← Breaking Points with Krystal and Saagar
Breaking Points with Krystal and Saagar
1/13/26: Yanis Varoufakis On Trump, Venezuela, The Fed & MORE!
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- [00:00]
Podcast Host (iHeart)
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Ryan Seacrest
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- [02:16]
Krystal Ball
Sager and Crystal here.
- [02:17]
Saagar Enjeti
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Krystal Ball
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Krystal Ball
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- [02:49]
Saagar Enjeti
All right, guys. We are very lucky to be joined this morning by Giannis Varoufakis. He is an economist, he is a best selling author, he is a podcast host of the Econom class and he is the former finance minister of Greece. Great to see you, sir.
- [03:00]
Krystal Ball
Good to see you.
- [03:01]
Yanis Varoufakis
Thank you for having me.
- [03:02]
Saagar Enjeti
Yeah, of course. So let's start with this first element. Put this up on the screen. This is the president of the United States claiming to be the president, the acting president of Venezuela. I'm curious just off the top here, how significant you think the kidnapping of Maduro and now Trump's claims that we run Venezuela and we're going to take their oil, how significant do you think this mode of US Operation and foreign policy is to the world and to our own politics?
- [03:32]
Yanis Varoufakis
Well, this is significant. There is no doubt. The question is what kind of significance are we detecting in this very confusing stage that we find ourselves in? Just seeing the picture that you put on your screen reminded me that this is not the first time he does it. Remember, only a few months ago he declared himself to be the owner, the person who has actually annexed personally. That has never happened in history. Before Gaza, he declared himself to be the head of a company that is taking over Gaza. And then of course, you know, before we had a chance to scratch our heads and see what that means for the people of Gaza whose lives are devastated and, you know, whose genocide is continuing. He abducts Maduro and he declares himself to be the acting ruler or owner of Venezuela. And then on the same day he talks about Greenland. I wouldn't be surprised if this confusion is strategic. And the whole point is to continue to build up a reputation for accumulating territories, accumulating companies, accumulating stablecoins, accumulating different kinds of resources for himself and his clique in order to make it far more, you know, alluring for powerful people around the world in the United States as well, to do deals with him, hoping to get some crumbs off his overladen table.
- [05:08]
Krystal Ball
One of the things that we've seen backing up your point, we can put the next one up here on the screen. For example, ExxonMobil, one of the largest oil Companies here in the United States apparently told the President at a recent meeting on Friday that actually they weren't all that interested in. In investing in Venezuela. President Trump saying they're playing too cute, saying he may block them from some eventual deal. I do think that this bolsters your point, but I'm wondering if you see this as any bigger strategic play that may not just have Trump and his own personal interest or those around him, but a bigger kind of driving motivation for the United States.
- [05:42]
Yanis Varoufakis
Well, there's no such thing as the United States. We should never talk in terms of national interest. There is no such thing. There are different cliques, there are different ruling classes, and they have different interests. The interest of some of the majority of the people in the United States never had anything to do with the agenda and the strategy of Democratic presidents, of Republican presidents. I'm just stating this so that you know where I'm coming from, but there is a strategic plan. And, you know, one of the great mistakes of the Democrats in the United States and of the centrists in Europe is they have dismissed Trump as a buffoon who has absolutely no strategic vision. You know, he's haphazard. He moves from one disaster to another. He's a fool who somehow has managed to defeat them so handsomely. I don't take that view. I consider him to be a political adversary, a political, if you want, even aesthetically speaking, enemy of mine. But I take very seriously his strategic plan. And, you know what? He's put it on paper, not so much himself, but, you know, before his inauguration, second inauguration, I studied very, very carefully the texts that have come out of his theme, like, you know, things that Scott Besant had said and written. You know, the. The Mar A Lago, famous Mar A Lago paper. It's clear what the strategy is. Trump looks at the last 60 years and what he sees is a period that. Some people refer to it as the period of globalization. Others refer to it as the neoliberal period or the globalist period. It's a period that started in 1971 with Richard Nixon, when Richard Nixon and his team, not himself personally, blew up the Bretton woods system. So why did that happen? It happened because the United States ceased to be a surplus country. It slipped into a deficit position. And, you know, Henry Kissinger was part of Nixon's team then, even before he became Foreign minister, before his move to the State Department, when he was still at the National Security Council. He put a very simple question to his team and said, well, now we are a Deficit country. How can we maintain our hegemony? And the answer is, blow up the Bretton woods system. Use the dollar as a weapon. Devalue the dollar while enhancing its reserve currency status, its hegemonic status. So Trump looks at that and says, I want to do this again. Because