Global Strategist Michael Every: Our Liberal World Order is breaking down. Here’s what’s to come
What this covers
In this conversation, Pascal Hugli and Michael Every discuss the collapse of the liberal world order and its implications for global finance and geopolitics. He emphasizes the importance of understanding the interconnectedness of various factors, including technology, trade, and inequality, in shaping the future landscape. Every critiques the simplistic views often held about macroeconomic indicators and stresses the need for a more nuanced approach to investment and strategy in a rapidly changing world. In this conversation, the speakers delve into the complexities of global issues, emphasizing the persistent nature of problems akin to the mythological Hydra. They discuss the disruptive potential of emerging technologies, the demographic challenges facing many nations, and the evolving concept of economic statecraft. The conversation also touches on the future of trade, the possibility of war, and the changing landscape of investment, particularly in relation to cryptocurrency.
Chapters: 00:00 Intro 02:20 The Collapse of the Liberal World Order 07:08 The Role of Trade in a Changing Landscape 14:03 Understanding Inequality and Its Consequences 21:00 The Dichotomy of Political Philosophies 26:37 The Hydra of Global Issues 28:54 Technological Disruptions and Their Impacts 32:46 Demographic Challenges and Global Stability 33:01 Economic Statecraft in a Changing World 37:13 The Future of Trade and Economic Models 44:29 The Possibility of War in Modern Times 47:22 Investing in a Complex Landscape 50:39 The Role of Cryptocurrency in the Future
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#LiberalWorldOrder, #Geopolitics, #Trade, #Inequality, #InvestmentStrategy, #GlobalStrategy, #EconomicHistory, #PoliticalScience, #AGI, #Technology, #globalissues, #technology, #demographics, 3economicstatecraft, #trade, #war, #investment, #cryptocurrency, #geopoliticalchallenges
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The liberal world order is collapsing due to structural inequalities and geopolitical overextension, requiring a shift from macro-focused analysis to 'grand macro strategy' that integrates technology, security, demographics, and political economy to understand cascading systemic risks.
- Conventional macroeconomic metrics (PMI, growth forecasts) are backward-looking and irrelevant when fundamental global architecture is being rebuilt
- The current crisis stems from repeating historical errors: domestic inequality, international trade imbalances, and inability to maintain security umbrella across multiple theaters
- 2025 presents 'stackable binary geopolitical outcomes' with extreme variance (inflation/deflation/stagflation), not median forecasts
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The Hydra mythology illustrates a fundamental truth about policymaking: you cannot permanently solve systemic problems because addressing one problem creates two new ones; the best approach is to recognize you're in perpetual battle with complexity and design adaptive policy accordingly.
“the one that speaks to me the most at this age...is the hydra. And I'll tell you why. Not just because it's a great adventure story, but you cut the hydra's head off, and what happens? Yeah, a few more appear...This is teaching you you can't solve a problem. You cut them, and then you cut those two off, you're going to get another two. Maybe they're smaller, maybe they're different. This will always happen.”
Economic statecraft is an ancient concept in which countries manage their economies like families managing in rough times, distinguishing between friends and non-friends, ensuring self-reliance while maintaining selective relationships, and prioritizing foreign policy and national security over GDP growth metrics.
“economic statecraft is effectively recognizing that you're trying to maintain your country like a family in very rough times where you presume you've got friends and you've got people who are not your friends. And you can rely on people to a certain extent, but you have to be self-reliant to an extent, too. Um, and you have to think about foreign policy and national security rather than what CPI going to be.”
The historical model of trade that worked (Ricardian trade where trade clears and no country runs a deficit) cannot function with free movement of capital because businessmen will just move capital and production to cheaper locations, destroying the balanced trade assumption.
“Ricardo himself in his same text said trade won't clear if you have mobile international capital. So, if a businessman in England can basically take all his money and technology and move it to Portugal and produce stuff more cheaply in Portugal, he would just do that. And if he does that, Portugal makes cloth and port and the UK has to import both and doesn't really make much of anything, runs a trade deficit and has to borrow from Portugal in order to buy them and goes further and further into debt.”
Neoliberalism's core error was misapplying its own ideology: while free trade is beneficial under Ricardo's comparative advantage model, that model assumes trade clears (no persistent deficits/surpluses), but free movement of capital breaks this assumption by allowing capital to flow to lowest-cost production centers, causing trade deficits and the collapse of the system
“part of the problem with liberal world order was it mis-taught its own ideology. Of course, trade is good. Of course, comparative advantage is good. That's undeniable. But, you are taught... the standard example from the economist Ricardo who came up with the concept of comparative advantage was that you swap cloth for port between the UK or England and Portugal... if you go back to his original text... you will notice no one runs a trade deficit. He talks about how one produces cloth only and the other one produces port only even though Portugal could produce both more cheaply. And they swap one with the other implying trade clears.”
In the West, mass immigration has been used as a balancing mechanism for demographic collapse (low birth rates), but this policy is highly controversial and politically polarizing, driving major shifts in elections
“in the West the balancing act for that has been mass immigration. Now, I'm not going to get into that cuz it's very controversial and I'm not being normative. But I think you'll be blind not to see it's highly controversial. And it comes with very very polarizing political viewpoints which are splitting society. And having having a major impact on elections.”
If a businessman in England can move his money and technology to Portugal and produce more cheaply there, he will do so, meaning Portugal produces both cloth and port while England imports both and runs a deficit, eventually going into debt—this is exactly what happened in the modern system.
“So, if a businessman in England can basically take all his money and technology and move it to Portugal and produce stuff more cheaply in Portugal, he would just do that. And if he does that, Portugal makes cloth and port and the UK has to import both and doesn't really make much of anything, runs a trade deficit and has to borrow from Portugal in order to buy them and goes further and further into debt and eventually you get the equivalent of Brexit happening in that, you know, historical example. Which is exactly what our system looks like”
The liberal world order (LWO) is the third iteration of a global order system; the previous two iterations collapsed before World War I and World War II respectively, and the current one is collapsing due to the same root causes: too much domestic inequality, too much international inequality between exporters and importers, and collapse of the global security architecture
“the global system we're in now, let's call it the liberal world order, LWO, is variant three, the third iteration. We've had two more before it. Both of them collapsed. One of them for World War I and the other one just before World War II. And the reason both of them collapsed and the reason this one is collapsing were the same.”
