Yesterday we covered the key players in the US and Saudi relations. Today we’ll look at the strategic implications of this relationship over the past 40 years and what it looks like moving forward.
Saudi Arabia matters to the US more than many other US allies. Not only are the Saudis massive oil exporters, but they also have strong ties to the world’s Muslim population.
Over the past few decades, the US and the Saudis have partnered up to tackle a handful of critical situations; from stalling the Soviets to the war in Afghanistan to spurring economic growth in Europe and Japan, this relationship has proven vital.
The bottom line is with major players like Russia and China already in motion, the US and Saudis won’t allow ugly politics to get in the way of geopolitical relations. Saudi Arabia is a power center and doesn’t need to be under the American wing, but there’s still a mutually beneficial relationship on the table.
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.
We’re talking US – Saudi relations. This will be a two-parter, but today we’re focusing on the key players.
US National Security Advisor Jake Sullivan went to Saudi Arabia to lay down the framework for a new set of relations. As of late, relations have been less than ideal.
The National Security Advisor is really the manager of American foreign policy – even though the State Department gets all the credit. So seeing the hyper-competent Jake Sullivan leading the charge here is indicative of just how critical this is.
Biden’s push to Greentech has caused riffs in the relationship, but the other side has played a role too. MBS, the crown prince, is – for lack of a better term – an ass. And as anyone who’s dealt with someone like that knows, you have to put up with a lot of crap.
However, with Russia and China making moves against the US, Biden is starting to realize that Saudi Arabia is a very useful partner to have.
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.
What are my thoughts on Environmental, Social, and Governance (ESG)? It is the idea that business has a role in pushing society towards certain norms and positive outcomes regarding environmental and social issues. We must look at what ESG should be, what it is, and what it is not.
What ESG should be…Until now, American business has played a minimal role in the political system. With the American political system in flux, it is only natural that companies would reevaluate their place in society and create policies that align with the ESG mission.
What ESG is today…The new policies businesses implement can be equated to attempting to climb Mt. Everest before ever learning to walk. Without benchmarks or industry standards, these companies can’t even make it Everest base camp; this process will be long and iterative.
What ESG is not…It isn’t a global conspiracy to destroy the US economy. When Elton John gets invited to a week-long confab in the Alps, you know the WEF isn’t plotting with the Illuminati…they’re just partying.
To this point, most ESG has been influenced by activists pushing policy from the outside OR activist investors making policy from within. The international stage doesn’t have much say, making ESG a domestic conversation of politics and culture.
Prefer to read the transcript of the video?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.
Hey everybody. Peter Zieihan here. The clouds have become a little bit more serious. Well, on the upside, it means that all the mountain bikers have bugged out. So I’ve got to turn to myself. But my ears bailout points five miles. So who? Who? This is the latest in our Ask Peter series. And today, the question is about ESG. What do I think about it in general?
Do I think it has a future? Is it a conspiracy to destroy us all? ESG, at least nominally, is called, is short for environmental and social governance. And the idea is that business has a responsibility to play a role in society and push it towards certain norms or positive outcomes. As regards things such as environmental issues or racial inclusion.
And so each corporation should have a series of ESG policies that help them achieve those goals. So let’s talk about what it is or what it should be, then what it actually is and then what it’s not. So first, what it should be and why we probably should consider some form of ESG. For the longest time, American business has really only been involved in the political system when it comes to, say, developmental policy, civic expansion, contracting or regulatory discussions.
They’ve tried to stay out of all the social issues, the get loud especially thing regarding the culture war, because it’s not something that they have the aptitude for. And they have a wide array of shareholders and investors and managers and employees and customers who are all going to have radically different opinions on really anything that matters. So why get involved in it?
Well, for those of you who’ve been following me for a while, you know that our political system is currently in flux and all the factions that make up the parties are in motion specifically for the business community. The Trump administration kicked them out of the Republican coalition. So they’re swing voters right now. So if you look at where the business community is in the concept of ESG, the idea that now when they’re not part of the political process, when we’re going through all of these changes, when our political system looks like a washing machine, it makes sense for them to reevaluate their place in society.
And coming up with policies as they struggle with that fits very nicely with the very concept of ESG. Now we can argue about whether they want to or whether they’re adopting the right policies. And that’s when we get to what ESG actually is today, because this is something that’s done at the corporate level on an ad hoc basis, company by company.
There is no overarching structure. There’s no regulatory guidelines for this. It’s just what individual companies have decided to do. And as you know from your personal life, there are things that you’re good at and there are things that you’re not good at. And if you have spent the last century assiduously not paying attention to cultural or environmental issues, and then all of a sudden you want to redefine your personal life based on those, you’re not going to get it right on the first try.
And I would argue that no company in the United States that had gone down that route has really put together even remotely productive or coherent set of policies to implement the supposed goals. The environmental ones are probably the ones that have been the worst because they equate things like adopting electronic vehicles with being a good but based on who you are and what you’re doing and where you are.
That may be one of the most environmentally damaging things you can do. So like if you get an electric truck and you’re running around the northeast, which is mostly fossil fuel powered, and this is a vehicle that has a huge carbon footprint to build in the first place. You’ve actually made the situation significantly worse, but by your scheme that works, you’re right on the path.
What we need is a little bit more coherence and intelligence and regularity for these sorts of regulations, for them to make any sort of sense. And we’re not going to get that on the first try. And it’s difficult to see us getting that within a decade without some sort of benchmark. And since by its very definition, this is not a government initiative, it’s hard to see us getting that benchmark.
