people from the south on the Politburo. But as we've gotten into a more ossified and centralized decision-making system, all of the lessons of the past are going away, and it's all about central control. And once again, because this is another trend that pops up in China over and over again, they're forgetting their own history. But China has always been thought of as a country, at least the narrative has always

been that they plan long game. Yeah, it's a bunch of crap. Is it? Yeah. No, the Chinese are just as bad as everyone when it comes to ideological blinders and short-term decision-making. And the more isolated and concentrated the decisions, I'm sorry, the tools of power become, the more problematic that becomes.

So what is their plan on getting through what you think is a 10-year timeline for their demise? Beat the nationalist drum so that when the food and the energy run out, everyone is banding together simply because they're Han Chinese. That's it? That's as good as it's going to get because there is no trade option out of this without the United States. What do you think the world looks like in 10 years? I think we'll have a system of regional trade where you've got certain regional powers who have actually benefit from the environment. So one of the fun things about

the United States is that we've got more navigable waterways than everyone else in the world put together, about 13,000 miles. And it's about one-tenth the cost to move things by water as it is to move it by truck. So with that sort of environment and ocean moats, the United States is an economic power, whoever is in charge. I mean, we've had decades of bipartisan effort to try to screw this up, and we haven't pulled it off yet. We're not going to do it under Biden. He doesn't have the energy. Which means that globalization from our point of view, from an economic point of view was a problem because we had one of the world's best geographies and we deliberately sublimated

that in order to support our allies against the Soviets in the Cold War. We basically paid people with globalization to be on our side. And it worked. But we're getting away from that. And now geography is going to have a much bigger role to play. And if you layer demographics on top of that, if you have a country with a decent geography and a decent demography, they can kind of write their own ticket in the world we're going to. And there are a few of those. The United States is at the top of the list. Argentina looks really good. France and Turkey look great. And then Japan is kind of a consolation prize because they've managed to cut a deal with both the American right and the American left and get themselves invited into kind of an American friends and family plan.

So you get these spheres of influence that don't necessarily cooperate or compete with one another, but are kind of in their own little worlds. And anything outside of those spheres of influence is probably a territory that is not very economically viable. And most of them don't have demographic structures that are sustainable at all. This really is the end of the world. The end of the world we understand. Yeah. We're going back to something that's a lot more similar to the world as it existed in the early 1900s. How does China come through this though? They don't. So what happens to them if they don't? Well, I mean, this is one of the wild things and the hard parts of my job is we have never

and the hard parts of my job is we have never faced a demographic collapse that wasn't caused by war. The closest would be the Black Plague. But the Chinese are going to lose a greater percentage of their population in the next 20 years than Europe did during the Black Plague. And you think by famine? This assumes no famine. This is just aging. Just aging. Yeah. If you have an energy breakdown or a food breakdown, it happens a lot faster. And they have energy issues and they have food issues. They are the world's largest importer of energy, about 14 million barrels a day.

Remember, we're a net exporter. And they are the world's largest importer of food and food inputs. And are we the only major superpower that can generate its own natural resources in terms of natural gas, shale oil? We're the only ones who can do it at scale. I would argue that Argentina can do a pretty good job of it by Argentine standards. So we're fairly safe in that regard? Yeah. I mean, we'll always find things to stress about. I don't mean to suggest that the next five years are just going to be a picnic.

always find things to stress about. I don't mean to suggest that the next five years are just going to be a picnic. We're going to have to double the size of the industrial plant as the Chinese system and the German system both fall offline. But that's an opportunity. You double the size of the industrial plant. Obviously, that's inflationary. But at the other side, you're building things at home using local resources and local workers. You're using less energy and less water. It's cleaner. You're selling to locals. And your supply chains are simpler and safer and shorter.

And you're largely become immune to shocks beyond the horizon. This is a good challenge. It won't be easy. But to be perfectly blunt, we've done it before. We can do it again. Well, one of the things that came up during COVID was our understanding, really for the first time, of the supply chain and what happens when it gets cut off. When medicine, so much medicine is produced in China, so many computer chips, so many different things are made over there, that there's been a real conversation about the need to have all that stuff here and for the United States to be self-sustaining.

With the inflation, I mean, I don't want to come across as a partisan here, but the Inflation Reduction Act, while from an inflation point of view is ridiculous, there's nothing about that that addresses inflation. It did put together a nationalist economic policy that we probably did need in terms of pushing the re-industrialization on some specific sectors. It'll probably be the first of a series of things that are coming. And a lot of this stuff is not particularly complicated. So take the medication issue. It's 1950s technology for the most part. The medicines that we import from China and India are not the biologics or the cutting edge stuff or the cancer drugs. They're the day-to-day maintenance things that a lot of us use. And it is not particularly expensive or time consuming to build out the capacity here. It's basic chemistry. But there has not been an economic incentive to do it yet. here. It's basic chemistry, but there has not been an economic incentive to do it yet. So you get one act of Congress and splash a little cash on it, and it might cost us eight cents for a pill instead of four cents. But we can argue whether or not that is worth the

price. You get into more sophisticated manufacturing and it kind of does this weird split. So the United States is a world leader at the very high end, whether it's semiconductors or vehicles or machinery or software. But we're also a world leader on the low end if it's input intensive. So energy products and food products, fuel, processed foods. Our problem is in the middle, places where it's not the natural bounty of North America that helps us out. And it's not the ingenuity and the skill of the American workforce that helps us out, the stuff in the middle. To be perfectly blunt for that, we've got Mexico, and they're great at it. The American-Mexican trade relationship is already the largest in the world,

and they're going to be our largest trading partner moving forward for at least the next 30 years, probably a lot more. Are there hiccups? Oh, yeah. Plenty of hiccups. Well, I'm sure you're paying attention to the cartel wars that are going on right now. Yeah. It would be so much better if Americans did not like cocaine. I would just solve half of this overnight. Or if cocaine was legal. The health studies that I have seen suggest that that is not the way forward. But do you really think that it would change the consumption? Oh, it would definitely alter the consumption. How, I don't know.

This is not something I'm an expert at. But most of the people that I've seen who have done the assessments suggest that any gain in terms of law enforcement and criminal activity would be lost in terms of work days and sickness. So from a purely economic point of view, at best, it looks like it might be a wash. So the legalization of cocaine, in your opinion, would cause more use and more problems. But wouldn't it stop all these fentanyl overdose? Because this is an issue with the illegalization. See, that's the problem. We ask people why they're taking what drug to say that if cocaine was immediately available that they'd stop taking fentanyl. But they're not taking fentanyl on purpose. Oh, you're talking about the stuff that's cut in.

