#29 - Yat Siu

25:41And so the issue is that basically when you have the English internet, you've got Americans, Indians, Europeans, people from all over, and they're all packed into one place digitally. And there's just this absolute mealy and free-for-all because nobody knows who's in charge or who's in control or it's people who are in control or the CEOs of the platforms or is it the government that can regulate them or is nobody in control because it's cryptocurrency. That order is being worked out now. And I think we're on the end of it by, I mean, 20 years is a long time. But like 20, 30 years from now, I think digital borders and physical borders will coincide.

26:20Oh, I think it's kind of happened in a way. Kind of. Well, it's happened. I mean, China, in a sense, is the forerunner of this. But like if you take a look at, for instance, you know, like basically Chinese overseas, right? Basically, like our population, it's larger than the population of France, right? In terms of quantum and certainly Indian as well, right? Look at sort of the expat communities. I mean, there are, like, if you go to Dubai, it may as well be India, right? Yeah, exactly. 80%. Exactly, right? Yeah. So you can see that kind of transporting out. But what's interesting is that they move and bring with them a specific culture that is sort of part of their national identity.

26:55Yeah. That doesn't disappear, despite the fact that the global internet has brought everyone together. And it also allows people to connect with certain interests from those particular societies to combine them together. So what I see happening is, you know, if you want to call it nationalism or patriotism, there are pockets of this type of patriotism where, you know, I grew up in a time where you would describe a kid like me growing up in Austria as like a third culture kid, right? Yeah. Well, to me, this concept of third culture kid kind of is thrown out the air because… Everybody is that. Everyone is that.

27:24Yeah, that's right. Everybody's internet culture. Internet culture. We're all connected one way or the other. And so I could be a national of Austria or a national of America, but I could have affinity to someone in China. I could have affinity to Chinese culture. You know, I could love Japanese anime, and I could suddenly be maybe in some ways even more Japanese, you know, going to be a Japanese person, right? And so that is the part, I think, that society is struggling with as well, because you have that incredible divergence and you have incredible diversity within a construct that is hard to manage.

27:53And I think part of that is because we don't have the traditional power structures to hold it together. The traditional power structures were education, centralization, your passport, your identity, your travel, maybe national anthem, whatever. These are ways in which we try to keep society cohesive. But because of what you described and also media at large, we've now fragmented that open. And actually, that makes me more bullish on America because if there's one society that has managed to be as – Oh, really? Yes. I understand. We talked about America as a nation. But when I compare it to other nation states, China being maybe an exception because it has more tighter control, is that very few countries can survive this type of mass diversity and let's call it implosions and creation and destruction of societies and cultures within, as America has, because it's done this for hundreds of years.

28:47It's kind of like its genesis, as it were. It's a nation of immigrants. It's built in this foundation versus other places. So America is the only place where you can have this kind of creative destruction, which really upheaves an entire industry, which would completely be not allowed in Europe, would basically be defaulted in many other places. And in many ways, China is responding to what's happening to America. Like, for instance, people talk about China as a head of AI. but Chinese being ahead of AI is a response to America suddenly leading, right? In this area originally with, you know, when OpenAI came.

29:22Because remember before OpenAI, it was like China with surveillance state and everything has full control over everything. They've got all the data. They're going to lead in AI. Then America came, boom, with something that was disruptive, highly, highly creative, but also highly destructive for many, many industries. And then China had to respond in kind, right? Yeah. So I feel like that's sort of interesting to see. And I think America's probably the only place they could do that. not counting small city states because they're smaller places like if your population of like 5 million or whatever so let me let me uh let me disagree with you and let me explain why yeah it's because i think talking about america as a unitary entity today like for example think about korea that's very explicit it's on the map we can see it does korea exist no north korea exists and south korea exists but korea doesn't exist right like if you said what do koreans do you get a very different answer for south koreans and north koreans of course and And that historical division didn't exist prior to the 30th parallel, 37th parallel.

30:16Sure. Right? But now it does. And when I say Americans, I mean the United States more than, say, including Canadians. I know. But I would say it's the dis-United States. Yes. Right? Like, there's no America. There's only blue America and red America and tech America. And so just like there's no Korea, there's only North Korea and South Korea. We can see that on the map. It's explicit. Right? They actually have territory. They have governments. They have laws that are incompatible with each other. And they point guns at each other and they hate each other or whatever, right? Fine. So, you know, I don't know the very latest on creative politics, but, you know, they're still alienating.

30:50Yeah, exactly. And it's not likely to come together anytime soon. No, exactly. That's right. So whereas Blue America and Red America, they kind of have separate territories with blue states and red states. And the level to which they're polarized is widening over time where, you know, for example, only 4 % of Democrats marry Republicans. Right. Right. And so you also have something where they don't vote for Republicans, obviously. They don't even socialize with them. Essentially, starting in 2020 with a bunch of Republicans going to Gab and Truth Social, and now you had tens of millions of Democrats going to Blue Sky, right, and Threads and TikTok.

31:29The center has smashed into pieces. Like Twitter's acquisition was like a – I think it was necessary and good that what Elon did. It's like a Tower of Babel moment where the old center, even the internet center where Twitter was the center of the English internet doesn't exist. You have X and you have Gab and you have Truth and you have Farcaster and you have Nostre and you have Bass and so on. And you have Threads and you have Blue Sky and you have Macedon and you have TikTok. So the whole thing has gone just smashed into pieces. And the digital succession has already happened, right? Like Blues and Reds have already split apart.

32:02The third thing in terms of which Americans can handle the thing that you're saying, they're tech Americans. That's yet a third group, right? The internet Americans can ride the lightning, right? The internet Americans, maybe that's 5 % or 10%. They can, you know, they're born in the chaos, right? Because startups are chaos, right? So they can ride the curves all the way up. And that's fine. And that's the milieu that we know, right? Those are the people who are developing AI. They are developing. But let me ask you a question. What is America minus the internet? Well, what is America minus the internet?

32:32Yes. Right. Like, is it successful? No. No, but I also think that, you know, in some interesting way, the internet needed America at start. Yes. So it sort of pushed it forward and everyone had to adopt it because of America. Totally, totally. But I'd say, as an analogy, the internet is to America as America was to Britain. Okay. So Britain, obviously, does America owe a debt to Britain? Of course it owes a debt to Britain. in many ways, so many countless ways, its culture was a fork of Britain, right? Still maintain the English language. Still maintain the English language, exactly. All kinds of things.

33:06And they have a sympathy for Britain. They're not anti-Britain, right? But they're 10x the scale of Britain. They're more progressive and more libertarian, right? And the internet is to America as America is to Britain, where it's like 10x the scale. It's anglophone. But do you think America is not going to be America? Maybe America might not be America in the physical sense, but I think America is the idea. Well, that's what the internet is. So basically what MAGA and, you know, what is happening now in the U.S. is MAGA has China envy. They don't admit it, right? Like basically, I'll show you two graphs, right?

33:39Okay. Let's see it. All right. This graph, okay, shows, so let me just back up for a second. Imagine not a two-faction model of blue-red or America-China, but a four-faction model of blue America, red America, China, and the internet. Okay? This first graph shows that in the year 2010, right, essentially Google and Facebook disrupted legacy media, right? Yeah, they were at$60 billion-something revenue even to the mid-2000s, and they plummeted to like$16 billion revenue, like a 75 % drop in like four years, five, six years, right? And the internet went vertical. So the internet disrupted blue America right around 2010, okay?

34:20At the same time, in a different theater of this giant social war, here you see China disrupting U.S. manufacturing. And the colors are reversed, but basically this is China disrupting red America. So red America, in the same time that blue America is losing to the internet, red America is losing to China. And the response to this, you've heard the saying maybe sometimes like, go woke, go broke. But actually what happened was go broke, go woke. Right. Right. First, blue America lost all this money. Then they politically radicalized the consequence. And they started fighting a two front war where there was the anti tech tech lash, which started in 2013.

34:59And then there was the obviously the wokeness, which was an attack on red America because their pie was shrinking. and they wanted to take back the pies from these two guys, you know, the red and internet factions, they'd taken their pie away, right? Red America felt the exact same feeling because they were under attack from China, economic attack, so they felt, right? And so they responded with Trump and Trump was both a fight against blue America and the trade war was versus China, right? So you actually have a bar brawl with the internet, blue America, red America and China and the internet in china in the mid-2010s were sort of taken aback because the internet thought of themselves as democrats and china thought of themselves as basically working collaborative with u.s manufacturing because all those ceos who had basically moved the stuff overseas or whatever right and they were their trade partners and they were working hard for them they were grinding and the internet in china were taken aback in the mid-2010s by all of this and and at first they took huge hits right like the internet like all the way you know all the censorship all of the attacks on CEOs and stuff over the second half of the 2010s, like Travis Kalanick getting pushed out of Uber, all that kind of stuff.

36:08And it didn't make as much headlines in the Anglophone world, but the trade war was a huge thing in China. Lots of companies had their IPOs crushed. All kinds of crazy things happened. But then what happened after 2020, 2021 is the tide turned, and then the internet after 2022 really went on offense. China went on offense. And now China started shipping cars and they flipped everybody worldwide say basically they they took all these hits then they figured it out and now only 15 of the revenue comes from the u.s and they just went to a completely new gear after 2022 someone on the internet had taken all these hits and they figured out a new gear elon acquired twitter and we were you know we pushed with all in and all this all of these kinds of things you know with the like pirate wires all the tech media but really more of a baseness among tech just pushing in and actually okay you're fighting we're gonna fight Right.

36:59And in fighting, actually, there was a victory, right, where like the Internet's victory of Blue America is kind of obvious at this point. China's victory of Red America is obvious in China or anybody who's looking at graphs. Right. And yet there is still a rear guard action. Right. What Trump is doing with the tariffs is actually mirrored by what Blue America is doing with less fanfare. Blue America has, for example, all these unions and media corporations that are anti-AI. They're trying both to maintain a protectionist thing and protect what money they have against this internet and China kind of wave.

37:33But the problem is that all media is going to be AI and all money is going to crypto. So the last strongholds of blue will fall. And all manufacturing is going to robots and all military is going to drones. And that's where China is totally dominant. And it's kind of like Red America is trying something there. and there's, I think there'll be something that comes out of that, right? They're at least more productive. Blue America is just purely defensive. There's at least some attempt by like the tech guys, which is different than the reds, by the way. But there's some overlap between tech and the right over here to try to build like, you know, American dynamism and so on and so forth.

38:11Nevertheless, that is not price competitive on global markets with Chinese manufacturing because of the sheer scale of what China is. Yeah, the expertise that have built over time, yes. Yeah, there's like 1.4 billion Chinese people and 77 million magas. And China's exported to every country in the world. And China has the insane price competitiveness required to make a profit in Nigeria and Brazil and all these kinds of places. So they've got all their numbers completely dialed in. And really, the physical world is made in China and the digital world is made in the Internet, right? And when you see this, my analogy is to Europe in the early 1900s, OK?

38:43So Europe in the early 1900s was the center of the world. Sure. Right? You had Britain, you had England, you had France and Germany. And this is where culture was. All the Nobel Prizes were there, all that kind of stuff. And you had these barbarian powers on either side, America and Russia. And then what happened was these were the ones that had the growth rate. They were the biggest populations, and they're barbarians in some way. They weren't considered the center of culture. They had some things going for them, but they were always downrated relative to, obviously, it's Europe. But what happened was Europe, essentially, after a lot of fighting, inwardly collapsed.

