Summary
Transcript
We are on the cusp of world War three. We are provoking the keeper of the world’s largest nuclear repertoire. It is, in my view, the most dangerous time, far exceeding the dangers of the cuban missile crisis. You can’t win a kinetic war against a nuclear power without risking nuclear annihilation. And honestly, I think it’s just incompetence. The man is not fit to be president. Anybody who continues to claim otherwise is not being authentic. The enemies of the US are looking at profound weakness. Had outright war with Iran, you could see oil go to 203, $400 a barrel easily.
If we go to war with China, do we think they’re going to give us all the parts we need to make the bombs and missiles that we’re going to fire on them? Of course they’re not. The US was truly worried about keeping the dominance of the us dollar and we would not have frozen russian reserves. India has to look at what happened to Russia and wonder whether it’s them next. China is certainly looking at what happened to Russia and wondering if it’s them next. This is the death of the dollar system. We’re sleepwalking into the abyss.
World War three is already happening. This is a house of cars. Fossils are collapsing. Right now you’re going to see an economic crash the likes of which we’ve never seen. Hi folks, canadian prepper here. So it’s an honor today to have on the channel our first non human guest, Doomberg. It’s not AI. I know a lot of you guys are going to think he’s AI, but he’s not. This is a collective of energy and financial analysts, very popular in the alternative financial news end of the Internet, and they have 236,000 members on Substack. And I believe it is the most paid subscribed substack.
Is that correct? Yes, sir, Nate, and a great pleasure to be here. Big fan of yours. I was telling you before you hit record that we’ve been subscribers to your YouTube channel long before Doomberg was a thing. But yes, we are humbled to be the number one paid finance substack in the world, which has truly been an amazing ride. Like I said, big honor to be here with you today. Well, that’s pretty incredible. What is it exactly that you do? If you could just explain it to people? And maybe you can explain a little bit about the anonymity because I’m sure that’s on people’s minds right now as to why I’m talking to a cartoon.
Yeah, you bet. So first of all, what we do is we provide effectively the industry perspective on the energy debate, which was lacking largely from the discussions around energy. Doomberg is made up of a team, a small team, it should be said, of former industry executives with a science and finance background. I personally have a PhD in an area that would be relevant to commodities and led large teams of researchers in industry. And what we observed is, in the energy debate in particular, most people from industry are kept behind public affairs walls and either are uncomfortable or not free to give their honest opinion about what should be policy and what is arguably the most important sector of the economy.
And we have served to occupy that inefficiency in the media world. Most people in the energy sector either work at a university, have only ever worked in government, or are journalists who don’t have scientific training. And so Doomberg was born a little over three years ago. We publish about eight articles a month, and we just have grown beyond our wildest dreams. And so it’s been truly the work of my life. And to your question on ammonymity, it started mostly as a brand. My very standard looking face would not have been noticed on Twitter and as a guest on podcasts.
And a green chicken stands out. And one of the first rules of marketing is you can’t be remembered if you don’t stand out. And then once Nunberg grew, we have observed when other large social media platforms that are anonymous de anonymize, they tend to shatter the brand intrigue. And so the brand is very valuable to us. It’s something that we have nurtured. And we have decided that maintaining our anonymity is mostly for brand. There are hundreds of people on Wall street, and our friends and family and coworkers know that we’re Doomberg. It’s not some big secret.
We’re not writing these things from jail. Substack knows who we are. Stripe knows who we are. We passed kyc, Aml, and all those other things. And so it’s mostly for brand. And then there is a small bonus of people have to address our arguments and not assassinate our characters, which is nice. And then I’d say a distant third is, as I’m sure you’ve encountered, there are some unstable people in the world who, when you become a relatively large social media property, will make your life potentially uncomfortable. And so there’s a bunch of reasons why we would like to stay anonymous.
