#144 Erik Bethel - TikTok Spies, Blockchain Technology and China's #1 Goal
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I have been looking forward to this since General Spalding introduced us, I believe, what, a couple months back. Yeah, yeah. Great guy. Thank you for coming. I'm glad to be here. Look, Tom, so we have a lot to talk about. I want to cover a little bit of your life story and then move into World Bank, which we'll get into, and some geopolitics stuff.

All right. But everybody starts off with an introduction. So here we go. Eric Bethel, you're a global finance professional with experience in the private and public sectors. In 2020, you were nominated to serve as the U.S. ambassador to the Republic of Panama. You were nominated by the president and confirmed unanimously by the Senate to represent the United States at the World Bank.

At the World Bank, you participated in the analysis and deployment of over $100 billion of capital through grants, loans, equity investments, and other financial products.

You were previously the managing director at Franklin Templeton Investments. You also held a variety of emerging markets-focused private equity and investment banking positions at J.P. Morgan and Morgan Stanley in both New York and Mexico City. You are currently a partner at Mare Liberum. Mare Liberum, excuse me. It's Latin for freedom of the sea. Freedom of the sea. Yeah. Love it.

A venture capital fund focused on maritime sustainability. You're a husband, a father of three, and a devout Christian, as I found out last night. And am I missing anything? I think you got it, man. You put me in the higher tax bracket, unfortunately. Oh, man. Well, that's quite the introduction. Very impressive. And I'm just...

ecstatic to have you here. Glad to be here. Thank you. And, you know, we had, we were kind of talking about General Spalding and his, his venture with, do you remember, I can't, Siempre? Yeah. The, the... Hardened telco equipment company, yeah. Very fascinating stuff. Are you worried about, do you worry about data collection and all that kind of stuff? I mean, who doesn't? What do they do with the data?

Who's they? That's the question. Yeah, who is they? Where's our data going? What is it? And why is it so intrusive? Look, I think people over the last, I would say, 10 years, perhaps longer, believe that if you give yourself... Let me back up for a second. There's a guy who wrote this book called Life After Google.

Very, very interesting book. But basically what he posits is this. When you go on Google, which has the entire body of human knowledge, and you start accessing it, Google is monetizing you, your search history, your Gmails, your everything. What do they do with it? Well, in the case of Google, they sell it for ad revenue.

which is, you know, benign. But Alexa is doing the same thing. We had an Alexa in our home, and then I realized, wait, what are we doing? Why am I voluntarily giving all of my information over to someone? And those are U.S. companies that have legitimate businesses that are, you know, selling ads. Where I get a little bit more concerned is when you have folks like TikTok that are collecting information on your kids

And so the TikTok algorithm, which they didn't want to sell, so if TikTok goes and gets sold to, I don't know, Microsoft or Oracle or whatnot, the Chinese government has said the algorithm doesn't go with it. And so my concern, and history will perhaps prove me right,

is that when you are looking at a TikTok video, it's monitoring your facial expressions, the camera's looking at you, it's looking at your pupil dilation, and it's sending you videos that elicit the same response. And so after a long enough period of time, they know who you are as an individual.

Are you a divorced dad, you know, with three kids? Are you a 17-year-old that's, you know, that's troubled? And all of that information is going to a firm in China called ByteDance. And who knows what ByteDance is doing with it?

And who knows if they can inject things in the video feeds that make you think a different way. Maybe make you think a different way about your country, about your value system, about China. Maybe it encourages people to accept the fact that China is going to win in everything. And we may just as well become accustomed to that.

That to me is frightening. I'm less concerned about Google and Facebook and so forth, although I don't want to voluntarily give my information away. And so what I've done over the last number of years is I don't use text messages. I use Signal. Even when I call my wife, I speak to her on Signal.

I use the Brave browser, which is phenomenal. Is that the best one? In my opinion, I think it is. So what they've done is they've stripped out all the ads, and then you get to opt in. In other words, if you want to see ads, you opt in, and when you do that, you can get BAT tokens. So you can get paid for looking at ads. But if you don't want to look at ads, you don't look at ads.

And it's the closest thing we have to a private browser that's out there. Interesting. I don't use Google. I use DuckDuckGo, although that has its own share of problems. But it's not perfect, but it's one of the better ones out there. So that's what I do because I care about my privacy. And having lived in China for eight years, I'm very concerned about privacy.

malign influences looking at who I am. It's not like I have anything to hide or anything, but I just don't like it. Well, I got you a little present. You did? I did. I did. Because... Is it a black buffalo dip? It is not. But it is a unplugged

UpPhone. Cool. What is this? That is, are you familiar with Eric Prince? I am. Eric Prince developed a phone with a couple of partners. One of the guys on the project was on the development of, what is that virus? Pegasus. Okay. Was on this project as well. But basically, that keeps your data up.

it sounds like. So the data is stored in the phone? I don't know exactly how it works. Let's see where it's made. Made in China. No, just kidding. But I believe it's... I believe it's...

I think it's... So it's like a privacy phone. It is. So there's a kill switch on there. So even when you turn your phone off, people think it's actually off, but it's actually still listening. What do I do? Do I just put in my SIM card? It has a kill switch. And so you flip the switch and it automatically puts a blocker between where the battery connects so nobody can listen in. Wow. Instead of having to put it in a Faraday box. There's a quick suite that'll... It's like a little menu that pops up and...

basically what it does is you can control your VPN and all these different things from one menu. And it won't, even if you do download Instagram, Facebook, TikTok,

It will not allow those apps to track your phone when you're not using the app. You can actually, that's on that menu. You can block it. So anyways, I just thought you might appreciate that. So a couple of months ago, I met Eric Prince randomly. I didn't know him before. And I was walking through the lobby of a hotel, and I see this dude working on a computer. And I say to myself, okay, cool.

"That guy looks like Eric Prince." I didn't think about it. I had my cup of coffee, I had a business meeting, and when I went back, he was still there. And I stopped him and I said, "Hey, are you Eric Prince?" He's like, "Yeah." I was like, "Hey, nice to meet you, man. What are you doing here?" Like, you're just like randomly sitting in the lobby. He's like, "Well, I'm countering illegal fishing and I'm working with a South American country and we're gonna board Chinese fishing boats in like some country in South America." And I thought, "Okay, cool."

That guy's always up to something. But yeah, that's the unplugged phone. All right, thank you. You're welcome. But next question. I got a couple of just random questions here before we kick it off with your life story. But what is the World Bank? Oh boy, how much time do we have? Is this like a five-hour, one of these five-hour interviews? I can go on forever and ever. But I'll distill it to the more salient point. So I'll give you the Cliff Notes version.

It starts with history. After World War II, Europe was decimated. And so the United States decided to create a vehicle, an institution, to originally, that's the origin of it, to rebuild Europe. And I think the first loan was to France, if memory serves, and it was like $100 million. Over the years, after Europe was rebuilt,

the World Bank moved into another category, which is, we want to eliminate poverty and to promote shared wealth creation, shared prosperity. So that was the World Bank and is the World Bank as I joined it.

So what the World Bank does is... Is it a private institution? No, no. It's a multilateral institution that's owned by a bunch of different countries, almost every country in the world, with the exception of, say, like Cuba, North Korea, folks like that. Who would be the country with the most shares? We are the biggest shareholder. We are, by far.

And so it's different than the United Nations. At the UN, it's one country, one vote, right? So a small country in, you know, some, you know, Southeast Asia might have the same vote as the United States. At the World Bank, we started out with a very large shareholding, and that has whittled down, I think we're at about 16% or so. How does it whittle down? So there's a formula. It's called the dynamic formula. It basically works like this.

Your shareholding is a function of two factors. One is your growth of your economy, your GDP growth, and the other is how much you contribute to the bank. It's 20% based on contributions and 80% ballpark. My numbers may be off a little bit, but it's 80% based on how your economy grows.

So what's concerning is that for years and years and years, China's economy has been on a plane like that, and the United States has sort of stayed like this. And so China has not contributed very much until recently, but yet their shareholding grew exponentially. I'm not sure why that is, because we contribute far more than any other country, but it is what it is. So are they the second largest shareholder?

They would have been, but they're not. They're probably, and I say would have been because there were some changes four or five years ago that prevented them from being the second largest shareholder. And it was most likely for that reason that they created their own version of the World Bank called the AIIB, the Asia Infrastructure Development Bank. So they have a competitor to the World Bank.

And that's why they did it, most likely. But the bigger shareholders are after the U.S., Japan, a number of European countries, and it sort of goes down from there. And so the mission of the World Bank is to? Promote shared prosperity and to eliminate poverty.

How do they do that? Invest in countries? Yeah. So if you think about the cap stack, well, I'm using technical terms, but if you think about ways in which you can contribute money, you can do it through loans. So the World Bank can loan money to governments. Okay? Track one. Track two is you can provide money in the form of grants. Grants are free money.

You can provide loans to companies in certain countries. You can invest in equity. You can provide a loan guarantee. A loan guarantee is if the loan doesn't get repaid, the World Bank will guarantee it. Insurance products. So think about everything that you can think of in finance or markets, and the World Bank does it. And this is to help countries? This is to help countries get out of poverty. What does the World Bank get out of it?

I mean, look, the World Bank is a phenomenal institution and there are a lot of well-intentioned people. But there are a lot of, you know, I'm going to go with a number here. There are probably 13,000 to 15,000 people full-time at the bank. What they get out of it is a great job. And there are probably another 15,000 consultants. And so that's what the World Bank gets out of it. Plus,

There are a lot of very well-intentioned, very good people working at the bank who really care about solving poverty. They could have gone to the private sector. They could have gone to J.P. Morgan or Goldman Sachs, but they said, no, this is what I want to do because it's meaningful to them. But sometimes, you know, Charlie Munger, who was Warren Buffett's business partner for years, has this famous quote that said something like,

Show me your incentives and I'll show you the outcome. And so we put hundreds and hundreds of billions into emerging markets and developing markets. In some cases, we've seen change, but in many cases we haven't because there's a misalignment of interests. Let me explain what that means. If you're a desperately poor country, right, you get grants. Grants are free money, as I mentioned earlier.

But as you move up the poverty scale and you get yourself out of poverty as measured by GDP per capita and a few other factors, then you graduate. You don't get the free money anymore. You get into the loan program. And so desperately poor countries are like, "Hmm, do I want the more—do I want free money more or do I want to get a loan?" So they, like, don't necessarily want to graduate.

I'm certain people are going to say, "Oh, Eric, you're being silly." I mean, of course everybody wants to get out of poverty, but the incentive structure isn't aligned for that. And then once you're in the loan program, you're getting very inexpensive loans. The LIBOR, whatever, the prevailing rate of interest plus a few basis points, right? 10 or 15 basis points.

50 basis points, even 80 is pretty good. That's 0.8% on top of the prevailing rate. That's pretty darn good. But once you graduate out of the loan program, then you have to go to the markets and the markets price you at 800 basis points over the prevailing rate. So the folks that are in the World Bank loan program don't want to graduate. And so we've created a system where everybody wants to stay in their box and they don't necessarily want to leave.

And then many, not all, but many of the World Bank employees are like, "Hey, you know, this is great. I got a great job. And I'm not really incented to, you know, to change things." And so, you know, it becomes a challenge.

Interesting. And I say this, you know, a little bit with a heavy heart because what do we all want to do? We all want to get people out of poverty. I mean, there are people that are living on less than a dollar a day, right? So what if we were to create an incentive system, not like the current one, but where we actually reward the individuals at the bank and we reward the countries for getting out of poverty? Fix the incentives. How would you do that?

There are a lot of ways. But it would require a big restructuring of the World Bank. I mean, you would have to incentivize the individuals working there to show results. You show me a result, a tangible result after a given period of time, and you get a reward.

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We see this in our own country, right? Nobody wants to... Those that don't want to work are not going to work. They're going to take from the system. And so is that kind of what's happening here? Look, I think it depends. It's a country-by-country basis situation. You have some countries, and by the way, not every country is either monolithic

nor are they, you know, they've got election cycles as well. So you can have good leaders, you can have bad leaders, and it's, you know, every five or six years, you know, things may change in a given country. And sometimes you have leaders that are really trying to make a change, and they're trying to do good for their country, and the World Bank can be extremely effective in doing that. In other cases, there's a lot of inertia, and a lot of the World Bank loans have been pre-programmed in, you know, years earlier. And so...

So you never know what you're going to get. And so the bureaucratic inertia and the momentum is like, oh, we just check boxes and country X gets a loan. My beef at the World Bank was really focused on China. And we can get into that a little bit later. But while I was there, things have changed somewhat. While I was there, China was one of the largest recipient of World Bank loans.

Really? Yeah. Interesting. And so I sort of scratched my head thinking, well, wait, isn't China the second largest economy in the world? Aren't they building, you know, quantum communications in space? Don't they have the largest venture capital pool? Like, what's going on here? And what I came to realize was it was part of an elaborate ruse,

such that if China gets World Bank loans, they're considered a developing country. If you're a developing country, then what? Then you get favorable treatment at the World Trade Organization and the entire alphabet soup of UN agencies, including things like the Universal Postage Union, which nobody's ever heard of and nobody seems to care about, but it's actually important. So the Universal Postage Union is a...

one of the offspring of the UN system that regulates freight rates around the world. So if you're a developed country, you pay in. If you're a developing country, you get paid. Follow? And so if China's a developing country, then their freight rates are subsidized and they can export more. So that's one of a zillion examples. And it's wrong. Does that mean they're getting paid to ship all the fentanyl supplies here?

Yeah, don't get me started. Yeah. We'll get you fired up later on that. All right. But is there, can you name a, is there any particular country that was a wild success story from the World Bank? Maybe...

