US Offshore Balancing & Future Dollar System | Bartosiak, Świdziński, Gave

Dive into a compelling conversation as Jacek Bartosiak and Albert Świdziński engage in a dialogue with Louis Vincent Gave about the intriguing topics of U.S. offshore balancing and the future of the dollar system. Gain unique insights from these experts as they navigate through the complexities of international relations, economic dynamics, and strategic foresight. Join us for an in-depth exploration of the potential shifts in global power structures and their impact on the financial landscape. Don’t miss this thought-provoking discussion that delves into the heart of geopolitical and economic transformations. Subscribe for more enlightening conversations!

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[Music] hello everybody my name is Jacek Bartosiak welcome to strategy and future with me today is of course Albert Swidzindki from strategy&future and our favorite guest Louis Vincent Gave already have been a few you’ve been a few times our show Hello Louis how are you I’m great how are you we’re fine although in the dark winter almost winter in Poland which where it’s cold and really horrible and very dark well you get nice Summers true true uh you know we have had already a few shows together we we were discussing the uh the world of currencies Empires the future but this time around we want want to ask you and we want to to venture into the the the future where the United States doesn’t hold the strategy of pracy of preponderance of course it’s a little bit counterfactual today since the Biden’s speech over Israel in Gaza thing and Ukraine for like three weeks ago where he stuck to the Primacy strategy at any cost that the United States will be the arsenal of democracy and why we want to ask this question as the opening you know question of our conversation is that we increasingly think here in Poland that the strategy of Primacy of preponderance for the United States is unbearable at least you know the rally Cardinal rally used to say that you know in order to have some object the objectives must equal the means to reach the objectives otherwise it’s a bluff and if it’s a bluff it’s being challenged and tested along the peripheries and Poland is in the periphery of the system so we we we very dearly look at the uh the events so the question is what would happen to the US dollar which is the subject of your you know all interviews actually uh if the United States decided to do as opposed to the pracy the offshore balancing and withdraw from Eurasia but would remain the point to-point you know situations to to create a proper balance of power would that change I could Albert go ahead add some parameters just quickly because you know most of his history us followed either offshore balancing or non-interventionism it really ends with creation of NATO First Alliance they entered since military Alliance since treaty with France that was terminated 1800 and it was pretty much based on you know containment of the USSR but the key element of it the one that’s stabilized and in terms and in turn was stabilizing the international environment was open economic order right the Liberty the the freedom of uh strategic flows this is what really served as a backbone of this entire system this is why the US felt it must stabilize the entire system for it to work and we see that the US is moving away from this already they they didn’t joined the TPP and that was a constant between two administrations right Trump and Biden they followed the exact same policy um we see more and more that the US elites have you know have been have drawn a conclusion that it doesn’t really serve their economic interests hence the reindustrialization the industrial policy so the US is kind of by itself dismantling this very Foundation of their of their world order really so what happens if they succeed right this is what happens if they decide that it doesn’t really serve their interests anymore which I think you you made this point before uh that you know you look at what happened to the industrial class in the US and how how actually spending patterns could change once the blue colar regain their buying power their spending power which I paid a lot of attention to when he said that so this is basically this is what it boils down to yeah all right well first thanks again for having me and then let’s let’s dive right into it because that’s probably the single most important question uh in the world right now uh basically what you’re asking is is the world that we’ve known for the past 70 years or 80 years the world of tomorrow or does it change really dramatically um now I think there’s there’s many different ways to to answer that question um one way I would start off by saying is that um uh justess like you pointed out Biden speech uh I can’t remember what it was three weeks ago four weeks ago right after the October 7th events uh where he basically came out and said look we can fight two War we’re the United States you know we can fight two Wars on two fronts uh no problem um and the markets didn’t like that speech right the the bonds bonds sold off and the dollar sold because you know undeniably having an Administration that commits to bunch of Wars bunch of costly Wars isn’t great for market so so I’ll put that aside for now but um it was a fairly hawkish speech and again the markets didn’t like it so that’s one signal that potentially some people would be listening to now um the the the second point I’d point out is the one the one you made Albert um about the US you know pulling away already from from Primacy and here um I would say that there’s a clear class CR between on the one hand us Business Leaders and US policy makers I think us Business Leaders have been pulling away from us Primacy for a long time I mean they’re the ones who are responsible for the industrializing the US they’re the ones who are very much for you know globalization let’s have you know let’s cut back our military expenses Etc um and on the other I think a US political class that that remains fundamentally neoconservative from right to left um that remains fundamentally you know interventionist and fundamentally very keen on having 800 American military bases around the world um and so there’s a clash there and if anything perhaps uh pictured this Clash was uh the recent Apec meeting where you had C ping invited to dinner with all the American Business Leaders who all stood up and applauded him and and treated him as if he was you know a really great guy um and as if they were all best of friends and meanwhile you know the US Administration is obviously giving very different signals a China so I think if you’re c g ping and you’re probably not used