How France, Germany and Poland Can Strengthen the Weimar Triangle

In the post-Cold War world, France, Germany and Poland concocted the Weimar Triangle as a way to foster cooperation amongst the three countries. The trio has weakened over the years – due to differing national priorities – but Russia’s invasion of Ukraine might necessitate getting the gang back together.

Thanks to their renewed military collaboration, the Weimar Triangle will be working to develop long-range weapons to enhance their defensive capabilities; the aim is to prevent Russia from falling back into its old ways. While these three countries have a good thing going, Henry Kissinger argued that a Weimar Quartet might be even better – if not necessary.

Ukraine would strengthen the triangles’ ability to ensure regional stability and effectively counter Russian threats. The bottom line is that when (or if since we’re feeling optimistic) the Russians come knocking, these countries sure as hell want all the tools and partners necessary to stop them in their tracks…

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey everybody, Peter Zeihan here. Coming to you from the base of the serious part of West Spanish Peak in New Mexico, adjacent to southern Colorado. I’m waiting for a storm to pass before I get out on the ridge line. Being 6.5 feet tall and a Thunder Boomer isn’t really the best call. Anyway, on the topic of things that have been mehhhh, but very soon may be incredible.

Today, 27th of June, there was a summit with a group called the Weimar Triangle, which includes the leadership of France, Poland, and Germany, the three critical countries of the Northern European Plain. The Weimar Triangle was envisioned in the aftermath of the Cold War when Poland was no longer a Soviet satellite country and was on the way to joining the European Union and NATO organizations that Poland has since joined. The idea was that in the long swath of bloody European history, France, Germany, and Poland tended to find themselves on different sides of most major issues, leading to many of the major wars.

Anyway, the idea was that if you get them all on the same side, then the Northern European Plain, instead of being the most blood-soaked part of the planet, can become something better—a path of trade and cooperation.

And you could argue that the idea of the Weimar Triangle has been realized, but it’s not because of the triangle. This is how it all started in the 1990s, but by the time we got to the 2010s, the three countries drifted apart. France tried to be an independent pole in international affairs, which is always a mixed bag. Germany tried to forego the politics and security talks and simply focused on trade by exploiting labor and infrastructure in Central Europe, taking a completely amoral position on everything that mattered. And Poland was in and out, in and out, with every possible interpretation of what it means to be Polish. Remember that Poland had its first democratic elections in the early 1990s.

So here we are, really only one generation later. There are a lot of deep divisions within Polish society about the role of government and where Poland fits within Europe and the wider world, and it’s not going to reach equilibrium anytime soon. By the time we got to about 2002, especially with the Iraq war in 2003, the Weimar Triangle had basically fallen apart until Russia invaded Ukraine in 2022.

Now, the three states are starting to talk a lot. Instead of collaborating on economic issues, they have decided to start working on joint military acquisitions and development, specifically for long-range cruise missiles with a range in excess of 2000 km. The reason is simple: as the Germans will tell you, if you go to war with the Russians and take a defensive position, the entire wealth and resources of the Russian Federation, Soviet Union, or Tsarist Imperial Russia, whatever it happens to be, can be collected into a single fist and punch at you wherever it wants. If you are left playing defense against that, you are going to lose. You have to have a deep strike capacity that shatters the infrastructure and logistical capability of the Russians far from the front. Throughout the Cold War, this is basically what NATO did by practicing things like the North Cape exercises, which weren’t necessarily designed to plug the Fulda Gap but instead to prevent the Russians from reaching the gap in the first place.

Now, where to go with this? It’s a realization, especially in Germany, where the defense minister is heading up this effort, that we are in a fundamentally different world. The foreign policies of the French and the Germans in recent years simply don’t work anymore. Getting that sort of weapons capacity in Europe gives the Europeans the ability to forestall a Russian invasion if Ukraine falls. The Poles know they’re next, and the Germans are fearful they’re after the Poles. So it makes sense to do this as soon as possible.

The question, of course, is whether it’s going to work as well as my hike. The answer is probably not, because even if the triangle can come up with the perfect weapon system, launching from the eastern half of Poland, you’re still a long way from huge parts of the Russian industrial base. Remember, during World War II, with the German invasion of the Soviet Union, Stalin built a lot of industrial plants on the other side of the Urals. We’re talking about a big place here, which is why that greenie peacenik Henry Kissinger always said in the post-Cold War era that no matter what your goal is vis-à-vis Moscow, it can’t be achieved by the Weimar Triangle alone—it has to be a Weimar Quartet. Ukraine has to be involved. If Russia is hostile, then you get a civil war among the Slavs, and you can launch an assault from 1500 miles further east, throwing a huge amount of Russian territory open.

Remember, from the Ukrainian border to Moscow is only about 350 miles. That’s not that far. More importantly, Ukraine is not technically part of the Northern European Plain; it’s actually in the Eurasian heartlands itself. So you split that territory between Russia and Ukraine, and instead of Russia being able to focus all of its attention on the Polish Gap, it suddenly has this massive frontier to worry about.

That’s in part why Putin launched the war in the first place. But second, the better option, as Kissinger put forward, is to assume that Russia gives up its genocidal irredentist ways and decides to join the family of nations. Splitting the territory ensures that you can never have a retrenchment that would be sustainable. If there is a way forward where Moscow is a decent place and Russia becomes a normal country, it will do so with Ukraine on its side. The only way to ensure that works is to have the Weimar Quartet fortify Ukraine, not just economically but also militarily, so there can’t be any backsliding.

