Is the Era of US Hegemony Coming to End? Conversation w/Richard Turrin!

Hello everybody and welcome to Geopolitical Trends, where truth matters. Excited, excited to be with you once again. I know we met earlier at noon for the live stream, but this one is different and I am very, very excited because I have a good friend of mine, uh, Rick Turan, who really is— I'm, I'm so glad he was able to join us here because you guys are in not only for a treat, but also as far as acquiring the necessary knowledge to understand where things are headed. So, so what we're gonna do is I am gonna go ahead and bring in Rick right away, then we'll start. So, hi Rick!

Hello David, and hello everybody out there in video land. It's a pleasure to be here again.

So, so excited to have you. To those guys in the community who do not know who Rick Thurn is, I'm gonna provide you a brief bio, but please make sure to go to the description for the video where you see the full bio of Rick. It will be worth the time, uh, it would be worth your time reading that. So Rick is a best-selling author of Cashless. Actually, I have a book I took, I read it, it's very, very interesting. Here it is, so take a look at that one, guys, later on. So, uh, And for, as I said, author of The Cashless: China's Digital Currency Revolution, and he's a top global fintech influencer. Actually, he is among the top 4 in the world. So you are here with, with some highly, highly qualified individual. In addition to being an award-winning former IBM fintech leader with 2 decades in banking Rick has lived in Shanghai for the past 15 years, witnessing China's cashless shift firsthand. Consider that, guys, a big, big, big time. So anyway, we are not gonna— we're gonna get into that because we got a lot to cover. So, so Rick, I want to start first. I'd like to have your sort of, uh, reflection, assessment, whatever way you want to put it of the current geopolitical landscape with China-US tensions at the heart of it?

Oh, what can I say, David? It's bad and getting worse.

That's the truth.

It's the truth. So, you know, look, first of all, I don't mean to frighten anyone out there. This is not something that's going to lead to a hot war anytime soon, despite some proclamations by US generals that there'll be a conflict with China over Taiwan in the coming 4 years. Um, I don't think that's going to happen. China is a place with a, with a very long history and a lot of patience, and, um, the Taiwan conflict I think is overhyped by the US media. But more generally more generally, um, we're facing two big trends that I think that people have to be aware of, and they are very clearly the trend of de-dollarization, meaning that other countries will use the dollar less in the future. And it's not a sudden thing, it's something that will take many, many years, um, And the other one is, of course, what's in the newspaper every day, and that is what's been called the tech war. And I'm— I want to let people know that this is, um, a tech war is real, but, uh, in the sense that the US and the— and China are competing over AI. Um, but it's not the same thing as the Cold War. Remember, anybody who makes a Cold War comparison between China and the US currently is— I won't say forgetting, but is minimizing— and, um, the, the differences between what we have now with China, which is two economies between the US and the China that are tightly integrated. And that's something that you didn't have with the Cold War. You know, the US didn't buy anything from Russia. The world bought very little from Russia during the Cold War. And, you know, it's not— it's convenient to look back to the past and use that term, but it's not what's happening with the tech war. So it's something new, and it's something where what we're looking at is two tremendous— tremendously large economies fighting it out over, of all things, innovation. And I think these are the two big things, de-dollarization and the tech war. And those are geopolitical elements now, and they are playing out on the big geopolitical screen before us.

Very, very interesting. Well, speaking of the de-dollarization, when you consider, for example, certain assertions out there, and I heard some, read some statements and so forth, arguing that, you know, it's kind of oil is China that is now wants to sort of expedite the de-dollarization and plunging the dollar value. And this is why some have argued the reason why China is not buying treasuries, but rather buying gold. Is there any truth to that, Rick?

Um, yes and no. So let me take this question in two parts. Um, first of all, China has no interest in destroying, tanking, or otherwise, uh, uh, negatively impacting dollar value. Why? It's very simple. They have $3.2 or $3.6 trillion in US dollar assets, so They're big dollar holders. So the last thing that they want to do is cause some kind of collapse of dollar value. Um, but that said, however, um, China is buying lots of gold and it's not condition normal. And, you know, I have some pictures here that help bring this out. And, you know, these are recent headlines from people like Ray Dalio, the former head of founder, but the former head of the Bridgewater hedge fund. And he's saying that there's something big going on. This is not just a shock that is now over because the stock market came back. And you can look at Citibank's CEO, who's also claimed this. And we can look to JP Morgan and Jamie Dimon, who is the oracle of Wall Street these days. Everybody knows him. What we're seeing is a fundamental transition, all brought about by the loss of faith of the dollar. Now, is this promoted by China? Uh, to a certain degree, yes, in the sense that China feels that it wants its RMB to be used in trade, and it has made big, um, gains in that. If you look now, something like 52% of China's exports to the world are now purchased in not in dollars. They're purchased in Chinese RMB, with other countries willingly using the RMB to buy from China. So they're making progress on this. But, you know, the concept that China wants to destroy the dollar, you know, that's great for those really flashy YouTube clickbait titles that make you want to watch. Um, and they always have half-truths and half-facts in there. But the reality is There's no desire, and never has a Chinese official said, oh, we want to destroy the dollar, we want to decrease the value of the dollar. And China doesn't need to. China's had— forgive me for being so blunt, but the Trump administration has done it all by itself. China didn't need to help with this. A trade war is shocking the world enough that China really didn't push, didn't really assist in the current dollar devaluation.

