Pippa Malmgren - Global Macro Series - May 18th, 2022

[00:00:06] Pippa

The media is reporting on Ukraine because I talked to one of the editors of a major newspaper and he said there’s an old saying, If it bleeds, it leads. ‘ In other words, if there are humans dying, then it’s a story. But that’s not a story because there’s no dead body. Now, I’m deeply respectful of the fact that many people have so unnecessarily lost their lives in Ukraine. But there are also other things that really matter for geopolitics that we must stop ignoring just because it’s not sensationalist.

[00:00:43] Intro

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Here’s your host, veteran hedge fund manager, Niels Kaastrup-Larsen.

[00:01:38] Niels

A new world order is emerging, and in our global macro series, I, along with my co-host, Cem Karsan, want to dig deep into the minds of some of the most prominent thought leaders to help us better understand what this new global macro driven world may look like. We want to explore their perspectives on a host of game changing issues, and hopefully dig out nuances in their work through meaningful conversations.

Our guest today is very special. She is not only an economist and an award winning author, but her family roots run deep into the White House. On top of this, she is an entrepreneur, who also finds time to brief NATO generals on geopolitics and new technologies. So please enjoy our very special conversation with Dr. Pippa Malmgren. Pippa welcome, and thank you so much for joining Cem and I today for what I’m sure will be a fantastic conversation as part of our global macro series.

Now, I have been familiar with your work for quite a few years, all the way back to your early morning appearances on CNBC with Geoff Cutmore and company. But of course, in recent years, I feel that there has been a shift in your focus. And to me, you have become this incredible thought leader on so many of the most important topics that the world is facing. So as you can tell, I’m very excited. I’m very grateful that you found the time to speak with us today. So welcome.

[00:03:03] Pippa

Oh, thank you so much. And you know, it’s so funny, I just bumped into Geoff Cutmore yesterday just in the street.

[00:03:10] Niels

That is a small world, that has a small world. Now, since this is your first time on our podcast, perhaps I could ask you to maybe set the stage and provide a little bit of context for our conversation by just giving us a few highlights of your background, and perhaps also a little bit about your family’s background, as this, of course, is very relevant for our conversation today. And then we’ll dive into some of the many different topics that we are excited to get into.

[00:03:37] Pippa

Sure. Well, I guess the key things are. I grew up in Washington, D.C, because my father worked for four presidents. He was literally in charge of the missile trajectories during the Cuban Missile Crisis. So I grew up wanting to be a nuclear arms negotiator because if you grew up at Ground Zero, you want to stop that from happening.

So I’ve always had an interest in strategic security matters because of that personal history. He was the chief trade negotiator for the United States. So I became fascinated. He gave me a great sort of apprenticeship and how the world economy works. Then I went into finance after I finished graduate school at the London School of Economics and worked in the city. I realized that people in finance don’t often know very much about national security and politics and vice versa.

So my core competency, I realized as I speak both Klingon and Federation, and can explain one side to the other. Since then, I decided instead of just writing about the world economy, which I do a lot, I try to explain it in plain English. I also should be part of building it. I’ve gotten into the world of founding companies. I co-founded a robotics company at one point. I’ve been involved in the venture capital world and so I’m really at the cutting edge of where the innovation question is. And that’s exciting to see people building stuff. So that’s a bit exciting. Oh, I forgot. Then I worked in the White House. Small detail. (laughing)

[00:05:11] Niels

Yeah, small detail. Yeah, absolutely. Which makes it really fun and highly interesting for everyone every time you speak. Now, there are so many topics that we would like to cover today and it’s very hard to pick a place to start. Let me start with something that you wrote a couple of weeks ago on your wonderful Substack, which every listener should go and subscribe to because it’s like a fusion between watching a movie like the Clear and Present Danger with Harrison Ford and The Inferno with Tom Hanks.

So perhaps you can first unpack some of the issues you see around the terms, outsourcing and off balance sheet, which has now given me a completely different meaning after what I read you in your Substack. Tell us a little bit about that. And why this is important to understand.

[00:06:02] Pippa

Okay, gosh, interesting. So there’s what we look at, whether that’s a corporate balance sheet, or we understand, for example, looking at the war in Ukraine. You say the Russian’s have this many troops surrounding Ukraine. So therefore, you make conclusions about that. But we’ve lived in a world where there’s so much pressure on balance sheets, and what people have been doing in every realm is to move stuff off the balance sheet. And so corporates move more and more of their activities through outsourcing. Suddenly you think you know what the financial situation of a company is, but you don’t, because so much of it is off balance sheet.

The financial crisis was very much about off balance sheet derivatives, for example. The shadow banking system being bigger than the known banking system, because it’s all these off balance sheet transactions. It turns out, even in the military, militaries have decided in the last few decades to reduce costs by outsourcing to privatized militia. If you really want to understand Ukraine, you have to understand there is also not just the official Russian army, there’s the private President Putin’s army, who don’t wear a uniform and are highly trained. They’re very important in this picture, but they’re invisible if you’re looking at the traditional military infrastructure. So all of these things are off balance sheet. And so it’s a way of widening the aperture and giving you a broader perception of reality that otherwise would be too narrow.

[00:07:44] Niels

Yeah. And also, from memory you wrote about that kind of off balance sheet terms of military for sure. There are actually probably conflicts between off balance sheet armies from Russia and the U.S, or all the West (let’s call it that) all the way down through Africa, which is something we never hear about. As you say, it’s kind of invisible. Let me stay on the topic of invisible and take you to a completely different place. Because as I was preparing my notes for today, you landed another great piece on your Substack, titled Space Space. This is definitely where we are out in the new world.

You write about things like that, a lot stuff is being declassified right now. So that we’re getting a sense of what we know or the west knows about outer space and aliens, frankly. Also, potential new sources of energy. So if you don’t mind talking to us a little bit about what’s happening in that area, because it’s also relevant for warfare. But there’s so many things to it that I just didn’t realize before I read it today, and then we’ll get back to earth.

[00:08:59] Pippa

Okay. Well it’s interesting, yes. I was writing about the Space Space as an investment frontier. As something you need to understand in the world of geopolitics, because we are definitely in a genuine space race now between the superpowers. Whoever controls the highest altitudes with satellites, also has the greatest capabilities here on Earth. If you can take out the other guy’s satellites, you can remove all of their guidance systems and their capacity to act. And we’ve seen extraordinary, really, warfare occurring in space. So I’ve argued for a while that we’ve been in conflict amongst the superpowers for literally four or five years.

