The Man Who Predicted the Iran War 2 Years Ago Says We're Already in Phase Two — And There's No Exit Prof. Jiang Pt 1 | Impact Theory w Tom Bilyeu

Summary

---

Podcast Summary: "The Man Who Predicted the Iran War 2 Years Ago Says We're Already in Phase Two — And There's No Exit | Prof. Jiang Pt 1"

Podcast: Impact Theory with Tom Bilyeu
Date: March 19, 2026
Guest: Professor Jiang
Host: Tom Bilyeu

---

Episode Overview

This intensely analytical episode of Impact Theory features Professor Jiang, renowned for his prescient warnings about escalating U.S.–Iran tensions. Tom Bilyeu dives deep with Jiang to dissect the roots, strategies, and broad consequences of the ongoing U.S.–Iran war, exposing the economic, political, and historical forces that drive modern conflict. Rather than focusing solely on headlines, both speakers examine how shifts in financial systems, generational attitudes, and global alliances have pushed the U.S. into a near-inescapable military and geopolitical quagmire.

---

Key Discussion Points & Insights

1. The Real Drivers of the U.S.–Iran War

• Surface vs. Structural Causes
  While mainstream narratives claim the conflict is about stopping Iran’s nuclear program, Professor Jiang insists this is a symptom, not a cause.
  • “So we know the cause is not Iran's nuclear program... a few hours before the Israelis struck Tehran and killed the Ayatollah, the Omaniya foreign minister went on TV and said that the Iranians had already agreed to zero uranium enrichment, even for civil purposes...” (05:56, Prof. Jiang)
• The Nature of Declining Empires
  • Jiang claims the U.S. is behaving like a declining empire—racked by hubris, desperation, and an inability to accept strategic defeat.
  • “Washington D.C. has become an insular bubble... so arrogant and so insular that they refuse to consider the possibility of defeat, so that they always double down.” (01:58, Prof. Jiang)

2. Game Theory, Mission Creep & The Escalation Trap

• According to Jiang, American involvement was never likely to remain limited. Mission creep, sunk cost fallacy, and the lessons of Vietnam presage deeper escalation.
  • "The great irony of all this is that the Marine Expeditionary Force that is going to Iran is the same force that went into Vietnam..." (41:48, Prof. Jiang)

3. Historical Lens: The Heartland Thesis

• Mackinder’s Geopolitical Theory:
  The British and later the Americans sought to prevent the unification of Eurasia—particularly via overland routes that would rival sea-based empires. Control over maritime chokepoints, like the Strait of Hormuz, is essential for global dominance.
• Financial Innovation & Empire
  • The British creation of the Bank of England and the U.S. adoption of the Federal Reserve system enabled both nations to finance extended, expensive conflicts.
  • "Once you start to fight a war, you have to keep on fighting... it's almost like a Ponzi scheme. And so that's what led to the Napoleonic Wars." (09:14, Prof. Jiang)

4. Post-WWII Economic Order and the Fragility of U.S. Hegemony

• Bretton Woods & Dollar-Based System
  • The U.S. dollar became the world’s reserve currency with the promise of gold backing, then shifted to petrodollars—a system now under strain.
  • "Nixon did two things... Saudi Arabia would only sell its oil in US Dollars... and he made a deal with China to become trading partners... These two deals... became the basis of the new global economy." (24:09, Prof. Jiang)
• Loss of Trust & Military Overcompensation
  • Sanctions against Russia, overreliance on fiat currency, and the loss of faith in American financial stability have increased the need for overt displays of military power to prop up the system.

5. Interplay Between U.S., Israel, Saudi Arabia, and Global Powers

• Diverging Interests & Pressures
  • While Trump wants quick victory and optics, Israel and the Gulf states push for Iran’s total neutralization as a threat.
  • "I think... the Israelis are thinking much more long term, and they really want to eliminate Iran as a threat in the Middle East..." (36:15, Prof. Jiang)

6. The Strait of Hormuz, Kharg Island, and Strategic Dilemmas

• Potential U.S. Moves and Risks
  • Seizing Kharg Island is likely, but would not deliver the intended knockout. Mission creep is almost inevitable due to Iranian resilience and outside support (mainly from Russia).
  • “...once you take Kharg Island, you expose the Marines to drone strikes and artillery... this is exactly what happened in Vietnam...” (41:48, Prof. Jiang)
  • Iran and Russia’s counter-strategy: Spike oil prices, expand the conflict, use attrition.

7. Domestic Dynamics and the War’s Political Logic

• Trump’s Personal Stakes
  • The war’s extension is incentivized by Trump’s existential need to retain power and avoid prosecution.
  • “We know exactly what's going to happen if he leaves office... So Trump cannot afford to leave office.” (48:23, Prof. Jiang)
• A Possible ‘No Exit’ Scenario
  • The cost of retreat is geopolitical, economic, and political collapse—leaving the U.S. with little option but further escalation.
  • “...if Trump were to leave the Middle east, basically the American empire would collapse.” (48:23, Prof. Jiang)

8. Ripple Effects on the World Economy

• AI Bubble and Global Investment
  The war’s impact threatens not just the dollar, but also the continued flow of GCC investment into the U.S., particularly into the AI sector, risking an economic double-blow if confidence unravels.
  • “If he doesn't manage to restabilize the Middle east... they're going to pull all of that money to defend their country. That... causes a shock, a potential collapse of the AI bubble.” (53:27, Tom Bilyeu)

---

Notable Quotes & Memorable Moments

• On the true cause of the war:
  “This is a war that is looking for a purpose and a strategy. And maybe 100 years from now, historians will still argue over why this war started in the first place.”
  (05:56, Prof. Jiang)

• On American hubris:
  "So a lot of the problem is that if you look at empires inclined, they're no longer capable of strategic planning because there's a legal and toxic combination of hubris and desperation."
  (01:58, Prof. Jiang)

• On the economic lens:
  “If it was purely economics, then America and Iran would have sat down, you know, like 1979, 1980... and just agreed on an economic solution. And like, 40 years later, there's never been a serious economic solution. And so this tells us that, yes, economics is at the heart of it, but doesn't really fully explain what's going on.”
  (15:26, Prof. Jiang)

