Can crypto save the US economy?
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Today, we talk with economist Ben Norton about China and today's world. Welcome to The Bridge, enlightening conversations on world cultures, life, and everything in between. Hey, everyone. This is Jason Smith, host of The Bridge podcast from sunny California. If you like the show, don't forget to subscribe. We love The Bridge.

Hey, everyone. My name is Jason. I'm originally from sunny California, now living in beautiful Beijing. Today's guest is journalist and economist Ben Norton. He is the editor of geopoliticaleconomy.com. Welcome back to The Bridge to China, Ben Norton. Thanks for having me, Jason. It's always a pleasure being here. It's always a pleasure to have you. The fans love you. Let's talk about Switzerland. So the US and China got together and had some talks. Everyone, the whole world was watching. And

In your opinion, did China cave to pressure from the United States? No, it's the contrary. It's the US that caved into its own pressure.

Trump started this crazy trade war. You know, basically it was a nuclear trade war because Trump started the original trade war back in 2018 during his first term as president. And then Biden came in and he continued. In fact, he escalated the trade war. In particular, he made it more of a technology war on China. So Trump originally was targeting the Chinese economy with tariffs in certain sectors in companies like Huawei. But then when Biden came in,

He especially targeted the high tech sectors of the Chinese economy. And the Biden White House put 100 percent tariffs on Chinese electric vehicles and batteries and solar panels and semiconductors. And the Biden administration also put export restrictions on China.

trying to block China from access to the most advanced cutting edge chip, which they thought it would need to train artificial intelligence, large language models. Although we've seen that that obviously didn't work, Chinese companies like DeepSeek and other Chinese technology companies were able to develop very advanced

AI models without the most advanced chips. And now China is very quickly advancing in the production of its own domestic semiconductor industry. And in fact, Xiaomi just announced a huge breakthrough in very advanced three nanometer chips. So China is making a lot of progress. This came after a

Huawei announced a 7 nanometer chip in its Mate 60 Pro phone. So China's made a lot of progress. That was under the Biden administration. Now here we are in the second Trump term. Trump massively expanded this trade war and put 145% tariffs on China, which after you get a certain point...

You're just adding more numbers. It doesn't actually impact trade because after a certain point, trade is so unprofitable that there's basically a trade embargo. And that's why I said this is basically a nuclear trade war with 145% tariffs. It would have essentially ended trade between the U.S. and China. But

but that was doing much more damage to the U.S. economy than it was doing to China. Now, of course, China wants to trade with the U.S. China wants to trade with the world. But in the past decade, China has been minimizing its dependency on access to the U.S. market, its exposure to the U.S. market, whereas the U.S. still is very reliant, very dependent on exports from China,

especially technology goods. This is why Trump immediately after imposing these high tariffs on China, just a few days later, he issued an exemption for Chinese technology goods, in particular cell phones, computers, semiconductors, and other electronics, which was a major blow to his own trade war that he voluntarily took a step back on. And then now through these talks that were held in Switzerland,

We now see that the Trump administration announced a 90-day pause. So it's not the end, of course. This could very well once again kick back up when Trump announces tariffs after 90 days on China again. So we should not be too optimistic here. But I do think that this is a sign that the U.S. gave in. This was a major admission of defeat, essentially, by the U.S., because...

The U.S. is much more reliant on trade with China than vice versa. And there were many reports that there would start to be shortages on the shelves of U.S. stores, especially Walmart. There are reports that executives at Walmart called Trump. They met with the Trump administration and told top officials, you have to pause these tariffs because very soon there are going to be big shortages at Walmart, which is the biggest employer in the U.S.,

And it would also lead to significant price increases, inflation. And the only reason that Trump even won the election in 2024 is because of inflation. Multiple polls, including by the Washington Post, found

that the majority of US voters said that the inflation that they experienced after the pandemic was the biggest factor for them in the election. According to the Washington Post, an exit poll they conducted found that two thirds of US voters said that the economy was the most important issue for them. Trump claimed that he was going to make the economy better, bring down prices, stop inflation,

And his tariffs have only threatened to make inflation worse, especially in China. The US imports more goods from China than from any other country. So at the end of the day,

Trump started this whole problem, and then he voluntarily paused those tariffs that he imposed. It was not China that started all of this. So I think what this has shown is that the US is in a much weaker position economically than China. You know, you already answered this question, but I want to ask again, because so many Americans are under the impression that China's economy is dependent upon exports to the United States.

What truth is there to that? China does still export a lot to the U.S., but less and less over time. So as I said, I mean, China is not the one pushing for economic decoupling, which is the term that's become popular in the West. This is an idea that goes back many years, but in the past decade in Washington, it's become a bipartisan strategy is decoupling from China, breaking off the relations between the U.S. and China, which are very deep. Like I said, it's

The U.S. imports more from China than it does from any other country. China is not the largest trading partner of the U.S. That would be Mexico followed by Canada. Those are the two biggest. And then third is China. But in terms of imports, because the U.S. also exports a lot to Canada and Mexico, in terms of imports, the U.S. imports more from China than from any other country. It's very important. And what does the U.S. import?

The largest imports are cell phones and other communications devices, semiconductors, and

batteries, and also computers. Those are the biggest imports from China. Other big imports include things like Tupperware, plastic products. Those are pretty easy to replace. Other countries can make those. The US still imports a lot of furniture and textiles from China. Those are easy to replace. What's very difficult to replace are these advanced electronics like cell phones, like the iPhone, for instance. So the US is the world's largest

consumer market for iPhones, and over 80% of the iPhones in the US market come from China. And Apple has tried to replace its supply chain in China and move it out to another country, like India, for instance, but it has been very difficult. It's a very slow process.

