0:00 A couple quick announcements before we start class. Next Thursday will be our last class and we will do the final examination next Thursday. It'll be the same format as the midterm examination where you can prepare some questions and we will review what we've learned so far in class. Um if you are on YouTube and you want to ask some questions, please leave the question behind. um in the comment section and my wife will go over and sect um some questions for us to do next Thursday. Next Tuesday we will do an overview of everything we've learned so far and make certain predictions about the next 5 to 10 years. Okay? So next
0:47 week will be our last week. Um today I want to talk about Putin in Beijing. So he came to Beijing um Tuesday evening. He had a full day yesterday and then he left last night. And um as you can see, President Putin and President C are very good friends. They went to a conference hall where they unveiled a photo of the two being very close. Um, this is President Putin's 25th visit to China and in November he's coming back to Shenzhen to
1:33 attend APAC and that'll be his 26. He's a very good friend of China's and the two are very close. This is the two of them at an education conference announcing a year of education exchange between Russia and China. And the goal is to enhance people-to-people um connections between China and Russia. The major um output of the meeting was their different perspectives on the multipolar world. Okay. So um
2:18 this is a part of President C's speech and this is a part of Putin uh President Putin's speech and this is um this is actually AI translation. So the transl translation is very bad but I will point out certain things. Okay. So both are committed to a multipolar world and what uh President C and President Putin both want are more exchanges okay bilateral student exchanges uh deepen interactions in universities do more research together. He also is afraid of the turbulence in the world and he's very much afraid of a return to the law of the jungle where might is
3:03 right. So it's very important for the world to work together in order to maintain the rulesbased international uh order. And what President C says is that as prudent members of the UN Security Council, China and Russia will work together to uphold the authority of the UN international justice and oppose all manifestations of unilateralism and hijgemony. Um resurrecting signs of fascism and militarism. Okay. And this specifically refers to Germany and Japan. Okay. So he sees um the possibility of nationalism, a resurgence of nationalism
3:50 in Japan as a threat to the peace in East Asia into the world in general. Okay. So China is most resol resolutely opposed to the remilitarization of uh Japan. Putin says the same thing same things almost but the tone is very different. Okay. So um first of all Putin is much actually more specific than presidency about areas of cooperation. Okay. So for example uh the tent Russia China summer games and also cooperation in between different media outlets. Um and he also talks about how it's
4:36 important to maintain independent autonomous foreign policies at the same time work together to stabilize the global um stage working together for peace and universal prosperity. This is the logic behind Moscow and Beijing's joint defense of international law and the provisions of the UN charter in their entirety comprehensive and inter relationship. Okay. So it sounds like they're saying the same thing but again the emphasis is different. Whereas in China, China's very very much focus on maintaining a status quo a rules based national order but in the UN at the very top and for the UN China and Russia will work towards um ensuring global stability for
5:23 President Putin. What's important is that China and Russia they take the lead in leading the multipolar world. Okay. So these are two very different conceptions of how the world should be run where the China the Chinese system is let's just maintain the way things are and we'll play a supportive role whereas Putin is like no Russia and China should be the leaders of this new multipolar world. China can be the leader and will be a junior partner but we need to take the initiative in promoting global stability. Okay. Um this is much more clearer. Okay. where this is actually a joint statement between Russia and China where they
6:11 advocate uh multipolar world and Russia and China undertake and call on the international community to adhere to the following basic principles in their relations with one another. Number one uh maintaining open trade okay maintaining sovereignty of different nations maintaining decision- making through consensus okay primary the United Nations maintaining authority of the UN and respecting the civilizations of each different nation state so refusing to prioritize one civilization over another. All right. So, this is something that both Russia and China agree to. Now, this is
6:56 actually a much better translation of President C's words about the multi-polar world. Okay, so let's read it together. The world today is far from tranquil. Unilateralism and hedgemanism are doing grave harm and the world faces the danger of sliding back to the law of the jungle. As permanent members of the UN Security Council, China and Russia must firmly carry out the mission and responsibility of major countries, defend the authority of their nations, international fairness and justice, oppose all unilateral bullying and acts that turn the will of history backward, and especially oppose all provocations that negate that negate the victorious outcomes of World War II or that seek to reverse the verdict on and summon back the spirits of fascism and militarism,
7:42 jointly pushing for the building of a more just and reasonable glob. global governance system. Okay. All right. So, this is a lot of words, but I will emphasize certain takeaways. First of all, what President C is saying is that there were three major winners of World War II, the United States, Russia, and China. And we must ensure that these three nations who won World War II are still in charge. Okay. Okay. This is really important to understand. First of all, US, Russia, and China are allies, not enemies, right? Because right now a lot of people think that China and the United States are in competition to rule the world. And President C says, "No, that's not true. We're allies because we
8:28 won World War II together." All right. Second, he sees the real enemies as those who are trying to overturn the World War II order. And those nations of course are Japan, Germany, and Israel. And the last thing he will point out is that all unilateralism and hedgemonism are bad. Okay? If you act by yourself and you declare war against other nations, that's bad. So obviously the United States attacking Venezuela is bad. Obviously the United States attacking Iran is bad.