But, you know, it’s not like we really care if we get, quote unquote doxxed. There’s no, no grand mystery behind us. And we stand behind the quality of our work. And I think the market has told us that anonymity is okay. People still pay to subscribe to our newsletter, even though they don’t, quote unquote, know who we are. And as long as we delight our customers, I think we’ll be just fine. Yeah, it really is a testament to the work that you guys are doing that in spite of not having a official name and a face to what you’re doing, so many people are willing to pay for your advice.
So I’d encourage people to go and check out the substack after the video. We wanted to have you on today because with all the geopolitical turmoil going on in the world, there’s uncertainty about energy prices and how the current political situation is going to factor into this, how the climate situation is going to factor into this. And there’s so many different data points in this grand equation that determines what the price of energy is going to be, because we know that at the crux of it all, cheap energy is basically what drives a lot of the economy.
You think energy consumption is going to continue to increase? If humans are going to flourish, it has to. And betting against the desire of humans to flourish has been a sucker bet for millennia. First of all, climate fears and having leaders that are either incapable or unserious are truly luxuries of the richest. Now, in the US, the shale revolution happened predominantly because the states tend to be able to control permitting for energy projects that don’t cross state lines or international borders. Which is why states like Oklahoma and Texas and Louisiana have been able to produce so much energy for the rest of the world to enjoy, because these markets are highly interconnected and inelastic.
We had lived such luxurious lives, right? Electricity comes from a switch on the wall and food comes from touching my phone. And the young generation has no idea how much time, effort and technological ingenuity goes into creating all of the energy we need to make those things happen. The people in India don’t believe that. The people in Russia know it’s different. And those leaders, Modi, for example, are distinctly serious, deeply intellectual, generational type leaders like we used to have in the west when we were still developing. And I think having developed to the point of, do our lives really change that much? If we made ten or 20 or 30% less money next year for you and me, probably not.
For some Canadians and Americans at the edge, it would be pretty bad. But even for them, we have social safety nets and so on. If you’re in Brazil, in the shantytowns or if you’re in Mumbai on the sidewalk begging for money from foreigners who are coming out of the airport like you are desperate and you dont have time for that nonsense. And so I think what were seeing is a disparity in the seriousness of the leadership of the BriCS countries who are desperately trying to develop and are thinking for their people. And the western world, which has an abundance or had an abundance and therefore has the luxury to ponder sort of greater things.
If youre sitting at the top of the pyramid of Maslovs hierarchy of needs, you can ponder climate change. If you’re in India and worried about where the next gallon of fresh water is coming from, do you really care about carbon emissions? No. You’ve got children to hydrate, and that is going to be your predominant objective for the day. And there’s way more people in that category than in our category, which is something I think people in our category are quick to forget. To just assume that India is going to burn less coal because we would ask them politely to do so is the height of naivete, which is proven by the fact that they’re more than willing to buy sanctioned russian oil and dare the west to do something about it.
All of the oil that wasn’t being refined, all of the russian oil that was no longer being refined in Europe and in the west is now being refined in India. And by the way, that diesel is finding its way to the US, northeast. India stepped in and basically saved Putin. And what could we do about it? Are we going to sanction India? No. Yeah, I guess that obviously does have a potential consequence, though, right? It goes back to the whole tragedy of the Commons thing. Whereas, of course, we can’t expect that India is going to live at a substandard.
And one could say that that really is a very sinister policy masquerading as virtuous. So we know that they’re not going to stop using energy and they’re going to continue to try to develop as we would expect they would. And for us to expect anything else is clearly a double standard. Do you believe that part of the conflicts that we’re seeing emerge around the world are related to energy? Because there’s that old idea that all wars are resource wars. So how much of that as a causal factor in those conflicts? I think it’s a great question, and we’ve thought about this a fair bit.
So I agree with you that all wars are effectively resources wars. And it is our view that the current slate of quote unquote diplomats, if we’re going to round up and assign them that title. In the US, and in the west in particular, grew up at an age where the belief was that oil production had peaked in the western world. So 1973, Hubbard’s peak. All this predates shale. Our whole geopolitical outlook, our whole reason for being in the Middle east, is because we believed, tar sands notwithstanding, that production of oil in the US in particular, was in terminal decline.
