Erik Bethel - World Bank Director | #144

[Music]. Eric bethl welcome to the show glad to. be here I have been looking forward to. this since uh General Spalding. introduced us I believe what a couple. months back yep y so great guy thank you. for coming I'm glad to be here but um so. we have a lot to talk about I want to. cover a little bit of your life story. and then move into World Bank which. we'll get to and and uh and some.

geopolitics stuff all right but uh. everybody starts off with an. introduction so here we. go Eric bethl you're a global Finance. professional with experience in the. private and public SE sectors in 2020. you were nominated to serve as the US. ambassador to the Republic of Panama you. were nominated by the president and. confirmed unanimously by the Senate to. represent the United States stes at the.

World Bank at the World Bank you. participated in the analysis and. deployment of over 100 billion doar of. capital through grants loans Equity. Investments and other Financial products. your previously the managing director at. Franklin Templeton Investments you also. held a variety of Emerging Markets. focused private equity and Investment. Banking positions at JP Morgan and. Morgan Stanley in both New York and.

Mexico City you are currently a partner. at Mari Mari leam Mari Le baram excuse. me it's it's uh Latin for freedom of the. sea freedom of the sea yeah love. it a venture capital fund focused on. Maritime sustainability you're a husband. a father of three and a devout Christian. as I found out last night and um am I. missing anything I think you got it man. you put me in the higher tax bracket.

unfortunately oh man well that's uh. quite the. introduction very impressive and uh I'm. just ecstatic to have you here glad to. be here thank you and uh you know we had. we were kind of talking about uh General. Spalding in his his Venture with um I. can't s yeah uh the the Harden Telco. equipment company yeah very fascinating.

stuff are you worried about do you worry. about data collection and all that kind. of stuff I mean who. doesn't what do they do with the data. who's they that's the question I don't. yeah who is they where's our data going. what is it and why is it why is it so. intrusive look I think people uh over. the last I would say 10 years perhaps. longer uh believe that uh if. you give yourself let me back up for a.

second um there's a guy um uh uh who who. wrote This Book uh called life after. Google very very interesting book but. basically what he posits is this when. you go on Google which has the entire. body of human knowledge uh and you start. accessing it Google is monetizing you. your search history your Gmail your. everything and what do they do with it. well in the case of Google they sell it. for ad Revenue.

uh which is you know benign but Alexa is. doing the same thing we had an Alexa in. our home and then I realized wait what. what are we doing um why am I. voluntarily giving all of my information. over to someone um and those are us. companies that have legitimate. businesses that are you know selling ads. where I get a little bit more concerned. is when you have um folks like Tik Tok. that are collecting information on your. kids.

and. so the Tik Tok algorithm which they. didn't want to sell so if Tik Tok goes. and gets sold to I don't know Microsoft. or Oracle or who or whatnot the Chinese. government has said the algorithm. doesn't go with it and so my concern um. and uh history will perhaps prove me. right is that when you are looking at a. Tik Tok video it's monitoring your. facial expressions it's the camera's. looking at you it's looking at your.

pupil dilation and it's sending you. videos that elicit the same response and. so after a long enough period of time. they know who you are as an individual. are you a divorced dad you know uh with. three kids are you a 17-year-old that's. you know that's that's troubled and all. of that information is going to a firm. in China called bite dance and who knows. what bite dance is doing with it uh and. who knows if they can eject things in.

the video feeds that make you think a. different way maybe uh make you think a. different way about your country about. your your value system about China maybe. it encourages people to accept the fact. that China is going to win in everything. and we may just as well become. accustomed to that that to me is. frightening I'm less concerned about. Google and Facebook and so forth. although I don't want to voluntarily. give my information away and so what.

I've done um uh o over the last number. of years is I don't use text messages I. use. signal uh even when I call my wife I. speak to her on Signal I use the brave. browser which is phenomenal is that the. best one in my opinion I think it is so. what they've done is uh they've stripped. out all the ads and then you get to opt. in uh in other words if you want to uh. see ads you opt in and when you you uh.

when you do that you can get bit tokens. uh so you can get paid for looking at. ads but if you don't want to look at ads. you don't look at ads and it's the. closest thing we have to a private. browser that's out there interesting I. don't use Google I use duck ducko. although that has its own share of. problems but it's not perfect but it's. it's one of the better ones out there so. that's what I do um because I care about. my privacy and having lived in China for.

8 years uh I'm very concerned about uh. malign influences looking at who I am. it's not like I have anything to hide or. anything but I just don't like it yeah. well I got you a little present you did. I did I did because is it uh black. buffalo dip it is not but it is a. unplugged up phone cool what is this. that is are you familiar with Eric. Prince I am Eric Prince developed a. phone uh with a couple of Partners uh.

one of the guys on the project was on. the development of uh what is that what. is that virus Pegasus okay was uh was on. this project as well but basically that. keeps your data it sounds like so so the. data is stored in the phone I don't know. exactly how it work see where it's made. made in China no just. kidding but um.

I believe it's I believe. it's I think it's so it's like a privacy. phone it is so there's a kill switch on. there so even when you you know when you. turn your phone off people think it's. actually off but it's actually still. what I I just put in my SIM card and it. has a kill switch and so you flip the. switch and it automatically puts a. blocker between the where the battery. connects so nobody can listen inow. instead of having to put it in a faity. box um there's a quick Suite that'll. it's like a little menu that pops up.

and basically what it does is is you can. you can control your VPN and all these. different things from one menu and uh it. won't even if you do download Instagram. Facebook Tik Tok it will not allow those. apps to track your phone when you're not. using the app you can actually that's on. that menu you can block it so anyways I. just thought cool thought you might. appreciate that so A couple of months. ago I met Eric Prince randomly I didn't. know him for and uh I was walking.

through the lobby of a hotel and I see. this dude working on on the computer and. I say to myself gu guy looks like Eric. Prince I didn't think about it I had my. cup of coffee I had a business meeting. and when I went back he was still there. and I stopped him and I said hey are you. Eric Prince he's like yeah it's like hey. nice to meet you man uh what what are. you doing here like you're just like. randomly sitting in the lobby he's like. well I'm I'm countering illegal fishing. and I'm working with a South American. country and uh we're gonna board Chinese.

fishing boats in like I don't know some. country in South America and I thought. okay cool that guy's always up to. something but um but yeah that's that's. uh the unplugged phone so all right. thank you you're welcome but um next. question I got a couple of just random. questions here before we kick it off. with your life story but what is the. World Bank oh boy how much time do we. have does this like a 5 hour one of. these 5 hour interviews I can I can go.

on forever and ever but I'll distill it. to the more more Salient points so I'll. give you the uh The Cliff Notes version. it starts with history uh after World. War II Europe was decimated and so the. United States uh decided to create a. vehicle an institution to originally. that's the origin of it to rebuild. Europe and I think the first loan was to. France um if memory serves and it was. like $100 million. over the years after Europe was rebuilt.

the World Bank moved into another. category which is let's we want to. eliminate poverty and to promote. shared um uh wealth creation uh shared. Prosperity so that was that was the. World Bank and is the World Bank as as I. joined it so what the World Bank does is. is it a private institution no no it's a. it's a multilateral in institution.

that's owned by a bunch of different. countries almost every country in the. world uh with the exception of say like. Cuba North Korea folks like that who. would be the who would be the we the. most shares we are by far and so it's. different than the United Nations that. the UN it's one country one vote right. so a small country and you know some you. know southeast Asia might have the same. vote as the United States at the World. Bank we started out with a very large L. shareholding and that has whittel down I.

think we're at about 16% or so how does. it Whittle down so there's a formula. it's called the dynamic formula it's. basically it basically works like this. um your shareholding is a function of. two factors one is your growth of your. economy your GDP growth and the other is. how much you contribute to the bank it's. 20% based on contribution and 80%.

ballpark my numbers may be off um a. little bit but it's 80% based on how. your your economy. grows so what's concerning is that uh. for years and years and years China's. economy has been on a you know a plane. like that and the United States has sort. of stayed like this and so China has not. contributed very much until recently but. yet their shareholding grew um. exponentially I'm not sure why that is. because we contribute far more than any. other country but it is what it is so.

are they the second largest. shareholder um they would have been uh. but uh but they're not they're probably. and I say would have been because there. were some changes four or five years ago. uh that prevented them from being the. second largest shareholder and it was. most likely for that reason that they. created their own version of the World. Bank called the aib the Asia infrastr. structure Development Bank so they they.

have a competitor to the World Bank um. and that's why they did it most likely. but you know the bigger shareholders are. after the US um uh Japan uh a number of. European countries and it sort of goes. down you know from there and so the the. the mission of the World Bank is. to promote shared uh Prosperity uh and. to eliminate. poverty how do they do that invest in.

countries yeah um so if you think about. the cap stack uh well I'm using. technical terms but if you think about. ways in which you can contribute money. you can do it through loans so the World. Bank can loan money to governments okay. track one track two is you can provide. money in the form of Grants grants are. free money you can provide loans to. companies in certain countries you can. invest in Equity you can provide a loan.

guarantee a loan guarantee is if the. loan doesn't get repaid the World Bank. will guarantee it uh Insurance products. uh so think about everything that you. can think of in finance or or or or. markets and the World Bank does. it and this is to help countries this is. to help countries get out of poverty. what is the World Bank get out of. it cynically I mean no look the World. Bank is a is a phenomen Al institution.

and there are a lot of well-intentioned. people but there are a lot of you know. I'm going to I'm going to go with a with. a number here uh there are probably 13. to 15,000 people full-time at the bank. what they get out of it is a great job. uh and there are probably another 15,000. Consultants uh and so um that's what the. World Bank gets out of it plus there are. a lot of very well-intentioned very good. people working at the bank. who really care about solving poverty um.

they could have gone to the private. sector they could have gone to JP Morgan. or or Goldman Sachs but they said no. this is what I want to do because it's. meaningful to them um but um. sometimes um you know Charlie Munger who. was um Warren Buffett's business partner. for years has this famous quote that. said something like um show me your. incentives and I'll show you the the. outcome and so we.

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helixsleep.com. SRS if you're a desperately poor country. right um you get. grants um grants are free money as I. mentioned earlier but as you move up the. poverty scale and you get yourself out. of poverty as measured by GDP per capita. and a few other factors then you. graduate you don't get the free money. anymore you get into the Loan program.

and so desperately poor countries are. like H do I want the more do I do I want. free money more or do I want to get a. loan so they like don't necessarily want. to. graduate I'm certain people are going to. say oh Eric you're being silly I mean of. course everybody wants to get out of. poverty but um the incentive structure. isn't aligned for that and then once. you're in the Loan. program um you're getting very. inexpensive.

loans the lior whatever the prevailing. rate of interest plus you know a few. basis points right 10 or you know 15. basis points 50 basis points um even 80. is is pretty good that's uh 8% on top of. the prevailing rate that's pretty darn. good but once you graduate out of the. Loan program then you have to go to the. markets and the markets you know price. you at you know 800 basis points over. the prevailing rate so the folks that. are in the the World Bank Loan program. don't want to graduate and so we've.

created a system where everybody wants. to stay in their box and you know they. don't necessarily want to leave and then. many not all but many of the World Bank. employees are like hey you know this is. great I got a great job um and I'm not. really. incented to um you know to change. things and so you know it becomes a. challenge interesting and I say this you. know a little bit with a heavy heart. because what do we all want to do we all.

want to get people out of poverty I mean. there are people that are living on less. than a dollar a day right so what if we. were to create an incentive system not. like the current one but where we. actually reward the individuals at the. bank and we reward the countries for. getting out of poverty fix the. incentives how would you do. that there are a lot of ways um um but. it would it would require a a a. big restructuring of the World.

Bank um I mean you would have to. incentivize the individuals working. there to show results you show me a. result a tangible result after a given. period of time and you get a. reward interesting so so what generally. happens does a country. just I mean I think we see this in our. own country right nobody wants to.

those that don't want to work are not. going to work they're going to take from. the system and so is that kind of what's. Happening. Here look I think it depends it's it's a. country by country basis uh situation um. you have some countries and by the way. not any not every country is either. monolithic uh nor are they you know. they've got election Cycles as well so. you can have good leaders you can have. bad leaders and it's you know every five. or six years you know things may change.

in a given country and sometimes you. have leaders that are really trying to. make a change and they're trying to do. good for their country and the World. Bank can be extremely effective in doing. that in other cases there's a lot of. inertia um and a lot of the world bank. loans have been pre-programmed in you. know years earlier and so um so you. never know what you're going to get and. so the bureaucratic inertia and the. momentum is like oh we just check boxes. and Country X gets a.

loan my beef at the World Bank uh was. really focused on China uh and we can. get into that a little bit later um but. while I was there things have changed. somewhat while I was there China was one. of the largest recipient of world bank. loans really yeah interesting and so I. sort of scratched my head thinking well. wait isn't China the second largest. economy in the world uh aren't they uh. building you know Quantum Communications.

in space uh don't they have the largest. Venture Capital pool like what's going. on here and what I came to realize was. it was part of an. elaborate. ruse uh such that if China gets World. bank loans they're considered a. developing country if you're a. developing country then what then you. get favorable treatment at the World. Trade Organization and the entire. alphabet soup of un agencies including. things like the universal postage Union.

which nobody's ever heard of and nobody. seems to care about but it's actually. important so the universal postage Union. is a one of The Offspring of the UN. system that regulates uh Freight rates. around the world so if you're a. developed country you pay in if you're a. developing country you get paid follow. and so if China is a developing country. then their Freight rates are subsidized. and they can export more wow so that's.

one of a zillion examples um and it's. and it's wrong and so I mean they're. getting paid to ship all the fent andol. supplies. here yeah don't get me started yeah. we'll get you fired up later on that all. right but is there can you name. a is there any particular country that. was a wild success story from the World. Bank maybe I think you can look you most. of central central eastern Europe uh who.

you know 30 years ago were in pretty. Dire Straits and through the help of the. World Bank they are where they are okay. um so those are you know that's exhibit. a for countries that have taken World. bank money done something successful. with it and then moved on okay uh and. many of them are out of the World Bank. they've graduated okay and there's by. the way there's dignity in. graduating yeah staying an impoverished. country for the rest of your existence. is not necessarily you know what I would.