Economists and textbooks teach that tariff reduction will cause industries to move and towns to be destroyed, but then they claim government retraining programs will help workers transition, yet these retraining programs never actually materialize, revealing the fantasy at the core of free trade ideology.
“when you reduce the tariff on this, that industry will leave this country and go to that country, and everyone who makes that product will be destroyed, and all the towns who were based around that industry for generations will be destroyed, but they'll transition into something else, you know, they'll they'll be some kind of government program to help them retrain. They don't. There isn't.”
Demographic collapse in developed economies (fertility vastly below replacement) combined with aging in Asia creates structural impossibilities: South Korea at current fertility rates will have almost no young people by century's end and will become famous for wheelchairs and empty landscapes rather than youth culture.
“Demography is collapsing in most parts of the world. We are vastly below uh replacement rates in fertility in nearly every developed economy. And in North Asia it's staggeringly low. Like South Korea it if you project forward the current level of births in South Korea which is very hard to change socially once it becomes entrenched. You know, by the end of this century there's going to be hardly any South Koreans at all.”
Demography is collapsing in most developed economies with fertility rates vastly below replacement; South Korea's current birth rate, if projected forward, would result in almost no South Koreans by the end of the century
“Demography is collapsing in most parts of the world. We are vastly below uh replacement rates in fertility in nearly every developed economy. And in North Asia it's staggeringly low. Like South Korea it if you project forward the current level of births in South Korea which is very hard to change socially once it becomes entrenched. You know, by the end of this century there's going to be hardly any South Koreans at all.”
Cross-disciplinary analysis (economic history, political science, sociology, popular culture, national security and their interactions) is necessary to understand complex systems, whereas single-metric analysis (PMI at 49.9 vs 51.1) cannot predict how systems actually work.
“You have to understand how things work. They don't work by looking at the PMI the purchasing managers index and saying is it 49.9 or 51.1 and is it going up to 52 or is it going down from 49 to 48? How is that analysis? How does that tell you how anything works? You have to take a cross-disciplinary cross-geography cross-asset and and historical view of things and try and understand how all of complex parts of the puzzle work together. So for example I spend a lot of my time looking at economic history political science sociology popular culture um national security their interaction of all of them.”
Fredéric Bastiat's principle ('If goods do not cross borders, armies will') implies war is a realistic possibility when trade relationships break down; this suggests that the current restructuring of trade patterns creates genuine military risk.
“Frédéric Bastiat, you know, the French guy...he was also saying something along the lines if if if goods and maybe cap it was it was mostly referring to goods or not crossing with the soldiers well.”
Traditional macroeconomic metrics are irrelevant to understanding the current global situation because any published macro numbers are one to three months old, while the fundamental superstructure of global financial, economic, political, and security architecture is actively crumbling and being rebuilt.
“That's completely irrelevant. Because any number you're getting is obviously a month or three months old depending on what the numbers are. So, anyone who's just looking at the macro numbers and saying geopolitics as if that explains it is not going to tell you what's going on when the entire fundamental superstructure of the global financial, economic, political, and security architecture is crumbling and being rebuilt before our eyes.”
AI, automation, robotics, and 3D printing combined will eliminate the labor cost arbitrage that makes offshoring to China economically rational, allowing countries to produce goods locally in small batches and bespoke fashion, which will completely remake global supply chains.
“If you've got that AI and you've got automation and robotics and you got 3D printing, why do you need to have everything made in China? Why can't you make everything locally and small batch, bespoke? And you've got no labor costs to doing so therefore you can't arbitrage one country against another. That will completely remake global supply chains.”
The US security umbrella is collapsing because it cannot simultaneously fight wars in Europe, Asia, and the Middle East where it is threatened in all three locations, and even if it could win against all three, the cost would be prohibitive and the defeated nations could rearm faster than the US could rebuild.
“The US security umbrella is collapsing because it can't be everywhere at once. The US cannot fight a war in Europe and in Asia and in the Middle East. And it's threatened in all three. Uh it it can beat any one of those countries, you would think, in a certain field. But it couldn't beat all three together.”
The liberal world order is the third iteration of such a system; the first two collapsed (one before World War I, one before World War II), and both collapsed for identical structural reasons: domestic inequality, international inequality between trading partners (exporters vs importers), and collapse of the security architecture due to polarization.
“the global system we're in now, let's call it the liberal world order, LWO, is variant three, the third iteration. We've had two more before it. Both of them collapsed. One of them for World War I and the other one just before World War II. And the reason both of them collapsed and the reason this one is collapsing were the same. The pillars that held them up collapsed because we had too much inequality domestically. We had too much inequality internationally between countries that were exporting a lot and countries that were importing a lot.”
The neoliberal ideology of 'because markets' creates exponential centripetal and centrifugal forces once deregulation occurs, causing some things (biggest cities, richest people) to concentrate wealth while pushing others (surrounding areas, working and middle classes) into relative poverty, and this is a mechanical outcome of the system, not a bug that can be fixed.
“because market force absolutely, once you deregulate everything, creates exponential centrifugal and centripetal forces. So, they continue to increase, and some things are pushed apart and some things are pushed together. So, for example, all the biggest cities get bigger and bigger and bigger and richer and richer But at the same time, people around them get poorer and poorer and poorer. And the rich in every country get richer and richer and richer, and the middle class in most countries and the working class get poorer and poorer and poorer in relative terms compared to what they've been used to.”
Human psychology creates explanations (like caste systems attributing position to karma or meritocratic narratives) to justify why some people are living well while others are not, rather than accepting that the system is deeply unfair, and this psychological mechanism is embedded in liberal economics itself.
