Latest / UK Column Radio / China's Economy is 2-3x Bigger Than the US | Silk and Steel

Transcript

China's Economy is 2-3x Bigger Than the US | Silk and Steel · UK Column Radio

0:01
Speaker 1: Hello, and welcome to another episode of the Silk and
0:03
Speaker 1: Steal Podcast. I'm your host Carl Za. Today we have
0:07
Speaker 1: crowd favorite Doggie a ka Humphates, who is a prolific
0:12
Speaker 1: writer on Asia Times, write some very provocative and interesting
0:18
Speaker 1: piece on China, China's economy. The last time I have you, Okay,
0:25
Speaker 1: I'm just gonna call you Doggy. Okay, it's I think
0:29
Speaker 1: it's more endearing because Doggie is what was your Twitter persona?
0:35
Speaker 1: Now you go buy what the blue Bear monkey?
0:38
Speaker 2: That's your monkey. Doggie is dearly departed for his past since.
0:45
Speaker 1: So for people who not familiar with with Doggy or
0:53
Speaker 1: aka Blue Bear Monkey, or have Hunt Faids to check
0:56
Speaker 1: out his column on Asia Time. Uh, you know he
0:59
Speaker 1: has written prolifically on China. But the reason I have
1:03
Speaker 1: you back, Doggie is because last time you made a
1:07
Speaker 1: very uh you made a very provocative claim and you
1:12
Speaker 1: said China's economy is actually should be twice. It should
1:17
Speaker 1: be much larger. It's much larger than it's been reported.
1:21
Speaker 1: And I believe you said it should be twice the
1:23
Speaker 1: size of the United States if I remember correctly.
1:26
Speaker 2: Oh, it's very rubbery. I think twice is the bottom end,
1:31
Speaker 2: my estimate is two to three times now depending on
1:35
Speaker 2: your count once because none of this, this is all estimates,
1:38
Speaker 2: so it must be rubbery like that. The midpoint will
1:42
Speaker 2: be two and a half. But you know the range
1:45
Speaker 2: is wide. Two to three times the size of the
1:46
Speaker 2: US economy.
1:48
Speaker 1: Now, I kind of wanted to, you know, of course,
1:51
Speaker 1: you know, ask for source, because that's a that's a
1:54
Speaker 1: pretty big claim. And I know according to Wall Street,
1:58
Speaker 1: uh now, Wall Street, a World Bank, and IMF, they're
2:01
Speaker 1: usually keep according to power purchase parity accounting for Chinese economy,
2:06
Speaker 1: it's usually about twenty five percent larger than the United States.
2:11
Speaker 1: And then there then there's a people who point to
2:14
Speaker 1: the nominal dollar terms that shows China is smaller, which
2:20
Speaker 1: it doesn't really mean anything nowadays, because that's that's that
2:23
Speaker 1: people need to realize that the nominal dollar terms accounting
2:27
Speaker 1: on GDP heavily depend on the exchange rate, and the
2:32
Speaker 1: current dollar exchange rate is manipulated because they they are
2:37
Speaker 1: now currently we're entering a phase dollar is artificially strong,
2:42
Speaker 1: so vis a vu want you know, people are posting
2:46
Speaker 1: on Twitter ridiculous graphs that's showing that that China's growth
2:50
Speaker 1: is you know, in the dollar terms, China's economy growth
2:54
Speaker 1: is basically negative for few for the last few years,
2:57
Speaker 1: which is completely nonsense.
3:00
Speaker 2: I mean, it all turn around this year, so I
3:01
Speaker 2: mean the next year's graft will be a big spike,
3:03
Speaker 2: just because the R and B appreciated against the against
3:07
Speaker 2: the dollar this year. So, you know, the most destructive thing,
3:11
Speaker 2: the most destructive thing that you hear on to do
3:15
Speaker 2: the West, that you hear in Western media is whenever
3:19
Speaker 2: you know something on CNBC or Bloomberg or whenever these
3:23
Speaker 2: talking heads start talking about China Chinese economy, they'll they'll
3:26
Speaker 2: start out and say, the world's second largest economy did X,
3:31
Speaker 2: Y and Z. Now, whenever I hear that, I think
3:35
Speaker 2: that has gotten the US into all kinds of trouble,
3:40
Speaker 2: because in reality, China's economy is much bigger than the US.
3:46
Speaker 2: It's not just bigger in purchasing car parody turn by
3:48
Speaker 2: say twenty five thirty percent, It is bigger by multiples
3:53
Speaker 2: two times, three times. And it's because of the thought
3:58
Speaker 2: that everybody is still in their head are using nominal,
4:01
Speaker 2: and nominal has been lowball, just as purchasing power parody
4:05
Speaker 2: has been lowball that you run into problems like you know,
4:10
Speaker 2: Basant thinking that or Trump thinking that trade wars are
4:14
Speaker 2: easy to win. This is the exact kind of thinking
4:18
Speaker 2: that got the US in trouble when they thought that,
4:22
Speaker 2: you know, they could crush Russia's economy when Russia is
4:25
Speaker 2: just a gas station with an army. This is the
4:29
Speaker 2: exact same thing when they actually started fighting the trade war.
4:35
Speaker 2: Then all of a sudden they find that China has
4:38
Speaker 2: all these resources, all these cards to play, and you
4:43
Speaker 2: get into a you know, the Jaws moment when they
4:46
Speaker 2: find out how big the fish is. We're gonna need
4:48
Speaker 2: a bigger boat. So what has happened over decades is
4:54
Speaker 2: that China has been lowball. Is GDP works, and this
5:02
Speaker 2: has started in the nineteen eighty five was when China
5:06
Speaker 2: first had its first GDP estimate, which is submitted to
5:10
Speaker 2: the World Bank. The World Bank insisted that trying to
5:14
Speaker 2: start out with the per capita GDP of two hundred
5:17
Speaker 2: and fifty dollars per person, and the NBS fought tooth
5:21
Speaker 2: and nail and it kept it to one hundred and
5:22
Speaker 2: eighty dollars. So right in the beginning, China and the
5:29
Speaker 2: g and China and the World Bank had been having
5:31
Speaker 2: these fights. They did weird thing. They're China used to
5:36
Speaker 2: measure its economy. It's national accounts on MPs system. It's
5:40
Speaker 2: a material production system where they do not count services.
5:45
Speaker 2: This is part of the Soviet Lendonist economic how they
5:50
Speaker 2: account for the economy. Right now, everybody uses un SNA
5:55
Speaker 2: system and national accounts and that does include service. So
6:00
Speaker 2: the first round out when China was chalculus GDP, it
6:04
Speaker 2: just added thirteen percent to its NPS number and called
6:08
Speaker 2: it its services GDP. Thirteen percent is a ridiculously low number.
6:16
Speaker 2: So the idea behind you know, communists or planned economy
6:22
Speaker 2: GDP is that services kind of doesn't count. Services is
6:27
Speaker 2: considered a cost of production. Whether that's true or not,
6:32
Speaker 2: that's that's the theory behind it. So for decades China
6:37
Speaker 2: has been and even when it did go to the
6:40
Speaker 2: SNA accounting system in the nineties, China was given a
6:44
Speaker 2: lot of leeway, so they were actually operating on a
6:47
Speaker 2: hybrid MPs SNA system for many years. Part of it
6:54
Speaker 2: was lowballing as GDP for wto negotiations where it wanted
7:00
Speaker 2: to be a developing nation for as long as possible,
7:04
Speaker 2: and part of it was they just not did not
7:06
Speaker 2: believe that a lot of these services was really value added.
