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TFTC - The US Is Losing The Great Digital War | Matthew Pines

Jun 12, 2024

TFTC - The US Is Losing The Great Digital War | Matthew Pines

TFTC - The US Is Losing The Great Digital War | Matthew Pines

Key Takeaways

In this episode of TFTC with Matthew Pines, we explored the intersection of politics, economics, and the Bitcoin industry. Pines, leveraging his experience in Washington DC, analyzed the complex relationship between the Bitcoin community and the evolving political landscape in the United States.

The conversation started with speculations on whether a "Trump Bump" for Bitcoin could be on the horizon, with Trump's camp seemingly more receptive to the Bitcoin industry compared to Biden's administration. Pines observed that the political valence of Bitcoin often correlates with market prices, and as prices soar, so does political attention.

We also discussed how the current administration is reacting to the shifting political winds, especially as the Bitcoin community becomes a more significant voting block. Pines pointed out the peculiarity of this early recognition, acknowledging the rising political influence of the industry.

A significant part of the discussion pivoted towards the broader geopolitical implications of Bitcoin, particularly their impact on U.S. national security and geopolitical positioning. Pines articulated that the legacy financial system, while originally optimized for a certain geopolitical status quo, now poses diminishing returns and growing vulnerabilities, particularly in manufacturing and industrial capacities.

Moreover, Pines emphasized the strategic competition in the digital realm, where capturing key nodes in global networks is paramount. He argued that the U.S. must recognize this inflection point and not solely rely on legacy systems. Pines concluded by stressing the importance of engaging with Bitcoin as a means to maintain economic and strategic dominance.

Best Quotes

  1. "The price is to first order the political valence of digital assets as a function of the price."
  2. "Our political system is driven by money. It's not really driven by mass preference. It's driven by who can help support different electoral slates of candidates."
  3. "The idea of engaging in politics, especially for true bitcoiners, was seen as anathema... But I think a larger swath of politically active and engaged bitcoiners... have realized that it is potentially existential for the industry in the U.S."
  4. "The legacy monetary financial system... has progressively reached a point of diminishing marginal returns and in fact, now probably creating increasing marginal costs on our overall global position and our domestic stability."
  5. "The global economy is effectively a digital set of systems... It's about capturing key nodes in that global system. And those rapidly changing topology of those global networks is where the front lines of global competition reside."



The episode presents a reflective discourse on the current and future states of Bitcoin within the U.S. political framework and their broader global implications. Pines offers a nuanced perspective on how political interests and financial motivations intersect with the growing influence of Bitcoin.

As the U.S. faces strategic challenges, Pines suggests a pivot towards embracing Bitcoin as a means to secure national interests and maintain a competitive stance on the global stage. The overarching message reaffirms the critical nature of understanding and integrating emerging technologies into the political and economic fabric of the nation.


0:00 - Intro
0:14 - Bitcoin in politics
4:33 - Pitching Bitcoin to policy makers
11:38 - River & Unchained
12:53 - BRICS
24:16 - Is US govt asleep at the wheel?
36:50 - Current system isn’t as permanent as it appears
45:27 - Gradually, Then Suddenly & Zaprite
47:05 - Private sector finding a way out
57:11 - Expecting the big moment tomorrow
1:03:08 - AI
1:15:21 - US needs long term plans
1:29:21 - State/non state power is shifting
1:50:37 - Bitcoin is out best strategic option
1:55:43 - WWIII