the Nixon shock is petering out after 2008. American hegemony is being seriously contested. I want to give it another 12, and I'm going to do it in a way that will make me and my mates lots of money as well. So, you know, the devaluation of the dollars is not a failure. It is a aim. The issue of stable coins and the legitimation of cryptocurrencies. The Genius act that was passed recently by Congress or in Congress through Congress, is an attempt to privatize fiat money, the dollar. The attack on the Federal Reserve is part of this plan. There is a clash between old money and new money. There is Wall street on the one hand, that is very coy about this whole thing, but then there are the tech brawligarchs. There's tethers that are issuing stablecoins at the expense of Wall street and the Federal Reserve. So there is a strategy. There is a huge conflict within different oligarchic interests, and Trump is playing a very smart game in keeping all these people hating each other and, you know, competing for his graces.
- [09:44]
Saagar Enjeti
So I listen to a lot of your appearances and your speeches that you give, and I think it's really important to assume that your adversary is not just an idiot, that there is some sort of a strategy there. But sometimes I do have trouble holding that in my head. With Trump, for example, when I think of his tariff policy, which, you know, from the jump, the percentages that were chosen were seemingly random or AI generated. You know, he'll go into these negotiations and come out of them basically rolling the tariffs back or going back to where we started. We now have an announcement yesterday that now anyone who does any sort of trade with Iran is gonna have a 25% tariff. You've also had situations where his own personal emotions and grievances seem. Seem to be driving the tariff policy. Brazil being a key example here. Where initially he was mad at Lula over their prosecution of Bolsonaro. Then, according to journalist Glenn Greenwald, Lula came in and charmed him and said, that Bolsonaro guy, you wouldn't like him. He's weak. He's always in the hospital. He's kind of a loser. Trump decides he likes Lula, rolls back the tariffs so when I look at those sorts of things, I'm like, how can this be a grand strategy when it's so all over the place and so driven by his own emotions and personal grievances day to day.
- [10:56]
Yanis Varoufakis
Look, I can't resist the temptation to agree with much of what you said. But at the same time, let me continue along the lines of my earlier position. I mentioned Richard Nixon before. Now we all know what a flawed character he was, what a psychopath. He was really okay. I mean, he was moody, he was a very poor excuse for human nature. And yet it was under his administration that the world changed. They blew up the post war miracle system, the Bretton woods system, and they replaced it with chaos. It was designer chaos. John Connally, the Treasury secretary of Richard Nixon, traveled to Europe and effectively did a Trump on them. He said, you know guys, you're on your own. The dollar is our currency, but from today is going to be your huge problem. I don't give a damn. You can go and jump. This is all about maintaining and enhancing American hegemony while at the same time increasing our deficits. And I'm going to divide the dollar. Now you mentioned the use of tariffs by Donald Trump. Well, he's not the first one to have used tariffs as a ramming rod, as a, as a weapon. Ronald Reagan in 1985, remember the so called Plaza Accords, the Plaza debates. What did he do? He got the Japanese in one room and said, okay, you have grown your trade surplus with the United States immeasurably and I'm going to smack you over the head with a blunt instrument. And the blunt instrument is 150% tariffs. If you don't agree to revalue, to increase the value of the yen effectively to devalue the American dollar vis a vis the Japanese currency. And they rolled over and the result is that Japan is finished, kaput, ever since the Plaza Accords. So it, you know all this, I mean, in a sense you're quite right. He's bringing a new intensity of chaotic behavior and a lot of it is personal. But you know, you said that it were, they were AI or randomly chosen tariff rates. Look, by the way, they were not. There was a very simple deterministic formula. He simply computed his tariffs, the Liberation Day tariffs, in proportion to the trade deficit the United States had with particular countries. It was really very, there was nothing reciprocal about them. It was, you know, them. The greater your trade surplus towards the United States, the greater the tariff. I'm going to slap on you. But he Never meant to keep these. These were simply, you know, these blunt instruments that he used to batter people around, to hit them about the head and then to say, okay, now come and negotiate with me, each one of you separately. Now he has gone into a territory of personal self celebration that we've never seen from any American president in the past. That's, that's quite correct. I mean, I was astonished the way he has behaved vis a vis Prime Minister Modi of India. One would have thought that the United States would be very eager to see India move away from China, move away from the brics, you know, going to bed with the Trump administration. He hasn't done that. And instead he has chosen to make the issue of whether he was the one that stopped the recent skirmish, war between India and Pakistan the determinant of whether he's going to increase the tariffs or not. So he does that. But you know, that, I mean, the madman strategy, we have to remember, was devised by Rand Corporation in the 1950s as a rational game, theoretical way of behaving. Because if you convince people that you are mad, then they will think twice before they confront you.
