Civilization #END: The Decline and Fall of the American Empire

July 1944, this is the Bretton Woods Hotel in New Hampshire. Forty nations get together, and they discuss what the post-war peace will look like. Everyone knows that Nazi Germany will eventually be defeated as well as Japan. So the question now is how does the world build peace and prosperity after such a devastating war? The Americans propose the Bretton Woods system. The idea is to facilitate global trade. The American currency will become the reserve currency of the world, meaning that everyone can use it to trade.

Now the term we use for this is exorbitant privilege. This is like the power of God because you're basically taking paper, turning it into gold. That's the power of God. So how can we ensure the Americans won't abuse this power? The answer is the Americans agree to create a global financial network as well as peg the currency to gold, which means that the USD is a contract, and at any point you can choose to exchange US dollars for gold. So what America does is it transports all the gold from London to Fort Knox, and that becomes the basis for the new global financial system that we still have today. It is incredibly successful.

The Architecture of Global Finance

• This is the Bank for International Settlements in Basel, Switzerland, and it is the bank of banks. It is the central bank of central banks. The idea here is we need to create a system for risk mitigation. For example, if maybe a country goes bankrupt, the other countries need to come in and rescue that country's economy. This bank is something you've never heard of, but it's one of the most powerful institutions in the world because it facilitates the entire global financial economy.
• Bretton Woods also created something called the World Bank, which is based in Washington, D.C. What it does is it gives out loans to third-world nations like China.
• The IMF, the International Monetary Fund, coordinates global financial policy.

So the Bank for International Settlements, the World Bank, the IMF, among other organizations, now become the global financial system, and underpinning all of this is the US dollar as the global reserve currency.

The Origins: 1688 and the Bank of England

Where did this system come from? Well, it comes from 1688. Remember, this is the year that William of Orange of the Netherlands goes to England and launches something called the Glorious Revolution, and he takes the throne from James II. When he goes to England he also brings with him Dutch wealth, because the Netherlands is now the most prosperous nation in the world because of global trade. They have something called the Dutch East Indies Company that has monopolized the spice trade in East Asia, and so it's extremely wealthy.

The Dutch are Calvinists. They believe that there's a religious obligation for them to get wealthy. Wealth will guarantee their entry into heaven. But for that to happen they need to ensure their wealth is protected. At this point in history the Netherlands is being conquered or at war with France, with Spain, with a host of enemies. So the money isn't safe in the Netherlands. It's being transferred over to England because England has a navy that is the most powerful in the world. It's also an island, so it's pretty hard to invade.

In 1694 this wealth becomes the basis of the Bank of England, which is considered the second oldest central bank in the world, but it's really the first central bank in the world. The reason why is this bank, it's a private bank, but it's guaranteed by Parliament, which means that the nation-state of England promises to always pay back the investors in this bank.

So why does this happen? It happens because it will resolve a huge issue throughout human history. If you're a king you need financing to go to war. You often need to pay for mercenaries. To get this money you need to basically borrow from your wealthiest citizens. The problem with this is as king you may not want to pay back that money after the war, or you could get killed in the war. So there's always tremendous risk when you lend money to the king. The Bank of England solves this problem because you're not lending money to the king. You're lending money to England, and the people will always have to pay you back. Maybe they won't pay you back today, but they'll have to pay you back sooner or later because it's guaranteed by Parliament.

This system is extremely successful. In fact this system is what allows England to defeat Napoleon in the Napoleonic Wars. In 1815 Napoleon is finally defeated. Napoleon, he is a military genius, and he conquers most of Europe, and he defeats England many, many times. But because of the Bank of England the English have infinite financing. So the British are always financing wars against Napoleon until he is finally defeated, and this establishes the British Empire. After the defeat of Napoleon and France, Britain becomes the global hegemon.

The Bank of England now becomes an imperial bank, and the power of this is, before, when you go and conquer a country or nation you're always afraid of rebellion. You're always afraid of local elites getting together and overthrowing you. But the Bank of England solves this problem. Why? It solves this problem because now the local elite can take their corrupt earnings and put them in the Bank of England. So now the elite have an incentive to work with the British to maintain their empire, and that's how Britain was able to build the world's first truly global empire and was able to maintain such harmony and stability within the empire for such a long time. The secret was international finance as embodied by the Bank of England.

Let's summarize the history of central banking. It's complicated, but we need to understand this history if we are to understand today's world. First important idea is that Dutch Calvinists have a religious obsession with storing wealth. The Protestant religion demands that you get rich.

The Parliament of England guarantees this wealth, thus giving England infinite financing for wars. This is important because if Parliament is willing to guarantee financing, not only can it use all this wealth stored in the Bank of England, but it can also generate new wealth from investors overseas as well.

Third idea, this infinite financing allows Britain to defeat Napoleon.

Fourth, the Bank of England stores wealth of corrupt local elites, allowing for stability and harmony within the empire.

The Federal Reserve and the Feudalist System

Now this is important. What will happen next is America will emulate this model and create something called the Federal Reserve in the year 1914. The idea of the Federal Reserve is you have all these provincial banks around America. They get together and decide that we as private banks will convince the government, the Congress, to give us the power to print money. How do you print money? You issue loans. When you issue loans you're just basically putting money into the system. So in 1914 they developed the Federal Reserve system.

