Sovereign Finance

Rob Drummond
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Connect the dots between personal finance, global finance trends, and deep human history. Tune in every week to demystify the money puzzle, and protect your interests in a turbulent world. sovereignfinance.substack.com

  1. 1d ago

    Unravelling The Money Puzzle: What is Wealth?

    Rob’s comments below are in italics.Derek’s comments below are in normal font. Wealth is one of those terms we all think we know. When you dig into it, it’s quite hard to pin down, isn’t it? Or we just equate it to “money in the bank”. Maybe there’s a slightly wider perspective on it as well. Yes, I thought we’d start by examining that question, because it’s something we take for granted. When we were talking about what is money, one of the main aspects we discussed was that money is a claim on wealth. So right away, that indicates that money and wealth are two distinct things. If money is a claim on wealth, it can’t actually be wealth itself. We tend to think of wealthy people as having lots of money. When we talk about the statistics of Bill Gates or Jeff Bezos or Warren Buffett, their wealth is actually stated in terms of an amount of money, and very often they probably haven’t got any actual money at all; it’s all in other assets. Interestingly, most of the expenditure that the ultra-rich have is not done by cashing in their other forms of wealth, because that would dilute what they own. That’s the real bedrock of it. What they do instead is borrow against that wealth at extremely low interest rates, compared with what’s available to the rest of us. They spend that, and eventually, when they die and their estate is settled, some of those assets will be realised and it will repay the loans. It’s partly one of the reasons why they very often pay almost no tax at all, because on the face of it their income is close to zero. The income that derives from their wealth, usually in the form of shareholdings in their enterprises, or real estate or land, along with all the rents from that, goes into trust funds rather than being paid to them directly. That would have been the straightforward way of doing it, which would have incurred enormous income tax bills. Wealth is Things People Want So if money is a claim on wealth, wealth is the actual thing itself. I’ve just mentioned two or three examples of the kind of things we think of once we step back a bit: shareholdings, large holdings of treasury bonds, houses, apartment blocks or farms. But I’d like to look at it in the broadest, simplest terms possible. I’d like to make this suggestion: wealth is things people want. How does that seem to you, Rob? Yes, because the value is only in the eye of the beholder, surely? Exactly. Which of course raises the question, what sort of things do people want? It also flags up the fact that wealth doesn’t actually need to be anything permanent. It could be something semi-permanent like furniture and appliances. It could be something pretty permanent like farmland or houses. Or it could be something entirely transient, like a holiday or a meal out at a restaurant. I’ve been thinking it could be something personal. As this is the Sovereign Finance show, if you don’t have the time and space to be sovereign, you aren’t really wealthy. If you never have time to do school run, or have time for a nice homemade meal with your spouse, are you wealthy? So there’s a lifestyle element to it as well. Yes, and that is indicated really by the etymology of the word. Wealth comes from the same root as whole, heal and hail, from which we get words like health and well-being. Wealth in a way is the abstract noun from the word well, just as health is the abstract word from the verb heal. They’ve clearly got very similar roots in language. Wealth, as it’s generally used in everyday language, has drifted a long way from that. A good starting point for answering the question of what people want is to look at Maslow’s hierarchy of human needs. In the original version he created in the 1950s, at the base level we have our physiological needs: our need for air, water, food, clothing and shelter. At the base level you have non-negotiable physiological needs, things you’re not going to survive without. Image credit: User:Factoryjoe, CC BY-SA 3.0, via Wikimedia Commons Once they’re taken care of, the next level is the need for safety and security. It’s pretty compelling if you’re living in fear of what other people are going to do to you, or whether wild animals are going to break in and eat you in the night. Above that are the social needs: the need for love, affinity and companionship. Above that, he suggested there’s a need for esteem, both the need for self-esteem and the need for respect from others. At the top of his original formulation, he put self-actualisation. In its broadest terms, that’s what we eventually settle on and decide for ourselves are the things that matter. It might be creativity, travel and new experiences, or artistic expression. It’s making your life the fullest expression of you, and doing that from a position of strong self-understanding. Yes. There’s another element he added in a later revision a decade or two on, where he put something called transcendence at the top. Image credit: U3199117, CC BY-SA 4.0, via Wikimedia Commons The way he characterised that is the very highest and most exclusive levels of human consciousness: behaving and relating as ends rather than means, to oneself, to significant others, to human beings in general, to other species, to nature and the cosmos. You might regard that as the focus of what’s generally regarded as religious or spiritual. That’s an important point, because it’s something that’s been in abeyance over the most recent modern period, when people have generally become more atheistic and materialistic. Even where they’ve been overtly religious, they probably haven’t had that empathy with other people, or, in a lot of cases, the sense of awe at the cosmos and the wonder of the whole thing. If we’re ever going to make our way through the chaos of the current era, a renaissance of recognition of that aspect of human life is going to be important. Yes, it’s having a sense of wonder as well, isn’t it? A sense that we don’t actually have all the answers. Although I wonder if the pendulum is swinging back in that regard. I have no doubt about it. The only question is whether it’s going to swing back fast enough and comprehensively enough to avert the obvious disasters we appear to be facing at the moment. All we’ve got is this moment now, and there’s no point getting unduly depressed about things which haven’t happened yet. But one point that’s been made to me by various people, particularly some with Buddhist backgrounds or other spiritual perspectives, is that maybe I’ve got that upside down, and maybe transcendence comes first. I’ve thought about that, and there’s quite a lot in it. But what I’d say is that it can’t come quite first. We still need to address the physiological needs, because if you haven’t got food, water or air, you won’t be reaching enlightenment. You need bread on the table first and foremost. It’s back to the aeroplane analogy: you put your own mask on first, and then you put someone else’s mask on. You don’t go around putting everyone else’s mask on. Absolutely. So it’s a useful thing to reflect on. Suppose we had our physiological needs and our needs for safety and security taken care of. Suppose we had, as a next priority, the drive for transcendence. Then possibly all of the other things further up the pyramid would come much more easily and naturally. Another thing worth contemplating, if we look at wealth this way, is that unless you’re in a position where you can entirely grow your own food, you do need some money for the transactions to get your food, a roof over your head and your clothes. You may or may not personally need money to buy yourself safety, given that there are bad actors around and we need police services of some sort, which have to be paid for. In the society we live in, that’s managed through the distribution of money. But if you look at those other levels, the social needs, the needs for love and affinity, the needs to express yourself creatively, you could go a long way with many of those without money coming into the picture at all. This is something we build on as we look at alternative lifestyles, at creating a life on your own terms. We covered this a bit last time as well, where if you’re dealing more with people at a community level, you maybe don’t need as much money, because you can barter more. Or you can just do it out of reciprocity. You can do it out of reciprocity. You can put it into the network and then take it out of the network when you need to as well. Yes, and I don’t want to be a boring old fart about it, but I’d say that over the course of my lifetime there’s been a distinct decline in that. For instance, I was a diving coach for fourteen years, and I did that entirely as an amateur. I didn’t even expect to have expenses paid by anybody else for travelling around and getting whatever kit I needed. That was fairly common. These days, more and more, even with children’s sports, it’s increasingly expected that somebody who coaches will be financially reimbursed, and that the sports people or their parents will hand over money for it. Whereas in the past, it was taken for granted that people would do that as a form of self-expression, if you like, and as a form of contribution. People do want to do it though. You do it for a love of the activity or for a love of the people involved. But if things are so tight that you don’t have the space to do that, sometimes people simply can’t. I was thinking as well, as you were talking, about the schools my kids go to and the PTA groups, the parent-teacher associations. They’re all staffed by volunteers, all people volunteering just for the love of their kids. So there are plenty of examples. Yes, I’m not saying it’s gone entirely. I’m just saying there’s been a drift away from people being prepared to help out on a voluntary level. I

  2. Jul 9

    What is Money, and What's In It For You?