7:12
Speaker 2: And then so we all of that has continued on
7:17
Speaker 2: to today. Now where is the proof of this? It's
7:22
Speaker 2: it's all over. You just crunched some basic number. You'll
7:24
Speaker 2: get there. One. You know, China's electricity production is about
7:29
Speaker 2: two point four times that of the US. You know,
7:32
Speaker 2: how can that be when you are when you are
7:38
Speaker 2: supposedly you know, two thirds of the US economy. China's
7:42
Speaker 2: production of cars are three times in the US. China's
7:46
Speaker 2: you know, production of shifts is like two hundred times.
7:49
Speaker 2: And you know, you can go through all of these
7:51
Speaker 2: not not just on the production side, also on the
7:52
Speaker 2: consumption side. Now, an economist, Rafayel Gutman of Brazilian but
8:00
Speaker 2: he teaches in Santiago, Chile. He has very meticulously crunched
8:05
Speaker 2: all these numbers. So every few years, the World Bank
8:09
Speaker 2: does this thing called the ICP International Comparison Program, and
8:15
Speaker 2: the IPC is what officially sets the purchasing power parody GDP.
8:21
Speaker 2: So what they do is they send people into all
8:23
Speaker 2: these shops sixteen thousand shops in China to compare China's
8:26
Speaker 2: prices to everybody else, just to set all the DGP's
8:29
Speaker 2: to equivalent to everything supposed supposed to be equivalent. So
8:34
Speaker 2: what you what it ended up with is China's per
8:39
Speaker 2: capital purchasing power parody GDP was almost exactly equivalent to Mexico. Yeah,
8:47
Speaker 2: all right, that's about twenty four thousand dollars a year.
8:51
Speaker 2: Any Chinese person will go, huh, Mexico because you look
8:57
Speaker 2: at any city in China down to the four tier city,
9:00
Speaker 2: they're all more impleasant than Mexico City. And and just
9:03
Speaker 2: you know, walking down the streets, you can just tell
9:05
Speaker 2: which city is richer and poor. But if you actually
9:09
Speaker 2: crunch the numbers, as Roschael Goodman did, you will find
9:13
Speaker 2: that China has been completely low balling. It's uh, it's
9:19
Speaker 2: ICC data, which you're not really supposed to do. I'll
9:22
Speaker 2: read you off some of the some of these some
9:27
Speaker 2: of this data, it's pretty stunt.
9:30
Speaker 1: Yeah, before before you pull up those data. This reminds
9:34
Speaker 1: me of the recent IMF ranking of the world's Advanced economies,
9:39
Speaker 1: and they listed Bulgaria advanced economy, but they didn't include China,
9:46
Speaker 1: which it doesn't make sense. But but you know, I
9:49
Speaker 1: saw people saying, oh, this is because Bulgaria is part
9:53
Speaker 1: of EU. You know, it's people can easily, you know,
9:56
Speaker 1: move across the borders where they can get higher South dollery.
10:00
Speaker 1: Blah blah blah. But still I meant compare the cities,
10:04
Speaker 1: compare the infrastructures. There's no comparison, but anyway, yeah, go ahead, sorry, yeah.
10:09
Speaker 2: So yeah. So for instance, when you when they list
10:15
Speaker 2: out what the ICP purchasing power parody GDP is, and
10:19
Speaker 2: then you check third party sources for these long items
10:24
Speaker 2: of how much is actually produced or consumed in that country,
10:28
Speaker 2: you find out that, uh, you know, food consumption in
10:33
Speaker 2: Mexico purchasing dollars per terms, it's over two thousand, two
10:39
Speaker 2: hundred US dollars in China's eight hundred and twelve. And
10:43
Speaker 2: that comes out to be twenty four cents per calorie
10:46
Speaker 2: for China and sixty eight cents per calorie for Mexico.
10:50
Speaker 2: Now that's definitely possible, but you would have to believe
10:55
Speaker 2: that Mexican food is multiple times better than Chinese food.
10:59
Speaker 2: You'll run this analysis through a whole bunch of products,
11:04
Speaker 2: and you have the average car sold in China is
11:07
Speaker 2: twelve thousand dollars compared to the average car sold in
11:11
Speaker 2: China Mexico is twenty six thousand dollars. Now, now I
11:15
Speaker 2: know what the price of the average car sold in China,
11:17
Speaker 2: and I know from third party sources. I know it
11:19
Speaker 2: because we've covered cars in my old bank and it's
11:22
Speaker 2: twenty five thousand dollars. It's not twelve. So that's twelve.
11:24
Speaker 2: Somebody is low balling with the housing. China's housing is
11:29
Speaker 2: half the price in Mexico's housing.
11:31
Speaker 1: An other car, other car itself. I know for a
11:35
Speaker 1: fact that for cars that sold in China, assume as
11:39
Speaker 1: they exported overseas, the price doubles at least, yes, because
11:43
Speaker 1: I own I own a Chinese ev well actually it
11:48
Speaker 1: was manufacturer in Indonesia's but owned by a Chinese brand, ruling,
11:53
Speaker 1: and that the same model, same brand in China goes
11:58
Speaker 1: for Bob for about twelve thousand. But Indonesia the sticker
12:03
Speaker 1: price is like twenty four thousand dollars. Is double. It's
12:07
Speaker 1: double the price you pay in China.
12:09
Speaker 2: Yeah, yep, yeah, I mean even even the twelve thousand
12:12
Speaker 2: dollars that's trying to lists as its average price, we
12:16
Speaker 2: know it's not twelve dound dollars twenty five thousand dollars
12:18
Speaker 2: an anybody, any auto analysts who covers it with third
12:21
Speaker 2: party data, finds all these prices not what is the
12:25
Speaker 2: average actual price in the market. You know, education like
12:30
Speaker 2: university education in Mexico is four times better than university
12:34
Speaker 2: education in China. You know, if you had to do
12:37
Speaker 2: the pricing, electricity in Mexico is twice as good as
12:41
Speaker 2: Chinese electricity. So in this ICP data which nobody checks,
12:47
Speaker 2: but if you do any kind of spot check, you
12:49
Speaker 2: would find that China, all of China's numbers have been
12:52
Speaker 2: LOWDAL So it's unclear how much we have to adjust
12:58
Speaker 2: for it. Well, we have just for for at least
13:01
Speaker 2: a multiple. That's where I get my two the three
13:05
Speaker 2: times GDP number were China's uh see two to three
13:11
Speaker 2: times uh US levels.
13:17
Speaker 1: Okay, I mean I I my back of napkin calculation
13:23
Speaker 1: is I look at electric consumption and I look at
13:26
Speaker 1: the car sales, and and that's why I thought, or
13:29
Speaker 1: car sales in China, it's about twice uh The number
13:35
Speaker 1: is the car sold in the United States, and the
13:37
Speaker 1: electricity is twice I guess now it's more than twice
13:41
Speaker 1: than than than US. Uh. So that's that's why I
13:45
Speaker 1: I my my backup napkin calculation is two times. So
13:49
Speaker 1: I was I was surprised when you say it was bigger.
13:52
Speaker 1: But I did hear that number before because I was
13:54
Speaker 1: in recently traveling in China and Shanghai. We also met
13:57
Speaker 1: American economists who said the same thing, said least China's
14:01
Speaker 1: economies at least three times society of the United States.