After World War II America is now able to export this Federal Reserve system all around the world by creating independent central banks in each nation and having these central banks work together to create more wealth for the investors. There's something really important you have to understand. Nation-states compete against each other, but independent central banks in all these nation-states work together, because that way it's easier for them to generate wealth for their investors. To grow capital private central banks coordinate rather than compete. They're parasites that feed off the nation-state.

This is a really important idea that no one understands. The nation-state is responsible for protecting this wealth, and these central banks can use the resources of the nation-state to feed its capital growth. This is the modern financial system that we have today. The central banks basically rule the world.

This is Carroll Quigley, and he wrote a book called Tragedy and Hope, which I highly recommend. He was a Georgetown professor. He was Bill Clinton's favorite professor at Georgetown. In this book he explains how this financial system works. Let's read it very carefully. He's talking about the 1920s, after World War I.

The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks, which were themselves private corporations. Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strong of the New York Federal Reserve, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank, sought to dominate its government by its ability to control treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.

So in today's world it's the central banks acting in concert that dictate financial, economic and political policy all around the world.

The Metaphysics of Central Banking

How can we understand central banks? Well, the main function of central banks is to control the money supply. Money is just a concept. It's an idea. It's something that we just made up. The way that a central bank controls money is by controlling its scarcity, which creates the illusion that it's valuable. Also you're forced to use money to buy things as well as pay taxes, take out loans. They control the interest rate, which is the cost of borrowing money.

Another way of saying this is one mechanism the central bank has to control the economy is by lowering or increasing interest rates. With a lower interest rate it's just easier to be able to borrow money, so you can go buy a house or buy a car. They increase the interest rate, it's more expensive, so people will spend less money. Through that mechanism they're able to control the supply of money in the system.

How do we understand what central bankers are? Well, I'll give you three possible metaphors, and I think these are legitimate.

1. Central bankers are the ultimate priests. They must control the flow of money to maintain the illusion that money is God. In this way they are the new Catholic Church. Remember the Catholic Church in medieval Europe was the dominant power. It was beyond nations. It represented God on Earth. Well, that's what central bankers are today.
2. But also you can think of central bankers as the game masters. They must control the flow of money to motivate people to play the game. Today we live not in a civilization but in a game where we're all individual players trying to make as much money as possible. Central bankers are the ones who control the rules of this game.
3. Last metaphor is central bankers are drug pushers. To expand their dominance they offer easy money, and once a country is addicted or bankrupt they hijack the financial system, which means to privatize or make independent the central bank.

How do central bankers work? Let's use a thought experiment. Let's just say I'm a central bank, and I'm trying to get you to become addicted to my power. So what I do is this. I say to you, "Hey, here's $10,000." You're like, "Okay, and what do you want for $10,000?" I'm like, "Nothing. Just go enjoy yourself." So you take that $10,000, and you go on vacation to Hawaii. You live in a five-star hotel. You're really happy. You come back, and you say, "That was great. Can I get more money?" I'm like, "Here. Here's a million dollars. Go and enjoy yourself." You're like, "What do you want for it?" I'm like, "Nothing. Just go enjoy yourself."

So you go, but this time you're smarter. You're like, "No, no, no. This money is limited. I need to go invest it if I want to generate more money. Otherwise I have to go back to the bank and get more money." So you start opening businesses. You invest in restaurants and ski resorts. Who knows? But you have all these investments. The problem is you really don't know what you're doing, and you make these bad investments. Eventually what you recognize is you're in debt now. You had a million dollars, but now you owe ten million dollars. So you come back to the bank, and you say, "Listen, I need ten million dollars." I'm like, "Fine, but now you have to give me your soul." You're just stuck. That's how central banks work. I know this sounds terrible, but that's really how they work in the world. Now I'll give you examples.

What central banks do is they have the power of God. They're alchemists basically because they can take paper, which we know is worthless, and turn it into gold, which is what everyone wants.

Technology and Central Banks

Now something to remember, and this is really important, is that throughout history whenever there's a major power there's always a rising power that challenges it. In our world today there's no nation-state that can challenge the power of the central banks, but there are these technology companies that are arising that are trying to displace them.

Bitcoin is something they've invented. It is the American military's fail-safe system in case the American government defaults on the debt and the US dollar loses its reserve currency status. So Bitcoin has been controlled by the American military along with certain technology companies, and they're trying to displace the USD. So there's a conflict going on here.

Also artificial intelligence will be used to create the illusion of God. Why is there so much investment interest in artificial intelligence? Because even though it doesn't really work that well it can trick people into believing it is God, that it is omniscient, that it is always right, that it is the ultimate authority.

Last example is social media, video games and porn are the drug of the 21st century. In other words these technology companies, they're really in the process of creating a matrix in which we just live in a simulation, and we're all slaves to the simulation. This is something that we need to think about, how the central banks are in power, but there are always powers that are arising and which will challenge the power of the central banks.

The Pax Americana vs. World War II

How do we get this system? Go back to the year 1950, 1960. The world is divided into two. It's divided between the capitalist West and the communist East. Now this is ultimately a war of ideology. It's really a question of which system, capitalism or communism, is better for humanity. Well, we don't know the answer to that question, but we do know the elite prefer capitalism, because capitalism gives them more power, gives them more wealth. So the elites both in China and the Soviet Union basically give up. In 1991 the Soviet Union basically unconditionally surrenders, and this creates the complete dominance of the American system, the Pax Americana.