39:13It went to socialism, nationalism. Yeah, debilitating wars. Debilitating wars, exactly, internal wars. And it ended up being literally split down the middle between America and Russia, between American capitalism and Soviet communism, right? And I think that that's happening again today, where in the early 2000s, America was the center of the world. And after winning the Cold War, basically, it was just the center of everything. And Democrats and Republicans had nobody really to fight for each other. There's no more enemy to unite against. Yeah, exactly. So they just started fighting each other even more aggressively.

39:44And then the two barbarian powers on either side were the Internet and China. And these had the growth rates, right? Billions of users, you know, like the growth rate of China, I don't have to tell you, over the last 50 years. Of course. Yeah, it's insane, right? But in a sense, they're both invisible. To an American, the Internet's intangible, and China's overseas. So these growth rates, as crazy as they are, were also invisible, right? They were far away in some sense, right? Like I have to still, even today, persuade people of how important the Internet is or how big Chinese manufacturing is.

40:12it's simply not part of the equation that they're thinking about well they can only perceive it through graphs and charts right like you and i have been part of enough tech companies and seen enough projects that we viscerally understand actually though even a lot of tech guys don't understand the sheer scale of what the internet is until you're at like a giant tech conference where you've materialized all those people into the physical world right like you know we see a number on the screen but you don't perceive like there's this great post uh by um lime visualizing crowd sizes right like this is like 50 people this is 100 this is 150 250.

40:47But there's comes a point where it's hard to perceive at that point. Well this thing is like 10 ,000 people in one place is like a stadium right 20 ,000. It also feels impersonal right because what happens is that you can't and you can't relate to the dynamic sometimes. Yeah yes so here's my point this is what 180 ,000 people looks like right so I have like 1.1 million followers on on x right so that's about 5, 6x this this number so i sometimes before i go to tweet visualize like going to the center of the star spangle you know the center of uh same you know the star brother let's go well well kind of like that kind of like that like you know like the nfl you know you'd be yeah yeah oh say can you see right so they're uh you know before someone gives the national anthem at the center of a giant sports event there's like 20 000 people and if you've got one note off everybody hears it right yeah so when you before you go to tweet you when you actually see this you're like oh that's what 180 ,000 views means.

41:41It literally means that, right? And with Twitter, you know, or actually, if you refresh it, you will actually see the page view count go up and you're like, wow, that means actually there's one of the very few scenes in movies that have depicted this in the social network movie. There is a scene at the beginning with face mash where it actually shows a bunch of people all looking at the same screen, but in different rooms, right? You don't perceive that as an individual because you need to have simultaneous cameras in like hundreds thousands of different rooms to see all these people refreshing the phone at the same time if you actually saw the clip of 180 000 people seeing the tweet and some guy is like you know after a workout and somebody's on a plane someone's in the desert and so on and so forth just that alone is an interesting premise for for like a maybe a short clip maybe i should do that the point is the internet despite its enormous scale is invisible in a sense in china despite its enormous scale is invisible in a sense right so these barbarian powers have been growing And then in my view, what's going to happen is, you know, the enemy of enemy is a friend, right?

42:42And so I'm seeing the Democrats will eventually side with Chinese communists. That's why Newsom has gone to China and said, you know, Gavin Newsom? Of course. Yeah. So he went to China, met with Xi, and he said he wants to be China's long-term stable and strong partner. I don't know if you saw that, right? Wow, I didn't see that. Yeah, here. That's insane. I mean, so I'm obviously not at the heart of American politics, but this idea that Newsom is actually doing this would be quite surprising to me. Well, yeah, so here is basically, this was the whole thing in Xinhua, welcome more Newsoms to come, right?

43:17But how much of this is Xinhua saying it versus actually what? This is his quote. Yes. He's willing to be China's long-term stable and strong partner. Okay. I mean, a lot of people might just say that, but would they actually mean it? But politics is sometimes a snake in the room. It's true. It's true. But basically, so Newsom welcomed Xi also out to San Francisco. He cleaned up the streets for him and so on, so on. If you remember that, right? So this was the other part of it. He had had a whole visit. Because the thing is, Xi could sort of recognize Newsom as also being the governor of a large state that becomes the president is a path that Xi could recognize as similar to him.

43:51This meeting happened in 2023 where people thought Newsom could maybe become president because there was going to be a jump ball after Biden stepped down. Everybody knew Biden was going to step down. The funny thing about it is it wasn't a Biden conspiracy theory. It was Biden conspiracy theories. The reason is different factions, the Democrat Party, thought each of them would win the hot swap. Like was it going to be Michelle Obama? So Newsom probably thought he was going to win the hot swap. He took a whole meeting right after the thing, but it went to Kamala. OK, what's my point? The point is, Newsom, also Tim Walls, has basically said China should intervene on the Iran thing.

44:21In many ways, I can share a bunch of graphs, but essentially Democrats are much more sympathetic to China than Republicans are, just like Republicans are more sympathetic to Russia historically than reverse. So I think Democrats will end up aligning with Chinese communists because if they don't have D.C., they need Xi. That's how Newsom is going to think about it. I would not be surprised to see them essentially not enforce the tariffs in Oregon, in Washington, in California, the West Coast states. If the tariffs really contribute to inflation, they may simply not enforce them, especially because the Chinese tariffs keep getting suspended, suspended.

44:57But who knows? They might go real, right? If they did, there's a possibility for a left populism where they just don't enforce the tariffs and then they invite a confrontation on that or whatever, right? So I think it's very possible, right? That's the kind of thing which is federal versus state who has control. And this is similar, by the way, to the federal versus state on the border, but in reverse. Now the Democrats want the packages to come in as opposed to Republicans wanting the people to stay out. Then the other side of that is Republicans and the Internet. right and this is something which is um one way of thinking about this is from 2020 to 2025 especially or 2024 democrats really did fight china pretty hard right um but then eventually they're now in the can't beat them join them mode and i think by 2030 they will link up with them completely but don't you think that politically at least the impression we have and first of all i'm all for more collaboration between countries yeah because i actually think uh more confrontation is bad, and I also think it's inevitable, right, in a way.

45:55I would also argue that the more the U.S. can integrate and work with China and vice versa, there becomes more co-interdependence between them. Yes, but the U.S. doesn't exist. Like they said, Red America and Blue America have different foreign policies. I understand. Different foreign policies. I understand. But just generally speaking, because when there's jobs and there's money. Oh, of course, of course. Broad level, I agree. Broad level, we should get there. But I think for the time being, I don't see, at least externally from the lens being in Hong Kong and by extension China as well, that we view neither Democrat or Republicans as being pro-China.

46:30Oh, yeah, I know. That sounds to me as, you know, that's a bipartisan thing, which is a bit of a shame. But I think it is one of those challenges. And I think China is responding at the moment politically, including in the area of crypto regulations, like with the stablecoin in Hong Kong with HKMA and so on. basically it's a response to America as a whole, not specifically to MAGA America, but I think generally speaking to just how do we make sure that we protect what we have and so forth. Totally. But I'd say that while we're in a time of transition where the tectonic plates are moving, but there's a number of reasons where Democrats, I think, will link up with Chinese communists.

47:06For one, the thing is that... Go ahead. No. I mean, I'm not as familiar with that, so obviously it's hard for me to comment but this idea that uh an american faction in this case would actually side with china to me sounds like as a as a country sounds almost sounds as big as you know when people were saying trump is siding with russia well or trump with elon yes trump with elon basically like new sim ji is as big of realignment as trump and elon temporarily anyway well yeah that's right exactly but basically exactly so like remember elon you know trump was like, oh, Elon should get on his knees and beg or whatever, the first administration.

47:44Then obviously they were the bestest friends ever for like two years, three years, and now they're out again, unfortunately. Right? So, but that was something... Isn't that called politics? Well, it's politics. But it's actually, it reminds me of World War II and like how the Nazis and the Soviets were actually allied at the beginning to invade Poland together. And then the Soviets and the Americans were allied to beat the Nazis. And the Soviets and the Americans split the Germans, East and West Germany. Right? And, you know, the So basically all three factions existed, right? Germany plus Russia against everybody.

48:16Russia plus America against Germany. And then half the Germans and Americans and half the Germans and Russians against each other, right? So all three permutations happened, right? And my view is Democrats align with Chinese communists and Republicans become Bitcoin maximalists. So that's the other piece of it, right? Like we're still in the middle of this transition. But what you're then saying is that America will essentially no longer be... It's not a country. Well, country is a geography. Well, with borders and a government. But to me, I guess a country is representative by its people. One could say, what is those people?

48:55Are we saying it's two Americas, or are we saying it's still one America under one hub? because the whole, I guess, federal construct allows for, I guess, different opinions and ideas and structures to exist within a common federal structure, whereas the states themselves are different. Does it mean that states have more freedoms as a result? There's different ways it can break down, right? And it's possible that it's like the fall of the USSR where these administrative boundaries for like the so-and-so socialist republic actually suddenly became real, right? And suddenly Tajikistan is like, okay, I'm a country, right?

49:25So those like fake administrative boundaries became real. because they were just something that everybody could agree existed beforehand. So it's possible, because you saw this during COVID, actually. There were hard borders between Rhode Island and New York or whatever. People were not able to just go back and forth because of their COVID borders. It was Rhode Island and New York. Yeah, but the collapse of the Soviet Union was essentially one that the Soviet Union simply couldn't sustain itself anymore. I think the interdependence and relationships that you have, because the one difference about a communist planned economy, and that's only because of the fact that when I grew up in Europe at the time, I witnessed that to some extent, is that planned economies have centers because essentially there's a country that's dictating what you do, where you do, how you do it, right?

50:12So this place makes coal, that place does this, that kind of stuff. COVID checkpoints targeting out-of-state residents. Yeah. So I understand the restrictions on the borders, right? No, no, but I'm saying, like, see, Rhode Island pulls over New Yorkers to keep the virus at bay, right? Yeah. So the point being that basically— Did the virus correspond to, like, what state you lived in? No, it didn't, right? But that was the existing administrative boundary that people could coordinate on, and even if it was completely uncorrelated with the virus or what have you, they established borders on that basis.

50:45And I look at—just like 2008 was, in a sense, a dress rehearsal for 2020, 2020 was a dress rehearsal for 2030. Yeah. So I would disagree with you with that, but I understand the construct. And the reason why I disagree is that because when you look at what happened to the fall of the USSR, the planned economy construct of it basically forced the – sort of made the breakup somewhat easier, I would say, because you didn't have true interdependence because there was no decentralized economy that existed inside USSR versus America, which is because of its nature. Yes, it's very international and global as well, but there's many more ties and connections between them.

51:20Sorry, go ahead. So what I'm saying is that while politically and ideologically there could be parts that definitely would fall apart in America, we can see this right now, I think the business construct and the transactional elements of doing business together is what ties it together. Basically, inter-American trade won't fall apart. Okay, I disagree with that too. Here's why. I think it took me a while to articulate this, but a deep point for me is that Keynesianism is communism but for wimps. Okay, let me explain what I mean. So Keynesianism, so if you've seen the graph where it shows like the U.S.

51:55dollars value, right? So that means that Keynesianism actually does seize 100 % of the wealth of the country over time. It does seize 100 % of the wealth of the country over time, but it doesn't go door to door with guys with guns like communism does, right? So it's able to do it invisibly. Like when you issue another trillion dollars or whatever, it dilutes everybody down invisibly, every dollar holder down. but you don't have to go door to door, right? See, what happened in the Soviet Union is they had to actually have, you know, like Lenin sent his crazy guys to every house. They would kick in the door.