And as Tim Cook, the CEO of Apple, famously explained, you know, he said, we're not in China because of low labor costs. In fact, Chinese workers have much higher wages today than in other neighboring countries in Asia. So we're no longer in the 1980s or 90s. Chinese wages are not low. They're actually very high. In the past three decades,

median income in China has increased by 10 times in China. So it's not because of low wages. It's because one, China has very good infrastructure. The government has invested heavily in high quality infrastructure. In a country like India or other neighbors in Asia, the infrastructure quality is much lower. Two, China has a lot of very skilled workers. So even though they're paid a lot more than in neighboring countries, they're very skilled and

And a lot of this process, it's no longer just like people using their hands to put in little chips and stuff and screws. A lot of this process is automated. It's using robots. It's using other capital equipment machinery. And you have to be trained and know how to use it. You have to actually have the machinery. And India doesn't have a lot of that machinery. Other neighboring countries don't have a lot of that machinery. One country that has been following the China model...

it has a very similar model, is Vietnam. You know, China is governed by a communist party. Its system is officially known as a socialist market economy. Vietnam is also governed by a communist party.

It's a system is officially known as a socialist oriented market economy. It's very similar to the Chinese system. The Vietnamese government has invested very heavily in infrastructure, in training, in the actual capital goods needed. So Vietnam, ironically, has become the biggest alternative to China for creating this complex supply chain. So

Some of this manufacturing is moving to Vietnam, but still there are many other factors. Another example is in China, you also have the network effect. So it's not just that China has invested in infrastructure and has advanced worker development, but also if you go to a place like, for instance, Guangzhou in the south of China, which is a major manufacturing hub, you have all of the other

and components needed in order to manufacture a good located locally in the same city, often in the same area, in the same neighborhood, even in some cases the same street. So you can locally source all of the screws and even the chips and other parts. Much of that is physically produced in the Chinese mainland.

except the most advanced chips which are produced in Taiwan, the most high quality semiconductors. But you don't need the most advanced chips for a lot of consumer electronics, only the most high quality expensive products. But if you're making a Samsung phone or even lower quality iPhones, so much of that supply chain is located in China. It's very difficult to move it out of China.

Trump says he wants to reindustrialize. It's not going to happen for a variety of reasons we can talk about. He has no industrial policy. The government is not investing in infrastructure. You don't have the worker training necessary. You need a lot of education, and Trump is cutting education. So he's not going to reindustrialize. What's more likely is that parts of the supply chain will move out of China to other countries like Vietnam, like China,

maybe India in the longer term. It's not going to happen immediately because India needs to invest so much in a lot of these parts, these other necessary tools that are needed in order to develop these products. So the reality is that

The U.S. relies very heavily on technology produced in China, and there's no easy short-term solution. There is no alternative in the short term. So in terms of China's imports from the U.S., so the U.S. trade with China. I was talking about China's trade with the U.S., now vice versa. What does China import from the U.S.? Well, energy. The U.S. is the world's largest producer of oil and gas. So China does import some oil and gas from the U.S.,

Also, certain commodities like wheat, like soybeans. And then China does import some electronics, some advanced electronics. It does import some other things like pharmaceuticals because U.S. big pharma companies have intellectual property rights over some advanced pharmaceuticals.

But the reality is that a lot of what China imports from the U.S., it can get from another country. So what we've seen in recent years is as the U.S. and China have traded relatively less with each other, in absolute terms, they're still trading a lot, even more than before. But in relative terms, as a share of their total trade, it's been decreasing. But at the same time, China's trade with Brazil has massively increased. So instead of importing soybeans from the U.S.,

China is importing soybeans from Brazil. Instead of importing oil and gas from the U.S., China is importing more oil and gas from Russia. So the point I'm getting at is that, yes, China does still rely on export to the U.S. market, but what it imports from the U.S., most of that is relatively easy to replace, and it is replacing it. Now, I already talked about how the U.S.,

It's difficult for the US to replace what it imports from China. It's going to be a long, complex process to recreate global supply chains.

Now, in terms of what China exports to the US, it's still an important part of China's trade. So if you go back 20 years ago, by far, the US market was the largest export market for China. That has fallen over time. And today, the largest export market and the largest trading partner overall for China is Southeast Asia.

in the Association of Southeast Asian Nations known as ASEAN. ASEAN is the largest trading partner of China, more than the US and also more than Europe, if you take Europe as a block.

If you look at trade data from China Customs, as recently as 2017, let's go to 2017, 2018, when Trump started the trade war, China's exports to the U.S. were over 19% of its total exports. In the past few years, that figure has fallen, and it's now, as of 2024, 14.7%.

But if you look at a chart, you can see that there's a very simple trend. China's exports to the U.S. as a percentage of its overall exports have been declining and its exports to ASEAN have been increasing. So what's likely is that that trend will continue until China's exports to the U.S. declines.

get to single digits and close to zero. And what's going to happen is that China will continue trading with the U.S. indirectly. Instead of directly sending Chinese-made products on a ship that goes to a U.S. port and unloads, instead, what's going to happen is that Chinese companies will

Offshore, their factories invest in other parts of the supply chain in places like Vietnam, Brazil, Indonesia, India, Mexico. They will add value in the production process and then they'll complete the product and

and send it to the U.S. Mexico has become a big location for this because Mexico has a free trade agreement with the U.S., although Trump is trying to tear that up. It used to be NAFTA. Now it's the U.S.-Mexico-Canada Free Trade Agreement.

