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The China strategy that could break America · Cultural Wars | America Out Loud News

• 0:11
  It's the tip of the spare in the epic battle to defend the United States of America.
• 0:19
  The national security hour exposes the wolves in sheep's clothing and the nefarious plots to undermine and destroy U.S.
• 0:27
  national security.
• 0:31
  Okay, so we've got a lot of things to discuss today.
• 0:35
  A lot of news in the going on in the world.
• 0:38
  We've got, you know, questions about what exactly happened with President Trump and the uh the attempted assassination.
• 0:48
  Who is this person that attempted to kill the 47th president at the White House Correspondents Center?
• 0:54
  Uh, what were the various security failures?
• 0:58
  Who was behind it?
• 0:59
  A lot of questions like that.
• 1:01
  Then we've got questions about what about the price of gas.
• 1:06
  How is it that the economy continues to apparently keep going?
• 1:11
  And uh there's you know, obviously some pain at the pump, but nothing like what we assumed it would be.
• 1:19
  What's really going on there?
• 1:21
  And what is the outcome of the Iran war, which is causing all of this chaos and disruption globally.
• 1:31
  Is it over?
• 1:32
  The president has been talking about getting a deal potentially, uh, very little action so far.
• 1:40
  What's really happening here?
• 1:43
  And so these are some of the questions that we're going to be exploring a little bit today on the show.
• 1:48
  Another question is um, we've got people like George, excuse me, George Friedman, you've got people uh from Heritage Foundation, all these right-wing people talking about um, you know, uh the this notion that uh the Iran war is basically an indirect approach toward stifling or styming uh China's energy flow, uh talking about how the Strait of Hormuz counterblockade the president is conducting against Iran is a uh uh a wonderful uh uh snapshot of what the president and what the United States at some point soon could do to energy and trade flows going through the Strait of Malacca.
• 2:33
  Of course, all of this to me smells like cope, smells like copium, as the kids would say.
• 2:42
  Doesn't seem like there's any serious uh uh grand strategic thought being put into this.
• 2:50
  In fact, if you believe that what we're seeing in Iran is a purposeful indirect approach, as a colleague of mine who wrote at 1945.com earlier this week, uh senior fellow from the Heritage Foundation, I believe his name was Jim Fine.
• 3:08
  Um he's involved with the technology and sort of Indo-Pacific strategy over at Heritage.
• 3:13
  He wrote a a piece at 1945.com where I'm a senior national security editor these days, in which he quoted B.H.
• 3:22
  Little Hart's uh indirect approach, and he said that um basically he said to stop planning to win a potential war with China over Taiwan by smashing a Chinese invasion fleet of Taiwan.
• 3:38
  He advises that we start planning to win by collapsing the system that powers it.
• 3:44
  So it's an indirect systems approach to fighting and defeating China.
• 3:49
  And so Reuters is reporting that something like 70% of China's energy is imported from abroad.
• 3:59
  Uh 50% of it at least is coming out of the Middle East.
• 4:03
  Um, you know, and by choking off the Strait of Hormuz, choking off potentially the Strait of Malacca, uh, the United States going after Venezuela as well, because remember, there was a small percentage of of oil, but it was increasing.
• 4:19
  Um that was coming out of Venezuela going to those refiners in China.
• 4:25
  So the the argument from sort of this this right-wing ecosystem is that uh, you know, we're going to be able to indirectly go after these um struts that underpin and support the Chinese juggernaut, and that by putting pressure on them, not directly attacking them, targeting the systems, the logistics, the morale, it would force the enemy, in this case, the Chinese into strategic paralysis.
• 5:00
  And so, in this scenario, this kind of little heart's uh indirect approach applying to China, the center of gravity in any conflict with China would not be Taiwan.
• 5:11
  That would just be the fuel, basically.
• 5:14
  Um by targeting these choke points, the sea lanes like Malacca and Hormuz, going after supplier states like Saudi Arabia, Iraq, and the United Arab Emirates, uh, going after transportation infrastructure, going after even ports potentially inside China.
• 5:36
  Um the United States would theoretically choke the flow, right?
• 5:41
  We would, it was it's a it's a macro level play.
• 5:45
  We would interdict shipping, we would pressure golf suppliers diplomatically.
• 5:49
  We're already pressuring them by basically blockading their ability to move oil in and out of uh the the region, at least through the Strait of Hormous.
• 5:58
  Uh, we would disrupt maritime insurance and logistics that could potentially disrupt the ability for China to reliably receive in theory the goods that they purchase from abroad.
• 6:11
  Basically, the effect would be to force China to burn through its strategic reserves and to basically create sort of a guns versus butter crisis, you know, military fuel versus civilian economy, force a sort of Sophie's choice, if you will, uh in Beijing that would theoretically force or put the regime in China in a position where they could run a foul of uh the Chinese people.
• 6:41
  Again, this all goes back to the China collapse narrative.
• 6:44
  This all goes back to the regime change desire on the part of Washington to regime change the Chinese government.
• 6:53
  But all of this just all very 19th century, right?
• 7:00
  All very 19th century, right?
• 7:03
  All of this theorizing coming mostly from the right, uh, about how the Iran War is actually a excellent test bed for how we're going to effectively fight and defeat the Chinese without directly fighting them, say, over Taiwan, or even over the South China Sea, or even over, you know, in some kind of engagement between.
• 7:03
  All of this theorizing coming mostly from the right, uh, about how the Iran war is actually a excellent test bed for how we're going to effectively fight and defeat the Chinese without directly fighting them, say, over Taiwan, or even over the South China Sea, or even over, you know, in some kind of engagement between China and Japan.