    Rob’s comments below are in italics.Derek’s comments below are in normal font. As we said last time, over the next series of episodes, we’ll discuss chapters from our forthcoming book, Unravelling the Money Puzzle. The first chapter is “What’s in it for you?” So why would you bother? What’s In It For You? Why would you bother with this? Essentially, we’re all pitched into life in the society we live in. Money is pretty much essential. Robert Anton Wilson once described it as bio survival tickets. Clearly, if you want a roof over your head and food on the table, you need to have money to do that in the society we live in. I like that. I’ve learned since I’ve got older that there isn’t actually that much difference between monopoly money and real money. Well, this is one of the things we’ll cover in the next section, where we look at the issue of what money is. Essentially, we’re not given any formal education on it at all. Whatever we learned, we learned from our parents, and for most of us, we didn’t have any formal lessons from them about it. We picked it up in between, out of the implications of what was going on around us. Or, in my case, I ignored everything my dad tried to pass on to me and had to learn it all the hard way instead. That’s a pretty common experience. Certainly, I don’t remember any lessons on it in school. The only time I can remember it being discussed at all was when one of our teachers remarked in passing that the pound note, as we had it in those days before they went over to pound coins, actually still said, “I promise to pay the bearer on demand the sum of one pound in gold,” over the signature of the Governor of the Bank of England. The teacher said, well, actually, that’s not true these days. The reason it wasn’t true is that they suspended the convertibility of pound notes into gold in 1933, when they finally threw in the sponge on pretending that the First World War hadn’t destroyed a lot of value in the country. A pound was no longer worth what it had been. But that’s another story. Anyway, one of the boys asked, well, in that case, why is it worth a pound? Which was a very sensible question. The teacher replied, “Well, if you’re not sure about that, you can always give me any that you’ve got.” Which was typical of that particular teacher, totally missed the chance for what could have been a very constructive and informative discussion around that. At the time, I just thought it was a preposterous brush-off. I suppose you could take the view that he was subtly getting the point across that it’s because we all believe it’s worth a pound, and that somebody’s going to give us a pound’s worth of goods, whatever that might be. It’s a shared story that if we stop believing it, it collapses tomorrow. So we come out into life, and most people’s experience is that it’s a constant juggling act. We feel we’ve done all right if we get through the month without having got worse off. Of course, a lot of people in the present day, in pretty much all of the developed economies, are actually finding that they’re not getting wealthier; they’re getting less wealthy. Just to go back a few steps, why was gold used in the first place? Gold has been used across the ages. Is it just because it’s a scarce, finite resource? Well, it’s a scarce, finite resource. It’s incorruptible in the sense that it doesn’t corrode, rust or tarnish. That’s what makes it attractive. It’s been known since antiquity how to ascertain its purity, and it’s what they call fungible, meaning that one lump of gold is exactly like any other. We tokenise it because it’s quite inconvenient to carry lumps of gold around. Well, this is getting on to the topic of the next chapter. At the moment, we’re just saying why this is important to you. It’s basically important to you because, plainly, some people have a flair or expertise for accumulating it, and most of us don’t. This makes me feel that it probably suits the people who have that flair, that expertise and possibly that obsession, that the rest of us are not so well informed. It makes it easier for them to take advantage of us. I don’t think I’m being paranoid when I say that, or even if I am, it doesn’t necessarily mean I’m mistaken. Just because you’re paranoid doesn’t mean they’re not out to get you. Exactly. I’m just running through the notes I made about the points. We’re covering them pretty rapidly. Another impression most of us have is that it’s very difficult and complicated. In the course of the investigations we’re going to be sharing, it will come across that it’s almost embarrassingly simple in a lot of ways. The things you really need to know don’t require much sophistication or exceptional mental powers to grasp. When they’re brought out into the open and examined, they’re very easy to grasp, and once you’ve grasped and internalised them, that will empower you going forward. So that’s what we’re up to with this educational project. What you’ll get from following this through to the end is that you’ll become confident, relaxed and effective in dealing with your finances, which very few people would say, in all honesty, that they are at the moment. You’ll get the clarity to avoid being taken advantage of, and you’ll probably be quite angry when you see some of the ways you have been being taken advantage of. You’ll get clarity on how to build prosperity over the course of a lifetime. So that’s what’s in it for you from following it. What Money Actually Is Now I’ll go on to the next section, taking a look at what money actually is. Before I do that, are there any other points you want to raise, or any other questions you want to ask, Rob? No, just to say that I think there was a hole in my education. I think we have to unlearn certain mental habits around it as well. It’s not just about learning; it’s about unlearning some unhelpful thought patterns around this too. So the next section will address the question: what is money? It used to be a bit more obvious what the answer to this question might be than it is now. At the time I was growing up, which seems increasingly like ancient history, money for the most part was something completely tangible. It was coins and notes. There were one-pound notes, ten-shilling notes and five-pound notes. The ten-shilling note is worth fifty pence in today’s currency. Slowly, we picked up on the fact that money could be balances in a bank. We thought of the bank as a big storeroom where the money was kept in a safe place. There were lots of banks up and down every main street in every town, and people were going in all day long, either depositing money or withdrawing it. So it was quite easy to look at it just as though it was a kind of storeroom. Like a big piggy bank. Yeah, whereas now increasingly it’s something entirely abstract, it’s figures on a screen. There’s been this huge push over the last five or six years, particularly to steer us all away from tangible forms of money and toward intangible ones, on the grounds that they’re more convenient. Of course, it’s convenient until it isn’t - when the system breaks down or when you become a victim. This has been happening quite a lot, in terms of people who felt to be troublesome to the ruling elites in some way or another being debanked. There’s absolutely nothing they can do about it, because it’s an extra-legal procedure. A number of people are grappling with court cases over this, and in the meantime, it’s almost impossible to function normally in the society we have. I think Nigel Farage had one of his accounts closed, didn’t he? Although he’s clearly back in line with the establishment narrative because he’s back in the fold now. He did. I don’t have a great deal of sympathy for him, but I don’t think it should happen to anybody. The Canadian truckers’ protest was the other thing that came to mind. Exactly. Anyway, what is money, in essence? I’ll start with the classic definitions, and then we’ll see how this works out. 1. A Medium of Exchange First and foremost, money is regarded as a medium of exchange. Now, what does that mean? The typical way it’s explained is that, in primitive societies, people operated by barter. Somebody would take goods they had produced or otherwise acquired and swap them for other goods, which is obviously very cumbersome. There’s considerable doubt over that narrative as a literal historical sequence. Part of the confusion comes from the degree of obsession we have these days with money, and the degree of obsession we have with looking after our own individual interests over and above others. In very primitive societies, much of what went on was much more like a gift economy. It was the local community as well. It’s not like you were buying from someone in a different country. Yeah, or someone you’d never met before and never expected to meet again. But people were much less rigorous about making sure they covered their own interests. They were much more prepared to just be generous, providing something to their neighbours and fellow villagers, and expecting that when the boot was on the other foot, they’d be taken care of. It was very common throughout the world, in all sorts of cultures. All the Scottish clans used to do that, didn’t they? This principle of hospitality. Yes indeed. So, what does it mean, a “medium of exchange?” Suppose a farmer wants a table, and the carpenter thinks the table is worth three bags of wheat. If they were operating on a strict barter system, they’d do a straight swap, and chances are the carpenter doesn’t want three bags of wheat. So a convention arises in the village, in which some system of tokens is brought into play. It could be anything - let’s say they agree to use seashells to keep track of things.