So ESG may be a great idea, at least in concept. It may fit the times for business community. That doesn’t mean it is or will be done very well. Now what ESG is not, it is absolutely not some global conspiracy to destroy the United States. I’ve heard that a lot of late kind of pisses me off because, I mean, think about this.
Most people point towards like the world economic Forum and the build back better and all that good stuff. No. Okay. So the World Economic Forum is not a shadowy cabal of international Illuminati who are seeking to push their will on the United States. A majority of the people there who are matter are American, for one from all political stripes.
In addition, whenever you see Elton John going to a week long confab on international affairs, you know it is not a week long confab on international affairs. It’s a party. Klaus Schwab, the guys who are in charge of the World Economic Forum, I know he’s got the great hair that makes him look like a villain. But really, just think of him as a deejay for the rich and everyone getting together in Davos, Switzerland, for a week of body shots or their equivalent for rich people.
It’s not that WEF is pointless, it’s that it’s entertainment. And to think that there’s any sort of policy coming out of that is kind of funny. Most ESG to this point is a product of one of two things. Number one, the activist culture in the United States that protests and tries to get impose policies on the business community from the outside.
And then secondly, activist investors who are within the company probably have minority stakes who are trying to get the company to shift its policies from within. That’s almost every little bit of it. The international pressure has almost no impact. And you can tell that because the international companies generally have less aggressive ESG policies than American national ones. This is a domestic, political and cultural evolution.
If it was really strong internationally, you would expect the international companies to be the ones that are leading the way and they most certainly are not. Okay. Ooh, that was lightning. Well, the next one might be really exciting.
Democrat Joe Manchin managed to sneak a few clauses into the debt ceiling extension deal for the completion of his Mountain Valley Pipeline. Environmentalists are pissed, and fossil fuel lovers gave Machin a double thumbs up. So who’s right and who’s wrong?
For those who think wind and solar are the future and there’s no use case for fossil fuels, you might want to check the math. For wind and solar to be viable, they need a complimentary energy source…and natural gas is the best option.
For those natural gas lovers who think green energy can only work with massive subsidies, your math needs some checking too. In the right geographies, solar and wind are the cheapest energy option on an hour-by-hour basis.
While the Mountain Valley Pipeline might seem to benefit only one side of the aisle, Manchin moved us one step closer to the inevitable future of American energy. It’s not green. It’s not fossil fuels. It’s both. And I’m okay with that.
Prefer to read the transcript of the video?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.
Hey everybody. Peter Zeihan coming to you from the ever increasingly foggy Docman Trail. This is the next in our Ask Peter series that was born out of my airline delay. Today, the question is about Joe Manchin, the Republican excuse me, the Democrat, from West Virginia, who has managed to insert a couple of clauses into the deal with the White House to extend the debt ceiling. Specifically, it’s something that it mentioned has been after a while, which is permitting and federal approval to get a new pipeline built through West Virginia to ship natural gas. Environmentalists hate it because it’s natural gas, pro fossil fuel folks obviously think it’s okay. The truth is that everyone’s right and everyone’s wrong. So let me kind of lay out what it means.
Let’s start with the green side. For those of you who think that solar and wind is the future of energy and that any sort of fossil fuel is just antithetical to that future. You’re clearly very bad at math. Just think of every day in your life when the sun goes down. Solar. No longer works. And while you can’t use batteries a little bit, the United States right now has less than a couple of minutes of battery storage and there is not enough lithium on the planet for the United States to get to 4 hours of battery storage. And we don’t have a battery chemistry that would allow us to go not just through the night, but through the winter and through periods where there’s usually not a lot of sun, which, if you live in the American Northeast, is the vast majority of the year. So you need a complementary power source that can work with solar and wind. And the best way to do that is with natural gas. You basically use solar when it’s available and you have a combined cycle natural gas plant that can spin up in 10 to 15 minutes whenever it gets cloudy or whenever the sun goes down, you know, every day for the foreseeable future, until we have a better, better technology or better solar or probably better wind is what would get there first. This is just where we’re going to go. So if you want to build solar and wind without a complementary system, you’re then basically forcing anyone who needs emergency power to use a diesel generator. And as we’ve seen in the case of Germany, they have used Lignite coal as the backup. And you can’t spin that up and down in ten or 15 minutes. You have to leave that on the whole time. So despite $2 trillion in green tech build out, Germany’s carbon emissions have actually gone up. So, you know, there’s a problem.
Now, for those of you on the fossil fuel side who say that intermittency of solar and wind means it’s not a viable power source and it can only exist with subsidies. You’re not very good with math either. Solar and wind in the right geographies are now the cheapest way of generating power on an hour by hour basis. Now, hour by hour being the key word there, there’s something that some folks like to use called the levelized cost of operation, meaning that you average the cost out over the 24 hour, three, 24 hour day three in a 65 day year period. That’s really not a great measure, because when the sun stops shining, the power goes down to zero. You still need it. And that’s not reflected in the levelized cost, or at least not sufficiently, in my opinion, because, you know, when you don’t have power and you need power, you will pay whatever you have to do to get power. There are parts of the country that can do more of one or the other. So if you’re in the American Northeast, which is neither sunny nor windy, you know, fossil fuels are going to be a much bigger part of your power mix going forward than it can be in the rest of the world. However, if you’re in the southwest, you’re in a place that has great sun, and if you were the Southwest overlaps with the Great Plains, you’ve great, great sun and wind. And that means ultimately more and more and more things like what Manchin is after. Keep in mind the pipeline he was so much in love with the way he wants to get this done is not just a one off approval for a pipeline across a state line; he wants that for all energy infrastructure. And obviously the green zealots think this only means pipes, but it also means power lines, because if we’re going to move to a cleaner, greener future, we have to be able to move electric ones from where they can be generated with solar and wind to where we actually live. And since the single largest concentration of population is on the American Northeast coast, and that’s where none of the green power comes from, we’re ultimately going to have to run this in by wire from other places. So we need more and more transmission, more than we need something like batteries right now, at least with today’s technology.