• 7:32
  I think it really really misses the point because it's all very logical on paper.
• 7:39
  It's very logical on paper what you're what you're seeing and hearing out of these sort of heritage foundation types, um, sort of mirrors that anaconda strategy of the civil war, the United States civil war, you know, blockade plus infrastructure destruction.
• 7:55
  Ultimately, with that sort of anaconda, you know, snake-like blockade, squeezing the South, the American South.
• 8:05
  They couldn't resist, they couldn't sustain their armies over time, and the war ended primarily because the South was successfully economically suffocated.
• 8:14
  And this is the logic of what these people are writing about and talking about.
• 8:22
  But first of all, I don't even think that's really what's going on here.
• 8:27
  And I and I and I hate to offend my MAGA friends in the audience, but I don't believe the president is playing 5D chess.
• 8:36
  I think he's playing checkers right now.
• 8:38
  And I don't think he's the only one calling the shots when it comes to the Iran crisis, because again, the argument from these people is that the Iran crisis is a segue into slowly putting the squeeze on the People's Republic of China through this indirect systems approach to warfare.
• 9:00
  Um, sort of a it's a it's war by other means.
• 9:04
  Um I don't think the president actually thinks like this.
• 9:08
  I I've seen nothing in his repertoire, and I've followed him now as a politician for 10 years.
• 9:15
  I don't see anything, not a thing that indicates to me that he's playing 5D chess, that he's sitting around theorizing this.
• 9:25
  Yeah, he might want to go after the oil flow because he wants to go after it, because he wants to, he thinks force the domestic energy production in the United States to surge forward.
• 9:39
  This might be something he's thinking about in an ancillary fashion, but there's no indication that we entered the Iran war the way we did, when we did, how we did, because the president alone decided that that was the time and the place to do it.
• 9:56
  What it sounds and looks an awful lot like that the president was sort of pushed into it, that he was sort of ambivalent about it, but then was convinced to do it, not just by Benjamin Netanyahu, but by circumstance.
• 10:20
  Now you you're sitting there maybe saying, well, wait a second, though, he did first knock off Venezuela, which is a big oil producer, and then he shifted over to Iran, which was partnered with Venezuela in many respects.
• 10:33
  But I'm here to tell you that I don't think that that's actually part of a grand strategy.
• 10:37
  I think the president went after Venezuela, went after Nicolas Maduro, and then he was riding a high off of that very impressive midnight raid, and he thought he could do it all over again.
• 10:52
  And he had the Israelis telling him, yeah, we can get this done in 72 to 96 hours.
• 10:58
  It won't be a full-blown war, we'll decapitate the Ayatollah Khamani, the whole system will collapse like a house of cards.
• 11:05
  It'll buy time for the Iranian people, and they will overthrow their government once we destroy their top upper echelon of leadership.
• 11:16
  And everything that's happened thereafter, February 28th, has not been part of some grand strategy.
• 11:24
  It's been the president vamping.
• 11:27
  Because the president realized, uh oh, my 96-hour non-war war is in fact a full-blown conflict.
• 11:35
  And oh, by the way, we're having trouble wrapping this thing up in an amenable fashion for us, our allies and our interests.
• 11:44
  We've kicked over a hornet's nest, and it turns out that those hornets are really nasty buggers.
• 11:51
  So for those people sitting around saying that this is phase one of a multi-step indirect strategy directed at choking China and pressuring China and forcing China to play more fairly and play more within our world system.
• 12:11
  I don't see it.
• 12:12
  I don't see anything in the president's repertoire that that makes me believe that, yeah, he's really playing this, you know, this big chess game.
• 12:22
  No, he's playing checkers.
• 12:24
  He sees an asshole and he jumps them.
• 12:28
  And sometimes it works out, like it did with Maduro.
• 12:31
  Other times it doesn't with Iran.
• 12:36
  But it is interesting, the fine piece in 1945.com, in which he's basically encouraging American leaders to stop focusing on the tactical side of defeating a potential invasion by China into Taiwan, and you know, winning the initial battle.
• 13:00
  What this writer from Heritage is is telling the audience to do, and I give him points, big big props for doing this, is he's asking, what if that fails?
• 13:12
  How do you still win the war if China were to say invade Taiwan?
• 13:18
  So he's making a systems warfare argument, right?
• 13:22
  He's saying China's military power is fuel dependent, that fuel system is import-dependent, it's infrastructure constrained, and it's operationally fragile.
• 13:32
  So instead of fighting the people's liberation army head on in the Taiwan Strait, the smarter play, according to this guy, would be to collapse the system that lets the PLA fight.
• 13:43
  It's an elegant argument.
• 13:44
  The problem is that it assumes that America can execute a clean controlled systems war against China's fuel network without triggering consequences that overwhelm the strategy itself.
• 13:58
  And I'm just here to tell you, I hate to be the negative, you know, I hate to be blackpill Brandon here, but uh it is highly unlikely that this plan, if you want to call it a plan, will work in practice, at least not the way it's advertised, okay.
• 14:00
  To be the negative, you know, I hate to be black pill brandon here, but uh it is highly unlikely that this plan, if you want to call it a plan, will work in practice, at least not the way it's advertised, okay.
• 14:15
  The plan assumes you can interject oil, hit refineries, and pressure suppliers without triggering full scale escalation.
• 14:15
  The plan assumes you can interject oil, hit refineries, and pressure suppliers without triggering full scale escalation.
• 14:22
  It's completely unrealistic.
• 14:22
  It's completely unrealistic.