- [15:15]
Saagar Enjeti
Yeah, I am fairly convinced. So it has been effective enough.
- [15:18]
Yanis Varoufakis
Yeah, there you go.
- [15:19]
Krystal Ball
No, you're absolutely right. Actually, you mentioned the Federal Reserve. Given your expertise, I'm curious for what your view is here about Trump's current attack on the Federal Reserve. You're saying it's in a privatized manner. There's also some complaint about interest rates domestically here in the United States. I do also just curious for your take, for kind of the global outcry of support that Powell now has. I mean, you know, multiple central bank leaders from around the world this morning signing a letter saying that they are supportive of Jerome Powell. How do you see that? You know, you were talking about oligarchic interests. The Federal Reserve, obviously a key note.
- [15:54]
Yanis Varoufakis
In that, by the way, you know, these central bankers will never learn. By signing that letter in support of Jerome Powell, they're handing a huge, huge gift over to Donald Trump. Because Donald Trump's base hates all these people. So when they see that they are coalescing together in support of the Fed's chairman, you know, Trump is, is applauding all this. You know, it's amazing. You know, those centrists, the liberal establishment, how inane they are. I remember, do you remember during the Brexit referendum in Britain when, you know, Mario Draghi from the Central bank of Europe and, you know, various finance ministers and bankers and central bankers generally were warning the British People, don't you dare vote for Brexit, because Armageddon is going to befall. And I knew at that moment that Brexit would win because these kinds of letters of support for the liberal establishment don't help the liberal establishment at all. Now look, what's happening here is this. There are different discussions you could have. One is, is the interest rate policy of the Fed appropriate? I hate to say that, I really love to say that, but I think that Trump is right. The rate of interest is not going, if it's going to stay at such high levels, it's not going to do anything in order to reduce the cost of living, to reduce inflation. Inflation is not controlled by interest rates anymore. We have to understand that. Now we have what I call in a recent book of mine entitled Techno Feudalism. Sorry for plugging it, but it's important in order to make the point that if you go to groceries around the United States, not just Walmart or Amazon, but bricks and mortar groceries, many of them, thousands of them, are being controlled in terms of their pricing by Instacart, which is a technofeudal company that effectively uses very sophisticated algorithmic systems for ensuring that you cannot compare prices between different stores. You cannot even compare prices, prices the prices you pay with the prices that others pay. It's intense first degree price discrimination, which is algorithmic. And we know that Instacart on its own, along with Amazon.com have contributed to an increase in the value of groceries by 30%. Now there's nothing that the Federal Reserve can do that even if they put up interest rates to 10%, that kind of technological inflation, inflation created by what I call the confederate, is not going to go away. So I fear, I hate saying that, that on the question of interest rates, I think that Trump is right. But there's a bigger question, the question about the so called hypothesis or aspiration for central bank independence. The idea that the elected government shouldn't run monetary policy. Monetary policy should be handed over to experts who on behalf of the whole of society make dispassionate, apolitical decisions. Well, you know, that's rubbish. There's no such thing as an apolitical decision. Who sets interest rates is a political decision. And you know, you have, have a class conflict. You have debtors and you have lenders. When you increase the interest rate, you fair favor one at the expense of the other. So it's a political decision. Now the gist however of it is remember the Federal Reserve bank is not, it's not even A state bank. It belongs to Wall street formally, and not just formally, but in terms of when they speak of the independence of the central bank. Independence from whom? Independence from Congress. Independence supposedly from the President, but not independence from JP Morgan, Morgan or the bank of America. So dependence on the bankers whom they're bailing out. When the bankers bets, go Ori. So personally, I don't have much time for independence. The independence of the central bank. Once upon a time, there wasn't even this discussion. I'm old enough to remember a time when no central bank was independent. The bank of England was bound by its relationship with the British government. So on. What we now have, however, is not that Donald Trump agreed with people like me and wants to democratize the Federal Reserve and take it away from the bankers. No, he is representing the big tech. He's representing the stablecoin industry. He's representing Facebook, Zuckerberg and several upstarts that want to privatize the American dollar and they want to make use of the genius act in order to do this. And Wall street is represented through the Fed. So there's a clash between old banking money and new techno feudal money. And Trump is taking the side of the ladder.