• On mission creep and Vietnam parallels:
  “Five years later, you're at 500,000 American soldiers, right? So once you send in ground troops, then it creates a logic, a momentum of its own. And then you have mission creep, and it's sunk cost fallacy, and then eventually you have an actual draft.”
  (41:48, Prof. Jiang)

• On the risk of U.S. withdrawal:
  “If Trump were to leave the Middle east, basically the American empire would collapse.”
  (48:23, Prof. Jiang)

• On Russia’s incentives:
  “Russia is most interested in the Iran government staying intact... So the Russians are heavily invested in the Iranians winning this war. The Chinese... they don't really care.”
  (41:53, Prof. Jiang)

• On the economic house of cards:
  “Right now there’s still a massive gap. We find ourselves in a position where the one thing propping up the US economy poof. Goes away. And so... if the first one doesn't kill the dollar, the second one could kill the thing holding up the economy.”
  (53:27, Tom Bilyeu)

---

Key Timestamps

• 00:45 – Opening salvo: Iranian goals, American motives, and the economic cost of war (Prof. Jiang)
• 01:58 – The logic of declining empires; toxic hubris and strategic myopia (Prof. Jiang)
• 03:55 – Game theory and escalation: Why the U.S. can't win quickly or leave quietly (Prof. Jiang)
• 05:56 – Exposing the false narrative behind the nuclear issue (Prof. Jiang)
• 09:14 – Mackinder’s Heartland thesis and imperial strategy (Prof. Jiang)
• 15:26 – The limits of economic logic and the non-rational drivers of conflict (Prof. Jiang)
• 24:09 – Bretton Woods and the evolution of dollar dominance (Prof. Jiang)
• 36:15 – Differing goals: U.S. optics vs. deeper Israeli/GCC interests (Prof. Jiang)
• 41:48 – The Kharg Island quagmire and Vietnam analogies (Prof. Jiang)
• 48:23 – Trump’s existential incentives and the U.S. no-exit scenario (Prof. Jiang)
• 53:27 – Investment, AI bubble, and cascading economic risk (Tom Bilyeu, Prof. Jiang)
• 55:10 – Episode conclusion

---

Tone and Language

The tone remains urgent, analytical, and direct—blending historical narrative, economic theory, and current events with clear-eyed pragmatism and a willingness to challenge mainstream assumptions. Both Tom Bilyeu and Professor Jiang avoid partisan snark but do not shy away from probing the personal motives of political actors or the flaws of national policy.

---

For New Listeners

If you missed the episode, this summary distills the essential, interconnected threads: the roots and logic of the U.S.–Iran war, the economic and historical forces at play, and the unique, perilous incentives shaping present decisions. Whether considering macroeconomics, political psychology, or military stratagem, Jiang and Bilyeu make an urgent case: this war is much bigger than its headlines, and its consequences could reshape the global order.

---

Transcript

[VRBO Narrator]

Whether it's a birthday trip, a family reunion, or just a fun getaway, booking a VRBO vacation rental means no worrying about surprises. VRBoCare and 247 Life Support have your back if something's off. The Loved by Guest filter helps you find top rated homes. And verified reviews mean real feedback from real VRBO guests so you know exactly what you're booking.

[Commercial Voice]

Honestly, I just booked my VRBO because there was a sweet wine fridge.

[VRBO Narrator]

Hey, we all have our reasons. Don't walk into a surprise if you know you. VRBO terms apply. See vrbo.com trust for details.

[Tom Bilyeu]

Nine out of the ten largest banks get it. They get Advantagescore. The Modern Credit score is the leader in predictive power, improving mortgage default predictions and saving lenders billions better predictions better for your business with VantageScore.

[Professor Jiang]

Iranians have said that their goal is to spike the price of oil to $200 a barrel. If Trump were to leave the Middle east, basically the American empire would collapse. It's very risky to use military force to resolve an economic issue.

[Tom Bilyeu]

It isn't enough to remind everybody that you have a big military. You actually have to get control of Iran.

[Professor Jiang]

This is a war that is looking for a purpose and a strategy. The Marine Expeditionary Force that is going to Iran is the same force that went into Vietnam. Like five years later, you're at 500,000American soldiers. You can make the argument like a lot of the issues in America come from the fact that the baby boomers are a selfish, materialistic and self absorbed generation that refuse to surrender power.

[Tom Bilyeu]

So who are going to be the winners and who are going to be the losers in this?

[Professor Jiang]

Trump in America, they continue to underestimate the resilience and resolve of the Iranians.

[Tom Bilyeu]

Professor Jiang, welcome to the show.

[Professor Jiang]

Hi Tom.

[Tom Bilyeu]

If you had to advise the US what would you tell them if they actually wanted to either get out of the war with the least amount of damage or actually win? What, what is the play here?

[Professor Jiang]

So a lot of the problem is that if you look at empires inclined, they're no longer capable of strategic planning because there's a legal and toxic combination of hubris and desperation. And so the. So Washington D.C. has become an insular bubble, right? And if you just look at these press conferences where reporters are like, hey, Mr. Trump, what's the plan here? And then Trump's like, shut up, man, I'm going to put you in jail. In fact, I'm going to pass a law that says if you criticize us in the war, we're going to put you all in jail or we're going to shoot you to death. Right. That's how empires behave. And so at this stage where empires are in decline, and they are, and the leadership is unwilling to omit any possibility of defeat, and they're just trying to force everyone to repeat talking points. Right. So Peter Hextef in his press conferences is just saying, like, you know, the problem with you guys is you don't talk about the good things. All you talk about is the bad things. Stop talking about the bad things. You just focus on the good things, and then we're good. Okay. And what. What he doesn't recognize is like, I'm sorry, but, like, the world's going bad. You need to hear it. And they absolutely refuse to hear it. Okay, so why Amber's decline is they become so arrogant and so insular that they refuse to consider the possibility of defeat, so that they always double down. And I don't know how you resolve this issue.