9:15 But what about Russia attacking Ukraine? Well, according to this framework, this is also bad. Okay, according to this logic of what he said specifically, this is also bad. So it seems as though China and Russia are best friends and they will unify against United States together. But this statement reveals that actually things aren't as simple as they seem. All right. Also, what's important for us to understand is that yes, there are many areas where China and Russia can work together, but the cooperation is not going as smoothly as one would imagine.
10:01 Okay. So, let's look at some some some examples. First of all, the economic cooperation between China, United States, it is booming. Uh what's happening is that China needs a lot of energy and resources from Russia. So you you would think that they would build infrastructure as soon as possible to make this trade as smooth as possible, right? Especially with this war going on in the Middle East, blocking China's access to the Middle East. uh energy but um and the main pillar of this corporation is something called the power cyber barrier 2. Okay, as you can see it extends all the way from the north of Russia to Shanghai. It's a huge
10:50 project and everyone has assumed that at this meeting the first thing that they would accomplish is signing anou an agreement to build this pipeline and they have not done so and a lot of it is because China does not want to become too dependent on Russia because obviously if you build this pipeline then you must buy a lot of energy from Russia. and but they want to still negotiate over the price as well as the volume. Okay, so that's one area. Second area is Iran. As you can see, the Russians are absolutely supportive of the Iranians.
11:36 Right? So what Vlamir Putin says is this absolute unprovoked aggression of US bombing against Iran has no basis and notification whatsoever. For our part, we are making our efforts to assist the Iranian people. Okay, this so this is this was last June actually when America bombed Iran. Um the Chinese on the other hand are much more nuanced and much more diplomatic. So President C says um Israel's military operation against Iran has caused a sudden escalation of tensions in the Middle East. Uh mil conflicts are not the solution of problems. Okay. So the Chinese are much more muted and this shows us that whereas the Russians are much more clear about their regional alliances, China does not want
12:22 to participate in disputes among different nations. Okay. All right. So one area of cooperation uh between Russia and China is trade routes. All right. So as we discussed previously uh in this class, what the Americans want to do is they want to block China from um accessing global trade and they can do that by closing off the straight of Mala. Okay, there's something called the Malaca dilemma for China where if the Americans were to close out the straight of Malaa, China Chinese trade would collapse. So the solution is for China to build a
13:10 another route to the north called the northern sea route with Russia. Okay? But the problem with this is that now you're completely dependent on the Russians because you're going through Russian territory. Okay? So it's not an advantage of China to say, you know what, screw you America. We're going to work with the Russians. They're actually better off balancing Russia and China. That way they keep both of these routes open. Okay. This is the most economical, this is the most strategic way of um accessing global trade. Okay. Um but the further you look there are certain tension points in the relationship between Russia and China.
13:55 First of all, this relationship clearly favors China. Okay, so this is a map, a chart of Russia exports to China. And as you can see, it's mainly just energy, coal, LNG, crude oil. Okay, that's the extent of Russia's exports to China. And what does China export to Russia? Mainly vehicles, electronics, and machinery. Okay. So basically what China does is it takes Russian resources, converts them into manufacturing goods, machinery in its factories and then exports it back to Russia. This is a very bad deal for
14:42 Russia. It's a good deal for China, but it's a bad deal for Russia. Okay, so that's one point of tension. Another point of tension is the dependence. Okay. So basically um China China and Russia may be best friends but look at this. Okay. So Russia's share in Chinese imports is only 5%. And then Russia's share in Chinese exports is only 3%. So economically Russia and China are not that close. The problem though is that Russia is highly dependent on its relationship
15:28 with China because all these economic sanctions imposed on it by by the west. Okay. So as you can see what's happened um after February 2020 2022 uh when Putin invaded Ukraine and the wester sections on Russia the relationship the economic dependence on China has increased a lot where be where in the beginning of the war Russia didn't have that much in ruining B but now the ruin B accounts for over 40% % of Russian imports. Okay. All right. Another thing is that
16:14 Chinese investors aren't that interested in going to Russia and investing in Russia. Okay. So, uh before the war, this is the war. Okay. This is the war. Um there was some okay but there weren't that many and then as you can see after the war it dropped precipitously okay so why and as you can see from this map okay maybe the Chinese are in the Russian far east and that makes sense because it's close to China but as you can see the further you go out okay here there's really no real investments. Chinese aren't that interested in
17:00 investing in Russia. Okay. And why is that? Well, um there are different different reasons we can speculate. Okay. The first reason, and this this is really important, is that the Chinese are respecting Western sanctions on Russia. If you do business with the Russians, then the West can choose to debank you, remove you from the global financial system. And Chinese investors care more about their relationship with the West than they they they than they care about with Russia. Okay, that's point one. Point two is that Russia is not that friendly to foreign investors. Uh Russia is a very much a closed system. Um and it's very hard to do business in Russia.