Well, actually, China is taking its stand, sort of. I don't think so the Trump administration counted on China not to stand firm in its position regarding the tariffs. So basically, in my opinion, and please correct me if I'm wrong, Rick, basically the tariffs that— we're talking about China here, only China, not the rest of the world. But for the tariffs regarding China, I think Mr. Trump miscalculated the response of the Chinese, and now he's finding out it's backfiring.

Oh, absolutely. Look, let me give this to Trump. And his first thing to say, and I think this is important, the Trump administration is often passed off as dumb, incompetent, clueless. And that's not wholly true. Their desire to bring more manufacturing back to the United States is not at face bad. How they went about doing it is, however, not exactly, um, optimal, you know, by terrifying the world and shaking up the entire global trade system. Now, did they overplay their hand? What I like, um, the analogy I like to make is when I listen to the sound bites from coming out of the administration, it's as though they are talking about a China from another era. It's as though that they are talking about China from 1960 when everybody rode bicycles and had blue, uh, uh, blue jackets on. You know, it's, it's like they are were— they think that they're dealing with a place, and they treat it as though they are dealing with a place that is not the world's second largest economy. And actually, it's the largest economy if you look at it on purchasing power parity, according to the IMF. You can go look at those statistics, they're there. Um, so yeah, they overplayed their hand. And, you know, the big question comes is with the Geneva meeting, who blinked first? Was it the US administration or was it China? And, you know, I think if you look at it analytically, it was the Trump administration that blinked first because they realized that with high tariffs, inflation was coming to the United States. But worse, they realized that many industries in the United States simply can't survive And that's the amazing thing that people have to— I think people understand that more— people have to understand, and they clearly now with tariffs they do understand, is that America, and to that degree, and to a certain degree China as well, these are economies that are intercoupled with one another, intertwined with one another. They both need one another to survive. So, you know, but the question is, who needs whom more? And the reality is China is a manufacturing power, finds that it can survive and prosper longer and more effectively, um, without the United States than the U.S. without China. And I think that's factual, and I think that's what really hit the Trump administration, and I'm not sure that they were prepared for that. I don't— again, they overplayed their cards and thought of China as a place from a different era. And, you know, ironically, I don't— you know, and I feel that this is somehow related to the age, to the age of Donald Trump and to the age of his administration, with the exception, of course, of Vice President Pence, who's a younger guy, and Rubio, who's certainly young enough to understand this. Yeah. But, you know, when I see Bessett and when I see Trump, these are older gentlemen and they're wonderful guys. I don't— I think I'd probably like to meet them in person. They'd probably be nice, nice enough guys if I was out on the golf course for Trump for a couple of, couple of holes, right? But, you know, but the thing is, their vision of what China is capable of, both in terms of innovation skills, technological skills,, the China's, um, economic footing. I think it comes from a different time that doesn't reflect accurately what China is today. And it's a juggernaut, it's a major world power. And, um, the— and another thing briefly, and I don't want to get into this too much, but, you know, China was colonized and has a— China has a very deep history of 5,000 years. I'm sure everybody knows that. But when Xi Jinping or other spokespeople from China talk about the Hundred Years of Humiliation, roughly from the 18— uh, 1850 to 1949, when Communists took over China and the colonial powers were all gone. You know, they call that the Hundred Years of Humiliation. And from American perspectives, you're like, oh, you look back on 1850, that, that's ancient history. For China, that's yesterday. And what China perceived from the Trump administration was bullying and a return to that sense where colonial powers were telling China what to do. And that's a hot-button issue for China. That gets to them at a psychological level that most Americans can't comprehend because we look at 1850, '60, our Civil War, and we see it as ancient history irrelevant to today. But in China, the— their experience with colonialism is very relevant and part of the Chinese psyche.

Oh, you are absolutely correct, Rick, because the one thing we do not understand is really having a grasp of the culture and the history of China, what it went through. I was there, I visited last year. It was, it was, I'll tell you, I was, it was mind-boggling knowing, at least I read a little bit of the history of China for what it used to be, at least just the last century or so, and I saw the changes on the ground, from technological aspects to infrastructure. And all this has to do also with its own people. It's the people that are making these changes. And, and I was very, very impressed, to say the least. So let me go back to this tariff here before we jump into the chip, uh, banned by the US and AI and so forth, because you mentioned some key points regarding how Trump miscalculated. I'm gonna just add to that, that also Trump has lied to the American people by saying that, oh, it's the foreign companies, it's the foreign countries who's gonna bear the cost, when now we are witnessing that investors are dumping US government bonds as the faith in American system has faltered. Will I be wrong in saying within the next few months, we're going to see like some excessive dumping of the US government bonds moving forward?