want to do yeah me neither well thank. you for sharing that um one last thing. before we move on I have a uh. subscription account on patreon they're. are top supporters they've been here. since the beginning and uh without them. I wouldn't be sitting here and and. neither would you so one of the things I. do is I offer them the opportunity to. ask the guest a question they had a ton. of questions for you I narrowed it down. to two all right um.

but this is from Craig. Bowden do you see the World Bank the. world going back to a goldback currency. standard no. no this is from Joseph Barnes is there. is there a more Sinister plan for. digital currencies to gain more economic. controls of Americans as a whole is this. part of the Obama administration's plan. for a global government.

economy Central Bank digital. currencies are evil and bad uh in their. current Incarnation as exemplified by. the ecny the Chinese digital currency um. um we could theoretically in the United. States adopt a different type of. currency that provides privacy and. security if it's done the right way. um if it were me I would just stick with.

cash and regular you know bills dollars. and coins but if we were to do a central. bank digital currency the way I would do. it is to create what's known as a bearer. instrument uh which in finance terms. means if you bear it on your body it's. yours right uh which means nobody can. take it away uh and if you could create. a. decentralized this is going to sound. crazy a decentral ized Central Bank. digital currency that provides people.

with freedom and privacy um I think. you've got something what we want to. avoid is a digital currency in the US or. in the western world that basically. um creates a a pseudo benevolent. relationship between the government and. the people and what I mean by pseudo. benevolent is what if we had a currency. that said uh. that monitored your fuel purchases as we.

discussed I think last night well you. drive a truck you know or an SUV well in. the interest of CO2 emissions you can. only fill it up a couple times a month. or if you haven't gotten your 12th covid. booster well maybe your money isn't good. at Walgreens we want to avoid all of. that you want to have people uh to have. agency and autonomy over themselves over. their currency over their shopping. habits you don't want somebody to know.

that you're you know what if you're. buying something at the at the uh. Pharmacy that's private maybe you know. for your one of your kids you don't want. anyone to know that so as long as it's. done that way where you have privacy and. agency in mind great if on the other. hand uh it's designed the way China's. digital currency is designed uh which is. attached to a social credit score which. I can talk about later then it's totally. frightening it's George. Orwell I can't wait to get into that but.

um but we'll start off with where did. you grow up where did I grow up so uh I. grew up in Miami um my mom fled Cuba. when she was very young she was maybe 20. years old with uh two young sisters she. had to flee with basically the clothes. on her back um because they would uh. open up your bag bage at the airport and. take anything of value so she was.

wearing I don't know five dresses one on. top of each other she had a photo album. and a Bible and that's it and she left. with her two young kids went to Miami uh. with her two young sisters um moved to. Miami and waited for my grandparents who. were under house arrest uh my. grandfather was the um uh I guess you. would call him White House correspondent. in this country uh he covered Palo pres.

which is um he was the guy that was in. the presidential Palace covering uh a. lot of the news that came out of there. and so he was under house arrest for a. couple of. years uh my dad was a US Diplomat. stationed in Havana at the time of the. Revolution and um my parents um had met. in Cuba uh at the embassy and uh when. they uh both ended up in Miami and sort. of the early 60s they reconnected.

ultimately got married uh and. um started me started a family and here. I am that is quite the story what kind. of uh Diplomat was your. father great question he was uh the. Press attache at the US Embassy um but. he also relayed a lot of. Intel because being the Press atache me. means that you cover all the newspaper. men you know exactly what's going on in. the country and you can ingest all that.

information and then send it to the. powers that be in Washington so he did. some Intel work uh and um and also you. know the face was he was the Press. atache uh when he left the Diplomatic. service he did a number of things he and. my mom started a business um but it was. unusual growing up in my household. because my dad believed that I need to. speak Spanish Spanish is my mom's native.

language so I didn't really speak. English until I was you know I don't. know in elementary school no kidding. yeah I was in a like English for you. know E ESL like English is a second. language kid they'd look at me and say. Eric what is 4 plus three and I would. say Okay. noo uh so you look like me and and and. and you and you only speak Spanish it's. kind of weird but that's Miami at least. at least it's Miami today now it's. normal in Miami yeah yeah um and so it.

was unusual growing up in the sense that. my dad would go off on trips and he. would come back he he took a trip to. Bolivia and he came back with this kind. of weird looking soccer ball and uh it. was handmade and um uh I asked my mom. what was he doing in Bolivia and she. said oh he was looking for Chay gavara. it's like what wait what like now I say. wait what back then I was like oh. whatever hey thanks for the the soccer. ball so um so yeah that was growing up.

who is that CH Gara yes CH Gara was well. today you see him on you know three qus. of college kids t-shirts but he was. basically an an Argentine Marxist who. accompanied Fidel Castro everywhere and. he was a really bad guy he was a butcher. who shot people at the you know uh Cuban. dissidents uh and um he was a he was a. pretty bad guy and your dad was hunting. him down hunting him down yeah what was.

he going to did he find him um no he was. found somewhere else by other folks but. uh but yeah how old was your mom when. she came to the US. 21 did she pursue her. career interesting so my mom came from a. very conservative uh household and my. grandfather wanted her like most girls. of that era and that time to settle down.

and get married um and uh she said well. what I'd really like to do is I'd like. to. study and he said. study why why aren't you like all of. your other friends getting married and. so somehow she prevailed uh and uh she. got to go to the University of Miami. after two years of that my grandfather. said okay that's enough these Americans. are going to warp your brain it's too. liberal come back so she came back.

grudgingly this is in the 50 what he. saying now yeah and so uh she came back. and she said I want a job at which point. my grandfather said what are you doing. you know this what do you mean you want. a job and the only place he thought that. would be suitable for her was to work at. the US. Embassy so um she worked at the embassy. until the end of the Revolution and uh. and then as I mentioned earlier led to. Miami yep interesting so um the sad.

chapter is that when I was very young. eight or nine my dad passed away and uh. my mom and I I'm an only child you know. were struggling financially big time and. uh you know we lived in uh let's call it. the the bario in in Miami we spent a lot. of time with my grandmother in hiia uh. which is a suburb of Miami that's you. know very blue collar spent a lot of.

time with plumbers and electricians. and by and large the Cuban diaspora and. so I grew up sort of feral in this in. this world of uh of you know. Spanish-speaking uh folks that had had. to flee Cuba because of. Communism uh and it and it really uh. made a lasting impression on me what. communism can do to a country and. destroy a tremendous amount of we wealth. not just physical wealth but also human.

capital uh and people really suffered. and so anyway little by little uh we. sort of moved you know sort of like the. the Jefferson show back in the 70s. moving on up um we um we ended up in a. in another town called Coconut Grove and. then ultimately uh to Coral Gables which. is a reasonably nice suburb and um my. mom decided to start a magazine company. focusing on on you know the airline seat. pocket.

magazines uh working for a um uh uh uh. well initially she was working for a US. company that did I think the magazine. for Delta or United and uh the venzell. and Airline at the time called them up. and these were a bunch of gringos and. they couldn't speak Spanish so they put. her on the phone and said uh you know. hey would you like to do our magazine. and the Gringo said well what do we know. about Venezuela we don't this is out of. our comfort zone so she asked and they.

allowed her to pursue this uh and she. started aboard magazines viasa and then. subsequently she got um um the contract. for the Chilean Airline at the time it. was called Lan Chile fast forward um you. know 20 something years later she had. almost every airline in Latin America. wow 800 million passengers at that time. uh and and it turned out to be very. successful and she did it as a single.

woman. immigrant so she did wow and so I'm I'm. I couldn't be more uh proud of the fact. that a we live in America anybody can. make it uh number two um you know you. can just start a business and and and. flourish and be successful as a woman as. a Latin with no you know she didn't. graduate from college as a sing sing Le. mom like right on wow go America that's.

impressive very impressive yeah so um. but yeah I didn't speak English uh for a. long time. uh see. get how did your dad pass he died of. cancer oh man I'm sorry to hear that. yeah and he was young too so yeah it was. tough yeah I'll bet I'll bet so what. were you into as a.

kid I think like most kids uh I just. hung out with my neighborhood friends uh. we rode dirt bikes and you know made. ramps and crashed and skinned our knees. and broke things. um Hot Wheels cars um uh Sports yeah. yeah I was I was on the uh the swim team. uh uh I was I was also once on the.

soccer team uh unfortunately I was. terrible uh I was I I'll remember this. as if I remember it as if I were you. know as if it were. yesterday uh I think I was 10 years old. and I scored a team I scored a a a goal. for the other team and my mother who was. in the audience was like. cheering she didn't know she's from Cuba. I don't they don't play soccer in Cuba. and so it's very embarrassing but yeah. a lot of sports a lot of just doing what.

kids did back in the you know 70s and. 80s um you're outside most of the time. you're building tree forts and you're. playing with your friends and riding. bikes how was. academics pretty good um I was uh a. little hyperactive as a kid so um. sitting down and listening to boring and. repetitive things was very hard. uh I always got good grades at the time.

in my elementary school they gave you. three scores there was the score that. you got for your actual grades there was. a number that they gave you for effort. and then there was a score that they. gave you for conduct and so I was always. like an A1 C A1 D like my conduct was. always pretty bad but it was just. because I was fidgety and. hyperactive and so um yeah that was hard. yeah. yeah well where did you go from here.

where did I go from where from school. from childhood uh well I uh I was. fortunate enough to get into the Naval. Academy um um I went to well let's back. up I went to a um a high school in Miami. called balen balen was the high school. in Cuba it was the high school actually. Fidel Castro went there. and uh probably you know 5 minutes after.

taking power he kicked the Jesuit. priests out and uh they went to Miami. and they started balen in Miami which is. interesting because even though it's a. Catholic School based in the United. States it reports to the arch dicese of. the Dominican Republic it's not really. an American school no kidding yeah and. most of the kids like me were uh Cuban. or venez today it's a lot of Venezuelans. but but mainly Cuban. and uh as I mentioned my conduct was not.

always superlative and uh I was a little. bit of a troublemaker and my mom at one. point said you know what if you don't. behave I'm going to send you to military. school and sure enough she did uh so I. went to military school and uh it was. awful um and um from there I went to the. Naval Academy why was it awful it's like. you're in jail man um for a kid who's. hyperactive. uh it was a school in the middle of. nowhere uh and um there was really.

nothing to do there there was no no. social activities I did well in school. don't get me wrong I think I was like. number three or four or whatever in the. class um but uh but it was academically. I've always done well right um but it. was um it was a honestly it was a very. very difficult experience as one would. expect military school to be you don't. threaten to send your kids to military. school unless it.

sucks um but um in my you know it was a. school that. was the guidance counseling department. wasn't. um wasn't very um uh. elevated uh they didn't you know I I I. think I was going to end up at a. community college or something I didn't. know where I was going to go I had heard. of these schools like Princeton and. Georgetown and so when the applications. came in I wrote wrote it in I didn't.

even type it I would like to go to. Georgetown cuz it's a good school right. stuff like that no one gave me any. guidance uh and of course I didn't get. in anywhere and I was on the swim team. in uh um in at this school and we swam. against the Naval Academy junior varsity. team and I went to the Naval Academy and. I said wow. I could go here and what I saw at the.

Naval Academy was people who were proud. to serve their country leaders who would. one day be responsible for important. things like the life and death of you. know the people that work for you and I. saw a sense of of. nobility in not just you know it's a. great school and it's and it's got. number of academic accolades but there. was a certain sense of you're doing. something with a higher purpose and that. really appealed to me so uh I.

transitioned from all these other. schools where I wasn't going to get in. anyway or Community College where I. probably would have gotten in and gone. nowhere and uh I applied earnestly to. the Naval Academy I didn't get in the. first time around so they sent me to the. prep school which is in Newport Rhode. Island uh and uh through a lot of hard. work and um um you know a lot of. struggle. uh I made it through and I got to the. Naval.

Academy were you more dedicated to. getting into the Naval Academy or. serving the. country curious um that's a good. question um as a 17-year-old I didn't. know I was I was interested in um in. doing something good for the cause of. humanity okay um I was also toying with. the idea which freaked my mom out of. taking a freighter and going to. Afghanistan and fighting with the.

