Erik Prince & Erik Bethel - The China / Taiwan Conflict | SRS #209

[Music]. Eric Prince, Eric Bethl. I was hoping. you guys would meet someday. Glad to. make that happen. Um, but Eric's with a. cake. Yeah, truly an anomaly. Three of. them in the building right now. But, uh, just thank you guys for coming. Both of. your repeat guests, former ambassador to. World Bank, Eric Prince, former CEO of. Blackwater Navy Seal. Um, so I wanted to.

get you Ambassador of Happiness. Ambassador of Happiness. Um, I wanted to. get you guys in here about this Taiwan. stuff that's going on. So, the timing. couldn't really be better for me. I got. the vice president of Taiwan coming on. here pretty soon and um, so everything. just lined up perfectly. And I want to. use this interview to kind of educate. the audience and not only the audience. but myself on on why this why Taiwan is. such a strategic location and why it's.

so important in in the world. and. when it comes to chip manufacturing, all. this stuff. But, you know, I did not. realize how delicate that situation was. due to its history with China until I. started prepping for this interview. And. I mean, I knew, you know, the. semiconductors and it's been terrifying. to me to to think that China might take. them. And they say they will by 2027,

but when you look at the history, it's. it's pretty dicey. And um so Eric Bethl, if you don't mind giving us a brief. history on Taiwan and China and and how. delicate the situation actually. prepared, you know, I'm not a not a. historian, but I'll give you some a. rough a rough outline. Uh we got to go. back way way way early. So the Dutch. arrived well the the Portuguese. discovered Taiwan. They called it uh. Ilia Formosa, which means, you know,

beautiful island. Uh the Dutch arrived. in the 1620s or so uh and formed little. villages of sorts. The people that were. living in Taiwan were Austronesian. um tribes. There were no ethnic. Hanchinese living there at the time. Uh. and the Dutch were at the time competing. with the Spaniards. The Spaniards had a. settlement in one part of the island. The Dutch had a settlement in the other. And it was ironically the Dutch that. began bringing in folks from mainland.

China uh into Taiwan. Typic they were. typically from Fujian province but some. came from the south. Uh and um over time. um uh it was uh Taiwan was essentially a. backwater. Neither the Ming dynasty nor. theQing dynasty gave a rip about Taiwan. Uh, and in want to say 1895, somebody will correct me on this, I'm. sure, the Japanese took it over. Uh, and.

it was a part of Japan until after World. War II. Never in Taiwan's history was it. a part of the Chinese Communist Party. And so uh after the Chinese revolution. uh as Chiang Kaishek and the. nationalists were losing they fled and. they started the Republic of China uh in. Taiwan. So there were two China. There. was the communist China and then there's.

the nationalist China. uh but there has. never been any uh Chinese. Communist Party presence or any history. linking it to uh to the Chinese current. Chinese government. Is that that pretty much sums it up. So, but it's gone back and forth and back. and forth a couple times since 1949. Correct. Nope. Never been ruled by. Beijing. No. Never been ruled by. Beijing. Not since 49. Like you said,

Shanghai uh fled there with the. nationalist leadership and there's been. serious fighting, artillery duels. I. mean, there's islands that belong to. Taiwan that are within 5 km of the. Chinese mainland. Yeah. Quimmoy Matsu. I. think it's called Kinman now. Yeah. Chinman right up like I said a a a hour. and a half swim from the Chinese. mainland. Wow. And so how does how does the rest of the. world view Taiwan? Do they view do they.

view it as part of China, part of the. communist China? As the Chinese. communist economy has grown, they. Beijing has used that economic leverage. to twist countries into not recognizing. Taiwan and to only recognizing um. Beijing. In the 70s, Taiwan was China. Uh, and we did the switcheroo and we we.

gave uh PRC China the seat that Taiwan. used to have in the United Nations. Uh, you know, but as Eric mentioned, um, Nixon did that. Yeah. Every, it was in. the 70 every country has with the. exception of, you know, a handful have. switched diplomatic recognition from. Taiwan to mainland China. And this is a. function of the fact that China's. economy is so important. uh that it uses. it as a le a leverage point. But Nixon.

also did it back then because you know. the Soviet Union and communist China. used to be very very closely aligned and. then in the 60s they started having a. bit of a falling out and border disputes. and Nixon um kind of used that outreach. from China because they were afraid of. getting run over by the Soviet Union to. um to kind of put a wedge between the. Soviet Union, the USSR and uh and the. Chinese Communist Party.

and and and and you know you you look at. the history of China then they were. still under Mao Mao died in 75 or 76. China, mainland China had some massive. problems in the great leap forward in. the 50s which was a. probably the single greatest. terrible decision by a political leader. where they. forcibly. uh push collectivized land and and then.

on top of that believed all the lies of. the of the local communist officials as. to how much each of these fields each of. these farms was producing. And it led to massive starvation like 40. 50 million Chinese died at the hands of. their own government because of this. forced collectivization of agriculture. and then they start recovering from that. and then they get what's called the. cultural revolution in the late60s which. kind of started at the university level.

and if you see woke culture in America. imagine that but now you have armed woke. gangs that are arresting people writ. charge and and taking any of the. intelligentia professors, mid-level professionals that are not. sufficiently communist and manic getting. sent away or executed or worse. And that. finally dies down um in the 70s and Mao. is still alive. Deng Xiao Pang took over.

after Mao dies and Deng Xiao Pang so. that was he there was kind of a a buffer. period of about two years I think and. Deng is the one that started opening up. China. and the first trip was to Singapore. which is basically. Hanchinese but on freedom in Singapore. because Singapore went from a lousy. fishing village in the in the 1940s. right at the tip of the Mallay Peninsula.

right next to the Straits of Mala, a. natural shipping choke point. Uh, and. they went from, like I said, a lousy. fishing village to having enormous. economic development. Deng said, "We. want to be like that." And so that leads. to the opening up of China for business. I think he called it um, uh, communism. or socialism with Chinese. characteristics. So that leads to this. massive development of the economy of. China. and they use that leverage to. pivot countries away from recognizing.

Taiwan to recognizing the CCP. But where we are today is a full 180. from where Deng Xiaoping was. And the. 180 is um the Chinese government has. asserted control over every aspect of. society. So back when I lived in China, um you know, the Communist Party really. didn't factor into people's lives in any. meaningful way. Uh compared to say. JackMa or Tencent or uh Tao or a zillion.

of these uh companies that were um. radically transforming the country. Uh. and when Xi Jinping took over, he said, "Hey, wait a second. uh we're an empire. just like theQing dynasty and the Ming. dynasty before that. Uh we are at risk. of losing our empire to these oligarchs. and something's got to change. And he. began reasserting control in the same. way Mao did over every aspect of the. economy. And today you're basically. dealing with a techno uh surveillance.

state where disscent isn't tolerated. people have to read Xi Jinping thought. uh and it's kind of strangely done a you. know a full circle you know Deng. Xiaoping opened everything up and now. he's closing things back. and you know when he's talking about um. Jack Ma was a high school English. teacher and he builds this company. called uh Alibaba which becomes the. Amazon.

market. massively. successful all across China, a true. unicorn. And to give you an idea of of. of Xi clamping down, Jack Ma, so it's. almost like a Jeff Bezos. um uh type figure who's disappeared from. public life for almost a year and then. he reappears lecturing at a kindergarten. in rural China and the and the official. press said he had embraced supervision.

That's the level of reassertion of. control. So all the growth and the. openness that happened in the late 70s, 80s, 90s, early 2000s really clamped. down by Xi and he has really. consolidated control. He is the most. powerful Chinese leader since Mao and. and and in the latest. uh I think it was a year and a half ago. he basically at the Chinese uh at the.

party conference. he made it possible for him to stay on. effectively emperor for life because. normally they had stayed for uh five or. 10 year terms and he is now for life to. the point of uh Jang Zamin his. predecessor had him arrested publicly. dragged off the stage at the party. conference. Kind of a f you, I'm in. charge. Um, a real consolidation. And. there's there's three factions of the. Chinese Communist Party. There's young.

princlings. Xi is a young princling. So, his father. literally did the long march with Mao. back in the 30s when they escaped. fighting against the nationalists and. goes all the way up almost to Shinjzhan. in the northwest of the country. So that's the lineage. Uh the Shanghai. faction, which was another that's kind. of the business faction of the Chinese. Communist Party. Yep. And the um um. Communist Youth League, both the.

Shanghai faction and the Youth League. have been smashed by his anti-corruption. campaign uh to really consolidate. control. What I found super interesting, um, Eric mentioned that, uh, uh, um, Xi. Jinping's predecessor, Hu Jun Tao, was. taken off the stage. That's right. Uh, I. know what you meant. Um, so he's taken. off the stage and in in a very. embarrassing sort of way. Uh, sort of. cringe-worthy, but what what I noticed.

wasn't necessarily the spectacle that. was going on between, you know, Huenta. and, you know, Xi Jinping. I was looking. at the hundreds of other faces around. this this spectacle looking literally. straight ahead. They were scared to look. down. Uh and to me it's kind of. emblematic of where things are in China. No one dares do anything in, you know, that that isn't in conformance with what. the government wants because you can get.

disappeared, you go to jail, you know, you get exiled, uh you get your fortune. taken from you. So everyone lives in. this sort of state of abject fear. And I. mentioned, you know, techno. authoritarianism. You literally have surveillance cameras. everywhere. Uh and facial recognition. Yeah. Facial recognition. So like as you. are crossing, if you're jaywalking, I'm. not sure if I mentioned this in in our. last podcast, but as you are walking.

across the street, if you're jaywalking, your phone is geoloccating you. It knows. that you're jaywalking. The cameras are. recognizing that it's you and your. phone, your Alip Pay connected to your. bank account is deducting money from. your bank account as you're jaywalking. across the street. Are you serious? Yeah. I mean, it's it's pretty bad. Uh, holy [ __ ] I didn't realize it. And so, you know, all part of the social credit. score, spitting, saying something. Tell. them about the social credit score.

Yeah. If you don't behave exactly as the. Xi Jinping thought specifies, um, you get banned from public. transportation or from going to the. school you want to or getting the. housing that you want. You literally. have no rights. And it is when we see. elements of this in woke culture in. America with being cancelled for. speaking out on social media or. whatever, they've perfected it at industrial scale.

in China. Wasn't there a Black Mirror. episode on this? Uh I'm trying to. remember, but yeah, it's real. It's a. real version of this where every facet. of your life is monitored and tracked. Uh if you're in a rural highway, they're. timing the distances between two points. and they will flash on the board on a on. a um uh on a board alongside the road. your license plate, your name that. you're speeding also being deducted. Hey everybody, I'm in Taipei, Taiwan.

right now, the street market and. tomorrow I am interviewing the vice. president of Taiwan. You guys know been. talking for a couple years now about the. potential. invasion, China taking Taiwan. So we came here to. interview the vice president about it. Took us about 6 months to get this. interview lined up. It's all going down.

tomorrow. Should be out in a week or. two. It's going to be a fascinating. interview. Hope you all enjoy it. See. you soon. Cheers. Summer's here and if you're anything. like me, you didn't spend the winter. just sitting around. You stayed sharp. and kept moving. And now it's time your. gear caught up. And that's why I want to. introduce you to Roka. I've been looking. for eyewear that can handle any.