14:06
Speaker 2: Higher than three. Yeah, higher than three. I would be
14:08
Speaker 2: a little bit hesitant, but between two and three, it's
14:12
Speaker 2: somewhere around there. If you just did buy products, and
14:20
Speaker 2: people will disagree with me on this, you will get
14:22
Speaker 2: like two if you just try to equate it played products.
14:25
Speaker 2: But I also put in a hedonic adjustment. You know,
14:30
Speaker 2: people think Chinese products are extremely low quality, but actually
14:35
Speaker 2: the stuff you get in China is much higher quality
14:38
Speaker 2: than the stuff you get overseas that made.
14:40
Speaker 1: But baham, faiths, come on, come on, China do not
14:43
Speaker 1: have only fans. Okay, that's a large part of the
14:46
Speaker 1: economy that was founded for for the GDP. Contribute to
14:50
Speaker 1: the GDP. China don't have that. China banned only fans, Yes, so.
14:55
Speaker 2: You know, where is this missing. So part of what's
15:00
Speaker 2: missing is that there is a certain amount of intellectual
15:06
Speaker 2: honesty with the way SNA, the national system of National
15:12
Speaker 2: accounts that the US uses and Europe uses, and that
15:16
Speaker 2: intellectual honesty is we will just count everything under the sun,
15:22
Speaker 2: as in, we are not going to make a value
15:24
Speaker 2: judgment of what counts a GDP and what doesn't count.
15:27
Speaker 2: With GDP.
15:29
Speaker 1: UK the UK, that means the count gambling prostitution, except
15:35
Speaker 1: except I don't know exactly how they come up with
15:37
Speaker 1: that figure because that's all like part of the gray economy.
15:41
Speaker 1: I don't know how they go get their data on
15:43
Speaker 1: the gambling and prostitution feel good.
15:47
Speaker 2: I volunteer for the field work to count gambling and
15:50
Speaker 2: prostitution in the UK. So there's a certain amount of
15:54
Speaker 2: intellectual honesty with the system of National accounts because they
15:57
Speaker 2: just want to count everything. So over the year years,
16:00
Speaker 2: for every innovation of SNA, it just got more and
16:05
Speaker 2: more service. As in R and D was not in
16:11
Speaker 2: GDP decades ago, imputed rent was not in GDP decades ago,
16:18
Speaker 2: lawyer fees were not in GDP decades ago, but they
16:21
Speaker 2: just got added as time went on. And therefore the
16:26
Speaker 2: US service accomomy got bigger and bigger and bigger because
16:28
Speaker 2: it just got counting more. Now we don't exactly know
16:33
Speaker 2: how this hybrid system of China's MPs slash SNA system
16:39
Speaker 2: is working, but I suspect they're still making judgment calls.
16:42
Speaker 2: They're saying this doesn't count, that doesn't count, that doesn't count,
16:45
Speaker 2: with low ball this. And there's two reasons why they're
16:50
Speaker 2: doing that. One is many reasons. One is, you know,
16:56
Speaker 2: is the HydroD strength by the time, you don't want
17:01
Speaker 2: to be looking like you're much bigger than you actually are.
17:05
Speaker 2: Two is wto negotiations. They want to be a developing
17:08
Speaker 2: nation as long as possible. And three China does it's
17:13
Speaker 2: bending over backwards trying not to trip into the developed
17:19
Speaker 2: or the high income nation status under the World Bank
17:21
Speaker 2: definitions to preserve leadership of the Global South. They always
17:27
Speaker 2: want to developing economy.
17:29
Speaker 1: So is that the only reason is that the only
17:31
Speaker 1: reason for China to not want to be classified as
17:35
Speaker 1: a high incomy economy because purely because he wants to
17:38
Speaker 1: be the leader of the Global South, or was there
17:40
Speaker 1: other economic reason?
17:42
Speaker 2: Okay, there's many I suspect I mean, they have given
17:45
Speaker 2: up a lot of their privileges as a developing nation already,
17:48
Speaker 2: so that part should not be a reason anymore. But
17:53
Speaker 2: I suspect they also don't want to do an adjustment.
17:55
Speaker 2: If you really want, you're trying to, really wanted to
17:57
Speaker 2: it could do an adjustment and then it will come
18:00
Speaker 2: out that it's economy is not you know, thirty five
18:06
Speaker 2: trillion on a perching power parity basis a seventy trillion.
18:09
Speaker 2: They'll scare them, but Jesus out of the very well.
18:11
Speaker 2: So I think a lot of it is just it
18:15
Speaker 2: just inertia, inertia over all these years when they've been
18:20
Speaker 2: low balling all these years to just keep on going.
18:24
Speaker 2: The growth rates are you know, quote unquote correct, We're
18:29
Speaker 2: just growing off a different basis. So it would be
18:37
Speaker 2: how do I put this there? Is you know that
18:42
Speaker 2: meme that goes around real Nigga economy and state Nigga economy.
18:47
Speaker 2: So so what I am doing when I say China
18:52
Speaker 2: GDP is two to three times, it's twice, and it's
18:57
Speaker 2: it's it should it should get a multiple two and
19:00
Speaker 2: it's about two to three times that of the US.
19:04
Speaker 2: What I am doing there is pretty much going onto
19:08
Speaker 2: the US basis. I'm saying China's real nigga economy needs
19:12
Speaker 2: to be multiplied by two to get it, you know,
19:16
Speaker 2: to account for all the fake nigga stuff that the
19:18
Speaker 2: US counts now, or you can do it the other way.
19:22
Speaker 2: You can also do it.
19:23
Speaker 1: But but wait, wait, wait, wait yeah, wait confa, let
19:26
Speaker 1: me play Devil's advocate for a seconds. Okay, so people
19:30
Speaker 1: can argue. Look, China's electric consumption is twice the number
19:35
Speaker 1: of United States. This can be perfectly explained by the
19:39
Speaker 1: fact that China is the is a factory of the world.
19:44
Speaker 1: It's manufacturing for everyone. United States is no longer a
19:47
Speaker 1: manufacturing economy. That's why, you know, electricity consumption is not
19:52
Speaker 1: so important because US don't make things anymore. But you
19:58
Speaker 1: know us, you where the economy derive up much more wrong,
20:03
Speaker 1: like intellectual property which the Chinese are stealing.
20:08
Speaker 2: Yeah, so, so what really is The three big things
20:12
Speaker 2: in the US economy that you know crowds out everything
20:15
Speaker 2: else is housing, health care, and education. Those three big
20:21
Speaker 2: things are you know, a huge part of household consumer spending. Now,
20:32
Speaker 2: the question is where is that in China? As in
20:37
Speaker 2: Chinese people don't live in housing, they don't have health care,
20:41
Speaker 2: they don't educate their kids. So when you calculate that out,
20:45
Speaker 2: I mean China's education sector is like a fraction of
20:49
Speaker 2: the US. It's it's healthcare sector. It's also a fraction
20:54
Speaker 2: of the US, and it's housing. When you do all
20:56
Speaker 2: this imputed rent or what China does not do in
20:59
Speaker 2: Pewter rent or doesn't do it enough, it's also a
21:01
Speaker 2: fraction of the US.
21:03
Speaker 1: So what happened, but doggie, but doggy, China's housing price
21:06
Speaker 1: is crashing. China's housing market collapsed.