A lot of the fentanyl deaths is cut. Like cocaine, fentanyl deaths are very high. Well, then you're talking about a regulatory issue. And just keep in mind that whenever you move something in from an illegal to a regulatory point of view, there is a, how should we call this, an adjustment process. So I live in Colorado now, which was the first state to legalize pot. And what we discovered was that, yes, you solve some problems and you bring a lot of money in for the government, but it has criminalized a lot of economic activity in Colorado. Because think about what happened with pot. It's still controlled from a financial point of view at the federal level. So banks won't touch it. So all the pot dispensaries have a walk-in safe where they keep all the cash. So the Federal Reserve is like, this is a theft issue. This is a security issue. We can't allow this to happen.

So what we're going to do is we're going to hire out a bunch of armored cars and trucks, and we're going to send these to these pot dispensaries after hours. And with armored guards, we're going to come in and we're going to take all your cash. We're going to spray a lot of Febreze on it. We're going to take it back to the Federal Reserve building. We're going to count it and give you a digital deposit. The Sinaloa cartel is like, whoa, whoa, whoa, whoa, whoa. Let me get this right.

The Federal Reserve of the United States of America is now in the business of money laundering. Count us in. And so now they are laundering their money through the pot industry of Colorado. And it's generated just a different problem. This is a gentleman named John Norris, and he started out his career as a game warden, a guy who checks fishing licenses and stuff. And along the way, he discovered that

because of the legalization of marijuana in California, they decriminalize it to the point where growing it is a misdemeanor. And so people are growing it on federal land, on state land. And so these state forests and federal forests in California are filled with cartels. They're growing marijuana. So he had to form a tactical unit to combat these cartels. So they're wearing tactical gear, and this guy was a game warden. And now they've got Belgian Malinois

and fucking machine guns, and they're going in there and they're fighting off cartels. And he wrote this book called Hidden Wars. It's fucking crazy. There's rarely a silver bullet, unfortunately. But this is the problem that you have when you have it illegal. I mean, this is literally what propped up organized crime during the prohibition. This is what

funded the mafia. They ran booze illegally because it was illegal. So criminals are going to be in charge of things that there's a demand for when there's an enormous economic incentive. I think the mafia is a great example for why you shouldn't look for the silver bullet. Because yes, that in the 1920s during prohibition was one of the big reasons they got going. But the mafia didn't waste any time in diversifying and neither of the cartels. So one of the many problems in Mexico today is that the cartels have diversified. They've gotten into cargo theft and kidnapping and avocados and limes and real estate and local government. And criminality is always going to exist. Now,

the attractiveness of gutting them of some of their primary income, should we look at that? Of course. But it's not so simple as removing one and it just all stops. Because of the limes and avocados and all these other things. Because, I mean, these are things that are obviously legal. Right. But the cartels have found a way to take it over and make it their own. But isn't that the problem was initially because of illegal drugs.

So that's where they got their enormous resources. Well, I would say. And then that allowed them to expand into other semi-legal or legal. I'd say the problem was lack of rule of law. And that goes to Chicago as well. And the way we ultimately got past that is after prohibition ended, it still took 20 to 30 years to kind of ground down the mob. And we welcomed them into politics to normalize it. So careful what you wish for. So do you anticipate that happening with Mexico?

Mexico is, to be perfectly honest, really early in this process. The challenge we're seeing in Mexico right now is that the, air quotes, good cartel, the one that saw drugs as a business, is being broken up. If you remember El Chapo. That's the good cartel. The one that saw drugs as a business is being broken up. If you remember El Chapo. That's the good cartel? Yeah. Remember El Chapo, Sinaloa cartel? Yeah. He thought of himself as a Korean conglomerate president. So it's like, we smuggle drugs. That's our business. You don't mess with things that mess with the business. So you don't trip the old lady. You don't steal her purse. You don't shoot at the cops. These are people who live where we operate. We want them to be on our side. So maybe even throw a party every once in a while. You focus on the business.

son, one of the Los Tepitos. And his cartel as a result is fracturing because his leadership's gone. The replacement cartel is Jalisco New Generation. They're led by a former Mexican military officer who thinks that rather than don't shit where you sleep so that the people on your side, whenever you move into a town, you shoot it up. You do kick over the old lady. You do take her purse. You make the people scared of you. That's the point of this. Drug running is a side gig. We are here to be powerful. And drug running is just one of the ways we make that happen. And he has taken the fight to every cartel and the Mexican government. And they're in the process of trying to break into the United States. Break in, in what, economically? Yeah. El Chapo and the Sinaloa became the largest drug trafficking organization in America

under the Obama administration. And one of the reasons our birth rate went down so far so fast is they basically either co-opted or killed American gangs. So they killed the people who were doing the killing. Not a lot of Americans got killed after that. American gangs. So they killed the people who were doing the killing. Not a lot of Americans got killed after that. All of the other cartels control the access points in the United States, but Jalisco New Generation now is challenging every single one of them trying to break through. And if they do, and they bring their business acumen, if you will, north of the border, they're going to start killing white chicks named Sheila in Phoenix. And then we're going to have a very different conversation in this country about the drug war and about trade with Mexico. So when you say that they've killed the gangs, in what way? Because that is an

interesting thing that you don't hear a lot about American gangs anymore. Well, that's because they're not there to the same degree. So the Sinaloa, they co-opted the Hispanic gangs, especially the Mexican gangs, because there wasn't a language barrier there. And they really targeted and gutted a lot of the African-American gangs. They took over drug smuggling and distribution from them to deny them income. And then they just shot a lot of people. Trevor Burrus And when did this take place? Jason Kuznicki That happened during the 2000s. It was pretty much completed by the time we got to 2013.

But we weren't really kind of, this narrative didn't really go around. This is not something that I've heard before. Oh yeah, look at the murder. It's making sense when you're saying it. Look at the violent crime rates in the United States. They've been trending down really significantly since about 2004. And the drop from 2004 to roughly 2014 was amazing. That's largely Sinaloa. So they have silently sort of invaded and taken over the distribution and taken over the gang activity.

Right. And this is El Chapo's cartel that is now getting broken up. And as soon as you have more players, more violence is going to happen, especially against one another. And that's one of the reasons that the murder rate in Mexico has skyrocketed in the last three years. Do you know who Ed Calderon? Have you ever followed Ed Manifesto on Instagram? He used to work for the government in Mexico to fight off the cartels. And now he's made his way to America and he just does a great job of highlighting all this stuff. But one of the things he was showing is they were using 50 caliber

rifles to try to shoot down planes yesterday. Have you seen that? I have. I mean, what the fuck is going on over there? I mean, it seems like we concentrate so much on these conflicts that are happening all around the world. And there's a massive one happening in a place where we could walk to. It's the disintegration of the Sinaloa cartel. So back in 2019, the Los Chapitos, I can't remember his name. I keep wanting to say Octavia and that's not it because that's a girl's name. Anyway, it begins with an L. He was captured in 2019 and they weren't able to get him out of town fast enough so all of his homies

basically got together with assault weapons and descended upon the police units that did it and they were forced to let the guy go yeah i remember that this time they were able to get him to the airport fast enough and he's already in mexico city so there was a clash but not nearly to the degree that we had a couple of years back. Look at this here. Oh yeah. One of the things, this is a guy shooting at airplanes, which is fucking bonkers. I mean,

what kind of airplanes are those? Those are probably civilian. And why is he doing this? We're seeing a change in heart of the administration in Mexico. Lopez Obrador, for the first couple of years of his presidency, followed what he called hugs, not drugs. The idea that if we don't bother the cartels, they'll just be nice. Yeah. So that didn't work out. And now he's taken a much more direct approach. And since most of the security services at the local level have been infiltrated by the cartels, he's tapped the military to do it. So the military is now taking active steps against the cartels.

