#209 Erik Prince & Erik Bethel - The China / Taiwan Conflict

Summary

Shawn Ryan Show Episode #209: Erik Prince & Erik Bethel - The China / Taiwan Conflict

Release Date: June 16, 2025
Hosts: Shawn Ryan
Guests: Erik Prince (Former CEO of Blackwater, CIA Contractor), Eric Bethel (Former Ambassador to the World Bank, Navy SEAL)

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Introduction

In Episode #209 of the Shawn Ryan Show, host Shawn Ryan engages in a comprehensive and insightful discussion with renowned guests Erik Prince and Eric Bethel. The conversation delves deep into the escalating tensions between China and Taiwan, exploring historical contexts, current geopolitical dynamics, and the profound global implications of a potential conflict. The episode aims to educate both the audience and the hosts themselves on the strategic significance of Taiwan, particularly in the realm of semiconductor manufacturing, and the broader economic and security ramifications should China take aggressive action against Taiwan.

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1. Historical Context of Taiwan-China Relations

Eric Bethel provides a foundational understanding of Taiwan's historical relationship with China, tracing back to the early colonial period.

• Key Points:

  • Early Colonization: Taiwan was first discovered by the Portuguese and later became a site of Dutch and Spanish settlements in the 1620s. The indigenous population comprised Austronesian tribes with no significant ethnic Han Chinese presence at the time.
  • Chinese Migration: The Dutch facilitated the influx of Han Chinese from mainland China, particularly from Fujian Province, altering the island's demographic landscape.
  • Japanese Rule: Taiwan remained relatively neglected by both the Ming and Qing Dynasties until it was ceded to Japan in 1895 following the First Sino-Japanese War. It remained under Japanese control until the end of World War II.
  • Post-WWII Era: After the Chinese Civil War, Chiang Kai-shek and the Nationalist government fled to Taiwan, establishing the Republic of China (ROC) separate from the People's Republic of China (PRC). Since 1949, Taiwan has functioned independently of the Chinese Communist Party (CCP).

• Notable Quote:

  • "[04:40] Eric Prince: Never been ruled by Beijing?"
    "[04:52] Eric Bethel: Nope."

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2. Current Tensions and China's Intentions

The discussion shifts to China's current stance on Taiwan, emphasizing the CCP's unwavering intent to assert control over the island.

• Key Points:

  • Xi Jinping's Ambitions: Xi Jinping has solidified his power, effectively positioning himself as China's emperor for life. Under his leadership, China has intensified its efforts to unify Taiwan with the mainland.
  • Social Credit and Surveillance: China has developed a techno-surveillance state, employing facial recognition, social credit scores, and extensive monitoring to suppress dissent and control its population.
  • Military Preparations: China has expanded its military brigades from one to 42, enhancing its capabilities for potential invasion or blockade of Taiwan.

• Notable Quotes:

  • "[10:46] Eric Prince: And when he's talking about Jack Ma was a high school English teacher..."
    "[14:16] Eric Prince: ... It's pretty bad."
  • "[30:48] Eric Bethel: ... the historical trend toward China's ultimate inevitable reunification is unstoppable."

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3. Global Implications of a Taiwan Conflict

The episode explores the strategic importance of Taiwan beyond its geopolitical position, focusing on its critical role in the global semiconductor industry.

• Key Points:

  • Semiconductor Manufacturing: Taiwan Semiconductor Manufacturing Company (TSMC) produces approximately 60% of the world's chips and 90% of high-end semiconductors. Control over Taiwan would grant China dominance in the global tech supply chain.
  • Economic Fallout: A Chinese takeover of Taiwan could trigger severe economic consequences, including massive inflation, high interest rates, and disruptions in various industries reliant on semiconductor technology.
  • US Dollar's Dominance: The destabilization of the semiconductor market could undermine the US dollar's status as the world's reserve currency, leading to economic instability similar to historical events like the Arab oil embargo of the 1970s.

• Notable Quotes:

  • "[35:21] Eric Prince: What does it mean for the chips in your F250 pickup truck or your iPhone, phones or anything?"
    "[35:45] Eric Bethel: Everything as important as the Arab oil embargo was to the world market in the 70s."

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4. China's Export of Authoritarianism

The conversation highlights how China leverages its economic might to influence and control other nations, promoting a model of state-driven capitalism and surveillance.

• Key Points:

  • One Belt One Road Initiative: China's extensive infrastructure project provides loans and investments to countries in Africa, the Pacific, and beyond, often with predatory lending terms that result in debt traps and increased Chinese influence.
  • Technological Dominance: Chinese companies like ZPMC dominate global markets in areas such as port cranes and telecommunications, often embedding backdoors and surveillance capabilities.
  • Global Surveillance: China's export of its surveillance technology enables authoritarian practices in other nations, facilitating strict control and suppression of dissent.

• Notable Quotes:

  • "[24:58] Eric Prince: And they do black bag diplomacy really well when you're a head of state..."
    "[25:46] Sean: Is it really?"
    "[25:50] Eric Prince: Yeah."

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5. Defense and Military Strategies

Erik Prince and Eric Bethel discuss the shortcomings of the US defense industrial base and propose innovative strategies to counter China's military advancements.

• Key Points:

  • Defense Industrial Consolidation: The US has reduced its number of major defense contractors from over 100 to around five, leading to inefficiencies and high costs in defense procurement.
  • Call for Innovation: The guests advocate for decentralizing procurement processes, allowing lower-level commanders to procure innovative technologies rapidly without the bureaucratic delays of a centralized system.
  • Autonomous and Swarm Technologies: Emphasis on investing in drones, autonomous vessels, and other modern warfare technologies to create a flexible and resilient military force capable of countering China's strategies.

• Notable Quotes:

  • "[104:08] Eric Prince: ... Innovation speed in Ukraine is a guy gets an idea because they're getting their ass kicked in the battlefield."
    "[106:29] Eric Prince: ... If we get into a conventional conflict with China right now, we will suffer calamitous levels of casualties."

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6. Economic Vulnerabilities and US Debt Crisis

The discussion addresses the severe economic challenges facing the United States, including soaring national debt and the potential collapse of the dollar's reserve status.

• Key Points:

  • National Debt: The US faces $37 trillion in debt with unsustainable budget deficits, leading to higher interest rates and increased financial strain.
  • Reserve Currency Risk: Loss of the dollar's reserve currency status would necessitate higher interest rates to attract buyers for US Treasuries, exacerbating the debt crisis.
  • Global Economic Influence: A shift in Taiwan's status could prompt countries to adopt the Chinese renminbi, undermining the dollar's dominance and causing widespread economic instability.

• Notable Quotes:

  • "[20:14] Eric Prince: ... it's the exact opposite in China. So yes, it is a fundamental difference in governance between a state that has total, unbelievable, unequivocal control over not citizens, but the serfs..."
    "[73:52] Sean: ... That is a loss of face to the Chinese Communist Party. It must go."

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7. Potential Responses and Recommendations

The guests offer strategic recommendations on how the US and its allies should prepare for and respond to China's potential aggression towards Taiwan.

• Key Points:

  • Empowering Local Militias: Arming and training a small but dedicated portion of the Taiwanese population to resist invasion through guerrilla tactics.
  • Strengthening Cyber Defenses: Enhancing the resilience of critical infrastructure like the power grid, telecommunications, and financial systems against cyber-attacks.
  • Reindustrializing the US: Encouraging domestic manufacturing of critical components, reducing dependence on China for essential goods such as rare earth elements and pharmaceuticals.
  • Innovative Military Procurement: Reforming the defense procurement process to foster innovation and rapid deployment of new technologies.

• Notable Quotes:

  • "[75:33] Eric Prince: ... I think this is a competition of governance philosophies."
    "[76:00] Sean: They import how much of their fuel?"
    "[82:13] Eric Prince: ... Protect more than just your life. Protect your future."

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8. Broader Global Impact

The episode expands on the global repercussions of a Chinese takeover of Taiwan, touching on regions like Europe, Africa, and Southeast Asia.

• Key Points:

  • Southeast Asia: Increased Chinese dominance in the region, leading to tighter control and reduced individual freedoms similar to China's model.
  • Africa: Economic colonization through predatory lending and infrastructure projects, coupled with poor treatment of local workers, resulting in widespread resentment and dependency.
  • Europe: Demographic challenges, high energy prices, and economic struggles exacerbated by dependence on Russian and Chinese resources, potentially leading to political instability.
  • Global Supply Chains: Disruption of global industries reliant on Taiwanese semiconductors, affecting everything from consumer electronics to defense systems.

• Notable Quotes:

  • "[131:26] Eric Prince: ... For immediate Southeast Asia you'll see a scenification of meaning a Chinese control..."
    "[133:09] Eric Bethel: ... What does the world look like a less free place?"

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Conclusion

Episode #209 of the Shawn Ryan Show offers a thorough exploration of the intricate and potentially volatile relationship between China and Taiwan. With expert insights from Erik Prince and Eric Bethel, listeners gain a comprehensive understanding of the historical context, current tensions, and far-reaching implications of this geopolitical flashpoint. The discussion underscores the urgency for the United States and its allies to adopt proactive strategies in defense, economic resilience, and technological innovation to counterbalance China's growing influence and assertiveness on the global stage.

Final Notable Quote:

• "[137:03] Eric Prince: ... the battle of ideas competition ultimately will win the day. When you have the smartest people in the world competing for the best ideas, the best companies, we're going to end up winning."
  "[137:17] Eric Prince: ... A republic might be dirty and messy and imperfect and efficient, but at least you have rights."

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This summary captures the essence of the podcast episode, highlighting the critical discussions and insights shared by the guests, while excluding non-content sections such as advertisements and intros.

Transcript

[Sean]

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[Eric Prince]

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[Sean]

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[Eric Bethel]

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[Eric Prince]

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[Sean]

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[Eric Prince]

The Vitals app is for wellness purposes.

[Eric Bethel]

Only and not for medical use. Put us in a box. Go ahead.

[Sean]

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[Eric Bethel]

Of what comes standard.

[Sean]

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[Eric Bethel]

Foreign.

[Sean]

Eric Prince, Eric Bethel, I was hoping you guys would meet someday. Glad to make that happen, but Eric's with a keg. Yeah, truly an anomaly. Three of them in the building right now. But just thank you guys for coming. Both of your repeat guests, former ambassador to World Bank, Eric Prince, former CEO of Blackwater, Navy seal.

[Eric Prince]

So I wanted to get you Ambassador of Happiness.

[Sean]

Ambassador of happiness. I wanted to get you guys in here about this Taiwan stuff that's going on. So the timing couldn't really be better for me. I got the vice president of Taiwan coming on here pretty soon, and so everything just lined up perfectly. And I want to use this interview to kind of educate the audience, and not only the audience, but myself, on why this, why Taiwan is such a strategic location and why it's so important in the world and when it comes to chip manufacturing, all this stuff. But I did not realize how delicate that situation was due to its history with China until I started prepping for this interview. And, I mean, I knew the semiconductors, and it's been terrifying to me to think that China might take them. And they say they will by 2027. But when you look at the history, it's pretty dicey. And so, Eric Bethel, if you don't mind giving us a brief history on Taiwan and China and how delicate the situation actually prepared.

[Eric Bethel]

I'm not a historian, but I'll give you a rough outline. We got to go back way, way, way early. So the Dutch arrived. Well, the Portuguese discovered Taiwan. They called it Ilha Formosa, which means, you know, beautiful island. The Dutch arrived in the 1620s or so and formed little villages of sorts. The people that were living in Taiwan were Austronesian tribes. There were no ethnic Han Chinese living there at the time. And the Dutch were at the time competing with the Spaniards. The Spaniards had a settlement in one part of the island. The Dutch had a settlement in the other. And it was ironically, the Dutch that began bringing in folks from mainland China into Taiwan. They were typically from Fujian Province, but some came from the South. And over time, it was. Taiwan was essentially a backwater. Neither the Ming Dynasty nor the Qing Dynasty gave a rip about Taiwan. And in. Want to say 1895, somebody will correct me on this. I'm sure the Japanese took it over. And it was a part of Japan until after World War II. Never in Taiwan's history was it a part of the Chinese Communist Party. And so after the Chinese revolution, as Chiang Kai Shek and the Nationalists were losing, they fled and they started the Republic of China in Taiwan. So there were two Chinas. There was the Communist China and then there was the Nationalist China. But there has never been any Chinese Communist Party presence or any history linking it to the current Chinese government.