17:46 If you're United States and you put your money in United States, you know, you'll be you'll be protected legally and contractually. If the person screws you over, you can go sue the person in a court of law and you can probably win the case. Whereas in Russia, well, if you get screwed over, too bad. Okay. Uh Russia is still very much a mafia um system. Then the third reason and this is actually something that that is really problematic is that um Chinese are much more interested in USD than they are in the ruble. Okay? They're much more interested in accumulating US dollars than they are in ruble. And this is the central dilemma
18:34 of the US, sorry, of the Russia China relationship where yes, you can get Chinese to go visit Russia. You can announce a lot of um cooperation, but at the end of the day, Chinese investors want USD and not ruble. Okay, here's another um chart where Yes. Okay. As you can see, Chinese are going more and more Chinese are going to Russia. Okay. All right. So, right now you have about 50,000 Chinese studying in Russia. But this does not compare at all to the Americans
19:21 where the when when when at when Chinese have enough money to go study in America starting in 2008, you can see a huge boom. Okay? Right? There's maybe six uh 60,000 Chinese who are learning Russian in China while everyone else is learning English. Okay? So at the end of the day, Chinese people are much more interested in the west than they are in Russia. So in other words um you the relationship between Russia and China seems to be top down where it's mandated from the government but the relationship between the United
20:07 States and China seems to be bottom up where people are choosing to work with the Americans and so this is not really an equal relationship. So what I want what I want to look at today is why is this a case? Why is it that the Chinese want to go to America and what can Putin do about it and what will Putin do about it? Okay, so these are the two questions that we're going to look at. First of all, why is the relationship like this? Second of all, what is Putin's strategy of dealing with this? Okay. All right. So to answer this, we need to go back to World War II. So this this is the end of World War
20:52 II and America has won the war. Okay. So this is United States, USA. This is Europe and this is uh East Asia. Okay. Japan basically, but also Taiwan and Korea. Okay. All right. So um war World War II has ended and the United States has a problem. It's got all these factories that produce tanks, machine guns, airplanes, and now the war is over. So what are you going to do with these factories? You can't just tell everyone to go home and not work. Okay? So they make a deal with the Europeans and these Asians. Basically, the deal is this. The Europeans will
21:39 agree to buy manufactured goods from the Americans, television sets, radio, bicycles, cars. But then the Europeans and the Japanese are like, "We don't have any money." And and the Americans are like, "Don't worry, we'll lend you the money." Okay? Not only will you will we give you the goods, but we'll lend you the money to buy the goods. Okay? And this is um and of course the money is the US dollar. So the US dollar is basically a contract, right? And because the Americans are lending US dollars to the Europeans and the Japanese and the East Asians, they want the US dollars to be actually worth something, right? So the US dollars is
22:27 pegged to gold, the gold standard, meaning the Americans can at any time force the Japanese and Europeans to give their gold in exchange for the US dollars. Okay, does that make sense? And so this is a really good deal for the Americans. And this is what we call the bread and wood system. Okay, bread and woods. 1944 where the Americans would facilitate global trade in order to maintain demanufacturing power and they would lend other nations the US dollars to participate in this trade and US dollars would be backed by gold. Okay. So from 1950
23:16 to 1970, this was a great deal for America. And this led to probably the greatest wealth creation in the world where if you were just like a average white American male, you had the best life possible. Okay, this led to tremendous prosperity in America. But with prosperity comes corruption and complacency. Okay. So what happened was that the Americans started to work hard. But then the Europeans and the Japanese like we need to work harder because we need to rebuild ourselves and we need to pay off this American debt. Okay? So Europe start to work really hard. The Japanese
24:01 work really harder. And then what happened was that the Europeans and the Japanese start to make products that were actually not only cheaper than the Americans could make but also better. Okay. So then what it started to happen was that instead of America lending money to the Europeans and the Japanese to buy things from them, they start to borrow money in order to purchase the European and Japanese manufactured goods. Okay. So now this relationship goes backwards. All right. Now USA went from a credit nation to a debtor nation. But not only that, but the Americans recognized that you know what, we can
24:47 print as much money as we want. So we can spend as much money as we want. And so the Americans start started to do stupid things like start a war in Vietnam that he could not win. Like send a man to the moon for no particular reason. like start like and the Americans start to spend way too much money and it's by 1970 the entire world recognized that you know what America owes us a lot of money but they probably can't pay it off with gold. Okay. And then 1971 Richard Nixon says you're absolutely right. Okay. We can't pay you off with gold. So we're going to move off the gold standard. Okay. Okay, so this creates a problem now because everyone's sitting on this
25:32 US dollar and it's actually worth nothing. So to solve this problem, what Nixon did was he brought in to the system okay the GCC Saudi Arabia basically uh as well as China to create more demand for the for the US dollar. Okay. So this created the petro dollar because from now on Saudi Arabia would only sell its oil in US dollars. Okay? And so this kept the system going. The thing to appreciate about this is the Americans did this not because it was strategic, not because it showed
26:19 long-term thinking, but because the Americans by now have become addicted to the US dollar. Do you understand this idea? This is really important for you guys to understand. At this point in history, the US dollar was the global reserve currency. The global reserve currency is unique in human history. We've never had the idea of a global reserve currency where one currency could be the basis for value of all other currencies. Okay? Never has this happened before. What happened? because of an accident of World War II when Americans won and can impose their
27:07 system on everyone else. Okay? And before it was tied to gold and they went off the gold standard. So this is a complete accident of history and it's terrible for America for many reasons. Okay? The first reason is that it's the guaranter of global trade. What does that mean to be a guaranteer of global trade? Well, first of all, it means you have to print a lot of US dollars, okay? Access liquidity, okay? You have to print a lot of US dollars so people can use US dollars and this causes inflation in your system and it's hard to manage. Okay? Second problem is something called an open capital account.