Of course, the question then is: will that work? Well, that’s why we call it making history. All right, see you on the next mountain.

Photo in header by Občanská demokratická strana | Civic Democratic Party in the Czech Republic | Wikimedia Commons

The Future of Manufacturing: Where and Why?

China has been the global manufacturing hub for decades, but what happens if that goes away? If and when China experiences a significant collapse, someone will have some big shoes to fill, but who can do it?

There’s a few requirements that help narrow down our list – proximity to a consumer base, a young workforce, and existing infrastructure. Argentina shows promise, but political instability limits the country from realizing its potential. North America – specifically the US and Mexico – have the opportunity to claim a piece of this pie. However, the region that is most likely to benefit most from a shift in global manufacturing is Southeast Asia.

Countries like Vietnam and Indonesia are particularly noteworthy, thanks to their large, youthful populations, expanding infrastructure, and ability to handle manufacturing along the entirety of the value-added scale.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from the Gulf Shores. Today I’m taking an inquiry from the Ask Peter Forum. And it’s if my estimation for the mass collapse of China comes true, where is the manufacturing going to go? Well, first things first. If you remove a billion people from the global pool, you people are stopped. So yes, we’re still talking about tens of trillions of dollars of capital investment that needs to happen, but maybe not quite as much as we think. 

Now, once you’ve gotten past that, you’re basically looking at three factors that shape where the stuff is going to go. Number one, a place that is either has itself or is proximate to a significant consumer base to justify the infrastructure development in the first place. Number two solution number of people under 50, not just to consume, but actually to do the work that is necessary. 

And then third, you would prefer somewhere where they’re not starting from scratch. there’s $35 trillion of leased and industrial plant in China. And even if we only need to relocate half of that, which would be overly optimistic, I would argue, having to do that in a place that doesn’t have a road and rail system would be a much heavier carrier than a place that does. 

So this rules out any number of locations. Africa doesn’t look too good because it doesn’t have the infrastructure, and it’s too dependent on numerous oil imports to make it system function. Europe doesn’t look that good because it all has the infrastructure. It doesn’t have the consumption base. Japan kind of falls into the same category. So when I think of this, I think of three regions. 

So in ascending order at the bottom is Argentina. good infrastructure, great educational system, positive demographics, probably. They’re arguably the best one in the world for a country at its point of economic development. Of course, the downside is that it’s full of, Argentina foreign policy and. Yes, yes, yes, Malay, the new president is, doing reasonably well, but one president does not make a pattern. 

So we will see. But if if Argentina is successful at reinventing itself, it will easily become the manufacturing hub and player, not just for itself, but for the broader Southern Cone region. Brazil can’t compete in this. The infrastructure isn’t there, the education system is there and the country is aging rapidly. So you can see a world evolving where Argentina gets a lot of these pieces and then just treats Brazil as a captive market. 

Okay, that’s number one. number two is North America. the United States obviously has the consumption base, but so too does Mexico. It’s a pretty young country, demographically speaking, and, well, most of North America has already been absorbed into the NAFTA system. Central and southern Mexico really haven’t. So there’s a lot of low hanging fruit there, not just from a consumption point of view, but more worker point of view. 

And then, of course, the United States is the world’s largest consumer market with top rate infrastructure. so we’ll grab some chunks to, the third section. And the part that I think in relative terms is going to do the best is Southeast Asia. Here you’ve got a cluster of countries that have partially integrate. We partially globalized and partially industrialized, but almost all of them still have significant, reserves. 

They can grow up under labor. And as the place does better and better and better, the consumption situation is going to look better. the two countries that I’m arguably most, interested in, in relative terms are Vietnam and Indonesia. Both have large populations who are at a beach. Both have large populations in excess of 100 million people. 

High almost quarter billion in the case of Indonesia. Their infrastructure is okay, not great, but it’s rapidly expanding. And there’s some very clear population centers where this is all really serving as nodes for greater regional distribution. They’re also proximate to China. So this is a place where Chinese companies are already investing. These are countries who get along with the United States. 

They’re places where the Americans are invested. These are places, the people of Japan. So the Japanese are investing. And most importantly, they’re all at different stages of production. So it’s easy to imagine a supply chain system where the Vietnamese do the really high end stuff, then come down the Thais and Malaysians for the middle manufacturing and then lower end stuff in places like Indonesia. 

Vietnam is the one I’m most interested in because they’re trying to jump stages of production, and already 40% of the college grads are Stem graduates. So it’s easy to see them becoming the next Malaysia. But with a population that’s roughly four times as large. that becomes significant very, very quickly. So. So I get everything. Yeah, I think that’s everything. 

All right. I wanna have a good one. 

The Europeans Are Having Some Gas Problems

Europe has been taking a beating lately, from economic issues to demographic problems, but there’s a new one on the horizon. When the Ukraine War wraps up, what will the European energy situation look like?

Prior to the war, Russia was the energy powerhouse of Europe, providing crude and natural gas to practically everyone. Now, countries are seeking a layer of insulation from Russia and fulfilling their energy needs elsewhere; some are looking to the US or the Persian Gulf for LNG and others are turning to exports from North Africa.

