Top Three Videos – July 17 2023

China and the US are engaged in a global techno-industrial war, with tensions arising from competition over finance, data, supply chains, and military alliances, leading to a complex power struggle and potential shifts in global power.

Quick Summary Bullets:

Global Power Dynamics and Alliances

• The global power struggle between the US, China, and Russia is complex and involves different alliances and interests.
• The US and its G7 allies dominate the credit or money aspect of the global system, exerting influence through control over the financial system and global regulation.
• The influence of private wealth and oligarchs in the global system is a new wrinkle that doesn’t always align with state capitals, as their first-order motivation is to protect their massive amounts of capital and influence jurisdictions to protect their interests, even if it means corrupting Western democracies.
• “China fundamentally wants to change the security architecture in the Western Pacific, while the US wants to prevent that from happening.”
• The US’s global military presence and focus on securing trade routes could make them vulnerable to China’s military advancements, especially in the next three to five years, creating a dangerous window of potential conflict.
• “You want to try to do everything you can to amplify your actions… You want it to be amplified by its effect on everyone else.” – The goal is to maximize the influence of actions by affecting others, emphasizing the interconnectedness of global power dynamics.
• “The biggest divergence in possible scenarios is whether we avoid war with China or engage in a hot war, with technological and financial warfare being potential factors.”
• The question of whether the US can avoid an acute conflict scenario with China in the next three to five years is crucial, as even without a conflict, there are still structural factors and challenges to navigate in the US-China relationship.

Geopolitical Competition and Information Control

• “Modern States rely on controlling Capital flows, Supply chains, and the most Advanced Technologies to accrue and project power in the era of great power competition.”
• Data and information have become significant elements in the geopolitical competition, with intense competition over control and influence over data networks, as seen in China’s control over information flow through the Great Firewall and concerns about misinformation.
• The war between the US and China is about controlling money and information, with states investing in strategic influence operations to shape policy making and public perceptions.
• The pandemic has highlighted the US’s heavy reliance on China for production, emphasizing the need for a more self-sufficient approach in order to avoid vulnerabilities in the future.

Technological Advancements and Security Threats

• The traditional management structure, developed during the era of mass production, may not be suitable for the information age.
• China’s model of “authoritarianism as a service” leverages surveillance and AI tools to efficiently manage an authoritarian structure, raising questions about the ability to centrally control a complex society using technology.
• China’s strategy is to create a digital currency system that bypasses the traditional correspondent banking system, allowing for direct central bank-to-central bank transactions and atomic settlement of currencies.
• China’s cyber army poses a significant threat to the US, as they are patient, persistent, and heavily investing in resources to establish persistence in the advance of a potential military conflict.

Transcript Summary:

