Peter Zeihan: COLLAPSE of Globalization, POPULATION, and World Order (w/Brad Carr)

Russia's geographic position is bordered by mountains and deserts with gaps between them (nine total), and Russia must concentrate forces in those gaps for security; since seven of the nine gaps are populated by non-Russians, Russia must conquer countries to secure these gaps.

“The Russian space is bordered by a lot of mountains and a lot of deserts, but there's a lot of gaps between them. And so the Russians feel they need to concentrate forces in those gaps. There's nine of them. There's two on the other side of Ukraine. So Ukraine's just the start of getting to those gaps. The problem is that the people of those gaps in the cases of seven of the nine, they're not Russian. So the Russians have to conquer countries in order to concentrate forces.”

Afghanistan has only been a functional country when every surrounding country (Pakistan, Uzbekistan, Iran) has been in breakdown; otherwise it reverts to non-functional state similar to the 1990s.

“Afghanistan has only been a country at in time periods when every country around them has has been in uh breakdown. as long as there is a Pakistan and a Yuzbekiststan and a Iran, you should not expect uh Afghanistan to be a functional state.”

China is far and away the top of the list for industrial terminal countries, and Germany is far and away number two, both lacking resources within their borders while depending on global supply chains and U.S. military protection to secure access.

“China is far and away at the top of the list. Germany is far and away number two.”

The open question is not whether China will be the next global superpower but how soon China will collapse as a nation-state, with the manufacturing model collapsing this year and complete collapse coming within the decade.

“the open question at this point is whether the Chinese manufacturing model collapses this year. There's no way it's going to survive the decade. Uh the China's population is in collapse.”

Everyone in the United States should learn Spanish because it's already the second language and will be the second language of the Western Hemisphere.

“I will always tell everyone in the United States to learn Spanish. It's already our second language and it's going to be the second language of it's second language of the Western Hemisphere as a whole.”

3D printing can reduce automotive parts from 30,000 to approximately 10,000 (2/3 reduction) by combining parts that would normally be 15 separate pieces into a single 3D-printed component.

“one of the really big advantages of 3D printing is a complex part that if you do it from the old diecast or injection molding style might be like 15 pieces. You can do that all with one run of a 3D printer. And so instead of 30,000 parts for a car, a 3D printed or contributing with 3D printing to a car is going to shrink the number of parts by at least 2/3”

If global trade breaks down due to American withdrawal, populism, mercantilism, or war, supply chains collapse and countries can no longer access the raw materials, energy, and food required to maintain industrial systems, forcing de-industrialization.

“but if you break down global trade, uh, whether it's because the Americans go their own way or populism bursts up in a lot of places or you have a heavily mercantalist country like China or a war like what's going on in Russia, all of that breaks supply chains and makes it difficult, if not impossible, for countries to get the raw materials they need to keep an industrialized system going.”

The collapse of globalization does not mean the end of smartphones and cheap gadgets for North American consumers because North America has favorable demographics for both production and consumption and can supply a mass production system with one-third of global population consumption.

“I expect a North American manufacturing system to do very well in this world that we're going into. Most of our resources are within the hemisphere. Uh the United States has the healthiest demography for both production and consumption in the world. And Mexico has the most uh favorable demographic structure for production and consumption in the advanced developing world.”

The 250% yield increase from combined genomics and precision agriculture would allow feeding an extra half-billion to a billion people, but this is insufficient to feed all additional population, only a start.

“You're talking about being able to increase yields by 250% before 2035. That's really impressive. We've never had that kind of expansion in yield growth. But again, it's only works in places that have the financing for the equipment and the inputs. And that means if you have to be in a large row crop environment like the United States or Canada or Australia or have a government that's really involved in making sure their agricultural sector doesn't break down like say France. Um so there's maybe a dozen countries that can do that and that will allow us to feed an extra half a billion, maybe even a billion people. That's not enough.”

Southeast Asia could potentially develop a relatively constrained regional supply chain, and Europe might develop one if it can access raw materials, but North America is uniquely positioned to pursue either the old global model or a new localized model.

“I can see that working in Southeast Asia. Maybe we can see some version of that working in Europe if they can get the raw materials in. But North America is really lucky because we can do it the old way or the new way.”