[Sean]

That pretty much sums it up. But it's gone back and forth and back and forth a couple times since 1949, correct?

[Eric Bethel]

Nope.

[Eric Prince]

Never been ruled by Beijing?

[Sean]

No, Never been ruled by Beijing.

[Eric Prince]

Not since 49. Like you said, Chiang Kai Shek fled there with the Nationalist leadership. And there's been serious fighting, artillery duels. I mean, there's islands that belong to Taiwan that are within 5 km of the Chinese mainland. Yeah, Puimoi Matsu. I think it's called Kinmen now.

[Eric Bethel]

Yeah, Kinmen right up.

[Eric Prince]

Like I said, a hour and a half swim from the Chinese mainland.

[Sean]

Wow. So how does the rest of the world view Taiwan? Do they view it as part of China? Part is part of the Communist China.

[Eric Prince]

As the Chinese Communist economy has grown, Beijing has used that economic leverage to twist countries into not recognizing Taiwan and to only recognizing Beijing.

[Eric Bethel]

In the 70s, Taiwan was China. And we did the switcheroo and we gave PRC China the seat that Taiwan used to have in the United Nations. But as Eric mentioned, Nixon did that. Yeah, it was in the 70s. Every country has, with the exception of a handful, have switched diplomatic recognition from Taiwan to mainland China. And this is a function of the fact that China's economy is so important that it uses it as a leverage point.

[Eric Prince]

But Nixon also did it back then because the Soviet Union and Communist China used to be very, very closely aligned. And then in the 60s, they started having a bit of a falling out and border disputes. And Nixon kind of used that outreach from China because they were afraid of getting run over by the Soviet Union to kind of put a wedge between the Soviet Union, the USSR and the Chinese Communist Party. You look at the history of China then, they were still under Mao. Mao died in 75 or 76. Mainland China had some massive problems in the great leap Forward in the 50s, which was a probably the single greatest terrible decision by a political leader where they forcibly collectivize land and then on top of that, believed all the lies of the local communist officials as to how much each of these fields, each of these farms was producing. And it led to massive starvation. Like 40, 50 million Chinese died at the hands of their own government because of this forced collectivization of agriculture. And then they start recovering from that. And then they get what's called the Cultural Revolution in the late 60s, which kind of started at the university level. And if you see woke culture in America, imagine that. But now you have armed woke gangs that are arresting people writ large and taking any of the intelligentsia, professors, mid level professionals that are not sufficiently communist and manic, getting sent away or executed or worse. And that finally dies down in the 70s and Mao is still alive. Deng Xiaoping took over after Mao dies. And Deng Xiaoping. So that was. There was kind of a buffer period of about two years, I think. And Deng is the one that started opening up China. And the first trip was to Singapore, which is basically Han Chinese, but on freedom in Singapore, because Singapore went from a lousy fishing village in the 1940s, right at the tip of the Malay Peninsula, right next to the Straits of Malacca, a natural shipping choke point. And they went from, like I said, a lousy fishing village to having enormous economic development. Deng said, we want to be like that. And so that leads to the opening up of China for business. I think he called it communism or socialism with Chinese characteristics. So that leads to this massive development of the economy of China. And they use that leverage to pivot countries away from recognizing Taiwan to recognizing the CCP.

[Eric Bethel]

Where we are today is a full 180 from where Deng Xiaoping was. And the 180 is, the Chinese government has asserted control over every aspect of society. So back when I lived in China, the Communist Party really didn't factor into people's lives in any meaningful way compared to, say, Jack Ma or Tencent or Taobao or a zillion of these companies that were radically transforming the country. And when Xi Jinping took over, he said, hey, wait a second, we're an empire, just like the Qing Dynasty and the Ming Dynasty before that. We are at risk of losing our empire to these oligarchs and something's got to change. And he began reasserting control in the same way Mao did over every aspect of the economy. And today you're basically dealing with a techno surveillance state where dissent isn't tolerated. People have to read Xi Jinping thought, and it's kind of strangely done. A full circle. Deng Xiaoping opened everything up and now he's closing things back.

[Eric Prince]

And when he's talking about Jack Ma was a high school English teacher and he builds this company called Alibaba, which becomes the Amazon market, massively successful all across China. A true unicorn. And to give you an idea of Xi clamping down, Jack Ma. So it's almost like a Jeff Bezos type figure who's disappeared from public life for almost a year. And then he reappears lecturing at a kindergarten in rural China. And the official press said he had embraced supervision. That's the level of reassertion, of control. So all the growth and the openness that happened in the late 70s, 80s, 90s, early 2000s, really clamped down by Xi. And he has really consolidated control. He is the most powerful Chinese leader since Mao. And in the latest, I think it was a year and a half ago, he basically, at the Chinese at the party conference, he made it possible for him to stay on, effectively emperor for life, because normally they had stayed for five or ten year terms and he is now for life to the point of Jiang Zemin, his predecessor had him arrested, publicly dragged off the stage at the Party conference. Kind of a f you, I'm in charge. Real consolidation. And there's three factions of the Chinese Communist Party. There's young princelings. Xi is a young princeling. So his father literally did the Long March with Mao back in the 30s when they escaped fighting against the Nationalists and goes all the way up almost to Xinjiang in the northwest of the country. So that's the lineage. The Shanghai faction, which was another, that's kind of the business faction of the Chinese Communist Party. Yep. And the Communist Youth League. Both the Shanghai faction and the Youth League have been smashed by his anti corruption campaign to really consolidate control.

[Eric Bethel]

What I found super interesting, Eric mentioned that Xi Jinping's predecessor, Hu Jintao was taken off the stage. That's right. I know what you meant. So he's taken off the stage in a very embarrassing sort of way, sort of cringeworthy. But what I noticed wasn't necessarily the spectacle that was going on between Hu Jintao and Xi Jinping. I was looking at the hundreds of other faces around this spectacle looking literally straight ahead. They were scared to look down. And to me it's kind of emblematic of where things are in China. No one dares do anything that isn't in conformance with what the government wants because you can get disappeared, you go to jail, you get exiled, you get your fortune taken from you. So everyone lives in this sort of state of abject fear. And I mentioned techno authoritarianism. You literally have surveillance cameras everywhere.

[Eric Prince]

Facial recognition.

[Eric Bethel]

Yeah, facial recognition. So like as you are crossing if you're jaywalking, I'm not sure if I mentioned this in our last podcast, but as you're walking across the street, if you're jaywalking, your phone is geolocating you, it knows that you're jaywalking. The cameras are recognizing that it's you and your phone, your alipay connected to your bank account is deducting money from your bank account as you're jaywalking across the street.

[Sean]

Are you serious?

[Eric Bethel]

Yeah. I mean, it's pretty bad.

[Sean]

Holy shit. I didn't realize it.

[Eric Bethel]

And so you know, all part of.

[Eric Prince]

The social credit score, spitting, saying something.

[Eric Bethel]

Tell them about the social credit score. Yeah.

[Eric Prince]

If you don't behave exactly as the Xi Jinping thought specifies, you get banned from public transportation or from going to the school you want to or getting the housing that you want, you literally have no rights. And it is when we see elements of this in woke culture in America with being canceled for speaking out on social media or whatever, they've perfected it at industrial scale in China.

[Eric Bethel]

Wasn't there a black Mirror episode on this? Trying to remember. But yeah, it's real. It's a real version of this where every facet of your life is monitored and tracked.

[Eric Prince]

If you're in a rural highway, they're timing the distances between two points and they will flash on the board.

[Sean]

On.

[Eric Prince]

A board alongside the road, your license plate, your name that you're speeding also being deducted.

[Sean]

Everybody, I'm in Taipei, Taiwan right now. There's street market and tomorrow I am interviewing the vice president of Taiwan. You guys know I'm talking for a couple years now about the potential invasion, China taking Taiwan. So we came here to interview the vice president about. It took us about six months to get this interview lined up. It's all going down tomorrow, should be out in a week or two. It's going to be a fascinating interview. Hope you all enjoy it. See you soon. Cheers. I've spent years on this show pulling back the curtain and trying to reveal what's really happening in this country. And the truth is there's a double standard here in America. You see time and time again people defending themselves, defending their family and then the judicial system goes after them. It's a double standard. And if you don't believe me, check out episode number three with Don Bradley. That is a perfect example of what I'm talking about. Because it's not just about what you did, believe it or not, it's how the legal system interprets it. And that's why I'm a USCCA member. The USCCA has over 860,000 members because they know the reality is after you stop the threat, the real fight begins. Your membership gives you the education, elite training and self defense liability insurance you need for the second fight, the legal one. Plus every member also gets access to a 247 critical response team and attorney network in the event of a self defense incident. Violent crime happens too often in America. This isn't about living in fear. This is about being prepared. When things go sideways. You don't get to schedule danger. And with the world changing so fast, you have to do what you can to protect your family. Check out the USCCA's risk free [e-mail] SRS. That's uscca.com SRS. Protect more than just your life. Protect your future. Go right now to uscca.com SRS Summer's here and if you're anything like me, you didn't spend the winter just sitting around. You stayed sharp and kept moving. And now it's time your gear caught up. And that's why I want to introduce you to Roka. I've been looking for eyewear that can handle any situation with performance and style. And let me tell you, these aren't your average shades. I've tested them in the real world, from shooting shooting to fishing to off roading. And they hold up. They're lightweight, don't slide around on my face, and can take a hit without falling apart. And the best part, they look good. They're clean and modern. No frills here, just premium eyewear that performs without compromise. That's something that I respect. And that's also why every time I head out the door, I reach for my Roka shades. Roka is based in Austin, Texas. American designed, no cut corners. The optics are crystal clear, cut through glare, and the fit stays comfortable all day long. Need a prescription? They've got you covered with both sunglasses and eyeglasses. Not only does Roka have awesome shades, they also have these that protect you against blue light. I wear these every night when I'm winding down for the day and I still got to look at my phone or my laptop or My iPad. It just helps you wind down and get ready for bed. They are a one stop shop for eyewear that's built to handle whatever life throws at you. Roka is the real deal. Ready to upgrade your eyewear. Check them out for [e-mail] and use code SRS for 20% off site wide at checkout. That's R O K A dot com.

[Eric Prince]

So for people to say there's a fundamental difference in governance between a constitutional republic that we live in, where we're supposed to have rights, where the government, government mandate is limited to that and the consent of the governed, it is the exact opposite in China. So yes, it is a fundamental difference in governance between a state that has total, unbelievable, unequivocal control over not citizens, but the serfs that reside there versus citizens. And a republic might be dirty and messy and imperfect and efficient, but at least you have rights.

[Sean]

Yeah, no kidding.

[Eric Bethel]

I think that's a really good, really good point. I mean there's a narrative battle going on, right? Our narrative is that the way to govern society is through individual agency, freedom, free markets, where it's the battle of ideas that wins. So you know, I was flying into Memphis last night and you can see that the Memphis airport, you know, you've got people singing songs. And I thought to myself, Memphis is competing with, to some degree with Austin, Austin is competing with Miami. And so cities compete with each other for talent, for companies. Similarly, corporations compete with each other, ideas compete with each other and the best ideas rise to the surface. And that's our idea. Whether it's free markets, individual agency, democracy, these are how the values that underpin + our Judeo Christian value system. This is what we believe is the right way to govern society. Over here it's authoritarianism, state driven capital and surveillance and autocracy. Ours is, as Eric mentioned, a lot messier, theirs is a lot more efficient. But ultimately when the state directs the, I don't know, like you've got 200 million empty houses in China and apartments, I mean to me that's economic foolishness. When you kill 50 million people through the Great Leap Forward, that's just, it's awful, right? But the narrative battle is happening today. And in the short term it looks like they're winning, right? Because they're more efficient. They can build trains. Like look at California. You can't build a train from San Francisco to LA. It takes 20 years and billions of dollars. In the short term it looks like they're winning, but I think long term we prevail.

[Eric Prince]

Why do you think as long as we allow the private sector to do what it does best, because if it's all government, all the time, that it's going to be our solution in America, we're screwed.

[Eric Bethel]

That's true.

[Sean]

That's the only advantage I see that we have is the innovators and the economy to reward massive innovation where they don't have that. Am I missing something?

[Eric Prince]

Entrepreneurship is by definition the creative destruction of the old order. And if we get away from that, then we have a also ran version of statism where you get the great leap forward and that kind of stupidity and imagine a nationwide, imagine 50 million people starving to death in America. Not likely to happen because we have, I mean the idea of empowered citizens, first amendment, free speech, freedom of religion, freedom of association, backed up by a second amendment that is so antithetical to how the Chinese government is and even how Chinese citizens view government. So it is a 180 out governance view.