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So for people to say there's a. fundamental difference in governance. between a constitutional republic that. we live in where we're supposed to have. rights where the government uh. government mandate is limited to that in. the consent of the governed. It is the. exact opposite in China. So yes, it is a. fundamental difference in governance. between a state that has total.

unbelievable unequivocal control over. not citizens but the surfs that reside. there versus citizens. And a republic. might be dirty and messy and imperfect. and efficient, but at least you have. rights. Yeah, no kidding. I think that's. a really good really good point. I mean, there's a there's a narrative battle. going on, right? uh our narrative is. that the way to govern society is. through individual agency, freedom, uh free markets where it's the. the battle of ideas that wins. So, um.

you know, I was coming I was flying into. Memphis uh last night and um and and you. can see that the Memphis airport, you. know, you've got people singing songs. Um and I thought to myself, Memphis is. competing with to some degree with. Austin. Austin is competing with Miami. M and so cities compete with each other. for talent uh for companies. Similarly, corporations compete with each other.

Ideas compete with each other and the. best ideas, you know, rise to the. surface. And that's our idea whether. it's free markets, individual agency, um, democracy, these are these are how. the values that underpin plus our. Judeo-Christian value system. This is. what we believe is the right way to. govern society. Over here, it's. authoritarianism, state-driven capital, and surveillance, right? And autocracy.

Uh, ours is, as Eric mentioned, a lot. messier. theirs is a lot more efficient. But ultimately, when the state directs. uh the the I don't know, like you've got. 200 million empty houses in China and. apartments, I mean, to me, that's. economic foolishness. When you kill 50. million people through the, you know, Great Leap Forward, that's just it's. awful, right? Um but the narrative. battle is happening today. Uh and in the.

short term, it looks like they're. winning, right? because they're more. efficient. Uh they can build trains. Like look at California. You can't build. a train from San Francisco to LA. It. takes, you know, 20 years and billions. of dollars. Um in the short term it. looks like they're winning. Uh but I. think long term we prevail. Why? Why do. you think as long as we allow the. private sector to do what it does best? Because if if it's all government all. the time that it's going to be our. solution in America, we're screwed. Mhm.

That's true. I mean, and that's the only. advantage I see that we have is is the. innovators and the the economy to reward. massive innovation where they don't have. that. Am I. is by definition the creative. destruction of the old order and if we. get away from that then we have a a also. ran version of statism where you get the. great leap forward and and that kind of. stupidity. And imagine a a nationwide.

imagine 50 million people starving to. death in America. Not likely to happen because we have I. mean the idea of empowered citizens. first amendment free speech, freedom of. religion, freedom of association backed. up by a second amendment that is so. antithetical to how. the Chinese government is and even how. Chinese citizens view government. So. it's it's um it is a 180 out governance. view. Let's not think China isn't trying. to export their system overseas. Mhm. Uh.

you've got places from small islands in. the Pacific like the Solomon Islands. that have just done a security treaty. with the Chinese to their security. apparatus in airports all over the world. to port scanning equipment to the port. cranes like 75% of the world's cranes. are ZPMC cranes with very likely uh I'll. qualify that uh with back doors that can.

stop working And so China is exporting. its techno athoritarianism around the. world. And for some governments it's. like catnip, right? Um if you want to. stay in power forever, if you're a. random dictator somewhere, uh China can. help enable that. And they do black diplomacy really well. When you're a head of state, foreign. minister, mining minister, energy. minister, whatever China where they want. to get their hooks in, they on your trip.

to Beijing, they take you to the Chinese. foreign ministry, take you to the. basement, and there's a long series of. um safe deposit boxes, one of them with. your name on it, filled with gold, diamonds, cash, whatever, and they say, "This is yours for when you retire as. long as you play ball with us." Wow. Or why not give you, you know, why not. give every politician in the country uh. a Bank of China debit card and hey, you. know, buddy, it's on us. You know, you.

want to buy a Lamborghini, invite your. family to a trip to Europe, come to. Beijing. It's on us. Don't worry about. it. I mean, I just I don't I don't. understand how you combat that. In Africa, it's hard. China has made. themselves exceedingly unpopular with. the vast majority of people. The few. government officials that are getting. paid off, great. But all the big Chinese. infrastructure, the mines, the energy, the roads, the bridges, when China goes.

and does that, they provide capital. They provide a loan and they charge. about three times what market rate. should be because they're the only. lender. And they take everything with. them from China to do to do that. every. worker, the noodle maker, the barber, everything to a literal Chinese enclave. In a lot of cases, they're even. exporting Chinese convict labor. So, you. got 10 to 20 years of hard labor on your. sentence in China. Mhm. They send you to.

do an infrastructure project in Angola. and uh when you've completed that job, you're free to stay. So that has completely alienated the. average African because the Chinese. treat them terribly as workers are very. abusive and um that's the one thing. about western capital and there's more. accountability through western capital. markets etc and governments that expect.

western companies that are operating. there to behave and there's a court. system to back in the west to hold them. accountable non-existent in the the. China African nexus. So, China created 10 or 12 13 years ago. something called the one belt one road. initiative. Uh and the premise was to. build arteries to and from China, physical arteries like highways, airports, infrastructure, maritime ports and the like and railways.

railways especially railways telecom. infrastructure. Um, and the way it works. is, you know, I think of it as predatory. lending. So, they'll go to a given. country and say, "Hey, we'll lend you, China, will graciously lend you. whatever, a billion dollars to do. whatever.". Uh, but the fine print says if you can't. pay, well, we'll take your port. Um, and, uh, clearly that has met with a. significant amount of resistance. So, in.

the case of I'll give you a few. examples. One is Djibouti uh where the. Chinese lent a very large amount of. money and now China has a military base. there. The second place that comes to. mind is uh right across from the US base. actually. Right across from the US base. Is it really? Yeah. The next is uh Sri. Lanka where they built a port. Now they. have a 99-year lease the Chinese on this. port. It's called Hamban tota. The list. goes on. Uh but this is what makes them. very unpopular. Um, and um, they're also.

just, as Eric mentioned, not very nice. Uh, and they they don't treat people. with the same levels of decency that. that we would. Look, again, nobody's. perfect. I mean, we're also very. unpopular in the world. Correct. Yourself? No, I don't think so. What. about in Europe? Um, exceedingly popular yet? Not with. the elites.

Look, Europe's been having a free ride. for decades on their defense spending. That's a whole another topic we can dig. into, but you have when when Trump 45. took over, there was I think five of 28. countries that were paying 2% of their. defense budgets, 2% of their GDPs in def. in defense. That's a not serious. Yeah. Um alliance. We want we want alliances, not protectorates. And that's I think. the point that President Trump's been. making. Look, I'm not an expert in.

European politics, but um something. struck me recently. I saw a map of a. recent French election and Marian Le. Pen. It's like the entire country is. hers uh uh uh voting wise except for. small isolated pockets like Paris and. other places too long. Uh you know, and. it reminds me of the electoral map of. California, right? It's a it's a giant, you know, red state with deep blue San. Francisco, deep blue Los Angeles, etc.

So, um, whether or not we are popular or. unpopular in Europe, I don't know. The. headline is that we're not, but the. reality, I don't know. So, why why why is China when are they. going to make a move on Taiwan? I mean, this is from May 7th from Shei. No. matter how the situation on the Taiwan. Islands evolve or what trouble what. troubles external forces may make, the.

historical trend toward China's ultimate. inev inevitable reunification is. unstoppable. That was on May 7th. Yeah. And and that's the one inaccuracy as. Eric was explaining. Formosa was never part of of mainland. China ever. Ever. But it is such an irritant because you. have what 1.4 4 billion mainland Chinese. and you have 24 million. largely well maybe half 60 70%.

Honchinese in Taiwan but you have. Hanchinese culture on freedom which has. been enormously successful enormous. wealth generation and the fact that. Taiwan is the size of one large Chinese. city but it is such an irritant because. it's the anti anti antithesis. Yeah. To. the monolithic Chinese Communist Party. where what they say goes with no.

question. 100%. Here's another quote for. you. This is Xi Jinping's new year. address. Uh, as compatriots on both. sides of the Taiwan Straits are one. family, no one can sever our bloodline. affinity affinity and no one can block. the historical momentum of the. unification of the motherland. Look, there's there are I I don't know how. many different ways they can say this, but they want to take Taiwan. And Eric. mentioned earlier that Xi Jinping got a.

third term and he's going to be emperor. for life. One of the justifications for. that was uh that he's going to take. Taiwan. Um and so the narrative in China. and the narrative of the Chinese. Communist Party is there is no other way. to govern China. Historically, the. historical precedent is that in. millennia, we've always been governed by. authoritarians. because it just it's impossible to. govern the Chinese people any other way.

And over here, you've got Taiwan in a. thriving, messy democracy where the GDP. per capita is higher than it is in in. mainland China. Now again, small place, you know, with a lot of wealth, you. know, with a relatively small. population. But the point is, the fact. that Taiwan exists is a loss of face to. the Chinese Communist Party. It must go. Does that make sense? Makes sense. On. top of the fact that China was not. always ruled by emperors over the last.

couple of millennia, they would come. together under a dictator and then they. would after a couple hundred years, they. would fragment apart. And there's what. 54 different ethnicities. residing within China, different. languages, uh different faiths even. And uh you. know, Confucianism, Buddhism, and uh and. Islam. Um. I'd say it's in our interest to help. them go back to a a bit more of a. fractious, less consolidated entity.

How important is Taiwan to the rest of. the world? Not just with semiconductors, but the location. Well, look, I think it's important for. us, and I'll I'll give you a few reasons. Um, the day Taiwan goes. is the day that the CCP tells everyone. the emperor has no clothes. uh not the United States military might.

could not hold Taiwan. Uh and if we. pretend that we are beacons of freedom, I mean, if if we want to be beacons of. freedom, you know, we we can't just. pretend that, you know, we're going to. let this island of 25 million people. become absorbed by communist China. But there are going to be there are a. lot of implications and and we can talk. a little little bit about those but the.

for me aside from you know the fact that. TSMC that produces 60% of the world's. chips and I guess 90% of the high-end. ones that is either going to go to the. Chinese or all of those fabricator all. the fabs are going to basically get. blown up and all the engineers move to. the US. In either of those two cases, you have to ask yourself, well, gosh, if. the semiconductor manufacturing isn't. being done by TSMC, what does that mean.

for Nvidia? Wait, what does that mean. for uh um you know, AI? What does this. mean for, you know, Grock or Chat GPT or. and the NASDAQ? What does it mean for. the chips in your F250 pickup truck? Mhm. Or or phones or anything? everything as as important as the Arab. oil embargo was to the world market in. the 70s, gas lines in the United States, remember when they shut it off after the.