52:31They'd kill the father. They'd rape the mother. They'd take the son off to the Gulag, and they'd collectivize the farm. That's what, like, collectivization meant. The same thing happened with Mao. So that's what communism meant. And Keynesianism, quote, innovated on that by stealing all this wealth, but by essentially diluting people down. When you're running a cap table, for example, you're highly sensitive to dilution on a cap table, right? Like you're watching every point percentage ownership, right? Because you actually can see the denominator. But there isn't a well-agreed-upon denominator for how many dollars exist.

53:05The whole point of M0 and M1 and M2 and so on is to make it complicated and abstract. How many dollars are there? Who knows? Let's do another trillion, right? But Keynesianism doesn't violate the construct of property rights in the same way. Well, it does. On money, but not on assets. Yeah, but the thing is, you're basically, you're still seizing the assets, right? Well, actually, you're seizing the money, but the assets are yours. Therefore, the assets do inflate because of the fact that more money is put into the system. I think the other thing on Keynesianism, just independent of Keynesianism, obviously, there's obviously a philosophical construct as well, which I think is interesting, is that the politicians haven't been, and just to be clear, I'm not a Keynesian, maximists on Keynesianism.

53:50I'm just saying that politicians have gone addicted to the idea of basically money printing to QE without actually doing the fiscal discipline of, okay, now that it's there, let's go and pull back, right? Because really, Keynesianism was trying to sort of, and I think, to me, the innovation of Keynesianism was around understanding that when you put... Essentially, adding liquidity to a market. Yes. And to generate that sort of activity, I think, is what was powerful there. I want to show you something. Yeah, please. Because it pulls the pieces together. Yeah. So this is a piece from 2010, how to spend$1.25 trillion.

54:25Okay. And these are two people at like the New York Fed, right? Yes. And it says the Fed decided to buy$1.25 trillion in mortgage-backed bonds. So this is the connection between currency and assets because you print the currency, they can buy the assets. But they're doing this to protect essentially a base of people. But I understand. Well, what they're actually, in my view, they diluted down all Americans and the world to prop up the banks. Right? Like the money – like this is – But the prop up the banks was to basically ensure the safety of the state and essentially to make sure that – There's an argument for that, right?

55:00And I can – and we'll come back to that argument, right? But let me just at least say what they actually did, right? So somebody actually go buy all these mortgages. So how did they do it, right? This was this really interesting thing. It's possible I was buying the mortgage on my own house, says this guy. And then they came very, very close to Target. They told they were 61 cents short. They bought$1 trillion,$249 billion,$999 million,$909 ,999 ,999, right? The Fed was able to spend so much money so quickly because there's a unique power. Can you create money out of thin air? Okay. But here's the thing about this, right?

55:30There's several – this is an unusually clear statement of what the actual U.S. government is, which is like communism, where they can just seize any asset by printing money. Because they're buying the mortgages. It is centrally planned. 1.25 trillion, there's no max tax. There might be a minimum wage, but there's no max tax. This 1.25 trillion, just to think about what that means, that's a$1 ,000 iPhone for a billion people in China. But they did end up, they bought it, but then ultimately over time, they basically sort of sold it back, so to speak. Was it? Yes. Okay. They haven't actually completely offloaded all their assets there.

56:10Sure, but they have offloaded. I guess the point is the government seized it. But why did they seize it? They seized it to rescue it rather than to seize it as a means of control, which I think is the difference between the two. Okay, okay. But there's two – well, okay, first of all, you're agreeing that they had good intentions, right? Yes. I would say if you actually go to what caused the mortgage crisis in the first place, it was the government forcing many banks to extend mortgages to people who couldn't afford it, right? The anti-redlining stuff, they forced mortgages onto black people, Hispanic people, and so on.

56:41And in fact, actually, even NYT admitted this. Like, NYT Bush era.

56:51Bush drive Bush drive the ownership, fueled housing bubble So this is both a Bush and a Clinton thing. There's something called the CRA, Community Reinvestment Act. The thing is, if you trace it back, the government forced the banks to make these mortgages. Then when it crashed the economy, they said, oh, we're coming in to save it. And what happens is the state causes the problem. It's like a firefighter who's also an arsonist. They cause the blaze. And there's a blazing. And then everybody's confused about what caused the blaze. The firefighter comes in, sprays like this, and then they increase the firefighter budget as well.

57:23right so like when you actually track back why did they have to save the world because they destroyed the world right and the net effect of it at like a meta-organism level was upward redistribution of wealth right that's to say they printed the money they diluted down everybody else and they bid up the banks and they bid up the these mortgages now who got diluted down so i'll show you another graph which is this yeah unfortunately inflation hurts so hurts the weakest of any because i mean if that's what you're trying to point to that's right so i'll you this really amazing graph this is from um let me see if i can share the screen here so we've got it recorded um so did republicans pay for 2008 okay so let me just show you this graphic let me explain it what it is okay so there's actually an animated version of it yeah okay let me zoom yeah this is good all right so what is this graphic this shows each dot there is a county okay and uh Gosh, silly thing.

58:24So each dot there is a county, right? And this is the GDP of that county. This is a poor county down here and a rich county up here, right? Okay. And the blues are Democrat voting counties and the reds are Republican voting counties, right? Assume they don't flip sides at this point, right? Yeah. So in the year 2008, this solid line over there, that envelope over there, you can see that the blue envelope and the red envelope are roughly the same. But by 2018, you can see that all the richest districts are blue. But we can see this already when you look at like right now, people look at the blues as the party of the elite as opposed to the party.

59:04But that happened from 2008 to 2018. It happened in that 10-year window where roughly Democrat counties and Republican counties were at parity to suddenly blues pulling way ahead like this, right? And how they pulled way ahead like this, I argue it's because that was the time of the Obama administration. All the printed money was being allocated. And where did it go? It went mostly to blue-connected states and institutions. So it went to banks in New York. It went to D.C. And how much of that would you say is related to the growing tech wealth that happened during that period of time? A small slice of it, right?

59:40So it's not a big slice. It's a small slice. Like all VC is like$10 billion,$20 billion a year or something like that, right? So relative to like… But all the people who ended up working at Google, a million-dollar packages and that kind of stuff. Yes. But what happened was a small slice of the trillion – like there's a trillion for the mortgage-backed securities loan. A small slice of that, like less than 1%, made its way through the rivulets into a productive sector of the economy, which is the tech economy. And just a relatively small amount of money on that very fertile field went whoosh like this.

1:00:09And so that led to the growth of tech. But another piece of it was the crash led to huge price pressure. So it also led to the growth of China. Right. And so China and the Internet both were the strongest, you know, the most supple, resilient, where they were the ones who were actually able to benefit from this, even if they didn't weren't next to the money printer directly. Right. OK. So then one thing that happened is it wasn't cost free. That inflation was exported, for example, to the Middle East, helped trigger the Arab Spring. Those countries were just in chaos, civil war and so on and so forth.

1:00:41In a sense, they paid for the bailouts. Right. These countries got diluted down. Their food prices got spiked. They got pushed into the Civil War. They're shooting each other. Why? Because it got printed down. Now, the thing is, there's no blockchain, so it's hard to prove this. I can only show a series of events. A series of events, some assumptions, but basically the theory around it. I understand what you're saying. So basically, if the food price spikes helped, why did those prices spike then? Because the inflation was exported, and these countries were already near the border of survival.

1:01:13And one of the reasons why countries like China are very, very sensitive to food prices and manage it. I mean, I think one of the best examples of a super stable society, despite the fact that economically on a global parity wealth probably has suffered a lot is Japan. And one of the fascinating things, I don't know if you were in Japan, but when you go slightly a little bit out of Tokyo, but even within Tokyo, I'm always fascinated how I can basically buy all those vending machines for the same amount of yen. The same drink that I could pay for, say, 20 years ago, the same price. Yeah, it's kind of like the...

1:01:45I mean, they were the masters of QE, if you think about it, right? Yeah, well, it's funny. They've done it for a long time. They've done it for a long time, and I think they went through... But again, I come down to the thinking of why did they do it? And they tried to keep the cohesion and stability of a nation together. Okay, so let me counter-argue on this. Okay, okay. So I want to bounce the ball back. So my view is as follows. Japan was actually doing really well against America in the 80s, right? Right. And but America had actually see at a certain point, you know, you can rise to a certain point within the system, but then you have to become the system.

1:02:22Right. And so Japan was rising to a certain point in the system and it hit a ceiling where it's getting too big for its britches and becoming so successful that the U.S. was, you know, there's rising sun. There's all this anti-Japanese. And then the U.S. government actually did kill the Japanese economy with the Plaza Accords. right and so what that was was something where japan was forced to not use its yen to buy up valuable factories and stuff in the u.s it had to buy you know treasuries so right number one and number two is actually interestingly a lot of ip was transferred from japan to america it's in reverse from how people think about it right and there are other kinds of things as well but fundamentally what that did is it just blocked the rise of japan inc and resubjugated them.

1:03:04Because the thing is, Japan and Europe, right, they are in Canada, these, until very recently, are US colonies, right? They don't have, they have a US military base there, right? There's no Japanese military base in America, right? And this is a post-war, a post-war construct. That's right. So when we, you know, some people say, oh, China will get, you know, we stopped Japan's rise, so America will stop China's rise. I can point to... It's not the same. Absolutely not the same. It's not the same. And I can actually point to one article that shows that anybody, you know... Yeah. And the other thing, of course, is that during that time, obviously, I mean, Japan is dependent on American security.

1:03:39So there's a different relationship between that versus what you see in China. Exactly. So when push comes to shove, the U.S. had root over Japan, but did not have root over China. And one way of proving that is like killing CIA informants, China crippled U.S. spying operations. So that shows that's something that China could do that Japan could never, ever do. right japan can never kill a u.s spy right and what that means is if they can't kill you a spy they can never have any communications that are genuinely um encrypted and genuinely like you know seen as uh as private or whatever in their country right um china can actually have communications that are private within their country but how does that relate to the fact that japan was in qe well i'll come to that in a second okay so well actually the um japan there's like look there's many complicated things about Japan I can't say I understand every single piece I don't speak Japanese but they were essentially forced to buy treasuries and print as a way of crippling their economy and this is something where Japan Inc their export machine was broken they were not allowed to export this is why like Sony Mitsubishi all these things that were so amazing just suddenly just kind of fell off a cliff right Robert Lighthizer other guys trade representatives essentially restricted japan there's a guy um oh gosh i think michael hudson and so on who writes about this and my view is that when they didn't have the export growth anymore they had to do the fake growth of qe right now that whole thing is breaking because you see japanese yields just going zooming like this they're they're seeing that you know qe for for that was there for well they also have a democratic time bomb they have demographic they have a lot like this century i think japan becomes a chinese colony so history is running in reverse So last century, China became, you know, this century, Japan becomes a Chinese colony where Chinese people will be able to go into Japan, buy lots of property relatively cheaply.

1:05:28And just like Indians are now buying a lot of property in Britain, it's like in reverse, right? And because a lot of things are happening with history in reverse. Like I can show a boomerang or a U-curve kind of curve from any different phenomena. My point is basically that the Japanese, you're right, have preserved some degree of stability in their society because they have homogeneity of culture, language, people, and so on and so forth. And if you are – they're not going to melt down in the same way America is. America has 300 million guns, more guns than people. People are crazed on every dimension.

1:06:01There's gender and racial and ethnic and political and even now age polarization because the young don't want to pay for the old, for Social Security, and so on and so forth. So that's just going to melt down, right? I really disagree with you that – or not really. I'd say my biggest point of disagreement is you're correctly seeing tech America. And tech America can ride the lightning. But most of America is not tech America. And they are not rising with the internet and they're not rising with China. And you don't think tech America will try to save America? Because I do think there's a degree of – They already just did.