21:09
Speaker 2: Right in GDP terms, it doesn't matter what the value
21:14
Speaker 2: of the house is. It only matters what the rent
21:18
Speaker 2: where the imputed rent of that house is what the
21:20
Speaker 2: house generates in value. What China doesn't even count that part,
21:24
Speaker 2: trying to only counts a part of the construction part
21:27
Speaker 2: of the house that's that's definitely counted. How much of
21:30
Speaker 2: the imputed rent is a question mark of what's actually
21:35
Speaker 2: in there. So what's really going on is that China
21:40
Speaker 2: has been counting all these parts of the GDP or
21:42
Speaker 2: these parts of GDP is inflated in the US. So
21:47
Speaker 2: there's two ways to do this. One way is to
21:49
Speaker 2: put a multiple on what China does report, or you
21:54
Speaker 2: can take a haircut of what the US reports. Now
22:00
Speaker 2: you know, I'd do the multiple part, but'll be it's
22:05
Speaker 2: some people are the temptation to do both, but that
22:07
Speaker 2: would be wrong, right, So if you're going to set
22:09
Speaker 2: the US as a basis and you put a multiple
22:10
Speaker 2: and China to set China as a basis, then you
22:13
Speaker 2: have to take a haircut of all these things. In
22:15
Speaker 2: the US. I mean, the US healthcare is almost twenty
22:18
Speaker 2: percent of the GDP, but life expectancy is a tick
22:23
Speaker 2: lower than China, and healthy life expectancy is two and
22:28
Speaker 2: a half years lower than China. I mean, China is
22:32
Speaker 2: a society where people have had, you know, decades of
22:36
Speaker 2: inadequate healthcare when they grew up, you know, in the
22:39
Speaker 2: sixties and seventies, and you still have two and a
22:42
Speaker 2: half years of higher healthy life expectancy. There's a lot
22:46
Speaker 2: of reasons for this, but you know, lack of health
22:50
Speaker 2: care is not one of them.
22:54
Speaker 1: But but but but US have the best AI. You know,
22:59
Speaker 1: the US is the American AI still world leading. That
23:04
Speaker 1: that's gonna that's gonna fundamentally change the next century. You know,
23:08
Speaker 1: the American hegemony will continue forever because a US will
23:14
Speaker 1: achieve the AGI first and the Chinese will be screwed.
23:18
Speaker 2: Yeah, see, this is an AI. I kind of take
23:21
Speaker 2: a punt on this because one, I am not the
23:24
Speaker 2: expert on this, and there's tons of people going off
23:28
Speaker 2: on it. What I will say, just from having been
23:32
Speaker 2: around for a long time, is that it has a
23:37
Speaker 2: whiff of all the dot com nonsense that I went
23:41
Speaker 2: through when I crashed and burned my startup in the
23:45
Speaker 2: late nineties early two thousands, where everybody's company was going
23:49
Speaker 2: to rule the world and go from zero to you know,
23:52
Speaker 2: five hundred billion dollars revenue for delivering pet food or
23:56
Speaker 2: whatever it is. And then there's also a w of
24:01
Speaker 2: wonder of often in this AGI discourse where the US
24:08
Speaker 2: has no hope of catching China catching up to China
24:12
Speaker 2: in any other industry. Pretty much, it's like a handful,
24:17
Speaker 2: and therefore all the investment and tact and everything will
24:22
Speaker 2: be dumped into AI because that will solve everything, kind
24:27
Speaker 2: of like the Manhattan projector now it could be true,
24:30
Speaker 2: it could not be true. This is a lot of
24:32
Speaker 2: it is outside my level of expertise, but the psychological
24:36
Speaker 2: part as in, this is what will save everything. Well,
24:40
Speaker 2: you know I have my dots, right, so we are
24:43
Speaker 2: already what is it? We are already four years into
24:48
Speaker 2: GPT chat when everybody, you know, when everybody is supposedly
24:52
Speaker 2: got to taste a real AI for the first time.
24:56
Speaker 2: What really has changed about the bottom has changed?
25:01
Speaker 1: So eighty percent of the eighty percent of the user
25:06
Speaker 1: on social network are now bots. That's what's changed.
25:10
Speaker 2: Yeah, yeah, so and you don't you don't know whether
25:16
Speaker 2: videos are real or not. So oh well, you know,
25:21
Speaker 2: we'll we'll see. You're supposedly software engineers are now multiple
25:26
Speaker 2: orders of magnitude more productive than work before. I'm still
25:30
Speaker 2: waiting for the stuff, right, where is this stuff? Yeah,
25:34
Speaker 2: we'll see. My son is a CS major, so so
25:39
Speaker 2: you know if tex him a lot as well. So,
25:43
Speaker 2: But to me, I'm just I'm really reeks of the
25:47
Speaker 2: uh you know, internet will change everything, the dot com
25:50
Speaker 2: era of the late nineties or two thousand.
25:52
Speaker 1: I remember that I was going to be a paper millionaire.
25:58
Speaker 1: And so your son is asual in China. Yeah, in
26:01
Speaker 1: Chinese university. Yes, uh uh he's.
26:04
Speaker 2: A chinhaw right now because you can graduate yeah, so
26:08
Speaker 2: uh regulation yeah, he was educated in U in Hong
26:12
Speaker 2: Kong in the international school system. So he's a Hong
26:16
Speaker 2: Kong admit chinghaw oh you.
26:19
Speaker 1: Got, you got, you got the you got the oversea rout.
26:23
Speaker 1: That's like the chating way of getting No.
26:29
Speaker 2: Well, he's not a he's not an international student. He's
26:33
Speaker 2: considered a local show and he lives in the local
26:37
Speaker 2: dorms and everything. Ok, but it is gone out tai
26:41
Speaker 2: Hong Kong, Macau, Taiwan, which under the King Hawk Admissions
26:47
Speaker 2: Teching Order which every Chinhawk person has it has it
26:52
Speaker 2: uh delineated extremely minutely. Finally from you know the IMO
26:57
Speaker 2: math guys who come in to the don't call guy
27:01
Speaker 2: from Hunan, which is like the most most competitive province
27:05
Speaker 2: and at the bottom at the bottom slight you know,
27:08
Speaker 2: above the international students, but still at the bottom it's
27:11
Speaker 2: Hong Kong Taiwan editions.
27:15
Speaker 1: You have, you have much smaller pool of competition. Uh,
27:19
Speaker 1: but still congratulations, that's that's the top school and and
27:23
Speaker 1: which this is another talking point by people high on us.
27:29
Speaker 1: Why is it then, you know, Chinese all rushing to
27:33
Speaker 1: send their children to be educating United States that if
27:36
Speaker 1: China is so great, have such a great University, et cetera.
27:40
Speaker 2: Because there's a lot of dunk kids in China. So so,
27:46
Speaker 2: I mean, there's a lot of people in China and
27:48
Speaker 2: a lot of them are dune. I shouldn't say that. Uh,
27:52
Speaker 2: that's a little bit too mean, but oh late, it's
27:57
Speaker 2: pretty much.
27:58
Speaker 1: It's it's Chinese school system. Ecosystem is very competitive. It's
28:04
Speaker 1: hyper competitive people. People.
28:07
Speaker 2: Yeah, there are two types of people who go overseas. Uh.