[Eric Bethel]

But let's not think China isn't trying to export their system overseas. You've got places from small islands in the Pacific, like the Solomon Islands that have just done a security treaty with the Chinese to their security apparatus in airports all over the world, to port scanning equipment, to the port cranes. Like 75% of the world's cranes are ZPMC cranes with very likely, I'll qualify that with back doors that can stop working. And so China is exporting its techno authoritarianism around the world. And for some governments it's like catnip, right? If you want to stay in power forever, if you're a random dictator somewhere, China can help enable that.

[Eric Prince]

And they do black bag diplomacy really well when you're a head of state, foreign minister, mining minister, energy minister, whatever. China, where they want to get their hooks in. On your trip to Beijing, they take you to the Chinese Foreign Ministry, take you to the basement and there's a long series of safe deposit boxes, one of them with your name on it, filled with gold, diamonds, cash, whatever. And they say this is yours for when you retire. As long as you play ball with us.

[Sean]

Wow.

[Eric Bethel]

Or people have, why not give every politician in the country a Bank of China debit card? And hey, you know, buddy, it's on us. You know, you want to buy a Lamborghini, invite your family to a trip to Europe, come to Beijing, it's on us. Don't worry about it.

[Sean]

I mean, I just, I don't, I don't understand how you combat that.

[Eric Prince]

In Africa.

[Eric Bethel]

That's hard.

[Eric Prince]

China has made themselves exceedingly unpopular with the vast majority of people. The few government officials that are getting paid off, great. But all the big Chinese infrastructure, the mines, the energy, the roads, the bridges, when China goes and does that, they provide capital, they provide a loan, and they charge about three times what market rate should be because they're the only lender. And they take everything with them from China to do that. Every worker, the noodle maker, the barber, everything to a little Chinese enclave. In a lot of cases they're even exporting Chinese convict labor. So you got 10 to 20 years of hard labor on your sentence in China. They send you to do an infrastructure project in Angola and when you've completed that job, you're free to stay. So that has completely alienated the average African because the Chinese treat them terribly as workers, very abusive. And that's the one thing about Western capital. And there's more accountability through Western capital markets, et cetera, and governments that expect Western companies that are operating there to behave and there's a court system back in the west to hold them accountable. Non existent in the China Africa nexus.

[Eric Bethel]

So China created 10 or 12, 13 years ago something called the One Belt One Road initiative. And the premise was to build arteries to and from China, physical arteries like highways, airports, infrastructure, maritime ports and the like.

[Eric Prince]

And railways, Railways, especially railways.

[Eric Bethel]

Telecom infrastructure. And the way it works is, you know, I think of it as predatory lending. So they'll go to a given country and say, hey, we'll lend you. China will graciously lend you whatever, a billion dollars to do whatever. But the fine print says if you can't pay well, we'll take your port. And clearly that has met with a significant amount of resistance. So in the case of, I'll give you a few examples. One is Djibouti where the Chinese lent a very large amount of money and now China has a military base there. The second place that comes to mind.

[Eric Prince]

Is right across from the US base, actually.

[Eric Bethel]

Right across from the US base.

[Sean]

Is it really?

[Eric Bethel]

Yeah. The next is Sri Lanka where they built a port. Now they have a 99 year lease. The Chinese on this port, it's called Hambantota, the list goes on. But this is what makes them very unpopular. And they're also just as Eric mentioned, not very nice. And they don't treat people with the same levels of decency that we would. Look again, nobody's perfect.

[Sean]

I mean, we're also very unpopular in the world. Correct?

[Eric Prince]

Include yourself.

[Eric Bethel]

No, I don't think so.

[Sean]

What about in Europe?

[Eric Prince]

Exceedingly popular yet popular not with the elites. Look, Europe's been having a free ride for decades on their defense spending. That's a whole other topic we can dig into. But you have when. When Trump 45, took over, there was, I think, five of 28 countries that were paying 2% of their defense budgets, 2% of their GDPs independent in defense. That's a not serious alliance. We want alliances, not protectorates. And that's, I think, the point that President Trump's been making.

[Eric Bethel]

Look, I'm not an expert in European politics, but something struck me recently. I saw a map of a recent French election and Marie Anne Le Pen. It's like the entire country is hers, voting wise, except for small, isolated pockets like Paris, Paris and Toulon. And it reminds me of the electoral map of California. It's a giant red state with deep blue San Francisco, deep blue Los Angeles, et cetera. So whether or not we are popular or unpopular in Europe, I don't know. The headline is that we're not, but the reality, I don't know.

[Sean]

So why is China. When are they going to make a move on Taiwan? I mean, this is from May 7, from Xi. No matter how the situation on the Taiwan Islands evolve or what troubles external forces may make, the historical trend toward China's ultimate inevitable reunification is unstoppable. That was on May 7th.

[Eric Bethel]

Yeah.

[Eric Prince]

And that's the one inaccuracy, as Eric was explaining. Formosa was never part of mainland China, ever, ever. But it is such an irritant because you have, what, 1.4 billion mainland Chinese, and you have 24 million largely, well, maybe half, 60, 70% Han Chinese in Taiwan. But you have Han Chinese culture on freedom, which has been enormously successful, enormous wealth generation, and the fact that Taiwan is the size of one large Chinese city. But it is such an irritant because it's the antithesis to a monolithic Chinese Communist Party, where what they say goes with no question, 100%.

[Eric Bethel]

Here's another quote for you. This is Xi Jinping's New Year address. As compatriots on both sides of the Taiwan Straits are one family, no one can sever our bloodline affinity, and no one can block the historical momentum of the unification of the motherland. Look, there are. I don't know how many different ways they can say this, but they want to take Taiwan. And Eric mentioned earlier that Xi Jinping got a third term and he's going to be emperor for life. But one of the justifications for that was that he's going to take Taiwan. And so the narrative in China. And the narrative of the Chinese Communist Party is there is no other way to govern China historically. The historical precedent is that in millennia we've always been governed by authoritarians because it's impossible to govern the Chinese people any other way. And over here you've got Taiwan in a thriving, messy democracy where the GDP per capita is higher than it is in mainland China. Now again, small place with a lot of wealth, with a relatively small population. But the point is, the fact that Taiwan exists is a loss of face to the Chinese Communist Party. It must go. Does that make sense?

[Eric Prince]

Makes sense on top of the fact that China was not always ruled by emperors over the last couple of millennia they would come together under a dictator and then they would, after a couple hundred years they would fragment apart and there's what, 54 different ethnicities residing within China, different languages, different faiths even, and you know, Confucianism, Buddhism and Islam. But I'd say it's in our interest to help them go back to a bit more of a fractious, less consolidated entity.

[Sean]

How important is Taiwan to the rest of the world? Not just with semiconductors, but the location?

[Eric Bethel]

Well, look, I think it's important for us and I'll give you a few reasons. The day Taiwan goes is the day that the CCP tells everyone the emperor has no clothes, the United States military might could not hold Taiwan. And if we pretend that we are beacons of freedom, I mean if we want to be beacons of freedom, we can't just pretend that we're going to let this island of 25 million people become absorbed by communist China. But there are a lot of implications and we can talk a little bit about those. But for me, aside from the fact that TSMC, that produces 60% of the world's chips and I guess 90% of the high end ones, that is either going to go to the Chinese or all of those fabricator, all the fabs are going to basically get blown up and all the engineers move to the US in either of those two cases you have to ask yourself, well, gosh, if the semiconductor manufacturing isn't being done by TSMC, what does that mean for Nvidia? Wait, what does that mean for AI? What does this mean for Grok or ChatGPT or the NASDAQ?

[Eric Prince]

What does it mean for the chips in your F250 pickup truck or your iPhone, phones or anything? Everything as important as the Arab oil embargo was to the world market in the 70s. Gas lines in the United States, remember when they shut it off after the 73 war. Imagine that level of hegemony times five.

[Eric Bethel]

Stuff that you don't think about. Your washing machine has chips in it. Where are you going to get a new washing machine? And everything goes up in price, not.

[Eric Prince]

To mention if you can get it at all.

[Eric Bethel]

If you can get it at all. So chips are important. But I would also make the argument that if China takes Taiwan, it's going to have massive implications for the US Economy. Extreme amounts of inflation, high interest rates, job losses because of the chips. No, no, it's actually, you're going to have to bear with me, Indulge me for a second, but I'll take you through a meandering journey of economics. I'm sure that there are going to be some macro economists out there that are going to try and shoot holes in my argument. But bear with me. Here goes. Let's take stock and understand where we are in our economy. We've got $37 trillion in debt. We've got insane and unsustainable budget deficits. So the US Government makes money by taking in taxes and we spend money on the military, Medicare, whatever. The deficits are in the trillions. And when we can't finance those deficits with tax revenue, what do we do? Well, we issue bonds, right? Treasury bonds and bills and so forth.

[Eric Prince]

Printing money.

[Eric Bethel]

Well, see, the way it works is treasury will issue bonds. They have treasury auctions. We had one, in fact, last Wednesday we did a $16 billion auction. But the bidders said, well, gosh, we want, we want the rate to be higher. We won't buy your treasuries unless your 20, this is a 20 year auction, are high enough and they hit a five handle or five, five and change percent. Why? Well, for many reasons. In part, it's because the, the big beautiful bill adds $4 trillion of debt over the next 10 years, which seems, you know, financially illiterate because members of Congress just added on a bunch of pork to it. The rating agencies jumped on the bandwagon, bond yields fell. But look, we're, you know, like those Mission Impossible movies where, you know, there's a train that's like lurching off a cliff and Tom Cruise is like, you know, trying to escape. And it's like the train is being held by a, by a wire. You know, that's like starting to fray. Like we're not there yet, but we're approaching that. And so that's the context. Okay, back to Treasuries. When people don't buy our Treasuries when large institutions and sovereign wealth funds and, you know, the. Whatever Wall street doesn't buy it, the Fed becomes a buyer of last resort. How does the Fed do this? Well, as Eric mentioned, by printing money. So. Well, when you print crazy amounts of money, you have to ask yourself, why don't we look like Zimbabwe or Argentina in the hyperinflationary days? And the reason for that is there's an artificial demand for dollars around the world because the dollar is used in almost everything. Every commodity is priced in dollars. The world's reserve currency, the world's reserve currency. Every FX settlement is done in dollar. Foreign exchange is done in dollars. So everyone needs to use dollars in the world so we can print for a period of time, and the world needs to use it. Okay, let's go. Let's take this back to Taiwan. In a Taiwan scenario, if China takes Taiwan, every country in Asia is going to be told, hey, guys, there's a new sheriff in town. Why should we trade Malaysian palm oil in dollars? Why shouldn't it be in renminbi? And China's been trying to erode and chip away at the dollar's reserve currency status in many, many different ways because they. We can talk about that later.

[Sean]

So this is brics.

[Eric Bethel]

Yes, this is partially brics. It's partially the ecny.

[Sean]

If they did take Taiwan, why would they be the new sheriff in town?

[Eric Prince]

Here's the easy corollary. You done?

[Sean]

No.

[Eric Bethel]

Yeah.

[Eric Prince]

Okay.

[Eric Bethel]

I was too. I went on too long anyway.

[Eric Prince]

No, no, it was great. No, no, I. I didn't want to. I didn't. It was a great thought. I don't want to interrupt it. 1804, 1805, Britain defeats Napoleon's navy. Okay. During the Napoleonic wars and Britain rules the seas for all the 1800s, the British pound was the world's reserve currency. Britain started to lose that at the Battle of Jutland. Big naval battle against a rising continental industrial power, Germany. They didn't lose, but they definitely didn't win. I would say that marked a pivot in the beginning of the end of the British Empire, which you see collapsing, really ending in the 40s and 50s as older colonies go away. They lose India. I see the world's reserve currency as the dollar losing that. If there is a significant naval loss or even a draw over Taiwan, I agree.

[Eric Bethel]

I mean, if you look at.

[Eric Prince]

And that literally cuts off.

[Sean]

So that would be why they're the new sheriff of town, because they.

[Eric Bethel]

Well, if they're the new. Look, if they're able to take Taiwan and the United States leaves, which they want us to leave Asia. Just. Just leave. We. This is our pole of influence. The South China Sea is ours. Taiwan is ours. The Yellow Sea is ours. We have the largest economy. And let's go back to the way things should be. In their mind, the way things should be is China is the center of everything. And countries around China are vassal states that pay homage to the emperor every year. That's the way it was 200 years.