Regardless, there’s plenty to sort out amongst the Europeans, with no clear path to a successful energy mix and sourcing.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Italy against the backdrop of olive trees, jasmine and bougainvillea. So, you know, just get much more Italian than that. I’m on the Ligurian coast and it is easy at this moment to forget about great power politics. But even here in Italy, they’re finding a way to punch through. the issue is energy. 

unsurprisingly, before the Ukraine war began, Russia was the world’s largest exporter of natural gas, mostly in pipe form, mostly to Europe. And while there has been a lot of talk on all sides, especially the Russian side, but also among pundits in the West that the Russians are just going to redirect natural gas exports somewhere else. 

Most notably, China is the one that keeps coming up. but natural gas is not like oil. So what is a liquid? you can put it on to a tanker and then send that tanker anywhere in the world but natural gas to get put on a tanker has to be frozen down to 300 odd degrees. Negative. and the infrastructure to do that is involved. 

And the Russians lack the capacity to do it themselves. I’d also argue that the Chinese lack the capacity to do it themselves. so your only other option is to go by pipe. And almost all of the natural gas that Russia has exported historically has gone to Europe. There are some pipelines that go to China, but they tap fields that are on the eastern side of Russia, far on the other side of the Urals. 

And the two networks are completely separate. And there’s a couple thousand in some places, 5000 miles of open virgin terrain between them. So linking them together is not something that’s simple. And even if you link them together, that’s not enough, because the existing pipelines are already at maximum capacity. So you would have to run new infrastructure from the existing fields in northwest Siberia, all the way across central Siberia into southeastern Siberia, and then cross into China and make it all the way to the coast. 

So you’re talking about a series of pipelines that would be the largest in human history, that are over three times the length of the that we’re currently the longest ones in existence. This is conservatively a $100 billion project. And it would take even if the Chinese were in charge, all of it over a decade to build. It’s just a physics issue. 

now that’s assuming, of course, that you’ve got the money for it. The Russians, as they always do when they talk about new projects, just assume that the other side is going to pay for the whole thing, which is usually how it doesn’t work. And the Chinese are like, no, not only do you need to pay for it, we’re not going to pay any more for the natural gas that is coming through this most expensive infrastructure project in history than what we’re paying for other natural gas. 

So the Russians think that they should be able to charge 300 to $1000 per thousand cubic meters. Where’s the charge? Like, you know, maybe 80, maybe 150 on a big day. So that’s not this, this deal of the century as it’s been referred to. But hasn’t been agreed to. No one’s putting money down. No one started construction. And we’re two and a half years in the Ukraine war. 

It is not going to happen unless our understanding of transport, physics, construction and energy change significantly. And that doesn’t seem to be on the table at the moment. And so let’s put that to the side. the Europeans, the Europeans are looking for more and more ways to cut off income to the Russians. They’ve been whittling down their exposure to direct oil transfers from the Russians, almost to zero at this point. 

that doesn’t mean to suggest that they’re completely immune to anything that happens. What they’ve done is they’ve stopped bringing in the crude directly. The crude bypasses Europe now makes a much longer sale to places like India, where it’s refined into a fuel, and then that fuel is sent back to, Europe. So they’ve achieved a degree of market insulation, but they’re certainly not out of the woods. 

natural gas is a little bit more straightforward, because those pipelines are basically turned off now, and the last of them will be going off by the end of this year. the Europeans have largely supplemented their natural gas from other sources. And since natural gas cannot be easily rerouted, by pipe, this Russian stuff really has just gone off the market. 

So Gazprom, that’s the Russian state authority, that’s in charge of all natural gas production and exported almost all of it in Russia. has actually reported its first ever loss this year, and it’s only going to get worse. Moving on, because they have relied upon those natural gas exports to Europe to generate the currency, to maintain their own fields, in their own production, in the road transport. 

natural gas within Russia is very, very heavily subsidized. So their only remaining hard currency is now coming from, a couple smaller projects, that export LNG projects that someone else built and that the Chinese cannot help them maintain. And then, a singular pipeline that does start in the eastern Siberian fields. There’s maybe two pipelines now, that goes to China, but the two of those combined are less than a quarter as large as what used to go to Europe. 

that means the Europeans have had had to find other sources. for most countries in Europe, the solution has been that liquefied natural gas that I mentioned earlier, with a lot of it coming from the United States and a lesser amount from the Persian Gulf, most notably cutter. but for the Italians, that’s a different solution. 

the Italians, because they’re in southern Europe and because the boot of Italy, it’s so far south, they’ve been able to bring in natural gas by pipe, from North Africa. The volume of natural gas is not in question. Countries like Algeria and especially Libya have loads of the stuff. the problem is stability. the Algerians are so anti-French because of this whole colonial war thing that they went through, that the logical customer for them, France is one that they try to avoid dealing with whenever possible. 

And you add in some energy nationalism and Algerian output. It has been steadily dropping for almost 20 years now. They’re probably not a reliable long term producer unless there’s a significant change in politics in Algiers. And even if that happens, Algeria has a large and growing population, a large and growing economy. They need more and more of their natural gas from themselves just to keep the lights on. 

That leaves Libya, which has been in a state of on again, off again civil war ever since the death of or even preceding the death of gadhafi, 15 years ago. But that is now emerge as the single most stable supply for the Italians. And in a post Russia world where there just isn’t enough supply to go around, Libya is going to become more and more important for the Italians, keeping everything running, which means we’re in this weird little situation where the Italians have to do one of two things. 

