the the overall theme is that we are at the end of an era that globalization was a moment in time
that the united states created artificially in order to generate alliance to fight the cold war
and in the eight elections since the cold war ended the american population has always gone
with the candidate who is less globalist and more populist that includes biden so we've been moving
this way for a long time it's not an aberration it's a pattern and without globalization most
of the major economies in the world have to add a minimum retool and for many of them that's the end
of their systems the other piece is depopulation we've finally passed the point where the problem
is no longer overpopulation the problem is that uh as globalization took hold everyone everywhere was
able to move off the farm and into the town on the farm kids are free labor and in the town they're
really expensive annoyances and adults aren't dumb so they have fewer of them you carry that out for
75 years and you don't just run out of children you run out of 20-somethings and 40-somethings
most of the major countries of the world have now aged past the point of no return
and this was always going to be the decade where they moved into mass retirement
you play these things two together and the whole system starts to spin apart the ukraine
war is a piece of that countries looking to attach themselves to a superior power is a piece of that
the evolution of china and japan and russia are pieces of that and the whole point of the book
is to show what happens on the back side in terms of the major economic sectors whether
it's transport or finance or agriculture oh it certainly does everyone assumes that trump
since he was the one who threw the fits and broke trade deals uh is the one who's the more populist
and i don't mean to suggest that he wasn't he certainly was but what biden has done is
fundamentally different trump would tweet out that we're pulling out of this or that or we're
leveling tariffs on countries and then he would walk away sometimes he'd even fire the people who
were responsible for making those policies happen because he was a relatively volatile personality
biden is coming in and biden is reinforcing every decision that trump made on trade
with actual code with actual executive orders with with actual bureaucrats to enforce it
so biden and trump from a foreign economic policy point of view actually have the two most
similar foreign policies in this country's history the difference is that biden is making it stick
sure china tariffs the phase one deal um never really went through because trump never really
implemented it all the tariffs stayed in place and trump and his uh trade czar uh katherine thai
have basically extended those into perpetuity uh and formed a bit of an alliance with some of
the other western countries to make it not just an american thing but global and that's one of
the reasons why companies like huyway are facing such a catastrophic problem everyone assumed that
as soon as the trump administration went away this would all just fade away and instead it is now i'm
fully embracing the american trade law uh but yeah the whole book is on that topic so for example
uh transport is international safe and cheap transport is the foundation of all manufacturing
supply chains the entire global energy market and the entire global agricultural market
there are now parts of the black sea that have already become a no-go zone which have
taken the world's largest wheat exporter russia and the fourth largest wheat exporter ukraine
off the market uh the russians are having a similar problem with their fertilizer because
it is exported through that same no-go zone so we are already looking down the maw of a global wheat
crisis that this year is going to at a minimum triple probably quadruple meat prices at the same
time we have a global fertilizer shortage which is going to reduce yields on a global basis
we're not going to have to wait 10 years we're looking at that right now
sure so as you move off the farm and into the city you have fewer kids you play that forward
for a few decades and fewer kids becomes fewer young workers becomes fewer mature workers i
think a great case study is south korea south korea is a country that wasn't industrialized
at all certainly wasn't globalized when it got independence from the japanese at the end of
world war ii they started to develop in 1950 and steadily over the course of the next four decades
they went from the most rural country in the world to the most urbanized country in the world
and they're now 30 years after that in an environment where they have more people
in their 60s than their 50s than their 40s than their 30s than their teens and children
for a while that works for you because if you have a lot of workers aged 30 to 50
but not a lot of kids all the money that is normally spent on school and diapers
is instead spent on cars and condos and you get this massive generation of economic growth from
the consumption side at the same time the higher investment and tax levels from those more mature
workers can be building out infrastructure and industrial plant on the industrial side
and so we've seen this story over and over again in germany and korea and japan and china
but it's a bit of a starvation diet because if you then fast forward another 10 years
you're talking about that bulge that right now is in the 50s being in their 60s and then retiring
and in that sort of environment you just have a complete collapse of production and investment
and consumption all at the same time and we're now looking at about half the developing world going
through that process right now so the growth we had from roughly 1995 to roughly 2015 the fastest
economic expansion in human history was about all of them being in that magic demographic moment
before they flipped now they're flipping okay so as populations decline the capacity for them to
participate in normal economic activity collapses because you have to have sufficient young people
to get it going and that's no longer an option for a lot of countries so the model of capitalism or
socialism or fascism or communism or whichever ism you happen to be a fan of they were all designed
for the market getting a little bit bigger every year and they can't cope with a market that's in
terminal decline in terms of global affairs if you don't have safety on the high seas and the
us is the only country that can even pretend to guarantee that the steps that allow for modern
manufacturing supply chains the complexity that brings us the goods that we use every day that
breaks down in that sort of environment individual countries will feel forced or out of a sense of
opportunity to take matters into their own hands and try to generate regional manufacturing hubs
regional spheres of influence the problem is that the resources you need to fuel a