“in other societies people say, I you know, I must be a good person, this is why I'm here. Human psychology creates explanations, including in the liberal economics, to explain why I'm living well and you're not. Rather than just saying, this is deeply unfair.”
The current global situation is the inevitable outcome of the liberal world order violating Ricardo's own conditions for balanced trade; someone (Trump or otherwise) was always going to say the system doesn't work and impose tariffs, because the system was internally incoherent.
“And then if it wasn't Trump coming along, it was always going to be someone else who would have said, 'Well, this Ricardo model doesn't work.' Which is exactly what this is this is about.”
Stock markets and bond markets have both declined recently while gold has performed well, which is a sign of complete distrust in the monetary system; however, gold itself can be confiscated by government mandate (as happened in the US in 1934), so there is no truly safe asset in a political restructuring.
“stock market is down. Bond market is also down. So, both those have have gone badly wrong. The only thing that's done very well recently is gold, which of course, you know, is a sign of complete distrust in the system. And yet, gold itself can be snapped out of existence by political mandate. It happened in 1934. The Fed just said gold eagle, hand it all over.”
Smaller countries are hit hardest by the collapse of the liberal world order because they relied on the 'ladder' the system provided: following the economic recipe for growth, exporting to larger economies, sending youth abroad for remittances, and using the American navy to protect sea trade for free.
“the liberal world order was the first time that any little country anywhere, provided you followed the certain magical recipe economically you could get a certain amount of growth, at least for your middle class or your upper class if not for all your working class and you could try and export to larger economies and piggyback on their growth. And at the same time you might be able to say we've got too many young people, well we can all send them to that country over there, they'll take them and they'll send remittances back. And any goods you exported you could send by sea and you knew that the American navy would be protecting it for free so that it would get there without pirates stealing it. And it was a wonderful ladder for those countries.”
AI and automation (robotics, 3D printing) will eliminate the geographic arbitrage that drove globalization; with zero labor costs and local production, there is no reason to manufacture in China or other low-wage countries, which will completely remake global supply chains
“If you've got AI and you've got automation and robotics and you got 3D printing, why do you need to have everything made in China? Why can't you make everything locally and small batch, bespoke? And you've got no labor costs to doing so therefore you can't arbitrage one country against another. That will completely remake global supply chains.”
The US security umbrella is collapsing because it cannot simultaneously defend Europe, Asia, and the Middle East, and it cannot defeat Russia, Iran, and China combined; even if it could win such a war, its post-war industrial capacity would be insufficient to quickly rebuild, making it vulnerable to rearmament by adversaries
“the US security umbrella is collapsing. Because it can't be everywhere at once. The US cannot fight a war in Europe and in Asia and in the Middle East. And it's threatened in all three.”
The first mover in adopting local AI-enabled production will have a sustained advantage because change is expensive and people (and organizations) exhibit switching costs and inertia, similar to how bank customers rarely switch accounts
“But whoever is the first mover to get that, you know, that first effect going if everything is cost of here, they'll have the benefit of it. Because, you know, it's it's expensive to change and people don't like changing. It's why people stick with their bank account rather than shifting from one to another, etc., etc. You know, that is psychology has proven that.”
Free markets without regulation create exponential centrifugal (wealth spreading outward) and centripetal (wealth concentrating) forces simultaneously; the result is that wealth concentrates at the top (rich get richer) and geographically (big cities get bigger) while the middle and working class get poorer relatively
“that market force absolutely, once you deregulate everything, creates exponential centrifugal and centripetal forces. So, they continue to increase, and some things are pushed apart and some things are pushed together. So, for example, all the biggest cities get bigger and bigger and bigger and richer and richer But at the same time, people around them get poorer and poorer and poorer. And the rich in every country get richer and richer and richer, and the middle class in most countries and the working class get poorer and poorer and poorer in relative terms compared to what they've been used to.”
Classical political ideology (capitalism, libertarianism, socialism, communism, fascism) are all contingent on conditions; people support them until the conditions change (e.g., capitalist until a monopoly destroys their business, libertarian until invaded, socialist until they pay taxes, communist until they want to think independently)
“everyone's a capitalist until they're the ones that lose out under capitalism. You know, when suddenly a big business swoops in and shuts down your small business, which happens all the time. That's that's part of the process. And everyone's a libertarian until you get invaded and then you need an army.”
Neoliberalism's fundamental error is the statement 'because markets,' which assumes all outcomes are morally acceptable if they maximize profit; this ignores that morality (e.g., child labor laws, Sabbath rest) supersedes market forces and is itself a social innovation, not a law of nature
“the neoliberal system you're talking about, which I I simplify to everyone saying because markets, uh which I find one of the most absolutely asinine statements anyone can say about anything. Well, because markets. So, okay. Why don't you sell your children for organs?”
Human psychology creates post-hoc rationalizations for inequality: the wealthy tell themselves they deserve their position (e.g., 'I'm a good person'), while the poor are told they deserve their poverty (e.g., karma in caste systems), and both are equally false but socially comforting narratives
“In the same way that the caste system in some societies says, you know, I'm here, you're there because of past karma, um you know, in other societies people say, I you know, I must be a good person, this is why I'm here. Human psychology creates explanations, including in the liberal economics, to explain why I'm living well and you're not. Rather than just saying, this is deeply unfair.”
There is no perfect system that works for everyone everywhere at all times; all political and economic systems work in some contexts and fail in others, and the best approach is understanding this limitation rather than defending any single system as optimal.
“there is no perfect system that works for everyone everywhere for the best at all times. It isn't. Not on the left, not on the right, nowhere. But we like to delude ourselves that that there is, rather than accepting the fact that this isn't a very good system, but I'm doing okay.”
The neoliberal/free market ideology reduces all judgment to 'because markets' as the justification, but markets themselves have no inherent morality and are constrained by moral/social innovations (e.g., religious prohibition on organ harvesting, mandatory rest days) that override market logic and prove that morality necessarily supersedes market mechanisms.
