TRIGGERnometry - Economic Disaster is Already Here - Peter Zeihan

Episode Date: August 4, 2022

SPONSORED by Fortune and Freedom: It’s time to take control of your money… Sign up for free here: https://subscribe.fortuneandfreedom.com/X983Y230/faf2-b Peter Zeihan is an American geopolitical analyst, author, and speaker. He analyses data from geography, demographics, and global politics to understand economic trends and make predictions. His latest books is, 'The End of the World is just the Beginning: Mapping the Collapse of Globalization' See Triggernometry LIVE at the Edinburgh Fringe for 2 nights only on the 6th and 7th of August! We’ll be joined by very special guests Andrew Doyle and Leo Kearse. Get TICKETS here 👇 https://tickets.edfringe.com/whats-on/triggernometry-live Join our exclusive TRIGGERnometry community on Locals! https://triggernometry.locals.com/ OR Support TRIGGERnometry Here: https://www.subscribestar.com/triggernometry https://www.patreon.com/triggerpod Bitcoin: bc1qm6vvhduc6s3rvy8u76sllmrfpynfv94qw8p8d5 Buy Merch Here: https://www.triggerpod.co.uk/shop/​​​ Advertise on TRIGGERnometry: [e-mail] Join the Mailing List: https://www.triggerpod.co.uk/sign-up/​​​ Find TRIGGERnometry on Social Media:  https://twitter.com/triggerpod​​​ https://www.facebook.com/triggerpod​​​ https://www.instagram.com/triggerpod​​​ About TRIGGERnometry:  Stand-up comedians Konstantin Kisin (@konstantinkisin) and Francis Foster (@francisjfoster) make sense of politics, economics, free speech, AI, drug policy and WW3 with the help of presidential advisors, renowned economists, award-winning journalists, controversial writers, leading scientists and notorious comedians. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Stream with added privacy. Browse securely. Connect with confidence. Right now, save 83% off the two-year plan. Get started today at IPVanish.com slash audio and take control of your privacy with IPVans. Globalization obviously has a bad name nowadays because of the disruption it's caused, particularly to our countries, the loss of manufacturing jobs, all sorts of other things, the fact that suddenly in the middle of a pandemic we realize we get a lot of our drugs from China and China may not be sending them quite as willingly as it has done, etc., etc. But isn't it fair to say as well that the period you're describing since the 1950s through to about 2015, we've all benefited massively from this project. So the end of globalization is not all good.

Oh, the end of globalization is going to be a disaster for most of the world. Most of the world cannot feed and fuel itself without either direct imports or the inputs that's necessary to allow them to feed and fuel themselves from another continent. You break that down. You're talking about food shortages that are global in scale that affect billions of people. You're talking about an end of manufacturers trade in the way that we know it, which basically strangles tech in the cradle. tech in the cradle, and you're talking about a collapse of the ability of energy from one region

to reach another region, which Europe is discovering right now means the lights go out. These are not positive things. It doesn't mean that there won't be winners. Just as in any system, there will be winners and losers. But we've had a lot of winning in the last 75 years that's about to go away. Hello, and welcome to Trigonometry. I'm Francis Foster. I'm Constance and Kisson.

And this is the show for you. on honest conversations with fascinating people. Our terrific guest today is a geopolitical analyst whose latest book is positively titled. It's called The End of the World is Just the Beginning. Peter Zahan, welcome to Trigonometry. Thank you very much. It's great to have you on the show, man.

Before we get into it, and you know, you're a fascinating person to talk to about geopolitics, economics, and all of that. Tell everybody a little bit about who are you, how are you where you are? What has been the journey through life that leads you to be sitting here talking to us? I've always been interested in how things work.

So whether it's geography or demography or politics or economics, I need to understand how the pieces fit together, which means I absorb information voraciously. And I've worked in D.C. for some think tanks. I work for a private intelligence company. And now I take my insight and I spell it out for companies who are trying to figure out what's coming down the pipe. It means that I'm always absorbing from everywhere,

and I get a lot of migraines. And when I go on vacation, I have to go someplace. My phone doesn't work. So in 21 days, I'm going backpacking in Yosemite, and I will not come out for a month. I don't blame you, given everything that's going on. And speaking of looking forward, one of the things we wanted to talk to you about a few months ago was the conflict in Ukraine, Russia's invasion of Ukraine. But actually since then, I think a lot of people, particularly people in our audience in the UK and America,

are waking up to the fact that it's very likely that we're all going to be a lot poorer than we have been. and everybody's sort of scratching their heads and going, why is that? Why is that, Peter? Well, the world before globalization was a mosaic, tiny little local economies. And if you didn't have what you needed locally, you just did without. So if you didn't have oil, you didn't industrialize. If you didn't have food, you had a very small population. And the companies, excuse me, the economies, the countries that had more

would be able to use that power and leverage themselves into becoming empires. Those empires clashed, that brought us World War II, whole system collapsed. But with globalization in the late 40s and 1950s, the Americans created a strategic rubric where the little guy could actually get by. And the little guy could access the inputs and the outputs of other economic systems. And so instead of thousands of tiny little systems, we eventually migrated into a single huge one, where anyone could import or export anything to anyone at any time. that gave us global agriculture, that gave us global energy and finance, that gave us global manufacturing supply chains, and ultimately created the world that we know. But now we're de-globalizing for a mix of reasons, and we're going back in the direction of thousands of little disconnected systems, which means that the strength of the whole is now failing.