(00:05) this rip of tftc was brought to you by river it's the best place to buy Bitcoin go to tftc and enjoy this episode Matthew Pines long time coming can't believe this is your first time on the show it is wow I uh I'm glad to be here I I'm glad you're here we have a lot to talk about let's start with the Trump bump is the Trump bump coming TBD I I know that uh there's a lot of folks working Working The Angles behind the scenes to try to get uh sort of play each political side off of each
(00:37) other and it seems like the Trump Camp has uh been a little bit more Cooperative in listening to theit Industry and we'll see I know Biden has tried to adjust tact we'll see if that manifests in a policy stance that will attract similar donations but yeah it seems like uh at this point he's going all in and uh I know that uh whatever future Administration eventually turns into to seems like a digital assets policy plank that's very positive for the industry is likely coming yeah given your experience in DC and being around
(01:10) these conversations for years what like how would you describe the the reaction that you alluded to from the biding campaign and where we sit now as an industry politically it seems that we're definitely entering a phase where the voting block built up of individuals who wanted to see big coin and broader crypto succeed have a voice that is that is being listened to which I'm not going to lie is a bit of a shock I didn't think was going to happen this soon but here we are yeah I think it's it's two
(01:41) things one is uh like the price is like to first order the political veilance of digital assets as a function of the price right so when when the price is dumping when it's 15K 20K politicians don't care right it's it's dead it's moving on it's not a very you know top of the top of the ticket item um when now it's reaching close to all-time highs that's that draws political attention um and to to to a certain extent our political system is driven by money right it's not really driven by
(02:11) you know Mass preference it's driven by who can help support uh different uh electoral slates of candidates and I think when the Republican candidate showed a a willingness to sort of engage with the crypto community and that resulted in financial commitments I think the Democrats saw that a potential strategic disadvantage um and I think there's some folks in that camp that are you know much more about okay what what does it take to win um and aren't necessarily aligned with the Elizabeth waren Wing
(02:42) sort of quotequote crypto Army and are trying to uh you know develop you relationships and send maybe backdoor ENT treaties to the Bitcoin and crypto communities to try to get some of their support I'm not sure how successful that's been um recently but I think Trump's sort of hard uh an explicit um endorsement of Bitcoin and digital assets more generally um has sort of set the set the marker and it remains to be seen if the Democrats are gonna are going to Annie up um and I think that's that's where the dividing line is in
(03:13) terms of the strategist level uh in terms of the folks that are running the campaign are just looking at Battleground States and it's coming down to a few hundred thousand votes and all the money and all the um all the effort to to win a campaign is you know leveraged on a small number of of sort of flip and so any advantage or disadvantage um really is magnified in importance and so this is where I think the the broader digital assets industry has now come into its own as a result of several years of kind of building you know you
(03:44) know progressively stronger political muscles um you know I think four years ago the idea of engaging in politics especially for like you know true bitcoiners was seen as an aema right like you're just compromising you're selling out to the man why even getting involved politics is you know a gr business like we should just build and you know ignore the politicians and I think um at least you know there's certain strains of belief that still hold to that um but I think a larger swath of of you know politically active
(04:13) and engaged bitcoiners other folks in the broader industry have realized that um you know it is potentially existential for the the the industry in the in the United States not necessarily globally um which just a matter of whether the US uh plants a flag um in that new territory or whether it seeds ground to to others around the world yeah not gonna lie I fell into the the former camp at one point I think combination of you others at the Bitcoin policy Institute and in the industry nvk over at coin kite pretty thoroughly
(04:47) convinced me that you may not care about the politicians but the politicians care about you it's probably best to engage put your best foot forward because we we we actually do have a good story to tell good narrative uh I think the idea of Bitcoin being this reinvigorating Force within the American economy has a lot of strong legs to it and a lot of validation behind it up to this point particularly within the energy sector and obviously from the aspect of it being an asset that can protect you against inflation these are very strong
(05:22) narratives that Americans desperately need at this given point in time so I guess how would you pitch Bitcoin to politicians as this vehicle to re reinvigorate the American economy why should America want to lead when it comes to bitcoin yeah I mean I've had the occasion to provide some white papers and talking points to some um candidates on both sides of the Isis on the Senate side um and the white house to help at least from my my position as you know someone who looks at geopolitical risk National Security um which has been
(05:59) obviously a consistent theme mostly on the negative side and how policy makers have uh assessed Bitcoin digital assets more generally as being a potential risk for National Security and I have tried to make an argument I think you know reasonably so that um in fact the net benefits to US National Security or geop political position from Bitcoin are positive and quite strong um if we take advantage uh of our unique position at the moment um and so I've you know articulated that in number of different forms long white
(06:30) papers I think the the key thrust um of my argument has been one like the Legacy monetary uh Financial system that we constructed sort of the postwar era and really sort of fine-tuned in the last 50 years sort of like all sorts of systems they start off being quite well um optimized for a certain geopolitical status quo certain arrangement of trade and financial flows um and they get sort of optimized for that set of arrangements and they acrew lots of power to the system that that set up and that's sort of the system that we've
(07:02) been running for the last 50 years and it's I think progressively reached a point of diminishing marginal returns and in fact now probably creating increasing marginal costs um on our overall Global position and our in our domest and our domestic stability in the sense that we have essentially um sold off a manufacturing base we no longer have a defense industrial capacity to credibly deter upgrade power adversaries um that's direct Downstream function of the fact that we uh effectively have to uh print uh debt to supply Global demand
(07:34) um that's a result of us uh running structural trade and you know Capital account Sur deficits and our adversaries accumulate dollars and reinvest them historically into our into our debt and that that mechanism that sort of global dollar recycling is you know led to the benefit of our fire sector uh and our Tech sector but has sort systematically atrophied sort of the core elements of domestic manufacturing and and and Industrial power that that you really need to have if you get into global conflict and so that is that's
(08:03) increasingly seen as a risk um an acute risk in the defense intelligence communities um but that's that's a hard sort of thing to unwind the second is so that's like essentially the Legacy system is an acute vulnerability um and it's growing uh as a vulnerabilities and creating acute sort of um fragilities in our debt markets that our policy makers essentially have to keep um uh sort of scrambling to to contain and that distracts our strategic attention the second is our adversaries are really not fighting to first order a
(08:32) global um physical conflict although there's proxy wars this the the main argument is that they're fighting a digital Network competition and the global economy is effectively a digital set of systems whether it's the financial systems the Computing systems um uh other Comm uh communication systems and it's about capturing sort of key nodes in that global system and those uh rapidly changing sort of topology of those global networks is where sort of the front lines of global competition reside and so it's not
(09:02) really a matter of physical territory to first order it's about capturing sort of strategic advantage over core nodes and an emerging set of digital systems um that are now increasingly interl between value uh uh energy and communication and those are the systems that are going to you know determine who who sort of maintains dominance in the next 10 20 years and I think if we just sort of um pretend that that these changes aren't happening and we sort of just double down on sort of the Legacy systems that
(09:29) we've rode to Global dominance on that we're we're exposing ourselves to an acute risk of being rug pulled strategically in the next five or ten years and that is something that doesn't happen uh it's hard to sort of get policymakers to think about those changes um because they sort of start in the margins they seem easy to dismiss it seem like you know flashes in a pan or sort of somewhat trivial peripheral issues um until they're not and that is that's you know I think the lesson of of
(09:55) of global power politics is that um these changes can ACR and get momentum and then they're sort of hard to stop unless you've um seen ahead so that's what I've talked about in terms of our our our existing system is leading to and has caused strategic vulnerabilities our adversaries are sort jumping ahead to try to capture strategic advantages these emerging digital networks um unless we you know recognize that this is is an inflection point um where and we just double down on our on our existing systems um which are
(10:26) increasingly fragile and require ever more effort to to sustain uh we're not in a good position to uh you know counter authoritarian objectives around the world so that is that's the way I sort of frame it uh in terms of Bitcoin and Dollar by stable coins is essentially helping to butress uh and transform but in a more gradual form uh a global system that is still um open still you know fundamentally liberal it's still oriented towards sort of the core values that America at least um holds up for itself historically in
(10:57) terms of you know uh Freedom uh property value property rights um human rights Etc so that is that's kind of the stakes and I think we're we're we're going to see that that unfold the next few years so how we sort of set our our political and geopolitical orientation to those emerging systems whether we're actively hostile to them and allow folks like the Emirates or the singaporeans or Hong Kong to become kind of the dominant nodes in those emerging uh networks or whether we um retain our our our place in those
(11:33) emerging systems and then can compete effectively in a in in a shifting global system this episode was presented by river river is the best most secure place to buy Bitcoin in the United States go to TFC set up an account today you'll be able to DCA into Bitcoin without paying any fees you'll be able to give people Bitcoin via river links you'll be able to send and receive Bitcoin over the lightning Network and you'll be able to set limit orders if you want to buy Bitcoin at a particular
(11:59) price price below or above where it is now you can set orders to buy Bitcoin when it hits that price go to tftc and set up your account today this rep was also brought to you by our good friends at Unchained Unchained is building a financial services platform for a Bitcoin standard they have over 7,000 clients that are securing over 990,000 Bitcoin with 12,000 keys on their platform their platform leverages bitcoin's native multisig properties their Cornerstone product is their vault product at two or three multisig volt
(12:30) which allows you to hold two of three keys in a multisig quorum that gives you full control over your Bitcoin they also have an IRA product a lending desk and they're rolling out a bunch of other products including inheritance protocol and sound advisory so go to unchain dcom set up a call with our concierge onboarding team today tell them that tftc sent you and use the promo code tftc at checkout unchain dcom it's not looking good and I'm happy that people like you are ringing the alarm bells for
(12:58) this I mean what are your thoughts on the bricks meeting yesterday there's been a lot of talk I think it's an X rumor there was the meme going around over the weekend that the Petro dollar contract agreement uh expired on June 9th if it wasn't it wasn't resigned but I don't I did some research last night didn't look like it existed in the first place Sunday was the 50th anniversary of the Petro dollar coming to life uh but regardless of whether or not that contract exists and whether or not it
(13:33) was reup Saudi Arabia is officially part of the bricks Coalition whatever they're defining it as and there was a big meeting yesterday in Russia in which the bricks countries talked about areas they want to focus on everything from Global government to climate change and uh one of the important points that was brought up that is pertinent to this show and what we do as bitcoiners is the fact that these countries want to begin settling Financial transactions in their native currencies instead of having to
(14:06) go through the Petro dollar system yeah I think so the bricks and the whole de dollarization narrative gets gets muddled in various ways and sometimes there's a lot of motivated reasoning behind uh the core geopolitical analysis and the real politic and the inherent constraints um placed upon those actors in the existing global system not not to say they have aspirations but I sort of calibrate what's what's plausible and what's what's what's likely um to first order the brics Coalition or or
(14:36) aggregation um is not a monetary military Alliance it's essentially um an economic arrangement of collaboration and Partnerships at various stages um and various sort of strengths um so in that sense it's like a g it's like a G20 um so it doesn't necess commit members to a whole lot of kind of mutual or bilateral commitments but it expresses kind of an orientation uh to certain political values and and and patterns of trade um that I think reflect a larger pattern of multipolarity right that I think that's
(15:05) pretty obvious at this point that there is no dominant hegemonic power like the United States that can just um police all the world's hotspots and can sort of enforce a certain system of rules and and state behavior that it was able to kind of do in its hyperpower moment um that that system is gone and so we're seeing is sort of this uh you know emerging new pattern it hasn't yet set into a new equilibrium it's a multipolarity un like you know the Cold War sort of bipolar system or kind of the the short post-war sort of uh sort
(15:34) of unipolar hedonic moment which were quasi stable systems where you could have kind of two great Power Systems essentially compete uh for for the world and kind of divide up and all sort of middle Powers had to kind of pick aside um you know most non-aligned powers you know were kind of on the margins uh in the postwar era the United States kind of rule the roost uh for for a short period of time now you're seeing kind of emerging Challenger powers and middle powers and balancing Powers kind of all kind of re recalibrate their
(16:03) relationships globally and that hasn't taken you know that hasn't resolved itself into a new equilibrium right it's still very much an unsettled uh State and so the brics uh phenomenon which is you know kind of a misnomer in terms of the membership now it kind of spans you know many different countries and many different continents um and and many folks that are members of bricks are also strategic partners and allies of the United States like the UAE and Saudi Arabia so there's a lot of folks that
(16:28) are essentially especally ese in the Gulf countries um and some folks in South America that are essentially trying to play Both Sides right as you as you see essentially in the multipolar system it's sort of geopolitical promiscuity right right where there isn't just one major power that you kind of have to pay fty to now there are multiple powers that are all vying vying multiple great powers are all vying for influence and they can sort of um and those middle powers can sort of uh you know play each side off each other to