Trump, in his first term, renegotiated NAFTA to have this new term, the USMCA agreement. He's tearing that up again. So we'll see. But a lot of what's been happening in recent years is that China has been rerouting its trade through third countries. And I expect that trend to continue despite Trump's tariffs. You're listening to The Bridge.

Well, it sounds like the winner are developing countries. But I wanted to ask about the state of the US economic standing as an investable place, the treasuries, the stock market, and the relationship of the dollar in terms of is it de-dollarizing? So

Would you say that it's fair to say that the tariff war has undermined global confidence in the US economy? Absolutely. There's no question. It's not just my view. This is what mainstream prominent financial analysts and top-level officials at Western financial firms have been saying. I often point out that the head of foreign exchange analysis at

Deutsche Bank, the major German bank, he came out and said that the global investor community, especially in Europe, has been de-dollarizing and has less and less confidence in U.S. assets. And this is all U.S. financial assets. So this is stocks,

We've seen a lot of volatility in the U.S. stock market. And this is bonds. I'll talk about that in a second. U.S. government debt. And it's the dollar itself. This is another major reason why we've actually seen the dollar fall against some other major currencies, including the euro and the Japanese yen. Now, in terms of the stock market, it's pretty obvious. There's been a lot of volatility. If you follow the main stock market index, the S&P 500, it's been down up, up,

down, up, down, up. In some days, you know, falling by double digit percentage. I mean, it's very volatile. In terms of the bond market, this is very concerning for the U.S. government because what are bonds? They're U.S. government debt.

And the U.S. government can tolerate volatility in the stock market, even though it actually has what's known as a wealth effect, because as the stock prices fall, that means that wealthy Americans who own the majority of stocks, because 10% of rich Americans own 93% of stocks, at least as of 2020,

a year ago. When the stock prices fall, it means that they often feel poorer because they are technically poorer. So they buy less, which leads to lower economic growth. So and that also leads to lower tax returns, tax income by the US government. So

There is an impact on the U.S. government, but the U.S. government is not as concerned about the stock market as it is about the bond market because the U.S. government is running massive deficits of over 6%, nearly 7% of GDP. And in order to balance its budget, essentially, the U.S. government, the Treasury, sells Treasury securities, bills, notes, and bonds, which are all different forms of debt at different years.

Bills are short-term. Notes are two, three, five, seven, 10-year Treasury securities. And then bonds are 20, 30-year. So the government sells these debt instruments and then investors buy them. If there's less demand for those securities, that means that investors demand higher interest rates. If there are a lot of people demanding them, the interest rates will be lower. If there aren't a lot of people, interest rates will be higher. What we've seen is that

the interest rates on U.S. Treasury securities have been going up very significantly under the Trump administration. And this is a big issue because the U.S. government debt as a percentage of GDP is more than 120%.

and increasing. That's manageable if interest rates are low. Japan has debt of over 200% of GDP, but until recently, the interest rate in Japanese bonds was very low. In fact, in real terms, it was zero or negative because inflation was the same level as the interest rate on the bonds or inflation was even a little higher. So

In that case, debt is not a big issue because you can manage it over time, just roll it over. But in the US, because of the inflation issues that came out of the COVID pandemic and supply chain disruptions and global stimulus and anyway, because of that, what that meant is that now interest rates in the US are much higher. The Fed raised interest rates, which means that interest rates on government debt are way higher. And on corporate bonds, this is also...

spilling over into the private sector. You have a lot of corporations that need to refinance their debt, and they have to do so at much higher interest rates. So now this debt is becoming less and less manageable. And now the US government is spending more than 3% of GDP just paying interest on the federal debt, which is how much it spends in the military. And the US spends more in the military than the next nine largest military spenders in the world combined.

So all these factors coming together, which is largely related to the inflation issues in the U.S., because U.S. debt is denominated in dollars. The U.S. could technically just print a lot of money. The Fed could just buy up all the Treasury securities to keep interest rates low, which is known as quantitative easing.

and that would also scare off investors and it would lead to more inflation. The issue that the US has is it has these inflation issues. That's why Trump won. So there are these contradictions here that are irreconcilable. The US has these bond market issues, this dysfunction. It wants to bring down interest rates, but it also wants to keep inflation low. So it has to play this complex balancing act.

And this brings in foreign investors. So a lot of foreign investors are saying, why would we take our money and buy U.S. Treasury securities, U.S. government debt, if

If the inflation rate is going to be higher than the interest on the treasury security, let's say inflation is 4% and you're getting 4.5% on the treasury security. Okay, you're making a 0.5% real return on your investment. However, then there's another issue. The US dollar has been falling against other currencies. So if you're a European investor and you hold your wealth in euros,

or in many cases, these are institutional investors. They're big investment banks and asset managers. They're investing the wealth of Europeans, right? So, or a pension fund. So they're investing euros. So they have to exchange their euros for dollars in order to buy US assets, like US treasury securities. However, the dollar has been falling against the euro. So even though you have a 0.5% real return or whatever it is,

on the treasury security, your currency is rising against the dollar. So in real terms, you're still losing value on your investment. So it's not just because of all the political factors. It's now at the point where it's simply because of economic factors. Foreign investors are de-risking because...

What Trump is doing is completely reckless. No one knows what's going to be the policy. It changes every few days. So they're de-risking. And out of their own economic interest, they're selling U.S. assets. And this is accelerating de-risk.

de-dollarization. Because, you know, this is something that I and other people have been talking about for years, mostly for political reasons, that foreign countries, especially countries targeted by sanctions or risk of being targeted by sanctions, have been trying to drop their exposure to U.S. assets and the dollar in general. So China, for a decade now, the People's Bank of China has been reducing its holdings of U.S. Treasury securities as

as a percentage of its overall foreign exchange reserves. And many other countries have been doing the same. They've been buying gold, they've been buying other assets.