China is the big loser from the Ukraine war, de-globalization, depopulation, and populism shifts because they are farthest from raw materials, lack navy to secure them, and are completely at U.S. mercy for success or failure of their system while Americans are done with this heavy lifting.

“China is the big loser from most of these shifts whether it's the Ukraine war or deglobalization or depopulation or populism. uh they're the farthest away from where the raw materials are coming from. They don't have a navy that allows them to go out and get them themselves. They are completely at the United States's mercy for the success or failure of their system.”

Building industrial plant for solar manufacturing must happen simultaneously with North American de-globalization efforts to double their industrial base, creating significant inflation for several years regardless of good planning.

“you have to build all that industrial plant first. And you have to do so in an environment when North America is already trying to double their industrial plant because of deglobalization, because we have cheaper energy, because we have a more stable labor market. So all this has to be done at the same time. We're going to have some significant inflation for several years. That is unavoidable even with good planning.”

If Russia takes Ukraine and pacifies it, Russia will push on to the remaining gaps: the Moldovan/Bessarabian gap, Polish gap, and Baltic gap (Estonia, Latvia, Lithuania), leading to direct NATO-Russian confrontation.

“Well, the Russians have to get those gaps. One of them is best Arabia, that modern day Muldova. One is the Polish gap. You can guess where that one is. One is the Baltic gap. That's Estonia, Latia, and Lithuania. So once the Russians are done with Ukraine, once it's pacified to their satisfaction, they will push on and there will be a direct NATO-Russian confrontation.”

It has become essential for NATO to ensure the Russian army dies in Ukraine, which is why the West is sending everything it can, but Zeihan is not sure how long this can be sustained.

“So, it has become essential for NATO to make sure that the Russian army dies in Ukraine. And that's why we're sending everything that we can. I'm just not sure of how long we can keep it up.”

All disinflationary factors of the last 40 years are now reversing: Russian raw materials gone (Ukraine war), Chinese labor aged out, millennials now consuming, need to double industrial base, creating an inflationary pulse that will last until at least 2027.

“But look on what was going on in the background. The baby boomers were no longer in their peak consuming years. And the millennials were too young to be in theirs. My generation, Gen X, were the consumers in that period. and there weren't enough of us, so we didn't have demand driven inflation.”

Regardless of what Trump or Biden do or don't do, the macroeconomic environment of persistent inflation through 2027 cannot be avoided through government policy, though poor policy can make it worse.

“regardless of what Trump or Biden do or don't do, this is the macroeconomic environment now and there's not a lot that the government can do to make it better. Well, they can certainly make it worse, but there's not a lot they can do to make it better”

We can see conflicts emerging around economic management in both internal (culture wars, political realignment) and multi-state contexts as the world enters an era of economic contraction.

“So I can see us having conflicts internal and multi-state over how economics works now that we are in a world of less.”

Raytheon can only produce about 2,000 Javelin missiles per year and estimates it will take over a year to increase production to 4,000, while the West has already shipped 2,000 missiles, demonstrating production bottlenecks in defense manufacturing.

“Like Rathon can only produce about a 2,000 Javelin missiles a a year. And they think it's going to take them over a year to increase that to 4,000. Well, we've already shipped them 2,000 missiles.”

New systems like howitzers with Excalibur precision-guided rounds are potentially game-changing in Ukraine because precision guidance with good intelligence allows decapitation of individual enemy units without mass assault.

“there are some new systems like the howitzers with the Excalibur rounds that are potentially gamechanging. So, I don't want to be overly pessimistic for the Ukrainians here. Uh, but the Russians have a lot more stuff stashed.”

Japan, Korea, Taiwan, Thailand, Germany, Belarus, Russia, Ukraine, Italy, and Belgium are all countries destined to vanish over the next century due to terminal demographic decline unless they greatly redefine what their nationality means.

“these are all countries that we know are going to vanish over the course of the next century because they just want people unless they greatly redefine uh what their nationality means like say Australia or Canada have, uh there there's really no way out.”

American agricultural producers are so efficient that they must export approximately one-third of what they produce, which will create economic mismatches as global trade breaks down and markets for exports disappear.