Ukraine is just the most recent manifestation of it, but I’m going to give you three quick examples just so you understand what I’m talking about. One is the Russians have been blowing up their own satellites in order to create these massive debris fields. Which creates all these little bits of metal creates something called the Kessler effect. Kessler Syndrome, which has been described as razor blades in a washing machine. They literally rip apart everything that’s in that orbit. So they’re very dangerous. They can take you out if your capabilities in that orbit.

Second, the Chinese have shown that they have these satellites with a robotic arm. They can go in and basically grab your satellite and hurl it into what they call the gray zone. Outer space where it just doesn’t work anymore, you can’t communicate. This competition for who has control is very big. I would say, the event that kicked off this modern war that we’re in was not Putin’s tanks crossing into Ukraine.

The event was in January this year, when there’s an internet cable, it’s the fastest internet cable in the world and a tiny little island called Svalbard in Norway. And it’s a double cable. And why? Because satellites still have to connect to a point on Earth. That is the point at which most every satellite under 5,000 miles high connects to Earth, including the International Space Station. It seems that what happened is that the Russian military used their submarines to cut the cable about four and a half kilometers apart. That middle bit is completely gone. So nobody can say they hit a rock or something. It’s definitely gone.

It seems that there was an oligarch who had a massive vessel called the Ragnar. Which apparently was over the top cloaking the military submarines from our satellite view. When it happened, the chief of the British defense forces, which is really the forward arm of dealing with Russian submarines for the United States. Tony Rabkin came out and said under normal circumstances this would be considered an act of war. I think that is how the military saw it. So that’s a different way of understanding space and warfare.

Then on top of that, to finish, and this is the bit that made me go very carefully and slowly, as I wrote, (particularly) the second part of that article, there seems to be an agreement, or let’s say a consensus amongst all the superpowers that there may be intelligent life in space and it’s worth exploring that. So I outlined all the different ways we see this happening, and one is the U.S. Congress is literally compelling the Defense Department and the intelligence agencies to declassify everything related to sightings of UFOs. They’ve renamed UFOs UAPs: Unidentified phenomenon to basically de-stigmatize it. There’s a guy at Harvard called Dr. Avi Loeb, who’s really the most prominent and revered astronomer of our time. He’s the longest serving chairman of the Astronomy Department at Harvard. His background is absolutely epic. He’s the inventor of the black hole project.

Anyway, his view is this is definitely so. He says, I don’t want any of your classified data. I don’t want any wobbly, blurry photos from some UFO fanatic. I’m going to build my own telescopes, we’re going to canvas the sky. And we’re going to look for all kinds of signs that there’s something out there. Including he’s dredging up what he believes to be an interstellar object off the coast of Papua New Guinea, but very much with the support of the US military. So something fascinating is happening in the Space Space.

[00:13:44] Niels

Yes, indeed. And actually, you also refer in the article this thing about what they’re trying to find out, as far as I remember, is it one of ours is one of theirs? Meaning it could be Russian, it could be Chinese, it could be U.S, and then it could be from outer space. But maybe we do have capabilities we’re not talking about.

[00:14:05] Pippa

Yeah, that’s why none of the US government references ever say anything about extra terrestrials or aliens because nobody knows. It could be that we have, in the US, some extraordinary weapons system that very few people know about. If that’s what it is, let’s face it, the Russians and Chinese have totally developed hypersonic glide missiles now, against which we have no known defenses. That’s why it could be ours. It could be theirs, but it could be them and we don’t know what them is. But I think it’s really interesting that so many people in officialdom are now involved with this project.

[00:14:49] Niels

Fascinating. Cem, take us back to Earth please with some grounded questions.

[00:14:55] Cem

I don’t know how I one up that but let’s try. Let’s start at the beginning. Pippa you are, by your own admission, an unbridled optimist. Which is in this macro world, incredibly refreshing. But I did want to poke at that optimism and see how you remain optimistic, I guess. What causes you to be optimistic broadly? Is that the diplomat in you ultimately, realizing that there’s always a solution in the middle?

I guess my question is, referring back to the last time globalization was, in the 1860s, when it started was really underpinned by British statecraft and naval power. A lot of books at the time assumed that the interconnectedness of the world was really such that it was increasingly impossible for there to be a world war. And then, it happened. In a world where things are seemingly crumbling. What gives you optimism?

[00:16:04] Pippa

So it’s really interesting. I am, almost all the time, always very optimistic and see the upside of most things. But there have been two times in my career where I’ve been really negative, and one of them was in the year before the financial crisis. I was very adamant that we were about to see something that was kind of like the savings and loan crisis. At the time, that sounded outrageous. In retrospect, it was a fraction of the size of the savings and loan crisis. But that was considered hugely alarmist when I said that. It’s hard for people to face trouble. So you try to just be the person who can help explain how you can manage it.

Then the second one was just in this last year, definitely six months. I wrote a piece, actually the initial piece that kicked off my Substack column. I wrote about how we’re about to be in World War Three. And I don’t say that lightly. I think we are in it. It is global in nature. It is superpower to superpower. The media is reporting on Ukraine, because I talked to one of the editors of a major newspaper. He said there’s an old saying, if it bleeds, it leads. In other words, if there are humans dying, then it’s a story. But like what I referred to with the cutting of the internet cable in Svalbard in Norway, that’s not a story because there’s no dead body.

Now, I’m deeply respectful of the fact that many people have unnecessarily lost their lives in Ukraine. But there are also other things that really matter for geopolitics that we must stop ignoring, just because it’s not sensationalist. I’ve been writing about these two things. And I found people just didn’t like it. Because it’s bad news. But it looks if you’re going to be in macro, if you’re going to be involved in what’s going on in the world you have to understand sometimes things go badly and awry.

The question is, how do you get out of that? Then that’s where my optimism kicks back in. I see so many signs of innovation speeding up because of not just the war in Ukraine, but the wars. We’ve had a war on a virus as well. We’ve had a war on COVID.

I’ll just give you one tiny example of something I just find so interesting. Jeff Bezos always says his best performing divisions are the ones that have the least amount of capital because it forces them to use their imagination. Ingenuity is always a better answer than money. So as an example, in Ukraine, we’ve seen how it is the Ukrainians, they’re up against trillions of dollars of defense spending by a superpower, but somehow they’re winning. It turns out that some of them are clever, and they’re using yoga mats. You’re like, wait, what yoga mats? Well, they have a material in them. That means if you hold it over your head, it cuts the heat signature so their satellites can’t see you. So they can sneak up and drop stuff off, but have a blow up and get away.