73 war. Imagine that level of hegemony. times five stuff they don't think about. Your washing machine has chips in it. Um. where are you going to get a new washing. machine? Um. and everything goes up in price. Not to mention if you can if you can get. it at all. If you can get it at all. Um. so chips are important but I would also. make the argument that. um a the if Taiwan if China takes Taiwan.

uh it's going to have massive. implications for the US economy. Um. extreme amounts of inflation, high. interest rates, job losses because of. the chips. No. No. Um, it's actually. you're you're going to have to bear with. me. Indulge me for a second, but I'll. take you through like a a meandering, you know, journey of of of economics. I'm sure that there are going to be some. macroe economists out there that are. going to try and shoot holes in my.

argument, but bear with me. Here goes. Let's begin with let's take stock and. understand where we are in our economy. We've got $37 trillion in debt. We've got uh insane and unsustainable. budget deficits. So, US government makes. money by taking in taxes and we spend. money on the military, Medicare, Medic, whatever, right? The deficits are in the trillions. And. when we can't um finance those deficits.

with tax revenue, what do we do? Well, we issue bonds, right? Treasury bonds. and bills and so forth. Printing money. Print. Well, see, the way it works is um. Treasury will issue bonds. They have. Treasury auctions. We had one, in fact, last Wednesday. We did a $16 billion. auction. And but the the biders said, "Well, gosh, we want we want the rate to. be higher. We won't buy your treasuries. unless you're 20 this is a 20-year.

auction, uh are high enough." And they. they hit a five handle or five five and. change percent. Why? Well, for many reasons. In part, it's because the uh the big beautiful. bill adds $4 trillion dollars of debt. over the next 10 years, which seems, you. know, financially illiterate because. members of Congress just added on a. bunch of pork to it. The rating. agencies, you know, uh jumped on the. bandwagon. Uh uh bond yields fell. Um,

but look, we're, you know, you know, like those Mission. Impossible movies where, you know, there's a train that's like lurching off. a cliff and Tom Cruz is like, you know, trying to escape and it's like the train. is being held by a by a by a wire, you. know, that's like starting to fray. Like, we're not there yet, but we're. approaching that. And so, that's the the. context. Okay, back to treasuries. When people don't. buy our treasuries, when large. institutions and sovereign wealth funds.

and you know the whatever Wall Street. doesn't buy it, the Fed becomes a buyer. of last resort. How does the Fed do. this? Well, as Eric mentioned, by. printing money. So, well, when you print, you know, crazy amounts of money, you have to ask. yourself, why don't we look like. Zimbabwe or Argentina in this hype in. the hyperinflationary days? And the. reason for that is there's an artificial. demand for dollars around the world.

because the dollar is used in almost. everything. Every commodity is priced in. dollars. Every the world's reserve. currency. The world's reserve currency. Every FX settlement is done in dollar, foreign exchange is done in dollars. So. everyone needs to use dollars in the. world. So we can print for a period of. time and the world needs to use it. Okay, let's go. Let's take this back to. Taiwan. Uh, in a Taiwan scenario, if. China takes Taiwan,

uh, every country in Asia is going to be. told, "Hey guys, there's a there's a new. sheriff in town. Why should we trade, you know, Malaysian. palm oil in dollars? Why shouldn't it be. in remn?". And China's been trying to erode and. chip away at the dollar's reserve. currency status in many, many different. ways because they Well, we can talk. about that later. So, this is bricks. Yes. This is partially bricks. It's. partially the ECNY. Their their If they.

did take Taiwan, why would they be the. new sheriff in town? Here's the easy. correlary. You you done? Yeah. Yeah. Okay. I was too I I went on too long. anyway. No, no, it was great. No, no. I. I didn't want to I It was a great. thought. I didn't want to interrupt it. Um. 1804 1805 Britain defeats Napoleon's. navy. Okay. During uh the Napoleonic Wars and. Britain rules the seas for all the. 1800s,

the British pound was the world's. reserve currency. Britain lo started to lose that at the. battle of Jutland. Big naval battle. against a rising continental industrial. power, Germany. They didn't lose, but. they definitely didn't win. I would say. that marked a pivot in the in the. beginning of the end of the British. Empire which you see collapsing. really uh ending in the in the 40s and. 50s as all their colonies go away they. lose India.

uh I see the world's reserve currency as. the dollar losing that if there is a. significant naval loss or even a draw. over Taiwan I agree I mean if you look. at um and and that literally cuts off so. that would be why they're the new. sheriff of town because they they if. they're the new look, if if they're able. to take Taiwan and uh and the United. States leaves, which they want us to. leave Asia, just just leave. Uh we this.

is our pole of influence. Uh the South China Sea is ours, Taiwan. is ours, the Yellow Sea is ours. uh we. have the largest economy and let's go. back to the way things should be in. their mind. The way things should be is. China is the center of everything and. countries around China are vassal states. that pay homage to the emperor every. year. That's the way it was 200 years. ago. But but they call themselves the.

Middle Kingdom. All maps produced in. China show China as the exact middle of. the world. So, they have the economic, military, uh, and cultural might to basically be. the sheriff in town. Uh, and it's not. unreasonable. Look, I'm trying not to. catastrophize this too much. Uh, but. it's not unreasonable for them to push. countries in their orbit to use the. Chinese remb as opposed to the dollar as.

the currency of trade in Asia. Assuming. that happens, you have to ask yourself, what happens to the dollar? Um, and does. it cause inflation back here? And if it. does, and the Fed's job, among other. things, is to counter inflation, what. does the Fed do? It has to jack up. interest rates. So imagine a world uh uh. again look I may be going out on a limb. here but imagine a world in which the.

you know your mortgage rate you know. spikes to double or triple what it is. today or if you're going to finance uh. you know your your car um how much does. it cost? So there's a reason like. economics does play into all of this. currencies play a role, treasuries play. a role, our I think un un you know. unchecked spending as a US government. plays a role in this. Uh and I think.

it's you know very foolish. I I don't. think it just plays a role. It's the. fundamental underpinning. If the dollar. is not the world's reserve currency and. the idiots in Washington can't continue. to deficit spend because no one's going. to buy, no one's going to use those. dollars, it forces the US government to. actually have a balanced budget and cut. deeper. Already the interest payments on. the existing debt, interest payments. alone on the debt exceed the defense. budget. Yep. Which is already too big.

Now you start to literally constrict all. aspects of American government spending. uh because of you know military. victories have um very economic. realities. So that's it is a cascading. effect that's catalyzed by a. embarrassing. loss unnecessary loss of Taiwan. Now is. is China's economy just as fragile? It's. bad. Yep. It's bad. And one could make. the argument that, you know, when you.

have massive youth unemployment, uh, an insane amount of real estate. defaults, uh, and debt to GDP levels that are. really, you know, bad and unsustainable, what does one do to deflect from, uh, domestic, uh, problems? You know, you. point to the west, you point to Taiwan. Uh, and I think this is a time of. maximum peril. 10 years from now, I'm not as concerned, but the next couple of years, I think,

are pretty bad. Yes, I fully agree with. that. But, uh, but, uh, just to double. click on something Eric said, um, right. now we're spending a trillion dollars in. servicing interest on our debt. Imagine. like your credit card. All you're paying. is interest on your credit card. Uh, and. it's, you know, that's what we're doing. Furthermore, we have to refinance. something close to $10 trillion worth of. short-term debt, government debt, uh at.

higher rates. Uh so the rates are going. to be at, you know, somewhere between. four and 5%. Which is going to. exacerbate the interest that we're. paying, not the two and 3% that it has. been at, right? And so it's kind of like. there there's this show and we have a. bill that just went up a bill. Yeah. trillion deeper in. Yeah. Look, I I. think um. you know, does anybody does anybody look. at this [ __ ] that's on the inside? Of.

course they do. Um look look man, don't. blame the player, blame the game. There. is not a single member of Congress. that's going to win an election by. saying, "Hey, I'm going to, you know, provide less benefits to my. constituents." Just doesn't work that. way. Mhm. Uh we've allowed the US. government to just become so much of a. sugar daddy to all aspects of society. And no one has ever forced the guns or. butter decision. It's guns and butter. because the dollar is the world's. reserve currency. It's gotten us into. the habit of spending anything and.

everything all the time. And the Fed becomes the buyer of last. resort for a lot of things. Uh at least. it has over the last 20 years. It's sort. of colloially known as the Fed put, right? the Fed will uh provide a backs. stop to anything going wrong with the. economy. Um now there comes a point. where so we just watch it go off the. cliff. Well, we got to stop. We got to. do something. But we don't win elections. if you try to do something.

That is the disadvantage to a republic. Yep. I have a collection of German marks. from the 1920s. The currency of Germany. This is the Vimar marks. Exactly. And. the first ones, the one, five, 10, 50, beautifully done, very well printed. You. definitely see some effort went into. making those bills. But then you get to. 20,000, 50,000, a million, and then they. just took the million ones and restamp.

them 1 billion marks. Okay? And you see. the destruction of a currency and the. destruction of a society because you. took very normal, very orderly Prussian. German society and they elected Adolf. Hitler. because of that economic destruction. So. we ignore that kind of debt insanity at. our own peril. Yep. You can go back to. um the Roman Daenerius. uh little by.

little you started seeing the you know. silver content you know get smaller and. smaller and smaller. Uh so there there's. been this is this isn't something that. we haven't seen before. Um but it never. ends well. It never ends well. But let's. understand this, right? Uh so the big. beautiful bill passed the house. It's. going to go through reconciliation. Hopefully members of the Senate will. take a more thoughtful approach uh and. remove the extraneous things that we. don't need. Uh I'm hoping. But let's.

also understand that the Republicans. have, you know, what, like a two vote. majority or a three or something vote. majority. Um I'm sure that there were. members of the Republican party that. said, "Look, uh oh, by the way, the. Democrats all voted against it." Right? So it's basically along party lines. And. so to win over a certain number of. Republicans, we had to offer them some. concessions. Um this is how you know. this is just I'm not saying it's it's. awesome on the contrary. I'm just saying.

it is what it is. What do you do? So. it's going to go through the Senate. Uh. hopefully they go through a thoughtful. reworking of this and it's not another. 4 trillion on our debt. It's a lot of money. That's another 10%. Jeez. All right, let's get back to Taiwan. on that happy note. Yeah. Wow. It's.

great. I mean, what what other countries. are concerned with the potential of. China taking Taiwan? Are we Are we the. only ones that are really that. concerned? US, Japan? I mean, Australia's got to be Japan is very. concerned. Is anybody doing anything because Taiwan. was. um was a Japanese colony before the war, right? And if the president, I think I.

was told this, the president of Taiwan, when they visit Japan, they speak. Japanese. There's a lot of Japanese. spoken in rural Taiwan to this day. The one country in the Pacific Rim that. China fears is Japan. Yep. Because Japan or you have Han. China, that's a race of people. Japan is. different. Japan is Mongols on an. island. If it's one thing that terrifies. all Hanchinese is Mongols.

Mongols on a peninsula, Korea. Mongols. on an island, Japan. And the fact that Japan has woken up and. is starting to spend serious money now. and with the magnificent efficiency, right, Toyota level production. efficiency of Japanese-made weapons, uh, Japan can be a a significant. deterring force and we should let them. be. We should not expect it to be all US. Navy all the time. Let the let the you.

know the the at a recent exercise Japan. showed up with their flagship. I think. it was the Kaga which was the old. uh command ship of the Imperial Japanese. Navy. It's good to let a little bit of. that um that uh. uh Japanese warrior tradition return. Um, Korea, Japan, Australia, and the. Philippines are the ones that we should.

most closely follow. Um, I'm concerned. politically about where we are with the. exception of the Philippines. And I'll. explain. Uh, I'll begin with Japan. Uh, Japan's prime minister, uh, well, the. he's part of a of a political party. They're called the LDP. Um, and for the. first time in quite a while, they don't. have a majority in parliament. The. second party that's there uh is called. the CDP uh and they are much more.

consiliatory toward China. They're not. necessarily uh in favor of growing the. defense budget. And so Ishiba, the. current prime minister, has to sort of. appease the various constituencies in. parliament. So he's not a strong prime. minister like Prime Minister Abbe was. several years ago. That's Japan. Korea is a disaster right now. Um, former President Moon had martial law. Uh, he's in jail. He may face, you know,

many years in jail up to potentially the. death penalty. Uh, there's a snap. election that's being held next week. Why is he in jail? Uh, go ahead. Because. there's China works on their neighbors. Yep. Massive political subversion. 100%. in all these countries. You see it in. Japan and it was especially the case in. Korea. And the reason that prime. minister tried to act was to cut off. that subversion.