“the neoliberal system you're talking about, which I I simplify to everyone saying because markets, uh which I find one of the most absolutely asinine statements anyone can say about anything. Well, because markets. So, okay. Why don't you sell your children for organs? You know, if you've got children, why don't you just strip out their liver and kidneys rather than spending your money on the children, which costs you money, why don't you mine them for their organs?”
Basilat's principle ('if goods don't cross borders, armies will') applies inversely to the current moment: because trade is becoming regionalized and politicized, military conflict is becoming more likely, not less.
“another economist, philosopher that I studied a lot, you know, Frédéric Bastiat...if if if goods and maybe cap it was it was mostly referring to goods or not crossing with the soldiers well.”
Without a functioning security umbrella, you cannot have a liberal world order because countries will not accept free trade and open markets if they cannot trust in military protection of their interests and trade routes.
“without a defense umbrella, you don't have a liberal world order”
The liberal world order was never truly liberal; it had 'liberal pockets' but was 'incredibly illiberal in lots of places,' only applied globally after the Cold War (40 years), and prior to that existed in only about one-third of the world with strict guardrails to keep everyone else out.
“This liberal world order, first of all, it was never liberal. Never. Not really. It had liberal pockets. It was incredibly illiberal in lots of places. Uh it didn't apply to the whole world. Um we only applied it to the whole world since the end of the Cold War, which is about 40 years. But prior to that, it was only in about a third of the world and it had very big guardrails around it to keep everyone out.”
The future trade system will organize into regional blocs with political divisions between blocks; goods will be produced locally and within blocs rather than globally, with each bloc using industrial policy (subsidies, tariffs) to ensure internal balance rather than pure comparative advantage
“It's clearly not going to be what it is now where the value chains for every project and product are sliced into a thousand pieces and scattered all around the world to get the price as low as possible. So, that's not going to happen. There are going to be blocks and there is going to be onshoring and there is going to be a political division between similar products made in this block for these people and similar products made in that block for those people and there won't necessarily be much trading between them.”
Military experts (not financial media) warn that major war in multiple theaters is possible; this is unsurprising given simultaneous crises in politics, society, belief, climate, trade, and finance, because treating these as independent is 'desperately naive'
“If you actually read military experts, which I do as part of the job rather than just look looking at Bloomberg or Financial Times headlines. Lots of them do feel we're heading for exactly that.”
Switzerland's geographic position (hedgehog-like, indigestible, surrounded by mountains) and maintenance of conscription make it relatively safe from the emerging geopolitical chaos, but most other countries are 'a delectable feast' offering no natural defense.
“the Swiss used to understand because of course you still got conscription in Switzerland. And you've got mountains all around you. And you have perhaps what is the correct hedgehog approach to the world. You know, the we're we're indigestible you know, porcupine that no one else can step in and then and snuffle up. But most of the rest of the world is a delectable feast. Just just sitting there offering nothing but treats for anyone who wants to try and take it.”
Mass immigration in the West has been the balancing mechanism for demographic collapse in developed countries, but this has become highly controversial and politically polarizing, driving major shifts in elections, creating policy tensions that will intensify as demographic pressures increase.
“in the West the balancing act for that has been mass immigration. Now, I'm not going to get into that cuz it's very controversial and I'm not being normative. But I think you'll be blind not to see it's highly controversial. And it comes with very very polarizing political viewpoints which are splitting society. And having having a major impact on elections.”
The liberal world order was never truly liberal and did not apply globally until the end of the Cold War (about 40 years ago), having prior been confined to about one-third of the world with large guardrails to keep others out and maintain internal security.
“This liberal world order, first of all, it was never liberal. Never. Not really. It had liberal pockets. It was incredibly illiberal in lots of places. Uh it didn't apply to the whole world. Um we only applied it to the whole world since the end of the Cold War, which is about 40 years. But prior to that, it was only in about a third of the world and it had very big guardrails around it to keep everyone out and and and us safe.”
Economists and policymakers 'magic away' the painful side effects of free trade by claiming workers in displaced industries will 'transition into something else' via government retraining programs, but these programs don't actually exist; this is a fantasy used to justify policies that destroy entire industries and towns.
“when you reduce the tariff on this, that industry will leave this country and go to that country, and everyone who makes that product will be destroyed, and all the towns who were based around that industry for generations will be destroyed, but they'll transition into something else, you know, they'll be some kind of government program to help them retrain.' They don't. There isn't.”
Central banks and military experts are writing about the possibility of real war in Europe and Asia, but mainstream financial commentators (Bloomberg, Financial Times) ignore this analysis because it doesn't fit market narratives.
“If you actually read military experts, which I do as part of the job rather than just look looking at Bloomberg or Financial Times headlines. Lots of them do feel we're heading for exactly that. Now, some of that analysis can be shallow, some of it can be very very deep with a with we know with real legs. But it's no surprise at all that you had that threat at the same time as you have a crisis in politics, in society, in belief, in the climate, um in the trading system and in the financial system.”
The saying attributed to Churchill ('If you're young and not a communist you have no heart; if you're old and still a communist you have no brain') captures the tension between idealistic and realistic views of systems; neither pure idealism nor pure realism is correct at all times.
“If you're young and left and not left you don't have a heart, right? And and the other way if you're still old and you don't all right then you don't have a grips or something or I Churchill, yeah. If you if you're right saying and you're not a communist heart, if you're 30 and you're a communist you have no brain, yeah.”
Understanding how things work requires cross-disciplinary, cross-geography, cross-asset, and historical analysis that integrates economic history, political science, sociology, popular culture, and national security; PMI-level metric analysis cannot reveal systemic outcomes.
“You have to take a cross-disciplinary cross-geography cross-asset and and historical view of things and try and understand how all of complex parts of the puzzle work together. So for example I spend a lot of my time looking at economic history political science sociology popular culture um national security their interaction of all of them.”