“Because American producers are so efficient, they have to export about onethird of what they produce. That is going to generate some interesting mismatches as the breakdown happens.”

Precision agricultural technology would require only 2-3 passes over a field for an entire season compared to 16 passes for organic farming, representing a massive reduction in fuel, labor, and time inputs.

“And so you're talking about things going having to do two or three runs over a field for the entire season and you're done. as opposed to organic where it's something like 16 uh which will never work.”

Wage differences from low-end to high-end in East Asian electronics manufacturing are approximately a factor of 10, which is beneficial for electronics and cell phones, whereas the United States does not have quite that range of wage variation.

“from the low end to the high end, it's a difference of a factor of about 10 for wages. That is really good for electronics and cell phones. In the United States, we don't have quite that range. Uh also, we have um fewer less variety of of price point.”

Modern manufacturing touches almost every country in the world and even relatively simple products touch 50 different countries, with complex products like iPhones and automotive systems involving 30,000 individual pieces each with their own supply chain.

“modern manufacturing touches almost every country in the world and even relatively simple products touch 50 different countries. Uh the iPhone is one of the more complex. Automotive is one of the more complex. You're talking 30,000 pieces, each of which has their own supply chain.”

Solar panels are currently assembled in China with no technological barrier to relocation, but assembling solar cells requires manual fingers and eyes that cannot be automated, making assembly labor-intensive and location-dependent.

“Right now, solar panels are assembled in China. Now, there's nothing about that technology that prevents it from being relocated. We've been making solar panels in various qualities since the 70s, but making the actual solar cells is the easy part. Assembling everything requires fingers and eyes. You can't automate that.”

Digital currencies are distinct from Bitcoin and represent a sovereign question about whether governments will issue their own digital currency, which is separate from cryptocurrencies but inevitable for digital dollars.

“now digital currencies, that's a different picture, but that's a sovereign question. We can talk about that later if you want.”

Gold is a fear play with industrial uses, making it 'wiggly' from a valuation perspective because it mixes speculative and utilitarian value, whereas Zeihan prefers firms that will benefit from demographic and trade restructuring.

“gold is one of those weird ones. It's a fear play and there's a lot of reason to expect a lot of fear, but it also has some industrial uses. So, that makes it a little wiggly from my point of view”

Since World War II, there have been two major inflation bursts: late 1940s-early 1960s (industrial demand-driven from first globalization wave) and late 1970s-1990 (consumer demand-driven from baby boomers forming families), followed by 40 years of lowest inflation in history.

“We've had two big bursts of inflation since World War II. The first was in the late 40s to early 60s when everyone was taking advantage of that first big globalization wave in industrializing. So, that was industrial demand-driven inflation. Our second big one was in the late '7s to roughly 1990. That's when the baby boomers had caught were all coming of age and they were founding families and buying cars and homes. That was consumer demand-driven inflation.”

Traditional Democratic and Republican coalitions are built by grouping demographically diverse factions: Democrats combine minorities, college professors, urban dwellers, and single women into the single largest chunk of U.S. voters.

“on the Democratic side, you've got minorities, you've got college professors, you've got um urban dwellers, you've got single women. You know, these in these groups don't have a lot in common on the surface, but the Democrats have built them into an electoral alliance that has the single largest chunk of of votership in America.”

Countries that are terminal in terms of industrialization lack resources from within their borders and depend on imports from different continents, but lack the military capacity to secure those resources or even the sealanes necessary for civilian shipping, making them vulnerable to supply disruption.

“countries that are termble in terms of industrialization. These are countries where the resources don't just come from not within their own borders but from a different continent and they lack the military capacity to secure those things for themselves or even to secure the sealanes that are necessary for civilian shipping to come and go.”

Germany's historical pattern shows it repeatedly faces the problem of having industry and population but lacking inputs and markets, and this is a new problem for Germany across history that required military conquest until NATO and the EU provided alternatives under U.S. protection.

“This is not a new problem for the Germans. We've seen this multiple times throughout their history that they have the industry and they've got the population, they've got the skills, but they don't have the inputs in the markets and under NATO and the EU, the Germans haven't had to go all Highlander on everybody in order to get that.”

The U.S. Navy maintains cheap and safe transport globally, allowing modern manufacturing to leverage labor and input price points across the world; breaking down this system requires moving to shorter supply chains closer to end consumers.