1:06:34They just did. And actually Elon posted, did my best. What? You saw that post? Yeah, but did my best versus I'm giving up completely are two different things. Well, what does it mean to, quote, save America? Can you save Britain? Like, can you actually put it like this? The, you know, the American empire, right, which was actually something that there's a great book called Tomorrow the World, Stephen Wertheim, that actually talks about this. That was something that was consciously built. Because how is it there's a McDonald's everywhere? How is it there's, you know, like, you know, 750 military bases, U.S.

1:07:07military bases globally? How is it that the dollar is the reserve currency everywhere? How is it that U.S. media is ubiquitous? You don't become global number one by accident, right? This is like it's hard. You know how hard it is to become number one in any industry or in anything, right? You just don't become global number one in so many different categories by accident with having the U.N. in New York and, you know, all these people educated at Harvard. Like there's 20 heads of state educated at the Kennedy School of Government alone, right? Right. Becoming the center of a global empire was something where in 1939, 1940, when Britain was on the ropes, until that point, America had been fine with the British having an empire.

1:07:41Right. Because it's expensive to run an empire. Yeah. All this kind of stuff. Right. So they had wisdom. They're like, we're just going to build up our strength, not run an empire. But then they realized, wait a second, if we don't run an empire, they thought at the time the Nazis could choke them off in terms of trade. Right. And then later it was the Soviets. And they're like, well, if America doesn't build an empire of democratic capitalism, the Nazis or the communists will. And that'll be bad for the whole world, which was true. Right. So there's almost a we're forced into a position. Right.

1:08:06And so they actually decided, all right, we need to take up the imperial burden. And they started playing to win. Right. And all kinds of institutions, for example, FDR set up the U.N. is something where nominally every country gets a vote, but the Security Council actually has a veto, and it's in New York, so they can bug the entire UN headquarters. So the US actually had the veto over the veto over the veto, right? Many kinds of things like that, all these post-war institutions that were set up that had the US at the center, were how the global American empire was set up. And the US taxed the whole world.

1:08:35The business model of the US was the dollar, because anytime anybody's using either the dollar directly overseas or a US financial asset, You usually need the dollar to buy into that and so on. So that was their mechanism where global dollar inflation is global taxation. The whole world pays tribute to America. That whole business model is now reaching end of life because the main two competitors to USD are CCP and BTC, China and the Internet. But I guess that's why they're trying to push stablecoins the way that they are. So it's interesting because this is something where – so let's talk stablecoins, right?

1:09:08So a new bill is being passed. It's a GD set. Yeah. Yeah. And, you know, obviously I was very, you know, like I know a lot of stablecoins. It's also interesting that Hong Kong also passed this actually a month before, right? Yes. Which is, you know, we can talk about that. Oh, that's interesting. So tell me about that. Go ahead. Yeah. So before the Genius Act actually came out, and it's actually one that we're quite involved in, our LegCo, which is the equivalent of our parliament, basically passed the Hong Kong stablecoin bill, allowing the HKMA, which is a central bank, to basically start issuing sort of stablecoin licenses starting from August 1st.

1:09:38So the applications are going to start basically next week, right? And so it's a little bit of a head, right? But this was already in the works for a while. In fact, we ourselves, together with Standard Chartered and Hong Kong Telecom, are part of three companies that have been involved in a sandbox, essentially trial period for stablecoin. And of course, you know, what's also interesting is China's response to it was that they're looking at what's happening in the U.S. And they recognize that since it's not China that's going to start buying all these T-bills, and it's going to be stablecoins.

1:10:08And they also realized that the dollar hegemony, the state point strategy is around extending dollar hegemony. And so what's, you know, basically the response to this one? And Hong Kong has always been the financial center for China, for this type of stuff. Frankly, one of the reasons why the U.S. is, you know, I'm not sure if you remember this, but during the time of the protests, Hong Kong basically lost its special status with the U.S. on account of, you know, freedom and so on. But really, I think the undertone was really around choking off essentially, ideally, one of China's main financial strongholds, which is Hong Kong.

1:10:42China itself also, what's interesting to me is around that time, a lot of people thought China was just going to say, OK, Hong Kong is going to be the fishing village now and we're just going to build up Shenzhen. But interestingly, China decided to sort of rebuild Hong Kong. In fact, double down on it. And it's because Hong Kong is necessary. So tell me about that, because that's an angle that was interesting. Well, okay, so the reason why— Is it a model for— Yeah, so this is really important, because Hong Kong plays this role, because it has laws and rules that are not all the same as in China.

1:11:13Right. And it's actually also— One country, two systems. Yeah, one country, two systems. It's also the way which global trade can match. If you're European or American, for that matter, you'd much rather work on something that's based on English common law rather than basically that's based on Chinese law. It's also English is the official legal language as well, which is the language of trade, and frankly, the Internet. So Hong Kong plays an incredibly important role for this, right? And if you think about sort of, you know, especially now, right? If you think about it, you could say, you know, a lot of people are saying, well, there's a shipping port, which is probably true.

1:11:44You know, Guangzhou is going to be bigger. Yeah. And it's just literally across the border. But when it comes to legal contracting and rights, and also all the wealthy Chinese people actually want to live in Hong Kong and send their kids to Hong Kong schools, right? While they work in China. So Hong Kong has a special sort of role around that. And I think China recognizes its importance. You know what's interesting is I also understand that they use Macau in a similar way. It's much smaller, but they use it not just for the gambling, but it's actually a lusophone. Like Brazil and all the Portuguese, especially Brazil, which China has an important relationship with.

1:12:18The Portuguese-speaking lusophone countries have the forum with China in Macau. So that is for Portuguese what Hong Kong is for English or something. Yeah, I think the big thing, and I think this is where I think a lot of people in the West misunderstand China, at least from our perspectives, is that China's number one agenda is, of course, they want to have power, but they need stability in their country. They're most worried about what happens. So what's the reason that, you know, if you think about where is particularly American media slash politics poking? Hong Kong and Xinjiang, right? And what is the thing about those two places, different about the rest of China?

1:12:59Well, Hong Kong is in particularly a, you know, you could call it multicultural. It's more, let's say, westernized. So it can appear a little bit of a weak spot, although at this point I would say it's very much sort of cleared up. And then Xinjiang, which is basically 99 % Muslim, right? And it's homogenous Muslim. So if you want to poke the bear somewhere, this would seem to be its weakest spot, right? And so all of the stuff that you see in media and discussion around that is actually really trying to sort of find ways to sort of poke. And just to close this thought, the important thing for China is harmony within its own country.

1:13:33Everything is built around it. So the one thing that would not happen in America, for instance, is that, you know, when Xi talked about common prosperity, right, one of the things that he took down was private tutoring. So from a Western perspective, you're like, you just killed an entire industry. That's bad. And this is the risk of centralization. But he did it or they did it because they realized that this type of tutoring was only available to the wealthy. It was creating a much more bifurcated society. Yeah, but they reestablished it, though. Yeah, but not in the same construct. And more importantly, also, they wanted to equalize education.

1:14:07Also, they were very worried about the wealth inequality because it was the instability that they were more worried about what's happening in China than specifically the dynamics around the world. Right, right. So the thing is, you know, you ultimately have to judge something by the outcome, right? And if you see Chinese cities and Chinese streets, they're beautiful and clean and they're aesthetically really amazing and so on and so forth. So there's obviously some huge success there for, you know, building people. There are manufacturing powerhouses. Other countries that complain about overproduction, you can't like – it's something where, oh, what, they're making it too fast and too cheap or whatever?

1:14:46It's like you have to get good, right? So there's a lot of things that China has done where you just have to respect it and you have to, you know, look at all the graphs and so on. I would say that my view is China might be good for the most, but the internet is good for the best. So I don't disagree with that because also the construct of this pendulum shift between sort of, let's call it freedom, and you can call absolute freedom a form of anarchy, and then safety and security, and then the trade for safety and security. Between American anarchy and Chinese control. There's something in between, and there are people who prefer one or the other.

1:15:21So you will see people in China, and this is, I think, where the West often couldn't understand, why do you like this? Because I would never accept to live in this type of environment. but the safety and stability of not having to worry about possibly getting shot in the street. Yeah, exactly. That kind of stuff. Of course. And the fact that, yes, there is much more surveillance. But at the same time, you have much more security, right? And some people say, look, I want surveillance, but I don't want it quite that way. So maybe Hong Kong is better to compromise or some other place, whatever. So there will be lots of things that are intermediate to compromise.

1:15:48Exactly. But there is a pendulum. You can't have this idea that you have complete absolute safety without the fact that you have also high degree of surveillance and control. Yes, that's right. Right. Well, so I think the question is, you're absolutely right that those are two points on the extreme along the spectrum. And I think you're also right that many Democrats are going to opt for Chinese control. Like I say, basically, in the 20th century, one thing that's not very well understood is... Maybe, but do you think it's because they don't really understand it? So, for instance, one thing that I've noticed so much to my shock is, you know, the conversations around, you know, the populism of Marx that is emerging in the American dialogue.

1:16:26Actually, I should be clear. There's the Luigi left, which is just violent anarchists. Actually, put it like this. Many Democrats have replaced G-O-D with G-O-V. Like the state has become their god, right? And so because of that, when they lost control of the American state to Trump the second time, that shattered Democrats' faith in what they thought of as democracy in the American state. Because all of their rituals, everything is organized around the American state handing out money to Democrat NGOs or funding to Democrats or professors at universities or gives leaks to Democrats who are journalists.

1:17:05Like the state is their central organizing principle. Like Democrats ran this ad a while back, which is government is the only thing we all belong to, right? Literally as that's the sharing kind of thing for them, right? So replace GOV, right? Right. And this is similar, by the way, Carl Schmitt has written the book called Political Theology or, you know, when the Soviet Union failed, they called it the God that failed. Right. The point is these state based ideologies are a replacement for God in many ways. Many different kinds of factions have talked about that. OK, so their God just died. What is the answer?

1:17:37One answer is some of the left, some of the Democrats go to the Luigi left, violent anarchism. They believe in nothing, kill everyone. And other factions are basically like, OK, well, what is the most powerful state today? If we don't have D.C., then we have Xi. So I'll just fold into China. And the way of thinking about that is think about Venezuela or lots of these other countries that have melted down. They are basically propped up with Chinese support, right? And one way I think about it is China is the monkey's paw opposite of the neocons and neoliberals. China will trade with kleptocratic Venezuela or meritocratic Singapore.

1:18:08It will trade with Christian Orthodox Russia or, you know, fundamentalist Iran, right? But China doesn't care what that country does internally, so long as that country doesn't, quote, interfere in China's internal affairs. This is the exact opposite of the neocon or neolib who wants to bomb every country into democracy. Right. But it's not like the exact opposite isn't necessarily good because the problem is China's developed a surveillance stack. And, you know, like 1.4 billion Chinese people are very smart and they're really clever and they work around all kinds of things. You know, the mountains are high.

1:18:41Emperor is far away. It's very, very clever, especially Southern Chinese people and capitalism and entrepreneurship, right? And so historically the balance— But by necessity. By necessity. Because Southern Chinese were the persecuted ones. That's right. That's right. And so historically that balance was a very pragmatic balance. We didn't say that laws limited the state. It said practical realities limit the state. Yes, they have total root control, but they don't have the ability to surveil everything at all times. They can't monitor. So I can just do what I want. The state can do what its want, right?