I think you can look at most of central/eastern Europe, who 30 years ago were in pretty dire straits, and through the help of the World Bank, they are where they are. Okay. So that's exhibit A for countries that have taken World Bank money, done something successful with it, and then moved on. And many of them are out of the World Bank. They've graduated. Okay. And by the way, there's dignity in graduating.

staying in an impoverished country for the rest of your existence is not necessarily, you know, what I would want to do. Yeah, me neither. Well, thank you for sharing that.

One last thing before we move on. I have a subscription account on Patreon. They're our top supporters. They've been here since the beginning. And without them, I wouldn't be sitting here and neither would you. So one of the things I do is I offer them the opportunity to ask the guest a question. They had a ton of questions for you. I narrowed it down to two. All right. But this is from Craig Bowden.

Do you see the World Bank, the world going back to a gold-backed currency standard? No. This is from Joseph Barnes. Is there a more sinister plan for digital currencies to gain more economic controls of Americans as a whole? Is this part of the Obama administration's plan for a global government economy? Central bank digital currencies are evil and bad.

in their current incarnation, as exemplified by the ECNY, the Chinese digital currency. We could theoretically in the United States adopt a different type of currency that provides privacy and security if it's done the right way. If it were me, I would just stick with

and regular bills, dollars, and coins. But if we were to do a central bank digital currency, the way I would do it is to create what's known as a bearer instrument, which in finance terms means if you bear it on your body, it's yours, right? Which means nobody can take it away. And if you could create a decentralized, this is going to sound crazy, a decentralized central bank digital currency,

that provides people with freedom and privacy, I think you've got something. What we want to avoid is a digital currency in the US or in the Western world that basically creates a pseudo-benevolent relationship between the government and the people. And what I mean by pseudo-benevolent is, what if we had a currency that said,

that monitored your fuel purchases, as we discussed, I think, last night. You drive a truck, you know, or an SUV. Well, in the interest of CO2 emissions, you can only fill it up a couple times a month. Or if you haven't gotten your 12th COVID booster, well, maybe your money isn't good at Walgreens. We want to avoid all of that. You want to have people to have agency and autonomy over themselves, over their currency, over their shopping habits.

You don't want somebody to know that you're, you know, what if you're buying something at the pharmacy that's private, maybe, you know, for one of your kids. You don't want anyone to know that. So as long as it's done that way, where you have privacy and agency in mind, great. If, on the other hand, it's designed the way China's digital currency is designed, which is attached to a social credit score, which I can talk about later, then it's totally frightening. It's George Orwell.

I can't wait to get into that. But we'll start off with where did you grow up? Where did I grow up? So I grew up in Miami. My mom fled Cuba when she was very young. She was maybe 20 years old with two young sisters. She had to flee with basically the clothes on her back because they would...

open up your baggage at the airport and take anything of value. So she was wearing, I don't know, five dresses, one on top of each other. She had a photo album and a Bible, and that's it. And she left with her two young kids, went to Miami with her two young sisters, moved to Miami and waited for my grandparents who were under house arrest.

My grandfather was the, I guess you would call him White House correspondent in this country. He covered Palacio Presidencial, which is, he was the guy that was in the presidential palace covering a lot of the news that came out of there. And so he was under house arrest for a couple of years. My dad was a U.S. diplomat stationed in Havana at the time of the revolution.

And my parents had met in Cuba at the embassy. And when they both ended up in Miami in sort of the early 60s, they reconnected, ultimately got married, and started me, started a family. And here I am. That is quite the story. What kind of diplomat was your father?

Great question. He was the press attaché at the U.S. Embassy, but he also relayed a lot of intel. Because being the press attaché means that you cover all the newspapermen, you know exactly what's going on in the country, and you can ingest all that information and then send it to the powers that be in Washington. So he did some intel work.

And also, you know, the face was, he was the press attache. When he left the diplomatic service, he did a number of things. He and my mom started a business, but it was unusual growing up in my household because my dad believed that I needed to speak Spanish. Spanish is my mom's native language, so I didn't really speak English until I was, you know, I don't know, in elementary school. - No kidding. - Yeah, I was in a, like,

English for ESL, like English as a second language kid, they'd look at me and say, "Eric, what is four plus three?" And I would say, "¿Qué? No entiendo." So you look like me and

And you only speak Spanish. It's kind of weird. But that's Miami. At least it's Miami today. Now it's normal in Miami. Yeah, yeah. And so it was unusual growing up in the sense that my dad would go off on trips and he would come back. He took a trip to Bolivia and he came back with this kind of weird looking soccer ball and

It was handmade and I asked my mom, "What was he doing in Bolivia?" And she said, "Oh, he was looking for Che Guevara." I was like, "Wait, what?" Like now I say, "Wait, what?" Back then I was like, "Oh, whatever. Hey, thanks for the soccer ball." So yeah, that was growing up. - Who is that?

Che Guevara? Yes. Che Guevara was, well, today you see him on, you know, three-quarters of college kids' T-shirts, but he was basically an Argentine Marxist who accompanied Fidel Castro everywhere. And he was a really bad guy. He was a butcher who shot people at the, you know, Cuban dissidents. And he was a pretty bad guy. And your dad was hunting him down. Hunting him down, yeah.

What was he gonna, did he find him? No, he was found somewhere else by other folks, but yeah. How old was your mom when she came to the US? 21. Did she pursue a career? Interesting, so my mom came from a very conservative household and my grandfather wanted her, like most girls of that era and that time, to settle down and get married.

And she said, "Well, what I'd really like to do is I'd like to study." And he said, "Study? Why? Why aren't you, like all of your other friends, getting married?" And so somehow she prevailed, and she got to go to the University of Miami. After two years of that, my grandfather said, "Okay, that's enough. These Americans are going to warp your brain. It's too liberal. Come back." So she came back.

- Grudgingly. This is in the '50s. - I wonder what he's saying now. - Yeah. And so she came back and she said, "I want a job." At which point my grandfather said, "What are you doing? What do you mean you want a job?" And the only place he thought that would be suitable for her was to work at the U.S. Embassy. So she worked at the embassy until the end of the revolution. And then, as I mentioned earlier, fled to Miami.

- Interesting. - So the sad chapter is that when I was very young, eight or nine, my dad passed away and my mom and I, I'm an only child, you know, we're struggling financially, big time. And, you know, we lived in, let's call it the barrio in Miami. We spent a lot of time with my grandmother in Hialeah, which is a suburb of Miami that's, you know, very blue collar.

Spent a lot of time with plumbers and electricians and by and large the Cuban diaspora. And so I grew up sort of feral in this world of Spanish-speaking folks that had to flee Cuba because of communism.

And it really made a lasting impression on me. What communism can do to a country and destroy a tremendous amount of wealth, not just physical wealth, but also human capital. And people really suffered. And so anyway, little by little, we sort of moved, you know, sort of like the Jefferson show back in the 70s, moving on up. We...

We ended up in another town called Coconut Grove and then ultimately to Coral Gables, which is a reasonably nicer suburb. And my mom decided to start a magazine company focusing on, you know, the airline seat pocket magazines, working for a—well, initially she was working for a U.S. company—

that did, I think, the magazine for Delta or United. And the Venezuelan airline at the time called them up, and these were a bunch of gringos, and they couldn't speak Spanish, so they put her on the phone and said, you know, "Hey, would you like to do our magazine?" And the gringos said, "Well, what do we know about Venezuela? We don't... This is really out of our comfort zone." So she asked, and they allowed her to pursue this, and she started Abord Magazine's Viasa.

And then subsequently she got the contract for the Chilean airline. At the time it was called Lanchile. Fast forward, you know, 20 something years later, she had almost every airline in Latin America. - Wow. - 800 million passengers at that time. And it turned out to be very successful. And she did it as a single woman immigrant

So she did. Wow. And so I couldn't be more proud of the fact that, A, we live in America. Anybody can make it. Number two, you know, you can just start a business and flourish and be successful as a woman, as a Latin, with no, you know, she didn't graduate from college, as a single mom, like, right on. Wow. Go America. That's impressive. Very impressive. Yeah. So...

But yeah, I didn't speak English for a long time. I still speak Spanish. I speak it very well. If you want to finish this interview in Spanish, I'd be very happy. How did your dad pass? He died of cancer. Oh man, I'm sorry to hear that. Yeah, and he was young too. So yeah, it was tough. Yeah, I'll bet. I'll bet. So what were you into as a kid? I think like most kids, I just hung out with my neighborhood friends. We rode dirt bikes and...

made ramps and crashed and skinned our knees and broke things. Hot wheels cars. Sports. Yeah, I was on the swim team. I was also once on the soccer team. Unfortunately, I was terrible. I remember this as if it were yesterday. I think I was

10 years old and I scored a team, I scored a goal for the other team. And my mother who was in the audience was like cheering. She didn't know, she's from Cuba. They don't play soccer in Cuba. And so it was very embarrassing. But yeah, a lot of sports, a lot of just doing what kids did back in the, you know, 70s and 80s. You're outside most of the time. You're building tree forts and you're playing with your friends and riding bikes. How was academics?

Pretty good. I was a little hyperactive as a kid, so sitting down and listening to boring and repetitive things was very hard. I always got good grades. At the time in my elementary school, they gave you three scores. There was the score that you got for your actual grades.

There was a number that they gave you for effort, and then there was a score that they gave you for conduct. And so I was always like an A1C, A1D. Like my conduct was always pretty bad, but it was just because I was fidgety and hyperactive. And so, yeah, that was hard. Yeah, yeah. Well, where did you go from here?

Where did I go from where? From school, from childhood. Well, I was fortunate enough to get into the Naval Academy. I went to, well, let's back up. I went to a high school in Miami called Belen.

Belen was the high school in Cuba. It was the high school. Actually, Fidel Castro went there. And probably five minutes after taking power, he kicked the Jesuit priests out. And they went to Miami. And they started Belen in Miami.

Which is interesting because even though it's a Catholic school based in the United States, it reports to the archdiocese of the Dominican Republic. It's not really an American school. No kidding. Yeah. And most of the kids, like me, were Cuban or Venezuelan. Today it's a lot of Venezuelans, but mainly Cuban. And as I mentioned, my conduct was not always good.

superlative, and I was a little bit of a troublemaker. And my mom at one point said, "You know what? If you don't behave, I'm going to send you to military school." And sure enough, she did. So I went to military school, and it was awful. And from there, I went to the Naval Academy. Why was it awful?

It's like you're in jail, man. For a kid who's hyperactive, it was a school in the middle of nowhere, and there was really nothing to do. There was no social activities. I did well in school. Don't get me wrong. I think I was like number three or four or whatever in the class. But it was academically I've always done well, right?

But it was, honestly, it was a very, very difficult experience, as one would expect military school to be. You don't threaten to send your kids to military school unless it sucks. But in my, you know, it was a school that was, the guidance counseling department wasn't very elevated in terms of,

They didn't, you know, I think I was going to end up at a community college or something. I didn't know where I was going to go. I had heard of these schools like Princeton and Georgetown. And so when the applications came in, I wrote it in. I didn't even type it. "I would like to go to Georgetown because it's a good school." Right? Stuff like that. No one gave me any guidance. And of course, I didn't get in anywhere.

And I was on the swim team at the school, and we swam against the Naval Academy junior varsity team. And I went to the Naval Academy, and I said, wow, I could go here? And what I saw at the Naval Academy was people who were proud to serve their country, leaders who would one day be responsible for important things like the life and death of the people that work for you.

And I saw a sense of nobility in not just, you know, it's a great school and it's got a number of academic accolades, but there was a certain sense of you're doing something with a higher purpose. And that really appealed to me. So I transitioned from all these other schools where I wasn't going to get in anyway, or community college where I probably would have gotten in and gone nowhere,

And I applied earnestly to the Naval Academy. I didn't get in the first time around, so they sent me to the prep school, which is in Newport, Rhode Island. And through a lot of hard work and, you know, a lot of struggle, I made it through and I got to the Naval Academy. Were you more dedicated to getting into the Naval Academy or serving the country? Just curious. I was—

That's a good question. As a 17-year-old, I didn't know. I was interested in doing something good for the cause of humanity. Okay. I was also toying with the idea, which freaked my mom out, of taking a freighter and going to Afghanistan and fighting with the Northern Alliance and the Mujahideen because they were fighting communism. Like, what did I know as a 17-year-old?

And, you know, my mom was understandably not very happy with that. So it all gets jumbled together. Patriotism, fighting on the side of the good guys, getting an education. And that led me to the Naval Academy, where I flourished. I did very well. And after the Naval Academy? After the Naval Academy, I served as an officer for a number of years, which was great.

And when my time came to leave, I thought to myself, well, I can stay in and it's going to be a 20-year career. It was during the Clinton sort of real backs of funding. We had won the Cold War. And I had a friend that worked on Wall Street and he called me up one day and said, hey, if you're thinking of getting out, you should consider this. You did really well in school. You're good with numbers. You're good at math.

Try it out. And so I took leave for three and a half weeks. I went to New York. I bought a pair of shoes at Payless. I bought a suit. I had never owned a suit before. I bought a tie. Thankfully, the Naval Academy teaches you how to tie ties. And there was a book. The book was called the Naval Academy Business Resource Directory. This is long before the internet.

And it highlighted people on Wall Street. You know, it was one of these bookstores by city, by industry or whatnot. And so I was in New York. I stayed at the Bachelor Officer's Quarters on Governor's Island, which doesn't exist anymore. And I just started cold calling. Probably three quarters of your listeners don't know what a payphone is, but there I was with a roll of quarters calling people.

"Hi, Mr. Smith. I would like to work for Bear Stearns. It seems like a great company. Can I come and meet with you?" Right? It's like time after time after time. And I started getting hits. And so I'd never been to New York before.

overwhelming. I didn't know what I was doing. I didn't know anything about finance. Like, I wanted to be an admiral, right? And so my first meeting was with this guy. I won't say the name of the firm. He was a bond trader and he was chewing gum. He was like a Naval Academy class of, I forget. And he goes, "So," as he's chewing gum, and he has like a, I could tell, like a five minute attention span. "What do you know about bonds?"