to this sort of Divergence in in messaging between the business sector on one hand and uh you were probably a little confused uh one day one day you’re being you know FedEd as a hero and the other uh you’re you’re being uh you know treated like a a second cousin coming up from the backwoods that is a little bit embarrassing so um I highlight this because I don’t want to bail out of your question but it’s deep down who makes policy in the US yeah ex exactly whether there’s a balance between business and political life because you know I I met I met once a french guy who was a an air to hugenot who were you know expelled from France and he told me sure you know on the continent it’s always the political life that rules in the islands there is a balance between political life and capital and that’s why you know stock exchang is the most important are in London and nework City and know so who who who calls the shots and the the more refined questions do you think that all kinds of business are like already abandoned Primacy all you know production business I think it already sees China as a competitor right as opposed to financial business so maybe there are some distinctions between you know kinds of business in the United States what do you think um so I think in the short term to answer your question I think in the short term the politicians make the call in the long term the businesses influence the policy um and this is especially true in the US where you know the power of lobbying is such um the the strength of the lobbyist is so deep that um I tend to think that over time the Business Leaders have their way uh and you know it doesn’t happen immediately but you know they they influence the media they influence um uh popular culture and you know o over time they they they tend to to have their way but it’s um you can’t have business be blatant um and it’s it’s a slow moving process say but look I think if you know China joined the WTO in 2001 if in 2001 you’d said look in 20 years this is where us industry will be and you describe the current situation uh nobody would have signed up for it yeah it’s they they would have said no way um and but in the meantime you’ve had a hell of a bll market to us um business has done extremely well well us americ business have done extremely well out of globalization so for business people it’s worked out for the working class not great for the country as a whole you could say well you know if you look at industry today in 2001 Chinese industry was one-third the size of us industry today it’s 60% bigger than us industry now this comes back to your question of Primacy is at the end of the day in the modern era uh Warfare if you ever get to that Warfare is a test of one industrial base against another um is you know how how strong is your industrial base and or it might not be all of only that but that’s a big component uh today of of warfare today Chinese industry is 60% bigger than us industry um China’s come from nowhere five years ago to be the biggest Auto exporter biggest machine tool exporter Etc so um so and that’s and that spread continues to to widen every year so can you have you know and again I’m not talking the next six months but the next 10 years 20 years can you have the the country that basically doesn’t have industry to be the you know to to to hold pracy in the world um I guess you know if you had people from the technology world on this call they would say sure you can because industry was you know the second world war and the first world war um but in the modern day and age it’s no longer about armies at each other it’s going to be about uh it’s going to be about uh you know space uh the conquest of space it’s going to be about uh cyber warfare um it’s no longer about men in trenches I know you guys are at the border of a war with men in trenches but that’s in essence a remnant of an of a past age um and by the way as as just as a sign um the fact that Russia is you know hold has done with this war seems to be slowly grinding out Ukraine that has under the support of the whole of Europe and the United States tells you that this dislocation on industry uh is no longer to the great advantage of the western world yeah we no longer have a huge comparative advantage there so so then you become a quest of okay um if war is about one industrial complex against another then the US is bound to lose Primacy if war is about one technological complex against another then it’s up and ended um but the longer time goes the more China can catch up today the US has Primacy there no problem you know they dominate the tech World um but each year China now graduate more Engineers than the US has um China right now is graduating 12 million kids a year I just wrote a paper on it’s 12 million kids a year from from University um it is moving extremely rapidly in all the stem subjects um so you look at all this and you say okay if I project this over the next 10 years how can China not also dominate the tech world when they’re producing that many more Engineers um if you start off with Ines the only wealth is man um then uh you know the Primacy is about to change now again if it happens through business decisions it’s going to be slow moving no shock nobody hurt if it happens to political decision it might more painful yeah but Albert I ask let me come back to the original question about the US dollar you know so why not why not the US business just pressing the political life okay guys you know let’s let’s give up on this premacy thing offshore balancing is good enough because we are you know the most important important from the equal ones and we have the Safe Harbor in North America and still we can make a deal that US dollar is a currency of the world because you know like with Windows you you describe this phenomenon you it’s very difficult to abandon the the current world currency so you know there are some still upsides of it and there is no war nothing yeah so why not so I think that’s a great question um the U that deal would be very good for American businesses you could see why they’d want to push it having said that I think American B you know most businesses just follow T they don’t think in big terms they think in terms of narrow interest you know what’s my interest right here right now um the a deal that maintains the US dollar as the world’s Reserve currency and trading currency um I think is no longer acceptable to a China and the reason for that to be honest is the weaponization of the dollar over the past 10 years uh by by the US Administration that deal might have been acceptable 10 years ago before the dollar was weaponized against Iran against Venezuela and most recently against Russia against France yeah and against France