Yep. And and North Korean as well. Correct. And it Yeah. In that case, you. see China and North Korea very much. cooperating to undermine South Korea. politically. That's the vulnerability of. a democratically elected government is. the ability for outside forces to to. screw with it. That's very much the case. in Korea. For the first time we've seen. in many many decades. Um what where that. goes, you might see a devolution of.

democracy in in Korea where another. right-wing strongman takes over to say. we're not going to we're not going to. live with left-wing subversion of the. country. And right now the left-wing guy. it there's an election next week and the. uh the left-wing candidate uh whose name. is Lee uh is favored to win. Uh and this. candidate is you know very sympa more. considerably more sympathetic toward. China than his predecessor. So you've.

got Korea in a state of political. turmoil. you've got a relatively weak. Japanese prime minister because he's got. to balance the different factions. And. in Australia, you have uh a prime. minister uh Albanzi who again is much. more consiliatory. He's from the. left-wing sort of Labor Party side of. the equation. uh who values um non-inference in. Taiwan. Uh, and you know,

non-inference. Well, nobody wants to get into World War. II. Like I certainly don't. I don't. think anybody does. Um, but um you can't. sort of signal that you're not going to. interfere. Now, I'm not saying he has, but he comes from the political party. that has been, you know, again, much. more consiliatory. Let's not, you know, uh, let's not muddy the waters with. China. Let's just keep things on an even.

keeled basis. What do these people think happens if. it's worse than that? China uh Australia. all of 22 million people has had a. massive influx of non native Australian. type people a lot from China Chinese and. Indians. which don't really subscribe to the the. same old Aussie values that you would uh. that you would imagine and especially. the the the Chinese business class and.

it's been both sides of the party on. both sides of politics the right-wing. has been sellouts to corporatists and. you know low labor cost importing of. labor and um yeah Australia is is also. in bad shape that way politically. So. Australia's economy uh is very dependent. on selling iron ore to China, selling. natural gas to China, selling. agricultural products to China. I mean, it's it's a giant continent with very.

few people, uh, that has a lot of. natural resources with pretty much one. buyer, right? And so, uh, I think the. business community says, "Hey, look, let's not, uh, let's not create waves. here." Um, so I'm not sure that you can. count on 100%. Uh, so it's us. It's basically us. Yeah. And the Filipinos. The Filipinos are. awesome. Uh, yes. But there's no there.

there. They have no ability to project. power. I mean, the I'd say the only good. thing I've seen the Filipinos do is they. actually bought um. a Russian Indian uh hypersonic. anti-hship missile called the BRAMOS, which if they roll it out will actually. provide some deterrence because that is. a that is a missile that would smoke a a. Chinese warship. my my biggest hope or. confidence in an ally that would come if.

Taiwan goes is is Japan still. So if you look at the map so if this. have you seen the this map here of uh. this is here's China here's this this. line where they basically claimed pretty. much all of all of this territory. It's. very far away from China. This is uh. Paloan. And over here there are a bunch. of little little islands. Not even. islands. They were just reefs. Like at.

title at low tide you'd see one foot of. reef or sand sticking out of the ocean. and at high tide it goes away. Then all. of a sudden the Chinese said, "Oh, um. you know, let's build something here.". This is China. And they they would they. blew up like a millennia's worth of. coral reef to build islands. And you see. these islands, you can Google them. They. are incredible. Like with runways you. can land a 747 on, uh, missile defenses, um, naval bases, basically. They built.

full-on military bases all through the. South China Sea. And in my travels in. China, I met the the CEO, I was drinking. with him one night of China Harbor and. Dredge, the stateowned enterprise that. built most of those islands. And he. admitted, he said, 'It was never in our. grand plan. to be able to do these islands, but we. found the Obama administration to be so. vapid, so useless that we just said go. And they did. And they built now dozens.

of bases claiming tens of thousands of. square miles of territory now as Chinese. territory to the detriment of the. Philippines, Vietnam. Philippines, Vietnam, Malaysia, all these guys. And. so here you have little Filipino fishing. vessels uh trying to do their thing and. then the Chinese Coast Guard comes in. and literally shoots lasers at their. eyes or waterboards them uh or rams them. and uh in Philippine territorial water.

And I say it's Philippine territorial. water because in 2016. the United Nations uh proclaimed an. edict saying that yeah this is it was a. it was a it was a law of the sea trial. based on 500 years of admiraly law. Clearly it was Filipino territory. Yeah. And so China says that because an. admiral in the Ming dynasty named Jun Ha. traveled there that this is all you know. belongs to China which is complete. nonsense. So um we can so they're not only.

building these islands just for the. militaristic advantage. They're also. they're they're expanding the borders of. course and and in that they're doing. geocience exercise. They're playing. they're actually playing by the rules. for drilling playing by playing by the. rules. No no the rules who's recognizing. these borders then the border the border. gave the so the UN said that the border. belongs to the Philippines. China said. oh no it doesn't and it belongs to us. We don't care what the UN says. So, China lost their case, but there's no.

consequences for them, are there? Correct. Correct. And it started with. the Obama administration not delivering. any consequences cuz China first said. and because the Washington believed the. lie when when China said, "Oh, these are. just going to be weather stations or. search and rescue locations." Yeah. No, they were full-on military bases. And. now they're even pushing into Korean. waters. Just two weeks ago, they plunked. down a a used oil rig, saying it's just.

a fishing station. And of course, I'm. sure within months, you'll see missiles, radars, all the rest on this jackup rig. just off the coast of Korea. So, they. are expansionist. It's called salami. slicing. They take very thin slices and. they just keep moving the fence. Trump. in the first administration, they're. China was like the neighbor that builds. their fence into your yard and moves it. a foot a year. And Trump's the first one. that said, "Get the hell back on your. side of the line." And uh so what he's.

been doing on trade negotiations, all. the rest, uh has definitely put them a. bit on their back foot. I think one of. the heroes in the Trump administration, the Trump 45 administration, was Matt. Pottinger, who uh was a former Marine, lived in China for many years. uh and. ran the China team at the National. Security Council and then became the. deputy national security adviser. Uh. he's now he's now with an outfit called. Garno Global and they write lots of.

research pieces on uh what they expect. to happen in Asia. And uh you know Matt. thinks that we're we're. you know I'll quote actually Admiral. Paparo here. He's who runs the. Indo-Pacific Command. Uh, you know, we've heard of the boiling frog analogy, but this is boiling at a pretty rapid. rate. And that's sort of Matt. Pottinger's conjecture as well. Things. are going to get heated very quickly. Uh, and we should get our game on. We. should be preparing as if something.

really bad is going to happen soon. Hopefully, it doesn't. Nobody wants to. be in another forever war. Um um, but we. should be preparing as if something may. happen. The national debt is spiraling out of. control. Trade wars are causing record. volatility and inflation continues to. rise. Are you prepared for what might be. coming in the rest of 2025? Don't sit on. the sidelines. Take action today to help.

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Protect your future. Go right now to. uscca.com/srs. And the Chinese government is making. some very unmarket decisions in. preparing for war. And if you look at. Xi's speeches, not the ones that are. necessarily public, but the ones that. are eventually. located and translated when he's. speaking to the um uh standing committee. or the pullet bureau, he says, "Prepare.

for a great conflict. This is going to. happen.". Very obvious. and things like. uh Chinese stateowned enterprise if they. have land holdings in the United States. A lot of real estate stuff. Yes, there's. problems with Chinese owning land in the. United States. In a lot of cases, they're dumping it for pennies on the. dollar. Their banks are dumping their um. aircraft holdings for their leasing. companies. they are taking all kinds of.

steps to to make them not exposed to. dollar sanctions and to having any of. those assets seized in the United. States. So those are the things that a. country does if they're preparing not. for economic war but for actual kinetic. war. Yep. And we can double click on. that because there's a lot to unpack. Here's the Chinese embassy in the US. right around the time when we were. starting to talk about tariffs. quote from the Chinese embassy in the.

US. If war is what the US wants, be it a. tariff war, a trade war, or any other. type of war, we're ready to fight till. the end. It's pretty self-explanatory. Um so um. there are there are many there are many. vectors uh that we need to deal with but. when you've stored 70% of the world's. corn uh as they have why do you do that.

uh when you've built enormous hospitals. in Fujian province across from Taiwan. why do you do that when you have. um increasing you know you're tightening. the noose in these military exercises. What began in 2021 with one brigade. uh has now reached 42 brigades. uh in these military exercises over time. exercising logistics.

Um like a rehearsal for D-Day. That's. exactly that's exactly right. These are. rehearsals. These are not military. exercises. Uh and what's happening is a communist. Goliath, right, uh is is taking over. like a a small little David uh who is. democratic and. um you know, we're we're sort of in a. quandry because if we step in, whether. it's a blockade, a cyber attack,

internal strife, a full-on invasion, whatever it is, and you know, I don't. pretend to know. I can I can see. different sides of this equation. If we. if we don't step in and we allow China. to take over, there are consequences to, as I mentioned earlier, for our economy, for semiconductors, and frankly for our. standing in the world. People are going. to say, you see, China's going to say. certainly, look, the United States is a. paper tiger.

If we do step in uh and you know, they. sink in Arley Burke, gloves come off and. it's game time. I that's bad too. Uh so any way you look. at it, it doesn't seem good. What do you. guys think? Well, actually, porcupine, finish up. What should we do? Porcupine, don't give them the playbook they're. expecting. The one the terrible thing about the. Pentagon is they are very predictable.

They're predictable in their. acquisitions, in their exercises, and. all the rest. And so the whole paycom. strategy about carrier air wings and. long range bombers out of what two or. three locations in the Pacific all of. which if it's one lesson people should. learn from Ukraine is anything that's. located can be targeted by not a few but. by hundreds of precision weapons almost. instantly. Yeah. Okinawa and Guam get. smoked. Yes. And and what are those? The.

key bases. I mean that Okinawa is. Japanese territory. Does that. automatically trigger Japan to uh to. raise that battle flag? I don't know. But the one thing that that China can't. necessarily account for and I've I I. really hope they do this. The the. Taiwanese leadership deludes themselves. in thinking big Uncle Sam has all the. solutions and the US Navy is going to. come to the rescue. Is that their plan?