Number one, they’re going to have to send more and more money and more and more people into Libya to stabilize the situation in order to keep that energy flowing. And the last time the Italians had troops on the ground in Libya, things got decidedly weird. And it was the opening stages of World War two. the Italians would really rather not do that, but they might not have a choice. 

Option number two is to find another source of energy to keep the lights on. the Italians don’t have a lot of coal on their environmental goals at the moment. Wouldn’t that allow that to happen? Hydro is pretty much tapped out for everything they can do at this point. You can only take efficiency. So far, the only remaining possibility is nuclear power, and the Italians are one of a handful of European countries that is basically dusting off their old infrastructure and looking very, very hard at what would it take in order to bring some nuclear plants back into the system. 

Italy is one of those countries that got rid of pretty much everything, and now they have to start over with where they were back in the 1960s and 70s. It’s not a cheap solution. It’s not a quick solution. But if you’re alternative is invading Libya, it’s something they have to consider very, very, very closely. 

Backfire: Putin’s North Korean Joyride

If there’s anything Putin’s good at, its pressing the West’s buttons…and his latest trip to North Korea is no exception. However, by signing a new defense pact with Kim Jong Un, Putin might inadvertanly gain Ukraine a new supporter.

For years, the US, China and Russia have worked together to contain North Korea’s weapons programs and illegal activities; Russia has clearly stepped away from that aggreement. In the process of antagonizing the West and partnering with North Korea, Putin likely pissed off South Korea.

The South Koreans have become one of the top five arms exporters globally, but until now they’ve limited exports to Ukraine. If South Korea’s position begins to shift – and it looks like we might be heading in that direction already – we should expect to see plenty more deals like their recent tank deal with Poland.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here coming to you from Green Mountain, just above Boulder with the flat irons there behind me. Today we are going to talk about Vladimir Putin’s recent trip to North Korea. 

Basically, he went there, talked shit about the United States and, said he would sell weapons to North Korea, signed a defense pact and talked about how they are best buds. And he and Kim Jong un, that’s the premier of North Korea. He’s a really chubby guy. basically took turns, flattered each other and driving themselves around in a Russian made limo, which is, well, let’s just say it didn’t crash. 

And that’s kind of an achievement anyway. So, the purpose of this trip was basically to piss off the Western alliance, especially the United States. US diplomacy going back several presidents, at least to Clinton, have been working pretty aggressively to partner with the Chinese and the Russians to box in North Korea to tamp down their weapons program, the drug smuggling, their money laundering, all that good stuff. 

And in the last year, because the Russians are now finding themselves on the opposite side of everything from pretty much everybody, the Russians have actually been vetoing resolutions in the Security Council that would continue those sanctions programs on the North Koreans. which is something that the United States is really cheesed off about because the number one target of any missile launch is going to be Los Angeles or San Francisco. 

Well, let’s look at this from anyone else’s point of view for a moment. Just not Russia’s, not North Korea’s and not the United States’s, the other country that matters on the Korean peninsula is South Korea, an economy that’s roughly 15 to 20 times as large and as a technological leader, not just in things like semiconductors and manufacturing, but increasingly software and weapons technology. 

In the last five years, South Korea has emerged as one of the top five arms exporters in the world, specifically excelling in things like artillery and rocket systems and tanks. And if you start looking at this from the South Korean point of view, it is clear that Vladimir Putin made a colossal mistake, because until now, the South Koreans have limited their arms exports to Ukraine because they don’t want to get involved. 

But now that Putin has come to North Korea and bandied about how he and the North Koreans are best friends, the sky is the limit. And unlike German tanks or American tanks, things that are being made in limited volumes and so can’t be rushed to the Ukrainian front all that quickly, the South Koreans are the masters of making anything at quality and at scale very, very, very quickly. 

I mean, this is the country that back in the 1970s built what was then the world’s largest supertanker by building it in halves in two different dry docks and then welding it together at the end. And for those of you who built supertankers in your garage, you know, don’t do this at home. This is really dangerous. Anyway. It works. 

they’ve already sold 180 K-2 tanks to the poles. There’s another hundred and 80 on their way, and they’re going to be working with the poles on setting up domestic manufacturing. So it’s not just that the South Koreans can upset the balance of power in terms of the arms balance in Ukraine. By selling weapons directly, they can help various European countries establish their own production, and then they can have two, three, four different production sites basically working against the Russians. 

this isn’t the dumbest thing I’ve seen any country do in the last 20 years, but it definitely makes the top ten. All right, see you guys next time. 

5 Days Left In Our June MedShare Donation Match

There are only a few days left in our donation matching drive for the month of June. In addition to the $50,000 in donations that Zeihan on Geopolitics will be matching, an anonymous donor has agreed to match an additional $50,000 in donations. That means $100,000 in donations could be matched this month to our chosen charity partner, MedShare International. If you really want to maximize your impact, I encourage you to donate before the end of the month!

From the ongoing medical crisis in Ukraine, to life-saving maternal and child health programs in developing countries and support for vital safety-net health facilities in vulnerable communities in the U.S. and around the world, our donations serve as a force multiplier for MedShare.