modern industrialized post-globalist world are not equally spread out around the world they're very
concentrated so oil in the persian gulf cobalt in congo nickel and northern russia for example
not everyone can reach everything the united states should be pretty much okay because we're
going to be combining the western hemisphere with maybe the japanese in southeast asia
but for everyone else you're looking at sharply truncated capacity to access the inputs that
allow modern life to happen so we're seeing some of this going on right now with the ukraine war
there are a number of countries
who are completely reliant on globalization to allow them to import energy china is probably at
the top of that list and in a world where russian crude is going offline bit by bit that means the
entire map of where crude can go is going to reshuffle so it's probably gonna look something
like this as the russian crude falls offline the europeans who are the primary customer are going
to go back and re-interface with countries closer to them that they have better relations with
primarily former colonies that's north africa and west africa there's enough there plus norway to
supply the europeans but that means that russian crude is going offline and north and west african
crude is going offline that means there's not enough left to go to east asia now the japanese
have a navy they can reach the western hemisphere work with the americans still get supplies in
but china can't china is a good example of a country that is absolutely screwed from this new
sort of environment they've mined most of their own country out and the resources
that they need from further abroad are concentrating certain footprints that the
chinese can't reach so china and a lot of countries in the broader world
will not be able to access affordable and ample energy supplies to maintain their current system
and they also can't reach the cobalt and the nickel and the copper that is needed
to maybe try their hand at the green transition and that sort of environment you're not just
looking at a trade breakdown in east asia you're in a population bust you're looking at a loss of
the inputs that are necessary to maintain today's economy much less the future one
and that suggests a screaming reverse and economic activity and a de-industrialization of the system
that doesn't simply make the chinese no longer rich it puts the chinese in an environment where
they have to go back to subsistence rice paddy agriculture just to prevent their
population from dying out some version of this is going to play out in large parts of the world
i'm specifically concerned with sub-saharan africa north and north north africa and the middle east
a little bit in southeast asia i'm sorry a little bit in south asia and absolutely in central europe
uh let's start with the demographic picture since we've already kind of established that
the one child policy has been in place for 40 years and that means that the chinese
are running out of 30 year olds that's just how math works anyone who suggests that the
chinese think long term or good at math really needs to take a closer look at their system
also with the more recent census data that has come out they they are now admitting grudgingly
that they've overcounted their population by in excess of a hundred million people now the chinese
system as of two years ago before this new census data had come out they were already the fastest
aging and fastest demographically collapsing country in human history and now with the new data
it suggests that the chinese population will be less than half of its current size as soon as
2050. so just from a demographic point of view this is the last decade of china as a unified
nation state they're a dead man walking um let's go beyond that okay one belt one road this is a uh
an outcome of something the chinese do with their financial system so we give the fed a lot of crack
a crap for uh monetizing and printing currency and all that good stuff and on average we we do print
a substantial amount but the us dollar is used as the lubricant for the world's largest economy we
have another 20 odd currencies in the wider world that are linked to it and it is the sole currency
for international trade and the primary currency in terms of store of value as such the american
increase in the money supply actually broadly correlates with those other factors combined
so do we play a little fast and loose with the rules sure will we pay for that down the road
probably but the chinese which is not the chinese you want is neither the store of value
nor the currency of exchange and yet the chinese in any given month print two to five times as
much currency as we do their overall money supply is over twice what ours is and it's
not internationally exchanged at all they use that money to lubricate their systems to force
capital into any company that might be able to employ people so for us the money supply
is primarily an economic issue for them it's a political one and it's treated appropriately
and that means that the chinese are brimming with huge volumes of liquidity and if you're someone in
the know in china and you have access to that it's a gold mine because if you can get that
currency out and exchange it for something else anything else even if the price is ridiculous
that means you've gotten some capital flight out and you have your rainy day fund
that's exactly what one belt one road is on a global basis whenever you see the chinese bidding
eight billion dollars for something that's only worth two billion dollars that is not a sign of
national strength that is a sign of a corrupt bureaucrat who is establishing his nest egg
and they've now done that on a global basis now there's lots of other impacts from this over
financialization this hyper nationalization system but overall it does mean that each individual
chinese company of size could not survive in the global environment unless that money keeps coming
other countries have tried various versions of this japan probably is at the top of that list
they're the ones who kind of designed the model but eventually you have sufficient exposure
that you can't compete and you start going down a japanese style economic melees that in this case
has lasted 30 35 years already and the chinese excuse me the japanese economy today is about the
same size that it was in 1994 before the decline really got going that is the best case scenario
for the future of china a slow long stagnation but there's a lot of reasons to expect it to
be a lot worse wow this is really fascinating this is why i love reading your books and why
i think everybody should go pre-order buy your book right now we're going to have a link down
in the description i've gotten a lot out of this conversation could talk to you for uh for hours
so peter thank you so much for joining us really appreciate it yeah it's our pleasure my pleasure
you