Yes, US assets overall. So there's sort of two parts to the question. And I, look, I don't know what to say. To other American citizens. I'm an American citizen. And for those who are wondering, you know, you've lived in China for 15 years, have you suddenly gone communist? Have you suddenly become brainwashed by China? And the answer is no. I was an investment banker for 18 years, you know, believed in open and free markets, and that still persists. So I don't understand how the administration could get in front of the American people and say that China would pay for the tariffs, that other countries would pay for the tariffs, that— I don't know what to say. I'm sorry. You know, and this is why programs like yours are increasingly important, because people understand at some level that this is something, a fact that they need to check. And outlets like yours and many others are in equal state of shock that I am that this was sold to the American people as truth. Okay, that's— I, I'm trying to be, um, as, uh, polite as I can, short of saying that you were lied to. And, you know, that's— I'm sad. I, I'm genuinely sad. Now, where does this leave the United States, and most importantly, the United States financial system? Well, the US was looked at as the leader in free trade. And now, something that was considered cast in stone, something that you believed in as a core belief in investment and faith in the dollar has been shattered. And trust, once it's like you and your dog or a cat or a kid, I don't know. Once you no longer have faith in that other party, that trust is slow to be regained. And what we're seeing in financial markets now is a slow— this is not something that's going to happen overnight. The US dollar is everywhere. It is in pension funds in Australia. It is held as reserve currency, currencies by, by countries all over the planet. It's not something that overnight you dump dollars and you buy something else. There's— it is partially accurate to say there's almost nothing that can replace the dollar right now. But what has fundamentally changed is the perspective by asset managers, hedge funds across the globe that perhaps we should start looking at other assets. And what you can see are quotes. And in fact, this quote I think before that I held up from the CEO of Citibank was that pension and asset managers are tilting more to Japan, India, and it's cut off there, but, and other countries. But basically, they're looking to reduce dollar exposure. Now, this is not a fast process. This is not something— it's something that you are seeing now, is beginning now. And, um, it's not something that you can take lightly. It doesn't mean the dollar is dead. It doesn't mean the dollar is dying. No. But what it means is that other countries are going to start to look toward other assets because their faith and confidence in the dollar is fundamentally different. And we've got Kenneth Rogoff, professor from over at Harvard, and he writes, "This time is different," meaning that in the past, during various financial shocks, we've heard other countries saying, "Well, maybe the dollar, maybe we should start dumping dollars. Maybe we should reduce our dollar exposure." And I think Rogoff is right in the sense that this time it's different because the level of intent on a global basis is much higher. Plus, technology has changed the playing field. To transfer cash between— I'm going to pick two random countries, Kenya and China. You know, 20 years ago, they all did dollar trades because dollar was the only way to get money through the SWIFT system. Between Kenya and China. And now, um, like it or hate it, thanks to the folks who developed cryptocurrency and the blockchain technology that they, they invented— give them credit for it— even if you don't like crypto per se, that technology can be used to transfer government currencies now. So We've got an intent to find a different way to conduct global trade in non-dollar currencies. And we've got new technologies that finally allows those that want to explore this possibility to actually explore it and do it. We've got the systems now that allow that to happen. So it's different this time, Rogoff says, and he's got a new book out about dollar decline. And dollar decline is no longer— let me tell you a story. Let me tell everybody a personal story. On Twitter, I run a daily column called De-Dollarization Daily. And I've had it ever since writing my book Cashless, where I proposed that the RMB would be used more in trade. Which is absolutely true and came true. But that goes back now, I guess I launched my book 3 years ago. So, when I first put de-dollarization up on Twitter, people called me a communist, people thought I was nuts, people thought I was in this radical fringe. And my views on that Twitter daily column were low, a couple hundred. Now, with Trump's tariffs, I got 10,000 views on one of my post the other day on DeDollarization Daily. And we've got Harvard professors like Rogoff coming out saying, well, this time it's different, it's real. So it's funny, David, because it's gone from something that had been a fringe belief only for radical YouTubers, radical people, to something that, okay, this is real and it's actually happening around us. And I'm proud. I have some pride. I like being proven correct on these things, and I like that I called it in advance. Um, but yeah, this time is different, and faith and trust have been broken. Yeah. And, you know, so people out there are like, well, the dollar is a risk-free asset. Ask Russia if it's risk-free. I'm not condoning what Russia did in Ukraine in the least, But the American response was to put severe sanctions on Russia and hold, hold, block off and hold their foreign currency reserves. They basically took Russia's money, which some people will say is good, Russia is bad, and some people say it's not good. What it— you're— whether you believe it's right or wrong, this isn't isn't the issue. The issue is that if you're a third-party country watching this, you're saying, "Hmm, dollar is supposed to be risk-free. It's the safest of all assets. But now with what's called the weaponization of the dollar through sanctions, maybe my dollar isn't as safe and risk-free as I thought it was." My dollar assets, I should say. So, We're living in a, in a changed world where faith has fundamentally been shaken. And again, once you lose that faith, it's going to be a long time getting it back. And that, that will transcend the Trump administration and the next and then one after that. It's, it's, um, faith has been shattered or broken and it'll be a long time to get it back. And even if you, even if the United States gets it back, it's a new and very different playing field.