“By making transport cheap and safe, we can shuttle things to take advantage of labor and input price points in the United States and Canada and China and Japan and Germany, you know, all over the world. And that's created the world that we know. To a lesser degree, the same thing holds true for agriculture because whether it's fertilizer or fuel, there is a supply chain for that.”

Because of the Ukraine war, China will get less from Russia because most Chinese imports from Russia come from Eastern Siberia and Russian technology cannot operate those fields, with all foreign technology having left, causing shutdowns.

“we also know that because of the Ukraine war, the Chinese are likely to get less stuff from the Russians than it did before because most of the stuff that China imports from Russia comes from Eastern Siberia. The Russians don't have the technology to operate the fields in Eastern Siberia and all the foreigners have left. So those are all shutting down.”

Baby boomers being mature but not yet retired created the greatest capital bubble in history with lowest capital costs and most liquid systems, allowing China unprecedented development speed, but now that capital costs are higher, labor costs higher, and financing costs higher, each development project must be individually justified.

“with the baby boomers being mature but not retired yet, we have been in the greatest capital bubble in human history with labor costs, I'm sorry, with capital costs being the lowest they've ever been and capital systems being the most liquid. In that environment, when cost of finance is no longer really an issue, everyone builds out everything because it makes sense if interest rates are one versus interest rates being 10.”

A digital dollar will inevitably become the form of central bank digital currency and will be a problem for traditional banking because the Federal Reserve account would replace private bank deposits.

“the idea of a digital dollar, I I think is inevitable. Uh they're obviously working out the kinks and the Federal Reserve is not known for making rash decisions, but we will get there. Um it's just a half a step removed from what we're doing with banking already. The biggest difference of course is that you would just have a Federal Reserve account is probably the form that will take and that is going to be a problem for traditional banking.”

The downside of 3D printing has been speed (only a few or one part at a time per machine), but as mass manufacturing collapses, this becomes less of a concern.

“Part of the downside of 3D printing has been its speed. You can only make it parts a few at a time or well one at a time per machine actually. Uh and that means the cost is high. But if we're moving into a world where the mass manufacturing model is collapsing for various reasons anyway, all of a sudden that becomes less of a concern.”

The conflict in Ukraine represents precision-guided munitions (precision) versus mass assault (quantity), an age-old strategic dilemma where historically the mass side tends to win wars of attrition.

“It's the old Sparta versus Athens war just in a different context. We'll see. Um, historically, the mass side tends to win this sort of conflict. So, perhaps a war of attrition here. It if it's a war of attrition, it's Russia's to lose.”

The last 40 years have had the lowest inflation in history despite demographic and structural changes because: (1) baby boomers no longer in peak consumption years, (2) millennials too young for peak consumption, (3) Gen X alone insufficient for demand-driven inflation, (4) Chinese labor pushed down wage costs, (5) two-income families pushed down labor costs, (6) Soviet collapse kept raw materials cheap.

“The baby boomers were no longer in their peak consuming years. And the millennials were too young to be in theirs. My generation, Gen X, were the consumers in that period. and there weren't enough of us, so we didn't have demand driven inflation. We also had the Chinese labor enter the global market, which pushed down the cost of labor. The baby boomers tended to favor two income families, which also pushed down the cost of labor. And then the Soviet system collapsed.”

U.S. disengagement from the Middle East is good for the U.S. (not caring about internal politics), but is a problem for others because the Iranians and Saudis have strong opinions about who should control the region, and without U.S. mediation, another crisis similar to Ukraine's scale will emerge.

“We're obviously like who we have revolution. We don't care. That's exciting after 15 years of crap in the Middle East. Uh but if you're anyone else, this is a bit of a problem because the Iranians and the Saudis have some very strong opinions about who should be in charge in that part of the world. And if the United States is not there keeping them separate or picking sides, I expect this to boil up into another crisis on a scale rel r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r r roughly similar to that of the Ukraine war.”

Europe is furthest along in economic contraction, with China probably being a hard second, but North America (U.S. and Mexico) has favorable enough demographics that it won't face severe contraction for 50 years, assuming birth rates don't recover.

