Rob’s comments below are in italics.Derek’s comments below are in normal font.

We thought we'd comment on the state of the world and some goings on today that relate to Sovereign Finance. So what's been going on that people should be paying attention to?

Well, there are lots of things that don't seem to be working. Rather than addressing them, our wonderful leaders seem to be simply doubling down. Some commentators think that Britain, France and Germany are all on the brink of civil war.

Pouring more petrol on the fire in the process of talking about it...

It would surprise me if it came to that. Once again, the trouble with civil wars is that they're probably more divide and conquer than actually overthrowing the causes of the problem.

It doesn't benefit the proles. Also, we're not well-equipped enough for it.

No, America, of course, is a different story. The assassination of Charlie Kirk this week has thrown that into sharp relief. I'll have a word about that in a minute.

I have to admit I didn't know who he was until that happened. It was pretty clear that whoever fired that shot was a professional and made a professional-level getaway.

Well, whether they were professional or not, they were certainly extremely competent. Whether or not there was any collusion in allowing them to get away is yet another question.

Yeah, there were two guys right behind him making funny hand signals right before the bullet hits him in the neck. Lots of things that look a bit suspect.

The thing that has come up for me is the extreme polarisation of the reactions to it. There are a few sane voices who are saying, well, you might or might not like what he was saying. But if we haven't got the right of people to express themselves and to deal with disagreements in a civilised manner by entering into a debate, then we're on the way down.

Ultimately, a family has still been left without its dad.

Yeah. I was generally aware of him, not of him personally, or the particular focus of his movement. But a few months back, I bumped into some videos of one of the meetings of his organisation. But we're still bumping up against these ‘left-wing’, ‘right-wing’ labels. Those terms are practically meaningless these days.

Thinking back a few decades, the distinction was pretty clear. Right wing meant being conservative, basically wanting to keep things the way they were, which primarily means keeping the privileges of the elites in place and keeping everybody else down. Left wing was anything from mild socialism to extreme communism, but essentially at least arguing in theory for equality of something or other between human beings. At least equality of opportunity and equality of access to education, and at least a bare minimum material standard of life. I'd find it difficult to argue with that as a broad agenda, but of course, it doesn't always work out as well as that in practice.

I quite like James Corbett's distinction where rather than left and right, it's actually uppest and downist, where uppest is your for more centralisation, more big power structures and downist is more towards anarchism.

Yeah. Anyway, so to get back to the, as I said, the same commentators to my way of thinking were the ones who said, you know, shooting people is no way to resolve disputes, basically. Freedom of speech is a genuine good; in fact, it is essential for the proper functioning of society.

We've been saying this on the show for ages as well, haven't we? You should go and listen to people that you disagree with, at least to try and understand what it is that they're trying to say.

I do a lot of listening to people I disagree with. But anyway, what it threw up was the extremity of the polarisation, particularly in American society, but across the Western world generally, possibly even the entire world, for all I know. But apart from the few sane voices, the majority of the comments are either "Ha ha ha, he got what's coming to him. That's what comes of saying that you support the Second Amendment and people should own as many guns as they like." Then, on the other hand, you've got people going, "we've lost a wonderful person who was a great leader, he would have made a wonderful president of the United States at some stage." Taking such extreme positions doesn't bode well.

No, the point to me is that anyone like this in the public eye shouldn't be endangered by visiting a university to give a talk.

Yeah. Another notable thing is that yesterday was the 11th of September, which marks the 24th anniversary of 9/11. Over yesterday, the day before and today is a major conference on the events of 9-11. Were you aware of that? No? Exactly. It hasn't got much coverage in the mainstream media.

Is this truth-based event of what really came to pass on that day? For people who have questions about how three massive buildings collapsed into their own footprint? And a missile-shaped hole appeared in the Pentagon?

Rather than an aeroplane-shaped hole. Of course, it happened to take out the office where they were investigating the hole in the Pentagon's budget…

You can't write this stuff can you? Or about how the steel girders apparently disintegrated, but two passports floated to the floor of Manhattan. Yeah, yeah, sure.

If you wrote it in a novel, nobody would believe it.

So apart from that, we've got Israel. Just when you think it can't get any worse in Gaza, it does. Just when you think Israel and their at least passive supporters in the West can't lose any more credibility with the rest of the world, it seems they do. Then they have an attempt at the so-called Houthi leadership in Yemen and certainly killed a lot of civilians there.

It's desperate actions by people who are likely to fail at what they're trying to do.

Well, I don't see how there can be any success. War orphans make great terrorists.

Why did Hamas exist in the first place? Other than the fact that the Israelis funded it, but why did people in Gaza want to get their own back in the first place? You don't have to be a huge historian to work out that.

Then of course, there was the attack on the Hamas negotiators in Qatar. There are two things. Well, three things about that. First of all, America arranged for them to go there to have peace negotiations, and then they got assassinated. Once again, it looks as it did with the Iranian situation, that America set up a meeting and that meeting was targeted for a lethal attack. Who knows whether that was deliberate or not? Yet again, the mere fact that there've been no cries of outrage from official sources in America shows how much under the thumb of Israel the American leadership is.

My rule of thumb is that they lie about everything, so the truth is probably the opposite of whatever they're saying.

Well, that's about the size of it anyway. Somebody pointed out that even the Mongols didn’t kill envoys or diplomats. That's just common sense, as well as established international standards of behaviour.

Even people who raped and pillaged their way across half a continent did not resort to that kind of tactic.

They didn't. It's also been a little while since the meeting in Alaska between Trump and Putin. As far as the Ukraine conflict goes, nothing much has changed.

Trump's public announcements are pretty mystifying, apart from explanations along the lines of:

* A, he's not very bright

* B, he has no attention span

* C, he's got no sophisticated knowledge of history or geopolitics or anything else. He's a real estate speculator and a TV reality show star.

But you've also got to take account of the fact that there are manipulations by what you might call the deep state intelligence services and their associates who have been really controlling the actions of every president since Kennedy.

So on the one hand, nobody knows what pressure or what leverage he's under. For another thing, he has to do the balancing act of keeping all his political enemies at bay, who seem to have significant legitimate grounds for criticism of him. Also, to keep his own supporters in line, who must be deeply dissatisfied by whatever progress they thought he was going to make towards their well-being.

I don't think he cares about his own supporters, for what it's worth.

Well, he's got midterm elections coming up at some point. I'm not an expert in American politics, but I would have thought there was a good chance that he'd lose control of both the House of Representatives and the Senate in those. If he does, it will be extremely constrained. So that's why he's got to pander to such supporters as he still has, as much as possible.

Anyway, so there's that, but the main thing is that Zelensky is not prepared to budge an inch. I don't know how convinced people are about him claiming that Putin's not interested in talking, when it's quite obvious that he's just taking an implacable position which makes it impossible.

Then you have the European leaders. In Britain, we can't keep our schools in order, our health service or the holes in the roads, and yet they're proposing to spend enormous sums on weaponry. Which if they get sent to Ukraine, will be annihilated in very short order.

Yeah. Super.

Whatever you think about the morality of the situation, any proposals you make, I should have thought, have to be grounded in some sense of realism. I would have thought any assessment of realism would indicate that the whole of Europe couldn't drum up an army that is capable of engaging with Russia in any way that wouldn't be annihilated in literally a matter of weeks, as far as I can see.

The alarming thing is that they are just talking up the prospect of war more and more as time goes by.

I don’t think there's any appetite for it, other than among the people who claim to be in power. I don't think anyone else wants it.

War is the last-ditch response to losing popularity. Look at what happened to Margaret Thatcher up to the point of going to war in the Falklands. Her popularity was plummeting for plenty of adequate reasons. All of a sudden, the whole country was behind her.

Over a rainy rock in the South Atlantic covered in penguin poo.

It has usually worked up until now that the country rallies behind its leaders during times of war. That's possibly what they're relying on...

Except we now have the internet to talk to each other.

We now have the internet, which is, of course, a big game changer. So, the reality is that there still seems to be the delusion that Ukraine might manage to get some victory, whatever they imagine that would look like. Anything short of driving Russia out of all of the areas that they have actually taken by force of arms strikes me as improbable in the extreme.

In fact, on the ground, there's only one little bit of the front where Ukraine is pushing back at small areas of territory that Russia has captured. That's to the northeast of the Kursk. That seems to be the only area of the front where they actually have got motivated, well-equipped, crack troops. Nobody really knows what cost these battles are being fought at.

But they've had to divert such resources from other parts of the front. The Russians are just moving ahead by leaps and bounds there. There was the opportunity again for a diplomatic solution that was rejected. Russia is clearly going to press ahead and resolve it on the battlefield, which is tragic. Both sides are losing lives all the time in every single life that's lost as a tragedy, whichever side they're on. We won't know until the war's over and the accounting is done, but this is tragic.

Of course, the latest thing this week is a lot of jumping up and down over the fact that 19 drones of Russian design encroached on Polish airspace. I note that almost all of the mainstream accounts of this repeat over and over again that this was a deliberate incursion by Russia. Actually, it's impossible for anybody outside to know. The only person who knows is whoever launched those drones. But to me, it doesn't even strike the plausibility test. Russia has so much going on that it doesn't need to go out of its way to do something that will cause a lot of aggravation and adverse publicity.

It could be a false flag event.

It wouldn't be the first time, would it? Finally, the ongoing grind away is on the international economic front. Several commentators I've heard lately say that the dollar is on the way out as a global reserve currency, which we've discussed several times. But most of them say this will take decades. My own guess - this is just my personal estimation - is that it could happen much more suddenly than that.

I heard some interesting statistics this morning. About 40 years ago, Europe had 10 times the level of economic activity as China. Now, China's economic activity is about equal to the whole of Europe put together. Europe is seriously economically declining as we speak. China is still going from strength to strength.

That in itself is significant. Of course, we have recently discussed the BRICS organisation, the Shanghai Cooperation Organisation, and ASEAN, the Association of Southeast Asian Nations. All of these are collaborating more and more tightly together. They're doing more and more transactions independent of the dollar system and independently of the American banking structures and institutions.