    What is Money, and What's In It For You?

  3. Jun 26

    Sleep With One Eye Open!

    Rob’s comments below are in italics.Derek’s comments below are in normal font. We thought we’d do a bit of a roundup of recent goings-on today. What do people need to know? Well, in the week since our last recording, there have been more or less daily reversals in the apparent American stance regarding the discussions with Iran. It was more or less a surprise that we actually got the memorandum of understanding signed by Trump. No sooner was it signed than Israel continued the fighting in Lebanon, despite the fact that the number one item on the memorandum is a complete cessation of hostilities, including in Lebanon. The strait was reopened, but it’s already been shut again in response to that. As of today, this is what I mean by the rapidity of reversals. The moment you think one thing has actually developed, the next minute, we’re back to where we were before. Each time there’s a failure to live up to what has already been explicitly agreed, it erodes the credibility of the United States even further. It just makes it appear like a circus, doesn’t it? All done to probably manipulate the stock value of certain companies, I would suspect. Yeah. Originally, there was going to be a signing ceremony, initially in Islamabad, then it was moved to Geneva. It has since become apparent that there was a Mossad plot to assassinate the Iranian negotiators. That’s why the agreement was actually signed in separate locations. The Iranian side signed separately, and Donald Trump signed in Versailles. That is ironic, because that’s where Germany agreed to the humiliating terms that ended the First World War, which of course was responsible 20 years later for the outbreak of the Second World War. So a slightly ironic gesture. Even though it’s been signed, and even though the Iranian Supreme Leader expressed his reservations about whether America would continue with it, he agreed to go along because a majority of the governing council had decided this was the best way forward. Because of the immediate reopening of hostilities by Israel in Lebanon and the subsequent closure of the strait almost as soon as it was opened, apparently about a dozen tankers got out, nearly all Iranian ones. Now we’re back to square one as far as the Strait is concerned. The negotiations are now about how to reaffirm America’s seriousness about this agreement so that the strait can be reopened. We’re still in this phoney war state, which has gone on far longer than you or I would ever have imagined. Certainly in this country, we’re not yet seeing actual shortages at the pumps. We are seeing price rises in the shops, which is more or less inevitable given the rise in diesel fuel prices, which is much sharper than the petrol price rises. In America it varies by state, but price increases have been quite painful and will continue. One reason we’ve been insulated from actual shortages, rather than just price changes, is that there was obviously a lot of petroleum in transit on tankers when the straits were closed. These have taken time to reach their destinations and be discharged, providing something of a buffer. All countries have also been drawing down their reserve stocks - to the point that these are now close to exhaustion. Some people reckon there’s less than a couple of weeks before there’s nothing left from that source, and then the pain on the world economy will really begin to bite. Even if the strait opened tomorrow and production from the mothballed oil fields was ramped up to full capacity with shipping going flat out, those who understand these matters better than I do estimate it would take three times as long to recover as the three months the strait was shut. So it’d be nine months before we got back to where we were before. Which is essentially what we’d said back in February and March, wasn’t it? It may just have taken a bit longer than we thought to become apparent. Yeah. Once again, there’s been a complete asymmetry between the seriousness with which the Iranians are approaching these negotiations in Geneva and the frivolousness the Americans are displaying. Foreign Secretary Agarci and parliament speaker Cardibuff simply walked past Vance, Witkoff, Kushner and all the photographers sitting there waiting for a photo opportunity, all set up to show them grinning and shaking hands. They just weren’t going to go along with that pantomime. Some people are depicting this as a deliberate snub, but it was simply that they wouldn’t stoop to that masquerade. They then walked into another room, where they were greeted by the Prime Minister of Pakistan, who warmly embraced them. They continued to ignore the Americans, and Vance looked completely disconcerted, clearly out of his depth. The Iranians then refused to enter the discussion room until all reporters had been cleared out. All of this was entirely predictable. It’s astounding that the Americans didn’t realise they could have avoided all of that public embarrassment by treating them with the respect they deserved. They could have kept the press circus out entirely. Yeah. I was thinking about Caitlin Johnston’s comment the other day. The US Empire seems to think the entire world is its property. Anyone living in those places who responds to US naval bases or whatever is deemed to be committing an act of aggression, even though it’s in their part of the world. Until that mindset changes, the US Empire’s attitude towards these negotiations won’t change. Yeah. So it’s going to be a rocky few months. We just have to watch this unfolding day by day. The approval ratings of the Israeli regime amongst the American public have been plummeting, and this is likely to continue. Particularly when the full effects of this conflict feed through to affect people’s own day-to-day lives and financial stability. Trump is in a difficult position. He doesn’t seem capable of controlling himself. Part of the reason the talks got off to such an appalling start is that he published yet more rants on social media before proceedings had even begun, almost like dealing with someone who can’t control what they blurt out. Yeah, it all feels like a big show. I was reflecting last night on the fact that the Iranian football team played two World Cup matches in America. Surely that reflects the fact that some elements of this are theatrical. If you were genuinely at war with someone, would you have that country’s football team playing on your home turf? Even that was done incredibly incompetently. They made life as difficult as possible for those players, with delays, harassment, and so on. If you’re going to allow it, you could at least do it properly. So sometime soon we’ll get back to the original idea of this podcast: to provide an outline of how the money system works, how to get to grips with it, and how to apply that understanding to working within it to your own best advantage. We didn’t intend this to be a current affairs channel, but we didn’t expect world events to unfold quite like this. These events will affect the financial position of all of us and the options available to us in life. That’s right. Would you say, for someone thinking of starting a business, it is worth hanging fire for a month or two and seeing how things play out? What kind of volatility do we think is going to come up? It depends on what your business is. I’d been working on developing various electronic devices and audio effects for musicians. I’d projected quite considerably forward with plans to have things manufactured in China. I’d got prototypes done that way and opened negotiations with suppliers about scaling things up if it worked out well. I’ve just put all of that on ice because of the uncertainty. Not knowing how much you’ll be affected by events entirely beyond your control is unsettling. The best business would be something local, providing services to people immediately around you, face-to-face, offering things they’d find harder to get or much more expensive to get through the larger corporate structures we’ve taken for granted. Things they can’t just buy on Amazon. Yeah exactly. OK, until next week. Good thoughts. Thanks. Thanks for reading Sovereign Finance! Subscribe for free to receive new posts. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sovereignfinance.substack.com

    Sleep With One Eye Open!