[Tom Bilyeu]

Yeah. Isn't going to be easy. That is for sure. So, okay, if we don't know how to do it well, what is your prediction for how it's actually going to play out? Is this a Trump declares victory, leaves it in chaos, comes home, or is this Trump gets sucked in because Israel, Saudi Arabia, they want a ground war. They want this protracted thing to play out so that they can basically jockey for power in the Middle East. Which of those two scenarios is more likely, in your view?

[Professor Jiang]

Right now, there's a talk of war. So it's almost. Almost impossible for us to ascertain who's winning this war because the Israelis and Americans are doing too much damage to Iran. The Iranians are fighting back as well. So we can't actually ascertain who's actually winning this war. But if you just look at historical examples, if you look at Green theory, then the idea is the Americans are stuck where they are and they can only double down because if they ever quit. Right. It's not cost fallacy. It's like you go to the casino and you're losing $100,000. If you quit now, you'll always lose that money, so you keep on gambling. Okay. So unfortunately, what game theory suggests is that Trump's just going to double down. And so I think what he's going to do is he's going to take Car island, and he'll do it very easily. And then he'll want to secure the coast as well. And so you have mission creep. And unfortunately, he's being egged on by both Israel and The gcc, because Israel clearly wants this war to escalate, and the GCC wants to remove the Iranian threat as soon as possible because they see the amount of damage that the Iranians can do to the gcc. So Dubai, if nothing changes, Dubai will just cease to exist. Because. For. Because Dubai is just based on the perception that is a safe tax haven. Right. But if Iran can just rain drones on Dubai uncontested, then no one's going to put their money in Dubai. So for Dubai to continue to fr, it needs to destroy Iran and remove that threat from the Middle East. So, unfortunately, the way that things are structured suggests that this war can only escalate and not actually move towards a ceasefire.

[Tom Bilyeu]

All right, the official story is that this is a war to stop Iran from going nuclear. But the framework that you've been working off that allowed you to predict this war nearly two years ago suggests the structural forces that are actually driving it are deeper than that. If the war in Iran is just a symptom, what is the actual sickness?

[Professor Jiang]

So we know the cause is not Iran's nuclear program, because a few hours before the Israelis struck Tehran and killed the Ayatollah, the Omaniya foreign minister went on TV and said that the Iranians had already agreed to zero uranium enrichment, even for civil purposes, which was before a red line. So we know that the nuclear program is not the real cause. And in fact, Trump has yet to articulate a good reason for why this war started in the first place. Now that the reason the administration is articulating to the public is that, well, the Israelis were going to strike first, and if that would have happened, the Iranians would have struck back at both the Israelis and the Americans. And therefore, the Americans had to preempt the Iranians. And that's why the Americans went in with the Israelis. So this is a war that is looking for a purpose and a strategy. And maybe 100 years from now, historians will still argue over why this war started in the first place. So let's go over some possibilities. So the first possibility is that this war had to happen. And the reason why is the nature of the American Empire. The American Empire, its power rests mainly on its ability to control maritime trade. It's able to control key maritime choke points like the Strait of the Strait of Malacca, the Strait of Hormuz, the Strait of Gibraltar. And the great fear is that the Eurasian continent would unify under great power. And so in the beginning of the 20th century, there was a British strategist named Mackender who, Harold Mackender and he argued that the greatest threat to the British Empire was the rise of a Eurasian power, whether it be the Ottoman Empire, whether it be the French, the Germans or the Russians. Because if that power were to arise, that power would unify both Europe and Asia and connect the entire Asian continent through railways and then, and then absorb the Middle east and Africa and Southeast Asia into a continental trading block that would negate the naval power of the British Empire. And the British Empire only had naval power. It didn't have the population to sustain a land army. We saw that in World War I and World War II. So the entire strategy of the British was to create as much, to cost as much discontent and chaos in Eurasia as possible, and if a great power were to arise, to basically go to war against that power. So we first saw the strategy play out during the Napoleonic wars when Napoleon basically unified Europe. And then what Britain did was find out seven wars, seven wars against Napoleon. They lost six and they won the seventh.

[Tom Bilyeu]

Do you think that the Brits at that point saw that as an existential threat and that's why they were going that hard?

[Professor Jiang]

Yes, they did, because Napoleon wanted to institute something called the Continental System. So basically just blockade England because remember, Britain is a resource poor island. So they were blocked off from the European continent. And if Napoleon was able to embargo them, then they would have starved, basically. There's also another issue in that there are two main sources of British imperial power. The first, of course, is the Royal Navy. The second, which is actually more important, is the bank of England. And so the bank of England was chartered in 1688. Sorry, sorry, 1694. 1680 was the glorious Revolution. The Glorious Revolution is important because that's when basically the Dutch Republic merged with the British Empire. And the merger happened because one of the Dutch princes, William Orange, went over to England to become their king, something called the Glorious Revolution. And when that happened, when the Dutch aristocracy went over to England, they also brought with them their capital and their wealth. And so they set up the bank of England as a private bank that would serve British monarchical interests. So, so previously before, if you're a merchant, you lent money to a king to fight his wars. The problem with that is that, well, the King could die or the King could lose the war, or the King could just reneg on his promise and say, you know what, I'm the King, you can't do anything about me, so screw off. Okay? So there was a lot of risk involved in lending money to a king. Now the Great innovation of the bank of England is that you no longer let money to a king, you give that money to the parliament, the nation state. So when you do that, then everyone in the nation, including the children, the grandchildren, are now obligated to pay you back. Okay. And in America, this became the Federal Reserve System. So in other words, all this wealth in Europe that was looking for stability all went to England, including the Dutch Republic, but also including the Habsburgs, including the Catholic Church. And so that allowed England infinite financing for wars. So even though it could not produce a land army, it could give you the financing to fight Napoleon. And that's what led to the seven Napoleonic Wars. And, and, but, but the problem with this is that once you start to fight a war, you have to keep on fighting because you, if you stop, if you lost, then you lose all your money, right? So it's almost like a Ponzi scheme. And so that's what led to the Napoleonic Wars. And again in the seventh, seventh war, Britain won, was, was able to force an indemnity onto the French and that saved the, the British system. So after the French came the Russians, which led to the Russian Great Gate, which let's even call the Great Gang between Britain and Russia in Central Asia,

[Tom Bilyeu]

but with the same idea. They're trying to stop them from forming this heartland alliance so that they can do trade via trains.