• 14:24
  We're already seeing in Iran, uh, which is a sort of a uh it is in in in a very
• 14:24
  We're already seeing in Iran, uh, which is a sort of a uh it is in in a very real way, it's a preview of what would be a far worse and bigger conflict with China if we did this indirect approach.
• 14:37
  The Iranians have resisted us quite effectively this entire time.
• 14:42
  So, you know, China would interpret U.S.
• 14:46
  attacks on its energy system as existential warfare.
• 14:50
  Um, they might respond in a military unpredictable fashion.
• 14:55
  They could, worst case scenario, uh, conduct strikes on U.S.
• 15:00
  bases in Japan and Guam and for the Philippines and elsewhere, they could, in theory, do very extensive cyber attacks on U.S.
• 15:07
  financial systems and infrastructure, they could even, you know, escalate into space and nuclear signaling.
• 15:14
  Um, it could very quickly stop being an indirect approach because the Chinese would rightly view what we were doing as an existential threat.
• 15:24
  In other words, Liddell Hart's logic, the great strategist of the 20th century, it breaks down when both sides uh can escalate vertically.
• 15:36
  And when I get back, we're going to talk more about this.
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• 16:56
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• 17:08
  So we're back, and we were talking about how this sort of very intricate thought process, mostly on the American right when it comes to thinking about the Iran war as a possible piece in a larger strategy that the Trump administration might be employing, which is really not about the Islamic Republic of Iran or even the Middle East at all.
• 17:37
  It's supposedly about, you know, going after the energy infrastructure supporting the People's Republic of China.
• 17:46
  Um as I said it before the break, there's no way.
• 17:50
  I do not believe for one second that this is a real grand strategy that the president has embraced.
• 17:56
  I think he's, you know, I think he's spitballing.
• 18:00
  I think he's, you know, shooting in the dark because his original plan for Iran so badly failed, he can't admit that it failed publicly.
• 18:09
  He can't be seen as losing.
• 18:11
  So he and his people are floating all these kind of kakamimi ideas about how this is really indirect about you know, indirectly collapsing China or restraining China.
• 18:23
  And that could, yes, that could very well, there could, there has already been some damage to the Chinese system from the Iran war, but that damage has been mitigated.
• 18:36
  It has been mitigated.
• 18:37
  Now, are they prospering exactly as they want to or as they could if all things were equal?
• 18:44
  No, because they do get a lot of energy from the Middle East, but they get a lot of energy, they get the most amount of their energy from next door in Russia.
• 18:58
  And while the Russians are definitely, I would say, currently at capacity, if this crisis really goes protracted, which is what it looks like, the Strait of Hormuz being closed down, it's looking like this is going to be a protracted thing.
• 19:15
  There is waiting to be signed a very powerful new pipeline connecting the Yamal Peninsula of Russia, which is this very oil and natural gas-rich area in the Arctic down to China.
• 19:34
  It's called the power of Siberia 2.
• 19:37
  It is um it has been basically frozen in place because of um major diplomatic disagreements between Beijing and Moscow.
• 19:49
  But if this Strait of Hormoose blockade persists, as I think it will, the Chinese are definitely going to sign on the dotted line, and they will probably, with their very impressive industrial capacity, be able to complete that um pipeline that has been stalled because of arguments between Moscow and Beijing, really petty arguments.
• 20:18
  It will probably be be overcome in relatively short order.
• 20:22
  In the meanwhile, how has China been able to survive what has happened already?
• 20:29
  Well, this is because China, while we were for years draining our own strategic petroleum reserve, the Chinese were happily expanding theirs.
• 20:40
  They now have the world's, as of December 2025, China has the world's largest strategic petroleum reserve.
• 20:49
  Okay.
• 20:50
  I think they have something like 1.5 billion barrels.
• 20:52
  Now we're number two, but we have let we have far less than that.
• 20:57
  And we're draining it even now to try to keep those oil prices down because guess what?
• 21:00
  Keep those oil prices down because guess what?
• 21:02
  The blockade of the Strait of Hormous is really hurting the United States.
• 21:02
  The blockade of the Strait of Hormuz is really hurting the United States.
• 21:06
  It's hurting the rest of the world even more, but it's hurting the United States in the form of high prices and shortages.
• 21:06
  It's hurting the rest of the world even more, but it's hurting the United States in the form of high prices and shortages.
• 21:12
  That's why the high prices are there.
• 21:12
  That's why the high prices are there.
• 21:16
  So we need to understand what it is we're dealing with.
• 21:16
  So we need to understand what it is we're dealing with.
• 21:20
  And the Chinese not only have this connection to Russia, they not only have the pipeline that could potentially be fulfilled, they not only have.
• 21:20
  And the Chinese not only have this connection to Russia.
• 21:24
  They not only have the pipeline that could potentially be fulfilled.
• 21:28
  They not only have the largest strategic petroleum reserve in the world.
• 21:34
  The Chinese also have the ability to continue moving energy sources through the Strait of Hermuz.
• 21:42
  The Shadow Fleet, this shadow fleet we've been hearing about, uh, that Iran and North Korea and Russia and China operate to kind of circumvent Western sanctions on various countries and goods.
• 21:55
  It turns out that the Shadow Fleet continues to operate quite effectively.
• 21:59
  Who knew?
• 22:00
  A professional, a professional shadow fleet was good at evading U.S.
• 22:05
  military blockades.
• 22:07
  It turns out, though, the Shadow Fleet has been very effective in moving Iranian oil out of the Strait of Hormuz even today, even with a full-blown U.S.
• 22:17
  naval blockade in place.
• 22:21
  And a lot of that oil and natural gas is being moved to none other than China.
• 22:25
  Now, again, they're not getting the full amount that they need, and that is hurting them, but it's not enough to kill them.