So we could turn around and see something reach a tipping point very quickly. So just watch this space. So that's about all I wanted to say for this roundup. You got any other comments?

If you told me 10 years ago that this would be the state of the world today, that we'd be banging the drums of war about going to war with Russia, I'd have been like, “nah, all of that's in the past!” So, I suppose that illustrates how poorly we tend to predict the future and how much we underestimate the people ostensibly in charge.

Yeah, absolutely. Of course, it's not helped, as we keep saying, by refusing to acknowledge or listen to or analyse what, if you like, our opponents are saying. For instance, while he was in China, Putin gave a very clear, very measured, striking speech to a big news conference over there. So I searched on the BBC website for “Putin press conference”. Guess what the most recent result I got was for that.

About 2015?

It was Putin and David Cameron giving a press conference in 2013.

Yeah, there we go. Propaganda is as much about omission as what they say.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We’ve got some thoughts to share on the SCO Summit, which before this call, I was not aware of. So what is it, and what do people need to know?

Well, it's the Shanghai Cooperation Organization, an organisation which is oriented towards both defence and trade. It's another thing which has expanded enormously over the last few years.

One of the most notable things about it, which has largely been ignored in the Western media, is the enormous camaraderie between Putin, Xi and Modi from India. One of the things I found very interesting was comparing their body language, which came across to me as entirely natural and spontaneous. They were walking around grasping each other's hands, smiling, chatting, clearly totally relaxed with each other.

If you contrast that with all of the European gatherings, there's a lot of smiling and hugging and shaking hands. Even more ridiculous when you see it in movement, clearly posing for the camera, where they are shaking hands and turning to look at the camera, grinning inanely. The whole thing comes across to me as very clearly staged and formulated. They're not even terribly good actors.

Yes it's a PR exercise. Can we have some better actors please!

After all, Ronald Reagan was an actor.

Trump's got a few acting credits in his bio too...

Yeah, well, of course, he was in the reality show. He imagines he still is. But that's another story.

Anyway, the point is that there was clear enthusiasm. A major report was issued, detailing their findings on the future of global governance. It's the same theme. It keeps on recurring. It's obviously a wave of the future. It's building momentum. The theme is a multipolar world.

There was a catchphrase they had. The paper they produced was titled the Concept Paper on the Global Governance Initiative. I searched the BBC website for global governance initiative, and nothing came up.

One of the section headings was sovereign equality. This actually sums up the theme being pushed by both organisations, which is purely a trade, economic, and global finance outfit.

These two groups both have considerable overlap in their membership. Obviously, both of them have got Russia, India and China in them. Indonesia, Iran. Then there's another group of countries which are in one or the other, but not both.

The underlying themes discussed are very much along these lines. What's summed up by that phrase ‘sovereign equality’, is the idea that one nation-state has just the same rights to respect and justice as any other.

This discussion about multipolar polarity is obviously an attempt to move away from the unipolar world that the United States imagined it was living in since the collapse of the Soviet Union. Before that, we could have said we had a bipolar world.

Yet again, it was clear that any prospect of dividing Russia and China from one another is clearly fanciful. This was part of the game. Of course, in Orwell's 1984, you had the three global power blocks, which obviously were the American, the Russian and the Chinese, although they weren't actually labelled as such in the novel, and how the alliances shifted from one to another. That was what was happening all the way through the Cold War.

The more I look at it, the more it seems clear to me that when the Soviet Union dissolved and they terminated the Warsaw Pact, they imagined that it was going to really be the end of the Cold War. There was going to be open free trade and mutually beneficial relationships between all the countries in the world.

Of course, as we know, the American power centres didn't want that at all. They just wanted to decide now that they'd won the Cold War and that they were the hegemons that ruled the entire world.

Everyone else was now fully under the thumb.

People could be taken by surprise by how quickly this unfolds. Very interesting statistic I came across.

The trading transactions are increasingly being done in the native currencies of the trading partners. For example, over 54% of Chinese trade is in the Chinese currency. Over 90% of the China-Russia trade is in either renminbi or roubles. More than 75% of the Russia-Asian trade is in the national currencies of the relevant countries.

Where are these numbers from?

It might have been Jeffrey Sachs. It was certainly one of the prominent economic commentators. It could have been Richard Wolff in correspondence with somebody like Danny Haifong or Judge Nimboni Alataro.

So the dollar has already toppled from its position. The other thing to note is that the members of the BRICS consortium now account for somewhere around 50% of the world's population and somewhere around 50% of global GDP.

When you bear in mind that America is what, three or four per cent of the world's population, and the entire Western Bloc is a little under 10% of the world's population. It is plain that in these days, where we clearly have a much more universal grasp of technology and of military power, education and a rapidly rising expertise in finance and banking, the leverage that the West had over the rest of the world has already evaporated for all practical purposes.

Yeah, it's already gone.

Anyway, a couple of days after the SCO meeting in Beijing, there was an enormous military parade. This was a celebration of 80 years since the defeat of the Japanese, in which the Chinese had a large part. Obviously, the Americans think it was entirely them that defeated the Japanese, just as they believe it was entirely them that defeated the Nazis.

It's one of the forgotten theatres of war.

Yes. An interesting thing I found out is that the Second World War, or whatever label you put on it, didn't start in 1939 for China. It actually began with Japan's invasion of Manchuria in 1931. So by 1945, the Chinese had been at war for 14 years.

It suffered brutally. Many, many millions slaughtered by the Japanese. I don't think we take complete account of that. Once again, the Chinese and the Americans were allies in the war against the Japanese. Of course, as soon as the war ended, they became sworn enemies. Very similar situation with Russia.

People don't take that for granted. Another interesting aspect is that the enmity towards Russia from Britain, which the Americans inherited, is often attributed to the economic differences of opinion with the Bolsheviks in power. But it goes back way beyond that. It goes back another 100 years or so.

The British and Russians were geopolitical rivals with considerable bitterness since the 1840s onwards. Of course, they had a war in Crimea between them, which didn't work out all that well for the British.

Anyway, they have this enormous military parade showing the latest Chinese weaponry, which is obviously far more advanced than anybody in the West had ever realised. So there's a certain statement being made there.

Rather miserably and pettily, with the exception of Slovakia and Hungary, nobody from Europe or America went to join in with that parade. So once again, we're moving into a world where the powers that have been dominant for the last two or three hundred years and have imagined that this was going to continue indefinitely are finding themselves increasingly irrelevant.

Against that, it's worth commenting also that Trump seems to have an inherent contradiction in his approach to the dollar. He wants to eliminate the trade deficit by making America strong again. To do that requires a weaker dollar so that imports become more expensive and people are less inclined to buy from abroad. American exports become more attractive.

However, that is clearly incompatible with Trump's other declared intention, which is to maintain the dollar as the world reserve currency. Clearly, it's highly unattractive for the rest of the world to hold their investments in dollars and do their transactions in dollars if the value of it is evaporating before our eyes.

Needless to say, the same goes for Britain. As we noted the other day, the cost of borrowing each time that a bond issue expires and has to be replaced by a new issue has to be issued at ever-higher interest rates. This also has the effect of depressing the price of the old government bonds in the marketplace, which are paying a lower interest rate.

So it'd be very interesting to see how rapidly this unravels, but it could easily take a lot less time than people had been imagining.

There has to be a tipping point.

Of course, the other way in which the West is losing credibility is on the moral front, as more and more people. The rest of the world has been able to see what was going on in Israel for quite some time. But it looks to me as though even our own general populations are beginning to become horrified by it.

So it's difficult to see how the government are going to maintain the slavish support that they've been showing. There could well be some revelations as to what leverage Israel has over our own politicians.

Well, that's the big thing about how powerful the lobbies are.

Yeah. So interesting events this past week.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We're talking about debt today. Last time out, we were talking about how debt can be a good thing or a bad thing at individual, business and national level. It appears in the last week or so that Britain is in a much worse state than the authorities have led us to believe. It seems we might actually be bailed out by the International Monetary Fund, which doesn't bode very well for ordinary folk like you and I. So what do we have to say about that?

Well, we were both watching a brief Neil Oliver monologue this morning, where he was saying that suggestions are circulating that Britain's finances are in such a bad state that we may need a bailout from the IMF. This happened once before in 1968 during the Harold Wilson Labour government.

The press had a field day saying this is all a response. The outcome of Labour's fiscal incompetence and irresponsibility. In fact, the reason for that was that there was a run on the Bank of England caused by the fact that the pound was overvalued relative to the dollar. At the time, they were still on the fixed exchange rate, which came in at the end of the Second World War during the Bretton Woods negotiations of $2.80 to the pound. It was put down to $2.40, which was regarded as a tremendous humiliation at the time, although we'd be delighted if we could get $2.40 for a pound these days.

The reason for that mismatch had nothing to do with the immediate year or two that the Labour government had been in power. It was the cumulative effect of the 23 years since the end of the Second World War. During the majority of which time the conservatives had been in power. So really everybody was equally to blame insofar as blame is relevant. The American economy was obviously in a far stronger position at the end of the war than at any other time. This calls into question the entire degree of realism associated with fixed exchange rates, even though in principle it sounds like a great idea.

Anyway, whenever the IMF are called in anywhere, their prescriptions are pretty standard. It essentially lets the elites off the hook and absorbs any government expenditure that benefits the wider majority of the population.

I don't know how much further we can go down in that regard. But what is weird is that at the same time as we're in this position, as we mentioned last week, we're talking about spending money that we haven't got subsidising the war in Ukraine. So is the rest of Europe, which is in a similar position across the board. Apparently, Germany has just pledged to give nine billion pounds worth of support to the Ukrainian side in the war, whether by buying weapons from America and sending them out there or sending the money straight there.