  4. Jun 19

    Book Review: Jeremy Lent's 'Ecocivilization'

    Rob’s comments below are in italics.Derek’s comments below are in normal font. We’re going to chat today about a book you’ve been reading - Ecocivilization: Making a World that Works for All by Jeremy Lent. Now I’ve been rather crafty here, nudging you to read this because I know you’ll read it much faster than I will! That way we can have this conversation and you can tell me what it’s all about! Yes, it’s almost the book I wish I’d written myself. I’m staggered by the depth and breadth of his scholarship and his attention to detail. It’s very much along the themes of quite a lot of things we’ve probably spoken about, and of my own book, The Letter from 2100: A Possible World for your Grandchildren. The idea is that we’re at a crisis point in human global society. We’re either going to pull through it into an unimaginably great situation, or we’re going to have a catastrophic collapse. There’s no real third alternative, as far as I can see. Ecocivilization is not a rose-tinted spectacles job, saying everything’s going to be all right. It actually goes into a lot of detail and points out some possible pathways. The overall structure of the book is in four sections. The first one is “How Did We Get Here?”, pointing out that we as a society are careening towards a precipice. This is obvious to anybody who hasn’t been living in a hole in the ground for the last five years or so. There are crises of all sorts, and it looks as though if one doesn’t get us, another one will. He flags up “The History They Didn’t Teach You in School” - that’s the title of one of the chapters in this section, and it’s brilliant. There’s a whole bunch of insightful stuff there. The second section is what he means by an ecocivilisation - a world that works for everybody. Obviously, that has to have respect for human beings as an absolute cornerstone of what’s involved, along with respect for the planet and the entire living systems, without which we won’t survive anyway. That section provides a theoretical outline of what to aim for. The third section is the biggest part of the book. It’s called “Envisaging an Ecocivilisation”. It has eleven or twelve chapters. One covers the world economy, and the other structures industry and enterprise to serve the common good. One is on agriculture, and the way that needs to be revised so it provides nourishing food for every human being, a fundamental necessity that the present system doesn’t achieve at all. He’s also got a chapter on wealth and what he calls the commonwealth, or the commons. There was an important insight in that chapter about the royal seal being put on the Magna Carta by Henry the Third, a couple of years after the barons forced King John to acquiesce to it. At the same time as the Magna Carta was sealed, there was also a Charter of the Forest, which is of personal interest to me. That charter reassigned to the common people the areas which had been fenced off as rural hunting grounds - the New Forest was one of them. They’ve now introduced car parking charges all over the forest, even little two-line strips on the side of a lane outside the pub in the village. I don’t know how much impact that’s had on the pub’s trade, but it’s about time somebody reminded them that this was actually granted under royal seal. We almost need a Magna Carta 2.0, don’t we? Just remind me, when was Magna Carta sealed? That was around the 1200s, wasn’t it? 1217. It was acknowledged in 1215, and actually put under royal seal in 1217. It’s quite interesting - I’m surprised nobody’s flagged up that the right to jury service has just been abolished by the government. Anyway, that’s another story. If you go to legislation.gov.uk, you can look up Magna Carta, and it’s still there. So it’s a piece of active legislation. That’s not much help if they’re ignoring it! They can’t get rid of it, so they’re just ignoring it and gaslighting everyone. Pretty much. Another point - there are all sorts of interesting sideways snippets of information in this book. One is that when the UN was established after the Second World War, Albert Einstein said it wouldn’t work. He said the trouble was that the Charter grants sovereignty to individual countries without providing a mechanism to make them adhere to it, which is exactly what’s been happening since. The next chapter is on finance - transforming money to work for us all. We’ll probably have a detailed run-through of what he’s suggesting in another episode. It’s very much in line with a lot of the discussions we’ve had on this channel. There’s a chapter on technology, and one on infrastructure - the networks of communication, physical and informational. On governance, there’s the obvious fact we’ve discussed at times: that democracy in its present form isn’t really delivering the goods, however great an idea it is in principle. The law is a very interesting one, because it’s not something I’d given much thought to. We naturally assume the law is what it is, without analysing how it came about and who it’s designed to benefit. There’s a chapter on global governance, looking at a system that would integrate the entire global system. What’s written in the UN Charter would be a good starting point, if there weren’t the opportunity for any sufficiently strong actor to decide to ignore it. There’s also a chapter on the living earth - mutually beneficial symbiosis with the rest of the biosphere - and a chapter on culture and community, talking about education. There was a very interesting thing I didn’t know, flagged up in that chapter, about the way the education system we all take for granted was set up. The modern education system resulted from Prussia’s humiliation after being overrun by Napoleon. Did you know that? I’d heard about this - they needed soldiers, didn’t they? People who follow orders and don’t think too much. That was about it. In 1806, Napoleon conquered Prussia, and a philosopher called Johann Fichte said it was necessary to revise the entire education system. He said that “The new education, on the soil whose cultivation it takes over, completely annihilates freedom of will, producing strict necessity in decisions and the impossibility of anything else.“ That set the pattern for the way schools everywhere are run, and that we take for granted: you sit down, you do what you’re told, you don’t talk, you don’t decide what you want to learn, and you’re drilled into compliance. That produced enormous technical advances in Germany on the one hand and, just over a hundred years later, led directly to the First World War. I would argue that being in business is a good antidote to the inability to think for yourself. It’s quite a long road, but an important one. One of the insights in that first section, “The History They Don’t Teach You at School”, is how deliberate it was to impoverish the population at large as a way of disciplining them. There was a Scottish merchant and magistrate who actually wrote, without any sense of irony: “Poverty is therefore a most necessary and indispensable ingredient in society, without which nations and communities could not exist in a state of civilisation. It is the source of wealth, since without poverty there would be no labour; there could be no riches, no refinement, no comfort, and no benefit to those who may be possessed of wealth.” You could apply that to today. Absolutely. Over the course of my lifetime, I’ve seen how steadily leisure and space to think have been eroded. There was another insight from George Kennan, the American diplomat - he was the ambassador to Russia for a while. One of the things he wrote was: “We have about fifty per cent of the world’s wealth, but only six point three per cent of its population. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relations which will permit us to maintain this position of disparity. To do so, we will have to dispense with all sentimentality and daydreaming, and our attention will have to be concentrated everywhere on our immediate national objectives.” Which is pretty much still how the empire operates today. Exactly. That was eighty years ago, and we’ve now seen the results of pursuing that incredibly narrow objective all around us. Before we get too gloomy, section four of the book is “How Changes Happen” - models of societal transformation, with examples of specific things where quite dramatic changes have come about. The other chapter in that section is “Making Changes Happen: Moving Towards an Ecocivilisation”. Once again, his main point is that it’s not a done deal. We’re in a very perilous situation. The actual crisis thrown up by the logical working-out of the way we’ve been structuring things may well be the context within which there’s a possibility of transforming into something entirely different. He points out numerous little ways this is happening right now, and has been happening over recent decades. Any one of them might be regarded as small beer, impossibly out of scale with the magnitude of the problem, but taken all together, they’re building up a cumulative effect. So, for an initial summary, how does that sound? That sounds great. I was also thinking that the amount of hope you have for the future probably depends on how much faith you have in young people. I have equal amounts of faith and despair - who knows? I’m certainly surprised by the lack of vigour amongst young people in agitating against the system. Maybe it all just seems hopeless to most people. But who knows - it’s a possibility. We’ll see. There’s definitely a sense of apathy, but there are also lots of surprises. Young people don’t seem to be taking on the traditional narratives we’ve be

