DEBATE: Does The Entire World Face A "Bronze Age Type" Collapse? | Brent Johnson vs Craig Tindale

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I think the current cycle is is ending. I think we we're we're facing a much more fundamental bronze age type uh collapse where the things that we want to do um aren't aren't sustainable. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert. Today we have a very special debate for you. Um we will be talking with uh Craig Tinddale and Brent Johnson. And uh most of you are probably familiar with Brent because uh I interview Brent on this channel quite often. Brent is the CEO and portfolio manager at Santio Santiago Capital. Uh but probably he's even better known as the developer of the dollar milkshake theory. Brent in his travels talks to lots of smart people and one of them is Craig Tinddale who is publisher of a popular financial substack and he manages investments for a private family office uh out there in Australia and uh they oftentimes get engaged on sharing ideas back and forth batting them back and forth. They were doing so on X recently and the audience that was sort of watching the debate said, "You know what? You guys should get together and actually hash this out on camera and somebody uh was crazy enough to say you should do it on Adam Tagert's program on Top of Money and uh and everybody agreed to it. Um so we're making it happen here right now." And gentlemen, I'll let you get started in just a second. I'm positioning this as a debate. My strong sense is you gentlemen probably agree on more things than you disagree on. But let's flesh all that out and uh and obviously where you disagree, let's try to understand why. Um folks, this is going to probably be somewhat wide ranging. Um, but we're going to cover topics like the increasing instability of our economic and financial systems, how competition for scarce resources uh will define the future, um, which countries will fare better in this process and which ones will will fare worse. Um, and the future of fiat currency. So, um, with all said and due, gentlemen, let's kick right in. First off, Brent and Craig, thanks so much for joining me. >> Thanks for having us. >> Thanks. Thanks for doing this. This will be fun. >> This should be a lot of fun. Okay. Um, well, there's, like I said, there's a lot of different directions we could go. Craig, why don't I give you the baton here at the start. Um, you write a lot on your Substack. It's uh you're a prodigious uh producer of insights and one of your frameworks for looking at the world uh is what you call the Tindale trap. And I'm wondering if you can sort of succinctly describe that for us and then let us know how you think that is going to shape events going forward. >> I guess at its simplest level, it's a bifocation between a financial economy and a material economy. You know, financial economy all we all know what that is. That's paper on paper. That's the the economy that we've lived in for the last 40 or 50 years. And gradually we've dematerialized or de-industrialized um the economy from that financial economy. And we've reached a critical point. We've reached an end point which is the the material economy is no longer responding to the financial economy as it as it did. It's a you know gradual process. It's not uh it's it it doesn't happen all at once but it happens gradually. We've come into a situation where we've got a rival. The west has a rival who is doing a material job on the economy who is providing most of our substances. Um and so we we've gone from a point where you know China provides you know 50 to 98% of the metals and you know just about everything else in in the economy and the west buys it off them and that has some consequences for the for the the various different currencies you know for the Australian economy um you know we're we're selling raw materials we're not selling the endstate product um that's refined in in in China for the American economy um when they're not you know they they're buying everything as well and you know the financial economy is much much much larger than the material economy and the material economy's forgotten how to do things um you know it it doesn't refine its own metals it doesn't produce its own components it can't get its titanium for the F-35s it can't get um it it it can't get its copper for its data centers. It's it's really become limited in what it can do without the permission of of the foreign rival being China. Now, this is caused basically by the FOMC or the Federal Reserve policies. They've focused on I guess a financialized economy. You know, we've we've seen the financial economy grow from I think 8% and I think it's about 23% depending on how you measure it at the moment. Um and you know the FIMC has acted basically as like a super lobby group and you know it's it's I guess truncated um you know wages into financial products um you know through domestic debt etc. And that's been caused by what Beni called um the wealth effect. You know, that is if you inflate assets and you inflate housing and you inflate shares, people feel richer even though they probably still have the same amount of debt. So, they'll borrow some money to do the bathroom or or borrow some money to, you know, they use the the home ATM to withdraw money out of it. And this has kind of been being clouded by the reserve um the the reserve status of the of the USD. The USD has you know obviously attracted global funds because of its yield etc. And a lot of money flows into the US economy because it is a reserve econ economy and it has this ability to provide um I guess a cloud or a or a camouflage over what's happening in the rural economy. And you know, the the Federal Reserve hasn't um noticed because of its its frameworks, hasn't noticed that it's de-industrializing, that that that Main Street is is basically shrinking and and and de-industrializing, dematerializing, and the financial economy is growing and growing and growing and growing. And we've reached a critical point where the only valid supplier of most materials, most industrial products and most tradable goods um is the is China. You know, even India, I've I've got a you know, it's not just the US. I' I've got an essay coming out on India and India um you know gets 100% of its uh rare earths for defense products and um um just about everything else from China. Um so you know they're dependent as well. Um and most of the I guess the the central banking policies that were put in place by the Federal Reserve were copied right across the world. Australia's in the same position too. We're obviously a big commodity economy, but we don't sell the end product. So, it's akin to having a factory that um takes all the raw materials, but doesn't produce the end product. It sends sends the raw materials to somebody else. And so what we have, you know, to move it back into a a kind of a currency framework is we've we've got an economy um that doesn't produce things on one side and has been financialized you know to an inch of its life and you know that's happened right across the west and we've got an economy on the other side that makes all the stuff and is starting to require um you know CMY offshore CMY Remic um to buy things. So you know you got examples like BHP who had always insisted on US dollars now taking CNY. Um and so you got a dislocation a bifocation between the financial economy and the material economy where the material economy that provides everything being China um is now insisting on its own its own its own currency being used. And so you've got, I guess, what I see a warping of what we traditionally know as you know the USD reserve currency. It's obviously going to be in very high demand. It's going to be a debt service um currency because six, you know, I think it's 58% or 56% Brent would probably know that the accurate figure um of of debt is denominated in USD. So that's that's going to be in demand. But um the the currency that's needed to buy copper um you know is basically CNY because uh or rare earth because you know they do most of the refining and have most of the end control. So you know what you've got is an emerging transactional economy in in China. you know, it's