I think so. I think you should you. should ask any Taiwanese official what. is their plan. because what in the American Revolution. where you had 13 colonies farmers with. no standing army took on what was then. the most powerful military in the world. and they did it not really by. conventional but they started with a. guerilla war. 30% of America in 1776 was. in favor of the crown loyalists. 40%.

were in the middle, didn't really care, just trying to survive. 30% were pro. liberty. 10% of that 30% or 3% are the. ones that took up arms against the. British Empire. 3%. So if we took and. I'm confident we can find 3% of. Taiwanese society that is willing to. defend the status quo, meaning Taiwan. continues as it is not an independent. country, but they're not going to be. ruled by the CCP. And you can find those.

by either a few motivated policemen, firemen, reservists, um the crossfitters, the marathoners, the boy scout leaders. It doesn't take. that many. 3% of that society. So that's. I think the the standing Taiwanese army. is like 150,000 largely worthless very. soft very woke and any significant. weapon system they have has already been. targeted by probably a dozen or. pre-registered by a dozen Chinese.

precision weapons cuz it's only what 70. 80 miles from the mainland to Taiwan. But what they can't account for is. 720,000, right? 3% of 24 million that. show up that step outside their house. and say, "Get off my yard." And if. they're equipped, if they have access to. small arms, EFPs, a very potent roadside. bomb, uh emergency comms, emergency. comms, drones, fiber optic drones, which.

can't be jammed, RPGs, and the innovation and the basic skill. sets to make every street corner, every. intersection, every every neighborhood. another fortified urban hell hole for. the PLA to have to push through. or even. if the first wave comes through and now. they're getting lit up from behind, that. is not something the PLA can plan for. because if China's going to go for this, they have to make it quick. They have to. own Taiwan in a matter of days or weeks.

They cannot ex they cannot accept the. blockade or the embargos that would. happen and the videos of Taiwanese. people being slaughtered by this. terrible occupation that inevitably. would happen. And another side to this. coin is the the headline numbers. Taiwan. spends around 2% of GDP uh on defense. They're trying to increase it. Uh I. think the Trump administration is. saying, "Hey, get it to 10%." Um the. problem is that the current political.

leadership in Taiwan is hampered by the. fact that Congress is controlled by the. opposing party and the opposing party is. kind of sort of in bed with China. Uh. and they're they're resisting any. attempt to grow the military budget. Um. now for years Taiwan has bought things. that don't make sense like tanks and you. know advanced aircraft. Uh I think. Eric's exactly right. They should focus. on a domestic defense. Uh and there's a.

guy Switzerland on steroids. Yeah. There's a guy named Robert Sao who is I. think an oxygenarian uh billionaire. United Semiconductor if memory serves. was his company. He's trying to stand up. a homegrown militia outside of the. government. Uh but that's exactly what. they need. Be a porcupine and give China. pause. So China says, "Gosh, do I ingest. this or am I going to get heartburn if I. do?" Uh, and that's the only thing.

that's going to save us. because China is also not immune. You. have a huge amount of one child policy. families. Yeah. And so if you they're. they're not immune to losing lots of. casualties and they aborted all the. girls. Correct. Females. There's 40. million males of marriage age with no. prospects of marrying a female. So it and here's the thing. It's really. about increasing the pain calculus for.

Xi. All the generals around him have all. bought those positions because they buy. those positions for corruption because. they get to pocket and that's why. there's been a significant turnover of a. lot of those generals of the strategic. rocket forces and those eastern commands. because of those kind of highlevel. corruption stuff. But still, every. general there is saying, "Yes, boss. We. can do this. We've got all this new. tech. We've got this great capability. Go, go, go. Let's go flex our muscle and.

and take back Taiwan." But the injecting. that uncertainty of a few hundred,000. possibly really pissed off Taiwanese. that have the basics of arms, the basic. of skill sets, and the will to defend. their status quo freedom. That is a very. very difficult thing for him to look. past. It doesn't involve American soldiers. It. doesn't involve American carriers. That.

is that should be the United States. government's policy to arm twist Taiwan. into doing that to because this is a. matter of political will. We're not. looking for the government Taiwan. Taiwanese political leadership to do. this. It's really about impowering the. rank and file people that say, "Yep, this I will defend.". Well, let's add to that. Um, how do you. strengthen your uh your cyber defenses? Um, you know, Taiwan imports pretty much.

like 98% of its fuel. Uh, when the sea. lanes are cut, what do you do? Well, you. need to have storage. Can that storage. get cyber attacked? Can your electricity. grid, can your water uh systems, can. they get attacked? The short answer is. they import how much of their fuel? Well, I mean, they just. closed their last nuclear plant. I don't. understand that. Why would they have. done that if they're importing 90% of. their fuel? Cuz they worship the green. god more than they worship. Well, this.

is the current this is the current. political party. The DPP is very green. Uh very woke, but it's what's we we. can't I mean, we're trying to understand. them in American terms. They're green. and woke, but they're also pro- Taiwan. and anti-China. The other party is promilitary and more. conservative, but they're like kind of. in bed with China. So, it's it's a very. strange and fluid situation. So, even. even the Taiwanese are split. It's a.

democracy. Oh, yeah. Yeah. Yeah. Sure. It's a democracy. I mean, when it comes. to China, some of them are proh China. But but here's the thing, and I I have. to segue here a minute. Where's the last place Gavin Newsome. visited? China. When you see Trump. taking a hard line against China, against the Chinese Communist Party, the. Democrat party of the United States will. adopt a much more pro-China policy and. you will see more illicit money flowing.

to Democratic candidates. If Gavin. Newsome is their candidate, you can. expect a very pro-China friendly. politics. TR like we said the Chinese. political subversion that you see in. Japan in Korea in Australia believe me. it's in the United States as well the. the thousand talents program massive. intelligence collection the United Front. workers uh United Front work program. again Chinese subversion at the. university level and through thousands.

of American corporations. that is a a deliberate. you know it's that's an ancient society. They understand how to do how to how to. shift that fence 6 in a year. Yeah. Uh elite capture. Um you may. recall um Eric Swallwell u member of. Congress who was you know uh on the. intel committee on the intel committee. who allegedly had a relationship with a. Chinese spy. Uh you had Diane.

Feinstein's driver for 20some years was. a spy. You've had a series of. allegations uh in New York, various. members of Congress, various important. political figures. Uh McConnell Oh, McConnell's McConnell's wife. Uh and so. elite capture is very important. Now, it. just doesn't h it doesn't only happen in. politics, but also uh on Wall Street, hedge funds, hedge funds, uh Silicon. Valley, um you know, major corporations.

Try and find I mean, I've been trying to. think about this. What large American. company can you think of that either. sells a product to China or imports a. product from China? It's hard, right? You have to really. sort of scratch your head and think. about it. Look at the look at the stink. China made about the last Top Gun movie. because on Tom Cruz's deployment jet. Taiwan flag was a Taiwan patch. Good on Tom Cruz for leaving it in the.

movie. Yeah, but that speaks to that. level of of institutional capture of. Hollywood funding, hedge fund dominance. when you have Ray Dallio saying that um. uh you know being making totally. apologist statements for China during co. it's because he has billions of dollars. that are managed from China. So Ray. Dalia runs a an outfit called. Bridgewwater. Uh Bridgewwater is one of. the largest hedge funds in the world and.

you know in my opinion and I'm I think. you sympathize he's like an apologist. for China. Uh so you have elite capture. politically, Wall Street, Silicon. Valley. Now that's changing uh and it's. changing very quickly. Um. uh some of the sort of points of light. that I'm seeing is foreign direct. investment that was being deployed into. China is now leaving. Uh Wall Street. fund managers are starting to pull their.

money out. And certainly whether the. taxes are 145% today or 20% tomorrow, whatever the case may be, I'm fairly. certain that in every corporate. boardroom in America, uh the risk. officer is telling the board, hey, listen, we should probably think of how. to move ourselves quietly out of China. to India, to Mexico, where Abu Dhabi, elsewhere, or certainly back to the. United States. So these are some bright. points that I'm seeing. Uh and we we do.

need to detangle and we can't have. important parts of our economy held. hostage to an adversarial nation. We. just can't do that. An adversarial. political system that is the inverse of. our constitutional republic. Do you want. antibiotics being largely produced there. in China? No. Or or any of these key. components. I mean on the defense side.

uh there's a uh there's a lot of defense. tech uh going into or VC money going. into defense tech but the fact is all. the rare earth elements all the minerals. mined around the world 90 to 95% of them. are processed in China the only. functioning rare earth mine in the. United States um it's called Mountain. Pass California MP materials yeah That. offtake goes to China for processing. because we don't do processing in the.

United States. Processing is dirty, not. so environmentally friendly. It's. difficult and the China has subsidized. and built to dominance in that space. That's something where the USG should. they should take a section of um Dougway. proving ground in Utah where they used. to do chemical weapons testing. Never. going to build condos there. Let that be a free zone for processing. rare earth elements where you can do the. processing of dirty, environmentally.

unfriendly things, but let it be an. America in a friendly place that we. control. That should be a I'm all in. favor of the free market, but the free. market only works if it's actually a. free market and you have state sponsored. controlled capitalism coming from China. where they predatory land and they. subsidize to the point of destroying. western competition. There has to be. some level of state level push back in. the west to counter that.

and it's happening in everything. um uh. solar panels. It's hard for us to. compete uh in this solar panel world. when to understand how solar panels are. made. You use huge amounts of silicon. tetraflloride and hydrofluoric acid, right? Uh so again, similar to. processing of rare earth elements, uh. it's not a very clean industry. Now. obviously we can do it in a much cleaner. way than China can. Um but they. subsidize their solar industry. Uh, and.

um, was it last week or the week before? Uh, I think it was last week, an. article, a series of articles came out. saying that China has put back doors, kill switches in all the solar panels. they're sending to the US. Um, just makes you scratch your head and. say, why why do we depend on China for. things that are very critical to our. survival? And I think, you know, as Eric. mentioned, um, pharmaceuticals, antibiotics, penicellin, these are.

things that we should not outsource. It's ridiculous. Telecom, phones. Yeah, it was a great uh not a great scary. conversation at breakfast. You want to. go into that? Well, next time. Salt. typhoon. I mean, I I can like very briefly. This. is all it's all out in the open, you. know. uh FBI director Chris Ray was it. last year mentioned that um well let me.

provide a little bit of background. after 911 um um we needed to find bad. guys um and so we created the Patriot. Act and we asked the telco carriers to. put in back doors so that we could. listen into bad bad guys wanting to blow. stuff up. Um, now we can't access the. phone conversations without a FISA. warrant because we have, you know, the. Fourth Amendment and, you know, we have. rules and regulations that stipulate.

what we can and can't do. But the back. door has existed for decades. Guess. what? China hacked into the back door. Guess who doesn't need a FISA warrant to. listen into your phone conversations? And so uh so that's when the FBI and you. can look it up. The hack is called Salt. Typhoon. Um and um you know salty salt. you know like you salt and pepper you. know salt typhoon. So, um, yeah. Uh, it's ve very well known,

at least maybe to me or to us, but to. most Americans, you know, they they I. don't know. It's like I feel like people. live in the matrix or something. Oblivious. If we do go to if if if China does take. Taiwan by 2027, like he says, what what. is our response going to be? What how. does this go down? How does China take it? They've been. practicing, as you talked about, one. brigade, now 42 brigades.