And we're seeing that with the Ukraine War, and we're seeing that with the Chinese disintegration. And we're seeing that with some of the problems that the Western world is having as they try to unplug from Russia. This is where we're all headed. And Peter, globalization obviously has a bad name nowadays because of the disruption it's caused, particularly to our countries, the loss of manufacturing jobs, all sorts of other things, the fact that suddenly in the middle of a pandemic we realize we get a lot of our drugs from China and China may not be sending them quite as willingly as it has done, et cetera, et cetera.

But isn't it fair to say as well that the period you're describing since the 1950s through to about 2015, we've all benefited massively from this process. So the end of globalization is not all good. Oh, the end of globalization is going to be a disaster for most of the world. Most of the world cannot feed and fuel itself without either direct imports or the inputs that's necessary to allow them to feed and fuel themselves from another continent. You break that down. You're talking about food shortages that are global in scale that affect billions of people. You're talking about an end of manufacturers trade in the way that we know it, which basically strangles tech in the cradle. And you're talking about a collapse of the ability of energy from one region to reach another

region, which Europe is discovering right now means the lights go out. These are not positive things. It doesn't mean that there won't be winners, just as in any system, there will be winners and losers. But we've had a lot of winning in the last 75 years that's about to go away. And what are the major reasons, Peter, behind this dig. this effect of de-globalization? What are the things contributing to it? There are two big pieces. First, globalization did not happen on accident. When the post-World War II system was being born, the Americans proposed that we would use our Navy, the only one to survive the war, to patrol the global ocean so that anyone could gauge in any trade with anyone at any time.

This is normally the sort of benefit that you would have only had if you were on the winning side of the war and you were in imperial power already. So we basically made the world open for everyone. And that allowed everyone to take manufacturing and services jobs and diversify and specialize and access anything from a world over. And once that became an option, people started taking those jobs, but all of those jobs are in the cities. And that changed who we are. Because in the pre-industrial, pre-globalized world, most of us were farmers and small plot farmers at that. But once we could move into the cities and take those more value-added jobs, it changed how the way we thought of families. On the farm, kids are free labor. You have a bunch. In the city,

kids are really expensive habits. You have very few. You fast forward 75 years, and it's not that we're running out of children. That happened 40 years ago in most of the world. We're now running out of adults. And so we're in an ever-accelerating population crash. So even if the Americans were willing to continue a 20th century strategic policy in a world where there's no longer a Cold War, we no longer have the population structure for consumption that allows globalization to work either. So whether it's the front end or the back end, this period in history is now over, and it's just a question of how we segue into whatever's next. So I've always been told, Peter, that we've got too many people.

The world is overpopulated. That we need to have less people. Yet here you are telling me that actually we don't have enough young people. The population busts in the advanced world started in the 1950s and 60s, and that spread to the advanced developing world in the 1980s to the 2000s, with Japan, I'm sorry, with China most aggressively in the 1990s. So it's just that it takes a long time for you to realize, that a population, I'm sorry, a birth rate bust is leading to a population bust. That takes 30 to 50 years. Well, it's now been that in spades. So in the entire advanced world, populations are aging at the same time they are shrinking. And one other thing. When you industrialize for the first time, you don't just get roads and rail and electricity. You also get antibiotics and medical care. So mortality rate collapses. So China's probably the best example. They industrialized starting in the late 1980.

their mortality rate collapsed. Their birth rate did not increase. It dropped as well. But because everyone was living longer, the population continued getting bigger. Well, you play that forward 40, 50 years. And now you've got so many people who are so old, they can no longer even have kids. So this population rubric belief looks at the core numbers, just sheer numbers. And by that number for the last 40 years, yeah, the population's being bigger and bigger and more and it's sustainable. But if you look under the hood and look at the younger generation. It has been steadily vanishing now for long enough that we have run out of people of reproductive age to generate the next generation in much of the world China included. And so assuming nothing else goes wrong, assuming globalization holds, we're still looking at a population crash. So we'll probably hit, what, $8 billion next year, we'll never hit nine, and it's going to be an accelerating fall off from this point. And that is going to contribute to de-globalization, as you've said. What else is going to happen with this population crash?

Pick a topic. We can go anywhere with that one. Let's start with the really unsexy one finance. If you're 55, 55, 60, 64, something like that, your kids have moved home, your house has been paid down, your incomes are high, your expenses are low, you are the richest you will ever be. And then you move into retirement and you liquidate all of your investments and you go into very rote investments, things like treasury bills and cash. Because if there's ever another currency or market crash, you're out of luck, you're destitute. Well, that is now happening to the baby boomers this year, at the end of this year that happens in most of the world. And our richest generation ever that has been providing all the financial ballast that has allowed everything to happen is going to basically take their marbles and go home.

and in most of the world there is not a generation coming up and behind them. The next generation in the United States is very small, but it's even smaller relative to the boomers in the advanced developing world. Sorry, in the advanced world. So we know that the cost of capital is going to bear minimum quadruple in the United States. It will probably increase by a factor of six to eight in most of the rest of the world, and it won't get better. Now, in the United States, 10 years from now, our millennial generation, which is a large generation, will enter that capital-rich demographic.

