Could the West Lose the Resource Wars? AI, Rare Earths, and Economic Statecraft with Michael Every & Craig Tindale | RR 22

How is it possible to do what we would need to do in the West in terms of building refineries, etc?

If you're looking at it from a financial market perspective, they'll go, ah-ha,

more markets will work it out.

Well, no, they won't.

Markets won't work this out because market forces the way that we understand them are not at play.

Even if you talk to generals, they say, okay, well, look at all the opportunities in this sector

to try and leverage private capital in.

You're talking to a room full of people who want to make a 20 or 30% return

and you're dealing with another side which is prepared to produce everything at a loss

in perpetuity in order to achieve that control.

How do you possibly think that is going to allow you to win?

You're listening to the great simplification.

I'm Nate Hagins.

On this show we describe how energy, the economy, the environment, and human behavior all fit together

and what it might mean for our future.

By sharing insights from global thinkers, we hope to inform and inspire more humans to play

emergent roles in the coming great simplification.

Today I'm joined by two former TGS guests, Craig Tyndale and Michael Evry,

to discuss their financial analyses of the growing tensions between critical materials,

industrial capacity, and geopolitical power, and to take a deeper dive on what these trends say

about the stability or instability of our current economic and political systems.

Craig Tyndale is a private investor who's spent nearly four decades working in business

strategy and infrastructure planning, including direct experience working in East to West

supply chains as the CEO and Asia director for data direct technologies.

He now uses his knowledge of Chinese industrial strategy and Western tech demand

to identify the choke points in the markets for critical metals.

Michael Evry is global strategist at Ribobank Singapore, analyzing major developments and key

thematic trends, especially on the intersection of geopolitics, economics, and markets.

With over two decades of experience working as an economist and strategist,

he analyzes major financial developments and contributes to various economic research publications.

In this conversation, it was my hope to give Craig and Michael the opportunity to merge the parallel

stories that they've both been telling about the restructuring of global power amidst rapidly

changing industrial, technological, and geopolitical landscapes. And I was not disappointed.

To put it bluntly, this was probably one of the most intense conversations I've had on this

platform in the four years of doing this podcast. And the implications of what we covered,

I had previously known or felt a looming sense of, but this conversation made them more real.

I understand this episode may not be everyone's cup of tea, but I think it's an extremely important

conversation nonetheless, especially because it demonstrates a wide boundary,

cross-disciplinary approach to these topics that I think is vital in understanding the full

picture of our unfolding more than human predicament. Please welcome Craig Tindale and Michael Evry.

Michael Evry Craig Tindale. Welcome back. Both of you to the podcast. Thank you.

Great to be here. When I found out that you two knew each other, I just had to get you

on the same conversation. So I used to say this a lot and I will start the podcast by saying this,

I have so many questions for the two of you. This conversation could go in multiple directions.

I'll start by saying this. You're in Thailand and Australia, respectively, and it's Thursday night

here in Minnesota. Anything important happened overnight that I'm unaware of.

When when didn't it? It would be I think the most appropriate answer. Well, I think

speaking from the Asian times I'm Craig, you were probably the same few hours ahead of me.

You know, we all woke up and just immediately checked our phones to see if the war with Iran

had started. As of now, time is speaking not yet, but we've got the typical flow of headlines with

some of them saying everything's going wonderfully and we're about to get a new agreement struck

and others saying things are actually falling apart and Iran isn't moving one inch and you know,

buckle up when market closes at the end of Friday. We're going to have to talk about Iran as a

podcast host. It's difficult because I'm not really a journalist. I'm kind of an analyst who

cares about these things, but there's a there's a lead time, right? We're going to have to air this

episode a couple of weeks after it's recorded and a lot can happen in the world. So I will timestamp.

This is Thursday, February 26, 615, US Central time. Let's dive into it. Craig Tindale in your

recent episode, a couple of months ago here, you laid out how and why rare earth metals and other

critical materials are increasingly defining our global economic and financial landscape.

When we recorded that podcast, silver was like $58 an ounce. It then went to $120 an ounce,

back down to $65 or something. And I think it's at $88 or $90 as of this recording. So you know,

specifically not just whether the United States and other Western nations have the reserves of

these metals and minerals or not, but whether they also have the production and refining capacity

to meet their own consumptive needs. And Michael, I understand that you are aligned with Craig's

analysis and have been telling a parallel story regarding economic state craft for many years,

including multiple episodes on this platform. So let's start there. As governments, investors,

and markets have been catching on to the story you've both been telling, how have you seen them

starting to respond to these issues? Craig, start with you. Well, I guess it's a form of unrestricted

warfare. And I mean that in the context of the book that was written by the two Chinese

generals in 1999 whose names I can't pronounce. Now, the reality is there's an old saying that

old generals fight the last war. And you know, that was, I guess, diagnostic of some of the issues

that the Allies had in Europe in both World War One and World War Two. They've been paired

for old wars and they weren't ready for the new wars. And I think we're under siege at the moment

through, you know, I guess some fairly thought out rivalry. And we've gone through the most of

the rare earth metals and most of the chemicals, you know, 50 to 100% produce in China. And that forms

a choke point. Then we go to the contractual level, which is, you know, most of the off-takes

a channel to China as well. So the mine might be in Australia or Canada or the US, but

or even Brazil, but the contractually configured to send all their all to the refineries. And

we haven't got the refineries anyway because we haven't got the financial capital to all the models

under our existing system to make them sustainable. Now, you know, if the reality is I think Canada

through Glencork cancelled the idea of a copper refinery because the OSG cost was, I think,

near 9% or something ridiculous. And that's 9% of the existing capital. The problem there,

you know, fundamentally, okay, they didn't want sulfur released into the atmosphere in large

amounts. They were 99% reduced and arsenic doesn't sound like it's good to anyone. So they wanted

that, I guess through a process, you know, they basically spray the arsenic fumes with water and

they return it into a solid and buried and concrete or something like that. So, you know, they've

cancelled that. There's one was just cancelled in Western Australia and because it wasn't profitable

because we're under economic war. And so it's a form of state capitalism. Re-capping on that,

there's also all kinds of nuances like the golden, I call the golden screw. And that's named after

one of my car parts refailed to be obtainable, you know, during COVID and I couldn't drive the car

for nearly 12 months. You know, if you have to tell, tell, tellium, sorry, that's a rare earth.

And gallium, if you're missing scanium, does that break you down because you've got a mixture problem

then because you lack the main thing. So what is the back to your question? What is being done?

There's a lot being done, but not enough, I would characterize it. You know, there's a recent

tender by, as an example, Department of Energy, 355 million. Let's get all that cold dust

that billions of tons are laying around because they're rich in minerals. And let's see if we can

refine that cold dust and, you know, we can we can mine our tailings, so to speak. There's all

different versions of that for aluminium and all kinds of things. There's lots of, for instance,

in the tailings of aluminium smelters, there's lots of gallium and we know gallium to knock down

the drones and the hypersonic missiles. So we've got it a metabolic system. Everyone thinks

it's a cloud that just appears on our screen, but it's a metabolic industrial system.

It's probably the, has the heaviest metabolism in any industrial system ever created.

And it snuck up on us because it needs energy. It needs, it needs parts, you know, from

people like Siemens for Transformers, it needs, an ESG environment that actually allows it.

And it needs the rarest metals that China has

walled up and put in prison and there's license to us, any in ways that they decide.

Well, I want to follow up on the golden screw concept because I think that is going to apply

in many different aspects of our society in the coming decade. But let me bring Michael in here.

Michael has previously mentioned the key focus of yours in your work on podcasts is the importance

of distinguishing economic policy from economic state craft. Could you give us a very brief refresher

on what state craft is and how you currently see it intersecting with the framework on

critical minerals and materials that Craig just all pined on and usually presents.

Yeah, sure. First of all, it's a real pleasure not just to be banged, but to add the

chance to talk to Craig on camera, you know, live rather than chatting because his work is just

so staggeringly important to be able to underline all the nuances that they just did. And

then obviously there's a lot more we're going to unpack. But to address your point, what I've

been saying for the past couple of years over and over and I'm sure people are kind of getting

bored hearing me say it and I get bored saying it. But to try and break it down to its simplest

component part that the golden screw of that is what is GDP for? That's what economic state craft

really begins with making you ask that simple question of what do you think you should be doing with

it and the idiot answer that we've had via economic policy for like 45 years has been because

markets. Just let the market do everything. Well, yeah, what if the other team isn't doing that?