- [21:13]
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- [23:15]
Ryan Seacrest
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- [23:47]
Saagar Enjeti
I want to talk to you some about the ideas in your book. But first, if you could tell our audience a little bit about you were one of the most deep faked men on the Internet. Which is, I mean it sounds sort of impressive, but I don't think it's really a positive thing. There are so many videos that really, I mean really look like you really sound like you really appear to be things that, you know, content that you would say or along the lines of things that you would say. Can you talk about how you discovered this and how difficult it is to parse through whether this is real Yanis Varoufakis or AI Yanis Varoufakis. And also what how the tech companies involved responded when you reached out to them and flagged for them that this was happening in a widespread manner.
- [24:29]
Yanis Varoufakis
It's such a dubious honor to be one probably the most deep faked person on the Internet. You know, I really have no idea why this has happened. Absolutely none. Usually have theories about everything. But on this I'm stumped. I have to confess that the way I discovered this I received a very flattering message text message on WhatsApp from an American scholar whose name I'm going to not mention of high regard and somebody I really admire and he was congratulating me on a video I had done on some economic matter. I can't remember exactly what it was. And he had included the link to the YouTube video. And I clicked on it to admire myself, to say, okay, well, this guy, whom I highly appreciate, like that video, man, let's let me remind myself which this video was. And I started looking at it, and it took almost two minutes before I realized this wasn't me. And what's even worse is why I realized it wasn't me, because I was wearing a blue shirt with this background here, but that blue shirt had never left my island home in Aegina. And I thought, how come I'm wearing that blue shirt against this background? That's when I started thinking, hang on a second. I don't remember saying these things, but the even eerier aspect of it was that they were things I could have said. But then, you know, interjected, within that flow of arguments that I could have made, which I hadn't made, there were statements that I would never have made. And that's where the danger started part comes, especially for people who are politically exposed as I am. I have lots of enemies that would love to, you know, pretend, pretend, present me as somebody that said something, let's say, anti Semitic, in order to take the wind out of my criticism of Israel. Similarly with Russia, you know, I'm. I have made enemies everywhere because I am. I believe that Putin is a war criminal. At the same time, I think NATO are war criminals too, in the way they've been expanding and giving. Giving Putin the opportunity to do that, which he's doing. But, you know, if you have. If you're standing against both NATO and Putin, it's very easy for somebody to use deepfake in order to insert the sentence in what you're saying. That completely destroys your credibility. So I wrote to go to Google because it was. The videos I saw were mostly on YouTube. They were on Instagram and on TikTok. Excuse me. So I wrote to Google and I didn't get an answer for days. And then they asked me to fill forms in, and I filled them in, and then they asked me to fill some more forms in, and I did that as well. And then it took, you know, seven, eight days before they brought down that particular channel. And then it reappeared 20 seconds later, again in YouTube under a different name, different channel. And it's very clear that, you know, this is not incompetence on the part of big tech. It's their business model. I mean, you know, my Fake versions have a lot more views than I have. So they make a lot of money out of that. And Google are simply not interested. And you know, I talk to other people who are similarly deep fake, like John Misheimer from Chicago University and my great friend Jeff Sachs from Columbia University, and we are in the same boat. You know, do I spend the rest of my life litigating against big tech? I mean, I don't have the resources, I certainly don't have the time. You know, I'm getting on in life. I'm not going to waste five years of my life doing that. Would I win? Would I remain solvent before the court case finished? So it's one of the situations where you realize that supposedly here in the liberal west, we have rights. We have no rights. We do not even own our own audiovisual image.