And I gave him this word salad of nothingness. Well, a bond, sir, is like a, it's a bond-like instrument with characteristics that reflect the bond intensity. It's like nothing. And he looked at me and he stopped for like 10 seconds. He stopped chewing gum.

And I was like mortified. And he goes, and he used the F-bomb in every conceivable way. Like I didn't know you could use it as a preposition, as an adverb, you know, as a verb. And he just like unloaded all of this on me and said, "You effing better effing get to know you eff. Like you don't know effing anything about anything." And so I walked out of there with my tail between my legs. It was my first interview. I was like, "Oh man, this sucks." And of course there was no internet. So how do I learn? So I went to the library.

the New York Public Library on Fifth Avenue, and I just started reading books, understanding Wall Street and taking notes. And so every day I was there for like 12 hours, just grinding, like learning everything I could. Oh, that's what a bond is, okay. And by the time I got to my later interviews, they sat down with me and they said, "Wow, you actually know what you're doing." And I had studied it, like,

I didn't even know that Morgan Stanley was a financial firm. I thought it was a vacuum cleaner company. Because I'd heard of Stanley Steamer, you know, like you can steam clean your rugs. Are you serious? Yeah, I didn't know anything. So what, hold on, hold on, let's rewind for just a minute. What got you, what caught your attention in the finance world? Was it the lifestyle? It couldn't have been the job, correct? Because... It was really serendipitous. I had a buddy of mine and he's like, you should try this out. And I said, okay, why not?

It was really that simple. And so I interviewed at Morgan Stanley. They saw that my grades were good. They saw that I had, you know, done some leadership stuff in the past as a naval officer. And then the interesting thing that happened was, you know, you look like a Morgan Stanley banker, but you speak Spanish? And so they tested me out, like, with their Latin America team and stuff. And, like, my Spanish is fluent. It's, like, as fluent as my English. And they said, dude, you're in the Latin America group. And I got a job.

It was an entry-level job on Wall Street as an analyst, and I basically was there for three years grinding it out. And it's a bear. Like, I've been through Plebe Summer. I've been through the Naval Academy. I've been through, you know, at that point, my dad passing away. I've been through hardship. That was a bear, and it was super hard. So crunching financial models day in and day out.

inflationary accounting, doing models to account for inflation in places like Brazil. Like the first time I went to Brazil, this was in '94,

The taxi meter didn't tell you how many, at the time it was called a cruzeiro, how much money you needed to give them. It had a chart. It would say like, C5. And he'd read his chart for the day. C5, okay, you owe me this amount of money. Because inflation was changing every day. And so I had to do models to account for inflationary accounting. And

I had no training in finance at the Naval Academy. I took economics. I was an econ major, but that doesn't prepare you for a lot of this stuff. And by the time I got out of that, it was like, I mean, I'm not going to, it's like the mental equivalent of going to Bud's for three years. Sleeping under your desk for, you know, yeah, it was hard. Wow. Did you enjoy it? I did. I did. I really did. I learned a lot.

And I have a philosophy which I carry to this day, which is I live my life with one foot in chaos and one foot in order. And that's how you grow. If you're always in the chaos, then it's just your life is crazy, right? And if you're always in order, well, then everything is just humdrum and very boring. So if you're able to straddle both, it's where you grow. At that point in my life, I was more in the chaos.

a little bit more in the chaos, and I was growing exponentially. And so by the time I got out of Morgan Stanley, I actually knew a lot. And so I had traveled throughout Latin America. I had worked on billions and billions worth of deals, again, in a very low capacity. In some cases, I was carrying bags for the managing director. In other cases, I was doing PowerPoints. In other cases, I was running the whole model, right, the Excel spreadsheet. So it was a phenomenal experience. And that got me into business school.

Where'd you go to business school? I went to Wharton. Nice. Yeah. Nice. What did you, what about business did you study at Wharton? I was a finance major like most people. And what did you want to go do? Did you know? I didn't really know. But there's a path, there's a glide path from a Morgan Stanley, which is where I worked, through to business school and then on to private equity and venture capital.

So I knew I wanted to be at the intersection of finance and developing markets, because that's where I felt comfortable. And that's what I did. How did you like Wharton? It was great. Wharton was phenomenal. I had classmates from all over the world. I spent most of my time with my Latin American classmates because I felt a lot of affinity to them. I had lived in Mexico for—I was at the Morgan Stanley Mexico office for a year.

My Mexican classmates were fantastic, as were the Argentines and the Chileans and so forth. At the time, interestingly, I had a few classmates from Venezuela, and Hugo Chavez had taken over the reins in Venezuela. And I would hear this guy talk. Hugo Chavez was a very bad guy, as is his successor. And I said to my Venezuelan classmates, this guy sounds a lot like Fidel Castro, right?

And they would say, "Oh, please, you know, we have a constitution. That'll never happen in Venezuela. The Cuba thing, oh, please, Cuba's an island. We're a real country. We have all this oil." I said, "All right." Well, what you've seen since then is Venezuela is now at the bottom of the barrel. And they were producing three to four times the amount of oil, you know, 20 years ago than they are today.

They adopted a socialist model. They nationalized pretty much everything. And it's a basket case. The fact that it even works today, Venezuela, there was a time where they had like a million percent inflation, something like that. The fact that it works is testament to how much oil they have in the ground, which is more than Saudi Arabia. They should not be a poor country. It's just that they're managed by— They have that much? Oh, yeah. I had no idea. Oh, yeah. They're just managed by numbskulls. How quick did that happen?

You know, it's been a gradual decline, but certainly over the last 20 years. In 20 years they went from? Three million barrels a day to, I'm going to go with like 700,000. And what they do is they do stupid things like they give 100,000 barrels a day to Cuba, basically for free. And Cuba goes, thanks guys. And then they sell it in the open market. And that's how Cuba generates revenue. Are you serious? Yeah. Why do they do that? Because Cuba's an ally.

Plus, Maduro's team is... That doesn't sound like an ally. Well, the Cuban Special Forces are all over Venezuela. Okay. Maduro, who's the new guy, his security detail is a lot of them are Cuban. And he himself was sent by his communist dad to Cuba when he was a teenager to study. So...

The Cubans are actively involved in almost every facet of the Venezuelan political apparatus. Interesting. I had no idea. Wow. Wow. So, Wharton, back to Wharton. Yeah, so Wharton was great and met a lot of dear friends. You know, since I had already done a lot of accounting and finance before,

That part was less relevant, but I learned other things, you know, marketing and sales and things like that, things that you need in business. And from there, I went to J.P. Morgan and, you know, sort of never looked back. I've stayed for the last 20 years, I've stayed in the world of finance and where finance intersects with emerging markets. And ultimately, that brought me to China. What is an emerging market?

An emerging market, I think that's the non-PC term. Now it's called developing markets. It's basically, so you have Western Europe, Australia, Japan, the US, Canada, countries like that. Those are the so-called developed world markets. And then there's everything else. And there are gradations, right? So you have Mexico or Brazil that might be closer to us. Chile is certainly closer to a developed country. I think Chile is considered a developed country now.

And then countries that are further away. So, yeah. Okay. And so then you went to China. Yeah. So I, you know, through a friend, I was introduced to a guy, an American guy that ran, created the first private equity fund in China in 1982 or something. And so we met and we developed a friendship, me and this guy. He's probably in his 70s.

And I thought, what an interesting dude. And his background was even more interesting. He was a CIA asset back in the 70s who would dress up as a hippie and go to North Vietnam and to pose and take selfies or whatever the equivalent of that time was with the North Vietnamese artillery and geolocate them and then sort of go back and then somehow those...

those installations would disappear. He moved to Hong Kong and started a business with, I want to say the first bank of Dallas, dipping their toes into China. And then he started a private equity fund. And I thought, wow, what a super interesting guy.

And so we developed a very cordial friendship and relationship. And one day he said, "Hey, listen, would you be interested in coming to work for me?" And I thought about it. I thought, "Wow, what a great adventure to go to the biggest developing country." Back then it was a developing country. Today it's not.

What an opportunity. And so mentally I jumped on it. But of course, I had to consult my wife, who was six months pregnant with our first kid. We were living in Carmel, California, where I was working for a family office. A family office is basically a high net worth individual or individuals. And I was entrusted with making investments for them.

living a very comfortable life in Carmel. I was on the city council, and the thought of moving to China was pretty radical. But again, back to order and disorder, my life was very orderly, and I was kind of bored, to be honest with you. I was just going to ask you, you don't seem like the kind of guy that's going to settle for that. No, I pretty much redline everything I do, which is, it could be bad, but...

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It's worth trying. How long did that gig last? Which one? The city council gig or the China gig? Not... I'm backing up from China. The managing people's money gig. A couple years. A couple years. Is that when you met your wife? Yeah. How did you meet your wife? So I met her at a car show in Pebble Beach. And because I was on the city council in Carmel, which maybe I should back up for a second...

Prior to working for a family office, I got a call from a friend of mine. I was at J.P. Morgan at the time, and my friend had left his Wall Street position to take a job in a startup in Silicon Valley. He calls me up and he says, "Dude, you've got to join me. This company is like a rocket ship, and we're going to make zillions of dollars."

And if you go back in time to, you know, '98, '99, it was a bonanza of activity in Silicon Valley. And I didn't want to miss out. I didn't want to sort of have this lingering thought that, man, I could have done something, but I didn't. So I moved out to California. And within probably six months of me being at this company, we sold for half a billion dollars.

to a Microsoft-backed company. And I was like, "Score." And so, of course, I had options. And I said, "Well, I'm going to go and move to Carmel." Unfortunately, those options, they were restricted shares. What that means is I couldn't sell them. And so from March of 2000 when we sold the company until the time I could sell them, they basically were rendered completely worthless.

which is, you know, humbling, but whatever. You got to pick yourself up and do something else. But anyway, there I was in Carmel, and I didn't know a soul, and I said, well, maybe I should run for office. Why not? So I registered, put on a blazer, went knocking door to door, and hi, I'm Eric Bethel. I'd love to be your representative at the city council. And

Some people were very pleasant, some people were not. "Who are you?" Like, "I don't know you." Or one day, Betty White opened the door, you know, like from the Golden Girls. I was like, "Whoa!" And yeah, and I thought, so the big advocate you want on your side, at least in Carmel, is Clint Eastwood.

And I unfortunately had had a very bad run-in with him, and so I was concerned that he wouldn't support me. But he did. He did? He did support me, yeah. Good for him. Good for you. Yeah, so my run-in was I had at the time a crazy dog who was probably crazier than I was at the time, who was a Labrador. And I was at the Mission Ranch, which is a—

It's a Clint Eastwood resort. Think of a beautiful farmhouse looking at a bucolic meadow scene with sheep eating grass and people sipping their Chardonnays. And I opened the door of my truck and the dog ran out and he stopped and he looked at the sheep and his laser beam eyes just went straight for them. Next thing you know, the sheep were like in a state of disarray, running everywhere.

The guests at Mission Ranch were probably spilling their Chardonnay on each other. You know, the sheep disappeared. My dog is like attacking them. And so Clint Eastwood came out and said, hey, buddy, see your dog here again. I'm going to shoot him. So I was like, I got to go back to this guy and tell him I'm running for city council. Anyway, so sorry to go on these crazy sidebars. I am.

I went to, I was invited to this thing called the Concours d'Elegance, which is a car show in Pebble Beach where they have these antique cars, one-of-a-kind Bugatti from 1932 and the guys polishing the fender and stuff. Really, really nice. And my wife was there with some friends. We met. I went, hello. She went, hi. And we ended up

meeting through our collective group of friends later. A group of us went out and had dinner that night. A few weeks later, you know, we got into in communication and I said, "Well, hey, are you dating anybody?" And she's like, "No, not right now." And I said, "What are you doing tomorrow night?" And so I took her out on a date and I don't know, 18 months later, we were married. Two years later, we moved to China. - Wow.

- Wow, did she want to go to China? - Little did she know what she was getting into. Well, I mean, she was six months pregnant. We were living in Carmel, which is like a place that doesn't suck. It's legitimately, objectively, by any account, it's really nice. And I had to, somehow I prevailed. So we took a fact-finding trip to China a few months before, and we stayed at a nice hotel

We got to see the hospital. She's going to have a baby in China. This is what it'd be like. It's the expat hospital. It was very nice. Very nice. And so she felt a lot more comfortable. Let's look at housing. What does the housing look like? Because one has an image of what daily life is like in China. But at the time, China had millions of expats.

And I mean millions. Really? Yeah. And so— What year is this? I'm sorry. It's in like '04, '05 timeframe. And so, yeah, we went to visit some friends that I had down there. They lived very nicely. A lot of them were on expat packages with multinational firms. And it was good. It was very good living. And it was at the time

where everybody, myself included, thought that China was going to develop just like a big version of South Korea or a big version of Japan, just 10 times bigger. And it looked like it was heading in that trajectory. And, you know, I'll say it now, I was wrong. At some point, they did a 180 and they said, all right, now it's our turn. And the United States is a speed bump

on our mission to global dominance. And that's sort of, that's when I had my sort of escape the matrix moment. I popped out of my pod and said, whoa, wait, what's going on here? And how many, how long did it take for that to happen? I think it was a gradual evolution. When I first got there, everybody in China was super polite, very nice. And by the way, I have no animus at all. The Chinese people are lovely people.