What if the other team is using state capitalism, neomechancelism, whatever you want to call it again,

we can unpack all those terms. But I'm hoping we don't have to for this particular audience.

And you're using the opposite free market strategy. That just means that they take the high ground

on everything. They end up with a control of all the choke points, you know, upstream,

midstream downstream that we've been talking about. So economic state craft is attempting to grapple

with that very uncomfortable reality and say what do we do? But specifically to what you ask me

note, which is what am I seeing people do in response to what Craig has been has been raising?

Like specifically, here are the choke points. Specifically, here we have the shortage of ZXYZ.

There's very, very split reaction. Because on one hand, after a short delay, there'll be a

and a nod and a recognition that there's been an enormous error made. And then not a lot happens

generally because you have a cascading domino effect of policies, many of which are absolutely

sacred cows, which all have to be slaughtered all at once in order to actually achieve the outcome

that you want. Because you are having to deal with free markets, free trade, ESG, pricing,

vested interests, labor markets, infrastructure, budgets and budgetary rules, even interest rates.

All of them, many of which have been segmented into, you know, independent circles where one

person isn't responsible, all of them have to change. Or how we use all of them have to change.

Everyone has to be singing from the same hymn sheet and all agreeing what GDP is for. And as a result,

the people who built this fragmented, atomized, efficient, bloody, stupid system around us now

tend to look rather panicked and then just say, we'll get back to you. And with the exception of

America, that's pretty much what's happening. So let me ask you this, Michael, because you talk to

a lot of investors and VIPs around the world. When people first learn about material and energy

constraints that technology and money alone can't solve, you said they first have an aha.

And they're like, oh, that makes sense. That makes sense. Until the implications of what it

means start to encroach on their job description or their identity or their plans. And then they

kind of revert to denial or just, I better keep my mouth shut and not dig further. Is it that sort

of cognitive dissonance going on? Very much. I mean, let me give you some examples. So obviously on

the ESG front, how is it possible to do what we would need to do in the West in terms of building

refineries, etc. And again, Craig can speak to this infinitely better than me. But how is it possible

to maintain that with the ESG agenda? I don't have the answer for that. But if you don't, you just say,

well, okay, so we're sticking to the ESG agenda. Well, that doesn't solve the problem. But there you go.

If you're looking at it from a financial market perspective, which a lot of the people I told to,

they'll go, aha, well, markets will work it out. Well, no, they won't. Markets won't work this out

because market forces the way that we understand them and not at play. Politicians just stare blankly

and central bankers just say, well, interest rates, you know, maybe the base rate needs to go up,

what the base rate needs to go down. And I've been saying loudly for years, maybe you need multiple

interest rates, maybe some sectors are going to have to have very, very low cost of borrowing,

and others are going to have to have high ones. And then everyone of course gets very confused because

that breaks every single central rule of our system. So those are the kind of individual experiences

you have. But collectively, everyone's in a model. And one more just to add, sorry, just for

another 30 seconds, even if you talk to generals, which, you know, I have done a bit recently

some interesting events. They say, okay, well, look at all the opportunities in this sector to try

and leverage private capital in. And I say, yeah, absolutely. But if you're talking about rearmament,

so in other words, upstream, midstream, downstream, here are your bullets, you know, here are your widgets,

et cetera, here are drones. You're talking to a room full of people who want to make a 20 or 30%

return, because they're, you know, they're private capital or investors, et cetera. And you're

dealing with another side, which is prepared to produce everything at a loss in perpetuity in order

to achieve that control. How do you possibly think that, which is the equivalent of an ESG system,

is going to allow you to win, you know, the wars are one with bullets, not profits. And individually,

each one of those interest groups would just go quiet and then wander off and just trying to keep

doing what they were doing. What you just said reminded me of the frankly that I did last

week. And I put some conceptual graphics in it that were there's really three pricing models.

There's one which is no frills, no externalities at all. There's another that puts a green wedge.

You might say ESG or something to account for the externalities on the global biosphere. And then

there's another maybe Europe that has a large gasoline tax that puts some reflection of the

finiteness of the non-renewable inputs to our system like a depletion wedge. And in our current

world, what we're doing is we're having different people with different value systems express

these. This is how we want to live. We want to have solar and we want to have renewables

because we care about climate. But they're going to be out competed by the pricing model number one

that has no frills. And so this gets kind of back to your what is GDP for. And so there's competing

value systems embedded in these pricing models. But our current global metabolic superorganism

cares about cheap energy and cheap access to all the stuff. So that pricing model is going to win.

Do either of you want to follow up on that? I think the whole pricing model is the problem.

Procing is basically a lagging indicator. It's like if you use the metaphor of a dashboard,

it's like a dashboard that tells you the speed you were going 30 kilometers or 10 minutes ago.

And so what it is is a lagging indicator. So I'll give you an indication. The exact one that

Michael was talking about, that is we go by consumption inflation. We go by the indicators

that that dashboard tells us about consumption. But we totally ignore the industrial sector. And I

have actually got a theory that they totally ignore it because they're boffins and they live in

weird rooms inside the federal reserve. And it's all been math to them. They haven't noticed the

industrialization hollowing out. And so it hasn't been alarming. I said to somebody the other day

that there's probably one lobbyist for mining and manufacturing versus every hundred lobbyists

for the banking sector, especially with the federal reserves. There's a lot of registers, lobbyists

for the federal reserves. I actually couldn't find one for the mineral sector. And so maybe it

just as simple as an angle that they never spoke up for themselves as well because there's always

this kind of contrarian idea as well that's happening for a reason. And I don't think one of the

things that I think brings a bit of sanity to this is I think the period of AI has

worried a lot of us with respect to privacy and individuals and things like that. I think

the next foot to drop is the amount of granularity, the lens that we can put on government and the

system, the whole economic system is going to be exponentially greater. And that lens is going

to be exponentially finer. That clarity itself, being able to see the mechanics of what's happening

in the economy in such detail. And also anyone can put it through their A&G and ask themselves

what's going to happen. He's going to change it. So let me just summarize that. There's a lot of

risks to AI, which we don't have to get into here. But what you're saying is one possible benefit

is it is going to allow the material reality and the biophysical substrate that underpins our

financial and technology narrative to be clearly understood by a lot more people faster. And that

that might change decisions. Yeah, it's an evolutionary single signal to us. Okay, that we're

evolving and the world's become too complex to be compartmentalized. And you know, we used to have

legal accounting and this and that because we had to compartmentalize information. And we never

integrated. We never orchestrated it. Right. And so the next era will be about going horizontally

so to speak rather than vertically. And you know, all the vertical specializations when we look at

all of them put together horizontally, we'll get some surprises and that clarity will give us

insight into how to how to change it. But that clarity still will come from underneath the hierarchy

of GDP, more GDP for growth and the metabolism of more energy and materials. That's the the

goal. No, that has to change too. That has to change too. Like if you haven't got materiality,

right, any of my two ledger concepts where you got financial ledger and material ledger,

if you haven't got materiality built into it, what happens is your financial ledger or your paper

on paper economy eventually destroys your currency and destroys your entire system.

And so when that, you know, we've got to assume that the clarity of showing people that will actually

move the politicians, which it will and will evolve into a new era because we won't be able to

stand those frictions. Human beings move because of frictions and pain, not because of great ideas.

Michael, please follow up to any of the nine points Craig just raised.

I'm trying to remember all of them. Obviously, look, I concur on many of them. What I would just

say is this, I've been arguing alongside the what is GDP for question for years now that what's

going to have to change isn't just the technology which has. And I'm no expert on AI, but I believe

we need to discuss it conceptually much more in a moment. It needs to be the ideology.

So that's what you were just alluding to. No, what are we trying to do? But it needs to be linked

to physicality as Craig was just saying on materiality and ecological reality as well, I think.

Okay, so lots of lots of why words or words ending in why, which are all important here.

If you think of it like this, I mean, I just said, what was the one with bullets, not profits? I'm

not any kind of militarist, but militaries, another word that ends in why, which is obviously

in the background of the discussion right now. And we'll remain so for many, many years.

You can have the most efficient system in the world, but if, for example, your entire population

or all the decision makers in your particular polity, there you go, there's another white

word, are all deciding that they are incredibly pacifist Christians or Buddhists or even James.

So, you know, completely opposed to the taking of life, you could be producing

barrettas and Kalashnikovs and M16s or whatever. No one would use them.