with BNP that was really the first shot across the bow uh when B&P got I think it was like a$2 and a half billion dollar fine uh for for doing a deal in Sudan um that you know that that basically signaled to a country like China that when you trade in US dollar you are fundamentally dependent on the US Treasury in essence you know the message the US sent with the BNP find a little over 10 years ago was when you do a deal in dollars you might think that this is a two-way deal deal but it’s a three-way deal the US Treasury can always get in the middle of it see what you’re doing approve disapprove um and if you’ve got uh superpower Ambitions like or even Regional power Ambitions like a China does um that deal is unacceptable you you you you can’t accept a deal where the US Treasury can come in and say yeah we don’t want you to make that no no Sovereign Nation can really accept but also if you if you look at you know the impact that making dollar a Global transactional Currency had on us industry not business but industry it was extremely detrimental right it uh it makes their their exports un competitive really uh so I think it initially in the first sort of 20 or 30 years after the war it was terrific um and then and then over time I think basically you to your point it becomes it becomes detrimental it almost becomes like you’re having Dutch diss where instead of producing say oil and you know you produce oil and to the detriment of everything else it’s even better you don’t even need to produce oil you just produce dollars um and and fund consumption um you know and um and so yeah you get you get to the point where we are today where you know the US is now um you know it’s it’s basically in full employment it’s it it has a nominal GDP growth of seven or eight% US economy is most likely at a cyclical high right now and with that you got budget deficits of 8% of GDP um because in essence just like a country that has Dutch disease you the government could afford to to not be fiscally responsible um but you can do that for a while but you can’t do it forever it’s the problem but is it really so Lou that it’s it’s you know I the test is is is if anybody has tested really the length how long you can do it and I think of course I’ve checked the you know we we we read Ral about you know all those cycles and all the empires but there was no Empire of a kind as the United States is in terms of you know its importance to the world because at the end of the day where would the investors go you know so that’s a that’s a very important question and you know it’s it’s a little bit like tequila shots right you never know you never know when you’ve had enough until you’ve had too much um and and and govern and budget deficits are the same it’s uh it’s it it’s almost quite binary you know you add them up and it’s no problem it’s no problem it’s no problem and then all of a sudden the market chokes on it and says you know what I can’t take any you know I I I I can’t do this right we saw this in southern Europe right um in 2011 2012 now to your point where would where would investors go um one of one of the examples I’ve I’ve used a lot in in talks and my research Etc is imagine a chillion copper Mone um let’s say ento fasta or whichever or Brazilian Val it doesn’t matter um historically these guys would buy caterpillar machines right and because they knew that there’d always be a point in the cycle where um your Chilean Investment Bank sorry your US Banks would not want to lend to Chile or would not want to lend to Brazil they always kept dollars in working capital so they could always pay caterpillar so they always had a lot of working capital in dollars now here comes long machine you say don’t buy caterpillar buy Longo two-thirds of the price and I’ll fund it for you in your local currency so now all of a sudden I don’t need to keep US dollars in my work on Capital it’s not that I change them for something else is I just don’t need them yeah as more and more trade moves into other currencies your need to keep precautionary Savings in dollars whether in Central Bank Reserves or in um in um or or in cash in working capital just disappear so you don’t I I get the point people tell me well surely people aren’t going to replace dollars with REM andb because who trust the Chinese or people AR going to tr you know who trust the Euro nobody nobody wants to do that um but in fact you end up needing less precautionary capital and I think that’s what the world is going through right now um which is perhaps one of the reasons why growth has turned out to be much better than most people expect yeah but it’s still long term it’s very difficult to to keep the uh so say stability in exchange if there is no some you know currency world currency it’s very difficult to keep a longlasting oh it makes for much more unstable yeah it makes for much more stable World unless unless um let’s say you have a new EXP exporting superpower let’s call it China because frankly that’s what it is um and that that exporting superpower turns to the people it is exporting to and that it likes let’s call them Indonesia Chile Colombia Brazil and says hey I’ll sign a central bank swap deal so that if ever you run shorts of I know like right now don’t bother keeping dollars don’t bother keeping you can pay me in local currency you can pay me in rem andb and tell you what if you run out of REM andb I’ll lend you some you know short so that there’s not a short-term hit u i can lend you some so and we’ve seen Argentina do this right Argentina runs out of dollars to pay uh it’s trade with China China says okay I’ll lend you I’ll lend you the REM andb so you can pay me back and we can you know you can pay me back later um in that situation the inherent volatility that you you would have had by removing the dollars completely disappears um that is precisely what we’re seeing today um we’re seeing trade with China explode and on the back of this trade China comes in and says hey well get rid of your US Dollars and sign a swab deal with me let’s do our trade in rem andb and I will uh I will back your trade I will back our trade um and you’re seeing it everywhere just last week you had what I think is one of the most important macro development of the past year which is China signed a swap deal with Saudi Arabia of all countries you know Saudi Saudi you know the the 51st state uh for all intents and purposes it’s you know this is this is somewhat mind-blowing now you could wonder why the hell would CH would Saudi need REM and bees uh you know they produce oil price in dollars export it they got a currency Peg to the dollar um and uh you know most of what they buy wheat weapons is priced in dollars um why would they need a R&B swap two