• 22:32
  It's not enough to have this systems war happen in a successful way for the United States.
• 22:39
  And now, if we were to look beyond this, and by the way, by the way, let's also just talk about one thing that many people in our party, the Republican Party, don't like talking about.
• 22:50
  Right?
• 22:51
  Alternative energy.
• 22:53
  This is not a popular subject.
• 22:55
  We don't like talking about it.
• 22:56
  But guess what?
• 22:57
  Turns out for the last 10 to 15 years, China has become the world leader in the alternative green energy revolution.
• 23:08
  And I'm not just talking about wind, and I'm not talking about traditional solar power as we understand it.
• 23:15
  I'm talking nuclear power.
• 23:17
  Fission, yes, but they're even now experimenting with nuclear fusion.
• 23:22
  The last I checked, the hottest Takamak nuclear fusion reactor in the world is presently in China.
• 23:30
  It's got a long way to go still, but it just shows you the Chinese are dedicated to pioneering this very important alternative energy revolution.
• 23:40
  Hydropower is another big deal that China has, the Three Gorges Dam is a great example of that.
• 23:48
  But it's not just the Three Gorges Dam.
• 23:51
  Uh geothermal power.
• 23:53
  The Chinese are really hot and heavy into this, right?
• 23:57
  And then there's space-based solar power.
• 24:00
  That's a really cool thing.
• 24:03
  Space-based solar power was theorized by the United States by NASA in the 1960s.
• 24:08
  We never did anything with it.
• 24:10
  Came up again in 2007, the National Security Agency presented it to George W.
• 24:15
  Bush's administration and never went anywhere.
• 24:18
  So China picked up the ball and has been running with it quite effectively.
• 24:22
  This is different from the solar power you and I or the terrestrial space solar power that we're used to.
• 24:28
  Space-based solar power basically would put collectors in geosynchronous orbit so that they receive continuous access to sunlight.
• 24:37
  Those collectors would, as the name suggests, collect solar energy and then beam it back to receivers on Earth in the form of microwave radiation.
• 24:49
  The Chinese are very, very, very invested in this technology for a variety of reasons.
• 24:55
  But basically, it's the ability to beam wirelessly endless amounts of energy to any position in the world.
• 25:03
  Okay, this is like a huge strategic boon.
• 25:06
  This is why the National Security Agency in 2007 was advocating for the George W.
• 25:11
  Bush administration to more fully embrace it.
• 25:14
  And, you know, respectfully, um, as much as I dislike the Biden administration, Joe Biden's vice president Kamala Harris also welcomed this technology when she was the vice president.
• 25:28
  She sat on the White House Space Council, and she was a very forceful advocate for space-based solar power.
• 25:35
  So we don't like Biden and Harris, but uh not everything they did was awful.
• 25:41
  And this was one of the few things where they were getting it right because they understood, and I know because I know who was talking to Kamala Harris's people about this specific issue.
• 25:54
  Um, the Chinese were they leapfrogged us in this domain.
• 25:58
  So you apply this now to this weird theory on the right about how we're gonna wage an indirect systems war to collapse China without directly fighting them.
• 26:08
  It ain't gonna work because of those factors.
• 26:12
  But also, and this is another key thing here is you're talking about it, say we're gonna we're gonna blockade the Strait of Malacca.
• 26:22
  This is a massive maritime interdiction campaign, right?
• 26:26
  We're talking about not only the Strait of Malacca, but we're gonna have to squeeze the South China Sea.
• 26:30
  We're gonna have to put pressure on the entire Western Pacific, as well as the Indian Ocean.
• 26:35
  This would require persistent naval presence, air dominance, and a superiority in intelligence surveillance and reconnaissance across thousands of miles.
• 26:46
  But China has the world's most advanced anti-access area denial, A2AD network that is specifically designed to break U.S.
• 26:56
  access to what's known as the first island chain, which is basically the territory extending from Russia's Kamchakta Peninsula down through Japan through Taiwan, down into the Philippines.
• 27:10
  And for many decades, the Chinese have built up this A2AD capacity.
• 27:15
  U.S.
• 27:15
  logistics chains are already stretched in no small part because of the strain put upon it by the Strait of Hormuz blockade.
• 27:25
  So you're not going to get a clean blockade of Chinese energy flows.
• 27:29
  You're going to get a contested leaky one in a leaky blockade, my friends, fails strategically, especially when we're talking about a very resilient, clearly country like China.
• 27:41
  This plan also assumes that fuel pressure quickly degrades the people's liberation army.
• 27:47
  But China is built for absorption and endurance.
• 27:50
  So, like I said, large strategic petroleum reserves, they have the ability, they and we saw this during COVID, right?
• 27:57
  When they imposed wartime controls on their population.
• 28:00
  The Chinese have an uncanny ability to ration civilian consumption if they need to.
• 28:00
  The Chinese have an uncanny ability to ration civilian consumption if they need to.
• 28:05
  They have a highly centralized political system that can enforce austerity.
• 28:05
  They have a highly centralized political system that can enforce austerity.
• 28:09
  They have industrial redundancy and stockpiling culture.
• 28:09
  They have industrial redundancy and stockpiling culture.
• 28:13
  So you know, the PLA doesn't stop fighting just because suddenly they have a restrained import uh profile of energy.
• 28:13
  So, you know, the PLA doesn't stop fighting just because suddenly they have a restrained import uh profile of energy.
• 28:23
  They just prioritize military fuel and they start using alternative uh energy sources.
• 28:23
  They just prioritize military fuel and they start using alternative uh energy sources.