Everyone becomes a political ideology partisan until conditions change: capitalists until they lose to big business, libertarians until they need an army, socialists until they pay taxes, communists until they think their own thoughts, inadvertently supporting fascism/corporatism.
“For everyone's a capitalist until they're the ones that lose out under capitalism... everyone's a libertarian until you get invaded and then you need an army... everyone's a socialist until they have to pay tax. And suddenly they're not... everyone's a communist until they want to start thinking their own thoughts... many people inadvertently actually support elements of fascism although they'd never call it that... which is corporatism... the government and the private sector... working together in certain aspects.”
There is no perfect system that works for everyone everywhere at all times, whether on the left or right; the oldest and most useful insight is the mythological image of the hydra: cutting off one problem head creates two new ones, so policy should adapt continuously rather than presuming final solutions
“there is no perfect system that works for everyone everywhere for the best at all times. There isn't. Not on the left, not on the right, nowhere. But we like to delude ourselves that that there is, rather than accepting the fact that this isn't a very good system, but I'm doing okay.”
The best investment approach is to ask 'what is GDP for?' rather than seeking financial returns; this reorients you toward understanding what a country or society actually needs (food, defense, energy, infrastructure) rather than betting on asset price appreciation.
“I I don't have an easy answer for you. But I would say one of the best ones is what do you think GDP should be for?”
Large countries like America are pivoting toward 'America First' economic policy that prioritizes national objectives over market efficiency, changing market rules so that pricing becomes secondary to achieving political targets.
“for the large countries, America first, and America first is what they're doing, by the way. They're pivoting towards it, not economic policy, which changes how markets have to operate, cuz it's no longer about because markets, it's about because this or because that. And so, pricing becomes secondary compared to the target they are aiming for.”
Economic statecraft means treating your country like a family during rough times, requiring self-reliance balanced against selective alliances, and prioritizing questions of what GDP is FOR (national security, food, defense, etc.) rather than how much GDP will be
“economic statecraft is effectively recognizing that you're trying to maintain your country like a family in very rough times where you presume you've got friends and you've got people who are not your friends. And you can rely on people to a certain extent, but you have to be self-reliant to an extent, too. Um, and you have to think about foreign policy and national security rather than what CPI going to be.”
Morality is critically important because it constrains markets (e.g., preventing organ harvesting despite its market value); however, morality doesn't tell you what to do in specific situations, so the best approach is to ask 'what then?' repeatedly to trace consequences, accepting that solving problems creates new ones (hydra model)
“morality is incredibly important. If morality wasn't important, as I said, then we we would be out there saying you know, um what what what what price, as I said, you know, for for a child's organs? And thank God that doesn't have”
A 40-year paradigm in which 'because markets' was the first statement on everyone's lips has normalized the idea that wealth creation comes from trading and asset speculation rather than productive work, but this mindset is itself a luxury of the stable liberal order and will not survive its collapse.
“because you've just had a 40-year plus paradigm in which because markets was the first statement on everyone's lips...The world in which people your age would be at home thinking about can I how do I trade something rather than what job can I do? Is a new world. It didn't used to exist at all.”
The relevant question for policy is not 'What is GDP?' but 'What is GDP for?'—and the answer depends on what threats a country faces; if you face military threats, having everyone be a hairdresser (maximum GDP) is catastrophic because no one grows food, defends the country, or produces exportable value.
“I have no interest in what GDP is going to be, unless you say GDP is going to be minus five...I want to know what is GDP for. And I've used this analogy...What if everyone in Switzerland decided tomorrow they're all going to train to be hairdressers?...Who's going to grow your food? Who's going to defend you? Who's going to be producing the high high value items that you export, cuz you can't export very many haircuts.”
A theoretically sound global trade system would require an American president to impose massive simultaneous tariffs on all countries, then offer tariff elimination in exchange for balanced trade agreements with everyone except China (which deliberately uses industrial policy), until China rejoins the balanced trade system.
“You have an American president elected who puts up massive tariffs on absolutely everyone around the world at the same time. Therefore, showing I will blow up the entire global trading system. And then he offers to trade away those tariffs on everyone except China...And then he says to everyone else in the world...I will remove all tariffs on you if you remove all tariffs on me. I will remove all non-tariff barriers on you if you remove all non-tariff barriers on me. I will ensure we have balanced trade.”
In a restructured world where capital is directed toward national objectives (infrastructure, defense, security), there will be no easy investment returns from simply buying assets like defense stocks without understanding whether the company is actually producing at scale; profitability divorced from productive capacity becomes politically unsustainable.
“thinking you can make an easy return somewhere, whether it's, you know, defense stocks for example, buy defense stocks because of that. Trends towards remilitarization. No, because that's extra profit. Unless they're making a very low profit per piece and it's massively high volume, how does it help a country to have a company making a lot of money because it's not making as much stuff to defend you as it could. Like, you know, we need a million bullets, we've only made 100,000, but the profits of that company are good. This is not a world in which it's I don't think that's sustainable politically.”
The fundamental questions investors must answer are not about rates, FX moves, or metrics but about structural architecture: who sets rates (independent central bank or politician), what are rates set for, do we have one or multiple interest rates with different priorities, what exchange rate regimes exist, which currencies can be exchanged, whether gold or other assets replace fiat money, and whether money can be transferred across borders.
“that means the whole global architecture changes. It isn't about do you cut rates once or twice? It isn't about does the FX market move 1 or 2% in this direction? It's about does who sets rates? An independent central bank or a politician? What are rates set for? Do we have one interest rate or multiple interest rates? And if multiple, what are we prioritizing and what are we not? What exchange rates do we even have? Which currencies can be exchanged with others? Do we look at gold, for example, instead of something completely different or Bitcoin? Can we even transfer money from one country to another? Do barriers come down as they have in the past? These are the fundamental questions people need to ask. And before anyone's going to invest any money in this environment, they'd better have some bloody answers for them. Cuz if they don't, the risks you're taking are just extraordinary.”