This seems pretty odd at a time when the German economy is in a desperate state and they've been cutting their welfare programmes. They've been put in a much disadvantaged position since the cutoff of the supply of cheap Russian gas and oil. Yeah, the destruction of the Nord Stream pipeline. Apparently, Norway has pledged $8 billion to support Ukraine. I don't know what state Norway's been in generally over the last few decades. Norway's finances have been in a pretty healthy state due to the North Sea oil and gas. I'm not sure whether that's still the case or not.

The point, apart from anything else, it seems to me pretty certain that any weaponry which is sent to Ukraine is likely to be destroyed before it even gets used very effectively if you take a realistic look at the battlefield.

We've said in the past that warfare in the last resort is armed robbery on a grand scale and we're seeing that very clearly in this case. We are over a barrel in both directions. Some of the support given to Ukraine is in the form of loans, which can be shown on our balance sheet as sound assets if Ukraine wins the war, but will have to be written off if it loses. Conversely, there was the $300 billion worth of Russian assets which Western banks have seized: a small proportion, no more than about $5 billion, is held by American banks.

About $47 billion from British institutions and considerably more from France and Germany, and Belgium. We've all been effectively stealing the interest due on those loans since they were frozen.

Nobody really knows to what extent the actual principle may have been dipped into and diverted elsewhere. Should Russia be victorious, those assets would have Russia's claim restored to them.

The war will end when Russia wants and how Russia wants. Anyone with half a brain should probably know that. So then the question is, why are they just using it to keep the magic money tree flowing in the meantime?

Well, this comes back to a conversation we had some time back, asking, ‘Is it really true that the love of money is the root of all evil?’ It's certainly the root of a lot of evil. It's undoubtedly the root of the motivation of people who make these weapons of war. For them, it's just more business and more profit, and they're prepared to ignore the tragic human loss on a grand scale, which is the result of warfare.

This has been going on for a long time. I recently read that the same American companies basically financed both sides of the Second World War, including both the Allies and I.G. Farben.

Yeah, absolutely. This is now well known. I have a book about it. I can't remember the title at the moment, but there's enormous detail about the extent of that.

Anyway, so that's where we stand. The additional funds being sent to Ukraine or spent on weapons, which will be sent there, is a case of good money being thrown after bad.

Especially since the Ukrainians have stated that they can't account for so many billions of it that has already been sent, anyway, so who knows?

It's truly tragic. It will be very interesting to see how long it takes for an objective summary of the validity of the different narratives about the war to emerge. I'm not sure how plausible the mainstream narrative seems to people. But there are plenty of clearly very knowledgeable commentators in the alternative media space who are all unanimous in what the real situation is.

It would appear that most Ukrainians want it to end. The only ones who don't are the ones who are far away from the fighting. Or the West wants it to continue. So then you have to query, well, why exactly is that the case? You have to say borderline evil reasons that we've been aligning.

It’s a rather gloomy outlook!

But things can unravel quite quickly.

Well, the real joker in the pack is at what point the American economy collapses totally, because America has very little to export except arms. It looks as though the Russians have pulled a long way ahead in terms of their missile technology and rate of production. This is another significant factor: the Russian industrial capacity for producing war machines and ammunition outstrips that of all the Western nations combined. Nobody really knows where the Chinese are.

No, no, and hopefully we never find out.

Well, I certainly hope we're not going to find out the hard way. Anyway, it's a very fluid situation. I hope we managed to live through it and that we will see a brighter outcome within our lifetimes.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We're going to revisit a topic today that we've been talking about quite a bit recently - debt. So yeah, what's going on that people need to know about?

What prompted me to think about this again was a broadcast I listened to the other day. It gave a rundown of the state of the United Kingdom's finances, which are in a dreadful state. We recently borrowed an additional £20 billion, and three-quarters of that is simply going to pay interest on the debt we already have.

We have also discussed interest rates in the past and how they've been artificially held down. There's only so long that you can do this before the markets will no longer trade debt at the prices and interest rates that governments have been used to for the last 20 years or so.

In this context, I would like to revisit the distinction between good debt and bad debt that I've previously discussed. From the point of view of business, personal finances and national level, there are parallels between the three. The easiest one to grasp is with business.

Business Level

Suppose you're running a business and you negotiate a loan with the bank, for example. That's not necessarily a bad thing. If you are investing that in something which is going to—

If there's a bigger rate of return than the interest that you're paying on the loan, then it makes sense to do.

Yeah, absolutely. That's the one-line summary. If you buy, for instance, a piece of machinery that you can use to manufacture things that you wouldn't have been able to do previously, and there's a ready market for those, you can sell them and make more profit than you're paying on the loan. Then it's a sound proposition.

If, on the other hand, you take that loan and use it for frivolous purposes - you redecorate your office or use it to pay yourself to go on holiday - then all that's happened is you've spent it on things that don't actually bring any new customers in.

Or splashed it on Google Ads!

Exactly, there are any number of ways that it can be frittered away. That means you then have to repay the loan, paying the interest on it, and your balance sheet is worse off than if you hadn't done it.

Personal Level

It's very easy to see that parallel if we bring it down to a personal level. There are all manner of things that we might not be able to afford, but if we had them, it would increase our ability to bring in an income. There are also any number of ways that we could just fritter it away. We could go out for a lot of expensive meals, or go on holiday. Once again, that means we still have to pay the money back. We will still pay the interest on it.

National Level

The same principle applies at the national level. There are things that a nation-state could invest in which make the nation a more viable proposition. This was John Maynard Keynes' advice to governments during the Great Depression of the 1930s.

The whole thing had seized up. There was nobody to harvest the crops. They were rotting in the fields because there was no money to pay the labourers to do the harvesting. Because there was no money to pay the labourers, they were unable to go out and buy things in the local shops, which kept the local businesses going. It was all stagnant.

So Keynes's solution was that the governments should effectively create money out of thin air. Whether they do it themselves or have the banks do it and then the banks give it to them, it comes to the same thing. It's money that hadn't been earned previously. But then by paying people to do something constructive, that creates a certain amount of wealth and puts money into their hands. There is also a cumulative effect from it.

It creates circulation, doesn't it?

Now Keynes receives a lot of criticism from economists who accuse him of encouraging fiscal irresponsibility in governments, which is somewhat unfair to him. He planned that when the business cycle picked up again as a result of that stimulation, we would go into the boom phase. At that point, the governments could pay back the loans.

I don't know whether he was being naive here or simply being realistic and dealing with the most pressing problem that was immediately at hand. However, the trouble is that when the boom times come, governments are only too ready to take advantage of them and enjoy the benefits. They don't want to start spoiling the party by running things down and being tight on expenditure, so they have the money to pay back the debt.

There's no incentive for them to do that. If you just follow the incentives, it's pretty clear what any government is going to do.

Exactly so. The worst possible thing we could do, particularly in the current circumstances of this country, is to run down the situation regarding the scale of debt in the United States. The UK's relative to its economic activity is probably even worse.

At times when all manner of penny-pinching measures are being taken by the government, such as cutting off winter fuel payments for old age pensioners and attempting to reduce disability allowances, we can't run our health service adequately. We can't maintain the buildings of our schools. We can't fill the holes in our roads.

Against this background, Starmer appears to be seriously considering purchasing a substantial amount of weaponry and sending it to Ukraine, where, as we've seen, it rapidly becomes scrap. So this makes no sense whatsoever.

We said that there is a terrible situation if you borrow money and then do nothing constructive with it. Of course, it's even worse if you're spending it on weapons and ammunition, which actually have a negative impact on the total amount of wealth and circulation, as we're seeing.

It's essential to go beyond merely financial accounting of this and examine what it means in terms of the cost of energy, in particular, and raw materials generally. One of these days, I'm going to conduct an analysis of the amount of energy invested in the two notable conflicts currently underway - the one in Israel and the one in Ukraine.

Bearing in mind that it seems pretty clear to me that over the course of the next 20 years, we're going to pretty much exhaust our readily available sources of fossil fuels. As we've discussed at other times, there doesn't seem to be any contingency plan in place for maintaining the standard of living we've come to expect.

As that goes out, it's not at all impossible that we could rejig things to live within the budget of our available solar energy. This is surely what must happen. Whether it's through a significantly reduced human population living a much more primitive lifestyle, or whether we make a smooth transition to a high-tech one based on completely different energy sources.

Yes, my understanding is that the small proportion of people in the world who essentially own and control everything will have plenty of energy, while the rest of us will either not exist or be left in the cold. That seems to be the grand plot.

Yeah. Against this, we must consider the enormous amounts of energy that are being wasted. Even if you are using all of your munitions effectively in battle, it's still a tremendous amount of energy that's gone into that shell or that bomb or that missile, which all gets consumed in a matter of a few seconds or a few minutes.

Every time one of these military aircraft goes on a sortie, that's a huge amount of fuel consumed. This is even before you get into the situation where there's an ammunition depot and the whole thing gets exploded without even being used, which is happening all the time in Ukraine.

There are wanton, vandalistic attacks on oil refineries, gas pumping stations, and oil pipelines, which have also been carried out extensively by both sides. This is a consumption of energy that could have provided years or decades of continued constructive civilian use.

More importantly, it will take energy to construct the solar infrastructure, which we need to make a transition to a technologically sophisticated, sustainable life. To me, that should be a clear priority.

Yeah, looking at the climate narrative and how we're being told to worry about carbon dioxide and all of these things - if that actually were true, then that would apply first and foremost to the war-making activities that have by far and away the biggest environmental impact. This just shows that what they are saying and what they value are completely different things.

Absolutely, yeah. You could go on a lot of car trips, foreign holidays, or even hot baths for the cost of one missile strike.

Yeah. If I were attending a climate conference and actually cared about these things, I probably wouldn't take a private jet there. But there we go.

Yeah, we've gone into that before, too. So, against this background, there has been, of course, an apparent attempt to bring a conclusion to the Ukrainian war with the summit meeting between Putin and Trump.