But most of the rest of the world does not have a millennial generation of size. So we're going to get this split in capital costs with the Americans going one way, the advanced world going another way, and most of the developing world never having been able to become rich enough to play their own role. So we get to do all of this in a period of multi-decade capital shortages. We don't even have an economic theory that describes what that is going to look like. IP vanish protects every device you own, your phone, your laptop, your smart TV. If it connects to the internet, it should be protected.

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at IPVANISH.com slash audio and take control of your privacy with IPVanish. Exciting stuff, Peter. But you know, you talk about the situation with demographics, and you mentioned winners and losers. Who are going to be the winners of this situation? Well, the United States is the first world country in the best position demographically. And in terms of structurally economically, it never invested its economy. into globalization because it was a bribe.

We basically created this environment so that people would be on our side versus the Soviets. So if we had invested our economy in it, we would have just been another empire and there probably wouldn't have been all that many takers. So that means the United States can step away from this system and not suffer too much pain. France had a very similar view of globalization

because they saw it as an American strategic play. They're like, oh, that's what we would have done. So of course they didn't invest their economy into either the globalized world or even into the European Union. They think of the EU as a strategic project, not an economic one. And so they invested into the European system about the same way that the Brits did. Small, late, have some regrets, never went in whole hog. But then there are countries that can attach themselves to one of those systems

or maybe start up a little echo of their own. Turkey looks pretty good. Japan clearly has the military force to go out and secure the things that it needs, and it has offloaded a lot of manufacturing base into countries with better demographic structures. Argentina, despite its creative policymaking, has all the inputs that it needs to be successful, should it so choose. And then other countries have already managed to kind of get into the American inner circle, whether that's Mexico or Canada or Colombia or Chile. They already have the legal structure and the trade deals in place.

Australia looks good because even though they're going to suffer a horrific recession as they adapt to some of the excesses of the last 30 years, they've got a stable population, they've got resources, they've got the raw materials, they've got an agricultural system that's hugely export-oriented and they're America's best friends. So you can see countries latching on to some of the more successful systems and others trying to go their own way with various degrees of success. Well, Peter, we're sitting here in Britain, which I take it would be on the list of winners by being sort of under the umbrella of the U.S. is out. That is entirely up to you. One of the problems that Britain has right now is it still hasn't figured out what the hell it wants to do about Brexit. I mean, come on, guys, it's been five years. Tell me about it. The smart play would be to go to Washington and ask for a deep free trade deal and maybe inclusion in the NAFTA. The problem with that strategy is that we will treat you, we have treated you, exactly the same in these talks as we treated you during Lend Lease. So we gave you in Lend Lease 40-odd, outdated, badly constructed, mothballed destroyers in exchange for every military facility you had in the Western Hemisphere. That's the scale of the capitulation that Washington is going to demand.

That means all your deals with Ireland on Northern Ireland have to stick because we like those. those. That means you have to surrender to American agricultural norms, which means most of your farms will go out of business. And that means that the financial hub needs to move from London to New York. I mean, these are non-negotiable from the American point of view. And that's one of the reasons why the trade deal has not happened. The rhetoric of the Brecissiter is that they would just be able to go to Washington and get a better deal. Not true. But what the Americans are demanding is the best you are going to get. And until, and unless the UK comes to that conclusion on itself, then it is trapped at the edge of the European system. Now, the European system is

facing its own mortal problems, but you can no longer be part of whatever the planning is for the next stage. And that does lead you kind of out on your own. And long-range manufacturing supply chains are no longer viable anyway. So you do need to partner with someone. And that either means going crawling back to the EU, which I don't think is a viable option anymore, or crawling to Washington, which is at best distasteful. Right. Well, we're going to be crawling is your point. We're sort of on our knees already, to be fair. But, Peter, one of the things that a lot of order, you're clearly someone with a lot of expertise, a lot of the people who watch our show are not as educated on these issues, but what they're trying to do is understand what's happening in the world and what's happening in their lives right now.

And we talk a lot about the cost of living, we talk a lot about the rising price of fuel, all of these things. How have government policies played into this? Because a lot of people will say, well, look, the pursuit of net zero is one of the reasons that all our prices are going up. Someone else will say it's the war in Ukraine and people come up with all of these different explanations. What do you make of all of that? Well, let's start with kind of the conventional wisdom because it's not all wrong. I'm usually the guy who pokes that, but not this time. Net zero, with today's technology, until we have figured out a low-cost mass storage electricity system,

and that means storing electricity not for four hours, but for four months, so you can make it through the winter. Until we have that technology, net zero is really dumb from an environmental point of view. Forget from an economic point of view. It's suicidal from an economic point of view. But from an environmental point of view, there isn't enough lithium on the planet to make that work. Now, in the UK, you do have advantages over almost everyone else in your hemisphere because the UK has some of the best wind resources of the world. And if you put a wind turbine high enough, you can tap stronger currents that are more reliable that can actually generate base load.

We're seeing that in the North Sea. In the United States, we're seeing that in Texas and we're seeing that in Iowa. It's not foolproof, but wow, is it better than what we had five or ten years ago? So I don't mean to suggest you can't green your system. I'm just saying that getting to zero today is not possible. And if you try and if you do it by decommissioning more reliable energy producing systems, which almost by default means nuclear or fossil fuel, you are going to have high prices and rolling brown and blackouts.