  5. Jun 6

    Updated Thoughts on AI

    Rob’s comments below are in italics.Derek’s comments below are in normal font. Derek and I know each other through an American consultant called Perry Marshall. Perry was originally a marketing guy but has transitioned into an all-around business expert. You attended one of his seminars this week, specifically on AI. We thought we would unpack what you had learned and how we, and anyone listening, might apply that. Yeah, absolutely. It was a really inspiring, really interesting day, with a strong focus on AI. Frankly, I’ve been very cautious about the whole AI thing and somewhat sceptical of its value. We use it a little bit, don’t we? We use Claude to clean up the recordings and generate transcripts. I’ve been very impressed by how that goes and how much better it is than anything on offer until a few years ago. I’ll add some comments on that. When we started the podcast a few years ago, getting the transcript into a readable version took a lot of work. These days, it’s literally 20 minutes before I go to parkrun on a Saturday, courtesy of the tools available. Yeah. I then give it a second check. Other than where I’ve expressed things poorly, all it’s required from me are minor spelling and punctuation changes and a bit of reformatting. I’ve had less and less to do, more or less week by week. One of the reasons I was sceptical about AI is that it’s yet another technological innovation which has produced a disproportionate amount of hype. A lot of people who’ve been swept up in that hype are going to be disillusioned, because it’s unclear to many what it is and what it isn’t. There are two levels of hype. One is “this is going to transform humanity,” but nobody seems to be suggesting how. “This is the future of great prosperity,” but nobody seems to be saying in practical terms what that prosperity will actually look like. And who for? Who’s going to get the benefit? Exactly. There’s also a philosophical dimension to the hype. There’s a lot of speculation about whether AI will become fully conscious, whether it’s going to overtake the human race. I’m absolutely clear that whatever it is, it’s an algorithmic system running on computers, and that is never going to be conscious. That’s a very big philosophical debate, but I’m crystal clear in the basis I have for being certain of that. Did you see that Richard Dawkins got ripped to shreds for saying he thought Claude was conscious? That was so funny. I cannot imagine how he thought he would enhance his credibility by putting that out. Don’t get me started on Dawkins. It’s very much on the side of people who are still trying to say the universe is a great machine, that we’re all bits of machinery, and there’s nothing transcendental. I had a brief word with Perry about the Turing test. Do you know about it? I’ve heard of it, but I couldn’t tell you what it was. Alan Turing, the guy who, to all intents and purposes, created the underlying intellectual framework for computing, was also a major player in breaking the Enigma code in the Second World War, a major contribution to defeating the Germans. The Turing test was Turing’s contribution to the debate about whether a computer could be conscious. The test is basically this: if you could have a dialogue between a person and a computer and the person couldn’t determine whether the entity they were conversing with was human or a machine, then the computer would have passed the threshold of consciousness. According to that criterion, we’ve actually passed that point, and Perry and I agreed on that. I got the output of Perry’s group, what he calls the Superconductor, a sort of AI business consultant. You do a quite challenging questionnaire and get a report back. The report blew my socks off. I could not tell that it hadn’t been written by a more-than-averagely competent, insightful business consultant. Yeah, and this is going to completely derail a lot of middle-class jobs for people doing this kind of work. We’ve seen this progressively, haven’t we? The point is, it still isn’t conscious. Broadly, the main reason is summed up in Roger Penrose’s book, The Emperor’s New Mind. Did you ever read it? It’s absolutely spot on. In summary, what Penrose says is that because of Gödel’s theorem, that’s Kurt Gödel, it’s impossible to create a formal system for mathematics that is both complete and consistent. What it comes down to is that there will always be mathematical statements which are true but not provable. Gödel showed this by constructing one. At the same time, he showed that the human mind was capable of convincing itself of the truth of that, which a computer could never do. There’s an argument sufficiently obscure that many people who are disinclined to accept that point of view simply don’t get it. They say, “Who cares whether a computer can prove Gödel’s theorem or not?” Anyway, I digress more than I needed to. But it explains why I’ve been put off by speculations about whether AI could be conscious. It can certainly be intelligent. If you define intelligence as the ability to extract a simple summary from a complex argument, for instance, you can bring up a whole bunch of definitions. But that’s not the same thing as consciousness. So, my big takeaway from Wednesday’s discussions was that this is yet another tool. The thing about any tool is that you can use it for good or ill. That brings up another whole aspect of the overhyped discussion. Is AI a force for good or a force for evil? The answer is neither. In the hands of someone motivated to do evil, it can enhance their ability to do evil, which is unfortunate but a fact of life, just like any other technology. You can use them for good or for evil. Yeah. That was another very interesting thing, because as anyone who knows Perry will know, he is essentially as strongly grounded in ethical principles as you can be. There were two special guests at the seminar. One was Scott Chang, the guy who developed the Superconductor programme. It was great to meet him and converse with him personally. I’ll be taking up the offer he gave to seminar attendees, an hour’s consultation. After that, I’ll apply it to the project we’ve got to get this book out, which has been a long time coming. He was there, and there was also another guy called Finn, who founded a business called Solar Quotes for selecting solar power installations. It’s essentially a lead generation website for contractors. He recently sold the business for multiple millions and is now enjoying his retirement. What he said was that the biggest factor in his success was running the business not to maximise short-term profit, but to build something of lasting benefit that provided the best possible deal for customers. He structured it so that was genuinely the case. They had one of those rock-solid guarantees that could bankrupt you if you weren’t doing things the right way. If any installer that a website client had booked gave an unsatisfactory job, they would, at their own expense, rectify it to the customer’s satisfaction. You can’t get a more ballsy guarantee than that. I asked him what the philosophical basis for that commitment was, and he said, “It’s just the golden rule.” This touches on what we’ve said before: the strongest thing you can do to build a successful business is to operate according to that principle. It’s depressing how few people in business appear to have that as their overriding priority. Scott Chang, had been a mortgage broker and was one of the few not to go completely out of business overnight when the 2008 financial crisis hit. Mortgage broking is famously another business area operated by complete sharks and charlatans, but Scott operated according to the same principle. It would have been very easy in the early 2000s to make a great deal of money getting people into mortgages that turned out to be immensely profitable for the lender and ruinous to the customer. The devil will always place short-term opportunities in front of you to tempt you away from the longer-term goals… Of course, you don’t have to be a Christian to hold that principle. Any ancient wisdom tells you the same thing, whether it’s Taoist, Buddhist, Hindu or whatever. So it was quite interesting from that point of view. It’s a creativity accelerator, if you like. It’s only as good as what you put into it. This has been the thing for a long time, hasn’t it? Garbage in, garbage out, or good input in, good output out. The work we do for this show, in preparing the written versions, generally involves good input. Yeah. I’m looking at that in a whole new way. Scott gave me one or two pointers about how to approach the project we have on constructing this book. It’s more or less what we had been thinking of doing, but I had been struggling because of not being quite clear about how to go about it.. Incidentally, I put one chapter I manually cleaned up into the shared document you created for this purpose, so you can have a look and tell me how close I’m getting. With the insights I’ve now gained, I’m going to take that approach and feed material in, with instructions, to one or the other of the AI tools. I’ve got ChatGPT on the £20 a month subscription. You’ve got Claude. We can see how one or the other works, and if there’s any way to find synergy between the two, that’ll be an interesting project in itself. I’m quite upbeat about exploring this going forward. I’m now seeing it in very much the same way that I see the CAD system I use for designing electronic circuitry. I use KiCad. I downloaded and installed it as a 70th birthday present to myself. Despite having tried it two or three times before, it clicked on that occasion. Within a week, I was getting a schematic in and turning it into a circuit layout. Having done that on the old system and kn