So you have to also have a polity and an ideology beside that materiality, which can

understand what are we willing to actually do with everything at the end and what are we doing

it for? And where that flows back to the argument I was making a moment ago, and it's not even

an argument, it's an observation dealing with people, is that the compartmentalization that we

have intellectually and functionally is only going to be removed, I think, with a revolution.

Because I can assure you through repeated conversations with people, it's the old adage,

it's very hard to get a person to understand something when their job depends on them not

understanding it. You are talking about removing vested interest after vested interest,

profession after profession. For example, if you say to an economist, you have to now understand

things military, political, and ecological, they're just going to get furious. If you say to

an ecologist, you need to understand war, they're just going to get furious. If you say to a politician,

you need to understand the economy, they're going to get furious. If you say to people in

financial markets, you need to understand the material, they get furious. Everyone says, yeah,

yeah, and they don't do it. You're asking someone to retrain very often after decades of

experience, because they're at the top of the ladder, obviously. And they're just simply not

going to do it. As they say, progress in science comes one funeral at a time. Well,

unfortunately, from an ideological perspective, we need the equivalent of the Black Death,

rapidly, because we just need to see a rearrangement and a reshuffling of what people do and

don't see within their disciplines or to expand their disciplines to take a more holistic view of

everything. But where's that going to be studied? Who's going to teach that? And I mean,

AI is a tool which can allow us to do it, but it can't even operate through traditional

educational channels, because you can kind of go out and upwards. You're channeled into this

extra specialized and increasingly useless channel. So it's such a broad reaching issue.

It rings true to me. So we have the material constraints. We have the complexity constraints

in the analogy of the golden screw that Craig said. And then we have something like the

Upton Sinclair quote of retraining your status and life identity as technology changes. And

those are all kind of hurdles. And we haven't mentioned the biophysical decoupling of our financial

claims on reality and the flat to maybe eventually declining actual reality. And the first step

is a doozy. So I know you guys generally agree with me that that doozy of a step is likely or

probable in the next decade or so. So I always come back to that and how we're going to manage it.

But let's maybe cover some other topics before before we get there. Craig, did you want to

reply to anything Michael said? No, I think we covered. Yeah.

So back to the initial few questions. Michael, how are the rapidly changing dynamics

from your statecraft position affecting the position since you've been less on the show of

the hardened soft power for the major global superpowers, especially US, Russia, Europe. How do

you see the regional dynamics changing? Sure. Well, it's looking a nutshell. The US now gets it.

And I believe part of that is due to Craig's good work, which is, you know, to be applauded.

But there's a very big difference between getting it and doing it. And again, there's just a

sea of vested interests to swim your way across with sharks in it to try and actually achieve

something. I've been making the argument in the past couple of months that Trump is effectively

a reverse Gorbachev who's trying to bring in a reverse perestroika. So he's attempting to

reform an entire system. I mean, that's a parallel to what I was just saying effectively.

What would happen if all the countries get it? With all the countries get it,

simultaneously, you either have a come by our moment where everyone understands that there's

only one planet, one humanity. We all need to understand this is silly. And I don't believe for

a second, that'll happen. And just sit around the campfire and there wouldn't be a campfire,

because that's probably not environmentally friendly. But sit around some kind of environmentally

friendly heat source and have some kind of environmentally friendly marshmallow together.

But that's simply not going to happen. I think almost immediately what you will have instead is

a zero-sum scramble for, you know, the remaining resources to make sure that at least one policy

or one civilization has the whip hand over the other. And that's exactly what you see.

So you can decry it, but I think it's a very, very understandable reaction, which anyone looking

at history would have said is more is more likely to occur. So America gets it, but it's very hard

to implement. And there are lots of questions that flow on from that. Europe is talking a hell of a

lot and doing very little because it's incredibly hard to get 27 countries to actually operate as one

when they each has their own vested interests and often they run in different directions. And when

you are dyed in the wool, believers in the power of rules and regulations and markets, which is

a bit of a contradiction in terms, but you know, regulated markets, shall we say. When actually

you have to start ripping up all of the base assumptions that you thought you were building your,

you know, your union on. And they recognize that now, but then doing something about it, I don't know

if they can catch up in time. Optimists will say they can, pessimists will say they can't, again,

that's a whole different discussion. China just carries on carrying on. You know, they already

have a winning formula for themselves. But to kind of open up the discussion more broadly and show

how it all links in. And there are so many things that I have, I'm sure all of us are going to throw

in. We spoke about Iran at the beginning. And even things like this are linked because I would

argue that while China still has the whip hand on materiality in terms of rare earths, for example,

and just overnight, we were seeing that once again, critical rare earths that the US needs to

manufacture microchips and for jet engines. Well, I mean, that includes military jet engines,

by the way, are suddenly very, very short supply, which means production will have to drop off

fairly soon. China has that whip hand, which effectively limits how much the US and the US allies

can rearm even if they want to. And the, you know, the time window within which you need to rearm

is not one that you get to set by market forces or at leisure or, you know, in accordance with

budget schedules when it needs to be done and needs to be done. We all understand that and that's

national security. So I've been arguing for a while what the US is going to do. And I think we're

already seeing this play out is explained to China. Okay, we can't match you on that even if we now

get it and start using economic state craft, for example, to have more state ownership of firms in

the US or golden shares or price controls and tariffs and various different measures which the

US is putting in place that will still take years to get something rolling out on the other end.

In the interim, we are going to make sure that you are aware you won't get raw materials from the

parts of the world that you rely on if you're going to play that game with us. So for example,

we don't get rare earths, you might find you can't get oil from Venezuela and Iran.

And understand that we can make that a lot more painful for you if you want to keep playing that

game. And that I believe is part of what's driving the agenda right now in Iran, not just that

Trump is trying to distract from other headlines as someone said to me yesterday. I think it's

it's a very, very focused strategy, which is incredibly high risk can go wrong in all kinds of

different ways. But from the US perspective, there's not really any alternative.

I happen to agree with all of that. And I personally think oil is for now, not necessarily

forever, the master resource, even more important than some of the rare earths and the US at least for

now is dependent, independent in a way that China is not. Craig, please jump in and give me your

thoughts on what Michael just said. Do you remember Chinese burns when you were a kid where they

grabbed your arm and they twisted your arm? Yes, we've got two conjoined twins giving each other

Chinese burns. Well, it's also a Chinese finger trap and we keep going farther in.

Yeah, and the finger trap, yeah, they were, but what they don't realize is, I think the old term

is Chinese twins, wasn't it? They don't realize they're conjoined twins and you can only do this

to some extent before you get to the precipice of something you don't want to get to and then you

pull back. Exactly. And you know, oils, one of them, you know, when I saw Venezuela unfold, I

thought, yeah, okay, Iran, Iran has to go. Somebody said to me that, oh, you know, we know how regime

change works and we know how, you know, that's never worked before. Look at Iraq and look at

Vietnam, I said, but you've never been in an existential situation before. You know, at the first

year of hierarchy, as far as the decision making, yeah, you're probably ruled yourself out of any more,

you know, regime change, but at the second year, it might become a really easy decision.

And so Iran, I think, is a must. I don't think there's any arguments there. They need to control

Iran to balance the world power. That's the incentive and, you know, whether you agree or not

as a material. And so what, where I think we get to is this kind of multiple Chinese burns,

trying to work out, there's, you know, altrufine quartz that, you know, it comes from, I think,

lone pine or something pine, spruce pine from North Carolina. In North Carolina, you've got

software, which they controls all their fabs. You've got the, you know, you've got a multiple things.

It's not, it's not, it's not all one sided. And so what happens over time is, you know,

we'll come to some consensus and the system will change. But, you know, I think some states

will become Chinese vassalists. They, you know, Canada, for instance, are not interested in

their own independence. They're interested in, I guess, Genoflecting to Trump and, sorry,

I'm G, and, and, and tearing Trump apart. And to me, that's all kind of theater. It's

posturing. And it doesn't get the bottom problem, you know. He let in 48,000 cars without restrictions

that are subsidized. And, you know, the reality is, what do you get for that? He got to export,

I think, I think it was two billion dollars worth of grain. But so he's basically taking the

decision to undermine his industrial economy in order to sell some grains today. And,

you know, he's going to go and sign up agreements. And I don't think these people are self-aware

about what's happening. I agree with that, Michael. Yeah, on that point.

Completely agree. And I think we're all in agreement on what's happening on an underlying

basis between the US and China. And I think if you don't start seeing everything through that lens,

you desperately misread what's going on, which feeds back to what Craig was just saying. Because

obviously my role as global strategist, you have to look at a lot of different countries. And

I'm lucky enough over my life to have lived in nine, including Australia, which is a wonderful

place. And wherever you live, of course, that's the center of your outward concentric circles.