Well, you're absolutely correct. As a matter of fact, you did call on some stuff way back. I remember my conversation. As a matter of fact, I want to share something on the screen with everybody for the community because the person who wrote this, he is here today. That's Matt Bakke. And the reason for why Matt is here Rick, because here is what he wrote. So let me just read it here for the whole community. Here is what Matt wrote: This is exactly what I learned from your channel about 2 years ago when you had fintech specialists like Rick— Richard Turan, if I remember correctly— on your show. Just want to say, when it comes to analysis, you and your guests are about 2 years ahead of others. Most don't understand your analysis at the time But a year or two later, when it becomes more of a general talking point of other analysts, then they all pretend that they had light bulb moments. Doc, you are on another level. So I just want to share this with the community and with you, Rick, also, because he wrote about you back then, and I said, yeah, Rick talked about this stuff way back ahead of time. So And this is one thing I want to applaud you for this. Matt, like in this video so far, don't just be a watcher. Go ahead and hit the like, share, and subscribe button. And don't forget to tap the bell so you will not miss any of my videos or live streams. This way, you will be supporting a channel that stands for the truth and objective reporting. The choice is yours. Thanks for your support. And indeed, Rick, uh, Matt is here. He is—

I want to say thank you to Matt. Thank you so much. You made my day. I mean, really, look, David and I are talking heads, and we get on these channels because we believe something, and we want to share our beliefs, and that Matt, that you remembered and that perhaps it changed your perspective on what was happening is why I wrote my book. It's why I do these podcasts with David, and it brings me tremendous joy. Thank you so much for writing that. I appreciate it.

Yeah, he's right here. There is Matt. So he's waving to you, Rick.

Thanks, Matt.

It's an avid supporter. I have a wonderful community, just to take this advantage of this time here to say it, a wonderful community that is intellectually engaging, Rick. And really, when they sort of listen to what my guests have to say, they really absorb. And this, I'm very, very grateful. So I'm very grateful for the community. Uh, let me ask you one question before I'll comment on the, uh, uh, the, the issue of the dollar. I want to ask you one personal question, if I may. You've been in, in China for over 15 years, so you saw the changes that China went. What I'd like to ask you, Rick, is did you see— or let me rephrase this— in your opinion, was the advancements of China, especially regarding the financial aspect, was it based on because the changes on the global stage Or was it because of a strategy that they put in place decades before?

Yeah, that's a wonderful question. And the answer to that is that the Chinese are playing chess or the Chinese equivalent, the game of Go, and the US is playing checkers. Look, there was a period between 1949 and the late '80s when clearly China was a different place, and that's important for people to understand. The past 30 years, China has exploded economically because the Chinese Communist Party fundamentally changed itself, okay? And that's something that people don't quite understand, that it's not this— yes, it's the Communist Party, yes, the, the red flag and the stars are still there, that, that hasn't changed, But, um, but, uh, fundamentally China changed its economic system to be what they call democratic socialism, but what is essentially adding on a good amount of free market into its economy. So, um, these were planned now. So the economic changes were planned back in the late '80s. They started under Deng Xiaoping. And progressed through a series of Chinese leaders, um, ever since. But let's take it more grand— let's look at a more specific instance. When we look at technology, digital technology, China has something called 5-year plans, okay? And these— and they even have 10-year plans, um, but these plans basically say, look, this, this is where we want to be in 5 years, this is where we want to be in 10 years. And they are very important planning tools. And what they allow China to do is to focus on what it believes are going to be the important transformational technologies or trends in our world. And they include everything from green energy, which China went big on 20-plus years ago now, um, to artificial intelligence, to digitization of all kinds of new, um, uh, services in, in society. So there's a tremendous amount of long-term planning, and that actually goes into— speaks to our tariffs. Under Trump 1 administration, China realized— because remember, Trump, the first Trump administration, put sales bans on high-tech chips. So China realized, hey, we are dependent. And they're— by the way, they were happily dependent on U.S. chips. They didn't, they didn't have this huge, uh, effort nation, whole nation strategy to build AI and, and chips. They were happily buying them from NVIDIA at the time. But once Trump 1 administration, uh, put trade bans on, they looked at it and said, okay, well, we are vulnerable. So now Trump 2 is really picking a fight with a nation that is very different than the one that it dealt with a mere 5, 6 years ago. So, yes, they're very, very good strategic planners. And probably the best example of strategic planning is China's Belt and Road Initiative, which is really long-term. 20-plus years now, where they went to the developing worlds in Africa, all through Southeast Asia, and said, partner with us, you know, we want to build infrastructure with you, we want to help you, um, advance. And that was tremendously successful for them because now what you see is that the US exports from China. US exports from China are a mere 14% of China's total export base. And the Global South, all of those African countries, Southeast Asia, all of the rest of the world that mostly the US ignored, are now in bulk China's main trading partner. So China looks at, okay, US, you want to cut us off? Good luck with that. You're 14% of our total exports. Will live, you know. So yeah, they are strategically, um, much more coherent and able to, um, hold on to long-term plans far more than the United States, which changes administrations every 4 years and doesn't have a long-term strategic vision about where it wants to go in the world.