Please click the link below to donate, and all of us at Zeihan on Geopolitics, thank you for your generosity.

learn more or donate here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
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Russians In Space…Well, Maybe Not Much Longer

Last week, I talked about how Ukraine has been targeting Russian air infrastructure to prepare for the arrival of their F-16s. Well, Ukraine launched a rocket attack on occupied Crimea and destroyed some air defenses and one of Russia’s deep space satellite communication stations.

The loss of that deep space satellite communication station is the focus for today. This isn’t great news for Russia’s already struggling civilian space program, given they’ve depleted their old ICBMs used for satellite launches. This will also reduce tracking and communication with Russia’s military satellites, which complicates things for any other nations relying on Russia for maintenance or launches. The final kicker is that Russia’s GLONASS system – their version of GPS used in precision-guided munitions like glide bombs – could be jeopardized or degraded.

This attack could significantly impact Russian capabilities, but we’ll have to wait for final reports to determine the full extent of the damage and impacts.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zain here coming to you from Colorado. It’s the 24th of June. And as we’ve been discussing on and off for the last couple of weeks, the Ukrainians are hoping to take out as much of the Russian air defense network as possible before they get F-16 Mirage fighter jets over the summer. The idea is if they can establish local air superiority, even if just for an hour at a time, then ground forces can then advance without fear of massive artillery barrage is hitting them, and that helps them clear out, say, minefields and actually penetrate into, Russian lines. 

Anyway, over the weekend, we had a significant ly the largest rocket attack I’ve seen yet from Ukraine into occupied Crimea. And while we’re going to be looking at the damage reports from this for several days to figure out how much was destroyed, it looks like several air defense systems were taken out again. But the one I want to talk about today is the Russian deep space satellite communications network. 

You use a deep space system to basically keep track of all your satellites in orbit and communicate among them into the ground. And since satellites typically are, you know, you need several of these stations, around the world in order to provide good coverage. Now, the Russians have never had that, because the Russians have never had a series of allies that they can trust on a global basis. 

So they have four of these networks within the Russian Federation, and that’s it. And apparently one of them was completely destroyed within the last 36 hours. this has three implications. Number one, it pretty much is the end of the Russian civilian space program. And it was already floundering, wasn’t economically viable, especially with the advent of space-x, because the Russians used to use their old ICBMs as launch vehicles. 

Basically, you use one of them and then it’s gone, and then you use another one, and you keep doing it until they’re all gone. And, well, they’re all gone now, unless they actually want to go into their active reserve. They were using the ones that were decommissioned after the end of the Cold War. So they’re no longer cost effective at all. 

And now they can’t even keep track of things as they orbit the planet. second, military satellites, most military satellites, most, like most civilian satellites, are whipping around the planet. And now the Russians have lost one quarter of what was left of their capacity to track and communicate with them. That’s going to provide a real problem for the Russians in terms of satellite communications. 

Not to mention anyone who was looking at getting the Russians to launch and maintain a military satellite for them now has to find someone who is not Russia to maintain it. And if your goal was to get away from the United States, there just aren’t a lot of options here because the Chinese don’t have a good network for this either. 

so basically, you’re down to Europe, with the Airbus consortium and EADS or the United States. Third, and perhaps most significant moving forward is with the loss of this. The Russians are losing the ability to not just keep tabs on their satellites, but, gets good telemetry for things like repairs. And if the Russians lose the capacity to do that, then their glossiness system, which is their equivalent of GPS, starts to fall off line. 

Now, there are already parts of the world that don’t have very good coverage all that often. But if you remove meaningful launch capability and modern capability and maintenance capability from the Russian system, you know, losing one more radar system would probably do that. Then you’re talking about the Russians losing the capacity to use precision guided munitions using geographic tags. 

that would be an end to things like, say, glide bombs, which are the newest military innovation that the Russians have used, basically dropping one to 2 to 3 ton bombs, from within Russian territory and then having them glide and hit targets. If you lose their ability for satellite communication, that goes away, too. So very significant outcome. 

we will still be tallying the damage from this weekend for several days. It’ll be interesting to see what else is now gone. 

Does Size Matter? Exploring the Geopolitics of Micro-States

Micro-States like Monaco and San Marino aren’t often included in major geopolitical discussions, but every so often they get called up to the big leagues. Next up to the plate: San Marino.

San Marino, located in Italy, has recently gotten some attention…and not the best kind. As the Ukraine War rages on, Europe has tightened its intelligence operations and foiled the covers of many Russian agents. However, many of these agents have found San Marino to be quite accommodating in facilitating their entry into the European Schengen zone.

As you could imagine, Italy isn’t too happy with San Marino becoming a hub for Russian activity. So, to answer the age old question – does size matter? – I’ll give you every strategists favorite answer, it depends.

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here coming to you from the hills above Monaco and San Marino. A Monaco is one of the microstates here in Europe. Pretty much. They’re all, in your opinion, I think about it. And I’m not talking about here like small places like Luxembourg. I’m talking about micro states that are just a few square miles. Monaco here, it’s under a square mile itself, second smallest state in the world. 

the existence of micro states is kind of a weird little story. Basically, you get a geography that is rugged enough that little patches can be carved out, and they’re difficult to access from other places. So, for example, Liechtenstein is it occupies a specific mountain pass between Austria and Switzerland. And either they’ve been able to be tough enough to conquer that you leave them be or they’re useful as kind of a diplomatic go between. 