That's natural. But that doesn't mean you are actually the center. If you live in

Micronesia, lovely as Micronesia is, you don't, you know, you're not the fulcrum around which

everything else in the world pivots. So as an example of that, and I will come back to Canada

in just a second, when you talk to the Europeans at the moment, which obviously I do regularly

working for a European bank, they are, they were obsessed with the Europe versus Russia,

these are the Ukraine, which is kind of dropped off the radar, even though it's still very important

in the background. And since the Greenland affair, they're now absolutely

rapidly focused on the US. And you know, for good reason, but they

regard this entire struggle as Europe versus the US. And what should we do to versus the US? How

should we deal with the US? And I keep trying to explain to them, you do understand this is the US

versus China, in which Russia is completely secondary to China, but China is happy to use it towards

its particular goals. And Europe is incredibly secondary to the US.

So the US is attempting to treat Europe roughly to get a certain outcome, which it wants

vis-a-vis its relationship to China. China is using Russia in a very different way in order to

get an outcome vis-a-vis the US and Europe to an extent. And if you don't understand that,

if you think it's all about you, you get things wrong. So Europe is thinking, okay, well we can

push back against the US. We can use this pressure point, this choke point here, blah, blah, blah, blah.

And I keep saying, no, if you look at the totality of power across the spectrum, across different

disciplines, every single time you try and play that game, you just lose. You end up worse than

you are now, even if it emotionally feels good. And the same is true for Canada. That's why I

want to link it to that Karni, for example, really seems to see himself as the elected representative

of the anti-Trump forces behind the quote unquote rules-based order. This is the same rules-based

order we're all agreeing, doesn't understand how the world really works. And the irony being the

Karni, of course, Davos gave that speech in which he had the temerity, I'm not trying to attack

them personally, but he had the temerity to quite vatslav Harval, the great anti-communist dissident.

And he's short book, The Power of the Powerless, which I have read, by the way, he's a wonderful,

wonderful piece of work. And saying, you know, the older rules-based order was completely

hypocritical. Well, yes, and you were neck-deep in it, mate. And, you know, we have to accept that,

you know, it never really worked the way we wanted. And now we have to create something new. And

they seem to think there's going to be a new rules-based order that you can create while

ignoring all the factors we've just mentioned, you know, those material factors, those real

politic factors, et cetera, et cetera. So the Europe's of this world, not everyone in Europe,

but Europe collectively, the Canada, the Australia, for that matter too, in New Zealand,

are all somehow thinking that we can continue to just rebuild what was not working up until recently,

without the one economy that was the prop for the entire thing, which was the US, while ignoring

the larger existential struggle that we're seeing across different disciplines by the US versus China,

which of course is playing out in places as disparate as Venezuela and Iran.

I have a very serious question to ask about China, but I want to follow up, I'll let you both

follow up with this. Given what you just said, what would you recommend countries in Europe or

Canada or Australia or Brazil or India do, given that a new rules-based order is unlikely,

and the rules that we currently have are not really being followed? Like, what advice do you have

with this existential material, energy, ecological backdrop to these other countries?

Economic state craft and pick a side. That's ultimately all it comes down to.

Pick a side, what do you mean? Well, ultimately, you're going to have just,

it's the US versus China with two very different models, even if they're starting to look more like

each other. Craig, we go back on the same pressure points. Like, I've got the benefit of writing a

27-page essay at the moment on India, because I've got some Indian readers who

have taught me into it, and I was a bit resistant, because I always had this idea in my mind that

India was the emerging industrial economy, and now I've mostly written it, and I'm just agonizing

over terms and words and those types of things. I really, because the essay is brutal. It's way

more brutal than it was for the US. How so? Yeah, I'll give you one snapshot.

If you list all the industrial metals that require to defend yourself, all the defense metals,

write all the railroads, all the coppers, and all this kind of stuff, and then you look at their

reliance on them. It's overwhelmingly Russia and China that provides all these metals.

There's a few exceptions. Thailand comes into it occasionally and things like that.

But it's 100% reliance. I've looked at all sources and tried to estimate the

amount of munitions supplier India has. I came up with a number between 14 and 30 days,

depending on the munitions category. Now, if I'm a student of history, I was that kid that had

Jane's weekly in magazine every copy. It's not hard to work out. Anyone could work out. If you

want to attack India, you just attack them for 31 days. It's obviously more complex than that.

They can't defend themselves because they haven't got the metals and they haven't got the

manufacturing. So they're even more reliant on China than the Republicans.

The US is. And the same goes for more. Here's a difficult question.

And I'm going to ask you both to speculate on this. I understand what you're saying, Michael,

that you choose a side. And with the population, the resources, the size of the economy,

the industrial capacity, the military, all the things, it's China and the US ultimately.

What will we have to do? Paint a benign path that we make it through the next 15 years without

giant war between the US and China. What would have to happen generally? I'll ask both of you,

Michael. Well, I think the clearest path towards that is to, in the short term, pivot very,

very aggressively towards economic state craft, as I said, which is more state involvement,

breaking the because markets, holy rule. And alongside that, doing exactly what the US is doing,

which is using its legacy military power, which is massive in terms of the stock and very low

in terms of the flow. These are the China. Like India. Yeah, to take over slash flip, shall we say,

a more neutral term, flip pressure points, such as Venezuela, which was the course in the China,

Russia camp, such as Iran, et cetera, as the same French pulling courage,

et le autres, basically, to encourage the others in the region, because the Middle East is

full of countries who like to follow a strong leader rather than saying, you know, ideologically,

we're going to stick to this. So that then allows them to explain to China, look, we have this

Chinese burn situation in which we were talking about. And you gradually, gradually build up your

strength, whilst working with China, to the extent you can, to explain to them, you need to change

your economic model, because it's not just that China is doing this in things like critical

minerals, minerals to be at a rarer, to be able to coerce people, although that's a happy

byproduct for them, as far as they're concerned. Their entire industrial economy is overly

slanted towards manufacturing and the way that it was overly slanted towards real estate for a while.

And shifting away from that model, which is the inverse of what we have in most of the West,

which is we just consume, sit on this over, watching Netflix and expect the rest of the world

to provide us with stuff because we're Western. You know, they have, they have the complete inverse,

we have to start making stuff again, and they have to start consuming more. Now, you can consume

environmentally well or badly, but the proportion of GDP has to move much, much more towards consumption.

So that's only going to happen from a position of strength where basically you can say we're on

this particular path. We are going to go from here to here. It will mean your relative coercion

power declines, but we can make sure that it will hurt you very badly if you try and do anything

about that on the way. But we don't mean war and we don't want to try and crush you on the other

side of it. We just want something that's more like a stable equilibrium. And I tell you honestly,

talking to many different people from many different sectors. Obviously, people in finance don't

get that. Obviously, people in economics don't get that. Most politicians don't get it. Some in

the military do, but I genuinely think that that is what a lot of the overarching US strategy is

about at the moment. It's not we want to try and crush China. We want to try and make sure that

we can rebalance versus them, but that needs to come from a much more evident position of strength.

You know, I'll put it bluntly. You have to capture Africa. You have to catch yourself

America. Think of it as a game of risk. You have to capture all the aligned parties because,

you know, obviously there's an axis here. There's an axis of all versus finished material. And

then you've got to make space for all that finished material capability to catch up in the West.

You know, I think they're making investments there. I'm sure they'll make some more.

And then you've got to make yourself, I think Palmer Lucky calls it porcupining.

You've got to make yourself make all the military adventures that they might conceive of.

So so damn difficult. Taiwan obviously is the first or Philippines is probably because I think

Taiwan and Philippines are kind of joined together at the hip to be honest. I don't know that you

can attack Taiwan without attacking the Philippines. And so you've got to make it adversarial.

You've got to make it brutal to contemplate that kind of thing. And you keep them, you keep

there art. You know, it's that that friend that you use in rugby league and NFL is you, you shove

your hand in their face and you run as hard as you can. But there are other components.

You know, I like what is J.P. for J.P.

J.P. Turgle, Brian. Yeah, what what is G.P.T. for?

Well, that's a good question. But it's also what's electricity for? You know, comfort,

convenience, status, lots of things. And security and intelligence. It's the substrate of

intelligence now. It's yeah, whoever might be the most intelligent nation might be the the one

with the best electrification. And on that basis, China's three times bigger than the U.S.