Northern Alliance and the. mujahedin and um because they were. fighting communism like what did I know. as a. 17-year-old and uh you know my my mom. was understandably not very happy with. that so it all gets jumbled together. patriotism um fighting on the side of. the good guys getting a an education um. and that led me to the naal Academy. where I flourished I did very.

well and after the Naval Academy after. the Naval Academy I served as a as an. officer for for a number of years um. which was great and when my time came to. leave I thought to myself well I can. stay in uh and it's going to be a. 20-year. career uh it was during the Clinton sort. of reel backs of of funding we had won. the Cold War. uh and I had a I had a friend that.

worked on Wall Street and he called me. up one day and said hey if you're. thinking of getting out you should you. know consider this you know you did. really well in school you're good with. numbers you're good at math try it out. and so I took leave for three and a half. weeks um I went to New York I bought a. pair of shoes at pay less uh I bought a. suit I didn't had never owned a suit. before I bought a tie. uh thankfully the Naval Academy teaches. you how to tie ties and uh and there was.

a book the book was called the Naval. Academy business resource directory this. is long before the. internet uh and it highlighted people on. Wall Street you know it was one of these. books there was by city by industry or. whatnot and so I was in New York I. stayed at The Bachelor officer Quarters. on Governor's Island which doesn't exist. anymore uh and I just started cold. calling um probably three qus of your. listeners don't know what a pay phone is. but there I was with a roll of quarters.

calling people uh hi Mr Smith uh I would. like to work for Bear Sterns it it seems. like a great company can I come and meet. with you right it's like Time After Time. After Time and I started getting hits. and um so I'd never been to New York. before it was. overwhelming uh I didn't know what I was. doing I didn't know anything about. Finance like I wanted to be an admiral. right mhm and so my first meeting was. with this guy I won't say the name of.

the firm he was a he was a bond Trader. and he was chewing gum he was like a. Naval Academy class of I forget and uh. he goes so as he's chewing gum and he. has like a I could tell like a five. minute attention span uh what do you. know about bonds and I gave them this. word salad of nothingness well a bond. sir is like a it's a bond-like. instrument with character istics that. reflect the bond.

intensity something like was like. nothing and he looked at me and he. stopped for like 10 seconds he's he. stopped chewing gum and I was like. mortified and he goes and he used the f. bomb in every conceivable way like I. didn't know you could use it as a. preposition as an adverb you know as a. verb and he just like unloaded all of. this on me and said you effing better. effing get to know you f like you don't. know effing anything about anything and. so I walked out of there with my tail. between my legs was my first interview I.

was like oh man this this sucks and of. course there was no internet so how do I. learn so I went to the library uh the. New York Public Library on Fifth Avenue. and I just started reading books uh. understanding Wall Street and taking. notes and so every day I was there for. like 12 hours just grinding like. learning everything I could oh that's. what a bond is okay uh and um by the. time I got to my later interviews um. they sat down with me and they said wow.

you actually you know know what you're. doing and I had studied it um like I. didn't even know that Morgan Stanley was. a financial firm I thought it was a. vacuum cleaner company because I'd heard. of Stanley Steamer you know like you can. steam clean your rugs yeah I didn't I. didn't know anything so what hold on. hold on let's rewind for just a minute. what got you what caught your attention. in the finance world was it the. lifestyle it couldn't have been the job. correct because it was really. serendipitous I had a buddy of mine and.

he's like you should try this out and I. said okay why not it was really that. simple uh and so so I interviewed at. Morgan Stanley they saw that my grades. were good they saw that I had you know. done some leadership stuff in the past. as a naval. officer and then the interesting thing. that happened was you know you look like. a Morgan Stanley Banker but you speak. Spanish and so they tested me out like. with their Latin America team and stuff. and like my Spanish is fluent it's like. as fluent as my English and they said.

dude you're in the Latin America group. and I got a job it was an entry-level. job on Wall Street as an analyst and I. basically was there for three years. grinding it out uh and it's a bear like. I've been through plea summer I've been. through the Naval Academy I've been. through you know at that my my dad. passing away I've been through hardship. that was a bear and it was super hard so. crunching Financial models day in and.

day out uh inflationary accounting doing. models for to account for inflation in. places like. Brazil like the first time I went to. Brazil this was in. '94 the taxi meter didn't tell you how. many at the time it was called a cruo. how many how many you know how much. money you you needed to give them it had. a a chart it would say like C5. and he'd read his chart for the day C5.

okay you owe me this amount of money cuz. inflation was changing every day mhm and. so um so I had to do models to account. for inflationary accounting and I had no. training in uh in finance at the Naval. Academy I took economics I was an econ. major but that doesn't prepare you for a. lot of this stuff and by the time I got. out of that it was like I mean I'm not. going it's like the mental equivalent of. going to buds for for 3 years uh. sleeping under your desk for you know.

yeah it was it was hard wow did you. enjoy it I did um I did I really did I I. learned a. lot and I have a philosophy which I. carry to this day uh which is um I live. my life with one foot in chaos and one. foot in order and that's how you grow if. you're always in the chaos then it's. just your life is crazy right and if. you're always in order well then.

everything is just hum drum and very. boring so if you're able to straddle. both it's where you grow at that point. in my life I was more in the a little. bit more in the chaos and I was growing. exponentially and so by the time I got. out of Morgan Stanley I actually knew a. lot and so I had traveled throughout. Latin America I had worked on billions. and billions worth of deals again in a. very low capacity. uh in some cases I was carrying bags for. the managing director in other cases I.

was doing PowerPoints in other cases I. was running the whole model right the. Excel. spreadsheet so it was a phenomenal. experience and that got me into business. school where'd you go to Business School. uh I went to Wharton nice y nice what. did you what about business did you. study at warten was a finance major like. most people uh and um what did you want. to go do did you know I didn't really. know uh but there's a there's a path uh.

there's a Glide path from a a Morgan. Stanley which is where I worked through. to business school and then onto private. equity and Venture Capital so I knew I. wanted to be at the intersection of uh. finance and developing markets because. that's where I felt comfortable and. that's what I did how did you like. Wharton it was great Wharton was. phenomenal um I had classmates from all. over the world I spent most of my time.

with my Latin American classmates. because I felt a lot of affinity to them. I had lived in Mexico for um I I was at. the Morgan Stanley Mexico office for a. year my Mexican classmates were. fantastic as were you know the. argentines and the Chileans and so forth. um at the time interestingly I had a few. classmates from Venezuela and Hugo. Chavez had taken over the the Reigns in. Venezuela and I would hear this guy talk.

Hugo Chavez was a very bad guy uh as is. his. successor um and and I said to my. Venezuelan. classmates this guy sounds a lot like. Fidel Castro and they would say oh. please you know we have a constitution. that'll never happen in Venezuela the. Cuba thing oh please Cuba's an island. we're a real country we have all this. oil I said all right well uh what you've. seen since then is Venezuela is now at. the bottom of the barrel uh and they.

were. producing three to four times the amount. of oil you know 20 years ago than they. are today they adopted a socialist model. uh they nationalize pretty much. everything and it's a basket case yeah. the fact that it even works today. Venezuela there was a time where they. had like a million per inflation. something like that the fact that it. works is Testament to how much oil they. have in the ground which is more than. Saudi Arabia they should not be a poor.

country it's just that they're managed. by they have that much oh yeah I had no. idea oh. yeah they're just managed by num skulls. how quick did that. happen you know it's a it's been a. gradual decline um but certainly over. the last 20 years in 20 years they went. from 3 million barrels a day to I'm. going to go with like 700. thousand um and and what they do is they.

do stupid things like uh they give. 100,000 barrels a day to Cuba basically. for free and Cuba goes thanks guys and. then they sell it in the open market and. that's how Cuba generates Revenue are. you serious. yeah why do they do that cuz Cuba's an. ally uh plus maduro's team is doesn't. sound like an ally well what the the. Cuban special forces are all over. Venezuela okay um the you know Maduro. who's the new guy his security detail is.

a lot of them are Cuban and he himself. was sent by his communist dad to Cuba. when he was a teenager to study. so um the Cubans are actively involved. in almost every facet of the Venezuelan. political apparatus interesting I had no. idea wow wow. so warten back to yeah so Wharton was. great um and uh met a lot of met a lot.

of dear friends. um you know since I had already done a. lot of accounting and. finance um it was that that part was. less relevant but I learned other things. you know uh marketing and sales and. things like that things that you need in. business and um from there I went to JP. Morgan uh and you know sort of never. looked back I've stayed for the last 20. years I've stayed in the world of. finance and where Finance intersects.

with um with emerging markets and. um ultimately that brought me to China. what is an Emerging Market an Emerging. Market I think that's the non that's the. non-pc term now it's called developing. markets it's basically so you have. Western Europe Australia Japan the US. Canada countries like that those are the. so-called developed World Market markets. and then there's everything else and. there are great Asians right so you have.

um Mexico or Brazil that might be you. know closer to us Chile is certainly. closer to a developed country I think. Chile is considered a developed country. now and then countries that are further. away uh so yeah okay and so then you. went to. China yeah so um I you know through a. friend I was introduced to uh a guy an. american guy that ran it created the. first private Equity Fund in China in.

1982 or something and uh so we met and. we developed a friendship me and this. this guy he's probably in his 70s and I. thought what an interesting dude uh and. his background was even more interesting. he was a uh a CIA uh asset back in the. 70s who was who would dress up as a. hippie and go to North Vietnam to and to. pose and take selfies or whatever the. equivalent of that time was with the um.

North Vietnamese artillery and geolocate. them and then sort of go back and then. somehow those. those those installations would would. disappear uh he moved to Hong Kong and. uh started a business with uh I want to. say the first like Bank of. Dallas making dipping the toe dipping. their toes into China uh and then he. started a private Equity Fund and I. thought wow what a super interesting guy.

uh and so we developed a uh um a very. cordial you know friendship and. relationship and one day he said Hey. listen would you be interested in um in. coming to work for. me and um I thought about it I thought. wow what a great adventure to go to the. biggest developing country back then it. was a developing country today it's not. uh what an opportunity and so uh.

mentally I jumped on it uh but of course. I had to consult my wife who was six. months pregnant with our first kid we. were living in carmell California uh. where I was working for a um a family. office a family office is basically uh a. high net worth individual or. individuals uh and I was entrusted with. making Investments for them living a. very comfortable life in Carmel I was on. the city. council uh and um the thought of moving.

to China was pretty radical uh but again. back to order and disorder my life was. very orderly and I was kind of bored to. be honest with you I was just going to. ask you you don't seem like the kind of. guy that's. um going to settle for that no I'm I I'm. pretty much Redline everything I do. which is it it it could be bad but. whatever it's I just I was just wired I. was like wired crazy like.

yeah how long did that gig last which. one the uh the city council gig or the. China gig not I'm backing up from China. uh the the. the managing people's money gig couple. years couple years is that when you met. your wife yeah how did you meet your. wife so I met her at a car show in. Pebble Beach uh and. because I was on the city council in. Carmel which which maybe I should back.

back up for a second um prior to working. for a family office uh I got a call from. uh a friend of mine I was at JP Morgan. uh at the time and uh my friend had left. his Wall Street position to take a job. uh in a uh in a startup in Silicon. Valley he calls him up and he says dude. you got to join me this company is like. a rocket ship and we're going to we're g. to make zillions of dollars and if you. go back in time to you know 98 99 it was.

a bonanza of activity in Silicon Valley. and I didn't want to miss out I didn't. want to sort of have this lingering. thought that man I could have done. something but I. didn't so um I moved out to California. uh and within probably 6 months of me. being at this company we sold for half a. billion dollars uh to yeah to a a. Microsoft backed company and I was like.

score um and so of course I had options. and I said well I'm going to go and move. to Carmel unfortunately those options. there they were restricted shares what. that means is I couldn't sell them and. so from March of 2000 when we sold the. company till the time I could sell them. they basically were rendered completely. worthless which is you know humbly. uh but whatever you got to pick yourself.

up and do something else but anyway. there I was in Carmel and um I didn't. know a soul uh and I said well maybe I. should run for office why not so um I. registered put on a Blazer went knocking. door too and hi I'm Eric bethl I'd love. to be your representative at the city. council and some people were very. pleasant some people were not uh who who. are you like I don't know you or some. one day Betty White opened the door you. know like from The Golden Girls I was.

like. whoa uh and um yeah and and I thought so. um the the big Advocate you want on your. on your side at least in carmell is. Clint Eastwood and I unfortunately had. had a very bad runin uh with him and so. I was concerned that he wouldn't support. me so but he did. he did he did support me yeah good for. him good for you yeah so yeah my runin.

was um I had a I had at the time a crazy. dog who was probably crazier than than I. was at the time um who was a Labrador. and um I was at the Mission Ranch which. is a it's a it's a Clint Eastwood Resort. think of think of a beautiful Farmhouse. looking at at a bu IC Meadow scene with. sheep you know eating grass and people.

sipping their Chardonnay and uh I opened. the door of my truck and the dog ran out. and he stopped and he looked at the. sheep and his laser beam eyes just went. straight for them next thing you know. the Sheep were like in a state of. disarray running everywhere the guests. at Mission Ranch were probably spilling. their Chardonnay on each other you know. the the Sheep disappeared my dog is like. attacking them and so Clint Eastwood. came out and said hey buddy see your dog. here again I'm going to shoot. him so uh I was like I got to go back to.

this guy and tell him I'm running for. city council anyway so sorry to to go on. these crazy sidebars I um I went to uh I. was invited to uh uh this thing called. the concour de Elegance which is a car. show in Pebble Beach where they have. these a you know antique cars you know. one-of-a-kind Bugatti from you know 1932. and the guy's like polishing the fender. and stuff and uh really really nice uh.

and my wife was there with some friends. uh we met I went hello she went hi and. we ended up meeting through our. Collective group of friends later uh a. group of us went out and had dinner that. night uh a few weeks later you know we. we got into in. communication uh and I said well hey are. you dating anybody and she's like no not. right now and I said what are you doing. tomorrow night and so I took her out on.

a date. and I don't know 18 months later we were. married two years later we moved to. China wow wow you want to go to China. little did she know what she was getting. into well I mean she was you know 6. months pregnant we're living in Carmel. which is like a place that doesn't suck. it's legitimately objectively by any. account it's really nice. uh and uh I had to you know somehow I.

prevailed um so we took a fact-f finding. trip to China a few months before and we. stayed at a you know a nice hotel we got. to see you know the hospital if she's. going to have a baby in China this is. what it'd be like it's the expat. hospital it was very. nice very nice like uh and so she felt a. lot more comfortable let's look at. housing what does the housing look like. because you know one has an image of. what housing is daily life is like in. China but at the time China had like.

millions of expats and I mean Millions. really yeah and so what year is this I'm. sorry it's in like. 0405 time. frame and so um yeah we went to uh to. visit some friends that I had down there. they lived very nicely um a lot of them. were on expat packages uh with. multinational firms. uh and and it was good it was very good. living and it was at the time uh where.

everybody myself included thought that. China was going to develop just like a. big version of South Korea or a big. version of Japan just 10 times bigger. and it looked like it was heading in. that. trajectory uh and you know I'll say it. now I was wrong uh it at some point they. did a 180 and they said all right now. it's our turn and the United States is a. speed bump on our mission to Global.

dominance and that's sort of that's when. I had my sort of escape the matrix. moment I popped out of my pod and said. whoa wait wait what's going on here and. how many how long did it take for that. to happen I think it was a gradual. Evolution when I first got there um. everybody in China was super polite very. nice and by the way I have no anima at. all uh the Chinese people are lovely. people but I started noticing kind of a.

phase shift in the way um people began. treating Americans and foreigners. generally initially it was hey we're. here to learn we're very humble teach us. about your manufacturing oh wait what. does that computer do um and I had. friends that were. noticing um things that were a little. off kilter so I had a friend that worked. at um a um a a joint venture of General. Motors. JV where um their Chinese JV partner was.

basically stealing everything and so. they were playing gorilla Warfare at the. factory like oh don't look at those. servers don't look at this manufacturing. capability well next thing you know. China creates a competitor to General. Motors uh the company was called Cherry. uh and they took the Chevy Spark. blueprints like down to the rivet and. created the Cherry automobile notice. that there's onlet difference between.