it's being used to buy things. And you've got a a debt servicing currency um and a block uh you know, an allied block currency in the USD. And so you got a I guess a change in status and a change in labeling and a and an evolution of these currencies. Um you know, and and it's all path dependent. Where do we end up to where where they end up? And you know, I'll hand it over to you, Brent. Well, no. I think uh Adam, did you want to jump in or do you want me to to >> Yeah, I'll let you go, but let me just make sure that I and the viewers fully uh digest what what Craig just laid out there. So, Craig, um just tell me if I if I got this right. It sort of sounds like you're saying there's been sort of like a almost like a feudal relationship between the west and China um particularly the US and China over the past decades where um you know basically the Chinese economy was was acting in service to the US economy and over time they made more and more of the things that we want and we de deindustrialized along the way and we're kind of now at the point where the the vassel is actually potentially more self-sufficient than the master. Uh, and we're at the point where maybe the world is sort of waking up to that. And you're saying, um, you know, China now, the fact that it makes everything um is the is potentially the ascendant power is sort of what I'm taking from what you're saying. Um, and it's going to increasingly demand that its currency become ascendant. Um, a did I capture that part correctly? Yeah, we we forgot how to make things. We uh learned the code, bro. We were going to go up the value chain and we we got out of the refining business and just about every other business. And we gave that to China because we were going to go up the value um the value tree. And um and China said yes very much and it has done that. And now we're in a position where you know the West doesn't make anything anymore and where we've got national security issues. um and and path dependencies >> and critical dependencies. Yeah. >> Yeah. Yeah. >> Okay. So, so we're so essentially the argument you're making is sort of the west has become kind of sclerotic over time kind of through its hubris or whatever not not really realizing that it was giving its servant all the opportunity to to you know potentially eclipse it eventually. We may be trending towards that point of of eclipse at this point. Pardon me. >> We've got those crazy economists who used to say, you know, price efficiency should govern where everything was made from, right? And everybody kind of nodded their head, including me in in that time. Price efficient. If the iPhone can be made in in China, it's better made in China. >> Um, you know, and so that applied to everything because of wage arbitrage. So um that price efficiency was a stateless economic um you know theory and we we've we've rammed straight into a a a state-based economic theory state capitalism who who want to make everything because they see the importance of making everything. And so, you know, we've been following, I guess, a funny theory that said that we were never going to have any rivals, that, you know, it was the end of end of history, so to speak, as that saying goes. >> Mhm. >> So, so presumably we were very comfortable doing that because we got to exchange paper that we printed out of thin air for real things and that was great for us. But it sounds like you're saying we're approaching the point where China and the rest of the world's going to say, "I don't really need your paper that much and I don't really need you that much anymore." And so again, I'm just trying to to get to the kernel of your your argument, which I think is you're saying China is going to start ascending here while the West is going to start descending because of these dynamics. Is that am I getting that right? >> Yeah, you got that right. and the west has suddenly realized where it is and it's trying to fix and it's trying to fix it very fast. >> And I guess the big question is is can it? So Brent, now that we've kind of clarified everything, let's have you go. >> Yeah. So I think Craig has done a fantastic job of identifying all the problems and and in many ways uh very well elucidating why those problems have developed. I mean, for lack of a better way of saying it, the United States gave away their manufacturing prowess to China in the hopes that China would become more western. Um, that did not happen. And now that the United States realized they gave it all away for nothing, they have to fix it. Um, and I think Craig has done a very good job of in much more detail explaining what I have said for years will eventually lead to a sovereign debt crisis. And my belief is so so my point is is I agree with all the all the the points that Craig has raised. um I agree the the reasons for which they have happened and I don't even necessarily disagree with what may come next but I would also say a lot of and this is not directed at Craig necessarily u because I think anybody who writes about these these things and talks about things has gotten it largely correct I just don't think they have told the whole story and what I mean by that is often times when this position is presented or when this argument is presented, it's that the United States and the West is in a lot of trouble and Asia and the global south is on the rise. And I don't think it's quite that simple. Um, problems in the West will boomerang back on the global south in the same ways that problems in the global south will boomerang back on the West. And that is largely a function of the fact of what Craig just explained that we moved towards one supply chain. We moved towards a stateless economy. We moved towards uh finding who could make the most important widget at the cheapest price and deliver it in the shortest period of time. And that was the only thing that went into decision-making was essentially price and time. national security wasn't considered. Um, you know, impact on social norms wasn't considered. Wage wages for the middle class was not considered. But we're now at a place where those things are being considered. And the the thing that I think is a little bit ironic about this is for I don't remember who said it and I don't remember in what the context was but there's this famous saying about China you know let the giant sleep for when she awakes she's going to shake the world right and I I think that giant has woken up um but I think that can also be flipped back around and you know the United States was asleep at the wheel for a long time but The United States has woken up. And the people that think that the United States has not woken up are wrong. And the people who think the United States has nothing they can do about the problem they've put themselves in, I think are wrong. Now, that doesn't mean that there's not going to be blood and tears and sweat and all that kind of stuff. But I I I I'm not ready to seed Western hemogimmony to the global south just because of the bad position the West has put itself in. >> Okay. So Craig, I'd love for you to respond to that. And I think, you know, a core question underlying this discussion is who has the long-term competitive advantage here? Has the West already seated it? Or to Brent's point, is it has it has it let itself go, but it's got the ability to come back and uh and combat the rise of this new contender. In your opinion, which do you think is more true? >> Firstly, I don't see it as a baton change. I think the age of he hegemony um is probably fading out. Um you know the reality here is that China and the US are the same coin just different sides. You know what we've got in um in you know we got a centrally planned consumer economy in the west and in the in the in the east let's call it we've got a centrally planned production economy and they've both got ramifications to them. you know, people can easily point at the US economy and say it's fragile or or you know, it's it's it's it's underwhelming in the sense of its longevity or its ability to sustain itself. Um, and that has to be fixed. I agree with Grant on that. But on the other side, we've got an overproducing economy that's gone mad that that that is producing stuff that if