27:54 What does open capital account means? It means like I can change the US dollar anytime I want. So money can come into the country but it can also flee the country. Okay. And that's really problematic if you're trying to control a nation's currency. All right. The third thing is financialization where because there's so much demand for US dollars because US dollars is so complex to manage your economy shifts from manufacturing to financialization. Financialization just means gambling. Okay. So this has been terrible for America, the American economy. The problem is that once you have easy
28:41 money, it becomes addictive. Okay? And so the way the way to protect the system is by expansion war. You don't care if expanding your system makes any sense. You don't care if expanding your system is good for your nation. All you want to do is expand it in order to create more demand for US dollar because you're so addicted to it. Okay? And you have to go fight wars in order to protect the US dollar. Right? So this is what leads us to China. So to create China, what what America did was destroy its middle class and transfer its manufacturing sector to China. It it gave China technology capital as well as market access. Okay.
29:27 And the entire intention was to create more demand for the US dollar. Okay. And this also explains the war in Iran where Iran is not part of the system and so America wants to destroy Iran in order to make everyone else more dependent on the system. Okay. All right. Now, why did China agree to to participate in the system? Because the US dollar solve for for China a a huge problem. Okay. Huge problem is this. The US dollar I need you guys to appreciate this. It monetized power.
30:14 Okay, so I'm the elite in China and I control millions of people. But so what? Who cares? What the dollar did was it en enable me to monetize my power. Meaning now that I could take this power and store its value in the US dollar and then export it to United States where it would be safe. Does that make sense to you guys? Okay, this is what it did. It monetized power in China. Now the elite could use their power over the people and they get rich in America. Okay? So in other words, there were two major beneficiaries
31:00 of this system that was created even though this system doesn't really make any sense. The first of course is the American elite, American financial elite. The second is the Chinese political elite. Okay? And this explains why it's so hard for Putin and for Russia to form an alliance with China because the elite the mentality is to use their power and monetize it through the US dollar. So what matters is the US dollar, not the relationship with Russia. Okay, does that make sense? Any questions so far? Yeah.
31:48 Um, so I I think like it also aligns with the like the international education of Chinese which the rich people and the elites that they send their kids to America but not the Russia. >> Yeah, that that's exactly right. Okay, so if you think about it, the entire point of society in China right now is to is to generate as much US dollars as possible. Okay. So, sending a child to United States in order to learn English, in order to get the American degree, in order to accommodatize to American society is part of the strategy. Hey, do you understand? Because women be by itself has no value. If you convert B into US dollars, that has value. Okay? Does that make sense? Okay. So,
32:33 that so that that's what explains the relationship between the United States and China and why it's so hard for Russia to break into this relationship. There's there's actually nothing the Russian can offer the Chinese elite. All right. Okay. Uh in fact, the Chinese elite think Russia is a problem because because of its uh because of its militarism throughout the world. All right. So Putin's so Putin if he wants to establish a new world order what he needs to do is ultly destroy the US dollar as the global reserve currency. Okay, that is his mission. That is his game. If he really wants to destroy the
33:19 American empire, he needs to destroy the value of the US dollar. Okay? And the way the way he does that is by destroying demand for the US dollar. Okay, does that make sense? All right, so we're gonna go over Putin's game, his grand plan to destroy the US dollar. Okay, actually before I do that, one thing that I need to make clear to you guys is that not all Americans think this is a good thing that the United States has a world reserve currency. In fact, most Americans, if you explain the system to them, they'll be like, "Yeah, we don't want to be the world reserve currency because one, it causes corruption. It it
34:06 causes all these corrupt people to come to our country. It causes all these illegal immigrants to come to our country. It causes us to go fight wars in Iran. It causes us to support Israel. So yeah, we don't want to be the world reserve currency. The problem though is that they're addicted to it because it's such easy money. Okay, so this is a contradiction. On one hand, the Americans know that the world reserve currency is bad for them, but on the other hand, they're addicted to it. Okay, so America's basically a drug addict. And so what do you do? Well, the only thing you can do is something called a force withdrawal. Okay. a force withdrawal,
34:52 which means that you just deny America's capacity to print money. Okay? And the way you do that is by destroying global demand for the dollar. Does that make sense? This will cause a lot of pain in America in the short term, basically economic depression, civil war. the long term, this may be the only solution to save America. Okay. All right. So, let's go over Putin's grand strategy for um um destroying the US dollar. I will also point out that of all the world leaders in the world, I would say only Vladimir Putin seems to be strategic. Okay. The guy actually is able to think long term
