Peter Zeihan: Author of The End of the World is Just the Beginning: Mapping the Collapse of Globalization.

In his second appearance on the podcast (the first was December 6, 2022), Peter Zeihan, a geopolitical strategist and the author of four books, including most recently, The End of the World is Just the Beginning, talks about deglobalization, demographics, and why he still believes “the American system will thrive.” In addition, he discusses the catastrophic decline of Germany’s industrial sector, the “exorbitant privilege” the U.S. dollar has as the world’s reserve currency, and why, in his view, China is facing “national oblivion.” (Recorded February 22, 2024.)

Transcript

0:30 - Robert Bryce 

Hi, everyone. Welcome to the Power Hungry podcast. I'm Robert Bryce. On this podcast, we talk about energy, power, innovation, and politics. And I'm pleased to welcome back for the second time, second time, that's right, Peter Zion. He is a globalist, an author, and a very popular YouTube presence. He's the author of four books. Peter, welcome. Welcome back to the Power Hungry podcast. Thank you much. You may remember, I know you do a lot of engagements, a lot of podcasts, but guests on this podcast introduce themselves.

1:02 - Robert Bryce 

So I've given a very brief introduction for you. Imagine you've arrived somewhere, you don't know anyone, you have seconds, no more than seconds to introduce yourself.

1:11 - Multiple Speakers 

I don't need seconds. I help people figure out what's going to happen in the world and how it's going to impact them.

1:16 - Peter Zeihan 

That's my life these days.

1:18 - Robert Bryce 

Okay, well, that's fair enough. And you're based in Morrison, Colorado, if that's right.

1:24 - Multiple Speakers 

And you used to be here in Austin, Texas with stress been a while, but yes, five years ago. Gotcha. Okay. Good.

1:30 - Robert Bryce 

Well, let's jump right in because you were last on the podcast. It was December of 2022. And in our last conversation, you were very bullish on the U.S. I go back and forth. I'm all day bullish on the U.S., but you said the American system will thrive. And when I look at the presidential election, I look at Trump and Biden. Oh, my Lord. We have a country of people, we only can choose between these two doddering old fools. And yeah, doddering old fools. I got I got criticized. I gave a speech recently.

2:01 - Robert Bryce 

Oh, you can't call them. No, they're doddering old fools. Are you still? That's being fairly polite, actually. Yeah, doddering and fools. Yes. But so the American system will thrive. You said that. And now a while ago, you still believe that?

2:15 - Peter Zeihan 

Well, let's put politics to the side because that's more than just a minor detail. It is more than a minor detail, yeah. This is not the first time we've had political craziness in the country. We've come through it just fine before. I'm not worried about it this time either, as uncomfortable as it is. But the core issues, having enough young people to generate another generation, having the consumption and the workforce that comes from that, having a system that's not dependent upon international trade in an era of deglobalization, and having a military that can keep all of your foes more than arm's length away.

2:46 - Peter Zeihan 

Everything the United States needs to succeed, it has. It's a massive exporter of not just food but now energy. It's the controller of the only mine that provides the silicon that allows for semiconductors to be made, and it then designs almost all of the semiconductors as well. I don't mean to suggest there aren't gaps in the system, and as we see more reshoring, it will generate a lot of inflation, but that's inflation from a growth story that's building up the supply chains we need for the next years.

3:16 - Peter Zeihan 

These are good problems.

3:18 - Robert Bryce 

Let's talk about that for a minute because you mentioned young people and I've got, I have three children, my wife Lauren and I, three grown children, super proud of all of them but I was talking to a couple of them this morning, Mary and Jacob, and talking about where they are today and let's talk about inflation because housing prices for them, I mean if I'm I am like you, I'm all day bullish on the US. We still now, how many, some odd years after the Constitution, we're still litigating the Constitution, how durable the document is, right?

3:46 - Robert Bryce 

And how the Bill of Rights, we're still talking about these things. We use this in our daily conversation, the Fifth Amendment, First Amendment, Second Amendment, all these things we're still fighting about, but still makes this amazing system work. But aren't, well, how do you view the opportunities? Let me put it in a form, this way, in a question. Younger people today, particularly in terms of housing, inflation in the housing market, is that, it's a concern for me as a father.

4:12 - Robert Bryce 

Is it a concern for you as for the opportunity for this next generation, the post-baby boomer generation, the affordability for them? Because I know what you're saying about inflation and growth, but there's a flip side to that.

4:25 - Peter Zeihan 

Well, let's start with the basics issue that for each decade for the last seven, people have been concerned that this was the last decade of the American experiment and the new generation coming in had it so much worse than the people that came before. There's nothing new there. No, but this time it's true.

4:40 - Multiple Speakers 

This time it's different. No, Peter, now this time, no, really.

4:43 - Peter Zeihan 

Because they're my kids. They're my kids this time.

4:47 - Multiple Speakers 

The specific issues are different every decade. When I was entering the workforce in the late 90s and the early 2000s, it was all about globalizing, or globalization increasing competition on a global basis. And all of a sudden we had to compete in a way we didn't have to before. And it sucked. It was awful. And we got through it. This issue, there's two things playing out specifically for housing.

5:07 - Peter Zeihan 

Number one, a lot of the home builders are still, still a little bit shell shocked from the subprime crisis. And so we haven't seen the expansion in the housing stock that we normally would have on a year by year basis. And we probably have a shortage of housing units in the country of about four to five million. Now, remember, if you go back to 2007, we had an excess of four to five million, so we've now compensated in the other direction. We are now seeing strong housing starts again, which is starting to chip into this problem, but it is a multi-year process to get out from under that sort of backlog.

5:44 - Peter Zeihan 

This is not something that's going to get fixed in the next year or two. This is a five-year, 10-year program. This is how long it takes to move a country with a housing stock of over million units. Second, we are coming off of the most capital-rich period in history. Most capital generation is put together by people who are aged to whose kids have moved out, their expenses have gone down, and they're saving for retirement. That 10-year block for the last years has all been baby boomers.

6:13 - Peter Zeihan 

And what we've seen is about a year and a half ago, the majority of them had reached mass retirement. So we're in this weird transition moment that is historically atypical in capital markets going from this massive generation of capital, which has allowed anyone who could control the capital to bid up the price of everything. It's very Chinese, it's very Japanese. That's one of the reasons why we've had this tear in the stock market. That's one of the reasons why we actually had a relatively robust economy even during COVID.

6:41 - Multiple Speakers 

And one of the reasons why Obama, Trump, and Biden have been able to issue record amounts of debt at the federal level without crashing the overall system.

6:49 - Peter Zeihan 

Just the capital has been there.

6:53 - Robert Bryce 

Now it's changing form.

6:54 - Peter Zeihan 

It's going from stocks and bonds into things like T-bills. Now that means that we're seeing capital costs finally rising. And if you are in your 20s and you're trying to enter the housing and there's a housing shortage at the same time that capital costs are going up, you're crunched in the middle and there's no easy fix.

7:13 - Robert Bryce 

That's a problem. Now, this too will pass.

7:18 - Peter Zeihan 

By the time the baby boomers have been all retired in a few years, and by the time the millennials enter their mid fifties, we will see capital costs come down again. We'll also have a lot of capital flight from the wider world coming in that will push capital costs down again, but that's off. So in the meantime, we've got years of insufficient housing, and higher capital costs, and of course that's going to hurt if you're a first-time home buyer. This was always going to happen, and it is coincidental based on the demographics.

7:48 - Peter Zeihan 

It is not structural, and we will get through this. It's just going to hurt for a little bit.

7:55 - Robert Bryce 

So, are you making a call then on interest rates there as well then? Because you're talking about capital flows, so necessarily that means how the Fed is going to fix interest rates. So, you're projecting a longer period then, if I'm hearing you right, of higher interest rates because of this shift in capital, the large amounts of capital overall. Am I hearing you correctly?

8:14 - Peter Zeihan 

I prefer to use the more generic term of capital costs, which includes interest rates and the 10-year and T-bills and credit cards and bank loans and the IMF and all of it. Because it's in the aggregate that we're seeing the shift. Once you get down to more specific instruments, making that sort of prediction is a lot more squirrely. I am definitely a believer in the higher for longer. The United States needs to rebuild a lot of industrial plant in a time of less capital and less labor.