it wants to continue its current growth, we'll need two or three uh globalsized demands to satisfy it. It's also unsustainable. And so I don't come out of this with with you know the the West is going to come back and they'll they'll they'll continue to hedge Germany or or the or China will now prevail. I actually have a third point. Um if you look at the production capacity of of of the whole globe you know for copper and rare earth and things like that we haven't got the production capacity to build what we want on either side even if we don't have this kind of contention between the rivals. um you know if you go kind of takes me back to the um the limits to growth stuff in 1973 you know when and you know that was updated a number of times where they said they'd run we'd run out of commodities for instance and you know I I think we're in a situation where we've got a kind of variegated hybrid limits to growth scenario where you know either way you look at it we have to open six copper mines a year and refine the copper and we're opening one um either way you look at it, we we need, you know, in the, you know, I could go through each rare earth, but tantelum, for instance, we need five times more tantelum in five years than we we currently produce. Um, you know, so we we've we've also got a third problem, and that is it's not just the rivalry that we've got. It's it's the fact that we've we haven't got enough stuff to build the stuff that we want. We haven't got the bill of materials to build all these data centers. Um, I think somebody said the other day, I think it was Eric Smith said, or no, it was Jensen who said it, we need a thousand times more electricity. Um, you know, like than we're currently producing. Now, that's ridiculous. Um, you know, why why do we need a thousand times more electricity? We're not questioning any of these AI gurus. So, I'm pointing to a kind of third point. I don't think I don't think I I think these rivals will batter batter each other out, but I compare them to um you know conjoined twins who are trying to choke each other that if successful they both die. It's a very integrated >> I agree I agree with that. I agree with that. >> We've got a very integrated economy. You know, it's it's you know, China is still importing $2.5 trillion dollars worth of stuff into its own economy. How's it going to do it? >> Okay. So, sorry to interject, but Craig, so your third way is that it's not a competition for ascendy. It's that both players kind of come out of this worse off. >> Yeah. I don't I think I think the current cycle is is ending and it's not it's not trying to you know it fits too cleanly into everybody's little you know ideological narrative that one wins and the other loses or one loses and the other wins. I think we we're we're facing a much more fundamental bronze age type uh collapse where the things that we want to do um aren't aren't sustainable. Um you know, from any number of ways. >> Um that's so much I could ask about that, but I think Brent, I got to bring it back to you, your reaction. >> Well, so again, I I don't really disagree with Craig. um or I don't necessarily disagree with Craig. I I have always said uh that I don't know how this is going to end up, but what I do know is that the United States will not willingly seed hgeimonyy and I do know the United States will fight to keep its position in the world and we cannot go from the system we have now to a new system without a great deal of volatility. Now whether that volatility is implemented intentionally or whether it happens as a knock-on effect of everything else that's happening I'm not smart enough to know that but I think to go from this system to a new system will be very chaotic and will be very volatile and in that chaos and volatility I expect the dollar to rise not fall and I expect um >> sorry interject real quick but but rise versus other currencies not necessarily versus some of the real things that Craig was mentioning like energy and key commodities. Correct. >> That's correct. The with the one caveat being that when the dollar rises versus other fiat currencies, bad things happen in markets. The dollar rising versus other fiat currencies is what causes a credit contraction in the world. The dollar rises ver rising versus other fiat currencies is what causes liquidity crisis. And liquidity crisis is what cause currency crisis. And currency crises cause failures of states or countries. And so as that dollar goes higher versus other fiat currencies in this transition period, if it happens, I expect really really a lot of I I I expect great volatility and I expect the United States or the West, but primarily United States to be able to weather that chaos, which will affect the whole world. It won't just affect the United States. It will affect the whole world. And I think the United States will be able to weather that storm better than most others. Maybe not better than everybody else, but better than most others and perhaps better than most people expect. >> Back to you, Craig. >> Yeah, I I actually see it very similarly. Um I put it this way. I You've got two countries with very strong militaries and and great resource bases and and a lot of smart people. Um you know my my my bet is you know other than if they have a war or something you know that we can't predict my bet is they do better than everybody else and it's the weak countries you know you look at the fertilizer capacity of India or Bangladesh or or all those kind of you know can they get the inputs the LG the the the fertilizer the herbicide the nape farm the the various petrol chemicals they they can't at at the moment. Um, and so one I don't think I I think I think this China versus US is a distraction. You other than if they had the war, I think they're probably going to, you know, they've got the means to make their population's life liveable. >> Um, you know, it's the it's all the other countries that I think are are in more trouble. Um, sorry to interject, Craig, but what what what parts of the world do you think are the most disadvantaged here? Is it the small little developing countries or is it the the older slow growth places like Europe? >> Well, I got a lot of readers in Bangladesh, believe it or not. Um, and so I've I've written a couple articles on Bangladesh as as as thank yous for them. And I also find them wonderful people. I was I I spent, you know, years traveling through Asia, you know, 40, 50 years traveling through Asia doing um, you know, deals. I was one of the offshorers, so to speak, for for US companies. Um, and so, you know, I I know that country very well and I they they haven't got them, you know, they they haven't got the 100 more than 100 million people and they haven't got the means to look after themselves. They haven't got the LG because of this hormous thing. They haven't got the the herbicides because of the name farm um uh shortages, you know, they're missing lots and lots of inputs, you know, to survive. And India is not far behind them. Um and then so if you work around all these Southeast Asian countries like Thailand, I don't we've probably all seen the lineups for fuel in Thailand and things like that. these countries have minimal, you know, they they haven't got the buttons to push to, you know, if if things get difficult. Um, and so what you end up in, especially with a a super Elnino coming that's probably biggest in 150 years, is you end up with a shortage of chemicals. You know, for instance, fertilizers. There's, you know, five main fertilizers, right? you know, some help the roots, some you help the stems, some help the the plant. You know, in a in in a in a drought, you need more fertilizer, you need more herbicide, you need more pesticide, and weather's going to run into shortages just as people need these. So, people aren't going to be able to grow their crops. Now, I'm sure the US can manage it. I'm sure Australia can manage it. I, you know, you know, we may go through some hardship, but not compared to these countries. And so, you know, I I see this um let's call it a war, unrestricted warfare, because that's the definition the Chinese use. I think I see this going on between China and um the US for 10 years, you