And cheaper. I want to get to that. I want to get to AI in a second. But

Craig, I know you in some private conversations, you deeply understand and care about our ecological

crisis, especially global heating and the trajectories that we're on and the new highs because

of the removal of the sulfur emissions. And we talked about a little on our first podcast to

someone whose primary concern is climate change and the ecological pending six math extinction and

all the exceeding of seven or nine planetary boundaries who just listened to the last 10 minutes

about shoes aside and Russia and China and military and materials and everything. What would you

say to them? I'd say that we're going to go through a very difficult time. I think that's

fairly obvious. I think I think we need to embrace that. You know, they've got those five

stages of grieving and everybody seems to be in denial or, you know, sadness or whatever. You

know, we're going to move to acceptance that there's going to be a big there's going to be a big

change and we can't stop it. And yet you also are investing in and doing philanthropy on regenerative

agriculture and you have some ideas on how to use renewable energy as a wedge in the future.

Can you say a few words on that? I think one of the key things to say on that is that

when, you know, there seems to be an access on climate change where you if you

if you don't subscribe to the existing system, you know, the existing system formula of

renewables and carbon taxes and all kinds of things, you must be a skeptic. And I'm far from

skeptic. I've actually got a great model of all the IPC models models. I spent, you know, a lot

of COVID going into it and I understand what all the flaws in the models are and where the models

of the models come from, et cetera, like that. And I think it's much worse than anyone thinks.

And I think there's some now some scientists are lining with that belief because

who's Craig is just a kind of boffin that likes to look at models. Well, James Hanson is certainly.

Yeah, James Hanson, Leon Simons. And so, you know, it goes back to that. I'll

I'm Stephen Morphram's idea of computationary or just irreducibility. We like to think how

fed models and our climate models are capable of understanding things. They're just not capable

of understanding. And so, if it's much worse, you know, like if we go down to 500 million people,

or 250 million people before we solve it, I don't think the earth or the evolution or anyone cares

about it. You know, we might care about it, but you know, it would be probably too old by the

time it happens. And that's what makes the difficulty and the problem because, you know, I really

want to do something about it. And I'm trying to figure that out. But how you get a self-interested

population with a limited lifespan interested in something that we can't prove that unfolds in

a way that we don't really understand coming back to Wolfram's idea of it's the model, the model

is just a map. It's not the territory. You know, it's a difficult problem. We may have to go into

this dystopian hole and put up with all these radical, different climates. And people will say,

no way that's not going to happen. You can't prove it's not going to happen right up until it

happens. Yeah. I mean, where I was going with that is, even if everyone cared about that,

and you just described why they wouldn't, we still have this war resource energy constraint

and statecraft issue that seems to be much more prominent in all the ways. Michael, do you have

any thoughts on this? We're just one kind of a dendon. I think, you know, Craig hits the nail on

the head yet again, that it's very difficult to get people to deal with this as we've underlined.

But where I see people are reaching for, you know, what the Germans call Gestalt, you know,

to look at the thing in its entirety. Obviously, you end up in very different places. You know,

I think what I call grand macro strategy, you know, what I, you know, self titled that is one

way to go. But frankly, you're not going to get the man on the street interested in grand macro

strategy. It's very hard to get experts interested in it. And what worries me personally,

as much as professionally, is that people can kind of pick up on the confusion around us.

They can pick up on a lot of the questions that are being raised in various different ways,

just in their day to day life. But if you're looking for a Gestalt answer, you're going to get some

very, very worrying ones, like right across the political spectrum from the far left to the far right

to just the far out. And I think you can already see that in Western political systems,

that our democracies based on a post-World War II assumption of a, you know, a comfortable middle

class with a, you know, a tolerably sized working class, it wasn't going to get too balshy. You know,

can all somehow regularly just shift right a little bit, left a little bit, and the technocrats

will guide us in the direction that we need to go. I don't think that's the case. I think we are

getting some absolutely radically transformative for the better and worse. And I don't want to get

specific on that because everyone's entitled to their own opinion. But we've got some, you know,

the over-term window no longer exists. We basically now have wall to wall, floor to ceiling glass,

like in some of these fancy new apartments that, you know, people can't afford to buy anywhere.

As our over-term window, and that basis one can be enthused, that yeah, okay, grand macro-estrategy

might now be possible. But you're dealing with a population that's going to be prepared to vote for

a lot of really, really wild ideas in lots of different directions. And you've got to try and

make them all stick to one path against that backdrop. And that should be a concern to everybody

listening. And probably the people that are listening to this show, it is a concern.

So let's move to AI. I know you guys have busy Fridays. I want to be respectful of your time.

But I mean, I could literally have hours of questions for you.

My understanding is AI is the single largest new driver of critical materials demand.

And so has suddenly become a central component of all the analysis of economic, financial,

geopolitical landscapes. But one thing I don't see discussed as much with the possible exception of

Secretary Hegseth's challenge to anthropic and changing claw to remove some of the security

protocols, which is supposed to be by tomorrow. I don't know what's going on there.

Is the impact in the AI race as the biggest accelerant of defense spending? So how does AI's

increasing ties to defense change the competitive hierarchy for critical materials for both

private companies interested in these things and government, economic and military strategy?

Is that something that people should be paying more attention to? Craig, we'll start with you.

Yeah, I think there's a hierarchy develops. You know, whether there's a shortage of something

when we can't produce things, you know, in order to satisfy a need, there has to be a hierarchy

emerge of people who can pay more. People who need it more, you know, as in defense, you know,

pay more is probably AI. And some people in the hierarchy miss out because they kind of either

afford it or they can't obtain it. And so what happens is you end up with the, you know, all the

things that we care about, you know, all the renewable energy, the solar panels, the wind power,

all those things end up at the bottom of the hierarchy. And it's because we've built the

the hierarchy the wrong way in the first place, like how I think, you know, Lutnik said what

something I don't normally quite Lutnik, but he said, he said to the European Union, you were

trying to build a climate change engine, you know, all these batteries and all these windmills,

but you haven't got any materials to do it with, you're going to import all that stuff yourself,

and it doesn't economically work. It's a price signaling idea that you can, you know, you can

price your way into this. And the way that built the economic system is that it, you know,

the things like carbon pricing, for instance, lay on the top of deindustrialisation and make it

worse. They accelerate deindustrialisation because, you know, for instance, in Canada, I was talking

to somebody yesterday, it's about five to seven percent of the project. Now that's been landed on

a more expensive capital source anyway, so all of a sudden you're pricing yourself out of the

whole thing and you accelerate the deindustrialisation with carbon pricing. And so we need capacity

for us, like, you know, defense requires surge capacity. And, you know, I've got a model of

developing that I've been talking to you off screen that basically models a new economy,

you know, a materials economy that takes the whole FMRC framework and I've actually got down

the two pages of calculus and you can put it in an AI engine and you can tell which, you know,

you can put it under a rivalry scenario or a climate change scenario and you discover the

materiality is actually called to addressing the climate change issue anyway. You could not

address it the other way, you know, to flawed system. You never have enough copper and all that

kind of stuff and you end up in rivalry anyway and that diverts half of the stuff to the other place,

the AI engines and the energy engines. And so you end up in a, you know, you need to change the

whole economic system into one that facilitates your goals and the current one doesn't facilitate

our goals. And as we provide clarity to this and I think I can play a role in providing clarity

to that in a way that I don't think is being contemplated before, you enable that visibility,

that ability to see things, you know, let's go back to your accountants and your lawyers and

everything like that. Rather than all this specialist knowledge, we join them all together and we create

orchestrated insight into these things. So everyone can go, oh my god, look at what we've done to

ourselves cross functionally and that drives, that drives, that drives change. I guess the second part

of that is that controls AI too, which you know, I might flag as something that we should talk about

because, you know, there's a lot of controversial around AI at the moment and I've got a model of how

how we solve that and how it solved. I want to have a second question on AI but I'm going to let

Michael respond to what you just said. Well, all I'm going to say is it's a great pleasure to be

doing this podcast because to just reiterate, for years now, I've been looking at balance sheets

in a much more simplistic way than Craig is using, you know, godly minskie models, which themselves

based on Marx and, you know, but no one really understands that in markets, but it's true.

Wait, the godfrey and minskie models are based on Marx. Yeah, I didn't know that.

Intellectually, you can't, you got godly, GOD, Elywai, you can't possibly understand them without

having seen Marx's views on how capitalism actually works and what financialization is.

But of course, no one ever reads the originals anymore. So why would they understand that, right?