And if you are in a cartel, that means you need heavier weaponry to fight back. And that's why the 50 cals and things like them are starting to pop up a lot more. And so what is the Mexican strategy in terms of utilizing the military and dealing with the cartels? What are they trying to do? I would argue that the AMLO administration isn't to the point yet that they have a strategy, but they realize that the murder rate has reached the point that hugs not drugs is no longer a viable option. And so they're trying to militarize the equation in the hopes that the Mexican military is more capable than this or that cartel. You can kind of break the cartel world into three groups.

You've got Jalisco New Generation, the hyper-violent ones. You've got the Los Chapitos and the associated groups that are what's left of Sinaloa. They're the most capable ones for smuggling drugs. That's where the money is. And so that is where Amlo seems to be focusing his efforts. And then you've got what's left of the Zetas and the Gulf cartels, which is a very twilight 2000 dog-eat-dog world out in Eastern Mexico, which everyone's just kind of ignoring because it's not strategic. It's just violent. But it appears, and I don't want to oversell this because Amalo's clearly making this up as he goes. It appears that they think if they can put a pinch in the income,

that maybe they can turn Sinaloa into the next Zetas and just break it apart. I don't think that's a very good plan, but it's better than what they've been doing for the last two and a half years. And what's worst case scenario with Mexico? Worst case scenario would be if Jalisco New Generation penetrates north of the border and it changes our political discussion to be very anti-Mexico. One of the great achievements in my opinion of the Trump administration is convincing America's hard right that Mexicans are part of the family and taking one of the biggest looming racial issues in the United States and just dissolving it. If Americans start to think of Mexicans as drug runners again, regardless of why, that damages our most productive trading relationship and our most brilliant opportunity for our

future right out of the gate. But what is the worst case scenario in terms of the cartels overwhelming the Mexican military? Because it does seem they have unlimited- You're asking all the fun, cheery questions. Well, that's why you're here, bro. I'm here to get freaked out. Our advantage with Mexico so far is because they haven't had to fight a war in a long time, that the military is not particularly competent, but it's still armed. And so when you bring it into the system, they hit with a punch that compared to the normal local security services is really impressive. But every time a armed group of the state has been brought into the fight, the cartels have found a way to corrupt it. And if you do that

to the military, we could have a very real problem here. Think Chicago at the height of Al Capone, but on a national scale. Jesus Christ. We're not there yet, but that would be the concern. Now, how much effort is the United States putting to mitigate this? And how, I mean, how much policy is directed towards trying to steer this in the right direction? This is one of those where being a border country is a negative because, you know, we may be great trading partners and to a degree friends and integrated economically and demographically. But we're always going to be titchy about the other one telling us what to do.

Trump and AMLO got along great because Trump really never asked anything of AMLO. He said, like, as long as you take steps to limit Central American immigration into the United States, I'm going to be hands off on everything else. And so relations were pretty warm. Biden comes in and takes a much more traditional American approach. So it's about immigration. It's about drugs. It's about rule of law. It's about investment. And AMLO is like a really, really angry Trump. And he sees this all as unnecessary challenges to him personally. So the relationship between Biden and AMLO is really poor. is really poor. And in that sort of environment, it's been very, very difficult for anyone in the U.S. bureaucracy to have a productive relationship with anyone south of the border. So most drug

extraditions have stopped. Most law enforcement cooperation has stopped. Most intelligence sharing has stopped. So we're just leaving that and watching it play out. Well, because the Mexicans shut the door on us. Well, AMLO specifically. I don't want to put credit for that anywhere but on him. What's the best case scenario? Well, there's term limits in Mexico. AMLO will be gone in a year and a half.

So we will get a new person. Now, who will that person be? Way too soon to know. But you can only serve for five years as president of Mexico. That's it? Yeah. So they've got a very, very bad one right now. five years as president of Mexico. That's it? Yeah. So they've got a very, very bad one right now. We'll see who's next. Oh, Jesus. And that's right there? Yep.

So the whole world's fucked. That's a bit of an overstatement, but we've got some challenges. But it's making me more optimistic about America. Yeah. I mean, our economic system is broadly positive. We've got a great partner for the most part. Energy, there's- A great partner? Mexico's got our largest trading partner, and they have what we need. So, I mean, this is a relationship of partners that's facing challenges. I think we'll get through this.

Remember that one in every six Americans now has genetic links into Mexico. So, this is a family argument. This is a good argument, believe it or not. We're never going to have a food crisis. We're the world's largest food exporter. We're never going to have an energy crisis. We're the world's largest energy producer. And we're bit by bit by bit bringing in countries to our kind of a friends and family plan. So Japan is already on board. Hopefully the Brits will be there before long. How do you sleep at night?

Easily. But do you really, with all this information? I would imagine that this would keep me up. I imagine it'll keep me up tonight. Yeah. Just thinking about- If you focus on the negative, you're never going to sleep. How do you manage to, are you medicated? How do you- Oh, well, I get migraines. There's no doubt there. But I focus on the fact that we've got the greatest opportunity for economic expansion in the history of our country. And it's not just us. It's Canada and it's Mexico as well. This is going to be a great story.

We're going to emerge from this in 10 years in so much of a better place. a better place. And we're hopefully within 10 years, I'll probably be more like 15 or 20, be able to then go back and reintegrate with the world and share what we've learned and remake the human condition. This is a once, not in a generation, this is a once in a century opportunity to overhaul what being human means. And I'm really excited about where this leads us. I just wish we could bring more countries with us along. Now, is there any possibility of regime change in China that would facilitate this in a more peaceful way? I mean, when you've got a one-man government, you're talking a popular uprising with leaders that don't exist to displace an old paranoid guy who has all the guns.

That's a tall order. I don't think so. And how strong is his control over there? I mean, how much dissent is there against Xi? There's definitely a lot of unhappiness with the system. But because Xi has systematically removed everyone with an opinion or competence, if Xi were to die tomorrow, I don't think there is a replacement system in the wings. It's basically a system of cronies. So if you look back to what happened after Mao died, you had the gang of four and you had a period of just absolute chaos until Ding Xiaoping took over. But Ding Xiaoping was part of the

system. Xi is far more paranoid and far more isolated and far more consolidated than Mao ever was. Jesus. So how old is Xi now? He's also late 60s, I believe. Yeah. Most of the people in the new Politburo technically aren't supposed to serve because they're too old. He waived that rule. What is their requirement before that?