• 28:29
  The civil
• 28:29
  The civilians of China would suffer for first, their economy would contract, but ultimately military operations would continue longer than expected.
• 28:39
  Plus, you risk unifying China instead of breaking it.
• 28:42
  Just look, we were told going into Iran, the way we did that, oh, this is going to allow for the people of Iran to rise up as one and break the whole vice grip that the Iranian, the Islamic Republic of Iran has over the Iranian people.
• 29:00
  But in fact, what we've seen is the exact opposite.
• 29:04
  Okay.
• 29:05
  The Iranian government was able to, thanks to the rise of these anti-government protesters that we were backing, that we were trying to help with our bombings and whatnot.
• 29:15
  The Iranian government was able to better identify those individuals who were leading the protest movement than they were able to, because we were bombing Iran, in many cases, they were not only able to do a lot of damage to the protest movement by taking out their leaders and terrorizing the people that were involved, but also because the United States and Israeli Air Forces were bombing a lot of targets, not just military targets.
• 29:42
  Um, it created a rally around the flag effect, and you're seeing that today play out among the Iranian people.
• 29:49
  Something similar could happen with China if we were to do fully what these writers are talking about doing at the Heritage Foundation and elsewhere.
• 30:01
  So instead of China backing down, suddenly you're going to get China doubling down and even escalating further.
• 30:06
  And then there's the biggest uh, you know, second and third order effects we're not fully processing, and we should be considering we're going through it right now with the Strait of Hormoose blockades.
• 30:17
  Cutting China's oil doesn't just hurt China.
• 30:20
  It detonates the entire global system.
• 30:23
  Okay.
• 30:24
  Once you cut off the oil flow, you get oil prices spiking massively.
• 30:29
  You get shipping insurance collapsing even more than it already has, you get supply chains completely seizing, and then manufacturing globally, the manufacturing output crush just completely spirals and crashes worldwide.
• 30:44
  You would probably get double digit global GDP contraction.
• 30:48
  There would definitely be a severe U.S.
• 30:50
  recession or worse, and you would have financial market instability.
• 30:55
  Even the 1945.com essay written by the Heritage Foundation senior fellow, which is promoting the strategy.
• 31:02
  Even he was supposed to even he was forced to admit that there's roughly potentially 10 trillion dollars in damage.
• 31:12
  Okay, so effectively we would be strangling our own economy while trying to strangle China's, right?
• 31:19
  Right?
• 31:20
  This is sort of like cutting off your nose to spite your face.
• 31:25
  It's pretty kooky when you think about it.
• 31:27
  And it has nothing to do with us rooting for China.
• 31:31
  It has everything to do with us people like me insisting upon a Hippocratic oath for foreign policy practitioners in the United States first, do no harm.
• 31:43
  Specifically, do no harm first to your citizens.
• 31:49
  This kind of strategy will have the unintended impact of devastating the American economy, disrupting our society, and likely destabilizing the tenuous political order here far more far sooner than it would uh happen in China.
• 32:08
  There's also the added problem that uh our allies are not going to go along with this.
• 32:13
  Saudi Arabia, the UAE, Iraq, for instance, Iraq's not really an ally, but but Saudi Arabia and the UAE, there's a limit to what they're going to tolerate us doing, especially in the wake of the Iran war.
• 32:25
  All those countries depend on oil revenue and they all have deep economic ties with China.
• 32:30
  So they're not guaranteed to go along with cutting exports to China or supporting a U.S.-led energy war.
• 32:36
  And it's the same with India and much of the Southeast Asian region, even parts of Europe.
• 32:41
  So if that coalition that you the U.S.
• 32:44
  sits atop of, if it really fractures, then the entire potential strategy of collapsing China would absolutely collapse.
• 32:59
  Which is it's really getting into a problem here because even the people who admit that this strategy that the Trump administration is kicking around or this sort of coping mechanism they're engaged in, wherein they they tell themselves and the world that actually the Iran War isn't the Iran war.
• 33:28
  It's about collapsing China.
• 33:33
  They don't seem to understand that China doesn't have to immediately jump into sort of this kinetic military response.
• 33:40
  So many of these people, when they write and they acknowledge that, yeah, there could be some really bad downsides, but they seem to assume that China has no cards outside of just pulling the trigger on a military operation that would inevitably result in an American victory.
• 33:58
  I don't believe that's the case.
• 34:00
  First of all, China is all about being asymmetrical in their response.
• 34:07
  So this is a complete misreading of what the Chinese would likely do.
• 34:13
  Um China wouldn't have to run any potential blockade, by the way, of the Strait of Malacca or elsewhere.
• 34:19
  Beijing can just disperse their shipping across multiple routes.
• 34:23
  They can use flag of convenience fleets, shadow tankers, and transshipment, and they can push more crude overland, as I noted earlier, even if it's not enough to replace the seaborne flows, they just would accept lower efficiency in exchange for continuity.
• 34:36
  Now that is very Chinese, because if there's one thing we understand, it's that the Chinese prefer stability and security over dynamism and uh instability or uncertainty.
• 34:51
  So you would get a messy partial disruption, but not a decisive cutoff.
• 34:56
  And we're seeing this play out with Iran.
• 34:58
  We'll be right back.
• 34:59
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• 35:55
  So that gets us to our final segment here where we've got to we gotta start figuring out what would China do really if we really started threatening the energy flows and the trade flows that they rely upon.
• 36:10
  Again, all these theorists on the right keep talking about like, well, eventually the Chinese would just attack and then we could handle that, and it would show the Chinese to be the villains, and you know, we basically want to get them, if you'll pardon the expression, to blow their wad prematurely.
• 36:28
  But the Chinese have indicated in the trade war, they don't have to do this the way that we assume they will.