We are seeing that across Central Europe right now. The technology just isn't there. So it's real. That doesn't mean you should give up. But, Peter, just to interrupt, right? If that's the case, then why is everybody insisting that we do it? Because it's a great catchphrase. I mean, people have bought the ideology, unfortunately, without looking under the hood.

We're just not there yet. And Europe is now giving us an excellent example of 40 years of policy of what exactly not to do. So because it sounds good and it's a great catchphrase and politicians get to look all virtuous and moral, we embark on this policy, which is fundamentally unworkable. Hey, hey, hey, you guys are the ones who basically said you wanted a cheese submarine in the shape of Brexit, and you went along with it. So this is not an isolated incident, okay? People have ideas.

People have bad ideas, and politicians of all flavors strap onto them. We've certainly seen that in my country in the last five years. You are not unique in that. So whether that makes you feel better or worse, I do not know. but I certainly agree that net zero in its current form with today's technology is economically and ecologically suicidal. But that's only one piece. So we've got the Ukraine war then. The Russians have recently shut off Nord Stream, and we know that all the pipelines that are crossing Ukraine to Europe are going to get blown up one way or another this calendar year.

So you can count on roughly four to six million barrels a day of crude and raw. roughly, oh, geez, I got to translate this one. Sorry, I'm thinking BCF. It's 9 to 12 BCF. So what's that? 90 to 120 million cubic meters of natural gas a year, going offline before the end of the year. And that will obviously sucker punch everyone in Europe repeatedly. Again, UK has a little different system. You're further from the Russians. You hardly use any of their stuff. You have the option of taking stuff from the North Sea first. you have closer access to LNG from the United States. So you're going to be able to watch Europe,

and when you're not giggling, because that would be rude, you're hopefully going to learn a few things on what not to do as you're adjusting your own energy plans. But all of that is going to be inflationary, no matter who you are. We're losing potash fertilizer that used to come from Russian Belarus. We're losing phosphate fertilizer, which used to come from China. And we are losing nitrogen fertilizer, which is made from natural gas. globally. So we know food prices have to go up. Again, I don't see the UK starving, but that contributes to inflation.

But what's really going on, in my opinion, is a labor story. In the UK, in the U.S., our largest generation has been our baby boomers. They're all retiring right now. And the kids who are zero to 20 who are now moving into the workforce, they are the lowest, the smallest generation that either of our countries has ever seen. in the United States, that is already an annual shortage of 400,000 workers. In my country, that's going to go up for the next 12 years until we hit 900,000. So we are looking at labor inflation here being higher than inflation in energy and food and manufactured goods combined for a decade. So, Peter, again, that being the case, how come politicians haven't looked at, at this and thought, right, there is a problem coming down the pipe. Let's give people incentives.

Let's give people incentives to produce kids. Let's make it better for families and make it more sustainable and less expensive. That's a lot more difficult than it sounds. Now, the advantage we've had in the United States is we've got the elbow room. We're the world's largest producer and exporter of food. We're the world's largest producer of energy products. And we have more arable land per person than any other country in the world. And that has kept the costs for all of the inputs for families low without a government policy. The UK is lower productivity in its agriculture. Its energy reserves aren't tapped out, but they're well past their peak. And most of you live in a relatively dense urban environment. That's just by nature is going to be more expensive. So if you do

decide you want to fix this with policy, the country to have a conversation with is Sweden. And not so much about what to do, but about what not to do. Sweden has maintained a higher birth rate than most countries, certainly most countries in Europe, and they do have a cradle to grave social support network. But it's come with some of the highest tax rates in the world, which actually makes Sweden a very expensive place to live. It wasn't for the support. No one would be able to have a family. In addition, there are a lot of societal negatives that come from it. So, for example, they've got this great program where a young mother with her first kid has gets so many months off work with pay if she has a second kid it adds on an additional time plus some same for a third same for a fourth

what that means is that if you're under age 35 in sweden and you're a woman it's impossible to get hired because you could go in for your first day of work say you're pregnant and then not work a day for eight years. So, yes, higher birth rate, but it comes at the cost of just screaming economic inequality

between the sexes. This is hard. Social engineering is incredibly difficult. It will always have side effects. The United States has been fortunate

in that geography takes care of most of it for us. Very interesting. That is very, very interesting, Peter. Because you would think that

somebody must have been able to crack this puzzle by now. Because as you've explained, and we're starting to see now, the labor shortages are having a huge effect. We're going to be, well, by the time this comes out, we would have flown to the US. And there's part of me thinking, are we actually going to be able to make the flight? No, no, we're going to make it.

The suitcase, not so much. I've got two in the wind right now. I feel your pain. Because it seems every industry is, crippled by these shortages. And they're not going away. I mean, the baby boomer is the largest generation the West has ever had, and they're going away,

and they are never coming back. In the United States, we have to wait 10 years for the millennials to kind of fill this out. Most of the advanced world doesn't have a millennial generation. So we're not going back to where we were pre-COVID or pre-Trump. That is not possible. We don't have the numbers.