They have been practicing a quarantine. first. So, a a surrounding of the island. to make uh resupply, naval visit, whatever, cutting off the energy and, you know, basically laying siege to it. Um, I can see them doing that to the. point of forcing some kind of. capitulation or is there a way to uh. break that siege with naval vessels or. with um uh subsurface resupply, lots of.

creative ways or I I would argue that. immediately there's a lot of other. things that should happen to China's. global supply chain, whether it's all. the gas pipelines flowing in from. Kazakhstan, Turk Manistan, Burma, eastern Mongolia or eastern eastern. Russia. Um obviously uh full-on blockade. of the straits of Mala so that nothing. goes in or out of China uh and dialup.

consequences for any of the Chinese. assets anywhere in the world almost. simultaneously. That is not a normal conventional. military response. Um, I can see China trying to do a massive. decapitation strike of hundreds of. helicopter helicopters flying into. Taipei, seizing their White House and. trying to do trying to do it that way on. top of a of a quarantine. They have.

there's been uh pictures published of. them building very long range or very. long uh reach barges like floating peers. that they could offload multiple uh row. type vessels that they would use in. amphibious assault. There's an old. frogman friend of mine Tad Divine may he. rest in peace. He surveyed all the. beaches in Taiwan in 1959 as a UDT.

before even the SEALs existed. He said. there are no good beaches for amphibious. assault. So Taiw So China has been. building these very long barges right. out in the open able to you know you can. buy commercial imagery of them. There's. no other there's no other earthly reason. for those to exist other than to seize. Taiwan full stop. So if we can delude. ourselves into thinking, well, it's not. going to happen. It's not going to. happen. That is visual proof. It's it. it's almost like the mulberries that.

were used in uh Armanas to uh to build. the the portable harbor that we used in. World War II at at D-Day. That's what. China is doing right now. Well, they had. an exercise. It was called Straits. Thunder. Why is it called Straits? Hm. Maybe it's because of the Taiwan Strait. I mean, give me a break. I mean, it's. it's obvious that they're planning for. something and they want Taiwan. There is. no place in my universe where China does. not want to take Taiwan.

I wish it weren't. So, do you think they. would use a boweapon and create another. global pandemic? Uh, possible. I could see them I could. see some kind of other. financial massive shorting of the. financial system with a debt crisis. We're kind of doing that to ourselves. now by adding more and more trillions of. debt. Uh if they can cause that level of. financial pain and and chaos, what. what's not going to happen is, you know, if it is to be it's up to we, it's going.

to be the US government. It's because. the Australians are not going to do. much. Maybe Japan, probably not Korea, right? Because Koreans and Japanese just. they hate each other. uh as much as. Korea should be involved in that fight. because they're either join or uh or get. squeezed off on their own um NATO, Britain, France. totally useless, which is why it is so.

important. It is in the interest of the. United States government to end the. debacle that is Ukraine and pull Russia. away from the orbit of China. Because. right now. I I I I talked to one head of state that. had been at every bricks meeting, every. bricks summit and the previous ones were. always very equal footing between Xi and. Putin. The last one Xi was definitely. ascendant. and for 100 plus years it was the policy.

of the United States to keep German. industry from combining with Russian. natural resources. Now all we've done, all this stupid. Ukraine war has done is push Russia, all. those Russian resources into a. subservient role um to the Chinese. Communist Party and their massive. massive industry. That is not in our. strategic interest. We do not want to. tangle if China is going to go for it. We don't want Russia on the side of.

China in any way, shape, or form. That. we cannot handle. Well, you asked how. could it go down. Um or when would it go. down? These are I guess two different. questions. Um the latter question, I. don't know. Nobody knows. It can happen. next week. It could happen 5 years from. now, but it's going to happen at some. point. How it happens, um. uh I suspect that a a fullon invasion. would be very difficult. If you go back.

to World War II, we had something called. Operation Causeway, which was a an. invasion of Taiwan, and our military. leaders said, "You know what? This is. way too hard, so let's go to the. Philippines instead. Taiwan is a hard. nut to crack." Um, could it happen with. a combination of cyber uh influence. operations? Eric mentioned uh very. briefly, you know, United Front and. Thousand Talents. You may want to. explain what those are, but these are. basically spies. Um, massive spy network.

infrastructure all through American. companies, infrastructure, all the rest. The ability to really cause mayhem in. the United States at the behest of. Beijing. But the thousand talents and. um, United Front work doesn't just ex. leave the United States. You also have. United Front spies in Taiwan. What I'm seeing uh is that you these. these exercises.

uh are getting they're they're slowly. tightening the noose to the point where. it's becoming demoralizing for the. Taiwanese and they're and what I would. hate is for them to see this to resign. themselves to say well to the. inevitability of it right this it's. inevitable anyway we may as well just. give up and so they become despondent. And I 100% agree with taking 3% of the. Taiwanese population, arming them to the. gills, and creating a real insurgency. that gives China pause.

As to our response, I don't know. Um, and um, that's a really tough one. because if if there's a blockade, uh, the the international community is. going to want um they're going to want. um attribution. who who well who started. this, right? Well, if they started it, then there's an appropriate response. But I don't think we want to start. anything. Uh and I don't think we want.

to put ourselves in the position of. having sailors and soldiers die. I mean, look, let's face it, many Americans. can't tell the difference between Taiwan. and Thailand. And like, why should we. care? That the narrative, the high level. narrative is why should we care? Uh, and. you explained it at the beginning. Both. of you guys did. We lose our economy, the chips, our economy, US dollars, no. longer the standing world. Yeah, hard. Most voters don't understand that. They. win the tech war and be become the.

global leader. Agree with all that. But. you're right about the the salami. slicing that you've seen them do with. the South China Sea, building islands. where there were no islands, moving. boundaries. now with a with an oil rig. just off of Korea, maybe Indonesia, those waters are next. The amount of air incursions where they. fly Chinese aircraft, PLA air force. aircraft into Taiwanese airspace, fly.

around, it's very hard to even intercept. them. That's my frustration with. Indopaccom or the Taiwanese leadership. Be innovative. Okay. plack off an IED in. front of that Chinese that that squadron. of aircraft, not shoot it down, but. there's a way you could build. effectively an airborne IED and put a. cloud of grit up in front of those. engines so that every one of those. engines of those Chinese fighters has to. be overhauled and replaced by the time I.

make it home. You can really up the cost. of their nonsense if you're innovative, but if you depend on RA, Rathon, Lockheed, Northrup, Boeing, you're. screwed and you're going to pay a. hundred times as much and not have the. effectiveness. Uh, I agree with that. Um, look, I'm probably talking my own. book here, but um, our we have a fund, it's called Mari Libram, and we which. means freedom of the sea in Latin. And. what we do is we invest in. technologies in the maritime space that.

can help move the needle. So, um, you. might say, gosh, is is an aircraft. carrier going to be really effective. against a Chinese hypersonic missile? Maybe, maybe not. But can you put. drones, uh, let's call them, you know, um, raceboat drones in the water that. are autonomous that can carry kinetic. payloads? Could that move the needle? So, you know, we have to think. creatively as Eric mentioned and and. sort of holistically, but what we. certainly need to do is we need to.

prepare as if this is happening. yesterday, right? But, um, what I see is. a lot of threat deescalation. Like, to. give you an example, um, a month and a. half ago, uh, what's his name? Um, uh, Hi Dong, uh, the guy that that the. Chinese military leader that runs the. Eastern Theater Command was demoted and. he was sort of removed from office. He. was actually pretty good. And so the. China scholars are like, "Okay, good. They're not ready for Taiwan cuz Huei.

Dong is gone." And so let's just. deescalate things. And it's just so. foolish. Let's plan as if this is going. to happen uh and be prepared for it both. as a whole of society. uh our cyber Taiwan cyber I mean our. infrastructure is not immune by the way. uh from cyber attacks to say the least. are you talking about our power grid. 100% power grid telecom grid banking oh.

you yeah I mentioned if if it involves. moving ones and zeros it's vulnerable I. mentioned salt typhoon you could. probably, you know, Google Volt Typhoon. Uh, and the Chinese are embedded in our. grid already. So, I think we just, my. point is, shut, they built half of it. Yeah. I mean, the large transformers in. our country. So, let's just prepare. So, we have to think about, you know, how do. we prepare for this economically? Uh, what are defensive and offensive things. we can do? How do we prepare prepare for. this militarily? How do we prepare for.

this socially, medically, right? Pharmaceuticals and so forth. uh how do. we decouple and start thinking through. the range of options that exist but. actually prepare you know it's as if you. know we're in La La Land uh and focusing. on you know silly things remember when. we were banning gas stoves a year two. two years ago you guys remember that. like nonsense and and the Pentagon was. spending all kinds of money on green. environmentally friendly jet fuel and.

and so kudos to to Secretary Hexath for. amen. Focusing on merit and lethality. That's all the Pentagon needs to be. focused on. And we have an extremely. convoluted, ineffective defense. industrial base, which has largely been. cartelized by way over consolidation and. really bad, really dumb Pentagon. procurement processes. So, what they. should do on the ship building side, we. have there's lots of family-owned small.

and medium enterprises that build ships. for the oil and gas space, for the. exploration space, for uh servicing lots. of remote islands. So, there's lots of. companies they could go to with. three or five designs of autonomous. underwater vessels or very lowprofile. stealthy unmanned vessels. So that. instead of. what a 100 uh Burke class destroyers, a. 100 Burke class destroyers could have a.

thousand or 5,000 autonomous unmanned. other weapons platforms that you have a. massive swarm be for plenty. America. America's main contribution in World War. II was our industrial base was. innovation. Pivoting from making cars. and refrigerators to making weapons. Making a major combat aircraft every six. minutes. Making a Liberty ship in a week. was the record for assembly. That is what the Pentagon should pivot.

to now. Mhm. And and to to do anything. through the existing Boeing, Lockheed, Northrup, Rathon, General Dynamics. cartel is a massive mistake. Now again, they are incented to do. things based on the game that they have. to play, right? Right now, we have cost. plus accounting and the way cost plus. contracting and the way it works is it's. the way the system is set up. And we may. hate it, but it is the system. like in.

their defense and by the way I'm as. opposed to them as you are but in their. defense you know the cost of a missile. is let's say a million dollars and so. they charge a markup it's cost plus a. little markup right the next year what. are they going to charge well gosh my I. I got to grow my stock price so I guess. my cost went up to $2 million. incentivized to raise cost every year. right and and I'm sorry I don't hold. them blameless at all because they. employ effectively a brigade aids.

thousands of lawyers and lobbyists in. Washington DC. Mhm. They do. To change the law to their. benefit. Yeah. Yeah. To get Congress to. appropriate way too much money to the. Pentagon that spends it on that cartel. who then takes some of that money and. pays the politicians to rinse and. repeat. They are a huge part of the. problem. What do you think about what do. you think is going to happen here with. all these newer tech companies, these. new innovators coming in like Palmer.