So the future of American electricity isn’t green, but it’s also not fossil fuels. It’s both. I’m okay with that.
If reading the headlines gave you some major déjà vu…welcome to the club. Trump is getting hit with a series of new indictments, but will it impact the election?
For those who love their red hats, Trump can do no wrong. If you try to tell them otherwise, it’s either a plot or a conspiracy theory. And regardless, you can run for president from the comfort of your prison cell…so he’ll be alright.
But none of this matters anyways. Biden will take the independent vote since Trump threatened to take away their voice, allowing Biden to run (or slowly and carefully walk) off with the election.
As long as these two spring chickens can keep clucking until the election, we’re looking at a 2020 rematch with the same results. So you get a double dose of déjà vu today.
Prefer to read the transcript of the video?Click here
If you want a refresher on my original 2024 election prediction, watch this video first.
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.
Hey everybody. Peter Zeihan here coming to you from the world’s best 4th of July fireworks overlook. That’s the Denver skyline there behind me. Today, we’re going to talk about all of the new indictments of Donald Trump. A lot of people have written in, asking what sort of impact this is going to have on the election. And the short answer is not a bit.
Just to give you a quick review of how I see things going. Donald Trump is so solid with his base that he’s going to get the nomination. There’s no way around that. And Joe Biden has been the – what’s the best way to put this – Independents have thrown in for the Democrats. The independents think that the Democratic positions in the administration are really hurting them economically, but they’re so opposed to what the MAGA Republicans want to do with the general election because it would gut their ability to have any influence on the country at all. So their hearts are definitely against the Democrats, but they’re voting for them in number. And in that sort of situation, you’ve got 10% of the population who are the swing voters who all of a sudden are not. And that means we might even see Biden win places like Texas that only lost by a few percentage points last time around. It’s going to be wiped out anyway. This isn’t going to change that.
The indictments are not going to change that. First of all, there’s many coming. We’ve got the espionage one’s related to the documents. The issue that is different here between what Trump did and what everybody else who seems to be leaking these documents did is, number one, most of these are top tier security, national security issues.
Number two, they were unsecured. Number three, Trump was actually sharing with them with people. So, you know, I’m no national security lawyer, but that strikes me as a fairly open and shut case, which is why we’re seeing so many counts and it’s moving so quickly. Second, Eastman, what’s up? What was his first name? Can’t remember. Anyway, he was one of Trump’s lawyers back during the January six stuff, and he’s the guy who came up with the legal theories that have been proven wildly inaccurate in order to overturn the election. He is now in the process of getting disbarred. And if you look at the list of people who are testifying as part of that, there are people who were all close to the administration who haven’t spoken yet. So there’s probably some interesting bombshells, especially from Eastman himself, that are going to throw some more indictments, Trump’s way. But that doesn’t really matter. You can run for president from prison. There’s an open question about if you win, what happens? Let’s just say that the security issues would be complicated, but that doesn’t matter for Trump’s base. MAGA Republicans assume that anything that reflects badly on Trump is a plot or maybe even something to boast about. And Trump is now at the point where he’s so ensconced as a leader of a cult of personality that he could live stream the abortion of his trans lover and he would still get the nomination. Remember, in the Republican system, first past the post wins. You need one more vote than the other guy. And as soon as we had four people in the race with him, that meant that he couldn’t lose. And now we’ve got like eight or nine. In fact, Pence declaring for president the deal because it means that if you’re an evangelical and you want to take a moral stance, you know, you’ll vote for Pence. And that’s only going to be a few single digit of percentages, which means that the MAGA vote is going to be that much more potent for Trump. We’re in a position now where he if he gets 20% of the votes, he’s automatically the nomination. He’s probably gonna get twice that. So that doesn’t change at all.
And then on the other end, it doesn’t change at all. Because if you have a somebody or indictment or God forbid, a convicted felon running for president, that is going to sour for all moderates in the country, not to mention everyone who normally would try to stay on the sidelines. So we were already looking at a pretty big washout of Trump versus Biden. Round two. This just makes it that much more extreme.
Now, of course, this is all dependent upon two things. Number one, Joe Biden has to live until the election, not a non risk. And number two, Donald Trump has to live until the election. People like to point out that if Biden wins, he’ll be the oldest president we’ve ever had. And that is true. But if Trump wins, he will be the oldest elected president we’ve ever had. So, you know, we’re not exactly choosing between some spring chickens here.
The topic of de-dollarization is like the weird cousin no one wants to talk to at parties. They only come around once every year or two, and most of what they say is complete bulls***. But when the day comes that you need to take that weird cousin (aka de-dollarization) seriously, here are the three factors to look out for.
#1 Size – To be a currency of exchange, trade, and reserve, a currency must exist in a massive volume. Only four currencies meet the size requirement: Dollar, Euro, Yen and Yuan.
#2 Access – You need to be able to get ahold of a (nearly) unlimited supply of said currency at the drop of a hat. The Dollar comes out on top in this category, with the Yen and Yuan unable to provide the necessary level of access.