know, maybe longer. Um and you know, and I I think the conjoined twins eventually will stop choking each other and hopefully come to a peaceful resolution and get get on with the world and they can both be honest. >> All right. But it sounds like it sounds like you're saying as the twins are troking each other and both getting weaker, >> they're like stomping, you know, stumbling around the room just trumping over everybody else. So in other words, not only those two vying for, you know, hopefully not dying, but everybody else is fairing worse than those two are. >> Yeah. >> Yep. I agree. I agree. And so one one knock-on effect of what Craig is talking about, I think he will agree, but maybe he won't, but I'll I'll bring it up here because it's it's appropriate, I think, as these smaller countries get into trouble as a result of either energy prices going higher or food prices going higher or just general inflation uh for needed inputs to their economy. what they are forced to do because they neither make those things nor have a a reserve currency that they can use, they have to buy it on the open market on the global market and those things are priced in US dollars. Now, they might not be at some point in the future, but as of now, they are. And when they have to then print their own currency to be able to buy needed inputs such as energy and food to keep their uh citizens from revoling against the government that ends up making the their currency fall even more than it was previously >> and the dollaraus and it and it it becomes a vicious cycle. that causes their yields to jump on their their sovereign bonds. And so I think the the point I'm trying to make is I think a lot of the things that Craig has very correctly pointed out end up being a currency crisis and a sovereign debt crisis. perhaps not for the United States and China, but for the Southeast Asian countries, some of the peripheral European countries, and perhaps even some of the bigger, you know, developed countries um because I think that's eventually where it gets to. Now, does it get there this year or next year? I don't know. Um I could make a case that it gets there in the next 9 to 12 months, but you know, I could make the case it'll take another nine to 12 years as well. I'm not smart enough to know the timing, but I understand the mechanics pretty well and I understand the plumbing pretty well. And I just don't think we can go from a system of plumbing as we have now to a new system of plumbing without this great chaos that I think Craig is very very well uh laid out. >> Okay, Craig, I'm going to guess you agree with most of what Brent just said there. I'm curious, do you agree with his outlook that the dollar will still be the number one game in town during this chaotic period or like some others claim, do you think that another currency will challenge it, whether it's the one directly or a bricks currency or something else? >> Well, I think it's going to I I think our conceptualization of the currencies will will evolve. You know, we've already seen the swap the the dollar swaps come to the four. You know, UAE, if it wants to stay in the fold, needs the dollar swaps. It'll probably become the currency of the UAE. Um, you know, we're already seeing um and Bren's done a lot of good work on uh stable coins. I I think you'll have a block a block currency. you know, the USD will become in within its allies will become the block currency and the swaps will become a kind of a a medium of transfer or a medium of support within that block economy. Um and so you'll end up you know China might not be using the USD and you know some of the you know Russia certainly won't but um you know within the block economies it it becomes the the local currency as well because I don't think a lot of these local currencies are going to be able to stand up to this kind of pressure. Um, and so you've got this kind of evolution from a reserve currency status that we're used to to a block economy status, a transactional economy status because it's different if you're going to off swaps to everyone. I think it I think it's probably the only thing they can do. I I I think percent's probably smart in doing it. But, you know, you change the nature of the USD as soon as you start doing that and you start, you know, taking on risk as well, but you're you're managing that risk of of having those swaps versus the risk of of losing that ally from the block. Um, and so yeah, I I I you know, whether these two conjoined twins bashing around and kind of crushing everyone around them, I think I think the choice will be for countries to to either join one or or not. Um, I don't think this idea of independent currencies is going to is, you know, so so to put it another way, I'm not predicting the end of the USD or the CNY. I'm predicting the end of probably a lot of the others. Okay. Um, >> and Brent, I imagine you would agree with that. And Brent, you know, has been a big fan of, or let me shouldn't say that, Brent has been a proponent that instead of ddollarizing, the world may increasingly dollarize. And I think what you're saying, Craig, is yes, in the block of its allies, but there may be a competing block. Um, maybe that's Chinacentric. We'll see emerges. Um, Bren, I'm curious if you think that is true. I'm betting you you agree with him that a lot of smaller currencies will probably go away, right? >> Yeah, I think that is the case. And I think I actually think what Craig is suggesting is even though it would be extremely chaotic would probably the best case scenario considering the trajectory that we're on. >> Wow. You guys are just rays of sunshine today. I got to say, >> well, I just kind of, you know, if the world it the problem with these conversations is they get really dark really quick. And it's, you know, you don't want to go around the all day with a dark cloud over your head. But if you really take these back to like first principles and and how how the world has traditionally settled these things with each other, they do tend to get dark pretty quick. And what I mean by the best case scenarios, these problems are going to happen whether we want them to or not. Even though we have all woken up to the fact that these problems exist, trying to actually solve them is going to be incredibly difficult under the best of scenarios. And if the two great powers or three great powers or four great, you know, regions, however you want to describe that, if they were to agree to take their own little corner of the world and take care of that and leave the other part alone, that might actually be the best thing from a peace perspective. It doesn't mean it would be easy. It doesn't mean there wouldn't be a lot of pain involved, but that might be the least painful of the of the of of the choices. Can >> Can I ask you this? Do you think that do you think that's underway? Because some people are positing that that kind of in the background the US is talking to China saying, "Look, we'll get out of Taiwan eventually. You can keep your hemisphere. We're going to be here in the Western Hemisphere and Russia will let you keep Ukraine." Could Could this already be underway? >> It it could be. I I It's not my base case, but I I can certainly see that as a possibility. Um, but even if even if that's agreed to, let's just let's just assume that it let's say I'm wrong in on my base case and that is the plan. It doesn't mean it will go easily. Doesn't mean it will go well. Doesn't mean it will be implemented perfectly. Um, I I think these problems are real problems and I don't think the United States is going to willingly seed global hedgeimony or what, however you want to describe their their current place in the world. Um, and I don't necessarily think that they should. And now that doesn't mean that I think the United States should run the world. It doesn't mean I'm in favor of imperial America. doesn't mean I want the, you know, the US to start bombing everybody, but I don't think that the United States should just play second fiddle to the manufacturing prowess of China. I think they should try to build back up their manufacturing prowess. I think they should try to bring some of those industries back. I think they should