Chevy and. Cherry like even the name wow and so. that was starting to happen um and uh. and it was and it just got worse um then. what are some of the other ones that you. saw well I mean look we had a guy I was. on the uh finance committee at the. American Chamber of Commerce and I'm not. going to say where this guy's company. was from because that's it wouldn't be. proper but a guy came in and he was the. uh Chief technology officer for let's. just say a big Manufacturing Company in.

the. US and he sat down with us in the. committee and said you know the. strangest thing happened I plugged into. the ethernet at my hotel and my computer. just died and then when I resuscitated. it my hard drive was empty and I was. like dude really you brought your hard. drive with all your intellectual. property to. China um and at the time nobody really. thought about it um but I saw this.

happening every day every single. day um I saw the craziest things in. China what else did you. see well um so did let me did you know. did you have I mean obviously you did. the way that you just described that. incident your reaction to it but how did. you know. that they were sucking all the. information out of the devices and and. and kind of the because I started.

developing relationships with um a lot. of folks in China um and um you know. talk to them and the operating. philosophy is well if it's not bolted. down I'm just going to take. it um they're just letting us have all. this stuff for free. thanks but there's something more. fundamental and that is what happened in. China after Chairman Mao took over is.

they had this thing called the Great. Leap Forward and then they had the. cultural revolution and they eradicated. any semblance of. morality from society and so they. replaced Ma's Little Red Book which was. their religion at the time with success. power success and the new little G Gods. became famo and Gucci and lvmh and. success and. Harvard and um um when you're untethered.

from any sort of moral core you'll do. anything to become successful powerful. and you have a billion four or whatever. 1.4 billion people who are just out for. Bear uh looking to make it uh and I. don't begrudge them uh because they're. hardworking very hardworking and. intelligent people but the the the beef. I have is when you don't have a moral.

core you'll do. anything so um here we are we've got a a. kid in China and uh we've got to buy. infant formula and my wife says we're. not buying Chinese milk formula it's. like well you you got to be kidding me. there are like 200 million Chinese kids. here or whatever the number is nope so. every time i' come go to the states I'd. come back with two suitcases you know. Nestle Good Start and she would buy Evan. uh water and I'm just like watching.

dollar bills evaporate thinking it's. like the stupidest thing and it turned. out I want to say in 2007 2008 that. Chinese infant formula companies were. putting a plastic called melamine in the. infant formula that was. poisoning countless children in China. because apparently that melamine. artificially beefed up the. protein um so they could so they could. they basically were cutting corners and.

putting chemicals that were hurting. people so this sounds like the. FDA I don't. know Sor to cut you so um so yeah I i'. I've seen it all I've been you know. screwed over more times uh if I'm not. getting screwed over in China something. is. wrong so if if I'm at the signing. ceremony of a deal and this it's. happened to me on more than one occasion.

you go to let's say you're doing a deal. in some random Province in. China um true story I stayed I went to a. uh I think this was. in um was it in dalion I don't remember. where it was but it was a it was in a. not Shanghai not. Beijing uh and I stayed at this hotel. called the galactic peace hotel which I. thought was funny. um because a lot of the names in China. are very aspirational even though they.

sound sort of silly uh to us so I stay. at the galactic piece hotel and it says. welcome famous American investor Eric. bethl there's like this placard you know. in in in lights right anyway I go to. sleep the next day we're at our signing. ceremony and you walk into a hallway and. you have guys with TV cameras looking at. you you've got two chairs it's very. imposing one with an American flag one. with a Chinese flag the the. municipal um leadership team is there.

you know from this. municipality and uh we're going to sign. the deal and I look at the numbers I. look at the guy that I'm supposed to be. doing the deal with and it was like the. number we were supposed to be paying X. and he had like made it X plus 40% and I. said bro what what's up with this and. he's like well we had to change things. at the last minute you're you're you're. okay with it right and I said. no but but everyone's here like what are.

we going to do uh you have to you have. to sign I was like uh-uh and I walked. out and so I'm walking out uh everyone's. looking at me it's very awkward uh I'm. hoping this isn't going to cause an. incident uh and so I'm about to get in. my car and the guy's like okay okay okay. okay okay we'll go back to your original. number wow welcome to China wow that's a. that's an everyday occurrence now. everyday. occurrence so you see all this and you.

say okay I get it um Everything is. transactional Everything is a. negotiation and um unfortunately many. Americans many people in the west. believe that when you negotiate with. somebody in good faith the other party. is also also has good faith but what if. they don't. and so you can extrapolate that to. everything geopolitics you can expand it.

to doing. business uh and for you know American. investors that are still for whatever. reason doubling down on China I ask. why it just doesn't make any sense I can. understand if 20 years ago you needed to. you know start a business although I am. at this point very opposed to the. wholesale Outsourcing of our industrial. base to what is now an adversarial.

Nation we've outsourced it all and and. that's a problem is there any getting. that back do you. think uh I hope so the good news is some. of it's going to come to Mexico some of. it's going to come to the US but I will. bet you that in every single Fortune 500. company. quietly their boardrooms are saying how. do we quietly extract oursel from the. political risk that we have the. geopolitical risk and is having 70% of.

my pharmaceutical production in China a. good or bad thing I don't know like what. if they decide to cut us off we saw it. with PPE equipment and with masks even. American companies that were making. masks in China were forbidden from. exporting. them wow what was the draw to I mean. what what is it priced is it is it cheap.

in other words why do people go to China. why do they go to China well I mean it. the Chinese made it very attractive so. if you're an American manufacturing. company and you're paying unionized. workers whatever an hour uh let's just. throw out a number 60 80 bucks an hour. on an assembly line uh and they can only. work you know X number of shifts and. you've got occupational health and. safety concerns you've got uh um. regulatory burdens you've got all of. this stuff and that was on us right red.

tape uh and China says I'll give you. free land my people will work for you. know a150 an hour and they'll work. tirelessly and I have like like human. human capital is we're unconstrained. right because and people living in the. peasants in the countryside would come. to the cities and they'd be thrilled to. get a buck 50 or two bucks a day and so. they worked really really hard uh and. they had favorable tax um uh uh uh.

considerations they had free land and it. was very. enticing but over time as China learned. how to do the factory stuff that we were. teaching them to do they would create a. splinter Factory called like almost with. the same name and take all the employees. and then the American company would be. left you know so here's a Chinese. company that's producing the same. product. almost with the same name and then the. Chinese company was competing with you. that you would help start so you started.

seeing a lot of that going. on Wow would they sell it back to the us. as well or was that just for the Chinese. market sometimes sometimes for the. Chinese market sometimes for you know um. Kazakhstan or or South Africa or. whatever but yeah. wow how long were you in China about 8. years what was the end for for you well. the end for me was uh we had uh created. a fund uh I left the firm I was working.

for and um it's a pretty interesting. story. um there were very few Latin American or. Spanish speakers in China uh at the. time uh and um um I had hired a Mexican. intern to work uh at our The Firm I. initially went to go work for uh he was. studying at the China Europe. international business school he's. getting a basically an a master's degree.

and uh we hit it off great guy and um. one day out of the blue he said hey why. don't we create a chamber of commerce. between you know Mexico and Latin. America and China which didn't exist. before and so I said sure why not and so. in our free time uh you know he he. worked very hard to get this thing up. and running and uh little little did we. expect we started getting calls from. people like heads of state from Latin.

America who wanted to come to China and. learn more and be uh involved in the. business Community how can Latin. American multinationals expand like. making tortillas or whatever uh for KFC. in China that kind of. thing and uh and I thought to myself. there's there's got to be a business in. here to link China and Latin America but. gosh what could it be what could it be. and um it uh it dawned on us one day.

when a large Chinese Mining Company came. to us and said hey we want to invest in. a mine in Chile but we don't know what. we're doing can you help us at which. point like many light bulbs went off and. we said wait China is going to invest. overseas cuz they need natural resources. and we looked at each other and we're. like wow let's let's start a business. around. this and so I approached my boss at the. time and I said hey why don't we start a.

fund to invest in. overseas um you know Africa Latin. America whatever uh natural resource. companies because China needs them. because China didn't win the geological. lottery so uh my boss said yeah I've. been in China a long time sunny boy and. I don't see them really going overseas. that's not their their thing they're the. Middle. Kingdom and so we said all right we took. a flyer and we started a company to do.

this uh and we uh raised some Capital. got together a team uh and um uh. ultimately were able to invest in a few. things and the uh interamerican. Development Bank and the China export. import Bank gave us a mandate to go and. like they gave us a mandate and money to. go out and raise a big fund and the. money was like a lot uh in the you know. hundreds of millions of dollars and so.

with that uh we actually became a real. thing and we ultimately forged a. relationship with Franklin Templeton uh. that absorbed uh this business and. Franklin Templeton said hey dude why are. you like investing in Latin America and. places like that but you're living in. Shanghai and so come to Miami where we. run our Latin American Business and uh. and run it from there I went home and I. told my wife and she was like thank God.

she thought it was going to be a. two-year gig and it turned out to be. like eight years uh so she was ready. ready to come back and so the the um. incredible you know Serendipity and pro. Providence was that I came full circle. uh I left Miami years and years and. years back and I come back to Miami me. and I bought a house like six blocks. from the one that my mom lives in and so. she of course is thrilled she gets to.

see the grandkids she doesn't have to. fly you know 25 hours to see them uh and. um and it's been great good for you I am. curious how would you bring back. Manufacturing in the US I mean I have a. have a friend a good friend his name is. Rob Luna he's an investment guy and he. always says money goes where it's. appreciated and with all the red tape. here and all the taxes how how how would. we bring manufacturing back to the US.

well I think you answered part of it um. we have to make it. attractive uh particularly in the. so-called flyover states the US can't. just be New York and Boston and you know. the Bay Area as the or La as the driving. factors of our economy everything in the. middle has to be. rebuilt uh and you do that through uh. favorable incentives like taxes like. land like just what you know similar to. what other countries are doing energy is.

very important I mean how would you give. land everything's owned already not. necessarily um I'm sure you have. municipalities uh throughout the country. that are sitting on Parcels of land that. are vacant uh or derel factories that. are vacant uh that can be. repurposed the the other important thing. is energy right now we have a and and. it's going to grow an energy deficit so. if you think about things like ai ai.

uses as we all know a lot of compute. power and that compute requires. hyperscalers and data centers and those. data centers require a ton of power and. right now unless we build it uh those AI. data centers are going to go elsewhere. so we need a lot of electricity we need. a lot of you know we land we need um. work programs cuz we've forgotten how to. bend. metal and and there has to be an.

understanding that there's dignity like. I grew up around like bluecollar workers. uh there's dignity in that uh and so uh. teaching our kids that you don't have to. be a YouTube influencer but you can. actually do something where you're. working with your hands mhm we need to. fix our education system such that um we. train people to go in different. professions European countries are very. good at this they have apprenticeship. programs in places like Germany where if.

you're a carpenter you're like a good. Carpenter and you spend years and years. perfecting your craft we don't have that. in the United States in the same way so. there has to be a wellth thought out. plan but it has to be holistic right it. can't just be uh I'm going to give you. tax breaks it's not going to do it do. you have can we dive into some of these. sure the land for example if it's who.

owns that factory and how would it be. how would it be look this is all. hypothetical okay um but let's assume. you know you've got a place like uh you. know St Louis Missouri St Louis Missouri. uh I'm certain that when industry left. uh you have vacant Parcels of land that. somehow were absorbed Oran gifted or. whatever to the municipality okay uh I'm. guessing look again this is all.

theoretical if if the if the city of St. Louis or Detroit or akan or whatever uh. could take that land and say I'm going. to bring in Industry uh and let's figure. out some Revenue share we're going to. make it enticing for you to come here we. want to create jobs uh we want to. rebuild our our ecosystem of. manufacturing we're going to give you. tax breaks but you got to give us. something as well in addition to. hopefully the workers that'll be there.

generating tax revenue maybe the company. can also share in its wealth creation. with the city and then the city would. then hopefully in an Ideal World be able. to take that money and say I'm going to. create new programs training programs. I'm going to fix our high schools to you. know there's a there's a whole lot of. virtuous circling that can take place. let's talk about energy I mean are you. aware of how weak our power grid system. is it's pretty bad how would we how.

would we develop more energy I. mean from everything I've been told and. read into and discussed on this show. through through numerous. interviews we. are on the verge it sounds like of the. grid going. down how would we fix that and develop. more energy there's there's a lot to. unpack there there's a there's a there's. an element that we can discuss that.

relates to National Security there's an. element that relates to power generation. there's another element that relates to. you know transmission and distribution. I'll begin with the national security. stuff um we have a vast preponderance of. our electricity Transformers especially. the large ones that are Chinese M okay. um it wouldn't surprise me if those. Chinese Transformers had a back door and. they could be turned.

off we don't even check them that is. super dangerous and uh and we need and. um I I tend to stay out of political. discussions but I sort of scratched my. head when one of the first executive. orders in the Biden Administration was. to allow for Chinese electricity. Transformers and the prevailing thought. was oh these are commoditized products. you know who cares. and you know certainly the electricity. companies wanted them because they were. cheap right and they're looking for. their bottom line and the bottom line.

reflects in their share price and the. share price reflects in the CEO's you. know uh. compensation I get it but uh I think we. need to do a very deep dive on where. we're vulnerable and it's not just in. our electricity. Transformers our cons our Port cranes. are also vulnerable those that are made. in China and there are a lot of other. vulner abilities that you know we. haven't even thought about water supply. uh. sanitation and so um yeah like the.

colonial pipeline that was just uh those. are that was the appetizer for um other. things that could happen and so there's. a national security threat we need to. fix that um but we'll table that for a. second on the power generation side. um we are endowed with some of the best. energy resources in the world we have. oil we have natural gas and a lot of it.

um we have all the minerals that we need. to make you know electricity. lines um but we just don't have the will. to exp I mean we were a net energy. exporter uh you know several years ago. and now we're I don't know where we are. uh but the trend line isn't what it used. to be. um and I don't I don't really have a lot. of Heartache about transitioning from.

fossil fuels to renewable sources at all. in fact my wife has a Tesla we have. solar panels on my. roof um and that's great the problem is. we have to be intellectually honest. about how these things work so when you. have a giant solar farm or a giant wind. turbine Farm uh what happens when the. sun isn't shin shining what happens when. the wind isn't turning the turbine so.