I want to, I'm not positive, I want to say it was 66. And so he is at the... He's right at that age, I believe. And there's no threat to his reign. None. Well, none within the system. And as long as he stays alive, he will maintain power. Right.

And he'll be constantly surrounded by cronies. And he has insulated himself from any criticism or any bad news. Yeah. We've been going this way for a while. So when Ding took over, he realized that one-man government was awful. So he worked out a series of secession in 10-year increments that different parts of the country, different factions would have time in government and rule. And then when they were not the ones who were making the big decisions, they'd still be in the Politburo. So we got our third generation and our fourth generation in the form of Jiang Zemin and Hu Jintao. But Ding realized when he

set the system up around 1980 that he wasn't going to be there forever and he wasn't going to be able to predict what was going to happen in the 2000s. So he told these two factions, you then have to pick a compromise candidate for who comes next. And they went with Xi because he's from the south, but his family is with the Maoists and he had a foot in all camps. Well, Xi spent his first five years purging the system of all the other factions. And then the second five years of his reign in making sure that everyone realized it was him and him only who was in charge. After 10 years of that, there's no one left.

And so there is no secession plan post-Xi. There is no one waiting in the wings. And the old factions as they once existed have basically been sledgehammered. This is such a wild perspective on world economics and international relations. Welcome to my world. But do you feel isolated in that? You're the guy who's like explaining it this way?

I'm adopted. That's not new. What led you down this road to sort of developing this comprehensive view of the future of the world? Well, I'm adopted, so I really have always been on the outside looking in. That is definitely a part of my worldview. But my background is in economic development. So figuring out what works where and why. And once you kind of get the ideology out of it, you can look for patterns. And that took me to Stratfor and that took me to geography.

And so just kind of combining the data patterns with the American strategy for World War II and beyond, with the demographic developments that have happened because of that strategy, it leads you to some pretty unavoidable conclusions. And then it's merely an issue of filling in the blanks. And most of my career now has been filling in the blanks for the last 10 years. Do you have dissenters? How much pushback do you have about these ideas? Do people think you're full of shit? All kinds of people think I'm full of shit. I am very sector and goal agnostic in my work, which means I don't really care what your investment strategy is. If it doesn't play against demography and geography in a comprehensive way, at best, you're hoping that everyone just

kind of sways in your general direction. And so there's no shortage of people in a room when I'm speaking who get really upset because they have an investment thesis, or maybe they've bet their company on something that I just see as a non-issue. So, you know, obviously the folks in the crypto world have never liked me. And I dropped a video last night about how EVs are just a disaster that aren't going to be with us very much longer. And I've gotten some interesting communications because of that one. Things like this happen with me with almost every presentation. And last year, I gave 179 presentations.

What is your perspective on EVs? They're not nearly as good on carbon as people think. Most of the data that exists doesn't take into the fact that most of this stuff is processed in China where it's all coal-driven. And it doesn't take into effect the... I'm sorry, it does not take into account the fact that most grids that they run on are also majority fossil fuels. And that extends the break-even time for carbon from one year to either five or 10 based on what model you're talking in. Cybertruck's far worse than EVs. But the bigger problems, we're just not going to be able to make them much longer. If we really do want to electrify everything, that doesn't just mean EVs,

that means the entire system that feeds into the EVs. We need twice as much copper and four times as much chromium and four times as much nickel and 10 times as much lithium and so on. We have never, ever in any decade in human history history doubled the amount of a mainline material production in 10 years, ever. And we need all of this by 2030? No. It's just not technically possible. So how does the government, say, of California justify these mandates when they're saying something like, by 2035, all combustion vehicles must stop being sold in the state of California? Let's put the ideology to the side because I'm not even going to try to explain that.

I will give a little bit of defense for California though, because I do consider myself a green. I just think of myself as a green who can do math. So I don't get invited to any of the parties. I just think of myself as a green who can do math, so I don't get invited to any of the parties. California's state legislature gives a lot of authority to their state bureaucracy. So the bureaucracy will set the goalposts, no ICEs by 2035, knowing that the technology doesn't exist, knowing that the supply chains don't exist, but they will set the goalposts. If we get closer to that date, say 2027, and it's apparent that the technology is not proceeding at a pace that will allow that target to be reached, they have the authority already to move the goalposts. And they do this on clean air issues. They do this on toxicity. They've done it on

nuclear power. They undoubtedly will end up doing it on EVs. So do you think it's one of those things where there's a bunch of green people who don't do the math? Oh, yeah. And it just sounds great. It falls in line with the progressive ideology. We need to, you know, carbon neutral. We can do this. Everyone go electric. Yeah. And there's going to be, well, there is a fascinating discussion happening in the environmental community right now because they're being confronted with reality. So California and Germany have very similar green tech policies, but the Germans have spent three times as much as California, but are only getting about a fifth as much power. Because I don't know if you've ever been to Germany, but the sun doesn't shine in Germany. And now with the Russians on the war path and

their clean-ish energy from natural gas going away, they're going back to lignite coal in force. It was already their number one source of power. Germany, the idea that Germany is green is ridiculous because they rely on really, really dirty coal now, especially so. But there's now a conversation going on between the German environmentalists and the Californian environmentalists about why California in relative terms is doing so well at this while Germany is not. And the answer is simple geography, but that's never been part of the conversation in the environmental community before. Now it is. They should have had this conversation 15, 20 years ago, but they're having it now. And as soon as they come to the conclusion, unwillingly, but they'll get there, that we have to choose where we put our copper and our lithium and our nickel, EVs are not going to make the cut at all.

Where will the copper and the nickel and where will all that go? It'll be focused on the green techs that actually work in the geographic areas where it can be applied. So you put solar panels outside of Tucson. You put wind turbines outside of Tulsa. That works with the technology we have now. You do not put solar panels in Connecticut. That's stupid. That actually increases your carbon footprint. Because there's no sun. There's not enough sun to generate enough electricity to pay down the carbon debt that it took to build the stuff in the first place. There's an ideology in this country that is we must act against climate change

or we will die. And there's a lot of people that haven't done the research and haven't really looked into this and really don't know what the numbers are. And they repeat that over and over again, like it's a mantra. It's become a new religion. Yeah.

Like I said, I'm a green, so I broadly believe in the science. When you say you're a green, what do you mean by that? Well, I believe that climate change is real and I believe it's caused by human action. I believe there are things – Some of it, right? The bulk of it. The bulk? Oh, yeah.