Smaller countries face a severe problem because the liberal world order allowed them to export to larger markets while piggy-backing on their growth and sending excess population abroad for remittances, with the US Navy protecting sea lanes for free; when this system collapses, these countries have no alternative model for employment or trade
“the liberal world order was the first time that any little country anywhere, provided you followed the certain magical recipe economically you could get a certain amount of growth, at least for your middle class or your upper class if not for all your working class and you could try and export to larger economies and piggyback on their growth. And at the same time you might be able to say we've got too many young people, well we can all send them to that country over there, they'll take them and they'll send remittances back. And any goods you exported you could send by sea and you knew that the American navy would be protecting it for free so that it would get there without pirates stealing it. And it was a wonderful ladder for those countries.”
Every doesn't like the current crypto strategy proposal because he doesn't understand the granular mechanics of how it works; he prefers logical analysis where unintended consequences can be predicted, whereas macroeconomic forecasting is always wrong and offers no predictive leverage
“I still question exactly how it's going to work in terms of what the new reserve asset will be. It's So, you can see the concept, but without the granularity of how the moving parts interact, and I don't like that. I like understanding how all the moving parts will work. I like logic. Because again, that can't Logic can't really be wrong. It can show you what outcomes can be, but there's nothing that can surprise you within it, whereas macroeconomic forecasting can always be wrong, and it nearly always is.”
Bitcoin and crypto were initially viewed as frivolous (NFTs being obvious examples of excess liquidity with nowhere productive to go), but the US administration may be considering using Bitcoin as a proxy extension of the dollar to maintain dollar demand while appearing to accept alternative assets.
“I was very, very skeptical on crypto from from day one. I used to call it crapto because it when you when you say what's GDP for, it it's not pictures of monkeys wearing sunglasses...clearly from the signs I see the US is considering trying to utilize some aspects of crypto, but bit Bitcoin in particular into some kind of proxy extension of the dollar.”
2025 is 'the year of living dangerously' characterized by stackable binary geopolitical outcomes where each outcome has starkly variant macroeconomic implications—resulting in either massive inflation and spiraling problems, massive deflation, or stagflation—making any median forecast (e.g., 2% growth, 3-4% inflation) laughable
“I said it's the year of living dangerously... we are on the verge of a series of stackable binary geopolitical outcomes. Each of which had such starkly variant implications for the macroeconomy and for markets that to make any kind of median forecast like growth will be 2% or inflation will be 3 or 4 was frankly laughable”
Trump's tariff strategy is attempting to implement a Ricardian trade system by first threatening to blow up the entire trading system with universal tariffs, then offering tariff removal to all countries except China (if they remove tariffs in return), to force balanced trade and exclude China until it abandons industrial policy
“I would hypothetically say this. You have an American president elected who puts up massive tariffs on absolutely everyone around the world at the same time. Therefore, showing I will blow up the entire global trading system. And then he offers to trade away those tariffs on everyone except China, which is of course the core of the overproduction problem cuz it's not a Ricardian trader. He uses industrial policy deliberately to try and control market share of everything.”
There are no easy wins anymore in a world transitioning from the liberal order to a fragmented multipolar system; investors seeking easy returns (passive appreciation, asset trading) will not exist, as capital will be politically directed toward strategic needs (defense, food security, infrastructure) rather than profit maximization
“you've just had a 40-year plus paradigm in which because markets was the first statement on everyone's lips. You can't do that because markets. You must do this because markets. Even the question, 'Where do I make you know, where do I make easy money? Where's my next win?' That's the mindset of someone who thinks the economy is set up for you to make an easy win.”
Buying defense stocks as a way to profit from remilitarization is flawed logic; politically, governments will prioritize volume of production (e.g., making a million bullets) over company profit margins, so companies making massive profits while producing insufficient quantities will face political pressure or regulation
“thinking you can make an easy return somewhere, whether it's, you know, defense stocks for example, buy defense stocks because of that. Trends towards remilitarization. No, because that's extra profit. Unless they're making a very low profit per piece and it's massively high volume, how does it help a country to have a company making a lot of money because it's not making as much stuff to defend you as it could. Like, you know, we need a million bullets, we've only made 100,000, but the profits of that company are good. This is not a world in which it's I don't think that's sustainable politically.”
Every was initially skeptical of crypto ('crapto') because NFTs and speculative crypto were symptoms of excess liquidity with nowhere productive to go; however, he has adapted his view because signs suggest the US is considering using Bitcoin or stablecoins as a proxy for the dollar to maintain dollar dominance while appearing to abandon it
“I was very, very skeptical on crypto from from day one. I used to call it crapto because it when you when you say what's GDP for, it it's not pictures of monkeys wearing sunglasses, you know, I I still think NFTs are just incredibly stupid and were a reflection that we had too much liquidity and we didn't know what to do with it.”
The core problem with the current dollar system is that everyone wants to hold dollars, which forces them to earn dollars (creating a US trade surplus demand), but the US wants to reduce its trade deficits while maintaining dollar power; the solution being considered is dollar-backed stablecoins or Bitcoin where the dollar is the only access point
“Part of the problem with the global system, and we don't have time to go into detail here now, is is everyone wants to hold the dollar. And by everyone holding it, that creates a US trade deficit. That's how they get hold of the dollar. The US wants to get rid of its trade deficits, but it wants to keep the power of the dollar.”
Every's predictions of Trump's election victory, tariff imposition, and the volatility now being observed were made years in advance (over 10 years of general analysis, with specific calls in 2024) and were not dependent on Trump's election but rather on structural inevitability of the system collapsing.
“I wasn't just calling this outcome last year uh in terms of where we are right now I was clarifying quite specifically. I've been making this call for over 10 years. Um and if and in fact uh you know longer than that in other in other formats in other locations.”
Despite seeing potential strategic use cases for Bitcoin, Every remains skeptical about exactly how the system will work and what the new reserve asset will be because he prefers understanding the granular mechanics of how all moving parts interact; without that detail, logical certainty is impossible.