#3 Trust – You must feel secure that the chosen currency is a safe store of value and that the government will not intervene. This makes the currency a subset of trade, and if the country in charge wants to micromanage the value on a daily basis, it won’t work.
Several countries have been shouting from the mountaintops that they want to move away from the Dollar. I don’t take most of these too seriously, but one country is seriously considering de-dollarization, and we’ll talk about that tomorrow…
Prefer to read the transcript of the video?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.
Hey everybody. Peter Zeihan here coming to you from Colorado where the weather can’t decide what it wants to do. Today it’s sunny, so, you know, we’re going to work with it. A lot of you have written in asking me about all this hullabaloo about de-dollarization that comes up every year or two. And so I have to explain it again. Fundamentally, nothing has really changed this time, but let me give you the three things to look for if you do want to take de-dollarization seriously in the future, this is not the time.
Number one size. For a currency to be a currency of exchange, a currency of trade, and especially a currency of reserve. It has to exist in huge volume because that’s a lubricate trillions of dollars of financial transactions and physical transactions every single day, and something in excess of $25 – 30 trillion of annual merchandise trade. That’s a lot. And there are really only four countries in the world, four currencies in the world can even theoretically do that. The U.S. dollar, the European euro, the Japanese yen and the Chinese yuan. Number one.
Number two, access. You have to be able to get a hold of nearly unlimited volumes of that currency whenever you want to. Obviously, the dollar scratches that itch. The Japanese yen, not so much. The Japanese tried to go global back in the 1980s. It turns out their financial system couldn’t handle it and it contributed. It was one of the many factors as to why they have had on average 0% growth since 1993, 94 or something like that. And so they have kind of closed up shop. The currency is available. You can add it to the side, but it’s never going to be a mainline exchange currency. Let’s see, China is eliminated from that category as well. The number one concern that the Chinese have is for control. Absolute, domineering, dictatorial control over their own internal financial sector. That means they don’t want to see large cross-border flows, especially from China to the rest of the world. So every once in a while, the Chinese will do what they’re doing now and talk up the yuan and talk up internationalization. Then as soon as that starts to happen, a flood of currency from the Chinese goes elsewhere because the Chinese are the people who are the least confident in their own economic system. And then the Chinese government slams it shut and we don’t hear about it for a couple years again…like we are now.
Okay. What’s the other big one? Trust. You have to trust that the currency is going to be worth something. You have to trust that the government is not going to intervene. And that means this is kind of a subset of trade. Now, with trade, if you are a major trading country and a large percentage of your GDP is gotten from exports and imports, then you have a vested interest in what the value of your currency is every single day. The U.S. is perfect for that because the U.S. trade to GDP ratio is only about 15%, and about half of that is either energy or NAFTA. And everything else falls into that other like six, 7%. So the United States really doesn’t care what happens to the value of occurrence every day. The Chinese don’t have a freely traded system, so they can micromanage what the value is every single day. There’s also the issue of whether your money’s going to be there the next day. Now, the United States maybe is taking a hit on this with the Russia sanctions and that it’s weaponized the U.S. dollar in a few ways. But compare that to, say, what goes on with monetization. Now, I know I know a lot of you folks out there who are like gold bugs are like, oh, the U.S. monetizes like mad. And, you know, there’s something to be said for that. We do have a large money supply. It’s probably bigger than it needs to be. But a couple of things to keep in mind. It’s been shrinking for the last year as all the stimulus efforts from the last 15 years because of COVID and financial crisis and everything else have finally wound down. It’s going in the right direction. And second, I compare it to everyone else the Japanese, the Europeans, and especially the Chinese print currency in far greater volumes in the U.S. does. So the U.S. currency is the primary finance currency. It’s a primary currency. And everyone’s foreign reserves, the primary trade currency is the primary store of value. The Chinese yuan is none of those things. In fact, 99% of the issued currency of the Chinese yuan is held within the Chinese system. But their money supply is bigger than the United States because they print currency so ridiculously. So if you want to use that as a reason and talk down the dollar, that’s fine. Just make sure you apply the same criteria to everyone else. Because the yen and the U.S., even though the Japanese economy is less than a third of the size of the U.S., it’s about the same currency exchange. And the euro is bigger, too. So the U.S. runs the least bad ship, if that’s the right way to look at it. And then finally, of course, there’s the euro. The Europeans for a long time have been looting the U.S. dollar as a coequal currency, if you will. The European euro should be right there with them, but they confiscated insured bank deposits back when they had the financial crisis in the late 2000, early 20 tens. And as a result, anyone who could move their money out of Europe did. So. It’s a regional currency that’s not nothing, but it’s no longer a serious contender for any sort of broad, dominant international role.
There are a couple of other countries that have started to kind of join the shouting on this topic, but I don’t take those seriously either. One of them is Bangladesh. Bangladesh has recently publicly pledged that the nuclear power plant that they’re planning on buying from the Russians will be paid for with rubles. Yeah, that means nothing because the Bangladeshis don’t have the money to buy a nuclear power plant. So to pledge for something that’s never going to happen in a currency that they don’t have yet, whatever. And then there’s Argentina who says it’s gung ho to join any sort of not-dollar system. The Argentines are trailblazers in many financial matters, but currency adoption is not one of them. They’re basically looking for a currency that can be printed without causing inflation for them and without them having to pay back and foreign currency later. So, you know, I wouldn’t take that too seriously either.
Now, all that said, there is one country out there that is seriously considering and maybe even implementing a degree of de-dollarization because it doesn’t care about these factors. It has something else that is driving its decision making. And we’ll talk about that tomorrow.
