globalization largely removed military considerations from the table and allowed
countries to develop in a way that we had never seen before in human history most of the world
was not industrialized in 1945. most of the world today is vast majority of the world is and even
the parts that are we think of as backwards like afghanistan still have industrial technologies
there's no huge split anymore between the haves and the haves not from a technological point of
view think of it from the point of view of the british empire they ruled the world for
200 years because they were the only ones who were industrialized they literally brought a
gun to a knife fight for two centuries so they were great that doesn't exist anymore
but if you break down globalization the materials and energy and food access that
allows everyone to specialize and have a lot of value added right now that goes away
and so your china's instead of consolidating will break apart same for your russia's
maybe for your brazil's india i think will come through okay but it's got a couple tough decades
ahead of it and so any time that your country is reliant on an external input to function
and that input goes away all of a sudden you're dealing with pressures that haven't existed and
you haven't had to deal with for 70 years now again north america most of these inputs are local
this is going to affect the western hemisphere far less than the eastern
but yes we should expect to see significant degradations in central control in a lot of places
in the eastern hemisphere the question to ask is you know who when and who benefits from that
and like we talk about the united states and china and the us is obviously going to benefit
from a chinese breakup but so too is india so too is indonesia so two is malaysia there's
a lot of chunks of manufacturing that are going to be up for grabs and some countries are very well
positioned to take advantage of those when you look at a a very significant rise in the price
of food what does that do to social stability in country after country after country well when
prices tripled in the middle east well prices doubled in 2010 and they tripled in the middle
east which was the area that was most directly impacted by some decisions the russians made we
got the arab spring we got the civil war in syria we're expecting a much broader impact and a much
deeper impact in terms of supplies to that region so at a minimum we should expect a reprise of that
whole series of issues but this time most of these countries don't have the political bulwark that
they had a decade ago most of them are already on the edge so i'm concerned particularly for
for libya obviously it's a near failed state this is going to more than be enough to push it over
that also impacts libyan energy output i'm very concerned for iran which is the second or third
largest importer of a lot of these commodities coming out of the former soviet space and that is
an industrialized agricultural sector so without fertilizers that's a problem uh there's another
million barrels a day that is offline potentially and then more stable countries like morocco and
algeria where the governing system has managed to hold during the arab spring but now they're going
to be facing another wave uh into an already weakened system so we're going to be looking
at government changes we're going to be looking at riots we're gonna be looking at revolutions
and it's entirely possible that we're gonna have another couple of civil wars thrown into the mix
yeah we're never going back to 2019. we don't have the labor structure uh global energy and food are
functionally breaking down the politics have changed uh you know there are a lot of things
about donald trump that i didn't care for but one of the things that he was very successful
at is changing the conversation when it came to manufacturing trade internationalization and
globalization and his kind of baseline that the system is rigged against us has become
the mantra across most of the united states and if you look at all the political factions in both
political parties there's only one faction in one party that is pro-globalization anymore and that's
the business community but the business community has been ejected from the republican party
courtesy of trump followers so there's no longer a political argument in the united states to rebuild
the system back to where it was in 2019 that conversation is not happening the conversation
is about what do we move back first and fastest and what role does the government play in that
that's a fundamentally different world we're not going to get it right on the first try nobody gets
it right on the first try but melon scooping the united states system away from everything
else in the world will require adjustments in policy and labor in inputs but unique among
the world's major economies the united states can pull this off especially with help from the
nafta partners and i'm not going to ex i'm not expecting the degree of disruption in the western
hemisphere writ large so we can even work out alternate input systems for raw materials which
we're gonna be using a lot more over the next five years uh how long the transition period
is going to be it's going to be different sector by sector manufacturing is the one that will take
the longest but the one that is also going to be prioritized and the one that mexico can help
us with the most in other sectors i mean we can we can retool our refining system to primarily
deal with american crude instead of imported crude you know we can do that in two or three years
that's a relatively low carry and i know energy people who are watching like oh my god it's awful
yes it is awful i get it it's still easier easier for you than anyone else and there's nothing
really threatening our agricultural system so the bedrock of what allows the american economy to
function none of that's in danger and we have some really interesting opportunities ahead of us here
for adding in the things that have been globalized away over the last 50 years we'll of course argue
about it every step because we're american but i'm pretty bullish on where this is going to take us
just keep in mind that the road from here to there is not a straight line and you can't turn on new
supply lines over this once the world became safe everyone was able to move into higher value-added
jobs which took them from the farms to the cities when you move into the cities you have fewer kids
and so over the course of the post-world war ii era the whole world has been living longer
but living in tighter conditions with fewer children you play that forward for 70 years and
a lot of countries china included have reached have gone far past the point of no return in
terms of regenerating their own populations and so we're seeing a halloween out we saw holland
out of children last decade which means we're seeing a hauling out of 20 30 20 somethings and
30 somethings this decade so we always knew that the global trade system was going to collapse this
decade trump sped up covet sped it up the ukraine wars a hard stop so we're already past the peak
and it's just a slide from here you i think you're absolutely right when it comes to companies taking
supply chains into their own hands because when you have a second third fourth fifth sixth level
supplier and you have no idea who those people are well because of coveted because of trump we've
kind of found out and the chinese are seemingly going out of their way to make sure this happens
faster there are a lot of things going on in china right now the two big ones xi has created a
cult of personality that's so tight that anyone who is capable of independent thought is gone
they're just not part of the system anymore they've either been executed or exiled or
intimidated into silence so china can't shift gears and adjust to changing situations anymore
the policies they had five years ago two years ago are now all they have and they will hit their
head against the wall over and over and over and over covid is probably the best example of that
the chinese vaccine doesn't work so the only way that the chinese can fight kovid as a lockdown
and for something that's as communicable as omicron b or susha 7 or whatever it's called now
that means everything just shuts down so right now hong kong and shenzhen and guangzhou and shanghai
are all shut down so the two biggest manufacturing and shipping centers on the planet are offline
for an indeterminate amount of time they can't participate in supply chains like that at all
so if you are in the united states and you started your near shoring or reshoring process
two or three years ago when the writing was on the wall it was obvious it needed to be done
all of a sudden you're feeling pretty good about things but if you were one of those people who
thought this was all going to blow over and we were going to go back to where we were in 2019
no that's never happening and now we have a food shock and an industrial material shock
and an energy shock on top of that the problem that the late deciders are going to have
is now in the united states the baby boomers are retiring so the largest concentration we
have of skilled labor and the largest demographic within the workforce is going away and will never
come back and in mexico they had a baby bust about 25 years ago so the amount of people
in labor you can tap in mexico is also limited so the early returners got first dibs
and everyone else now has to bid for labor in a highly an inflationary environment and if you're
going to double your industrial plants in a few years it was going to be inflationary anyway so
i personally don't think we have more than even odds of having a recession this year next year
primarily because of the industrial investment that's going to happen
but we can have growth and high inflation at the same time very easily
at this time passing zero seven zero four one four zero looking at rtb linking via septum
you