The bulk of climate change you think is caused by humans. Yeah, I know. I mean the science of it was settled in the 1890s. It's not particularly crazy. Different gases have different albedos and absorption rates. Now, to think that we can predict on a local level what that looks like, we don't have the math for that. We don't have the case studies for that. We do have weather data going back 130 years, which shows some pretty clear trends. We've heated up by about 1.1 degrees Celsius over that timeframe, but that has different impacts based on where you are. If you're in the upper Midwest, it's extended growing seasons and gotten

rid of some frost. So pretty soon we're going to be double cropping. But if you're in a drier climate, like say Phoenix or Australia, it's led to wildfires and a breakdown of the agricultural system. So climate change is change. It's not a disaster. It depends upon where you are. So why do you think this ideology has been so pervasive, this ideology that it is a disaster, we're all going to die? Well, now we're getting into cultural debates. Yeah. So one of the many, many, many aspects of modernization is that people become more connected but live in smaller units. As you urbanize, you have fewer kids.

And that means that people are looking for other ways to belong because the old traditional methods of family and farm aren't as tight as they used to be. And so this is much more further advanced in places like Japan or Europe than it is in the United States. But it's happening here too. And when you're looking for social opportunities, politics are a way that can reach across the geographic distances, no matter where you happen to be. And you can use social media and tech to communicate with people who have a belief system that you find attractive for whatever reason. And so the same thing that makes the environmental community more potent if less informed is exactly the same thing that brought Donald Trump to power. Because you got people who felt like they were on the outside of a society who all of a sudden could link into one another. It's a technology conversation from my point of view.

So do you drive an electric vehicle? No. I live at 7,500 feet in Colorado. That would be suicide. Why is it. I live at 7,500 feet in Colorado. That would be suicide. Why is it bad up there at 7,500 feet? They don't deal well with inclement weather. They don't deal well with cold. Right.

Yeah. It's fun to drive, though. No, for people who enjoy it for the driving experience, go for it. Just don't pretend that you're being an environmentalist. What do you think? Have you paid attention to Porsche's, what they're trying to do now with hydrogen? They're trying to build a new type of carbon neutral fuel. I don't want to condemn any technology that has not been through its development process.

But what I have seen from hydrogen at the moment suggests that it is far dirtier than gasoline. In what way? You have to get the hydrogen from somewhere. And right now we pluck it from natural gas. So you've got a carbon input there. Then you have to build out a transmission system for it. And the hydrogen molecules are tiny. They're the smallest molecules that we have.

And the seals have to be perfect. Otherwise, you're just hemorrhaging the stuff. So you're generating something from fossil fuels, and they're hemorrhaging it all along the way. And I got to say, if they don't do it right, a car accident where hydrogen is involved is really exciting. Oh, Jesus.

You got a Hindenburg-type situation. No, I'm not saying they can't make it work. I'm saying they haven't made it work. Is that what Porsche is using? Do they have some sort of experimental fuel that they have in production. I don't know. But I know that they're, I mean, obviously they've created electric vehicles. They call it e-fuel.

Act like gasoline. It could provide gas alternative amid EV push. It could provide gas alternative amid EV push. Porsche said Tuesday that a pilot plant in Chile started production of an alternative fuel as it aims to produce millions of gallons by mid-decade. Officials say e-fuels act like gasoline, allowing vehicle owners a more environmentally friendly way to drive. Porsche officials celebrated the beginning of the e-fuel production with the filling of a Porsche 911 with the first synthetic fuel produced at the site. I am unfamiliar with the chemistry for this one. Porsche and several partners have started production of a climate neutral. Do you believe that? Not really. E-fuel aimed at replacing gasoline in vehicles with

traditional internal combustion engines. The German automaker owned by Volkswagen said Tuesday that a pilot plant in Chile started commercial production of the alternative fuel by mid-decade. Porsche is planning on producing millions of gallons. We already said that. There are some versions of this technology where they're hoping they can get. There it is. Yeah. Yeah, there are some versions of this technology where they're hoping they can get... There it is. Yeah, so e-fuels are a type of synthetic methanol produced by a complex process using water hydrogen and carbon dioxide. Companies say they enable the nearly CO2 neutral operation of a gas-powered engine.

Vehicles would still need to use oil to lubricate the engine. In the pilot phase, Porsche expects to produce around 130,000 liters of e-fuel. Plans are to expand that to almost 55 million liters by mid-decade, around 550 million liters roughly two years later. The Chilean plant was initially announced with Porsche in late 2020 when the automaker said it would invest $24 million in the development of the plant and the e-fuels. Partners include Chilean operating company, highly innovative fuels, renewable energies. Let me slap some science on that real quick. The three base materials, water, carbon dioxide, and oxygen, are three of the most stable molecules in the natural world. And so to break them apart with electricity to make something else is a massive power suck.

If you're going to do that with a conventional fuel system like we have in pretty much every part of the world, you're talking about a carbon footprint that does at least triple what we do with gasoline right now. The idea would be that if we can do it with green tech, solar in Chile, for example, that maybe we can make that footprint carbon-free or at least carbon neutral, and then use the electricity to generate this stuff in a relatively green way. That's a lot of solar power. And all of that to get in their best case scenario, 550 million gallons. We use almost 10 million barrels of liquid fuels in just the United States every day. So you need to expand that by a factor of a couple hundred. What about nuclear?

I am broadly pro-nuclear. The problem is timeframe. If there were no regulations at all, it takes seven years to build one of those suckers. We don't have that kind of time, honestly. And if we start right now, we won't see first output this decade. There are small modular reactors that look really promising. You can basically put them on the back of a semi-flatbed, but they don't exist yet. And once we build one of those, then it's probably a 10-year process to build out the manufacturing supply chain to produce them in volume. But wouldn't it be wise to start moving in that direction now if you're broadly pro-nuclear?

The issue is until we solve the fuel containment issue on the back end once it's spent. So the chemistry of taking a spent nuclear rod and refurbishing it for a new reactor, it's relatively inexpensive. It's relatively easy, but it has a side effect of producing weapons grade plutonium. So to do this at scale, we have to produce a civilian plutonium weapons quality plutonium disposal and management system. We haven't figured out how to do that. What do they do with it now? They don't process it. They just leave it in the spent fuel rods and they put it into a pond until the end of time. Oh, boy.

Yeah. No silver bullets. So is it just that they don't know how to do it or do they have theories on how to do it? Well, you have to basically take the rod. You go through a chelating dissolving chemistry process and you separate out the various isotopes of uranium from the plutonium. But then what do you do with the plutonium? Because you have now purified it because of this process. What do they do?

They just put it in a pond. Well, that's what I'm saying. Yeah, they don't even separate it. I was reading about some technology where they think they could take nuclear waste and convert it into batteries. I have not heard that one. See if you can find that. that one. See if you can find that.