But you look at these particular, you use these lenses to see the world with others too. There are

lots of other ideas in the mix there. And you turn around and you say, look, the way we do things

now is just not going to work. As I said, most, most simply and most, most crucially given

that I work in markets, you can't have one interest rate. You can't have an overnight cash rate

in Australia of X. And when it goes down, everyone runs a housing. And when it goes up, housing

crash, but as a result, no one can go into industry because the interest rate has gone up,

which is, of course, you know, something that Australia has talked about 24, 7, I know,

having lived there, right? You can't have one Fed funds rate, which is the base rate for the

entire world, where everyone is M3 to lend on the back of that, you know, with a credit spread

on top into whatever they want in a free economy, because that's hey capitalism, because markets

just do whatever you want, because people will make stupid choices. I mean, equally, you can say

state isn't the best arbiter of what is a good or a bad choice. And that's also true,

heuristically, but neither are individuals. If they're not thinking in terms of the totality,

the Craig is just pointing to Craig, you're on, you're on the spot. So let's, I mean, I've been

trying to do this for 15 years with politicians and such. And I've learned that there's,

in the moment, there's an understanding. And then when you leave the room, there's a rapid decay

in the next three days, and a week later, they're with all their buddies and peers that didn't get

exposed to that. And it's forgotten. Number one, and number two, it's the uptinson clear thing. It's

like, oh, I understand this, this makes sense, but I don't want to say this stuff in front of my

constituents, which is why we need some version of advanced policy, people like understanding

this stuff and designing plans. And my whole thing is that first step is a doozy once people

understand it. But that's a deeper discussion. Let me get back to AI, because there's so many

things about AI given both of your economic financial acumen. What is your opinion about

I think Mustafa Suleiman and others in the news have said that there's a possibility of

80% of white colored jobs might be gone in the next 18 months. What are your both of your

takes, both from an economic and governance perspective? Craig, start with you.

I spent most of my life implementing systems in the end of prices, and I think I understand

the metabolic system how they work. And I think that all these AI gurus don't understand

how the metabolic system of enterprise works. So I think they understand the functional

bits. It wasn't accountant too. That's pretty easy to understand. You just consumer and accounting

book. That's what an accountant does. So I think they've made a misjudgment. The other part of it

is that they've just raised 600 billion or 700 billion dollars. And in order to do that,

can you imagine the decks? We need a hundred billion dollars. And this is what we're going to do

with it. We're going to drive revenue in three years. All these decks look the same. They don't

look any different. And their decks are going to the most senior businessmen in the world.

So they have to be robust. And so in one office, before they go on the podcast, they're saying,

yeah, a hundred billion dollars rather than ever, we're going to replace accountants or whatever

we're going to do. And so they get on to the podcast. And they've got to say the same thing.

And the reality is they haven't got, you know, I wrote a little post. Yes, yes,

to that. I gave them like 50 questions that would normally have to be asked by an enterprise

to work out the viability of a system replacement. I've also talked to the CTOs in the, yes,

the SaaS place, the SaaS software companies. And, you know, the accounting software companies

have already introduced AI and they built themselves and they're not never going to pay,

you know, any of these big frontier models to use AI because they've got their own computers

and they've got their own software developers. So your take is that before we lose 80% of

white color jobs, the AI won't be able to sustain itself due to lack of funds.

Oh, yeah. And they'll run out of funds. They'll run out of metals. But most importantly,

there's a, you know, the cash, I think Darius said, you know, if the cash were high, if the

revenue rise a year late, we're done for. I think the revenue is going to arrive many years late.

Right. And the other thing, the other aspect I'd include is, hey, how are we going to introduce

this? Where are the humans? We're in charge. You know, are we children? Like these idiots are

threatening us, right? And I'm not a blood light. But I think it's the worst marketing campaign

ever invented. Go out and tell everybody how they're going to become redundant when you, especially

when you have not working models about how to make them actually redundant and you can't actually

deliver. And then at the middle of it, they're missing the golden key, which is our aging demographics

means that, you know, somebody's going to have to look after me in 25 years. And we're not going

to have the people to do it. So we better have the robots because we're not going to have enough

people like the white color retirements from boomers is, is, is spiking higher than it's ever done.

And everyone's worried about what color redundancies from AI. And they haven't, they haven't

measured one against the other. The second part of that is, hey, I outsourced a whole bunch of

Indian, sorry, Australian call centers to the Philippines, you know, going back into the 90s. And

and I, I also outsourced a whole bunch of application developed software and all, all the other

stuff that goes with it, including main front to India. Right. So if it, I suggest you that the white

color jobs, actually, we're going to lose. I'm going to happen in the west to the extent that they

predict that it's going to happen in other countries. I feel sorry for the Philippines.

The, you know, the third part of that is that we're going to have to have somebody to help look

after all these old people because, you know, people arrive the age of 85 doubles in the next five

years, you know, and depending which country you look at, obviously demographics are different.

Who's going to, who's going to wipe all those bumps? And, and the, no one has any answer that.

We can't build a nursing home infrastructure. We, you know, because we literally haven't got the

time, not that we have the capital. So who's going to, who's going to do all that?

While you were speaking, I'll just be totally honest. My mind went to the text I just got before

our podcast where my girlfriend sent me a picture of a puppy that she wants us to adopt tomorrow.

That's where my mind went, Craig. That, that was, that was pretty heavy. Michael, do everything to add?

Yeah, I'm very glad that's what the picture was sent after Craig had been talking about wiping

bumps because I just couldn't see where you were going with that. So that's, that was a great

relief to hear you come out with that statement. But no, in, in terms of the, the arguments,

I think there's an awful lot of truth there. I look, I don't buy the 80% in 18 months.

I also completely see a lot of the potential upside. I do. What I can say, and I think this is the

first time I, you know, different from Craig at all, is that within the very polarized,

increasingly radicalized polity that we already exist within, you know, with rising geopolitical

pressures, which are potentially going to make it worse imminently. And if they don't, you know,

just after we stopped talking, they may have already started to by the time people,

you know, see this particular podcast. It doesn't take 80% of white collar workers losing their jobs

to radicalize things even further. It takes 8%. If we lose 8% of our, of our white collar jobs,

what about the mortgage payments and the trips to Disneyland and all the things? Exactly. So

what, what I'm seeing around me in terms of what exists in AI today, like what a $20 a month

subscription can already do, it can get the functionality of a lot of investment banking.

For example, you can get data feeds fed into a laptop now with all the live data coming in,

which is cheaper than going through platforms like Bloomberg, by the way, that's already

exhibit A. But then for a couple of bucks a month on top, it can then automatically

write all the reports for you, create all the graphs and charts and create the PowerPoint

presentations. Now, if you've got something really original to say and you think cross-disciplineery,

so you know, you're aware of the facts that Minsky and Godly were based on Marx, etc, etc.

And you can add nuance to everything you're saying and you can link up across disciplines.

That can't possibly replace you now and it may never be able to. But if your job and a vast

number of them are in the industry is basically to say the data came out, it was 0.2,

everyone expected 0.1 assets moved exactly in line with how we thought they would do when they

did that. Here's the text, here's the graph, here's the chart, send it to someone who sends it

onto someone in the sales team to a client who, themselves, is a CFO who's managing interest rate

and FX rate risk, but can also be replaced with a $20 a month subscription, which is automatically

linked to the marketplace to buy and sell FX or interest rates futures based within a certain

risk parameter. The entire industry is gutted and you will lose more than 8% of jobs that are well-paid.

And that's what I think could start to happen within 18 months, that could.

Well, for the record, if that does happen in your industry, Michael, I think you would be an

excellent podcast host, not that the runway for that is that long. Anyways, but on that trajectory,

Craig, let me ask you this, what happens if it's a scenario where more and more people take

advantage of the $20 a month chatbots and advance feeds that Michael was just describing,

and there's a productivity boost like that, and it sucks 20% of the population in and they get

super productive. And then there is an AI winter where that $20 a month doesn't pay for all the

materials and minerals and electricity prices get too high. And there's an economic crash.

And that AI that people just added their cognitive laborers to the fossil laborers that we've

become accustomed to, you know, 500 billion strong in the world, then what happens? Like we got

used to that thing and then it's not available. Is that plausible? Evolution has friction.

All evolution has friction. Who are we to think that our evolution won't have friction? There's

a culture as an individual. You know, we've all had friction in our own lives. So, you know,

the idea that we can bright side this thing at some point and we can actually navigate this

true because we're navigating, you know, better than anyone else and we've got AI to navigate this.