Like this is what happened with 9/11 as well. How did Al Qaeda go up against trillions of dollars of American defense spending aircraft carriers galore, answer $5 box cutters. All of us should be thinking about what’s my yoga mat? What’s my $5 box cutter? What’s my unbelievable leverage that doesn’t cost anything but it’s ingenuity. I just see that magnified through the entrepreneurship community. Like people building businesses, this is how they think. It’s hard not to be optimistic about what they’re coming up with.

[00:20:00] Cem

I’m actually optimistic in a really backward way. I think we’ve had building pressure in the system (Niels and I’ve talked about this on other podcasts) that have created an almost existential risk in the system. I fear that if it had continued for longer the risks to Western democracy and the really important stuff could have been at risk.

I actually see the fact that we’re getting into some actual conflict now. When there’s a time of Western democratic dominance as a potential good thing. I’d be curious to hear your thoughts about that. In the last 40 years, we’ve seen a secular increasing inequality in the world, which has created entropy in the Western system. And there’s a lot of cracks. It definitely feels like we’re in need of going back to our original ideals and reconstructing the checks and balances and things that make western democracy, individual liberty and freedom exist (which have been exceedingly rare in history). I feel like this might be the thing that brings the west together to challenge those. I’d be curious to your thoughts.

[00:21:17] Pippa

That’s really interesting. I wrote a book, in 2015, called Geopolitics For Investors. At the time, people were like, “Who cares about geopolitics? It is completely irrelevant. It’s permanently gone.” This was also the moment everyone was saying, “Inflation is dead, and we never have to worry about it again.” I argued that both geopolitics and inflation were going to come back and we should be preparing for that. They have now.

Why is it that people got so complacent? I think it is partly that they started to assume that the state of affairs was normal. In fact, if you look at history most of the time you are in conflict. We were very lucky that we had this extraordinarily prolonged period after the end of World War Two. Which is not to say we didn’t have any conflicts, because we did, we had Vietnam. And we had regional wars, and all sorts of things, Iraq and Afghanistan. But in terms of the superpowers facing off against each other, we were very privileged to have these checks and balances that worked for that long. Then they stopped working. And we no longer have that.

We do have a situation today where our military leaders and our political leaders are genuinely concerned about the possibility of a nuclear event. Which the Russians have repeatedly threatened and certainly have the capacity to execute. It’s a very dark moment, but it’s not one we haven’t seen before.

Like I said, I grew up with this. The good news is, in spite of all the threats, we didn’t get a nuclear exchange or a nuclear event. So I think that’s encouraging. But it does at its core, to your point, it forces us all to really think about what we would be willing to fight for, truly.

Like, as an example, it’s clear Putin has his eye on the Baltic states and the Scandinavian states, and he’s making rather overt threats towards them. And we may say well, his army is not in great shape, but his navy is. The Navy is right there, right off of the coastline of Kaliningrad, Sweden and Denmark. And so it’s a possibility. The question then is, would we fight for Sweden? My family are Swedish and Danish. We say yes. We say, yes, we’ll bring them into NATO, and then we’re required to fight for them.

But it’s interesting, we didn’t really fight for Ukraine, and why? Because we were so afraid of it escalating into a superpower conflict. Well, that will be true again, with other nations. So yes, it brings us back to our core values. What really are our core values?

Second, it does some other things we should think about and one of them is that war is a leveler in every way, including a social leveler. When we’ve had a huge stretch between the rich and the poor, the privileged and the underprivileged, the socio-economic spectrum has become very wide in recent years, in my judgment partly because of the money printing. What would narrow that gap?

Well, war narrows it, it’s a leveler socially, but also the dark, dark side is who benefits? Where are the arms makers that are making a fortune out of conflict? They’re there somewhere too. All of these things we have to think about. So, it’s like a philosophical point where we’re thinking about stuff that we’ve ignored for a long time. I just hope you don’t need war to have to address your core values.

[00:25:10] Cem

And to your point, I mean, We talked about this again on another pod, but monetary policy, the money printing (as you mentioned), really tightens the business cycle. It has created a situation of artificial calm, if you will. Which suppressed the need over 40 plus years now to solve other problems. It’s made certain problems bigger, particularly inequality and the corruption of absolute power corrupts absolutely internally, and authoritarianism globally. So, that’s leading to a much bigger issue now, but ultimately, better now than something even bigger in 20 years. Obviously, you look back at World War One, World War Two and everybody wishes we didn’t have to go through that but if we hadn’t gone through that, where would we be?

[00:26:03] Pippa

I think also, for me, one of the super interesting things, and I made the argument in my book Signals, that the money printing would spur the return of geopolitics. Money printing would bring back social unrest issues, because it split society. So, it’s kind of a civil war and superpower war, or both. It’s like, rubbing the bottle and the genie comes out.

To my mind, there is a clear connection. The more money you print, the more you are spurring social unrest on both of those levels. Of course, what I’m saying is I do blame to the Fed. I do think that they are absolutely not understanding the consequences of their decisions. Their view is that our money printing has nothing to do with the return of war or with social unrest. And I’m like, guys, it’s so interconnected it’s ridiculous. It’s like being in a high priesthood when you’re in the central banking world. They’ve got their own catechism, and they’ve got their own kind of Bible or their holy books and stories of what is true. I’m a little bit of a narrative disrupter there.

[00:27:29] Cem

So we couldn’t agree with you more here. But the question is, is it the Fed’s fault or quite simply the fact that their mandates that they’re given don’t include it? The system is definitely broken.

[00:27:44] Niels

Yeah, I want to stay with World War Three for just a few more seconds speaking as a Dane and, of course, now that you talked about Denmark and Sweden being in the firing line, I have two questions for you.

One, I know this has been talked about by people, besides yourself; Peter Zeihan, who was on the show a couple of weeks ago. So. I wanted to ask you whether you truly believe that Putin will go for the Baltic and even including a Swedish and Danish Island and what have you? That’s one question.

The other thing that Peter Zeihan talks about, which I don’t think is being talked about (certainly not in the mainstream press), is that he feels that there is going to be a really hard effort by Russia to separate Germany from the rest of the block and sanctions and all of that by obviously playing the energy card. They do have a pipeline coming into Germany directly, where they don’t have to go through Ukraine. So I am really interested in those two points from your perspective.

[00:28:49] Pippa

Yeah. So, on the first, I have been writing about the islands in the Baltic Sea, so Bornholm, Gotland. Most people have never heard of these places yet they were strategically of tremendous importance during both World Wars. I think the Germans certainly were using, I think it was Bornholm for their v2 rocket testing. These islands were some of the last locations that they gave up because of the tremendous significance.