28:12
Speaker 2: One is you're absolute, totally just dumb fox. You have
28:19
Speaker 2: dumb fox with rich parents who can affortuition. So dumb
28:22
Speaker 2: fox with rich parents who can affortuition, they will go
28:25
Speaker 2: overseas and don't wind up anywhere. Yeah, don't wind up
28:29
Speaker 2: at Vasser, They'll wind up at University of Iowa. They'll
28:34
Speaker 2: wind up you know, a ware of And then there's
28:37
Speaker 2: another route. The other route is uh, smart enough kids
28:43
Speaker 2: whose parents say, oh, okay, we don't want them to
28:48
Speaker 2: suffer the soul crushing uh you know, lifted the galcau,
28:54
Speaker 2: and we will give them a kind of a Western education,
28:56
Speaker 2: which these schools do exist in China where they can
28:59
Speaker 2: have a kind of a more chilled out time, and
29:04
Speaker 2: they will might well, they'll have a shot at the
29:08
Speaker 2: elite schools in the US. Yeah, your your IV's Oxbridge.
29:15
Speaker 2: These kids are also made fun of by the elite
29:19
Speaker 2: students in China, by the chin paws in the day
29:21
Speaker 2: that they also think everybody think these kids are spoiled
29:25
Speaker 2: dumb fox as well. So both both both these kids,
29:28
Speaker 2: both these routes are now I mean ten years ago
29:31
Speaker 2: was probably the same, but now they're a round the.
29:36
Speaker 1: Yeah, I have to qualify that. That's that's more of
29:40
Speaker 1: a case in the you know, the last ten years
29:42
Speaker 1: or so, because back in the nineteen eighties that was
29:45
Speaker 1: still the top you know, cream Della cream of China's
29:49
Speaker 1: intellectual elite that was coming to the United States in
29:52
Speaker 1: the eighties and nineties, I think all the way to
29:56
Speaker 1: early two thousand. But after that, Yeah, I agree with you.
29:59
Speaker 1: It's more like the economically affluent families who are sending
30:04
Speaker 1: their kids to the United States. Yeah.
30:08
Speaker 2: Yeah, So, I mean other proof of how by China
30:11
Speaker 2: TVP is multiples that of the US is just look
30:17
Speaker 2: at how the university rankings and as far as the
30:22
Speaker 2: objective scores go, not these other legacy ranking systems that
30:27
Speaker 2: go by reputation, where reputations like eighty percent of score
30:31
Speaker 2: or objective ranking, which is basically papers published, which is
30:34
Speaker 2: Nature Index with the lead in index. You know, Chinese
30:38
Speaker 2: universities are sixteen in the top twenty in applied sciences,
30:42
Speaker 2: they're twenty of the top twenty twenty nine of the
30:44
Speaker 2: top thirty, number thirty is University of Singapore. So you
30:51
Speaker 2: look at you know, ASP will do a you know,
30:55
Speaker 2: key technology report, and China is the lead on ninety
31:00
Speaker 2: out of one hundred of them or them the key
31:05
Speaker 2: technology vertical. China is leading, the US is leading on
31:09
Speaker 2: a handful, but these are the handful that gets the
31:12
Speaker 2: most pressed, you know, rocketry AI, uh, parts of biotech.
31:20
Speaker 2: But you know, it's just a matter of time and
31:23
Speaker 2: the matter of time, it's that's just a math problem.
31:26
Speaker 1: Yeah. I mean, graduates already top of fifty of the
31:30
Speaker 1: top AI talent graduate from Chinese universities. They're they're not
31:35
Speaker 1: even Chinese Americans, They're they're Chinese from China. And the
31:41
Speaker 1: but the thing is, uh, you you made an interesting
31:46
Speaker 1: point earlier. You said, all these low balling of Chinese
31:50
Speaker 1: economy create a delusion among the Western elite that could
31:55
Speaker 1: lead them into some very dangerous decision making. What what
32:00
Speaker 1: do you mean by that? What did you mean by well.
32:03
Speaker 2: First of all, the trade war. The trade war itself
32:07
Speaker 2: was the delusion that the US had a bigger economy,
32:11
Speaker 2: that China's workers needed America's consumers, and that trade wars
32:17
Speaker 2: are easy to win, when in fact you do not
32:25
Speaker 2: have any leverage. When you are a industrial decapacitated country
32:35
Speaker 2: and you import of your industrial goods, that's a colonial
32:43
Speaker 2: level of dependence.
32:45
Speaker 1: Wow wow, wow, okay, okay, hold your horses on faces.
32:50
Speaker 1: I'm going to quote our great Secretary of Treasure Scott Beston.
32:54
Speaker 1: Scott Beston says, you know, we are the consumers. They
33:00
Speaker 1: depend on us, the fact that you know, we don't
33:03
Speaker 1: have manufacturing anymore. Actually it's it's on them. They depend
33:09
Speaker 1: on us to buy their continually buy their goods if
33:12
Speaker 1: we don't buy their.
33:14
Speaker 2: Screw But it's China doesn't care about America's consumers. What
33:23
Speaker 2: China wants is American asset. That is a trade that's
33:27
Speaker 2: going on. What it's happening is a US which is
33:31
Speaker 2: asset rich. And this is perfectly fine. It's it's it's
33:33
Speaker 2: how markets work. It's the trade deficit that the US
33:38
Speaker 2: runs against world and with China. Uh is just what
33:42
Speaker 2: will happen when an asset rich economy trades with a
33:46
Speaker 2: productivity rich economy. So you couldn't can't even help yourself.
33:52
Speaker 2: Americans want to sell their their bonds, the real estate,
33:57
Speaker 2: their companies, their shared their companies.
33:59
Speaker 1: There I'm facing the US Congress apparently already awakened to that.
34:05
Speaker 1: You know, they are putting a lot of restrictions on
34:08
Speaker 1: Chinese investment into the United States. This is why they're divesting,
34:12
Speaker 1: forcing TikTok to be divested. They're they're they're blocking all
34:16
Speaker 1: these sales of different companies to to China because they
34:21
Speaker 1: don't want actually want China to catch in on all
34:25
Speaker 1: these acid vultures, which are like the US dollars and
34:30
Speaker 1: so so essentially they want China to hold all these
34:33
Speaker 1: paper io us, but they actually don't want China to
34:36
Speaker 1: spend those paper cash in there's those paper io us
34:39
Speaker 1: because they China. They don't want China to buy Ai chips,
34:44
Speaker 1: they don't want China to buy American companies. They don't
34:47
Speaker 1: want China to invest in the United States. So you know,
34:51
Speaker 1: the only thing they want China to buy right now
34:53
Speaker 1: is treasury.
34:54
Speaker 2: Bonds, which, yeah, so they can keeck do that and
35:00
Speaker 2: sooner or later. If I was running the US and
35:03
Speaker 2: I had all power. So if I was running the
35:05
Speaker 2: US as a democracy, no nothing can be done. But
35:07
Speaker 2: if I was running the US as dictator, that's pretty
35:10
Speaker 2: much what I would do. You know, I would shut
35:12
Speaker 2: down the assets for good trade because it's the assets
35:16
Speaker 2: for good trade that is d skilling, d industrializing the US.
35:20
Speaker 2: Now there's pain in that. Once you shut down the
35:23
Speaker 2: assets for good trade, then your high flying, high compensated
35:28
Speaker 2: industries like investment banking and you know, and and Silicon Valley,
35:35
Speaker 2: they instantly their compensation levels will gravitate toward your Zinzo
35:42
Speaker 2: process engineer that works for Fox con right, So it
35:46
Speaker 2: will equalize everything now, but it's better for the US's
35:51
Speaker 2: long term security because.