    Updated Thoughts on AI

  6. May 17

    Going to Tehran

    Rob’s comments below are in italics.Derek’s comments below are in normal font. You were telling me before we hit record that you’ve been reading a book called ‘Going to Tehran’. You were saying that if the people in the American establishment had read it, it would have saved everyone a lot of heartache! Yes, it’s called ‘Going to Tehran’. It’s by Flynt Leverett and Hillary Mann Leverett, obviously a married couple. They were policy advisors or analysts in both the Bush and Clinton administrations. When was this book written? The book came out in 2013, with a slightly updated edition since. It gives a very detailed, impartial description of what the Islamic Republican government of Iran has been through since it was created 47 years ago. It explains a lot about the experiences it’s had and why it’s taken the position that it does. It totally undermines the prevailing Western narrative that they’re all lunatics, fanatics and extremists. The religious regime may not be one we would choose, but it does seem that a large majority of the population are very happy with it. The events of the last year or so have led many younger people — particularly those who didn’t live through the Shah’s rule — to reassess. The Shah, of course, was installed by American and British intelligence services in 1953, overthrowing the democratically elected Mossadegh government. He then ran a very brutal tyranny with a great deal of torture and assassination of anyone who rose up against it. Didn’t the Shah go to boarding school in Switzerland or something? He was groomed and then put back into position. He was totally a Western puppet. He was installed because Mossadegh wanted to nationalise the oil extraction processes. Mossadegh wasn’t even going to restrict its use; he just didn’t want it sold off at a knockdown price. He wanted a fair return to the country for the resources being extracted. It’s the same old story. The recent events have caused many people who were looking to the West, thinking the grass might be greener, to reassess. Anyway, well worth a read. I’m only about 20% of the way through it myself at the moment. Just while we’re on books — you obviously read a lot. Do you read 20% of a book and then dip back into it later, or what’s your preference? Usually, if I decide it’s worth reading, I stick with it until I’ve got right through. How about you? I’m trying to get better at giving up on books that aren’t excellent. So I’m trying to get a bit smarter about it. I very often read the first page or so and the last page or so of each chapter to get an instant summary. It obviously depends on how they’re written, whether that’s a useful exercise. A lot of writers do open each chapter by giving a rough idea of what they’ll cover. A lot of them also finish with a brief summary of what they’ve covered, which is good presentation practice anyway. If they do that, you can get a pretty good idea of whether you want to go into the full depth and detail. Sometimes I do that exercise and conclude I’ve pretty much got the drift. Anyway, very interestingly, Robert Kagan — it’s very difficult to label him. I was inclined to say “right-wing,” but “right-wing” and “left-wing” no longer make much sense. ‘Right-wing’ just means he says things the establishment doesn’t agree with, doesn’t it? Not in this case — he is the establishment. He’s the husband of Victoria Nuland, who was Assistant Secretary of State at the time of the 2014 overthrow of the Ukrainian government. So he’s a militarist, a warmonger. I remember her. He’s part of the swamp. In this article, he actually says that the Iran conflict is the biggest defeat in US history. So you’ve got somebody from the core of the American establishment effectively taking it for granted that the conflict is lost, whatever happens from now on. He says the only way it could be resolved is by a land invasion and occupation. I don’t know whether he’s saying this to strengthen the military’s resolve to go ahead and do that. It seems blindingly obvious that any attempt to do that would result in an even more humiliating defeat — and a more decisive one. Of course, Trump was probably hoping, with this visit to China, to get some sort of support in getting the Strait of Hormuz reopened. They gave a very polite reply without actually suggesting they do anything. Have you been following the China trip at all? I saw that he was there. To be honest, if something is really meaningful, I rely on you to tell me about it! Well, I’m glad I’m doing something useful. I don’t know what he expected. As somebody suggested, it was partly about stroking his ego — I’m sure it did that to some extent. There was a reception, flag-waving, bands, 21-gun salutes, a huge ceremonial banquet, and sycophantic speeches praising each other. What actually happened in any of the closed-door meetings, we don’t really know. There haven’t been any announcements of grand progress on any front, which is no surprise. China has been as robust as it could while remaining polite in laying out its position. Before it even started, they said they had four red lines: discussions of Taiwan, democracy and human rights, their political system, and any interference with China’s right to development. So if Trump had thought he was going to make any assertions about any of those, they were off the list to start with. In fact, Xi made a very coded reference to Taiwan and to the necessity of avoiding conflict. There are clearly very strong elements in the American political establishment that want some sort of proxy war against China to restrict its future prosperity and its ability to rival the United States, which is almost too late, I would say. Taiwan is to do with semiconductors, right? Well, the history of Taiwan is that the Kuomintang retreated there after losing the civil war against the communists in 1948. For quite a long time, the United States took the position that this rump of non-communist politicians in Taiwan was the actual legitimate government of China. At some point — possibly around Nixon’s visit — they had to abandon that and accept that mainland China was the real China. The position since has been what they call the “one-China” policy — that Taiwan is actually part of China. There are strong elements within Taiwan that want a clear separation. It’s quite a muddled situation. As long as they don’t cause any trouble, the Chinese are perfectly happy to sit it out and wait. Meanwhile, America has been selling increasing quantities of arms to Taiwan. In one light, that might be regarded as yet more profit for the military-industrial complex. By doing that, however, they’re plainly playing up to the separatist factions — there’s no point otherwise. Taiwan’s not going to have a fight with anybody except mainland China, so selling them weapons can definitely be seen as an invitation to pursue that. The American position is that they would intervene to protect the democracy of Taiwan if China attempted to take it over by force. I can’t see there’d be much appetite on either side for armed conflict, because there’s a great deal of kinship between them — literally. There are many mainland families with relatives in Taiwan, and many Taiwanese families with relatives on the mainland. It would really take something to stir things up to that point. But of course, this is the playbook we’ve seen everywhere. It’s too big a fish, basically. Xi’s message was that we should be careful not to fall into the Thucydides Trap, which surprised me. You don’t expect Chinese leaders to be versed in classical Greek history. What Thucydides was referring to was that when one powerful state was growing to the point of becoming comparable to another, war would be inevitable. Xi was saying as clearly as he could — without spelling it out further — that it would be far better if the US and China could avoid going to war with one another. He then went on to give a very diplomatic warning against any interference or provocation regarding Taiwan. We’ll see whether we get any more concrete announcements. The other thing is that not only have we got the Strait of Hormuz closed, but Ansar Allah — generally referred to in the Western press as the Houthis — have effectively closed the strait at the mouth of the Red Sea to US shipping. Most Western shipping companies have more or less abandoned the Suez Canal route because they simply can’t afford the very real possibility of losing a ship and its cargo. The insurance premiums for passing through that route for a fully laden container ship are now up to three-quarters of a million dollars. How much is the cargo worth if the insurance premium is three-quarters of a million dollars? A figure I heard was around 10 million. But that three-quarters of a million represents pretty much the entire net profit of the voyage, so it makes paying the premium uneconomical. Routing around the Cape of Good Hope adds an extra 14 days to the journey and an extra three and a half thousand dollars in fuel. All of that will feed through to the costs of anything imported into the Western world, which of course is most consumer goods and appliances from China, Vietnam, and various other places in that region. So there’s another front which has been somewhat eclipsed by Ukraine and Iran — the North African states: Mali, Chad, Niger, collectively referred to as the Sahel. These are all former French colonies, and there’s been considerable realisation in those areas of the extent to which they’ve still been economically subjugated even since nominal independence. Those governments are standing up to the French. They’re making their own currency arrangements rather than ones controlled by the French central bank, and they’ve been supported in that by the R