Basically for the submarines and the naval fleets, it was like a gateway. If you control the island you can get through and if you don’t. So it’s been interesting watching, particularly as Swedes kind of re-militarize their islands, Gotland in particular. It sounds like such a small thing, like it’s a tiny island, who cares, it’s got nice beaches, but it’s the strategic importance from a naval perspective that matters.

We have had so many incidents between, particularly Russian submarines and British submarines. We’ve had The Hunt for Red October going on for quite some time. It’s just that it wasn’t in the public eye and militaries didn’t tell you it was going on. In fact, now, when you talk to nuclear submarine experts tye’ll say, “The Cold War never stopped. We were always having cat and mouse games together. They’ve just intensified in more recent years.”

But yeah, I think there’s something called the Sawaki Gap that people should be aware of. It’s been considered the single most vulnerable spot within NATO. It’s just this 64 Kilometer gap, a little road between Kaliningrad, which is Russia on the Baltic Sea, and Belarus. What the Russians did was to deploy over 100,000 official troops into Belarus for War Games, some months ago, and then it was announced, they’re not leaving. So suddenly, Belarus became part of this risk board, like a Monopoly board of this war.

Then the next thing was the Belarusian started talking about changing their constitution so that they could have nuclear weapons there. The Russians already had nuclear weapons in Kaliningrad but they might also have them in Belarus. Suddenly, that little gap starts to look really vulnerable.

The question again is, are you really going to fight for it? Are you really going to risk a nuclear weapon for that little gap? But if they get that gap then the Baltic states, Estonia, Lithuania, Latvia, are literally surrounded. So it has tremendous meaning for them. Those are some of the most advanced economies in Western Europe. So it’s of huge significance.

Germany, very interesting to see that already you’re starting to see Germans drive around with Russian flags on their cars. Russia has always had a deep relationship with Germany. Germany doesn’t want to be at war with Russia, and certainly not after seeing how brutal Russia can be about it. They will always be much more into let’s cut a deal, then let’s fight. Although it’s been fascinating to watch Germany literally turn on a dime, and announce they are going to spend 2% of their GDP on defense, which will make them a massive, massive military. The interesting thing is going to be to see does their military wear uniforms or do they adopt a modern military where you don’t even know who’s in it because they’re so low key about it and it’s much more about cyber than it’s about physical.

Do you really care about tanks and guns if you own cyberspace and outer space (back to our original subject). I think it’s not going to be simple. It’s not like Angela Merkel who was educated. She was East German, educated in Russian; understood the two have to be engaged in sophisticated diplomacy with the Russian bear. Then suddenly now these events happen, and they go, “No, no, no, we’re with the West.” Well, I think it’s going to be a gray zone for Germany. So, it’s in play diplomatically.

[00:33:35] Niels

Super interesting.

Cem, I’ve got a completely off topic thing that’s going to get me into trouble when I get to it, I think, not with Pippa, but with the audience. I’m going to let you jump in here before I have the nerve to ask this one.

[00:33:50] Cem

Okay. So Russia, obviously, is the topic of the day. As you said, if it bleeds, it leads, and that’s front and center. The thing that’s in the background that we’re talking about less is China. Russia is the 11th biggest economy in the world. Yes, its major commodity input, particularly Europe. But that’s something that we as a Western global pack work through and in a year or so call it. China is obviously the second biggest economy in the world. I think it’s incredibly telling that they, on February 7, did that joint communique together and stopped walking aligned, which they have walked for 45 years. As far as I can tell, the only reason that they would do that is if they have something else that they really want. That they’re willing to give up playing both sides.

The obvious thing is Taiwan. What is your view of or what the odds of a Chinese invasion of Taiwan is? Again, there’s Scottish historian Niall Ferguson, who I’m sure you’re familiar with, came out predicting that this Chinese move would (and this was back about a year ago), come sometime after the Chinese Olympics. Within a year or so getting towards the midterm election. We’re very much in that window. There’s a lot of signs that might be happening. A lot of people are in denial about that. What are your thoughts?

[00:35:24] Pippa

Yeah, this is such an interesting question. So imagine two guys in a bar. And one of them says, “I hate these Ukrainians and NATO and all this guy just wants to punch these guys.” The other one, the Chinese guy, says, “You should do that. Yeah, you have reasonable grievances, and we’ll be with you, we’ll be your friends, we’re your best friend.” Then the Russian starts punching. The next thing the fight breaks out, the police come in and the public sees. Then the Chinese guys, now at the other end of the bar going, “I met the guy once. We were sitting in a bar,” but suddenly there’s this huge distance between them.

So I think China did encourage Russia to go down this road, and they got a lot out of it. They got the most valuable stuff. They now know what our reaction times are like. They know what our decision making is like and they understand the public reaction. They got really invaluable knowledge about what would be relevant if they were to go for Taiwan. So, don’t think that they didn’t get anything out of this. They did.

Second, I think that there’s something happening in the background that’s important to understand (the Chinese play a long game, obviously) that’s been the Korean Peninsula question. What we’ve seen is the new president of South Korea is quite a hawk on China. But he’s only just been elected, but the previous president of South Korea, his view was let’s do a deal with the Chinese.

The deal was, China said we’ll take responsibility for North Korea and we’ll pay the cost of managing the North Koreans. In exchange, we want an announcement of the end of the war between the north and the south and a rapprochement between the two sides, not reunification but the end of the troubles. If you can get that then the question becomes, why do the Americans have 30,000 troops stationed on the border between these two places? You don’t need them there anymore.

If you can get the Americans out, then it’s much easier to deal with Taiwan. I think they were hoping that the deal would get done before the previous president of Korea was out, but they didn’t get it done.

Second, I also have questions about how you would take Taiwan from a Chinese perspective. They have a very Senzu theory of war which is the best way to conduct a war is to get your opponent to do what you want without firing a single bullet. That’s a smart way. Do you really need to do it militarily? I think maybe the answer is going to be no.

It might end up being like Hong Kong (and I lived in Hong Kong, when the handover to China happened). You might be able to do this without a single bullet being fired. You can use your flyovers to intimidate. The reality is that most of the Taiwanese middle class makes their living from the Chinese economy. So in a sense, they’re already bought. There are a lot of Taiwanese who would say, one country, one system, we can live with that. There’s a smaller group of really hardcore pro-democrats in Taiwan. But are they getting smaller? There’s a question, maybe there are fewer and fewer of them over time.

I think China’s waiting for that gradual moment when you get a less aggressive leader in Taiwan, a less aggressive leader in South Korea, and then a whole bunch of things can happen all of a sudden and you could have a reuniting of Taiwan and China without having to go to war for it. The Chinese do not want to take on the United States in a battle. That is not their idea of an easy thing to do or a smart way to spend resources. They’ll challenge us in lots of ways but to provoke the United States. I just don’t see the Chinese thinking that’s a smart thing to do. I don’t think we’re going to end up with an invasion because it’s just the least elegant way to accomplish the task. And they prefer to choose something that takes longer than something that is more bloody.