use the power that they have to try to solve these problems in a way that benefits their own citizens as opposed to other parts of the world. Um, I think that's the whole point of a country. If a country is not going to do that for their citizens, what's the point of the country in the first place? Um, and so I ju I just think we have a lot a lot of challenges ahead of us. Even if we all kind of agree to try to do it peacefully, there's incredible challenges. And unfortunately, whenever countries get in trouble, the time old strategy that has been employed forever is to blame the evil foreigner. It's their fault. They did this to us. If it wasn't for them, your life would be better. And that is the way governments get away with the mistakes that they have made and blame it on somebody else. I expect China to employ that strategy. I expect the United States to employ that strategy. I expect the EU to I expect everybody to employ that's that that is literally Iran's uh strategy. They have been saying that if it wasn't for the evil Satan of the West, your life would be they've been saying that for 40 years. So every country does this to a certain extent and I feel like we are probably headed towards a situation where they do that even more than they already are because of the challenges that they're facing. >> Okay. So uh Craig, there was a lot there. I saw you trying to jump in a couple of times. Um any key reactions to that? I think all of us, all all of us and all of our listeners, if you go back a thousand generations, every generation had a harder time than possibly the last one or two, right? Is the the steady state of humanity is it's almost tedious in its regularity is is been very difficult times, right? But we we gradually evolve up and and we gradually we make progress. It's snakes and ladders. We go up the ladders, we go down a snake, we go up a ladder. Um, so you know, this is all part of evolution. You know, the world's got very very very large and very integrated and now we're we're struggling with that and this just is the evolution from it, you know, and this this u ideological stuff that goes around that, you know, America's the great Satan or Iran or whatever, it's just part of the evolution. You go back a thousand years, it's war and war and war and war. You know, that's the nature of humanity. When we try and blame a state or blame a nationality or blame an ethnicity, we're just ignoring the reality of history is, you know, Alexander the Great was invading people. You know, um, Jenis Khan, you know, we're not a peaceloving people and and we deny that from ourselves to a certain extent. So, I think this is this is a natural evolution >> and um, you know, can I ask you a question? Can I ask you a question somewhat related to this Craig because I I've been thinking about this recently and that is >> one of the criticisms of thei towards the United States or the West however you want to is is that you know since World War II or even really specifically after World War II the way they carved up the Middle East led to a lot of the problems that we're having now and this idea of nation building and you know after 911 there was that thing where the United States was going to go into five countries in five years and D and the the criticism has always been this is so arrogant. The idea that you know countries can create other countries and you know enforce new morals and ethics and cultural phenomena on different peoples of different nation and that's a very arrogant to think that that the world can be run like that but but then on the other hand when I look back at history that's how history has always been like history has always been decided by war history has always been decided by violence history has always been decided in rough and tumble ways, unfortunately. And so, there's a part of me that thinks it's even more arrogant to think that we're going to solve this peacefully. Now, don't get me wrong, I want it to be solved peacefully. That's much what I would prefer. But the idea that just because that's the best way and that's what I would like, that that's the way it's actually going to go, history tells me the exact opposite. Do Do you think I have I'm off base on this? Hey, we we conceptualize ourselves in group think, right? So, you know, you go back a thousand years, we're sitting in a village. It didn't pay for any of us to argue with the leader, did it? We we group thought our way into survival. And that was the evolutionary impulse. You know, if if we started arguing, no, I think we should do this or I should we think we should do that. And so, you know, conceptually, um, in order for us, you know, in evolutionary terms to defend ourselves, we we identified with our own point of view. We identified with with us as good and and them as bad, the other as bad. And so, you know, you've got this kind of um narrative that runs through our society at the moment that says, "Oh, they're bad, we're good, they're bad, they're good. You know, the Palestinians are bad or the or the Israelis are bad, etc. like that." And it ignores the natural the natural reality of things that you cannot listen to this partisan point of view and come up with anything, you know, logical. You know, it it is what we do from an evolutionary point of view and and what we'll probably always do because like we've been, you know, a couple hundred thousand generations has has kind of evolved that that into us. And so to a certain extent we we u we we try and sterilize oursel from it with stories you know stories about who about our goodness and their badness and and we all do it and so you know whoever you identify with is you know you can see it online all the time all these people you know saying xy zed in you know the the Palestinians are bad or the Palestinians are good or you know whatever. We're not looking at that framework that we've always used to create conflict. And it's it's that framework that actually creates the conflict. Um >> you gentlemen are making me think of the uh the comment that you know we today's generation is dealing with challenges of the space age but using medieval institutions to do so and and and the individuals who are making the decision are using stone age you know wetwware 1.0 you know our our brains of what and what they evolve for. So, it is to your point, Brent, you know, it's it's a good question, which is can we really can we really think our way out of this when we're still using such antiquated um neural capacity and in institutions? I'd like to be optimistic here, but um it's a great question. Let me ask you guys to let me try to inject some sunshine in here and I'll let you guys, you know, slam the window fully shut, the curtains fully shut. Um, first question is just you were talking about, you know, it's it's it's in our nature to kind of demonize another, right? Um, Craig, if if if all these different blocks just all agreed to blame Australia, could we get out of here? Okay, >> I'd be fine with that to be honest with you. Um, you know, >> I'm kidding on that one. I'm kidding. The second one is serious though. Um, what if I said to you guys of everything that you just laid out, Craig, in terms of the challenges and, you know, resource constraints and all that stuff, what if somebody says, "But dudes, what about AI? We're going to have the smartest intelligence in the world, creating new solutions for us, making our economies way more efficient, helping us find resources more, use them more efficiently, unsnarl a lot of these these intractable long-term human problems. Can AI ride to the rescue here? >> Yeah, it's it we'll treat it like a deity. Um it'll be the sol it'll be the solution to everything. You us fragile humans will become um I guess religiously afflicted to to to to AI because we'll see it as allseeing and all capable and independent. You know, we've got this Fed independence. We've got this thing about independence. Um, and so what we'll do is, you know, one of our next evolutions is is is hand a lot of it over to AI. And that'll have its own problems, of course, and it'll drive people crazy that we do that kind of thing. But it's it's it's the natural thing to do because, you know, in a chaotic world, um, we'll