(16:53) get benefits for themselves I think you're seeing folks like the Saudis and the amadis really being successful at that strategy and so um what that has implications for in terms of the monetary and financial system I think is very important because um many of those countries want to preserve as much as possible their strategic their strategic autonomy right they want to have um as much um as much sort of optionality and how they conduct their economic Affairs as possible and they recognize they're sort of emerging
(17:20) from a legacy system where because it was so uh subject to such hedonic dominance by the United States they didn't have that flexibility right so the Saudis in the right the main Arrangement there was was pretty clear it was you know we will provide military protection um you'll buy our arms and weapons you'll um sell your oil for dollars and you recycle those dollars back into our weapons and our debt and you did that for 50 years and we hold those we we agreed to hold your treasury Securities in a secret account um
(17:47) because for for for regional sort of Politics the Saudis didn't want to to to have it be known that they were um they're funding us uh essentially US military um and that that Arrangement is now kind of reaching um its end point but it could still sustain under a different logical basis especially you know the the the relationship between us uh and the gulf countries and the gulf countries and China is like I think the most important kind of prism to see these these changing Dynamics um in in particular you know if you look at those
(18:19) those Gulf those Gulf states that have uh they're now sitting on you know trillions of dollars of of dollar reserves many of which have been have been moved into Sovereign wealth funds and those Sovereign wealth funds have then been deployed for strategic purposes for those Gulf countries to try to um to do a few things but uh one of the most important things is try to you know transform their domestic Pate economies into more you know Leading Edge technology um uh and emerging energy sort of sort of technology so
(18:50) they are trying to transform their their position in the global sort economic system from just being a provider of raw Commodities to being a kind of a key hub for you know AI semiconductors telecommunications networks and hubs throughout the region in Africa and so that is that is their strategic objectives um and so their monetary plans are always going to be sort of Downstream of their larger strategic objectives and so for example if they have if they can you know acquire valuable assets and Technologies using
(19:18) dollars then they'll re redeploy those dollars to you know uh the AI uh sort of Entry ecosystem and they'll try to then use that influence to pull some of that technology and that capital and that Talent uh domestically to build out their own indigenous capacities to sort of reinforce their role as a as an innovation hub for those for those Technologies if China can offer uh Military Support intelligence support security support um as well as other Technologies like Huawei 5G or or construction uh you know expertise for
(19:48) big Mega projects then they'll look to recycle those surpluses uh uh to the Chinese and if the Chinese want to you know demand uh payment in in Yuan for those services then then it's likely that will happen so I think you'll see kind of a uh you know on the margin a rebalancing away from those Petro States from Pure dollar-based recycling uh into whatever unit of account is necessary to to to purchase the Strategic um uh services and goods from essentially whether it's a us or China Tech and
(20:20) Industrial ecosystem and I think that's that's that's what you're probably going to see it's going to sort of take place on the margins um but for that sort of China shift or or China balancing to take place they kind of need to have new infrastructure new Financial infrastructure kind of created right because this doesn't happen overnight it's not just political decision to sort of red denominate sales it usually requires you know setting up you know Financial uh uh an Institutional infrastructure and I think
(20:48) one of the you know key pieces of infrastructure that's being put in place is um you know exemplified by project embridge which is kind of a crossbridge cbdc uh project sponsored by the bis but essentially it's um essentially Chinese project with several South Asian States and importantly now Saudi Arabia and and the Emirates um and so you can imagine if that sort of starts to scale become like institutional um you know in state level system to actually uh hold you know lots of transactions um uh kind of a way to
(21:22) kind of bypass the Legacy dollar clearing and settlement system right I think a lot of um folks in the Middle East sort resent the fact that if they want to send a dollar payment uh you know essentially has to go East before it can go I mean has to go west before it goes east right it has to essentially be routed through the chips clearing Network in in New York uh before it sort of waterfalls through the correspondent uh sort of banking system to whether it's a bank in um in Vietnam or a bank in the Philippines right uh and so I
(21:50) think that that that logic holds both at the state level uh where they don't they don't like to be vulnerable to these uh potential surveillance and choke points uh powers that the United States has over the dollar Financial Network um via things like ofac and finsen so ofac gives us sort of a choke point capability over the global dollar system and finsen gives us sort of a global surveillance capability and if you're a middle power you know you you you are trying to remove as as much possible elements of or points of coercion or
(22:18) exposure you have to uh another great power and so you want to have you want to have you want to have redundancies right you want to have backups you want to have alternative uh no uh sort of sort of clearing and settlement systems uh so that you can conduct your trade that you have the Strategic autonomy that you that you that you desire and so I think that's all basically motivating the construction of these alternative digital um uh Arrangements uh at the state level and I think it also is going to Cascade and
(22:45) you're seeing it you know be motivated at the at the individual level like with dollar-based stable coins for example if you're a if you're a a foreign worker in the Emirates and you're getting paid in in um in dollars or local currency and you want to send that back as a remittance payment to your family in say the Philippines or in India well you know as with all remittance payments you're going to be taking you know a massive um you know hit on on all those different fees whereas if you can just
(23:08) send a stable coin um you know essentially peer-to-peer from you know your self-hosted wallet to your cousin or your or your or your wife's wallet back in the Philippines or in India well that has a lot of value to you um and and I think that's you know an endogenous demand for for for the the the populations in those in those countries as well so I think all those Trends are sort of pushing in this direction of a proliferation of um novel digital Financial networks and the sort of Legacy correspondent banking system
(23:40) that emerged in the post-war era that sort of has been the mechanism by which the US has kind of projected uh Financial economic dominance you know it sort of has reached a high Watermark I would say doesn't mean it's going to collapse but it means that there's now a strong incentive and also just endogenous um technological drivers behind the creation of of alternative Financial systems and networks that the United States either just um ignores that those are being created or um can help you know Steer and shape how those
(24:08) get formed and which of those key nodes um emerge uh in those in those in those uh in those new networks perfect layup for my next question which was are we asleep at the wheel because it seems that a lot of this has been somewhat choreographed and it's almost like the US Financial system is a frog slowly boiling in water as other nations begin to form alliances and do things outside of the purview of the dollar system and I think I I was going through your Twitter earlier today and Logan can pull it up but you tweeted
(24:43) last year quote Tweeting or a quote from the Saudi aramco CEO from March 2021 basically signaling that Saudi aramco is really going to lean into supplying China with energy for the next 50 years and signaling that there's going to be a stronger relationship between China and Saudi Aro specifically but the illusion there is that Saudi Saudi Arabia the country as well and so it seems like a lot of moves have been made on the chessboard bitcoiners and other macro analysts have been calling this out for many years the quote
(25:21) unquote oil Wars or the bricks currency Wars whatever you want to name them and at least from my perspective looking at what the current Administration has done over the last four years it seems like we've been asleep at the wheel and a lot of this has been happening with little to no push back is that a correct assumption in your view or is the US government doing something to position themselves for relative success moving forward I think we belatedly woke up uh to the Strategic um implication of China's uh you know um
(26:03) you know success in both recruiting and also engaging diplomatically in the region and you know just you know I think the biggest manifestation of that was the before the October 7th uh Hamas attacks you know China was very much now like a Middle East player and was basically developing and secured a Repro between Saudi Arabia um and Iran so kind of a historical achievement uh where China was now essentially uh the Diplomatic power broker in in the Middle East which for the United States's historical standpoint was kind of like a
(26:34) an oh moment um and I think you know there isn't like always an All or Nothing thing and there's always like countervailing objectives that say the Saudis have and playing off the Chinese against against the United States for their own for their own strategic purposes obviously China looks to the Saudi Arabia as a critical provider of their Commodities right that's just like that's like the foundation of their relationship they just rely on those energy Imports um so you know China has also reciprocated providing um you know
(27:02) ballistic missile support uh and is willing to accommodate saudi's um you know Adventures uh in other parts of the world you know as part of kind of a like there's there's a certain part of this which is geopolitics and the certain part of part of this which is you to think about the CCP the ruling families of the gulf countries as their own sort of like extractive Mafia right and so some parts of these relations are motivated and sort of seen through the prism of states with tax bases and populations and um big big bureaucracies
(27:35) and some parts of these relations are you know essentially motivated as like different mafias like carving up territory right and doing deals to support each other's um you know criminal ever sort of criminal Endeavors and I think you to a certain extent you can see the ruling families of like the amadis and and the Saudis and and the CCP essentially is like mafia families um and and you have to kind of model that into how you think about how they how see the world and to the certain extent look at uh because if they're
(28:03) essentially small groups of people that control vast quantities of wealth they can do things that you know don't look like traditional State Behavior right they don't look like you know setting up military bases they don't look like you know doing Port calls with aircraft carriers or doing training missions Etc right they look like Venture Capital Deals they look like um you know cutout llc's putting millions of dollars into Western Banks and financial institutions and those um are for other strategic
(28:31) purposes whether it's to acquire strategic Technologies or investments in different firms whether it's to influence the political systems in the west um you know via outright corruption or political you know donations and I think we have sort of discounted the the nature of the sort of Saudi uh or sort of the gulf East uh alignment is essentially if you zoom out like where the surpluses are they were essentially in Russia you know were in essentially in Petro States and in manufacturing you know Powers essentially you know OPEC
(29:03) plus and China and so the the way that the US has sort of run the last 50 years is that you know we would be the consumer of global goods and so therefore we would essentially stimulate the economies of the global South these emerging markets that produce raw Commodities and then climb the value chain and Manufacturing and then they would recycle those dollars into our debts in a sort of a controlled safe fashion where like we could um sustain the benefits I think those emerging Powers sort of woke up though and they
(29:31) realized they could leverage those dollars to um to essentially corrupt the Imperial core right to sort of insinuate themselves into our into our into our system and S to extract strategic benefits for themselves and I think that's what you've see now and and I think though the Russia I think Invasion has sort of broken kind of one one aspect of that um what was more of like a quasi like just pretend it's not happening Arrangement because now we had to go out and sanction all the Russian oligarchs and that kind of broke sort of
(30:03) an implicit part of the deal right was the Russian oligarchs and everyone in the Russian system could get immensely wealthy and they would just recycle their their wealth into Manhattan South Beach Miami London Mayfair you know real estate Etc um and then Russia invaded and now we have to sanction all of those all those oligarchs seize their yacht seize their property Etc and I think that signal then was cascaded down through what you know I call this kind of this you know State quasi mafias um who were doing the same sort of thing for the
(30:35) past you know 30 years and now they have to look at the that Arrangement very differently and so those Gulf Powers those you know Gulf uh you know Elite royal families the Chinese uh sort of elite families that have you know hundreds of billions of dollars in real estate overseas they have to sort of reassess the risk to those assets uh and start to find Alternatives right to protect those assets right and also try to construct alternative um financial institutions that they can that are more safe for them um so like a great example
(31:07) of this is is is Switzerland so Switzerland has been seen as like this Bastion of you know Financial autonomy and Independence and you know banking secrecy for 100 plus years it's where all you know the the world's Rogues kind of hide their money and swiss numbered accounts and or just gold gold bullion inside mountains and they looked at the Russian invasion the sanctions and the Swiss government uh you know passed changes to their Bank secrecy laws that essentially you know undid a huge portion of of the secrecy
(31:35) protections um and then number of accounts were essentially unmasked and had assets seized and that I think is like a sense like a shock wave you know not at the geopolitical level to first order but to like those like networks of mafias that control trillions of dollars right but also happen to be you know sort of heads of states or cousins of the heads of states right and so it does have geopolitical impacts because what it then precipitates is uh for example the emergence of um alternative Financial Centers like um like Abu Dhabi
(32:04) Global markets in Abu Dhabi or DC uh in in in in Dubai that are now trying to essentially position themselves as alternative Financial Centers to um absorb some of that um scared Capital right and so to the extent that this Capital starts to flow out of say the city of London flow out of Switzerland flow out of New York and Miami real estate into abuabu uh into uh Dubai into Singapore into Hong Kong that is a strategic challenge to the sort of the whole Global Arrangement right um now Saudi Arabia so this is where it's like oil matters but
(32:40) it's like oil is just one input into like okay they sell the oil but then they get a bunch of dollars what do they do with those dollars right that actually matters a lot more than just the unit of account they used to sell the to sell the the um the commodity itself because it's that it's that Capital that is what provides power depending on how it's deployed in in the global system if it's just sits in a treasury account you know at the FED it doesn't give the sa is a whole lot of power it's safe to the extent that they
(33:08) think that it's not going to be you know you know blocked or or or um or devalued which is increasingly new risk they have to price in but they also realize that the value of that Capital can be deployed much more strategically and so this is why you've seen the emergence of sovereign wealth funds like the PF like adq like Adia like um like mgx and as and also the Chinese have their own sort of s Sovereign leverage funds to do something similar um and so the world is now being sort of shaped not just by