That's true. Just to follow up on this, the latest being Colombia, I believe they signed the BRI with the Chinese, and, and that's a major shift now in Latin America given what China has been building as far as infrastructure for the ports and so forth. So, so you're absolutely correct, Rick.

Absolutely. BRI is a game changer. And in fact, that's why one of the reasons why Trump went and picked on the Panama Canal as he picked on it as a security issue, but it had been happily run by Hong Kong company, uh, Hutchinson Whampoa. I think, I think I got the name right. But, you know, China opened new ports in Chile. It's opening or It's opened— now opening a couple of blue-water ports on the west coast of South America to give it new routes into Latin America. And, you know, even Jamaica has ports, I think, that are now China-funded. So, you know, we are— the US is responding to plans that China has put in place, you know, more than a decade ago. And it's going to be very hard for the US to counter China's Belt and Road Initiative. And, but that's, that's, I encourage all listeners to go, you know, read up about Belt and Road. It's fascinating and it's a game changer for China.

Indeed, indeed. Before we move into talking about AI and chips, I need to ask you one question here, Rick, just to follow up regarding the dollar, because I've been thinking about this one here. If we are to go with the hypothesis, just, just hypothetically thinking that what if something happened to the dollar, what will you replace it in your opinion?

So that's a, that's a wonderful, that's a wonderful question, and the answer is simple. First thing is that many will ask a similar question. You know, what if, what next? And the answer is, usually that question is couched in a way that says, well, what will replace it? And the answer is, nothing is going to replace the dollar. There will be no single currency that will take over for the dollar. Instead, understand this, when Australia buys from China. Australia takes Australian dollars, converts them to American dollars. Then China takes the American dollars, converts them into RMB. There's two stages, right? There's two stages to that transfer. And what's going to happen is slowly but surely, um, China's going to start accepting Australian dollars. Australia may accept more RMB. What you're going to see replacing dollars, particularly in trade is local currency transfers. And there's a, you know, people are like, well, did that happen before? Yeah, it happened before. European zone, the eurozone, you know, before the euro, before 1997 and the launch of the euro, Germany bought from Italy in Deutschmarks and they transferred Deutschmarks to Italian lira and back and forth. And that was how trade happened in Euro— in, in Europe before the Euro. And we're going to look at a world, particularly in Southeast Asia and in APAC, where Korean won, Japanese yen will be more important and used directly in trade with China and directly in trade with other APAC member APEC countries. So, um, it's a wonderful question. Now let me tell you, let me flip that question on, on you. So this is, uh, how the question is often asked in the press, and you'll see nothing can replace the dollar. What could possibly replace the dollar? And, you know, the The way the question is framed is it's framed that there should be another— what other singular currency would replace the dollar? And certainly, the RMB isn't going to. Certainly, euro is not going to take over for the dollar and dollar assets. People should understand that when we talk about the dollar, we're talking not just about using cash money to buy something from China or from some other country, but we're also talking about investments in US Treasury bonds, Treasury bills, you know, dollar-valued corporate debt. You know, the dollar is everywhere. But the question is always posed that, well, there could be nothing to replace the dollar. And that is true. I, for one, consent that. But that doesn't mean that there could be a diminution, a reduced usage of dollar, particularly in trade and for other uses where countries decide that it's not worth the risk of using the dollar or the cost of using the dollar, because buying dollars for many developing nations is very expensive. So, um, there's a fundamental change going on, and I ask listeners to see how this— usually in an article that is negative to de-dollarization, stating that it's not possible, not happening, don't bet any money on this. The desire is to look for what singular currency will replace the dollar. And that's a false question. It's a strawman argument. So the answer is, No single currency is going to replace the dollar, but you can still have less dollar use through buying gold in reserves, which is what China has done, through direct foreign currency trade between two countries. So yes, there's many ways that nations can wean theirself off or reduce dollar use, but it's going to be a— what I like to say, I always said it's a long, slow process, but that long, slow process just got a lot faster with the Trump tariff war. Indeed.