So once America has domination it now can spread its system throughout the world. This is Karl Popper, and he wrote a book called The Open Society. In it he questions grand ideologies because he believes that it's these grand ideologies like communism and fascism that destroyed the world and which have led to World War II. He hates Plato. He hates Marx. He hates Hegel. He thinks these are the three totalitarian philosophers in human history. So what he proposes is that the height of civilization is the Anglo-American civilization. The Germans and the Russians are bad because they are racists, because they are nationalistic, because they are grand in their vision. They're always trying to transform humans into shapes and things that are anti-human. But the Americans and the British, they are practical. They are utilitarian. They believe in evolution. So Karl Popper believes the Anglo-American civilization is really the height of human civilization.

But there's actually another way to understand the Pax Americana. The idea is from World War II we transfer to the Pax Americana, and there are major differences. World War II was about the nation-state. That was the main constituent body of World War II. In the Pax Americana what matters is the international rules-based order, which includes central banks, but also includes the United Nations.

World War II was about mercantilism. Mercantilism is that you only trade within your sovereignty. You only trade with your colonies. But Pax Americana argues for global free trade. Global free trade will lead to prosperity in the world.

World War II argues for unity of will, and Pax Americana argues for consumerism. The unity of will is the idea that we must be a whole, that the constituent parts together are less than the whole. Consumerism is just: individuals should just go and spend money and enjoy their life. And don't worry about big problems like the nation-state and history, these ideas.

In other words what's happened in our world is the world's gone from one that focuses on civilization to a game. In a civilization people are citizens who sacrifice themselves in order to obtain glory. So think of Achilles. Achilles went to Troy because he was in competition among his other Greeks to seek eternal glory. But in the game we're all individual players who are trying to make as much money as possible. Now in theory you're taught that the best way to do that is to work hard, be smart, be talented, create something innovative. But in reality the best way to make money is by cheating. What is cheating? Cheating is basically creating a monopoly, and everyone else is forced to pay as much as you want. So John Rockefeller, Bill Gates, these were all monopolists, and they were the wealthiest people in human history.

The Evolution of the US Economy

After World War II America is the only major industrial nation left standing, and America used the opportunity to rebuild both its economy as well as the global economy. It does so by transferring its wartime economy into a peacetime economy. In a wartime economy you're manufacturing goods en masse. In a peacetime economy you're also doing that. The problem though is now that you have peace who's going to buy these products? So what America did was it basically said to Europe, "We'll make these products, these manufactured goods, these cars, and you will buy them." Europe's like, "We have no money." America's like, "Don't worry about it. We're lending you the money."

So this worked out really well for America. If you were a white high school graduate male in America in the 1950s, 60s, 70s, you had the best life. You lived better than the nobility of Rome. This is just a guy. He could be a salesperson. He could be a clerk. He could be a factory worker. But he had a car. In fact he probably had two cars. He had his own house. His wife didn't have to work, and he could send his three kids to college. Also they could take one or two vacations a year to Europe. It was really the best life, and that's what the Pax Americana created. Prosperity and peace for the American middle class.

But the problem is that over time the Germans start to catch up. The Germans were destroyed in World War II, so they were incentivized to work together, to work hard to rebuild their civilization. German manufacturing became famous throughout the world, as did Japanese manufacturing. Now what's happening is because of the superiority of German and Japanese manufactured goods, America was transitioning from a creditor nation, where everyone owed it money, to a debtor nation, where its consumers were buying things that they couldn't really afford from overseas. Again, America could do so because America had the US dollar as the reserve currency.

The Military-Industrial Complex and the Gold Standard

In 1961 Dwight Eisenhower is retiring from the presidency, and he says to the American people, I know we are at war with the Soviet Union, it's a Cold War, but we don't have any real enemies. Our enemies are all internal. There is currently in play something called the military-industrial complex. They employ millions of people, they manufacture weapons, and they're intent on war. They are our true enemy. If we allow the military-industrial complex to hijack the American political system, then we'll be constantly fighting these useless wars that will bankrupt our nation. Be aware. This is our greatest threat to our nation in our history. This is his farewell address:

The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes.

He's talking about the military-industrial complex. And it proved prescient and prophetic because after he retired, America would start engaging in wars around the world that it could neither afford nor could it fight properly, and it bankrupted America. The most famous example is the Vietnam War, where America lost about 50,000 soldiers and killed millions and millions of Vietnamese civilians. It was a pointless, brutal war that almost bankrupted America, and it almost caused a civil war in America.

At this time America was also competing with the Soviet Union in the space race. In 1969 America sent a man to the moon. This is a real picture. Now some of you who might be conspiracy theorists, not me, but some of you might be conspiracy theorists say, "Wait a minute here. Why is the lighting perfect on the moon? And why are there no stars in space? And why is this flag floating around?" Conspiracy theorists would ask these questions. I don't ask these questions because I'm not a conspiracy theorist. Just so we're completely sure.

Also at this time Lyndon B. Johnson announced the Great Society, which was just a fantastic social program to ensure that each and every American had an opportunity at the American dream. You had free healthcare for the elderly. You had programs like Head Start. It was fantastic, but it's also really, really expensive.