There was a process of processing nuclear waste and converting it into a renewable resource. It's a nice thought. Great thought. If the aliens could come down and give us some new tech. But as of what we have right now, you're not aware

of anything that could do that. No, no. I mean, don't get me wrong. I think solar and wind, especially wind, are great in the places where they work. Here it says, radioactive waste can be recycled to create diamond batteries. Scientists involved at American Startup

for the Development of Nano-Diamond Batteries are trying to turn radioactive waste into batteries. NDB is a perpetual green self-charging battery made from recycled nuclear waste isotope

combined with layers of nano-d nano diamonds in a battery cell. Extremely good thermal conductivity of micro diamonds causes heat removal from radioactive isotopes, so the process of generating electricity is fast. NDB generates electricity similar to that obtained from solar panels, but uses radioactive decay energy instead of sunlight. An NDB battery usually consists of three main components, an isotope, a converter, and a storage unit. Due to the delay, decay rather, isotope radiation is transformed into electrical energy in the converter. The storage unit accumulates energy for future use. We're problem solved, bro. Yeah, just keep in mind that this is

radioactive decay and that's what turns you into goo. So you're not going to put this in your watch. You're not going to have it in your car. You're going to have it at a fixed secured location. Now, will that be like a power plant? Maybe, but wow, I hope nothing goes wrong.

So these radioactive diamonds. It's a diamond layer over the waste and then the waste is decaying and then they conduct the heat somehow. So the decay is inside the diamond as long as the diamond doesn't get broken. I'm guessing that the diamond is there to absorb things like beta and gamma radiation. Hmm. But this, you believe, also very dangerous. Well, it would require some very serious security issues,

but at least from a chemical point of view, it sounds theoretically possible. The patented NDB universal self-charging battery provides a charge of up to 28,000 years of battery life. No more worried about your phones, bro. The half-life of most of this stuff is in the thousands of years, so yeah, I guess technically that's true.

Nanodiamond batteries will be able to charge devices and machines of any size, from aircrafts and rockets to electric vehicles, hearing aids, smartphones, sensors, and more. I'm going to go with a hard no on that one. Really? Why? You're going to put something that is powered by radioactive decay in your ear?

But is this an oversimplification? I mean, if you were really well-versed in this technology, do you think there's a possibility? There's always a chance that if you prevent me with the facts, I'm going to change my mind.

But radioactive decay is not something you fuck with. You're certainly not going to have it on your person. So you think this is all just pipe dreams? I think in that interpretation, it's a pipe dream. Because think about what would happen if this is real. And you can get a sizable one of these like for a car.

All it takes is a pickaxe and all of a sudden somebody has a dirty bomb. Jesus. Yeah. Having it in a secured location where it provides energy to a grid? Maybe. Maybe. Maybe. Have a good security system.

Yeah, but you don't – so you're not a believer. But are you just basing this on your instincts? I mean do you think that you should maybe reserve judgment? Oh, no, no, no. That's fair. But they did say specifically powered by radioactive decay of spent nuclear fuel. Right. That's what turns you to goo.

And so you just think just because it's encased, this presents all sorts of damage if the case is broken. If the case is broken, anyone locally screwed. Yeah. So if you drop your smartphone and it starts leaking radioactive decay. We all know that smartphones are indestructible, so I'm not worried about that. Jesus, Peter. I'm an equal opportunity bubble popper. You must be a real problem at parties. When someone starts talking at a school. I bring the bourbon, everybody gets over it.

So if you were the king of the world, how would you navigate us out of the situation? Oh, like the whole thing, not just the nuclear waste issue? Well, let's start with the nuclear waste issue. We need a central repository where the stuff can be processed and the plutonium can be disposed of, or at least incarcerated forever. That is the idea behind Yucca Mountain. But because the U.S. is a federal system with the state and the local authorities having as much power as the federal, it's been locked up in courts ever since it started. Because nobody wants that stuff in their neighborhood. Right. Which is why we want to put it in Nevada, because aside from Vegas,

there's nobody in Nevada. Sorry, Reno. Sorry, Reno. So when you, it's like if you did, if somebody said, hey, Peter, how do we handle this? What would be your steps? Well, if you want to look at American history, we'd probably put it someplace like Guantanamo, where American federal law doesn't apply. I'm not saying I recommend that. I'm just saying that's the easy solution. Really, we need a place like northern Nevada that the federal government just buys and shoves it through. And if they did that, do you think that's feasible?

I think that's what other countries who have experienced this problem have done. There aren't a lot of them because most of the nuclear industries of the world are linked into the American system when we don't allow it because we don't want the plutonium processing. So that's not really – That would be the best approach if you want nuclear power to be a meaningful part of our future. But it would take a radical restructuring of law. Trevor Burrus Right. And it would probably take Congress literally ramming it through the courts.

They'd have to change the law so that the states can't fight it and that triggers a legal fight, which in the United States, as we all know, we love to do. Trevor Burrus But the conversation about nuclear has not been very positive in this country. Trevor Burrus No, it's not. We've only built one new facility in the last 45 years. So outside of that, how do you think we should handle it?

Wind, wind, wind. Wind, really? The new turbines are pushing a thousand feet tall. And as you go up, you tap stronger and more reliable wind currents. So right now, our good wind territory

is the Great Plains. So Western Texas up to North Dakota. But as you go higher and higher and higher, you can spread that out. And I would argue a third of the population of the United States can get at least a third of their electricity from wind if it's done at scale. And we're moving that direction. And it's not with subsidies. It's just that the economics of the turbines as they go up get better and better. What about the possibility of solar getting more efficient?

It can. The big problem with solar is not just the efficiency, though. It's the timing. Peak demand for electricity in most places is after sunset in the winter. And solar will never be part of that solution. Right, because sun's not out at night. So we need a lot of money into tertiary education and research grants to find a better battery than lithium. Because we don't want

something that can store power for an hour, two, three, four hours. We need something that can store power for a week, a month. We're never going to do that with lithium. And is there anything on the horizon that holds promise in that regard? There's nothing that at this point is promising that has reached the prototype stage. There are things like flow batteries and iron batteries that, you know, the chemistry looks intriguing, but none of it's been tested out in a meaningful way yet. So if you were going to guide our energy policy— I would say let's invest a trillion dollars in material science solutions before we start applying them at scale and we know already that they don't work. And would that be effective? I mean, even if you just throw a lot of money at it? Until we have the material science breakthroughs, the rest of it is kind of just spinning in the mud.

So you think that an approach in that regard would be wise because we're spending a lot of money on a lot of things anyway. Right. Spending it on that, at least you have the promise of possibly coming up with some sort of a feasible solution. I'd rather see us spend a trillion dollars on figuring out what might work rather than us spending a trillion dollars on things that we know already don't work. Okay. So that's our energy problem. What about our food problem? In the United States, we don't have one. We don't. No. Don't we have a problem with our topsoil where there's only like

60 seasons left of the topsoil? Yeah. I've been hearing that for 40 years and it hasn't happened yet. I don't mean to suggest that soil fertility isn't an issue, but when it comes to crop rotation and the fact that your fertilizer is made within North America, it's a manageable issue. I mean, we're not Brazil where there's zero soil fertility. And if something happens to one season of fertilizer supply, you just don't grow anything. They have zero soil fertility? Yeah, it's all reclaimed tropics. So they have to basically rip out the vegetation, poison the land with lime to get rid of the acid, and you get left with something like beach sand.