And when the U.S. and Europe froze more than around $300 billion in euros worth of Russian government assets in 2022 due to the war in Ukraine, that was a wake-up call to many countries. And they also, for political reasons, started dropping their exposure to U.S. assets, selling U.S. government bonds, or at least

not buying more bonds, and instead holding their exchange reserves in other assets like gold, which is a big reason why gold prices have gone up so much. And that was for political reasons. They feared that the U.S. would seize their treasury securities if they invested in them.

But now it's not just political reasons, and it's not just countries like China and Turkey and Russia and Saudi Arabia and Egypt that have been de-dollarizing their reserves. It's now also foreign investors in mainstream financial firms. So what Trump is doing is actually accelerating de-dollarization, even though he said during his presidential campaign that he would save the dominance of the U.S. dollar, and he threatened tariffs

of 100% on BRICS countries, you know, Brazil, Russia, India, China, South Africa, and BRICS has now expanded. He threatened tariffs on BRICS countries and in general, he threatened 100% tariffs on countries that de-dollarize, saying that the US will stop trading with them if they drop the dollar. But ironically, his tariff threats on the rest of the world are

only accelerating de-dollarization further. You know you're a treasure, Ben. That is extremely complicated and yet you make it so comprehensible. I just love these interviews because I personally learned so much. I'm sure the fans are learning as well.

Let's talk about digital currency or a cryptocurrency. Besant recently announced that the Trump White House, and that's how he framed it. He didn't say I. He said the Trump White House is intent to support cryptocurrency as opposed to digital U.S. currency. How do they think this is going to help the U.S. economy? Well, a few things. So we should distinguish between crypto currency. It's technically called cryptocurrency, but I actually prefer...

I actually like how most people just say crypto now. No one says cryptocurrency anymore, they just say crypto. That's better because it's not actually a currency. If you look at polls, there have been numerous studies done, they find that well over 90%, some studies show over 99% of people who buy Bitcoin do not buy Bitcoin to actually use it in order to buy other goods and services as a currency. They buy Bitcoin as a financial asset, as a speculative investment.

So in reality, crypto is not a currency. It's an asset. It's a speculative asset, which is why some crypto supporters, Bitcoin supporters, they call it digital gold because you're not buying gold to use it. You don't use it for industrial purposes and you're not using it to exchange usually for other goods and services. That's very inefficient. You're buying gold as a store of value, as a financial asset, because you think

that there will be inflation or whatever and over time that the US dollar or whatever currency you're using to buy gold will fall in value so you buy gold as a stable store of value. That's what crypto is, even though it's extremely volatile, it's not a very good store of value. But the vast, almost 100% of people buying Bitcoin and other crypto, it's because they see it as a financial investment

and they hope to make money over time through capital gains on their investment. So that's very different from a central bank digital currency. When people talk about a digital currency, they usually mean a central bank digital currency. So for instance, China has an e-yuan, an electronic yuan,

Many other countries are experimenting with digital currencies. Those are central bank digital currencies. They are digital versions of the currency that is managed by their own central bank. It's not really that different from the currency that already exists. The main difference is if

The question is if they will allow retail investors to open accounts with the government directly through the central bank. That's the main difference because the vast majority of money that exists in the world is digital. Like the amount of physical dollars in circulation is only a small percentage of the total dollars in the world because most dollars don't exist physically. They're created as numbers on a computer screen. If you go to a bank,

and you have a bank account in dollars, or even if you don't have a bank account and you wanna get a mortgage loan, right? You wanna buy a house. Even if you don't have an account with them, they'll open an account with you, they'll create an account, they'll give you the loan, they create that loan out of nothing. This is well known now, it's acknowledged by the Bank of England, this is how modern banking works.

It's an IOU. That loan is a debt. They don't need to physically print. If you're asking for a loan for 200,000 US dollars, they don't print 200,000 US dollars. They make that loan in the system. It's just numbers on a computer screen. And then they put that money in your bank account. So it evens out.

the debt that you owe is the amount that they put in your account. So there's technically, it sums to zero, right? So that's how money exists, the vast majority of money in the world. So anyway, the point is, is that the difference is a central bank digital currency is instead of going through a private bank, instead of JP Morgan making that loan to you,

the central bank will allow you, well, the question is, will they allow you to have an account with the central bank?

which would be better, by the way, for most average people, because then the interest rate you get on your savings at the bank will be the same as the interest rate set by the central bank. So right now in the U.S., the average interest rate on a savings account in a private commercial bank in the U.S. is like 0.2%. Whereas if you take your savings and you buy

US Treasuries, you can get 4% based on the interest rate set by the Federal Reserve. So if you actually had a central bank digital currency, it would incentivize people to hold their savings at the central bank. First of all, it's safer because the central bank is not going to collapse. JP Morgan Chase, I mean, the government would bail it out, so it's not going to collapse either, probably, but it's still a little riskier than holding your savings at the central bank.

And furthermore, a lot of people, they would just take their money out of the private banks because they're only getting paid 0.2% and put their savings in the central bank where they're getting 4%. So Wall Street has been lobbying heavily against central bank digital currencies known as CBDCs. They don't want CBDCs because that would be major competition with their own savings accounts that are paying almost nothing. Okay, so anyway, the Trump administration has made it very clear. They're against CBDCs.

central bank digital currencies. Scott Besant, by the way, is a billionaire hedge fund manager from Wall Street. He's against it. Trump's against it. They're not going to make a central bank digital currency, which would be known as a digital dollar, right? It's commonly known as the US digital dollar. It's not going to happen. China did do it. Other countries are experimenting. I made that clear. Now let's go to crypto.