[Professor Jiang]

That's exactly correct.

[Tom Bilyeu]

We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere

[American Express/Grainger Commercial Voice]

saving for your next milestone. Turn your everyday errands into cash back opportunities. Thanks to the blue Cash Every Day card, we can earn 3% cash back in the US on essentials like groceries at supermarkets, online retail purchases and gas stations. That's how we started growing our family's little nest egg. Take the next step with Blue Cash Every day from Amex. Learn [e-mail] Explore terms and cash back cap apply.

[Commercial Voice]

When you manage procurement for multiple facilities, every order matters. But when it's for a hospital system, they matter even more. Grainger gets it and knows there's no time for managing multiple suppliers and no room for shipping delays. That's why Grainger offers millions of products in fast, dependable delivery so you can keep your facility stocked, safe and running smoothly. Call 1-800-GRAINGER Click grainger.com or just stop by Grainger for the ones who get it done.

[Tom Bilyeu]

Thanks for sticking around. Let's get right back into the action. Yeah, I want to keep beating this point for people because this is one of the more brilliant ideas that I had never heard of before that you brought forward. I'm constantly trying to get people to understand what's going on in Iran through the lens of economics. And I don't know if this is going to be a point of agreement between us or a point of contention, because I know we're going to get into the religious element of it. With your thesis on eschatology, we'll get there in a second. But this idea that there have been all these attempts to get people that. That multiple different empires have tried to unify that heartland that you're talking about across Europe, that would essentially go from Eastern Europe all the way to the Middle East. And because I had often wondered, you hear a lot that, you know, the US Patrols the seas, that England did it before them. And I was always like, how, with boats that can't go on land, how exactly are you controlling this large empire via the sea? And this is the first way where I've heard somebody really dive into, well, if. If you force commerce onto the water, you actively stop it from going on land. Now you get these few choke points. And if you can control those choke points, you control the economics. And if you control the economics, you basically control the world. And I've had a shockingly difficult time getting people to view this war through the lens of economics. Now, I know you're just starting here and you have other things. Do you feel like the economic lens is the predominant lens, or are we going to get to something that you think is actually even bigger than that?

[Professor Jiang]

Yeah, I think the economic lens is the priority, but there are other issues adjacent to this economic issue and about understanding these other issues, we can't really understand what's really going on because it was purely an economic issue. Then what America could do is say to Iran, let's just be friends. Let's be trading partners. Right. And Iran would be ecstatic about America lifting sanctions because the entire point of negotiating with America on the nuclear deal was to lift sanctions. Right. So it was purely economics. Then America and Iran would have sat down, you know, like 1979, 1980, whenever, and just agreed on an economic solution to the differences. And like, 40 years later, there's never been a serious economic solution. And so this tells us that, yes, economics is at the heart of it, but doesn't really fully explain what's going on.

[Tom Bilyeu]

Okay, I want to set the religious component on the shelf for now. We'll get to why the right lens is economics. But however, if you want to know why people Stop being rational actors. We'll get to that. So we've got this Mackinder's Heartland thesis. The British have it. They're fighting against, you know, first France, then Russia. Like that keeps going for a while, but the baton handoff from the Brits to the US running the same strategy is something that I think certainly Americans are largely blind to. Can you walk us through that? And why something that made sense for this tiny island continues to make sense for, you know, the gigantic land mass and economy that is the U.S. right.

[Professor Jiang]

So we have to remember, like, much of the reason why Britain was able to keep its enemies in the heartland at bay was because it allied itself with the Germans. Right. So basically, basically it was an alliance with the Prussians that allowed the British to defeat the French at the end of the day. But in the late 19th century, about 1870, Germany unified under Bismarck and now they have their own ambitions. And now Britain came to conflict with Germany. The Germans were extremely technologically advanced at the best universities. They were extremely sophisticated, cultured people, just the best philosophy in the world, and they had the best general staff in the world. So Britain found a tremendous adversary in Germany. So much so that it took two world wars to defeat Germany. So we can argue about the causes of World War I, but most historians agree that World War I was cost because Britain was a hegemon and Germany was the challenger, a rising power that threatened the economic imperial security of Britain. And that's what ultimately led to this World War I. And America came into the war because, quite honestly, it seemed as though Germany was going to triumph in the end. So it took basically an entire global alliance to defeat Germany in World War I. The tragedy, the travesty of World War I is that in the Versatiles Conference, the Allies made Germany take all the guilt for causing World War I, which was extremely unfair and inappropriate. And it basically laid the seeds for World War II. And so you have World War II and now Germany is spreading across Europe and Germany decided to attack Soviet Union, which is communist. And you would think that American Britain would. Would fight alongside the Nazis, but instead they chose to support Stalin. And again, the reason why is the Hartland McKenna thesis. You can, you cannot allow a great power to emerge in the Eurasian continent. And at that time, it seemed that Germany was ascended, right? Because if you marry German technology and logistics organization with Russian manpower and resources, then this is the empire that rules the world. So America could not allow that to happen. But over World War I and World War II exhausted Britain and it forced the Peaceful transfer of imperial power from Britain to America. And this was cemented in something called the Bretton witch Conference of 1944, which established the global financial order that we live in today. So, so that, that is the story.

[Tom Bilyeu]

Okay, so the part that I think a lot of Americans will be a little bit baffled by is why is that handoff so obvious that, okay, the way to rule the world is to stick with these shipping lanes. It makes sense when you've got a small island. It gets more confusing when the US Is a gigantic landmass with cooperative neighbors to maybe slightly varying degrees, certainly right now to the north and to the south of them. So why did we accept this idea of trying to patrol the entire world via the seas? Was it just the, the call of being the imperial leader is so strong and so intoxicating that we're willing to take on the risk of empire? Or was it that, well, that's what we're going to have to do to make sure that the dollar remains the world's reserve currency.