options either they’re planning to buy a whole lot more from China yeah not s future or at some point they’re gonna break their Peg to the to the dollar and they’re you know they’re doing a backup to make sure they don’t have too much currency volatility um so yeah I think uh if China wasn’t on the back stop you know with with all these Curren swaps it would be very volatile as it turns out it might be less volatile also if I could when you speak of dollar the I I think if developing markets developing countries seese um you know using dollar for their trade or for their investment this really frees up their ability because this was I think you mentioned this this was a huge backstep towards their development right because they had to Source dollars uh for for investment structure and if they don’t if they can trade in their local currency or have swaps right with with China or even with other countries this instantly removes one of the key barriers to development right absolutely well look if you move from a world where you have one supplier say caterpillar and one funer say JP Morgan to a world where you have two or three and many sources of funding the the odds that you get squeezed at the bottom of the cycle the odds that you have to cut your orders at precisely the wrong time go go down considerably um and but it also means that you know you’ve had 30 years of massive us curent account deficit accumulation around the world sitting in the working capital of the anastas of the valleys of this world as well as sitting on local central banks whether in Peru in Colombia and the in China wherever else and if everybody turns around and says okay I now need fewer dollars to cushion my trade cushion my economy to make sure I don’t have a shock I now need fewer dollars than I had before then all these dollars have a vocation to come back into the US um you know it’s like if I don’t need these dollars now the problem is then what’ you do with them maybe that’s what we’re seeing today maybe that’s why you know people decide I don’t need as many US treasuries I don’t know what to do with these dollars I’m just going to buy Microsoft I’m just going to buy Google I’m just going to buy Facebook because I’m not quite sure what to do with them so I’ll just do that um so and so all these dollarss come back now logically as the dollars come back into the US it should it should see a weaker US dollar as well um which so far which so far we haven’t seen um although you know the US you know it’s been it’s been a pretty aggressive fed tightening cycle and the US doar hasn’t gone out to to break the highs we saw in 2020 um so I don’t know uh maybe we’re starting to see see the world over exactly you know when you listen to the U debate in the United States they seem pretty confident that they would go through all this thing including the uh the death crisis and stuff they talk about you know the the new Revolution of AI that would increase productivity and they will you know simply jump over this sort of the steep steep fiscal issue and and you know what is your take on that you know it’s the you know they they they they claim that this is a new economy we you can have as much debt as you wish you know we will make it the world the world has to buy and if there is any war in Eurasia we can also you know offset any debts you know because we we are the superior military power so at the end of the day we will be imposing rules whether we need to pay back or not you know a to cut long story short yeah yeah um and so far that’s been proven Right In fairness that uh so far that that’s been proven right and U now you know the I tend to think that over the very over the long term that the currency is the ultimate variable of adjustment it’s um it’s it’s so I don’t think the US faces a debt crisis per that you know bond yields in the US are going to go to 20% it’s going to be an absolute disaster um it doesn’t need to be that way because the FED can always St in ears money buy the debt basically do what Japan did with the yield curent controls which I think ultimately is where the US will end up and when it ends up there um when it ends up there you will see uh the US dollar go down uh so again the variable of adjustment will be the dollar now you could say well to be honest the dollar is pretty overvalued against every major currency today it’s massively overvalued against the Yen it’s marginally overvalued against the Euro um you know I think China the REM andb is very undervalued you don’t run a 75 billion a month Trade Surplus if your currency isn’t undervalued um so you know one of the anomalies out there is the US dollar is too high so the first you know 20 or 30% drop in the US dollar won’t feel bad at all it’ll feel it’ll feel absolutely fine and um and so to to your question you know what you know it’s are we going to see a big cataclysmic event where everybody uh thinks oh my God the US has changed Etc probably not for a while because first right now we’ve had a big adjustment in the bond market next comes the adjustment in the currency market and once you have the adjustment in the currency Market you’ll probably start to see proper inflation in the US and once you see proper inflation in the US there you’ll have a political crisis most political crisis are triggered by inflation uh that might sound very German of me but I think or or even very Marxist you made it you made it on Germans you know your French made it on Germans in verise so you know exactly well the Americans are going to end up doing it to themselves um you know they you can’t run budget deficits of 8% of GDP with full employment um and so I think there’s little signs already that things are creaking like I said I start off I the first thing I said was with Biden’s Primacy speech immediately the bond market sold off in the dollar it was almost as if he said look we can Finance everything and the market said yeah but we’ll tell you the price at which you’re going to finance this um you don’t get to control the price at which you fund this was in essence the market saying and since then incidentally you’ll notice that there’s been a lot of articles in the Washington Post uh in the New York Times I the sort of the organs of the CIA and the state department of well um we’re backing off from U uh we’re back backing off from basically back you know um supporting Ukraine to the very hillt maybe it’s time to do a deal with Russia maybe it’s time to uh to sit down with Putin things that would have been unprintable uh 18 months ago or even six months ago uh are now open conversation it’s like okay what you know what deal can we get with these um so you know why why this shift is it because they realize that a actually perhaps can’t win a