[Eric Prince]

Ago, but they called themselves the Middle Kingdom. All maps produced in China show China as the exact middle of the world.

[Eric Bethel]

So they have the economic, military and cultural might to basically be the sheriff in town. And it's not unreasonable. Look, I'm trying not to catastrophize this too much, but it's not unreasonable for them to push countries in their orbit to use the Chinese renminbi as opposed to the dollar, as the currency of trade in Asia. Assuming that happens, you have to ask yourself, what happens to the dollar? And does it cause inflation back here? And if it does, and the Fed's job, among other things, is to counter inflation, what does the Fed do? It has to jack up interest rates. So imagine a world again, look, I may be going out on a limb here, but imagine a world in which your mortgage rate spikes to double or triple what it is today. Or if you're going to finance your car, how much does it cost? So there's a reason economics does play into all of this. Currencies play a role. Treasuries play a role, are, I think, unchecked. Spending as a US Government plays a role in this. And I think it's very foolish.

[Eric Prince]

I don't think it just plays a role. It's the fundamental underpinning. If the dollar is not the world's reserve currency and the idiots in Washington can't continue to deficit spend because no one's going to buy, no one's going to use those dollars. It forces the US Government to actually have a balanced budget and cut deeper. Already the interest payments on the existing debt, interest payments alone on the debt, exceed the defense budget, which is already too big. Now you start to literally constrict. All aspects of American government spending because of military victories have very economic realities. So it is a cascading effect that's catalyzed by a embarrassing loss, unnecessary loss of Taiwan.

[Sean]

Now, is China's economy just as fragile?

[Eric Bethel]

It's bad. Yep, it's bad. And one could make the argument that, you know, when you have massive youth unemployment, an insane amount of real estate defaults and debt to GDP levels that are really, you know, bad and unsustainable. What does one do to deflect from domestic problems? You know, you point to the west, you point to Taiwan. And I think this is a time of maximum peril. Ten years from now, I'm not as concerned, but the next couple of years I think are pretty bad.

[Eric Prince]

Yes, I fully agree with that.

[Eric Bethel]

But just to double click on something Eric said, right now we're spending a trillion dollars in servicing interest on our debt. Imagine like your credit card, all you're paying is interest on your credit card and it's, you know, that's what we're doing. Furthermore, we have to refinance something close to $10 trillion worth of short term debt, government debt, at higher rates. So the rates are going to be at, you know, somewhere between 4 and 5%, which is going to exacerbate the interest that we're paying, not the 2.

[Eric Prince]

And 3% that it has been at.

[Eric Bethel]

Right. And so it's kind of like there's.

[Sean]

This show and we have a bill that just went up and.

[Eric Bethel]

Bill. Yeah, add another portrait deeper in. Yeah, look, I think.

[Sean]

You know, does anybody look at this shit that's on the inside?

[Eric Bethel]

Of course they do. Look, look, man, don't blame the player, blame the game. There is not a single member of Congress that's going to win an election by saying, hey, I'm going to, you know, provide less benefits to my constituents. Just doesn't work that way.

[Eric Prince]

We've allowed the US government to just become so much of a sugar daddy to all aspects of society. And no one has ever forced the guns or butter decision. It's guns and butter because the dollar is the world's reserve currency. It's gotten us into the habit of spending anything and everything all the time.

[Eric Bethel]

And the Fed becomes the buyer of last resort for a lot of things. At least it has over the last 20 years. It's sort of colloquially known as the Fed. Put right, the Fed will provide a backstop to anything going wrong with the economy. Now there comes a point where so.

[Sean]

We just watch it go off the cliff.

[Eric Bethel]

We gotta stop, we gotta do something.

[Sean]

But we don't win elections. If you try to do something.

[Eric Prince]

That is the disadvantage to a republic.

[Eric Bethel]

Yep.

[Eric Prince]

I have a collection of German Marx from the 1920s. The currency of Germany.

[Eric Bethel]

This is the Weimar marks.

[Eric Prince]

Exactly. And the first ones, the 1 5, 10, 50, beautifully done, very well printed. You definitely see some effort went into making those bills. But then you get to 20,000, 50,000amillion. And then they just took the million ones and re stamped them 1 billion marks. Okay. And you see the destruction of a currency and the destruction of a society because you took very normal, very orderly Prussian German society and they elected Adolf Hitler because of that economic destruction. So we ignore that kind of debt insanity at our own peril.

[Eric Bethel]

Yep. You can go back to the Roman denarius. Little by little you started seeing the silver content get smaller and smaller and smaller. So there's been. This isn't something that we haven't seen before.

[Eric Prince]

But it never ends well.

[Eric Bethel]

It never ends well. But let's understand this. So the big beautiful bill passed the House. It's going to go through reconciliation. Hopefully members of the Senate will take a more thoughtful approach and remove the extraneous things that we don't need. I'm hoping. But let's also understand that the Republicans have what, like a two vote majority or a three or something? Vote majority. I'm sure that there were members of the Republican Party that said, look, oh, by the way, the Democrats all voted against it. Right. So it's basically along party lines. And so to win over a certain number of Republicans, we had to offer them some concessions. This is how this is just. I'm not saying it's awesome, on the contrary. I'm just saying it is what it is. What do you do? So it's going to go through the Senate. Hopefully they go through a thoughtful reworking of this. And it's not another 4 trillion on our debt. It's a lot of money.

[Eric Prince]

That's another 10%. Geez.

[Sean]

All right, let's get back to Taiwan.

[Eric Bethel]

On that happy note.

[Sean]

Yeah. Wow. It's great. I mean, what, what other countries are concerned with the potential of China taking Taiwan? Are we the only ones that are really that concerned Us? Japan, I mean, Australia's got to be.

[Eric Prince]

Japan is very concerned.

[Sean]

Is anybody doing anything?

[Eric Prince]

Because Taiwan was a Japanese colony before the war. Right. And if the president, I think I was told this, the president of Taiwan, when they visit Japan, they speak Japanese. There's a lot of Japanese spoken in rural Taiwan to this day. The one country in the Pacific Rim that China fears is Japan.

[Sean]

Yep.

[Eric Prince]

Because Japan or you have Han China, that's a race of people. Japan is different. Japan is Mongols on an island. If it's one thing that terrifies all Han Chinese is Mongols. Mongols on a peninsula. Korea. Mongols on an island. Japan. And the fact that Japan has woken up and is starting to spend serious money now and with the magnificent efficiency. Right. Toyota level Production efficiency of Japanese made weapons. Japan can be a significant deterring force and we should let them be. We should not expect it to be all US Navy all the time. At a recent exercise, Japan showed up with their flagship. I think it was the Kaga, which was the old command ship of the Imperial Japanese Navy. It's good to let a little bit of that Japanese warrior tradition return.

[Eric Bethel]

Korea, Japan, Australia and the Philippines are the ones that we should most closely follow. I'm concerned politically about where we are with the exception of the Philippines. And I'll explain. I'll begin with Japan. Japan's prime minister, well, he's part of a political party. They're called the ldp and for the first time in quite a while, they don't have a majority in Parliament. The second party that's there is called the cdp and they are much more conciliatory toward China. They're not necessarily in favor of growing the defense budget. And so Ishiba, the current Prime Minister, has to sort of appease the various constituencies in parliament. So he's not a strong prime minister like Prime Minister Abe was several years ago. That's Japan. Korea is a disaster right now. Former President Moon had martial law. He's in jail. He may face, you know, many years in jail up to potentially the death penalty. There's a snap election that's being held next week.

[Sean]

Why is he in jail?

[Eric Bethel]

Good.

[Eric Prince]

Because there's China. Works on their neighbors.

[Eric Bethel]

Yep.

[Eric Prince]

Massive political subversion, 100% in all these countries. You see it in Japan and it was especially the case in Korea. And the reason that prime minister tried to act was to cut off that subversion.

[Eric Bethel]

Yep. And North Korean as well.

[Eric Prince]

Correct. And in that case, you see China and North Korea very much cooperating to undermine South Korea politically. That's the vulnerability of a democratically elected government is the ability for outside forces to. To screw with it. That's very much the case in Korea. For the first time we've seen in many, many decades where that goes. You might see a devolution of democracy in Korea where another right wing strongman takes over to say we're not going to live with left wing subversion of the country.

[Eric Bethel]

And right now, the left wing guy, there's an election next week and the left wing candidate, whose name is Li, is favored to win. And this candidate is considerably more sympathetic toward China than his predecessor. So you've got Korea in a state of political turmoil. You've got a relatively weak Japanese prime minister because he's got to balance the different factions. And in Australia you have a Prime Minister Albanese who again is much more conciliatory. He's from the left wing sort of Labor Party side of the equation, who values non interference in Taiwan. And you know.

[Sean]

Non interference.

[Eric Bethel]

Well, nobody wants to get into World War three like I certainly don't. I don't think anybody does. But you can't sort of signal that you're not going to interfere. Now I'm not saying he has, but he comes from the political party that has been again much more conciliatory. Let's not muddy the waters with China. Let's just keep things on an even keeled basis.

[Sean]

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[Eric Prince]

It'S worse than that? Australia, all of 22 million people, has had a massive influx of non native Australian type people. A lot from China, Chinese and Indians which don't really subscribe to the same old Aussie values that you would imagine. And especially the Chinese business class. And it's been both sides of the party, both sides of politics, the right wing has been sellouts to corporatists and low labor cost importing of labor. And yeah, Australia is also in bad shape that way politically.

[Eric Bethel]

So Australia's economy is very dependent on selling iron ore to China, selling natural gas to China, selling agricultural products to China. I mean it's a giant continent with very few people that has a lot of natural resources with pretty much one buyer. Right. And so I think the business community says hey look, let's not create waves here. So I'm not sure that you can count on 100%. So it's us, it's basically us.

[Eric Prince]

Yeah.

[Eric Bethel]

And the Filipinos. The Filipinos are awesome.

[Eric Prince]

Yes. But there's no there there. They have no ability to project power. I mean I'd say the only good thing I've seen the Filipinos do is they actually bought a Russian Indian hypersonic anti ship missile called the Brahmos which if they roll it out will actually provide some deterrence because that is a missile that would smoke a Chinese warship. My biggest hope or confidence in an ally that would come if Taiwan goes is Japan still.

[Eric Bethel]

So if you look at the map, if this, have you seen this map here of this is, here's China, here's this, this line where they basically claimed pretty much all of, all of this territory. It's very far away from China. This is Palawan and over here there are a bunch of little, little islands.

[Eric Prince]

Not even islands, they were just reefs. Like at low tide you'd see one foot of reef or sand sticking out of the ocean and then at high tide it goes away.

[Eric Bethel]

Then all of a sudden the Chinese said oh you know, let's build something.

[Eric Prince]

Here, this is China.

[Eric Bethel]

And they, they would, they blew up like a millennia's worth of Coral reef to build islands. And you see these islands, you can google them, they are incredible. Like with runways you can land A747 on missile defenses, naval bases, basically they.

[Eric Prince]

Built full on military bases all through the South China Sea. And in my travels in China, I met the CEO. I was drinking with him one night of China harbor and dredge the state owned enterprise that built most of those islands. And he admitted, he said it was never in our grand plan to be able to do these islands. But we found the Obama administration to be so vapid, so useless that we just said go. And they did. And they built now dozens of bases claiming tens of thousands of square miles of territory now as Chinese, Chinese territory.

[Eric Bethel]

To the detriment of the Philippines, Vietnam.

[Eric Prince]

Philippines, Vietnam, Malaysia, all these guys.

[Eric Bethel]

And so here you have little Filipino fishing vessels trying to do their thing and then the Chinese coast guard comes in and literally shoots lasers at their eyes or waterboards them or rams them in Philippine territorial water. And I say it's Philippine territorial water because in 2016 the United nations proclaimed an edict saying that yeah, this is.

[Eric Prince]

It was a law of the sea trial based on 500 years of Admiralty law. Clearly it was Filipino territory.

[Eric Bethel]

Yeah. And so China says that because an admiral in the Ming dynasty named Zheng he traveled there, that this is all belongs to China. Which is complete nonsense.

[Sean]

So they're not only building these islands just for the militaristic advantage, they're also, they're expanding the borders, of course.

[Eric Prince]

And in that they're doing geoscience exploration.

[Sean]

They're actually playing by the rules for drilling. Playing by the rules?