We have to find a new way to function. And if you want to get a little, optimistic slash depressed. It all depends on your point of view. I'm going to get depressed. Crack on. If I'm right about China and we're looking at the disintegration of the Chinese system. And if I'm right about Germany

and we're looking at the end of the German system this year, that's a lot of manufacturing that is going away. Now, your country and my country are excellent at manufacturing. In terms of value added, we're actually better than the Germans. But to rebuild those supply chains somewhere else, especially in short order, especially during a time of protracted labor shortages, that is also inflationary. And Peter, there's always been the traditional solution, certainly, in this country in recent years,

which is, well, yeah, we've got labor shortages, but what we're going to do is we're going to get a bunch of people, we're going to cream off the best people from Bulgaria and Romania and Poland and maybe Ukraine now and also from North Africa and maybe sub-Saharan, and we'll just get a bunch of people. people in from everywhere and solve the labor shortage. Isn't that the way? By the numbers that has a possibility of working. Now, in the European Union, that is exactly what you did for the last 15 years, and it's one of the reasons why the Central European economies are now facing demographic collapse. Everyone who's under 30 left for the West, or the Western European countries, you can only do that once. So you're talking about now going further afield. In that, the United Kingdom absolutely

has an advantage over the rest of the EU because the UK has always had a more open definition of self because by by definition the UK is a merger of multiple ethnicities without necessarily erasing them in the way that the French did or the Germans did and that makes you a little bit more culturally open but it will not happen by accident you're a freaking island and you just need to build the system that allows them to come in either from the former colonies or from countries that are closer there are ways to skin that cat. All of them generate a degree of political backlash, and I think it's safe to say that everyone in the UK right now

has a fresh appreciation for just how touchy you can be when it comes to your politics. In the United States, we learned that lesson five years ago with Donald Trump, and for people who thought that all it was going to take was the fall of Trump and the rise of Biden that changed it, no. Our immigration policy is, if anything, tighter now than it was two years ago. This requires a significant cultural adaptation. We go through phases, and right now, both countries,

kind of like the door is shut. And Peter, you mentioned something about German, about the German system collapsing. Now, I haven't heard anything about this. But it does sound exciting. Yeah, it does. You know, he's got a Jewish background, so he's thrilled. I'm glad he laughed at that.

Otherwise, that joke is very problematic. But anyway, Peter. It's like, there is no longer anything but bad humor in my life. Okay, so the German system has four pillars of support, and without all four, it doesn't work. Number one, inexpensive energy supplies from Russia. It's the only place that the Germans can get the stuff cheap, and it forms the basis of their heavy industry,

which provides the materials for their medium and their lighten. industries. So if something happens in the base level, it's not just that they have a problem with electricity, although they do. It's that they no longer have the materials that's necessary to make plastics or to forge steel or to do anything downstream of that. The Nord Stream pipeline went offline yesterday. There's a concern, a very real concern, that it's never going to come back on. What's going on right now is that the Russians are trying to blackmail the Germans into backing out of NATO. It's that simple. Because without German assistance, there are no logistical means of getting equipment from the rest of NATO into Ukraine. End of story. So the Germans

are being forced to decide between being industrialized and neutral or unindustrialized and Western. Not a fun conversation to happen. The Germans are the fastest aging society in Europe. They're in the top five globally. Germany is not a country where you can have an open, honest, national conversation about population policy. And it shows. And so they now have more people in their 60s than their 50s than their 40s than their 30s than their 20s. Until now this has worked because when you have a lot of people in your 40s, 50s and early 60s without kids, they can work long, they can work hard, they can get better educated,

they're the most productive workers on the planet. But that group that is in the 60s is now flipping into retirement this decade and that changes things overnight. going from an advanced worker base with lots of experience to a retired worker base where the experience is irrelevant. That happens this decade. That was always going to happen this decade. This was always going to be the last decade of the German manufacturing model. Third, it's not just about the Germans. A successful manufacturing system requires different stages of production with different workforces, with different skill sets at different costs.

the Americans do this with Mexico, the Germans do this with Poland and the Czech Republic, and Romania, and Ukraine. And it's now over. And then finally, you need globalization. Because when you have an advanced population that's top-heavy, you don't have enough people to consume. You have to export the stuff and the Americans have lost interest. So it's not just Nord Stream. That's just the proximate cause of the day.

all four of these pillars were already breaking. The demographic ones were definitely going to break completely this decade. With the Americans, it all depends upon our mood. And then, of course, the Russians are just forcing things into the light right now. So the German manufacturing model cannot survive the 2020s. The Russians get to decide whether it survives 2022. Wow. And so obviously that, the German economy is such a powerhouse.

If that goes down, then that is going to have. shockwaves right across Europe. It takes Belgium and Poland and the Netherlands and all of the Central European economies down with it and the French are left to inherit the earth. That's a depressing thought. There we go. Peter, I wanted to talk about China

because this is another area where you have ideas that are very different to most people. A lot of people, including former guest of ours, We had Dr. John Lee on the show recently talking about what China is trying to do, the threat of China, vis-à-vis Taiwan, et cetera. You believe that, again, due to demographic issues, particularly and also this end of globalization, China is on the verge of collapse. Tell us about that. Well, let's deal with the punchline first. China doesn't survive the decade as an industrial power, probably not even as a unified country.