1:19:08Fine. A very practical balance of power as opposed to the European balance, which is all about laws and quoting things. Okay, fine. Which has its own merits, which is different. My view is that stack, which is being developed in China, if it can kind of lock down China, it can absolutely lock down Venezuela. It can lock down every kind of country because if it's debugged on 1.4 billion Chinese, one of the smartest, hardest working, most entrepreneurial cultures around at that scale, it'll work to lock down just about any country. Right. And that's a stack that they're selling. And in fact, when when countries are buying weapons or security stuff, they actually buy the missiles and stuff from America because they're pointed out.

1:19:45But they buy the security stack stuff from China because it's pointed in. Right. But I mean, so now to be clear, I'm saying this in a beyond good and evil way. Right. Like I'm just observing, you know, because I think let me let me also argue your point for a second. Yeah. The the dumb V1, let's say V1, V2, V3. The dumb V1 American way of thinking about China, or a lot of people, is like the Chinese Communist Party. And they actually think they're still Maoist or they're still poor or it's all slave labor. China is actually much more capitalist than most of the world. Yes, exactly. That's right.

1:20:17So they have just a really weird outtick. Part of it is there have been very few depictions of what China actually is in American media. They always haven't been to China. Well, that's right. That's what I mean. China is invisible. Exactly. And so the only non-Western society that I've seen that's being depicted as prosperous recently was Singapore and Crazy Rich Asians. And that's the exception that proves the rule, right? Because Singapore is still kind of within the Western camp or what have you, right? But because of that, and the reason is Hollywood didn't want to make movies that show other people overseas having a good time and leveling up.

1:20:50Because, of course, that would not do well in their screening and their focus group testing. Who wants to see Chinese people doing well if you're an American? They're envious or mad or whatever. Okay, fine. So because of that, though, they have just a huge unreality. The V1 view of China, like they want to conquer the world and so on when China's been very insular historically. That's like dumb. OK. Then the V2 view, however, let me quote it to say why I disagree with it. The V2 view is someone like, let's say, Arnaud Bertrand or what have you on Twitter if you've seen his posts or, you know, he's like a – or Carl Zah or something like that.

1:21:18They'll make an argument, which is as follows. They'll say – and some of them are Chinese nationalists. Some of them are just really alienated Westerners. But they'll say something like, for the last 40 years, China has not invaded any country. They've built up Africa while America's blown up the Middle East. They had a peaceful rise. They brought all these people out of poverty. They built all these amazing cities. They've just been playing defense. They didn't start the trade war. They're just playing defense. And what is their great crime? To ship lots of stuff cheap? Wow, that's so bad. And they just don't want the same anarchy in their country like that the U.S.

1:21:48has brought everywhere else. So that's why they don't want American influence. and China should be able to develop in its own way without alien Western software and so on. And, you know, even blocking social media, we'll look at what social media has done to the West. You know, maybe they made the right decision and so on and so forth. This is the steel man of the V2, right? Now the V3 would be granting V1 and V2 for a second. We say, okay, so now what happens when like, you know, exports really rise even further, right? So you have a Chinese self-driving car or phone or drone or center everywhere, right?

1:22:19Well, all of those things have essentially, like when you sell a Chinese chair, it's decentralized. There's no software connecting it back. But when you sell any kind of IoT-enabled, AI-enabled device, it can be shut down, controlled, surveilled, whatever, by a central server. It's got a string, a digital string attached to it, right? And the interpretation of what, quote, interferes in China's internal affairs rises as Chinese, it just absolutely dominates. And there's not just a Chinese chair or a desk or a table, but it's a Chinese car and a drone and a phone. They essentially have root control not just over China, but the whole world.

1:22:53Like the exporting of goods carries with it software. That's like the big thing, right? So it gives root control because payments are in WeChat and so on and so forth. So it starts extending that sphere in many, many places. That's one. The second thing is also that the stack that they're selling to governments, they are recognizing the government as legitimate. Go ahead. No, no. I appreciate that. I think, to me, I think the, let's take the Western and Asian lens perspective. You know, I think the Western lens is much more conflict-oriented by its culture. Yes, of course. And so they take the lens of everything must be a conflict.

1:23:30Yes. But when you do business in Asia, in your own experience. You try to be as win-win as possible. Yeah, but also the whole perspective of. At least this century. Last century was crazy. Yeah, but last century was also subject to, I mean, at the end of the day, it was invasions and colonizations and so forth. And also when you think about sort of China's takeover, even the Qing dynasty, technically they were invaders from the north, right? There is a root culture, I would say, in Asian culture and very Chinese culture, which, you know, I hesitate to say it's peaceful, but it's about order, maybe is the right word.

1:23:58Yes, order, that's right. And so the whole Confucian sort of values system that basically generations follow, and there's something deeply embedded. Absolutely. Which when you think about the history of Europe, which in a way was European colonizers that came to America, their history was much more violent by necessity, right? I mean, you had the Taiping Rebellion. You had a lot of crazy wars. You had Warlord Era. You had all kinds of things happening in China. Yes, but the Taiping Rebellion, I mean, that also was initiated in… By the Christianity. Yes, exactly. By external forces coming in, right?

1:24:26Sure, sure, sure. And of course, China had basically three kingdom wars and that kind of stuff. So China went through those absolutely debilitating wars much earlier. And as a result, this fear of disharmony and this fear of rebellion was absolutely embedded in this root culture, which I think took a different shape in the West. But as a result, and I think this is the pro and the con, is this confrontational culture also allows you to do business in a confrontational way and yet not take it as personal. Yes. Which here, for instance, in Asia, if you're confrontational in business, you're actually personal as well.

1:25:02Yeah, yeah, yeah. You know, the whole face thing. Right. So there are dimensions that are different that are deeply embedded culturally. And this is, by the way, also why I think that I think the Chinese way works within China. Yeah. But I don't know that it exports super well to America because the you know, you can't. I think it's very difficult to sort of remove a cultural DNA. They, I mean, Mao has tried it with the Cultural Revolution, and he has completely failed. Yes. And he's did it in China. Fortunately, right? Yeah. Well, so to that point, the way I kind of think about that is many great civilizations have a deep culture thing, which they actually take seriously.

1:25:38So for America, everybody unironically believes in freedom. Other countries think it's fake, or they roll their eyes. But Americans unironically believe in freedom. Absolutely. And the Chinese, I think, unironically believe in harmony. Yes. So for a certain kind of American – And it passes down family to family. That's right. Exactly. So for a certain kind of American, they would say, oh, harmony. Oh, everyone's all brainwashed and so on. And no, the Chinese actually mean harmony like people actually cooperating, singing in unison, working together. You know, there's like that game. There's a collective spirit which can be viewed negatively and positively.

1:26:11Yes, exactly. That's right. So now the downside of it is everybody's working together in the wrong direction, lemmings off a cliff or whatever, right? The good side of it is the whole thing comes together and you can build this giant – And I would argue the Chinese antidote has been education. Interesting. Go ahead. So you know how maybe people used to have this parallel around India and China back in the 60s and 70s? And then especially with the Cultural Revolution, everyone basically thought of China being set back. But if you look at the economic charts, even during the Cultural Revolution and with Mao's purges and so on, China continued to rise in terms of economics.

1:26:41It wasn't that the miracle of China just happened in the – Deng Xiaoping came in and just happened in the 70s. Oh, really? It was already – the underpinning was there. because Chinese were more educated en masse than India as a parallel. Well, India has always been a more elite-focused country. Correct. And also the caste system, as well as the fact that India was much more fragmented in terms of languages, whereas in China, frankly speaking, it's predominantly Han Chinese. I think... Go ahead. Finish your second. But the main differentiator between the two was that one was broadly getting more and more educated and was already starting at a higher educated level, which meant that the balance of power may appear to be not as sort of brainwashed and as, hey, let's all go this direction because we're all just lemmings, because actually Chinese people don't operate this way because of their education.

1:27:27And so you'll find... Well, during the Cultural Revolution and during the Great... Like for 30 years, they did have a bad... I mean, it was purges and stuff, I guess, and elites got killed. But you had a lot of... The education levels didn't decline as a result, right? Well, so literacy has always... Finish what you're saying. So literacy continued to increase. And if you look at the charts, which I don't have on hand, you'll notice that Chinese literacy and education continue to rise even during the Cultural Revolution, which is interesting. Yeah. So first of all, the thing is, my view is there's many, many things.

1:27:59Unless you understand what China does really well. You can't, you know, so and I think so I would I would probably argue with you more about like, I really do think Deng Xiaoping taking over from Mao was a discontinuous event. Of course. Like throwing the gang of foreign jail. Yeah, exactly. Right. So I don't think China, you know, like Mao's success was like, hua guofeng i'm probably mispronouncing that right and he was he was basically like a communist and whatever um like a real communist and dung he was purged three times because he's a capitalist rotor i want to take it to the right but uh but leaving that aside for now on the india point you know my view is um china play i've said this before basically china plays perhaps a world's best home game but india plays a very strong away game right so indians abroad do well yes because all of that complexity and diversity and language stuff at home means that they're more comfortable, okay, quickly getting the lay of the land.

1:28:50Okay, so this is this and this is that, right? And so they're a very complementary set of skills where so in some ways Chinese are the new Germans and Indians are like the new Israelis or the new Jewish community, right? Like that's one way, macro way of thinking about it. Let me give the analogy. Although the Chinese diaspora isn't doing too badly either. Of course, of course. That's right. India at home is rising. But it's like India is like a 10 abroad and like a 7 at home. And China is like a 10 at home and like a 7 abroad. Very roughly. Something like that, right? But it was reversed before.

1:29:23Or was it? Go ahead. The reason why is that a lot of the growth that also happened in China was what we describe as sea turtles. Yeah, the ones coming back to China. Coming back to China, right? That's right. And that's actually also a very strong indicator about where a country is going when people are coming back. Coming back, right? Yes. By the way, that's also why we're so bullish on places like Saudi Arabia. Yes. Because Saudi is seeing the same effect where people used to leave, and now they're all coming back. Totally. Educated abroad. It kind of says something. And I actually think, by the way, I think Indians are going to have a very tough time over the next 10 years.

1:29:52Because I think being the global swing vote and so on now, like, for example, both the U.S. and China are funding Pakistan. Yes. You know, like, even though the U.S. and China are fighting on other things, they cooperated in Pakistan to beat up India, right? and you know like basically being in both bricks but also in the quad like india's had it both ways and so india's got a strategic both india and indians the global diaspora are going to have a they're gonna have to basically prove themselves over the next 10 years the way that china proved itself for the last 10 years um but i think of china as a state indians are a network like in the sense of china's you know a physical location with borders and so on and so forth and 97 percent of people of Han Chinese descent are underneath that.

1:30:34The nation, the state, the network are one vertically integrated whole like Apple, like vertically integrated where you've got the Great Firewall, the Chinese language apps, you've got the party state, and you've got the people and the 5 ,000 years of culture. That's like one vertically related thing. And the diaspora is only like 2 % or 3%, whereas India actually didn't even exist as a country until recently. India is actually more like the EU, where like the difference between a Tamil and a Gujarati is as big as the difference between a Spaniard and a Fin, right? And so it's actually, India is the most unified it's ever been in its history.

1:31:06And it's actually doing surprisingly well in some ways. Like for example, on many graphs, China is far and away number one, like on steel or nuclear, right? But then if you take China out of the graph, India is actually a distant but real number two, right? And I'm not saying India catches China, but I am saying that India is actually much stronger relative to the West than anybody realizes. Oh, I agree with that. And so like insofar as like the Anglophone world is having kind of a redistribution of power, right? Like the capital moved from London to D.C. I think it's moving from D.C. to the Internet means there are a much larger percentage of the Internet than they are of America.