8:41 - Peter Zeihan 

That can't help but generate higher capital costs and higher interest rates. And then the Federal Reserve also has its eye on the horizon and is watching something that most Americans are just not aware of we think of demographics to the degree we think about them as baby boomers retiring, and then maybe the millennials coming up in years, and there's nothing wrong with that. But on a broader scale, the rest of the rich world has a baby boomer cadre just like us, but their baby boomers never had kids.

9:09 - Peter Zeihan 

So there aren't German or Italian or Korean or Chinese millennials, which means that as they're going through the same mass retirement of the boomers as we are, experiencing the same increase in capital costs that we are, there's no generation coming up from below that will have consumption and capital generation in the future.

9:27 - Robert Bryce 

From the Federal Reserve's point of view, there are only three economies of size anymore that are normal, us, Mexico, India.

9:34 - Peter Zeihan 

If they get interest rate policy wrong and cut too soon, then they risk us falling into a Japanese-style trap of deflation that we don't recover from for years. And so they're much more willing to keep rates higher for longer so that they have more dry powder when the next recession finally hits. Because they know if they get this wrong, it's a generation of lost growth, not a decade of high housing prices. It's interesting.

10:02 - Robert Bryce 

Well, I'm glad you mentioned those four countries because you were just on JPMorgan podcast, I think it was Talks of the Trade, and I was looking at that.

10:08 - Peter Zeihan 

I had so much coffee that morning. Oh my God.

10:13 - Robert Bryce 

I think you may have had a little caffeine this morning, too. Maybe I'm wrong, but you've always seemed fully caffeinated, by the way. I've seen you speak. It's an effort, but yes. But you talked about, I'm quoting you pretty much directly here, you're talking about deglobalization, which I want to get to. But on the Talks of the Trade podcast, you said, this is the decade we're running out of working-aged adults. And you said the problem is most acute in Korea, China, Italy, and Germany.

10:38 - Robert Bryce 

The first question I have here, or first point I want to bring up is, two of those countries are in Europe. And I've been watching the European situation recently. I just made a slide of a presentation coming up in Washington in a couple of days. The amount of natural gas from Russia into the EU was at At the end of it Here's my question, is Germany going to drag, well, we'll include Italy in that, is Germany going to drag Europe down with it?

11:08 - Peter Zeihan 

Italy never restructured their debt or changed their fiscal policies in the 1990s when they joined the EU, so they joined the EU with a massive debt that they will now never recover from because they no longer have enough young people to generate the next generation of growth. So Italy has been a drag on the European system for years and it's never going to improve. This is just how it is.

11:29 - Robert Bryce 

Because their demographics suck too, right?

11:32 - Unidentified Speaker 

Exactly.

11:32 - Multiple Speakers 

They now have more people in their seventies than their sixties and their fifties and their forties and so on. And so they can't recover.

11:39 - Peter Zeihan 

They can't grow out of their debt and they can't cut their debt spending because they have to support an aged population. So we're just looking for fiscal and monetary collapse in the case of Italy. I can't tell you exactly when that's going to happen. I can tell you it's inevitable and I can tell you it's in less than a decade. And beyond that, there's too many moving parts. Germany's demographics are not quite as bad as Italy's, but that's like saying the Lusitania didn't sink quite as fast as the Titanic.

12:09 - Peter Zeihan 

It's still deeply terminal and they still have less than a decade left, but they're in a much better fiscal position because they've seen this coming and have at least taken some steps to insulate themselves a little bit. But you're right, they don't just face the demographic issue, they face the energy issue that goes with it. And there is not enough natural gas within easy reach of the European continent to supply everyone. And the North Sea, first and foremost, goes to Norway and Sweden and the United Kingdom, and secondly, to the Netherlands, and only third to places like Germany.

12:45 - Peter Zeihan 

The Germans pathologically opposed building new natural gas infrastructure for the last years, unless it went to Russia. And now that is all wasted.

12:54 - Multiple Speakers 

So even Poland is ahead of the line for North Sea gas. As for stuff coming out of North Africa, obviously Italy, France, and Spain get first dibs there.

13:02 - Robert Bryce 

So the only way- Via either pipeline from Algeria or LNG then out of Algeria or out of Nigeria, maybe then?

13:11 - Peter Zeihan 

There's also a pipeline out of Libya. Nothing out of Nigeria yet. There is LNG that does come from there, but the idea of a trans-Saharan pipeline has always been a pipe dream. That's not going to happen unless something very, very strange happens in European-African relations. But, you know, it's a weird year right now. Who knows? But not imminently. Anyway, it's not just about electricity and the electricity situation in Germany is dire.

13:35 - Multiple Speakers 

It's also because the natural gas the Germans brought in was used to form the basis of their entire petrochemical system.

13:41 - Peter Zeihan 

And that's just stopped. You actually have German petrochemical companies dismantling their city-sized facilities and moving them to other countries where there's more access to natural gas, places like Louisiana. Their hope is that they can do that fast enough and then ship the intermediate materials back to Germany to save their manufacturing model. Don't think it's going to work. They'd have to work a lot faster than they did in World War II. And at the end of the day, there aren't enough workers to maintain the factories more than a few more years, and there's no consumers in Germany for the finished products, so it has to go out anyway.

14:14 - Peter Zeihan 

So everything that's going on in the world right now, the Ukraine war, de-globalization, the demographic crash, it all hits Germany hard.

14:24 - Multiple Speakers 

It's interesting to see that. Well, the IEA just put out a report. I put it on my sub stack a couple of days ago.

14:29 - Robert Bryce 

Electricity, industrial electricity demand in Germany went down last year. They were very lucky.

14:36 - Peter Zeihan 

That's all it was.

14:37 - Robert Bryce 

Just incredible drop and the and the and the they also published a table showing the drop in chemical production and you know Virtually everything else there were slight gains in a couple of things. I think automobile in terms of industrial electricity demand, but you know electricity is a I write a lot about electricity pay attention to it a great deal That's just a proxy for economic output in in large part, right? It's not perfect but pretty close so But I'll ask that question again, because you made a lot of good points there.

15:04 - Robert Bryce 

So does Germany drag the rest of Europe down because it's the economic engine of Europe? Well, that's the thing.

15:09 - Peter Zeihan 

If the economic engine dies, there isn't anything left. It's not that you've got Germany in the rest of Europe, you've got Germany at the heart of Europe. And the manufacturing supply chain system that the Germans control and dominate also involves the Netherlands, Belgium, Austria, Switzerland, Poland, the Czech Republic, Hungary, Slovakia, Romania. And without the Germans, none of it works. So we're looking at the end of the entire economic model that has allowed the European Union to function to this point.

15:36 - Peter Zeihan 

The exception to that, or two exceptions, number one is Britain, which if they can figure out Brexit, maybe they can find a better future. And France, which never really integrated its own economy into the European norm because they saw it as a political project. That doesn't mean that France doesn't have its own problems, but they're different from what's facing the Germans.

15:57 - Robert Bryce 

Well, and they have their nuclear plants, which assures them a fairly low cost electricity vis-a-vis the rest of Europe.

16:04 - Peter Zeihan 

I wouldn't call it low cost, but I would call it more reliable.

16:08 - Robert Bryce 

Okay, fair enough. Good. Well, they're not relying on imports of gas to make everything work. And the Germans, what are the Germans doing? They're building gas-fired power plants. Oh, and restarting their lignite plants.

16:17 - Peter Zeihan 

Yeah, well the lignite plants is basically the future of electricity in Germany. So their commitment to low carbon fuels like natural gas and wind and solar in a country that is neither windy nor sunny means that their carbon emissions are skyrocketing because all they've got left is lignite.

16:31 - Robert Bryce 

So the energy vendor is dead then?

16:34 - Peter Zeihan 

The Energiewende was never a particularly great idea, in my opinion, because, you know, anyone who has been to Germany knows you don't need sunblock. I mean, let's be honest here. So having forests of solar panels in a country that's not sunny was always stupid. And the Germans have substantially increased their carbon footprint as part of the Energiewende because the technologies are just not appropriate for them. Maybe, maybe, and I'm being generous here, of the electricity can be met by wind from the North Sea, and that's about it.

17:05 - Peter Zeihan 

Everything else, the solar panels they've put up in the vicinity of Dortmund and Berlin and the rest, they will never pay down the carbon costs that it took to build and install those things from the electricity they generate in the back end. It's just not enough.