[Eric Bethel]

No, the rules.

[Sean]

Who's recognizing these borders?

[Eric Bethel]

The border. The border gave the. So the UN said that the border belongs to the Philippines. China said, oh no it doesn't, it belongs to us. We don't care what the UN says. So China lost their case, but there's.

[Sean]

No consequences for them, are there?

[Eric Prince]

Correct, Correct. And it started with the Obama administration not delivering any consequences because China first said, because Washington believed the lie when China said, oh, these are just going to be weather stations or search and rescue locations. Yeah, no, they were full on military bases and now they're even pushing into Korean waters. Just two weeks ago they plunked down a used oil rig saying it's just a fishing station. And of course I'm sure within months you'll see missiles, radars, all the rest on this jackup rig just off the coast of Korea. So they are expansionist. It's called salami slicing. They take very thin slices and they just keep moving the fence. Trump in the first administration, China was like the neighbor that builds their fence into your yard and moves it a foot a year. And Trump's the first one that said, get the hell back on your side of the line. And so what he's been doing on trade negotiations all the rest of the has definitely put them a bit on their back foot.

[Eric Bethel]

I think. One of the heroes in the Trump administration, the Trump 45 administration, was Matt Pottinger, who was a former Marine, lived in China for many years and ran the China team at the National Security Council and then became the Deputy National Security Advisor. He's now with an outfit called Garneau Global. And they write lots of research pieces on what they expect to happen in Asia. And Matt thinks that we're, I'll quote, actually Admiral Poro here, who runs the Indo Pacific Command, we've heard of the boiling frog analogy, but this is boiling at a pretty rapid rate. And that's sort of Matt Pottinger's conjecture as well. Things are going to get heated very quickly and we should get our game on. We should be preparing as if something really bad is going to happen soon. Hopefully it doesn't. Nobody wants to be in another forever war, but we should be preparing as if something may happen.

[Eric Prince]

And the Chinese government is making some very unmarket decisions in preparing for war. And if you look at Xi's speeches, not the ones that are necessarily public, but the ones that are eventually located and translated, when he's speaking to the Standing Committee or the Politburo, he says prepare for great conflict. This is going to happen. Very obvious. And things like Chinese state owned enterprise, if they have land holdings in the United States, a lot of real estate stuff. Yes, there's problems with Chinese owning land in the United States. In a lot of cases, they're dumping it for pennies on the dollar. Their banks are dumping their aircraft holdings for their leasing companies. They are taking all kinds of steps to make them not exposed to dollar sanctions and to having any of those assets seized in the United States. So those are the things that a country does if they're preparing not for economic war, but for actual kinetic war.

[Eric Bethel]

Yep. And we can double click on that because there's a lot to unpack. Here's the Chinese Embassy in the US Right around the time when we were starting to talk about tariffs. Quote from the Chinese Embassy in the US if war is what the US Wants, be it a tariff war, a trade war, or any other type of war, we're ready to Fight till the end. It's pretty self explanatory. So there are many vectors that we need to deal with. But when you've stored 70% of the world's corn as they have, why do you do that? When you've built enormous hospitals in Fujian province across from Taiwan, why do you do that? When you have increasing, you know you're tightening the noose in these military exercises. What began in 2021 with one brigade has now reached 42 brigades in these military exercises over time exercising logistics like.

[Eric Prince]

A rehearsal for D Day.

[Eric Bethel]

That's exactly right. These are rehearsals, these are not military exercises. And what's happening is a communist Goliath is taking over like a small little David who is democratic and we're sort of in a quandary because if we step in, whether it's a blockade, a cyber attack, internal strife, a full on invasion, whatever it is, and I don't pretend to know, I can see different sides of this equation. If we don't step in and we allow China to take over, there are consequences as I mentioned earlier, for our economy, for semiconductors and frankly for our standing in the world. People are going to say, you see, China's going to say certainly look, the United States is a paper tiger. If we do step in and they sink an Arleigh Burke, gloves come off and it's game time. That's bad too. So any way you look at it, it doesn't seem good.

[Sean]

What do you guys think? Well actually porcupine finish up.

[Eric Prince]

What should we do? Porcupine don't give them the playbook. They're expecting the one. The terrible thing about the Pentagon is they are very predictable. They're predictable in their acquisitions, in their exercises and all the rest. And so the whole PAYCOM strategy about carrier air wings and long range bombers out of what, two or three locations in the Pacific, all of which if it's one lesson people should learn from Ukraine is anything that's located can be targeted by not a few but by hundreds of precision weapons almost instantly.

[Eric Bethel]

Yeah, Okinawa and Guam get smoked.

[Eric Prince]

Yes. And what are those? The key bases. I mean that Okinawa is Japanese territory. Does that automatically trigger Japan to raise that battle flag? I don't know. But the one thing that China can't necessarily account for and I've, I really hope they do this. The, the Taiwanese leadership deludes themselves in thinking big. Uncle Sam has all the solutions and the US Navy is going to come to the rescue.

[Sean]

Is that their plan?

[Eric Prince]

I think so. I think you should ask any Taiwanese official what is their plan because what in the American Revolution where you had 13 colonies, farmers with no standing army took on what was then the most powerful military in the world. And they did it not really by conventional, but they started with a guerrilla war. 30% of America in 1776 was in favor of the Crown loyalists. 40% were in the middle, didn't really care, just trying to survive. 30% were pro liberty. 10% of that 30% or 3% are the ones that took up arms against the British Empire. 3%. So if we took, and I'm confident we can find 3% of Taiwanese society that is willing to defend the status quo, meaning Taiwan continues as it is, not an independent country, but they're not going to be ruled by the ccp. And you can find those by either a few motivated policemen, firemen, reservists.

[Sean]

The.

[Eric Prince]

Crossfitters, the marathoners, the Boy Scout leaders. It doesn't take that many 3% of that society. So that's, I think the. The standing Taiwanese army is like 150,000, largely worthless, very soft, very woke. And any significant weapon system they have has already been targeted by probably a dozen or pre registered by a dozen Chinese precision weapons because it's only what, 70, 80 miles from the mainland to Taiwan. But what they can account for is 720,000. Right. 3% of 24 million that show up that step outside their house and say, get off my yard. And if they're equipped, if they have access to small arms, EFPs, a very potent roadside bomb, emergency comms, emergency comms, drones, fiber optic drones which can't be jammed, RPGs. And the innovation and the basic skill sets to make every street corner, every intersection, every neighborhood, another fortified urban hellhole for the PLA to have to push through or even if the first wave comes through, and now they're getting lit up from behind. That is not something the PLA can plan for. Because if China's going to go for this, they have to make it quick. They have to own Taiwan in a matter of days or weeks. They cannot accept the blockade or the embargoes that would happen and the videos of Taiwanese people being slaughtered by this terrible occupation that inevitably would happen.

[Eric Bethel]

And another side to this coin is the headline numbers. Taiwan spends around 2% of GDP on defense. They're trying to increase it. I think the Trump administration is saying, hey, get it to 10%. The problem is that the current political leadership in Taiwan is hampered by the fact that Congress is controlled by the opposing party and the opposing party is kind of Sort of in bed with China. And they're resisting any attempt to grow the military budget. Now, for years, Taiwan has bought things that don't make sense, like tanks and advanced aircraft. I think Eric's exactly right. They should focus on a domestic defense. And there's a guy Switzerland on steroids. Yeah. There's a guy named Robert Tsao who is, I think an octogenarian billionaire. United Semiconductor, if memory serves, was his company. He's trying to stand up a homegrown militia outside of the government. But that's exactly what they need, be a porcupine and give China pause. So China says, gosh, do I ingest this or am I going to get heartburn if I do? And that's the only thing that's going.

[Eric Prince]

To save us because China is also not immune. You have a huge amount of one child policy families.

[Sean]

Yeah.

[Eric Prince]

And so if you. They're not immune to losing lots of casualties.

[Sean]

And they aborted all the girls.

[Eric Prince]

Correct.

[Sean]

Females.

[Eric Prince]

There's 40 million males of marriage age with no prospects of marrying a female. So. And here's the thing, it's really about increasing the pain calculus for Xi. All the generals around him have all bought those positions because they buy those positions for corruption, because they get to pocket. And that's why there's been a significant turnover of a lot of those generals of the strategic rocket forces and those eastern commands because of those kind of high level corruption stuff. But still every general there saying, yes, boss, we can do this. We've got all this new tech, we've got this great capability. Go, go, go. Let's go flex our muscle and take back Taiwan. But the injecting that uncertainty of a few hundred thousand possibly really pissed off Taiwanese that have the basics of arms, the basic of skill sets and the will to defend their status quo freedom. That is a very, very difficult thing for him to look past. And it doesn't involve American soldiers, it doesn't involve American carriers. That should be the United States government's policy to arm. Twist Taiwan into doing that because this is a matter of political will. We're not looking for the government, Taiwan, Taiwanese political leadership to do this. It's really about empowering the rank and file people that say, yep, this I will defend.

[Eric Bethel]

Well, let's add to that. How do you strengthen your cyber defenses? You know, Taiwan imports pretty much like 98% of its fuel when the sea lanes are cut. What do you do? Well, you need to have storage. Can that storage get cyber attacked? Can your electricity grid, can your water systems, can they get attacked. The short answer is they import.

[Sean]

They import how much of their fuel?

[Eric Prince]

Well, I mean, they just closed their last nuclear plant.

[Sean]

I don't understand that. Why would they have done that if they're importing 90% of their fuel?

[Eric Prince]

Because they worship the green God more than they worship. Well, this is the current common sense.

[Eric Bethel]

This is the current political party. The DPP is very green, very woke. But it's what's. We can't. I mean, we're trying to understand them in American terms. They're green and woke, but they're also pro Taiwan and anti China. The other party is pro military and more conservative, but they're like kind of in bed with China.

[Sean]

So.

[Eric Bethel]

So it's a very strange and fluid situation.

[Sean]

So even the Taiwanese are split.

[Eric Bethel]

It's a democracy. Oh, yeah, yeah, yeah, sure, it's a democracy.

[Sean]

I mean, when it comes to China, some of them are pro China.

[Eric Prince]

But here's the thing, and I have to segue here a minute. Where's the last place Gavin Newsom visited? China? When you see Trump taking a hard line against the Chinese Communist Party, the Democrat Party of the United States will adopt a much more pro China policy. And you will see more illicit money flowing to Democratic candidates. If Gavin Newsom is their candidate, you can expect a very pro China friendly politics. Like we said, the Chinese political subversion that you see in Japan, in Korea, in Australia, believe me, it's in the United States as well. The Thousand Talents Program, massive intelligence collection, the United Front work program, again, Chinese subversion at the university level and through thousands of American corporations. That is a deliberate. It's an ancient society. They understand how to shift that fence six inches a year.

[Eric Bethel]

Yeah. Elite capture. You may recall Eric Swalwell, member of Congress, who was, you know, on the Intel Committee, on the Intel Committee, who allegedly had a relationship with a Chinese spy. You had. Dianne Feinstein's driver for 20 something years was a spy. You've had a series of allegations in New York, various members of Congress, various important political figures, McConnell, McConnell's wife. And so elite capture is very important. Now, it doesn't only happen in politics, but also on Wall Street.

[Eric Prince]

Hedge funds.

[Eric Bethel]

Hedge funds, Silicon Valley, major corporations try and find. I mean, I've been trying to think about this. What, what large American company can you think of that either sells a product to China or imports a product from China? It's hard, right? You have to really sort of scratch your head and think about it.

[Eric Prince]

Look at the stink China made about the last Top Gun movie. Because on Tom Cruise's deployment jet, he.

[Eric Bethel]

Had a Taiwan flag.

[Eric Prince]

Was a Taiwan patch. Good on Tom Cruise for leaving it in the movie. But that speaks to that level of institutional capture of Hollywood funding hedge fund dominance. When you have Ray Dalio saying that, making totally apologist statements for China during COVID it's because he has billions of dollars that are managed from China.

[Eric Bethel]

So Ray Dalio runs an outfit called Bridgewater. Bridgewater is one of the largest hedge funds in the world. And in my opinion, and I think you sympathize, he's like an apologist for China. So you have elite capture politically, Wall Street, Silicon Valley, now that's changing and it's changing very quickly. Some of the sort of points of light that I'm seeing is foreign direct investment that was being deployed into China is now leaving Wall Street. Fund managers are starting to pull their money out and certainly whether the taxes are 145% today or 20% tomorrow, whatever the case may be, I'm fairly certain that in every corporate boardroom in America, the risk officer is telling the board, hey, listen, we should probably think of how to move ourselves quietly out of China to India, to Mexico, where Abu Dhabi, elsewhere, or certainly back to the United States. So these are some bright points that I'm seeing. And we do need to detangle. And we can't have important parts of our economy held hostage to an adversarial nation. We just can't do that.