Lucky with Endural? And I think it's. wonderful in theory, but the fact is. there's 800,000 Pentagons in the. civilian. And as much as Pete Hexath and. team wants to change the culture, you. still have a horrifically awful. procurement culture. And so there's a. lot of great defense tech that's. starting and innovating and have a great. product. getting them to production, getting them to a DoD sale, not going to. be nearly as often as it should be. I. think a lot of great ideas are going to.

die on the vine. There's some great. companies. You mentioned Seronic, which. we invested in. Um, you know, there's a. company called Regent that makes a seag. glider that flies below radar and above. sonar with a very, very long range. It's. essentially invisible. Um, it would also. make a great long-range cruise missile. Exactly. uh or logistics platform. Um. but. consider um if you're a founder, you're.

a startup founder uh and somebody says, "Hey, sell to the defense department. It's so overwhelming. The ultimate the. desired end state is to get to what's. known as a PO, a program of record. So. the Navy or the Army will give you a. 10-year contract for $100 million each, whatever each year. To get there though, you have to navigate through this very. complex world. Uh, and you never know. how you're going to get there. So maybe. there's a Navy group uh out of, you.

know, Jacksonville that can give you a. sber. Well, what's a sber? Uh, you know, it's basically a small grant. Oh, DIU, the defense innovation unit might be. able to fund you over here. Uh, and so. they're living on, you know, nickels and. dimes to ultimately get to program of. record. They're living on R&D money, I. would argue. The explosion of drone. technology has been so pervasive in air, ground, and even maritime. Lessons.

learned from the Ukraine war. The real. ninja move would be to push procurement. decisions down to a destroyer squadron. level. Yep. Or to the brigade level if. you're a combatant commander. Yes. Like. in with that because what we have now is. a super hierarchical. Talk about a program of record that is a. super kind of socialist bureaucratic. hell in Washington that takes forever. for them to decide. And instead, if you. give it to the brigade commander or.

combatant commander to say, "Here's. money. We're in we're we're entrusting. these 10,000 or 50,000 American lives to. your responsibility. Oh, by the way, now. you can buy their stuff that they're. going to use." Great. The 25th Infantry. Division in Hawaii is probably not going. to go appear on the same battlefield. that the First Armored Division is from. Texas. Fine, let them buy different. stuff. Yes, it will cause permutations. of hell for resupply, but the the. half-life of this kind of innovation is.

so much faster than what we want to. believe that you can buy it cheaper if. you buy it at a lower level faster. versus these programmer records which. add so much cost and so much nonsense. You need that kind of speed. The. innovation speed in Ukraine is a guy. gets an idea because they're getting. their ass kicked on the battlefield. He. comes up with a prototype in their. garage, tests it in the battle space over the. next two weeks. If it works, they get a.

contract. That is the shortest. compression of of of flash to bang uh in. in warfare today. And we are not just. we're we're a thousand times that long. on the on the best day now and thus a. thousand or 10,000 times the cost. If it. takes 10 years to get to a program of. record and the program of record folks. say, "Well, gosh, we can't give you a. program of record unless you can scale, but you can't scale unless you've got. like a contract with the government, right?" It becomes this crazy catch 22.

What you're suggesting, Eric, is that we. democratize purchasing purchasing. Yep. Um and and and you allow these. individual units to buy exactly what. they need. like how does the Pentagon. how does a bureaucrat in the Pentagon. know what somebody in I guess you know. federated states of Micronesia of the. future you know uh Marines need. Um so I. think that's a that's a a thoughtful. approach. It's controversial. It's.

necessary. Mhm. Because the current. current paradigm is not it. It was. absolutely destined to fail. If we get. into a conventional conflict with China. right now, we will suffer calamitous. levels of casualties. We can't build stuff anymore. You've had. for all the all the um talk of naval. greatness and precision targeting all. the rest. You lost the war to the Houthis. The.

Houthis shut down, right? It's a. Iranianbacked faction in Yemen, Shiaabia. based, that closed off the Red Sea for. navigation because of uh Israel and. Gaza. The president, they think they called it. um Operation Ruff Rider, which is an. assault to the which is an insult to. Teddy Roosevelt because it did not. affect the change they wanted. They went. full hot and hard. all the power of. Sententcom, US Navy, Air Force bombers,

all the rest, they were still clacking off and. attacking ships and and and true. asymmetry. The the Houthis would launch. a 20 to $40,000 Shahhead 136 drone. against a ship and we'd shoot it down. with a missile, million- dollar missile. Not one, but two. Okay. Because they'd. have to double tap it. Yes. to the point. and obviously they were shooting at. aircraft carriers and shooting at them. effectively enough that they had to do.

high-speed maneuvers. Why? Because they. lost not one but two ships, two. aircraft, okay, an $80 million F-18 over. the side because it was not dogged down. It was being towed across and the. aircraft literally skidded off the deck. not once but twice. You rais a super. interesting point. Um, you know, we talk. about nearpeer adversaries and we tend. to think of, you know, China and that. Well, guess what? The Houthis are peer. adversaries in the sense that um they're. threatening ships. We for a month we.

reigned a billion dollars of firepower. literally on the Houthis in Yemen and. they were like, "Okay, you stopped. Good." And they came out like. cockroaches and started attacking ships. again. So, I guess the question then. becomes um um how good how good is our. [ __ ] Yeah. cuz we know it costs a lot thanks to. Rathon and Loheed and Northrup. Yeah. Problem children. They need to be. smashed, broken up. You've had a massive. overconolidation. You used to have 100.

plus major defense contractors. The. Clinton administration really pushed a. consolidation in the late 90s and we. have been suffering ever since from that. five. There's a good graph of that and. you could see like on the left, you. know, there are like a hundred and then. they start like whittling down to like. five or six. Uh, and it's basically a a. small oligopoly of defense primes. Uh, and I don't know how that's not great. for America. Let's just I mean, what do. you what do you see being in in venture.

capital? Well, what I said earlier, right? I mean, Seronic, they're doing. they're doing both. They're correct. They're also they're building for the. civilian market that can just be. modified that the exact same product can. be modified for the military. You have. some companies like sail drone uh that. you know they make uh autonomous. sailboats uh that can collect. information for civilian use for Noah. and so forth. But then you can also make. a kinetic version of that. You know. others others do the same thing. But.

what am I seeing? I'm seeing the same. thing I mentioned earlier which is. you're a founder. you've got this. amazing technology and then when you get. to the Pentagon, the Pentagon is a big. black box and you say, "How do I even. where do I even start?" Uh, it's so. overwhelming. Uh, now I think DIU is. making great strides. They're going to. probably amplify their budget, but the. system itself, as Eric mentioned, the. system is broken. Uh, and so something.

has to be done to reform uh, procurement. wholesale. I mean, take it down to the. studs and rebuild it. Uh, because it's. so broken. The secretary, the seaf has. to take it down to the studs as much as. he can with hiring and firing people. because people is policy. But then. there's underlying. law that has to be changed. Really, the. last time Congress did a big change on. creating a service was, I think it was. MFP1, is 85 or 86 when SOCOM was.

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fiction, about the fivepoint plan. Do. you know anything about that, either one. of you guys? I I mean, I've heard about. it, but anything leaked uh from the CCP. is quite I think it's it could be. fictional. I'm not going to I I don't. spend a lot of time on leaked memos. Okay. Well, is there anything that we haven't. covered that we should have? I think. it's important. There was a couple of. Chinese colonels, PLA colonels,

that wrote a book called Unrestricted. Warfare. Mhm. And after Gulf War I one, seeing all the uh precision strike. capability, the air, all that, and then. even after the 2003 Iraq invasion, seeing the level of precision energy. that the US can deliver, I think it made. China take a step back and say, are if. we're going to take on this hedgemen, we. have to do it in an unconventional,

unpredictable way. And my worry is that. Pentagon leadership likes to fight in. their box of the rules-based order. All. the people in Washington DC also always. talk about the rules-based order. Well, you know what? The first rule in a. street fight is there are no rules. And. and unserious people that delude. themselves. uh lead us down a uh kind of a um a. blind path of stupidity. If we think.

that China is going to follow all the. rules to achieve their goals. So when I. think of the rules-based order, I think. of the British red coats who would, you. know, who would stand in like two or. three lines and say ready, aim, fire, and we were taking pot shots at them. from the trees. And they would say. that's not gentlemanly. And we're like, so what? We just want to win, guys. Yeah. Um, yep. But this this book is. actually it's very important uh because. when China thinks of war they think that. everything becomes an artifact of war.

In other words, uh we think in terms of. war is kinetic uh but diplomatic stuff. is diplomatic stuff and uh you know uh. climate change is that and data is that. but what if everything were an artifact. of war? In other words, everything is. weaponized. Smuggling fentinel in the. United States where 90% of the. precursors of fentinel obviously come. from China. By the way, happy Memorial. Day. Uh I did some math and uh in the.

Pacific theater alone 110,000. uh soldiers died in World War II. plus add another 60 for Vietnam, another. 40 uh for the Korean War and another. roughly you know 7 to 10 from random. things that happened in the Pacific, the. Philippines and so forth. Uh it's about. um uh let's call it 200 plus thousand. deaths. Um in fentinel over the last.

four years we've had something like you. know 70,000 people die of fentinel every. single year. Many of them are veterans. much bigger numbers than that. Um I. think it's over 100,000 a year. Let's. assume it's 100,000 a year. That's. 400,000 uh over the last four years. Um, and a lot of them are veterans. And. guess what? That's coming from China. That's a weapon. And it's a weapon to. hurt Americans. Is it an intentionally. funded, organized, facilitated by the.

Chinese Communist Party, Chinese. nationals in Mexico, teaching the. cartels how to cook fentanyl. And it's a and it's a payback for the. opium wars of 150 years ago, which the. US was not even really part of. That was. the Brits. But they see it as a way to. corrode our society. I think it's very. important to remember we fought a war. against China. when 1952-53. when a million Chinese volunteers came.

rolling across the Yu River and attacked. the US forces in Korea. MacArthur wanted to bomb them properly. and he was relieved and we basically. fought for two more years to a stalemate. again ending up on the 38th parallel. But we fought a very hot war against. China. We haven't fought one against the. Soviet Union. Uh and and their ability. to project tens hundreds of thousands of. people. is a lot. Their their tolerance for pain.

is much much much higher than ours is. Yep. What edge do I just don't understand. what edge we have on them? They have infiltrated our power grid, our communications, the fentanyl crisis. They're buying our land. I mean, the. medical supplies, the whole supply. chain, elite capture, our What the [ __ ]. are we doing? Our sergeants, our 03 captain.

bricks. fine militarily, our middle management. and NCOs's are way better. It is not. something that I'm not going to argue. that, but they get so frustrated with. the bureaucrats up top that they leave. Correct. Fair. But there's still a lot. of them serving the decision-making of a. uh.

Chinese Communist Party one-state rule. where no one questions, no one questions. the boss, no one calls [ __ ] on bad. decisions, where every decision is not. made by the people here where it should. be. it's always kicked upstairs waiting. for someone senior to them to make that. decision really paralyzes their. decision-m and you even see that I. remember. probably uh eight years ago there was a. knife a knife attack from some um some.

weaguers okay which is a ethnic Turk. Muslim part of China from um Shinjang. province and they did a knife attack in. a major Chinese city and it was so bad. so bureaucratic the controls that the. police that responded, one guy could. carry the pistol, another guy had to. carry the magazine, and they had to call. back to headquarters to have permission. to hand the magazine to the guy to load. the pistol. This is during a full-on. knife attack to solve that problem.

Amplify that a thousandfold across the. Chinese military. Now, autonomy, maybe that accrus back to their their. benefit because they're not so worried. about friendly casualties and friendly. fire and collateral, but we have we have a innovative. populace. that will come up with new solutions. Um, look at Elon Musk, what he's done to. space lift and space travel versus the. all government all the time solution. Mhm. You need to find a hundred more.