Because what the Trump administration wants to do is to be a global center for crypto because they think it will lead to capital inflows into the U.S. And interestingly, they also think that it will strengthen the U.S. dollar. This is quite ironic because originally, if you go back 10 years, a lot of the libertarian Bitcoin bros said that Bitcoin was an alternative to the U.S. dollar.

to fiat government issued currencies. However, what we've actually seen is that the vast majority of people who buy crypto, they do so through stable coins. That's a way of linking their fiat currency, the currency created by a sovereign state

So the US dollar, every dollar technically says that this is backed by the Federal Reserve. And then the Federal Reserve allows banks to create money, private commercial banks like JP Morgan. They're chartered by the US government, by the Fed, to create money. But it's fiat money backed by the government. So...

libertarians originally, you know, crypto bros originally claimed that Bitcoin would be an alternative. But in reality, most people, when they have their dollars, they exchange those dollars for stable coin, and then they buy crypto with those stable coin. What are stable coin? It's

essentially this kind of asset that you can use to go in and out of more speculative, volatile crypto, because obviously Bitcoin in a single day, it can go up 10%, down 10%. It's very volatile. The idea of stable coin is it's stable because it's backed by physical assets or actually they're not, I shouldn't say physical. They're backed by real assets.

Although there's a big asterisk there. They claim that they're backed by these assets. Tether, which is one of the main companies, by the way, Trump's commerce secretary, the billionaire, another billionaire from Wall Street, Howard Lutnick, he's invested heavily in stable coins and Tether and all of that. So he stands to gain personally from the US government's promotion of these assets.

But the idea is that the U.S. government is promoting this because what are stablecoins backed by? At least they say that they're backed by U.S. Treasury securities. So in order to maintain a peg with the dollar, the people who manage these companies that manage a stablecoin, they take a bunch of dollars and then they buy U.S. Treasury securities.

because there's a little return and they're seen as not risky, although increasingly they are riskier. And then that's how they use to manage as their backing. That's how they manage the stable coin at a set rate. So in reality, a lot of crypto is indirectly backed by U.S. treasuries.

So this idea that Bitcoin is an alternative to the US dollar is absurd. It's not true. And the Trump administration recognizes that. And they see this as a way of, one, attracting capital flows into the US because a lot of these crypto companies are US crypto companies. Some of them were even working with US banks like Silicon Valley Bank, for instance, or Signature Bank, these banks that collapsed recently.

two years ago, a lot of them were managing the accounts of crypto companies. So the Trump administration hopes that by being seen as a pro-crypto government, they'll get in those capital flows coming in. And they also think that it will help ensure more demand for U.S. Treasury securities, which will help them manage their debt and keep interest rates

rates low because there will be more demand for treasury securities in order to back the stable coins that are used to invest in crypto. And then finally, there's another factor, which is simply corruption, which is a real factor here. I mean, before Trump, the US government was perfect without corruption. Obviously, there's been a lot of corruption for a long time. There's

There's been insider trading in Congress from both Republicans and Democrats, from Marjorie Taylor Greene and Nancy Pelosi, who often outperform the market, potentially using, you know, are they using insider information? There's a lot of speculation. There's a lot of insider trading going on. So that corruption is not new. But Trump has made it totally blatant. He's not even hiding it.

Right before Trump returned as president, he announced basically a pump and dump scheme, his own meme coin, Trump coin. And then Melania, his wife, announced Melania coin. And thousands and thousands of Trump supporters lost many millions of dollars investing in this scam. And Trump's team made hundreds of millions of dollars.

So Trump also personally, he and the people around him have invested a lot in these crypto scams. It's well known that Trump's sons are really into crypto. So they also are personally benefiting from this. And Trump's crypto czar,

The billionaire David Sack from Silicon Valley, he's also very heavily invested in crypto. So those are the main factors. One, that the Trump administration wants to have capital come in and they think that it will help to reduce interest rates on treasuries. That's the second. And then they think they can personally benefit from all of this. Wow. You recently did a YouTube video on your geopolitical economy report. I encourage people to go watch it.

entitled The New Strategy of the U.S. Empire, in which you delineate how that is tied to China. So what is this strategy and how is it related to China? This is related to a speech that was given by U.S. Vice President J.D. Vance.

He spoke at the graduation for the U.S. Naval Academy. So he's speaking to people who are in the military and they're going to fight future wars. And he essentially announced a new strategy for U.S. foreign policy and military policy. He referred to it as a generational shift. And he said that the Trump administration is moving away from soft power and going back to hard power. So

So, he outlined a history which I think is correct that after the end of the first Cold War and the overthrow of the Soviet Union in the 90s and 2000s, the US was the unipolar power in the world. There was no peer competitor. The US could impose its hegemony on most of the world. It tried to at least, not always successfully, but it tried to. It waged wars around the world, overthrowing foreign governments, imposing sanctions.

And then, of course, you had the rise of China economically, which in 2016 overtook the U.S. as the world's largest economy. When you measure its GDP at purchasing power parity, you had the rise of Russia as a major military power and also significant economic power. You had the relative decline of the U.S., at least economically speaking, and also militarily.