Of course, there's been a chorus of shrill complaints that this even took place. Why should anybody imagine that we're going to improve our chances of survival by cutting off communication between nuclear-armed superpowers? I cannot imagine. It can only increase the likelihood of some catastrophe occurring due to misjudgment or confusion.

I would have thought it was critical to restore the diplomatic relationship to a situation that was regarded as normal and essential until the last decade or so. Whatever else one thinks of Trump, that it was a monumental achievement to have even made this start.

Of course, the fact that the primary objective many people assumed was to settle the war in Ukraine, obviously hasn't happened. That doesn't make a difference because we have no idea what other agreements they've made.

The most important one is that they're talking to each other, which gives some chance that the Strategic Arms Limitation Treaty, which is due to expire next February, will be renewed. The world will clearly be in a more perilous situation if that's allowed to expire. That's in none of our interests.

Once again, the best way to avoid warfare is to have mutually beneficial trade going on between nations. So that would be a bonus too. There seems to be every intention to wreck the likelihood of that on the parts of some of the players. So who knows how that will come out?

The notion that a ceasefire should be declared now, while the combatants simply regroup and rearm, was obviously a ridiculous suggestion. The fact that this has now been taken off the table, and we've said that what we need is an actual peacemaking agreement, which is clear and addresses the underlying problems, once again, this appears to me to be elementary common sense. In contrast, it has been depicted as a sellout, particularly by our own government and that of all Western European leaders.

How much the population at large supports this position isn't at all clear to me. Probably a majority are still swallowing the official propaganda line. What's your view?

I probably live in my own echo chamber. I've been reading Caitlin Johnstone's emails recently, and she actually has more hope in the next generation than in the current or previous ones. So in the longer term, maybe there was some hope there as well.

Yeah, well, one of the things that I'm interested in - as I said in a recent podcast of ours - I look at the alternative viewpoints on YouTube. I'm greatly heartened by, first of all, the fact that views that go against the mainstream narrative get through and aren't censored. But also by the size of the followings of some of these commentators. There are excellent channels by Scott Ritter, Douglas MacGregor, John Mearsheimer, and many others.

I see that the material initially produced on those channels is being repurposed on many other podcasts. Many of these have followings in the hundreds of thousands, and some reach millions. So amongst the younger generation, there are probably more followers of that. Let's see how we go from here.

The only other thing I'd say is that there has been a lot of confusion since the meetings that Trump had with Zelensky and the European leaders that followed. They've been talking about security guarantees and a lot of this, which is a vague term. It's not spelt out what that actually means.

But a lot of the things that have been speculated by Western leaders and commentary in the media are clearly not going to be acceptable to Russians and could not possibly have been agreed to at Trump's talk with Putin. They're unlikely to be approved anytime soon.

Whether Trump deliberately misdirected, provided some misdirection, or allowed people to read more into his remarks than he intended - or whether people have taken the ball and run with wishful thinking - I don't know.

Of course, the next question is whether there will be a meeting between Trump, Putin, and Zelensky, or a bilateral meeting between Zelensky and Putin. We don't know.

I personally think it's unlikely to be a three-way meeting purely because it will likely fail. Zelensky's position is totally incompatible with Putin's, and there's no point in having a meeting at that level unless all the details are finalised, which was clearly not the case with the Trump-Putin meeting.

That would not have happened unless both of them had an obvious idea about what they were going to discuss beforehand, which had clearly been arranged through the discussions that Steve Witkoff had with Putin and through direct conversations between Trump and Putin before they began.

Yeah, so the meeting itself is like a PR exercise for something that's already been agreed...

Yeah, yeah. Although that was announced at a week's notice, it was absolutely clear that there was much more than a week's worth of planning to get all of that in place. They must have been aiming for that for at least a couple of months, if not longer.

So interesting times. Many things are not what they seem. Short answer: watch this space.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We're discussing big numbers today, a topic we've explored before in how billions and trillions are used in public discourse. We're going to talk about that today in the context of US debt. So what do people need to know about this?

Right, so I'll just give a bit of a recap. When we talked about an idea of how to get a handle on millions and billions in the past, I said that there are various ways we can envisage these things, but a very useful one is to say that if you take somebody who's earning £25,000 a year, pounds or dollars or euros or whatever it might be. They've got a working life of 40 years. Their total income over that lifetime is a million.

We could say, as a rule of thumb, that a million pounds or a million dollars is the lifetime earnings of a typical individual. You might want to play around with that if you reckon the earnings rate is a bit lower, a bit higher or the lifetime. But that's a good order of magnitude.

It seems to be in line with the stated averages for what people typically earn…

Yeah, anyway, so then if you move up to a billion, then obviously this is the lifetime earnings of a thousand people. It would be, let's say, the entire population of a fairly large village, a thousand people. A billion pounds or a billion dollars would be the equivalent of what that whole population earned.

Given that trillions have been cropping up lately, extending this to a trillion would represent the lifetime earnings of a million people. In other words, in a substantial city, the entire earnings of that city for a lifetime adds up to a trillion.

So in light of that, let's look at the various debts that are running about in the United States. The US federal debt outstanding is just under $37 trillion. The way things are going it won't take long to get it past that number. Then on top of that, you've got the total municipal debt. That's bonds issued by cities and urban and rural authorities across the country. So that's another four trillion.

Then you've got debt bonds issued by individual states. California alone is 1.6 trillion. That's significantly larger than the next largest single state, which is Illinois. But two trillion for the total of all of the 52 states would be a very conservative estimate. So I put that in at 2 trillion.

Then you've got US corporate bonds, debt issued by large corporations like General Motors and IBM and so forth, whereby they borrow money for a fixed period of time from investors. They agree to pay a rate of interest that is higher than the government rate. Some people might opt for this to earn a larger income, but they should be aware that, as a private financial organisation, it may not be as reliable as the government. Although the government is probably not very reliable at the moment!

Anyway, the total of the US corporate bond issues is 10.5 trillion. Then on top of that, you've got the US household debt, debt owned by the general population, credit cards, bank overdrafts, car loans, and mortgages. That's another 18.2 trillion.

So when you add that all up, it comes to 72 trillion. So if you then compare that with the US population of 340 million, what this amounts to is that the total outstanding debt in the United States is approximately 20% of the entire lifetime earnings of the entire population.

Looked at in those terms, it clearly is beyond the bounds of possibility that that is something which is ever going to be repaid in the normal sense. You know, if I borrowed a hundred pounds off you because I was a bit short one month and said I'd pay you back the next month, that would be the normal way we think about debt. But when you've got debt which is completely out of proportion to any chance of repayment, such as that across the whole of the United States. It's just not going to happen.

No, I think that was never the intention.

Well, of course, that's another whole point. I'll do a similar exercise next week for Britain. Of course, Britain had a substantial amount of debt on undated bonds, issued in the 19th or early 20th century, when British government obligations were considered as good as gold.

They could have kept that rolling, but some financial genius in the treasury decided to redeem them at a time when two and a half per cent seemed an excessive rate of interest because temporarily it was below that. Not included in those figures are social security obligations, Medicaid, Medicare, and state and federal pension obligations, none of which are included in that figure. That is a form of debt which is not even included in that figure.

So there's either going to be a default at some stage or there is going to be inflation on a much more massive scale than the inflation that we've seen over the last few decades, which will in the end bring the obligations down to nothing.

Of course, a lot of this debt is held by Americans themselves, but a lot of it has been held by other trading parties around the world, in particular the oil producing states and in particular China, because for the last 30 years that China's been accelerating its economic and industrial expansion and selling goods to United States and other parts of the world. If I want to buy anything from China, I have to pay in United States dollars. So I've got to change my pounds to dollars and then send the dollars to China.

They have been, of course, recycling these by, for the most part, buying United States Treasury bonds. So they've been lending that money back to the United States government, or they've been buying significant but minority shares in US industries. Of course, this presented them with something of a dilemma when, over the last few years, they decided this is possibly no longer looking like a sound investment.

Had they dumped their treasury bonds it would have crashed the prices of the securities. So they didn't do that. But of course, all of these treasury bonds have an expiry date when they have to be repaid. The US Treasury has been rolling over its debt by issuing new bond issues, hoping that the people who sell the expired bonds will buy the new ones. This approach has generally held up over the past couple of decades.

Of course, the unfortunate thing is that over the last year or so, the interest rates have risen. So although they might be able to issue an amount of debt, they're having to issue it at a higher rate of interest. So, this is draining the US federal economy at an increasingly rapid rate. However, overseas bondholders, particularly China, have been cashing in their expiring bonds and saying, “thank you very much, but we’re not buying the new issues.”

The brokers responsible for selling these bonds are increasingly struggling to find buyers. What the Chinese have been doing instead is they've been investing internally. They've been investing in numerous countries around the world.

This, I would say, is genuine investment. It's building roads, railways, viaducts, oil refineries, and water purification plants across large areas of the underdeveloped world. Of course, this has also rattled the United States Washington establishment because they are jumping up and down complaining about the fact that China and Russia are exerting undue influence in Africa, for example. Many African countries are beginning to realise which side their bread's buttered on.

That was pretty much what I wanted to say today for my summary of where we're at. Any thoughts?

Yeah, it ties quite closely to last week's discussion about the BRICS nations. But the clear emergence of a multipolar world and people coming to separate arrangements outside of the US dollar. So we are seeing a continuation of that.

What do you make of the assertion that if all of this debt were just wiped off, that essentially all money would disappear? In other words, why can't we just wipe off the debts? That's happened in the past in the form of debt jubilees.

Deby jubilees were pursued as a deliberate social stabilisation in the ancient world. That was part of certainly the Judaic code that there would be a Jubilee every 50 years or every seven times seven years, which was 49 years when debts would be written off and slaves would be freed because there was a recognition that as a matter of practicality having the majority of the population in hock to a small minority was socially destabilising.

Whereas our current rulers do not care about such trivialities!

Exactly. But sooner or later, equilibrium will be restored one way or another.

How much of what's going on, for instance inflation, do you think is being put in place deliberately? Or is it more like a runaway train that can't be stopped?