35:56
Speaker 1: Okay, okay, doggy, doggy, isn't that what Trump is doing?
36:02
Speaker 1: Isn't that what Trump is doing? Right now?
36:06
Speaker 2: I'm not sure what she's doing. I'm here, can you
36:09
Speaker 2: hear me? Yeah, I don't. I'm not sure what he's doing. Yeah,
36:14
Speaker 2: so I have no idea what what what? What? What
36:16
Speaker 2: Trump is doing? I think he would like to she
36:20
Speaker 2: would like to h he would like for manufacturing to
36:27
Speaker 2: all come back to the US. Some of it is coming,
36:31
Speaker 2: but the natural trade here is still assets for goods
36:37
Speaker 2: that will never go away, and that will never go
36:40
Speaker 2: away because it's just structural. It should never go away.
36:44
Speaker 2: America is a it's a fat bird of a country
36:47
Speaker 2: to coasts and the best oceans, securing the North, secure
36:51
Speaker 2: in the south, temperate climate throughout is it? Do you
36:58
Speaker 2: really want to work in a dirty, sweaty, smelly factory
37:04
Speaker 2: or do you want to be a real estate agent?
37:06
Speaker 1: Right?
37:08
Speaker 2: Give this choice to Americans. If you want to work
37:12
Speaker 2: in a dirty, smelly factory, well, okay, something has to
37:15
Speaker 2: come tell them because they're going to choose to be
37:17
Speaker 2: real estate agents.
37:21
Speaker 1: That's fair. Do you want to exit and come back
37:24
Speaker 1: in because I lost your visual? You are like a dark.
37:28
Speaker 2: Oh I see me? Okay, I can I can actit?
37:30
Speaker 2: Come back in?
37:32
Speaker 1: Yeah, okay, we'll just take a moment to wait for uh,
37:44
Speaker 1: I'm faced to come back because we have some technical difficulties.
37:48
Speaker 2: Let me see if, let me see if can you
37:50
Speaker 2: see me? Now? No?
37:52
Speaker 1: I don't, don't you just dark dark blank spot? All right,
38:00
Speaker 1: we'll give himp fhas a couple of minutes to come back.
38:05
Speaker 1: This has been a fascinating conversation. I can geek out
38:09
Speaker 1: on this for hours. You know, it's but he's But
38:16
Speaker 1: if you have a chance to go check out Asia
38:18
Speaker 1: Times based right about these topics, uh, you know, on
38:23
Speaker 1: a weekly basis. Oh, now I'm based. He's back.
38:26
Speaker 2: Welcome back.
38:28
Speaker 1: Yeah, okay, go ahead.
38:33
Speaker 2: Yeah, I'm not too sure where we where we left off,
38:35
Speaker 2: but we're.
38:36
Speaker 1: Talking about you. You think you're not sure what Trump
38:39
Speaker 1: is doing. But the asset for good strade continual nevertheless,
38:45
Speaker 1: because it's structural.
38:47
Speaker 2: Yeah yeah, so so okay. So one of my pieces,
38:53
Speaker 2: one of pieces in Age of Times is it dissects
38:58
Speaker 2: the smile Kurt, you know, smile curve. The smile curve
39:03
Speaker 2: is what has pretty much destroyed US industry for the
39:08
Speaker 2: over the last thirty forty years. The smile curve was
39:11
Speaker 2: developed in Taiwan, where they said the highest value add
39:15
Speaker 2: part of the curve is in R and D and
39:16
Speaker 2: design and sales and marketing. You know, the two ends
39:19
Speaker 2: the bottom of that smile. The bottom that smile is manufacturing,
39:23
Speaker 2: low margins, lots of competition, high capital costs. So we'll
39:27
Speaker 2: avoid that and we'll work on the the fun part,
39:31
Speaker 2: the high value part, the R and D and design,
39:34
Speaker 2: and then the the the sales and marketing. And then
39:39
Speaker 2: he developed this theory because it was acer computer. Acer
39:44
Speaker 2: computer had all these business lines. We found out that
39:46
Speaker 2: the manufacturing part captured very little part of the value team.
39:51
Speaker 2: So that's what has been driving America all these years
39:54
Speaker 2: where where Apple doesn't manufacture anything, but they do all
39:58
Speaker 2: the cool design, you know, rounding off the edges of
40:00
Speaker 2: cell phones, and all of that got shipped to China.
40:05
Speaker 2: And this is a low value stuff that you know
40:09
Speaker 2: that fox con does all the manufacturing that is then
40:15
Speaker 2: shipped to the US, and then Nike will then you know,
40:19
Speaker 2: jack up the price by you know, five percent and
40:21
Speaker 2: collect all that marketing margins. And then all of a
40:25
Speaker 2: sudden they said, oh, the US is d skilled and
40:29
Speaker 2: the industrialized. You got to bring that part back now
40:31
Speaker 2: in theory, in theory, if you bring that part back
40:34
Speaker 2: and it's the lowest part of the value curve, it
40:36
Speaker 2: should be really easy, should it not. And then they
40:39
Speaker 2: find out that it's so super difficult. And the reason
40:42
Speaker 2: for that, I think is that the small curve has
40:46
Speaker 2: been measuring the wrong thing all the time. From from
40:49
Speaker 2: the very beginning, it thought it was that measuring value
40:52
Speaker 2: add but it was actually measuring Dutch disease. And Bomo's law.
41:00
Speaker 2: Dutch disease is when they discovered natural gas in the
41:04
Speaker 2: Netherlands and the nineteen sixties, I think all of a sudden,
41:07
Speaker 2: all the capital went to natural gas and it deindustrialized
41:12
Speaker 2: every part of the Dutch economy, so all the factories closed,
41:15
Speaker 2: it drove up the Dutch currency, and then it become
41:19
Speaker 2: uncompetitive and just started selling natural gas. So it's considered
41:24
Speaker 2: a bad thing. The US is running on Dutch disease,
41:27
Speaker 2: except it's not selling just natural gas, selling everything. It's
41:31
Speaker 2: selling treasuries, it's selling commodities, it's selling real estate and
41:36
Speaker 2: selling crypto. So it's just asset sales. And these asset
41:41
Speaker 2: sales are leading to high compensations Bomo's law, where your
41:46
Speaker 2: compensation isn't reflecting your value. App So a lot of
41:49
Speaker 2: these designers and programmers and Apple who think that they
41:54
Speaker 2: are making all three hundred and one thousand dollars a year,
41:57
Speaker 2: that they're so much more valuable than that process, that
41:59
Speaker 2: dirty process engineer in Zinzo who's making fifty thousand dollars
42:02
Speaker 2: a year. But all that is happening is at Bonmo's law,
42:09
Speaker 2: you must benchmark your value to the highest UH value
42:14
Speaker 2: add in your economy, and that it's asset sales. So
42:20
Speaker 2: so what happens is but actually the hardest part of
42:27
Speaker 2: that smoker is the manufacturing. Elon Musk, he said that
42:33
Speaker 2: the value of engineering, design, design, engineering is a rounding
42:37
Speaker 2: error of the value of manufacturing. That in the end,
42:42
Speaker 2: all of the really hard work is in the manufacturing
42:46
Speaker 2: part of it. The you know, the design, the marketing,
42:49
Speaker 2: all of that is just garbage. So that that is
42:53
Speaker 2: what what the US economy is kind of running on.