[Sean]

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[Eric Prince]

An adversarial political system that is the inverse of our constitutional republic. Do you want antibiotics being largely produced there in China? No. Or, or any of these key components. I mean on the defense side there's a, there's a lot of defense tech going into or VC money going into defense tech. But the fact is all the rare earth elements, all the minerals mined around the world, 90 to 95% of them are processed in China. The only functioning rare earth mine in the United States, it's called Mountain Pass California.

[Eric Bethel]

MP materials.

[Eric Prince]

Yeah, that offtake goes to China for.

[Eric Bethel]

Processing because we don't do processing in the United States.

[Eric Prince]

Processing is dirty, not so environmentally friendly. It's difficult. And the China has subsidized and built to dominance in that space. That's something where the USG should, they should take a section of dugway proving ground in Utah where they used to do chemical weapons testing. Never going to build condos there. Let that be a free zone for processing rare earth elements where you can do the processing of dirty environmentally unfriendly things. But let it be in America in a friendly place that we control. That should be a. I'm all in favor of the free market, but the free market only works if it's actually a free market. And you have state sponsored controlled capitalism coming from China where they predatory land and they subsidize to the point of destroying western competition. There has to be some level of state level pushback in the west to counter that.

[Eric Bethel]

And it's happening in everything. Solar panels. It's hard for us to compete in this solar panel world when to understand how solar panels are made, you use huge amounts of silicon tetrafluoride and hydrofluoric acid. So again similar to processing of rare earth elements, it's not a very clean industry. Now obviously we can do it in a much cleaner way than China can, but they subsidize their solar industry and was it last week or the week before? I think it was last week an article, a series of articles came out saying that China has put back doors kill switches in all the solar panels they're sending to the US So just makes you scratch your head and say why? Why do we depend on China for things that are very critical to our survival? And I think, you know, as Eric mentioned, pharmaceuticals, antibiotics, penicillin, these are things that we should not outsource. It's ridiculous.

[Eric Prince]

Telecom phones.

[Sean]

Yeah, it was a great Not a great scary conversation at breakfast. You want to go into that next time?

[Eric Bethel]

Salt typhoon. I mean I can like very briefly, this is all, it's all out in the open. You know, FBI Director Chris Wray was it last year mentioned that. Well, let me provide a little bit of background. After 9 11, we needed to find bad guys and so we created the Patriot act and we asked the telco carriers to put in back doors so that we could listen into bad guys wanting to blow stuff up. Now we can't access the phone conversations without a FISA warrant because we have the fourth amendment and we have rules and regulations that stipulate what we can and can't do. But the back door has existed for decades. Guess what? China hacked into the back door. Guess who doesn't need a FISA warrant to listen into your phone conversations? And so that's when the FBI and you can look it up. The hack is called Salt Typhoon and Salt Typhoon salt like salt and pepper Salt Typhoon. So yeah, it's very well known at least maybe to me or to us, but to most Americans. I don't know, it's like I feel like people live in the matrix or something, oblivious.

[Sean]

If we do go to, if China does take Taiwan by 2027, like he says, what is our response going to be? How does this go down? How does China take it?

[Eric Prince]

They've been practicing. You talked about one brigade now, 42 brigades. They have been practicing a quarantine first, so a surrounding of the island to make resupply, naval visit, whatever, cutting off the energy and basically laying siege to it. I can see them doing that to the point of forcing some kind of capitulation or is there a way to break that siege with naval vessels or with subsurface resupply? Lots of creative ways or I would argue that immediately there's a lot of other things that should happen to China's global supply chain, whether it's all the gas pipelines flowing in from Kazakhstan, Turkmenistan, Burma, eastern Mongolia or eastern Russia, obviously full on blockade of the Straits of Malacca so that nothing goes in or out of China and dial up consequences for any of the Chinese assets anywhere in the world almost simultaneously. That is not a normal conventional military response. I can see China trying to do a massive decapitation strike of hundreds of helicopters flying into Taipei, seizing their White House and trying to do it that way on top of a, of a quarantine. They have, there's been pictures published of them building very long range or very long reach barges like floating piers that they could offload multiple railroad type vessels that they would use in amphibious assault. There's an old frogman friend, mentor of mine, Tad Divine, may he rest in peace. He surveyed all the beaches in Taiwan in 1959 as a UDT, before even the seals existed. He said there are no good beaches for amphibious assault. So Taiwan. So China has been building these very long barges right out in the open, able to, you know, you can buy commercial imagery of them. There's no other earthly reason for those to exist other than to seize Taiwan full stop. So if we delude ourselves into thinking, well, it's not going to happen, it's not going to happen, that is visual proof. It's almost like the mulberries that were used in Aeromanchas to build the portable harbor that we used in World War II at D Day. That's what China's doing right now.

[Eric Bethel]

Well, last month we had an exercise. It was called Straits Thunder. Why is it called Straits? Maybe it's because of the Taiwan Strait. I mean, give me a break. I mean, it's obvious that they're planning for something and they want Taiwan. There is no place in my universe where China does not want to take Taiwan. I wish it weren't so.

[Sean]

Do you think they would use a bioweapon and create another global pandemic.

[Eric Prince]

Possible? I could see them. I could see some kind of other financial massive shorting of the financial system with the debt crisis. We're kind of doing that to ourselves now by adding more and more trillions of debt. If they can cause that level of financial pain and chaos, what's not going to happen is if it is to be, it's up to we. It's going to be the US Government because the Australians are not going to do much, maybe Japan, probably not Korea, because Koreans and Japanese just, they hate each other. As much as Korea should be involved in that fight because they either join or get squeezed off on their own. NATO, Britain, France, totally useless. Which is why it is so important. It is in the interest of the United States government to end the debacle that is Ukraine and pull Russia away from the orbit of China. Because right now I talked to one head of state that had been at every BRICS meeting, every BRICS summit, and the previous ones were always very equal footing between Xi and Putin. The last one, Xi, was definitely ascendant. And for 100 plus years it was a policy of the United States to keep German industry from combining with Russian natural resources. Now all we've done, all this stupid Ukraine war has done is push Russia, all those Russian resources into a subservient role to the Chinese Communist Party and their massive, massive industry. That is not in our strategic interest. We do not want to tangle. If China is going to go for it, we don't want Russia on the side of China in any way, shape or form that we cannot handle.

[Eric Bethel]

Well, you asked how could it go down or when would it go down? These are I guess two different questions. The latter question I don't know. Nobody knows. It can happen next week, it could happen five years from now, but it's going to happen at some point. How it happens, I suspect that a full on invasion would be very difficult. If you go back to World War II, we had something called Operation Causeway which was an invasion of Taiwan. And our military leaders said, you know what, this is way too hard, so let's go to the Philippines instead. Taiwan is a hard nut to crack. Could it happen with a combination of cyber influence operations Eric mentioned very briefly, United front and thousand talents? You may want to explain what those are, but these are basically spies.

[Eric Prince]

Massive spy network infrastructure all through American companies, infrastructure, all the rest, the ability to really cause mayhem in the United States at the behest of Beijing.

[Eric Bethel]

But the thousand talents and united front work doesn't just leave the United States. You also have united front spies in Taiwan. What I'm seeing is the, that these exercises are getting, they're slowly tightening the noose to the point where it's becoming demoralizing for the Taiwanese. And what I would hate is for them to see this, to resign themselves, to say, well, to the inevitability of it. Right. It's inevitable anyway, we may as well just give up. And so they become despondent. And I 100% agree with taking 3% of the Taiwanese population, arming them to the gills and creating a real insurgency that gives China pause. As to our response, I don't know. And that's a really tough one because if there's a blockade, the international community is going to want, they're going to want attribution. Who started this? Right? Well, if they started it, then there's an appropriate response. But I don't think we want to start anything and I don't think we want to put ourselves in the position of having sailors and soldiers die. I mean, look, let's face it, many Americans can't tell the difference between Taiwan and Thailand. And like why should we care? The narrative, the high level narrative is why should we care?

[Sean]

And you explained it at the beginning both of you guys. Did we lose our economy? Chips.

[Eric Bethel]

Chips. Our economy. The US Dollar. The slaves are standing in the world. Yeah.

[Eric Prince]

Hard for most voters to understand that.

[Sean]

They win the tech war and become the global leader.

[Eric Prince]

Agree with all that. But you're right about the salami slicing that you've seen them do with the South China Sea. Building islands where there are no islands, moving boundaries. Now with an oil rig just off of Korea, maybe Indonesia, those waters are next. The amount of air incursions where they fly Chinese aircraft, pla, Air Force aircraft, into Taiwanese airspace, fly around, it's very hard to even intercept them. That's my frustration with Indopacom or the Taiwanese leadership. Be innovative. Okay, Clack off an IED in front of that Chinese that. That squadron of aircraft, not shoot it down. But there's a way you could build effectively an airborne IED and put a cloud of grit up in front of those engines so that every one of those engines of those Chinese fighters has to be overhauled and replaced by the time you make it home. You can really up the cost of their nonsense if you're innovative. But if you depend on Raytheon, Lockheed, Northrop, Boeing, you're screwed. And you're going to pay 100 times as much and not have the effectiveness.

[Eric Bethel]

I agree with that. Look, I'm probably talking my own book here, but we have a fund, it's called Mare Librum, which means freedom of the sea in Latin. And what we do is we invest in technology in the maritime space that can help move the needle. So you might say, gosh, is an aircraft carrier going to be really effective against a Chinese hypersonic missile? Maybe, maybe not. But can you put drones, let's call them race boat drones in the water that are autonomous, that can carry kinetic payloads, could that move the needle? So we have to think creatively, as Eric mentioned, and sort of holistically. But what we certainly need to do is we need to prepare as if this is happening yesterday. Right. But what I see is a lot of threat de escalation. Like to give you an example, a month and a half ago, what's his name? He Weidong. The guy that the Chinese military leader that runs the Eastern theater command was demoted and he was sort of removed from office. He was actually pretty good. And so the China scholars are like, okay, good. They're not ready for Taiwan because He Weidong is gone. And so let's just de escalate things. And it's just so foolish. Let's plan as if this is going to happen. And be prepared for it both as a whole of society. Our cyber, Taiwan cyber. I mean, our infrastructure is not immune, by the way, from cyber attacks, to say the least.

[Sean]

Are you talking about our power grid?

[Eric Prince]

100% power grid, telecom grid, banking.

[Eric Bethel]

Oh yeah.

[Eric Prince]

I mentioned if it involves moving ones and zeros, it's vulnerable.

[Eric Bethel]

I mentioned salt Typhoon. You could probably, you know, Google Volt Typhoon and the Chinese are embedded in our grid already. So I think we just.

[Sean]

My point is they built half of it.

[Eric Bethel]

Yeah, I mean the large transformers in our country. So let's just prepare. So we have to think about how do we prepare for this economically? What are defensive and offensive things we can do? How do we prepare for this militarily? How do we prepare for this socially, medically, pharmaceuticals and so forth? How do we decouple and start thinking through the range of options that exist, but actually prepare? It's as if we're in la la land and focusing on silly things. Remember when we were banning gas stoves two years ago? You guys remember that? Like nonsense.

[Eric Prince]

And the Pentagon was spending all kinds of money on green, environmentally friendly jet fuel. And so kudos to Secretary Hegseth for focusing on merit and lethality. That's all the Pentagon needs to be focused on. And we have an extremely convoluted, ineffective defense industrial base which has largely been cartelized by way over consolidation and really bad, really dumb Pentagon procurement processes. So what they should do on the shipbuilding side, there's lots of family owned small and medium enterprises that build ships for the oil and gas space for the exploration space for servicing lots of remote islands. So there's lots of companies they could go to with three or five designs of autonomous underwater vessels or very low profile stealthy unmanned vessels. So that Instead of what, 100 Burke class destroyers, 100 Burke class destroyers could have 1,000 or 5,000 autonomous unmanned other weapons platforms that you have a massive swarm. P for plenty. America's main contribution in World War II was our industrial base was innovation. Pivoting from making cars and refrigerators to making weapons. Making a major combat aircraft every six minutes, making a Liberty ship in a week was the record for assembly. That is what the Pentagon should pivot to now. And to do anything through the existing Boeing, Lockheed, Northrop, Raytheon, General Dynamics cartel is a massive mistake.