1:31:39Right. And even more than London. Right. So the Anglophone world is kind of where I say like China versus the Internet, you know, versus doesn't always mean, you know, you could say China and the Internet. Right. And I don't think it's going to be as it's not going to be tank for tank and plane for plane like like the Americans. and the Soviets. The European model is confrontational. In fact, I think to balance China, and why do I say balance China? Let me bring it back to a different example. Let's take 1991. The U.S. had just won the Cold War. It was completely dominant. But it turned out that total victory was actually arguably bad for it.

1:32:13Because over the next 30 years, with no balance in the world, it didn't just invade Iraq. Or no common ideology to attack, so to speak. Yeah, exactly. There was no balance. So what happened was, first, they fought each other, number one. Number two is they blew up all these countries. Number three, they printed all this money. Number four, somehow over 30 years, they squandered the most advanced position in human history. They squandered it really, really fast, right? And what happened was actually having a completely unlimited power to go and blow up everything and print everything and so on and so forth turned out to be bad for them.

1:32:45It's like somebody who inherited billions of dollars. Like we were talking earlier about, like you just mentioned, the phrase generational wealth, which we usually hear. I'm not even sure that that exists or is even good when it does exist. Because if people, you know, there's this movie, for example, called Born Rich about like a kid who inherits a Johnson and Johnson fortune. And what happens is they become almost like a communist because for them, wealth and effort were not connected. They didn't earn it, as it were. They didn't earn it, right? They inherited it. It is luck of the draw for them, right?

1:33:13Yes. So then they feel really guilty about that. And so they start to spend their money on like, you know, communism, you know, type stuff. and thereby actually pull up the ladder for others, right, because they kind of destroy market creation processes. But they do that to absolve their guilt. But come back to generational wealth point. The point is the lack of a balance for America. For example, think about West Germany versus Germany, which you know very well, right? During the Cold War, America built up West Germany. And in general, with its flaws, the American sectors were better than the Soviet sectors.

1:33:46For example, West Germany. No question. Right? No question. Or like South Korea versus North Korea. But that's the difference about state-planned economies versus— True, true, true. But South Korea versus North Korea, West Germany versus East Germany, even Chile versus Cuba, every place where the capitalist and communist variety—OK, fine. Now, though, what happened was by degrees, the U.S. went from being essentially like the conservative power, the capitalist power, whatever in the world, to becoming the anarchist power, just destabilizing countries in the name of democracy, sometimes the name of capitalism, often the name of democracy, blowing them up, right?

1:34:18and like there's a flip that's happened where uh you know america i think is now on the global left and china and russia are on the nationalist right right like basically over 30 years i actually have this figure this figure in the book right this is actually a really this is what i call the global flippening this is as of three years ago and we're in the middle of social war so things are moving very fast it's like you know world borders stay static and then in a war they move fluidly very quickly so we're kind of like that but in 2020 1988 okay the ussr was firmly on the economic warship act prc etc right then you have let's say switzerland is neutral okay because they actually did trade and then you have reagan's america the economic right and eu nato over here right okay and india was socialist china was in migration it was like 10 years post you know dung right but it's hiding its strength biding its time and so on right and then by 2022 you have woke America is the farthest left culturally.

1:35:14And you have nationalist Russia and China, I would argue on the cultural right. And then Eastern Europe and India, Israel, kind of over here. Bitcoin and Ethereum, you can argue, are the new Switzerland, right? And then Western Europe is like, you know, the center left, right? So this is economic left versus economic right. This is cultural right versus cultural left, right? And, you know, to establish this, I showed a bunch of almost like inequalities over here, right? Like, you know, for example, you know, each, one way of putting it is for each position on this, I've got a citation there and I've got another one that shows that who's to who's right, who's to who's left, right?

1:35:51So for example, you know, the detailed argument, right? So here - But wouldn't you say America? I mean, so just talking about specifically about woke America, I can see that, or specifically the left side of America. But what about the right side of America? Well, so that's a good question. That's right. So the interesting thing is the right side of America, I think, in this time of chaos and churn, will actually eventually end up on the global left. And let me explain why. The reason is, you can go libertarian enough that you're anarchist. But the global left does, if you are truly left, there's different versions of left and right.

1:36:25Okay. Insofar as you identify, so American anarchy, right? There's both the left and a right version of that. And the left version of it is BLM, which is we are all equal. And the right version is, let's call it extreme Bitcoin maximalism. You ain't the boss of me. Right. Okay. And what both of those mean is nobody's in charge. We are all equal means completely flat. Yeah. You ain't the boss of me means nobody's in charge. Again, completely flat. Right. And this is BLM and this is Jan 6th. Okay. So when you think about what that means on the street, it means swarming mobs, chaos, assault rifles, you know, everybody yelling at each other, no established hierarchy, and nobody wants to fold into anybody, right?

1:37:06Trump is like the last leader, and apre him le deluge, like after MAGA, maximalism, after Orange Man, Orange Coin, you have something where you have a bunch of basically Bitcoin warlords, whatever you want to call it, right? And you just have a bunch of leaders who - Back to the warring states. Go ahead. No, no, I was - It's warlord era, right? It's like warlord era in China, right? Or the warring states. Yeah, exactly. That's right. So actually, those are two different periods. But yes. Yeah. So the the thing is that people don't want to they they have taken one piece of American culture, which is leadership and so on and so forth.

1:37:47But they just don't understand the concept. They don't understand harmony or whatever. You know, they understand, you know, the understand the concept of organizing. one way of putting this is individually alpha is collectively beta right like if you i understand why andrew tate and so on exist right i actually think he himself is smart enough that a lot of what he says is like a persona okay but don't you think he says it also because he identifies the fact that men have become more disenfranchised so he's just yes totally totally so he's he's playing a character in many ways right he's he is smart enough i think that he i mean his father's a chess master and so it's over but his audience doesn't get the joke right his audience doesn't get the joke and and and maybe he means somebody says you know i'm not defending right but one way of thinking about it is um like andrew peterson is like jordan uh andrew tate is like jordan peterson with tax okay why jordan peterson gave advice to young men to kind of clean your room and so forth.

1:38:46And that was like the old culture where in Western culture hard work was valued and you're a valued member of the society and so on and so forth. And then lots of young men found that that just didn't work and they were just basically there being a nice guy they were taking advantage of. So they went to the Andrew Tate-ish you know all tats and like F you guttural you know the most you know insane form of ultra masculinity out there right. The problem is that being alpha in this way individually alpha is collectively beta because that means those men can't cooperate right by contrast the quote more beta men who are let's say working on a ship in china or in asia or something like that they're actually collectively alpha because they can build strength together right say beta by the way i'm not i'm trying to say the stereotype of like chinese indian men being beta but i'm saying the the the cooperative like the problem is male male cooperation is characterized as beta in the west right and i understand how it got there But it's bad because now you have women, men.

1:39:46Everybody's fighting each other on different axes. Nobody's in charge. This is what I mean by American anarchy. Like, for example, with Bitcoin maximalism, there's – go ahead. Yeah, but what do you call American – so what you might describe as, I guess, American anarchy, I mean, more positively, isn't that American individuality and exceptionalism? Well, in the same way that you had communism in the mid-20th century, and it had all kinds of nice words on it. Right. But the substance of it was just a disorganized, like a terrible society, right? Actually, I should say it was the presence of a malevolent state, right?

1:40:20American anarchy is the malign absence of a functional state. So as every institution melts down, like the FBI melts down, like Delaware melts down, right? Delaware, everybody's gotten out. California melts down to the point that Elon's gotten out. You have – every single day you see another fight where it's like – I don't know. Like the DOD thing. Some general is fired right over there. Yeah, and I guess you could also argue around all the conspiracy theories that are being sort of put forward as well and people listening to them, believing them and all that stuff. I get that, right? This is the end of the Soviet Union.

1:40:54At the end of the Soviet Union, once they stopped believing in communism, they believed in anything. But I would say that there is one route that I do appreciate, and hopefully you can disagree on that, is I do think the one thing that makes America a difference amongst almost any other country is this idea that on individuality and the celebration of that individual, which causes this anarchy and causes this thing. Because you saw it over COVID with the mask. It's like, it's my right. It's I got to do it. Whereas in China or in Japan, it's like, well, we all got to do it because it's for the collective good, so to speak.

1:41:22But I would also say, and this goes down more, I guess, more deeply rooted in maybe my perspective. Sure. I think humans are generally tuned more for good than for bad. As in, we care about our societies. Maybe we don't care about all of America. Maybe we care about red America more than blue America or MAGA, whatever. However, we're still something that we want to attach ourselves to. And there's a common thread that eventually we will agree to because we want to be, as social creatures, want to be attached to society rather than to be something where we're truly just individual beasts, as it were.

1:41:54And in some cases, that's reinforced by education in the States. So, you know, like China is an example of that. And one side of the extreme, which is very different from something inside North Korea, where it's basically just like literally whipped into you. Yeah, of course. So forget that. And, you know, like I think what you're describing to me is what, you know, back in days of the 16th, 17th century, there were many constructs of how society should operate one. And you had sort of the Hobbesian view, right, which is basically talking about how, you know, men are generally selfish and bad and evil, and therefore we need state control to put it together and control it because it's going to be chaotic, versus I think the one construct that maybe most of us more in the West the lock-in perspective, which is that, yeah, we have some elements that are selfish and some elements are problematic, but by and large, most people want to be helpful and kind and supportive, and we need to, you know, be involved in a way where we support that construct, but not basically sort of, you know, control it as it were, right?

1:42:56And I think just to close that thought, when we talk about a future of decentralization, we're talking about a future where through code and what you describe as a network state and so on expands on, Wouldn't we be able to say that we can then actually celebrate individuality much more so, but in a construct of common rules and code or laws, as it were, that we can agree on and do good things because we prefer to do good things rather than necessarily sort of really just fight each other all the time? So here's my view. My view is there's absolutely like, you know, capitalism versus communism is not interesting in the sense of like even the communists are capitalists, right?

1:43:36Especially today. Yeah, that's right. But individual versus group is always interesting because there's a balance between the individual and the group. What are your responsibilities? What are your freedoms and so on? I'd say three or four things in response to what you said. First is I think for you and me and for people in tech and so on, when we talk about individual liberty or freedom or something like that, we are also balancing that implicitly with responsibility. that say you're not going to go and curse and yell in public. You're not going to be drunk in public. There's this degree of like an onboard governor there where it is ordered liberty, right?

1:44:13Like because you take care of yourself, then you can have more freedom, right? The problem is that there is a low IQ version of I can do whatever I want. You can't tell me what to do. F you. You know, it's a free country, you know, blah, blah. Or like we are all equal, burn everything down. There's like really insane versions of this that do not have any onboard controller, right, that do not have self-governance that manifests in drug addiction or like extreme levels of obesity or, you know, out of wedlock births or, you know, like setting fires, riots, setting Waymos on fire, you know, or just generally being disordered even on X and like yelling for people to die.

1:44:52So that is a symptom of – see, the problem is we have a language to describe an excess of centralized control in the Anglophone world because that's communism, that's fascism. We don't have a language to describe the other extreme, which is anarchy. I mean there's the word anarchy, but it's something where actually in a sense, what is the Western left constantly afraid of? Fascism, fascism, fascism. What is the Western right afraid of? Communism, communism, communism, right? And so they will push so far away from centralization that they'll go to the anarchistic form of decentralization where there's anarcho-communism, anarcho-capitalism.

1:45:32And of the two, I'll take anarcho-capitalism because at least there's like some order, but it's like Mad Max, right? And I can show you – and when I say that, by the way, I know it might sound – No, it's fascinating just because it's interesting. It's just that I think that – There's a failure mode the other way is what I'm saying. And it's moving in that failure mode. And let me just show you some visuals because I've got visuals in my head that I want to show you when I say this, right? Sure. I mean, okay, I've been to San Francisco. I get it. Yeah, that's right. So, like, for example. But I think of San Francisco more as a state, as a place that's breaking down.