In the case of Monaco, it traded hands a lot, from the post-Roman period, into the Italian civil wars and reunification, ultimately into World War two. And ever since then, independence. and now, of course, Monaco is most famous for the Grand Prix, which plays well by the time you guys see this or be over, an at gambling. 

basically, if you’ve seen James Bond, you’ve seen Monaco. it’s also I can see this with authority. Great place to have lunch. microstates rarely, rarely play a big role. I mean, the micro, but every once in a while, a certain constellation of factors comes together and makes them really matter. So the one that matters right now is San Marino. 

Now, that’s not here in France. That one is down in Italy. but during the Ukraine war, the Russians have discovered that most of their normal avenues for intelligence gathering have been shut off, because instead of just having the Americans go after their spies, everybody in Europe did at the same time. And one of the things you normally do when you have a spy is if you get caught, you just redeploy them somewhere else in the world. 

Well, when something like two thirds of the Russian diplomatic corps and spies were declared persona non grata in some form, everyone started exchanging biographical information about all the agents. And so you could no longer deploy those people anywhere in the world unless you had a government was like, oh yeah, we’re okay with bunch of Russian spies. That’s fine. 

And that doesn’t happen. So basically, something like half the roster of Russian intelligence agents got vaporized. and they’re gonna have to be deployed for other things. San Marino comes in because San Marino has been a location where some of these people are getting recycled. And in addition to, like, the normal money laundering things that micro states her famous for, San Marino is now providing diplomatic cover for the Russians to get whoever they want into the European Schengen zone, which is the free transport union that the Europeans have. 

So the Italians are starting to get a little aggro at San Marino for serving as this bastion for Russian intelligence, diplomatic and financial power in the heart of their country hasn’t gotten to the point now yet that they’re starting to renegotiate forcibly some of the treaties that allow San Marino to function. But the Italians are starting to look at it. 

Mr. Putin Goes to Hanoi

With Russian President Vladimir Putin heading to Vietnam, some American security experts are getting concerned about the future of the US-Vietnam relationship. To understand why the Vietnamese are working with Russia, we need to take a quick history lesson.

Every American remembers the Vietnam War…the French have an even worse history in Vietnam…but both of those histories pale in comparison to China’s two millennia of conflict with Vietnam. All that to say, the relationship we’re seeing between Russia and Vietnam is simply a materialization of the phrase – “The enemy of my enemy is my friend.”

Essentially, Vietnam is using Russia as a bit of a counter-balance to China; think of it as an extra layer of security for the Vietnamese peace of mind. Don’t let that fool you though, US-Vietnam interests are aligned against China and will continue to grow closer over the coming years.

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
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Transcript

Hey, everybody, Peter Zeihan here. Coming to you from the Turks Trail near Denver, Colorado. It is the 20th of June, and the news today is that Russian President Vladimir Putin is on a state visit to Vietnam. He landed in Hanoi last night. He’ll probably be seeing this tomorrow anyway, some American security folks are having a bit of a conniption fit because, they thought Vietnam was now firmly in the American camp. 

And that is not a very, nuanced understanding of why Vietnam and the United States are going to be good allies in the future. quick story. So there is a plaza, kind of an open air museum in Hanoi, near the Capitol complex where they commemorate basically all the conflicts of the past. And there’s this two foot tall structure, little obelisk to commemorate the U.S. Vietnamese military know was the Vietnam War. 

I was about 20 years. And right next to it, there’s another structure about ten feet tall to commemorate the France Vietnamese War, which lasted about two centuries. And next to that is the largest structure in the facility, which is about two stories tall, which is to commemorate the Chinese Vietnamese conflict, which lasted the better part of two millennia. 

you see, American and Vietnamese interests are converging because they are both concerned about China. And for Vietnam, this is typically their first and foremost, their their first or last, their only security concern because they’ve been conquered more than once. And if any number of military conflicts with a vastly superior power in terms of numbers, and they fought back just like they did and are now over and done pretty well for themselves anyway. 

Bottom line is that, will always see its security interest through that lens. And so if you go back to the Vietnam War, when we were on the other side, they saw it the same way. And so in the Vietnam War, you’re talking about things that happened after the Sino-Soviet split. And when you all of a sudden had Maoist China and Soviet Russia staring down one another, all of a sudden Vietnam came into play from the Russian point of view. 

So the Russians were back in Vietnam, not just because we were involved, but because the Chinese were involved. And so the Vietnamese became used to having the Russians as a counterweight to Beijing, not just Washington, and said, if you look at the relations that the Russians have with everyone around the world, they’ve gotten significantly worse with almost everyone with the West, with the United States, with the northeast, Asian countries like, Korea, Taiwan and Japan. 

That’s pretty straightforward. It’s straight up Ukraine war, but with other countries it has to do with military contracting. Russian weapons systems have proven to be not a lot advanced, especially when it comes to things like jets and air intake aircraft and missiles. And so countries like India that have literally soaked billions of dollars into the Russian military complex, only to discover that most of the money now was stolen. 

And most of the technologies that the Russians said they were developing just weren’t. And then, of course, there’s the weapon systems, the legacy weapon systems, billions of dollars of that going back years that don’t work as well as they thought they did. And the Russians are even combing the world for things like artillery shells and hoovering them up in order to have them in the war. 