“Europe's probably furthest involved of furthest along in this. I think China is going to be a hard second. uh and in a world where the pie shrinks where we're in a world of less, we need a new economic theory. Now, in North America, because of demographics in the US and Mexico, we are the the place where that's least true. Uh our demographics are still aging, but we're not going to age into a situation of China or Germany within 30 years. It's more like 50 years, maybe.”

Changes in geopolitics and demographics (end of Cold War, rise and collapse of globalization, boomer retirement, millennial consumption rise) force faction movements: groups shift parties seeking better coalition positions, causing noisy political reorganization.

“when you have change in geopolitics and demographics and technology, the factions move around. Some of them jump ship, others come in. And if you look at the last 30 years, we've had the end of the Cold War. We've had the rise of Uber globalization, now the collapse of globalization. We've had the baby boomers be the primary consumers, and now they're moving into mass retirement. Of course, this was a time when the factions were going to move.”

In a world of economic shrinkage, we need new economic theory because economic theory determines social organization and is worth fighting for; historical conflicts like Cold War, World Wars, and German Reunification Wars were partly rooted in competing economic theories.

“the last major conflicts we've had, the Cold War, the World Wars, the German Reunification Wars, economic theory was one of the big bases for all of that. And to think that everyone in the world is just going to figure out what the next thing is 500 years after this thing and their first try, I'm not that optimistic. uh the the how you manage an economy determines who is who in your society and that is worth fighting for.”

For Americans preparing for coming changes, the most important factor is building out the industrial plant, which happens primarily at state and local level with cities taking their futures into their own hands, finding their own investors, and building their own infrastructure.

“We we all need to get used to a uh a faster pace of change, but ultimately what is going to allow us to get through this is building out that industrial plant. So, one of the things that I'm really impressed by the United States's capacity to do is not at the national level. It's at the state and local level of cities taking their futures into their own hands and going out and finding their own investors or building their own infrastructure or partnering with other cities in other states.”

If NATO directly fights Russia, Russia will be soundly beaten militarily and forced into strategic retreat, but seeing this as national survival, Russia will escalate and likely use nuclear weapons.

“What we know now though is that the Russians are not all that when it comes to war. So if we have a direct NATO-Russian fight, the Russians are going to be beaten soundly about the head and shoulders and they will be forced into a humiliating strategic retreat all the way back to Russia, maybe even past the borders. And since they see this as an issue of national survival, if we get into that environment, they will probably escalate and they will probably bring nukes to the party.”

The Chinese demographic collapse is now happening this decade (2020s), not next decade or the 24th century, due to compounding demographic and policy factors.

“So we're looking at the collapse of the Chinese demographic picture this decade, not next decade or the 24th, this decade.”

China is the country most concerned about de-industrializing because it can no longer maintain the inputs that make modern life possible, specifically electricity and food.

“So, we're going to see large portions of this world, China is the country I'm most concerned about, de-industrializing as they simply can no longer maintain the inputs that make modern life possible. And keep in mind that two of the aspects of modern life are electricity and food.”

Ukraine has outperformed expectations while Russia has underperformed, but Ukraine is limited by its own population and weapons inflow, making victory unlikely if Russia achieves general mobilization and moves from 200,000 to 2 million troops in theater.

“The Ukrainians have definitely outperformed and the Russians have absolutely underperformed. Um, we saw a policy change in most of the Western capitals at the start of the third week of the war when it became apparent that the Ukrainians actually might be able to hang in there. Everyone was kind of preparing for what would it mean when the Russians were on NATO's border, the entire frontier. Uh, this is going to sound a little depressing, but they're doing everything they can right now.”

Genomics and gene editing technologies are expanding at a rate that could double agricultural yields within a decade, and combining digital plant recognition with precision farming (cameras identifying individual plants, weeds vs crops, and precise pesticide/fertilizer application) could increase yields by 250% before 2035.

“uh genomics, whether it's GMOs or gene editing, uh at the rate they're expanding, they're probably going to be able to double yields within a decade. And if you combine uh digital recognition, you know, facial recognition for people, you can now do that for plants. And so a combine with a specific set of tanks on it and cameras can take photos of each individual plant, decide if it's a weed or a crop, decide if it needs fertilizer or a pesticide, and in one run hit everything.”