I think it's a runaway train that can't be stopped.

Anybody who thinks deeply about this knows that it's not a sustainable situation. At the same time, everybody concerned hopes that it will be somebody else's problem later rather than theirs in some impending present moment. Does that make sense?

I guess to take away from this episode, when millions, billions and trillions get thrown about, you make this mental heuristic that a trillion is a few billion, but it's not. It's many, many, many times more. A thousand times more. So having that mental visualisation of the village versus the city is essentially quite helpful.

Yeah it's a thousand billion.

Good, OK, well, we'll hopefully be back next week with some more comments on the more insane goings on.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We're going to talk a little bit about a book called the Mighty Micro?

This is a book written in 1979. As far as I was concerned, he was preaching to the converted. I'd already been using microcomputers and indeed designing with microprocessors for two or three years at the time the book came out. But I've kept it on the shelf, and I pull it down from time to time to remind myself of the extraordinary changes that we've experienced over the last 46 years since it was written.

1979 was really the outset of macro computing as well, wasn't it?

I'd been working with them for two or three years, but they were completely off most people's radar. In fact, in 1979, I was a co-director and part-owner of an Apple dealership, which could have...

Which I think we discussed previously on an episode about “all the money I could have made but didn't!”

Quite so. Anyway, two things are interesting looking at this, but one is the way he tentatively speculates about all sorts of things that may be possible. Pretty well all of those on a technical and development front have now happened. They've exceeded what he predicted, and most of these we've just got accustomed to. It's very interesting to hear him cautiously suggest the possibility that these things were going to happen and continually reassure the readers that although this sounds like science fiction, it isn't really. Even the laborious way that he speculates about the fact that we might not have to write letters to each other anymore because we can sit down at a computer and type something in which can be printed off at the other end.

I’ve got friends who don't even speak on the telephone. They just send each other voice notes on WhatsApp, and that's how they communicate.

Right, well, best of luck! Do they ever meet in person?

Yeah, it doesn't bode well. Well, sometimes, yeah. But I don't know. It's not how I choose to operate. But there we go.

However, there are also some ironic aspects on the social, economic, and political fronts that he turned out to have been wildly overoptimistic about. He discusses the idea that everything will become significantly more efficient, rendering the current level of work unnecessary. He says, the first practical evidence of this shift will be reflected in a cut in the working week to an average of 30 hours, a retirement option with strong inducements at 55 or even 50, and annual vacations of at least six working weeks. In tandem with these questions must come the first significant questioning of the work ethic, leaving aside a discussion of the use to which people will put their increased non-working life. The notion is that it is morally reprehensible not to work hard all the time. The idea that the devil finds work for idle hands to do is deeply ingrained in our culture. It would have been very nice if we had had a 30-hour working week.

Sounds great. Yeah. He underestimated the determination of the world's billionaires to work everyone into the earth!

On a practical level, if we could sort out the psychological and political dimensions of it, the possibility of a much more satisfactory existence than the one that most of us are experiencing now is very real.

I'm further reflecting on some of the things we discussed in the last few episodes about the various threads of narrative that are going on on the planet at the moment. One of those in last week's recording, I alluded to the fact that Trump's attempt to backpedal on the revelations about the Epstein case was beginning to backfire on him. I was saying that it's very difficult. You said it was pretty much par for the course that some politicians make promises to get elected and then discard them. But he didn't even do a very good job of discarding it, starting off by announcing that there were revelations on the way and then trying to backpedal suddenly.

It just astounds me that this has happened twice as well. This all happened in 2016. How many times do we have to go around the merry-go-round to learn that the people making promises during elections do not have our best interests at heart?

Well, there is that, but the most astonishing bit of the misjudgement is to imagine that having gone into office and made various announcements to the fact this was going ahead and then suddenly decide that it isn't, he completely failed to realise how much that was going to enrage everybody, particularly a large proportion of his own supporters. Last week, I felt that he couldn't have possibly been involved in the sexual manipulation of underage people himself, even if his friendship with Epstein was pretty suspect. However, what has emerged over the last few days is a torrent of accusations, repeated on various channels, particularly on YouTube, which is the most important one because it is widely viewed.

The proportion of people who are seriously questioning mainstream media narratives has increased. I don't know what proportion of the population that is, but the ones who are serious about it disregard YouTube at least. But it's worth looking at YouTube from the point of view that this has got a far bigger audience reach than Substack and Odyssey and Rumble, and things like that.

It's clearly an approved narrative.

Well, it certainly hasn't been clamped down yet.

Obviously, the powers that be want that message to get out, otherwise those videos would, like many of us, contravene community guidelines…

Yep. Anyway, I cannot believe he can survive this, even with the thick skin we know Trump has. On the other fronts, it's difficult to know where to start. Still, one of the things I've been reflecting on is that a lot of aspects of the goings on in the world which appear to be entirely distinct, like the Israeli behaviour towards the Palestinians, like the Ukraine and Russia conflict, like the unravelling of the American dollar-centric hold on world trade and world economics. They are all in a way different aspects of the same process. Does that make sense?

Yes, these are symptoms, not necessarily independent things that are just happening. Maybe symptoms of the same root metaphors that we are living under and operating by. Perhaps these root metaphors have been at work for hundreds of years and are still manifesting in this way here.

Yeah. Meanwhile, the government seems to be hell-bent on self-destruction. The mere idea of arming ourselves and taking up a combative stance towards Russia, which is the only way you put the latest treaty between the UK and Germany. To the best of my knowledge, it hasn't even been discussed in Parliament. It seems that Keir Starmer just decided to go off and sign it on his own initiative, as far as I can tell.

Apart from the fact that it strikes me, it should be obvious to any sane human being that any war is something that should be avoided at all costs. Certainly, rushing into potential conflict with someone whose military resources completely dwarf one's own seems to be the height of recklessness on practical terms, much less morality.

It'd be like the financial crisis though, wouldn't it? Think of all the profits BlackRock would make rebuilding everything afterwards!

Well, if there is anything left to rebuild.

Yeah, that's it.

So once again, we just have to watch this space, watch it unfold and see how it goes. The only ray of hope I can see is that America becomes impotent by running out of cash and running out of credit before they unleash the end of the world. Or whether they might, that might prompt them to rush ahead and do just that.

Well, it certainly feels like things are speeding up, doesn't it?

The other thing that is interesting I was having a look in the Observer came out on Sunday and there's a whole lot of stuff about Starmer and there's one pretty well whole page article saying essentially that his own supporters in this country may not be fully behind him, but he's widely respected in international circles for his diplomatic moves. Well, I don't know. I would have thought he was widely derided internationally, but who knows?

Whoever wrote that needs to lay off the spice!

Haha, exactly.

As we've discussed before, most people are underwater as far as their own personal balance sheet goes. This again is something that wasn't the case 50 years ago.

Yes, if you consider the amount of work required or the value you'd have to provide to achieve the same outcomes, it's not even remotely comparable.

Unless you've found a high-growth, highly leveraged way of operating, such as leveraging technology or AI, or building a network that connects people together. I don't know if you've read Perry Marshall's emails today, but he outlined three businesses that would be immune to developments in AI.

One was building a platform, in other words, making use of AI. One was building a network that connects people together. And one was providing a service that has some human touch that AI cannot automate. So, if you have to decide strategically how to invest your efforts, whether in employment or business, then those three areas sound good to me.

No, I haven't read that yet. I'll take a look at it.

Very good, we'll catch up next week.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

The news this week has been dominated by Trump backtracking on his commitment to be fully transparent about what was going on with Jeffrey Epstein.

Do you think he's on the list, presumably?

It's undeniable that he was friends with Jeffrey Epstein for 10 or 15 years. According to his biographer, they fell out not over any misgivings about what might have been going on with Epstein's sexual escapades, but over a difference of opinion over a rivalry over some real estate deal that they were both involved with. Whether that's true or not, I'm unsure. I thought it was extraordinary that Trump made the offer to come clean about Epstein, bearing in mind that it was open knowledge that he and Epstein had been on very friendly terms for a number of years.

He was on the flight logs...

I can't believe that he would have even made that offer had he been seriously implicated in anything likely to be revealed personally. The two main theories that have come up as to why he suddenly, having made that offer, decided to backtrack on it is either that it had been drawn to his attention that a whole lot of people that he didn't want to embarrass might be implicated in unsavoury goings on there, or that he decided it would be more advantageous to him to continue with being able to blackmail or coerce various people who were involved if the details remain secret rather than coming out into the public domain. Either of those seems plausible to me. What mystifies me is that he didn't foresee the difficulties in fulfilling that promise or the fact that the general public, including many of his supporters, would react so violently to the sudden reversal of the activity on that front.

Yeah, I agree. I think it's quite an obvious bait and switch pre and post-election. I think paying quite obvious lip service to whatever was said to get voted in. Whether someone is pulling the strings above him or whatever goes back to the usual questions of who's really in charge?

Ghislaine Maxwell remains the only person in prison in the world for human trafficking to nobody!

He clearly underestimated the determination of the general public to demand justice on these particular issues.

It's obvious also that the secret services, the intelligence services, are heavily involved with this. It's well known that MI6 and the CIA on Mossad have sexual blackmailers as one of their main weapons in their armoury to pursue their own goals.

The revelations that have come out over the Kennedy assassination have had less impact on public sentiment than I would have expected.

The apathy is quite astounding, isn't it?

I expected that that would cause much more of a public outcry.

You know, it's now... It's now been made abundantly clear that the CIA was involved with the assassination of their own head of state and was seriously involved in the cover-up afterwards.

Which is old news to anyone of a conspiratorial bent. However, it appears to me that for many people, if it's not literally on BBC News or written in The Guardian, it's as if it never happened. I don't know how much clearer it has to be.

Anna Paulina Luna, who has done such good work uncovering all the details, is also totally committed to revelations about Epstein, which is in itself quite interesting. It'd be interesting to see if that brings her out of favour with Donald Trump.