look for more and more control, um, in order to chop in attempt to to stop the chaos. And it will never stop the chaos, of course. Um but you know that's what we're seeing in governments too. you know, you star and and all those kind of things. The more the and I compare it to the pre-revolutionary France or the Bronze Age where they were they playing with, you know, ledgers and things like that while the the population was starving. Is that the that we've got this managerial class, let's call it, and this managerial class, you know, have all these ideas about how they manage the rest of us. you know, they they they live in different suburbs, they go to different schools, they're university educated, etc., etc., and and they start to define how we should live. Um, and and what we should be doing, net zero, all these kinds of things that come up, these new types of policies that touch every area of our life from gender to, you know, um, immigration. And so they you end up with this technocracy, this this uh these technocrats that know better than than everybody in the population. And this is part of the conflict we're seeing in the economy at the moment is, you know, that's part of the Trumpism. He's a push back against that technocracy. Um but AI is is is yet another tool for people to uh you know Alex K you know puts it really well really well in in explaining how he's going to solve all the world's problems with his uh he you know his uh his his his new software that will see everything and monitor everything and and and and mind everybody and and you know you'll end up with you know I think Britain's just you know the start of this you more people are being jailed in Britain for what they say than than anywhere in the world, including you know >> or what they think and and you know people and it's the technocrats trying to um tell everyone how to think and what to do and you know they're using control mechanisms now. So, >> all right. So, so when it comes to the prospects for AI solving all these intractical problems that you guys have been talking about for the past 50 minutes, sounds like you're going to take the under on it, Craig. Um, I I want to I want to because this is a wealth building channel. I do want to get to see if there's, you know, any investable themes coming out of this soup. Um, but real quick, I want to ask you gentlemen both a question that I ask Brent all the time. I probably certain I know what Brent's answer is, but we'll start with you, Craig. If are you familiar with the game risk? >> Yeah. >> Where you're you're you're trying to take over the world. >> I've got seven children. When I said whether you're comfortable um to be to blame, I've got this policy that I'm to blame for everything because it saves the arguments. >> Wow. Seven kids, you're a masochist. >> So yeah. So risk is a big iss one of them. >> Okay. So, if you were sitting down to the game of risk using today's countries and their current status, um, and you got to pick which country you got control of at the start of the game, which country would you pick? >> Just Australian, so I'd stick in Australia. Is Australia in risk? I don't think it is. >> And is that just because it's easy to defend and you get those two extra armies every time, or is there a real geostrategic reason for >> Well, no. Um, you know, I've got I I looked at all the climate change models and and remodeled them. You know, it's a good article if anyone's interested in reading them because it's completely different than the IPCC outcomes. And I have Australia and New Zealand um, you know, wet and hot but quite survivable and a lot of other different outcomes for everybody else. So, I think that's another wild card. I think um everybody's written off climate change or or they believe the world's going to end. I think it it in fact evolves into a a a different world very very quickly. Um and so I I like being in Australia um and and being Australian, but I guess you'd all say the same thing, wouldn't you? >> Well, we'll see. Brent, did he did he sell you? Are you going to change your answer? Well, my this depends on is is the goal of the game to win the game or is the goal of the game just to survive as long as you can in a peaceful manner. Um, and I I think those are two different answers to be quite honest. >> All right. I'm just to help you answer, I'm going to pick number one because I think that's what most countries are how they're going to tackle it. >> Yeah. Yeah. Yeah. No. So, I think uh you know to to me there's no question you pick the United States. And I know that sounds, you know, I I often get labeled the American exceptionalist or the jingoist or I think the United States is the greatest thing to ever happen in world history. And listen, it's just it's just if you just zoom out and you look at all the advantages versus all the disadvantages, the United States just comes out on top, I believe. Now, that doesn't mean they will necessarily win. You can have all the advantages and still lose, right? I'm just saying when I look at the board, I think the United States still has all the advantages, you know, and one one thing we haven't really talked about yet, but I think isn't a big big part of this, and I've tried to make this point over the last, you know, not just couple years, but several years is that even though we have largely in the west become a financialized economy and the global south has become the industrial power, if you want to lump China in the global south. The fact that the United States has the global reserve currency, it is still like having the ring of power. >> It is an immense weapon and it can be used as a weapon against other opponents. and with Scott Bessant at the Treasury who understands currencies and global markets probably as well as any US Treasury Secretary in history and when you understand that we are transitioning at least currently this could change but as of now we are transitioning from a rules-based order system or or the United States kind looking at the world from a rules-based order system to an America first system. The rules-based order system was largely a greater good system. Now, the US was still supposed to, you know, benefit the most in this greater good system, but it was kind of a greater good system. But rules-based order is not a great or or America first is not a greater good system. It is now a America first for the best for America first system. And that means that the monetary system and the way the monetary system is used by the guy that holds the ring of power is probably going to change as well because you could argue that Keynesianism was largely a greater good system. And I think what we're going to now is an America first system. And I think the tread and the treasury and the way that they work together is going to change. And I think that has immense ramifications for the rest of the world. And I don't think people quite understand how powerful that ring of power is. Now it again, this does not guarantee that the United States wins. It doesn't guarantee they don't get hit. doesn't guarantee they don't get a bloody nose. It just means they have something in their pocket that nobody else does. And I don't think that should be overlooked. >> Greg, you're nodding along a lot to that. Anything you want to put on top of that? >> Well, it is what it is, isn't it? The idea that this baton change is going to happen and America's going to go away and China's going to rise and it's kind of ridiculously naive. Um, you know, it's already it's already reacting. % you know has already um done some I think fairly smart things. You know I'd agree he's probably the best Treasury Secretary they've ever had. Um you know Chris Wright on energy um you know you can go right through the the the cabinet. They they've done a lot of things and they I would count a lot of those things as fairly smart. It looks like the the republic has got a lot of fight left in it. And um and I think a lot of the allies are aligning. Like if you look at the the agreement was signed a couple of days ago between um you know Japan, US, Australia and um the Quad um the the the you know the Quad you you're starting to see a block emerge, an allied