• 36:37
  You know, we live in a in in a in a strategic environment, the United States does, where all we have is a hammer and therefore everything looks like a nail.
• 36:45
  The Chinese fully understand that they have more at their disposal.
• 36:52
  And so rather than say try to run the blockade, the real counterpunch would be the real counterpunch would be to basically strangulate America's access to rare earths and other critical minerals.
• 37:16
  China has basically 90% of the rare earth mineral processing under their control.
• 37:22
  These are key inputs for precision guided munitions, jet engines and sensors, electric vehicles, batteries, electronics, et cetera.
• 37:30
  So if Washington really did target China's fuel network globally, say by blockading the Strait of Malacca, Beijing can easily respond by cutting the exports I just mentioned to the United States outright.
• 37:46
  They could weaponize quotas or licensing.
• 37:48
  Again, we're already seeing that, right?
• 37:50
  Where they're threatening or they're saying that they're imposing export controls on what they perceive to be dual use rare earth minerals to the United States, redirecting the supply chains to neutral states, complicating that entire industry and trade, spiking the price, slowing down access, etc.
• 38:10
  The effect in the U.S.
• 38:11
  would be very clear and decisive.
• 38:13
  It would be a defense production slowdown.
• 38:15
  So missiles, aircraft sensors, thing, important technological things the military needs, which are already in short supply and very hard to replace under the best circumstances because our defense industrial base is broken.
• 38:31
  The effect would be basically we couldn't build those things.
• 38:36
  The industrial base, which is already sclerotic, would get squeezed even more.
• 38:41
  More importantly, and again, we saw this play out in the Middle East with the Iran war, where the immediate effects were actually felt by the most important allies in the region for the U.S.
• 38:55
  war effort.
• 38:56
  Similarly, U.S.
• 38:58
  allies in the Indo-Pacific, Japan, South Korea, they would feel immediate pain.
• 39:05
  So we choke their fuel, they choke our industrial inputs.
• 39:09
  And the U.S.
• 39:10
  cannot quickly replace the processing capacity that China brings to bear with the rare earth minerals.
• 39:16
  Substitutes exist, but again, scaling them takes years, not months.
• 39:21
  The United States is not good about scaling things like this.
• 39:24
  They're just not.
• 39:26
  So China would basically flip the economic warfare table fairly quickly.
• 39:32
  Um it would lead to, you know, basically a two-system war indirect, not a one-sided strangulation.
• 39:41
  And I mean you want to talk about putting the hurt on the American people because it isn't just the military that relies on rare earths, it's everything.
• 39:56
  And that's not even to talk about what would happen if, as we're imposing a blockade, say on the Strait of Malacca, the People's Liberation Army Navy decides to impose a blockade on the Taiwan Strait.
• 40:08
  Sort of like what happened with Iran and the United States, right?
• 40:11
  Iran had a blockade on the Strait of Ramsey and then the United States decided to impose a counterblock farther out.
• 40:17
  Complicating everything.
• 40:18
  Well, the Chinese could do the same thing with their Navy in the Taiwan Strait.
• 40:23
  And of course, Taiwan supplies the majority of the world's semiconductors, those all-important computer chips that go in everything these days, not just computers.
• 40:32
  They go in everything from cruise missiles to even, you know, your car.
• 40:38
  In fact, one of the reasons during the COVID lockdowns that cars became so expensive is because computer chips were being restrained due to those COVID lockdowns and restrictions.
• 40:51
  So there were fewer of those computer chips on the market for cars, meaning the cars had to go up in price because as you limit, you know, certain products, they be and they're still in high demand, that creates price imbalances.
• 41:06
  So the civilian economy here in the United States would be the most directly impacted by any potential Chinese moves to basically strangle our access to rare earth minerals or to even strangle our access to semiconductors.
• 41:23
  So the question then becomes if this is really is the strategy of the Trump administration.
• 41:29
  And again, I don't believe it's a strategy.
• 41:31
  I think it might just be where things are naturally going because Trump cannot admit that he screwed up the Iran war.
• 41:38
  So instead, he's going to keep escalating and hitting everywhere until he can find a narrative that allows him to say, I won.
• 41:46
  But he's not going to find that narrative because he isn't winning because the United States can't win because for 30 years since, well, 40 years really, since deindustrialization in the 1970s, the United States has basically ceded its dominance in key industrial sectors.
• 42:00
  In key industrial sectors.
• 42:03
  And we've basically lost very important capabilities.
• 42:03
  And we've basically lost very important capabilities.
• 42:08
  So much so that we can't scale anymore.
• 42:08
  So much so that we can't scale anymore.
• 42:11
  Not the way we need to.
• 42:11
  Not the way we need to.
• 42:13
  The Raytheon CEO in 2023 actually told CNBC that he thought it was absurd the U.S.
• 42:13
  The Raytheon CEO in 2023 actually told CNBC that he thought it was absurd the U.S.
• 42:22
  government was even thinking about going to war with China because something like 69 or 70% of our defense supply.
• 42:22
  government was even thinking about going to war with China because something like 69 or 70% of our defense supply chain is either directly or indirectly affected by inputs from China.
• 42:37
  So here we are.
• 42:41
  We go to squeeze China's energy profile.
• 42:45
  China retaliates by blockading our access to rare earth minerals and semiconductors and the like.
• 42:52
  Oil interdiction is a slow process, as we're seeing in the Hormuz.
• 42:56
  It's logistically complex.
• 42:58
  Our Navy cannot sustain all these blockades.
• 43:00
  I hate to tell you this.
• 43:01
  It requires sustained military enforcement.