35:39 and execute with perfect timing. He's he's he's a chess player. Okay. And he's really the only world leader that's able to think so far ahead and plan so strategically. So, um let's go over his strategy. Basically, strategy is very simple. There are lots of different nations that have been sanctioned by the Americans. How can I form a relationship with these nation states in order to create volatility in the world to destabilize global trade and therefore destabilize the US dollar? Okay. Also, there are some nation states that participate in the system but who are not happy about the system. So, how can I actually break them away from
36:24 um dependence on America? All right. So these are nations that have been sanctioned by the Americans including Russia, uh Iran, okay, uh North Korea, Venezuela, Syria, Barus, Mimer, okay? So my a civil war, forget about them. Venezuela has been conquered by the Americans. Syria is destroyed. Okay, so basically there are four countries left. Russia, Belarus, Iran, North Korea. So these four are going to work together in order to destabilize the global order in order to destroy the American empire. Okay. All right. So the key is Iran and North Korea. Okay. We've already talked a lot about Iran. So so
37:11 today I want to talk more about North Korea. So um right now Russia and North Korea have become very very close. So last year, oh sorry, sorry, this is actually two years ago. June uh 2024, Putin visited North Korea and signed a mutual defense pact with North North Korea. This is a very very big deal because what a mutual defense pact means is that in the case that North Korea is attacked, Russia must militarily come to the defense of North Korea. If Russia is attacked, North Korea must come to the fence of Russia. Okay, this is a big deal because
37:57 previously North Korea had a mutual defense pact with China signed in 1961 after the Korean War. And so you would think that North Korea doesn't really need Russia because North Korea already has China to protect it. So why is Vladimir Putin signing a mutual defense pact with um Kim Jong-un? This is very strange. Okay. Well, I think if we wait a couple years, we'll know the answer. All right. Another thing to keep in mind is that um Kim Jong-un has been very supportive of Russia's war in Ukraine. In fact, he sent 10,000 troops to uh Ukraine. And the thing about the
38:44 North Koreans is that at first they're not very well trained. They're not very disciplined. But the thing about the North Koreans is they fight to the end. Okay? They have a policy of not surrendering to the enemy. If you do surren surrender to the enemy, guess what happens to your family back in North Korea? Okay? So the thing about the North Koreans, remember, is that yes, they're poor. They're not techn technologically suff sophisticated, but their soldiers are willing to fight to the bitter end. And that's actually the key to winning a war. All right. So, um, everyone makes fun of North Korea, okay? Because it's a very poor place. So, if you look, if you compare North Korea to South Korea, um,
39:30 the GDP per person is only $771. Okay, that's it. That's it. Whereas in North Korea, it's over 33,000. It's one of the highest in the world. Look at this map, okay, of a satellite image of the Korean Peninsula at night. This is South Korea, okay? This is North Korea. Pretty big difference, guys. Huge difference, right? But in a war, this place would defeat this place. Okay? Why? Because in this class, what you're taught is game theory. And if you look at how wars are fought
40:16 and who wins wars, societies that win wars have three characteristics, okay? They have energy, they're open, and they have cohesion. Now, what's important for us to understand is that the poorer you are, the more likely you are to be energetic, open, and cohesive. Okay? And you're like, "That's South Korea is wealthy. It has technology. It has a lot of weaponry. It has American support." The problem with um western capitalistic societies is that they tend to be very individualistic
41:05 as well as complacent and unequal. Okay? And you can tell because of the birth rate, right? Where in North Korea the fertility rate is still 1.81. It's not great, but look at South Korea. 0.81. Okay. So in 50 years time, South Korea will lose 80% of its people. North Korea will also lose people. But just if there's no war, if we just keep on going, eventually South Korea will go to zero and North Korea will still be around. Okay? But the other difference is that when you're poor, you're not afraid to
41:52 die, right? You have nothing to lose. Whereas if you're rich, well, you're you want to live. Okay? So all North Korea has to do is basically say, you know what, we have artillery and this is Soul. Okay? You can see how close Soul is to the border. So all North Korea has to do is tell the Koreans, you either pay us a lot of money or we'll go attack you, right? It's that simple. And and the South Koreans will be like, we'll give you money. Just please don't attack us. And what what this is going to do is create a lot of tension in Southeast Asia. It's it's going to have to bring in Japan as well as well as the United
42:37 States. Okay. So now Putin's defense pact with North Korea makes a lot of sense because if North Korea just creates a problem in the Korean Peninsula, this is going to be a huge problem for Japan and United States. And remember, United States is already distracted in Iran. It doesn't have the forces in order to defend South Korea. Okay, this this is going to create a lot instability. All right, let's move on. Germany, guys. Okay, so um after Russia invaded Ukraine,
43:23 Europe and United States responded by imposing sanctions on Russia. The problem is that Germany was dependent on cheap Russian energy to fuel its economy. And because you lost this Russian energy, you had no choice now but to buy American LG at 50% more uh 50% markup. Okay, you can tell from this chart the impact on Europe's economy where okay um in 2019 they weren't buying that much from the Americans but by 2025 they're buying a lot from the Americans and again this is 50% more than Russian LNG.