[00:39:57] Cem

The interesting part is that you mentioned time: in the long term. China has generally played the long game but they’ve really put themselves walking over that line. The arguments for many has been that it’s because there’s a closing of a window with using soft power or even hard power in Taiwan because of the broad encirclement that’s happening with the quad Alliance, A.

B, also because of Taiwan, slowly, in terms of trade, starting to step away and diversify is an add-on argument that is accelerating given what’s happened in Russia, given the commitments that China has made to Russia. I wonder, again, if that window is actually closing, if they are committed to this or if that long game is almost pushing Taiwan out of reach if they do it.

[00:41:01] Pippa

That’s interesting, too because one thing to watch is the Russians positioning themselves in the Pacific Islands, not only the Chinese. So, on the Chinese side we’ve had them very involved, of course, in the South China Sea. Then there’s a more recent announcement of the deal that tthe Chinese have struck with the Solomon Islands, which to remind people is where Guadalcanal is – one of the most significant battles of World War Two. Of course, the Australians are now having a heart attack, because that’s pretty much on their doorstep. That means weapons systems and surveillance systems can be positioned there.

Then what’s lurking in the background, and nobody ever refers to, is the islands that the Russians claim the Kreil Islands off of Japan. Those also have tremendous strategic importance, particularly if the Russians and the Chinese are collaborating, which they do seem to be. Suddenly you could find both Russia and China right on the doorstep of Japan. That’ll give the Japanese a heart attack. The senior brass of the Japanese establishment already understand that this is a very serious development.

So again, I don’t know if you remember the game, called Risk, where it’s like Monopoly except it’s warfare. That is how these guys are thinking about the world. They’re picking off parts of it that have strategic importance. It’s like, “Well, that island is not important to me.”

“Well, it’s useful to me, I’ll take that.”

This is a global geopolitical chess match. I say that advisedly. It’s not a game, this is a match. There are lots of ways you win chess master matches, intimidation is one of them. Smart forward thinking is another. That’s how we should be thinking about this.

[00:43:10] Niels

Maybe just as a follow up, because that’s one of the arguments that Peter Zeihan makes a lot and that is (and speaking to your point, Cem, about the window closing), is demographics. Do you think that China and Russia are actually in a situation where they’re potential ability to do certain things will disappear in a relatively short period of time because of demographics?

[00:43:36] Pippa

Yeah, this is a core issue. I think one way of thinking about it is because of the one child policy in China, and also in Russia, the demographics are very clear. They just don’t have young people coming online. So the population is aging. It’s very hard to conduct wars with old folks. So this is narrowing the window of opportunity to conduct war.

There’s another way of thinking about it, which I think makes more sense, particularly for China. If your economy is not delivering and let’s face it, it is not capable of delivering and perhaps for some reasons that are not their own fault – trade wars, COVID. There are all sorts of things that have shut the Chinese economy down. But what really matters is that the public in China were willing to work for pretty much nothing if they genuinely believed that they were going to get rich before they got old. Well, they don’t believe this anymore.

The next question is bound to be, “Well, why are you guys in charge? If you’re not going to pay me for it at all? Why are you in power?” That is a question China doesn’t want to face and inflation is a core driver here. Throughout Chinese history, major political turmoil always happens when inflation picks up, right? Tiananmen Square happened against the backdrop of 14% inflation. Double digit inflation starts to kick in, and boom, everybody’s asking these questions, “Why are you in charge?”

If that’s the situation, one way you would unite the public is to present them with a common enemy. So you go to war, not because you have an international strategic objective, but because you have a domestic objective. Back to your point earlier, you can create enormous social cohesion if you are all fighting a common enemy. You, again, flatten the power structure of the country. All the gaps between the elite and the non-elite start to disappear.

I think China has shown, under Xi’s leadership, that they did not choose the direction of more liberal western values. They’ve chosen the direction of more autocracy. That’s again, where they liked the idea of acquiring more control over North Korea because their view is the Chinese public should behave much more like this. You guys should walk in lockstep, much more than before. That’s just totally inconsistent with creating an economy that creates dynamism and jobs and innovation.

I see the risk of war more from that direction, rather than the window is closing. It’s that they have to act or they’re going to have a revolt.

[00:46:41] Niels

Okay, so I’m going to venture into this little controversial topic. I don’t know what you have written about this. And it’s not really about my little analogy that I want to lead with. But I do want to hear your thoughts about this. So you know, there was obviously the big topic of COVID. To make it even more controversial, we have the topic of vaccines. But it’s a long winded question, as I mentioned.

So the backstory is that a couple of weeks ago a group of Danish researchers at one of the universities in Denmark, and let me just remind the people listening that Denmark is actually one of the most or highly highly vaccinated countries in the world, with very, very good data. Even though you think this data actually was international data as well.

They made the first study, as far as I’m aware, where they looked at the two groups of vaccines. On one hand, you have the mRNA (which is the Pfizer Moderna). That was the one that we in Europe, at least, were told that was the gold standard. That’s the vaccine we should use against COVID. Then they compare that to the vaccines like AstraZeneca, Johnson & Johnson, and Sputnik, to not only look at whether these vaccines had a positive or negative effect on the risk of dying from COVID but also if they had a positive or negative effect on the risk of dying from another disease.

So you could say that they were essentially looking at the unintended consequences from these two groups of vaccines. Now, people can go and look up the study in detail. But first, I want to share their overall results to put it into context of our conversation. What they have concluded from this group is actually that the mRNA vaccines had no effect, positive or negative, compared with no vaccines at all.

But the adenovirus vector vaccine, in the other group, actually had a significant improvement, which is not what we were told, certainly, during COVID. In terms of the risk from dying from cardiovascular disease, for example, there was a large reduction of risk in the adenovirus vectors vaccines but in the mRNA group there was a significant increase.

So my question is not about vaccines, per se. But if we use that as an example, where we now start to see evidence of powerful institutions promoting and using the wrong medicine, so to speak, in dealing with COVID, perhaps down to the financial interests of Pfizer Moderna, but it was the two US companies that went that direction. What if we’re making the same mistakes when it comes to central banks?