The demographic situation now there is so bad that, and the aging is happening. so quickly and the birth rate dropped so low, so long ago that by 2050, the population of China will be less than half of what it is today. And we're already in a situation in, I'm going if I was going to phrase that wrong. Well, remember, Germany has more in their 60s and their 50s and the 40s and so on. Their demographic does this towards the children. China's does this. Right. Their point of no return was 30 years ago. This is not a problem. recent thing. Combination of the fastest urbanization humanity has ever experienced with the one-child policy at the same time, that was national suicide, and now they're dying. They no longer have a

workforce that is competitive in any manufacturing sector. There is not a product that is made anywhere else in the world that, I'm sorry, there's not a product made in China that can't be made cheaper elsewhere. And the only reason we still think of China as a manufacturing power at all is because of the pre-existing sunk costs of the industrial plant, but the COVID lockdowns are even removing that from the table. So there is no reason to expect China to ever get better. Also, their energy comes from a continent away, except for the part that comes from two continents away. Also, all of the inputs that they need for the food, with the exception of phosphate fertilizer, they're all imported. So anything happens to globalization for any reason, and this

is a Chinese, this is a country that just ceases to exist. There is no way with de-globalization that China emerges from this decade with more than 700 million people. It's going to be that bad and that catastrophic. Well, that does sound obviously hugely impactful on China. Would you say that that means China's not a threat? Because, you know, I'm originally from Russia, and people have been banging on about the demographic death spiler of Russia since I was a child.

And yet here is Russia invading Ukraine and upsetting the global balance of power and causing all of these problems that we're now talking about. Is it really the case that we shouldn't worry about what the Chinese are going to do? It's a fun little compare and contrast. So the Russian demographic is awful. It will lead to a dissolution of the Russian state this century, probably around mid-century, if I was a betting man.

But it's not so rapid because Russia, when it urbanized, it only urbanized in part, and when it industrialized, it only industrialized in part. So until you get to the post-Soviet collapse, the demographics really, I mean, they were ugly by many measures, but they weren't terminal. And there are some strategic things that the Russians can do to buy themselves more time. The Ukraine war is part of that. They're trying to get to a more defensible outer shell where they can put static forces in a few geographic areas that will block forces from coming into their space in the future. So I don't mean to suggest that the Russian situation is pretty. it is still terminal.

But there are some things that you can do with strategic policy that buy more time. China doesn't have that option. Russia is an exporter of food and energy. China's an importer. Russia can plug its periphery. China's periphery is naval. There is no country or combination of countries that the Chinese can invade and conquer in order to solve any of their problems

where there's a nice list for the Russians. So the most likely outcome here is that China just kind of implodes into itself. Does that mean there can't be a war? Of course not. When countries are dying, you never know what they're going to do. The issue of the moment, of course, seems to be Taiwan. But the Chinese government now knows that if they make a move on Taiwan, it's, A, going to be harder than they thought. B, they know they're going to be international sanctions. And C, they know they're going to be international boycotts. And any one of those is enough to destroy the Chinese system, much less all three at once. The Chinese have always thought of

of Russia as their dumb neighbor, and you let the dumb neighbor try things. They're the canary in the coal mine, if you will. And they now know that everything they've prepared for for the last 40 years was based on faulty assumptions. This is normally the place where you would as a national leader send all of your smart people into another room to kind of game out some replacement plannings. But the cult of personality in China is now so tight, and Xi has executed so many people at the top that he no long,

has a brain trust to send into the other room. So China's just slamming its head into the wall over and over and over and over until something cracks. And I don't think that's something that's going to be Taiwan. Well, Peter, you mentioned the reason that you think Russia is doing what it's doing in Ukraine, which is to secure a more defensible position. You mentioned that there are other places where it needs to plug those gaps as well. What does the conflict and the future of Russian aggressive behavior in Eastern Europe look like,

in your opinion. When the Russians did that first thunder run to Kharkiv and Kiev, and they realized that they were not going to be welcome into saviors, that no one had bought their propaganda but themselves. They had to reassess. The problem with Ukraine from the Russian point of view is not that it's in one of those geographic gaps. It's that it's on the way to two of them. So it's not that the Russians aren't going to stop until they have all Ukraine. It's that they won't stop when they have all of Ukraine. And that meant they had to do it. And that meant they had to dust off an older playbook. And that's why we're seeing

in all their artillery now. They're deliberately destroying every piece of civilian infrastructure they can see, specifically agricultural infrastructure, to make sure that the land is uninhabitable for at least several years because that forces the population

to self-segregate, either into refugees, which leave and you don't have to worry about them, or anyone who just stays, it's clearly a fighter, and you can set the Wagner group or the Chechens on them just to wipe them out.

And that's what we've seen in southern Ukraine and eastern Ukraine for the most part. And we're seeing these incremental gains by artillery. If the Russians succeed, that doesn't simply destroy the Ukrainian nation and the Ukrainian state. It's just the next step in getting to those gaps. And that means Estonia, Latvia, Lithuania, Poland, Moldova and Romania have to fall as well. On the western periphery of the Russian space, those are the countries that the Russians feel they have to have to have to hold. And if they pull that off, then the FSB is

released to do what the FSB was designed to do, and that's to suppress all national descent, no matter what the form, everywhere it goes. From the Russian point of view, that's the easy part. The hard part is can't conquer the country in the first place. Well, Peter, sorry, Francis, let me just finish off on this. As someone who's less of an expert in the economic side of this, but someone who is from Russia who's been paying attention, I've been saying this to people for a long time. Like, this is just the beginning. It's part of a much bigger plan.