1:46:09Where social cohesion, again. Well, but let me show you what it's actually at. This is the level that it's at. Okay, so here's a video in San Francisco. This is like a busy year. and it's not just this giant mob all-school cars running in circles and then here watch this they're setting them on fire okay this is just straight up black mirror mad max in the real world see black mirror is about like a dystopian future and all the sci-fi stuff presupposes that the future is bad but the present was okay right and here it's actually the reverse it's a present that's bad and look at this this is just like animals space right they have none of them are arrested the police fighting cars on fire obviously that can lead to i mean the reason fire is bad is it spreads right so this is look at this these these

1:47:02where is this by the way this is not like some random location this is in front of the ferry building right this is this is not like some place that's known to be a hellhole this is happening in one of the most expensive places in SF, right? And the police doing absolutely nothing is like a signal that the immune system of society doesn't work. Let me show you another one. Ready? Here's another one. Here is...

1:47:29But are we not at risk of highlighting... Well, I agree with you. This is terrible. But are we not at risk of highlighting the sort of exceptions to the rule? Because while it's true that there's a lot of problems in San Francisco, it is not that 90 % of the population is doing it.

1:48:13Yeah, now listen. There's one doing on his car. He's really proud of his life. Look.

1:48:25So, look. Wait, wait, wait, wait, watch what happens. Watch what happens. This is a large mob of people. This is hundreds of people, right? So, watch.

1:48:38Watch.

1:48:42Watch, watch.

1:48:48he manages a little bit let's see now watch this

1:48:54start this is the fast okay this is world war z this is 28 days later the fast zombies are running after him this beautiful thing and this well landscaped manicured thing That was the old civilization that built that. And this is the new anti-civilization that has risen. And you see the mopeds coming. That is the street mad men. Okay? Do you know what's saying this to them? No. This is like Minneapolis. This kind of thing is happening all over America. It's not even... Did this guy do anything? He didn't do anything. I don't even know his Israeli pals. These are insane people. And there's a lot of them.

1:49:39Enough to take over the street. have no police it can happen here in America wonder if that flag they have more made to I don't know but that's the point this is not acceptable anymore this is something that happens so much where's the police I guess where's the police they've been abolished defunded remember like you know one thing it took me a long time again this is obvious but it's just the level of property the billions trillions whatever in property that the police force protects in a city is like their pay is a tiny fraction of what that is worth. Right. So obviously there they have to do it for the honor, for the sake of protecting their community, for the praise of their community.

1:50:24You know, women love a man in uniform. It's supposed to be something where people are like, you know, thank you for your service for the military, but also like having that respect is actually a big part of what they deserve because it's a dangerous and difficult job and the whole insane abolish the police defund the police kind of thing took away a lot of that status and the police were suddenly characterized people as a bad guy so a lot of the guys who were good guys laughed and others just like like you know what take care of yourself you know right so that's like if they're not going to be praised for stopping bad guys let the bad guy you know go go take care of yourself idiots you know that's a lot of policemen feel right and so i mean the tragic thing would be that uh and i guess i try to be hopeful here yeah but the tragic thing would be that if you give up on a place right and then you leave that is the decline of the state for sure true right but but but america was founded by people who gave up on a place and left in the 1600s the the puritans gave up on england and left the cavaliers gave up on england and left 1848 revolutions 1848 the german americans gave up and germany left did the irish americans did they betray ireland there's more irish people outside Ireland than they were there.

1:51:31Absolutely. Yeah. So like every major group that came to the US basically essentially made the decision that their home country had too many problems. And later, obviously, Jewish people during the Holocaust, Iranians after the Iranian Revolution, Korean people after the Korean War, Vietnamese people at the Vietnam War, like Indians to escape socialism, Chinese people during Maoism. Every major group came to America because there was something busted, destroyed, wrecked, ruined in their home country, or they just couldn't fix it in time, practically, because not everybody can be like, okay, I'm going to ascend to becoming president and so on, right?

1:52:05The best decision for them was to vote with their feet and leave, right? And now I think another piece of this actually – sorry, you say something. I was going to – No, I mean, I think the point I was trying to make is that for as long as there's going to be people in the space that want to make it work, right, there is something worth fighting for. And so my sense is that America is worth fighting for. I'm not American, just to be clear, right? But I think there is something to lose that is more precious. The values are worth fighting for. Absolutely. And it's meaning. And so I do think that the idea and the place as it is, people fighting for it, whether this is something like an Elon or a series of people like this, I think people will come together.

1:52:48If the police fails as it is right now, I do think humans have this powerful way of reorganizing and reforming. And it will look differently, to your point. but they'll come together to make it work. And I think you see this in history when things fall, they come back slightly differently, but they will form and shape themselves in a way that, again, brings it back down to the ultimate sense of safety and security that people want. That's right. So this is like what I mean. So I think the way I think about it is like you can think of the Internet as either V3 or even V5. You have Greece, Rome, Britain, America, the Internet, right?

1:53:26Right. And for example, Bitcoin represents American values, but it's also it's really Internet values. Yes. Right. Yes. And so because global, because decentralized. Right. The Internet is more America than America. And MAGA is trying to be more China than China. Right. Like in the sense of MAGA has China envy. They want to be a manufacturing power. They want to be a military power. They want to even obsessed with Taiwan. All these kinds of things are things that nobody ever cared about America until basically 2015 when Trump like because red America was losing to China. MAGA had China envy. And nobody admits this, right?

1:54:00Like, basically, the Democrats also have China envy, right? Because they want to have that level of control and so on and so forth. And China just does it more competently. China is a much better China than blue Americans are. Very similar, by the way, to the 80s with the USSR, when they lost confidence in their own system and Gorbachev started copying America. Glasnost, Perestroika were American concepts that were brought into the Soviet context, and it didn't work. Also because they weren't ready for it. They weren't ready for it. You know, it was basically the cart before the horse. They were trying ideological reform before the manufacturing reform, right?

1:54:29All that kind of stuff, so the whole thing melted down, right? And basically, Gorbachev, you know, lost confidence in the communist system and tried to do things in a different way. He was trying to copy America, and the Soviet Union was a much worse America than America. Later, now Putin has rebooted the whole thing as a Russian nationalist project. That took 30 years, and, you know, like it's more successful than it was in the 90s. Maybe it's going to win this war in Ukraine. Who the heck knows what's going on for years and years and years? Okay. Okay, so, or he loses or it's some crazy stalemate that's been going on for way longer than anybody expected.

1:55:00Fine. So I think that in, you know, trying to, like China will always be a better China than MAGA, right? Sure. And because China is just comfortable in its own skin. All this stuff like industrial policy that MAGA is trying to do. It's also got decades and decades of buildup and experiences. You can't just replicate that overnight. Yeah, exactly. Like they want to replicate. Go ahead, sir. But there is one, of course, thing that is different is around applications of AI. Sure, but even – go ahead. And the reason why I think it was interesting is I do think that the way that AI is forming and developing in China under more of a state-controlled environment because of safety and security and so on is going to have a different flavor than it has in America.

1:55:42And I do think that – Yes, it's a physical world. Yes, sir. And also I think in America the application of individual AI will form differently than it will in China for that reason. Both of them will have their own forms of it. And maybe, you know, is the application of AI and by extension crypto and tokenization of that type of stuff not going to be perhaps that answer in terms of helping sort of reshape society? Because I feel like, you know, to your point about it's difficult for someone to compete, but, you know, in the classic labor construct. But when you talk about what's happening in AI on the creative side and what's happening with the tools available to you, actually it opens up entirely new frontiers.

1:56:21And it's true, people will get left out. But it's also true that in a place like America, you can be disruptive about this, which won't be allowed in China in quite the same way. So, again, I don't mean just tech people. But just to say that I actually think because of AI, you're going to have much more extensions of that human creativity extend throughout people who are not technical. Meaning that we're going to have much more amateurization, and therefore, you know, someone in the Midwest could actually have an application of use in the so-called technology world that they would never have had otherwise.

1:56:54Yeah, but I'd say my main, I agree with a lot of what you just said, except I'd say intranet first, as you see from America first, right? Because not just someone in the Midwest, someone in the Middle East, someone in South America, right? And only 4 % of the world is American. 96 % is not American, right? But isn't actually America ultimately the physical manifestation of what you just described earlier in terms of the nation of immigrants, people who came in? So I think the V3 will be network states, right? Like essentially the physical U.S. doesn't have a logic to it anymore because you've got people who are communists and nationalists and technologists and so on all living next to each other that don't share their values, right?

1:57:31Like basically it used to be or the whole nation state concept was this implicit premise that if you live near somebody, you share their values. Therefore, you could agree on laws and those laws would be enforced in a geographical way. Right. Now, people can live in an apartment building and they completely disagree with each other on everything. They don't know each other. They're 30 feet away, one above or below or whatever. They wouldn't recognize each other on the street. They would like completely different content. And now with the internet, they have a completely different system of laws.

1:58:04One is on this blockchain. There's another blockchain, right? So the entire concept of law being enforced geographically resides implicitly on culture being uniform geographically. When that breaks and fractalizes, as it is in America, you don't have that. Now, but China does have uniformity of culture and geography because they have the firewall. They kind of took the hit to do that vertical integration, right? Those digital borders that they've built, the Great Firewall, I think, especially in the age of drones, nobody can script something easily on China's territory because they have this, right?

1:58:40Like they have the ability to block. Basically, and this is the thing, like they kind of made this claim that if they can inspect physical packets coming across the border, they can inspect digital packets. And there's actually, again, I will still be on the side of the free internet. But to make the case for that, and I'll give the case for the free internet in a second. But to make the case for that, that concept of digital borders as opposed to censorship is an interesting way of thinking about it since it's actually true in the age of robots. And you don't want to allow someone to just connect and script a drone and blow something up like the Ukrainians did in Russia, right?

1:59:12Okay. So China is actually – they took the hit and they took the PR hit. and they actually have something where they have a communications layer and a social and cultural layer. Korea did something similar. Oh, really? Interesting. I didn't know this. So, I mean, notice how Google doesn't exist in Korea? Yeah, Naver. Exactly. It says, oh, Naver, the way the map system is going. They didn't do it in quite the Chinese way in the sense that you could still access Google in Korea, but all of the domestic sort of ecosystems and, frankly, utilities and all that type of stuff really could only be accessed in Korea by Korean companies.

1:59:44So for instance, Google Maps does not work in Korea. Oh, really? Yeah. So you have to use Naver or you have to use Kakao Maps, right? And it's sort of a different level of protectionism. But as a result, Korea now has a very strong native industry that doesn't exist elsewhere in similar or actually larger size countries because it's essentially been digitally colonized. So totally understand the perspective. That's exactly right. And I think India also has like, it has reliance to geo. It has kind of its own things. And so it has some degree of sovereignty on that versus others, right? So this concept of network versus state is actually like the capitalism, communism kind of thing of this century.

2:00:24It's centralization, decentralization, right? Because the network is capitalism, the state is communism. You know, or like when you actually say capitalism, those are loaded terms. You understand what I mean, right? Yes, exactly. The network is individual and the state is the collective, right? I think maybe you can summarize it as, I mean, it's decentralization, but it's ultimately down to getting one layer lower into your property rights. Yeah. Right? Yes. And as I think you were saying earlier, and I completely agree, there's many different valuable intermediates between these, right? Singapore and Dubai make different tradeoffs, but they're both valuable places and it's useful to visit them, right?