What if the Fed as someone inside the Fed has actually suggested last year. I think Jeremy B. Rod wrote a paper, in the fall of 2021, where he basically was saying that the Fed was looking at the wrong thing and this could lead to some unintended consequences. I wanted to ask you whether you see this as a risk and, more importantly, is anyone that you know (because you don’t seem to know everyone) thinking of the risk of central banks actually screwing up at this time? Because that’s the only stress test we never did, that is stress testing to Central Bank policies around the world. It’s a long winded question, but I’d love your thoughts.

[00:50:08] Pippa

It’s a super interesting landscape you’ve laid out. The last two books that I’ve written have been about leadership, and very specifically about why we’re having so many leadership failures. There’s so many examples from the Catholic church not cracking down on pedophilia, to Volkswagen falsifying the numbers on carbon emissions. The list is just ridiculously long. And the question that I and my co-author had was, why is this happening?

We came to a few conclusions that are relevant for these points that you make. One of them is that our leaders in our society tend to prefer that we all operate from a position of certainty that we know what’s going on, that we have the information we need to make a decision and we’re making the right decision. But in fact, we don’t have any certainty. We usually don’t have all the information we need to make a decision.

I know from personal experience, working in the White House, when we had two very significant crises, one was seven of the nine largest bankruptcies in American history in one year. That was Enron and Tyco and WorldCom. And one was 9/11. What I realized is the whole thing about working in the White House, and this isn’t left or right, Democrat or Republican. With any emergency (and there’s always an emergency in the White House) you will never have enough time or information to make that decision comfortably or with any real certainty.

So, you have to make decisions where you’re doing the best that you can, and you’re leaving latitude, in case you’re wrong. What I recommended in my leadership books was that it makes a whole lot more sense to move away from prediction. Which is what everybody loves to do; either or; this or that; yes, it will be, and instead move towards preparedness for a range of possible outcomes (some of which will sound absolutely crazy).

But gosh, pretty much every crazy scenario has actually happened. How many people said Trump will never win? The British will never Brexit, Putin won’t roll into Ukraine. The list goes on. We will not have a pandemic. So, I think all of this subject matter suffers from the same thing which is an overconfidence, over reliance on a certainty that isn’t there.

Second, an unwillingness to face the fact that the data is probably going to come in with lots of different conclusions. It won’t be one single conclusion because, by the way, that’s not how science works anyway. Science is just a process of asking a ton of questions and getting better quality answers, but not a definitive answer. There are no definitive answers, even in science.

I’ll add one more piece to this puzzle. There’s also something which is a social phenomena that’s hard to explain, but it’s that it doesn’t matter what the subject matter is. People today have the view that you either agree with me, or there are only two possibilities. You must be either evil, or stupid. Well, this is no means for having a conversation or for advancing anything. Because you have to be able to accept that there are other perspectives than your own that might have truth.

All of the subjects that you’re talking about are suffering from the fact that they are presented as, these are the facts, I am right, you are wrong, you’re either evil or stupid in your wrongness. Then this thing bites you because data keeps coming back and then says, well, maybe the situation isn’t quite what you thought it was, whether it’s a virus, or whether it’s a leader of a nation, or pick your topic. It’s all the same thing.

We could go into the geopolitics of COVID and there’s some really interesting stuff there. But again, it’s about perception of reality, rather than reality. Today you’re not even allowed to discuss… As you say, you were right to say you’re going to be careful even if you asked the question, because there’s no room for nuance.

Let me finish with this. The last thing I’ll say on this, the lack of nuance further exacerbates things because it’s all either or, So, for example in Roe versus Wade and the recent leaked decision by the Supreme Court (which I think we still don’t have the actual decision yet), if you’re asked, are you pro-abortion or anti-abortion? Are you pro-vaccine? Are you anti-vaccine? What happens if you are anti-abortion, but you don’t think that abortion should occur the day before the birth? Or what happens if you say you’re in favor of vaccines? But if you’ve had adverse reactions to two or three vaccines, maybe you shouldn’t have a fourth one, are you an anti Vaxxer?

The public dialogue now doesn’t allow any nuance and so this either/or makes everybody polarized and then you can’t come together to come to a nuanced conclusion. So that’s my core answer. That applies to the Fed as well. That you’re either going to believe inflation or there’s no inflation, and there’s no in-between.

[00:56:03] Niels

No, absolutely. By the way, what you’re saying there is something we discussed earlier with Ben Hunt. How narrative plays in which is a fascinating conversation, by the way. My last point on this would just that what I worry about is something similar like, where clearly there seems to be more questions today about the whole vaccine and how dangerous COVID really was, or is it ect., ect.

My worry is that if we talk about the central banks, that maybe, at some point, the financial world in particular is going to lose confidence in their ability.

[00:56:25] Pippa

It’s happening already.

[00:56:26] Niels

Exactly, and I think that opens up for something we have not seen, at least not in the last 50 years (maybe it happened before), but that’s a real issue.

[00:56:58] Pippa

You’re already totally seeing that with particularly young people being all over defy and crypto, they don’t trust the system. You’re right, the glue that holds all this together is trust. What we’re witnessing is a degradation of trust in institutions.

[00:57:16] Cem

Yeah, I referenced this before, but there has been an entropy of something that has been exceedingly rare throughout history which is the system of personal freedoms, which was created in the America and it was guarded by our founding fathers with checks and balances. But a very intricate system is hard to pass laws, but all of that ultimately decays – absolute power and does corrupt over time. There’s a need for a revitalization or re-strengthening if we are going to protect those ideals.

So, my last question here is, iIn a world where democracy was never the quickest way to get to the right answer but it was the most stable over time. In its more recent decay, whether it’s Citizens United, or gerrymandering, or the Fed and its creation and its power, which is extra governmental (pick your reason for its decay). Within a construct where it is decaying and you have an autocratic set of governments, China in particular, that don’t have those constraints of personal freedom and the friction that causes, Yet a world where their Achilles heel historically has been a lack of stability with all the technology and the ability to now command and control stability as we’re seeing, Is democracy in decline? What do you see as the future of democracy versus autocracy?

[00:59:01] Pippa

Yeah, I think autocracy is in decline. I do. I think we’re seeing that autocracy is not working well, it’s not pretty. It’s not delivering and for a lot of the last 30 years, I’ve had people saying to me autocracy is the way to go. Because, the Chinese can build so many bridges and roads. I’m like, okay, but that isn’t the only answer to making the economy improve. Back to ingenuity, back to the freedom of the human mind to explore and to invent and to create.

One of the things I’ve noticed about China is their social credit system, where basically all your behaviors and all your actions are being tracked all the time. So if you say anything negative about the Government or if you don’t pay your bills on time, or if you hang out with people that are not on the good list, all these things are scores against you. It turns out you’re not able to buy a train ticket, you’re not able to be on certain dating websites. Like there are all kinds of penalties you pay for your behaviors. The problem is, how do you say to people, I want you to be fully in line with government policy with no deviation? Oh, but when you go to work, I want you to be really, really creative.