  7. May 4

    Some Things The BBC et al Aren't Telling You

    Rob’s comments below are in italics.Derek’s comments below are in normal font. Today is the first of May — the Celtic festival of Beltane. We’re at the halfway point between the spring equinox and the summer solstice. I mention it because, amid all the dark stuff going on, we need to remember to pay attention to what’s in front of us and around us. Right. I’ve made a similar adjustment myself. George Orwell wrote in one of his essays that whatever the bureaucrats, politicians and militarists do, spring is still spring and the earth is still going round the sun. The sun will still come up. Having said that, there’s been a lot going on over the last five days, and we feel like there’s plenty to talk about. There are many different threads, and they’re all interrelated. The first thing to note is that, despite the demonisation of Putin in the Western media, he is far more accommodating than any leader likely to replace him, as far as I can see. Something people must wake up to soon is that he is talking to everybody prepared to have a dialogue with him. The most notable example is the Iranian foreign minister, Arachi, who visited him. Putin gave him a substantial meeting and has since come out publicly saying they are standing with Iran. That’s pretty notable in itself. Apparently, Trump is now saying he had a 90-minute conversation with Putin. Given everything, it would be understandable if Putin had decided it was a waste of time talking to Trump. The criticism he’s getting from within Russia runs along the lines that he’s not proceeding fast enough in Ukraine and should be far more aggressive. There are also plenty of people inside Russian politics and the military saying that Germany, France and Britain — who are openly bragging about supplying Ukraine with drones attacking Russia — are effectively waging war and Russia should strike back. It’s an act of aggression, surely. We’ve been very lucky over recent years that the Russian leader appears to have a couple of brain cells to rub together, which cannot be said of our so-called leaders. Certainly not of anyone in the West, as far as I can see. The leaders of Britain, France, Germany, the Baltic States and probably Poland are all actively trying to talk their populations into contemplating war with Russia in the not-too-distant future. They seem to be actively promoting this. They’ve not read the room. It’s not going to happen. Well, Merz has just said he aims to rebuild the German military to a strength of 480,000. Who he thinks will sign up, I can’t imagine. If they try to conscript people on that scale, my reading is that there would be open refusal. Certainly, anyone of military age just doesn’t buy into it at all. These look like acts of desperation, but I also don’t think these leaders make their own decisions. They seem to take their orders from above. Keir Starmer has not made a single independent decision. You can see when something happens — he waits to be briefed and then sticks to that line. Somebody must have an enormous hold over them. One wonders what they’ll do with all those elderly pensioners the police were picking up for holding a placard. This is another thing, though. If you think they’ll stop at arresting pro-Palestine protesters, just wait until it’s something you do care about, because it’s coming. Yeah. Another thing: Kazakh oil has now stopped flowing to Russia. Not only are they not getting oil from the Gulf states, but they’re also not getting any from Kazakhstan, either, which has been a significant portion of their supply. The reason for the stoppage isn’t entirely clear. Germany has been in continuous economic and industrial decline for four years, arguably since the Nord Stream pipeline was blown up. What they’ve had to pay for energy since then — largely from the United States — is far more than before. We’re getting an object lesson in how much we depend on the energy sources and prices we’ve taken for granted. Did you see the Chris Hedges interview with Richard Wolff? Wolff was essentially saying this is the price of globalisation. He was talking about car manufacturing. In the early seventies, it was all based in Detroit; the supplier companies were small- to medium-sized firms located within about 50 miles. Everything was done within America. Whereas today production is spread across different parts of the world, so you rely on these shipping networks. As soon as those networks are disrupted, the whole thing becomes very fragile. Yeah. The population of Detroit has fallen from 2 million to 700,000, which is pretty dramatic. There’s an enormous degree of social unrest there as well. There’s a famous photo of the old railway station in Detroit — a huge building you can see from miles around. It’s a monument to what once was. Image: Derek Gauci, CC BY-SA 4.0, via Wikimedia Commons That’s interesting. The other thing about Kazakhstan is that many of the Ukrainian drone attacks on the Russian heartland have been routed through Kazakhstan. There must be intense diplomatic activity, with Russia pointing out that this constitutes a de facto act of war. If further drones come over and the Kazakh government doesn’t take responsibility for shooting them down, Russia will respond, which means a certain amount of debris will land in Kazakh territory. Getting back to failure to read the room: in Germany you wouldn’t have to try very hard. The AfD, Alternative für Deutschland, is now running at 28% to 30% in opinion polls — higher than the governing party. In the Western press they’re portrayed as far right, sometimes even accused of Nazi affiliations. I have reservations about whether party politics can solve any of this. These movements tend to get infiltrated. But it’s still an interesting read of public perception. Yeah, so do I. If you look at their manifestos and publications, one clear position is that they strongly favour renormalising relations with Russia, which seems only elementary common sense. You have to judge them by what they do, not what they say. That’s the proof of the pudding. Yeah. They’re also calling for cooperation rather than confrontation. Meanwhile, Zelensky keeps touring Europe, saying Ukraine should be the bulwark between Russia and aggression towards the rest of Europe. That’s not going to happen. Now that Orbán has lost the premiership in Hungary, the obstacle to the EU providing the 90-billion-euro loan to Ukraine is out of the way. However, apparently Zelensky will only receive 20 billion of it, and Ukraine’s economy is already 20 billion in deficit. The remaining 70 billion is supposedly being directed to European arms manufacturers, which clearly indicates what’s driving this. Yeah, just what we need. Meanwhile, Bulgaria has just had an election with a landslide victory for a party that wants to re-normalise relations with Russia. Once again, I share your scepticism about party politics and about what actually happens when people get into power versus what they promised. All political parties of any size get hollowed out by corporate interests. Those corporate interests are largely invisible in the background. Yeah. The United States has been shipping increasing numbers of troops and equipment into the Middle East. They’re now talking about deploying hypersonic missiles — the first time we’ve seen those from the United States. We’ll see how well they perform in reality and what difference they actually make regarding Iran. They’ll probably still get shot down by a hundred-dollar drone or something. That seems to be the pattern. Who knows? Anyway, I had a quick check on the BBC website yesterday, and I listened to Radio 4 news. None of those items I’ve mentioned so far were on the main one o’clock bulletin. Do you still pay a licence fee, by the way? I do, because we watch quite a bit on iPlayer. I really feel I should cancel it. It’s only the family that keeps me paying, but we really ought to stop funding them. There’s something in that. I’ll talk it over with Gina. Now, whatever you think of Trump, Putin is still prepared to talk to him. They recently had a 90-minute conversation. I have no idea what was said or agreed, or how much agency Trump actually has. Apparently, they discussed both Iran and Ukraine. One way or another, this will affect how things unfold, though exactly how is unclear. Apparently, all this movement in oil prices involves heavily manipulated futures contracts on paper. Anyone trying to buy real oil for delivery now is paying between $150 and $230 a barrel. The prices going up and down to placate American public opinion have nothing to do with what anyone in the real world is doing. With shale oil and fracked gas, it’s true that current US consumption is covered by domestic production, with a little left over. But even without that factor, the price of diesel there has doubled. The US companies will sell it abroad first, ahead of selling domestically at a lower price. Exactly. That was another point Richard Wolff made in the Hedges interview. The price has gone up anyway, and it’s going to go up a lot more. I wonder how much pain the average American will bear before it erupts into real trouble, bearing in mind the population is heavily armed. The problem both the Russians and the Iranians face is that any restraint on their part is interpreted by the Americans and their allies as weakness, rather than as an opening for more constructive dialogue. One thing that’s contributed to European complacency is that for the past 300 years, Russia has been trying to integrate itself into Europe and has largely been rebuffed or left in a weaker negotiating position. What Europeans don’t seem to have grasped is that Russia has progressively taken the view: if you don’t want to engage, fine — there’s a whole world to deal with that’s more convenient and

  8. Apr 18

    Time to Stock Up?