war against Russia uh or is it B you know they’re getting tired of funding it it’s got to be one or the other would you if I could ask a more more a little narrow question about the impact what’s happening with the treasury Mark treasuries Market in the US you mentioned that this is one of the key stories right of Y well you know at its heart it’s more more more sellers than buyers um you’ve you’ve had a few failed auctions at the long end basically the US is starting to look a little bit like Brazil used to where whenever the government tries to issue long-dated bonds it finds that there’s very little liquidity nobody’s interested nobody shows up at the auctions the auctions are terrible um so the US government really doesn’t have much choice but to issue debt at the short end um and which is not not a sign of Health right when when nobody’s nobody’s very keen to to lend to you on a 10-year basis you know if I lend to you money on a six months basis but I won’t lend to you money on a 10 month on a 10 year basis is that I don’t really trust you um and so so that that’s that’s basically where we are on the bond market um I think the market is growing very wary of us um us fiscal policy and I don’t know if you want to interrupt but I had one more macro question about you know the rumors that Japanese will will move away from negative interest rates right and that from what I understood this was a huge source of liquidity uh around the globe right for investment and uh what would be the impact I think that’s the biggest thing that nobody’s looking at to be honest that’s um when you look around the world today and you think okay what price makes no sense you know what what price is completely out way a few years ago it was negative interest rates everywhere right and you know you looked at that and you think that makes no sense on a historical basis on an economic basis that that makes no sense today a Yen at 150 which is more or less where it’s hovering against the US dollar means that yen is undervalued on a purchasing parody basis by about %. now you know it’s one thing if the Polish LTI or the Swedish chrona is undervalued by a lot um but Japan is the second or third biggest industrial power in world depending on how you measure it it’s the second or third biggest industrial power in world to have such an important economy run such an undervalued currency um is deeply deflationary for the rest of the world um now the other thing and to to to your question Japan is also uh one of the biggest Savers in the world um and it’s it’s the biggest exporter of saber so the fact that it has such low interest rates I think has kept bond yields check all over the world because Japanese kept buying bonds abroad so if you foresee a shift in the Japanese interest rate policies it’s hard not to imagine that it’ll have a big impact on the Y that they’ll have a big impact on bond yields everywhere that fundamentally it’ll be it’ll be a bit of an inflationary shock if the Yen moves from 150 to 130 the price of your Toyota is going to could be coming up um and you know there is no doubt that Japan today is just it’s just too cheap it’s like the Y is that can’t last forever yeah okay you know I read the the newest book by Lynn Alden about you know the broken money that’s the the title yeah she posits that the it would be much better United States will be much better off if the um if that it became a us the country as opposed to us the Empire after the you know relatively short period of adjustment everything is in in the United States resources food water territory people demographics and you know they would be much better off it’s only the matter of time for the politicians to realize that this is the option otherwise there is no way out of this you know cycle what do you think so so first I think it’s a great bck uh and that everybody should buy it and read it um the second thing I would say is uh politicians don’t change uh voters do and then the and then you know the voters change the politicians that’s the the great Advantage we have as a democracy is um you know it’s the advantage we have in a democracy isn’t that we pick the best people for the job is that we get rid of the bad ones without Bloodshed without you know can now I think po US policy makers don’t want to walk away from Empire um because you know it’s the the perks of Empire if you’re a US politicians are tremendous now to Lin point for the US population I agree with her that it would be better to be a country and not an Empire but note that you know that was pad Buchanan’s slogan back when he ran against George Bush in 1992 a republic not an Empire that was his his slogan in 1992 and you know obviously he didn’t win um but that you’ve had that undercurrent in the US for a long time U there’s been big Winners out of the us being an Empire obviously all the US small final companies big Tech uh the US military industrial complex the FI the financial World um all of that have been big Winners out of uh out of the Empire the big losers uh basically us manufacturing us industry and and the 100,000 people who die out of fent every year who are more or less these blue color workers very often uh who who fall into the fenal despondency um so you know you if you move away from the Empire and back into being a republic um then you you have a very very different country and there’ll be a big losers you know the finan they’ll be really bad for the financial industry it’ll be really bad for the US military industrial complex um you know the fastest growing real estate market in the US and now the most expensive us real estate market is the greater Washington DC area um the US moves from being a republic to an Empire you can sell Washington DC real estate with both hands um so it’ll be a very very different country will it be a better country will it be more will the wealth be more equally spread absolutely um I think the story of every Empire is you end up with concentration of wealth at the very seat of the Empire whether you look at Rome you look at Paris under Napoleon you end up with tremendous wealth uh going to the heart of the Empire the British Empire with London or or Vienna I mean you walk around Vienna it’s it’s one of the most stunning cities in the world uh you know that that all the wealth flows to the heart of the Empire um but yeah then then the wealth gets spread out now having said that the the periods of end of Empires um and that’d be the counterargument to Lin’s Point um it’s pretty hard to move away from an Empire to not being an Empire and have tremendous wealth like you look at the Austrian Hungarian Empire when that ended there was no wealth to be shared when you look at the Ottoman Empire when that ended there was