No, creativity is a mindset. It’s not a number of hours in the day. I think this kind of ‘let’s all march in lockstep’ approach kills creativity. China may be very good (let’s talk about China in particular), they may be good, they can figure out how to throw a lot of money at a problem, and a lot of brains at a problem, fantastic. They’ve made some good progress on things. But is it really proving to be a model that’s working? I would say the Chinese public right now are not saying, “Hey, this is working great.” They’re not.

Meanwhile, is the democracy model we have in the US the best one we could have? No. Does it have fundamental inbuilt problems? Yes. One of them you say is that we have a zero system for removing laws that are no longer relevant. So, imagine if your whole life you put everything you’ve ever bought in a closet, but you’re not allowed to remove a single thing? Well, the closets now are bigger than the whole neighborhood. That’s what we have in legislation.

People talk about tort reform. I’m not even talking about that. I’m just saying, wow, how is it we don’t have any way of rolling it off. We’re starting to have a little bit, but that’s just recent years. So you have this messy sort of mix of things that don’t add up, that conflict with each other. We need to deconflict (that’s a military term, usually talked about on the battlefield). We need to deconflict legislation. Nobody’s done that. If you did that, then democracies would work a lot more smoothly.

Anyway, I’m profoundly optimistic about the ability of humans to figure out solutions in a democratic context, even if it’s noisy, messy, and difficult. It beats not being able to raise the problem in autocracies.

[01:02:42] Niels

Just maybe as a follow up to that before I have my last couple of questions for you Pippa. I mean, yeah, we talk about democracy but even our democracy has changed with technology, hasn’t it? We are somewhat more managed by certain interest groups. So maybe it’s still democracy, but it feels different. To me at least.

[01:03:03] Pippa

And then you’re referring to a corporatist, lobbying?

[01:03:08] Niels

The cancel culture, right? Yeah. Well, lobbying cancel culture if you disagree. You’re out like we talked about before. If you say anything against vaccines, you’re out of Twitter, you’re out of YouTube, all of those things. It feels different in the last few years, even if we still call it democracy, right?

[01:03:28] Pippa

Yeah, I’m not so sure. I think it’s always been a hard scrabble fought for phenomena. It’s never been totally easy. We’ve just had easier moments at times. I do think the willingness to tolerate dissent has been higher in the past. The willingness to tolerate dissent is a keynote feature of a democracy. So we’re testing that right now in profound ways. If we ended up saying that you don’t have that freedom, then we will have taken our step in the direction of autocracy. That we will have said, the Russian and Chinese model is better, let’s go with them. By the way, this isn’t the first time we’ve seen this.

Back to the Fed. If you look at the architecture of the Federal Reserve building, it’s totally Soviet. I mean, it’s built to replicate what the Russians were doing after the Russian Revolution, because we believed that if the state was going to control the allocation of capital and decisions in the society that would be so much more efficient than just the mob. So we became afraid that the Russians were going to win.

Even the choice of architecture in Washington, from that period, the kind of Franklin Roosevelt sort of era, it all was a copy of what the Russians built. Yet our version of democracy has seen us survive. And what the Russians built, well, the Soviet Union doesn’t exist anymore.What replaced it is, right now, not supported by most of the world. So it just goes to show you that it’s literally like FOMO. It’s like fear of losing, like, “Oh my God, they’re winning. We better build our buildings like theirs.”.

[01:05:30] Niels

So it obviously would be completely wrong if I didn’t just touch on this topic with you, given your background, but also given your father. What an amazing man. I saw an interview with him a few weeks ago, and he touched on some interesting things that I wanted to bring up with you so our listeners could also hear your views. It goes really to the impact of the Ukrainian war, but on US domestic policy, because we’re coming up to midterms. There are two things that I’m thinking about.

One is, you could say how Trump was viewed and his relationship with Putin and how that may affect the Republicans – that’s one. But your father brought up another really interesting point. That is that given what we’re seeing now, which is a clear sign of food crises around the world, that actually the farmers are being viewed in a completely different light now and could play a very important role, as well, also from a political point of view. Can you explain that a little bit? Of what you see coming.

[01:06:39] Pippa

Yeah very much. So, my Dad, and I, we jam a lot, and I was saying to him, we were basically discussing the secondary and tertiary effects of the war in Ukraine and whether or not Putin had thought them through, and we think he has. He knew when he started that this was not just about Ukraine, this was about creating reverberations for the whole world economy. So what are the reverberations? Well, initially, oil prices went through the roof. And energy prices for Western Europe go through the roof. Naturally, that affects agriculture immediately, because agriculture is just about converting energy into food. We already see farmers in Western Europe saying, “I can’t afford to plant, the tractor fuel costs too much, the harvesting cost is going to be too high.”

Then the next thing you know, you hear, for example, is the Italian livestock growers say, “Well, we’re beginning a cull, because we won’t be able to afford the grain because it’s going to be so expensive. So we better kill the animals now.” I said, Dad, this is like how famines start, you can see this. It’s like a tsunami wave hits in one spot, but the pain stretches across.

That led to our conversation about what he was involved with back in about 1973 when the Russians had a famine, and we decided to basically encourage our farmers to grow a lot more wheat – Canadians, Americans, and I think, also Australians. We decided to subsidize our American farmers in order to give the grain to the Russians. Why? Because we just signed a bunch of peace deals with them. We were trying to be in a dialogue.

When Nixon sent Kissinger to Beijing, he sent my Dad to Moscow. So my Dad was right at the heart of this hole trying to re-engage with the Russian bear. So saving them from a famine was not only the humane thing to do, but smart if you wanted to make friends. It worked beautifully, because all the American farmers were super happy, of course. It is remembered that in America, rural farmers anywhere tend to be Republican, and urban dwellers tend to be Democrats, not 100% true, but it leans heavily that way.

Today, if you were to subsidize the American farmers you would actually bring them into more mainstream politics, which perhaps would be a wise thing to do because they’ve been becoming more extreme in their views, and integrate them into a world that actually still is global, and where they still do have a role to play and an important heroic role to play. Russia and Ukraine are the fourth and fifth largest providers of wheat in the world. The last time we saw wheat prices do what they’re doing now. I wrote about it and said we’re going to have social unrest in the Middle East and then next thing you know, we had the Arab Spring.