But once again, we could say that the parallel with the United States at this point in history is very much reminiscent of the state of the British Empire and, for that matter, the French one in 1914. Although Germany was blamed for starting the First World War, it was clear that the British had a strong interest in restraining Germany, which was rapidly overtaking Britain as a dominant industrial power.

Many of these issues appear to stem from geopolitical control rather than the reasons they are actually given.

Yeah. Now we've a situation where the United States has clearly fallen behind Russia in terms of industrial output, sophistication, technology, and infrastructure development. The railways in this country are a joke, but they're even more of a joke in the United States. Yeah, the trains still chug along at 50 miles an hour. I'm surprised they're not burning logs. So there we are. But of course, the worrying thing is that Britain and France didn't have nuclear weapons in 1914, and the United States does now. When all of the other attempts to bring the situation under control to their liking fail, you know, there seems to be a real possibility that they might go, oh, well, let's go for broke, which of course would be catastrophic for all of us. Alarming times we're moving through.

Amtrak is the biggest joke in the United States.

Another thing is that in the early 19th century, as bankers and industrialists rose to prominence and prosperity, British industry could produce a wide range of goods much more cheaply than other countries could. They could then export those goods, import food, and import any raw materials that we couldn't source ourselves. The traditional ruling classes, which had been the landowners, were alarmed by this prospect. In particular, they didn't want cheap imported grain entering the country and undercutting what they could earn from their landholdings and the rents they could charge their tenant farmers. So there was an attempt to impose tariffs on imported corn. David Ricardo, an economist from the banking class, was strongly in favour of free trade.

It took 30 years of squabbling and going back and forth before we eventually abolished the Corn Laws and introduced a free trade regime worldwide. We now have a very similar situation in the United States, where the entire economy has been undercut and effectively deindustrialised, apart from the manufacture of weapons. Essentially, this is a form of rent seeking. It's a form of charging interest for money. It's making money by moving things around, conducting financial transactions, rather than by actually producing goods and trading them.

All of this talk about tariffs is likely to increase the costs to American consumers and, by extension, to American industry. They've only just woken up to the fact that a lot of the raw materials that they need, even to make their weapons systems, come from China, which is ironic.

So, the world's in flux. More and more countries are aligning themselves with China. China has experienced an enormous increase in the prosperity of its citizens. It took me a while to realise that the China we have today is not at all the China of our imagination from the Chairman Mao years and the great leap forward in the Cultural Revolution and poverty-stricken masses. A considerable proportion has been moved from landless peasants into some kind of middle-class existence. There's very little sign that the Chinese population are unhappy with their leadership. It looks coercive to us. However, it appears that what the Chinese population strives for more than anything is stability, and their current leadership has delivered that to them, along with

Because they invested heavily in educating their workforce, sending them abroad to Western universities, amongst other things, they managed to provide a whole level of competence which has faded out in this country and perhaps even more drastically in America. Those are the things to look out for. Additionally, the shift away from reliance on the dollar as an international reserve currency and a key component of the global trading system could occur much more rapidly than many people anticipate.

There could be a tipping point in the chain of events.

Okay, that's my review for this week. Once again, let's hope we're still here in time for next week's broadcast.

Depending on how quickly I get this episode out, we are talking on Sunday evening as well with a free live discussion on Zoom (register here).

Yeah, by all means, bring any questions you have or raise any topics for discussion when we meet on Sunday.

Thanks for reading Sovereign Finance! Subscribe for free to receive new posts.

A quick announcement: We’re holding a free live Sovereign Finance discussion on Sunday 20th July, at 7.30PM on Zoom. We’ll discuss global trends, things you might do, and answer questions from the podcast so far. Register for free here.

Rob’s comments below are in italics.Derek’s comments below are in normal font.

Okay, so it’s the 10th of July. It's a full moon rising today or tomorrow. We'll review some of the contemporary events insofar as they're likely to have an impact on your finances.

How much importance do you put on the changing of the moon by the way? I know some people who organise their lives around it, and many others who just think it's woo woo. I wondered where you stood on these things. It's quite hard to know, is my stance.

Yeah, absolutely. As I've said before, I'm agnostic about most things in principle. Even things I'm 99% certain of, I'm open to seeing evidence which causes me to revise my view. However, if it's under 99%, I'd be very surprised if such evidence appeared. The impact of the moon, I don't know.

My subjective impression is that quite often, around a full moon, the psychic tension peaks. There could be all types of really mundane, prosaic explanations for that. The mere fact that it's a lot brighter at night and very few people have completely blacked out bedrooms that makes it that bit more difficult to sleep. That could be a factor.

It could just be a placebo effect as well, where if you think it makes a difference, then it probably does.

Yeah, it could be that, too. Although the placebo effect is often overrated when it's used as a dismissal that there's anything real going on.

This touches on a point which is often not nearly as widely realised as it ought to be, which is that looking for causes and effects is almost invariably an oversimplification because anything which is non-trivial. This certainly applies to all of finance, all of markets, all of governments, all of politics, all of public opinion, as well as, you know, more concrete things like population growth or reduction, food supplies, energy supplies, prices of things.

All of these are part of the dynamic system, which consists of multiple nested feedback loops. So consequently, to choose one factor in a situation, assume that it is the cause of something else and that there's a cause and effect. It may well be, but it's itself the cause of something else, which is the cause of something else. Before you've gone too many times around the chain, it's going to be the cause of the thing that you think is causing the effect. Does that make sense? Was that clear?

I once read someone describe homo sapiens should be called homo explanicusbecause we just go through trying to assign explanations for things that may be quite complicated. We then create a story, narrative, and worldview based on that, which may have some directional accuracy, but it's never completely accurate.

Yep, that is absolutely the case. That ties into George Soros's key insight on reflexivity, that markets go up because some people think that they're going to go up, which makes them go up, which makes more people think they're going to go up and so on. So you get that feedback loop.

Until it becomes clear that it's overshot any realistic possible outcome, at which point the same thing goes into reverse and usually much more rapidly. That is a general factor of any dynamic system. As we've discussed before, that's built into the model of the limits to growth. We clearly are in overshoot on a number of fronts.

This is one major perspective on trying to make sense of what's going on in the world at the moment. Another major perspective on it is that the American Empire is clearly in its latter phase. One of the things that always happens in the latter phase of empires is that the people responsible for operating the empire are in acute denial of this.

Somebody was pointing out the other day that America hasn't fought a war against any opponent which is remotely comparable in strength and organisation since 1945. It's been at war continuously somewhere or other in between, invariably in a very unequal context.

That leaves amongst the warmongers in the American establishment, which is still in the ascendant...

I saw that Trump had been nominated by Netanyahu for the Nobel Peace Prize!

You couldn't make it up, could you? That was one of the more ridiculous events of recent days.

Caitlin Johnson's newsletter today raised a very interesting perspective on it. It says the Empire is a non-stop insult to our intelligence. Marco Rubio just denounced Francesca Albanese, the UN rapporteur on the Israeli Holocaust in Gaza. Of course, the UK government has listed Palestine Action as a terrorist group.

Meanwhile, HDS, which is the Al-Qaeda proxy running the Syrian government, has now just been delisted as a terrorist group. So, you put all those things together, it's certainly reaching the point that we keep thinking we've reached where satire is no longer possible, because nothing is more absurd than what's going on in the real world.

Yeah, I definitely, given that I have some ambitions to write novels, I don't think I can make this s**t up.

No. Incidentally, talking of novels, I just read an Ian Banks one. It must have been one of his last, I should think. It's called Transition. Have you been a follower of Ian Banks at all?

No, I'm not familiar.

It was very interesting. I couldn't help feeling it was an allegory for the Deep State. I won't go into that; we'll get too far off track. That's the first novel I've read in a long long time. I've mostly been reading non-fiction of one sort or another, as anything is non-fiction.

BRICS Summit

So, in the past week, they completed the BRICS summit. By all of the accounts that I find credible, it was a considerable success. In the Western press, there have been the usual attempts to marginalise it and discredit it. This is obviously going to be a very significant development in terms of world trade. It's primarily world trade.

Certainly, what's called the global south, the ex-colonial countries seem to be putting a great deal of faith in this as an avenue to the real prosperity that they thought when they attained their nominal independence from the colonial empires...

If not financial independence, saddled by loans and all sorts of things.

Exactly. The really brilliant speech by Lavrov, about a 30-minute speech followed by 15 minutes of questions and answers. That's available in full on the YouTube channel from the Hindustan Times. It's a very sound investment of 45 minutes or less, depending on the speed you tend to listen to these things.

What he says appears to me, A, to make sense and B, to be absolutely sincerely meant. I listen to what everybody says, whether they're people that I'm sympathetic to or not. I think it's more important that we listen to people we disagree with. First of all, hear what's going on outside our own particular chosen chamber. Secondly, because it's conceivable that even if somebody that I'm completely unsympathetic to might have something to say, which shifts my opinion or my perspective to some degree. But also it's deeply fascinating.

There are two things that I'm on the lookout for when I listen to what anybody has to say, particularly anybody in a position of political power or influence or financial power or influence. The first thing I'm looking for is, do I get the impression that this person sincerely believes what he's saying, or is he deliberately fabricating it to serve some other agenda? Definitely with Lavrov, I haven't seen a single thing which suggests to me that he's making stuff up.

The second thing that I'm on the lookout for is, assuming they are sincere, do I believe that they are significantly mistaken in the position that they've embraced? If I believe that they're sincere and basing their assertions and opinions on, as best I can judge, an accurate reading of events, I think they're well worth listening to and well worth taking on board.

One of the things that he said and that Putin has said as well over and over again is that the world could work a lot better by adhering to the charter of the United Nations, which we've all nominally signed up for. Clearly, the Americans cynically disregard at every turn. People have to look at the record and make up their own minds whether they think the Russians and the Chinese disregard that or whether they more broadly adhere to it.