And then you just throw fertilizer on it, and without the fertilizer, nothing grows. Now, with the fertilizer, you can get two, maybe even three crops, so it's not a horrible business model, or at least it hasn't been to this point, but that was before the Ukraine War. And Ukraine is where we get a lot of our fertilizer. Russia specifically.

Russia, yeah. So what would you advise us to do about that? There's not a lot we can do about that. There are things that you can do with genomics and with precision agriculture to more target the inputs to each individual plant. That can work with corn and soy. It probably can't work with wheat because, you know, if you see a corn stalk, you do a digital photo of it, the computer decides whether it's hungry or thirsty or has bugs and it squirts it appropriately. Stalk, stalk, stalk, stalk. But wheat is just a maze of tiny, tiny little plants. There are too many of them

for you to economically treat each individual one differently. And unfortunately, wheat is our number one crop in terms of calories. So it's genomics or nothing for wheat. And we're better off than a lot of other countries. We're the world's largest food producer and exporter. We are not going to starve. We might have some problems with out of season avocados, but I think we can live with that. But the rest of the world, it seems like, according to your model, is in real dire straits. Over half of the world's population is food threatened now. And that's before we have fertilizer shortages. And what was the cause

of this? Why has there been so... Runaway success. Since the Cold War ended, we've brought huge new swaths of humanity into the globalized system. And the integration of Russia and China and Brazil, that is the story of the post-World War. I'm sorry, of the post-Cold War era. weren't in the first round wasn't just ideology. It was that their geography isn't as good. So Brazil's land sucks without fertilizer. The Russian territories has very low productivity, and China has some of the worst land in the world. It took globalization and the access to all of the resources of the globalized world in order to make these places do very well from an agricultural point of view. We're now seeing that unwind. We're only in the very early stages of this. And as it unwinds, what can be done to mitigate this oncoming crisis that you're describing? Because it sounds quite terrifying. We're going to have to pick winners and losers, unfortunately. There's just not enough. If we do start a significant build out of the fertilizer system, it takes about three years

to bring new nitrogen or phosphate systems online, but it takes like 10 years for potash. Now the Canadians, after the Russians, are the world's leader and they have started. They've seen the writing on the wall and they're trying to speed it up however they can, but they still think they're going to need seven years. And what is potash? Potash is a mineral that you mine, and I'm grossly oversimplifying here, but you basically crush it and dissolve a little bit of acid and turn it into a pellet form that you can distribute on a field. It's potassium fertilizer. And this is just one? It's one of the three. Potash is potassium and then phosphate and nitrogen. Nitrogen, as a rule, is made out of natural gas.

And the United States is the world's largest producer of natural gas. And we're in the process of building out our nitrogen capacity in part because of this. And when you say winners and losers, like what do you anticipate happens to the losers? Well, I mean, if you only have enough fertilizer to support a half a billion people, that means you get to choose who gets it. Do you let the market do it? Do you pick your friends? Do you pick yourselves? And these are decisions we're going to have to make in the not too distant future. And when you say we, you mean globally? Well, it depends upon who has it in the

first place. So the Canadians are the world's largest producers, single producers of potash. We are their number one customer. They also supply potash to Japan and Australia and New Zealand. After that, they have to make some really hard choices. Do we try to save just the Chinese or everyone else? It's really that hard. Yeah. We can't support our current population without industrialized inputs for agriculture. And without those inputs, on average, yields will drop by more than half. And what kind of time frame are we talking about to this global collapse? That, of course, is the billion-dollar question. Because of what's going on in China, we don't know because the

decision-making process has become so opaque. But the United States is pushing the trade dispute issue to the hilt, which is a really big problem if you're concerned about global stability. But if you think it was all going to break down anyway, there's something to be said for pulling the cord earlier. The Russian system could break tomorrow or at that point. And that is not just wheat, that is barley, that is potash, that is nitrogen, that is ammonia, that is lithium, that is nickel, that is copper. Pieces are falling out. And the risk here is that something will fall out that will then domino. And I think the issue to watch for that this coming year is the energy question. Because now that we have insurance companies saying just, no, we're not going anywhere near the Russian space at all. It doesn't take much

imagination for someone to think that something's going to go wrong in a war zone where energy has already been weaponized. And once Russian stuff goes offline for whatever reason, pressure builds up back into the pipe all the way to Siberia, and then the wells freeze shut and you have to redrill them. And the last time it took the Russians 30 years to redrill everything. So when we lose Russian crude this time, it's gone for good. Holy shit, dude. And so if you look ahead 25 years from now, how do you see the world? 25 years from now, we're going to be on the other side of this. So we're going to see a significant breakdown in a lot of systems over the course of this decade into next. But after that, my bet is we're going to see a number of technological advantages be developed in the United States and within its group that allow us to do more with less and which transform the economy into a more sustainable footing.

We'll also have had 30 years, 25 years, for this demographic situation to play out and we will find out what is next. One of the big mysteries right now is we've never, ever in any era had a country with more retirees than working age population. We don't know really what that leads to. We know they're not growing food. We know they're not producing goods. But 25 years from now, that big retiree class is mostly gone. And then we get to see after 25 years of experimentation, what sort of economic model might replace that. Now, hopefully for the United States and Mexico and Canada, we're going to learn something from all these experimentations because the Germans are probably going to be at the leading edge of this. And they're not going to go quietly into that good night. They're going to try to survive.

Some countries are going to pull it off, but I don't think anyone has an idea of what that system looks like because N equals zero. We've never been through this before. We're making it up as we go. And I've heard you talk about the generations that are upcoming in this country and not with a very rosy perspective. You have a lot of concern about just the temperament, the ideology, the way these kids have been raised that doesn't lead itself well to adapt to this looming future. Well, I'm a Gen Xer, so I'm always going to belittle and look down on the millennials, mostly because they deserve it. My big concern moving forward, though, is not so much the millennials, because the millennials exist in large number. They're providing the consumption

ballast of today, the investment ballast of tomorrow. They're, to be perfectly blunt, going to save us all. My concern is with the Zoomers, the younger kids, kids 22 and under. There aren't a lot of them. They're our smallest generation ever. By what factor? lot of them. They're our smallest generation ever. By what factor? There are about 30% fewer of them than there were millennials at the same age. And what do you attribute that to? Well, their parents were Gen X. We were a small generation too. So a small generation generates a small generation. And they were raised in an era of digitization. So an iPad was part of their childhood experience, which means they're a little bit more socially awkward and they date less and they are less comfortable around other

people. So they are likely to also generate very few children. Now, this is something that the Germans and the Chinese and the Italians have been dealing with for 70 years, smaller and smaller generations, but this is new for us. How do you see that playing out? and smaller generations, but this is new for us. How do you see that playing out? The technology changes. It changes you, you change it. And the Zoomers are the generation who's going to decide what all this interconnectivity means.