“I'm starting to see what the vision is. I still question exactly how it's going to work in terms of what the new reserve asset will be...I like understanding how all the moving parts will work. I like logic. Because again, that can't Logic can't really be wrong. It can show you what outcomes can be, but there's nothing that can surprise you within it, whereas macroeconomic forecasting can always be wrong.”
The current liberal world order repeatedly made every possible mistake from previous world orders and did so 'proudly and arrogantly,' having been led by 'highly credentialed, highly intelligent idiots' who propagated economic ideology without understanding its actual mechanisms or historical precedents.
“we have been led by what Lenin would have called useful idiots for the longest time. Um, highly credentialed, highly intelligent idiots, uh, who have therefore replicated every error they could have possibly made, as I said, proudly and arrogantly.”
Intelligent, highly credentialed people (university professors teaching neoliberal economics) have been 'useful idiots' (Lenin's term) who replicated every error possible and did so proudly and arrogantly, creating the current crisis that nobody wanted
“we have been led by what Lenin would have called useful idiots for the longest time. Um, highly credentialed, highly intelligent idiots, uh, who have therefore replicated every error they could have possibly made, as I said, proudly and arrogantly.”
Economists at universities typically don't read original texts and therefore miss Ricardo's caveat about capital mobility, allowing them to teach a version of comparative advantage that is logically inconsistent with the system actually implemented.
“If you read original texts and you apply logical arguments of the kinds I'm putting forward, you will see why things will eventually either go very well because they're internally consistent past a certain threshold or blow up. And then if it wasn't Trump coming along, it was always going to be someone else who would have said, 'Well, this Ricardo model doesn't work.' Which is exactly what this is this is about. I hope we come up with a global trade system where we can go back to genuine Ricardo trade. I really That's what I hope. I try not to be normative, but that would be the best outcome. I'm very, very skeptical that will happen globally. I think a lot of economies don't want no part of that and prefer what we call industrial policy where you have subsidies and various different tools that make sure you sell more than you buy. Because they, you know, they're too silly to have even read that themselves. If you read original texts and you apply logical arguments of the kinds I'm putting forward, you will see why things will eventually either go very well because they're internally consistent past a certain threshold or blow up.”
Looking backward historically is the best way to look forward; understanding past patterns and structures (economic history, political science, sociology, military history) reveals how current outcomes are logically inevitable, not surprising
“the older you get, and I am a wee bit older than you, to put it mildly, is that you need to look backwards to look forwards.”
The benefits of predicting underlying structural problems (gray rhinos, not black swans) can be delayed for years, making the job of a strategist feel irrelevant in the short term, but eventually when collapses occur, structural analysis becomes invaluable for protecting business and wealth.
“a lot of the time this isn't a particularly relevant job. Um in the you can point to underlying problems that will emerge and whether you want to call them a black swan or a you know, a gray rhino, they're more gray than than black. Uh and yet they may not occur for years. And to give you an indicative example, um a long time ago when I was, you know, pretty new in this profession and not a global strategist. You know, I I developed a very sound view which pointed to the fact that we were going to have a financial crisis in 2008.”
Switzerland is well-positioned through the coming crisis because it is militarily difficult to invade, maintains conscription, and has its hedgehog strategy (indigestible, self-reliant), whereas most other countries are exposed
“I think you as Swiss you're probably fine cuz Swiss is very hard to invade. I presume you've done your military service or you know, you have friends who have. And Switzerland itself it will sit there safe I'm sure through all this. Lots of other countries have got some serious thinking to do.”
The current global situation in 2025 is the 'year of living dangerously' characterized by stackable binary geopolitical outcomes, each with starkly divergent implications (inflation spiral vs deflation vs stagflation), making median forecasts of normal growth (2%) or inflation (3-4%) laughable.
“I was asked, 'What's the outlook for 2025 going to be?' And I said it's the year of living dangerously. That was the title I chose. Because I said we are on the verge of a series of stackable binary geopolitical outcomes. Each of which had such starkly variant implications for the macroeconomy and for markets that to make any kind of median forecast like growth will be 2% or inflation will be 3 or 4 was frankly laughable. Laughable.”
Leaders and professors teaching free trade ideology who failed to predict Trump's election and believed the liberal world order was optimal have demonstrated they don't understand the system and therefore cannot be trusted as sources of investment or policy advice.
“if you are going to take investment advice from someone who said the world was going along nicely until Donald Trump was elected and and be was surprised he won but that particular combination um frankly you're throwing your money away as far as I'm concerned cuz they had no idea what's going on.”
What Every observes 'exactly playing out' in current policy (massive simultaneous tariffs followed by bilateral balanced-trade offers) matches the theoretically necessary restructuring, and failure to recognize this pattern reflects the intellectual blindness of economists who cannot abandon their attachment to the liberal order.
“What do I see around me? Exactly that playing out. What do I see people not understanding? Exactly the same professors who were screaming about Donald Trump who didn't expect he was going to win and who say that the liberal world order was the best thing ever.”
The problems emerging from the liberal world order (social, cultural, psychological, demographic, political, military, technological, geopolitical) are converging simultaneously, creating a multidimensional crisis that cannot be solved by addressing any single dimension.
“now everything is coming to a head in multiple dimensions at once. Socially, culturally, psychologically, demographically, uh politically, militarily, technologically, geopolitically.”
Large countries like America are pivoting toward 'America First' economic policy which changes how markets operate by replacing 'because markets' logic with strategic targeting ('because this, because that'), making pricing secondary to geopolitical objectives.
“for the large countries, America first, and America first is what they're doing, by the way. They're pivoting towards it, not economic policy, which changes how markets have to operate, cuz it's no longer about because markets, it's about because this or because that. And so, pricing becomes secondary compared to the target they are aiming for.”