44:11 This has been terrible for especially the German economy. Okay. So, um this is the red. The dark red is are the Germans. Okay. And as you can see, the decline has been pretty steep, far more steep steeper than the um French, the Italians, the Spanish, and the British. So, the Germans are really hurting from this war. Okay. All right. The other thing is that there's been a lot of immigration to um Europe. Okay. So in certain places of Europe especially uh Scandinavia
44:57 the population of immigrants has gone as high as 20%. Okay. In Sweden uh Germany is also a under a lot of stress. So there are two there's two these two trends. Okay. more immigrants coming to Europe which is threatening the local identity as well as this war in Ukraine. So these so AFD okay AFD uh which opposes immigration and which opposes this war in Ukraine they've seen a surge in popularity. Okay. And honestly, if there were fair elections in Germany, at one point the AFD is going to win. Okay, so what this means is that the
45:44 Germans are choosing instead to fight a war. Okay. So, in 2016, you can see the German military expenditure wasn't that great, but now they're going to invest a lot more in the military. Why? Because the plan is by 20 2029 for the Germans to have troops in Ukraine. Europe is moving towards total war. Okay? Stretching the entire society for war against Russia. Russia. Evan says that Russia is now under a lot of e economic pressure. Okay. And it's true that the Russians have in fact spend a great deal more
46:30 money on the military. Okay. So you can see how after the war started you have this huge bump um in military spending in the Russian Federation. But the thing to keep in mind is that it's still pretty low as part of its GDP. Okay. So the green is Saudi Arabia. Uh so this Saudi Arabia spends over 10% of its GDP on the military. The Chinese spend about 2 to 3%. Okay? The United States spends 5 to 4%. The Russians spend about the same. Okay? So in other words, the Russians still
47:15 have a long way to go. In fact, Putin still maintains that the war in Ukraine is a special military operation. It's not a fullscale war. If the moment that Putin declares war, the entire economy shifts to total war. We we can expect a to a complete surge in um spending on the military. Okay. Russia hasn't reached Russia hasn't reached that point yet. Now, um, what is Russia's plan for Europe? Eur Russ Putin doesn't actually want to fight Europe. Um, because it would be disastrous for both Russia and for Europe, but he understands that there's a civil war brewing in Europe where
48:02 these right-wing parties like the AFD, they're surging in in um popularity because they oppose war and because they oppose immigrants. So all Putin has to do is force Germany into a war and drag this war out, create a war of attrition. Why? Because as this war drags on, it's going to create a lot of political tension back at home, especially if you're drafting young men to fight this war. Okay? And if that were to happen, eventually uh right-wing political parties, FD would come into power. And how does Putin know this? Because this has this has historically been true. This this is what happened in Russia during World War I when the came into power. It almost happened in
48:48 Germany. Okay. When communist almost came to power in Germany. All right. So war creates political tensions and the the longer the war drags on uh the more the greater the tension is. Okay. So basically what Putin wants to do is create a civil war in Europe, allow these right-wing pro-Russia parties to come into power and then form an alliance between Europe, Germany and Russia. Okay. So um part one of the plan is to create as much political tension in Southeast Asia as possible by using North Korea. Part two of this plan is go to war with Europe in order to destabilize Europe politically and allow these right-wing
49:33 parties to come to power and then form an alliance with them. Okay. All right. Now, let's go on to the global south. Okay. So the thing about the global south is that Russia has been very supportive of the global south especially countries in Africa. Okay. Um after war started when Russia invaded Ukraine support um for Putin in the global south increased dramatically as this map tells you. Okay. Now the question is wait a minute here Russia
50:21 invaded Ukraine. So why would people around the world support Russia? And the answer is because of narrative. Okay, from a western perspective, Ukraine is this innocent country and Russia is the aggressor. So clearly Russia isn't wrong. But if you are not part of the west, if you're part of the south, what you will appreciate is that the west is this imperial bully and Russia is standing up for itself. Okay? NATO NATO was expanding too far. uh Ukraine was being co-opted by the west and so Russia was trying to defend itself and thank God that Putin and Russia and Russia now can set up against the Americans. Okay?
51:08 Because we in the south have been bullied by the Americans all this time. So the support for the Russians are particularly high in Africa which has been subject to western imperialism for the past 20 years. Okay. So this is a level of cooperation uh between Russia and African countries. As you can see there is a lot of trade going on but at the same time there's also military cooperation. There's nuclear power plant construction. There's also oil exploration and nickel uh nickel production. Also there are a lot of Russian mercenaries Russian mercenaries in Africa. Okay. and they're usually fighting against USbacked groups
51:55 uh in order to control the continent. Um, China is also heavily active in Africa. The thing about China is that it's very much focused on economic development as opposed to military intervention. The Russians use a full spectrum strategy in Africa. So, they're trying to win hearts and minds. We know that because the Russians spend a lot of effort on propaganda. Okay? So the the Russian flag is where they they have propaganda efforts and you can as you can see China is not that heavily invested in propaganda in Africa. All right. So what Putin is also trying to do is
52:40 create a narrative that Russia is liberating the world from Western imperialism. And this has particular uh strength in place like Africa which has been vict which has been a victim of uh western imperialism for a long long time. Okay. All right. India. Okay. So India for the longest time has been neutral. So what's been happening is that India and Russia have becoming very very close. The impetus for their close relationship is after the war in Ukraine, Russian oil became sanctioned. So the way to evade sanctions was for Russia to sell its oil to India which would then sell its oil around the
53:27 world. Okay. So what what we'll see is a very strong relationship between Russia and India develop over next few years. What Russia wants from India are laborers. Why? Because um because of this war, Russia is now short of manpower. So it needs people to to run its factories eventually. It's going to win this war in Ukraine. It's going to need people to go build rebuild uh Ukraine. Okay. So what we can expect that Russia and India will become very very close these past these next 10 to 20 years primarily because Russia wants to invest in relationship between uh Russia and India. Um,
54:13 Iran is the key to Russia creating a new world order. Why? Because first of all, as you can see, Iran is really the center of global trade. So if um Russia wants to access Africa, it wants to access India, it wants to access Central Asia, Iran is very important strategically. Okay. It's also very easy for uh Russia to trade with Iran because of the Caspian Sea. Okay. All right. So, basically um Russia understands that Iran is the key