This is worse, this is much bigger price movements. It’s not only going to be wheat, it’ll be all through the food chain. So, we were jamming about what can we do now? The biggest problem with the strategy is not that it wouldn’t work. We know it works, it worked in 1973. The problem is most of our politicians are thinking about my press conference tomorrow, and I’m talking about something that will happen. If we act now, we can save the world in a year. That’s just too far out of their time frames, which is just insane, let alone trying to fix the global pension problem which requires you to think 30 years in advance. That’s one of the core problems with the world economy is our time horizons have collapsed to such an extent. It’s hard to do problem solving.

But yes, again back to the risk, you can see it coming from a mile off. We have the capacity to solve this problem. But we have to act now. I think Putin knew this, and this part of his war effort was, I’ll hit you where it hurts. I’ll hit you literally in the food and energy supply chains. And he has.

[01:11:13] Niels

Absolutely.

I want to end on an upbeat note and it’s one thing that you do write about as well. I’d love for you to talk a little bit about it. And that is with the changes of demographics, but also with technology, ect. ect. you write about something you call the jobs of tomorrow. I actually think that’s a really positive way of rounding all of this, bringing it together. What do you see when it comes to that part? And especially for those of us who have kids, my youngest just turned 18, a couple of days ago. So they are the ones who are looking for the jobs of tomorrow in a few years. So what’s in store for them?

[01:11:59] Pippa

Yes, exactly. It’s funny, it’s hard for people to get their head around a broad concept like innovation even though it’s happening on an epic scale. I try to bring it into practical things. In these two articles I tried to outline that there’s all this stuff going on in space. There are going to be a ton of jobs related to space manufacturing, space mining. There are so many things, it’s even hard to imagine it.

But maybe for something that’s literally more grounded and down to earth, I wrote a piece called Mushrooms. And people were like, “Mushrooms, what are you talking about?” I literally went through and described, there’s a whole sector of the world economy that no one thinks, “Oh, I want to work in the sector, which you call mycology.” And if you do suggest this, the first thing they jump to is “Oh, you’re talking about psychedelics.” I’m like, no, no, no I am talking about packaging of consumer goods. Things like the carton your eggs come from. Increasingly, mushrooms are being used to make packaging because it’s biodegradable, they grow unbelievably fast, they fall back into the earth incredibly fast. Tthere are enormous innovations being made in this space, including Hermes, the famous Birkin handbag maker out of France, has started working with mushroom leather, and making leather goods basically made out of mushrooms, and I think it’s Adidas, the Stan Smiths, they’re made of mushrooms. There are shoes made out of mushrooms.

I talk about foraging, which has come back since crypto in a major way. There’s a wonderful book that was written a few years ago. It won all the top prizes for science writing, called The Mushroom at The End of The World, by Anna Lowenhaupt Tsing. She wrote about how the Japanese, the Cambodians, and Laotians from the Vietnam period had no English, no way to make a living, but they knew how to go into the woods and find the most valuable mushrooms that the top chefs in the world would want, and how to ship them. Actually you can make a living as a forager, and people do. This became a huge thing, particularly in Britain where I live, foraging is a thing.

Then you could go on. People are making bricks out of mushroom. Makeup is like the cool new makeup is mushroom based makeup. Then there are psychedelics, which are coming into their own. If you think a ton of money is made in medical marijuana, watch what’s going to happen in this space. That is a whole new sector. So now I’ve told you about something that, at the beginning you would say there is no possibility that there is a whole new sector in mushrooms.

Yet, I’ve just told you, that isn’t the half of it of what is happening in that field of endeavor. So I think that there are hundreds of new sectors in the economy like this. There are millions of new jobs that no one could imagine 20 years ago that will definitely be employing people tomorrow. So there is zero doubt in my mind that humans are fundamentally innovative. We always come up with new stuff to do.

[01:15:36] Niels

Yeah, absolutely.

Now, as I said in the beginning, there were so many things and directions we could have gone with our conversation. But of course, time, unfortunately, is somewhat limited. But I do want to ask you here as we’re ending, if there’s something that we forgot to bring up that you think is really, really important as we sit here in early May of 2022? Is there something you just want to bring up towards the end here.

[01:16:04] Pippa

Yeah, there is one thing. I’ve been banging on about inflation since about 2015. I started saying this is coming back. And it did begin at about that time. It steadily increased. People were like, “Oh, you were wrong, there was no inflation.” If you look at the numbers, we went from pretty much 0% to about 2%. Now that doesn’t sound like very much but if you’re from a poor family, 0% to 2% is a massive, incredible change in your standard of living. That’s enough to push people from proteins into cheaper calories, and helps explain why we have a healthcare and obesity crisis now.

It’s a massive change. If you’re a pension fund, the allocation you’re going to make with zero inflation is very different from 2% inflation.

Here we are in a world where countries like Germany are reporting nearly 8% official inflation. And remember, inflation is an average. Which means some people are experiencing double that, and some people are experiencing half of that. So inflation is real. It’s really hard to kill it once it’s back. So the question is, what do you do about this? And I think that Warren Buffett had the right answer on this one, he’s not right on everything, but he has a lot of right answers. One of them was the best inflation hedge is investing in yourself, investing in your own personal skill sets. If you can learn more things and get paid because you know more stuff, that’s the best inflation hedge.

That coincides with another phenomena today, which is something called the knowledge doubling curve that was invented by or sort of brought to the world by Buckminster Fuller, the famous architect who built the geodesic dome. He realized that the pace at which information is hitting us is doubling all the time. So in the year 1900, it was doubling every century, by 1945, it’s doubling every 25 years by the mid 80s. It’s doubling every 12 months. And IBM has now confirmed that as of 2020, the amount of information is doubling every 12 hours.

So if you feel like you can’t read enough to keep up, in fact, why are you listening to a podcast because you can’t read all this right? It will take too long. And so what does that mean? It means you have to start getting in front of that knowledge doubling curve. By learning more, you’ve got to become more competent and able and fluid in a wider range of subjects in a deeper way. Those two things come together. The fast pace at which the world is moving and the fact that inflation is on our horizon means that everybody needs to be investing in their personal skills.

[01:19:10] Niels

I think that’s a wonderful place to end our conversation. This has really been an absolutely wonderful conversation, Pippa. Thank you so very much for sharing your experience and adding to our knowledge curve doing this today. By the way, make sure you follow and subscribe to Pippa’s work over on SubStack and on Twitter. As you can tell, of course, the links will be in the show notes of today’s episode. And as you can tell from the conversation today, we are truly living in a global macro driven world and it is perhaps more important than ever before to stay well informed.

From Cem and me, thanks so much for listening, and we look forward to being back with you on the next episode of the global macro series. In the meantime, take care of yourself and take care of each other.

[01:20:00] Ending

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