Well, I just— I wanted to make sure I ask you this question because, you know, I talk to people and this always comes up as to the idea of, uh, uh, and, and hearing it from you, you've been around long enough to know how the financial world operates and so forth, so I thought of Okay, it makes more sense to ask Rick this one, so, uh, and thank you for that. So let's move on into talking about chips and the semiconductor ban and so forth and all that. I had a chance, Rick, to read a study that was released, I think, on April 1st, if I'm not mistaken, and this one stated basically that the export controls are less effective than policymakers intended. And this one was based on a study that was conducted by the University of California at Berkeley. Yeah, back then. So, so my question is sort of, uh, not a question, but rather just to highlight the statements. The Chinese AI— we also what happened with Deepseek and so forth— the Chinese AI industry has been able now to build advanced AI. And some have, uh, attributed that to China stockpiling the chips way before the US embarked on banning, uh, uh, uh, those from the Chinese. And the Chinese went ahead and optimized the software for all this. If this statement is true, in your opinion, where do you see this war on chips is going.

Yeah, so, um, let me back this up with, um, the chair— the CEO of NVIDIA, uh, just yesterday this broke in the news. The CEO of NVIDIA, Jensen Huang, condemns U.S. chip curbs on China as a failure. And objectively, they did. In fact, what has happened— and Jensen Huang said this, what, 6 years ago now, when Trump won, chip bans were put in place. He said, basically, you're going to create a chip industry in China that is currently on, you know, currently behind us, and you're going to give them the incentive to modernize their chip industry and create what is essentially a big competitor for us. So, uh, Jensen Huang, uh, head of NVIDIA— NVIDIA chips are the world's leading AI chip at this point, and their market share They had 95% of the China market. Now they're down to 50%. And China was once 22% of NVIDIA's total revenue, down to 13% now. So it's been catastrophic for them. In fact, the last chip ban— get this— so NVIDIA prepared a whole bunch of new chips for China that under Biden were acceptable for sale to, to to China, and the Trump administration banned the sale of these chips. So, you know, it cost NVIDIA $15 billion, you know, in one go. So these, you know, these are huge amounts of money and huge amounts of money that all go into research and development to make the next generation of chip to keep America's advantage in chips, uh, to further their— the US's advantage in chips. So, you know, these are key things. Now let me— so the chip ban, was it a failure? Yes, objectively it was a failure because what it did was to make China come up with special funds, special investment in the chip industry, and now Huawei is producing artificial intelligence chips that are behind those from NVIDIA. No question about that. NVIDIA has faster chips, but it doesn't mean that China doesn't have AI. They basically have slower chips, which makes it take them longer to get an answer or to train these large language models, as they're called. And it makes them use more energy, electric, to do it. But it doesn't stop China's AI effort. And now, according to a recent study out by Stanford University, their AI Index, the Chinese are at par with the United States in artificial intelligence. So no, this hasn't stopped them. And even again, back to Jensen Huang, because he's in the center of the storm, and he says they're very close. You know, the concept that the U.S. is going to win this race and China is going to lose is fundamentally flawed and based on, you know, this zero-sum where, you know, if I win, I win or take all. And that's very far from the truth. But let me get to another point. Did— and then you made this in the very first part of the question you asked— did China import chips in violation of chip bans and sanctions? Sure. There were thousands, tens of thousands of chips on the international markets And clearly Singapore has arrested a few people for starting trading companies that bought Nvidia high-end chips. They were sold to a Singaporean company and they were re-exported to China through shell companies. You know, the concept that you can keep all these— the concept that you can sell tens of thousands of chips and keep them all under wraps as though each one is accounted for is simply wrong. It was never bound to be successful. But sadly, what it did was it cut off China and now made a new chip competitor for the US. And it basically barely stopped Chinese investigation into AI. And, you know, just understand this. China graduates— I can't remember the stats now— some 2 million-plus graduate-level engineers in science, technology, STEM grads, right? Engineering and mathematics. Science, technology, engineering, mathematics. You know, the US on a graduate level, a couple hundred thousand. So They're producing, um, these, uh, tech engineers at a rate the U.S. can't possibly match. In fact, 50% of the world's AI researchers are now Chinese. Chinese. So, you know, the concept is that you were going to kneecap, hamstring, otherwise make it impossible for China to develop AI by simply banning the chips, yeah, is remarkably naive. I'm sorry if that's harsh, but, you know, I— it was ill-conceived from the very, very beginning. Now we've paid the price. The US— NVIDIA now has a reduced chip market in China, costing it billions. China has developed this Huawei Ascend series of chips, which are not as good as NVIDIA's, but they're good enough. They can do as much AI as they want on them. They just burn more electricity. And for China, with energy generation capacity that's going asymptotically up, um, that's— burning more electricity is not a problem. So yeah, very, very new world we're living in. Yeah.

And that leaves the question— led us to the question of regarding the TSMC, because the whole US administration, even during Biden, was under the assumption that if we bring the TSMC, uh, uh, manufacturing here to the US, which even You know, I'm not in the tech world. I don't get involved in that. It's not my area. But even for me, I was like, I was shaking my head because we don't have— first of all, we don't have infrastructure for that. Second, we don't have the brainpower for that because we don't produce engineers in that field. So I didn't quite understand the logic for why the US will consider bringing the TSMC to Arizona and build in the plants and so forth. I knew it wasn't going to work.