no wealth to be shared uh you look at uh at the end of uh of you know the British Empire the the 1950s 60s 7s in London that was no fun it was no fun whatsoever so the end of Empires you know are it’s it’s pretty rare that uh that that it goes very well that they willingly give up their position absolutely it would it would take right and that they come out stronger economically on the other side of it it’s there’s a period of adjustment that lasts at least one or two generations look at Japan you know Japan was an Empire stopped being an Empire 40s 50s 6 Japanese worked really hard to get to get to where they were but there was a whole generation that really tightened belt but then also I I remember you when you speak of blue colors and uh you know their decreased importance I I think you mentioned uh in one of your recent podcasts that this trend is now turning and you could measure it by the amount of strikes right of Dockers of truckers of of blue colar jobs that were looked down upon and now you also have vocational schools right in the US coming back to uh to life and you made a very interesting point that apart from spending or like uh buying pns that will be drastically different right if you if it’s no longer a guy in you know buying avocado toasts in uh in California it will be a somebody in Ohio buying a stake right so and this could then impact the political uh decision making right at the very long chain of events I I think so um again things are slow moving because we’re in democracies but the I I to your point I do think you know what’s quite striking in the US today is that uh there there’s this massive dislocations where people still go out and take you know hundreds of thousands of dollars in debt so that they can go get an office job that will likely pay less than a blue colar job at this at this juncture um so you go out you borrow hundreds of thousands you uh but meanwhile if you’re willing to you know carry a blowtorch to work rather than uh you know go into an air conditioned office um that you’ll make more money but people still go for the oh I need to get my college degree and I need to go to an air condition office and I need to work on the laptop because um I think socially we’ve been conditioned for it um now I think the us today is probably one of the very few countries Canada probably another maybe Australia another where blue color jobs are actually now getting paid more than white col jobs um so you would think that over time people will notice that and start switching um you know this takes a while right and this has just started to happen it’s it’s perhaps the the response to to the extreme moves of of the past you know the looking down upon blue color workers that don’t the yeah plus AI will also increase this tendency I guess you know that the AI will not replace the the minial work you know that’s right that’s right like if if if you need something welded together you know yeah or you need a good plamber or you know handyman in the house you know it’s it’s those jobs aren’t going anywhere exactly exactly you know the the interior design job the interior design job can now probably be done by an AI U and but the the moving the furniture in you still need a guy with muscles in a truck exactly exactly yeah you know just let’s move to to Europe for a while so you know as you know there there there have been discussions recently heed up in Europe that we will have a a new Empire the federal Europe and Poland is being pushed to that corner the negotiations sort of started the propositions are you know on the table it’s a major thing for Poland which you know always had you know this knack for Independence and then we don’t trust Germans so the just to put it you know politely and um and uh why wouldn’t you yeah and and that’s that’s yeah don’t trigger me Louie because you know that would sorry so basically the U my question is what the uh what the markets say about prospects of the federal Europe does it trust do they trust that this might be happening and Is it feasible will the Germans seize their power because otherwise it’s not going to happen what the the the markets uh you know say about it so I think look the European project was always an imperial project it was always an imperial project in the get-go um and the the only question is you know what what kind of empire were you going to devise in Europe was it like a a very decentralized Empire um where the model would have almost been say the um you know the the Roman Catholic Church in the uh in across the Middle Ages where a very decentralized Empire everybody agrees to play more or less by the same same set of rules everybody agrees more or less to the same set of beliefs uh you have one leader perhaps sitting somewhere but it’s still very decentralized and everybody’s responsible for their own you know their own jurisdictions that that’s one model I’d call the Roman Catholic model of Empire or do you have a very centralized model for for Europe U where all the powers are T all the decisions are taken at the center and and passed on down um now needless to say the guys who were building it w the ladder uh they want the deeply centralized where decisions are made at the center and more increasingly by people who are increasingly Not Elected whether the European Jud judges the guys sitting on the European commissions U nobody knows quite who answers to whom decisions come out of nowhere um and um and I think you know we’ve been pushed into that latter category we were sold the Roman Catholic Empire of look we all believe in the same things we believe in free trade we believe in free exchange of people um we believe in kids moving around for studies uh we were sold the Roman Catholic Empire and we were delivered the centralized Empire um now to your point I think there is great reluctance everywhere on amongst the populations on the centralized Empire you just saw it in Holland with with with G Wilders you saw it Sweden with new Democrats um and I think you where the where the resistance was always the strongest unsurprisingly perhaps is on the fringes of the Empire uh so it was Britain Britain said I’m out uh and then it was on the Eastern flank of the Empire um the Eastern flank of the Empire who always felt very uncomfortable with it because you guys were just in another Empire and you didn’t really like it U you know you were part of the Soviet Empire for all intents and purposes um and so you I think there’s an Institutional memory of you know what I don’t like it when we don’t get to make our own decisions like you know that that just doesn’t work for us we we’ve just done that and it really didn’t work for us um so I think the the whole idea of having this centralized Europe is I