We’re talking US politics today, and for those who don’t eat, sleep, and breathe politics (aka having a life), it’s about the debt ceiling. Spoiler Alert: It will probably end the same way it always does…
Anytime the White House and at least one house of Congress are in different hands, that house of Congress will use it as a chance to squeeze in some concessions. This is all just political theater, but it has gone a bit further than usual.
It can be attributed to the state of flux many of the leading political factions have found themselves in. Between the unions, fiscals, and business conservatives all transitioning, there’s no one around to knock some sense into these other groups more willing to push the limits.
So how will all of this end? I would expect a last-minute compromise because no one in the government wants to actually face a default.
Prefer to read the transcript of the video?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.
Hey, everybody. Peter Zeihan coming to you from a windy Fort Lauderdale. Sorry about the background noise. It’s unavoidable on this one. But that’s okay because I’m talking about U.S. politics today, specifically the debt ceiling issues.
For those of you who don’t obsess about the ins and outs of what’s going on in Washington, I understand if you don’t understand what’s going on, that’s totally fine. The very short version is, since the United States runs a significant budget deficit that requires approval from Congress to raise the funds that are necessary to run the government. And so every couple of years, whenever the White House and Congress are in different hands, whoever is in Congress tries to use this issue as leverage to get political concessions in one way or the other. Rarely happens at all when the same party controls both houses. But since were in a divided government right now, the Republicans are trying to wring some concessions out of the Biden administration.
Now, if the United States were to not increase the debt ceiling, that would mean that the United States would no longer be able to raise capital in order to fund government activities. And that would hit everything, whether it’s Social Security and Medicare or Medicaid or the military or the food stamp programs. Basically, the government would have to triage and decide what not to spend money on and actually live within its means. Now, there is no one that I know who has two brain cells to rub together in Washington, who thinks that a default on U.S. debt or a collapse of the US government functioning would be a good idea. So usually this is just used for political theater. And in order to generate a pretext for getting some concessions and both parties have played that game.
The reason that this has gotten a lot closer to the wire with us now within a month of the United States actually defaulting or entering into budgetary crunch is because our political system has shifted significantly. Now, for those of you who’ve been following me for a while, you know that I’m of the belief that we’re going through a political transition that we go through every once in every generation or two. And when that happens, the factions that make up the parties move around or they jump ship. Maybe they become swing voters, maybe they switch sides. And while that’s going on, everything is remarkably fluid and very angry. And social media certainly hasn’t helped. The stage that we’re at at the moment is that Donald Trump succeeded in excising the fiscal and the business community’s from the Republican coalition, but he’s also succeeded in bringing the unions in to the Republican Party from the Democratic coalition and Joe Biden, now that he’s president, has been partially successful at breaking up the unions and the Republicans and trying to get the unions back. And what this means is that the unions, the fiscals and the business conservatives are all in flux and all are basically swing voters. Now, those are the three factions that know how to do math for which economics is the core part of why they’re involved in politics. And so when you’ve got the three factions that know the most about things like math and finances and budgeting, no longer part of the political core. Everyone else who’s willing to use the debt ceiling as a political wedge can go a lot farther because there’s no longer a group of sane people in the background saying, No, we’re not going to do that. We’re going to try something else.
We’re seeing something similar with the Greens because we don’t have unions, fiscals, or business voters represented in Washington or really any level. The Greens are able to impress their view of economics on a lot of policies and so we’re getting a few things that maybe that don’t hold up to normal fiscal rules.
I still don’t think we’re going to be facing a default. I think I still think we’re going to have a last minute compromise. Joe Biden has canceled part of his Asia trip in order to come back and hammer out a last minute deal. But this is probably going to go down to the wire and that’s simply because our political system is too much in flux.
So hopefully that brings a little bit of context, a little bit of detail and what has become an unnecessarily problematic development. And I hope, hope, hope, cooler heads will prevail in the long run.
By the time you see this, I’ll already be on the other side of the world, so I figured it was the perfect opportunity to talk politics…specifically, who will walk away with the 2024 US Presidency.
This will piss everyone off, but the only way I see this election playing out is with another Biden v. Trump showdown. The cult following that Trump has garnered practically locked him in as the Republican nominee. And there’s really no one else that the Democratic Party is willing to let replace Biden. So get ready for a 2020 rematch.
Issues like age and vice presidents won’t move the needle on this election. To understand how this will shake out, we need to break down the voting behaviors of the Republicans, Democrats, and Independents. Most Democrats and Republicans vote within party lines, and a large majority of Independents always vote one way or another.
So this election really comes down to 10% of Independent voters who actually give a s*** about who wins. And based on the midterm turnout, Biden has all the numbers stacking up in his favor. All he has to do is stay alive and keep from drooling on stage, and he’s going to win the office for another four years.
Prefer to read the transcript of the video?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.
Hey everybody. Peter Zeihan here coming to you from the San Francisco airport where I am getting ready to be going on my first real big boy vacation since COVID started, they’ve all kind of stacked up. So I figured as long as I was leaving the country and you weren’t going to see this until after I was on the other side of the international dateline, now would be a good time to talk about American politics and tell you who’s going to win the next presidential election.