[Professor Jiang]

Right. So I think that at the end of World War II, first of all, there was a lot of tremendous goodwill among the Europeans for what America did, right? I mean, because Americans made a lot of sacrifices to save Europe from fascism. And so the Europeans were very grateful. And the real concern was that America retreated back into its continental fortress, which is what America did at the end of World War I. Then another threat would arise in Europe, possibly the Soviet Union.

[American Express/Grainger Commercial Voice]

Right?

[Professor Jiang]

Well, I mean, obviously the Soviet Union. And so the Europeans were very much interested in ensuring that America stayed interested in European affairs. And that's what led to the NATO alliance and the Marshall Plan. And America itself recognized that if it did not help the Europeans, then Communism was ascended. Communism had already won in the Soviet Union and it was clearly going to triumph in China. And so now you have a combination of both Soviet Union and China. And so that really scared American policymakers. So it was in their best interest to revitalize the Europeans and the Japanese as soon as possible. And that's what led, of course, to the Marshall Plan. So I think that it was a combination of idealism and a combination of goodwill as well as just real politic, long term strategic planning.

[Tom Bilyeu]

Okay? So with that as the backdrop, we now understand that America's taking the baton. They're patrolling the seas. They're for a very long time, they're really holding at bay Russia from becoming the next great power. We end up winning that largely because Russia just imploded by, by not being able to figure Out a successful economic system, now you get Pax Americana, one government, the monopolar world, where they're just running everything. How does that end up pushing us towards this moment? Because for a lot of people that grew up under that, it was awesome. So you and I, I think, were actually born in the same year. So for me, yeah, for me, this has just been like, yo, this has been amazing. And so it's. Watching it unravel is deeply distressing. But seeing it up close, as an entrepreneur, the way that I kept interfacing with something I've heard you talk about, but using very different words, is that some people need to be chased by a lion without hardship, without having to fight and struggle for something. The ideas that take root in people's minds are very distorted. They begin to think that, um, the world is just always going to be peaceful. That's just the default stance. And so they're not thinking about the real things that it takes to maintain hegemonic structure like we had for so very long. So when you think about the structural forces that were at play post the collapse of the Soviet Union, why did it get worse and not better?

[Professor Jiang]

Okay, so to answer this question, we have, we have to look at what America's major imperial innovation was. Okay? So the Britain Woods Conference 1944 was to establish the US dollar as the world's reserve currency. Something called the exorbitant privilege. And America did this to the benefit of Europe, because what this meant was that America was basically financing the reconstruction of Europe and Japan, right? Because Europe was devastated by war and they needed to rebuild the factories and manufacturing, but they needed an outlet and consumers, right? So Americans agreed to buy from Europe and, and America would also sell to Europe, okay, and, and the point was to very quickly build the manufacturing capacity of Europe as well as America. And this all made possible because of the US dollar. The problem is that when you have fiat currency, there's always a risk that you print too much money, that you lose financial discipline. So the agreement was that US dollar would be pegged to gold. So at any time the Europeans could reimburse the US dollars for gold. And so US Dollar, the US dollar basically became a contract between the Europeans and the Americans. And this worked out really well for the first 10 years and it led to tremendous post war prosperity. But over time, the Americans started to overreach, started to abuse this exuberant privilege in Vietnam, right? So basically America was financing this silly war in Vietnam that served no strategic purpose. Then you had the space race where America was spending billions of dollars to send a man to the moon. And then there was a great society of Lyndon B. Johnson, which was tremendous for the American people, but it made the Europeans question how much gold Americans actually had at Fort Knox. So the French famously sent a frigate, a ship to New York to pick up their gold and take it back to France. And after that led to something called the Nixon shock. In 1971, Richard Nixon said that the US dollar would no longer be pegged to. To gold. Now you have a problem like if you're not pegged to gold, then how do you determine the value of your currency? And so Nixon did two things, which was crucial and bas, which basically established the world order that we live in today. Okay? The first thing he did was he signed a deal with Saudi Arabia, where Saudi Arabia would only sell its oil in US Dollars. And that led to something called the petrodollar, right, which is now the basis of. Of the US Dollar. The other thing that Nixon did was also. That was also very important, which people don't really discuss, is he went to China and he made a deal with China to become trading partners where China would basically export its cheap labor and return. They would get US Dollars, right? So these two deals, okay, the petrodollar, as well as China become the factory of the world, became the basis of the new global economy. And in 1991, when the Soviet Union fell, this system then became the global financial order. And this was fine. The problem is that there was excess capital being produced around the world, and it all went to America. Now, at this time, America was shifting its manufacturing to China. So the economy of America became very unbalanced. And. And it became. It shifted from a focus on manufacturing to a focus on financing. So Wall street started to, you know, explode in both financial and political power. And that. That led to hubris. And then Wall street, because it had to create financial vehicles to absorb all this foreign capital, started to invent all these risky derivatives as such, as, you know, the CDOs, collateral debt obligations. And this, of course, led to the 2008 subprime crisis. And at this point in history, essentially the entire global economy should have collapsed. Why? Because Wall street had basically bundled the entire global economy together so that if one part of the system collapsed, the entire system collapsed. And I know that you've shared this with very well with your audience, so I won't go too much into it. The system didn't collapse because something happened which is that China bailed out the world by printing all this Money to build infrastructure throughout China. Okay. So China basically became the consumer for the world government of all these raw materials in order to build its skyscrapers, its high speed rail. And that worked out really well for, for the world. But then China said, well, you know what? Before we were exporting our cheap labor and now we are financing the global economy, so we want to have a greater say over global affairs. We want our companies like Huawei to go to Africa and sell our products and compete against Apple. And the Americans didn't like that. And that's what led to the Trump tariffs. And when he came to office in 2016, right. The first thing he did was to sanction these Chinese companies. And that's what led to the trade war. And so you have all this instability now in the system because China's trying to contribute heavily to the global economy, but it wants more political power because of this. And Americans are. No, we are still ahead to mind. You have to listen to us. So the 2008 great financial crisis was a heavy blow. Then this trade war of China was also not a heavy blow. But the, the, but the next heavy blow was of course, the 2022 Russian invasion of Ukraine. Why? Because after that happened, America started to use its financial weaponry to sanction Russia. Right. So it basically removed Russia from the swift system and it froze Russia's Russian $300 billion in assets in Europe and in America. And when it did this, it actually backfired because remember, the entire global financial order is based on legitimacy and reputation. And when you steal someone's money, you destroy your reputation. So Putin's response was, Wow, $300 billion is the best money I've ever spent in order to collapse the American led global financial order. And so this is what's led to, to a lot of the issues that we have today, where underpinning the global financial order is the US dollar. But people don't have as much faith in the US Dollar as possible. So how do you compensate for that? You compensate for that by using military power. And this helps us understand this war in Iran where by going to Iran, and I mean, we have to assume that the Americans under Trump were planning for a short, decisive war to control Iran. And once you control Iran, you control the entire Strait of Hormuz. You control all the resources, you can control global trade. Right. Also, what's really important is you prevent a Russia, Iran, China alliance from forming. Okay. Because once that happens, once China, Russia and Iran come together and trade and create this trading block, it achieves the heartland, right? And then Europe comes in, then Middle east comes in, then Africa comes in. FU breaks. So from an economic perspective, Americans didn't have a choice in the matter in that the US dollar was extremely unstable. People didn't have any faith in it anymore. And so you have to. You had to use force to remind people that the US dollar is still the only global reserve currency. And so they went into Iran hoping to control that crucial choke point of resources and trade. And it's really blow up in their faces.