that's a problem and then you have to. think about Baseline power if I'm a if. I'm a manufacturing company I can't just. rely on power like oh it's sunny today I. can start my manufacturing process you. need Baseline power and so to to get. Baseline power one of the solutions is. to create battery storage you need to. have battery storage right such that. when the wind doesn't blow you still. have power. um now to me there's a Stupify level of.

intellectual dishonesty when it comes to. the green energy World while I agree. that we should. transition I'm not going to dispute that. what we're doing is where if we were to. flip the green switch tomorrow we become. a we give. China the ability to become the OPEC. cartel of one in other words. China produces the vast preponderance of. our solar panels 90% of the photovoltaic.

material that goes into a solar panel is. made by ethnic minorities in China. enslave factories these minorities are. called the Wagers they're not ethnically. Chinese. um uh and the Chinese are putting them. in labor camps for making solar panels. so do we believe in human rights or do. we believe believe in you know climate. change hopefully it's. both um and then there's the issue of.

battery storage who makes the batteries. 70% of the refined lithium for lithium. ion batteries comes from. China 90% of the well 100% of the Cobalt. pretty much comes from Africa where like. seveny olds are in mines digging stuff. up which is awful it all gets refined in. China. um the rare earth magnets for wind T. turbines are all made in China uh and. the list goes on uh and by the way to.

make a solar panel uh what are you doing. China is burning coal from coal fired. power plants and they're building like. you know two new cold fired plants a. month wow to run. electricity to make a solar panel where. they use you know silicon tetrafluoride. and hydrofluoric acid to make a solar. panel that gets exported to the. developed world and we're like oh we're. so. good well wait a second what are we.

doing and so I think we need to. reshore uh a lot of that manufacturing. activity to the United States such that. as we make this transition from fossil. fuels into something else which by the. way should include nuclear uh we do it. intelligently and we're not beholden to. one supplier of everything that's super. dangerous where do they get the lithium. from so lithium is produced in one of. two ways um there's there are hard rock.

deposits the deposit is called spine and. they sort of mash it up and turn it into. a powder and then run a chemistry. experiment and separate all the the. things out of it typically that's done. in places like Australia um in South. America they have uh what are known as. salar deposits so think of the Great. Salt Lake in Utah. now imagine that going on that's 100. times bigger in places like Bolivia.

Bolivia has a Salt Flat called. uuni that sits you can see it from space. it's like this white dot in the middle. of the country um and uh it's reputed to. have 50% of the world's lithium and so. with the way 50% yeah and so the way you. you you process that is underneath the. crust you you have uh saloa I don't know. how you say that in English like a like. a salty mushy water and you basically.

drill stick a a straw in there pull pull. out the liquid and then you bake it in. the sun till it turns into a powder and. then it becomes a chemistry experiment. you separate the Magnesium from the. lithium and. stuff um the Chinese are basically. taking all of that and refining it in. China how many lithium. deposits do they have control of. throughout the world do you have any. idea it's not a question of the.

controlling the lithium deposit if they. are the buyer of all the lithium they. don't need to control the deposit. although they do have some don't get me. wrong they have lithium deposits around. the world but let's assume if you're a a. random Mining Company um and your only. buyer is China and China sets the price. you're a price taker so they can control. you without having to actually control. the mine okay I hope you I hope I'm. wrong here but it is my understanding. that China is investing in all these.

countries Afghanistan's one with from. what I understand uh very rich lithium. supply and copper and they're putting in. the infrastructure so that the Afghans. can mine that lithium and give it to. give it or sell it to China so would. 100% would that be control of that. mine because they put the infrastructure. look there are a lot of ways to control. things without actually having to. control them so um if you control the.

erass from the mine uh and you own the. road great uh if you've bought out the. government of a given country that's you. know check uh and if you are the buyer. of everything that that country. produces do you not control the country. you don't have to put a single people's. Liberation Army soldier on the ground. when you can just control the country. through economics that's.

that's better put but that's what I was. getting at is is just so they control. who they sell to as well correct yeah so. if the US wanted to go and buy lithium. from Bolivia or Afghanistan or Mexico. and China says. no well we can't because let's take. let's use rare Earths as an example. example. um rare Earths are not necessarily rare. um let me explain what these are this if.

you look at the periodic table if you. remember from chemistry there are these. two lines on the bottom that are kind of. separated from everything those are the. rare Earths there are light and there. are heavy rare Earths typically they're. found in deposits uh that contain a lot. of things right so you pull them out of. the ground and then you have to separate. the uh lanum from the. dysprosium um and unfortunately we don't. have with the exception of one company.

called Mountain Pass OR MP materials we. only have one company that can process. Rare Earth elements in the United States. and they do let's call it primary. processing but then you have to sell to. the magnet companies and whatever and. that they're all in China so here we. have a rare earth processor the only one. in America and they have no customers. other than China I mean I'm you know. maybe they have a few but it's China is. the vast bulk of of their customers so.

in other in other words if you wanted to. have a. robust um ecosystem for whether it's. lithium rare Earths or whatnot you need. to have the battery. company the cathode company the anode. company the people that create the the. shell that the battery lives in the. technology ecosystem that's doing. research and development to make these. batteries better you need to control the. processing uh you need to have um.

primary secondary tertiary processing so. that you can make battery grade lithium. which we really don't have in the United. States then all the way over here you've. got the mine right we can buy the mine. but if we don't have anything else we're. still dependent on China you follow MH. mhm I. do the power grid stuff and the in in. the man it all scares the hell out of me. the power grid stuff you know um AI is a.

big thing and AI is going to be a big. thing for as long as we're alive it's. only going to get better and like I said. before AI requires huge amounts of power. I think McKenzie Consulting uh wrote a a. report recently that we're going to need. something like 30 to 50 gigawatts of. power um you know over the next say 10. years for AI. alone to put it in context um a big. nuclear plant big like a big westing.

house plant like we have in in Miami. that runs you know a lot of our grid is. about 1 to one and a half GW we're going. to need 50 GW for AI data centers and if. we're not building them guess what. they're going to Abu Dhabi God forbid. China they're going to go elsewhere so. we really need to up our game. uh when it comes to building new. facilities and that's not happening at. all is it it's happening uh but in the.

case of say um nuclear power we have. what's known as the NRC the nuclear. Regulatory Commission that's very. onerous and it takes it's going to take. 10 years to build any nuclear. reactor and so how can we compete. China's building 20 yeah as we speak. so we've got to really get our game on. uh when it comes to building uh Power. Generation for AI and also for industry.

I meant you know you mentioned earlier H. how do we get industry back here yeah. sure tax and land and you know job. training but if if you have if you're if. you have to pay 13 to 17 cents a. kilowatt hour for electricity and in. China it's three cents a kilowatt hour. where are you going to go how do we. compete in a global globally competitive. world where our energy costs are three. to four times as much as they are in.

China I don't know it seems impossible. to me no it doesn't it just requires. will it's it's easy all we have to say. is we need more power and we work with. the agencies of course we need to do. make we need to make these in in the in. the right way right we can't just uh. build nuclear plants uh anywhere but the. new nuclear plants are very safe they. now have Pebble bed reactors that uh.

will not create a. Chernobyl um so there are new. technologies out there that make nuclear. very safe you have small modular. reactors that are very safe uh and um. you know we need to do. something because sitting around Naval. gazing and you know bureaucratic inertia. is is going to get us nowhere yeah yeah. War let's take a quick break and uh you. got it come back we'll pick right back.

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questions all right Eric we're back from. the break I would like to part two two. two part two so um I would like to dig. into how you got started at World Bank. how did I get there yeah um gosh I. didn't I don't even know where to begin. so uh I was at Franklin Templeton for a. couple of years uh and uh what is. Franklin Templeton it's a giant mutual. fund company okay uh well it's a giant.

Financial firm that has a big mutual. fund presence and then they've since. bought a bunch of companies that do all. sorts of um alternative strategies like. hedge funds and different types of funds. our fund was in a family of what's known. as private Equity where you invest in. privately companies yeah that's Franklin. Templeton big publicly traded company uh. it's a great firm you know I have.

nothing nothing but good things to say. about Franklin Templeton I have a. feeling I should be talking to you about. the about Black. Rock yeah we can talk about that um. we'll talk about that later we can talk. about. that but yeah Franklin Templeton is a. version of Black Rock uh or any large um. institution financial institution uh. Vanguard Wellington Fidelity there's a. bunch of companies like that but anyway. so um I was thinking of leaving Franklin.

Templeton uh I'm not really made for a. bureaucratic existence uh it just so. happened that Trump uh won the. election and uh I said to myself what. can I do to support this new. Administration I've got some Financial. flexibility um I've got hopefully good. experiences that I can can lend to the. service of my. country uh and um I just started. reaching out to friends I had a friend. that worked on on the transition team uh.

good dude West Point guy and uh and a. few others and I began inserting myself. in in. circles uh and so these are uh many of. these opportunities especially if you. come in from the outside and you don't. have any experience in my case Zero. experience in other than my city council. member thing in Carmel I had no. experience in politics none whatsoever I. didn't know anybody um and so little by.

little I began getting myself introduced. to people who introduced me to others. who introduced me to others and I would. sit down at my desk I'd go back to Miami. and like write these little Bubbles and. say okay you know this guy is like knows. that guy and that guy knows this person. and and so um I had a a very good friend. who said hey you've got to take a look. at The Plum Book. it lists. 4,855 uh appointed jobs in any. Administration it's like the plum Plum.

Book Plum why is it Plum well Back in. the Day little historical uh narrative. for you back in the day it was actually. a book today it's a spreadsheet or. whatever a PDF but back in the day it. was actually a book and the book was. plum. colored so and you can look through it. and say okay uh and it's alphabetical. agriculture you know assistant under. deputy secretary of AG agriculture I. don't know anything about that and so I. spent uh weeks and weeks and weeks.

looking through this Plum Book to find. something that I was qualified. for I naively thought that you needed to. be qualified for a job in Washington um. and have learned since that may maybe. you don't I say it somewhat you know. sarcastically but um anyway I look down. it's like world bank I can do that it's. the world it's. Finance uh so I began circulating myself.

as a you know potential aspirant to to. do the World Bank. job uh and so I had to go through um the. there's a there's a group in Washington. uh it's the HR division of the White. House it's called po it's the. presidential personnel office and sat. down with them and they said hey so you. want this world Bank Gig okay tell us. who you are um are you you know are you. a trump supporter like uh obviously like. why else would I be here and they looked.

at me and they kind of rolled their eyes. and they said well there are a lot of. people that don't like Trump but they. still want a job it's like well I don't. need a job I want to support America. Trump is our president and what can I do. to be helpful that's what I'm here to. do and they said all right cool do you. have an illegal. Nanny no I had to think about that um. have you said anything bad have you. tweeted anything bad about the president. I said no I don't have a Twitter account. you don't have a Twitter account cool. right don't um have you said anything.

that's going to embarrass yourself for. the president and I said no um I'm a. business guy and I'm here to serve they. said all right so I made it through that. hurdle then I had to go through uh a. series of FBI interviews they came to my. house they interviewed my neighbors my. neighbors were calling my wife saying. hey is Eric like on The Wanted list or. something no no no he's he's trying to. get a job in Washington okay cool they. interviewed my nanny uh who um I'm.

fortunate to have the only not the only. but um one of the few American citizen. Nanny she's from Honduras but has a US. passport we pay her social security we. pay her taxes we do everything straight. and by the book and uh the FBI left and. said great you know but they did a very. thorough investigation of Who Am I who. are my friends who are my. neighbors uh and I checked off.

everything uh green light green go uh. next what is an illegal Nanny what is an. undocumented yeah it's like like 3/4 of. the nannies in Miami yeah um probably in. the country yeah. um and that trips up a lot of um Senate. confirmations um and so I mean it's. important look as a rule in life I try.

and do everything by the book so that I. live above reproach and it's you know. and it's consistent with my my faith my. value system uh and I'm Unapologetic. about it um I. think CS Lewis once said that uh I. believe in Christianity the way I. believe that that the sun rises not only. because I see it but because by through. it I see everything else in other words.

the lens through which I view the world. is based on my value system and I want. to do things right so anyway that's me. um good for you a guy with no political. experience uh and uh I went uh through a. a senate confirmation process that was. it's tough uh for anyone so you have to. fill out forums that that ask you. questions like have you ever traveled. overseas uh yeah where did you go so I.

had to dig through my passport and look. at like all the trips I had taken over. the last 15 years imagine like and some. of the passport stamps you know you. couldn't even see them I was like okay. uh I went to Hong Kong on the you know. whatever um next question who did you. meet while overseas. yeah I love that are you kidding me um. and so these were probably forms that. were filled out when people didn't. travel as much you know back in the 50s.

but they just sort of held on to them MH. so my this is a clearance process it's a. clearance process and you know it was uh. you know hundreds of pages of who I met. who I knew and they had to go through. all of that the next stage which was. done in parallel was you have to go and. explain your financial situation oh you. have a trust okay how does the trust. work you have shares in X Y and Z. company oh you you know Mr bethl you. have a uh.

9,412 worth of uh Coca-Cola shares and. you know we think you're going to have. to sell that because you know you might. influence the. stock wait what what. really um okay fine I'll sell it. whatever and so it was like a very. laborious process the culmination of. which was sitting in front of the Senate. Foreign Relations Committee uh with my. family behind me uh my wife my three.

kids my mom who's in her. 80s and I'm thinking to myself I'm. praying to God oh please help me not say. anything. stupid um so um they asked me three or. four questions um I knew what I was. talking about I think they recognized. that I'm a professional and they said. all right you're good uh and uh once you. make it through the Senate Foreign. Relations Committee then you have to go.

to the full senate for a vote and in my. case I was a unanimous consent 100 to. zero which is great in a you know toxic. political environment um and I did the. best I could. to appeal to both sides everyone wants. to be heard right and so if the. Democratic senators wanted to meet with. me and they had uh things that they felt. were important it's my job to listen uh. and to be respectful to everybody uh of.

course I'm a Republican and but I I. think I'm an American before I'm. anything. else so um that process was fine and. then I showed up at the World Bank and. there I was and it's. a monstrous organization that's very. complex where is the World Bank. headquartered Washington Washington yeah. so I bought a an apartment close to the. World Bank I flew on my own dime I kept. my wife and family and everybody in.