But I started noticing kind of a phase shift in the way people began treating Americans and foreigners generally. Initially, it was, hey, we're here to learn. We're very humble. Teach us about your manufacturing. Oh, wait, what does that computer do? And I had friends that were noticing things that were a little off kilter. So I had a friend that worked at a joint venture, a General Motors JV company.

where their Chinese JV partner was basically stealing everything. And so they were playing guerrilla warfare at the factory, like, oh, don't look at those servers. Don't look at this manufacturing capability. Well, next thing you know, China creates a competitor to General Motors. The company was called Cherry, and they took the Chevy Spark,

blueprints like down to the rivet and created the Chery automobile. Notice that there's one letter difference between Chevy and Chery, like even the name. - Wow. - And so that was starting to happen and it just got worse. - What are some of the other ones that you saw?

Well, I mean, look, we had a guy. I was on the finance committee at the American Chamber of Commerce. And I'm not going to say where this guy's company was from because that wouldn't be proper. But a guy came in and he was the chief technology officer for, let's just say, a big manufacturing company in the U.S. And he sat down with us in the committee and said, you know, the strangest thing happened. I plugged into the Ethernet at my hotel.

And my computer just died. And then when I resuscitated it, my hard drive was empty. And I was like, dude, really? You brought your hard drive with all your intellectual property to China? And at the time, nobody really thought about it. But I saw this happening every day. Every single day. I saw the craziest things in China. What else did you see? Well...

So, let me, did you have, I mean, obviously you did the way that you just described that incident, your reaction to it. But how did you know that they were sucking all the information out of the devices and kind of the... Because I had started developing relationships with a lot of folks in China and, you know, talked to them. And the operating philosophy is, well, if it's not bolted down, I'm just going to take it.

They're just letting us have all this stuff for free? Thanks. But there's something more fundamental, and that is what happened in China after Chairman Mao took over is they had this thing called the Great Leap Forward, and then they had the Cultural Revolution, and they eradicated any semblance of morality from society. And so they replaced Mao's Little Red Book

which was their religion at the time, with success, power, success. And the new little g gods became Ferragamo and Gucci and LVMH and success and Harvard. And when you're untethered from any sort of moral core, you'll do anything.

to become successful, powerful. And you have a billion four, or whatever, 1.4 billion people who are just out for bear, looking to make it. And I don't begrudge them because they're hardworking, very hardworking and intelligent people. But the beef I have is when you don't have a moral core, you'll do anything. So here we are, we've got a kid in China,

And we've got to buy infant formula. And my wife says, "We're not buying Chinese milk formula." It's like, "You've got to be kidding me. There are like 200 million Chinese kids here," or whatever the number is. Nope. So every time I'd go to the States, I'd come back with two suitcases of Nestle Good Start, and she would buy Evian water. And I'm just watching dollar bills evaporate, thinking it's the stupidest thing.

And it turned out, I want to say in 2007, 2008, that Chinese infant formula companies were putting a plastic called melamine in the infant formula that was poisoning countless children in China because apparently that melamine artificially beefed up the protein so they basically were cutting corners and putting chemicals that were hurting people.

This sounds like the FDA. I don't know. It's already got you. So yeah, I've seen it all. I've been screwed over more times. If I'm not getting screwed over in China, something's wrong. So if I'm at the signing ceremony of a deal, and it's happened to me on more than one occasion, you go to, let's say you're doing a deal in some random province in China.

True story. I stayed at, I went to, I think this was in, was it in Dalian? I don't remember where it was. But it was in a, not Shanghai, not Beijing. And I stayed at this hotel called the Galactic Peace Hotel, which I thought was funny. Because a lot of the names in China are very aspirational, even though they sound sort of silly to us. So I stayed at the Galactic Peace Hotel. And it says, welcome famous American investor, Eric Bethel. There's like this,

placard in lights. Anyway, I go to sleep. The next day we're at our signing ceremony and you walk into a hallway and you have guys with TV cameras looking at you. You've got two chairs. It's very imposing, one with an American flag, one with a Chinese flag. The municipal leadership team is there from this municipality and we're going to sign the deal. And I look at the numbers and

I look at the guy that I'm supposed to be doing the deal with, and it was like the number that we were supposed to be paying X, and he had like made it X plus 40%. And I said, bro, what's up with this? And he's like, well, we had to change things at the last minute. You're okay with it, right? And I said, no, but everyone's here. Like, what are we going to do? You have to sign. I was like, uh-uh. And I walked out. And so I'm walking out.

Everyone's looking at me. It's very awkward. I'm hoping this isn't going to cause an incident. And so I'm about to get in my car and the guy's like, okay, okay, okay, okay, okay. We'll go back to your original number. Welcome to China. Wow. That's an everyday occurrence now. Everyday occurrence. So you see all this and you say, okay, I get it. Everything is transactional. Everything is a negotiation. And...

Unfortunately, many Americans, many people in the West believe that when you negotiate with somebody in good faith, the other party also has good faith. But what if they don't? And so you can extrapolate that to everything. Geopolitics, you can expand it to doing business. And for American investors that are still, for whatever reason, doubling down on China, I ask, why?

It just doesn't make any sense. I can understand if 20 years ago you needed to start a business, although I am at this point very opposed to the wholesale outsourcing of our industrial base to what is now an adversarial nation. We've outsourced it all, and that's a problem. Is there any getting that back, do you think? I hope so. The good news is some of it's going to come to Mexico, some of it's going to come to the U.S.,

But I will bet you that at every single Fortune 500 company, quietly, their boardrooms are saying, how do we quietly extract ourselves from the political risk that we have, the geopolitical risk? And is having 70% of my pharmaceutical production in China a good or bad thing? I don't know. Like, what if they decide to cut us off?

We saw it with PPE equipment and with masks. Even American companies that were making masks in China were forbidden from exporting them. What was the draw to, I mean, is it price? Is it cheap? In other words, why do people go to China? Why do they go to China? Well, I mean, the Chinese made it very attractive. So if you're an American manufacturing company and you're paying unionized workers whatever an hour, let's just throw out a number, 60, 80 bucks an hour,

on an assembly line, and they can only work X number of shifts, and you've got occupational health and safety concerns, you've got regulatory burdens, you've got all of this stuff. And that was on us, right? Red tape. And China says, I'll give you free land, my people will work for $1.50 an hour, and they'll work tirelessly, and I have like

Human capital is, we're unconstrained, right? Because, and people living in the peasants in the countryside would come to the cities and they'd be thrilled to get a buck 50 or two bucks a day. And so they worked really, really hard and they had favorable tax considerations. They had free land and it was very enticing.

But over time, as China learned how to do the factory stuff that we were teaching them to do, they would create a splinter factory called like almost with the same name and take all the employees. And then the American company would be left, you know, so here's a Chinese company that's producing the same product, almost with the same name. And then the Chinese company was competing with you that you would help start. So you started seeing a lot of that going on.

Wow. Would they sell it back to the U.S. as well? Or was that just for the Chinese market? Sometimes. Sometimes for the Chinese market, sometimes for, you know, Kazakhstan or South Africa or whatever. But yeah. Wow. How long were you in China? About eight years. What was the end for you? Well, the end for me was we had created a fund. I left the firm I was working for. And it's a pretty interesting story.

There were very few Latin American or Spanish speakers in China at the time. And I had hired a Mexican intern to work at the firm I initially went to go work for. He was studying at the China Europe International Business School. He was getting basically a master's degree. And we hit it off. Great guy. And one day out of the blue, he said, hey,

why don't we create a chamber of commerce between Mexico and Latin America and China, which didn't exist before? And so I said, sure, why not? And so in our free time, he worked very hard to get this thing up and running. And little did we expect, we started getting calls from people like heads of state from Latin America who wanted to come to China and learn more and be

involved in the business community. How can Latin American multinationals expand, like making tortillas or whatever for KFC in China? That kind of thing. And I thought to myself, there's got to be a business in here to link China and Latin America. But gosh, what could it be? What could it be? And...

It dawned on us one day when a large Chinese mining company came to us and said, hey, we want to invest in a mine in Chile, but we don't know what we're doing. Can you help us? At which point, like many light bulbs went off, and we said, wait, China is going to invest overseas because they need natural resources. And we looked at each other and we're like, wow, let's start a business around this.

And so I approached my boss at the time and I said, "Hey, why don't we start a fund to invest in overseas, you know, Africa, Latin America, whatever, natural resource companies, because China needs them, because China didn't win the geological lottery." So my boss said, "Yeah, I've been in China a long time, sonny boy, and I don't see them really going overseas. That's not their thing. They're the middle kingdom.

And so we said, all right, we took a flyer and we started a company to do this. And we raised some capital, got together a team, and ultimately were able to invest in a few things. And the Inter-American Development Bank and the China Export-Import Bank gave us a mandate to go and like they gave us a mandate and money to go out and raise a big fund. And the money was like a lot.

in the hundreds of millions of dollars. And so with that, we actually became a real thing. And we ultimately forged a relationship with Franklin Templeton that absorbed this business. And Franklin Templeton said, "Hey, dude, why are you like investing in Latin America and places like that, but you're living in Shanghai? And so come to Miami where we run our Latin American business and run it from there."

I went home and I told my wife and she was like, thank God. She thought it was going to be a two-year gig and it turned out to be like eight years. So she was ready, ready to come back. And so the incredible serendipity and providence was that I came full circle. I left Miami years and years and years back. And I come back to Miami and I bought a house like six blocks from the one that my mom lives in.

And so she, of course, is thrilled. She gets to see the grandkids. She doesn't have to fly, you know, 25 hours to see them. And it's been great. Good for you. I am curious, how would you bring back manufacturing in the U.S.? I mean, I have a friend, a good friend. His name's Rob Luna. He's an investments guy, and he always says money goes where it's appreciated. And with all the red tape here,

and all the taxes, how would we bring manufacturing back to the U.S.? Well, I think you answered part of it. We have to make it attractive, particularly in the so-called flyover states. The U.S. can't just be New York and Boston and the Bay Area or L.A. as the driving factors of our economy. Everything in the middle has to be rebuilt.

And you do that through favorable incentives like taxes, like land, like just what, you know, similar to what other countries are doing. Energy is very important. I mean, how would you give land? Everything's owned already. Not necessarily. I'm sure you have municipalities throughout the country that are sitting on parcels of land that are vacant or derelict factories that are vacant that can be repurposed.

The other important thing is energy. Right now we have a, and it's going to grow, an energy deficit. So if you think about things like AI, AI uses, as we all know, a lot of compute power. And that compute requires hyperscalers and data centers. And those data centers require a ton of power. And right now, unless we build it, those AI data centers are going to go elsewhere.

So we need a lot of electricity. We need a lot of land. We need work programs because we've forgotten how to bend metal. And there has to be an understanding that there's dignity. Like, I grew up around blue-collar workers. There's dignity in that. And so teaching our kids that you don't have to be a YouTube influencer, but you can actually do something where you're working with your hands. Mm-hmm.

We need to fix our education system such that we train people to go in different professions. European countries are very good at this. They have apprenticeship programs in places like Germany, where if you're a carpenter, you're like a good carpenter. And you spend years and years perfecting your craft. We don't have that in the United States in the same way.

So there has to be a well-thought-out plan, but it has to be holistic, right? It can't just be, I'm going to give you tax breaks. It's not going to do it. Do you have, can we dive into some of these? Sure. The land, for example. If it's, who owns that factory and how would it be? Look, this is all hypothetical. Okay. But let's assume, you know, you've got a place like, you know, Akron. Let's go to St. Louis, Missouri.

St. Louis, Missouri. I'm certain that when industry left, you have vacant parcels of land that somehow were absorbed or gifted or whatever to the municipality. Okay. I'm guessing. Look, again, this is all theoretical. If the city of St. Louis or Detroit or Akron or whatever could take that land,

and say, "I'm going to bring in industry, and let's figure out some revenue share. We're going to make it enticing for you to come here. We want to create jobs. We want to rebuild our ecosystem of manufacturing. We're going to give you tax breaks.

But you've got to give us something as well. In addition to, hopefully, the workers that will be there generating tax revenue, maybe the company can also share in its wealth creation with the city. And then the city would then, hopefully, in an ideal world, be able to take that money and say, I'm going to create new programs, training programs. I'm going to fix our high schools. There's a whole lot of virtuous circling that can take place.

Let's talk about energy. I mean, are you aware of how weak our power grid system is? It's pretty bad. How would we develop more energy? I mean, from everything I've been told and read into and discussed on this show through numerous interviews, we are on the verge, it sounds like, of the grid going down.

How would we fix that and develop more energy? There's a lot to unpack there. There's an element that we can discuss that relates to national security. There's an element that relates to power generation. There's another element that relates to transmission and distribution. I'll begin with the national security stuff. We have a vast preponderance of our electricity transformers, especially the large ones, that are Chinese. Mm-hmm.

Okay. It wouldn't surprise me if those Chinese transformers had a back door and it could be turned off. We don't even check them. That is super dangerous. And I tend to stay out of political discussions, but I sort of scratch my head when one of the first executive orders in the Biden administration was to allow for Chinese electricity transformers.

And the prevailing thought was, oh, these are commoditized products, you know, who cares? And, you know, certainly the electricity companies wanted them because they were cheap, right? And they're looking for their bottom line, and the bottom line reflects in their share price, and their share price reflects in the CEO's, you know, compensation. I get it. But I think we need to do a very deep dive on where we're vulnerable. And it's not just in our electricity transformers, our port cranes, right?

are also vulnerable, those that are made in China. And there are a lot of other vulnerabilities that we haven't even thought about. The water supply. Water supply, sanitation. And so, yeah, like the Colonial Pipeline, that was just, that was the appetizer for other things that could happen. And so there's a national security threat, we need to fix that. But we'll table that for a second.

On the power generation side, we are endowed with some of the best energy resources in the world. We have oil, we have natural gas and a lot of it. We have all the minerals that we need to make electricity lines, but we just don't have the will to, I mean, we were a net energy exporter several years ago and now we're, I don't know where we are.