[Tom Bilyeu]

Taking a short break. But there's more impact theory after. Stay tuned.

[Grainger Commercial Voice]

If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner offering the products you need all in one place from H vac and plumbing supplies to lighting and more. And all delivered with plenty of time left on the clock. So your team always gets the win. Call 1-800-GRAINGER visit grainger.com or just stop by Grainger for the ones who get it done.

[Commercial Voice]

If the world were like a sleep number mattress, everything would adapt for your comfort. Because as your life changes and your body changes, sleep number mattresses adapt and shift to give you personalized comfort night after night. And now it's the final days of our everything's on sale event. Save up to $1,200 on mattresses. Our Memorial Day event ends Monday. To experience a whole new world of comfort, visit a sleep number store or go to sleepnumber.com sleep number to a good life sleep.

[Tom Bilyeu]

Thanks for staying tuned. Now let's get back to it. Okay, so you've put a couple pieces together that I think are really important and I'm gonna say it in a slightly different way and see if this lands for you. So 1971, Nixon breaks the peg to gold. You become a true fiat currency. There's now no real tether for you. The world begins to realize, okay, hold on a second. This is just fiat. You guys are going to print out of control like every empire before you. And so Nixon does this brilliant thing and he finds two avenues to keep making the dollar systemically important. He gets essentially the vast majority of oil trade to be only transacted in dollars. Presumably you didn't say this, but I think it's basically will protect you dear GCC countries. So you can't really protect yourself super exposed there in the desert. Don't worry, we've got you. You guys focus on infrastructure, desalinization, all that stuff and we'll run your military for you, that works out very well. Hey, China, we need cheap labor, but, hey, we'll make sure that we're buying a lot of the stuff that you're producing. Just make sure that you're also doing trade in dollars. So you've got energy now pegged to dollars, and you've got this industrial revolution, not the one that most people think of when they hear that, but this new rise of China as the world's manufacturer, also now being tied to dollars then, because, of course, as empires do, uh, they overextend, they bully, they do things that ultimately are against their own interests. And we begin eroding the trust in the dollar, which is the only thing left on a fiat currency. And so the part that I want to reword is when you say that we use our military to remind people of the power of the dollar or that we're strong or whatever, I would say it slightly differently. And this gets to why Iran becomes so important. Like, what actually happens in Iran is it isn't enough to remind everybody that you have a big military. You actually have to get control of Iran. You have to control the oil now. You have to control the Strait of Hormuz. And if you either are forced to destroy the oil, which now is going to just have a massive negative impact on the global economy, or because of asymmetric warfare, Iran continues to cause a problem in the Strait of Hormuz. And it's technically open, but every time a U.S. or U.S. allied ship tries to go through, it gets blown up. Now, all of a sudden, you may have reminded everybody that you have the stronger military, but Iran is showing you they can still control the thing you must get control of if you want to win.

[Professor Jiang]

Okay, I would disagree, because you are saying that the Americans went in hoping for a Venezuela solution, right, where they removed Maduro, and, and that's what Rodriguez, the Vice President, was very happy to play along. So it's basically a regime change that favored the Americans. So let's just discuss how the interests of Israel and the interest of Trump are different. Right, because as you point out, Trump is interested in optics. He wants a quick victory. He wants the Iranians to surrender to him, and he wants to be. To be able to control the oil supply so that he, when he goes to Beijing at the end of this month, he can negotiate a great deal for America. And he will. And he'll look really, really good. Right, because he just came off a. A very decisive victory in Venezuela. So, you know, he was very arrogant. He's very confident That's Trump. But I think they really are thinking much more long term, and they really want to eliminate Iran as a threat in the Middle east, and it's just not the Israelis as well. If you look at Saudi Arabia, the Saudis have always had issues with Iranians. So I think it was a coalition of interest, the Israelis and the Saudis who were pushing Trump to attack Iran. And actually a reporting from the Washington Post actually confirms this, where mbs, the head of Saudi Arabia, Saudi Arabia, he was lobbling hard for Trump to attack the Iranians.