• 43:05
  Rare earth denial, however, of the kind that China would institute would be immediate.
• 43:10
  It would have direct and immediate impacts on the United States.
• 43:13
  And it's bureaucratically simple, far simpler than even a blockade.
• 43:17
  And it's very hard to replace quickly, those those lost sources.
• 43:23
  So China's counter is faster and cleaner than the U.S.'s initial move.
• 43:31
  The war becomes a global supply chain collapse.
• 43:34
  Instead of America strangling China, both sides strangle the global system.
• 43:39
  It's a feedback loop.
• 43:41
  Oil disruption leads to manufacturing slowdowns, rare earth disruption leads to tech and defense production collapse.
• 43:47
  Shipping disruptions leads to basically slowing everything down because we all rely on international shipping.
• 43:54
  It isn't a precise strategy anymore.
• 43:56
  It's mutual economic attrition at a global scale.
• 44:02
  Okay.
• 44:02
  The U.S.
• 44:03
  says we'll choke your fuel.
• 44:04
  China says we'll choke your industry.
• 44:06
  The real takeaway here is it triggers a reciprocal systems war, not a one-sided advantage any longer, like the Trump people and the MAGA people are saying.
• 44:17
  Victory in that case would depend less on who hit first, more on who can absorb, adapt, and outlast.
• 44:26
  So the question is in such a systems war in which the U.S.
• 44:29
  tries to block China's access to oil and natural gas, and China responds by choking off U.S.
• 44:35
  access to rare earth minerals and the like, which side has to abandon the systems war first because it's too painful for them.
• 44:44
  So in a U.S.
• 44:46
  China systems war, the most realistic outcome, as I noted before, is yeah, mutual damage that forces both sides to adjust, de-escalate at the margins or settle rather than one side clearly capitulating force.
• 44:59
  However, who's under more immediate pressure?
• 45:03
  It's the United States and its allies early on, because China's rare earth and critical minerals lever bites faster and harder.
• 45:13
  Over time, yes, China's energy dependence could become a deeper structural vulnerability to them.
• 45:19
  But given the nature of the American system, our politics being the way it is, who do you think would blink first?
• 45:31
  I suspect, given what the kind of economic damage we would almost immediately be feeling, especially in the wake of whatever's going to happen with the Strait of Hormous, I really think that the United States would be really in the weaker position, unfortunately.
• 45:52
  So the pressure favors China at the beginning.
• 46:04
  Their energy deficit could compound over the medium to long term.
• 46:08
  Their logistical supply chains could degrade.
• 46:11
  Military operations for them could become harder to sustain.
• 46:14
  But again, I don't actually think I'm increasingly of the mind that China actually would not try military direct conflict with the United States.
• 46:37
  China has proven for 40 years they will use economic warfare first and foremost.
• 46:44
  And so I think that they will shift like they did in the trade war.
• 46:50
  They will shift and they'll hit us in an economic domain the same way we're hitting them in an economic domain.
• 47:04
  China hits faster in this scenario.
• 47:07
  The U.S.
• 47:08
  hits deeper.
• 47:10
  But even if we were to quote unquote win, no matter who won, it would be a Pyrrhic victory at best.
• 47:20
  And that's because the global economy would break long before either side could actually strategically call a victory.
• 47:27
  And if the, you know, the next question should be, you know, if the global economy breaks before either side can win.
• 47:35
  What does that mean?
• 47:36
  What does that look like?
• 47:38
  It means the rules that make U.S.
• 47:41
  power cheap and scalable stop working.
• 47:44
  That's what it means for America.
• 47:46
  It means the consequences land in three layers from an immediate shock to structural damage and strategic re-ranking of priorities.
• 47:55
  Right?
• 47:55
  There would immediately be energy spikes and inflation surges, right?
• 47:59
  Shortages in key goods.
• 48:01
  Everything we're seeing at the Strait of Hormuz, the war in Iran, only probably times 10 because China is the second largest economy GDP, and it's really the world's industrial powerhouse.
• 48:13
  There'd be defense production bottlenecks that would only worsen in financial volatility, right?
• 48:21
  So we're talking wartime recession with concomitant supply chain shocks.
• 48:26
  That's not a normal cyclical downturn.
• 48:31
  Here in the United States, everything would get more expensive as a result, and people are already at an affordability crisis.
• 48:37
  So it's, you know, onshoring redundancy and security would be good from a national security perspective, but it would add cost to everything from chips to medicines, right?
• 48:50
  Less cheap import capacity, but more domestic bottlenecks.
• 48:55
  Government steers capital into mining, processing, energy, shipbuilding, whether markets like it or not.
• 49:00
  So this is industrial policy by necessity, which, you know, we're probably going to need to do anyway at some point.
• 49:00
  So this is industrial policy by necessity, which you know, we're probably going to need to do anyway at some point.
• 49:09
  But here's another important thing.
• 49:09
  But here's another important thing.
• 49:11
  Labor and skill deficits remain.
• 49:11
  Labor and skill deficits remain.
• 49:15
  And we've been, for instance, at America's naval shipyards, we've had a chronic workforce shortage for decades.
• 49:15
  And we've been, for instance, at America's naval shipyards, we've had a chronic workforce shortage for decades.
• 49:21
  It's only worsening.
• 49:21
  It's only worsening.
• 49:23
  So you can't conjure metallurgists or tool makers or refinery technicians overnight unless suddenly we get the robotic.
• 49:23
  So you can't conjure metallurgists or tool makers or refinery technicians overnight unless suddenly we get the robotics AI revolution really into high gear, which uh, if there's a semiconductor shortage or if this helium shortage from the Strait of Hormoose really gets gets becomes persistent, uh, there won't be any AI or robotics because we need the helium to make the chips.