And that sort of 40, 50 year outlook, the petrodollar, the supposed deal with the Saudis, whether you believe it’s real or not, all of that is framed from basically the Yom Kippur war and the oil embargo and the very serious sort of political PTSD that that imparted upon the diplomats at the time. And we have not changed that thinking. As a consequence of the shale revolution, the US is now an energy gigapower. We don’t need to be embroiled in wars in the Middle east. Most of the oil in the Middle east is going to China. Let China defend the Red Sea.
What are we doing? We should protect Israel, who’s our ally. But beyond that, let the region fight itself out. We have plenty of oil here. Worst case scenario, we could tweak our export rules and make sure they were amply supplied. We wrote a piece about the western hemisphere. If we just took the Monroe doctrine and said, the western hemisphere is the US, the rest of the world, knock yourselves out. We have so much potential in the western hemisphere, we don’t need to be floating on the seas looking for confrontations. Here’s a classic example of how we think the current slate of diplomats in the west has no idea how energy markets actually work.
When the sanctions against russian energy were first rolled out, we were early weeks after they were rolled out to say they would not only not work, they would backfire. We caught a lot of heat. Putin puppet all this nonsense. Which, of course, couldn’t be further from such characterizations. They were designed to backfire. Anybody who’s been in industry for two minutes knows that you cannot sanction the volume of a commodity producer in the hopes of hurting their price, because if you were successful, the price would go up by more than the drop in their volume. So to give you an example, if we cut Russia’s oil exports by half, we would legitimately trap them in Russia.
The price of oil would more than double and Putin would make more. Russia make more on it. Right? They make it all up in price and then some. And we’ve seen that russian oil has made its way to the market. And the sanctions have increased the friction, which has increased the price, which has funded Putin’s war machine, which is why he’s out producing the west in shells and missiles and planes and tanks and so on. We lost the sanctions war, which I think is going to be the reason we ultimately lose the war in Ukraine, because we didn’t understand energy.
So I think this whole cadre of western leaders would do well to understand the fundamentals of energy outside of the narrow lenses that they see it through today. So you think that the only reason why we’re in the Middle east and that oil scarcity is not a real concern, at least not in the near term. You would say that that’s not a factor at all in this, and we’re just playing out the PTSD of the seventies as you frame it, Mike, I would say, look, energy commodities are highly inelastic, and so supply shocks in one part of the world quickly spread to the rest of the world, especially in oil.
Natural gas is a bit more regional, and we’re trapped, for example, with the glut of natural gas in the US. Nothing that happens in the rest of the world is going to change that. But oil, easier to ship, it’s a liquid. Coal is even easier to ship, it’s a solid. So we don’t want to see a giant mess go off in the Middle east. Nobody should want that. But the country that should care more about that not happening is China, because unlike China, we are self sufficient, Preston. But I guess the challenge to that would be that we aren’t self sufficient because we are self sufficient in terms of energy.
But the global marketplace where we get all our stuff from, obviously is in China. What youre saying would entail a breaking off of economic relations with China, because if we decoupled from the global energy market and we nationalized our oil price or whatever, would that not have some pretty extreme repercussions with our ability to get those products that are made at a lower labor cost than were accustomed to? If we have to onshore all those costs, again, wouldn’t that lead to inflation? Pretty temporary, sky high inflation. So I agree with you. But at the very same time that we are policing the Middle east, in our view, to keep oil flowing to China, we are embarking on an economic war with China, which we can’t win because exactly as you said, we have offshored all of these critical materials to China because we don’t want to make them here.