Elon Musks amongst all these defense. innovative companies. Give them money, give them leeway, and great things will. happen. If we depend on the cartel that. is the big five defense industry, we're. screwed. I think at a macro level, one. of the things that we still have is the. ability to attract and retain the best. people in the world. Uh Elon Musk is an. example, but there are many others. you. go to Silicon Valley and it's really. really smart people that go to Stanford.

or um you know MIT or whatnot uh and. they stay here plus we have an enormous. appetite for risk-taking the risk. capital that we have in the United. States the venture capitalists and so. forth are able to they put money into. companies because one of them out of. their portfolio of whatever 15 companies. is going to be a unicorn. Uh and so we. have an ecosystem from the capital. markets, the IPO markets. Uh the the the.

strength of our financial uh and. commercial and private sector. infrastructure is so strong that I don't. think anybody's going to beat it. And I. think as I mentioned at the beginning of. this segment, the battle of ideas, competition. ultimately will win the day. And when. you have the smartest people in the. world competing for the best ideas, the. best companies, etc., we're going to end. up winning. When you have the state, in. the case of China, directing uh all.

elements of economic activity, it's. doomed to fail. That's why you have, you. know, ghost cities of apartments. everywhere and, you know, things that. don't work. Long-term, we win. Shortterm, I'm much more concerned. And it also takes good leadership. If. you think about the officers, the senior. officers that defeated the Japanese army. and navy in the Pacific theater, you had. guys like um Admiral Burke, they called. him 31 not Burke court marshaled as a.

junior officer because he ran a couple. of his ships ashore, but he was a. decisive risk taker risk taker. Nimttz, I believe, was also court marshaled as a. JO for. some risky decision. We have a very risk. intolerant culture in the military and. we promote bureaucrats that don't make. any decisions while at the same time the. lack of accountability. If you think. about like 2017 181 19 there was three. fatal collisions in the Pacific theater.

between the US Navy warship and a. commercial vessel. So you take a Burke. class destroyer which is what a billion. dollars or more with all kinds of high. dollar radars and all the rest. doing maybe 20 knots commercial vessel. doing 25 knots and they run into each. other. How is that possible? How is. that? That is the disgusting degradation. of the basics of seammanship and. accountability that the military has.

been allowed to devolve to instead of. focusing on merit and lethality. and that's changing. So um there are a. lot of bright bright spots on the. horizon. I think uh focusing on first. principles in the military is important. uh is an important component of that. On. the private sector side, I think we need. wholesale deregulation. The regulations. have have gotten so out of hand that. there's a reason why companies have.

moved overseas. Let's let's deregulate. to the point where things are sensible. I'm not calling for zero regulation. What I'm calling is for sensible. regulation. Have you seen any signs of. that getting ready to happen? Sure. We're about to uh you know, we're about. to unleash nuclear power in the United. States. Trump signed an executive order. and the NRC, the Nuclear Regulatory. Commission, uh I think needs to get you. know, readjusted. It shouldn't take, I. mean, 10 years to build a nuclear power. plant in America or 20 years to get a. permit to get a license to do so. Mhm.

So, deregulation, unleashing the energy. supplies that we have here and the. mineral supplies. Um we haven't talked. about tariffs. if you want to go down. down that rabbit hole. Uh but tariffs. are a part of not exclusively but a part. of re-industrializing the United States. Where they end up going, nobody knows. Um but I can tell you that there is a. rush for a lot of folks to to start. doing stuff back in America.

The United States government used to be. funded off tariffs alone. It was not till the progressive era they. passed. It's in the early 1900s, right? Yeah, a bunch of No kidding. Yeah, that's true. Used to be the sole income. of the US government was tariffs which. gave a basic level of protection for. domestic industries. I think that is a. very good idea. So what the president's doing on tariffs. is right. It is good to um incentivize. production. The whole US government was.

financed off tariffs 100%. Well, keep in. mind the US government was a lot smaller. back then than it is today. And it. should be a lot smaller. It should be. massively smaller than it is today. Yeah, it's very disappointing they. haven't made the doge cuts permanent in. our legislation. It's disgusting. It. speaks really badly to the Republican. party to a huge amount of those. Republicans to not even cut the most. egregious stupid waste that it speaks to. the problems of the uni party and and. why Trump was fighting not just against.

the Democrats but against most of the. Republican party because most of the. Republican party is as bad as the. Democrats. And so voters when they go to their. their go to their voting booth in. another year and a half, they need to. elect somebody that is fiscally. responsible because we have a lot of. people that are not. And let's go to, you know, just to pivot. back for a second to the. re-industrialization of the US and and.

why one of the many reasons why Trump. won. I think globalization over the last. 30 years has benefited the elites living. on in coastal cities, you know, San. Francisco, you know, Palo Alto, Silicon. Valley, New York, Wall Street, etc. Um, but what it's done is it's hollowed out. the industrial capacity of the middle of. the country and people there was dignity. and still is in being a welder in in. working in a factory. Um, but we decided.

that we would get it out of the United. States, send it off to China. Hey, I've. got to deal with quarterly earning. cycles. I'm the CEO and if it out of. sight, out of mind. And what you have is. a group of people in the United States. that, you know, once had jobs and real. dignity and now they've got nothing and. now they're being fed fentinel uh only. to die. there's a desperation and a lack. of hope and I think we need to. re-industrialize the United States. Um I.

mean is textile manufacturing coming. back? Probably not. But there's a whole. bunch of stuff that can still come back. But I would even disagree. Textile. manufacturing can even come back with a. certain level of automation or robotics. But when you what in the 90s when you. had when NAFTA started and you had a. over financialization the entire private. equity crowd that can buy a business. with a lower cost of capital because. they can borrow cheap. They consolidate. four or five family-owned businesses.

They gut the management of it and then. they outsource all the production to. China because there's a free trade deal. to do that. Yeah. those uh those family. businesses, the communities that they're. in all suffer because of it. Which is. why a baseline tariff incentivizes. people to make an America that should be. the law of the land. So looking for hope. and optimism uh on on Memorial Day. Um. we we will at some point. I think it's.

baked into the ethos of the. administrations of this administration. to re-industrialize. Um, I think that, you know, we've opened. the eyes of corporate boardrooms in. America who now see that their China. assets need to get moved. You may have. seen, you know, Tim Cook made an. announcement that, you know, we're going. to start moving a lot more apple. production to India. Um, you're seeing. changes in the military focusing, as. Eric mentioned, on merit and lethality.

and first principles. Uh, and so little. by little, you're starting to see, you. know, the the, you know, the cruise. ship, if you will, if you want to call. us a cruise ship, just moving slowly in, I think, in the right direction in many. respects. Like it's not perfect, but but. we're we're starting to move. But now we. need to move faster because we have an. adversary that is. um, you know, very formidable and we. better wake up. We're wrapping the. interview up. I want to get your guys'.

opinion on what what does the rest of. the world look like if China were to. take Taiwan. We talked about US. What. does it look like for Europe? What does. it look like for South America, Africa? What what does it look like everywhere. else? for immediate Southeast Asia. You'll see a scenification of meaning a. Chinese control and tentacles. into a lot of those societies with more. social credit score and more of the big.

government rule of the elite far away. from any kind of individual rights. in. Latin a in Africa you'll see effective. economic colonization and control uh if. there's if if it depends on what the US. role in the world if if if. Taiwan being taken causes a massive. bankruptcy in America and a complete. reversion. um that's a problem for the US. government but there's a lot of. entrepreneurs in America that don't.

depend on the US government that can. still take American knowhow capability. ility to go out and do innovative. things, right? If you think about think. about what SpaceX is now, he's built a. global communications platform to. provide global internet. Yeah, the the. NASA was his first customer, but SpaceX. and that kind of uh innovation continues. on. We still have 50 great states, 50. state governments that are well-run. if.

the US government has to take a uh a. massive haircut in a right down. um you know so it's not all um we have a. lot of fundamental elements in our. society that will continue on with or. without the US government. I've I've. learned that uh the hard way uh over the. last 20 years that maybe less federal. government is not such a bad thing. Um 100%. What does the world look like? A less free place. Um,

uh, what does Europe look like? Well, Europe has other issues. They've. got, uh, an imploding demographic. Uh, they've got immigration issues. Uh, many, not all, but many of the. immigrants that have gone to Europe. don't share, let's just say, the. European cultural values. I'll say it. stronger. They're completely. incompatible and don't belong in Europe. All right. Um and um uh they're.

suffering from very high energy prices. uh because they had spent decades. depending on Russian uh natural gas. while focusing on climate change and. listening to Greta Thunderberg. Uh, and. now the Chinese electric vehicles, if. they're allowed into Europe, are going. to decimate the German automotive. industry, um, which is already suffering. from a much higher cost of electricity. because they've embraced the stupid. green lie. And for all the noise of.

Europe, Europe, Europe for Ukraine, the. fact is they've continued to buy Russian. gas at a dollar figure above any of the. military aid that they provided to. Ukraine. Come on. unserious people. Yeah. So, you've got a demographic issue. Um. you've got an energy issue. You've got a. manufacturing issue. Uh and um it's. unclear how Europe comes out of this. Again, I'm not I'm not a European. political or economic expert, but you. can just sort of read the tea leaves.

They all have a demographic issue. Japan. not replicating itself. Not their their. population set to collapse. Korea, it's. even steeper. China has a population. collapse issue. Taiwan has an even. greater population collapse issue. That's another reason. If if you don't. believe enough in your society to. procreate, to have kids, to to leave. kids behind, um why die defending your Taiwanese.

society? Damn good point. It's a damn good point. So, look, I still believe in Western. Christian civilization that we've gone. through rougher patches throughout 2,000. years and um. uh there's a lot of great heroes to look. to the past that um can rally the people. when necessary. I'm I'm I'm exceedingly. thankful that Trump was elected and not.

to politicize this, but again, we've had. a very different paradigm of way he has. tried to shift the country versus what. Kla Harris did. Elections have. consequences and um and politicians. don't last forever, but ideas and values. should. And so uh you know, this is. still the best place on earth, United. States. Yeah. And look, I'm a believer. in American exceptionalism. uh we. attract and retain the best people. We've got a very robust capital markets.

and private sector. Uh all we need to do. is is tweak a certain number of things. to sort of get us all humming and you. know all the pistons firing. Uh and and. basically I think we need to be aware if. if anything comes out of you know our. discussion it should be an awareness. that we don't live in a peaceful world. uh the Francis Fukiyama famous the. famous famous author who wrote you know. the end of what is it the end of. civilization we won you know uh we're.

going to democratize the world we have. adversaries out there and we need to. open our eyes we need to be vigilant we. need to be prepared um and and I think. if we are able to harness the you know. the work ethic and the exceptionalism of. the American people we're going to. succeed and this really is a competition. of governance philosy ophies. Chinese. Communist Party is state control, rule. of the elites with the surfs having no.

rights. You're but a cog in the machine. Kind of like California. Yeah. Versus. the United States. We believe in rights. We have a constitution. We have a bill. of rights which is supposed to impair. and limit the government. And as. imperfect as the republic is, it's an. infinitely better place to be than. living under a massive statist monolith. Yeah. So, yeah, vote and defend freedom. Yep. Send it. That's right. Well,

gentlemen, I really appreciate your time. coming. That was a very eye openening. conversation and uh I learned a I. learned a lot. So, thank you so much for. being here. Thanks, Travis. Thank you. All right. Thank you. [Music]. No matter where you're watching Shan.

Ryan Show from, if you get anything out. of this, please like, comment, subscribe, and most importantly, share. this everywhere you possibly can. And if. you're feeling extra generous, please. leave us a review on Apple and Spotify. podcasts.