[Eric Bethel]

Now again, they are incented to do things based on the game that they have to play. Right now we have cost plus accounting and the way cost plus contracting and the way it works is, it's the way the system is set up and we may hate it, but it is the system. Like in their defense. And by the way, I'm as opposed to them as you are. But in their defense, you know, the cost of a missile is let's say a million dollars. And so they charge a markup. It's cost plus a little markup. Right. The next year, what are they going to charge? Well, gosh, my. I got to grow my stock price so I guess my costs went up to $2 million.

[Eric Prince]

They're incentivized to raise cost every year.

[Eric Bethel]

Right.

[Eric Prince]

And I'm sorry, I don't hold them blameless at all because they employ effectively a brigades thousands of lawyers and lobbyists in Washington D.C. they do. To change the law to their benefit.

[Eric Bethel]

Yeah, yeah, they do.

[Eric Prince]

To get Congress to appropriate way too much money to the Pentagon that spends it on that cartel who then takes some of that money and pays the politicians to rinse and repeat. They are a huge part of the problem.

[Sean]

What do you think about what do you think's going to happen here with all these newer tech companies, these new innovators coming in like Palmer Luckey with Enduro?

[Eric Prince]

I think it's wonderful in theory, but the fact is there's 800,000 Pentagons in the civilian. And as much as Pete Hegseth and team wants to change the culture, you still have a horrifically awful procurement culture. And so there's a lot of great defense tech that's starting and innovating and have a great product. Getting them to production, getting them to a DOD sale not going to be nearly as often as it should be. I think a lot of great ideas are going to die on the vine.

[Eric Bethel]

There's some great companies you mentioned Suronic, which we invested in. There's a company called Regent that makes a sea glider that flies below radar and above sonar with a very, very long range. It's essentially invisible.

[Eric Prince]

Would also make a great long range cruise missile.

[Eric Bethel]

Exactly. Or logistics platform. But consider if you're a founder, you're a startup founder and somebody says, hey, sell to the Defense Department. It's so overwhelming. The ultimate, the desired end state is to get to what's known as a por, a program of record. So the Navy or the army will give you a 10 year contract for $100 million each. Whatever. Each year. To get there though, you have to navigate through this very complex world and you never know how you're going to get there. So maybe there's a Navy group out of, you know, Jacksonville that can give you a sibir. Well, what's a cibber. You know, it's basically a small grant. Oh, diu, the Defense Innovation Unit, might be able to fund you over here. And so they're living on, you know, nickels and dimes to ultimately get to program of record.

[Eric Prince]

They're living on R and D money. I would argue. The explosion of drone technology has been so pervasive in air, ground, and even maritime lessons learned from the Ukraine war. The real ninja move would be to push procurement decisions down to a destroyer squadron level.

[Eric Bethel]

Yep.

[Eric Prince]

Or to the brigade level.

[Eric Bethel]

Even to the combatant commander.

[Eric Prince]

Yes.

[Eric Bethel]

Like, begin with that.

[Eric Prince]

Because what we have now is a super hierarchical talk about a program of record that is a super kind of socialist bureaucratic hell in Washington that takes forever for them to decide. And instead, if you give it to the brigade commander or combatant commander to say, here's money. We're entrusting these 10,000 or 50,000American lives to your responsibility. Oh, by the way, now you can buy their stuff that they're going to use. Great. The 25th Infantry Division in Hawaii is probably not going to go up here on the same battlefield that the 1st Armored Division is from. Texas. Fine, let them buy different stuff. Yes, it will cause permutations of hell for resupply, but the half life of this kind of innovation is so much faster than what we want to believe, that you can buy it cheaper if you buy it at a lower level faster versus these programmable records which add so much cost and so much nonsense. You need that kind of speed. The innovation speed in Ukraine is a guy gets an idea because they're getting their ass kicked in the battlefield. He comes up with a prototype in their garage, tests it in the battle space over the next two weeks. If it works, they get a contract that is the shortest compression of flash to bang in warfare today. And we are not just. We're 1,000 times that long on the best day now. And thus 1000 or 10,000 times the.

[Eric Bethel]

Cost if it takes 10 years to get to a program of record. And the program of record folks say, well, gosh, we can't give you a program of record unless you can scale. But you can't scale unless you've got, like, a contract with the government. Right. It becomes this crazy catch 22. What you're suggesting, Eric, is that we democratize purchasing. Purchasing, Yep. And. And you allow these individual units to buy exactly what they need. Like, how does the Pentagon. How does a bureaucrat in the Pentagon know what somebody in, I guess, Federated States of Micronesia of the future Marines need. So I think that's a thoughtful approach.

[Eric Prince]

It's controversial, it's necessary because the current paradigm is not it. It was absolutely destined to fail. If we get into a conventional conflict with China right now, we will suffer calamitous levels of casualties.

[Eric Bethel]

We can't build stuff anymore.

[Eric Prince]

You've had for all the, all the talk of naval greatness and precision targeting, all the rest, you lost the war to the Houthis. The Houthis shut down. Right. It's a Iranian backed faction in Yemen, Shia based, that closed off the Red Sea for navigation because of Israel and Gaza. The President, I think they called it Operation Rough Rider, which is an assault to the. Which is an insult to Teddy Roosevelt because it did not affect the change they wanted. They went full hot and hard. All the power of centcom, US Navy, Air Force bombers, all the rest, they were still clacking off and attacking ships. And true asymmetry. The Houthis would launch a 20 to $40,000 Shahed 136 drone against a ship.

[Eric Bethel]

And we'd shoot it down with a missile. Million dollar missile.

[Eric Prince]

Not one, but two. Okay. Because they'd have to double tap it to the point. And obviously they were shooting at aircraft carriers and shooting at them effectively enough that they had to do high speed maneuvers. Why? Because they lost not one, but two. Two ships, two aircraft, an $80 million F18 over the side because it was not dogged down. It was being towed across and the aircraft literally skidded off the deck not once, but twice.

[Eric Bethel]

You raise a super interesting point. You know, we talk about near peer adversaries and we tend to think of, you know, China and that. Well, guess what? The Houthis are peer adversaries in the sense that they're threatening ships. We, for a month we rained a billion dollars of firepower literally on the Houthis in Yemen. And they were like, okay, you stopped. Good. And they came out like cockroaches and started attacking ships again. So I guess the question then becomes.

[Eric Prince]

How good is our ship?

[Sean]

Yeah.

[Eric Prince]

Because we know it costs a lot. Thanks to Raytheon and Lockheed and Northrop. Yeah, Problem children. They need to be smashed, broken up. You've had a massive over consolidation. You used to have 100 plus major defense contractors. The Clinton administration really pushed a consolidation in the late 90s and we have been suffering ever since from that.

[Sean]

Brought it to five.

[Eric Bethel]

There's a good graph of that. And you could see on the left there are 100. And then they start whittling down to five or six. And it's basically a small oligopoly of defense primes. And I don't know how that's not great for America. Let's just.

[Sean]

I mean, what do you, what do you see being in, in venture capital?

[Eric Bethel]

Well, what I said earlier, right.

[Sean]

I mean, Sarana, they're doing, You've got. They're doing both. They're correct. They're also, they're building for the civilian market that can just be modified, that the exact same product can be modified for the military.

[Eric Bethel]

Look, you have some companies like Saildrone that, you know, they make autonomous sailboats that can collect information for civilian use, for NOAA and so forth. But then you can also make a kinetic version of that. You know, others, others do the same thing. But what am I seeing? I'm seeing the same thing I mentioned earlier, which is you're a founder, you've got this amazing technology, and then when you get to the Pentagon, the Pentagon is a big black box. And you say, how do I even. Where do I even start? It's so overwhelming now. I think DIU is making great strides. They're going to probably amplify their budget. But the system itself, as Eric mentioned, the system is broken. And so something has to be done to reform procurement wholesale. I mean, take it down to the studs and rebuild it. Because it's so broken, the secretary, the.

[Eric Prince]

SecDef, has to take it down to the studs as much as he can with hiring and firing people, because people is policy. But then there's underlying law that has to be changed. Really. The last time Congress did a big change on creating a service, I think it was MFP 11, so 85 or 86 when SOCOM was created. Why did you want SOCOM? They wanted unique spending authorities outside of the major services so that SOF could have the right equipment, the right aircraft, the right boats, whatever, for the unique needs of special operations forces.

[Eric Bethel]

And the right authorities.

[Eric Prince]

And the right authorities. 1985 or 6, 40 odd years. It's time.

[Sean]

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[Eric Bethel]

I mean, I've heard about it, but anything leaked from the CCP is quite intentional. I think it's. It could be Fictional. I'm not going to. I don't spend a lot of time on leaked memos.

[Sean]

Okay, well, is there anything that we haven't covered that we should have?

[Eric Prince]

I think it's important. There was a couple of Chinese kernels, PLA kernels, that wrote a book called Unrestricted Warfare. And after Gulf War one, seeing all the precision strike capability, the air, all that, and then even after the 2003 Iraq invasion, seeing the level of precision energy that the US can deliver, I think it made China take a step back and say, if we're going to take on this hegemon, we have to do it in an unconventional, unpredictable way. And my worry is that Pentagon leadership likes to fight in their box of the rules based order. All the people in Washington D.C. also always talk about the rules based order. Well, you know what the first rule in a street fight is? There are no rules. And unserious people that delude themselves lead us down a kind of a blind path of stupidity if we think that China is going to follow all the rules to achieve their goals.

[Eric Bethel]

So when I think of the rules based order, I think of the British redcoats who would, you know, who would stand in like two or three lines and say, ready, aim, fire. And we were taking pot shots at them from the trees and they would say, that's not gentlemanly. And we're like, so what? We just want to win, guys.

[Sean]

Yeah.

[Eric Prince]

Yep.

[Eric Bethel]

But this, this book is actually, it's very important because when China thinks of war, they think that everything becomes an artifact of war. In other words, we think in terms of war is kinetic, but diplomatic stuff is diplomatic stuff. And, you know, climate change is that, and data is that. But what if everything were an artifact of war?

[Eric Prince]

In other words, everything is weaponized.

[Eric Bethel]

Smuggling fentanyl in the United States, where 90% of the precursors of fentanyl obviously come from China. By the way, Happy Memorial Day. I did some math, and in the Pacific theater alone, 110,000 soldiers died in World War II, plus add another 60 for Vietnam, another 40 for the Korean War, and another roughly 7 to 10 from random things that happen in the Pacific, the Philippines and so forth. It's about, let's call it 200 plus thousand deaths in fentanyl over the last four years. We've had something like, you know, 70,000 people die of fentanyl every single year. Many of them are veterans, much bigger numbers than that.

[Sean]

You think it's over 100,000 a year?

[Eric Bethel]

Let's assume it's 100,000 a year. That's 400,000 over the last four years. And a lot of them are veterans. And guess what? That's coming from China. That's a weapon. And it's a weapon to hurt Americans.

[Eric Prince]

It's an intentionally funded, organized, facilitated by the Chinese Communist Party. Chinese nationals in Mexico teaching the cartels how to cook fentanyl. And it's a payback for the opium wars of 150 years ago, which the US was not even really part of. That was the Brits. But they see it as a way to corrode our society. I think it's very important to remember we fought a war against China. When? 1952, 53. When a million Chinese volunteers came roaring across the Yalu river and attacked the US forces in Korea. MacArthur wanted to bomb them properly and he was relieved. And we basically fought for two more years to a stalemate again ending up on the 38th parallel. But we fought a very hot war against China. We haven't fought one against the Soviet Union. And their ability to project tens, hundreds of thousands of people is a lot. Their tolerance for pain is much, much, much higher than ours is.

[Eric Bethel]

Yep.

[Sean]

What edge do. I just don't understand what edge we have on them.

[Eric Prince]

Innovation.

[Sean]

They have infiltrated our power grid, our communications. The fentanyl crisis. They're buying our land. I mean the medical supplies, the whole supply chain. Elite capture. What the fuck are we doing?

[Eric Prince]

Our sergeants, our 03 Captain.

[Eric Bethel]

Bricks.

[Sean]

Fine.

[Eric Prince]

Militarily, our middle management and NCOs are way better. It is not something that.

[Sean]

I'm not going to argue that. But they get so frustrated with the bureaucrats up top that they leave.