[Tom Bilyeu]

The thing that I want to understand better is, given the quagmire that we are now in with Iran, what are the options that are on the table, especially for Trump? So if you agree that for the US to actually have gained ground here, they need to control the Strait of Hormuz or by some miracle get a friendly government in Iran that will maintain control, but do things that are very beneficial to the GCC countries, to the us, To Israel, which seems sort of farther away by the day. But if he has to do that, do you think he's going to push into Karga island and take over? It's like 94%. Do you think he goes all the way to a ground invasion? What do you think are the options at this point, given the realities on the ground?

[Professor Jiang]

So what I've observed is that Trump in America, they're behaving exactly the way that an empire decline behaves, which is that they suffer from a toxic and lethal combination of both hubris and desperation, meaning that they continue to underestimate the resilience and resolve of the Iranians, and they are desperate for a knockout punch as quickly as possible. Trump wants this war to end as soon as possible because he knows that the longer this war drags on, the worse the economy will suffer, the worse his polling will be, and the more likely the stock market will tank. So he's looking for a knockout punch. And right now, if you're looking for a quick solution, if you're looking for a gamble, well, your best option is Carg island, because as you point out, that is where Iran exports 90% of its oil, primarily to China. So right now, a Marine exponential force is traveling from Japan to the Middle east, and we should expect them to arrive maybe in about a week. And there's about 2,500 of them, and they specialize in amphibious landing. So the idea is that they will bombard the coastline in Cargill island, and this will enable the Marines to land and secure the oil depots of Carc Island. And at this point, Trump will declare victory and try to get the Iranians to the negotiating table and says, listen, I have Carg island and this is your economic lifeline, so let's cut a deal that allows us to both save face. Okay? And I think that is the plan. But there are a lot of issues with this plan. Okay? The first issue is that Carte island is not as important economically as people believe. That's the first issue. Meaning that even if you were to secure Car Island, Iran does have workarounds where they can just ship from, from the coast. That's issue number one. Issue number two is that Iran needs financing for this war. And now they're using this oil as financing, as collateral financing. But if the Chinese and the Russians believe that the Americans want to strangle Iran, then it's not in their best interest to see Iran destroyed. They're not going to provide financing. And anyway, and look, the reality is that now that oil is shooting up in price, this benefits Russia tremendously. Right? So Putin can take all this oil riches and finance Iran in fighting this war. Because Russia has the most to lose if Iran loses this war and there's regime change. So that's issue number two.

[Tom Bilyeu]

You think Russia has more to lose than China?

[Professor Jiang]

I, I, I do. I do. And the reason why is that if Iran were to fall, this opens up the Russian southern flank to the Americans. Right? Because Azerbaijan is an Israeli American ally. And if Iran were to fall, then the Americans and Israelis could, could stage operations from the south. Also. Also, Iran has been providing a lot of support to Russia in the Ukraine war. So Russia is getting most of its drones from Iran. So Foreign Minister Sergey Lavrov has said that Russia will protect Iran. And Russia is most interested in the Iran government staying intact. And there's been reporting from American news outlets that American intelligence believes that Russia is providing targeting for the Iranians. So all these drone strikes, all these ballistic missile strikes, they're getting intelligence and targeting from the Russians, which, by the way, is what NATO did in Ukraine. Right? So from the Russian perspective, it's payback. So the Russians are heavily invested in the Iranians winning this war. The Chinese, problematic, they don't, they really don't care. They see Iran more as a major supplier of oil that they, that they need. But if they need to shift supply routes, they can do so. Right. So the Russians are heavily invested, and so they would finance the Iranians regardless if Iran is no longer able to export oil. Okay. And another issue is this. If you Attack the economic lifeline of Iran. They now have incentive to strike at the oil refineries of the gcc. Right, because no matter how much economic damage you can do to Iran, they can do so much more to the gcc. And this would cause the oil. The price of oil to spike. Remember, Iranians have said that their goal is to spike the price of oil to $200 a barrel. Now it's about $100 a barrel. And so what they're saying is that we're going to fight a very long war attrition that could last years. So I don't see what the strategic benefit of taking Carte island is. The last problem, and this is the most important, is that once you take Carte island, you expose the Marines to. To drone strikes and artillery strikes from the coast, which means that you now need to send in more Marines to secure the coast. Right? So you sent in 2,000 3,000 troops to secure Car Island. You've done that easily. But they can't secure. They can't secure the island against Iranian drones. So the only way you can do that is by taking. Taking the coastline along Clark Island. You do that with tens of thousands of Marines, but then you expose these Marines to attacks from the mountains, the Zagros Mountains, right? These drones, these missiles from the Zagros Mountains, which means that now you have to invest 100,000 troops to go after Iran's underground missile facilities. And this is exactly what happened in Vietnam. The great irony of all this is that the Marine Expeditionary Force that is going to Iran is the same force that went into Vietnam and marked the first major ground involvement of the Americans. In about 1965, they basically went into Dang Nan and secured the Air Force base. And at first it was like 3,500 soldiers. And that was supposed to be it. Like, five years later, you're at 500,000American soldiers, right? So once you send in ground troops, then it creates a logic, a momentum of its own. And then you have mission creep, and it's on cost fallacy, and then eventually you have an actual draft. Okay? So that is a great danger of taking Carg island at this point.

[Tom Bilyeu]

Okay, so let's keep pushing down that road, because I think that you're bang on with this. I think if Trump puts boots on the ground in Iran, I think he can get away with Kharg island because it will be small. It will feel like, hey, we're doing this very discreet thing. We can take it in, you know, a couple days. We've got it now he'll declare that that's a big win for us. We control 94%. He buys himself a little bit of time. Most people don't know what you just said, which is Iran has other options. So that's going to feel, going back to Trump equals optics. It's going to feel like an optical win. The thing that scares me is I think to your point, he will end up getting drawn into Boots on the Ground because one he'll have seen, oh, the American people didn't super freak out. Okay, that's great. We all start going, well, I mean, I guess we already have boots on the ground, so it's not so crazy that we go like, just try to finish the job real quick, you know. But by doing that, I think that his base implodes. I think he is a guaranteed loss at the midterms. And, and I think given the political dynamic in the US where we are so hyper polarized that it becomes existential for him in terms of he will go to prison. So if he loses the midterms, he gets impeached immediately. He then obviously loses power in 2028, which needs to happen no matter what. Given that right now our Constitution makes very clear, no third term for you. But I think that we would, I mean, look, many, many a thing can happen between now and the 2028 elections. But I would imagine if Trump down, the Republican Party loses power, Democrats get into office. They have already vowed that they're going to go after him legally. So I have a feeling he's going to fight like this is existential. So he's going to start making decisions that would seem rational to anybody else or irrational to anybody else will seem rational to him because he absolutely must find a way to victory. Better to prolong it, leverage a war to stay in power, et cetera, et cetera. So walk me through if you think any of that analysis is off base or if I'm missing something. But what do you see if he makes the fateful decision to go after Carg Island?