17:19 - Robert Bryce 

Well, let me follow up on that, because, well, then why, talk about the politics of Germany. Is this because of the political power of the Green Party? Because I look at Germany, and I think, what is wrong with these people? I mean, it's a country run by engineers. We're run by lawyers, right? But it's a country where the technocrats have a strong hold on the political system. And yet, they went down this insane policy. I mean, why, I guess, is it the Green Party? And why didn't they see this coming?

17:48 - Peter Zeihan 

I'm oversimplifying this a little bit, but the German Green Party is one of the greatest successes of Russian intelligence of the last years. Greenpeace, to a certain degree, got Russian sponsorship in the early days, specifically in Germany, in order to push the Germans in an economic direction that Moscow would perceive as being in their best interest. And part of that was this obsession that nuclear power is bad and natural gas from Russia is good. And that has been the underlying issue in German politics for over years.

18:22 - Peter Zeihan 

And we've had a couple of governments.

18:24 - Multiple Speakers 

So you're saying the Green Party has just been a stalking horse for the KGB.

18:28 - Peter Zeihan 

I mean, it's an oversimplification, but the Germans, I'm sorry, the Russians have been doing everything they can to encourage every argument that the Greens have ever made, no matter how silly they happen to be. And they were the genesis of some of them. And before you get too down on the Germans for that, it's been very successful in the United States as well. First on energy issues and affecting the left, and now on the impeachment issues affecting the right. We're not all as smart as we would like to think.

18:57 - Robert Bryce 

So I want to make sure I'm hearing what you're saying here. You're saying the Russians are impacting the left in the US?

19:04 - Peter Zeihan 

left and the right. So you're familiar with Michael Moore and all of his Gasland stuff.

19:08 - Multiple Speakers 

Yeah. Gazprom was a part sponsor of that film.

19:11 - Peter Zeihan 

More recently, that was Josh Fox.

19:14 - Robert Bryce 

That was not Michael Moore. Gasland was Josh Fox, the New York guy.

19:19 - Peter Zeihan 

Sorry. Yeah, I'm sure of that, because I've followed, I know Michael, I've followed Michael Moore's work.

19:24 - Robert Bryce 

I don't think Gasland was Josh Fox's movie, his documentary, his fictional documentary.

19:30 - Multiple Speakers 

Yeah, exactly. Fictional documentary, great way to phrase that. But the same thing is happening on the right now.

19:34 - Peter Zeihan 

We've just had the big bombshell in the last few days that the Republicans' big store of impeachment information against Biden was actually provided by a Russian agent, which just makes them look silly. It's not an ideology thing. The Russians will just do whatever they can in order to break economies and turn countries against one another. They've been doing this for a very long time. They're not new to the game. And even with the Soviet fall, they haven't forgotten all the tricks of the trade.

20:02 - Robert Bryce 

You know, it's interesting you bring that up, because the other thing that comes to mind when you talk about that is the issue of the Russians funding anti-fracking campaigns in Europe. And this has been, you know, numerous articles have been written about this to talk about that very, you know, it's been very effective. I mean, give them a credit. You know, what do you do with your foes? Well, you try and mess them up, right? You destabilize them however you can. And it's fairly low cost, I mean, too, and from a pure operations standpoint, much easier, much more efficient to mess with their politics than trying to, you know, confront them more directly, right?

20:36 - Robert Bryce 

I mean, this is just an ordinary kind of statecraft. Is that the name?

20:40 - Peter Zeihan 

It's not a new playbook. The Russians have been doing this across the world for quite some time. They've just been more successful at it with the West than in most countries because they're more open societies. So let's talk about de-globalization.

20:52 - Robert Bryce 

And it's one issue we talked about last time. But you also, in this recent piece on JP Morgan on the podcast, you talked about the de-globalization. What areas of the global economy are going to be the first order ones that are affected by de-globalization? Is it going to be semiconductors? Name the products, name the things that are going to be the first to be reshored here in the US.

21:19 - Peter Zeihan 

Well, let me kind of point something out here. Back in the 40s and 50s when the globalization process started, it worked because the U.S. Navy put itself at the service of the global commons so that anyone could trade with anyone else. And that gave us global energy and global finance and global agriculture and the multifaceted manufacturing supply chains of the modern world. So everything is tied up in this now. But then let's fast forward to when the Cold War ended and the United States decided, like everyone else, that history was over and the wars of the future would not be between the Americans and the Soviets, it would be between the Americans and the holdouts, places like Iraq or Iran or North Korea that just refused to be part of this new grand order of things.

22:03 - Peter Zeihan 

And so we retooled our military instead of patrolling the global oceans, which were now safe forever, and we went to the supercarrier battle groups. Perfect tool if you want to hammer down a North Korea, not good if you want to patrol the entire Pacific. Well, years later, where we are now, our military has completed that transition, and it's lean, it's mean, and it's tough, but it's concentrated on a very few battle platforms, of them, the supercarriers, which means that when the Houthis, a couple months ago, started cooking off rockets against ships in the Red Sea, the United States no longer has that patrolling force.

22:43 - Peter Zeihan 

And here we have some of the most incompetent terrorists operating from some of the most worthless land on the planet, stressing global shipping to the breaking point. So I can't tell you what's going to break first, because the insurance policy, the patrol system that we used to have just isn't there anymore. And all it takes is one guy taking out one ship, and this all falls apart.

23:08 - Robert Bryce 

Because it spooks the global market because now those shipping lanes are no longer secure. Right.

23:13 - Peter Zeihan 

And so if it happens in, say, Southeast Asia, that's global manufacturers because half of global manufacturing supply chain steps are shuttled on little container vessels in the East Asian Rim. If it happens in the Persian Gulf, obviously that's an energy problem. If it happens in the Black Sea, that would probably be agriculture. We're at a point now where everything is uniquely vulnerable, and we have multiple mortal threats on different seas and different continents, all of which are operating on their own logic, and any one of them could be catastrophic.

23:46 - Robert Bryce 

Let's follow up on that, because the US Navy, I think, is a really interesting point. And I like your idea about the carrier battle groups, because it is, I look at it and think, well, OK, are they really going to be able to resist a supersonic, hypersonic drone, a suicide drone? I mean, I know they have lots of fancy kit on them. But the cost of one of those little bitty, bitty drone, and I say little bitty, they're going to be big. But the relative cost of those to some, you know, a bad actor is minuscule compared to the cost of that carrier, right?

24:18 - Multiple Speakers 

And the loss, the loss of face, the loss of face of the U.S. Of losing a carrier to one of these things would be enormous. But it's a point I made with Greg Easterbrook, who was on the podcast a while back, and he has a great book called The Blue Age about the U.S.

24:30 - Robert Bryce 

Navy. It's subtitled, How the U.S. Navy Created Global Prosperity and Why We're in Danger of Losing It. So back to your point about the end of history. So we're fighting the last war here. What's your point about the US Navy now?

24:43 - Peter Zeihan 

Well, we haven't had strategic guidance from the White House when it comes to military structure since the Herbert Walker Bush administration. So we've been on coast, which makes it a little harder for the admirals and the generals to figure out, what do we prepare for next?

24:56 - Multiple Speakers 

What does policy tell us? What does our political leadership tell us we need to be ready for? And it's just been crickets now for years. So they ran with the last thing they understood. And we have those weapons systems now and they're awesome by any measure, but they're probably deeply inappropriate for dealing with a de-globalizing world because the decision that was made back in the early 90s was that history was done and

25:20 - Peter Zeihan 

it's just a matter of rubbing out a few rough spots and we all get along now. And clearly that's not the world we're in. And before you're too critical of the American Navy on that, the Europeans believed this was the world world on the 18th of February in hours before the Russians poured into Ukraine. So it's not like it was just us.

25:43 - Robert Bryce 

And we certainly never sublimated our entire economic system to this dream for us.

25:48 - Peter Zeihan 

It was always about security. And so while this is a inconvenience, and maybe a little bit of an embarrassment for the US, it's economic catastrophe for most of the rest of the world.

26:00 - Robert Bryce 

So then to follow up on this, I'm just in my own head, I'm wondering when were the Barbary pirates, right? It was off the, it was a Tripoli, right? This is the whole, the U.S. Marine Corps hymn, right?