54:58 to uh global trade, Russia's global trade with the world. And that's why the Americans are actually attacking Iran. Because by attacking Iran, uh, the Americans can block Russia from global trade or at least destabilize it. Okay, that's why one of the major battlefronts this this actually probably one of the two major battlefronts in World War II. The first is obviously Ukraine which will be fought between Europe and Russia. second major battlefront will be uh in Iran fought between uh Iran and the United States. This is also why by the way Israel is so
55:45 important. Okay, Israel. Why is Israel so important? Because Israel is the fortress. Okay, the American fortress in this area. It's very possible that if put in place these cards right all these regions will fall into the Russian sphere of influence. So America's guar guarantee against Russian influence is Israel and that's why the Americans support Israel so much because issue is key to check it to keeping Russia in check. Okay, does that make sense guys? All right. Um
56:30 the the last thing I'll talk about is Japan. Okay. So the grand strategy of the Americans is to use Japan to balance China. The Japanese don't like this idea. Okay? Because for the longest time the Japanese have become were a vassel to the Americans and the Japanese made a lot of sacrifice made a lot of sacrifices to be the vassal state to America. Okay. But now you've created a situation where Japan has no choice but to remmilitarize and rethink its national priorities. The war in Iran is forcing Japan to rethink the global map. Okay. So this is so Japan is heavily dependent on energy energy imports and for most of
57:17 its history most of its recent history it was getting its energy from the Middle East. Okay. But obviously most of this energy is now gone. So now you have two options. You can either depend on Russia or the United States. Now you would think, well, I'll just Japan will just buy all oil from the United States. The United States certainly thinks so. But the last time this happened was before World War II. Okay. Japan before World War II was getting 90% of its oil from the United States. But Japan was becoming too powerful. And so the United States start to embargo Japan. Then Japan had no choice but then to go invade Southeast Asia for its oil and attack the United States. Okay, does
58:02 that make sense? So Japan does not want to put put in a situation where it's completely dependent on Americans for oil because the last time this happened, it didn't really work out well for Japan. Okay, so Japan has no choice in this matter but to yes buy American LG, but also to try to smooth things over with Russia to start buying more oil from Russia. Okay. The other problem for the Japanese is that for the longest time they've been buying US treasuries. Okay. So, you can see how China um yes, China's addicted to US dollar, but they recognize that the Americans aren't that dependable. Um they're printing too much money. They're too much in debt. So, the Chinese have been selling US dollars, US
58:49 treasuries. But the Japanese have been increasing um buying US treasuries. Why is that? Why is it that US treasuries aren't worth as much money as before, but the Japanese continue to buy US treasuries? And the answer is because it's almost like a subsidy or a bribe to the Americans. Okay? Right? Because the Americans have a lot of soldiers in Japan. So Japan is a colony and so what you do is you bribe your the Americans to protect you but also to just leave you alone. Okay? And
59:37 the way they do do this is something called the yang carry trade. Okay? And this is the silliest thing ever. Okay? But but let let me explain to you let let me explain to you what this is. Okay. So, what the yen carry trade is this. Japanese banks will lend money to Japanese corporations at 0%. Okay? Basically, three money. So, if you're a big Japanese corporation and you want union money, you just go to the Japanese bank and they'll give you money at 0% interest. What this means is you can take this money and then go buy US treasuries. Okay, your treasuries
1:00:22 at 5%. Does that make sense? All right. And so that that's what's led to the surge of Japanese buying of US treasuries because it's free money. It's literally free money. But the problem is that as you can imagine, this is causing huge problems for the Japanese economy. Okay? Okay. And as as the political geopolitical situation gets worse and worse, Japan has no choice but to repatriate its money back from the United States. Basically selling US treasuries. Okay. So what America needs to do is basically force these countries like Japan, China to continually buy US
1:01:07 treasuries. And that's why we have this war in Iran. Okay. to really control the world's energy supply and time is running out for America. Okay. The reason why is that as more and more people sell US dollars, as more as more and more people refuse to buy US treasuries, certain problems arise. Okay. First is the um debt interest. So right now the debt is at $39 trillion. Let's assume the interest is 5%. That means
1:01:53 that the Americans have to pay two $2 trillion in interest payment alone. Does that make sense? Okay, that's a huge problem. Second problem is that as people refuse to buy US treasuries, you need to give them a higher interest rate. Okay? So right now 5% it has moved up to 6%. This is this is a disaster for America. Okay? So America needs to basically act now. Okay, it needs to move down the treasury rate. Okay, the way
1:02:39 you move down the treasury rate is by forcing people to buy US treasuries from you. Okay, so this is a war that's going on between Russian and America, between Putin and Trump, where Putin is trying to get people to not buy US treasuries and Trump is trying to force people to buy US treasuries. Okay? And this is a war that's being fought right now. Okay? Any questions about what's going on? Okay. How will America become or how will America end if like the world and America is so addicted to US dollars? >> Wait, wait. Could you ask that question again? >> Uh, how will America end or or like how will America be if the world and America
1:03:26 are still addicted to US dollars? because it is an addiction. Okay. It's free and easy money. >> Yeah. But but like what will America become like if this trend continues? >> If this trend continues with this addiction. >> Yeah. >> Okay. All right. So right now if these trends continue okay there's certain problems that arise okay the first thing is that America will print more money
1:04:12 okay so the debt $3900 will continue to increase and then the world's going to think you can't actually pay this off, right? So then what happens is that people stop buying US treasuries, then the interest rate goes up in order to get people to buy more US treasuries because if you don't do that, if people don't buy US treasuries, you go into default. Okay, so what does default mean? Okay. Well, um, let let me explain how the system works. Okay. First, so first of all,
1:04:58 it's a Federal Reserve that lends money to the US government. Okay? So, there there are different buyers of US treasuries, but the Federal Reserve is the biggest buyer. All right? So let's just say you owe a China has a trillion dollars in US treasuries and United States says to China, you know what? We're not going to pay you back. Screw you guys. Okay, does it matter? No, it doesn't matter. Who cares? Okay, the Federal Reserve is a different problem. Why? Because let's just say you owe the Federal Reserve $10 trillion. Okay, where where does this money come from? It comes from private banks.