We don’t want to pay the environmental price of making them here. So your view, which is a correct assessment, it proves the internal contradictions of current western policy. Like we are sanctioning China on the chips issue, which I understand, and we’ve written that we think we’re going to lose that war, by the way, because we have direct experience with how China operates. And by the way, China is a dastardly global competitor. They steal your ip, they bribe people, they blackmail people, they will infiltrate your company, rip off all your ip, and suddenly you see your patent protected products on the market at a fifth of the cost and five times the volume, and you dont know what happened and youre out of business.
This is how China came to dominate the solar market. But here we are totally dependent on China for our military supply chains, for example, and yet seemingly provoking a war with them. I dont really understand the strategy. Its the SAme strategy. Well, the same people who formulated the sanction strategy that seemed designed to backfire are now getting it on with Xi jinping in China. And so I’m all for a totally rational strategy where if we’re going to protect energy routes to China from the Middle east, then let’s have a good relationship with China. It’s inconsistent. So my point is, in an emergency, everybody is deeply hurt, but at least in that emergency, we are energy self sufficient.
When you’re doing your financial analysis, what is your predictions for World War three? I feel that that term has been overused lately by myself and others. But what are you seeing here in terms of worst case scenarios? You’ve given us a lot of really good news, I think, and that’s surprising considering your name is Doomberg. I think maybe you should change it to like a Zoomberg or something. Generation Z, I’m about to fire up some bad news for you on this question and live true to the name. Look, what keeps us up at night. Last week, maybe ten days ago, the russian foreign ministry summoned the US ambassador and basically issued a demarsh, which is the harshest communication you could give basically a foreign power short of a declaration of war, and said that the Russia now considers, because of this attack missile that exploded over a beach in Crimea, which I know that you’re very familiar with, that the US was party to the conflict in Ukraine, that that event was a war crime and could not have happened without us help, which was basically accusing the US of having committed a war crime against Russia.
And most importantly, that, quote, retaliation will certainly follow. That has been completely not reported in the west that this happened. And I can assure you that that meeting achieved wall to wall coverage inside of Russia. We are on the cusp of World War III. We are provoking a nuclear superpower. We hear this analogy like, you can’t be a chamberlain. You can’t appease, like Chamberlain did to Hitler in World War two in 1939. Germany didn’t have nuclear weapons. France didn’t have nuclear weapons, and neither did the UK. If all three of them did, I could assure you that world War two would have been different.
Let me ask you this. Why do we care so much about nuclear proliferation? Why do we care so much about whether Iran gets the bomb or North Korea gets the bomb? The answer is very simple. If they get the bomb, you have to treat them differently. You can’t win a kinetic war against a nuclear power without risking nuclear annihilation. And here we are through proxies, Putin would say rather more directly than just through proxies trying to win a kinetic war against the keeper of the world’s largest and most technically advanced nuclear repertoire. And we’re doing all of this without even a declaration of war from Congress or, frankly, an open debate in the US as to whether this is a wise thing to do.
It blows my mind. Like, I have draft eligible age children. I would like it if my congressional representative had an open and honest debate about whether this is a wise policy and cast a vote. That’s the way the constitution in the US is supposed to work. We have seen none of that. We’re sleepwalking into the abyss of. It gets no coverage over here. And frankly, you’re one of the few channels on YouTube that I follow that is covering these details, looking at the foreign reports, seeing what other countries are telling themselves, because that’s an input into your assessment of what’s going to probably happen.
And we get fluff pastry in the traditional mainstream media in the west. Yeah, it really is terrifying. And before we started our conversation today, you were talking a little bit about the difference between the cuban missile crisis and now. And occasionally I get reminded of the severity of the situation contrasted with the lack of interest. It is incredible to see that we’re on the precipice of possibly a major. At any moment now, things could just really go crazy. And you’re not hearing anything about this. I guess the question is, why, in your mind, is there this need to press the Russians so much on this particular issue, to press the Chinese on this issue? And within the context of your world, if energy is so abundant, shouldn’t there be enough to go around? It seems to me like that there’s no reason to continue to go down this path, or at least no material reason.