think it was Dead on Arrival uh we’re just going through the motions where more and more people are turning away from whether those people are called Hungary whether they called Poland whether they called Holland whether they called Sweden everybody is like increasingly saying look this this I’m out this isn’t for me sorry you guys have fun um and so yeah and I think that that explains partly the weakness of the Euro that explains why European stock markets have been so weak because you have that political uncertainty overhanging over Europe yeah uh where you think we’re building these institutions we know we’re supposed to play by these rules but we know these rules won’t last and you know I think if you’re an entrepreneur if you’re a businessman if you’re a CEO of a company you don’t really care what the rules are you just want to know what they are and then you adapt right the the last thing you want when you’re an entrepreneur is to not know what the rules will be in five years 10 years time um and that’s the problem with Europe I think that’s one of the main reasons nobody feels comfortable deploying Capital what would need to happen for the markets to really start believing that this is happening what would be the triggers for example the uh Promise by the by Germans that they would underwrite all that all around the periphera at any you know in any circumstances I don’t know forming of the army a major six month long process you know of a treaty like Treaty of versale or you know the Congress of Vienna or now akis gr that you know all those leaders meet and sign a constitution what would be a trigger you know I mean in terms of the uh business business mind minded people that this is really happening maybe it’s you know two years ago maybe we would all three of us would have agreed well look let’s say you had a war between Russia and Ukraine that would really mobilize Europe really decide to like Europeans to get together and against the big bare Russian threat it would and it would focus the mind of European policy makers of what’s important what’s not Etc maybe we would have said that two years ago right um and we would have been wrong if we had I would have said that perhaps two years ago and you know two years later here we are um so um what will work I don’t think anything will because deep down it goes against the very nature of the the European people so I don’t think you can sell European federalism to Global Investors because because they don’t buy it um and because there’s always going to be a vote somewhere and this week it’s Holland but you know in 18 months time it might be Belgium might be somebody else who knows um there’s always going to be a vote that reminds you actually these guys don’t they don’t want this um so I think what needs to happen for Europe to be an attractive destination for temple there a a strong shift in uh at the European you know Parliament level European Constitution for people to say okay look you know what we’ve heard you we we heard that you don’t want the European superstat the European centralized State we heard that you want more of the decision to be done at the local levels which is by sorry which is by the way most countries are heading no most most people want to have more decisions taken at a local level rather than at a at a a top federal level um and for Europe to basically start evolving in that way and saying you know what U we needed a centralized moment you know when we absorbed all of Eastern Europe into the European Union there was a huge gap you know western western Europe was living here and Eastern Europe was much poor they didn’t have the infrastructure they didn’t have so but now Eastern Europe is caught up you know you go you go to Eastern Europe you’ve got roads you got airports you got Railways it’s it’s the same as Western Europe for all intents and purposes uh so that has been done we can cut the European budget we can now devolve uh uh uh decisions to the to the outer fringes uh everybody can do their own thing we don’t need to have all the same rules for everybody on every single thing um if Hungary wants to have different marriage laws than Germany fine um have at it if we come into that so to your point yeah you you you meet up you set up a sort of constitution not that dissimilar to the US Constitution where you say whatever isn’t delegated to the central government is the resort of local governments um and we only only these things are you know the the central government’s role uh basically free trade and free movement of people and and human rights only these few things everything else boom gets pass to the states done deal uh then I think people feel extremely comfortable bringing back Capital back into Europe when no there because the policy makers um you know why would they how often have you seen policy makers willingly give up power you know in the US they did it from scratch um and the Constitution was a basically a compromise between individuals who are very attached to state rights very attached to to their own local communities um in Europe I think what we have is typically policy makers who want more power at the center and want to move to the center because if they move there they don’t have to aners to voters anymore so it’s much more attractive to be in Brussels if I could have a kind of jumping all all across the map but I wanted to I know we’re running out of time I I wanted to ask you about I was thinking when you mentioned before during our conversation today that you know China is probably more looking to become a regional or to secure its sphere of influence not really emulate what the US has done I was I was thinking a lot recently about what would be the Chinese offer it it presents to the world and the more I think about it the more it seems to me that it would try to offer a drastic jump in productivity which hasn’t happened across the globe since the ’90s right this was the last time when you saw an increase in productivity since then you didn’t since then you didn’t get this so do you think it it’s possible for China to offer an entire ecosystem of solutions you know hard infrastructure roads and stuff like that but also digital connectivity and on top of this for example digital currencies you know providing access to Capital to knowledge to an ability to partake in global exchange to like billions and billions of people in the global South who who never had a chance who did sustenance farming or sold a kilo of ters by their Road you know and then if you provide them with liquidity which they didn’t have access to because no banking infrastructure right and you wouldn’t trust them with the money anyway because they can spend on moonshine but if it’s cbdc you can program