Interest rate increases of 500-1500 basis points are coming, compared to historical financing constraints of 50-100 basis points, which will make private financing of solar and wind essentially impossible and limit government financing as states must choose between green projects and other needs.

“people talk about how if you increase the cost of financing by 50 to 100 basis points that a project fails because then the financing costs are too high. We're talking about a world where we're going to need to increase it by 500 to 1500 basis points. We're talking about a fundamentally new different tougher financial environment. And in that environment, very, very few solar and wind systems will be financed by the private market.”

China's one-child policy is now 40 years old, creating the fastest aging and fastest collapsing demography in human history, and census data revisions show they overcounted population by over 100 million people, destroying their competitive capacity.

“the China's population is in collapse. The one child policy is now 40 years old. They have been revising some of their census data. They now think that they overcounted their population by in excess of 100 million people. They were the fastest aging, fastest collapsing demography in human history before that data revision.”

In a tightening financial environment, only projects with better cash flow, better financial connections, and better economics survive; everything else shakes out, and in China this means 'everything is going to shake out.'

“you have to make the case for each individual development in a way uh not just in China but for foreigners going into China that couldn't be can't be done in the way that it's been done in the last 30 years. So, this is a seizing up of the overall system. And just like in any recession, the folks who have better cash flow and better financial connections and better economics for whatever they're trying to do, those are the ones that make it through. Everything else shakes out. Everything in China is going to shake out.”

Bitcoin is the quintessential example of odd things that pop up when capital is cheap and available, and will go away as capital becomes expensive and unavailable.

“I'm not a big fan of Bitcoin. I don't think it serves much of a purpose. I think it is kind of the quintessential example of the odd thing that pops up in an environment when capital is cheap and available. And as soon as that removes, as it is being removed right now, I just expect Bitcoin to go away.”

Blue collar and manufacturing skills (electricians, plumbers) have been discriminated against for 40 years and will become extremely valuable, with first-year plumbers earning $85,000 per year within 3-4 years.

“we need to get back into blue collar and manufacturing in a very big way, we we can't rely on the rest of the world to help with that. We can't rely on the Mexicans to help with that because they have a baby bust going on as well. So, anyone who can do kind of the nuts and bolt stuff of the economy, electricians, plumbings, I plumbers, I I realize that sounds a little lowbrow, but we've been discriminated against those uh sectors for 40 years now, and it shows. And the baby boomers were the last class that really had that full set and they're retiring. So, you know, we're going to have first year plumbers making $85,000 a year within three or four years here.”

Every time a supply chain in China breaks, someone figures out how to plug the gap and replace it, but the Chinese COVID vaccine doesn't work, forcing lockdowns as the only tool, which breaks supply chains because Shenzhen, Shanghai, and Guangzhou go offline and hurt anyone who is China-centric in their supply chain system.

“China is a great example to watch for supply chains. Every time the supply chain in China breaks, someone somewhere figures out a way to plug things together in a new way and replace it. So, the Chinese COVID vaccine really does not work. And we're now faced in an environment where the Chinese are forced to lock down because it's the only tool they have. So as places like Shenzen, Shanghai, and Guanghou go offline, if you are chinacentric in your supply chain system, you're screwed right now.”

As the Russia-Ukraine war disrupts energy supply and Russian pipelines to Germany are redirected, Germany will face a choice between having energy/electricity/industry by partnering with Russia or de-industrializing, and this choice will cascade to other resource-dependent countries.

“Germany will have a choice between having energy and electricity and industry and partnering with Russia or not and deindustrializing. So, we're going to have a lot of countries in that general situation with some hard choices to make this year.”

Germany hits its pension crisis peak point around 2026, while Italy is probably on the precipice now, and Russia, Japan, and Korea are in the same bucket but with less trustworthy data.

“Germany hits that peak point like 2026. Uh I would argue that Italy is probably on the precipice right now. Russia would be a great one to watch. uh because they're are they're they're crossing the Rubicon right now, but Russian data right now is not exactly trustworthy. Uh Japan is in that same bucket. Korea is in that same bucket.”

The financial crunch starts next year and will not let up until the millennial generation reaches their 50s, providing financial capacity, which won't occur until the 2040s, creating a 15-20 year period of severe constraint.