26:09 - Peter Zeihan 

It's been a little while.

26:11 - Multiple Speakers 

It's years ago.

26:12 - Robert Bryce 

So we're fighting, but we're back to an era really of what would be just kind of piracy, right? In terms of relative piracy.

26:19 - Multiple Speakers 

Piracy and especially state piracy is going to be a very big part of the next years.

26:23 - Robert Bryce 

And we have the wrong type of ships, we should have more smaller frigates. I don't know the term of art here.

26:28 - Peter Zeihan 

If the goal is to maintain global global open waterways, we need at least two or three times as many ships probably as many as destroyers. And the supercarriers are not good for that. But that's got to be a choice. If the United States is decided, we're just not interested in globalization, we probably have the perfect fleet.

26:48 - Robert Bryce 

So we have roughly, as our memory serves, about ships total in the US Navy right now.

26:53 - Peter Zeihan 

And you're saying- Most of those are either the carriers or dedicated to protecting the carriers.

26:57 - Robert Bryce 

Right. So you're saying that if we want to maintain this blue ocean Navy capable of preventing piracy, capable of keeping the hoodies in check and the rest of it, that we need to, I think the correct term is shit ton more boats. Right.

27:11 - Multiple Speakers 

Metric shit ton, to be specific. Yeah. Let's get let's use the SI units.

27:17 - Robert Bryce 

But that we're going to need a whole lot more ships of a different kind of smaller, smaller, less expensive ships.

27:25 - Peter Zeihan 

Let's say we decide we want that. That's not for us. The United States economy is not globalized. Only about of our total trade is internationalized. About half of that is NAFTA. About half of the remainder is energy and agricultural exports. So really in terms of our total exposure to the wider world, we're only looking about four, maybe of GDP is our total vulnerability. So if we decide we want to keep the ocean safe for merchant shipping, it's not our merchant shipping, it's primarily China's.

27:57 - Peter Zeihan 

And so the idea that the United States is going to engage in a multi-trillion dollar naval expansion in order to protect the economic strength of China, I'm sorry, that's a very strange sounding argument to me.

28:09 - Robert Bryce 

Well, and who's going to carry that message if you're if you explain it in that that term, who's going to be the congressman that brings up that spending bill?

28:16 - Peter Zeihan 

Yeah, exactly. And that's the problem with defense doctrine right now is because we haven't had that update from the White House and so long, the conversation no matter who is participating has really gone off the rails.

28:30 - Robert Bryce 

Well, it's interesting you mentioned George Herbert Walker Bush, because he was a CIA guy, right? He was an intelligence guy.

28:37 - Peter Zeihan 

He was a lot of things. He was in the private sector. He was in the House of Representatives. He was VP. He was in the CIA. And he was the last president that we had who kind of, how should we put this, did time in all the rooms in order to have a really deep understanding of how everything was put together. And as a result, he was also ambassador to China, too.

28:55 - Multiple Speakers 

Yes.

28:56 - Peter Zeihan 

And so he understood how all the pieces fit together, where the strengths and where the vulnerabilities were. And so he was the perfect president for when the Cold War ended to figure out what's next. And so, of course, we voted him out of office.

29:09 - Robert Bryce 

Right. Let's go back. Let's stay on this international shipping issue, because we were just talking about Europe. And I had this teed up for that discussion. But what do you make of, I have my own ideas about this, what do you make of the Biden administration's freeze on LNG exports?

29:25 - Peter Zeihan 

It's purely political. Think of it this way. It took us years of industrial expansion to get to the roughly billion cubic feet of natural gas liquefaction export capacity that we have today. There's roughly another BCF under construction that will not fully enter operations within the next decade. None of that is affected by this freeze. What is affected is what happens after, things that have not yet been permitted or approved at all. So if we build out currently what we've either started construction or already permitted, you're still talking about the United States having more LNG export capacity than any two countries on the planet combined, probably three, maybe even four.

30:10 - Peter Zeihan 

All this does is affect a theoretical expansion that wouldn't even break ground within the next several years. This is something that he was able to do that didn't spook the existing LNG operators or the existing natural gas producers, and it thrilled his left-wing environmental supporters because they think it's the beginning of the end of the industry, which is absolutely not. It may prevent years from now the industry from getting any bigger, but it'll still be far and away the largest on the planet.

30:43 - Robert Bryce 

Why did he do it?

30:44 - Peter Zeihan 

Because he got support from a wing of his politics that might have not showed up for the general election. He's managed to successfully short circuit the primary process, so he's not going to be facing a candidate from the left, but you still want to make sure that the people showed up to vote anyway.

31:03 - Robert Bryce 

So it was just a gift to the radical left.

31:05 - Multiple Speakers 

And it's one that he can undo in a day, or a future president can undo in a day. And since, let's assume for the moment, as I do, that Biden's going to win this election handily, five years from now might be the right time to readdress this, and he doesn't have to worry about it.

31:20 - Peter Zeihan 

That will be someone else.

31:23 - Robert Bryce 

So let's talk about that. You made a kind of a, just in passing note that Biden wins and I've made clear my view on it. I'm going to vote for none of the above all of the, I don't know what I'm going to write my own name in because if it's my vote, I can waste it on whoever I want. I might as well put my, I might vote for you, Peter. Oh God.

31:42 - Peter Zeihan 

No, you don't. You take that back right now. Okay. All right. I'll take it back.

31:47 - Multiple Speakers 

People ask me, what would you do if you were appointed Department of Energy Secretary? I'd fire myself on the first day. I would say, no, let's dissolve this department. It doesn't do anything good. We're wasting time here.

31:58 - Robert Bryce 

So let's talk about that. Why do you think Biden will win in a landslide? And before I ask that, do you think he's competent?

32:07 - Multiple Speakers 

And then why do you think- No, but neither is Trump. So that's not a fair question.

32:12 - Robert Bryce 

Well, okay. Now you're really cheering me here, Zion. This is really fun. I'm so glad we're talking.

32:17 - Peter Zeihan 

Let me start with the caveats and then the explanation. So caveat number one, Biden has to not die after June 1st.

32:26 - Robert Bryce 

Okay. If he dies after June 1st, the nomination process will be completed.

32:31 - Peter Zeihan 

and Kamala Harris will then be the nominee from the Democratic Party, and that is a rat hole of possibilities that I'm not gonna get into. Second, Donald Trump has to not go to prison before June 1st, because if he goes to prison before the Republican convention, then they will have a chance to have a normal primary process and actually come up with a candidate who's competent. So if those two extreme situations, which are non-zero risks, don't happen, then it's going to be Trump versus Biden, and Biden will demolish Trump, and it will be the second or third greatest defeat for any political party in American history.

33:10 - Peter Zeihan 

The reasons now. The Democrats and Republicans in modern times have followed two different strategies. The Democrats go for numbers, so they have lots and lots of factions, but those factions often fight, and so any candidate who can't who chooses to run on the issues automatically spawns a policy fight among the factions. So for example, gays and blacks have radically different concepts of what civil rights means. And so if they run on civil rights, the gays and blacks are like, well, what do you mean by that?

33:40 - Peter Zeihan 

And however you answer that, you're going to piss someone off. And so they don't show up. The Republicans have fewer factions, but they don't fight because their issues don't cross. So national defense conservatives don't care about the business issues. Business voters don't care about social issues. They're all reliable voters. They all show up and policy fights don't happen. And so they tend to win the big elections. What Trump has done is he's introduced a Democrat style internecine fight into the Republican coalition.

34:11 - Peter Zeihan 

And so we now have national security conservatives and social conservatives at each other's throats, for example, because of the Tuberville stuff. And we have national security conservatives at clash with the populace over foreign policy. So no matter what happens, not all the Republicans are going to show up and they already were at a voter discount versus the Democrats. So they lose right there.

34:35 - Multiple Speakers 

So if I'm going to read that back to you what you're saying is that biden hasn't split his his supporters and trump has badly Alien alienated badly and biden even if he splits them a little bit.

34:47 - Robert Bryce 

He still has the numbers But back to you said, of course, he's not competent. I mean Okay, so I'm not a partisan. I'm not a republican. I'm not a democrat. I'm disgusted deeply disgusted, right?

34:58 - Multiple Speakers 

I relate But but I watch biden and I say this with no joy whatsoever and it's clear. I don't He doesn't know what day it is. I mean you look you see the look on his face and i've been around Old elderly people.