block. It's not just the west west, you know, the the America and and South America. It's, you know, a lot of Asia, too. I've talked to a couple of Southeast Asian leaders um privately about what they what they want to do. And, you know, they like the balance of power, too. They don't want China to to be the only power in Asia Pacific. Um, you know, certainly Australia doesn't. It wants a balance. you know, Philippines certainly doesn't because Philippines become part of China if they if there isn't a balance. Japan is obviously very concerned. Korea is as well. I don't I I think there's a I think there's a lot of fight in the republic yet. Um and I think that's fairly obvious and anyone that's denying that is probably ideologically um you know affected. Let me let me ask you a question on that. And I'm gonna I'm going to ask you to speak for the rest of the world, which is an unfair question, but it seems it seems pretty clear from Trump's, you know, trade blitz last year, that he's trying to push everybody at the poker table onto a side and and and presumably America's side if at all possible, right? It's us versus China. Whose team are you on? I want you on my side. Let's make a deal, right? Um what do you think the world rest of the world's attitude towards America is right now? Is it more um you know America is uh you know flexing and I think they're a big giant and I'm better on their team versus better than better off not being on their team and therefore I want to get on board or is it much more distrustful like you know America is just becoming an America first engine and sure I might strike a deal with them today but tomorrow they might decide I'm not important and they're just going to starve me. Well, I think there's two levels that the population level, you know, there's obviously a lot of critics of the US in right through Asia and and there's a lot of supporters. I think at the government level, it's a different thing altogether, but you know, we're watching these two babies fight and we want to we want to not get in the road of either one of them. >> Yeah. >> Um and you know, we want to align ourselves where it makes sense. Um you know, Australia's doing that, all the Asian countries are doing that. We're trying to do the most pragmatic thing um you know consequential to what the toddlers are doing trying to kill each other. Um and and you know I think that pragmatism will be part of the whole thing. You know you you can see Japan's a great example. You know Japan is trying to partner with the US in every way possible. Um you know Korea's the same, Australia's the same. You know, I don't think they're losing. I don't I don't think Trump is losing that game by any means at a government level. He might be losing the hearts and minds of a few of the people in those countries. Um, but I don't think that matters so much in the long run. Um, and so, you know, speaking for the rest of the world, I you know, I I it's it's not a hard choice as far as I'm concerned. you know it's it's you know we have we have to look at we have to look after both partners obviously you know from Australia's perspective China is a big huge trading partner um but we don't want to become a vessel state either so we want to lodge ourself in between >> um >> okay well very eloquently spoken for speaking for you know 7 >> leader of the whole world yeah um all right well thank you all right gentlemen we're trying to start landing the plane in here to my point earlier. Um I think viewers have really enjoyed this discussion, found it fascinating, but are probably asking the question, okay, well, what do I do about all this? Right? And um obviously if you have anything to say about the markets or the economy in the short term, I'm sure they'd love to hear it, but a lot of the trends you're talking about are going to take years to play out, maybe even decades. What are the trends, if any, that seem clear to you from a an investing or wealth buildinging protection standpoint coming out of your your outlooks? And uh Craig, let's start with you because I think folks have heard Brent's more often on my channel than yours. Um I I think obviously the commodities but be careful because some of the commodities are beholden to things like sulfuric acid and that you know leech leech uh mining is is one of the first uh stages of of a lot of copper mining a lot of nickel mining a lot of rare earths. So you know pick pick your your commodity miners and refiners very carefully. There's a lot there's a lot in the technology section in the subsection after after the miners there's new companies that are bringing new um technology to the market to produce products um refined products inside the US market or the western market you know um I would focus on them you know there's a titanium company called X that I I think is is going to be the titanium provider for the US but there's a list there's a list to those types of companies. Um I I think um you know obviously copper, gold, um you know, they're no-brainers. Um you know, I I I think we're going to be anchored in the material roots of the economy. When I wrote the return to matter, it you know, it really is a return to matter. The financial economy in the US is about $400 trillion. I I think we worked out somebody worked out for me um you know 1% of that at the moment is metals and chemicals and and refined products and all that kind of stuff. You know that that that table has to turn. There has to be you know we got to cycle into the industrial economy. And so if I were I do invest obviously um you know that's where I'm putting all all my money that that that uh that cycle into the industrial economy and out of the financial economy. I I think the AI companies are going to hit hard times. Um, you know, Elon Musk in that podcast where he he's drinking a Guinness if I can't think of the podcast's name. Um, said that everyone's going to run out of electricity in the AI industry, you know, by the end of the year. He said it really quickly and no one picked it up. But, you know, you can't get you can't get transformers from Seammens for five to six years. They got 148 billion euro back order. um you know there's there's thousands of those examples. You can't even buy sulfuric acid furnaces or crackers as they call them. Um because you know they're customizable, they're orderable, all that kind of stuff. So, we got a log jam in the economy and you got to be careful of that log jam because, you know, we can only re-industrialize so fast before you I compare it to kind of Einstein and and Gordon Moore from Mo's law having three-legged race and they're both tied together and Gordon can go a lot faster because he's bits and bites, but Einstein can't go fast at all because he's he's he's constrained by physics. And you know, I think that's one way of thinking about it is that we're constrained by physics and we can only accelerate so quick. So that's my two cents. >> All right. Um and very understandable. Um Brent, I'm going to think you don't think too differently. >> No, not a whole lot differently. I I I will give a couple ideas that are I typically, you know, just give very big picture ideas and I'm not going to give any stock picks now. But I do think I do think there there's two things I want to say. Number one, I see incredible challenges ahead of us, but there's incredible opportunities, too. And I think there is a danger in being overly bearish and overly apocryphal. Um, and so while you should definitely be concerned about everything, I don't think you need to check out, move to a mountain top, and come back in 10 years. >> Uh, that's number one. Um, number two, I in general I agree with Craig that, you know, we're moving into a world that's become more real as opposed to financialized. And so, um, you know, uh, commodities, hard assets probably go up in value. Those are kind of the longer term themes over the next six to nine months. I think some more specific opportunities are in, we kind of touched on this earlier. I think uh some of the agricultural commodities, soybean meal, corn, wheat, I think we have an opportunity that they're not going to go down a whole lot. They could go lower, but they're not going to go down a whole lot, but