I think it was Tim Cook who had the best quote on this, and I don't remember it exactly, but he said essentially that if I have a meeting of chip engineers— he had another term, some very specific area of chip design— he said, if I have a meeting of them in the United States, I can fill a room. He said, if I have the same meeting of the same people in China, I can fill fill a football field. And, um, you know, that's the reality, is that with chips and with other industrial sectors, that China— that the United States wants to bring chip production back to the United States is not a bad idea. It's fundamentally good. Yeah. However, how are you going to do it if you don't have the educated people to man the plants? And that's what TSMC has found already. They, um, They don't have the workforce capable of filling the roles that are filled already by people from Taiwan who went to tech school, specialty universities, specialty technical schools, all that they funded, I'm sure, and they helped provide that, all provide this workforce with the necessary skills. So I don't think that the US effort will fail outright, but it's going to take many years to come to fruition, and that's okay. But, you know, the concept that you're going to have TSMC fund a chip plant and then have them, uh, turn it on and you're going to get chips out of it in 2 years is, you know, is, is a stretch. And ironically By the way, one thing about this chip plant in Nevada, I can't remember, somewhere in the Southwest.

You're right.

Yeah.

Nevada.

Yeah. You know, so one thing about it is that while it produces chips, it produces the actual wafers, like they have this round disc and they etch the chip onto the wafer. What it doesn't do, they have to take those wafers and send them back to Taiwan for what's called packaging. And packaging is taking that chip and putting it into the plastic thing with all the little pegs that stick out so you can mount the chip on a motherboard and use it for something. So what's ironic is that, you know, fine, it's great that America produces chips. Not saying anything bad about that, but it's still— we don't produce the entire chips to use. We still need Taiwan to do what's called the packaging and the mounting. So it's really not a— what it isn't is it's not the US organically regrowing its chip industry, which it can do, but will take years to do. Remember, there's a reason why Intel, And others went to Taiwan in the first place. It was cheap. It was dirty work, has a lot of hazardous materials associated with it. Um, it's work that was considered better done in Taiwan, which is— I don't want to call it a developing economy, it's not true, but still an economy that would welcome that style of work, which is less welcome than the United States.

Well, that's almost the same argument I made regarding ASML, the company that produces the equipment for the nanotechnology. And even when we sort of— we, when I say we, it was Biden at that time— convinced the former prime minister at that time, Mark Rutte, to block the sale of the equipment. And you know what I said, Rick? I said, Mike, my word, China is going to try now to build its own equipment and develop its own microchips. And they did. Of course, they didn't reach the level. That's what I said back then. We don't seem to think— I don't know what's going on with Washington. We don't seem to think about the consequences, long-term impact of our decisions.

Yes. Now, I want to throw— I love that you brought up 2 companies, ASML in the Netherlands, TSMC in Taiwan. And we can also throw in there Sony in Japan and in Korea. The name escapes me for the moment. One of the big Hyundai maybe, but, you know, all of them were Samsung. Samsung. Thank you. Samsung.

Thank you.

It just boom away went. I'm getting— I'm having a senior moment. Uh, but we're looking at 4 separate countries, okay? Netherlands, Taiwan, Japan, and Korea. And when Trump imposed the— Trump won, imposed the chip bans, all of these countries were forced to reduce their revenue. They lost money on this. So basically, the United States said, we don't want China to have chips, and you countries will support us. And if there's— and there will be a cost to it, and you will pay the cost, right? Now think about this. Right now we are in the middle of a tariff war, and right now the Netherlands, Japan, Taiwan— Taipei already signed off, I think, on a deal and, and Japan are all negotiating tariffs with the United States. Do you think that they would go for a deal like that today? In other words, would they automatically agree with the United States to curtail exports to China? Would they do— would they deal— do that deal today? And my answer is Not so easy. And so, you know, when people talk about tariffs, they impact everything. And what they are all about is US soft power. And they have fundamentally reduced it because the US can't lean on ASML anymore and say, hey, this next-generation machine that you claim doesn't have US technology in it, you can't sell that to China. ASML is going to tell them, tell Washington, look, we've already bled enough money for you. And by the way, we're, you know, you— we have new tariffs from the US that we have to pay for, you know. So it's, it's really, you know, it's really a new world. And the ability of the US to project soft power, to make these other 4 countries pay for the US's— hey, these other 4 countries have no problem with China AI. It was the US who imposed their AI, their desire to, uh, hamper China's AI development. They imposed it on these other countries, and they won't be able to do it again. So It's a brand new world we're living in, and tariffs have profound, profound implications for the whole world.

Indeed, indeed. Before— we are at the top of the hour here, Rick. So before I'll give you a last word, I want to share once again, guys, if you get a chance to sign up for Rick Thurn's Substack, you know, it's free, I think, right, right, Rick?