1:05:47 Okay. And who puts their money in the banks? The people put their money in the banks. All right. So in other words, the American government has borrowed its money from the American people. So if the American government were to default on its debt, the American people would lose all the money in the bank. And what would you and what would that happen? And so what would happen after that? a revolution would happen. Okay? In other words, it is impossible for the US government to default on this debt. It would create a revolution in America. The government would collapse. Does that make sense? Okay. So, now you're just forced to
1:06:34 um get China to buy two $2 trillion. Do you understand? Because you can't force the because you because you cannot default the debt domestically because everyone in America will lose all their money. Okay? So the only thing you can do is go overseas and force people to buy US dollars from you. And you do that through war, right? Does that make sense? Okay. So Putin understands that all he has to do is stop foreign countries from buying US dollars and America will collapse it in itself because because the economics doesn't make any more sense. Okay. It's impossible for you to pay all that that interest pay payment. Okay. So that that's a stark crisis that America's facing right now. Okay. Any
1:07:21 more questions? Yeah, Alan. So I'm curious about like even if Russia really this collapses systems of current global economies like what will be the new position position of Russia's like what what is the precious commodity of Russia that can maybe give give it the power to maybe lead the world. >> Okay. So, we're assuming that anyone someone wants to be the new leader. And the reality is that it's actually stupid to be the world reserve currency. It's silly to be the world leader because now you're just forced to spend all your resources on defending your position in the world. Okay?
1:08:07 >> It's like being a high school bully. Well, being a high school bully sounds cool, but now you have to go fight everyone in the school. Okay? So, no one actually wants to be the world leader. And America doesn't even want to be the world leader. It's just stuck being the world leader because of these historical accidents. It doesn't make sense. >> So all basically all Russia is trying to do is it's trying to get rid of the school bully. Once you get rid of the school bully, there's no more bullies. Okay? Which which means I I can do whatever I want now. More freedom for Russia. Now that doesn't mean that Russia will be peaceful. Russia is going to go is going to exert its power where it can, but it will have more freedom of of movement. Okay? It sees America as its greatest threat. And so Russia wants to get rid of America.
1:08:55 China's different. China appreciates that historically its neighbors have been very aggressive. Okay. Who who are who are who are China's neighbors? The Japanese, right? The Russians, the Vietnamese. They're very aggressive people. So if I'm China, I would prefer America to be the global policeman, to be the high school bully, right? Because honestly, if America's not the high school bully, someone else is going to be the bully. And I much rather deal with America than with Russia. Okay? So, so that's why the relationship between Russia and China is much more tenuous, much more unstable than people believe it is. It is in the mutual benefit of the two to get along
1:09:41 right now, but in the long term there's eventually going to be a divorce because their interests don't actually converge to together. Okay. So, um Putin's plan is just be is to remain good friends with China. He knows that China in the long term is going to side more of America than with Russia. But in the short term, Putin can do as much as he can to make China his friend. Okay? So he needs China to be neutral. The worst thing that can happen is that China sees Russia as a threat and China, United States got together to defend the system. Okay. Doesn't doesn't make sense. >> Yeah. >> Okay. Uh a further question is like does
1:10:28 the collapse of economic systems well affect the global police uh positions of America because I think we previously said that this global economy system basically build on the Americans uh military powers but even though this systems collapse financially it doesn't means that the military power of American decrease then I why then the like the Russia will get its like freedoms to move Then, >> okay, look, the reality is that your military comes from your nation state. Okay, your military comes from your nation state. Why? Because it's your nation state that provides the weapons, the manufacturer of the weapons, the people, the sold to
1:11:14 become the soldiers, the financing. Okay? So, let's just say this nation state is in a revolution where the people are fighting a war against the government. The military has no choice but to retreat and try to crush this revolution. Okay, does that make sense? So, America doesn't have the interest in defending the world if it entire nation is falling apart. That's just silly. It has to retreat. Okay. Okay. And it's possible that America is so stupid that it military um stays overseas. But if that would happen, then the military would need would still need a nation state. Okay. And so he needs now to move from America to different nation states. And I imagine that if that that were the case, the milit
1:12:00 military would split off and and form help um support three other nation states which are Japan, Germany, and Israel. In other words, different theaters of American military would find a different nation state as their host. Okay? So the American forces in East Asia would go and support Japan. In Europe, they go support Germany. In the Middle East, they go support Israel. All right. But they need a nation state as their host. Okay? Clear? All right. So, next week is the final examination. So, if you're on YouTube, you're watching YouTube, please post your questions in the comment section and my wife, my beautiful wife
1:12:46 will select um the very best. Okay? All right. See you guys next week.