Miami and every week I'm going you know. two three times a week back and forth. paid for by me I took a Stupify pay cut. uh to work for the bank but I did it as. a labor of love because I'm here to. serve and uh and it was a great. experience and the World Bank is it's a. it's a wonderful organization with. its flaws that I mentioned earlier uh it. it could be uh repurposed and. recalibrated in a way that uh that where.

it can do its job a lot more effectively. but um do you believe that will. happen it can happen but back let's. rewind to 15 minutes ago to our energy. conversation we can build um we can. build uh power generation capacity in. this country it just requires. will we can recalibrate the world bank. and make it a lot more effective it just. requires leadership and will um and it.

needs to be done in a way that's. respectful because the United States is. one shareholder a big shareholder to be. sure but we have to do it in a way. that's respectful to the other countries. and to make sure that you know it's it's. a multilateral organization with a lot. of moving parts. and you make no friends by being a. jackass or by being a a dictator or. anything you make friends by being a. good guy and so that was what I tried to. do throughout my time at the World.

Bank and. so we can pivot this to some of the. initiatives that I that I started um so. you can imagine that um a lot of money. um the world world bank has a term for. it it's called leakage a lot of money. gets leaked so when you have a $100. million loan that goes to Country X not. 100% of it goes there some of it goes to. elsewhere to Swiss bank accounts and uh.

Consultants that maybe the president's. brother is a consultant and you know not. our president but the president of that. country and so I said to myself um. what's the best thing that I can do to. make the World Bank more transparent and. give money to the people that need it. the people that need it are the poor the. fatherless like me like fatherless kid. who was poor like what can I do to help. people around the world that have no.

drinking water no electricity living on. a dollar a day that's my job right and. how can America be a forc for. good calling out corruption and being. obnoxious about it is not the way to do. it so I thought to myself technology can. play a very important role. here what if for example. we could instead of wiring money to a. finance ministry of a given country what. if we could put that money in a in a.

tokenized form and we can and we can see. the nodes that it goes through to get to. its ultimate destination what if we. blockchain enable that and put it on a. public blockchain and you create. transparency so um that was a project I. worked on and I brought everybody Under. the Sun to uh because my business card. gave me access to a lot of people and so. I I mean I even reached out to vitalic. buan the the guy that founded ethereum.

and he came he showed up at the World. Bank um and you know super smart guy um. I'm going to guess more than a little. autistic um but very smart and he and I. gave a an interview uh I interviewed him. just like we're doing and and we talked. about how blockchain could be beneficial. for the world um I brought in the teams. from Microsoft and from Goldman Sachs. and I spent a lot of time working with.

the World Bank Innovation lab to see. what we can do to leverage Technologies. to make the World Bank more effective. how would blockchain improve the. world well there's a there's a. philosophy that I alluded to earlier. this life after uh Google book uh who. this guy posits that. there's the world of centralized. everything and the world of. decentralized everything in the world of.

centralized everything you have a single. point of failure and a single point of. corruption in other words let's assume. you're doing National IDs for a given. country in a centralized. place if the servers go down or an. asteroid hits the server Farm whatever. you know um it's everything disappears. that's a central point of failure. central point of corruption could be. well maybe they want to disappear. somebody and erase them from the role.

the the the the records of of humanity. you can do that and so decentralization. means that the data lives in lots of. different places and it can't be. corrupted because if one server goes. down the other server still holds that. info and if that server goes down you. know you have hundreds and thousands of. servers in a decentralized way uh and. you can then protect people from um from. autocratic governments autocratic. companies and I think that.

decentralization is the future. for agency Freedom Liberty and. individual autonomy that's my. perspective and so if I can help at the. World Bank to do that and it's if it's. on a public blockchain everybody can see. where the money goes it's phenomenal. I would think you would get a lot of. push back for that am I correct actually. no um a lot of the.

countries uh that were getting World. bank loans especially those that were. led by uh folks that had an enlightened. vision of what they wanted to do many. leaders in Emerging Markets or. developing countries they don't want uh. to be corrupt uh the system around them. is corrupt and there's a lot that they. can't can't do about it because it's. it's ingrained in the. system so they welcome things like this. because nobody campaigns in a given.

country saying I'm going to steal less. than the last guy but I'm still going to. steal going to campaign on that they're. campaigning on honesty and integrity and. good values uh and so there was a lot of. receptivity from a number of of. countries the problem I faced was the uh. the the inertia the bank right there's a. lot of there a lot of people and so. you're trying to steer the Queen Mary. and it just takes a lot of time for.

people to understand what this is and. the headline at least at the time from. our then president uh of the bank was. yeah I don't know about this blockchain. stuff like isn't Bitcoin used by. criminals I was like look I'll bet you. $100 cash bills are used by criminals. more more often than Bitcoin but let's. take Bitcoin off of the you know out of. the equation here I'm talking about. decentralization of Finance I'm talking.

about web 3 I'm talking about blockchain. I'm talking about different concept. these are Concepts you can take Bitcoin. and put it over there and little by. little I started gaining traction uh but. this is an institution where from the. time a loan is originated to the time it. reaches its end destination you have. like 150. nodes that like have to approve or. disapprove so it's a very big. bureaucracy and moving the bureaucracy. is hard that was the.

challenge I could imagine the other. challenge. was I thought to myself um why are we. doing a loan or a or a grant or whatever. in a given. sector why is this sector better than. that sector why is sanitation better or. worse than education and the feedback I. got was it's all important and I said. well if we were to rack and stack and we. were going to prioritize what's most. important what would it be and. everyone's like well whatever the.

country manager thinks it is and so it. be it was very. subjective then I went back and I said. wait the World Bank sits on I don't know. pedabytes of data Going Back 40 years. what if we could apply machine learning. to all of the loans that we've given out. over the last 40 years and then overlay. that with um was it effective did uh did. school scores go up did infant mortality. get reduced uh what did literacy get.

improved whatever right and then you can. you can based on the data based on. objective hard science you can determine. well where should we deploy our. money and so that was another project. that was before AI became a thing and. this is in whatever 2017 2018 I'm trying. to move the bank into the modern uh era. uh and again I got a lot. of support but just turning the machine. is hard turning the Queen Mary is very.

hard yeah I could. imagine. so I could. imagine. what I don't know what to ask right. now you want we can talk about China at. the World Bank my my topic. dour um so I I get there and. I realized wait as I mentioned earlier. wait why is China getting all these. loans from the World Bank one of which. was to an education uh uh project in.

sang remember I mentioned earlier that. there were ethnic minorities that were. not Han Chinese living in the Far. Western Hinterlands of China uh so we. did a project World Bank did a project. there and it turned out that the Chinese. were using it for. repression uh and of course they covered. it up and when when the Press got wind. of it uh everybody went into you know. damage control mode uh because loans.

sometimes fall into the wrong hands and. they're used for bad things but I. couldn't quite understand why China was. getting all this money furthermore I. couldn't understand why China was. winning all these procurement contracts. so if the world bank loans money to a. country a poor country and they want to. build a road they do a tender and most. Mo in almost every case China wins the. tender because they're the cheapest.

bidder and so uh I thought man H. how what are we winning we being the US. I represent the us and we're winning. less than 1% of these billions and. billions of dollars of contracts and. China's winning. 40% so I thought wait China is getting. money from the World Bank yet they're. winning all these billions of dollars of. contracts something something's wrong. here and. then at the same time the Chinese.

government is is competing with the. World Bank and loaning money everywhere. around the world right we call it. predatory. lending and and what happens is um the. loans seemingly don't come with. strings to you know an African country. or or you know whatever a South Asian. country but they do when the country. can't pay back the Chinese loan China's. like I think I'll take that Port uh I'll. take that facil I want that mine and so.

these countries were coming to the World. Bank going help us help us and so wait. my taxpayer money is going to the World. Bank so that the World Bank can help. this country repay the Chinese loans wow. what and the world bank's paying China. and the world bank's paying China and. the Chinese are winning all these. procurement contracts I thought there's. something wrong here and so um I did the. very best I could to highlight a lot of. these problems uh but nobody in.

Washington really seemed to care because. the World Bank is first of all nobody. knows what it is or what it does but. it's got real money like a hundred. billion dollars a year 80 to 100 billion. that's real money MH uh and it could be. used very effectively for its real. Mission and its real mission is to help. poor people not be. poor and uh and so how how how can. nobody in Washington Care at the time. how is that even possible does anybody.

do their job there uh look I'm I'm not. going to throw anybody under the bus I. think there there were NR a lot of. well-intentioned people working in the. US government who um didn't see this for. the total the totality of what was going. on they just broke it down in 2. minutes yeah but uh some people would. would say well the World Bank has. policies uh and uh the country of X you.

know if China wins a procurement. contract well they won because they won. fair and square well wait did they win. fair and square if you were to unpack. how China won how did they win did they. win through coercive measures did they. win because they were the lowest bidder. in some cases they did um how did they. win um and so um you've got a lot of. folks in Washington that are well. intentioned and very smart uh but they.

don't. see at the time especially they didn't. really see what the big deal. was they can't think outside of a box. yeah and also China wasn't a thing back. then nobody thought that China was going. to be the malevolent adversary that it's. become I think now a lot of people's. eyes have been opened but back. then everyone just thought well China's. just a big developing country we got to.

help them with stuff like you know. climate change and we have to help. China how long ago was this 2017 2018. 2019 2020 uh I think one of the things. that Trump did very effectively was open. people's eyes to the unfairness he. looked at it in the in the in the trade. with a trade lens and he's absolutely. right how come you know. simplistically how come um uh if we sell.

a car to China they charge you know a. 20% tariff but if they not car whatever. we sell a good to China it's 20% and. when they sell something to us it's 2%. shouldn't there be reciprocity like. shouldn't the tariffs be the same we're. getting. screwed and you know president Trump is. a dealmaker and he saw us getting ripped. off and um I think his perspective was. we're getting ripped off because we're. allowing ourselves to get ripped off. which is stupid and so he decided to.

make trade changes put companies on uh. trade um entity lists and and really. start pushing back and when he did all. of a sudden people said wait he's kind. of right uh and in retrospect he was. 100% right on this but it goes far far. beyond trade where else does it. go. everywhere um. so let's understand what we're dealing.

with and I and I think this is a very. important thing for you and your. listeners to. understand China is not like anything. we've faced. before uh it is an adversary it's not a. competitor right great power. competition uh we are in an invisible. War uh and it's been going on for a long. time you say what does that mean An. Invisible War well it takes many forms.

and the vectors of attack are seemingly. nowhere but everywhere at the same time. intellectual property theft okay um we. lose more every year in intellectual. property theft than in almost. anything hundreds and hundreds of. billion of of dollars have been stolen. by China to advance their manufacturing. to advance their dual use Technologies. to advance their military and so forth.

this is happening at universities this. is happening at companies I mean it was. like two months ago that a Chinese. citizen working at Google like left the. company with a thumb drive and he was on. his way to Beijing this is happening. every day you have Chinese scientists at. Livermore Labs or wherever stealing. stuff so there's there's that element. which I think a lot of people understand. what people may not understand uh is. China's ties to organized crime and to.

moneya laundering. operations uh the Chinese at this point. have as much if not more power than the. cartels because they are the money bags. behind. everything uh we lose what a 100,000. people to fenel every year in World War. II we lost what 400,000 people we're. losing a quarter of the people we lost. in World War II every year and by the. way all the apis all the precursors to.

fento come from one place they come from. China um and it's hard for me to. understand if this if the Chinese. Communist party is in control of pretty. much everything and they are it's hard. for me to Fathom that they wouldn't be. willingly trying to poison the United. States mhm it's it's deliberate mhm so. there's that we have across the world uh. the United States being.

thwarted uh by the likes of Iran. Hezbollah Hamas certainly Russia in this. hemisphere Venezuela and a lot of it. goes back to China there is a there is a. new axis that's developing uh and China. is the economic might behind all of this. uh and so we're seeing it play out in. lots of different places and it wouldn't. surprise me if it's coordinated it seems. to me like they have us at pretty much. every angle which scares the hell out of.

me I mean remember Daryl Morley I don't. um he was the he was the GM for a big. basketball team uh I want to say the. Mavs um it'll come back to me I'm. getting a brain fog moment but uh he. tweeted something in support of the Hong. Kong pro-democracy. protesters and he got pillared by. everybody in the. NBA um and so why because the the NBA.

makes a ton of money broadcasting in. China and the Chinese picked up the. phone and said this guy's got to. go. um there are only something like 40. American movies that are screened in. China every year and so Hollywood Falls. over itself to appease China to make. sure that the movie can hit the Chinese. censorship. apparatus so everything is compromised.

universities um make money when people. pay full tuition and you've got 300,000. Chinese Kids In America largely paying. full tuition so the universities are. like I'm not going to talk about. China uh think tanks um uh a think tank. will be uh encouraged by China to write. a puff piece or a neutral piece on a. given topic like what China's doing in. Africa okay and China will say hey.

here's a bunch here's a few million. bucks there's more to come we want to. see what the outcome is the think tank. will write a piece you know like a big. Washington Think Tank uh which will get. picked up by the New York Times will get. picked up by The Washington Post and the. next thing you know China is a. benevolent actor in Africa wait how did. that happen if you were to dissect it. how did it happen and so um again the. vectors it's invisible but it's. happening. everywhere and it's very scary um and. they have a goal and the goal is to kind.

of push us out of the picture and. install their. system and their system is a. state-driven economic model and. centralized control and. authoritarianism our model is freedom of. the individual. um autonomy and free market capitalism. these two systems are. irreconcilable okay so this is what.

we're fighting uh so it's more than just. um a a country it's what we're fighting. is an ideology we're not fighting the. Chinese people we're fighting the. Chinese Communist party and they mean to. take us out and they have said we will. take Taiwan we will be the powerhouse. house in robotics and Ai and synthetic. biology and semiconductors this is what. we're going to do and we'll leave a few. crumbs to everybody else as long as they.