So the Trump administration recognizes that we're no longer in the unipolar era, we're in a multipolar era. So the Trump administration wants to move away from soft power, from all this propaganda about democracy promotion and human rights. Obviously, the U.S. government never truly believed in that, but that was the discourse used in the 90s and 2000s, that the U.S. had to

protect the rules-based international order and overthrow dictatorships and support the rule of law and democracy. It was always propaganda. It was always bogus. In reality, the U.S. government was acting on behalf of U.S. multinational corporations and financial interests and getting access to foreign resources and overthrowing governments that pursued

alternative paths of development, overthrowing socialist and nationalist governments, installing neoliberal regimes that would sell off their assets to the US. So that was what was actually happening. But the Trump administration is moving away from the discourse that the US previously used of democracy and human rights and all of that nonsense. And they're going back to a blatant hard fist of imperialism.

They're saying very clearly that the U.S. is going to act in what it sees as its own interest to maximize its power, to maximize its imperial influence. A good example of this is in the Western Hemisphere, where Trump is saying, we're going to colonize Greenland. We're going to take over the Panama Canal. He's threatening to annex Canada. He's threatening to invade Mexico. So he's trying to reimpose the Monroe Doctrine, this 200-year-old colonial doctrine that

He's also threatening to colonize Gaza, saying it's going to be part of the United States. So this is why Trump loves McKinley. William McKinley, the U.S. president at the end of the 19th century, he was an ardent imperialist. He was proud of it. He massively expanded the U.S. empire. He added multiple territories to the U.S. empire, including Hawaii, Puerto Rico, Cuba, the Philippines. These were former Spanish colonies. So

Trump loves McKinley. He wants to go back. He's promised multiple times that he's going to expand the territory of the U.S. He said that in his inauguration speech. He invoked manifest destiny, which is a colonial idea used in the 19th century to justify Western colonization, westward expansion in the U.S. and stealing the land of indigenous peoples and ethnically cleansing them. So

What J.D. Vance is announcing is that we're going back to the hard fist of imperialism and we're preparing for war on China. And if you listen to his speech that he gave at the U.S. Naval Academy, he mentioned China multiple times. He mentioned it more than any other country. And he said that

In the 90s and 2000s, his argument is that the U.S. made a mistake, is that it did not prepare for war with China. It traded with China. It allowed China to continue to grow and technologically develop instead of trying to prevent China from develop, which is what the U.S. goal is today.

stated goal stated by Joe Biden's Commerce Secretary Gina Raimondo. She said the US goal was to prevent China from innovating and to block China from getting access to the most advanced technology. So the Trump administration now says our goal is great power competition with China.

and we want to prevent China from becoming a powerful country to maximize our influence, and we're preparing for war. That was what J.D. Vance said very clearly in the speech that he gave at the Naval Academy. I did a video about it if people want to check it out. And I don't think it's a huge difference between the previous era, as they would call it, because I think a lot of that was superficial marketing. The U.S. never actually cared about

democracy promotion and human rights and the rules-based international order. That was all the marketing and propaganda they used to justify their imperial wars abroad. But I do think that there is a difference in that. It's not a significant difference, but it is a difference in that the Trump administration is now gloating. They're proud of their kind of imperialist

neocolonialist policies, whereas previously the US government tried to downplay it. And Trump is proud of it. He's saying, no, we are going to expand our territory. We are going to physically take over this foreign territory instead of just installing puppets who will govern on our behalf like the US did in Afghanistan and other countries. The US is just going to take over that territory. So it's an even more blatant form of imperialism. And again, the main target of it is China.

You're listening to The Bridge. That's some scary stuff. I want to switch because I think a lot of this matters. It's not just about China and the United States. It's about the opinions of people in other countries. And I think, you know, Marco Rubio recently gave several sets of testimony before Congress. But on the 20th and 21st of May, he said that China doesn't do foreign aid. He firstly said that

foreign aid from the United States was a tool of U.S. foreign policy, but he also said that China simply does not do foreign aid. Is that accurate, Ben? No, it's not true. First of all, it's objectively false. China has a lot of foreign aid. You can find it's all publicly available data. What he would say is that, oh, that's not real aid.

Those are, it's politically motivated or economically motivated. Well, that's exactly the same case for the U.S. All U.S. so-called aid is politically and economically motivated. Marco Rubio admitted that in the same hearing. He said it's a great investment. It's a form of soft power.

But again, we see this fight in the Trump administration where some of the more blatant imperialists are saying, we don't want soft power like aid, which is from a soft power. We want hard power. We want military threats. Whereas Marco Rubio is saying, look, to manage the U.S. global empire, we do need the soft power as well. We still need the so-called aid, which is, as he admitted, is advancing U.S. political and economic interests.

Now, he's saying the same thing about China, but what he's saying is that, well, China's aid is cynical. Our aid is benevolent, even though he admits in the same hearing our aid is political. So it's a totally contradictory discourse in terms of China's aid. Now, China has a lot of development aid in many countries. It has donations. As an example, Nicaragua, a country I know very well because when I'm not in China, I live in Nicaragua. China recently donated a bunch of

New high quality, high tech buses that are also electric buses and also non-electric buses, but multiple. I mean, that's just a very clear example. There are so many countries around the world where China has donated different technology, has donated even infrastructure projects that it isn't just landfills.

lend the money to build, it actually builds it and then either does it for free. In the case of El Salvador, I know another example, they built some infrastructure. They built some infrastructure projects for free as a sign of goodwill. Or in some cases, China will give the loan to build an infrastructure project, and then later, they'll just forgive the loan. So there are many cases of this. And a big difference, by the way, between U.S. so-called aid and

and China's aid is that when China does these aid projects, very often you actually have evidence of it. You have an actual tangible piece of infrastructure that was built, a hospital, a school, a road, an airport or whatever, a port. In the case of the US, where is the US making these infrastructure projects?