(33:36) kind of traditional geopolitical um you know arrangements or sort of you know tit fortat kind of traditional diplomatic U and Military um kind of positioning but now the sort of networks of immense Global Capital flows that are controlled by a small number of sort of autocrat um sort of Elites in the Gulf uh in Asia and the West sort of has a Str vulnerability to that right because if you if you talk to any venture capitalist now or private Equity uh you know firm what they'll tell you is that like the marginal source of new dollar
(34:12) investment um is coming from the Middle East it's coming from Saudi Arabia UAE Qatar Kuwait barock rain to a certain extent um and so you know you know he he who you know writes the checks calls a tune right so you have like just like shuttle flights of venture capital uh heads and private Equity you know honchos just just flying back back and forth to Riad to Dubai to to Abu Dhabi essentially begging for money right essentially trying to um you know uh make themselves uh friends of of the elite uh sort of families that run those
(34:48) S wealth funds and if those same vure Capital funds are investing in what we would call like deep Tech right the kind of strategic technologies that we think are going to be necessary to maintain our economic dominance and uh say Aerospace and defense uh you know emerging space economy AI in particular but also Quantum Information Systems synthetic biology these are kind of the frontier of strategic technology competition that we sort of currently have a a critical lead in um but those ecosystems are now effectively being
(35:22) penetrated compromised by Saudi and Amara um money which is Lally looking not just for like Roi like a traditional Venture Capital investor would be but they're looking for strategic Advantage they want those Technologies um you know produced uh and they want those Champions domestically they want to have those those sort of innovation clusters within their own jurisdiction they want to have the chip Fabs they want to have the training data centers they want to have the AI researchers they want to have the synthetic biology labs they
(35:52) want to have the space launch and satellite design they want to have those Technologies and those Industries um in inside their own countries uh and so they're aggressively deploying those Capital to capture the Strategic Frontier and try to pull using that influence pull those Industries domestically um and so that's I think is is where the new battle lines of strategic competition are it's not just over kind of who's going to denominate oil or gas in what what unit of account but it's also who's going to dominate
(36:18) these emerging strategic Industries and the traditional frame has been kind of US versus China and the amares and the Saudis have been really clever and positioning themselves in between uh to sort of play each off each other and to sort of position themselves as sort of um like neutral ground uh both for scared Capital as well as for these emerging technology so we'll see if it this Gambit plays out sort of in very much the early Innings but that is I think a new dimension of global competition uh that we're going to see
(36:45) kind of probably become much more important uh in the next in the next few years yeah this is the reason I wanted to bring you on because we had a conversation about this off the Record probably about a month ago not at this point but I I I can just confirm personally it it when you talk about like strategically taking advantage of an opportunity the Middle East particularly the UAE Saudis qataris Emirates um in that in that region they've really taken advantage because if you look at what's happened
(37:21) domestically here in the US in the Venture Capital Market post 2020 you had insane blow up in 20 like blow up in terms of asset bubble blow up in 2020 21 and you had a lot of funds raise a lot of money deploy a lot of capital at insanely inflated valuations in 2022 2023 with the market down term uh really put Venture capitalists and America in weird positions because they didn't have any returns to their investors from their 2020 2021 vintages and the LPS were sitting on the sidelines seeing that they were extremely Overexposed to
(38:03) private equity and so they all sat on their hands saying hey we're not going to not all of them but a good portion of the capital that would traditionally write checks into Venture Capital funds is said hey we're going to take a break here wait until our portfolio allocations rebalance and it makes more sense for us to allocate to private equity and you have the Middle East countries swoop in and say hey we've got money we can we can fill those funds up if you need them and they have obscene amounts of money and I mean I've
(38:34) seen it in the Bitcoin space as well I mean I mean it's pretty public too you just look at the amount of people that are going over to Dubai specifically to spin up companies and um domicile parts of their company in the Middle East and Dubai specifically and Buddy up with uh the capital allocators there and it is purely incentive driven where it's like hey we're running a business here where we need to raise and deploy money we're not able to raise in the US so we're going to go to where the money is and
(39:06) it's that's how it's played out the last two years yeah I think you're you're right I mean they have it's not just the money too I think in in digital assets they have really provided kind of a red carpet for um businesses you know very light touch regulatory very fast bureaucratic approvals very much kind of like a blank slate that they're um it gives them a lot of flexibility to craft uh sort of innovation friendly uh legislation that is like a competitive Advantage when you're competing for
(39:38) businesses and and and and startups it's really attractive kind of value proposition and I think there's like um uh you know a lot of Western Banks know spinning up kind of you know arms or subsidiaries or kind of spin-offs um to basically do trading activities to do things in dig elastics industry uh with you know like uh companies registered uh in in either you know um Abu Dhabi or Dubai and offer to doing it with with Partners from Hong Kong and so you're seeing kind of this you know it's like
(40:11) the first mover Advantage is very strong if those companies that have all that Legacy experience um you often they come from trafi and then sort of you know sort of adapt those skills for whether it's you know Market structure whether it's certain sorts of um setting up of of broker deal arrangements or or sort of trading infrastructure or capabilities that allow them basically you know create you know First moover Advantage in these regulatory sandboxes that have been established in in really the Emirates and and in Hong Kong and
(40:40) Singapore to a certain extent and that first M Advantage you know could could become strategically important in the next few years um us is is kind of you know definitely behind behind the curve uh when it comes to that I mean we have now the ETFs of course um we have the Legacy you know Bitcoin mining presence we have you I think a strong a strong sort of foundation but I think the you know the the the broader the broader environment is becoming extremely competitive for for where the next Tron of those businesses are goingon to gonna
(41:10) are going to set up and I think the the larger strategic play for those for those countries is to try to you know suck as much talent and capital uh into their own jurisdictions as possible I know that uh the DC you know was created Asen as a clone of the city of London um I think the lawyer who wrote uh who helped them write the the kind of like the set up the framework for the DFC you know was like you know one of the sort of top guys in the city of London you know 20 years ago and sort of crafted a uh you know a a sort of English law
(41:44) common law based system sort of to mirror the city of London so that contracts and legal agreements and disputes and arbitration would essentially be sort of mirror images of of the city of London system which if you think about it from like a you have this sort of Legacy node up here that has all these you know connections to it that would normally give it a lot of stickiness in a global system like you have a node that has a lot of other nodes connected to it it's kind of hard for other nodes to kind of like defect
(42:09) from that connection right because there's a lot of like sunk cost and sort of inertia and also just like embedded legal and historical connections that make it hard to kind of displace that node from its from its you know kind of dominant position but if you have like another node right say you know the DFC or or uh or or uh or adgm node that are basically almost like clones of kind of have the same connection points have like the same internal structure and sort of legal framework as that node that it's trying to displace then it's
(42:39) much easier for kind of the Legacy connectors to that old node to kind of just like create new connections to that new node and the more those connections kind of uh you get duplicated or even just swapped out you know the easier it is for that new node to kind of take over the role uh that that old node used to have it's more it's easier now for thec to kind of take more and more of what the of what the city of London was doing that's why I think people you know look at Dubai and like in England as
(43:07) like these geopolitical actors when I sort of think as like the sort of um nexuses or NEX ey of of law co uh uh you know like sort of legal codes social codes and capital and that if that's a convenient marriage of those things that work for the interests of the parties involved then you actually can have like a quick a pretty a pretty fast transition of the Legacy Network structure to a new configuration and I think that's like the the risk that we like we think the Legacy system is really sticky right that the dollar
(43:39) system is just so sticky because it's embedded in this you know very complex hierarchical correspondent banking system that's sort organically evolved over the last you know 75 years and that there's just a lot of embedded uh stickiness to all those relationships and all those um sort of patterns of corporate uh Financial relationships um I think what you're seeing these emerging isn't like a an attempt to replicate you know that same kind of messy organically evolved correspondent banking system what you're seeing is an
(44:09) effort to kind of um you know create like a new sort of from scratch sort of you know much more like uh Hub and spoke but on these digital rails uh sorts of systems that are much easier to kind of like create because you don't really need to do this whole massive messy multi- deade long process of correspond banks that just were sort of going out into the world and doing resource deals and had to do trade finance and the trade Finance turned into you know more more complex kind of dollar Finance um sort of instruments and sort of the
(44:38) Legacy Western you know us Capital system kind of built on top of that organically you know these emerging hubs uh can kind of like come in at the top and kind of just kind of create much more efficient um you know uh kind of on to many relationships as long as they have like the legal framework um there and I think that's that's what you're seeing kind of the the play by these uh by these Gulf powers in Hong Kong and and and Singapore to do now whether you know it succeeds to like take over right
(45:09) or whe they just emerge as like you know alternative you know key nodes in a global system that are sort of competing on par with with h with the city of London and and uh and uh you know other offshore centers so but that's that's I think an an important feature of of their of their activities that doesn't get um a whole lot of attention quick break here freaks this rip is brought to you by gradually then suddenly a framework for understanding Bitcoin is money by Parker Lewis I wrote the forward to the book I'm honored to have
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(46:26) your business create a redundant rail by accepting Bitcoin as payment using zap rate and reduce risk for your business I've done this for my business here at tftc we use zap right it allows you to easily create invoices payment links or connect e-commerce stores connect your wallets or custodial accounts and be set up in minutes we can also connect our bank accounts our stripe accounts or Square accounts to accept Fiat as well the time is now freaks the Fiat system is fragile invest in the infrastructure
(46:54) that dris the future invest in yourself Bitcoin payments with zap rate go to tftc to get $40 off their annual subscription tftc $40 off competition's good I think it's safe to say that the us both the political and financial perspective has gotten a bit complacent over the last couple decades and obviously gotten out of control particularly on the monetary financial and debt side of things and it would make sense that if this hyper interconnected system and some of the individual participants
(47:34) within that system notice that the the Nexus of the system is somewhat rotting at its core that they would move to create alternatives to secure their interest and their financial well-being but you see this as a I'm trying to think of how to phrase this like is this like this should be expected like this is just the way the world works um opportunities arise people take advantage of those opportunities seems that America um up until recently I think you said belatedly has become aware of these facts happening has been somewhat
(48:10) sleeping at the wheel but now we're aware of it and I guess that's my question like what is the reaction and does it even have to be political this is where I'm getting because it does seem like there's an emergence of actors within the private sector particularly in defense Tech and I would even throw big acquainted to that to the financial side of things that have acutely recognized these problems and are actively working within the private sector to solve some of the defense issues that exist and on
(48:41) the Bitcoin side the the monetary and financial problems that exists like do you have hope that the private sector could help navigate our way out of this yeah I think uh it is one of our sort of historical uh strengths right right America's kind of entrepreneurial Spirit our um just our sort of ability to kind of Imagine something from scratch and then create you know Global strategic Industries right it's been it's been it's been like a historical trump card for for American power um sort of you know clusters of innovation
(49:16) that really explore and then conquer kind of New Frontiers um and so yeah I I never want to like you know you know kind of doubt our ability to to kind of come back from from the brink right and really kind of um Marshall our Collective energies to to um a strategic purpose um and I think you're seeing some of that emerge uh again it's sometimes shroud in a bit of hype um and kind of the marketing speak by a lot of the the funders involved but I think there's a core there's a core um Trend underway Under the Umbrella of you know
(49:52) what you might call the a16 Z's like American Renaissance despite how maybe Hollow that is to a certain extent in my view um given that it's mostly Saudi Saudi money funding it um but uh but I think in general like there are a lot of like 20 somethings in the gundo valley a lot of smart aerospace engineers folks that now have access to um capital from whatever sources to pursue pretty in interesting ideas and I think you're seeing a convergence of attention given I think an alignment of Interest now that wasn't really in place
(50:24) a few years ago but is now I think pretty firm among certain subsets of like the three Core Power centers of the US right which essentially is Silicon Valley uh Wall Street and DC right like those are the three power centers really of the US and you have Dallas you know Houston you've got the energy Nexus there but you know that's kind of its own OPEC Island right they're like a mini us you know non OPEC member right but in terms of this phenomenon you're really seeing is is the Silicon Valley
(50:54) kind of Tech Community subsets of that align with subsets of kind of the Wall Street um Community that's you know not entirely compromised by China and then you have subsets of of DC especially the defense and intelligence community and some of the political um the political players they're also not compromised by China um kind of kind of reach common cause where they recognize that regardless of who wins in the presidential election this year we're g to have an a pretty old president that will preside over a very fractious