Macro numbers are completely irrelevant because any data published is one to three months old, making backward-looking analysis useless when the entire fundamental superstructure of global financial, economic, political, and security architecture is crumbling and being rebuilt
“any number you're getting is obviously a month or three months old depending on what the numbers are... when the entire fundamental superstructure of the global financial, economic, political, and security architecture is crumbling and being rebuilt before our eyes”
Both stock and bond markets have recently performed poorly simultaneously, suggesting traditional asset allocation models are broken; gold is the only asset class that has performed well, which signals complete distrust in the system, but gold itself can be confiscated by government mandate (as happened in 1934 when the Fed ordered gold surrender)
“right now, when you look around you, the stock market is down. Bond market is also down. So, both those have have gone badly wrong. The only thing that's done very well recently is gold, which of course, you know, is a sign of complete distrust in the system.”
The Swiss 'hairdresser' thought experiment illustrates economic statecraft: if all Swiss retrained as hairdressers, GDP might remain stable, but the country would lose food production, defense capability, and export revenue; therefore GDP is meaningless without asking what it produces and whether that serves national security.
“What if everyone in Switzerland decided tomorrow they're all going to train to be hairdressers? Everyone who does everything else he says, 'Nope, hairdressing.' So, Swiss All industry in Swiss in Switzerland ceases, but everyone becomes a hairdresser at once. Do you think this is good for Switzerland? Well, at the top of my head I would say no, but Why not? Yeah. No, no, I okay, I see issues. Well, of course it wouldn't. Who's going to grow your food? Who's going to defend you? Who's going to be producing the high high value items that you export, cuz you can't export very many haircuts.”
Every predicted over 10 years ago that the current crisis would occur, including Trump's election, tariff implementation, and resulting volatility, because he used cross-disciplinary, cross-geography, cross-asset, and historical analysis rather than relying on backward-looking metrics like the PMI
“I wasn't just calling this outcome last year... I was clarifying quite specifically. I've been making this call for over 10 years. Um and if and in fact uh you know longer than that in other in other formats in other locations.”
Every observes this exact pattern playing out around him currently in actual policy, and believes the White House is attempting to implement this reciprocal tariff framework, though he acknowledges uncertainty about whether the outcome will be achieved.
“And what do I see around me? Exactly that playing out. What do I see people not understanding? Exactly the same professors who were screaming about Donald Trump who didn't expect he was going to win and who say that the liberal world order was the best thing ever. So, maybe I'm naive here. Maybe I'm projecting an outcome which isn't achievable or maybe I'm projecting one which isn't genuinely what the White House is trying to do. We shall see. At least I'm prepared to look for a pattern in this rather than saying I like the way things were 12 months ago, orange man bad, which I don't think has much intellectual gravity to it and I don't think will help cuz it doesn't offer any solutions.”
The financial and economic experts (academics and professional analysts) who failed to predict Trump's 2016 election win or the subsequent shifts are fundamentally untrustworthy advisors because they lack understanding of structural patterns; they were surprised by events that were inevitable given historical analysis
“if you are going to take investment advice from someone who said the world was going along nicely until Donald Trump was elected and and be was surprised he won but that particular combination um frankly you're throwing your money away as far as I'm concerned cuz they had no idea what's going on.”
A long time ago, Every developed a very sound view predicting the 2008 financial crisis and terrible recession; he could only trade long on all assets until the crash, then long bonds, then would have profited by going long equities after the Fed printed money—but without backing, he could not capitalize on the view.
“a long time ago when I was, you know, pretty new in this profession and not a global strategist. You know, I I developed a very sound view which pointed to the fact that we were going to have a financial crisis in 2008. Uh you know, and a terrible recession and and everything would blow up. Very similar to the guys you've probably seen in in the big short. I was, you know, like one of the young dudes in that except I didn't have anyone backing me. I didn't make any calls on it. And in the lead-up to that, there was nothing much you could do. The idiocy was playing out around you. The disaster was already baked into the cake. And all you could do is every single day say for example, okay, go along every asset possible cuz every asset's going to be inflated and then when everything blows up, only go long bonds. Uh and then of course, if you'd been fully cynical enough and at that young age I wasn't, I would have said go long equities again cuz they'll cheap and print lots of money, which is of course what they did.”
Many people inadvertently support elements of fascism without calling it that, through corporatism (government and private sector working together), which is technically within the same conceptual penumbra as fascism even if not as extreme.
“many people inadvertently actually support elements of fascism although they'd never call it that, but just by any other name, which is corporatism, you know, which is the government and the private sector, you know, working together in certain aspects. I mean, that's obviously not the same as the extremes of fascism, but it does form fall technically within the same penumbra.”
Every was skeptical of crypto from day one, calling it 'crapto,' and still considers NFTs 'incredibly stupid' as a reflection of excess liquidity and lack of productive use for capital.
“I was very, very skeptical on crypto from from day one. I used to call it crapto because it when you when you say what's GDP for, it it's not pictures of monkeys wearing sunglasses, you know, I I still think NFTs are just Yeah. incredibly stupid and were a reflection that we had too much liquidity and we didn't know what to do with it.”
A large business can swoop in and shut down a small business as part of the normal competitive process, which everyone accepts as capitalism until it happens to them, at which point they recognize it as unfair.
“When suddenly a big business swoops in and shuts down your small business, which happens all the time. That's that's part of the process.”
Looking backwards to understand history is the best way to look forward, as exemplified by ancient Greek myths which contain powerful symbols and fundamental truths applicable to contemporary problems.
“you need to look backwards to look forwards. And I I particularly used to like the ancient Greek myths when I was a a kid. And you know, they were great fun adventures. The older you get, the more you realize the powerful symbols of them. They're really speaking to fundamental truths.”
The interviewer, educated at a Swiss university, was taught that the liberal world order (neoliberal order, social market economies, free trade, democracies) was correct, following Francis Fukuyama's 'End of History' thesis, without being presented with critiques of its fundamental flaws.
“When you deal with the people you're talking about from your Swiss university, which I'm quite sure with the best of intentions taught you everything they thought was right”