35:12 - Robert Bryce 

He's an he's an elderly man now Yeah, and he's not spry. So not only does he not have to die. You said that's a that's a it's not a low bar It's a bar, right? But does he also not have to make some catastrophically bad? Public performance, right? Because if you're a Republican, you're just waiting for him to fall down or confuse the Mexican with the Egyptians or whoever, right? Because those make him look really, really bad in the eyes of voters.

35:43 - Multiple Speakers 

And it seems the polls show they think he's too old.

35:47 - Peter Zeihan 

Yeah. And if Trump wins, he will be the oldest president we've ever had.

35:52 - Unidentified Speaker 

Right. Right.

35:52 - Peter Zeihan 

So I mean, the mental cognitive issue goes both ways. And anyone who's going to vote against one for it is going to vote against the other one for it. It doesn't move the needle because they're functionally the same in that regard.

36:03 - Robert Bryce 

Well, then who runs the country? So let's just work on Trump, because I think about this a lot. Not too much, because it drives me crazy. You know, the first time he says, oh, I only have the best people. Well, okay. So let's look at back at the first administration.

36:15 - Peter Zeihan 

And they all quit or were fired because they told him things he didn't want to hear, which is speaking truth to power is kind of an important job in the cabinet. Right.

36:22 - Multiple Speakers 

That's where I'm going here.

36:24 - Robert Bryce 

So he hires his secretary of state, Lee Raymond, right? Or not Lee Raymond. Oh, the former head of Exxon. He was the other former head. I'm sorry? Rex Tillerson. Tillerson, right, who's very competent. But then he fires Tillerson. And Tillerson didn't even let go. Without a conversation.

36:40 - Multiple Speakers 

Without a conversation.

36:41 - Robert Bryce 

So all the people that he hired, he alienated. And then virtually none of them are supporting him now. So the question is, we know Biden will keep the same people, right? It's going to be the John Podesta crowd and the rest of those. Probably. But who's going to agree to go to work for Trump now, after they see what he did last time? Yeah, no one who's competent.

37:01 - Multiple Speakers 

No, and that's a that's a very enormous concern to me right from a simple simple governance standpoint.

37:08 - Robert Bryce 

So Is that and well I'm I'm opining here But so you think that the democratic machine is going to be enough to re-elect biden and you said in a landslide You think it's going to not be close.

37:19 - Unidentified Speaker 

The second thing has nothing to do with the republicans or the democrats It's the independence.

37:23 - Peter Zeihan 

Everyone seems to have forgotten what happened in the midterm I mean, with the exception of reconstruction, the party out of power has never not done well in the interim elections until now, because Donald Trump basically told the independents that the general election doesn't matter at all. It should all be about the primaries. That's where I dominate, and that's what should decide this. And since the general election is the only place where the independents matter, They basically said, hold my beer, and in many cases voted four to one against Republican candidates.

37:58 - Peter Zeihan 

Because of the way the electoral college works, the Republicans need about a two to one split between the independents voting for Republicans versus Democrats to capture a lot of states, especially the swing states. That includes Texas. And if they don't get that two to one, they lose them all. And we're now looking at the vast majority of independents going the other direction Because Trump's position is still that the general election is not where this should be decided. So you're looking at a massive blowout.

38:27 - Peter Zeihan 

And the question is, how far down the voter list does this go? I have no idea on that question. But I can tell you that in terms of the general election, this is going to be, at best, a Goldwater-style blowout.

38:40 - Robert Bryce 

Wow. So you said there were three issues there. Did we get to the third one?

38:44 - Multiple Speakers 

No, those are the two big reasons why Trump doesn't have a chance. So what about, we haven't mentioned Kennedy, because as I look at Robert Bryce Kennedy is batshit crazy, and so he's going to split the batshit crazy vote, and the batshit crazy vote right now is going to Trump. So yeah, that's just a side reason why Trump will do badly.

39:03 - Robert Bryce 

Well, but is it there a possibility we have another Perot style thing that elects Clinton again? We talked about George H.W.

39:09 - Multiple Speakers 

Bush before, and he lost largely because of Ross Perot, I would say. Kennedy's not on the left.

39:16 - Peter Zeihan 

Most of his wacko ideas are on the right. So it's not going to draw a lot of support away from the Biden administration.

39:23 - Multiple Speakers 

Really, even though you think even the name Kennedy attracting Democratic voters, you don't think that he's going to pull something about that is that the Kennedy machine is already spending more on campaigning against one of their own than the

39:37 - Peter Zeihan 

than the RFK junior program is spending on itself. So yeah, we've got the name Kennedy basically pushing against Robert Yeah, that is interesting.

39:49 - Robert Bryce 

He's alienated his entire family.

39:51 - Peter Zeihan 

The guy's a complete nutbag. Yeah.

39:55 - Robert Bryce 

Nutbag, is that a clinical, psychological term?

39:58 - Multiple Speakers 

I lived in Australia for a while. It's very specific.

40:03 - Robert Bryce 

Okay, let's talk China.

40:05 - Multiple Speakers 

You were very bearish on China when we talked last. Oh my God, it's so much worse.

40:11 - Robert Bryce 

Okay, well, you said most recently now, this was just in the January, I think it was 27th podcast on JP Morgan. You said the first country to face, you're talking about demographics. I'm quoting you here, the first major country to face national oblivion will probably be China. National oblivion?

40:29 - Peter Zeihan 

That's a strong, very strong descriptor.

40:32 - Robert Bryce 

Walk me through it.

40:35 - Peter Zeihan 

Since I spoke with you in we've gotten a lot more clarity on some of the data. We now know that the Chinese birth rate has been lower than the American birth rate since probably And so when you have your birth rate that far below repopulation numbers for years. It's not that they're running out of children. That was in the 90s. They're now running out of people in their 40s and even early 50s. And we're now looking at the new data that's like just in the last two weeks is there might, might, this hasn't been confirmed, so I'm not sure, there might be half as many kids in kindergarten today as there was the day before COVID hit.

41:12 - Multiple Speakers 

Happens many in just three years? Yeah, because the birth rate bomb that hit in the late 2010s has now reached the education stage.

41:22 - Unidentified Speaker 

And so we're just seeing a complete dissolution of the Han ethnicity here.

41:27 - Peter Zeihan 

And it's now reasonable to think about what a post Han world will look like before the end of this century. But long, long before we have that, we'll have national dissolution from a lack of people.

41:41 - Robert Bryce 

Interesting. So is that how much of that? Excuse me of this demographic bomb this demographic oblivion that you're I mean because that's fundamentally what we're talking about here, right the demographic issue Is that what motivates g to do what he's done so far the you know, I still think I think maybe we talked about it before but that That news clip of the hu jintao being escorted out of the people's hall I mean, it was an opera in a matter of a couple of minutes, right? Just the body language and how Hu Jintao's looking around like, you're kidding me?

42:12 - Robert Bryce 

You're going to humiliate me in front of all these people? And he goes over to Xi and Xi's like, yeah, go away. But I mean, it was just the power politics there. So what is motivating Xi, I guess, would be the short question.

42:23 - Peter Zeihan 

Well, it's hard to know because there's no one left to talk to. He hasn't done what Trump has done.

42:29 - Robert Bryce 

Because he's purged everyone out. Yeah, exactly. Trump surrounds himself with yes men.

42:33 - Peter Zeihan 

So Trump insists that his inner circle lies to him.

42:38 - Robert Bryce 

But Xi has surrounded himself with silence.

42:41 - Peter Zeihan 

He doesn't want to hear from anyone. And so he's established himself as the sole arbiter and decision maker, but he's made it impossible for any information to get to him. And his inner circle aren't advisors. They're just silent men. So we have no idea what is motivating Xi right now except the voices in his head and our electronic surveillance is not good enough to listen in on that.

43:04 - Robert Bryce 

So national oblivion. So if you're predicting this fall of China, the implications for the global economy are profound for oil demand, for natural gas demand, for coal, for CO2 emissions, for manufacturing base. How does this play out then? How do you see this coming about? And then second, would Xi then just invade Taiwan to distract everybody from all these problems?