(51:26) country will probably not have a whole lot of political Capital to deploy in a lame duck presidency um and you know we'll preside over a global system that's increasingly under lots of strain um and aggressive and proactive challenge by by by adversaries and that is a that's an unsettling position for you know major major um you know captains of of of big Tech and emerging strategic technology Industries it's an unsettling position for you know hedge funds and and and and and and capital managers that are responsible for
(51:59) trillions of dollars uh of of of wealth management and it's unsettling for folks in the political defense and intelligence communities that um you know recognize that this next few years is going to be um you know very strategically destabilizing and and very challenging to manage uh and Protect US National Security interests and so that is there's like a sense that there needs to be kind of like um you know backup plans there needs to be like uh you know can't just rely on the White House to make
(52:26) good decision decisions right and and I think that is precipitating um actors you know on their own in the private sector looking to see how they can um you know uh kind of collaborate to to protect their own interests um and I think that's that's a you know that's an interesting phenomen we'll see how how well that Tak shape the one problem with the private sector is you know there's not like a natural uh orienting function right like they all have their own you know narrow competitive interests um and
(52:54) and those have traditionally been you know easy to exploit by you know powers that just want to you know buy their technology or or you know some somehow diverge the financial interest from the larger strategic common purposes they might otherwise want to support and so that's an interesting new phenomenon um I think it's you're also seeing you new players in the game right that are now pretty sizable like like andril and paler and SpaceX that have you know serious strategic capabilities um you know starlink as you know like was
(53:24) critical to Ukraine's defense um it's probably going to be critical to maintain communication lines in Taiwan if if China ever got frisky um it's being seen as US military they're creating like a separate constellation just for the US military called star Shield um it's be you know highly resilient capable sort of low earth orbit mesh Communications for you know a lot of different strategic purposes um so you can imagine capabilities coming out of these you know relatively new defense companies right andil Palo for
(53:51) software and AI andrell with you know essentially swarm drones of all different modalities under underwater surface Airborne Etc that you know now provide capabilities that are sort of um you know that that are not coming out of like the Lockheed and the boeings of the Rons um and they could be coming out uh in scale uh in the next few years and that's like a new phenomenon um that I think didn't exist before where you have essentially these Silicon Valley defense Tech primes that uh are being led by
(54:22) individuals that are not from the traditional defense Contracting Community right like Elon and Palmer lucky and Alex karp uh the Peter teal types these guys are not you know your typical you know locked executive right um and that that's a new Dynamic that I mean we'll see how that plays out but that's and it's potentially different because there's a lot of you know like literal chips on the line right you've got trillions of dollars of Western Equity that is now like an inverted pyramid resting on the stability of the
(54:50) Taiwan situation um and so that's that generates a lot of anxiety right uh among on those investors that have you know literally trillions of dollars in in paper gains uh on a certain configuration of of technology and capital um that's that could be vulnerable if one man president shei decides to um to take a gamble in the next few years and so that's an interesting position for the globe to find itself in where we've never been like richer than than we've ever been uh we've never had as much like
(55:21) technological possibilities laying up before us with the you know explosive growth of AI um and yet we've never had the sense of such acute vulnerability and fragility and I think that that combination is likely to sort of you know Rel to you know different sorts of reactions um and Arrangements of how you think about securing um strategic interests uh that that we haven't seen before um it could almost go back to like a more uh kind of pre pre- West philan State of things right like the concept of westan sovereignty was
(55:52) predicated on kind of a a very PR like a pure physical geography you standing armies that invade and Conquer you know subject neighboring populations extract the resources Etc um sort of global environment we're seeing right now you see like a mix of those old traditional like types of Wars like in Eastern Europe uh which are just you know like like land grabs um for resources and strategic depth but I think globally the US China competition is not really a competition about that to first order it's a competition over these Global
(56:24) networks right global trade Global digital um and financial clearing systems uh and then these emerging networks of value and energy um that are essentially going to be embedded on on top of AI and increasingly Bitcoin as well so I think that is that's a fascinating new development that changes sort of the pattern of what we think competition will look like um and it you know it's going to unfold I think in in ways that we had we don't have a whole lot of like historical templates for yeah when you frame it as we've
(56:52) never been as wealthy as we are as a society globally yet probably never as fragile either it just makes my mind go immediately def fery Paradox like we're not going to break to the filter like well yeah I mean we're seeing a lot a lot of things kind of converge in this decade and I don't know if it's just um you know what do you call that uh uh like parap pidia where you just see patterns where you're just you know where it's really noise um but if you look at like like you're seeing a rise in in all
(57:33) these different domains of uh of a of usually an obsession over some near future event or precipitating uh kind of Crisis that uh that we're sort of you know we're heading towards and we can't avoid right and in the traditional geopolitical space you see this as uh China's Taiwan Invasion that's like that's like the that's like anchoring kind of like inflection almost like Event Horizon it's like we're we're either converging towards it and everything after that will be fundamentally unknowable and
(58:06) most likely destructive um but like that's like the anchoring point is a China Taiwan invasion in geopolitics in the financial space it's another Financial collapse it's you know runaway you know hyperinflation with dollar um sort of dollar debts reaching like a critical inflection point so there's a strain of folks in uh sort of the sort of like the fwit space the look out over the next five or 10 years and see like it's a very fragile system you know eventually we'll have to do yield curve
(58:32) control and that'll precipitate like a loss of faith and there'll be Capital controls and effectively have to wipe out most treasury debt and so that's like the anchoring future event that we're sort of building towards it's a big crisis and everything after that will be nothing will be the same um and Bitcoin is sort of a is like a outgrowth of that but has its own kind of future event which is yeah like you know some version of either hyperbitcoinization or some inflection growth of of the price
(58:58) of Bitcoin Global adoption nation states competing that there's like going to be some event or some um uh triggering uh phase transition that after after which everything will be different right um and I see same with with AI that were you know increasingly serious um prognosticators say that you know at their current level of of sort of exponential growth about 5x per year or doubling time of about every six months in terms of like the total amount of compute where using to train sort of Frontier models that by 2027 2028 we
(59:31) could automate sort of AI researchers and once we automate AI researchers then we maybe hit like this sort of um sort of bootstrapping feedback loop where you get like an intelligence explosion and you get something past Ai and so the same thing with like the UAP conversation that we've talked about right there's like a sense that in the next few years there could be some disclosure of some you know other piece of information that has you know here to for not been widely recognized by by most of society that after which
(59:57) everything will be different so I see like across all these radically different domains there's like a similar psychological orientation towards a highly disruptive you know phase transition event crisis in the next few years and I think human beings are very much like prone to like you know catastrophism prone to like um almost apocalyptic styles of thinking um and it tends to make the world a bit cleaner to think about because if you think there's just going to be one big event that you have to prepare for and you have the
(1:00:27) inside straight for it and that you know after that one everything that you've been saying will be proven right right so for the folks that are like the China bears that are just like non-stop beating the war drum you know they'll be proven right for the Bitcoin you know uh uh kind of bulls would be like you know hyperb oranization I told you so for the for the pro UAP disclosure people be like you know what I told you so for for the AGI people be like yep it's like we're all going to be you know uploading
(1:00:54) our brains to to to to to the cloud and we're going to like you know dominate the future ly cone of human civilization and and they were the ones kind of at the front at sort of the Vanguard of that so there's you know there's a lot of this sort of thinking I see across all these different domains um and they all sort of Peg their like window for whatever that event is towards like the latter half of this decade right 2027 2028 2029 and I don't know what to make of that other than just it's just maybe
(1:01:25) it's a feature of of our colle Ive um thinking now that that after Co and Russia that everything kind of became very unstable very unsettled and we've just been you know we're all just now link looking in whatever our domain of of interest is looking for like the next the next big event that's going to be like the one we just went through right and and then we've been all been psychologically conditioned from covid that maybe some of us didn't feel prepared for then I we like over overreacting and we're like okay we need
(1:01:53) to prepare for the next big thing that's going to break the world system right um I I tend I tend to think that all those things have like a plausibility to them but I also tend to think that the world never just ends or goes through like a radical just like black hole in you know inent Horizon like it's always it always looks like that from from the standpoint of history but when you're going through it it's just like a messy Evolution and it's a transition to some other configuration that makes sense once you get there and
(1:02:21) it's never like the end of the world it's never like an apocalypse it's just different and there's a logic to how you got there that you know from our standpoint now would look like a radical jump or or transition but also Humanity has gone through many many of those before right of various kinds whether it's plagues and you know massive natural disasters world wars um massive industrial Transformations so I think it's not like a new thing um so that's like my Baseline expectations is it'll
(1:02:51) be just be like the ones we saw before um but it could you know still be disruptive it's just not going to be you know the end of all things or the you know the the great Redemptive moment for your particular um Obsession sorry that was a bit of a rant no I love that rant it aligns aligns perfectly with the sovereign individual thesis that was put forth in that book it's essentially that we're we've found ourselves at this 500e super cycle inflection point and these inflection points are typically
(1:03:23) extremely chaotic in many different domains politically monetarily techn technologically um and I think that's what we have to fall back on and then of course the social media age just accentuates all of this as you can communicate globally instantly and not only communicate but um observe and absorb information as it's being put out into the ether not to The Ether but put out into the internet on a second byc basis yeah it's fascinating that um you know this is the challenge I think the Western liberal democracies is gonna
(1:04:00) are going to face is democracy is sort of easy to it's easy for a power elite to accept when economic conditions are somewhat stable and positive I mean that's sort of is like there's like a a social contract there's like a there's a sort of an implicit trade of um sort of freedom of movement freedom of decisions freedom of speech Etc that can be accommodated by by an economic system Allied to a political system that kind of rising tide lifts all boats and that was kind of America in the post-war era we obviously hit sit
(1:04:39) some snags in the in the 70s but I think overall we've had the sense that you know the the arrangement between liberal democracy and and now techn capitalism is starting to diverge right and that is a that's a major challenge because I think you're seeing this kind of manifest in different ways um by folks that wouldn't traditionally kind of you wouldn't think would be aligned politically right uh like there's some folks that in sort of like the AGI like AI lab space that fundamentally think
(1:05:10) the risk is so high of like a runaway AI um intelligence explosion that we effectively need you know what would amount to like maybe benign Global totalitarian control over Computing right that we need to have onchip veilance of every compute load that's run in every data center around the world and to do that we need to have agreements in place with all the major great Powers including China and Russia as like the overriding almost like supervening you know civilizational prerogative that we need to now surveil
(1:05:42) all Computing in order to prevent the emergence of this you know existential intelligence explosion AGI like there's serious people who believe this and it's and they're not necess making it their their main policy program but that it's sort of in in The Logical and state essentially they need to then construct and need to lobby for political Arrangement that is effectively digital totalitarianism right there need to be complete surveillance and control over the computational substrate uh of civilization that's
(1:06:10) going to emerge in the next five next five or 10 years um and it's maybe well motivated it's motivated from probably folks that five 10 years ago would be like Bernie voters like very progressives like very much like anti- big Wall Street anti- Banks probably hate you know you know sort of what they see as like sort of Neo fascist uh sort of magas but in their mind there is this there's this new threat out there that some of them might be creating in their minds but that it will require policy framework that is effectively digital
(1:06:38) tarianism and of course China would love to hear that like that's that's music to their ears right um and I and I I think this starts up on the fringes now but I think I I people might call me a bit you know his histrionic I think this this will become one of the defining political debates and it's Downstream what you just mentioned terms of like social media conversation broader freedom of speech the broader sort of um you know uh social contract of Western liberal democracies in an era that's
(1:07:04) defined by intense geopolitical competition between systems different systems of government and power us China particularly kind of the liberal Oceana versus kind of um autocratic Eurasia as well as different technological systems right uh that are increasingly going to be like a stack of you know sort energy inputs you know Computing and then apis and sort of transaction relationships and increasingly like AI agents and systems of of relationships that that human beings and their beliefs and transactions are are embedded in and so
(1:07:37) you can imagine like Society in that in that construct like human society is like a there a relatively thin layer that's embedded in this very complex uh geographically mediated uh energy and computational substrate and so the the sort of political principles that Define uh you know whether you can buy and sell energy you know in a free market and whether you can run compute loads without you know government surveillance uh or you know like a like a choke point um sort of kill switch involved those are G be like defining political um