If what you’re saying is true about energy, now, in a world where energy was scarce, itd make a lot of sense because thered be something to fight over. But if what youre saying is true, then I dont really understand why were trying to go to war over these things. I dont understand either. And the neocons would say that im a pacifist, isolationist. But last time I checked, the word defense means to defend, right? The, you know, the US has never been at risk to real invasion, right? Like, not in modern times. I mean, who is going to cross the oceans and invade the US with the second amendment and all those guns in the hands of, you know, all the rural patriots in the country? What are we doing? I don’t get it.
I don’t understand it. So this is, again, I believe when you don’t understand something, you should say. So I don’t understand why it is that we can’t say to ourselves that the Donbas is more strategically important to Russia than it is to the US, and that maybe this isn’t the thing that we should be triggering world war three over. The situation in the Middle east is a little more complicated, given the history and the Holocaust and our support for Israel. But even there, I think the dastardly deeds of Hamas of October 7 could probably have been handled in a slightly different way.
But here we are, the leaders in charge have decided to go a different course. And then the issue with Taiwan and China, again, Taiwan is sort of a breakaway of a civil war and the world war two era. It is certainly way more important to China than it is to us. It’s important to us today because of Taiwan’s dominance of the semiconductor industry. And all of those things are true. But is that really worth triggering world war three over? Because Xi Jinping and Putin have both stated explicitly that to them, those particular issues are existential. They’re sort of nice to haves for us, but they don’t actually risk my personal life, your personal life.
And so if we’re going to draw a red line around Taiwan or the Donbass, let’s have an open and honest debate about it and put it to the people. We’re supposed to be a democracy. I don’t know that many people in Canada would want to send troops to defend Taiwan from China. Well, especially if they didn’t know why, exactly. People haven’t been explained exactly why. They just hear Putin, bad guy, Xi King, authoritarian. But even when they try to provide an explanation as to why that is. Of course, you can get into the debate as to whether or not it was a provoked invasion, but a lot of it is just speculation about what their future aspirations, imperialist aspirations, are, which are mostly unfounded, it would appear, and just not really based in reality.
Especially when you consider that for the last two and a half years, they’ve barely went beyond 20% of Ukraine. The idea that they’re going to continue and fight a conventional war with Poland and the Baltics, I’m not saying it’s impossible. It just doesn’t seem that likely. And so we have to ask ourselves, what is it to give our leaders the benefit of the doubt? Do they know something that we don’t? Or is it just that our global financial system, like the house of cards, the crash, will be so extreme if we allow BriCs to prevail, that that’s what they’re protecting us against? And if that’s the case, why wouldn’t they just say so? I don’t know how the development of bricks in parallel with world War three is better than just the development of bricks as a standalone evolution.
I don’t know. I honestly don’t know, Nate. I wish I had those answers, because, frankly, as a parent, again, of draft eligible children, I’m afraid of these developments. I don’t understand them. I would like a better explanation. I think you’re correct on your assessment of Putin’s. What he would call special military operation was always about the predominantly russian speaking regions of Ukraine. And I suspect that the last thing the Russians want to do is occupy Poland. How many wars has China started? Let’s be honest with ourselves. I think China cares about China. First. The Chinese Communist Party is deathly afraid of one thing, which is internal dissent.
They’re not really afraid of external militaries. And by the way, in a presentation to our pro tier a couple of months ago, we made a rather provocative statement that China is the new arsenal of democracy. The western militaries have outsourced critical supply chains to China. If we go to war with China, do we think they’re going to give us all the parts we need to make the bombs and missiles that we’re going to fire on them? Of course they’re not like, I don’t understand it. And so I used to think that behind the curtain there was like a really smart person that knows things I don’t know, and it explains it.
All right, I’m coming to conclude that those people don’t exist. And I come to that conclusion from two experiences in my life. One is anecdotal. Before when I was coming up in the corporate world, I remember when I got to sit in on my first board meeting and I used to look up at the C suite and see all these dumb decisions, think, well, there must be an oracle somewhere that explains it all. And I’m just missing information. And I finally got to the boardroom and I couldn’t have been more disappointed by how ordinary or self average these people were.