It's not doing it. I mean, you can maybe find a tiny, small example, but the reality is that this actually goes back to the Obama administration. The Hillary Clinton State Department tried to create an alternative to China's Belt and Road Initiative when it was first launched in 2013. It was originally just the New Silk Road.

China's President Xi Jinping announced it in Kazakhstan as the New Silk Road, and then it expanded, organically expanded, and became the Belt and Road Initiative. And in response to that, to the announcement of a New Silk Road, the Clinton State Department under Obama also announced the U.S. attempt to make a New Silk Road.

The U.S. said it would help to invest in this infrastructure. It obviously never happened. It was just an announcement. The U.S. is good at announcing stuff and then never doing it. And then under the Biden administration, Biden announced originally what was known as Build Back Better World. And then the branding on it was really bad. So they renamed it like the Global Infrastructure Initiative or something like that.

And then BlackRock, by the way, bought into this and basically it just became the U.S. loves to talk about public-private partnerships, but in reality, they're private-private-private-public partnerships. So the vast majority of the profit and benefit goes to private corporations and investment funds and asset managers like BlackRock, which is the world's largest asset manager.

with over $11 trillion in assets under management. So the Biden administration created this infrastructure initiative. It was basically a way of helping BlackRock get all these new projects. And the US government's basically not building anything. And in reality, BlackRock's not really buying anything either. BlackRock is buying up existing infrastructure projects, many of which were built by China, by the way. An example of this is the Panama Canal. So BlackRock is

signed a contract at least, it hasn't gone through yet, but to buy the ports on both sides of the Panama Canal that belonged to C.K. Hutchinson, which is a Hong Kong company. And this Hong Kong company made an agreement to sell dozens of ports and other infrastructure projects to

to BlackRock, these are projects that were already built. So in the case of the US, they're not even building anything. They just want to buy up these projects. China is building infrastructure all around the world. And then people say, okay, well, that's not real aid because China benefits. Well, the US benefits from its so-called aid. I mean, the whole idea of aid is that, yes, you give aid, you

you both benefit. It's mutually beneficial. I mean, that's the idea. And in the case of China's aid, and especially through a lot of these infrastructure projects,

In which, in some cases, yes, the country is paying for it. But in many cases, China is paying for all of it or part of it. And or China is giving concessional loans, which are below market rate. So they're giving very low interest loans to countries, which in some cases they're giving zero interest loans, which means that China's losing money over time with inflation when it gives these loans to countries.

And recently, China actually forgave zero interest loans that it gave to African countries. And at the end of the day, they benefit because they get all these infrastructure projects. And yes, China also benefits because it has closer relations with these countries. It's soft power and China can trade more with these countries. So yeah, Chinese aid is also about soft power, but US aid is about soft power as well.

So the U.S. should stop pretending that it's some unique, benevolent country, even though it's so funny. They used to do that. But then other people in the Trump administration no longer are even doing that. So this narrative, it's just more and more contradictory. Beautiful answer. I have a lot of questions. We don't have a lot of time. So I'm going to collapse some of them into one question. So and the IMF and World Bank. Firstly, the United States has the only veto power in the IMF because it controls more than 15 percent of the population.

money that goes into it. And it does not allow any other countries to take over that investment because it wants to maintain its veto power. But the United States uses these institutions to support democracy around the world, or that's what the claim is. And it has been investing for the last 70 plus years around the world, the IMF and World Bank are sometimes referred to as the bank. And recently, Argentina has taken massive loans from these institutions to

My question is, I'm going to boil it down, make it simple. Are the IMF and World Bank creating prosperity? Are they developing poor countries? Of course not. No. Now, I should distinguish a little bit between the two of them. People get confused about the difference. So the World Bank

projects, often infrastructure projects. We were talking about China's lending. China is the world's largest development lender. So China lends more for infrastructure projects than the World Bank. Even though it's called the World Bank, it's actually now less and less important in global financing because of...

It's a long history of trapping countries in debt and then imposing neoliberal structural adjustment policies on them. So countries that have debt with the World Bank have to, first of all, in order to get the loan, they have to implement structural adjustment, which means often cutting wages for government workers, reducing the minimum wage, cutting health care, education, privatizing state-owned companies, liberalizing the financial sector, removing banks,

protections for local industries, you know, all of these neoliberal measures that hurt local economies. And even the IMF itself, economists at the IMF admitted in a research paper that over time, those neoliberal policies lead to, in the long term, lower growth rates and a higher inequality and more instability. So that's what the World Bank does. The IMF

is lending for balance of payments issues. So if a country has a major shortage of dollars, it's running these big trade deficits, balance of payments deficits, and they can't pay for their imports and their currencies are falling significantly because they have to print more currency to get the dollars they need to pay for imports. They have a currency crisis, balance of payments crisis. They need a big injection of foreign currency. They get a loan from the IMF. And

often referred to as a bailout. So Pakistan, recently they were having really high inflation and they were having trouble paying for their imports of oil and wheat. So they get their 16th bailout from the IMF. And here we're in Argentina, a country obviously that has very high rates of inflation and has had, this is not the first time, this has happened again and again, and it follows a similar process.

So the country has inflation and they ask the IMF for a loan and the IMF demands privatization of state-owned enterprises, liberalization of the financial sector, cutting social spending and all of this.