it so they can only buy Chinese industrial Machinery to to improve their productivity right and then you know they can do it byet stuff like that is this something Swiss bank account again and it doesn’t end up in a Swiss bank account yep it just goes straight you know it probably you know recirculates back to China but again there is some objective ability for those people in the global South to bring themselves up right is this something that you see as possible well do you know I don’t know if you ever saw that clip on on YouTube I think it was the the Kenia prime minister was uh talking with the British Ambassador on a panel somewhere and the Kenyan the British uh um the the Kenyan prime minister says you know um when we go to the Western World we get a lecture and when when we go to China we get roads hospitals railroads Etc um and the British prime minister said yes but you know all these all these roads railroads Etc they come with strings attached and and then the Kenyan prime minister said then here comes the lecture uh and it was you know quite U quite telling I think to answer your question there is no doubt that China’s offering to the rest of the world today is one of prosperity um you mentioned productivity you know what China tells the world right now is look let’s try to get rich together um and that’s you know cin Ping’s big win-win strategy Etc um they are trying to tell the world we can get rich together um the US meanwhile if you think what’s the US selling strategy uh the US selling strategy is look we’ll keep you safe um it’s uh you know you you come in our corner and we’ll make sure that you stay safe and so you know it’s it’s I think this these two different strategies have different attract attractiveness for different people right if you’re Poland and you’re sitting between Germany and Russia and you have the history that you have the promise of look we’ll keep you safe is a deeply attractive right um it’s one that you’re you’re bound to to respond positively to um if you’re you know mozek and you don’t have a threat from anybody and you trying to come say look we’ll make you rich um that’s an attractive proposition so you know different parts of the world depending on their own concerns are going to have you know different different responses to this um now interestingly the the Lynch pin in all of this might well end up being Saudi Arabia you know Saudi Arabia the US’s promise to Saudi Arabia was will always keep you sfe um and and so now if you’re NBS you think okay what’s my long-term threat to my regime to to my family staying in power is it a Iran in which case I need to be in bed with the United States or is it be my own population that someday there’s a revolution uh and that I get upended in which case I better side with China because what I need is domestic prosperity to make sure that doesn’t happen depending on where you place the threat is my threat Iran or is it my population you either pick the us or you pick China and yeah that’s a very synthetic approach you know to and it also brings us back to our very first topic which is whether the US can keep Primacy which is providing safety but it’s more ever more extensive because they have to secure periphery and this just involves us everywhere right and then you get the thinner and thinner Force by the way yeah well and in In fairness you know the US um you know I think the US has basically decided we’re not involved with AF for for all intents and purposes you know they’re not doing very much they’re they’ve given it up to China you know they probably thought you know what’s Africa good for yeah it’s got great Commodities but a lot of the Commodities we get in Africa we can get either in the US or in Canada or in Latin America we don’t really need Africa so so they gave up on Africa I don’t think they want to give up on Asia they don’t want to give up on Europe because then you’ve given up on everything um and because that’s where all the global trade is going to happen so to your point I think the US says okay fine we’ve given up Africa China can have it um yeah maybe the next step is they give up on Asia and they keep Europe now remember uh Obama’s pivot Etc was that we we’re GNA keep Asia Asia is very important we need Asia um and you know a lot of what they’ve done you know the the deals with India the deals with Australia shows the opening of military bases all over the Philippines shows that they are committed to to keeping H uh I do think they want to keep each but here’s here’s the thing is if you’re in Indonesia if you’re at Thailand if you’re in Malaysia and the US comes and says hey you know we’ll keep you safe a do you believe them you know is it is it do you believe that the US will really go to war against China for Indonesia um or you know and the Singapore the Singapore prime minister made that very statement a while back basically condemning the Philippines saying look Philippines you’re acting as if the us is going to have your back in war are you 100% sure of this and that was always the Go’s thing you know why France needed its own nuclear deterrent Etc the goal always felt that if push came to shove the Americans would sacrifice Paris to save New York uh because that’s what he would have done he said it plainly like if I was American president I’d sacrifice Paris to save New York I’m not going to sacrifice New York I’m American of course and Kissinger by the way hinted it as well when when he was right after his term that you know sure we we were not thinking about seriously about this you know of course we wouldn’t s of yeah and so and the prime minister of Singapore reminded the president of the Philippines this very recently said look they’re not going to sacrifice La for Manila never so you know it’s so if you’re Asia you might think you might think yeah yeah I believe the us but the US has the option to not be in Asia China doesn’t have the option to exactly exactly the difference in resolve yeah and uh tragic because this is really a self-destruct and self-balancing mechanism when you get hegemony you get those paradoxical results because if you care about credibility so that you can build that system you have to try to defend it in random places which don’t really matter in peripherial studies right Bosnia in the 90s or in Vietnam but this also kills your power right it cuts into your power Ukraine is of peripheral importance to the US it’s of vital importance to Russia yes yeah true a symmetry of resolve yeah true okay Louise that was marvelous as always thank you very much guys yeah looking forward to the next one for sure thank you very much Louis Vincent for our guest today you got me thinking about a lot of things take care take care you very much thanks