These changes, you know, take pressure and stress and we're just going to own up to that.

You're not going to avoid that. You're actually going to, it's the friction that makes you change.

So, you can't avoid it because you won't change. And you know, one of the positives,

a circular economy, you know, we've got I think $10 billion worth of 10 billion tons of fly ash

sitting around the place and the full minerals. We'll learn how to reclaim that and lower the cost.

You know, we may have no developers, all the guys that went to learn to code may have no jobs

and may have to work in nursing homes or something like that. You know, those kind of compromises,

you know, the right through history. And the idea that we won't have a setback, I think we've

got to go to our philosophical roots and learn how to look at ourselves individually within

that setback because some of the greatest philosophy philosophy was written in hard times. And some

of the worst economist work was done in good times. You know, there's a natural physics to that

and we have to accept that and we have to accept the frictions and then we have to take

advantage of the things we're doing. Like I said, I think we can provide a way more clarity.

You know, at the moment, everything's hidden behind complexity. What the government's doing,

none of us realize that the broad population level goes back to your point about revolution.

What the hell's going on? If you go around all your friends and say, what do you think's going on?

I'll give you a special answer because that's what they know. That's their natural propensity.

So what we need to do is provide those horizontal lenses to provide clarity, to create

electoral pressure, to change it. And so if the AI is going to put all the people out of work,

you say bugger off AI, you can work, I'm going to give you a licensing model inside aged care

because that makes sense. It's like a skilled migration thing. But you know, as far as

you know, white color workers in investment banks, we might preserve them because they're

rare people. You know, we're going to have to come through a kind of ready reckoner of

what our priorities are because at the end of the day, where the humans were in charge,

I want to slap everyone over the face and say, you don't have to let the things that the AI

people are slapping us with happen. And that's not a bloodline thing. That's just an order thing.

And you know, a common sense, let's do things in an orderly way and not core suffering. And

that'll go to the top. I know it doesn't feel like at the moment. But as this gets worse,

you know, you'll have a politician elected in the US that says, I'm going to, I'm going to

lower the pressure on the population considerably by doing xyz. Well, we already have that.

Trump is trying to lower gas prices and highlight how inflation is down. And on the other side,

you've got Bernie Sanders trying to sign petitions to not have data centers built because he rightly

points out that electricity prices are going up for people that have nothing to do with AI.

I mean, that's another challenge. Well, they've got the architecture wrong as well.

You know, any metabolic system that takes 30 percent, I think it's in Sydney, 28 percent of

our water by 2035. What takes 28 percent? The data says. Right. So if you look at the

electricity in Sydney, I may have these numbers wrong. So people will tell me, by 2035, it will take

20 percent of electricity and some ridiculous number above 25 percent of our water. Now,

there's an architecture that solves that. And that's edge computing because you don't need,

you know, as much copper. There's monolith constructions. It's like mainframe versus

distributed systems. You know, these SaaS companies aren't using the front-end models that

sit in massive diocese. They're going to use their own boxes. You'll have an AI in your desk

in 10 years. And you won't have to go out to the thing. So I think they've made a God off

from mistake. I think they've gone for a model. And the Chinese have been forced into the model

that I think will ultimately win, where they go much lower footprint on energy, much lower

footprint on water, much lower footprint on community fatigue for a number of reasons. You saw

that thing that happened in New York somewhere, where they kicked the data center out.

You know, the people want to burn them down by the time we finish this. And we've got,

you know, they're on the spectrum of these AI gurus. There's no doubt that they're bright,

but they understand, you know, we're talking about narrow intelligence. They're geniuses.

What's the model that would work? I think what we move to is a post-capitalist world,

and not in a social sense, too. I think this is something entirely new. I think AI has an

ability to join the horizontals across the place and give us a different view of things.

And I don't think they'll be allowed to replace all the humans and make us obsolete,

because we're going to democratic system. They might be able to do it in China or whatever.

And so there'll be a forced evolution, because they'll force an evolutionary impulse back on

these crazy AI people. And they'll go, oh God, now I've got to build it without all the energy,

and they'll build it another way. And that points to innovation. And then you've got mineral

innovation, you've got materials innovation. And so you eventually get through there. I'm not saying

it's not going to be painful. It's not, you know, I'm talking about utopia. You eventually get to

the next level. That's what evolution tells us, doesn't it? We'll get to the next level and we'll

have a provocative amount of stress put on us to evolve that system. And we've got the tools

to do it. Well, so much to say, I guess one starting point would be that if we do, and I think

we're all in agreement, need to move away from financialization back towards, you know,

some form of industrialization has green as possible, or materiality as Greg puts it. I don't

think actually investment bank workers are very, very, very high on that list, because you know,

that's, that's, that's not a reserve profession, but I completely agree if you're going to ask

what is GDP for? You have to ask what is AI for? Absolutely. And it's not making, you know,

videos of Brad Pitt and Tom Cruise driving down the road in a sports car and then having the

fist fights on a roof. I mean, that's, that's a fantastic technical achievement. But, you know,

there are better things environmentally and perfectly to be doing than than that. But I

was just going to say, I think it's ironic that the drivers of so much of this, these,

these tech lords who are pushing for it, yeah, they're very many of them are on the spectrum.

Most of them grew up reading a lot of science fiction, which I'm guessing you two did the same

as myself when we were young. So therefore, a lot of these concepts around AI are things that

have actually been in the literature in fantasy future scientific worlds, you know, that I've

been reading since I was a boy. But they seem to be pushing for something without having remembered

the Butlerian G had from June. So, you know, I'm wondering when you first get the, I'm not just the G

had, I'm from the Butlerian G had candidate running for election somewhere because frankly,

I don't think that's too far away. What do you both of you really see as outcomes that should

actually have individuals in societies be striving for in terms of well-being of humanity and beyond.

In an ideal world, how should our economic, financial and geopolitical

strategies, policies, conversations be serving that to those listening and to the people that

they can influence? I think these podcasts are possibly, you know, not trying to be self-aggrandizing

for us three here, but I think there's some of the most important fora for doing exactly that because

the over-specialization and the institutionalization of, you know, bad ideas that we've already

addressed mean that there are very few spaces where you can think this creatively, where ideas that

are as radical and important as what Craig was just saying are being publicly announced.

And so we need a lot more of these because if you take it to the more macro level,

it isn't something that's going to be just purely top-down. It can't work there, even though it

needs to be part of that. But neither do I believe given the scale and the enormity of the

challenges around us, that it can be something that can just be community-driven. You can't just say,

well, you start with your own family and start with your own community. That doesn't really address

the fact that, you know, reality politics points to severe disruption and, you know,

lots of locales around the world and existential changes to the parameters within which we,

you know, we'd like to think we've lived as permanent, you know, for the past 45 years.

I think the best thing you can do is to be informed, to listen to this kind of debate,

to glean from it, you know, the best that you can, to share those ideas with others. So horizontally,

but to make sure you transmit them vertically to your elected representatives as often and as

frequently and as powerfully as possible, because I think only that combination of top-down and

bottom-up is going to get any change affected and it needs to be affected. I agree with that. Craig,

you have a thought. Clarity. I think if you find, provide the same clarity and mechanic,

mechanistic lens of the entire society and we, you know, talk of, you know, off-camera and in

a whole lot of senses, you've got this hierarchy of, you know, individual, family, community.

And, you know, in the, in the Holland sense, you've, we're a whole in ourselves, but we're,

we're a part of a family and the family is part of a community. I think what you do is you

rub, I guess, use a leverage AI to provide greater clarity because what's happening is the politicians

are seeing something and the individuals are seeing something else and they're not, they have

not the same picture. And, and so we can change that. So most people, I suspect listening will say,

what AI is full of hallucinations? How can we get clarity from AI? They've sold it as a

consumer device. And the reality is it's a programming device and you actually have to understand

how to program it to make it behave properly. You know, and what happens in programming is if you

put bad code in and then compile it and get the bad result, you don't play, you don't blame the

software program, you blame your own code. And so there's a lot of people talking to AI like in

English, like it's a human being. And then AI is like a really dumb human being,

so we're giving a real dumb answers. And so if you know how to use AI, that hallucination and that

idiocy disappears because you know how to program it. That's been my experience, not my personal

experience, but I know some people that are like super, you know, supermen with them with how they

use AI. Let me ask you both this. So because I have experienced this attempting to carry all this

biophysical macro, wider boundary view, he's really challenging in the sense that it's almost

impossible to encompass all the factors at play in the complex dynamics of even the topics we've

lightly covered today. Have either of you experienced any moment where your analytical frameworks

felt insufficient or the real world outcome didn't track with your model prediction? I'm just

curious. Well, yes, because there's always new, you know, new data, but because I don't provide

modules so much as thought frameworks or logic frameworks, they tend to be, you know, a little bit

more rigid, or not more rigid, a bit more stable, shall I say, that they so far nothing has come

up, which has rocked the questions that I've been putting forward. Like I don't see someone being

out of ribbutt, what's GDP4? And saying, well, we don't need to know what GDP is for because

AI will decide. I think I think it'll be a while before we get there, maybe eventually we will.