43:35 - Peter Zeihan 

Well, let me start with the last one first. I'm not going to be one of those people who is overly concerned and overly beating the war drums about a war with Taiwan or over Taiwan, because we just don't know. When Putin decided to invade Ukraine, he had an inner circle, so there were phones to tap, emails to hack into. And so we found out the details of the plan very, very early and shared them with the world. There's nothing equivalent in China. So he may have already decided the specific day, two years from now, on an idle Tuesday, that he's going to pull the trigger.

44:07 - Peter Zeihan 

It's possible, but he hasn't told anyone. And because he's gutted the decision-making apparatus of the state to such a huge degree, I would argue that their military is functionally incompetent, much worse, probably, than what we have seen in Russia. Because Russia, despite all of its flaws, still has some information transmission. The Chinese, officially at least, have a lot of training and some new gear, but they have no experience in a war, and they have no advice from their leadership as to what they're supposed to be doing.

44:37 - Peter Zeihan 

So it's entirely possible that if we do have a conflict, we're going to see a catastrophic failure of the Chinese system. It's only in the last couple months we found out that their strategic missile force is nothing of the kind because all the money was stolen Russian style, and their liquid-fueled rockets, which were the ones that target our cities, were filled with water. So we don't have a good picture. But the bits and pieces that have been coming out in the last year indicate a broad scale incompetence throughout the entire governance system, and that includes the military.

45:08 - Peter Zeihan 

So that's kind of piece one. I'm not saying there can't be a war. I'm saying it's not obvious to me, and if they did it, it would mean their national destruction in under a year, because this is a country that imports 80% of its energy and of the stuff that allows it to grow its food. It would be national suicide. And five years ago, Xi knew that. Five years of having nothing but propaganda, I don't know what's going on in his head. Okay, so that's to the side. As to your bigger question, what does it look like,

45:36 - Multiple Speakers 

Sorry, that's to the side.

45:38 - Robert Bryce 

Yeah.

45:38 - Multiple Speakers 

Well, it's just it's unknowable.

45:40 - Peter Zeihan 

But the trigger, the system doesn't look like it works very well anymore.

45:45 - Robert Bryce 

Right? Okay.

45:48 - Peter Zeihan 

We need to prepare for a post-China world in every economic sector. That's pretty much obvious now, because even if they weren't looking at government dissolution from incompetence and overcentralization, we have the demographic issue, which means this is all terminal anyway. Demographics, at best, tell us that they've got years left. It could be a lot less because of misgovernment. The place where it's Easiest to explain what's going to happen is manufacturing, because especially at the lower end of the value added chain, assembly and processing, the Chinese dominate that space.

46:20 - Peter Zeihan 

And we're going to have to put that industrial plant somewhere else. And we're going to have to reimagine it. Because when you've got a billion Chinese workers, or what's probably more accurately now million Chinese workers, you have one model. And then when you're working with first world workers and very highly skilled Mexican workers, you have a very different model. So every manufacturing subsector to a degree is going to have to reimagine how it works with a different supply chain system in a different place with fewer steps.

46:47 - Peter Zeihan 

That's not all bad. Because on a labor productivity level, the Mexicans and the Americans long since passed the Chinese, it's been over a decade. Our energy is cheaper, our infrastructure is closer to the end consumer, and we have a stronger consumer market in the first place. So it's not that it won't get better, it will get much better. It's just the process of building that out is something that takes years. And the sooner we start, the better shape we'll be in. And industrial construction spending in the United States has expanded by a factor of roughly eight in the last six years.

47:20 - Robert Bryce 

We're on the right path. We just need more. But that's going to be inflationary as well, right? Because of all the things. Okay, so I want to come back to, well, Okay, I'm going to ask you the question, but first, what is this with China, the collapse of China? You go to Walmart, Walmart's a China story. What is the decline of China mean for Walmart?

47:44 - Peter Zeihan 

Let me give you an example of how things are probably going to go. When COVID hit, all the textile manufacturing in China and India stopped. And what we discovered here is that in the years since the technology had left the United States with NAFTA, we had different options now. And so instead of having a bunch of women in the Appalachian States with sewing machines, we had facilities that were largely automated that would take in raw cotton, process it all the way to finish clothes, and the end product would be cheaper per garment than what was happening in Bangladesh.

48:18 - Peter Zeihan 

We didn't know that because we hadn't tried. And so what we're going to find out is all of these business models where the general approach has not really evolved. They've just moved to different locations because of cheaper labor. And when it comes back, it's going to look different. And predicting what that's going to be is hard, but we're not We have the technological acumen to try it a different way. We just, until we try, we don't know what it's going to look like, And so I would suspect that everything that's north of processing is going to look very, very different.

48:51 - Peter Zeihan 

When it comes to automation, the United States can do assembly with automation in a way that no one else in the world can, because we've got the technology for it. But if you need fingers and eyes, you're going to be relying on people like Mexico or people like Colombia. Countries that we have free trade agreements with and broadly good political relations with. It's going to be very, very different. The industry that I'm most concerned about is the one where a differentiated labor market is most appropriate because the people who do the wiring are not the people who do the injection molding are not the people who assemble the mother birds.

49:23 - Peter Zeihan 

That's electronics. I don't know what that's going to look like, but if we just pick up that model from East Asia and drop it here, We don't have the workers. So it's going to have to look different. Not going to know until we try.

49:37 - Robert Bryce 

But when we spoke last, and I know you've talked about this before, but you're very bullish on Mexico and the U.S. Moving more or relying more heavily on trade with Mexico. Mexico could be one of the locations for that kind of labor you're talking about, no?

49:52 - Peter Zeihan 

Yes, but a couple of things have to change. Most of the growth story of Texas and Mexico for the last years has been NAFTA. Roughly to of the growth that we have seen in both countries has been because of that trade relationship, Texas and Northern Mexico synergizing themselves, but it's just Northern Mexico. Northern Mexico, most of the labor is already spoken for. And so if we want to rely on Mexico, if Mexico wants to be part of this next phase of industrial build-out, it primarily needs to be central Mexico.

50:22 - Peter Zeihan 

And that means we need a lot better infrastructure linking the US border region with the Mexico City region. And the sooner we start on that, the better.

50:30 - Robert Bryce 

So that's roads, railroads, highways.

50:33 - Multiple Speakers 

Multimodal rail is the most important aspect of that. We need at least two or three trunk lines that go the whole distance.

50:39 - Robert Bryce 

Gotcha. So you've talked about inflation a couple of times and I'd like to ask this question when I'm just people who you know I run into people I'm acquainted with on the podcast as well. So you're bullish on the US, I am as well. But if I gave you here's the question, if I gave you and I might do it, it's unlikely, but I might, I name you my fiduciary and I say, okay, Peter Zion, I want the best return on this over the next, and you have to return it to me in years. Where would you put it?

51:09 - Peter Zeihan 

Gold, crypto, what?

51:12 - Robert Bryce 

No, real estate. We have a housing shortage.

51:16 - Peter Zeihan 

The baby boomers are a social generation. The millennials are a social generation and they're starting child formation and family formation late. They're into it now. So the demand for that is huge, even without inward migration, even without capital flight. And both of those are a very big part of the story too.

51:32 - Robert Bryce 

So land, so you're talking single family housing, multifamily housing. Yeah. Yeah.

51:40 - Multiple Speakers 

specifically in the Texas Triangle or North Carolina.

51:45 - Robert Bryce 

Okay, good. All right. Well, that's good. That's one. I'm not a gold bug. I don't understand crypto still.

51:51 - Multiple Speakers 

I'm not smart enough to understand.

51:54 - Robert Bryce 

Do tell. What do you mean?

51:55 - Peter Zeihan 

Oh, no, let's not waste time with that topic. It's okay.

51:58 - Robert Bryce 

Well, let's talk about the dollar then for a minute, because in your talk with JP Morgan, you talked about the issue we talked about, or you talked about the American dollar, you said the Europe, the euros functionally gone, the you are you on is not tradable and never will be. So here's the question. You don't believe America has a debt crisis.

52:20 - Peter Zeihan 

I don't think it's acute. I mean, I'm a fiscal conservative, so I'm not really happy with where we are right now, but as long as there's no challenge to the U.S. Dollar at all, not even theoretically anymore, the U.S. Can do things with its currency that other countries can't. It's the whole exorbitant privilege thing. And if all we do is expand the debt by our average growth rate of That means that the first billion of monetization every year is functionally free because it doesn't increase the relative debt level.