You can understand why the BRICS Nations have backed the other horse.

Yeah, absolutely you can. They certainly haven't got anywhere by backing the other one. The events of the past month, even more than the past year or two, have ever seriously undermined the credibility of the West.

Seriously undermined people's ability to accept any public pronouncements from any of the Western nations without taking it with a pinch of salt. Which moves on to probably a very major factor, which we should all be investigating under our own best attempts at due diligence, which is the shift away from the dollar as a global reserve currency.

I wanted to say one other thing about the treatment in the Western press of the British nations. There was quite a lot made of the fact that neither Putin nor Xi Jinping attended it in person, which they are trying to put some spin on as reducing the credibility of the organisation or reducing the commitment of those individuals to it. You know, calling it, calling into question whether they are in some way having their power diminished or something.

It's perfectly understandable that heads of state no longer feel that it's necessary and that they can send other ministers. One of the notable developments at this BRICS summit was the increase in breakout groups. Meetings were held among experts from various countries to discuss matters. To make practical arrangements about various aspects of how they should work together more closely.

One of these is that an increasing amount of trade is being done by the various members and the associates of BRICS directly between one another in their own currencies. There was speculation a couple of years back that they were going to come up with their own currency. That was obviously entirely premature.

I believe that in the future, before the end of the century, there will be a single global currency used for all transactions, because of the ratio between international trade and internal trade that almost every country has. It makes no sense to have separate currencies per nation.

It doesn't serve working people to have all these crazy fluctuations and to have the gambling on it essentially, which is all it is.

Well apart from the fact that some people are doing very nicely by gambling on it, of course, cancelled out by the losses that other people make because it's a zero-sum game. The only real reason for the continuing attachment is that the governments of every country want to be able to manipulate their currency for their own purposes.

So it doesn't solve anything. I think we will make a full circle to having that currency defined by reference to gold, because that is ultimately the only reason, the only mechanism that has ever been implemented which really works to prevent abuse through devaluation of the currency.

Yeah, every fiat currency has crashed and burned, hasn't it?

Yeah, or even the supposedly non-Fiat currencies. The Roman Empire supposedly had a silver-based currency, but as time went on, they debased the metal in the coinage more and more. As they say, history doesn't repeat itself, but it rhymes.

Each time around, we've got a slightly different arrangement. So once again, we all need to take a look at that, see what our assets are denominated in, what is substantial, what is based on something and what is built on sand.

Do you think we're gonna get this big financial crash that has been promised for a while, possibly to then usher in digital ID and control matrix on top of that?

Whether or not it's clear that they would like to usher in a digital ID, it's also clear to me from my own experience…

It's being introduced anyway. There will be slow incentives coming in. Then they'll try to enforce it or make it mandatory. A proportion of the population will say no, which will likely undermine the whole thing. Hopefully, we'll end up with a system that actually works for everyone. But it's gonna be rocky.

Yeah, it's going to be rocky. That is one of my current themes. The outcomes are not set in stone. If they were, we'd be living in a much less interesting world. We all knew what was definitely going to be the future. So, it's just a question of watching it day by day.

The Ukraine war is clearly now set in for the long haul, barring some unexpected event. It seems as though both sides are absolutely locked into incompatible positions. Russia has said yet again that it would prefer a diplomatic solution. It's ready to talk anytime. If there isn't a diplomatic solution, it will be determined on the battlefield.

It doesn't serve the interests of the US empire to have a diplomatic solution, which means that a lot of people are going to be pointlessly fed into the meat grinder.

I'm amazed that they still have enough morale to continue the fight, but there you go. Of course, every day that the war goes on, not only are lives lost tragically on all sides, far more on the Ukrainian side than on the Russian one, but whoever they are, they're human beings. They've got wives, sons, daughters, mothers, partners.

But not only that, every day of warfare is a destruction of wealth. It's far easier to destroy things than to build them.

I've seen that with my kids. It's far easier to pull the house apart than it is to tidy everything up!

Yep, absolutely entropy. Anyway, a collection of observations today, but hopefully there’s something of interest to people in today’s discussion.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

Our topic today is the BRICS annual conference, which started a few days ago. We've seen several trends accelerating that we've been discussing for a while. So we thought we'd talk about those today. Where do we need to start?

As you are aware, it was originally a group of five nations: Brazil, India, Russia, China, and South Africa. Now, the main hitters there are Russia and China. Brazil has the presidency of BRICS this year, and that's where the summit has been held.

They've now got up to 15 members. Iran has just become a full member, which is highly significant given the conflict with Israel and the United States. In addition to the 15 members, they've another dozen or so associate members.

This now represents approximately half the world's population and a substantial portion of the global industrial and economic activity. There has been an accelerating process of arranging international payments between them and establishing a system that's entirely independent of the American banking system, the SWIFT international money transfer system, and the dollar-based trading mechanisms.

It's been given an extra impetus by the attack on Iran. It's no secret that America is desperate and growing increasingly desperate to preserve its privileges of the dollar being the world reserve currency and one which has no anchor in linkage to gold, which was the way that it was originally set up in 1945. So this could all accelerate very rapidly. The dual processes of them trading with each other in a way which is independent of that system.

De-dollarization of the world currency system. It's very likely that, for a while now, it has been obvious that the currency system they introduce will almost certainly be ultimately anchored to gold in some way or another, whether they eventually move towards a single currency or not. If they're trading with one another, they've got to have some mechanism for confidence that the value of one country's currency is going to have some stability over at least the time that it takes to complete delivery and payment, which of course with floating currencies around the world, it is one thing that nobody could depend upon.

It sounds like we're witnessing the emergence of a multipolar world before our eyes.

Yeah, exactly. Once again, both Russia and China have been very forthright in laying out their vision of what a more equitable future world would look like. It would certainly be one where no single state has the imperial dominion over everybody else that for the last half a century or three quarters of a century the United States has had.

Do you think this heralds the potential end of the dollar?

Well, it's the beginning of the end of the dollar as the global reserve currency, I would say, as a matter of clear fact.

It sounds a bit like when the pound was the global reserve currency and now it’s an irrelevant footnote really to anyone outside of Britain.

When the pound was the de facto reserve currency, it was a gold-based currency. Each pound was, at that time, worth about a quarter of an ounce of gold.

It's debatable now whether we have much gold at all!

Well, yes, as we've mentioned in the past, it was a spectacular own goal for Gordon Brown to think it was a smart move to flog off about half of Britain's gold reserves to raise some quick cash shortly before the accelerating climb in the gold price.

So, the attack on Iran once again shifted the urgency, I would imagine, for that country to make its own independent arrangements.

They're going to need some powerful friends if they're going to get through the coming times.

Clearly they've been astonishingly lax in their own intelligence gathering and security to allow such a preemptive strike. It really, even if one takes at face value the ostensible reason for it, which was to prevent Iran from developing a nuclear weapon, which is hardly plausible anyway.

It's far more likely that it was an attempt to weaken that regime and replace it with one that would be more amenable to American and allied interests. From that point of view, it clearly had a spectacularly opposite effect. Rather than triggering a revolt against the current regime, it's had the effect of uniting the population entirely behind the present government.

That's what happened in the Second World War as well? Was it Germany that first started bombing civilian centres or did Britain bomb German civilian centres?

No, it was the German tactic, the blitzkrieg, the attack on particularly London and Coventry and the various industrial centres of Britain, which was fought off in the Battle of Britain. But it then set the standard, and the bombing of civilian centres has been a constant feature of warfare ever since.

In the ancient world, there was a convention of not attacking civilians. It wasn't really for humanitarian reasons. It was because the civilian population of the defeated nation would become enslaved. So you didn't want to kill your potential future slaves!

Nonetheless, it was a convention right up until the point where Franco, with support from Mussolini and Hitler, bombed Guernica, which horrified the world. Yet, less than 10 years later, this had become standard practice on all sides of the conflict.

But the point is it never demoralises the civilian population. It tends to cause people to rally around the cause instead.

Yeah. Of course, there could not possibly have been any expectation of the effectiveness of Iran's response from a military point of view. I'm not clear whether the ceasefire that Trump declared after the 12 days of conflict has been universally observed. Israel's record of honouring ceasefire arrangements speaks for itself. Anyway, one result of that has been a much strengthening of whatever arrangements Russia and Iran had for universal support on the military front. Another factor is that within the country, there was a significant body of opinion that advocated for greater rapprochement with the West.

An ending of the sanctions regimes and everything. This is now almost completely collapsed. They've presented one united front. Even the people who were, if you like, pro-Western have now concluded, well, we plainly can't trust them. So once again, that has been completely counterproductive. So this means that there is a considerable focus on building up the alternative arrangements with the rest of the world, which is not part of the American-led factions. So all of these are working together.

Trump's attempt to bully the rest of the nations by imposing tariffs on them has again been counterproductive. The attitude of China has been, well, if the Americans don't want to buy our goods, we'll sell them to other people.

They just come to other arrangements with more amenable trading partners.

Yeah. The other thing is that we don't generally in the Western world recognise the enormous success that China and India have had in getting large segments of their population out of poverty and into something resembling at least a lower middle-class standard of living.

Across China, India, and Southeast Asia, we've a population that is close to 50% of the entire world's population, of which approximately 90% were in poverty 20 years ago. This has now been reduced from 90 percent to getting pretty close to half and the process is continuing to accelerate because, once again, economics is not a zero-sum game. It's something which is self-reinforcing. The more prosperous people you have, the more they have to spend and the more they have to spend, the more they create prosperity for other people, which is the opposite of what's been happening in Britain, America, Europe, and the English-speaking world generally.

Especially when they're not required to spend it in dollars.

Yeah, exactly!

The majority of the population has seen their standard of living decline steadily since around 1975.

It's been an astonishing period to live through and to witness first-hand. The stories of the standard of living that was taken for granted across the British population when I was a child, a teenager, or a young adult seem completely fanciful compared with today. Almost nobody seems to be able to live within their income.