But I suppose that the most valid counter argument to that would be, would it not be suicide for Russia to attack NATO countries like Latvia, Lithuania, Romania, etc. Well, we found out in the first week of the war that the Russians' military, from a conventional point of view, was not nearly as important as it looked to be. We now know that the United States, NATO in general, is running out of a lot of the equipment that the Ukrainians need to fight because that's not how our militaries are designed. The U.S. does not do mass formations. We do precision from distance to destroy command and control and logistic hubs. And then we go in and clean up.

The Russians are going inch by inch by inch destroying everything. And fighting that requires a different sort of military. And we can't train Ukraine with the weapons that we use for the long range stuff because that isn't something you do. in a few weeks. That's something that takes a few years. We don't have that kind of time, even if we were willing to share our top shelf technology, which I think is open to debate. So we're running out of the sort of stuff that the Ukrainians can use, and we're probably going to be largely tapped by October. So if Ukraine has not ripped the guts out of the Russian military by then, this war is going to take a very different term, because you will have a large manpower-heavy,

Russian army that has low morale and poor equipment against a Ukrainian force that doesn't have weapons. There's no math there, but the Russians know they can't face us in a conventional war. And that's where the nukes come into play, especially, especially if the Germans have flipped. Because if the Germans have flipped, there's no defensive Estonia, Latvia, Lithuania, Poland, and Romania. anyway. So the Russians are playing their cards on the diplomatic and the economic side of this very,

very well. And to be perfectly blunt, it's not a hard hand to play. The Germans have pushed for 40 years against, depending upon Russian energy and raw materials. And we're seeing where it leads.

And before you criticize the Germans overlay, because you know that's justified, this is not a new problem. Germany and Russia are our neighbors and they try to get along so that they don't have to go to war and then it ultimately falls apart and they go to war and they try to get it again afterwards

to try to prevent the next one. That's all they can do. It's just that we're unlucky enough to be living in a time where we're in one of the zigs rather than the zags. Peter, the picture your painting is very bleak. It's very bleak. It's very bleak

with everything really. But you describe yourself as an optimist. So what is it to be optimistic about? Well, history is a series of cycles, of an organizational structure forming and generating a golden age, and then breaking apart under its own inconsistencies and collapsing. And what we know is history is highs and lows, highs and lows. Globalization has been the biggest high we have ever had. And its break apart was always going to hurt a lot. The demographics are just, faltering in on top of that, making it worse. But we're now in a position where roughly half of the Earth's surface has industrialized and urbanized

and is not subject to the collapse. Will it be inflation? Yeah. Will it be awkward? Yeah. But think of the level of awkwardness that the UK and the U.S. has to do. We have to double the size of our industrial plan. Yeah, that's expensive. Yeah, that's inflationary. That's a wonderful opportunity. it's going to generate some of the fastest growth in human history in the next five to ten years. We know that global agricultural supply chains are going away, but not ones in North America or in the UK most likely, which means we can incorporate some of the digital technologies that are past the prototype stage into the next generation of farm equipment and double yield.

This is a good thing. It's inflationary in the short term, but it's a good thing. Unlike the great collapses of the past, large portions of the world, large viable portions of the world are not breaking. So when we get to our next rise 20, 30 years from now, all of the building blocks of society of today will not have been lost. This is not the Bronze Age collapse. This is not the fall of Rome. This isn't even the disintegration in the aftermath of World War II. There's pain.

There's going to be a lot of ugly. But we're not looking at a civilizational break here like we have. have every other time. That's a good thing. It's so interesting that you say that because we talk to people and a lot of commentators, not very intelligent people, journalists, political thinkers, they make the point that what we're seeing are the final days of Rome and you don't think that. I think we're seeing, imagine if we could see the final days of the Roman system without the final days of Rome. Some version of that is where we're going. This is not like some, this isn't like the dark ages where the Arabs held the knowledge but didn't touch it for a thousand years.

Silicon Valley is still there. London is still there. And it's going to keep being Silicon Valley in London. What's happening is a contraction of what we consider to be the economic family of the world into the parts of the world that are more viable. And we're going to be able to continue to tinker with these technologies until the rest of the world is really. ready to rejoin. That could be a lot worse. And Peter, in terms of some of the other things that are going on, obviously you focus on the economics, the demographics, the geography, etc. How does the sort of modern informational landscape play into this? The reason I ask this is often when I hear you speaking, I'm sort of hearing a lot of rationality. And I know, and as you mentioned earlier,

that not all our decisions in politics and in the world in general are made by rational actors in responding to a rational observation of the facts and the data. So we now live in a world where there's an abundance of information. We're all connected by ways of communicating that didn't exist before. How does that affect the landscape and the way that our politics will develop over time? Well, social media is definitely part of the problem rather than part of the solution because we've given every Yahoo a bullhorn. And those Yahoo sometimes get together say the same thing

and elect people to Congress and Parliament. There's not a lot we can do about that at the moment. But I think a bit of a historical comparison, it might be useful. In the 1800s, we had a new technology called the Telegraph, which, like social media today, revolutionized our relationship between geography and information. Suddenly, you could send information across a continent in seconds. And that generated yellow journalism.