42:58
Speaker 2: It's a lot of the value is that has been
43:02
Speaker 2: you know, artificially inflated by the fact that it's been
43:06
Speaker 2: benchmarked to the value of the assets that are being sold.
43:10
Speaker 2: It is not actually being benchmarked to the value that's
43:14
Speaker 2: actually being added. When when you know, when the US
43:21
Speaker 2: is a consumer, it is not that the U China
43:26
Speaker 2: doesn't want the US to consume. What it wants is
43:30
Speaker 2: the assets that the US are willing to trade for
43:33
Speaker 2: whatever China produces, because American assets, everybody wants it. Everybody
43:37
Speaker 2: wants to you all stocked treasuries, real estate. The US
43:44
Speaker 2: is the bottomless pit of assets to sell off.
43:49
Speaker 1: Now, why couldn't this why why why couldn't this asset
43:53
Speaker 1: for goods trade continuing?
43:54
Speaker 2: Definitely, we don't know how long it can continue. But
43:58
Speaker 2: already since nineteen sixty when about zero percent of the
44:01
Speaker 2: US stock market is owned by foreigners, now it's about
44:04
Speaker 2: thirty over thirty percent. So you can keep drawing that line.
44:10
Speaker 2: So it's got decades. US has decades left. You really
44:14
Speaker 2: can't sell off grandpa's farm by bit, So what what?
44:20
Speaker 1: But what?
44:21
Speaker 2: What? Like?
44:22
Speaker 1: Okay, I'm playing again, playing Devil's advocate here. Okay, what
44:27
Speaker 1: if US continue this asset for a good trait, but
44:31
Speaker 1: you will allow China to accumulate US dollars your cloud,
44:34
Speaker 1: you walk home, China to buy treasury bounds, but you
44:38
Speaker 1: will not allow China to buy US companies to invest
44:41
Speaker 1: in US. So, in essence, China just getting paper IOUs, right,
44:45
Speaker 1: I mean, the United States can just keep on for money.
44:49
Speaker 1: US can just keep on twenty dollars.
44:51
Speaker 2: Yeah, at a certain point they won't want it, right,
44:52
Speaker 2: at a certain point when China figures out that, uh,
44:55
Speaker 2: these dollars are workless because I can't turn into anything
44:57
Speaker 2: I really want they'll star buying it. The interesting what
45:00
Speaker 2: starts going on which is already happening, which is already happening. Interesting,
45:04
Speaker 2: you know the ten year in the US, what is
45:06
Speaker 2: it like four point three? Uh in China the ten
45:08
Speaker 2: years at one point eight. So now it's cheaper the
45:10
Speaker 2: borrel in R and B than it is the battle
45:14
Speaker 2: of dollars, which is it's already happening. So these things
45:18
Speaker 2: don't happen instantly in the dollar crashes and start being
45:22
Speaker 2: with desert currency. You know, just over the decades, interesting
45:25
Speaker 2: will keep rising and you'll keep rising, you keep rising.
45:29
Speaker 1: Interest interest rights. Interest rate rising makes the US dollar
45:34
Speaker 1: more valuable. I mean like like you pop up the
45:38
Speaker 1: value of the dollar. Well, interesting goes out.
45:42
Speaker 2: You have you have to pay more for people to
45:45
Speaker 2: want to buy your to lend money to you. So
45:49
Speaker 2: uh so you have to raise your interest rates to
45:51
Speaker 2: bring in that money.
45:55
Speaker 1: Right, but but but but but but you also you
45:58
Speaker 1: know makes it actually makes it a cheaper now that
46:03
Speaker 1: that if you hold US dollar asset to buy goods
46:07
Speaker 1: from to continue this this uh acid for good strain.
46:12
Speaker 2: Right, well, you know you've got to kind of see
46:16
Speaker 2: where the dollar is going so the interviews are rising
46:18
Speaker 2: because because there's inflation in the US, and then the
46:20
Speaker 2: dollar has been depreciated against a lot of currencies, so
46:23
Speaker 2: they have to raise the interest rates to keep that
46:25
Speaker 2: from getting out of hand. So, you know, you got
46:27
Speaker 2: to see where what's driving what at this point. You know,
46:32
Speaker 2: so far for the past year, year and a half,
46:34
Speaker 2: the R and B has appreciated a lot against the
46:37
Speaker 2: against the dollar, and it'll just keep going because, uh,
46:41
Speaker 2: you know, probably China is getting you know, pockets are
46:44
Speaker 2: being stuffed. It understands that, uh, its markets are going
46:48
Speaker 2: to be kind of shut off in the US, and
46:51
Speaker 2: its ability to invest in the US will also be hindered.
46:54
Speaker 2: So that's why you know, China's trade with the US
46:57
Speaker 2: and it's holding the US as as a reserve currency
47:00
Speaker 2: is going down. Would you see it? Slowly? Slowly?
47:06
Speaker 1: I don't want this. This this makes me want to
47:10
Speaker 1: pivot to to another thing, the petrol dollar versus petrol
47:16
Speaker 1: yu on because you know, for for a long time,
47:19
Speaker 1: the dollar, the value of dollar is because, uh, it's
47:22
Speaker 1: a reserve currency. And it's because it's a reserve currency
47:26
Speaker 1: because all these countries that needs to buy oil and gas,
47:30
Speaker 1: they need to have a large reserve of US dollars
47:34
Speaker 1: in order to make the purchase because oil and gas
47:37
Speaker 1: was priced in dollars that a dollar valuable. We're work
47:45
Speaker 1: on West Asia and ran closing down the street or
47:48
Speaker 1: Hormos and making everybody pay tolls in in yuan and
47:53
Speaker 1: and pay for their oil in yuon with that, are
47:57
Speaker 1: we are we seeing a shift?
48:00
Speaker 2: We're definitely saying it's not just a petrol dollar. It's
48:05
Speaker 2: not just a petrol dollar. It's a petrol dollar. And
48:07
Speaker 2: the Asian export dollar. Those are the things I was
48:10
Speaker 2: keeping uh, the US dollar high in the hog all
48:13
Speaker 2: those years where uh, you know, Asian exports are price
48:17
Speaker 2: and dollar and it will be refunneled back into the
48:19
Speaker 2: US as treasuries, just like uh, you know, golf states
48:24
Speaker 2: and export oil and then they make all the dollars
48:27
Speaker 2: and they refunnels back to the US as investments in
48:29
Speaker 2: you know, companies or treasuries or whatever they buy. Now,
48:34
Speaker 2: you know, China's kind of reversing a lot of this
48:37
Speaker 2: to a large degree. One a lot less money is
48:40
Speaker 2: funneled back in the treasury these days from China, and
48:43
Speaker 2: China is doing the b r R a lot of
48:46
Speaker 2: this money is being more and more of it is
48:48
Speaker 2: being funneled into the global set, which is the way
48:52
Speaker 2: it should be. The way it should be is not
48:55
Speaker 2: what has happened the last forty to fifty years, where
48:58
Speaker 2: developing a comedy's tight their belts and lend to their
49:01
Speaker 2: rich customers to buy their wares. That's just half passed
49:04
Speaker 2: backwards economics and only work because East Asia is East
49:08
Speaker 2: Agent is able to do that. It's able to tighten
49:10
Speaker 2: its belt and have decades of sweatshop conditions to become rich.