Yes.

Yeah, the reason I am suggesting and recommending this for you is for you to become financially literate, to learn, because what Rick writes about is of great importance for you to understand where things are headed. This is, you know, as I always say, and I don't shy away from it, this is the purpose of this channel. It's not about just me showing up here and inviting guests. It's something for you to learn. So It is an opportunity for you. Rick also puts stuff on LinkedIn. But if I am to really recommend, go to Substack and sign up there. He's also on X at— you can reach out to him over there.

So I have something for you, David, and I'll make this real quick. Now, this is advertising for me. Ready? And this is also advertising for your next show that I'm going to be on in a couple of months. And it's going to be all about stablecoins and the Genius Act, which might be passed this week or next. And the US is going to get a digital currency. It's going to be called a stablecoin. It is a privately provided digital currency. And I write a lot about that on Substack right now. And yesterday's article was the good and the bad. I've got tons of articles about the good and bad in stablecoins. But I'm reaching out to the audience to say that this is something that will impact you for real this year. You may have the ability or the desire to pay with a new form of digital payment system called stablecoins. And they're good. I like them. They're— I'm not the biggest fan in the planet, but I like them. Fundamentally, they're good. And I write about that a lot on Substack. So how How we use AI is changing. I write a lot about AI. How we use and how we're going to pay in the future is also changing rapidly. And I recommend my Substack account in my links. And David, I say this on every time I'm on your show, and I get it. If you disagree with me on anything, if you agree with me, if you have something to comment that you've that you want to reach out to me, write me on LinkedIn, Twitter. Those are usually the easiest, and I'll answer you. And I do get people writing me. Your, your audience is wonderful. They're really switched on. And I get 3 or 4 emails every time I'm on the show. And I, and I love them because, um, I feel that's what I'm put on earth to do these days, is to, you know, to educate and help help people have a different, expanded point of view.

Not different.

I don't want to change your mind, but perhaps expand and change, change the direction a little bit.

Now, we do have a wonderful community. I'm very, very grateful and thankful to have the— or to be part of this community here. Very, very interesting stuff. So I'll give you a last word, Rick, if you are to give a word of wisdom to— I won't say just for us Americans as to what lies ahead, but to other people from around the world, because this financial entanglement that's going on around the world is not impacting just one country or one region, it's impacting the world. So some word of wisdom from you.

Okay, the most important two words I can say are— ready? Don't panic. It's going to be fine. But we are going to live through, at least for the next 4 years under the Trump administration, we are going to live through a period of increased tension between the US and China. And, you know, the last couple of weeks were a great example. We had the Geneva Accords where tariffs were reduced. And then within a week of the Geneva tariff reductions for 9 temporary, only 90 days, we had the Trump administration banning the purchase of Huawei Ascend computer chips globally, saying that they're using U.S. export technology rules, saying— claiming, not proven, but claiming that the Ascend Huawei— the Huawei Ascend AI chip uses U.S. technology. Therefore, all countries in the world are forbidden from purchasing this chip. Now, tech, leave, leave the details elsewhere. But the point is, you see this resolution. Okay, we've got a 90-day pause so everybody can breathe again. And then a week later, we're back up on the roller coaster with a global chip ban for Huawei chips, Chinese Huawei chips. So we're going to be on this roller coaster of up and down. And my advice to everybody is don't panic. It's all going to work out. But it's going to work out because we're going to live in a fundamentally different world. And I'm going to leave you with a shocking article. And I'm going to leave you this article. I'm not saying I believe it, but I think it's worth everybody reading. And it's from The New York Times. And it says it's a piece that says in the future China will be dominant, the US dominant, the US will be irrelevant. I do not for one believe that, but I think that the ideas, some of the ideas presented within are worth reading. And we are going to live in a new world where the US is not the great hegemon, and we have to at least be psychologically prepared for this. And I don't think that it's all bad. I think there can be real gains from So, ready? Don't panic.

Well, thank you so much for those words of wisdom, sir. Very, very, very insightful as always. On behalf of the entire community, Rick, we say thank you for sharing your knowledge. And really, we look forward to having you again.

Thanks for having me, and thank you out there for listening.

You're most welcome. Hi guys, hope you all enjoyed listening to Rick. We'll have him again here for sure. I mean, he's a wealth of, of knowledge and information and someone who's been around long enough to know how the financial system works. So, and again, it's, it's an opportunity to learn from someone who acquired the, the expertise over decades. So we're very grateful that he was able to carve out some time for us. So, uh, remember to join me. I think I might, I might do a live stream for you on Friday, but tomorrow I will be on, uh, the Geopolitics and Money channel. We'll be talking about the downgrading of the US banking systems. I guess 3 banks will downgraded, so we'll be talking about that tomorrow. And I will look forward to seeing you on Saturday also with my friend Carlza. So hope you enjoyed it and look forward to seeing you next time. As always, remember geopolitics impacts your daily life in more ways than one. Till next time, guys. Bye-bye.