- [28:30]
Krystal Ball
That is terrifying. Absolutely terrifying. I mean, the context of your book, which you mentioned earlier, techno, feudalism, and your own experience kind of bringing the thread of these together, how do you view the future that we're heading into, where we see the rise of AI? We recently had Jensen Huang, the CEO of Nvidia, on a podcast talking about this. We wanted to get your reaction. Guys, let's go ahead and play the clip. This is a technology that has the potential to automate many aspects of human labor very soon. And I'm curious the degree to which you feel a responsibility for making that transition go well.
- [29:11]
Jensen Huang
What AI will do is to make tasks that we do in our job more efficient. Our job is not to wrangle a spreadsheet. Our job is not to type into a keyboard. Our job is generally more meaningful than that. I'm fairly confident that AI will drive productivity, revenue growth, and therefore more hiring. There's a belief that the world's GDP is somehow limited at $100 trillion. Well, what's likely to happen is AI is going to cause that $100 trillion to become $200 trillion, $300 trillion, $500 trillion. There's no fundamental limit to the size of a GDP. And so and the, the number of people in the world that is participating in this GDP and the $100 trillion GDP. GDP is actually quite small. And so what if we brought the rest of the world, the rest of society, the rest of the world's population, empower them with AI, give them the opportunity to participate in the gdp and causes GDP to quintuple.
- [30:14]
Krystal Ball
So you're seeing the pitch that is made there. Your reaction, sir?
- [30:17]
Yanis Varoufakis
Well, I'm aghast at how such a very Smart, clearly competent businessman has such a low level of understanding of what capitalism, or what I call techno feudalism is like. Now, of course, look, AI technology is brilliant. I mean, think about it. You know, you are, you, you ask ChatGPT to take some rubbish you've written and put it in Shakespearean language and does it fantastically, you know, having translations. And I'm, I love technology. The question is not is it useful? Of course it's useful. The question is who owns it and who is excluded from using it and those who own it, what do they do with it? Because you see, there is a profound difference between a tool that helps me, as he said, do things more efficiently, take the chore out of my work and leave me with my creative, the creative aspects of my work which give me purpose in life, that's great. But when you have machines that are owned by 0.001% of the population that have the capacity to engage with you personally on a dialogue and pretend to be your servants, like Alexa, Amazon's Alexa, or Apple Siri or the Google assistant or whatever, one of these assistants, or the Instacart assistant for that matter, and they give you the feeling that you can say, switch off the lights, buy me some milk, order me an electric bicycle for my daughter or my son, and they do it. And it's great, great. Who doesn't like that? But what is really happening is you're interfacing with what I call the cloud capital of Jeff Bezos, of course, this 0.0001%. And essentially that machine trains you to train it, to train you better, so that you train it even better, to know you so well that it wins your trust. And once it was, it has won your trust, then it can direct your choices. Then, you know, you say, my coffee maker is broken, what should I buy? And says this, and you click on it. And then the coffee maker comes to you outside any market. You don't go to the shop to get it, it comes and Jeff Bezos, who Alexa has helped you, let's say, in the United commas get a coffee maker gets 40%. 40%. That 40% is a rent that has taken away from the laborers that have actually worked to produce the coffee maker, but even from the surplus value of the capitalist that owns the coffee making company. So you know, when we have AI that is empowering further and enhancing the control that this 0.001% have over our minds, over our behavior. You see, these are machines that don't produce anything. They are not productive Machines, they're not like industrial robots building cars. These are machines that determine what we think. And, you know, in other words, these are machines that the owners can use in order to extract rents, which are a loss of gdp. To go back to what you were saying, it is a break on growth. It is a break on societal enhancement. But, you know, these tech guys either don't know any of this because all they want is more of whatever it is that they're after, which is money, shares, whatever, and they have no idea how their technology is being utilized. In a sense, you know, this is not new because you go back to three centuries ago. You know, James Watt, the inventor of the steam engine, was neither responsible nor understood the effect that it would have on transforming society from feudalism to capitalism.