49:17
Speaker 2: You can't expect, well, I can't expect other economies to
49:22
Speaker 2: be able to put up with that, and they shouldn't
49:23
Speaker 2: put up with it if they don't have to. If
49:26
Speaker 2: China will offer invest and lend, take China's money, man.
49:36
Speaker 2: This is where a rich economy China is investing in
49:40
Speaker 2: a poorer economy Africa and Southeast Asia and to develop
49:45
Speaker 2: their infrastructure, their their roads, their their hospitals, their schools
49:49
Speaker 2: so that they can move up the ballot chain and
49:52
Speaker 2: have real industry. They don't have to go through decades
49:56
Speaker 2: of a sweatshop economy. Two industrial arts. So a lot
50:03
Speaker 2: of people were calling the death of the vr I
50:06
Speaker 2: three years ago that just a little COVID low. Last
50:09
Speaker 2: year the bri I hit record levels and record levels
50:13
Speaker 2: that's in two times a previous record. So so you
50:16
Speaker 2: know we're back when we're back in the swing of things.
50:19
Speaker 2: So this round of globalization were everybody, this is the
50:23
Speaker 2: final round. You know, you were final balls. Now, last
50:26
Speaker 2: round of globalization was making China rich, you know, bringing
50:30
Speaker 2: China into the world economy of trading economy. Now that
50:33
Speaker 2: China is rich, the next round of globalization is China
50:39
Speaker 2: developing the third world, developing economics.
50:44
Speaker 1: Let me play Devil's advocate for a second, can you
50:47
Speaker 1: hear me? Okay, okay, So let me play Devil's advocate here.
50:52
Speaker 1: So there are people who argue, you know, by the
50:55
Speaker 1: by China industrializing, blocking the path of the industrialization for
51:01
Speaker 1: other countries in the global South, because countries China just
51:04
Speaker 1: suck all the industry onto itself. Like you said, no
51:10
Speaker 1: other country can probably do what East Asia do, which
51:14
Speaker 1: is like tightening their belts, suck it up and working
51:18
Speaker 1: very hard, grinding sweatshop conditions like like China. Because China
51:26
Speaker 1: did that, they're saying, okay, now China is blocking that
51:29
Speaker 1: path of development for other global suse countries to to industrialize.
51:34
Speaker 1: What do you say to.
51:34
Speaker 2: That other economies global self poor development comomies, they should
51:41
Speaker 2: not be expected to go through what China did it,
51:46
Speaker 2: and they don't have to as in they're they they're
51:53
Speaker 2: not even industrialized. What they need are not markets, What
51:58
Speaker 2: they need is capital. They can find the markets later,
52:03
Speaker 2: after they got the roads, after they got their solar
52:05
Speaker 2: panels installed, after everybody has basic electricity, healthcare, and education.
52:09
Speaker 2: Then you figure out where your comparative advantages. Then you
52:14
Speaker 2: figure out you know, uh, you know, people are operating
52:17
Speaker 2: these days as a David Ricardo whenever born right, So
52:22
Speaker 2: at some point you there's this one article that accused
52:26
Speaker 2: trying to stealing all the industries of like Indonesia's boutiques
52:32
Speaker 2: and these these whatever you these what they call it
52:38
Speaker 2: rooster bowls from Thailand. I mean, is that what what
52:43
Speaker 2: you want these economies to subsist on, you know, a
52:46
Speaker 2: village level handicrafts that they have a they have a
52:51
Speaker 2: you know, and when China already has has already automated
52:56
Speaker 2: all this stuff. If these economies like Indonesia in Thailand,
53:01
Speaker 2: you know, upgrade their industry upgrade their infrastructure. Then their
53:05
Speaker 2: entire industry will move up to something completely different. I
53:07
Speaker 2: don't know what it is. I don't know what it is,
53:09
Speaker 2: but I have confidence in comparative advantage. They'll find it.
53:13
Speaker 2: But to say, oh, you should have comparative advantage because
53:17
Speaker 2: of your village level handicraft, rooster bawls, you're consigning these
53:23
Speaker 2: people to decades or poverty forever. You know that's not
53:28
Speaker 2: a real industry to sell these little trinkets of tourists. No,
53:32
Speaker 2: you want to fully industrialized countries. Get electricity running, get
53:36
Speaker 2: roads running, get railways running, and then they can figure
53:39
Speaker 2: out what they can really do.
53:45
Speaker 1: That is very interesting. The our hour just flew by,
53:50
Speaker 1: like I could geek out out on this for hitting
53:54
Speaker 1: for hours with you. What is there anything else you'd
53:57
Speaker 1: like to to cover?
54:00
Speaker 2: Just make one last point and then I can call
54:02
Speaker 2: a day for now. The last point is, you know
54:05
Speaker 2: this was my job about thirty five years ago. I
54:07
Speaker 2: was in the aid industry. I was the guy sent
54:10
Speaker 2: over to the third world country to live there, live
54:12
Speaker 2: among the people, to bring development there. And of course
54:17
Speaker 2: now I know it was all just window dressing. It's
54:21
Speaker 2: window dressing because the US runs massive current account deficits.
54:25
Speaker 2: It needs to suck in money from these thirdorough countries.
54:28
Speaker 2: There is no they don't have two nickels to rub together.
54:31
Speaker 2: So all I got for that school was advertising that
54:35
Speaker 2: an American lives here and it's all cool and shit
54:38
Speaker 2: and oh, I can get you five thousand dollars in
54:40
Speaker 2: school supply maybe. And then there's a Chinese company building
54:46
Speaker 2: a road right from the northwest of Southwolk Province and
54:49
Speaker 2: I met them And this was thirty five years ago,
54:50
Speaker 2: before Belton Rolle was ever even mentioned. So did who
54:57
Speaker 2: did more work? Who benefited that country more? Uh? The
55:02
Speaker 2: window dressing American or you know that three hundred cometer
55:06
Speaker 2: road that connected Southfolk Province Northfolk Province.
55:12
Speaker 1: Yeah, to be fair, a lot of the A packages
55:15
Speaker 1: that the West provides goes into pave for consultant fees
55:19
Speaker 1: to the Western consultants and leave very little to actual
55:25
Speaker 1: developmental work.
55:26
Speaker 2: But that is the us A scandal. I used to
55:30
Speaker 2: work with those guys.
55:32
Speaker 1: Yeah. So for people who want to, you know, uh,
55:36
Speaker 1: learn more from you, where would they where? Where where
55:40
Speaker 1: do they find you?
55:42
Speaker 2: Uh? They go to Asia Times and search for hunt faces.
55:46
Speaker 2: You can follow blue Bear Monkey dog. Yeah, oggie dogg
55:55
Speaker 2: is dead. It's just blue bear monkey, right, blue bear monkey,
55:59
Speaker 2: young eggs. I.
56:00
Speaker 1: It's acquired taste. It it's a it's acquired taste. You
56:05
Speaker 1: where your where you po have a post as a
56:08
Speaker 1: color for color, for color for personality, horny uncle personnel.
56:16
Speaker 1: But I I enjoy it. I enjoy it.
56:18
Speaker 2: I had to behave myself, I wouldn't be there.
56:23
Speaker 1: Well, ladies and gentlemen, again, blue bear monkey, uh and
56:28
Speaker 1: I'm facing from a times. Make sure you give him
56:31
Speaker 1: a follow and until next time, bye bye,