(1:08:12) debates that will inherently determine what sort of of space of of operating Freedom Society has right because it's no longer oh can I go plant a garden that's the space of Freedom that I think of like you 19th century you know Jeffersonian democracy like the space of freedom is can I can I say the thing I want to say to someone else on internet can I buy the thing that I want to buy can I pay using the thing I want to pay with can I consume the amount of energy I want to consume can I drive the kind
(1:08:38) of car that I want to kind of Drive where I want to drive it right like this sort of traditional space of Freedom we have for our daily life will all be essentially digitally mediated and so to the extent that those those digital systems that we live in and transact through are embodied in essentially a digital totalitarian or oriented system or a liberal Democratic oriented digital system those are like those are really like the fundamental like Choice point for you know the Western liberal democracies in the next few years like
(1:09:06) whether we decide to beat China we need to become like China just like our version of that kind of techno authoritarian system um or whether we find an alternative model that is still compatible with the technological path we're on as well as our historical um commitments to to Liberal democracy so that is that's I think where the Stakes are um and it's not encouraging to me to see you know our leading vetro capitalists essentially make common cause with you know um the nbs's of the world where you know I think it was um
(1:09:40) uh Ben Horwitz from Andrew and hores sits from Andrew and Horwitz who just raised $40 billion doar from the Saudis to invest in Ai and the argument he gave was kind of this torture justification and again they're they're very much on at least nominally on the side of like open source ing technology open sourcing AI they're very much against the kind of closed Microsoft you know kind of vision where it's like all proprietary black boxes you have to sort of pay rent to sort of as like surfs on their on their
(1:10:07) digital land um their vision is it's like open source competitive free market proliferating ecosystem which sounds great except you know the nominal justification was for open source was that we need to create open source you know AI models so that you know governments like like like the Saudis can adapt those models uh for their own political conditions and and he said we don't want you know NBS to lose power because an AI model you know was proliferated and you know led to like an unmanageable um spread of you know
(1:10:42) radical Islamic belief inside the kingdom and led to the the collapse of of of of of the ruling Elite so we need as like the West to create these technologies that help basically keep you know autocrat dictators in power um and that seems a bit uh you know uh I mean you could you can believe that but I would say argue for that not just say like I'm For Freedom technology therefore we need to have open source AI to keep you know uh Muhammad B Salman you know a ruler of Saudi Arabia because he gives us $40 billion right that seems
(1:11:15) that seems a bit um seems a bit uh self-interested um so I think that is that's that's the concerning part is that you know if we're facing this Choice point between two two you know paths in terms of how we build Society in these digital systems or based on these digital systems and the money that's being used to fund the development of those digital systems essentially coming from autocrats and they those autocrats want to leverage those systems for their own you know personal economic benefit as well as
(1:11:44) their political um you know the stability of their political rule uh well that's not that doesn't mean that that that probably is likely mean we're GNA not going to tip into the like the better part of that path right it's makes it more likely we're going to tip into this uh more dystopian path um and that's that's a concern uh and I I I you know I see this sort of play out on sort of the geopolitical side where you know if you read the articles about like the Microsoft g42 deal g42 is this emirati
(1:12:14) AI Tech conglomerate you know very much like um a national champion of the emirati uh State and you know the like like the ruling the ruling Elite you know we have you know been aggressively trying to pull them out of China's orbit into into US orbit you know secretary randoo even said you know that like this Microsoft g42 deal was essentially a win for bringing g42 kind of into the US camp and that you can only be in the China Camp or the US camp and that seems like a short-term geopolitical Point score at least to a certain extent maybe
(1:12:48) there's there's you know caveats to even that um given the nature of the deal um and how it's sort of phase two you know implementation might might go and the controls uh for those for those for those AI um models and everything else but in general though the relationship that we've the way we frame that relationship is like we need to influence the amiris to sort of come over to our side meaning the US Freedom good liberal democracy side and away from the China side the bad to you know digital
(1:13:16) totalitarians side um but I feel like that's like maybe like a pic Victory if in doing so we've effectively had to compromise all of our values along the way and we're effectively now committing to um you know uh an arrangement of Technology Capital that steers the the path of these of these digital systems down you know a path that's not in you know that doesn't respect individual liberty right uh and that's that's I think that's a concern right but that's not at the top of the policy space right
(1:13:44) the policy conversation is just be China right it's just okay it's just they got to be in our camp versus their Camp um it's not like a competition over value systems it's not a competition over uh conceptions of a of of a political order in a you know a digital Society um it's just you know it should be our spyware not Chinese spyware it should be our surveillance not Chinese surveillance right it's like well that that's not exactly a very attractive proposition um you know to I think go go out into the
(1:14:13) world and say oh okay yeah don't don't install the Chinese Huawei 5G you know and with like with the ZTE surveillance systems built on top of it and the and the chok pointable um you know digital Yuan and the mbridge sort of you know state-to-state kind of extraction system for digital clearing like just don't do that that's that's the bad digital totalitarian stack that China is trying to roll out around the world we don't really have an alternative model that's um right now align to our political uh
(1:14:43) beliefs at least our liberal um the liberal side of those political beliefs except for I would argue Bitcoin and dollar-based stable coins that are sort of in the private the private sphere where you know those are digital systems that I think are much more CL closely aligned to that you know Jeffersonian conception right uh and so if there is this you know that that's why I think Bitcoin is very important um as these systems start to take shape you know the role of Bitcoin uh at least to the extent that it can maintain that that
(1:15:11) orientation is going to be very important in kind of keeping keeping that that that balance between the Temptations of digital surveillance and totalitarianism from tipping too far again another another rant I love your rant uh comment then question comment I think the visualization description of the substrated layer of energy compute and Human Social layer is the clearest depiction of the potential dystopian digital future that lays before us in one path so kudos to that I think anybody who didn't pay attention during that part go
(1:15:49) back and listen to it I think it is in terms of describing the mechanics that would lead to that in future it is the clearest most async description I've ever heard on this show at least and then question like what would your solution all like if you had I know magic wands don't exist what would the advice to the people putting forth policy in DC what what advice would you give them how would you set up a an environment to compete with everything you just described yeah I think it has to start it has to start will with good
(1:16:27) leadership and a clear sense of what the stakes are like what are we fighting for are we just fighting for Microsoft's um market share are we just fighting for kind of shortterm you know interests of our venture capital and private Equity ecosystem that seems to be what has L us down sort of a you know maybe a deadend strategic straight or strategic road is we haven't clearly articulated what we're fighting for and therefore what is the what is what's acceptable what's not acceptable right and what tradeoffs are
(1:16:57) we willing to make right as a society and fundamentally this might be the part that inevitably we're just we're not prepared to to accept certain amounts of costs right like we're not prepared to allow uh uh we're not prepared to block say Saudi and Emira money into our Venture Capital system right like because our our our major political class relies on the donors from venture capital and private Equity um you know businesses and we just we just don't have the capacity to say no right so if
(1:17:29) I say ignore those political constraints the political economy of the US uh system given how vulnerable it is to you know essentially big donor capture I think the biggest important thing is just to say like what do we actually what's a vision of the future we're trying to build towards right and I think ironically our adversaries have done a much better job of laying out like long-term strategic plans like China has like a 2020 has has a 2035 long-term plan Saudi Arabia has Vision 2030 Emirates has Vision 2031 they have
(1:17:59) defined for their country for their Nation where they want to go in the next five ten years like this is the Strategic um you know plausible near-term you know point that we want to aim for this is what this is going to mean this is the these are the areas we're going to prioritize and this is how we're going to do it um now in what in messy democracies the operate under fouryear Cycles that's very hard to do but I think this really comes down to strong leadership if you come out the gate and you say yes there's 500 things
(1:18:26) on the plate of the president and Leadership of you know National leadership any at any given moment but here's here's a national plan for the next 10 years here's what we're going to do um and it isn't going to be the federal government's job to manage all those it's going to be here's what we think collectively these are the this is our strategic Advantage this is how we we preserve democracy in the next 10 years and this is the Transformations we're going to undergo we recognize that
(1:18:51) you know all these different aspects of our of our society are going to be strained by these emerging Technologies um but here's a Clear Vision for what um what success looks like and then you and then you sort of give those marching orders to the political class and say Here's here's here's this here's the here's the sets of initiatives that we think are going to um you know Marshall Collective um like a collective alignment of of of narrow self-interest right um I think it's it's gonna be hard
(1:19:21) to sort of do that uh but I think that's what you that's how you would start I think the the biggest thing and this is the problem I see with um you know like these like we're like any given policy instrument is often you know well justified in the Moment Like narrow narrowly Justified but it's symptomatic of a strategic failure right so like the the electric vehicle tariffs right that we imposed on on Chinese EVs and also a whole swath of other uh sort of Chinese um Chinese uh Chinese Imports like I
(1:19:49) think the argument for them may be sound now but the fact that we have to do them is is evidence that we strategically failed right like we totally didn't recognize this was going to be strategic industry we didn't um we we you know feel like we we could overcome the Legacy power of the big of the big three big four autos and we sort of snubbed snub Tesla uh you know from all from all those uh from like the political uh sort of uh sort of benefits that we gave to those other those other those other Autos um so I think that's but that
(1:20:23) that's where we are now is we have to fight these these rear guard actions so it's kind of hard to overcome the weight of those historical failures and just sort of all of a sudden have a Magic Bullet um to to clean things up uh I think it's gonna be it's gonna be if I had to like really step back and say this is like the most important thing to do um I would say and this might sound a bit TR but like there are decisions that are going to be made in the next one to two years maybe maybe soon maybe sooner
(1:20:52) depending on how quickly these these these different Arrangements come into play um of where the next like 10 where a 10 gwatt data center to train um the next Frontier Model is going to be right uh so right now we're training um I think about less than one gigt and our biggest ones think the Stargate one with Microsoft uh is about aund billion dollar um data center in Missouri I think um I think it's I think it's in Missouri um but then so this big question of like if it's true that we're
(1:21:25) going to generate something like AGI and I don't mean like Terminator take over the planet you know extinguish Humanity like AI I just mean like a computational system that can perform um you know almost every human cognitive task and with robots can perform most human labor tasks in the next you know three to five years if we're going to create that and it seems plausible maybe not guaranteed that we will but if it's plausible that someone's going to create that I think it's very important that that gets
(1:21:54) created you know inside the United States um and not in you know the Middle East or not in China um and that is that's important uh and if it does get created in in alternative jurisdiction then you know there's a whole host of other considerations that have to go in behind that because I think that that is that will that will acrw a huge amount of strategic and economic advantage to the jurisdiction in in which that that model is trained and over whose sort of power um uh uh you know and under whose
(1:22:26) power that that system is is being run um because if it's if it's aligned to an autocrat system it's maybe not great um but if it's aligned to a Democrat liberal system maybe it's you know it's list you get a Fighting Chance um so that that I think I mean it sounds a bit more sci-fi-ish but I think it won't it won't be so sci-fi in next year or two this these sorts of discussions will not I think become much more politically silent um think they're happening now um I know that there are folks inside the
(1:22:53) defense intelligence Community they're very very interested in that um set of decisions and so you know it sounds like a very narrow very sort of sci-fi thing is like where that 10 gwatt data center where those chips are going to be fabbed where those um where the next nuclear power plants are going to be built um and you look at the Emirates and this is all public now it's like the Emirates is freely you know they're going and the Emirates and the sties are going all in on basically this Nexus of AI and and
(1:23:20) nuclear energy um and they see it as like this strategic technology unlock that because they have so much Capital they can pour into it they can sort of you know reposition themselves in the global competition really uplevel their their status as geopolitical actors um not just Petro States but actually have you know captured and turned them to transform themselves into you know critical nodes in this emerging technological um sort of network and so that is that's I think going be the front lines um and the Emirates I think
(1:23:51) are are currently in the lead um the are trying to catch up but you know if we wake up in 10 years and or less and it turns out that you know the Emirates has managed to basically transform hundreds of billions of dollars of dollar Capital into the construction of new nuclear power plants maybe even getting prototype fusion um built in their country because they'll cut all because they'll cut all the red tape uh they've been able to um you know in induce tsmc to set up uh nextg Fabs in their in their country turnning out uh you know
(1:24:24) AI specific chips that are collocated you know next to those you know fision infusion uh you know power plants that are also right next to the Big Data Centers that are going to house those chips imagine a center where those data centers are now um hosting AI models that are you know effectively um designing the next generation of AI chips because I mean I heard um a um someone from open AI said this publicly that they expect uh you know the models in two years to be better at designing AI chips than they're best AI chip