This doesn’t really affect Vietnam. Vietnam doesn’t have an artillery army. It doesn’t use a lot of aircraft. It doesn’t use a lot of missiles. It doesn’t use a lot of armor. They want machine guns. They want RPGs. They want things that can be shoulder launched. They want anti-ship missiles. These are things that haven’t underperformed, in the Ukraine war to this point. 

So from Vietnams point of view, it’s almost unique in the world of arms, absorbers importers that they haven’t been disappointed yet by the performance of what’s gone on in the war. And so for the Americans out there who are concerned about the ally of the future, maybe not being all that, don’t worry about it. For the issues that matter to the United States in the region, we’re actually on the same page. 

It’s trying to trying to trying and trying to China. Now, I don’t doubt if you fast forward a couple of years, failures in the Russian military complex means it won’t have the capacity to export arms to Vietnam any longer. And then that part of the conversation changes, too. We’re just not there yet. 

Russia and the Changing Nature of the Spy Game

If you ask a fifth grader what the key to being a good spy is, they would likely respond with some variation of being sneaky or concealing your identity. Well, on today’s episode of “Are You Smarter than a 5th Grader”, we’re placing Russian Spies in the hot seat.

Since the start of the Ukraine War, Russian spies throughout Europe have been disappointing those 5th graders’ expectations. With most European nations collectively deciding to share information and expel Russian spies from their embassies, Russian intelligence operations in the West have been experiencing quite the disruption.

In places like Germany, the Russians are replacing their spies with bribes and payments to individuals for information. Obviously this isn’t a great strategy, but a little info is better than none. As for those spies who had their identities revealed, they’ll still be of use to Russian intelligence…just on domestic assignments from now on.

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. today we’re doing a little spy addition. the news is that Thomas, all the wearing of the very fast on Schultz. No, very fast on Schultz for forcing Schultz. That’s basically the, German equivalent of the FBI responsible for domestic security. Anyway, he has said that, most Russian attempts to achieve espionage operations within, Germany in the last few months have been basically the Russians just paying people. 

there’s at any number of ways that intelligence service can get at their information. And paying people has always been a classic, but it’s usually less effective because then you’re reliant on the people, being continuing to give you good stuff. And if you pay them, they will come up with stuff to give you, even if it’s not good stuff. 

And if you stop paying them, there is a chance that they will turn you in. So it’s generally pretty far down the list in terms of reliability. a better way is just to have your own assets in place and the way that the Russians have normally done this, the way most countries do this is by taking their intelligence assets and giving them diplomatic cover. 

So you basically say this person is a diplomat when really they’re trying to steal industrial secrets. the Russians have always, always, always excelled at this and used it heavily because they don’t have the technical skills to maybe do something like electronic eavesdropping, like the United States tends to prefer, and they can’t attack it from a mass approach like the Chinese can, because they just don’t have the people. 

So you focus on a handful of highly trained people that you put into every single embassy you possibly can. That strategy worked very well for the Soviets and worked even better for the post-Soviet Russians until the Ukraine war, when the Europeans collectively decided that the Russians were persona non grata in Europe. They took some steps. Now, normally there’s this ongoing cat and mouse game among, the Russians and the western states and everyone else when it comes to diplomatic espionage. 

Basically, you’re always try to keep track of the personalities that are involved, the potential spies. And every once in a while, you do a little bit of purge, but you don’t purge everyone that, you know, making the other side wonder if their agent was really exposed or not. And it’s a grand old game. but one of the problems you have with the strategy is you don’t necessarily share your list of spies that you’ve uncovered with everybody else, because maybe you don’t trust their information control systems. 

And if it got out, that, you had identified one and not the other, then all of a sudden your counterintelligence operations are a bit bonk. Well, with the Ukraine war, basically, the Europeans decided all at the same time that all spies in all embassies everywhere would not only be determined to be persona non grata and sent home the list of everyone who fell into that category would be shared not just with the Europeans, but with everyone across the world. 

So basically, you had 25, almost 35 years of Russian efforts to infiltrate Western institutions and governments, and everyone was exposed all at the same time. And then there was list of everyone who was exposed went global. So in the past, if you were to purge 3 or 4, they would end up at someone else’s embassy within a year. 

Doesn’t work like that anymore. I mean, the Brazilians might not have hostile relations with the Russians, but when the Europeans and the Americans come with this list of 5000 diplomatic personnel who were actually spies, and then all of a sudden they all end up in the Brazilian embassy, the Brazilians get a little cheesed off, too. So what we’ve seen is the most effective way the Russians have of hacking into society, has been gutted. 

It’s not that these people can’t do anything, but if you’re training someone for covert operations in diplomacy, you can’t just turn around and turn them into assassins or analysts. there’s an extensive period of retraining, and the Russians aren’t as young as they used to. And one of the big reasons for the Ukraine war is the demographic collapse. 

And all that good stuff is all very relevant. the most likely use for most of these people moving forward is to back up the Intel system within Russia. Russia has far more spies operating within the Russian Federation than beyond, because Russia isn’t a nation state. It’s a multi-ethnic empire. And the way it holds, it’s everything together is by basically shooting through its own population with spies to make sure that there are no rebellions forming. 

So it’s not that the Russians have no use for these people. It just has no use for these people abroad. 

Strong American Growth (and Something to Worry About)

If you don’t want to start your day with beautiful beach views and economic forecasts, you may want to skip the video. Today we’ll be discussing recent changes to the US economy and what future impacts might look like.