Because like with social media today, there were no restrictions on who could share the information. And so people would just make stuff up. And among other things, that got the United States involved in the Spanish-American War. Because people eventually bought the propaganda. Well, it wasn't propaganda. It was just flat out lies. And that triggered a conflict. That also, among other things, is shaping our political space in both of our countries right now.

We're seeing that with Trump. We're seeing that with Johnson. We're seeing that with everyone who wants to challenge them. Now, social media will eventually. we brought into check, just like the telegraph did. Eventually, we both passed slander and label laws. We need something like that for social media. Do we do that in a year? Probably not. If so, the Americans would have done it in the aftermath of the January 6th issue of last year. Or is it already a year before. Sorry, time is flying by. But that is an issue for my Congress and for your parliament. I would expect

Parliament to act on it quicker because your system is less clunky than ours. It's actually designed to government. It's designed to govern as opposed to designed to debate. So we are in the U.S. once again looking to our parents for a potential path out of this. Please don't let us down. USAA knows dynamic duos can save the day like superheroes and sidekicks or auto and home insurance. With USAA, you can bundle your auto and home and save up to 10%. Tap the banner to learn more and get a quote at usaa.com slash bundle.

Restrictions apply. Well, we will do our best, Peter. We'll do our best. Isn't part of the problem though, Peter, is that no one, we haven't, nobody has really got to grips with this technology. No, and it's new. I mean, remember, social media was only designed, what, 15 years ago and only kind of gendered into the mass consciousness within the last six.

It's very, very new. And one of the many reasons I'm looking to the UK rather than the U.S. for the first steps in this, you guys don't have a constitution. Normally that's a negative. We're seeing that with Brexit. But it means little things like free speech are not inviable. And that allows you to tinker with the legal structure that's necessary to contain this technology without immediately threatening the core precepts of your country.

This is a good thing because it allows you flexibility that we don't have. well it does unfortunately the people in charge instead of trying to find a sophisticated solution to regulate social media instead they get in the police to investigate comedians for jokes they tell and asking people to check their thinking and all of this other knowledge that is one of the downsides of your system i will give you that there's no challenge there not having it all written down sometimes as a negative usually is not that not for this now something else that's different about our systems another reason i'm looking to the uk over the u.s on this. When your leader does something monumentally stupid, even illegal, you can get rid of them in a day

because you can go through the party as well as through parliament. We don't have that option. We're in locked term limits. So if Johnson was our president today, we would have to wait a minimum of two and a half years to ditch him. You guys did it in an afternoon. Speed matters right now. and Peter there's going to be a lot of people listening to this and what you've painted is a very persuasive yet bleak image of the world

and its future if you're an ordinary person who's listening to this what advice would you give them what would you say to them in order to help negotiate what is coming down the pipe you need to understand where the things that make your life possible

come from if it's a secure system you're good If it's not a secure system, you need to personally invest in other means of sourcing. Otherwise, when those things go off, you'll just be doing without. It's not a simple process. Supply chains are messy. But anything that ultimately links back to the Chinese or the Russian system in particular, you know that's going away.

You know that's going away very, very soon. And so best to be forthright with what the nature of your problem is. So you can actually start solving it before it expletely. in your face. Germany is a textbook case of what happens when you do the opposite. Well, there we go. So if you're reading, watching this rather than your ordinary person, start manufacturing everything that you've been buying from China up until everything. Great. Fantastic, Peter. Well, you've given us some pointers there. Before we let you go, the last question we always ask, before we ask questions from our supporters, for our supporters, of course, is what is the one thing

that we're not talking about as a society that we really should be. I think of all the economic sectors that are facing upheaval, the one that people are really under estimating is agriculture. We've got a global disruption to the entire fertilizer supply chain right now. And building new fertilizer capacity is a minimum of a three-year investment. Roughly 80% of the calories we grow is grown with imported inputs. And we're going to have a really good idea, by September, October of this year of just how bad on a global scale the harvest is going to be,

it will not improve until such time as we have rebuilt that fertilizer capacity, and that's, you're talking 2025 at the soonest. We're not ready for that. None of us are ready for that. All right, pizza. So, listen, thanks for coming on the show. What I will say is this. You've made a lot of predictions.

I hope you're wrong about all of them. Right back at you. However, if you're not, we'd love to have you back on the show in like a year or so, so you can say, I told you so. That's why you don't have electricity anymore. That's not why I do this. And if you don't have electricity, they're not going to be watching. Yeah, I know, I know.

But anyway, my point is we appreciate your time. We appreciate your expertise. And we hope you're wrong about everything. But if you're not, let's do this again sometime. It sounds great. The book is called The End of the World is just the beginning. And there it is. If you were not infused and inspired and motivated enough by this interview,

make sure you get the book as well. Peter, we're going to ask you a couple of questions from our supporters for our locals. But for now, thank you for coming on the show. And thank you guys for watching and listening. We'll see you very soon with another uplifting episode just like this one. And for those of you who like, it has been fun. And for those of you who like your trigonometry on the go, it's also available as a podcast.

Take care and see you soon, guys. How does Peter see the almost total worldwide control by certain countries of certain key minerals, like antimony and lithium playing out in the next few years? This episode sponsored by IP Vanish. IP Vanish protects every device you own, your phone, your laptop, your smart TV. If it connects to the internet, it should be protected.

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