But the trend line isn't what it used to be. And I don't really have a lot of heartache about transitioning from fossil fuels to renewable sources at all. In fact, my wife has a Tesla. We have solar panels on my roof. And that's great. The problem is we have to be intellectually honest about how these things work.

So when you have a giant solar farm or a giant wind turbine farm, what happens when the sun isn't shining? What happens when the wind isn't turning the turbine? So that's a problem. And then you have to think about baseline power. If I'm a manufacturing company, I can't just rely on power like, oh, it's sunny today. I can start my manufacturing process. You need baseline power.

And so to get baseline power, one of the solutions is to create battery storage. You need to have battery storage, right? Such that when the wind doesn't blow, you still have power. Now, to me, there's a stupefying level of intellectual dishonesty when it comes to the green energy world. While I agree that we should transition, I'm not going to dispute that. What we're doing is where if we were to flip the green switch tomorrow, we become a

we give China the ability to become the OPEC cartel of one. In other words, China produces the vast preponderance of our solar panels. 90% of the photovoltaic material that goes into a solar panel is made by ethnic minorities in China in slave factories. These minorities are called the Uyghurs. They're not ethnically Chinese. And the Chinese are putting them in labor camps

for making solar panels. So do we believe in human rights or do we believe in climate change? Hopefully it's both. And then there's the issue of battery storage. Who makes the batteries? 70% of the refined lithium for lithium ion batteries comes from China. 90% of the, well, 100% of the cobalt pretty much comes from Africa where like seven-year-olds are in mines digging stuff up, which is awful.

It all gets refined in China. The rare earth magnets for wind turbines are all made in China. And the list goes on. And by the way, to make a solar panel, what are you doing? China is burning coal from coal-fired power plants. And they're building like, you know, two new coal-fired plants a month to run electricity to make a solar panel where they use, you know,

silicon tetrafluoride and hydrofluoric acid to make a solar panel that gets exported to the developed world, and we're like, "Oh, we're so good." But wait a second. What are we doing? And so I think we need to reshore a lot of that manufacturing activity to the United States such that as we make this transition from fossil fuels into something else,

which, by the way, should include nuclear, we do it intelligently. And we're not beholden to one supplier of everything. That's super dangerous. Where do they get the lithium from? So lithium is produced in one of two ways. There are hard rock deposits. The deposit is called spodumene. And they sort of mash it up and turn it into a powder and then run a chemistry experiment and separate all the things out of it.

Typically, that's done in places like Australia. In South America, they have what are known as salar deposits. So think of the Great Salt Lake in Utah. Now imagine that going on that's 100 times bigger in places like Bolivia. Bolivia has a salt flat called Uyuni that sits, you can see it from space. It's like this white dot in the middle of the country. And

It's reputed to have 50% of the world's lithium. 50%? Yeah. And so the way you process that is underneath the crust, you have salmoide. I don't know how you say that in English. Like a salty, mushy water. And you basically drill, stick a straw in there.

pull out the liquid, and then you bake it in the sun until it turns into a powder, and then it becomes a chemistry experiment. You separate the magnesium from the lithium and stuff. The Chinese are basically taking all of that and refining it in China. How many lithium deposits do they have control of throughout the world? Do you have any idea? It's not a question of controlling the lithium deposit.

If they are the buyer of all the lithium, they don't need to control the deposit. Although they do have some, don't get me wrong. They have lithium deposits around the world. But let's assume if you're a random mining company and your only buyer is China and China sets the price, you're a price taker.

So they can control you without having to actually control the mind. Okay. I hope you... I hope I'm wrong here. But it is my understanding that China's investing in all these countries. Afghanistan's one with, from what I understand, very rich lithium supply. And copper. And...

they're putting in the infrastructure so that the Afghans can mine that lithium and give it or sell it to China. So would that be control of that mine? Because they put the infrastructure. Look, there are a lot of ways to control things without actually having to control them. So if you control the egress from the mine,

and you own the road, great. If you've bought out the government of a given country, that's, you know, check. And if you are the buyer of everything that that country produces, do you not control the country? You don't have to put a single People's Liberation Army soldier on the ground when you can just control the country through economics. That's, that's,

Better put, but that's what I was getting at. So they control who they sell to as well, correct? Yeah. So if the U.S. wanted to go and buy lithium from Bolivia or Afghanistan or Mexico and China says no... Well, we can't because let's use rare earths as an example. Rare earths are not necessarily rare, right?

Let me explain what these are. If you look at the periodic table, if you remember from chemistry, there are these two lines on the bottom that are kind of separated from everything. Those are the rare earths. There are light and there are heavy rare earths. Typically, they're found in deposits that contain a lot of things, right? So you pull them out of the ground, and then you have to separate the lanthanum from the dysprosium.

And unfortunately, we don't have, with the exception of one company called Mountain Pass or MP Materials, we only have one company that can process rare earth elements in the United States. And they do, let's call it primary processing.

But then you have to sell to the magnet companies and whatever, and they're all in China. So here we have a rare earth processor, the only one in America, and they have no customers other than China. I mean, maybe they have a few, but China is the vast bulk of their customers. So in other words, if you wanted to have a robust ecosystem for whether it's lithium, rare earths or whatnot, you need to have the battery company

the cathode company, the anode company, the people that create the shell that the battery lives in, the technology ecosystem that's doing research and development to make these batteries better. You need to control the processing. You need to have primary, secondary, tertiary processing so that you can make battery-grade lithium, which we really don't have in the United States. Then all the way over here, you've got the mine.

We can buy the mine, but if we don't have anything else, we're still dependent on China. You follow? Mm-hmm. Mm-hmm. I do. The power grid stuff, it all scares the hell out of me. The power grid stuff, AI is a big thing, and AI is going to be a big thing for as long as we're alive. It's only going to get better. And like I said before, AI requires huge amounts of power.

I think McKinsey Consulting wrote a report recently that we're going to need something like 30 to 50 gigawatts of power over the next, say, 10 years for AI alone. To put it in context, a big nuclear plant, big, like a big Westinghouse plant like we have in Miami that runs a lot of our grid, is about one to one and a half gigawatts. We're going to need 50 gigawatts for AI data centers.

And if we're not building them, guess what? They're going to Abu Dhabi, God forbid, China. They're going to go elsewhere. So we really need to up our game when it comes to building new facilities. And that's not happening at all, is it? It's happening. But in the case of, say, nuclear power, we have what's known as the NRC, the Nuclear Regulatory Commission. It's very onerous, and it's going to take 10 years to build any nuclear reactor.

And so how can we compete? China's building 20 as we speak. So we've got to really get our game on when it comes to building power generation for AI and also for industry. You mentioned earlier, how do we get industry back here? Yeah, sure, tax and land and job training.

But if you have to pay 13 to 17 cents a kilowatt hour for electricity, and in China it's 3 cents a kilowatt hour, where are you going to go? How do we compete in a globally competitive world where our energy costs are three to four times as much as they are in China? I don't know. It seems impossible to me. No, it doesn't. It just requires will. It's easy. All we have to say is we need more power. And we...

work with the agencies. Of course, we need to make these in the right way, right? We can't just build nuclear plants anywhere, but the new nuclear plants are very safe. They now have pebble bed reactors that will not create a Chernobyl. So there are new technologies out there that make nuclear very safe. You have small modular reactors that are very safe. And, you know, we need to do something.

Because sitting around navel-gazing and, you know, bureaucratic inertia is going to get us nowhere. Yeah. Yeah. Warwick, let's take a quick break and come back. We'll pick right back up.

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Let's get back to the show. All right, Eric, we're back from the break. I would like to... Part two. Part two. Part two. So I would like to dig into how you got started at World Bank. How did I get there? Yeah. Gosh, I don't even know where to begin. So I was at Franklin Templeton for a couple of years. What is Franklin Templeton? It's a...

giant mutual fund company. Well, it's a giant financial firm that has a big mutual fund presence. And then they've since bought a bunch of companies that do all sorts of alternative strategies like hedge funds and different types of funds. Our fund was in a family of what's known as private equity, where you invest in privately held companies. But yeah, that's Franklin Templeton, big publicly traded company.

It's a great firm. I have nothing but good things to say about Franklin Templeton. I have a feeling I should be talking to you about BlackRock. Yeah, we can talk about that. We can talk about that later. We can talk about that. But yeah, Franklin Templeton is a version of BlackRock or any large institution, financial institution. Vanguard, Wellington, Fidelity, there's a bunch of companies like that.

But anyway, so I was thinking of leaving Franklin Templeton. I'm not really made for a bureaucratic existence. It just so happened that Trump won the election. And I said to myself, what can I do to support this new administration? I've got some financial flexibility. I've got hopefully good experiences that I can lend to the service of my country. And

I just started reaching out to friends. I had a friend that worked on the transition team, a good dude, West Point guy, and a few others. And I began inserting myself in circles. And so these are many of these opportunities, especially if you come in from the outside and you don't have any experience, in my case, zero experience in other than my city council member thing in Carmel. I had no experience in politics, none whatsoever.

I didn't know anybody. And so little by little, I began getting myself introduced to people who introduced me to others, who introduced me to others. And I would sit down at my desk. I'd go back to Miami and like write these little bubbles and say, okay, you know, this guy is like knows that guy and that guy knows this person. And so I had a very good friend who said, hey, you've got to take a look at the plum book.

It lists 4,855 appointed jobs in any administration. It's like the plum book. Plum. Why is it plum? Well, back in the day, a little historical narrative for you. Back in the day, it was actually a book. Today, it's a spreadsheet or whatever, a PDF. But back in the day, it was actually a book. And the book was plum-colored.

So, and you can look through it and say, okay, and it's alphabetical, agriculture, you know, assistant under deputy secretary of agriculture. I don't know anything about that. And so I spent weeks and weeks and weeks looking through this plum book to find something that I was qualified for. I naively thought that you needed to be qualified for a job in Washington and have learned since that maybe you don't.

I say it somewhat, you know, sarcastically. But anyway, I looked down and was like, World Bank? I can do that. It's the world. It's finance. So I began circulating myself as a potential aspirant to do the World Bank job.

And so I had to go through the, there's a group in Washington. It's the HR division of the White House. It's called PPO. It's the Presidential Personnel Office.

and sat down with them and they said, "Hey, so you want this World Bank gig? Okay. Tell us who you are. Are you a Trump supporter?" Like, obviously, why else would I be here? And they looked at me and they kind of rolled their eyes and they said, "Well, there are a lot of people that don't like Trump, but they still want a job." It's like, well, I don't need a job. I want to support America. Trump is our president. And what can I do to be helpful? That's what I'm here to do. And they said, "All right, cool. Do you have an illegal nanny?"

No, I had to think about that. Have you said anything bad? Have you tweeted anything bad about the president? I said, no, I don't have a Twitter account. You don't have a Twitter account? Cool, why not? Have you said anything that's going to embarrass yourself or the president? And I said, no, I'm a business guy and I'm here to serve. They said, all right.

So I made it through that hurdle. Then I had to go through a series of FBI interviews. They came to my house. They interviewed my neighbors. My neighbors were calling my wife saying, hey, is Eric like on the wanted list or something? No, no, no. He's trying to get a job in Washington. Oh, okay, cool. They interviewed my nanny, who I'm fortunate to have the only

Not the only, but one of the few American citizen nannies. She's from Honduras, but has a U.S. passport. We pay her Social Security. We pay her taxes. We do everything straight and by the book. And the FBI left and said, great, you know. But they did a very thorough investigation of who am I? Who are my friends? Who are my neighbors?

And I checked off everything, green light, green go, next. What is an illegal nanny? What is it? It's an undocumented. Yeah, it's like three quarters of the nannies in Miami. Yeah, probably in the country. Yeah. And that trips up a lot of Senate confirmations. And so, I mean, it's important. Look, as a rule in life,

I try and do everything by the book so that I live above reproach. And it's consistent with my faith, my value system, and I'm unapologetic about it. I think C.S. Lewis once said that I believe in Christianity the way I believe that the sun rises, not only because I see it, but because by through it, I see everything else.

In other words, the lens through which I view the world is based on my value system, and I want to do things right. So anyway, that's me. Good for you. A guy with no political experience. And I went through a Senate confirmation process that was, it's tough for anyone. So you have to fill out forms that ask you questions like, have you ever traveled overseas?

"Yeah, where did you go?" So I had to dig through my passport and look at all the trips I had taken over the last 15 years. Imagine, and some of the passport stamps, you couldn't even see them. I was like, "Okay, I went to Hong Kong on the," whatever. Next question, "Who did you meet while overseas?" - Yeah, I love that. - I was like, "Are you kidding me?"

And so these were probably forms that were filled out when people didn't travel as much, you know, back in the 50s, but they just sort of held on to them. So my... This was a clearance process. It's a clearance process. And, you know, it was, you know, hundreds of pages of who I met, who I knew, and they had to go through all of that.

The next stage, which was done in parallel, was you have to go and explain your financial situation. Oh, you have a trust. Okay, how does the trust work? You have shares in X, Y, and Z company. Oh, you, you know, Mr. Bethel, you have $9,412 worth of Coca-Cola shares. And, you know, we think you're going to have to sell that because, you know, you might influence the stock. Wait, what? Really? Yeah.

Okay, fine, I'll sell it, whatever. And so it was like a very laborious process. The culmination of which was sitting in front of the Senate Foreign Relations Committee with my family behind me, my wife, my three kids, my mom, who's in her 80s. And I'm thinking to myself, I'm praying to God, oh, please help me not say anything stupid. So they asked me three or four questions.

I knew what I was talking about. I think they recognized that I'm a professional. And they said, "All right, you're good." And once you make it through the Senate Foreign Relations Committee, then you have to go to the full Senate for a vote. And in my case, I was a unanimous consent, 100 to 0, which is great in a toxic political environment. And I did the best I could to appeal to both sides.