(1:24:58) designers now so that gives you a position where you know a country like the Emirates can basically design you know have ai models that are designing the best uh AI chips that are then fabed in in the Emirates that are going into the data centers that are designing the Next Generation that are you know Etc so you see that feedback loop can can be quite quite powerful um and that is a decision is probably going to get made soon um in terms of where those deals are going to get done and who's going to buy uh and where that infrastructure is
(1:25:28) going to be set up and for the United States to really get out of its own way um and you know make sure that we're we're the place where you where where we build those systems I mean it's going to require a pretty dramatic transformation of our political system um because you know our grid probably can't take that amount of growth um we don't have the bureaucratic and political um will right now to like cut all the red tape FastTrack approvals of nuclear power um Etc to to sort of keep up with the
(1:25:58) that growth uh and so yeah it's like there's sort of a an energy and jurisdictional gradient um that is pulling a lot of these emerging critical Technologies into the Middle East into the Emirates and the Saudis in particular and it's concerning to me that that could be a back door also for China right because right now the emirats is playing nice with the us being very friendly because they need to basically get this marriage done to be able to secure this you know access to these stre Technologies once they have it though
(1:26:27) once they've got this infrastructure built in the next five or 10 years I mean there's nothing that you know that makes it makes it likely that that strategic alignment to the us is going to endure I don't see why it would um and and instead they've just basically um harvested you know a lot of the gains they needed in the short term to put position themselves and then they could you know parlay that back to the Chinese for whatever you know inducements or or deals that that the Chinese would offer them so yeah that's
(1:26:58) I think where if there's a new great game happening the new digital great game we one recognize we're playing that new that new digital great game not try to score like short-term political points for our political aspirations um if you're say secretary randoo and you want to have like a big win but think about the long game think about what the second and third order effects are of these arrangements are going to are going to mean for us strategic positioning uh in these critical Technologies um and and learn to you know take
(1:27:26) short-term tradeoffs um to mitigate those long-term costs uh and I don't see that happening now so the first thing is just don't don't make dumb decisions uh don't don't don't don't don't make the short-term uh uh kind of kind of trade-off um easier said than done uh as as I think everyone knows that's that's the first step is just think think long term I think that's that's the lesson of Bitcoin is like long-term thinking long you know have have have don't have uh
(1:27:54) short time pref um usually make better strategic decisions uh uh if you just have that simple premise um but I think everything in our current political context and the the exercies of the geopolitical um contest sort of force our attentions very narrowly on just winning every tactical battle and mitigating a political enemy that might be trying to exploit um exploit the moment and that is that's led us down this road where now we're having to to sort of play uh play play on the back foot in many ways
(1:28:31) lovely uh yeah it's not great especially when you consider the hyper polarized political situation here in the United States and it's not encouraging that we have uh an election upcoming between two 80 plus year olds one of which is completely dementia ridden um yeah and then you got me you got me somewhat speechless here as I'm as I'm processing no I mean this is this is why it is kind of a danger zone for the next four years um you know it's like we kind of have to like any kind of have to get our get our
(1:29:19) ish together pretty soon um with all that being said like what I mentioned like it seems like it has to be driven by the private sector like people in the private sector you said that leader that Vision that needs to be put forth I think American citizens need to recognize again the hyper polarized atmosphere that exists in DC right now work to not be put into the frame that they want to put you in which is blue vers red always hate the other because that's the other thing domestically like at the social layer
(1:29:55) people are just so distracted by um and it's really trying to figure out like how to shake people out of that Framing and that polarization and recognize hey we've got um some big problems ahead of us that need to be solved and I think we do need the private sector to lead the way leaders in the private sector to come out and put these narratives forward and it's funny going back to like Silicon Valley um Environ it's like the big one of the big headlines of the last couple weeks is like David Sachs jamath hosting
(1:30:30) a fundraising event for Trump and San Francisco and it seems that even some of the people who would be deemed to be um competent private sector actors are still convinced that you need to play this political game and who knows maybe Trump gets in in this time around he's got a vendetta and is on the war path to completely hollow out the the swamp if you will um based on his first term I'm not going to hold my breath for that but I guess if you're going to go the political route that's what you have to
(1:31:05) hope will happen is something like that but outside of that it's going to be dependent on the private sector in my opinion yeah I think people always you know Trump is just one manifestation of this recurring American belief that it's just one great man will come in and fix all of our problems and that's fundamentally like it's a symptom of broader laziness that like oh I just donate some money or I go to a rally and therefore like the bad people are going to lose right from my standpoint and
(1:31:33) it's it's much more Nuance much more like like institutions don't get built by one person right they can be destroyed by one person but like the work of creative you know Progressive in like the neutral Progressive sense is is creating new institutions is is actually working collaboratively in a peer-to-peer manner to um create something new right and isn't just a destructive oh I'm gonna like you know get revenge on my political enemies or I'm gonna like you know clear out the clear out the the BS and DC Etc right
(1:32:04) the typical kind of um conceits on the campaign Trail it's much more difficult it's much more looks like what Bitcoin is which is like a a peer-to-peer system is s of a novel institution that isn't led by one man isn't subject to one man's you know foibles or obsessions it is is a is a collective project that is aligned with you know individual incentives um sort of engineered from the beginning to maximize kind of collective um Collective consensus but uh doesn't require kind of a traditional
(1:32:35) democratic agreement just just but helps sort of form an anchor point for for individual action that in the aggregate I think looks like a novel form of of an institution right in I mean all institutions all human institutions are essentially social fictions um you know you know patterns of collective belief that are sustained and acete you know reality over time and those are then you know uh formalized or codified whether it's in technical code physical infrastructure Capital Investments and then patterns of belief that uh sort of
(1:33:08) reinforce each other over time that's like all the human civilization is right um uh and I think that's an important um you know proof of what Bitcoin has done is it sort of turned from what was just like a project into like a novel Human Institution um that has global scale but that is sort of orthogonal to the traditional sort of human political institutions that that we're used to interacting with um so I think there's a model there that can be looked to as an example of how to you know go back to
(1:33:35) like the early early era of um when uh when when D toille was like was touring America he sort of was remarking on how sort of the Civic fabric of American society was really um stitched together by different uh you know smaller scale you know sort of individual social groups right whether it was church functions or uh sort of civil sort of civil civil groups of various kinds um you know different neighborhood societies you know in the modern era it's like kids soccer teams and uh and uh and sort of uh the school board Etc
(1:34:12) um and I think that is that's where like small D democracy like thrives and it's like it's messy but I think that's the part that makes America like uh endure through you know all sorts of political volatility at the national level is because people have a sense of trust and falty to their to their neighbors and their and their their local groups um the dangerous thing that I I see is like when you nationalize everything down to the local level right like the thing that I think is very dangerous and toxic
(1:34:41) about American politics now is that everything is is now sort of infected by the national political discourse right like like you can't the reason why I mean again like it's a podcast right but I think the all in guys again they're a bunch of you know sort of Rich Elites that dump their bags like salana on people right so I wouldn't necess say they're moral they're they're of moral pure hearts and I think their alignment behind Trump may be one politically motivated but also just motivated of
(1:35:10) self-interest right like he'll he'll give them tax breaks and you know whatever um but I think it also uh it reflects the sense that they also disagree with each other politically but they're friends and I think that's an important difference uh that's like hard to hard to maintain in a current political context where everyone has to pick a tribe um and that can even like cleave down to your neighbors right uh I think that's very unhealthy for democracy to be to be polarized um you know down to like that Atomic that
(1:35:39) Atomic level uh so yeah I I don't have a cure for that um I I do think though that like because people are just don't want to play the game anymore they're sort of trying to find alternative channels for Collective action and if you're a technologist that involves thinking about hard problems to build and it sort of doesn't necessarily require you know getting the thumbs up from your political team right um and and that's that's encouraging right it's like that's that's what I think um a lot
(1:36:09) of the sort of uh American Renaissance you know uh non- trademarked version manifests uh as um and yeah I think that's that's like that's one one plank of hope uh for the us like we do have like people that will just go out and just do stuff um together and you know that stuff turns out to be quite important uh and it's like okay well you know I I don't I don't want to count us out because that's the one thing China really doesn't have um you know they all respond to top down political mandate to
(1:36:40) to a certain extent I mean there's a lot of very smart very capable entrepreneurs and they've invested a lot in these technology ecosystems and these industries just have a scale and efficiency that you know is quite quite impressive and if not intimidating from us strategic perspective um but in terms of getting like the right mix of entrepreneurial talent and idea generation to actually build something novel and have like kind of a fertile ground to to go out and do the thing us still is the only place that you can
(1:37:12) really um really do that um and so as long as we kind of have that and sort of expand that I think we'll we'll keep winning um or we'll we'll win more than we're losing uh I would say um but yeah it's gonna it's going to be it's gonna be a challenge right so when you say the private sector I think this is the interesting phenomenon that is also changing right because there's the small small private sector like folks like you right entrepreneurs building a business sort of you know carving out of Niche um
(1:37:41) on their own but there's also again new type of private sector actor or maybe a new flavor of an old type of private sector actor that is taking shape in these um these new markets that have trally been uh you know State dominated right and and I think what you can look at the world you know I my view of the world system right now isn't necessarily one you know dominated by just States going at like you know interacting with each other in a traditional kind of realist um framework of you know States
(1:38:13) competing over resources and Prestige Etc what you see now you essentially have private companies multinationals that don't have like a national identity um they don't have like they have headquarters in one place you know for tax purposes they have different headquarters you know different sort of R&D centers Staffing centers like they've distributed their operations across the world to optimize for the local talent the local jurisdictions the tax benefits Etc right and so when you see a company you're like oh Google or
(1:38:46) you know Microsoft or you know Apple it's like well what is that like those are like novel entities that are like super National in scale that don't have like loyalty or strategic alignment to any one country right they kind of they kind of play across many different countries and actually I was at an event last year with Director of National Intelligence ail Haynes was was remarking on this in a very say just disjointed fashion when she was describing how the intelligence Community is having a difficult time
(1:39:17) adjusting to this new sort of pattern which is they have to think about the plans and capabilities of non-state actors at the same level that they have to think about the plans and capabilities of State actors like the traditional function of an intelligence service is to you know study your adversary study other countries figure out what they're planning to do and you know what they can do their military capabilities economic capabilities Etc and now she was saying they have you know entities now in the global stage
(1:39:44) that rival States in terms of their geopolitical importance and their power and that that changes how how the private sector can truly change things like you can have individuals uh now in positions of you know corporate leadership that are functioning almost as like quasi sovereigns right like Elon is a great example of this um and there's going to be and I think you're seeing this take place in in these emerging technology sectors like Ai and space in particular where you know the US government either in the case of AI
(1:40:16) kind of um lost the ball uh you know at least on domestic R&D or at least sorry National R&D and these Labs just kind of kind of figured out lightning in the bottle with Transformer architecture and figured out scaling laws in 2017 and then 2020 kind of hit an inflection point and now they're trying to to catch up but in space you know space has been a pretty much a state dominated Frontier since the you know since the Cold War right it was just us and Soviets and then the Chinese and a handful of other
(1:40:43) countries you know throwing up some satellites and now there like an intense commercial imperative to like develop um you know all different parts of the space economy and so you're having private sector actors now develop capabilities that you know just a few years ago were seeing as like strategic capabilities in space um but are just being driven by the private Market incentives and I think that what that's going to mean is that in a few years uh well it could go into a number different it could go in a number of
(1:41:12) different ways but it means the sort of division of power between the state and non-state is is is is is Shifting pretty dramatically um and this you know traditional Legacy dominating State bureaucracies like the US defense departments and intelligence communities are having a hard time adapting to that new regime um and it's it's hard enough for them for example with like space like there's a lot of companies now that are developing like on orbit servicing um sort of miniat satellites that can sort
(1:41:46) of go up to another satellite repair it you know potentially you know refuel it um swap out a module that's been that's been design to be swapped in that that activity of like on orbit surfacing is like identical to what us China and and Russia have been developing is like anti-satellite destructive capabilities where you you send a little follower satellite up to a adversary satellite you either get close to enough to fry it or you you you engage with it and you sort of push it up to you know a bad
(1:42:15) orbit and so it's really messing with the whole concept of like strategic deterence and defense in space where private sector actors have these capabilities now that we used to think it's like a most highly classified kind of like you know strategic capabilities and you're seeing that now proliferate in all sorts of different domains um and that makes it in general like much harder and in my sense like much more unstable um because you don't have like emerging Norms that sort of Define what sorts of behavior is is uh is safe or