• 00:00 China and the US are engaged in a global techno-industrial war, competing for control over finance, data, supply chains, and military alliances, with tensions arising between open discourse and concerns about foreign influence and deception.
  • China and the United States are players in a global game of risk, and the interview with Matthew Pines explores the Techno industrial War, the division of the world, the potential for war and supply chain disruptions, and the future of the dollar reserve status and inflation.
  • The global techno-industrial war is characterized by great power competition, where modern states rely on controlling capital flows, supply chains, advanced technologies, and networks to accrue and project power.
  • China and the United States are competing for control over networks of finance, data, supply chains, trade relationships, and military alliances, with China attempting to displace or co-opt the existing networks dominated by the United States.
  • The competition between nations for controlling information and data has intensified with the advent of global technology platforms, allowing for faster and more targeted operations to shape public perception across borders.
  • In a global world with intense state rivalries, tensions arise between open free discourse and consumer concerns about foreign influence operations and deception by parties controlling algorithms, as technology advances faster than our political structures.
  • The speaker discusses how the management structure of mass production and assembly lines has not evolved to fit the current information world.
• 08:02 The tension between technology and political institutions is leading to a bargaining process, with China showcasing its governance model, technology causing decentralization conflicts, and a complex power struggle between the US, China, Russia, and the global South shaping the global power shift.
  • The tension between the fast pace of technological change and the ability of political institutions to adapt is leading to a bargaining process between private sector actors and regulators, raising the question of how to balance the need for transformation with the potential obsolescence of outdated structures.
  • China is attempting to demonstrate that a central government can effectively govern a complex society using technology, offering to help other countries transition into the digital age while maintaining tight control, while in the western system, the concentration of data in the hands of big tech firms and government agencies challenges the democratic ideal of equal opportunity.
  • Technology is causing a shift towards decentralization while governments continue to grow and centralize, creating a conflict between the two forces.
  • Moss discusses the complex power struggle between different players on the global stage, including the US, China, Russia, and the global South.
  • The global power shift is shaped by the dominance of the US and its G7 allies in credit and finance, Saudi Arabia and Russia in commodities, and China in production, with each of these power blocks deploying their influence through financial control, raw inputs, and manufacturing capacity.
  • The breakdown of the global system is evident in the strained relationships between the US and Russia, as well as the tensions and restrictions on trade and technology between the G7 and China, with private wealth now playing a significant role in influencing geopolitical progress.
• 19:20 The tension between venture capital, private equity, and Wall Street’s trade interests with China and US national security concerns is causing a complex situation, with escalating trade wars, tariffs, and restrictions on technology supply highlighting the US’s heavy reliance on China for production.
  • The tension between the interests of venture capital, private equity, and Wall Street in maintaining trade relationships with China and the national security concerns of the US government is causing a divergence in opinions and creating a complex situation.
  • China and the US are competing for power, with tensions escalating due to trade wars, tariffs, sanctions, and restrictions on technology supply, highlighting the US’s heavy reliance on China for production.
  • The US and China are engaged in a retaliatory trade war, with the US restricting China’s access to semiconductor production equipment and talent, and China retaliating by controlling the supply of critical commodity inputs.
  • The US-China relationship is currently in a state of posturing and negotiation, with both parties recognizing the need to stabilize the relationship this year before it likely deteriorates again next year during the presidential campaign season.
  • There is a debate about whether the US and China can coexist peacefully, as China wants its own sphere of influence and wants to change the current security architecture in the Western Pacific, which the US opposes.
  • The US-China relationship is in a structural downtrend because China wants to rise and the US wants to hold them back, creating a conflict that needs resolution.
• 25:29 China’s struggle to catch up with the US in advanced technology may lead to aggressive actions, while their dominance in patents doesn’t translate into successful commercial products; they could potentially surpass the US in military capacity, and a financial attack could lead to mutual destruction.
  • The US and China are engaged in a zero-sum mentality regarding high technology, with China facing an existential challenge as it tries to catch up and the US taking actions that border on economic war, potentially restricting China’s access to critical technology.
  • China’s ability to catch up with the US in advanced technology, specifically in the semiconductor industry, is difficult without the US’s help due to the complexity of the global supply chain and the extensive research and development required.
  • China’s inability to catch up with the technological frontier may lead to aggressive actions in order to prevent others from accessing the technology, and the question of whether China’s political and cultural structure can cultivate the necessary creativity and development remains.
  • China has excelled in generating technological ideas and patents, but struggles to translate them into successful commercial products due to limitations in their domestic market and political constraints.
  • China may not be able to dominate the tech industry, but they could potentially surpass the US in military capacity in the near term, posing a threat to US global power.
  • Chinese-owned banks have trillions of dollars in offshore bank accounts, and a potential financial attack could easily occur, leading to a mutually disturbed destruction scenario.