tow the line and America is just kind of. in our way at this point and I don't. understand how our policy makers don't. see this with Clarity because it's so. obvious I don't either. do how much influence do they have over. our policy makers. um I don't know um we had a we had a. member of Congress that was you know. sleeping with a Chinese spy I mean it.

seems to me that they are also very how. do I say. very I mean they'll build our policy. makers businesses over there. correct and then they get hooked on the. money and then they can yank that. business at any moment because it's a. communist country for example. it's my understanding that Mitch. McConnell has a has a shipping business. a Chinese shipping business well his his. his wife elain chow and the Chow Family.

uh has longstanding ties to the CCP back. to the Jang Men Days uh and so yeah of. course uh Diane Feinstein um you know. rip had a driver for 20 years who was a. Chinese spy um but that's the overt. stuff the more nefarious stuff is it's. very plausible and very likely that. Chinese companies uh.

are hiring lobbyists in the United. States to Lobby on behalf of whatever. Tik Tock or or. whatnot uh Chinese companies May invest. in American businesses that in turn have. money to donate to. politicians um and then of course you. know you have an entire. uh like let's take the automotive sector. if Ford or Volkswagen or um a major. automobile companies were to leave China.

it would result in a. massive uh problem to their bottom line. and to their share price and the last. thing they want to do is upset their. shareholders and so they don't they. don't want anything to. change and then of course you've got. Wall Street um who is singularly focused. on one thing and that is maximizing. profit uh and. um they're doubling down on China and. they have been for years that's starting.

to reel itself back because they're. recognizing that um they're not making. money anymore that's really the reason. why they're dialing it back and they see. geopolitical conflict but if China were. doing well. economically they' feed at the trough of. you know Chinese stocks day in and day. out and these are American fund managers. they're like I don't care I'm here to. make money and don't get me wrong I get. it if you're a fund manager you have a. fiduciary responsibility you have a.

moral responsibility to make sure that. your pensioner grandma gets her pension. check and you will invest wherever. there's money to be made okay I get. it you have to balance that however with. patriotism and sometimes you may be. investing in a company in China that's. building parts for the next weapon. that's going to kill our soldiers and so. you have to balance patriotism with. making. money you had mentioned speaking of.

weapons you had mentioned uh Quantum. Communications in space yep what is. that um something that I'm clearly not. capable of fully explaining uh because. I'm not a Quantum. physicist um I don't understand in the. quantum world how you can be a zero and. a one at the same time but we'll table. that for a second it's a it's a means of. communication um that relies on new.

technologies uh that can't be hacked. can't be traced uh and I think people. are trying to still figure out how it. all works is this quantum entanglement. yeah it's Quantum entangle you can you. can basically have a base station on. Earth and a satellite and through. quantum entanglement and Quantum. Communications you can make the. satellite do stuff how it works I'm not. qualified to answer but um yeah this is.

you know very serious stuff and they're. making advancements in technologies that. uh that we need to be mindful of are. they more advanced than we are in many. ways yeah how else. so well I mean consider um if you. think um I may be wrong on AI but um if. you think of AI as as several things. it's an algorithm right that's that's. that's doing pattern recognition that's.

also ingesting the entire body of you. know everything that's ever written uh. and there's energy that feeds you know. the. gpus um China has data sets that are. much bigger than ours and they don't. have privacy laws so you're able to. ingest a lot more. data uh so I'll speak out of both sides. of my mouth here because the Chinese AI. industry is faltering in many respects. because they're trying to censor uh what.

goes into the machines like what if what. if something is anti-ccp or anti- shiing. ping so they've created filters and. blockers to make sure that the AI is. like you know Fosters xingping thought. uh which is a a strategic blunder but. they have huge data. sets um they have they own the entire. ecosystem of drones DJI is a drone. company it's Chinese um and nobody.

nobody can compete with them at this. point uh and so they just manufacture. drones better and cheaper uh and at. scale that we just can't compete with. ship building um we can't build ships. anymore in in the United States. especially naval ships and you can't. throw. you can keep throwing money at. Huntington Engles Industries a big ship. Builder or or electric boat the. submarine Builder but they still can't. build them fast enough China's crunching.

out new ships every four years they. create the equivalent of the British. Navy we can't compete with that because. we don't have ship building capacity uh. Hypersonic missiles um something that we. discarded years ago they took our. technology and they've created. Hypersonic missiles that are really good. and really scary. satellites uh they're launching. constellations of satellites um what. what are we doing they're sending. they're going to at least they've.

purported to uh want to build a moon. base um they're going to build it and. so I think if there's a threat in this. conversation it's that we need to get. our game on because these are very very. serious times and it requires serious. thinking to figure out what we do are. they creating a lot of the division that. we're. seeing no I think a lot of that is self. hatred um we've been Rich for a long.

time uh as a country and I think as. enough time passes and generations. become wealthier and wealthier they look. for nonsense to think about when you're. not thinking about your daily needs you. start thinking about other things uh. that are in my opinion stupid so create. problems out of. nothing so a lot of it is our. doing however uh do I believe that there. are influence operations do I believe.

that our adversaries whether it's Russia. or China or Iran or um Hamas do they do. they affect our ability. to sorry are they. influencing uh social. media yeah. yeah what about I mean I I don't. I it's got to. be at least a glimmer of.

hope I hope but I also want to talk to. you about brics. sure it's my understanding that brics's. the the entire mission is to. devalue the US dollar and completely. wipe it off the the. all right let's begin with glimmer of. hope and then we'll go into bricks okay. um at the end of the day I am a firm. believer in the American Spirit uh and I. believe that.

freedom uh people often think of freedom. and they think it's you know a a a meme. of some kind you know of Mel Gibson and. you know Scotland with a blue face and. freedom you know but it's what Freedom. means is uh anybody in the United States. can make it from a single mom that came. from Cuba with no college education to a. half Kenyan president of the United. States anybody can make it here and you. have the freedom through hard work the.

application of effort uh through taking. risks and from just busting your ass you. can do anything here uh and so I think. if we if we. harness that energy that we still have. in the United States we will prevail so. there is hope uh 100% but we need the. will and we need the leadership to. harness that we can't tell generations. and generations of American kids that. our country sucks uh that we're not.

worth fighting for that we're. irredeemably you know evil uh or racist. or something because that's not who we. are have we had a troubled history sure. but every country has the Roman Empire. you I mean everybody every country every. place of of note uh uh every important. um Society has had their share of flaws. but I think we are a Force for good so. there is hope we'll pivot here to brics.

so brics I'll tell you the story back I. don't know 25 years ago there was a guy. at Goldman Sachs uh whose name was um. O'Neal if my my like Alzheimer's is. working correctly uh and uh he coined a. phrase called bricks Brazil Russia India. and China that's what it stands for. and he said these are the countries that. are going to be important in the future. look at their population it's huge look. at the number of young people they have. look at their look at how their e.

economies are growing we should pay. attention to these four countries that's. how it started uh from a guy at Goldman. Sachs uh since then uh a lot of fund. managers have put a lot of money into. the bricks. countries um thinking that their stock. markets would would would perform well. uh foreign direct investment plowed into. these countries particularly. China and for a while the bricks was. like a. thing China developed uh the uh uh the.

notion of creating a bricks Bank where. you take these four countries and now. you you can glom on other you know South. Africa wanted to join and then Mexico. and Saudi Arabia now it's become you. know bigger than it originally was but. it's still called bricks and so China in. Shanghai developed a the bricks Bank uh. now it's called the new development Bank. uh and its objective is uh today it's. current Incarnation is how can we.

conduct trade in. the global South I'm throwing these like. names at you the global South is like. the developing. world so that we can trade with each. other more. freely um up until you know for the for. the last many many decades trade has. been condu Ed using the dollar as the. unit of intermediation right whether. Commodities uh what what you know the. currency that underpin Commodities has.

always been. dollars uh So when you buy oil oil's. traded in dollars whether it's in Saudi. Arabia or whether it's in the UAE or. whether it's in Indonesia it's a dollar. system. um and so the bricks are saying why. should we have to Transit it the US. dollar to trade um soybeans from Brazil. to China isn't there a way that we can. do this. internally they're not going to create a.

currency a bricks currency but they're. trying to figure out how how they square. away the plumbing the financial Plumbing. so that they don't have to go through. the dollar as the intermediary so that's. what's going on how does that affect us. if the dollar isn't the reserve currency. we're screwed like we become I don't. know. Argentina uh it can be very. bad so let's back.

up I'll begin. with our fiscal deficits and I'll take. this back to why the dollar is important. okay so right now uh we spend $7. trillion that's the latest budget. proposal and we generate in tax revenue. like 4.9 trillion right so there's a. deficit of you know roughly $2 trillion. a year now people don't understand.

unless you can make it real for them so. let's take out a bunch of zeros let's. assume you as an individual are making. 49,000 bucks a. year and you're spending 70,000 bucks a. year well okay uh that's bad that's. fiscally. irresponsible but that's what we're. doing as a. country if it's you as an individual in. that scenario where you're like $20,000. short every year what do you do well you. max out your credit card one year okay.

that covers you the first year the. second year you take out a loan from the. bank to pay your maybe your credit card. or whatnot but over time that's not. sustainable so what happens is when when. we have a shortfall The Way We The Way. We generate Revenue in shortfalls other. than tax revenue right tax revenues are. 4.9 trillion how do you get to Seven. well we issue bonds right so we sell. bonds around the world and when people. don't buy for whatever reason the FED.

buys the bonds the FED is the buyer of. Last Resort so you've seen the FED. balance sheet basically go from like 4. trillion to like 8 trillion because. they're the ones buying everything well. how are they buying it well they buy it. by printing. money and so the printing presses have. been off the charts certainly since Co. and throughout this. Administration and that of course has. caused inflation and a lot of other. problems which we can go. into now the artificial demand for. Dollars around the world is largely due.

to the fact that 60% of central banks. have the dollar sitting in reserves okay. and also because the dollar is used as. the unit of trade for commodities for. foreign exchange like if you want to go. from Colombian pesos to I don't know. Indonesian rupia uh you know you have to. go through the dollar mhm if the dollar. isn't there because nobody wants to use. the dollar we're screwed all that. artificial demand for dollars disappears. and we crater we're not going to forget.

financing the next aircraft carrier. we're not going to be able to pay. Medicare and that's when things get. really really. bad and it just takes. leadership in our government in our. Congress and in our executive branch to. say enough we can't fund everything. um and there are things that you know. look we. have 88 million people on Medicare 65. million people on Medicaid 8 million on.

disability 44 million on food stamps. that's like I don't know I'm not I'm not. good at doing math in my head but that's. like a little over 200 million people in. America that depend on the. government that's not. sustainable there only what 300 300 50. million 340 million something like that. 336 so if you know so we have to do. something to really re in our spending. and we're adding a trillion dollars of.

debt every hundred. days and so who who who do we owe the. debt. to our mainly ourselves uh we do have a. bunch of foreign debt buyers uh China. had at some point you know close to you. know maybe a trillion and a half or two. trillion and they've been pairing that. down they've been selling uh why because. they don't want to get sanctioned they. learned from Russia once Russia invaded. Ukraine we basically sanctioned.

everything we took all their money and. we're like okay it's ours so when you. when you have a central bank that has. dollars in reserves it's not like there. are Bales and bales of money sitting in. the Russian Central Bank in a in a. dungeon it's sitting at the fed and so. we can like turn the money off whenever. we want and so China was like hm I don't. know that I like this so I think I'm. going to start selling. treasuries so it's a problem uh it's a. and and the debt is a problem for many. reasons um we're always issuing new debt.

and there's debt that gets paid back and. as we start paying back some of these. shorter. duration loans and bonds and and. government obligations we have to borrow. at a new rate and that new rate is. really high and so I mean the 3mon I. think is like five 5% in change it used. to be zero and so now we're borrowing. money at higher interest rates which. means we have to pay you know our. government is paying more in interest on. our debt like over a trillion dollars in.

interest. alone and we're paying. 850 million uh 850 billion uh for um for. our defense department we're paying more. in interest just an interest to service. the debt than we are paying for the. defense department. you tell me is that. sustainable we're screwed unless. somebody changes things in a very. radical. way and in DC nobody seems to care so.

the people that own the Deb. are the FED bonds the the the the people. buy bonds yes the notes and the bonds uh. there's there's an entire Marketplace. some are owned by big Financial firms. your 401k probably has uh a bunch of of. government bonds in it uh so it's owned. by ourselves individually through our. 401ks it's owned by large corporations. like Black Rock and Vanguard and so.

forth Goldman Sachs it's owned by uh the. FED it's owned by uh institutional. buyers foreign buyers like the Saudis. and the Japanese it's owned by a lot of. people and can they call and. collect so the way a bond works is um. IOU. uh 100 bucks I'll pay back in 5 years M. with interest M I'll pay you 5% interest. a year and then in 5 years I pay the. principal so they do come to collect.

once the bond is due and that's what the. foreign countries are doing as well yeah. I mean uh well buying so it's all bonds. it is all so you have you have a many. types of government obligations you've. got a three-month you've got a six Monon. you've got a 10 year a 5ye you know so. there are lots of bond durations. uh and there's a giant Marketplace for. this people are buying and selling these. bonds all the time it's not like that. IOU that you just purchased from me like. I owe you a 100 bucks I'll pay back in.

five years you can take that I owe you. and sell it to your sister and your. sister can sell it and then there. becomes a a secondary market for these. and there's like a giant Marketplace of. people buying and selling bonds okay so. what does it look like when we default. [Laughter]. um I don't want to be around when that. happens I'll be in a menonite colony in. in Paraguay you know living off the land. or something no but joking aside uh it.

can be very it can it can get very bad. very quickly can you paint a. scenario uh sure um a scenario where it. can. happen very brief very quickly and it. can happen over over a long period of. time over a long period of time people. start losing faith in the dollar uh our. our obligations become less and less. valuable uh to them Faith and Credit in.

the US dollar uh becomes impaired the. dollar loses a tremendous amount of. value it depreciates significantly. compared to a lot of other places we see. huge amounts of inflation uh perhaps. hyperinflation uh or it can happen very. suddenly uh where we just can't meet the. obligations of the federal. government so you know we have we have 7. trillion dollar that we need to pay out. every year in whatever right and maybe.