2:00:54And there could be 50 different kinds of network states, 1 ,000 different kinds of network states, each of the million people that make different tradeoffs between the individual and the collective. And where I come to is you preserve democracy, you preserve choice by allowing people to choose between these locations, right? You go from the two-party system to the thousand-city system. And so you can pick – because actually one of the things that's happening in the U.S. is at the state level, they're becoming one-party states. California has been a one-party state for 15 years, right? That's why they've got the$100 billion change.

2:01:26So California is a one-party state. In response, Florida is becoming a one-party Republican state, right? And obviously China is a one-party state. So the actual choice is between states, not within them. So it's moving. The ultimate state ultimately for all of them, in order to preserve the ability for the state to survive, they do need to have access to military. Ah, okay, let me talk about this. All right, so my view on, I think Americans are, you know, and I've shown previous graphs in different podcasts, but like, you know, if you look at shipbuilding, China's 200x American shipbuilding. So on stat after stat, the current Secretary of Defense has said China's hypersonics can sink all these aircraft carriers.

2:02:03Our whole power projection platform is aircraft carriers and the ability to project power that way strategically around the globe. And yeah, we have a nuclear triad and all of that, but a big part of it. And if 15 hypersonic missiles can take out our 10 aircraft carriers in the first 20 minutes of a conflict. What does that look like? Former Secretary of the Navy has admitted one Chinese shipyard can build more than all U. shipyards combined. They have 13 shipyards. In some cases, their shipyard has more capacity. One shipyard has more capacity than all of our shipyards combined. CEO of Raytheon has said you can't decouple from China.

2:02:34So while we talk about pulling supply chain out of China and resourcing out of China, I would tell you it's very impractical. We've been de-risking for a couple of years, making sure that we have second sources for critical componentry. But unlike Russia, where we pulled out two weeks after the invasion last year, we shut down our factories, we pulled our people out, and we completely cut off any contact with our Russian customers. You can't do that with China. Too big, too important, and too necessary. There's a U.S. military study by an entity called Gavini that showed that the U.S. military is made in China, that like the Tomahawk, the JDAM, they go back to Chinese suppliers.

2:03:11So in many ways, the entire concept of the U.S. military being prepared to fight China is all completely fake. It's just basically something where it's like defense spending, or what have you. It's like a defense budget thing. But in an actual fight, it's just like a, it's completely fake, right? The US military cannot fight China. And so once that's actually priced in, then you actually realize, okay, the Chinese drone armada is the most powerful physical force in the world, right? And I'm describing something that doesn't fully exist yet, but it will, right? The Chinese drone armada, where the sky is blackened by like, you know, this crazy kind of things, right?

2:03:48Against that, I think you can't fight it directly. The entire American model is wrong. You need something more like Gandhian nonviolence. You need the agility of the internet. You need to have decentralization. You need to have, you know, essentially be everywhere and nowhere. You need a completely different strategy to balance the Chinese drone armada than the tank for tank, plane for plane model, which MAGA is still invested in and they're just wrong about. They just don't have the manufacturing oomph and they certainly don't have the price competitiveness, right? Right. So Gandhi and nonviolence is, you know, as that capital moves, you know, from Greece to Rome, to Britain, to America, to the Internet, new cultures influence it.

2:04:26Right. Like British culture had a lot going for it. But the American fusion, you know, all these different European strains and African-Americans and various immigrants like added more strength to it. And such that even British culture, as powerful as it was, you know, actually now looks up to American culture and American culture looks up to Internet culture there. in a sense, you know how like France... Oh, go ahead. So what I wanted to add to this is that I agree with you in terms of when it comes to... Although I do think neither side wants a war because it's going to be so destructive on each side.

2:04:57It's just not worth it. Because obviously there's going to be a lot of internal issues that develop from it. And when it comes to that, I think China will definitely have a much harder time weathering it than America internally. Oh, you think so? I think so. Really? Yeah. Why? Interesting. Because I think the harmony of China on wars is one of the reasons why I think this is that China… It's because of the one-child policy. Exactly. There's demographic issues as well. They don't have a flow of… You don't get… It's just not that obvious for immigration to take place in China, right, just for cultural reasons as well.

2:05:28It's also one of the reasons… They have visas in Hong Kong, though. They do. Yeah. Hong Kong is like eight billion people. Sure. So it's one of the reasons why… And I know a lot of people in the U.S. are saying, oh, China is going to invade Taiwan. They're treating it like the next Ukraine. I vehemently disagree with that perspective, primarily because I don't think, first of all, Xi is not Putin. The two are entirely different, right? He's not like sort of acting in a vacuum. I think they're much, much smarter about this. And the second thing also is that Russia shows China what not to do. Yeah, that too.

2:05:55You know that proverb? Especially like with the collapse of the Soviet Union, Russia, you know, the ideological is supposed to be economics first. They keep showing China what not to do. But also, again, sort of China inside first in terms of making sure that you have harmony and creating a war that's external is not fruitful for internal harmony whatsoever. So I don't think China would be the initiator of a war regardless. And I think America doesn't want one. So I think that's one perspective. But the second one is really when I talk about the Internet. You're going into it. Yes, exactly. Yeah, sure.

2:06:32What I was trying to say is that we will still need some form of protection because we're still physical beings. Yes. At the end of the day, whether it's police or this or something like this, and I think the common bond will be the fact that we need to have some form of social cohesion and security. Totally. And we'll come together, whether this is government, network state, as you say, and I think enough of them will then share around those values and come together because of that. Absolutely agree with this. And that's why I think these cloud communities can have leaders that can materialize in the physical world.

2:07:01And now people are once again geographically and ideologically aligned. And what I would say, I hear your point about America currently split and that kind of stuff. But if there is one place today, and maybe the place will be somewhere else, although it's hard to imagine. If there's one place today that still, despite all the struggles internally, can still exist with this divide, it is still America in comparison to other places. You couldn't, China wouldn't survive something like this. Europe wouldn't survive something like this, right? I think America, it's struggling. Do not get me wrong.

2:07:30I agree with you completely. But if there's one country that has an ability to potentially deal with it, I do think it's America because of its history. So why are we? But I understand what you're saying. Yeah, I think it's kind of like saying the sun will never set in the British Empire. But the British Empire. You know, that used to be a saying, right? And it was true for its history. For hundreds of years, the sun never set in the British Empire, right? But the British Empire was not an idea. It was more so than anything before. Because, well, actually, let me put it like this. One last thing, right?

2:08:04So common law and the Magna Carta was a crucial thing that made it. Oh, it's the father of property rights. Exactly. That's right. Exactly. So Britain was closer to an idea than any other European country, right? It was more abstracted out. That's why it was also naval power. It's a combination of geography, the ideas there. And then America. I just want to add one point also. I think the English language is also part of that. Yes. Because the English language is such a fluid language, and I think broadly a much more optimistic language. So I grew up speaking German, right, because it was my mother tongue, because I grew up in Europe.

2:08:36And German is an incredibly precise language. You don't have this joke about unless you put the verb at the end of the entire sentence, the entire paragraph you just said makes no sense, right? So it's partially true because of that precision. But it also makes, for a nation of people, more precise and frankly more sort of half-glass, sort of empty as half-glass-full perspective. And I find that in the English language, you have the ability to be much more nuanced, and you can be more, let's say, packaged, and maybe it's more political as well. And as a result, we can phrase things much more positively and optimistically than German, as an example.

2:09:13Yeah, it's... And I think it adds to that flavor. Yeah, I mean, people have... There's a... Gosh, there's a Spanish writer who made this point. And he's like, there's like a Latin and German version of every word. So like, you know, or like for, you know, there's chicken, but there's like a beef, but there's mutton. And, you know, you have the short German word for something and you have the longer Latin word for it. So there's a lot of variety and you can mix these up. And, you know, regal is different from, you know, royal, that kind of stuff, right? Anyway, so you're right. But so that's why I do think English is the language of the Internet.

2:09:45Yes. And, you know, in a sense, this interaction, balance, whatever, of this 21st century, again, it's in a sense Eurasian communism versus Anglosphere capitalism. Right. So except the Eurasian communism I'd actually put on the right this time and the Anglosphere capitalism I'd put on the left because the internet is sort of a more anarchic kind of capitalism, freedom, you know, and so on and so forth. Whereas China is a more ordered kind of communism and more nationalistic. Right. And so, you know, it's almost like the world has these certain confirmations. And again, the capital move from Moscow to Beijing of Eurasian communism, right?

2:10:23But it's still a land power fundamentally. Yes. What I'm kind of hearing is you're saying sort of back to the point about sort of the British Empire is that the British Empire itself obviously is no longer what it used to be, clearly. but the ideas of the people in the British Empire, right, have basically migrated into America. Yes. I mean, sort of Locke didn't have success politically in the UK as much as it influenced what happened in America. That's right. But now America is like 20 % WASP or something like that, right? So like... It wasn't like that before, though. It wasn't like that before.

2:10:59That's right. But the torch got passed, and think of it as like software versus hardware, right? The software is the values and the hardware is the people. And you can have – when the software and hardware are fully aligned, everything is great, right? But you can also have cultures pass on just like algebra came from the Middle East or what have you or zero came from India or gunpowder from China. There's cultural things that can spread, right, even independent of the people and then vice versa, right? People can have totally different – their software can be wiped and you can have North Koreans and South Koreans with totally different software on very similar hardware, so to speak, right?

2:11:32And the way I think about it is the Constitution came after English common law, then only scaled to America. But the blockchain scales to the internet. Yes. Right? Yes. So all the values of America, which I think we both value, free speech, free markets, privacy, sovereignty. Property rights, everything. Yes. All of those are guaranteed by encryption and by the internet, not by American courts. Right? But it still – Yes. Delaware doesn't protect your property rights, but the blockchain does. Go ahead. But there is a consensus that comes from the agreement we have with the society. And I guess we probably both agree that the consensus of proof is enough rather than necessarily needing a state to enforce it, so to speak.

2:12:15Because if someone's – Well, that's the thing. So the thing to your point about the military, like Bitcoin has gotten to a trillion without violence, right? It has no armies, it has no need of it. But if someone steals your Bitcoin, you still need someone to try to enforce to return it? Well, so the thing is that, yes, but does it— And that's what I mean, right? But, like, can you get a return? I mean, the Bitcoin theft is kind of irreversible, right? It's very difficult. Like, if a Brazilian takes it from someone in Turkey, like, for better or for worse, code is law, right? So you have—and, of course, you could instead store it non-BTC, but some other thing where there's a digital reset and there's system administrator and centralized, and you could have USDC freeze it and reverse it and so on.

2:12:57And those things have arisen because people do want that. But they also have a balance. Like, here's the amount that's totally with me, but it can also be stolen. Here's the amount that's with a centralized custodian, and it can be reversed. But I don't think the police are really that helpful. They're, like, somewhat helpful. Maybe at times it's a really big theft and so on, but most of the time they're not helpful. So without a system of enforcement, I think while most can be careful about it, it does, I think, it does create a scenario where people are going to be more. Like, for a certain subset.

2:13:24Again, it's not the majority, but a small subset sees opportunity. Yes, yes, yes, that's right. So that's why that's like network versus state, right? This is like total network, but then some police are the total state. And then if you go far enough this direction, they don't want crypto to exist at all, right? So that balances, I think, this century. Exactly, exactly. And then we have to go to a pendulum shift. Okay, why don't we wrap for now? Exactly, yes. All right, that's awesome. Thank you so much. This is a fascinating conversation. Okay, good. All right, good. See you soon. Thank you.