They put on pants and put deodorant on and go to the office and try their best. And they’re not always the smartest people in the world. They just happen by luck or circumstance or good fortune to be in these positions. But they’re no smarter than you and I. That’s predefined post. I’ve watched the sanctions policy, which I knew the moment they were put out would backfire. And the very same people who are formulating the sanctions policy, who are formulating the energy strategies, are also formulating the military strategies. And one of the big aha’s for us as a team was why would we think they were more competent in this area that we know less about then they have demonstrated themselves to be in this area that we know a lot about.
And honestly, I think it’s just incompetence. I don’t think there’s a greater. If you pushed me, I don’t think that the WEF is all that important or all that powerful. I think it’s mostly just a subscription grift. I just think we, because of the luxury of our development and the abundance that we have enjoyed for decades, we have a batch of leaders who are just deeply incompetent. And that would be great because there’s a solution to that, which is to wipe them out of power and install competent people. So we shall see if that will happen.
But if you pushed me, I’m in the camp of we just don’t know any better and we’re operating under this old model that I referred to earlier of resource scarcity. Yeah, it seems like there’s certainly a paucity of creativity amongst the leadership class that perhaps is due to this soft existence where we haven’t had to problem solve in many respects, and that this irrational or seemingly irrational unfolding of events that shouldn’t have any, doesn’t have any real basis in reality, is simply the result of this fallacious human reasoning, and that all of this is really just some social psychological sticking points that are causing us to bring us to the brink of global conflict.
And lack of communication is the only way I can really describe it, I suppose. But it’s fascinating, really, to see it happen. And I made a video last night where I was just really thinking about Joe Biden getting a call that there’s been a nuclear detonation. And you have Hunter Biden in the background smoking a cigarette and Joe Biden looking at Hunter Biden for advice on whether or not to fire a nuke. And it’s such a terrifying thought because that’s the reality. Right. I used to be of the belief that, okay, there’s got to be somebody in Stratcom who’s really in charge beyond the president.
And every single analyst that I’ve spoken to who works in the CIA, Orlando, us strategic command, all says the same thing. No, the president actually has the final say. And if that is actually true, in light of everything that is going on, I mean, that is absolutely terrifying to believe. Terrifying. And I think we want to believe that there’s a secret group who’s kind of doing these checks and balances on things. But what if there isn’t? So two things. First of all, you were very kind in saying that Hunter was smoking a cigarette, let’s be honest, because we both know what he’d actually be smoking.
Yeah, exactly. But to your point, and to augment my prior one, one of the things I observed when I finally got to the highest echelons of power in the corporate world, and, look, I was a pretty high ranking executive at a Fortune 50, and I have lots of friends who still are, is as you ascend the ladder in the corporate world, which must be even more true in the political world, fewer and fewer people are willing to bring you bad news, and you end up becoming surrounded with, yes, people who, I like to joke when I was in that world, that the velocity of good news is much greater than the velocity of bad news.
And so silence is a leading indicator that something is wrong. And you have to surround yourself authentically with people who will tell you the truth. And precious few narcissists who aspire to hold our office have the discipline nor the wisdom to do so. And I saw it firsthand, where, like, the CEO of the company I worked at lived in a distorted universe because he surrounded himself with people who owed their entire careers to his continued hold on power. And we’re seeing that play out with Joe Biden and the inner circle of Joe Biden. After that undeniably disastrous debate performance, it is very clear to everyone in the world, what happened.
And anybody who denies it is a lying gaslighter. That’s just it. After that debate, there’s no denying what we all saw. I saw it. You saw it. And now when somebody says he’s sharp as a tack, still, I’m not questioning my assessment of what I saw. I’m questioning the character of the person who is still saying that after what everybody else saw. As our friend Ben Hunt said, this was sort of a narrative game moment where everybody now knows that everyone else knows, and that collapses the facade that this man as well, who is the president of the US today, I know who it isn’t.