So if you are a nation like France, you're like, "You know what? America is sending people to the moon. It's fighting all these pointless wars. It's building all these great social programs for its population. Does America have the money to do this?" In other words, is it possible that the US currency, the US dollar, is no longer able to repay its obligations? That's why France, under Charles de Gaulle, sent warships to America in the mid-60s to repatriate its gold. It's afraid that America will go bankrupt. And this proved very, very wise.

After France did this, there's now this fear among Americans that every nation will do this. And if every nation did this, America would go bankrupt. That's why in the year 1971 Richard Nixon announces the US dollar will no longer be tied to gold, which means that you can't use US dollars to buy gold anymore. Which means what? Which means the US dollar is based on nothing. The value of the US dollar is now based primarily on people's faith in its value.

The Petrodollar and China

So this leads to a lot of problems like inflation and oil shock. To solve this problem, in 1973 Nixon signed an agreement with Saudi Arabia. Basically the agreement is that from now on Saudi Arabia, which is the world's largest oil exporter, will only take payments in US dollars. And whatever savings Saudi Arabia has will be invested in US Treasuries. This is what we call the petrodollar. The idea here is now the value of the US dollar is tied to the value of oil. You can always exchange US dollars for oil.

But then Nixon did something that was extremely clever. He went to China. For the longest time China and the United States were in a Cold War. Americans basically isolated China. In 1972 Nixon visited Mao Zedong. Why? The answer is very simple. Because he needed more consumers to buy US dollars. He needed people to want US dollars. He needed to create a US dollar addiction.

To do this, what did America do? America gave China everything. America started to ship its factories overseas to China. America gave all its expertise and technology to China. America started to educate the Chinese elite. And what's really important is American defense companies started to give military secret technology to China. Now I know that in the United States people believe that China stole this technology. China did not steal this technology because America gave it to China for free. Why would America do this? To create dependence on America. Because once a dependence is created, then Chinese people want US dollars. The intention has always been to create a market for US dollars in order to prop up the US currency.

So Saudi Arabia gave its oil to the United States, and China gave its labor, its most precious commodity, to the United States in exchange for US dollars. So why is this important?

Japan and the Plaza Accord

Let's look at the case of Japan. The year is 1985, and this is something called the Plaza Accord. The Plaza Accord was between the central bankers and the finance ministries of different nations, but probably between the United States and Japan. Japan at this point was an export powerhouse. It was the second largest economy in the world. High savings rate. People really didn't want to buy American goods, but Americans loved Japanese goods. So it was creating this trade imbalance, and Japan was growing and becoming an economic powerhouse.

So America said to Japan, "Listen, you guys need to restructure your economy because your consumers aren't spending any money. This creates trade imbalance, and ultimately this will lead to structural problems in Japan. So what we're going to do is we will revalue the Japanese currency. We will appreciate it against the US dollar. So as Japanese consumers, you're able to buy more from the United States." Now Japanese economists thought this was a terrible idea, but because America has military bases in Japan, Japan didn't really have a choice in the matter. And so this created the Japanese explosion of wealth. This created a fear of Japan in the United States.

To demonstrate to you how ridiculous the situation was, in the year 1990, in Kyoto, the Imperial Grounds. I'm not talking about the city of Kyoto. I'm talking about the Imperial Grounds in Kyoto. That land by itself was worth more than Canada as a country. You could sell the Imperial Grounds of Kyoto and go buy Canada for yourself. That's how ridiculous the situation was in Japan because of the appreciation of the yen. Cheap money flooded into the nation of Japan, and so people were speculating on real estate and the stock market, which led ultimately to economic collapse in Japan.

So as you can see, from the 60s up until about the 90s, Japanese growth was pretty strong. But after the Plaza Accord you saw a steep drop. The Plaza Accord, by pushing the yen, by giving Japanese easy money, destroyed the Japanese economy. So remember this. If you want to nuke an economy, if you want to destroy an economy in a nation, give them easy money. If I want to destroy you as a person, I'm going to give you a million dollars because you're going to take that million dollars and do stupid things with it.

Can You Clarify the Easy Money?

What does easy money mean? Easy money just means that you think it's free. You don't have to earn it. And the idea of easy money is central banks have the power to print money. So if you come to me and I'm a bank, I can just give you a million dollars and you take it. That's easy money. That's the idea. It's a hard concept to understand, but banks have that power. They can just put money out of nothing. This is what we call easy money. And what this leads to is a disaster.

So let's go over the list of how easy money destroys nations.

• First is that it turns manufacturers into financial speculators. The reason why is maybe you're a car company. Before you were making good money making cars and selling them to Americans. But if the economy is blowing up, the stock market is increasing, the real estate market is increasing, you're actually better off taking all your savings, your investments, and putting it into the stock market. Because you get better returns. And as a corporation you have to guarantee better returns for your investors.
• It makes people lazy, selfish and greedy. That's easy to understand. If someone just gave you a million dollars, you would not want to work or study ever again in your life.
• You create too much debt too quickly. You create financial bubbles.
• Corruption between the politicians and the financial elite.
• You create massive inequality because it's usually the wealthy who most benefit from this wealth generation. You will increase unemployment and bankruptcies.
• The last thing, this is really important, is because of all this surge in prices, you price out young people and you destroy the nation's future. You look at the birth rate in Japan. It's about one, and the reason why is Japanese young people do not see a future for themselves. Houses are too expensive. The jobs don't pay that well.