And if they can figure out how to do that and still have families, we'll be fine. And if they can't, we are starting down the German path. Now, worst case scenario, we still have another 60 years. Crypto. Yeah, it was always a hot dumpster fire. Always?

Yeah, I'm not going to say that it was all fraud. Some of it was a pyramid scheme. There's never been anything there. It serves no purpose. It's not a store of value. It's not a medium in exchange. And as we have seen, if you want it decentralized and not under government control, it is a haven for fraudsters. And now it is in the process of going to zero, except for Bitcoin, which will probably go negative. Because if we're moving into a world with carbon taxes, you have to take into account the energy that it took to produce it in the first place.

Well, that's certainly playing out with like FTX, where you're finding out that there'll be more house of cards. Do you feel like that's just sort of opened the door for people to examine all of crypto now? Oh, yeah, absolutely. It's like as soon as you have one of the big ones go down, it's just a matter of- And just go down catastrophically within a week. Yeah. I mean, there's no intrinsic value to this asset. And now it's starting to be priced appropriately. So it has a, what's Bitcoin at? 16,000? It has another 17,000 to go down.

Duh. Really? Yeah. There's no intrinsic value to this product. And do you think that people just inherently lost faith in the idea behind crypto because of FTX? Well, it became an ideology. And whenever you invest based on an ideology, you're going to make some decisions that are a little divorced from math. And what do you mean by ideology? Well, the people who really like crypto are convinced that it's the currency of the future and that a decentralized ledger is the way to go and that anything that is controlled by a government entity is by definition a negative and if it's done by the private sector freely, it will be better. And that's just not how currency

works. Currency is a method of exchange and a store of value. And for that, there has to be a degree of trust and you have to have it managed in terms of volume. I mean, one of the craziest things about Bitcoin is that there will never be more than X number of units of Bitcoin. Well, by default, that means it can't be used for trade because the whole idea of economic activity is that there's expansion, which means you need more currency to lubricate and manage that expansion. If currency is locked into a specific number, you get monetary inflation. And that is one of the fastest ways to destroy an economic model. So because of the lack of Bitcoin, because there's a certain controlled number, the only thing that can happen is Bitcoin becomes more expensive.

Right. And that means that the people who hold it are the ones that make the money, but everyone else suffers. I'm sorry, that's not viable. The alternative is you have some private dude out there who generates the coins on a whim. How is that different from the monetary reserve or the monetary authorities that we have at the Federal Reserve, except for the point that there's no accountability? No, no. Now, a lot of people have concern that the United States is trying to generate a centralized digital currency that they will control. The Federal Reserve disagrees with that statement. What do you mean? Well, they don't see a purpose. They don't see what need it fills. So there may be an argument for the Chinese doing a digital yuan so they can monitor each and every transaction.

But, you know But conspiracy theorists are going to conspiracy. That's just what they do. No, I was reading mainstream articles about the United States confirming that they're trying to develop a centralized digital currency. If you're talking about a digital exchange system, then I can see that. See if you can find something like that. But something separate from the USD? No. This is what... I only looked at the headlines of it because someone was sending it around and I didn't have the time

because it was yesterday. But this idea of a centralized digital currency is something that Maxine Waters talked about. She said that we have to do that in order to compete with China. Yeah, Maxine Waters

is not exactly the brightest person in Congress. That's not saying a lot. Yeah, I know it's a low bar, but she passes it. I don't know if this is a, I'm just pulling up to see if this is like what you're talking about. Digital dollar is something that makes sense.

The idea of smoothing the connections within the plumbing of the financial system or moving beyond a physical currency at all, you know, that all makes sense. That's kind of like the next step. But a separate currency where everything is mitigated or managed by the Fed, that's not something the Federal Reserve has an interest in. Let me go to Tim Kennedy's Instagram because he was the one who posted it a couple of days ago.

White House releases first ever comprehensive framework for responsible development of digital assets. Yeah, this happened right after Bitcoin really started a nosedive. And the question is, how do you bring crypto into the regulatory environment? But this is a framework for responsible development of digital assets. It doesn't mean a centralized digital currency

that the United States creates. If you just go to Tim Kennedy's, there's an article that describes it, and he's talking about the dangers States creates. If you just go to Tim Kennedy's, there's an article that describes it and he's talking about the dangers of this. Yeah. You got to go? Yeah. Sorry. This is fun though. It's been a lot of fun. You scared the shit out of me, buddy. You're welcome. But you're used to that.

Yeah. You throw some bourbon in me, I get really lively. It's official. The United States is developing a bank-to-bank digital currency. Take that headline and just Google that headline and find out what that means. United States is developing a bank-to-bank digital currency. I'm concerned with the United States having that along with a social credit score system. No, we don't have the math for that. And the Chinese have no, we don't have the math for that. And then the Chinese have proven- We don't have the math for that.

Yeah, well, the Chinese have proven that their social credit score system broke. They didn't have the processing capacity to keep track of it. And that is with a near bottomless supply of resources and full control of the political system. So we certainly don't. For those who thought the United States

was behind the digital currency space race, the news was welcome. In a subsequent white paper on the project named Project Cedar, the New York Fed explained that it has already completed stage one of testing and proved that international currency transactions can be done both quickly and safely through the blockchain. Buried in the technical details was a revealing line on the ambitions of the blockchain. But buried in the technical details was a revealing line on the ambitions of the project. The goal of the new network is to reduce settlement risk in cross border, cross currency transactions. The message, we see what the world is doing with CBDCS and the United States is not going to be left behind. So the way trade finance works is if you're in Korea and you want to sell something to Chile, you sell it in won. It's transferred into U.S. dollars, and then

the U.S. dollars are transferred into pesos. There's a three-step process, and each of those requires a transaction. But if you can digitize it, then it's click, click, and you're done. That's what that's talking about. So you don't think that the fear of a centralized digital currency that the United States controls, you're not worried about that? I mean, honestly, the Federal Reserve, that's not what they're good at, and that's not what they're trying to do, and it's not what they have an interest in doing. If they were to inject themselves into each individual transaction,

that would be a nightmare for them. Well, Peter, I appreciate your time. I know that you have to get out of here to catch a flight, and I appreciate you scaring the shit out of everybody. And this view of the world and what you've laid out is not that nice. Well, I'll bring some diapers next time. How about that? I don't think that's going to help.

But I appreciate all of your research and your time and your insight. It was very interesting. Glad you enjoyed yourself. I know I did. If people want to find out more about your stuff, what is your social media if you have it? Sure. On Twitter, I'm at Peter Zian. That's Z-E-I-H-A-N. Or you can go to Z-E-I-H-A-N.com and sign up for the newsletter, which is free and will always be free. Well, thank you very much. I really appreciate your time. My pleasure.

Bye, everybody. free and will always be free. Well, thank you very much. I really appreciate your time. My pleasure.