52:52 - Multiple Speakers 

I mean, it's kind of a weird way to- Relative debt level to GDP. Okay.

52:58 - Peter Zeihan 

Now, this is not my preference, but I'm not a baby boomer who thinks that they're entitled to everything or a millennial who thinks they shouldn't have to pay for their parents. I'm an Xer who gets caught in between these things and can't functionally affect the system because we don't have the numbers. We're going to see more things like debt forgiveness for college students. We're going to see more things like doubling and tripling down on some bad decisions on Medicare, Medicaid, and Social Security.

53:25 - Peter Zeihan 

And as long as the baby boomers are with us, they will have the voting power to make sure that we never have a balanced budget.

53:32 - Robert Bryce 

Interesting.

53:32 - Multiple Speakers 

So even though we're spending now more on debt service over a trillion dollars a year, we're spending more on debt service than we are on defense, which has been the holy grail, right?

53:44 - Robert Bryce 

But have we passed some, is that a significant marker to you? I mean, it sounds like- So it is, yes.

53:50 - Multiple Speakers 

I mean, this eventually will blow up.

53:52 - Peter Zeihan 

I don't mean to suggest it won't, but we have to go a really long way. So for example, look at Japan. Japan has been running primary deficits of of GDP for years. Where we only recently got to with Trump, they've been there since the late 90s. And their debt now, if you include pension arrears, is over of 500% GDP. But they're still there.

54:19 - Multiple Speakers 

And they are the global currency. And ours is of GDP? To somewhere in there, yeah.

54:24 - Peter Zeihan 

So we need to quadruple what we do before we get into a Japan-style situation. And that's before you consider that we're the global currency. So I'm not saying there's not an opportunity cost here. The opportunity cost is substantial. And I'm not saying we wouldn't be in a better shape if we could get our books right. But you have to push this a long way before it breaks.

54:45 - Robert Bryce 

So when it's this, a lot of this, uh, debt deficit spending is, is, is fueling the industrial expansion here because of the inflation reduction act, all these, the government largest.

54:56 - Multiple Speakers 

There are a thousand things that I could nitpick it that I don't like, And the general ideological view of the state being involved in that at all. But since we need to double the size of the industrial plant to prepare for a post China system, I'm being pretty forgiving because even if we build the wrong thing in the wrong place, it can always be repurposed.

55:14 - Robert Bryce 

So let me ask you, we've talked about a lot of things, and I produce a fair amount of content myself, whether it's the podcast or Substack or giving speeches. Well, let me ask you, I think in Savannah, we ran into each other in Savannah, Georgia at the CFC meeting. I think you told me you did engagements in is that right?

55:30 - Peter Zeihan 

It was about that, yeah. That's not happening again, that was too much. It was much calmer.

55:35 - Unidentified Speaker 

Gotcha.

55:36 - Robert Bryce 

So how many engagements do you think you'll do this year?

55:38 - Multiple Speakers 

I'm capping it at this year, because I need to get my life back.

55:42 - Robert Bryce 

Uh-huh, right. Well, yeah. Okay, I've got on my schedule so far, right? So I'm not capping it yet, but you're conversant in a very wide array of issues. And I asked you this before and you dodged the question, but do you have a photographic memory?

56:02 - Peter Zeihan 

I've got a very good memory. I wouldn't call it photographic. I'd also say that I'm full, so I'm at the point now where if new stuff comes in, I've got to make room for it somewhere.

56:11 - Robert Bryce 

Well, so how do you keep, so did you know, these are personal issues, but they're personal questions, I guess, but it's something about, you've had remarkable success, let's be clear, right? You know, you must look at yourself sometimes and say, damn.

56:24 - Multiple Speakers 

And because I'm guessing you're making a good living, right? Yeah, we're doing all right. Yeah, you're not holding a cup on the street corner.

56:33 - Robert Bryce 

But have you known when you were a kid, I know you grew up in Missouri, but did you- Iowa.

56:37 - Peter Zeihan 

Oh, Iowa, forgive me.

56:38 - Robert Bryce 

You went to school. You went to university in Missouri. What was this? That is true. Southwest Missouri State? No, Northeast.

56:44 - Peter Zeihan 

Northeast Missouri State. Yeah. Okay.

56:47 - Robert Bryce 

Did you know this when you were a kid that you had this intellectual capacity?

56:51 - Peter Zeihan 

I mean, I always knew I was clever and I always knew that I could hold different thoughts in my head. And my thought when I went into college, my thought when I went into college is that I was going to be pre-law and pre-med organic chemistry. I was thinking of going into patent law. I figured I could patent like the next Velcro and be done. Obviously it didn't go that way. And it wasn't until about years ago that I realized that I could do what I'm doing now. At my old job, I was the only real generous generalists they had, so I was always drawing connections among different things.

57:24 - Peter Zeihan 

But I really didn't like being in front of crowds and the rest of the analytical staff really didn't much care for me because I kept getting Middle East studies and their energy studies and vice versa. But when I left that job and clients approached me about following me, I was like, huh, maybe this is marketable. And the speaking circuit proved to be the right matrix for me over time. And years later, I'm doing this.

57:50 - Robert Bryce 

So that was when you were, so it was at Stratfor when you realized that you had the ability to go out on your own.

57:55 - Multiple Speakers 

I left Stratfor to be perfectly blunt, a hissy fit that I realized that this actually could work.

58:02 - Robert Bryce 

And so now you're making well, you've written now four books your latest which I haven't plugged And I haven't plugged a station break now here. We're already some odd minutes or an hour into this Zion.com to find out all things Peter Zion You're the author of the end of the world is just the beginning mapping the collapse of globalization but I want to just follow up on this so you have this capacity to synthesize staggering quantities of information and make them, and then I'm going to use the word regurgitate, you synthesize.

58:34 - Robert Bryce 

I prefer the term gist. Fair. Fair enough. A gister, right? You called yourself a gister. You're giving the gist of what's going on. But that synthesis, that capability of synthesizing all this, it's a gift. I mean, do you know where it came from or how it, something that you've had all your life?

58:54 - Peter Zeihan 

The country's first commercial meth house was next door to my grade school piano teacher. So I was on the escape from Iowa program from a very young age. And I figured out that that wasn't going to happen for me playing basketball because I'm a klutz. So academia was the approach. And so I tried to be good at everything.

59:15 - Robert Bryce 

And so now you have this recall for all of this information. Where do you get it? What do you read? What are the sources that you're tracking? Because given the number of presentations you're giving, the amount of travel you're doing, I'm assuming you're fairly pressed for time. Where do you get all the info that you're taking in to remember?

59:35 - Peter Zeihan 

To remember Japan's debt to GDP ratio.

59:38 - Robert Bryce 

That is not something that came to me. I could maybe recall it, but I'd have to study it. But where do you get your info?

59:44 - Multiple Speakers 

It's actually pretty straightforward. So every time I get a new client, I have to learn the world from their point of view.

59:49 - Peter Zeihan 

And so I've got a research staff and we do that for every single client. And you do that for enough clients and you get a really good picture of how it all fits together. And to be perfectly blunt, that made the most recent book, The End of the World is Just the Beginning, relatively simple to write. Because the research work for most of it had been done as a course of our other work over the previous decade. And so what we do now, especially for repeat clients, is really just kind of updating and then diving into a few questions here and there, which adds a depth that we didn't have before and makes it even better.

1:00:20 - Robert Bryce 

So how many people on your team? About a half dozen. And I asked you this question before, but I'm going to ask it again. The End of the World, it's a remarkable book. Did you dictate the whole thing?

1:00:30 - Unidentified Speaker 

Dictate?

1:00:31 - Peter Zeihan 

No, no. But in terms of start to finish, from a writing point of view, it only took about a year.

1:00:38 - Robert Bryce 

Because when I read it, you don't quote many other people, right? There are very few. If I remember, I don't see any quote marks in there. And you don't have a lot of reference. Reference or footnotes. I live and die by footnotes. I mean, it's just something I'm kind of weird about. But that's not how you wrote that. It was as though, here's my view on the world. Boom. And it was a kind of, I read it as your brain dump. And I don't mean, again, that be in a way.