(1:42:44) not safe and you have a competitive race to kind of get get advantage over one another um and the thing about the private sector commercial sector is like well everyone will say yeah one team one fight America great thumbs up the end of the day like they're commercially motivated right they want to maximize profit right so they want to beat their competitors uh not necessarily beat China if China's a competitor they want to beat China but that's a different thing right and so that's going to be an
(1:43:11) interesting Balancing Act to try to play the next few years which is to what extent that people aren't just like paying lip service to this idea of you know deep tech for America you know that sounds great when you're a small startup and you want to get the defense um Innovation unit to fund you you want to get that that small business grant you want to get that venture capitalist who's aligned with the defense intelligence communities to give you the seed round right but as you build a product that has to scale become
(1:43:39) commercially viable right those people that invested the money especially the Venture capitalists many of whom might be Saudi you know LPS or Emirate LPS right they may have other interests in mine um and so that's where I think if I'm the if I'm someone in the private sector I want to be cleare eyed about how changing incentives uh can dilute the like original strategic purpose and the United States in many of these different areas is trying its best to like you know align these companies to its
(1:44:09) strategic purposes but they they're sort of outside of its control in many in many ways like Microsoft is like you know it's like a qu it's like it's almost like its own non-state digital Sovereign right it's it's kind of like bullying the government like the US government around in many ways it's like it it has pretty predatory practices even on the US government um and and the US government is like trying to find ways of corralling it trying to trying to bring it to heel in many ways and
(1:44:37) it's resisting it uh and you're seeing that Dynamic play out which is like it's it's a challenge to kind of traditional Notions of Western sovereignty um and uh but yeah it's it's we're in a fascinating New Era like for example Microsoft at the start of the Ukraine war basically took uh all of Ukraine's government data and and and and moved it to um Cloud servers based in the UK on their Azure cloud and so they've effectively like teleported the Ukrainian government uh like put you
(1:45:10) know like digital government in Exile essentially teleported to to um to uh to Great Britain for safety right so it wouldn't be blown up by a Cris missile Etc and that's like a fundamental change in how we think about sovereignty right like the Ukrainian government um to extent like what is the government right the government has to like has all the data on its citizens has all the tax information provides Social Services you know disability payments has like you know registration for this for for um
(1:45:37) for the draft yada y y well if all those systems and services are now essentially hosted by a private company outside of your territory like okay like sovereignty is not a binary but like it's a it's on a spectrum like that element of your sovereignty has now Essen been sort of um eroded right and and you're seeing this great game play out like the g42 Microsoft deal case study in in um in Kenya they did a$1 billion dollar investment in Kenya with g42 to basically build a big data center fiber optic connections uh AI training Etc is
(1:46:14) all going to be connected like a hydro Electric Plant for power green energy Etc but the key condition of the deal was essentially the all like the Kenyan government would move all of its you know data and service services to to that data center and then they would also encourage maybe maybe Co who knows like much of the private sector big big companies in Kenya to also host their services and their data on that same Cloud infrastructure so if you think about it from like a colonization digital colonization perspective it's like right
(1:46:46) now Kenya has their own different disaggregated networks on premise service on premise servers Etc and okay the big Microsoft data center is coming in and is just like sucking in all of all these different locally disaggregated nodes and are now connected to their one super node and then that super node or that local say like um you know National node is connected to their super node in the Emirates um and the ammer hasic relationship with Kenya and that's how Microsoft kind of got in so the Microsoft g42 deal helped Microsoft kind
(1:47:16) of get in Kenya and work with g42 to set up um this this this big data center buildout um and I think the like the new pattern you're seeing it's sort of invisible it's like digital sovereignty but with a colonial TW like a sort of a Neo fudal sort of techno twist right where um you know now it's like okay who's whose digital land are you effectively paying are you living on and who are you paying rent to right and and it used to be individuals and companies and now it's governments right and that
(1:47:47) H and so that's I think we're seeing this tension now is like governments now waking up to the fact that they're their existence as Sovereign entities is now effectively mediated and dependent on these big technological these big Tech Giants right and that's an uneasy relationship between a traditional source of like National Authority and power and now this emergent private sector you know Authority and power and the biggest difference is those private sector you know Powers don't necessarily
(1:48:14) have the same interests as the national authorities do right so Microsoft you know they want America to to to succeed I'm sure I'm sure Brad Smith's a great great guy very patriotic American but his job is to like get Microsoft data centers you know in more places around the world and you know if he has to tell the story that's good for America then he'll tell that story but fundamentally his first order is to get more Microsoft data centers and if that means working with the Emirates and g42 to put those
(1:48:42) data centers um in Kenya then that's that's what he's going to do and so that's that's the pattern you're seeing now is like uh this kind of digital Colonial you could call it colonialism right it's not necessarily a bad thing for the countries involved like they're getting you know much more services they're getting access to Frontier AI models but there's an implicit trade between the inherent sovereignty that was embedded in this disaggregated network of data centers and on-prem
(1:49:07) services that were maybe less efficient but now they're now going to be dependent on a foreign service provider um you know Global cloud service provider for for their you know basic economic and governance functions um and that's that leads to a lot of economic benefits I'm sure and efficiencies at scale but it also implies a trade-off of of of of of sovereignty I mean you're seeing this kind of like lip service being paid to digital sovereignty where they have to like put put you know rules
(1:49:36) around our data has to M you know remain in in the country and you can't train any other models on it etc etc I suspect those will be um I'm sure those will be the those will be loopholes found in all of that uh because the imperative for these big Tech conglomerates to basically suck as much data as possible around the world to train you know the biggest models uh will will override sort of the national imperatives to to protect their their citizens and companies data but that's going to be the battle lines is sort of digital
(1:50:05) sovereignty uh as a new play on whether it's digital individual sovereignty or digital National sovereignty um and how much of this is you know that the power uh you know acrs to the sort of the top of that pyramid whoever controls those that fundamental substrate or whether it sort of has some counterveiling Force that keeps it somewhat disaggregated and decentralized damn it's a Brave New World again going back to the S I mean sovereign individual predicted all of this but uh yeah I think it's important to fall
(1:50:41) back to what you were describing earlier which is recognize that we're in this extremely chaotic transitionary period and try not to become overwhelmed um for the individuals listening out of this take care of what you can take care of control what you can control I think bringing this back to the American perspective moving forward and tying Bitcoin into it that's I actually after almost two hours talking about this have become more thoroughly convinced that Bitcoin is probably the most strategic tool that we can use at this current
(1:51:14) moment because of the properties that it enables and the power that it gives individuals and companies and states and federal government to a certain extent if it decides to leverage it um but the fact that Americans on a per capita basis own the most Bitcoin and so if you're looking at the landscape that you've described over the last two hours and you're trying to think strategically okay we've got a daunting task ahead of us what is one of the lwh hanging fruits that we can take advantage of it's let's
(1:51:47) not give up the Bitcoin advantage that we have right now Americans own the most Bitcoin we most companies being domiciled here that are enabling the Bitcoin economy and all the tools that are being built on the top of the protocol layer and so considering the fact that we've seeded ground in terms of energy um manufacturing base uh defense Tech to a certain degree uh all right what are the Strategic assets that do exist within our borders and that we should covet work to enhance and to me Bitcoin seems like the only logical conclusion of the
(1:52:28) lowest hanging fruit yeah I mean I was I explained this to someone as like just in the pure like hedge hedge scenario right like if there's a scenario the next five years where Bitcoin monetizes to parody with gold um how is the how how should you position now the United States to maximize the benefits of that development and minimize the risks right because if you imagine a counterfactual where Americans don't hold uh a large amount of Bitcoin where Bitcoin miners are not uh you know in in significant
(1:53:04) presence in the United States and that transition happens then it then that benefit will ACR to what are likely going to be authoritarian inclined adversaries or sort of middle powers and it will just strengthen their power relative to us whereas if that transition happens and Bitcoin monetizes to the level of gold and maybe at the expense of gold well our adversaries have really doubled down on gold right you know the bricks essentially like Russia stockpiling gold China's been stockpiling gold um you know the the
(1:53:32) traditional kind of standby safe hav asset for a large portion of the global South and Eurasia has been gold right so if they kind of backup plan in a increasingly contested you know if not outright um global conflict uh environment is just hedge with gold and our sole back our sole plan essentially just is to double down on the treasury security market right that seems like a strategic um mistake I mean yeah do what you can to like extract as much free free uh free value out of out of the essentially uh um you know willingness
(1:54:06) of people to hold treasury Securities over the next five or 10 years like do that sure if people willing to you know hold long-term bonds like you know they make their own decisions like that's fine so plan to extract as much wealth out of those people as possible Right put those people in the the treasury market killing pen for the next 10 years um but then what's your backup plan if people decide to to Really flip um and Bitcoin is I think a perfect Hedge for that because it uh one you we have right
(1:54:33) now um disproportionate share of of Bitcoin uh to the world so if it were to monetize to the level of gold or at the expense of gold um we would stand to gain disproportionately relative to our adversaries um so that just seems like a pretty basic thing it doesn't even require the federal government to own Bitcoin um it just requires you know keeping and having incen and having policies that don't um scare Bitcoin away from the United States that don't push the Bitcoin into uh into the Emirates into Hong Kong into
(1:55:01) Singapore uh Etc um and that's you know that seems like a basic sound policy is like you want Americans and American businesses to benefit relative to um to our adversaries and so um that's that like a pretty I don't I see like zero downside to that to that to that plan uh and uh yeah so we'll see what happens but that seems to be the straightforward um you know strategic uh orientation at this point as the great Michael Goldstein once said the only winning move is to play I'm hopeful I think people are
(1:55:39) starting to wake up to this um I'm hopeful got a long long road ahead of us we are 15 minutes over our lot of time and I was 15 minutes late do due to putting up with some terrible to downstairs um and I'm going to respect your time Matthew this is I can't believe it took us this long hopefully this is the first of many conversations thank you for all the work that you do to educate people about this and position Bitcoin as an important strategic asset in the minds of people on Capitol Hill and um I always feel smarter coming away
(1:56:17) from conversations with you so uh selfishly like to thank you for for your time to help illuminate the landscape of what's going on in the G poitical world and in the private sector globally as well because I think um I it is undeniable that we're in this insanely chaotic inflection point and I think you bring a lot of clarity to what's happening between the different variables that are moving on the chessboard doing my best it's a messy place you know don't seem too enthused to be doing your
(1:56:55) best it's it's it's funny it's like my my the demand for my skills goes up just before we hit World War I and then I basically become completely uh useless I have no zero marketable skills at that point so I'll I guess I'll ride that escalator up and then take the elevator down yeah then you just fall back to goats and other stuff that's when you just go byy a farm and just chill and yeah I have to get my hands dirty at that point so yeah I think you have a marketable skills Beyond uh beyond the leadup to World War
(1:57:28) I hopefully we don't get there seems like hey maybe that's like the last question and we keep it short yes or no answer has World War I started already Yes uh I think it's a short answer yeah I think if I would Define yeah I say that the shorter way to say is that great power war is too expensive to fight on a World War but we're still fighting World War we're just fighting it in sort of the boundaries of great power sovereignty so what we're fighting it is in space we're fighting it in cyber space we're
(1:57:59) fighting it um underwater you know fiber cables and pipelines um we're fighting it in Weak States in Africa South America we're fighting it in proxy States you know in a hot war in Ukraine but also in the Middle East and across the Eurasian periphery including in the border between India and Pakistan South Trin sea with the Philippines obviously Taiwan straight and North graen Peninsula so I think that um Arc of instability um both geographically around the Eurasian Peninsula and then in space and and under and in the Arctic
(1:58:31) are active zones of great power conflict um like cyberspace is a conflict Zone space is a conflict Zone we are blowing things up and cutting cables under sea um we're supporting proxy wars and you know killing Soldiers with you know missiles and arms provided by either side um we haven't yet gotten to the point where great po themselves are engaged in open conflict um you know with traditional military forces but we're sort of just below that threshold um so the question is whether we stay below that threshold uh or whether an
(1:59:06) accident or strategic miscalculation tips us over um I don't you know I don't I don't think anyone can predict uh you know you can have proxy wars you can have that sort of state of kind of cold war with um s of you know kinetic conflicts up you can have that sustained for for quite a long time um uh like we saw that during the early part of the cold war with Russia um this one's a bit more complicated and takes to account many different players so it's probably a lot more unstable than that than that
(1:59:38) Dynamic was um so yeah I I think of no other way to conflict that it is a world war in the sense that it's a conflict over it's a conflict of global scale um it's just not great Powers you know launching missiles directly at each other um but we are you know doing lots of other stuff just below the threshold all right World War I started freaks we'll end on that peace and love okay


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