they have the potential to go up quite a bit. So, I think the risk return is pretty good there. I don't think it really shows. Are you still quite nervous about a a food shortage coming later this year because of the lack of fertilizer coming out of the straight? >> I am. Yeah, I am. And then you combine it with things like uh energy prices and you combine it with things like uh El Nino that Craig was talking about. Again, the setup is there. The setup is for a really big move in food prices. Now, whether it materializes, I don't know, but I think the riskreward is pretty good. The other thing that I think that could show up in about nine months, which I don't know if people have quite and I listen I can be wrong. I actually know a guy who's very well connected in this space and he said he's not seeing anything yet. Uh but there's an industry called MRO which stands for maintenance, repair and overhaul of airplanes in the aviation industry. And it just so happens that one of the major places where this takes place for widebody aircraft and widebody aircraft or the most important aircraft for you know global trade and um uh freight etc etc takes place in guess where Abu Dhabi >> they already had a huge huge backlog a years'sl long backlog before all the stuff already happened going on in the Middle East. So if that doesn't resolve it even if it does resolve itself quickly I think six and what happens is if if airplanes don't get these certain maintenance done certain repairs done certain industry check offs that have to take place within a certain period of time those airlines get ground those airplanes get grounded meaning they don't fly and so then you get into a supply constraint and because of this backlog I think even if the straight completely opens tomorrow and we get a peace deal tomorrow. I think later this year, early next year, that block that chain that that supply chain, that backlog could start to show up. So, um I'm starting to look at uh at things surrounding that. >> All right. Fascinating. I haven't heard anybody mention that particular sector before on my program, so thanks for giving people something new to check out. Gentlemen, um it's been fantastic. I see we're almost 10 minutes over the hour. So, unfortunately, I'm going to have to start winding this down. But, I can imagine the audience is probably going to loudly say in the comments, get these guys back on again soon. So, I hope we have the chance to come on and continue this discussion on, you know, a wider spectrum of topics, too, if you guys are interested. Um, I'll let you each just sort of have a parting soliloquy to the audience here. Craig, let's start with you. Um any sort of concluding comments you you you want the audience to leave with here? >> Um I think I think I think through all the hard times that all of our thousand generations going back have had. We become better people in difficult times. Um when there's too much of everything, we take it for granted. Mhm. >> And so hard times don't necessarily mean that we're going to have a harder life. It might be a better life because we have better values. And you know, I I I think that's the important thing to focus on is, you know, hard times focus the mind. Hard times um are actually good for us in a lot of ways because we we we learn lessons from them. So, you know, I just encourage people not to to be too depressed about it. I think there's a there's a good life coming. It'll be the life of our great grandparents and their great-grandparents. It won't be the life that we're used to. It'll just be a change. And um you know, hug your families close and learn how to grow food and and become more resilient. Um I guess is where I'd live leave everyone with. It's it's it's all about the people that are around you really. Um the rest of it nonsense. >> Well, it's very hard to argue with that. Craig, I don't know if you are a student of the framework of the fourth turning, but you're essentially saying, look, after a fourth turning, there's a first turning. You know, the sun comes out, there's a there's a new dawn, there's a brand new way to do things. So, keep that optimism in mind. >> Okay. And >> you know, I I you know, I would reiterate everything Craig said. I think he said it very well. I can't really improve upon it. I think one thing I would add, you know, I love me, you know, I love movies. You know, I love uh you know, pop culture, stuff like that. There's a movie called Pool Hall Junkies, and it has Christopher Walkin in it, and he has to give the Pool Hall Junkie a pep pep talk at one point. So, I'm not going to tell you what it says, but go to YouTube, pull up YouTube, pull up Pool Hall Junkies, look up Christopher Walkan's speech about the lion. I don't think the lion's dead yet. I'll just leave it at that. >> All right. Um, I love your pop culture references and I get most of them. That one I I haven't seen that movie, so I'm going to go YouTube that right after we're done here. Um, gentlemen, this has been fantastic. Thank you so much. Um, for folks that have really enjoyed this experience and would like to follow you and your work from here, where should they go? Craig, let's start with you. >> Uh, see Tinddale. That's C T I N D A L E at just about anywhere really. Um, Substack, uh, X. Um, you know, I'm I'm I'm on everything, even things I don't even know I'm on. Um, so you can look up you you can look me up basically anywhere. Um, I'd love to talk to people. Please make comments. Um, you know, I do this for fun, so it's it's and it's it is great fun. All right. And Brent, for you, my friend, >> um, if probably the best place to go is research.santiago.com. That's where you can find our written work. Um, the best way to find me mouthing off is on Twitter. Um, and uh, you know, we do a you do a show every week on YouTube called Milkshakes, Markets, and Madness. And I will say Craig is very good. So definitely check out his stuff. I would I meant to mention this at some point along the way. Probably the best report that I read on his Substack was the importance of Japan to the United States. So for anybody who doesn't quite understand how important Japan is to the United States, I would go to his Substack, find that article, and read it. >> Uh that's high praise, Craig, coming from um such an august gentleman as as Brent. Um, Brent, when you and I saw each other in person earlier this year, it was at a conference where Japan came up a fair amount of times. Um, and you know, in a way I think that sort of surprised the audience. Um, and I mentioned right after that here on my channel, um, you know, folks, should I do an interview on a deep dive on Japan? There was a fair amount of of interest at the time and then of course we went to war and everybody's focus changed. But, you know, folks who are watching, if you'd like to see us do a deep dive on Japan, bring Craig in, bring in some other Japan experts, let me know in the comments, and if demand's high enough, we'll definitely do that. Uh, gentlemen, >> pardon me, >> Japan. >> Japan, Korea. I think those two are pivotal for the US um over the next few years. >> All right. I'd love to ask you why, but I feel like that's unfair to do right as we're wrapping up here. So, Craig, we'll just we'll mark it for next time. Um, all right, folks. Please join me in thanking these two gentlemen by hitting the like button and then clicking on the subscribe button below as well as that little bell icon right next to it. Uh just a quick uh FYI too. If if you would like some help from a professional financial advisor in integrating any of the insights discussed today into your own personal portfolio, feel free scheduling a consultation with one of the financial adviserss that thoughtful money endorses. To do that, just fill out the very short form at thoughtfulmoney.com. Only takes you a couple seconds. These consultations are totally free. There's no obligations involved. It's just a service that these firms offer to help as many investors as possible. Gentlemen, again, I can't thank you enough. And um I look forward to doing something like this with you guys again soon. >> Thank you very Thanks, Adam. >> All right. And everybody else, thanks so much for watching.