1:01:01 - Peter Zeihan 

I think you're broadly right. If we had done footnotes, the footnotes would, or like a normal journalistic style approach to that, we would have had over pages of just citations. Because if, for example, the CPC event that I did, that was drawing from a dozen different databases in all states in order to build an understanding of the electrical system. Which was summed up in the book in less than a paragraph. So that paragraph would have had over a hundred references, and that would have been true for aluminum and for semiconductors and for oil processing as well.

1:01:40 - Peter Zeihan 

So it's just not feasible. So at the end, we tried to list out all of the databases in a broad sense that were most useful to us, but there was no way we could have done it academic style.

1:01:53 - Unidentified Speaker 

Right.

1:01:54 - Robert Bryce 

Well, it's I'm okay with that, believe me, not academic style. So we just a couple more questions, because I know we've been going for an hour, I want to respect your time. But I want to challenge you here, because in your recent JP Morgan interview, you said you're talking about energy and electricity. And you specifically said the smart play would be to take technologies we have today and where they work. And then you said, put wind turbines in the Great Plains and solar in the Southwest, and then run HV lines from those production zones into these big cities.

1:02:22 - Robert Bryce 

So this is some work I've just done on transmission line build-out, and we're not building transmission lines in any great quantity. And I'm also a longtime critic and observer, really, of the build-out of wind and solar, which are facing enormous resistance from rural America, from Maine to Hawaii. Why are you so bullish on those intermittent sources of generation? Two things.

1:02:44 - Peter Zeihan 

Number one, in the places where they work, they work great. And that's the Great Plains in the Southwest. Those are places where wind can actually already provide a degree of baseload. And the amount of electrons that you get out of it for the amount of dollars you put into it is huge. Wind is about three times as good as solar. But if you're in solar and you're in the vicinity of, say, LA, where the Population Center is right there, great. If you're in the vicinity of Phoenix, great.

1:03:07 - Peter Zeihan 

You move outside of those zones. I changed my mind very violently. Most green tech in most places is not only an economic fail case, it's an environmental fail case. So putting solar panels, for example, in Toronto is among the dumbest things that humans have ever done. And on a per capita basis, the densest solar penetration in the country isn't in the Southwest, it's in freaking Vermont, which is monumentally stupid. But in the right places, it works. And if we're going to double the size of the industrial plant, I keep coming back to that.

1:03:40 - Peter Zeihan 

If we still want manufactured goods in the world we're coming into, we need bare minimum more electricity by the end of this decade. Solar and wind can be part of that in the right places. And if we can't fix the transmission issue because of the different grids and the way federal regulation works and the way local opposition works, then the solution is to build these things relatively close to population centers instead of having long range transmission, have short range transmission.

1:04:10 - Peter Zeihan 

And that is the model we're following right now. It is not the most efficient use of our money, but it's a lot better than just building wind turbines in places where the wind doesn't blow.

1:04:21 - Robert Bryce 

So fully agreed there, but let me just so you said more electricity Overall in the u.s. Word about terawatt hours now for parent petawatt hours. You're saying we're gonna need another terawatt hours just for industrial demand by the end of the decade. You're talking about the next five years. This is enormous Enormous increase which I got to tell you actually electricity demand in the US fell by about last year 1% now it's been trending up very very slightly, but Okay, well let me ask you the question.

1:04:52 - Robert Bryce 

Handicap that. I'm very skeptical, but then I'm a journalist, that we will come anywhere close to that amount of increase. Whether it's AI, crypto, AI demands, I'm very skeptical that we'll be able to build out the amount of power needed for AI. How assured are you, or what odds would you give me, that we actually build the capacity to add another terawatts of capacity, or generation capability?

1:05:20 - Peter Zeihan 

Well, it's an issue of terawatt hours, forgive me.

1:05:23 - Robert Bryce 

Yeah, it's an issue of where and what so for the what Moving things for manufacturing takes more electrons than moving data.

1:05:30 - Peter Zeihan 

So we've been moving into the direction of a services economy for the last 30 years. That's why we've been getting more efficient. It's not that we've gotten better at husbanding our electricity. It's just our economy has evolved in a direction that uses less of it. That is now reversing very starkly. And that's going to be about 25, that's going to necessitate probably a build out all by itself. And then the second is processing. Right now, most of the processing happens in China.

1:05:56 - Peter Zeihan 

And whether it's steel forging or aluminum forging or lithium, whatever it happens to be, it's very, very power intensive. And if it isn't going to be done in China, it has to be done here, probably in the Gulf Coast. So the zones we're going to see the biggest build out are the places that culturally and geographically are best able to reposition us as de-globalization really bites. That's the Texas Triangle, that's Arizona, that's the Front Range, that's the Gulf Coast, and the South.

1:06:25 - Peter Zeihan 

And those are places where it's easier to build electricity generation as well. So the country as a whole needs to double that industrial plant, but it's not going to be spread evenly.

1:06:35 - Robert Bryce 

Yeah. No, I agree with you. Interestingly enough, quick fact, the growth of electricity demand in North Dakota on a percentage basis has been greater than any other state. Texas is a distant second.

1:06:45 - Peter Zeihan 

And that's because they've been getting into agriculture and energy processing because they realize that if they're just exporting raw commodities, they're missing a lot of the money that's being left on the table.

1:06:54 - Unidentified Speaker 

Yeah.

1:06:55 - Multiple Speakers 

I think a lot of that's due to just the pumping load in the Bakken Shale as well, but that's my conjecture. There is some of that, but percentage increases does not justify the electrical buildup.

1:07:05 - Robert Bryce 

Yeah. So just a couple more questions. So we talked about your information intake and your near photographic memory. You don't claim to have that. But whose work do you admire? There are a lot of people who are in the geopolitical, geostrategic business of analyzing the world and talking about it and gisting, to use your line or your word. Whose work do you admire in this area?

1:07:32 - Peter Zeihan 

Let me give you two. One is kind of a hero, that's Robert Bryce, last in government in a serious way during the Herbert Walker Bush administration to help manage the fall of the Cold War. And then in several administrations since.

1:07:44 - Multiple Speakers 

Robert Bryce, former CIA director. Among other things, yes. He's had a lot of hats over the years. He is one of the people who was pushing for us to have an open, honest national conversation about what we want out of the world.

1:07:58 - Peter Zeihan 

And in doing so, he has helped educate a whole generation of business leaders to have their eyes open. And without him, what passes for awareness of international affairs in the United States probably would not exist. The other one would be Ian Brummer of the Eurasia Group. He and I see the world through a relatively similar lens, but we approach our business worlds from opposite ends. He's been primarily focused on the connections to high-level governments to figure out what governments are going to do in the short term, whereas I'm more focused on things like demographics to show what has to happen in the longer term.

1:08:31 - Peter Zeihan 

So we dovetail fairly nicely.

1:08:33 - Robert Bryce 

Right. Well, it's interesting you bring, I've had Bremer on the podcast. I think I was, his latest book, I had him on shortly after that, but yeah, I would think he would be, in fact, I would, now that you say it, he would be a peer. In fact, he's about your age, right?

1:08:46 - Peter Zeihan 

About a similar age, but- He's way smarter.

1:08:50 - Multiple Speakers 

But not as tall. Not as tall. Okay, so what are you reading now?

1:08:55 - Robert Bryce 

We've talked about your time constraints, what books are on your shelf or on your top of your list?

1:09:00 - Peter Zeihan 

Robert, I gotta go. I've got another interview in four minutes.

1:09:03 - Robert Bryce 

Okay, no problem. Then last question then, what gives you hope?

1:09:08 - Peter Zeihan 

Oh, we're going to get through this. This is not the first transition economically the world has faced, technologically the world has faced, and this is not the first time the United States political system has been scrambled as it goes through its own transition. It's just that for the next five years, we've got our political system largely offline. At the same time, we have to go through the biggest investment that we have ever seen. That will be confusing and inflationary in equal measures, but we will get through it.

1:09:34 - Peter Zeihan 

And on the backside, we'll have a system that is reconfigured for the new era economically and politically.

1:09:41 - Unidentified Speaker 

We've done this before.

1:09:42 - Peter Zeihan 

We can do it again.

1:09:45 - Robert Bryce 

It's a good place to stop then. My guest has been Peter Zion for his second appearance on the Power Hungry podcast. Peter, it's been a pleasure. I appreciate it. For more on Peter, go to Zion.com. And until next time, we'll see you on the next episode of the Power Hungry podcast.