Everyone wants to be heard, right? And so if the Democratic senators wanted to meet with me and they had things that they felt were important, it's my job to listen and to be respectful to everybody. Of course, I'm a Republican, but I think I'm an American before I'm anything else. So that process was fine. And then I showed up at the World Bank and there I was. And it's a

monstrous organization that's very complex. Where is the World Bank headquartered? Washington. Washington. Yeah. So I bought an apartment close to the World Bank. I flew on my own dime. I kept my wife and family and everybody in Miami. And every week I'm going, you know, two, three times a week back and forth, paid for by me. I took a stupefying pay cut to work for the bank, but I did it as a labor of love because I'm here to serve.

And it was a great experience. And the World Bank is a wonderful organization with its flaws that I mentioned earlier. It could be repurposed and recalibrated in a way where it can do its job a lot more effectively. Do you believe that will happen? It can happen. But let's rewind to 15 minutes ago to our energy conversation. We can build energy.

We can build power generation capacity in this country. It just requires will. We can recalibrate the World Bank and make it a lot more effective. It just requires leadership and will.

It needs to be done in a way that's respectful because the United States is one shareholder, a big shareholder to be sure, but we have to do it in a way that's respectful to the other countries and to make sure that, you know, it's a multilateral organization with a lot of moving parts. And you make no friends by being a jackass or by being a dictator or anything. You make friends by being a good guy.

And so that was what I tried to do throughout my time at the World Bank. And so we can pivot this to some of the initiatives that I started. So you can imagine that a lot of money, the World Bank has a term for it. It's called leakage. A lot of money gets leaked. So when you have a $100 million loan that goes to country X,

Not 100% of it goes there. Some of it goes to elsewhere, to Swiss bank accounts and consultants that maybe the president's brother is a consultant and, you know, not our president, but the president of that country. And so I said to myself, what's the best thing that I can do to make the World Bank more transparent and give money to the people that need it?

The people that need it are the poor, the fatherless, like me, like fatherless kid who was poor. Like, what can I do to help people around the world that have no drinking water, no electricity, living on a dollar a day? That's my job, right? And how can America be a force for good? Calling out corruption and being obnoxious about it is not the way to do it. So I thought to myself, technology can play a very important role here. What if, for example, we could

Instead of wiring money to a finance ministry of a given country, what if we could put that money in a tokenized form? And we can see the nodes that it goes through to get to its ultimate destination. What if we blockchain enable that and put it on a public blockchain and you create transparency? So that was a project I worked on and I brought everybody under the sun.

because my business card gave me access to a lot of people. And so I even reached out to Vitalik Buterin, the guy that founded Ethereum, and he came. He showed up at the World Bank. And super smart guy. I'm going to guess more than a little autistic, but very smart.

And he and I gave an interview. I interviewed him, just like we're doing. And we talked about how blockchain could be beneficial for the world. I brought in the teams from Microsoft and from Goldman Sachs, and I spent a lot of time working with the World Bank Innovation Lab to see what we can do to leverage technologies to make the World Bank more effective. How would blockchain improve the world?

Well, there's a philosophy that I alluded to earlier, this Life After Google book, who, this guy posits that there's the world of centralized everything and the world of decentralized everything. In the world of centralized everything, you have a single point of failure and a single point of corruption. In other words, let's assume you're doing national IDs for a given country in a centralized place.

If the servers go down or an asteroid hits the server farm, whatever, you know, everything disappears. That's a central point of failure. Central point of corruption could be, well, maybe they want to disappear somebody and erase them from the records of humanity. You can do that.

And so decentralization means that the data lives in lots of different places and it can't be corrupted. Because if one server goes down, the other server still holds that info. And if that server goes down, you know, you have hundreds and thousands of servers in a decentralized way. And you can then protect people from autocratic governments, autocratic companies. And I think that decentralization is the future for data.

agency, freedom, liberty, and individual autonomy. That's my perspective. And so if I can help at the World Bank to do that, and if it's on a public blockchain, everybody can see where the money goes, it's phenomenal. I would think you would get a lot of pushback for that. Am I correct? Actually, no. A lot of the countries that were getting World Bank loans

especially those that were led by folks that had an enlightened vision of what they wanted to do. Many leaders in emerging markets or developing countries, they don't want to be corrupt. The system around them is corrupt, and there's a lot that they can't do about it because it's ingrained in the system. So they welcome things like this because nobody campaigns corruptly.

in a given country saying, "I'm going to steal less than the last guy, but I'm still going to steal." Who's going to campaign on that? They're campaigning on honesty and integrity and good values. And so there was a lot of receptivity from a number of countries. The problem I faced was the inertia at the bank, right? There's a lot of, there are a lot of people. And so you're trying to steer the Queen Mary and it just takes a lot of time for people to understand what this is.

And the headline, at least at the time, from our then president of the bank was, "Yeah, I don't know about this blockchain stuff. Like, isn't Bitcoin used by criminals?" I was like, "Look, I'll bet you $100 cash bills are used by criminals more often than Bitcoin. But let's take Bitcoin out of the equation here. I'm talking about decentralization of finance."

I'm talking about Web3, I'm talking about blockchain, I'm talking about different concepts. These are concepts. You can take Bitcoin and put it over there. And little by little, I started gaining traction. But this is an institution where from the time a loan is originated to the time it reaches its end destination, you have like 150 nodes that have to approve or disapprove. So it's a very big bureaucracy. And moving the bureaucracy is hard. That was the challenge.

I could imagine. The other challenge was, I thought to myself, why are we doing a loan or a grant or whatever in a given sector? Why is this sector better than that sector? Why is sanitation better or worse than education? And the feedback I got was, it's all important. And I said, well, if we were to rack and stack and we were going to prioritize what's most important, what would it be?

And everyone's like, well, whatever the country manager thinks it is. And so it was very subjective. Then I went back and I said, wait, the World Bank sits on, I don't know, petabytes of data going back 40 years. What if we could apply machine learning to all of the loans that we've given out over the last 40 years?

And then overlay that with, was it effective? Did school scores go up? Did infant mortality get reduced? Did literacy get improved? Whatever, right? And then you can, based on the data, based on objective hard science, you can determine, well, where should we deploy our money? And so that was another project. That was before AI became a thing. And this is in, whatever, 2017, 2018. I'm trying to...

move the bank into the modern era. And again, I got a lot of support, but just turning the machine is hard. Turning the Queen Mary is very hard. Yeah, I can imagine. So... I can imagine. What? I don't know what to ask right now. We can talk about China at the World Bank. It's my topic du jour. So I get there and...

I realized, wait, as I mentioned earlier, wait, why is China getting all these loans from the World Bank? One of which was to an education project in Xinjiang. Remember I mentioned earlier that there were ethnic minorities that were not Han Chinese living in the far western hinterlands of China? So we did a project, the World Bank did a project there, and it turned out that the Chinese were using it for repression.

And of course, they covered it up. And when the press got wind of it, everybody went into, you know, damage control mode because loans sometimes fall into the wrong hands and they're used for bad things. But I couldn't quite understand why China was getting all this money. Furthermore, I couldn't understand why China was winning all of these procurement contracts.

So if the World Bank loans money to a country, a poor country, and they want to build a road, they do a tender. And in almost every case, China wins the tender because they're the cheapest bidder. And so I thought, man, what are we winning? We being the U.S., I represent the U.S., and we're winning less than 1% of these billions and billions of dollars of contracts, and China's winning 40%.

So I thought, wait, China is getting money from the World Bank, yet they're winning all these billions of dollars of contracts. Something's wrong here. And then at the same time, the Chinese government is competing with the World Bank and loaning money everywhere around the world, right? We call it predatory lending. And what happens is the loans seemingly don't come with strings, right?

to an African country or whatever, a South Asian country. But they do. When the country can't pay back the Chinese loan, China's like, I think I'll take that port. I'll take that facility. I want that mine. And so these countries are coming to the World Bank going, help us, help us. And so, wait, my taxpayer money is going to the World Bank so that the World Bank can help this country repay the Chinese loans? Wow. What?

And the World Bank's paying China. And the World Bank's paying China, and the Chinese are winning all these procurement contracts. I thought, there's something wrong here. And so I did the very best I could to highlight a lot of these problems. But nobody in Washington really seemed to care because the World Bank is...

First of all, nobody knows what it is or what it does, but it's got real money, like $100 billion a year, 80 to 100 billion. That's real money. And it could be used very effectively for its real mission. And its real mission is to help poor people not be poor. And so... How can nobody in Washington care? At the time... How is that even possible? Does anybody do their job there?

Look, I'm not going to throw anybody under the bus. I think there were, NR, a lot of well-intentioned people working in the U.S. government who didn't see this for the totality of what was going on. You just broke it down in two minutes.

Yeah, but some people would say, well, the World Bank has policies and the country of X, you know, if China wins a procurement contract, well, they won because they won fair and square. Well, wait, did they win fair and square? If you were to unpack how China won, how did they win? Did they win through coercive measures? Did they win because they were the lowest bidder? In some cases they did. How did they win?

And so you've got a lot of folks in Washington that are well-intentioned and very smart, but they don't see, at the time especially, they didn't really see what the big deal was. They can't think outside of a box. Yeah, and also China wasn't a thing back then. Nobody thought that China was going to be the malevolent adversary that it's become. I think now a lot of people's eyes have been opened, but back then,

Everyone just thought, well, China's just a big developing country. We've got to help them with stuff like, you know, climate change. And we have to help China. How long ago was this? 2017, 2018, 2019, 2020. I think one of the things that Trump did very effectively was open people's eyes to the unfairness. He looked at it in the trade, with a trade lens. And he's absolutely right. How come, you know, simplistically...

How come if we sell a car to China, they charge, you know, a 20% tariff. But if they, not car, whatever, we sell a good to China, it's 20%. And when they sell something to us, it's 2%. Shouldn't there be reciprocity? Like, shouldn't the tariffs be the same? We're getting screwed. And, you know, President Trump is a dealmaker and he saw us getting ripped off. And I think his perspective was,

We're getting ripped off because we're allowing ourselves to get ripped off, which is stupid. And so he decided to make trade changes, put companies on trade entity lists, and really start pushing back. And when he did, all of a sudden people said, wait, he's kind of right. And in retrospect, he was 100% right on this. But it goes far, far beyond trade. Where else does it go? Everywhere. So...

Let's understand what we're dealing with. And I think this is a very important thing for you and your listeners to understand. China is not like anything we've faced before. It is an adversary. It's not a competitor, right? Great power competition. We are in an invisible war, and it's been going on for a long time. You say, what does that mean, an invisible war? Well,

It takes many forms and the vectors of attack are seemingly nowhere but everywhere at the same time. Intellectual property theft. We lose more every year in intellectual property theft than in almost anything. Hundreds and hundreds of billions of dollars have been stolen by China to advance their manufacturing, to advance their dual-use technologies, to advance their military and so forth.

This is happening at universities. This is happening at companies. I mean, it was like two months ago that a Chinese citizen working at Google left the company with a thumb drive and he was on his way to Beijing. This is happening every day. You have Chinese scientists at Livermore Labs or wherever stealing stuff. So there's that element, which I think a lot of people understand.

What people may not understand is China's ties to organized crime and to money laundering operations. The Chinese at this point have as much if not more power than the cartels because they are the money bags behind everything. We lose 100,000 people to fentanyl every year. In World War II we lost 400,000 people. We're losing

a quarter of the people we lost in World War II every year. And by the way, all the APIs, all the precursors to fentanyl come from one place. They come from China. And it's hard for me to understand if the Chinese Communist Party is in control of pretty much everything, and they are, it's hard for me to fathom that they wouldn't be willingly

trying to poison the United States. It's deliberate. So there's that. We have across the world, the United States being thwarted by the likes of Iran, Hezbollah, Hamas, certainly Russia in this hemisphere, Venezuela. And a lot of it goes back to China. There is a new axis that's developing

And China is the economic might behind all of this. And so we're seeing it play out in lots of different places and it wouldn't surprise me if it's coordinated. - It seems to me like they have us at pretty much every angle. It scares the hell out of me. I mean- - Remember Daryl Morley? - I don't. - He was the GM for a big basketball team. I want to say the Mavs. It'll come back to me. I'm getting a brain fog moment.

But he tweeted something in support of the Hong Kong pro-democracy protesters, and he got pilloried by everybody in the NBA. And so why? Because the NBA makes a ton of money broadcasting in China, and the Chinese picked up the phone and said, "This guy's got to go."

There are only something like 40 American movies that are screened in China every year. And so Hollywood falls over itself to appease China to make sure that the movie can hit the Chinese censorship apparatus. So everything is compromised. Universities make money when people pay full tuition. And you've got 300,000 Chinese kids in America largely paying full tuition. So the universities are like, I'm not going to talk about China.

Think tanks. A think tank will be encouraged by China to write a puff piece or a neutral piece on a given topic, like what China's doing in Africa. And China will say, "Hey, here's a few million bucks. There's more to come. We want to see what the outcome is." The think tank will write a piece, you know, like a big Washington think tank.

which will get picked up by the New York Times, which will get picked up by the Washington Post. And the next thing you know, China is a benevolent actor in Africa. Wait, how did that happen? If you were to dissect it, how did it happen? And so, again, the vectors, it's invisible, but it's happening everywhere. And it's very scary. And they have a goal. And the goal is to kind of push us out of the picture and install their system. And their system is a state-driven economic model. And

centralized control and authoritarianism. Our model is freedom of the individual, autonomy, and free market capitalism. These two systems are irreconcilable. Okay? So this is what we're fighting. So it's more than just a country. What we're fighting is an ideology. We're not fighting the Chinese people. We're fighting the Chinese Communist Party. And they mean to take us out. And they have said,

We will take Taiwan. We will be the powerhouse in robotics and AI and synthetic biology and semiconductors. This is what we're going to do. And we'll leave a few crumbs to everybody else as long as they toe the line. And America is just kind of in our way at this point. And I don't understand how our policymakers don't see this with clarity because it's so obvious. I don't either. How much influence do they have over our policymakers? Um...