we have to fire people we have to fire. the 24 million government workers by the. way there are more twice as twice the. number of government employees than. there are um manufacturing employees man. that's uh 12 million versus 24 million. so you told me that last night that blew. my mind maybe we have to fire people uh. maybe people have to take a haircut on. their what what they think that they're. du maybe we can't afford a lot of the.

social programs some of which are you. know very important to people in in in. poor. communities uh and these people in poor. communities are saying well that was my. lifeblood like now I can't buy food and. people get really pissed. off I mean maybe if we just quit funding. Ukraine yeah I I don't follow the I. don't follow the Ukraine uh Russia as. much as I do China but um I don't.

understand how cooler heads can't. Prevail and get us to. some peaceful outcome at this point it's. probably too. late but I'm I have. hope uh that Future Leaders in the. United States will take an important. role in getting these two sides to the. table and saying let's figure out a way. to end this it's in everybody's best. interest to end this thing uh and I.

think Putin is obviously. indefensible um but I just don't know. what the strategy is if you were to sit. down and talk to anybody in Washington. and say what's our desired end state do. we want regime change in Russia is that. the is that this desired end State no no. no no we can't do that well well is it. to preserve the territorial Integrity of. Ukraine okay yeah I can buy that uh but. how do we do this so I'm a first. principles thinker what is your desired.

end State and let's go back and get. there um but I'm not quite sure what. we're trying to do maybe because I'm not. in the no and again I don't you know. I'll caveat this with I'm not following. the Russia Ukraine issue as much as I'm. following the China issue well I mean. I'm asking because of where you what. you're a part of now with the Venture. Capital firm and defense stuff and so. could it be that it is the.

military-industrial complex companies. locki Martin says locked and you know. are they pulling the strings behind. Ukraine I look I don't know yeah I'm. what I'm asking is are they lobbying. Washington to vote this in so that they. can send their weapons over to Ukraine I. don't I'm not really in the no on on. those discuss discussions um I I really. couldn't tell you okay what I what I. what I'm more concerned about is that. we're pretty much out of javelins uh. we're pretty much out of uh5 rounds uh.

we're out of a lot of stuff our arsenals. are getting depleted and if there's ever. a real shooting War over in Asia what. are we going to do uh that's my bigger. concern and so I think that um we need. to start rearming ourselves very quickly. because something is going to go down in. Asia when we least expect it and we're. not going to be prepared. mhm um and it's in things that are.

seemingly. nonsensical uh that are super. important I'll give you an. illustration uh a few days ago China. restricted sales of a metal known as. antimony to the West China both China. and Russia together they comprise. probably like 85% of the world antimony. Market why is antimony important because. we need it to make. bullets without antimony we don't have.

bullets we don't have ammo right because. they mix it with lead and whatever so a. bullet is made of a bunch of different. metals that are forged together it's. called an it's an alloy uh an antimony. forms an integral part of that China's. like oh guess what no more antimony for. you guys. so I ask you how are we going to make. bullets what what's the plan and and. it's something as esoteric and and and. like stupid as a a minor medal but that.

minor metal is super important to. everything. else China restricted uh gallium and. geranium uh uh six months ago and those. are crucial ingredients to make. semiconductors and China says well sorry. guys they're not they're not leaving so. gallium and and geranium prices you know. exploded uh and so these are things that. you know are seemingly. irrelevant but in their totality they're.

super important does that make sense it. makes perfect sense makes perfect. sense it's looking pretty. Grim There's Hope man we're America yeah. um and um and I think with with like I. said before with good leadership with uh. with humility. um. um and and I think a a return to Our.

Roots um look I'm a I'm a man of faith I. don't you know wear it on my sleeve or. anything but I think that uh I. think it would be good for the United. States many of us at a ground level not. the government to return to Our. judeo-christian Roots. especially when you know things are on. fire. um you know it's like the the story of. uh the pilot who was flying into the. landing strip a commercial pilot and his.

Rudder start stopped working and so he. called the the the the flight deck in. the tower and said oh my God my Rudder. is is flailing and the uh uh he was told. by the by the tower okay listen here's. how you here's how you fix it you've got. to do this that and the other and press. these buttons and just repeat after me. flaps check engines check Rudder check. okay good and he kept going down the. approach and all of a sudden his engine.

his left engine caught on fire and he. calls the tower again and says oh my. gosh what do I do the the engine's on. fire and they went through the same rig. roll and you know the buttons and you. know turn off the fuel and repeat after. me uh uh you know flaps check left right. engine check Rudder check okay good a. few seconds later the other engines on. fire and the tower says okay repeat. after me Our Father Who Art in. Heaven so it's a it's a joke but I mean. I think that when we're in a difficult.

situation I think the best thing we can. do is to pray get back to our value. system uh and. just brush the dust off and get back on. our feet we will. prevail yeah I hope uh I hope we do that. I'd like to Circle back on some of the. we're going to totally switch it up here. sorry about that I'd like to Circle back. on some of the web 3 stuff sure what is. web. 3 what I alluded to what I alluded to.

earlier uh web 3 is decentralized. finance so in simplistic terms. centralized Finance is everything is it. a central server central. location visa for example has something. called Visa. it is gigantic uh so it's in it's in the. DC area think of think of a like. football fields of servers that are.

processing uh my credit card transaction. at Walgreens or CV whatever uh and so. it's saying Eric is Eric Walgreens is. Walgreens and they're matching these. transactions they're doing using know. your client they're they're making sure. that I have enough credit in my account. to pay that Walgreens is you know so. there's a lot of stuff happening in all. these servers in a centralized location. right check. centralized decentralized imagine that.

server. Farm uh what's the right word atomized. uh uh. dispersed along a lot of different. servers everywhere and so my transaction. is not going to a central place it's. bouncing that same transaction is. bouncing upon a lot of different servers. okay so this is only. finance well I mean you can do. decentralized identity right let's. assume at some point you know you're. going to have a a passport uh an.

electronic version of a passport you can. do decentralized identity where uh. your all of your information resides in. lots of different computers. everywhere uh you can decentralize lots. of things but so is it a new. internet it's a it's a new way. of it's a new way of of transacting. between people or between entities or. between institutions yeah.

okay um where the transaction eliminates. the. middleman that's super simplistic there. are there you can we can really go into. the weeds and lots of different things. but um getting too technical sometimes. just people zone out mhm mhm but. yeah and you can do it in a in a. trustless environment uh so right now. the Visa net exists because um I'm a.

trusted agent in the system and. Walgreens is a trusted agent in the. system uh but in a world that you know. in a trustless society you can. decentralize a lot of stuff okay. so hence the origin of Bitcoin I would. encourage anybody who's listening to. read the original Bitcoin white paper. it's like eight or nine pages long but. it lays it all out okay it's really good.

that's what started it. all I wanted to we had a good discussion. about Bitcoin last night sure and I. was how do I say I was s surprised to. hear you. seemingly Pro Bitcoin I haven't talked. to a lot of people in finance who are. who are who like. Bitcoin why wouldn't it be it's an asset. class like any other you can go jogging.

on the treadmill and watch uh CNBC and. watch you know the stock tickers you. know and you see the prices of gold and. soybeans and and oh guess what Bitcoin. is there it's a real asset class it's a. legitimate asset class uh people are. able to buy Bitcoin ETFs um and so it's. really it's it's a version of digital. gold mhm uh so it's an asset class that.

that um Rises and Falls like any other. you know commodity uh but it's it's a. perfectly legitimate asset class does it. does it concern you at all that nobody. really knows who created. it um. does it concern me no because to date. Bitcoin you know it's been what a decade. and it's still working just fine okay uh. and while there have been hiccups along.

the way the hiccups haven't been related. to the Bitcoin architecture. itself the hacks that you hear about. like Mount gaau which was a famous. Exchange in Japan back in the day it's. the exchange that got hacked it's kind. of like saying you know the New York. Stock Exchange got hacked therefore. stocks I'm not going to buy stocks okay. but no the you know you know Bitcoin. itself has maintained its Integrity for. a decade because the architecture was.

genius well Eric we're kind of uh man. we've covered a lot so far a lot and um. but I want to get into what you're doing. now okay well um when the when the Trump. Administration uh left and Biden. transitioned in um I thought to myself. what am I going to do I'm 50 years old. uh and I want to do something. intentional and and purposeful and so as. I started thinking about what to do I.

had really two two tracks one track was. as I think we covered a lot of it. earlier um how can the United States. Remain the preeminent Global Currency. and how how do we need to think about. the Chinese Central Bank digital. currency with its authoritarian in hand. and H how it. could uh potentially be hurtful for the. rest of the world I didn't cover this. but China has what's known as a social. credit score are you familiar with this.

somewhat yeah so um at a baseline think. of your credit score when you go to a. bank they're going to want to know uh do. you have bills outstanding how much debt. do you have do you pay your bills on. time and they're you're given a score. right now take that and give it. steroids uh what have did you buy. diapers are you a good father uh great. your score goes up um have do you uh do. you engage in pro- XI jingping rallies.

have you read XI jinping's you know uh. thought leadership guide you know all. these things make you go up or down in. the social score ratings uh to the point. where there are apps on the phone in. China today where um if there's an. individual with low social credit score. near you you can avoid them are you. kidding me no it's not know that it's. not a you know Black Mirror episode this. is reality as you're crossing the street.

if you're jaywalking you're you're the. cameras are monitoring you through. facial recognition the phone is geoca. you and as you're jaywalking your the. system is taking money out of your bank. account for jaywalking right and so. everything you do is is monitored and. that includes of course your purchases. and the Chinese digital currency is a. part of a broader plan to impose. government will on its citizenry right.

that's frightening and so uh I was you. know how do we help the US dollar and. how do we preserve freedom and that got. me down the rabbit hole of of Bitcoin. and decentralized finance and so forth. so that was one track the second track. um that I've spent the last several. years on is um I I went back to my roots. as a naval officer uh and I came to a. few conclusions the oceans are important.

and they're important for a lot of. reasons um for the last several decades. 25% of the fish have been depleted from. the ocean I live on the water in Miami. like the ocean is important to. me um. so China's building you know four times. the number of ships that we are 10 times. the. number uh they have a 300 to1 ship. building advantage in tonnage to the. United States 300 to1 300 to1 um.

commercial shipping lines are getting. attacked by houes in the Red Sea with. you know Zodiacs and Stinger missiles. right so it's seemingly out of the blue. the maritime domain has become important. so. together with a team of folks we created. a fund focused on the intersection of. technology and the maritime domain so. tech companies and Maritime with.

basically three pillars that hold up our. strategy uh the first is uh how. commercial shipping how do we make it. more efficient can we put um internet of. things inside of shipping vessels that. you can track everything from the how. the room is doing just like you have. sensors on your car right uh can you put. cameras on the ship that can allow you. to see navigational obstacles way in. advance so that you don't have to you. know do crazy turns and you can save gas.

so uh Port software China controls like. 80% of the world's software that. operates ports it's crazy that's a. national security issue anyway so. commercial is one leg the second leg is. uh sustainability whether it's. countering illegal fishing mapping the. ocean floor or um decarbonizing ships uh. because the international Maritime. organization has mandated that ships.

lower their carbon footprint so that. could mean Technologies around new paint. Coatings New propulsion systems things. like. that and the third leg so track one is. commercial track two is sustainability. and track three is uh National. Security uh um and that probably needs. no. explanation so that's what we do we. invest in tech companies uh and we're. looking to not just invest in them but. make them better help our portfolio.

companies along uh and hopefully make a. make a meaningful change to the world's. oceans what else are you guys mapping. under. there well I mean we invested in a in a. company that so we're a fund and so what. we do is we invest in companies one of. those companies uh makes a drone that. Maps the ocean floor and so um think. about you know when you mow your lawn. and you're going kind of going backwards. and forwards and you know uh you can map.

a kilometer of ocean. floor uh and find you know there's a. little Hill there there's a mountain. there oh look there's a ravine uh and. why are you doing this so that you can. put the next fiber optic cable you're. going to need to know where to put it. you're going to need to potentially. track Marine Mammal migrations where. you're going to put the next offshore. wind. turbine um from the National Security. standpoint um you know a concern is that.

perhaps China or adversaries have put. ordinance on the ocean floor uh so there. are a lot of things and there are a lot. of reasons just like you have Google. Earth right um 2/3 of the of our planet. is ocean but we haven't mapped the ocean. floor so I think we need to and the. United Nations has mandated that we map. 27 times the size of the United States. uh over the next few decades wow so yeah.

there's going to be a lot to do in that. space But that's just one of our you. know various companies that we're. investing in which ones are you is there. one in particular that you're most. excited about I'm excited about all of. them okay um and um what I'm really. excited about is the mentality and the. entrepreneurial spirit that we have in. the United States where you have. Founders that are making the most. amazing things uh and inventing the most. amazing things and I'm like like I said.

before the American Spirit is alive and. well uh and we will prevail and we will. prevail because we have. Founders and we have. entrepreneurs that have the stamina the. creativity and the desire to just bu. build and do awesome things and uh I. stand like I'm in awe of the folks that. we're investing in many of. them so that's what gives me hope is. that there's still an incentive to to.

create in this country and. um that's important and we will prevail. so um thank you you know thank you for. you know chatting with me um I hope I. hope I was uh I wasn't too loopy or said. anything nutty but uh you know just gave. you a little bit of my background and. I'm very happy to be here it was it was. uh an amazing interview fascinating I.

learned a ton I know the audience did. too and uh I got to say this I would. love to be connected with somebody at. the executive level at that uh. underwater drone program to interview. him sure and uh and I would like to ask. you if you had if you had three Rec. commendations for me to interview who. would they. be uh Elon Musk comes to. mind um just iconic people that uh have.

done amazing things Elon Musk for. example I'm not sure if he's human how. do you create an electric car company a. space company a satellite company. neurolink Twitter I don't know how he. does it but he is seemingly successful. in many many disciplines and it's just. awe inspiring that America was able to. um uh attract because he's from South. Africa attract somebody to come to the.

United States and do these amazing. things and has given him the opportunity. to succeed the way he has um but I'm. sure I'll come up with other names those. are just the iconic top of Mind folks. those are some big ones I appreciate it. all right well Eric I uh I also really. appreciate you coming to Franklin and. and doing this interview and um it's. been a real honor and uh I learned a ton. so God bless and best of luck to you.

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