Financial Crises and Financialization

But it's not just Japan. It's also the United States. The 1997 Asian financial crisis. Remember, this is when South Korea, Thailand, Indonesia, their currencies were under attack. Because their currencies were under attack, they became devalued. The problem with this is before this, Thailand, Indonesia and South Korea had access to easy money provided by central banks. So they could afford to buy things overseas, invest in things overseas. But once the currency was devalued, they now went bankrupt. As a result the International Monetary Fund was able to step in and privatize the central banks. So that's the playbook.

1989 is important because that's when the Berlin Wall fell and the Soviet Union and communism came to an end. Now it's a Pax Americana, and in the Pax Americana the system is America would ship its manufacturing overseas. Remember, manufacturing was a source of middle-class wealth generation. Now it's shipping all its manufacturing overseas to focus on financialization. The idea is that Wall Street would take all this money, all this wealth being generated overseas, and then take it back to America and use it to invest in America, to basically engage in financial games. In other words, before America was manufacturing things like cars and washing machines. Now America is just gambling. The entire economy is based on gambling now. And this will lead to something called the 2008 Great Financial Crisis where the global economy collapses, basically.

2001, 9/11, the World Trade Center, the terrorist attacks. Again, I'm not a conspiracy theorist, so I'm not going to go into the conspiracies behind this. But it led to something called the War on Terror where America, for no particular reason, went to Iraq, Syria, Libya and destroyed these countries. Now if you're a conspiracy theorist, you would say, "Well, they destroyed these countries because these countries didn't have central banks." That's what some people say. I would not say that. I'm not a conspiracy theorist.

2008 is the Great Financial Crisis. Why did it happen? It happened because America had become a gambling economy, and so it had to take money and invest it. The problem though is there's too much money flowing into America and there's not enough good investments. So what Washington did was it started to invest in really bad investments. It was encouraging people with no money to go and buy like five houses. Eventually they would have to default, and when they default it would create a cascading effect where the entire global economy would collapse. That's what was the 2008 Great Financial Crisis.

To solve this problem, what America did was print money. Look at this, guys. Up until the year 1980 America had about a trillion dollars in debt. America was founded in 1776. By the year 1980, about 20 years later, it had a trillion dollars in debt. Today it has now 37 trillion dollars in debt. This is all money printing. Starting about 2008, boom! You see this steep curve going all the way up.

The economy in America right now is really screwed up. The reason why is the stock market is worth twice as much as the real economy. That makes no sense at all. The total value of the US economy is half of that of the stock market. So this shows you that right now America is living in a fantasy. It's a make-believe economy.

The other problem is this massive wealth inequality. As you can see, the wealthy people are pretty wealthy. But by 1980, the time of Reagan, it shoots all the way up. So you have this massive wealth inequality being created in the United States. This also shows you how wealthy the top 0.01% are relative to everyone else. So the main beneficiaries of all these reforms, of this financialization, have been the ultra-wealthy in America. At the same time, if you're an average American, all you're seeing is your debt go up. Your debt has gone way up. So you can make the argument that the system is designed to exploit the middle class by forcing them into debt so as to enrich the wealthy's investments. That's the American system, and in fact you can argue the global system.

China After 2008

So 2008, the global economy collapses. What happens? I believe this is what happened. I don't think this is a conspiracy theory. The central banks basically encouraged the Chinese central bank to start printing money. This is important because when you start printing money and you invest in real estate, you need resources. You need to buy resources from Australia, from Brazil. This is what saves the global economy.

This all looks very impressive, guys. I know when you go outside and you see all these big buildings and fancy railways, it's all very impressive. But remember, this is really important. Behind the veneer of this prosperity are three things. Massive debt. This is money that's being printed, so someone has to pay this off. You guys. Not the current people, but you guys or your grandchildren or your great-grandchildren. But someone has to pay off this debt. That's number one. Number two is this has created massive inequality in China. So the rich are filthy rich and the poor aren't that much better off. The third problem, this is really important, is it's created a lot of political corruption. So behind all this veneer are corruption, inequality and debt.

A really important lesson for you guys to understand the Chinese relationship with America is this. There's this very, very famous quote by Charles Baudelaire who said:

The greatest trick the devil ever pulled was convincing the world he didn't exist.

Well, I'm going to paraphrase him, and this is what I think is the relationship between America and China. The greatest trick America played was convincing China it could be rich. This is no different from 1985, the Plaza Accords, when America basically encouraged the Japanese to increase the value of their yen, which led to economic collapse. But when Americans encouraged the Chinese to print money in about 2008 and about 2015, it basically created conditions for China's economic collapse.

This is what led to the rise of this man, our dear fearless leader. I believe his intentions are good. I think he wants to save China from this global financial capitalist system. He needs to maintain China's independence and sovereignty. He's fighting very hard to save the Chinese nation. That's what I believe.