“we've got a financial crunch just around the corner next year that starts and will not let up until we have a large generation in their 50s to generate that financial boost again. That will be the boomers, that will be I'm sorry, that will be the millennials. That won't be until the 2040s.”

Canada and Germany have exhausted most of their defense stockpiles and no one wants to exhaust their frontline equipment, limiting Western ability to supply Ukraine.

“Canada and Germany have ex exhausted most of their stores and nobody wants to exhaust their frontline equipment so that they don't have a military.”

Ukraine is destroying its own physical infrastructure to slow Russian advances and using Excalibur rounds with howitzers to decapitate Russian forces, doing all of this to a degree far beyond what most observers predicted possible.

“They're also destroying their own physical infrastructure to styy Russian advances. And then if you add in the Excalibur rounds and the howitzers, they can start decapitating Russian forces.”

The U.S. has effectively withdrawn from the Middle East, eliminating DOD administrative staff and special forces in Syria, reducing Iraq presence to hundreds in advisory roles, removing presence from Saudi Arabia, closing supply lines, and no longer basing the Fifth Fleet in Bahrain, with France now having more ships in the Persian Gulf.

“if you eliminate the administrative staff in DOA and the special forces in Syria, we're already gone. Uh troops in Iraq are there's a few there in advisory role, but you're talking in the hundreds. We don't have anyone in Saudi Arabia. Uh we don't have all all those supply lines we had to get stuff into Iraq or into Afghanistan. Those are all closed down. So the fifth fleet is no longer hanging out in Bahrain. The French typically now have more ships in the Persian Gulf than we do. we're doing.”

Ukraine going offline is bad for agriculture, but Persian Gulf going offline even partially is horrendous for energy prices, potentially pushing oil to $200+ per barrel compared to current elevated levels of $170+.

“if we get a few things popping off in the Persian Gulf, 200 is going to seem cheap.”

The reason Russia is acting now (Ukraine invasion) is demographic: the Russian population started collapsing after the Cold War with birth rates halving and death rates doubling, making this the last generation that can field a significant army; waiting means Russia would face vastly smaller population for defending a huge frontier.

“The why now is demographic. The Russian population started collapsing postcold war. Their birth rate hald and their death rate doubled. So this is really the last generation that can field an army and attempt this. If they didn't do this now, the next time there was a war and someone did come through one of those gaps, the Russians would have a small army to defend a huge frontier and they just couldn't they couldn't pull it off.”

The future of manufacturing is co-located with population centers in regions like Texas-Mexico interface and Jersey, where industrial space and warehouses already exist and only need machine shops to be brought in.

“When I look at the manufacturing of the future, I'm not just looking at the Texas Mexico interface. I'm also looking at Jersey because they already have the industrial space on the warehouses. They just need to bring in a few hundred machine shops.”

The narrative that China is a rising superpower is driven by Americans needing to be stressed about something and by the 50-year period of globalization where the U.S. maintained market openness for all countries without cost, creating conditions that benefited China but are now ending.

“Two things. Um, number one, the Americans aren't happy unless they're stressed about something. And it's easy to stress about a boogeyman. We were stressed about the Soviets until they collapsed in a day. We most of us didn't see that coming. So, China is just the next iteration of that. Same thing with Japan. Uh also, we've had the perfect environment for the Chinese for the last 50 years, especially in the postcold war system where the United States was holding up the ceiling of globalization and maintaining market openness uh without a cost.”

When factions are moving between parties, they must shout to be heard because silence means exclusion from any party; being a swing voter is undesirable as swing voters cannot influence party platforms.

“And Trump is representative of that. And so the factions are moving around. And when the factions are moving around, they have to shout to be heard. because if they get left outside of a party, being a swing voter in the United States is not all that much fun because you don't get to decide any of the platforms.”

In the Accidental Superpower (2014), Zeihan pegged that by 2022 there would be a major geopolitical conflict like the Ukraine war, accurately predicting the timing of the current conflict.

“in your first book, The Accidental Superpower, came out back in 2014 and and you you pegged it by by 2022 we would see something like this and and and here we are.”