• 35:07 Chinese entities strategically invest trillions in Western assets to gain influence, potentially corrupt political processes, and exploit vulnerabilities in the global financial system, while the launch of Fed Now may facilitate malicious bank runs.
  • Moss believes that the use of a weapon in a conflict scenario will always come with a cost, but that doesn’t mean it won’t be launched if it is strategically justified or has a high chance of victory.
  • Chinese entities have been using two routes, the official route and the creation of sovereign wealth funds, to redirect their dollar surpluses from US Treasury Securities into strategic assets in order to secure influence in the global South.
  • Chinese entities use covert mechanisms to invest trillions of dollars in Western assets, allowing them to gain influence and potentially corrupt political processes in Western democracies.
  • Western financial institutions have a vulnerability in their thin cover on outflows, as seen with Valley Bank, where Chinese investors had billions of dollars in deposits backed up by the FDIC, revealing a potential weakness in the global financial system.
  • The launch of Fed Now may make it easier for someone with malicious intent to trigger a bank run by quickly moving large amounts of money between banks, potentially causing vulnerability and a multiplier effect.
  • Amplifying actions through propaganda and big transfers is important to have a multiplier effect and impact others.
• 42:34 The US is taking actions to secure the dollar’s control and shift away from LIBOR, while China is developing its own technology system and trade network to create a non-dollar clearing system, and Bitcoin and stablecoins offer financial freedom in emerging markets.
  • Jerome Powell’s actions may be aimed at securing the dollar’s control and draining liquidity and leverage, potentially affecting the structure of the banking system and the US economy.
  • The shift away from LIBOR as a benchmark interest rate was driven by the realization that it was controlled by a consortium of bankers in London, leading the US to want to shift control to SOFR in order to have more influence over the money markets, with COVID-19 accelerating this strategic imperative.
  • The money system is fundamentally geopolitical, with the growth of the euro dollar market and US dollar backed stable coins playing a role in spreading the influence of the dollar globally, despite initial suspicion and ignorance from the US government.
  • China is developing its own technology system, including Huawei routers and ZTE surveillance systems, as well as a digital currency control system, in order to create a non-dollar clearing and settlement system that bypasses the traditional correspondent banking system and allows for direct central bank-to-central bank transactions.
  • China’s strategy is to use its trade network to bootstrap its central bank digital currency (CBDC) network, similar to how Zuckerberg used the Instagram network to bootstrap a social network.
  • Bitcoin and stablecoins offer citizens in emerging markets a more attractive and aligned alternative to their local currencies, as they allow for greater financial freedom and protection against corrupt governments, which is in line with American ideals.
• 55:09 Cyber attacks and vulnerabilities in global systems, including supply chain attacks like the SolarWinds hack, pose significant threats, with nation states like China and the US engaging in cyber warfare and potentially causing widespread disruption and economic collapse.
  • Moss dismisses the idea of a cyber pandemic as a fantastical scenario created by non-experts to draw attention, stating that it is not a technical term in the security field.
  • Global systems are digital and rely on bad code, making them vulnerable to supply chain attacks like the SolarWinds hack, which exposed critical software used by various companies and even the US Treasury.
  • Accidental cyber attacks and vulnerabilities in systems pose significant threats to global networks, with financially motivated threat actors exploiting ransomware as a service as a major business.
  • Nation states pose the greatest strategic threats in cyber warfare, with potential catastrophic events such as a US-China conflict in the South China Sea having a cyber component that can quickly escalate from a nuisance attack to a strategic attack, causing widespread disruption and economic collapse.
  • Our systems are inherently fragile and vulnerable, constantly being patched up due to frequent cyber attacks and supply chain attacks, which poses increasing strategic challenges and closes the virtual distance in state competitions.
  • China’s cyber army poses a significant threat to the US, as they invest heavily in hacking and establishing persistence in critical infrastructure, while the US also invests in cyber warfare but lacks the numbers of skilled hackers that China has.
• 01:04:15 Moss discusses the potential power shift between the US and China, including supply chain disruptions and inflation, and invites viewers to consider various future scenarios and share their own conclusions on the complex nature of US-China relations.
  • In the context of Ukraine, the speaker discusses the concept of digital government exile, where a government can move its servers out of the country to ensure its functions continue to operate even if the physical capital city is invaded.
  • The speaker discusses the possibility of a power shift between the US and China, with potential supply chain disruptions, breakdowns, and higher inflation, and questions whether the conflict will be primarily technological or escalate into a hot war.
  • China’s potential military conflict with the US over Taiwan could lead to supply chain disruptions, inflation, price controls, capital controls, and a less dominant US power, but there is also a possibility of the US giving up Taiwan and maintaining a quasi-nuclear alliance with Japan and South Korea.
  • The next decade will be marked by major political dynamics and the resolution of imbalances in wealth distribution, inequality, and energy issues, potentially through the transfer of money from older generations to younger generations.
  • Possible future scenarios, such as supply chain disruptions, inflation, and monetary debasement, should be considered, as unexpected events like a Russia invasion or a China war can drastically alter the course of events.
  • Moss discusses the complexity of US-China relations and invites viewers to share their own conclusions on the future, while also encouraging them to like, comment, subscribe, and share the video.