• 49:49
  So power at that point among nations doesn't become about who's on top.
• 49:56
  It comes about who can endure the most.
• 49:59
  So the U.S.
• 50:00
  has certain strengths, right?
• 50:01
  We've got energy bases here in the North American oil and gas sectors, we have agriculture and capital markets, we have an alliance network that can be reorganized into trusted supply chain blocks, kind of.
• 50:14
  But we're also overly dependent on external processing for key materials.
• 50:18
  And it's going to take a long time, if ever, to actually get those processing capabilities back.
• 50:23
  Political sensitivity to price spikes and shortages in the allies that may fracture under uh economic stress.
• 50:30
  I mean, this is just a nightmare.
• 50:34
  It's a nightmare.
• 50:36
  If the system breaks before a clear military win in this sort of indirect systems war approach to China, the U.S.
• 50:45
  doesn't collapse, it just loses that cheap, frictionless globalization that underwrote its power.
• 50:50
  Now, this was coming no matter what.
• 50:53
  But again, how we get there is very important.
• 50:57
  Do we get there because we're making methodical, you know, wise, informed decisions in peacetime, or do we get there because we're under the gun?
• 51:07
  And when you're under the gun, you make a lot of mistakes because you're desperate.
• 51:11
  America can still come out ahead of this, of course, but only if it's willing to absorb early pain on a level that we still don't fully understand, keep its allies together and rebuild those critical supply chains fast enough to outlast China.
• 51:27
  So my next question to you, audience what would that early pain do to the political and social structure of the United States?
• 51:36
  The biggest effects wouldn't be abstract, obviously.
• 51:40
  They would, you know, it would be completely destabilizing to our economy, to our social system, and to our political class, our political system.
• 51:49
  So you know it it would be, it would essentially ensure that the United States would become more polarized and more interventionist.
• 52:04
  The real strain on household finances and public trust would be something not experienced probably since the Great Depression or the Second World War.
• 52:17
  And if we just look at what's going on with the Iran war and where everybody, you know, like me thinks it's headed in the next five to six months in terms of the effects here in the United States on the economy on the people, um, this would be uh uh this kind of systems war with China would be 10 times worse.
• 52:40
  And uh it wouldn't end the way that the Trump administration and these writers are saying.
• 52:49
  It just wouldn't.
• 52:51
  Um in fact, America would probably become a more mobilized, more protectionist, more state-directed, more socially strained nation.
• 53:04
  Um if the United States became that way, you have to ask then like would we ever return to the way we were before?
• 53:17
  We didn't return to the way we were before World War II.
• 53:20
  We didn't return to the way we were before the Cold War.
• 53:24
  We didn't return to the way we were before the global war on terror or before the COVID lockdowns.
• 53:29
  We've gotten progressively more dominated by tyranny here in the United States.
• 53:37
  The U.S.
• 53:38
  has a long pattern of surging more mobilization, more state-directed footing and crises, and then only partially at best unwinding afterward, leaving behind really dangerous, durable pieces of tyranny that that are never going to be uh uh fundamentally changed.
• 53:59
  You go look back at World War II, massive federal control of industry, rationing price controls, most of those controls afterward were lifted, but a permanent defense base and national security institution remained during the Cold War, sustained high defense spending, export controls, alliance system.
• 54:15
  That was all created afterward, the alliances and part of the security state persisted, day-to-day economic controls did not, September 11th.
• 54:23
  I mean, but we can go on.
• 54:24
  The U.S.
• 54:25
  doesn't revert fully, is the point.
• 54:29
  So where do we go?
• 54:34
  How does a systems war end with China and how does it benefit the United States?
• 54:42
  In my opinion, it doesn't.
• 54:46
  And I want to just make something very clear again that I've repeated throughout this episode.
• 54:51
  I do not believe for a second that this was some overarching plan created by President Trump and his team.
• 55:00
  I think what you are witnessing is a complete failure of the Trump administration's plan, if you want to call it that for Iran, and he has been escalating spasmodically ever since February 28th to try to find some new narrative, some new way of declaring victory, of changing the narrative from the fact that he got outplayed by Iran to now, well, we're doing this because we're trying to beat China without fighting them.
• 55:29
  And it all sounds wonderful on paper until you actually do what I did and you start analyzing the details.
• 55:36
  And the details are frightening.
• 55:39
  It will not end in a victory.
• 55:41
  It will end in a Pyrrhic victory at best.
• 55:43
  Just remember, when China catches a cold, when when excuse me, when China sneezes, the whole world catches a cold.
• 55:52
  We've got to do better than this.
• 55:56
  We've got to do better than this.
• 56:00
  China has passed the point, in my opinion, where the United States can effectively fight them either directly or indirectly, not without completely losing, you know, a large chunk of its status as a superpower, its money, its power, etc.
• 56:09
  You know, a large chunk of its status as a superpower, it's money, it's power, et cetera.
• 56:16
  But the Iran war is not ending anytime soon.
• 56:17
  But the Iran war is not ending anytime soon.
• 56:19
  The blockade of Hormuz is not ending.
• 56:19
  The blockade of Hormuz is not ending.
• 56:23
  And if it is some kind of a snapshot of a wider war with China, either direct or indirect.
• 56:23
  And if it is some kind of a snapshot of a wider war with China, either direct or indirect, it will end in misery and failure for the United States and the world.
• 56:37
  We will all be made poorer for it.
• 56:39
  It will be the worst self-imposed disaster, probably in history.
• 56:47
  And with that, I say goodbye, good night, and good luck.