The entire Apple ecosystem could disappear for 4-5 years until the supply chain can be rebuilt elsewhere, meaning Apple's next release is probably the last one for 5 years.

“I can see the entire Apple ecosystem just disappearing for four or five years until such time as the supply chain can be rebuilt somewhere else. And that means if you have a an Apple iPhone, you know, I hope you like it and I hope you don't think you're going to get another one anytime soon because it's just not going to happen. his next release is probably going to be the last one for 5 years.”

Communities better at local-level economic planning and infrastructure development will be the ones who write the future in the coming economic transition.

“the communities that are better at doing that are the ones who are going to be able to write the future.”

Zeihan looks for firms that are America-domiciled, serve American demand, use American (or North American) inputs, are energy-intensive (exploiting cheap U.S. electricity), and produce exportable products like food processing and energy processing.

“I look for firms that are going to do well because of the change in circumstance. So, I'm a big fan of things that are American doicile, that serve American demand, that use American inputs, or at least North North American. uh the United States has the cheapest electricity and energy inputs in the world. So if it's energy intensive that's actually attracts me rather than repels me”

The core of multiple global crises is a shortage of workers, a shortage of consumers, and soon a shortage of capital, which explains everything from culture war to Ukraine to COVID to China lockdowns.

“at at the core it's a shortage of workers, it's a shortage of consumers and very soon a shortage of capital and that is coloring everything that is going on.”

Korea is one of the countries facing the greatest challenges because it depends on global supply chains for raw materials and has terminal demographic decline, but Koreans have a tendency to completely reinvent their culture every 20-30 years and may follow the European automakers' strategy of massive foreign direct investment in the United States.

“Korea is one of the countries that's going to face the greatest challenges in the world to come. And if it was anyone else but Korea, I would say they're doomed. But the Koreans have a tendency to completely reinvent everything about their culture every 20, 30 years or so. And I don't want to bet against the Koreans.”

Apple is the global company most exposed to a China crack because every time something has gone wrong in China or Chinese-American relations, Apple has gone in the opposite direction and never diversified, keeping it concentrated in a China-centric system with no intermediate steps to mitigate problems.

“And Apple is so screwed. Uh Apple, every time something has gone wrong in China or with Chinese-American relations, Apple has gone the other direction. They've never diversified. They keep concentrating more and more in a Chinacentric system. And they are now the global company most exposed to a China crack.”

Colombia could be the location for solar panel assembly because Mexican labor is too expensive and educated compared to Colombian labor costs and education levels which match where Mexico was in the 1980s.

“If I was a betting man, I would say Colombia. They're relatively approximate. There's already a free tail free deal with the United States. The education levels for Colombian labor is high for their standard of living and the labor costs are good enough where the Mexicans were in the 1980s.”

Learning Chinese today is like trying to fake a southern accent in 1860: good if you want to be a carpet-bagger, but not good if you want to be a traditional business person.

“I see learning Chinese today a lot like um trying to fake a southern accent in 1860. Um, if you want to be a carpet bagger, great plan. Uh, but if you want to be a traditional business person, uh, not so much.”

Russian military advance in eastern and southern Ukraine is stalled, with Ukrainian forces having more people on the front line than Russians, but the limiting factor is how quickly both sides can bring equipment to the war front, with the West starting to run low on supplies.

“the Russian advance in eastern and southern Ukraine is definitely stalled and more and more weapon systems from the west are getting in which are contributing to that and the Ukrainians now have more people on the front line than the Russians do. Uh I do expect a general Russian mobilization and I do expect that to push the Ukrainians back and ultimately break their capacity. The the the limiting factor on both sides now is how quickly both sides can bring equipment into the war front.”

Ukraine has developed a fantastic human intelligence network in occupied territories and even in Russia, with suspicious industrial fires at Western Russian military facilities suggesting possible Ukrainian sabotage operations.

“They've developed a fantastic human intelligence network in the occupied territories and even in Russia. I'm spitballing here because I don't know this for sure, but there are a lot of really suspicious fires at industrial military facilities throughout Western Russia and have been for a month. The Russians, this may may be nothing more than the fact that Western techs are gone and the Russians are not really good at safety. Uh, but this is a lot of fires on a lot of places that are really sensitive. It feels like there's something else going on.”