But what I run into instead, again, just to reiterate is that you have this multi-dimensional view

of how everything flows together and people want it in one bullet point. And just don't agree with

you because they can't absorb the totality of all the different factors they have to bring

in. And so you actually lose a debate with people just because they have an incredibly core

argument that just won't shift away from that one thing. So a narrow boundary argument will almost

always win a debate against a wide boundary perspective. Yeah, unfortunately. Yeah, that's

well said. Craig, you have any experience thoughts? That makes me incredibly curious. So I get

excited. It's like, if I can't understand something, it just makes me chew on it and chew on it

and chew on it. I'm a little bit, if you haven't worked out already, OCD on those types of things.

So, you know, anything from biological systems or things like that, I like learning stuff. That's

the thrill I get out of things. So I spend in an ordinary amount of time, if I get something wrong,

trying to work out why I was wrong and not being wrong again. And so that's how I

treat it. It's like a tennis game. You know, that shot, I didn't hit very well and I didn't see

it very well. I'm not going to do that. I'm going to practice and practice. I think it's really

important to, to a, for us to also recognize that on top of the stack of challenges that we've

just presented, people who think like Craig are rare, very, very rare, that intellectual curiosity

that constantly asking why. I mean, I like to think I'm a pale echo of that, my, or pale shadow

of that myself, you know, why, why, why, why, why. But with the rollout of AI, what concerns me

and, and many others is that our education systems, such as they are already rubbish,

yeah, to a large extent, they're either very, very rubbish or not very useful even when they're good

in that, you know, you're, you're training people to be too specialized. If we don't implement

AI right from kindergarten up fairly soon, and we already don't do it right with access to

screens, et cetera, et cetera, which is slowly being reversed, I am desperately concerned that we

have a generation rising up who will not even be able to think the way that we are without them.

So effectively, we have got a very narrow demographic window to understand how to use this and how

to apply that downwards for the next generation coming through to make sure that they're then able

to pick up the ball and run with it after we've finished with it, which is, you know,

demographically only x number of years, and then we're done quite frankly, and this

how minds are transported onto a chip into a computer, some take laws might be thinking, but,

you know, I don't, I don't, you know, I don't plan for that myself. So yeah, I really think this is

an existential crisis that needs to be addressed rapidly, like who's going to be able to do maths?

Our maths skills and aggregate are extremely poor now amongst the image generation.

Who's going to be able to write? Who's going to be able to think? It's going to,

already people just Google for answers rather than understanding how to go and look them up

and cross-reference. So that worries me incredibly because I think it just puts extra gravity on

the situation and on the responsibility that we have now as a generation that grew up, not just

pre-II, but pre-computer, like I think all of us wrote essays with pen and paper at one point

in our life. I certainly did before moving on to a word processor, and we grew up with books,

you know? And so we have to give something back rapidly, I think.

I totally agree. And just since my knee surgery six weeks ago, yesterday, I read a book every night,

and I didn't do that last year, and it got me back into that habit, and my friend Zach Stein

says, reading is the new gym. And I think that's right. And I totally agree with you on education.

And while you were speaking, it just struck me that every single topic we brought up today,

Iran and AI and critical minerals in China, and we could have spent two hours just on that one question.

The world is so complex and nuanced. That is a segue into me asking both of you to come back again.

I have a couple more closing questions, but we have a lot more to cover, and I like this

dynamic. Of course, we could invite some others too, but there's a lot more here.

So this conversation and both of your analyses are very high level and hyper-global in focus.

But at the end of the day, each of you and me and our listeners lives in a hyper-local context.

Communities around the world and our ecologies. How might the hyper-global and hyper-local

perspectives complement each other going forward? Do you have any thoughts on that?

Well, I'll tell you what I do. I grow stuff. I go food. I get great joy out of that.

It gives me a rest from this crazy brain I've got. I spend time in nature. I build things.

I act like a human does. I always say to my kids, pretend you're a zoologist and you've got

specific needs. You don't give candy bars to the grillers, do you? We're humans in that context,

in that frame context. We need to be in nature. We need to build things. We need to cook things.

We need to do all those things that humans do. And if we don't, we don't get balanced.

And you're going to be resilient. You've got to know how to do things. We don't know where this

dystopian world goes to. But I've got a high level of confidence, other than violent conflict.

I've probably got a big confidence there too. I think I could handle anything because I've

spent years trying to do it because I love doing it. How to grow a fill full of vegetables is

the funnest thing all the way around. It's a complex matrix type approach of inputs and outputs.

And then one of my favorite things is to can goods. You can imagine me with an apron. But

it's a process. It's a system. And they give you joy and we have to rediscover those things.

And also the ancient philosophers. There's philosophers and we can spend a bit of a show on it one

day which predicted all this and predicted the likely outcome and predicted the evolution towards

a higher state and a higher frequency for humanity. And we should, they were bright guys.

They predicted quantum physics and all kinds of things just by sensing it. And what we're doing

now is Aristotle or Marks or whoever your favorite philosopher was. They had these big realizations

about the world. But they couldn't work out how to distribute that realization. The Bible

exists, Buddha exists, all this kind of stuff. And they gave you guidebooks. But you had to follow

the guidebooks and be pretty pious to get anywhere. I think that opportunity to distribute

that type of mental framework is going to accelerate in the middle of all this. Remember,

everything's good and bad. Everything's rough and smooth. Everything's healthy and unhealthy.

This is going to involve in a balanced way between healthy and unhealthy. When we come back in 10

years, hopefully we're all here. And we can do a podcast in 10 years. We can go on. Let's compare

that. This conversation feels like one of the last episodes of the series lost. I don't know if

you guys watched that, but Michael. How do you answer my recent question? Well, again, I'm just

thinking back to lost now. Who's John Locke? Who's the smoke monster?

Does it have anything that actually makes sense? I'm not trying to think, can I add something?

Look, what Craig just said was very, very profound. In fact, all I would add to it is that while

I'm very bad at many of those things and would like to be better, it's important to strive

to improve. I think what we all need to be is not just Renaissance man, but increasingly

Renaissance man and feudal man. So, ideally, we need to be extremely well versed in things,

but actually be able to get out into the field and grow things and you would and carry water

and actually be able to do some practical things too. And we're not taught how to do any of those

things anymore. I increase in what you think that most of our population is already feudal man.

We just don't know it yet. That's true. We'll go back to it very quickly. We haven't

forgotten. Look at those ancestors we've got. Look at how many people have to die for us to

get here. That's profound in its sense. We stand on the top of the shoulders, but they knew all that

stuff, so it can't be that hard to learn. It wasn't that hard for me to learn.

So, it's Friday morning. You guys have full days ahead of you. I really want to thank you

for making time for this conversation and for your continued work. We didn't talk a lot about

Iran. We'll see what happens there. That's a giant wild card in the near term window. Do any of

you have any closing thoughts or questions that you'd like to leave listeners with?

Folks, be content yourself. You can't pretend that you know what's going to happen. So, when you

create narratives and forecasts about what you think is about to happen and what you fear,

you're going to happen and then you attach yourself to it. You're doing something that's not

possible, but you can't predict what's going to happen. You just have to prepare yourself.

So, take yourself out of the future and bring yourself to the present and go and walk

among the trees or grow some vegetables. Michael. Amen. Thanks, guys. I will talk to you soon and

to be continued and thanks again. If you'd like to learn more about this episode, please visit

thegreatsimplification.com for references and show notes. From there, you can also join our

high-low community and subscribe to our Substak Newsletter. This show is hosted by me, Nate Hagenz,

edited by no troublemakers media and produced by Misty Stinett and Lizzie Seriani. Our production

team also includes Leslie Batloots, Brady Hyan, Julia Maxwell, Gabriella Slamon, and Grace Brunfield.

Thank you for listening and we'll see you on the next episode.