I don't know. We had a member of Congress that was, you know, sleeping with a Chinese spy. I mean, it seems to me that they are also very, how do I say, very, I mean, they'll build our policymakers' businesses over there, correct? And then they get hooked on the money, and then they can yank that business at any moment because it's a communist country. For example, it's my understanding that Mitch McConnell has a shipping business, a Chinese shipping business.

Well, his wife Elaine Chao and the Chao family has longstanding ties to the CCP back to the Jiang Zemin days. And so, yeah, of course, Dianne Feinstein, you know, RIP, had a driver for 20 years who was a Chinese spy. But that's the overt stuff.

The more nefarious stuff is it's very plausible and very likely that Chinese companies are hiring lobbyists in the United States to lobby on behalf of whatever, TikTok or whatnot. Chinese companies may invest in American businesses that in turn have money to donate to politicians. And then, of course, you know, you have an entire population.

Let's take the automotive sector. If Ford or Volkswagen or major automobile companies were to leave China, it would result in a massive problem to their bottom line and to their share price. And the last thing they want to do is upset their shareholders. And so they don't want anything to change.

And then, of course, you've got Wall Street, who is singularly focused on one thing, and that is maximizing profit. And they're doubling down on China. And they have been for years. That's starting to reel itself back because they're recognizing that they're not making money anymore. That's really the reason why they're dialing it back. And they see geopolitical conflict. But if China were doing well economically, they'd

feet at the trough of Chinese stocks day in and day out. And these are American fund managers. They're like, I don't care. I'm here to make money. And don't get me wrong. I get it. If you're a fund manager, you have a fiduciary responsibility. You have a moral responsibility to make sure that your pensioner's grandma gets her pension check and you will invest wherever there's money to be made. Okay, I get it.

You have to balance that, however, with patriotism. And sometimes you may be investing in a company in China that's building parts for the next weapon that's going to kill our soldiers. And so you have to balance patriotism with making money. You had mentioned, speaking of weapons, you had mentioned quantum communications in space. Yep. What is that?

Something that I'm clearly not capable of fully explaining because I'm not a quantum physicist. I don't understand in the quantum world how you can be a zero and a one at the same time, but we'll table that for a second.

It's a means of communication that relies on new technologies that can't be hacked, can't be traced. And I think people are trying to still figure out how it all works. Is this quantum entanglement? Yeah, it's quantum entanglement. You can basically have a base station on Earth and a satellite, and through quantum entanglement and quantum communications, you can make the satellite do stuff.

How it works, I'm not qualified to answer. But yeah, this is very serious stuff, and they're making advancements in technologies that we need to be mindful of. Are they more advanced than we are? In many ways, yeah. How else so? Well, I mean, consider if you think...

I may be wrong on AI, but if you think of AI as several things, it's an algorithm that's doing pattern recognition, that's also ingesting the entire body of everything that's ever written, and there's energy that feeds the GPUs. China has data sets that are much bigger than ours, and they don't have privacy laws. So you're able to ingest a lot more data.

I'll speak out of both sides of my mouth here because the Chinese AI industry is faltering in many respects because they're trying to censor what goes into the machines. Like, what if something is anti-CCP or anti-Xi Jinping? So they've created filters and blockers to make sure that the AI fosters Xi Jinping thought, which is a strategic blunder. But they have huge data sets.

They own the entire ecosystem of drones. DJI is a drone company. It's Chinese. And nobody can compete with them at this point. And so they just manufacture drones better and cheaper and at scale that we just can't compete with. Shipbuilding. We can't build ships anymore in the United States, especially naval ships. And you can't throw...

You can keep throwing money at Huntington Ingalls Industries, a big shipbuilder, or an electric boat, the submarine builder, but they still can't build them fast enough. China's crunching out new ships. Every four years, they create the equivalent of the British Navy. We can't compete with that because we don't have shipbuilding capacity. Hypersonic missiles, something that we discarded years ago. They took our technology and they've created hypersonic missiles that are really good and really scary.

Satellites, they're launching constellations of satellites. What are we doing? They're sending, they're going to, at least they've purported to want to build a moon base. They're going to build it. And so I think if there's a thread in this conversation, it's that we need to get our game on because these are very, very serious times and it requires serious thinking to figure out what we do.

Are they creating a lot of the division that we're seeing? No, I think a lot of that is self-hatred. We've been rich for a long time as a country, and I think as enough time passes and generations become wealthier and wealthier, they look for nonsense to think about. When you're not thinking about your daily needs, you start thinking about other things that are, in my opinion, stupid. So you create problems out of nothing.

So a lot of it is our doing. However, do I believe that there are influence operations? Do I believe that our adversaries, whether it's Russia or China or Iran or Hamas, do they affect our ability to... Sorry, are they influencing social media? Yeah, yeah. What about... I mean, I don't... There's got to be at least a glimmer of hope.

I hope. But I also want to talk to you about BRICS. Sure. It's my understanding that BRICS is, the entire mission is to devalue the U.S. dollar and completely wipe it off the... All right, let's begin with Glimmer of Hope, and then we'll go into BRICS. Okay. At the end of the day, I am a firm believer in the American spirit, and I believe that freedom...

People often think of freedom and they think it's a meme of some kind, of Mel Gibson in Scotland with a blue face and freedom. But what freedom means is anybody in the United States can make it.

from a single mom that came from Cuba with no college education to a half Kenyan president of the United States, anybody can make it here. And you have the freedom through hard work, the application of effort, through taking risks, and from just busting your ass, you can do anything here. And so I think if we harness that energy that we still have in the United States, we will prevail.

So there is hope, 100%. But we need the will and we need the leadership to harness that. We can't tell generations and generations of American kids that our country sucks, that we're not worth fighting for, that we're irredeemably evil or racist or something, because that's not who we are. Have we had a troubled history? Sure. But every country has. The Roman Empire. I mean, every country, every...

place of note. Every important society has had their share of flaws, but I think we are a force for good. So there is hope. We'll pivot here to BRICS. So BRICS, I'll tell you the story. Back, I don't know, 25 years ago, there was a guy, Goldman Sachs, whose name was O'Neill, if my Alzheimer's is working correctly.

And he coined a phrase called BRICS, Brazil, Russia, India, and China. That's what it stands for. And he said, these are the countries that are going to be important in the future. Look at their population. It's huge. Look at the number of young people they have. Look at how their economies are growing. We should pay attention to these four countries. That's how it started, from a guy, Goldman Sachs.

Since then, a lot of fund managers have put a lot of money into the BRICS countries, thinking that their stock markets would perform well. Foreign direct investment plowed into these countries, particularly China. And for a while, the BRICS was like a thing. China developed the notion of creating a BRICS bank.

where you take these four countries, and now you can glom on other, you know, South Africa wanted to join, and then Mexico and Saudi Arabia. Now it's become, you know, bigger than it originally was, but it's still called BRICS. And so China in Shanghai developed the BRICS Bank. Now it's called the New Development Bank. And its objective is, today, its current incarnation is, how can we conduct trade in the BRICS,

global south, I'm throwing these names at you, the global south is like the developing world, so that we can trade with each other more freely. Up until for the last many, many decades, trade has been conducted using the dollar as the unit of intermediation. Whether commodities, the currency that underpinned commodities has always been dollars.

So when you buy oil, oil is traded in dollars, whether it's in Saudi Arabia or whether it's in the UAE or whether it's in Indonesia. It's a dollar system. And so the BRICS are saying, why should we have to transit the U.S. dollar to trade soybeans from Brazil to China? Isn't there a way that we can do this internally? They're not going to create a currency, a BRICS currency, but they're trying to figure out how they...

square away the plumbing, the financial plumbing, so that they don't have to go through the dollar as the intermediary. So that's what's going on. How does that affect us? Well, if the dollar isn't the reserve currency, we're screwed. Like, we become, I don't know, Argentina. It can be very bad. So let's back up. I'll begin with our fiscal deficits, and I'll take this back to why the dollar is important. Okay. So right now,

We spend $7 trillion. That's the latest budget proposal. And we generate in tax revenue like $4.9 trillion, right? So there's a deficit of roughly $2 trillion a year. Now, people don't understand unless you can make it real for them. So let's take out a bunch of zeros. Let's assume you as an individual are making $49,000 a year and you're spending $70,000 a year.

Well, okay, that's bad. That's fiscally irresponsible. But that's what we're doing as a country. If it's you as an individual in that scenario where you're like $20,000 short every year, what do you do? Well, you max out your credit card one year. Okay, that covers you the first year. The second year, you take out a loan from the bank to pay maybe your credit card or whatnot. But over time, that's not sustainable.

So what happens is when we have a shortfall, the way we generate revenue in shortfalls, other than tax revenue, right? Tax revenues are 4.9 trillion. How do you get to seven? Well, we issue bonds, right? So we sell bonds around the world. And when people don't buy for whatever reason,

The Fed buys the bonds. The Fed is the buyer of last resort. So you've seen the Fed balance sheet basically go from like $4 trillion to like $8 trillion because they're the ones buying everything. Well, how are they buying it? Well, they buy it by printing money. And so the printing presses have been off the charts, certainly since COVID and throughout this administration. And that, of course, has caused inflation and a lot of other problems, which we can go into. Now, the artificial demand for dollars around the world,

is largely due to the fact that 60% of central banks have the dollar sitting in reserves. And also because the dollar is used as the unit of trade for commodities, for foreign exchange. Like if you want to go from Colombian pesos to, I don't know, Indonesian rupiah, you have to go through the dollar. If the dollar isn't there because nobody wants to use the dollar, we're screwed. All that artificial demand for dollars disappears and we crater.

We're not going to—forget financing the next aircraft carrier—we're not going to be able to pay Medicare. And that's when things get really, really bad. And it just takes leadership in our government, in our Congress, and in our executive branch to say, "Enough! We can't fund everything." And there are things that, you know— look, we have 88 million people on Medicare, 65 million people on Medicaid, 8 million on disability,

44 million on food stamps. That's like, I don't know, I'm not good at doing math in my head, but that's like a little over 200 million people in America that depend on the government. That's not sustainable. There's only what, 350 million? 340 million, something like that, 336. So we have to do something to really rein in our spending. And we're adding a trillion dollars of debt every 100 days.

And so who do we owe the debt to? Mainly ourselves. We do have a bunch of foreign debt buyers. China had at some point, you know, close to, you know, maybe a trillion and a half or two trillion. And they've been paring that down. They've been selling. Why? Because they don't want to get sanctioned. They learned from Russia. Once Russia invaded Ukraine, we basically sanctioned everything. We took all their money and we're like, OK, it's ours.

So when you have a central bank that has dollars in reserves, it's not like there are bales and bales of money sitting in the Russian central bank in a dungeon. It's sitting at the Fed. And so we can turn the money off whenever we want. And so China was like, hmm, I don't know that I like this. So I think I'm going to start selling treasuries. So it's a problem. And the debt is a problem for many reasons. We're always issuing new debt, and there's debt that gets paid back.

And as we start paying back some of these shorter duration loans and bonds and government obligations, we have to borrow at a new rate. And that new rate is really high. And so, I mean, the three month, I think, is like five percent and change. It used to be zero. And so now we're borrowing money at higher interest rates, which means we have to pay, you know, our government is paying more in interest on our debt, over a trillion dollars in interest alone. And we're paying $850,000.

million, 850 billion for our Defense Department. We're paying more in interest, just in interest to service the debt than we are paying for the Defense Department. You tell me, is that sustainable? We're screwed unless somebody changes things in a very radical way. And in D.C., nobody seems to care. So the people that own the debt are

The Fed. Bonds? People buy bonds. Yes, the notes and the bonds. There's an entire marketplace. Some are owned by big financial firms. Your 401k probably has a bunch of government bonds in it.

So it's owned by ourselves individually through our 401ks. It's owned by large corporations like BlackRock and Vanguard and so forth, Goldman Sachs. It's owned by the Fed. It's owned by institutional buyers, foreign buyers like the Saudis and the Japanese. It's owned by a lot of people. And can they call and collect?

So the way a bond works is, I owe you 100 bucks, I'll pay you back in five years with interest. I'll pay you 5% interest a year, and then in five years, I pay you the principal. So they do come to collect once the bond is due. And that's what the foreign countries are doing as well? Yeah, I mean, well, you go- So it's all bonds?

So you have many types of government obligations. You've got a three-month, you've got a six-month, you've got a 10-year, a five-year. So there are lots of bond durations, and there's a giant marketplace for this. People are buying and selling these bonds all the time. It's not like that IOU that you just purchased from me, like I owe you $100, I'll pay back in five years. You can take that IOU and sell it to your sister.

And your sister can sell it. And then there becomes a secondary market for these. And there's like a giant marketplace of people buying and selling bonds. Okay. So what does it look like when we default? I don't want to be around when that happens. I'll be in a Mennonite colony in Paraguay, you know, living off the land or something. No, but joking aside...

It can get very bad very quickly. Can you paint a scenario? Sure. A scenario where it can happen very quickly and it can happen over a long period of time. Over a long period of time, people start losing faith in the dollar. Our obligations become less and less valuable to them. Faith and credit in the U.S. dollar becomes less

impaired. The dollar loses a tremendous amount of value. It depreciates significantly compared to a lot of other places. We see huge amounts of inflation, perhaps hyperinflation, or it can happen very suddenly where we just can't meet the obligations of the federal government.

So, you know, we have $7 trillion that we need to pay out every year in whatever, right? And maybe we have to fire people. We have to fire the...