Now, the person to understand, if you want to see how this election is going to play out is Bernie Sanders. Because I think most people in America agree that he’s a bit cuckoo and his ideas are crazy. And if you sit down and actually force him to go through the math, how some people have done, he will admit that the math doesn’t make sense and he’ll just raise taxes until it does. And if that raises the marginal tax rate to the point that it destroys everything, he has no problem with that. And people who support Bernie Sanders, once you walk them through that, will come to the same general realization. But they will not change their minds because they are committed to the cause. Put another way, Bernie Sanders is not a political leader. He’s a religious leader, and he has a cult following as a result. And so does Donald Trump. Now, what that means is somewhere between one quarter and one third of people who self-identify as Republicans don’t care what Trump does or what he says. I mean, hell, he could livestream the abortion of his trans lover and they would still support him, which means that if only three other people run against him for the Republican nomination, he’s going to win the way the Republican Party works when it comes to delegates, as is in most of the races, as long as you get one more vote than whoever comes in in second place, you walk away with every single delegate. So it’s really easy for someone to come in from the outside, just like Donald Trump did, because by most metrics, he’s not a conservative in the American sense, certainly not the Republican sense. But he was able to mobilize a group of people who had been left to the outside of the populace and has catapulted not just to the presidency, but to control the Republican Party as a result. So in the environment that we’re in now, since we already have another three people have declared for the presidency, it doesn’t matter if someone like Florida Governor DeSantis runs at this point. The vote is already sufficiently split that Donald Trump will walk away with the Republican nomination. That’s pretty much hardwired in at this point. So that’s the Republicans.
So let’s talk about the Democrats. The Democrats select their candidates a little bit differently. They don’t have that winner take all mentality when it comes to the delegates. So if you get a number of strong candidates, they were going to break up the delegate count among them and it’s going to come down to the convention. And at the convention, there are a significant number of what they call superdelegates, which are people who are not representative of the primary, the caucus system, but instead represent kind of the party’s institution, which are primarily centrists. And the superdelegates came into play in the last presidential cycle when for a brief, shining, terrifying moment, it looked like Bernie Sanders might actually get the Democratic nominee. And since most centrist and center left Democrats were like, Oh, that would be disastrous by any number of manners. They all rallied together and used the party apparatus to make sure that Bernie did not get the nomination. And as a result, Biden was able to squeak through and then ultimately ran for president and ultimately gained the White House. Now, the centrists and the center left within the Democratic coalition have made the decision already that they’re not going through that again. And so if Bernie or more likely when Bernie decides to once again run for president, the centrists will swing into action to make sure it’s nipped in the bud as quickly as possible. In addition, the Democrats have always had a problem, I shouldn’t say always. The Democrats in the last 25 years have had a problem that it’s really hard for them to bring in fresh blood, because you’ve got these charismatic people at the top who are politically and maybe even economically powerful, who kind of suck all the oxygen out of the room and make it very difficult for young up and comers to make it into the system. Republicans don’t have that particular problem. And so you get a lot of people who are in their seventies, people like Biden, people like Pelosi, people like Schumer who dominate the scene. And there really isn’t a cadre of people below them. There is no deep bench. In that sort of environment, it’s really, really hard to get a primary system that runs on actual competitive candidates. You just get these freaks that come in from the outside, freaks like Bernie Sanders. Well, since the centrists have already decided what they’re going to do this time around, that means Biden is a shoo in to get the nomination, which puts us into a weird race. You get Republicans who are cult dedicated to Donald Trump and you’ve got Democrats who are willing to shut out everyone else so long as Biden doesn’t have a complete meltdown and start drooling effusively on stage, barring those two extreme events, we’re talking about a redux of the last election of Biden versus Trump.
And I don’t think that any of the things that people are talking about right now as having an impact on the election would really matter at all. So, for example, the age issue, I mean. Yes, yes, yes, yes. Biden is older than dirt by a wide margin and he would be the oldest president ever if he wins again. However, if Trump beats him, Trump would then be the oldest president ever. So the age issue is really a non condition for any voter who says it is. It may be a compacting factor, but since the runner up in this case is almost as old, it doesn’t play. And the same comes for replacing the vice presidency with somebody besides Kamala Harris. Has she risen to the occasion? No. Has she turned out to be a good VP, probably not by most measures. But replacing her isn’t going to really change anyone’s mind. Nobody votes for the vice president, so we’re left with Biden versus Trump. So the question then is who walks away with that? From my point of view, it’s pretty straightforward.
Roughly 20 to 25% of the electorate is either hardcore Republican or hardcore Democrat, and they might not like the candidate, but they’ll hold their nose and they’ll pull the lever on no vote for whoever their party’s candidate is. They are locked in. There’s no negotiating room there. Then you have another about 20% on each side that says they’re independent. But, like in 85% of races, they vote for either a Republican or a Democrat. So they’re really only independent. And they really they’re just subsidiaries of the left and the right in the American system. There’s not a lot of wiggle room there. There’s only 10% of the American electorate that is truly independent. And they’re wishy washy and they’re judgmental and they get buyer’s remorse. And the votes of this last 10% is the primary reason why in mid-terms, usually the party in power loses because they’re having buyer’s remorse. And I know this very, very clearly because I’m part of that 10%. We’re never happy with what we are and we’re not part of the decision making to determine what the candidates are. And so we get handed this pallet that we just don’t like but we have to make do with. And that usually manifests as us voting against whoever happens to be the guy in charge at the moment.