And it leads to inequality and poverty and social instability. And then the people elect a left-wing government. The left-wing government rejects the IMF. It pays off the debt. It rejects more loans. It expands social spending. And then you have a right-wing government that comes in, and then they ask for another loan from the IMF.

it traps the country in debt, imposes these structural adjustment policies and neoliberal policies, and leads to all these problems. And then the voters demand that a progressive government comes back in. The trend continues. There's this narrative, which is false, that

the left-wing governments in Argentina have irresponsible spending. They spend too much on social programs and they have all this debt, which leads to inflation. That's actually not true. It's actually the right-wing governments that have taken these huge amounts of debt.

from the IMF, not the left-wing governments. The left-wing governments actually paid off the IMF debt. It's the exact opposite. So when the left-wing president Nestor Kirchner came in, in the early 2000s, he paid off all the IMF debt. He and his wife were left-wing Peronists

in Argentina. His wife is Cristina Fernandez de Kirchner. She was president after him. They paid off the IMF and they reduced the government's debt as a share of GDP. So they were not the ones who trapped the country in debt. But then you had a right-wing multimillionaire president came in, Mauricio Macri, and he took on the biggest IMF loan in history. And a lot of that money went to funding Capital Flight to stabilize the currency. So a

Argentine billionaires and millionaires and big companies could sell all of their peso assets and exchange that for dollars using the liquidity provided by the IMF in violation of the IMF's own charter, which says that it will not give loans to fund capital flight, even though they did so in Argentina. This has been proven by Argentine data. I mean, it's been reported on in the Argentine media many times. It was a huge scandal under the Macri government.

So they stashed all of that money in dollars in offshore bank accounts, including the current economy minister of Argentina now. He's well known. He's notorious for having offshore bank accounts. This is well known. And then what happened is that a center-left government came in, Alberto Fernandez, and

And he had the biggest IMF loan in history. He could not pay it off. And this led to Argentina, along with a private debt owed in capital markets to bondholders like Vulture Funds and Wall Street. So Argentina was bleeding all of this foreign currency. It was running out of dollars that it needed to pay its debt because Argentina, unlike the U.S., cannot print dollars to pay off its debt because

because most of its debt is owed in dollars. So it was running out of foreign exchange, running out of dollars, which led to significant inflation. And then that inflation led voters to vote against the previous center-left government and vote for the current far-right leader, Javier Millet, who, like Elon Musk, he said he's going to slash government spending and reduce the deficit and all of this in order to bring down inflation. And then he comes in and he demands the second biggest deficit

IMF loan in the history of Argentina. The first one was over $50 billion. That was under Macri, the largest IMF loan in history. Now he's demanding the second biggest, which is $20 billion.

Argentina already has more debt with the IMF than any other country by far. It's going to be over 20% of all of the debt owed to the IMF. And this violates the IMF's own policies on what it says, what allows the quota of countries, because each country has a certain quota of loans they're allowed to get from the IMF.

Argentina, according to the IMF's own data, is at over 1,000% of its quota. And they keep giving it more and more money because this is politically motivated. It's not economically motivated. It's in support of the Argentine right wing and these billionaires and millionaires in Argentina who are all friends with the economists at the IMF. I mean, funnily, there was a scandal when Millet

had a meeting with IMF executives. They took all these selfies talking about how they loved Millet and they posted it on Twitter and then they were forced to delete the video and the photo of these selfies because of all the backlash. Recently, the IMF managing director, she...

called on voters in Argentina to support Millet in the upcoming election. She said, "We strongly encourage you to continue with the current government and their right-wing neoliberal program of privatization because it's benefiting US corporations that can buy up all the Argentine financial assets

if you invested in the Argentine stock market when Javier Millet won the election, your investment increased by many times. You've become very wealthy. So a lot of rich people have benefited a lot from this program while the majority of people in Argentina are living in poverty. So Argentina is a classic example of how the IMF and the World Bank, especially the IMF, also the World Bank, but the IMF is even worse. These are politically motivated organizations. The

The U.S. has complete control over them. The U.S. has veto power. They're physically located in Washington, D.C. And this is why the Global South sees these organizations as neocolonial. It's why they're so unpopular. And it's why China became the world's largest development lender. Because a lot of countries said, I'm not going to take a loan from the World Bank or the IMF.

First of all, they're going to demand all of these neoliberal structural adjustment policies. But furthermore, I mean, they're politically motivated. The former U.S. representative at the IMF, Mauricio Carvacarone, who is a Cuban-American right-wing, you know, diehard anti-Cuba activist, said,

He is Trump's top advisor in Latin America. In Trump's first term, he was Trump's appointee representing the US at the IMF. He admitted that Trump told that he ordered the IMF to give Argentina under its previous right-wing president, Mauricio Macri, the biggest IMF loan in history in order to try to help stabilize the economy to help the right wing win the presidential election in Argentina. He admitted that.

This is a political organization, which is why so many countries in the global south have said, screw the World Bank. We're going with China instead. This is why China has become the world's largest development vendor. Wow. That was a fascinating and amazing answer that gave me a lot of new insights. And your answers are always so comprehensive, which is why we're going to have to end there. We don't have time to ask the other questions. That's a polite way of saying too long. I love it because I actually study this all day, every day.

every day, exactly what you're talking about. And yet I still learn from you. So it's an amazing opportunity to hear from someone who has so many insights into this topic. I'd love to have you back on soon because I want to actually continue this discussion about Chinese lending versus U.S. lending.

I think that a lot of people don't understand it. And I think you have a lot of wisdom and knowledge therein. I think it would be educational for the general populace. Thank you so much for your time, Ben. My pleasure. Thanks for having me, Jason. It's always a real pleasure being here.