Trump and Biden boosted the economy with massive stimulus packages post-COVID, but things are beginning to settle down. There’s some minor issues starting to pop up, like a rise in loan delinquencies and higher interest rates, but the US economy still looks strong overall.

The bigger concern revolves around government spending surpassing private sector growth for the first time ever. This indicates a potential shift toward government-driven economic growth, that could undermine long-term dynamism and efficiency in the US economy.

This isn’t something that will happen overnight, but if left unaddressed, the US could face significant economic challenges down the road.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey everybody, Peter Zeihan here coming to you from Monarch Bay in Southern California. today we’re going to do kind of a big picture economic take of the United States. because, you know, a lot has gone down in the last 25 years. I think it’s good for me to kind of put my stamp on the ground and where we are. 

we might be getting back to some version of normal. It is a bunch of light here. Let me kind of spell that out from the back side. If you remember back to the transition from the Trump administration to the Biden administration, there was a contest among the two of them about who Americans would like more because they had been paid to, like. 

the incoming Biden administration had made it very clear that the first thing he was going to do was $1 trillion stimulus that would put money in people’s hands, to get over Covid. And as soon as Trump heard about this, he’s like, well, I want to do that too. So I want to be like an administration to leave on a high point. 

things, but work out that way. But he did put, I think it was $900 billion into the system in his final few weeks. and if you remember back, Covid was pretty much over by then. So we had $2 trillion dumped in and a quarter, into a system that was already experiencing rapid economic growth as one of the many reasons why we had an inflation pulse in the early Biden administration. 

Anyway, you combine that with all the stimulus that was still rolling around in the system from the Covid crisis, and Americans conservatively entered the Biden administration with over $2 trillion in savings that they hadn’t had before, according to the San Francisco Fed. They didn’t finish burning through that extra capital until the first quarter of 2024. which means we’re only now finding the ability to like, oh, look at that. 

A third of the economy with a more normal supply and demand dynamic. And at the moment, things look pretty good. yes. Loan delinquencies are rising, but we are pretty close to record lows still, nor nowhere near the average, or certainly nowhere near the numbers that we had back in the last technical recession in 2007. interest rates are higher, but delinquency rates are far lower than they were at the period before we entered any other recession. 

So I’m not saying that this is like we’re going to grow forever or anything like that, but at the moment the mechanicals look pretty positive, and I wouldn’t expect the United States to enter into recession. This calendar year. And some things would have to get a lot worse for us to consider a recession in next calendar year. At the current moment. 

if there is a concern, it’s more the structural because, it has to do with the balance between private credit and government spending. Now, normally, private credit rises and falls based on the job conditions. And if it rises too fast, you get a bubble, which leads to a correction. the last, of course, big instance. And we had that was the subprime building from 2000 to 2007, where we roughly doubled total private credit in seven and a half years. 

And as a result, we had the Great Recession, which was no fun for anyone. nothing like that is in the books this time. private credit has been growing for the last 15 years. It’s something much more along the lines of the century average. normally, private credit only drops or goes negative in times of recession because banks and stock holders generally restrict their play of capital on the system at a time when everything is over leveraged. 

we’re not seeing that today. Instead, what we’re seeing is more government activity. Normally, the balance between these two factors is private credit is in the driver’s seat, except in times of recession, which is when the government steps in. And if you add the two together, you get actually a pretty even. Why? What has changed in calendar year 2023 is that relationship broker. 

And for the first time in modern American history, total new government spending, not just the deficit, but the increase in the deficit year on year, that number surpassed the total increase in private spending for the first time in American history outside of a recession. Now, this is only one data point. I don’t want to overplay this, but for the first time in American history, the government has become the primary driver of economic growth in the country. 

This is not a healthy position to be in. This is a very Zimbabwe, South African, Venezuelan sort of approach to economic management. Now there’s still trillions of dollars of private investment. There’s still tens of trillions of dollars of private economic activity. this is not something I’m overly stressing about right now. But if the numbers from last year repeated this year and based on the Biden administration spending, it looks like they will be. 

And then next year, which Biden has indicated they probably will be, or if Trump wins. Absolutely. And if they do these plans to expand the government, then we’re in a different era of it. And if you remove the private sector as the primary driver of American economic growth, yes, you might get a little bit more populous support for the government or a particular candidate, but it comes at the cost of long term dynamism and size of the American economy, which has served the United States very well these last 200 years. 

Now, the degree of populism was always going to be in the cards, not just because of the politics, but because of our demographics. The baby boomers, the largest generation ever. There pass halfway through retirement. They’re going to be sucking at the government teat for Medicare and Medicaid and Social Security until the day they die. So government outlays have to go up, which means deficit spending has to go up. 

And there is no, appetite on either side of the American political aisle to do anything about that, because it’s not a vote winner. and if this sticks, we will have a problem down the line. This is a much bigger problem than the federal deficit, because this changes the complexion of the American economy and how we can adapt to shifts in the future, because the government just isn’t nearly as efficient. 

It can be quick, but it’s not efficient. And ultimately, the efficient use of capital is half of the American story. So you’re looking for something to worry about? I’d worry about that. But in the meantime, government spending is stimulatory. And that suggests that for this calendar year and next, we’re not looking at a recession. So, you know, take your good news where you can.