[Eric Prince]

Correct. Fair. But there's still a lot of them serving the decision making of a Chinese Communist Party. One state rule where no one questions, no one questions the boss, no one calls bullshit on bad decisions. Where every decision is not made by the people here, where it should be, it's always kicked upstairs. Waiting for someone senior to them to make that decision really paralyzes their decision making. And you even see that. I remember probably eight years ago there was a knife attack from some Uyghurs, which is a ethnic Turkic Muslim part of China from Xinjiang province. And they did a knife attack in a major Chinese city. And it was so bad, so bureaucratic, the controls that the police that responded, one guy could carry the pistol, another guy had to carry the magazine and they had to call back to headquarters to have permission to hand the magazine to the guy to load the pistol. This is during a full on knife attack. To solve that problem, amplify that a thousandfold across the Chinese military. Now, autonomy, maybe that accrues back to their benefit because they're not so worried about friendly casualties and friendly fire and collateral. But we have a innovative populace that will come up with new solutions. Look at Elon Musk, what he's done to space lift and space travel versus the all government, all the time solution. You need to find 100 more Elon Musks amongst all these defense innovative companies. Give them money, give them leeway, and great things will happen. If we depend on the cartel that is the big five defense industry, we're screwed.

[Eric Bethel]

I think at a macro level, one of the things that we still have is the ability to attract and retain the best people in the world. Elon Musk is an example, but there are many others. You go to Silicon Valley and it's really, really smart people that go to Stanford or, you know, MIT or whatnot, and they stay here. Plus, we have an enormous appetite for risk taking the risk capital that we have in the United States. The venture capitalists and so forth are able to, they put money into companies because one of them, out of their portfolio of whatever, 15 companies, is going to be a unicorn. And so we have an ecosystem from the capital markets, the IPO markets. The strength of our financial and commercial and private sector infrastructure is so strong that I don't think anybody's going to beat it. And I think, as I mentioned at the beginning of this segment, the battle of ideas competition ultimately will win the day. And when you have the smartest people in the world competing for the best ideas, the best companies, et cetera, we're going to end up winning. When you have the state, in the case of China, directing all elements of economic activity, it's doomed to fail. That's why you have ghost cities of apartments everywhere and things that don't work. Long term, we win. Short term, I'm much more concerned.

[Eric Prince]

And it also takes good leadership. If you think about the officers, the naval officers that defeated the Japanese army and Navy in the Pacific theater, you had guys like Admiral Burke, they called him 31, not Burke, court martialed as a junior officer because he ran a couple of his ships ashore. But he was a decisive risk taker. Nimitz, I believe, was also court martialed as a jo for some risky decision. We have a very risk intolerant culture in the military and we promote bureaucrats that don't make any decisions while at the same time the lack of accountability. If you think about like 2017, 1819, there was three fatal collisions in the Pacific theater between US Navy warship and a commercial vessel. So you take a Burke class destroyer, which is what, a billion dollars or more, with all kinds of high dollar radars and all the rest doing maybe 20 knots, commercial vessel doing 25 knots, and they run into each other. How is that possible? How is that? That is the disgusting degradation of the basics of seamanship and accountability that the military has been allowed to devolve to instead of focusing on merit and lethality.

[Eric Bethel]

And that's changing. So there are a lot of bright spots on the horizon. I think focusing on first principles in the military is important, is an important component of that. On the private sector side, I think we need wholesale deregulation. The regulations have gotten so out of hand that there's a reason why companies have moved overseas. Let's deregulate to the point where things are sensible. I'm not calling for zero regulation. What I'm calling is for sensible regulation.

[Sean]

Have you seen any signs of that getting ready to happen?

[Eric Bethel]

Sure. We're about to, you know, we're about to unleash nuclear power in the United States. Trump signed an executive order and the nrc, the Nuclear Regulatory Commission, I think needs to get, you know, readjusted. It shouldn't take, I mean, 10 years to build a nuclear power plant in.

[Eric Prince]

America or 20 years to get a permit to get a license to do so.

[Eric Bethel]

So deregulation, unleashing the energy supplies that we have here and the mineral supplies. We haven't talked about tariffs if you want to go down, down that rabbit hole. But tariffs are a part of, not exclusively, but a part of, re industrializing the United States. Where they end up going, nobody knows. But I can tell you that there is a rush for a lot of folks to start doing stuff back in America.

[Eric Prince]

The United States government used to be funded off tariffs alone. It was not till the progressive era they passed.

[Eric Bethel]

So the early 1900s, right?

[Eric Prince]

Yeah, a bunch of.

[Sean]

No kidding.

[Eric Bethel]

Yeah, that's true.

[Eric Prince]

Used to be the sole income of the US Government was tariffs, which gave a basic level of protection for domestic industries. I think that is a very good idea. So what the President's doing on tariffs is right. It is good to incentivize production.

[Sean]

The whole US government was financed off tariffs 100%.

[Eric Bethel]

Well, keep in mind the US government was a lot smaller back then than it is today.

[Eric Prince]

And it should be a lot smaller. Yeah, it should be massively smaller than it is today.

[Eric Bethel]

It's very disappointing. They haven't made the doge cuts permanent in our legislation.

[Eric Prince]

It's disgusting. It speaks really badly to the Republican Party, to a huge amount of those Republicans, to not even cut the most egregious stupid waste that it speaks to the problems of the uniparty and why Trump was fighting not just against the Democrats, but against most of the Republican Party because most of the Republican Party is as bad as the Democrats. And so voters, when they go to their voting booth in another year and a half, they need to elect somebody that is fiscally responsible because we have a lot of people that are not.

[Eric Bethel]

And let's go to, you know, just to pivot back for a second to the reindustrialization of the US and why. One of the many reasons why Trump won. I think globalization over the last 30 years has benefited the elites living in coastal cities, you know, San Francisco, you know, Palo Alto, Silicon Valley, New York, Wall street, et cetera. But what it's done is it's hollowed out the industrial capacity of the middle of the country and people. There was dignity and still is in being a welder, in working in a factory. But we decided that we would get it out of the United States, send it off to China. Hey, I've got to deal with quarterly earning cycles. I'm the CEO and if it out of sight, out of mind. And what you have is a group of people in the United States that, you know, once had jobs and real dignity and now they've got nothing and now they're being fed fentanyl only to die. There's a desperation and a lack of hope and I think we need to re industrialize the United States. I mean, is textile manufacturing coming back? Probably not, but there's a whole bunch of stuff that can still come back.

[Eric Prince]

But I would even disagree. Textile manufacturing can even come back with a certain level of automation or robotics. But in the 90s when you had, when NAFTA started and you had a over financialization, the entire private equity crowd that can buy a business with a lower cost of capital because they can borrow cheap, they consolidate four or five family owned businesses, they gut the management of it and then they outsource all the production to China because there's a free trade deal to do that. Yeah, those family businesses, the communities that they're in, all suffer because of it. Which is why a baseline tariff incentivizes people to make in America. That should be the law of the land.

[Eric Bethel]

So looking for hope and optimism on Memorial Day we will at some point, I think it's baked into the ethos of the administrations of this administration to re industrialize. I think that we've opened the eyes of corporate boardrooms in America who now see that their China assets need to get moved. You may have seen Tim Cook made an announcement that we're going to start moving a lot more Apple production to India. You're seeing changes in the military focusing as Eric mentioned, on merit and lethality and first principles. And so little by little you're starting to see the cruise ship if you will, if you want to call us a cruise ship, just moving slowly I think in the right direction in many respects it's not perfect but we're starting to move. But now we need to move faster because we have an adversary that is very formidable and we better wake up.

[Sean]

Wrapping the interview up, I want to get your guys opinion on what does the rest of the world look like if China were to take Taiwan. We talked about us. What does it look like for Europe? What does it look like for South America, Africa? What does it look like everywhere else?

[Eric Prince]

For immediate Southeast Asia you'll see a scenification of meaning a Chinese control and tentacles into a lot of those societies with more social credit score and more of the big government rule of the elite far away from any kind of individual rights. In Africa you'll see effective economic colonization and control. It depends on what the US role in the world if Taiwan being taken causes a massive bankruptcy in America and a complete reversion. That's a problem for the US government. But there's a lot of entrepreneurs in America that don't depend on the US government that can still take American know how capability to go out and do innovative things. Right. If you think about, think about what SpaceX is now. He's built a global communications platform to provide global Internet. Yeah, NASA was his first customer. But SpaceX and that kind of innovation continues on. We still have 50 great states, 50 state governments that are well run. If the US government has to take a massive haircut and a write down, you know, so it's not all. We have a lot of fundamental elements in our society that will continue on with or without the US government. I've learned that the hard way over the last 20 years that maybe less federal government is not such a bad thing.

[Eric Bethel]

100%. What does the world look like a less free place?

[Sean]

What does Europe look like?

[Eric Bethel]

Well, Europe has other issues. They've got an imploding demographic, they've got immigration issues. Many, not all, but many of the immigrants that have gone to Europe don't share. Let's Just say the European cultural values.

[Eric Prince]

I'll say it stronger. They're completely incompatible and don't belong in Europe.

[Eric Bethel]

All right. And they're suffering from very high energy prices because they had spent decades depending on Russian natural gas while focusing on climate change and listening to Greta Thunberg. And now the Chinese electric vehicles, if they're allowed into Europe, are going to decimate the German automotive industry, which is.

[Eric Prince]

Already suffering from a much higher cost of electricity because they've embraced the stupid green lie. And for all the noise of Europe, Europe, Europe for Ukraine. The fact is they've continued to buy Russian gas at a dollar figure above any of the military aid that they provided to Ukraine. Come on. Unserious people.

[Sean]

Yeah.

[Eric Bethel]

So you've got a demographic issue, you've got an energy issue, you've got a manufacturing issue. And it's unclear how Europe comes out of this. Again, I'm not a European political or economic expert, but you can just sort of read the tea leaves.

[Eric Prince]

They all have a demographic issue. Japan not replicating itself, their population set to collapse. Korea, it's even steeper. China has a population collapse issue. Taiwan has an even greater population collapse issue. That's another reason. If you don't believe enough in your society to procreate, to have kids, to leave kids behind, why die defending your Taiwanese society?

[Sean]

Damn good point. It's a damn good point.

[Eric Prince]

So, look, I still believe in Western Christian civilization, that we've gone through rougher patches throughout 2,000 years, and there's a lot of great heroes to look to in the past that can rally the people when necessary. I'm exceedingly thankful that Trump was elected and not to politicize this, but again, we've had a very different paradigm of way he has tried to shift the country versus what Kamala Harris did. Elections have consequences, and politicians don't last forever, but ideas and values should. And so, you know, this is still the best place on earth. United States.

[Eric Bethel]

Yeah. And look, I'm a believer in American exceptionalism. We attract and retain the best people. We've got a very robust capital markets and private sector. All we need to do is tweak a certain number of things to sort of get us all humming and, you know, all the pistons firing and. And basically, I think we need to be aware, if anything comes out of our discussion, it should be an awareness that we don't live in a peaceful world. The Francis Fukuyama, the famous author who wrote the End of what is it? The end of civilization. We won. We're going to democratize the world. We have adversaries out there and we need to open our eyes, we need to be vigilant, we need to be prepared. And I think if we are able to harness the work ethic and the exceptionalism of the American people, we're going to succeed.

[Eric Prince]

And this really is a competition of governance philosophies. Chinese communist party is state control, rule of the elites with the serfs having no rights. You're but a cog in the machine.

[Eric Bethel]

Kind of like California. Yeah.

[Eric Prince]

Versus the United States. We believe in rights. We have a constitution. We have a bill of rights which is supposed to impair and limit the government. And as imperfect as the republic is, it's an infinitely better place to be than living under a massive statist monolith. So, yeah, vote and defend freedom.

[Sean]

Yeah, that's right.

[Eric Prince]

Send it.

[Sean]

That's right. Well, gentlemen, I really appreciate your time coming. That was a very eye opening conversation and I learned it. I learned a lot. So thank you so much for being here.

[Eric Prince]

Thanks for having us.

[Eric Bethel]

Thank you.

[Sean]

All right, thank you.

[Eric Bethel]

The United States soccer Federation presents the.

[Sean]

U. S. Soccer podcast inside the opening 45 seconds.

[Eric Bethel]

What a goal with that cannon of a left foot. I'll leave it at 1. Never miss a game. What a start for the United States. Shot for distance. What a goal. Never miss a moment. Exquisite. From the San Diego. Can he finish? The U.S. soccer Podcast? Follow and listen on your favorite platform.