[Professor Jiang]

Yeah, no, I agree with your analysis. I think a lot of his thinking is how does he stay in power? Because we know exactly what's going to happen if he leaves office. The Democrats are going to come into power and they're going to go after him and his family. We know this because that's what happened in 2020. When, when, remember the raid in Mar a Lago? Remember all these, all this lawfare against Trump? Remember that he lost his court case and almost bankrupted him? Okay, so you can imagine that there's going to be a lot of people who want revenge for what Trump is doing in his exact second term. So Trump cannot afford to leave office. And so his personal calculus is, how do I stay in power? Well, staying in power for the ballot box is very risky. But if he starts a war, and this war is at first supported by both the Democrats and the Republicans, but then slowly this war spirals out of control, and then there's a lot of unrest around America, in which case he's forced to send the National Guard, and then he's forced to call the national draft in order to protect American interests in the Middle East. Then he can conceivably stay in power for as long as this war continues. And we know this because of what happened to Zelensky in Ukraine. Yeah, exactly. Because of the war in Ukraine. They suspended their constitution and they suspended elections, and Zelenskyy is still in power. Remember when Zelenskyy visited Trump in the White House, Trump asked Zelensky, hey, hey, can you really do that? And then Zelensky is like, you like this, don't you? Right. So I think, unfortunately, that is going through the mind of Trump right now. I just want to step back and. Because a lot of people are saying, well, why didn't Trump just declare victory and go home? The problem with this is if Trump were to leave the Middle east, basically the American empire would collapse. So let's go over, using game theory, what would happen if Trump were just to say, you know what, you know, I killed the leadership, I destroyed the nuclear weapons program, I set back the ballistics program. Everything I wanted to accomplish, I've already accomplished. I'm going to go home, guys. Goodbye. Okay, what happened is this. Iran would say, the gcc, hey, you've destroyed our country. You have to pay back reparations. If you don't pay back reparations, first of all, we'll continue to attack you and destroy your oil infrastructure. And second of all, we won't let you use the trade for hobo moves. And so now the GCC is forced to take a fortune, dollars in sovereign wealth funds. Before, this money was going to the United States. Now it's going to Iran to build back their economy and infrastructure and their military. Right? But then the Japanese and the South Koreans are like, well, we just saw what, what happened, right? Where the Americans attacked Iran and Iran fought back and destroyed the gcc, and the Americans refused to defend the gcc. Remember, the entire point of this petrodollar agreement is that Americans would guarantee the security of, of the gcc. And when this war started out, what we know happened is that the Americans abandoned their bases, changed into civilian clothes and moved into hotel, into hotels because they could not stop the Iranians from raining drones and ballistic missiles on their bases. So the South Koreans and the Japanese would be like, okay, well we can't trust Americans so we need to remilitarize as soon as possible. So let's just not depend on Americans and remilitarize. But what that also means is they stop buying U.S. treasuries. Right. And so the U.S. dollar loses buyers from the Middle east and loses buyers from East Asia. And so the dollar could potentially collapse in value. And Now America has $40 trillion in debt, which forces an economic crisis in America, a great reset financial depression. But you, you'll have riots in the streets. And then you go to Europe. The Europeans are like, the Americans are suffering from depression and the Americans are not able to defend their allies. Why are we fighting the Russians again? Why don't we just come to an agreement with the Russians? Why are we sending our men to die in Ukraine? Right. So now Russia becomes the dominant power in Europe and Iran becomes a dominant power in the Middle east. And America is, you know, imploding back in Western hemisphere. Is that a situation that the American government, that Trump would, would countenance? I don't think it is. So, so there's really no possibility of America retreating from this war. America can only escalate. Unfortunately.

[Tom Bilyeu]

Yeah. There's another piece that I think is getting lost in all of this, which is Trump went to the midd leased and secured, I don't know, call it $2 trillion in investment promises into the US which will largely go into AI infrastructure. And if he doesn't manage to restabilize the Middle east and make sure that the GCC countries don't have to spend that money on their own defense. They're going to pull all of that money to defend their country. That causes a shock, a potential collapse of the AI bubble or burst of the AI bubble. And so right now the American stock market, so as you well know, we have a grotesquely K shaped economy. And the only thing propping up spending right now is that the wealthy few at the top are still buying a bunch of stuff. And that creates this illusion that the economy is doing okay. Ish. And that stops if AI implodes. And AI doesn't have to not be real. AI is real. But if the money stops flowing in, they're not able to get the infrastructure investments. They need to see this across the finish line so that the revenues can catch up. Because right now there's still a massive gap. We find ourselves in a position where the one thing propping up the US economy poof. Goes away. And so it's like everything you just said and then squared because you've got the second thing waiting in the wings. If the first one doesn't kill the dollar, the second one could kill the thing holding up the economy.

[Professor Jiang]

I completely agree. It's a very dire situation.

[Tom Bilyeu]

That's it for part one. Make sure you are subscribed so you do not miss part two. Coming up soon.

[Grainger Commercial Voice]

If you work in university maintenance, Grainger considers you an MVP because your playbook ensures your arena is always ready for tip off. And Grainger is your trusted partner, offering the products you need all in one place, from a track and plumbing supplies to lighting and more. And all delivered with plenty of time left on the clock. So your team always gets the win. Call 1-800-granger. Visit grainger.com or just stop by Granger for the ones who get it done.