So that is how it normally runs. That’s how it’s always run. It’s how it ran until we got to the 2022 midterms, because in the 2022 midterms, almost exclusively, the independents were polled as not liking Joe Biden, particularly on economic affairs. They saw his continued governance as being against their own economic best interests, and yet they decisively sided with Democrats in all the races that really matter. And so for the most part, independents polled as not liking the Biden administration’s economic policies. And they saw a continuation of those policies as against their own personal economic interests, and yet they decisively voted against Republicans. Why? Well, it is not too hard to understand. A lot of this talk about what’s going on with the election system is real, but you have to look at it from the independents point of view to really understand if the Republican Party under Trump is able to change the electoral system in the way that they say they want to, then swing voters don’t matter anymore and independent voters don’t have a party. That’s the general election is the only way that they play in American democracy. And if you remove that, they are powerless. So the United States government under Democrats and Republicans has this interesting saying when it comes to democracy in the Middle East, we want one person, one vote, but not just one time. And if we go down the path of Donald Trump wants to, you know, that’s compromised. That and Donald Trump has made personal loyalty the predominant issue in any political system in which he touches, which brings us crap candidates like Oz or Walker who are very, very easy to vote against. And so from the point of view of the independents, the people who have decided the last seven general elections, there’s nothing to decide anymore.
And so it’s pretty safe to say that if the midterms were decided by independents who usually don’t even show up to midterms and they were willing to vote against what they see as their own economic best interests, you can bet your ass they’re going to show up in the general election in two years and vote against Trump and everything that he stands for. So for that purpose, primarily, I see this election as a shoo in for Biden. Round two. All he has to do is not die and he’s going to win.
Okay, in Queenstown now let’s see. What were we talking about…Biden and Trump? Oh yeah. Why it matters. Now, obviously, if you’re obsessed about who wins the US presidential election, it matters independently. But beyond that it raises the possibility that the United States is going to have the first extended period of agreement in its foreign policy across administrations. Now, let me explain that a little bit for Obama was infamous for never having conversations with anyone. So for seven of his eight years as president, we basically had no foreign policy at all. Then Donald Trump comes in and Donald Trump would tweet something bold and assume that that made it policy. But then nothing would ever be done with it because he could be bothered to have a constructive conversation with anyone in the government or the bureaucracy or Congress. In fact, at one point he said that his tweets were notification to Congress of certain policies, which clearly legally is not kosher. So for his four years, very little happened at the federal level. Biden has come in and Biden almost to a tee, shares Trump’s approach to foreign economic policy making. Extraordinarily populist, extraordinarily nationalist. But the difference between the two is that Joe Biden actually believes in the power of government. And can sit through a meeting in a way that Barack Obama could not. And so he is actually going back through Donald Trump’s tweets and turning them one after another into foreign economic policy and then embedding them into governance and into the American government bureaucracy. So if you are a Biden supporter, you should be furious because he’s taken all of his cues from Trump. And if you are a Trump supporter, you should be furious because Biden is getting all of the credit for Trump’s economic decision making and policy statements.
So there’s plenty in this video for everyone to get pissed off at. Now, if you disagree with my assessments on where this election is going and who we should blame for why, that’s fine. That’s fine. Go ahead and reach out and contact me. You can reach me at [email protected]. That’s [email protected]. I’m going to be here in New Zealand for the next three or four weeks and I will be doing a number of videos and reporting back to you. It might not be on the most current of current events because for most of this I’m going to be backpacking and I’m not going to have information access, but I will be back in time and we’re going to do a lot of deep dive stuff while I am gone.
So everyone have a great month and I will see you near the end of April. Bye.
No, we’re not headed for another financial crisis…although, to those with more than 250k in one of the three failing banks, it may seem like we are. Silicon Valley Bank is the largest of the three, but it’s still only the 16th largest in the nation.
The problem for Silicon Valley Bank and the smaller Silvergate and Signature Bank is that they all took on a questionable amount of exposure to illiquid assets. For SVB, it was a variety of long-term bonds and securities with long durations. Then interest rates started to go up–way up. And SVB was not left with many tools to manage interest rate risk it had not hedged for. When its primary customers–the tech industry–found out, they sounded the alarm. Being the tech world, they’re all relatively well-connected and active on social media, triggering a stampede of customers wanting to pull their cash out more or less simultaneously, or what we’d call a good old-fashioned bank run.
The real thread connecting all of these banking mishaps, however, is one that’s not going to go away anytime soon. Rising capital costs. Many of these banks and their customers have been operating in a world where money has been as close to free as it has ever been in human history. Over the past year, we’ve seen interest rates rise–sharply–and there’s little reason to believe that we’re anywhere near done yet. The fundamental operating paradigm for banks and the financial paradigm of the past decade and a half is shifting, and we’re going to see which financial institutions are able to deal with the change and which ones won’t be able to keep up.
The Biden administration has now stated that the FDIC will make all depositors whole. That’s great for ending any potential bank runs, but those CFOs who thought it was a good idea to put all of their company’s capital into one bank won’t be learning their lesson this time around.
Prefer to read the transcript of the video?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.
Hey, everybody. Peter Zeihan here, coming to you from Bloomington, Illinois. Sorry, I forgot where I was there for a second. It is the 14th of March. Tuesday. And for those of you that have been following the news, you, of course, know that the United States is facing a little bit of a banking hiccup right now. Over the course of the last few days, three banks of note Silvergate Signature and Silicon Valley have either been closed by regulators or just simply collapsed. And this is something that honestly, I don’t think anyone should really overly worry about. The biggest of them, Silicon Valley, is like number 16 in the country. So this is nothing like the financial crisis of 2007 when all of our Big Ten banks were in trouble all at the same time. Now, normally when you have a financial crisis, it’s because of a problem with loans. Whenever the business cycle turns, the cost of capital goes up and loans that may have made sense in the past don’t anymore. So in the 2007, the issue was subprime. We had, based on how you measure the math, somewhere between a half trillion and two and a half trillion dollars of questionable loans in the real estate market. And that meant that touched almost every single bank within the entire system. So when the real estate market turned and we realized that a lot of these people were baristas who had no incomes and had qualified for 100% mortgages on million dollar homes, and those loans went bad. We had problems across the entire space. Nothing like that is going on this time. We’ve had a very strong expansion and certainly capital has probably been overly cheap and there is some rot in the system that does need to be worked out. And what basically what’s going on is the financial system is going through the process of taking out the trash right now. You would expect some banks to go down. That’s not necessarily a signal of a broader contagion, systemic risk sort of thing.