    Rob’s comments below are in italics.Derek’s comments below are in normal font. It’s been about 10 days since we last spoke on the show. We thought we’d do a bit of a catch-up on what’s going on. We’ve had a ceasefire of dubious intent, some negotiations that were clearly theatre. What do we need to update people on? Well, let’s start with that. A lot of people breathed a sigh of relief when Trump said Iran had agreed to a ceasefire, that it was going to last a fortnight, and that they were going to reopen negotiations. He said that the Iranian 10-point plan seemed like a good starting point for discussion, though that sounded almost surreal to me. The Iranians’ 10-point plan is nothing new — it’s more or less what they’ve been saying from the outset: essentially a flat rejection of everything the Americans have suggested. It’s the same with Russia, isn’t it? If you look at the Russian demands, they’re just not compatible with the demands of the Empire. Yeah. Every single one of those 10 points is something it’s inconceivable to imagine America agreeing to without looking ridiculous, apart from any other considerations. Anyway, there were even public suggestions — in the Wall Street Journal, I believe — that the Iranian negotiating team should be assassinated. Mohammed Marandi said they fully expected to be sent to paradise on their journey back home. I hope they weren’t too disappointed to arrive in Iran instead! I’ve got the words of Hillary Clinton ringing in my ears, where she once said, “Can’t we just drone this guy?” Who was that in connection with? I’ve lost the specifics, but she was caught out saying something like that. Well, it’s fairly consistently what they’ve been doing anyway. I’m pretty sure everybody outside the US and its vassal states can see quite clearly that - although Iran was almost certainly not expecting anything useful to come out of the discussions - they did go into them seriously. They had quite a large negotiating team with specialists in all kinds of areas. They turned up fully briefed and fully authorised by the Supreme Leader to reach agreements. The first thing that happened, of course, was that Israel continued its absolutely brutal attacks on Lebanon, destroying whole blocks of apartment buildings in a dense city-centre area of Beirut. The BBC had the gall to describe these as Israeli strikes on Hezbollah command centres. That’s highly unlikely. Israel then said Hezbollah wasn’t part of the agreement. Trump said it wasn’t. The Pakistani mediators said it was. That immediately drew a question mark over whether the Iranian negotiators were going to leave the hotel in Islamabad and go to the actual negotiations. But, they got there. It turned out there were no face-to-face discussions at all. They sat in separate rooms while mediators carried messages back and forth. It went on for 21 hours. The US team consisted of JD Vance, who clearly had not been given the authority to decide anything or any clear briefing, because he had to keep ringing Donald Trump — and, according to some accounts, Benjamin Netanyahu too. He was accompanied by Witkoff and Kushner, both Zionists with no training as diplomats and not part of the US government. It’s not exactly the diplomatic dream team, is it? No. They’d already destroyed whatever credibility they might have had — not only in connection with Iran, but also in connection with Ukraine. So it was really doomed from the start. It was no great surprise when Vance came out and said they’d made progress on several points, but Iran had not agreed to their proposals, so it had gone nowhere. Which was entirely predictable. Then, as soon as they got back, Trump announced a blockade. He was not allowing any ships to pass through the Straits that had docked at Iranian ports. Quite apart from the fact that there’s no basis in international law to unilaterally make such a distinction, the Straits of Hormuz are of course territorial waters — either Iran’s or Oman’s. Territorial waters extend 12 miles from the coast. 12 plus 12 is 24, and they’re 21 miles wide. Every part of the Straits falls within the territorial waters of one or the other. Any stretch large enough for a ship to navigate is quite likely to be within 12 miles of the Iranian coast. So they’re entirely within their rights. There are many places in the world where a narrow waterway exists, and the adjacent sovereign state exacts some form of payment for passage through it under various pretexts. It’s not a particularly unusual situation. The Americans can’t bring warships close to the actual Straits because they’d almost certainly be attacked by Iran. The closest they could get is somewhere out in the mouth of the Gulf of Oman, which is far too large a stretch of water to supervise, even with the largest navy in the world. It’s completely impractical. We’re just about to start feeling the impact throughout the world of the shipping constraints that have been in place for the last six weeks. Yeah. It feels like the summer of 1940, doesn’t it? Exactly. I was just refreshing my memory of the Phoney War. The Second World War started when Germany invaded Poland on 1st September. Britain and France declared war on Germany on 3rd September 1939, in view of their treaty with Poland. It wasn’t until the following May that there was any actual fighting between the Allies and Germany. We were technically at war, but there wasn’t a war happening. The situation here — I’m amazed there haven’t yet been far more severe price rises than we’ve seen. The last time I looked, diesel was back to the two pounds per litre range. Petrol is considerably more expensive than it was six weeks ago. There’s been virtually nothing in the way of shortages, and people don’t seem to be taking it seriously. The reason there haven’t been any effects so far is that all current supplies were already en route when hostilities broke out. There’s been almost no passage through the Straits since then, and most of what has passed has been bound for China. China has issued some pretty robust warnings — couched in the usual general terms — against interference with its shipping on the high seas. A considerable amount of the ships allowed by Iran to transit have been bound for China, so it’s quite clear what they’re referring to. Incidentally, France actually joined China and Russia in vetoing the Bahrain proposal at the UN Security Council. The proposal was to censure Iran without providing any context whatsoever. I take at face value their position that they didn’t want this war in the first place. They didn’t start it. They’ve responded in a measured fashion, and the escalations have come entirely from the United States and from Israel. It’s how it gets framed in the media, isn’t it? All of these places “just happen to be under attack”. Yeah. So we’re about to start feeling the effects of that. The most immediate one is petrol shortages. Most of the world’s nitrogen fertiliser is either shipped from that region or dependent on natural gas shipped from there. There are going to be enormous price hikes in fertiliser, which are already occurring. We’re in the planting season in the Northern Hemisphere. This will feed through to food shortages and price rises in six to 12 months. That’s already baked in, regardless of what happens in the next few weeks. Regardless of the effectiveness of any naval action the United States takes, the major restriction on traffic in that area will be driven by insurance implications. London, European, and American-based insurers will either refuse to insure ships making those passages or vastly inflate the premiums for doing so. That alone will throttle the traffic, regardless of any naval action. Countries outside Western control won’t face the same restrictions — China, I’m sure, has its own insurance arrangements. The difficulty is that Trump’s ego won’t let him come out of this looking like a loser. He’s now put himself in a position where it’s very difficult to see how he can arrange anything else. He seems past the point of being able to provide any kind of window dressing. After all, the Vietnam War started with a contingent of 3,000 to 4,000 Marines landing. They were stuck with it for 10 years, suffered a catastrophic defeat, and lost over 50,000 American servicemen. This feels like Vietnam 2.0. It does indeed. That’s enough to be going on with, I think. The main message is: there’s a lot of chatter across various groups about prepping and being mindful of what’s likely coming, including potential price hikes and food and fuel shortages. So now’s a good time. Yeah. Stock up. Make sure you’ve got a few tins of beans as well. All right, thanks Derek. Thanks for reading Sovereign Finance! Subscribe for free to receive new posts. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sovereignfinance.substack.com

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  • Creator
    Rob Drummond
  • Years Active
    2024 - 2026
  • Episodes
    88
  • Rating
    Clean
  • Copyright
    © Rob Drummond
  • Show Website
    Sovereign Finance