SECURE ENERGY ASSETS

“Until the dawn of the telegraph until the dawn of Bitcoin, there was no fast settlement. And then so Bitcoin gets developed. And then even then, of course, it's worth nothing. It has no network effect. It's a novelty. So even, you know, for the first, say, decade of its life, it wasn't moving the needle at all. Even today, it's now it's increasingly part of the conversation, but it's still a small asset in the grand scheme of things. But basically, I would say that we've reached the height of fiat currency in the sense that we've been in this period of time where there was no alternative between fast transactions and slow settlements.”

“I think Putin is an enormous, extraordinary beneficiary of this operation because of course it takes all the global attention off of Ukraine. It diverts scarce US military resources away from weapons transfers to Ukraine and more to the Middle East. It makes Putin look just as justified in his military invasion than anyone else.”

“My closest analysts I follow, they're always like, no, it's fine. They're like, okay, this one's not fine. This is like DEF CON 5. This is a catastrophe. And everything I track says the same thing. 15 to 20 percent of global energy production is just offline, or at least can't get to where it has to go, and then starts going offline. Some of it's damaged. It's not clear when it's going to reopen. The economy is based on upside-on pyramid, and that little tip is basically raw materials. And that's the part that's disrupted. Because when you have molecules that just can't get to where they have to go at that scale, that is the third component.”

“To me, on the energy security question, the key issue is the debate about energy security in Asia only about price and as a result, a macroeconomic issue that central banks and finance ministers manage or does it become about access to quantity? ... That could redound to the benefit of the United States because as you know, Mike, we are a net exporter of LNG and there are all sorts of interesting LNG projects.”

“They've actually managed to mostly avoid the cascading problem. So they were highly productive for a long time. So they had huge trade surplus, which then turned into a current account surplus because they would, you know, they take all their capital and then they buy bonds and equity and commodity deposits and all these assets around the world. So they're getting interest and dividend income from the rest of the world. So they've kind of set up a financial fortress, even though they have a high sovereign debt in their own currency, they also have tons of assets.”

“Going forward, we've already kind of optimized a lot of what we're going to get out of globalization, manufacturing automation, that sort of stuff, which means that kind of really the next realm to tackle is to try to make some of those white collar services less expensive, more, you know, less human labor intensive. And so, I do think that AIs, you know, it's kind of the next major thing, where depending on how good that technology can get and how efficient it can be used, that can keep costs down. And obviously, you know, just like how manufacturing, automation and offshoring had losers and winners from that, AI is kind of the main thing.”

“You have the Asian response, principally Japan, South Korea and Australia, which is to double down on the alliance, pull the US closer. We saw that with Taki Ichi's visit just a few weeks ago, right? Basically, hold on to the US and the alliance and hope a better day comes.”

“I think we're at a reordering moment. The post-Cold War era is done. And we're now in a transitional interregnum between the old order and a new order. And right now we're going through the order dissolution process more than we're going through an order creation process. And I think that that order dissolution process is especially disorienting for Asia because of the centrality of the US to both the region's security and its economic development.”

“It's commonly what you think, because that's how many debts matter. If you have private debt, it often matters all at once. It doesn't matter until it does. Sovereign debt tends to work differently. It tends to be more of a process. So one of the arguments that I was making at the start of that talk was kind of saying that it has been mattering. Realistically, I would say it's somewhat mattered since the global financial crisis. But really, I would say, since about 2018, 2019, I think it's been really mattering, which is to say that we're shifting more and more toward that kind of fiscally dominant environment.”

“Having the US tied down in a complicated air, naval and missile war in the Middle East only redounds to China's benefit and to Russia's benefit as well. ... At the end of the day, Mike, what does Iran really get China? Geographically, the Chinese don't really get much from it. It's principally a market where they could invest, but it's been difficult to invest in Iran.”

“Wang Yi has done two major phone calls with his Iranian counterpart. ... Shifting from solidarity with Iran to de-escalation pressure, to me is really, really, really interesting. It's the result of this extensive shuttle diplomacy that China's special envoy to the Middle East conducted from March 8th to about the 25th in which their special envoy to the Middle East, a guy named Zhai Jun, went around to all the countries.”

“What's happening is the Chinese are becoming a source of premature deindustrialization for economies in the region. In particular, the auto sector in Thailand, apparel, textiles, and steel in Indonesia, e-commerce in Vietnam. Because the Chinese are just flooding these markets with exports, as a way to keep their manufacturing economy alive.”

“In the 70s, in the 80s, in the 90s, in the 2000s, the answer would have been mostly from the private sector, even though the government was running deficits too. But once we got over 100% debt to GDP, so we have pretty substantial interest expense, and we're running these entitlement systems that are kind of no longer mathematically as sound as they were decades ago, that combination of the demographics and the accumulated debt made it so that even in a non-recession year, deficits are bigger than all the net new loan creation. And so that starts kind of, it creates like a run-it-hot environment.”

“I think there's a good chance. I mean, yeah, you could have like a robot tax, you know, basically, like, so yeah, the equivalent, yeah. I think on a long enough timeline, that could become more commonplace. And I guess if things get more automated, certainly from the left side of politics, you're going to get more and more calls for UBI, and it'll probably be more and more enticing to a larger share of the population should some of these AI technologies keep taking off as the polls expect.”