In addition, the United States has something called the FDIC, the Federal Deposit Insurance Corporation, which is a system by where all banks pay a monthly fee into the system in order to get insurance for their depositors. So as long as your deposit is under a quarter of $1,000,000, you are federally guaranteed to get your money back without the federal government having to do anything. That system has kicked in and depositors will be made whole. It makes sense that these three banks are the ones that went under first. They won’t be the last, probably. Although that doesn’t mean I’m concerned about something like eating through the entire system like a cancer. It’s just that they’re all related to tech and tech tends to be a capital intensive industry, and especially when you’re talking about newer firms and startup firms and research firms, which are what these banks cater to. You’re talking about institutions and companies that don’t make money today. They’re hoping to make money next year or the year after, the year after that, or invest in the next big thing. So they tend to be more perspective. They don’t have to have any income. And so when capital costs go up, they face problems. And so these banks are the ones that are facing the issues. So there’s nothing about this that is any more than a run of the mill bank failure, that matches most of our understandings about macroeconomic trends. I don’t want to say it’s nothing to worry about, but I’m really not concerned about an overall national bank contagion or broad bank run. And I think what the stock markets have done in discounting all things financial is a gross overreaction. So there’s that.
Now, there are three reasons why this time it is a little bit different. First of all, tech has been on a tear for the last several years and not just because capital has been cheap, but because of COVID. When we all found ourselves living and working at home, we needed better cameras, we needed ring lights, we needed computers. We need to update our phones. And so in the year 2020 and 2021, and to a lesser degree in 2022, we were all buying all kinds of tech related products, generating a bit of a boom. Well, once you buy the newest and greatest computer and phone, you probably are going to wait before you get the next one. And so we were always going to have a little bit of a tech bust independent of what was happening with the overall economy. So that’s one. Number two, this is a little atypical for a bank run or a bank crash because normally the problem is on the loan side. It really isn’t this time. It’s not that there hasn’t been a capital crunch, but in the tech start up space, these companies usually don’t go to like the Small Business Administration to get a business loan. They get their capital directly from a venture capitalist. And it’s the venture capitalists who are finding themselves with less capital to throw at situations. So they’re not as able as they have been to throw money at these small startups. And so the startups have been drawing down on their cash, which means the problem from the bank point of view hasn’t been with the money that they’ve lent out. They don’t lend out very much. It’s been with the money that they thought they had. So as deposits have been drawn down, they haven’t had enough operating capital to continue normal operations.
Now, this is mostly good news because it means the overall exposure to the financial sector, which is normally what happens when you sell loans among banks, just isn’t there. But it is a very big problem for the tech sector.
And then we get to our third problem, which is how the Biden administration has chosen to deal with it. Now, if you are dealing with a deposit that’s under a quarter of $1,000,000, the federal government doesn’t have to lift a finger because the FDIC will take care of it. But a lot of these small startups, they put all of their money into individual banks, most notably Silicon Valley Bank. So it was a lot more than a quarter of a million now more than a quarter million is not insured. So what the federal government has done under the Biden administration is step in and say that all depositors will be made whole by the FDIC.
What will happen is banks will have to pay a little bit higher. All banks. Into the FDIC system in order to ultimately make up for this so that taxpayers don’t have to pay for the actual bailout. Now, this does put a hard stop on any risk of a bank run. So it’s definitely the right tool for the job there. But what it does is, is it encourages companies that have done stupid things like this to continue doing them, because now all of us have to pay through lower bank interest or more difficult loan conditions for a handful of startup companies who had CFOs who were just too dumb to realize that there is a limited limit to the deposit insurance system. And so this has injected a permanent level of stupidity into the financial system that was really not necessary. And by backing all depositors, the federal government, the Biden administration specifically has chosen to introduce what we call moral hazard into the system at the base level, which in my opinion, was really not a great idea, although it definitely does put a bit of a backstop on the financial maybe kind of sort of itty bitty crisis.
Okay. I’d like to give a little shout out here to Marci Rossell, who is an economist that I actually just saw on stage, who is fantastic. So if you ever have a chance to see her in person, she is definitely an entertaining show and will constantly give you new things to challenge your assumptions and think in new directions. Alright. That’s it for me. See you guys next time.
Senator Lindsey Graham captured the essence of what today’s video is all about – “If you jump on the Putin train now, you’re dumber than dirt.”
Between President Biden’s visit to Ukraine and VP Harris’ comment on Russia’s crimes against humanity, it’s clear that the US has drawn a line in the sand, and Russia is on the other side. This means that Russia (or at least Putin’s government) is on the blacklist of world affairs.
According to Secretary of State Antony Blinken, the Chinese are considering providing lethal aid to the Russians, so that blacklist might be getting a little bigger. Unfortunately for the Chinese, any disruption to the already crumbling relations between the US and China could prove catastrophic.
The breaking point has been on the horizon for years now, and we all should have seen this coming. The ramifications will be huge, and a complete reordering of the global economic system is just the tip of the iceberg.
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.