You can make the argument that what's happening today in China is no different from the Opium Wars. Remember, Britain created an opium epidemic in China in order to enslave the Chinese economy to the global financial system. That's the Opium Wars. Well, the same is happening today where the Americans are basically creating Chinese dependency on US dollars. What's the Chinese dream? The Chinese dream is work hard, get into a good school, get rich, move your money and your children to the United States. That's the Chinese dream. And if that's the dream, then eventually this civilization won't last very long. Am I wrong? Is that not the Chinese dream?

So now you have the COVID crisis where China's locked down for three years. Now I'm not a conspiracy theorist, but you can make the argument that some of this was intentional in order to implode the Chinese economy. Why? Because the Chinese economy had become a system of transferring wealth from China to the United States. So by imploding the economy, you're stopping this drainage.

Putin and the Global Financial Pyramid

This also led to the rise of this man, Vladimir Putin, who is very much like Joseph Stalin. He understands the grand picture. He understands strategy, grand strategy. He understands that now it's time to strike. Why? Because America has created this crazy fantastical system where there's a hierarchy of prices. In the American system, the Pax Americana, resources are the least valuable. The basis is the resources, which is what Russia has a lot of. Up next in this pyramid is manufacturing, which is what China does. Then up next is the knowledge economy, so professionals, and that's what Europe and America do really well. At the very top of this pyramid are the financiers, finance, and that's what Wall Street dominates. So this is the pyramid of the world that we live in.

What Putin said is, "You know what? If I can control the world's resources, the oil, the food, then I can invert this pyramid so that resources are at the top." And that's why Russia invaded Ukraine. Because if Russia were able to dominate Ukraine, Russia and Ukraine together would control one third, one third of the world's carbohydrates. Without Russian food, Africa and the Middle East would both starve to death. So that is the rationale for Putin's invasion of Ukraine. He's a genius. He understands this fundamental weakness in the American system. If you're able to control the resources, you are able to strangle this financial system.

So by invading Ukraine, Putin shows that America is a paper tiger. Faith in the USD rests on the aura of the American military's invulnerability and invincibility. This now forces the Americans to invade Iran. The logic here is very simple. Why does Saudi Arabia buy US dollars even though they know it's not worth anything? Why does Japan buy US dollars? Why does Germany? The answer is they're afraid that if they don't buy US dollars, America will come and invade them. They have no choice in the matter.

But now that Putin has shown that actually, you know what? The American military is not as strong as you think it is, the American military now has no choice but to prove it is as strong as people believe. It needs to restore faith in the military in order to restore faith in the US dollar. That's why the American military has no choice in the matter but to invade Iran. Why? Because if they're able to invade Iran, they're able to control the entire flow of Middle East oil. Also they're able to control the act of trade throughout the world. Iran is really the center of the world in terms of global trade. So these two factors mean that America needs to eventually invade Iran.

Iran and Conflict on Three Fronts

Once it invades Iran, it creates a huge problem for China and Japan and South Korea. Why? Because guess what? These three nations get most of their oil from the Middle East. Japan imports roughly 89% of its oil from the Middle East. And guess what, guys? Japan is the largest buyer of US dollars. So if Japan ever says, "You know what? Screw this. We're not buying US dollars," the American economy goes bankrupt. So when you invade Iran, you control the oil supply, you control the entire Japanese economy. You can charge whatever price you want for oil.

This explains the Israel-Palestine conflict. Because America just can't go invade Iran for no reason. It needs a pretext. The perfect pretext is Israel comes into conflict with Iran, Iran attacks Israel, the United States must now defend Israel because Israel is its ally. So America needs a scapegoat. That scapegoat is Israel. That explains why there's so much conflict right now in the Middle East.

Look at this map. This is Iran. It's surrounded by American bases. You have 14,000 troops in Afghanistan. You've got like thousands more over here. Iran is surrounded. It seems to me that America has been preparing to invade Iran for the past 20 years and is just looking for the perfect opportunity.

The problem though is that Iran is not an adversary that America can defeat. The reason why is the geography of Iran. Look at this. In 2003 America went to Iraq and destroyed Iraq. Why? Iraq's a desert. It's flat plains. America has bombs. It has fighter planes. It's pretty easy to destroy a desert. But Iran is all mountains. These fighter planes do no good against mountains. You can't bomb a mountain into submission. So if America were to invade Iran, there's very little chance that America would win this war. In fact it may be the end of the American empire.

And Putin has a plan. Putin is a genius. He knows exactly what will happen. So Putin is preparing for this possible invasion of Iran. This is a really important picture. Putin signed an agreement with Kim Jong-un. The agreement is a mutual defense pact, which means that if North Korea is ever attacked, Putin will come to his aid. Now why would Putin do this? This is really strange. The answer is if America attacks Iran, he needs to throw America off balance by creating a conflict somewhere else. The best place to create a conflict would be Southeast Asia.

Now you would think, we don't want it here. Putin and China are best friends. If America invades Iran, then China may invade Taiwan. But I've already told you this. China is dependent on the American economy, so I do not believe this will happen. And Putin is fairly certain this won't happen either. That's why he's now best friends with Kim Jong-un. Because Kim Jong-un, if he were to menace South Korea, that would throw the American military off balance. Because now there's war on three fronts, Ukraine, North Korea and Iran. That's the grand strategy of Putin. This is his trump card.