Not only that, but we also have a disintegrating infrastructure, including potholes in the roads. We have all the visible signs of decay and a tiny elite drawing more and more wealth towards themselves, which is then effectively being taken out of circulation. Not only that, you look at the civil engineering projects in China, the bridges, the tunnels, the dams. It's quite extraordinary.

There’s nothing like that happening here.

No, exactly. So, this is the thing to keep an eye on, to see the self-reinforcing changes take place.

There are 193 member states in the United Nations, but the decisions made by the United Nations are paralysed by the fact that the five permanent members of the Security Council, Britain, France, Russia, China and the United States, have a veto power. So they can prevent any significant alteration of the structure of the United States, and they can prevent any resolution being adopted that any one of them objects to. The United States has a solid record of vetoing proposals which have near-universal acceptance by the rest of the members. This is obviously a source of great frustration, and it renders the entire thing, whatever the ideals were, impotent.

Because eventually people will just leave and form alternative arrangements.

This is becoming increasingly clear day by day, and it is unavoidable to notice.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We're talking about warfare today, which is definitely a relevant topic, given worldly goings on and the connection to the financial system. So what do we need to know?

We had the so-called 12 days of what you could call it, Israel and Iran, terminated by a ceasefire that Donald Trump is taking credit for. It's worth examining the broader implications of this. Before we get back to that, I wanted to review the nature of warfare, as this has been a phenomenon that has been ongoing for approximately 6,000 years.

In the ancient world, it was a straightforward case of basically robbery with violence on a grand scale. That's what it remains. In the ancient world, there were essentially two forms of wealth. One was land, productive agricultural land, and the other was a means of labouring on the land.

Rulers would initiate warfare to grab more land from their neighbours and to grab more men and women that they could turn into slaves. Obviously, there's always a cost of warfare that has to be borne before you reap the dividend from it.

Throughout history, they've either financed it by building up a war chest beforehand or hoping to obtain enough plunder as they go about it to finance it, or in some cases, by borrowing it. There have been moneylenders prepared to lend to kings to finance warfare. Sometimes, that has been a very unsatisfactory bargain from their point of view. Probably one of the most prominent cases in history is the Knights Templar who loaned money to King Philip of France to finance his crusades.

He decided that he either couldn't pay it back or didn't want to. Therefore, he accused the Knights Templars of heresy and had them burned at the stake.

Yeah, I was thinking of Edward the First, who raised money from the Italians for some of his crusades.

This is topical because we had the NATO summit meeting yesterday. All of our European governments duly fell into line and promised to spend 5% of GDP on so-called defence. Considering that we're spending two and a half percent and struggling to get that up to 2.6. How we're going to reach 5% without even deeper cuts in the things that taxpayers of this country want the government to be doing for them is something we just have to see.

Meanwhile, the warlike rhetoric is going up. We're told every day that we're under threat from the Russians. One of the conclusions that NATO came to is that they want to create a minefield all down the edge of the Russian border. Why they imagine that Russia is likely to trample across Europe, I can't imagine. There's not much sign of it.

We won't delve into the pros and cons of the war in Ukraine or its origins here, but it doesn't seem to be going very well at all for Ukraine. Zelensky attended the NATO meeting but wasn't allowed to participate in it. He had a very short meeting with Donald Trump, apparently offering to pay for more weapons from America. Whether that goes anywhere or not, we'll have to wait and see. As far as I understand, his government is bankrupt. It's unable to pay the war pensions for its deceased soldiers and is unable to service its debts. So where the money is going to come from to buy more weapons, we don't know.

Of course, we've had the dramatic attacks on Iran by Israel. This is a breach of international law by any standards. They sustained far more damage in return than they had ever expected. We don't know the full extent of that because it's been heavily censored.

The justification for this attack was alleged to be to prevent Iran from developing nuclear weapons, although there was no evidence that it was doing so. It has now reduced its level of cooperation with the International Atomic Energy Authority, which had been monitoring it. Not surprisingly, seeing as that authority clearly provided Israel with the intelligence it needed to know exactly where to target the nuclear facilities. Furthermore, the somewhat ambiguous report that they just put in was what provided the nominal excuse for the attack.

Bear in mind that whether Israel carried out the initial attack or not, this is a client state of the United States. However, there seems to be a lot of debate at the moment about whether the United States is in thrall to Israel or Israel's thrall to the United States. The US has had an attack on Iran as part of its agenda for at least the past 20 years. Currently, you need to view this within the context of the BRICS Alliance, which is gaining strength and credibility as an alternative to the American-dominated World Financial System. It's valid to examine all the other wars America has been involved in as part of its efforts to maintain its hegemony over the global financial system.

Yeah, it's never really about weapons of mass destruction or preventing some state from having nuclear weapons or whatever excuse they give. It's about geopolitical hegemony and control.

Iraq had been seriously considering accepting payments for its oil in euros rather than dollars. Some people regarded that as the real reason for the invasion of Iraq, the two invasions of Iraq. Gaddafi had been discussing the establishment of a Pan-African gold-based currency and offering to accept it as payment for Libya's oil.

I was listening to an interesting discussion this morning about the Yugoslav war in the early 90s. The story in the Western press was that Milosevic was a ruthless dictator. We had to attack Serbia to prevent its humanitarian purges against the other parts of Yugoslavia. In fact, when Yugoslavia broke up after the dissolution of the Soviet Union in 1991, the various fragments of it except Serbia, all adopted Western-oriented governments. Serbia was the only one that elected a communist government, which was a significant part of the motivation for the NATO intervention.

From a humanitarian point of view, it didn't improve the fortunes of any people who were subject to Serbian oppression because there were an extra 10,000 non-Serbian ethnics who were massacred after the bombing started. It's also interesting that this was the point at which Europeans wanted to resolve the difficulties in the former Yugoslavia through negotiation. Rather than doing so peacefully through the European Union, which was originally established to prevent war in Europe. It was taken over by NATO which resolved it with a bombing campaign. This shift significantly altered the approach from one of peacemaking to one of resolution by violence.

It’s one of the great inversions, isn't there, where all of these things get cached as a defence fund or a defence force. It's not defence when you're going and picking a fight, is it?

Exactly. One of the things that I would have thought was the lesson from what we've seen in Ukraine is that the whole project of warfare has become self-defeating insofar as you pour all this money into advanced war-making machinery of one sort or another, whether it's fighters, bombers, tanks, personnel carriers and the rest of it. These are destroyed at a far faster rate than they can be produced.

Another significant aspect of the picture is that we must consider the costs in terms of materials and energy, which involve colossal amounts of energy in the manufacture of high explosives, as well as in the delivery mechanisms for those explosives, whether it's shells, missiles, or bombs. This is an ultimately finite resource that is being taken away from activities that produce genuine benefits.

I wonder how much silver is required to produce a fighter jet.

Yeah exactly so. What's your reaction to what we've said so far?

There's a significant difference between the narrative of what they're saying and the actions that actually occur. I come back to what Caitlin Johnson says about keeping a close eye on the movements of both military hardware and troops around the world. That gives you a much better idea of what's going on.

This relates to what I was saying about the systems established at the end of the Second World War during the Bretton Woods Conference. America had been essentially undamaged by the war itself. Lost 150,000 troops compared with the 27 million that had been lost by Russia, civilians and troops in that war, and the absolute devastation right across Europe and the destruction. America then demanded repayment of the loans it had made to the Allies during the war, which further crippled the European economies. They then generously had the Marshall Plan, which was provided to the Europeans to spend with American manufacturers re-equipping and rebuilding themselves.

Seems to be a great financial incentive for war, not against war. Some of the perhaps worst people in the world stand to benefit greatly by more war happening, not less.

This system that America established after the Second World War was one in which the dollar was tightly linked to gold. Of course, that was terminated by Richard Nixon in 1972, when largely as a result of the Vietnam War, money was being spent overseas. Particularly Charles de Gaulle wanted to send the dollars back to the United States and cash them in for gold. So they suspended that convertibility.

Since then, America has been able to spend as freely as it wished all over the world. The recipients were expected to hold the dollars and reinvest them in the United States, either in the form of treasury bonds or perhaps commercial bonds or stocks and shares, but without achieving a controlling stake in any American enterprises. Now, over the last decade, it has become increasingly clear to the rest of the world that this is not a good idea, that the dollar is not going to maintain its value. They're not going to play.

That brings us back full circle to the attempts to coerce the rest of the world to fall into line by military means. This could become self-defeating very much more rapidly than anyone would realise.

It feels to me like they're trying to kick the can down the road even further, and there isn't any more road.

That is increasingly looking like it. I'm not sure how willingly the Russians, Chinese and Iranians have been investing in the weaponry and military equipment that they've built up, which has obviously been enormous and has completely shifted the balance. It's astonishing the sophistication of these weapons have been produced internally by countries that we hadn't thought of as being technologically sophisticated or advanced.

But they've realised that as a matter of realism, they have to be in a position to defend themselves forcefully. It's certainly going to be a very interesting year and a very frustrating time for all of us as we watch our standards of living decline in the pursuit of trying to catch up and match this. Across Europe, I can't imagine that the population can be at all looking forward to larger amounts of their taxation going on something which is certainly not contributing to our well-being. Arguably, it makes the world more dangerous rather than safer.

Most people just don't understand what level taxation really sits at, and then also how it's used. It's clear that if they want to invest money on roads or something, they just get the magic money machine spinning and creating more money for it. They don't need to tax for this, it's just to make everyone poor.

But yeah, if everyone understood that taxation was really at 90% when you look at it, spend it, you tax them on what you earn, and you tax them on what you spend. It's not going to be the things that they tell us it's going on, like emptying the bins, fixing the roads and all of the things that we want to pay taxes for. Income tax was only introduced in the Napoleonic Wars as a temporary measure. So, but yeah, it strikes me that taxation could be more like 10% to cover the things that we all agree are beneficial to be done centrally.

Yeah, that's right. Quite so. Exactly so. Right, that's about it for today.

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