- [34:19]
Saagar Enjeti
And this is core to your argument that we have actually exited the capitalist system and moved into a new system, which you call techno feudalism, which is why people need to read the book. To fully understand the arguments that you're making here, I wanted to put F4 up on the screen, which is President Trump, the acting president of Venezuela. President Trump here making a similar case in his way as we heard that Nvidia CEO making. He. You have this New York Times reporter saying people are concerned AI is going to take their jobs and they will not. They will be out of work. Trump says, I think just the opposite. I think AI is going to be tremendous job producer. I think we have so many jobs. My biggest problem isn't taking the jobs. It's that we don't have enough people to fill the jobs. And that's where robots come in. Now, you do hear other tech CEOs who will say outright that their goal in AI development is to make all human labor irrelevant. So some of them are saying that outright. And I get the sense that their goal is to win some sort of final battle against workers who they find to be pesky and annoying and difficult and diminishing their profit margins and power in all sorts of. Of ways.
- [35:27]
Yanis Varoufakis
Well, we. What these people are lacking is a theory of change, of transition. Because, you know, ideally. Ideally, I would agree. Look, I'm a tricky, right? I mean, I spent. I have misspent my youth and my older age watching a lot of Star Trek. I love Star Trek because it is the. The best example of libertarian communism. Think about it. Nobody works because you have replicators doing all the, all the work. So, you know, you order food, clothes, even spaceships of replicators. Your machines convert energy and mass into whatever it is that you order. So there's no point in having an economy. Everything is produced for you. And you know, what they do is they spend time in a spaceship exploring the universe, having philosophical conversations. That's why I'm a Trekkie. I love that. The question is, okay, now let's say that we, we, we. We buy the hypothesis that at some point we will have the technology to replace all labor, all work, all, and you know, all chores. Let's say it because, you know, nobody wants to replace the labor of love that is writing poetry or composing music. But, you know, all the chores that people would rather not do, but somebody needs to do them. Let's say that robots do all that. Okay, yes. Then we can have libertarian communists, Star Trek. The question is, how do we get there? Because, you know, you sold Elon Musk's I forgot what he called he calls his Android. We've seen the androids are coming up that are coming from very different companies, from China and so on. You know, these things are going to cost money to buy. Not everybody will be able to buy one of these machines. Some small businesses will not have them. Bigger businesses will have them. But even large businesses may find that it is cheaper to have precariously employed labor, human labor, than machines. So then you're going to have bifurcation, yet another division of the economy between those who use the machine to produce a lot of stuff with huge profit rates and all the rest who are either making huge profits by continuing to exploit precariously employed human labor and others who are struggling and just can't make ends meet if in the meantime the 0.001% continue to have the ownership of the machines that completely and totally poison our minds and control our minds. That is not Star Trek. It is not libertarian liberal communism. It is a version of the Matrix where the vast majority of the population have succumbed to the powers of the machines. We feed them with our own power. Remember the movie? And that's a dystopia. And I'm very much afraid that Mr. Trump, and he is married men and women are working towards that particular dystopia.
- [38:14]
Saagar Enjeti
Yanis Varoufakis, thank you so much for your time and your insights this morning.
- [38:17]
Krystal Ball
Thank you, sir.
- [38:17]
Saagar Enjeti
Appreciate it.
- [38:18]
Yanis Varoufakis
Well, thank you.
- [38:19]
Krystal Ball
Hi, everyone. We talk too much. So gambling. We're going to kick that to Thursday just to make sure we can try and get the show out on time. And we will see you all then. We're counterpoints for a show. Counterpoints for all of you tomorrow.
- [38:45]
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- [39:15]
Yanis Varoufakis
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Yanis Varoufakis
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