China, America and Rapprochement

Now what I'm saying here is this. I know there's a lot of conflict now between China and America. There's a trade war going on, but I think this will pass. I think there'll be a rapprochement between China and America because both economies are dependent on each other. So I think this friendship between Putin and China won't last very long. There's also really a lot of geopolitical reasons why this friendship won't last very long. Because China and Russia have a lot of geopolitical conflicts. They share a border. They're trying to vie for influence in Central Asia. There's lots of reasons why in the long term China and Russia will eventually have to break apart. Which means that Putin now sees his best friend could be Germany.

These I think are going to be the two big geopolitical surprises in the next five years. First of all America and China will become best friends, or not best friends, but they'll have a rapprochement. And then Germany and Russia will have a rapprochement.

So Donald Trump, President of the United States, wants a third term. Everything he's doing right now is because he wants to be king of the United States. He wants a third term, for a variety of reasons. I won't go into many reasons, but he's that narcissistic. He has to solve a problem. This problem is the national debt. It's at $37 trillion. You can't pay this off. You can never pay this off. But the theory is as long as you are the greatest military in the world, as long as you can go invade everyone, you don't have to pay this off. You can constantly increase this debt. That's the theory.

This explains the US-China trade war. Everything that we're seeing today is because Donald Trump needs to come to an agreement with China for a variety of reasons. The first reason is Trump wants to invade Iran, and so he needs to be on good terms with China. Another reason is he needs people to buy US dollars. Right now there's a lot of financial repression in China, meaning that you can't convert Chinese currency into US currency. American investors aren't allowed to come to China and buy up the Chinese financial system. Trump wants China to open up. Trump needs to create more interdependency between China and the United States.

That's why for Trump, Chinese citizens and students in America are the ultimate leverage point in negotiations. Ask yourself why this is happening. Why is it that your visas are being threatened? You want to go to the United States and spend a lot of money to get an American education, but Trump is saying, "No, no, no, we could take away your visa." Why is this happening? It's all part of negotiation. There's no way that America will shut out Chinese students because America needs that money. Without Chinese spending money in America, without Chinese wanting to purchase US dollars, the American economy will collapse. So there's no way that America will close its door to Chinese students. But it needs China to open up its economy furthermore to create more interdependency to save the US dollar.

Athens and the Delian League

So where am I getting these ideas? Am I just making this stuff up? In this class what you're taught is that history tends to repeat itself, and by studying history meticulously and thoroughly we can gain insight into the future. What I want to show you now is there's a direct analogy between what's happening today and what happened in Greece in about 400 BC. This is Thucydides, and he wrote a very famous book called The History of the Peloponnesian War, which is what we discussed last semester. Now the Peloponnesian War is a war between Athens and Sparta for hegemony on the Greek mainland.

In 480 Athens and Sparta were best friends. They fought against Persia, which was invading the Greek mainland. At the Battle of Salamis the Athenians basically destroyed the Persian navy, and the Persians were forced to retreat. But there's always a threat that Persia over here would come back and invade Athens and Sparta. As well, throughout the Aegean Sea are Greek islands and colonies that are afraid of Persian hegemony. So after the defeat of the Persians, the Athenians got together with these colonies and they created something called the Delian League. The Delian League is like NATO. It's a defensive alliance. If the Persians attack, then this alliance will defend together against the Persians.

Now the Athenians had the best navy at this time, and the other islands are like, "We don't have a navy. But what we'll do is this, we'll give you our gold." So all these islands put all their wealth on a place called Delos. This is why we have the Delian League name. This money is meant as a mutual defense fund. You're not supposed to touch it unless the Persians invade, in which case you use this money to defend against the Persians. That's the idea.

This worked out well until the Athenians stole the money. Why? Because they wanted to create something called the Parthenon, which is one of the most beautiful buildings in the world. Within the building is the statue of Athena. It's pure gold. So the Athenians stole all this money from Delos, from their allies, and they built this Parthenon, and the wealthy were able to steal from the Parthenon in the construction process. So the citizens of Athens became really wealthy. It's easy money. Remember, easy money destroys a society.

This is what led to the Peloponnesian War because after Athens stole this money, it didn't apologize to its allies. In fact it forced its allies to continue to pay tribute to Athens. Athens became a mafia state, a protection racket. If you don't give us the money, then we'll come invade you. So these allies started to encourage Sparta to attack Athens, and then that's what led to the Peloponnesian War.

Democracy and Empire

So there are three major incidents from the Peloponnesian War that I want us to focus on. The first incident is in 428 BCE. A place called Mytilene, an island. They were a former Athenian ally who refused to pay tribute. So Athenians invaded and conquered it. Now the question is, what do you do now? How do you teach these guys a lesson? How do you ensure this doesn't happen again?

One faction in Athens said, "Let's kill all the men." Pretty simple. Let's kill all the men, and then we'll spread fear among our allies, and no one will rebel against us anymore. So they have a debate, and all of a sudden they say, "Let's kill them all." So they send a trireme, a ship, to the island to give the orders to the Athenian soldiers to kill the men and enslave the women and the children.

But after the debate the Athenians started to talk amongst themselves, and a lot of them couldn't sleep. They're like, "This is wrong. We're Athenians. We're a democracy. We fight for freedom and liberty. We can't do this to our allies." So the very next morning the Athenian citizens get together and say, "We're going to have another debate, and we're going to discuss what to do." They have this huge debate, and they say, "No, we're Athenians. We're virtuous. We will not do this."