24 million government workers. By the way, there are more, twice the number of government employees than there are manufacturing employees. Man, that's... 12 million versus 24 million. When you told me that last night, that blew my mind. Maybe we have to fire people. Maybe people have to take a haircut on what they think that they're due. Maybe we can't afford a lot of the social programs that...

Some of which are, you know, very important to people in poor communities. And these people in poor communities are saying, well, that was my lifeblood. Like, now I can't buy food. And people get really pissed off. I mean, maybe if we just quit funding Ukraine. Yeah. I don't follow the Ukraine-Russia as much as I do China. But I don't understand how cooler heads can't prevail and get us to some...

peaceful outcome. At this point, it's probably too late, but I have hope that future leaders in the United States will take an important role in getting these two sides to the table and saying, let's figure out a way to end this. It's in everybody's best interest to end this thing. And I think Putin is obviously indefensible.

But I just don't know what the strategy is. If you were to sit down and talk to anybody in Washington and say, what's our desired end state? Do we want regime change in Russia? Is that the desired end state? No, no, no, no, we can't do that. Well, is it to preserve the territorial integrity of Ukraine? Okay, yeah, I can buy that. But how do we do this? So I'm a first principles thinker. What is your desired end state? And let's go back and get there.

But I'm not quite sure what we're trying to do. Maybe because I'm not in the know. And again, I'll caveat this with I'm not following the Russia-Ukraine issue as much as I'm following the China issue. Well, I mean, I'm asking you because of what you're a part of now with the venture capital firm and defense stuff. And so could it be that it is the military industrial complex companies, Lockheed Martin,

So is Lockheed and, you know, are they pulling the strings behind Ukraine? Look, I don't know. Yeah, what I'm asking is, are they lobbying Washington to vote this in so that they can send their weapons over to Ukraine? I'm not really in the know on those discussions. I really couldn't tell you. Okay. What I'm more concerned about is that we're pretty much out of javelins.

We're pretty much out of 155 rounds. We're out of a lot of stuff. Our arsenals are getting depleted. And if there's ever a real shooting war over in Asia, what are we going to do? That's my bigger concern. And so I think that we need to start rearming ourselves very quickly because something is going to go down in Asia when we least expect it, and we're not going to be prepared. And it's in things that are...

seemingly nonsensical that are super important. I'll give you an illustration. A few days ago, China restricted sales of a metal known as antimony to the West. Both China and Russia together, they comprise probably like 85% of the world antimony market. Why is antimony important? Because we need it to make bullets. Without antimony, we don't have bullets. We don't have ammo.

because they mix it with lead and whatever. So a bullet is made of a bunch of different metals that are forged together. It's an alloy. And antimony forms an integral part of that. China's like, "Oh, guess what? No more antimony for you guys." So I ask you, how are we going to make bullets? What's the plan? And it's something as esoteric and stupid as a minor metal

But that minor metal is super important to everything else. China restricted gallium and germanium six months ago, and those are crucial ingredients to make semiconductors. And China says, well, sorry, guys, they're not leaving. So gallium and germanium prices exploded. And so these are things that are seemingly irrelevant today.

But in their totality, they're super important. Does that make sense? It makes perfect sense. It makes perfect sense. It's looking pretty grim. There's hope, man. We're America. Yeah. And I think with, like I said before, with good leadership, with humility, and I think a return to our roots, right?

Look, I'm a man of faith. I don't wear it on my sleeve or anything, but I think that it would be good for the United States, many of us at a ground level, not the government, to return to our Judeo-Christian roots, especially when things are on fire. It's like the story of the pilot who was flying into the landing strip, a commercial pilot, and his rudder stopped working, and so he called the pilot

the flight deck and the tower and said, "Oh my God, my rudder is flailing." And he was told by the tower, "Okay, listen, here's how you fix it. You've got to do this, that, and the other, and press these buttons, and just repeat after me. Flaps, check. Engines, check. Rudder, check. Okay, good." And he kept going down the approach, and all of a sudden his left engine caught on fire. And he calls the tower again and says, "Oh my gosh, what do I do? The engine's on fire."

They went through the same rigmarole and the buttons and turn off the fuel and repeat after me, flaps check, right engine checked, rudder check, okay, good. A few seconds later, the other engine's on fire and the tower says, okay, repeat after me, our father who art in heaven. So it's a joke, but I mean, I think that when we're in a difficult situation, I think the best thing we can do is to pray, get back to our value system,

and just brush the dust off and get back on our feet. We will prevail. Yeah, I hope we do that. I'd like to circle back on some of the... We're going to totally switch it up here. Sorry about that. I'd like to circle back on some of the Web3 stuff. Sure. What is Web3? What I alluded to earlier. Web3 is decentralized finance. So in simplistic terms...

Centralized finance is everything is at a central server, central location. Visa, for example, has something called VisaNet. It is gigantic. So it's in the DC area. Think of football fields of servers that are processing my credit card transaction at Walgreens.

or CV, whatever. And so it's saying, Eric is Eric, Walgreens is Walgreens, and they're matching these transactions. They're using know your client. They're making sure that I have enough credit in my account to pay, that Walgreens is, you know. So there's a lot of stuff happening in all of these servers in a centralized location, right? Check, centralized. Decentralized, imagine that server farm, what's the right word? Atomized, dispersed,

along a lot of different servers everywhere. And so my transaction is not going to a central place. It's bouncing. That same transaction is bouncing upon a lot of different servers. Okay. So this is only finance? Well, I mean, you can do decentralized identity, right? Let's assume at some point, you know, you're going to have a passport, an electronic version of a passport.

You can do decentralized identity where all of your information resides in lots of different computers everywhere. You can decentralize lots of things. So is it a new internet? It's a new way of transacting between people or between entities or between institutions, yeah. Okay. Where the transaction eliminates the middleman.

That's super simplistic. We can really go into the weeds and lots of different things, but getting too technical sometimes just people zone out. But yeah, and you can do it in a trustless environment. So right now, the VisaNet exists because I'm a trusted agent in the system and Walgreens is a trusted agent in the system.

But in a world that, you know, in a trustless society, you can decentralize a lot of stuff. Okay. So, hence the origin of Bitcoin. I would encourage anybody who's listening to read the original Bitcoin white paper. It's like eight or nine pages long, but it lays it all out. Okay. It's really good. That's what started it all. I wanted to... We had a good discussion about Bitcoin last night. Sure. And I was...

How do I say that? I was surprised to hear you seemingly pro-Bitcoin. I haven't talked to a lot of people in finance who like Bitcoin. Why wouldn't it be? It's an asset class like any other. You can go jogging on the treadmill and watch CNBC and watch the stock tickers, and you see the prices of gold and soybeans, and oh, guess what? Bitcoin is there.

it's a real asset class. It's a legitimate asset class. People are able to buy Bitcoin ETFs. And so it's really, it's a version of digital gold. So it's an asset class that rises and falls like any other commodity. But it's

It's a perfectly legitimate asset class. Does it concern you at all that nobody really knows who created it? Does it concern me? No, because to date, Bitcoin, you know, it's been what, a decade and it's still working just fine. Okay. And while there have been hiccups along the way, the hiccups haven't been related to the Bitcoin architecture itself.

The hacks that you hear about, like Mt. Gox, which was a famous exchange in Japan back in the day, it's the exchange that got hacked. It's kind of like saying, you know, the New York Stock Exchange got hacked, therefore stocks, I'm not going to buy stocks. Okay. But no, you know, Bitcoin itself has maintained its integrity for a decade because the architecture was genius.

Well, Eric, we're kind of, man, we've covered a lot so far. We've covered a lot. But I want to get into what you're doing now. Okay. Well, when the Trump administration left and Biden transitioned in, I thought to myself, what am I going to do? I'm 50 years old, and I want to do something intentional and purposeful.

And so as I started thinking about what to do, I had really two tracks. One track was, as I think we covered a lot of it earlier, how can the United States remain the preeminent global currency? And how do we need to think about the Chinese central bank digital currency with its authoritarian hand and how it could potentially be hurtful for the rest of the world? I didn't cover this

But China has what's known as a social credit score. Are you familiar with this? Somewhat. Yeah, so at a baseline, think of your credit score when you go to a bank. They're going to want to know, do you have bills outstanding? How much debt do you have? Do you pay your bills on time? And you're given a score, right? Now, take that and give it steroids. Did you buy diapers? Are you a good father? Great, your score goes up.

Do you engage in pro-Xi Jinping rallies? Have you read Xi Jinping's thought leadership guide? All these things make you go up or down in the social score ratings.

to the point where there are apps on the phone in China today where if there's an individual with a low social credit score near you, you can avoid them. Are you kidding me? No, it's really bad. I did not know that. It's not a Black Mirror episode. This is reality. As you're crossing the street, if you're jaywalking, the cameras are monitoring you through facial recognition. The phone is geolocating you. And as you're jaywalking,

the system is taking money out of your bank account for jaywalking. And so everything you do is monitored. And that includes, of course, your purchases and the Chinese digital currency is a part of a broader plan to impose government will on its citizenry. That's frightening. And so I was, how do we help the US dollar and how do we preserve freedom

And that got me down the rabbit hole of Bitcoin and decentralized finance and so forth. So that was one track. The second track that I've spent the last several years on is I went back to my roots as a naval officer and I came to a few conclusions. The oceans are important and they're important for a lot of reasons. For the last several decades, 25% of the fish have been depleted from the ocean.

I live on the water in Miami. Like, the ocean is important to me. So China's building, you know, four times the number of ships that we are, ten times the number. They have a 300 to 1 shipbuilding advantage in tonnage to the United States. 300 to 1? 300 to 1. Commercial shipping lines are getting attacked by Houthis in the Red Sea with, you know, Zodiacs and Stinger missiles, right? So...

It's seemingly out of the blue, the maritime domain has become important. So together with a team of folks, we created a fund focused on the intersection of technology and the maritime domain. So tech, companies, and maritime, with basically three pillars that hold up our strategy.

The first is commercial shipping. How do we make it more efficient? Can we put Internet of Things inside of shipping vessels that you can track everything from how the engine room is doing, just like you have sensors on your car, right? Can you put cameras on the ship that can allow you to see navigational obstacles way in advance so that you don't have to do crazy turns and you can save gas?

So port software. China controls like 80% of the world's software that operates ports. It's crazy. That's a national security issue. Anyway, so commercial is one leg. The second leg is sustainability, whether it's countering illegal fishing, mapping the ocean floor,

or decarbonizing ships because the International Maritime Organization has mandated that ships lower their carbon footprint. So that could mean technologies around new paint coatings, new propulsion systems, things like that. And the third leg, so track one is commercial, track two is sustainability, and track three is national security. And that probably needs no explanation. So that's what we do. We invest in tech companies.

And we're looking to not just invest in them, but make them better, help our portfolio companies along, and hopefully make a meaningful change to the world's oceans. What else are you guys mapping under there? Well, I mean, we invested in a company that, so we're a fund. And so what we do is we invest in companies. One of those companies makes a drone that maps the ocean floor.

And so think about, you know, when you mow your lawn and you're kind of going backwards and forwards and, you know, you can map a kilometer of ocean floor and find, you know, there's a little hill there, there's a mountain there. Oh, look, there's a ravine. And why are you doing this? So that you can put the next fiber optic cable. You're going to need to know where to put it. You're going to need to potentially track marine mammal migrations.

where you're going to put the next offshore wind turbine. From the national security standpoint, a concern is that perhaps China or adversaries have put ordinance on the ocean floor. So there are a lot of things and there are a lot of reasons. Just like you have Google Earth, two-thirds of our planet is ocean.

but we haven't mapped the ocean floor. So I think we need to. And the United Nations has mandated that we map 27 times the size of the United States over the next few decades. So yeah, there's going to be a lot to do in that space. But that's just one of our various companies that we're investing in. Which ones are you... Is there one in particular that you're most excited about? I'm excited about all of them. Okay. And what I'm really excited about is...

the mentality and the entrepreneurial spirit that we have in the United States, where you have founders that are making the most amazing things and inventing the most amazing things. And like I said before, the American spirit is alive and well, and we will prevail. And we will prevail because we have founders

And we have entrepreneurs that have the stamina, the creativity, and the desire to just build and do awesome things. And I stand, like, I'm in awe of the folks that we're investing in, many of them. That's what gives me hope is that there's still an incentive to create in this country. And...

That's important. And we will prevail. So thank you for chatting with me. I hope I wasn't too loopy or said anything nutty, but just gave you a little bit of my background and I'm very happy to be here. It was an amazing interview. Fascinating. I learned a ton. I know the audience did too.

I gotta say this, I would love to be connected with somebody at the executive level at that underwater drone program to interview them. Sure. And I would like to ask you if you had three recommendations for me to interview, who would they be? Elon Musk comes to mind.

Just iconic people that have done amazing things. Elon Musk, for example, I'm not sure if he's human. How do you create an electric car company, a space company, a satellite company, Neuralink, Twitter? I don't know how he does it, but he is seemingly successful in many, many disciplines. And it's just awe-inspiring that America was able to

attract, because he's from South Africa, attract somebody to come to the United States and do these amazing things and has given him the opportunity to succeed the way he has. But I'm sure I'll come up with other names. Those are just the iconic top of mind folks. Those are some big ones. I appreciate it. All right. Well, Eric, I also really appreciate you coming to Franklin and doing this interview and

It's been a real honor, and I learned a ton. So God bless, and best of luck to you. Thanks.

Hey, it's Rich Eisen here. Join me and my compadre, Chris Brockman, every Monday on the Overreaction Monday podcast. Rich, Jameis has taken the Browns to the playoffs. Dude, why can't they win seven, eight games to finish the year? Why not? I'm not saying there's no why not, but this is a definitive statement that's clearly an overreaction and it's perfect fodder for a show like this one. I appreciate you coming out of the gate hot.

Come react or overreact with us. Overreaction Monday, wherever you listen. It's game over. Over, man.