So they send another trireme to catch up to the first trireme. Remember, the first trireme is way ahead. They have a day's journey ahead. So the other trireme, they work their asses off to catch up to the first trireme, and at the very last minute they catch up, and they tell the soldiers not to kill the men. So this is the clash between democracy and empire.

Now let's fast forward to 416. Another thing happens where the Athenians are losing this war against Sparta. It's costing them a lot of money. They're forced to melt down the statue of Athena, the goddess, and use the gold to pay for this war. So their attitude changes, and now they're completely a mafia state. They don't care about democracy, don't care about virtue. All they want is for their allies to pay tribute.

So they go invade an island called Melos, and Melos is not part of this war. They're not part of Sparta. They're not part of Athens. They're just neutral. And then the Athenians said, "We don't care. You pay tribute to us." They're basically like a mafia racket now. The Melians say, "We're neutral. You have to respect our neutrality." The Athenians say in response:

Right, as the world goes, it's only in question between equals in power, while the strong do what they can and the weak suffer what they must.

So 12 years later the Athenians are like, "Screw virtue, screw democracy, screw liberty, just give us money." So remember this idea. Athenians wanted the trappings of empire. They also want to feel virtuous. Over time as Athens became poorer, they're like, "Screw virtue, let's have an empire."

In 415 Alcibiades, who basically is the Trump of Athens at this time, says to the Athenian people, "Hey guys, we're losing this war against Sparta, but don't worry. Let's go invade more territory." So they decide to go invade Sicily, which is very wealthy. The problem though is that Sicily's pretty far away. Remember, this is Athens defending this huge war in the Aegean Sea against the Spartans, and they're going to go and invade Sicily for its money, and it's pretty far away. It's not really well thought out. They don't really think about how to resupply the soldiers, and eventually their expedition gets wiped out at Syracuse. So it's a disaster for the Athenians, and it turns the war in favor of the Spartans.

Athens is so bad that the entire world gets together to destroy Athens. The Persians, remember the Persians were the enemies of both Sparta and Athens. The Persians start to finance the Spartans, and the Spartans eventually lay siege to Athens and defeat the Athenians.

The American Empire

So why is this important? Because history is going to repeat itself. There's going to be a lot of similarities between the Peloponnesian War and the American empire today. The first similarity is NATO. Remember, the Athenians had the Delian League and the Americans have NATO. NATO was always meant to be a defensive alliance. But if that's the case, then why is it that the Nord Stream pipeline got destroyed? Remember, the Nord Stream pipeline sends cheap gas from Russia to Germany. The German economy uses cheap Russian resources, primarily gas, to manufacture the best cars in the world and sell to China. But because of this war in Ukraine, America not only basically embargoed Russian gas to Germany, which destroyed the Russian economy, but some people even say that the Americans destroyed the pipeline. So the Americans are attacking their own allies.

Trump has said that America should take over Greenland and Canada. Why? Because they're wealthy, they have lots of resources, and also they don't have really strong militaries. Trump is like a mafia godfather. America is behaving like a mafia system today.

Now what America is doing is it's forcing Europe to rearm itself. Germany, Britain, France, they've all announced these huge military budgets. So you're like, "Does this mean that we'll have World War III?" Well, America doesn't think like that. America isn't like, "Let's fight Russia." America is like, "How can we exploit our allies further?" So you can make the argument that this is not really about fighting the Russians. It's really about getting their allies, France, Germany and Britain, to buy expensive and crappy American weapons. Remember the military-industrial complex. The entire point is not to fight the Russians. The Russians are just a pretext, an excuse. The real purpose is to get the Europeans to buy expensive American weapons. It's really a shakedown.

All around the world there's protests about what's happening in the Middle East. These are huge protests protesting what's happening in Gaza today. But ultimately it's not going to matter. Why? Because America's an empire. It's a mafia state. It needs to destroy Iran in order to maintain its power. So Americans want the trappings of empire. They also want to feel virtuous. That's why there's conflict right now. Over time, as America becomes poorer and poorer and more and more desperate, this virtue will go away and the raw, brutal power of America will express itself throughout the world.

This will eventually lead us to the final conflict, the war between Iran and the United States. Iran has been preparing for a long time, ever since 1979. America's been preparing for a long time. This conflict is World War III. I cannot overstate how brutal this conflict will be. It will lead to fundamental changes in the world. Our lives will never be the same again. Everything that we've known in the past is now gone forever, and we have to prepare for a new future.

Imagination and Love

So I leave you with a message. I know that this class has been depressing. You've been with me for a year now. It's been very depressing because we've gone into the heart of darkness of humanity. I know that the world looks more and more terrible. But remember this, and this is my final message to you. Remember this. The greatest minds of humanity, which include Homer, Dante, Immanuel Kant, they've all told us this. They've all told us one secret of the universe. One message, which is this. The imagination is the animating force of the universe. Love is the unifying force of the universe.

What this means is that in the darkest times, when all hope has been lost, when there's only despair, any of us, you, me, you, any one of us, can rise up, stand up and be the light to lead humanity forward. That's the task ahead of us if we are to save humanity in this darkest of times. So remember this. We all have the capacity to imagine. We all have the capacity to love. That's what makes us human. In the worst times we must defend our own humanity.