You know who it isn’t. We don’t know who it is. So, yes, the office of the president has the power of the button, but who is the person behind that? Is it Hunter Biden? Is it Joe Biden? Is it some unnamed advisor that has been close to Joe Biden for years, that nobody ever voted for, that nobody knows exists, that didn’t participate in debates? It is truly a scary, scary time. And by the way, our enemies see this. Like Putin and Xi Jinping and North Korea and Iran, they don’t have any doubt about what transpired at that debate.
They’re not lying to themselves about what they saw. They know exactly what they saw. It’s truly amazing. It is, in my view, the most dangerous time, far exceeding the dangers of the cuban missile crisis that the western world has ever submitted itself to, because these are truly the result of choices of the western world. And it’s really amplified by the obliviousness of people to the risks, like we were talking about earlier, how, I don’t know if people have just gotten. Because we have such abundance of news media and information at our fingertips that we just tire of things more quickly.
Or perhaps people had that initial scare in early 2022 and they just retracted back into complacency too quickly. But for some reason, it appears as though the closer we get, the less interested people become. Unless the media comes out one day and says, hey, you need to start worrying about this. And it was incredible to me to see the New York Times suddenly just like, flicking a switch, you know, like, okay, now it’s okay to criticize Joe Biden. And for me, the. The litmus test of change will be when Saturday Night Live makes a skit about Joe Biden and the negative.
That’s when you know, okay, he’s done. But they seem to be holding on, surprisingly so. There was almost this rift now within media. Here’s the trap. They’ve set for themselves. Nate, if he’s unfit to run for president, he’s unfit to be president. And if he’s unfit to be president, he’s unfit to have been president for some time because this is not an overnight phenomenon. And so they’ve all been spinning this lie that, this thing that you and I have seen. I’ve seen it from 2020. I happen to have a history of a certain disease that starts with the letter P that I would not project onto the president.
But his behavior certainly reminds me of it because I had a very close relative who died of it. I’ve seen those signs for years, and it’s been in the back of my mind, and the media has said he’s sharp as attack and so on. And so it’s, you are correct that there was a pivot. CNN right after the debate was done. MSNBC right after the debate was done. It was almost like it was choreographed, like, let’s move up the debate early, let’s have this event happen, and then let’s make things right long before the actual votes are cast and bring in Gavin Newsom or bring in the governor of Michigan or whoever you want to put in there or elevate Kamala Harris.
But everybody saw what they saw. That was a collapse in narrative. It’s irreversible. By the way, I think Tucker Carlson’s tweet, I’m sure you saw it, maybe you didn’t, where not only do they have to do something, but if they go ahead and put Trump in jail, then you’re really jeopardizing the Republic. And you need to step back from the brink here because he was scheduled to be sentenced on July 11, a week before the republican convention. Now, that has since been postponed breaking news, but nonetheless, the people that are still saying that we didn’t see what we saw are the ones that you really have to pay close attention to.
In my mind, the man is not fit to be president. I think anybody who continues to claim otherwise is not being authentic. And if he’s not fit to be president, he hasn’t been fit to be president for some time. And the fact that all of this is occurring while we are on the cusp of world war three should be getting way more coverage. It’s getting that kind of coverage in the rest of the world, like in the BRICS countries. Everybody knows what’s transpiring here. In Canada, the US. It’s noticed. People are kind of like saying, like, literally, I read in the paper today that they’re thinking about moving up the official finalization of his nomination to be the democratic nominee for president to July 21 to squelch the calls for him to step aside.
I think if they put this weekend at Biden’s up, like, what are we doing? Who are we kidding? Well, and it makes you wonder, like, what do they have planned? Because clearly they know he’s not going to be able to do another four years. So the question becomes, okay, so they just want to win so they can get the VP, whoever they select as VP, to take the. Assume the throne, I would presume. Well, that’s Kamala Harris today. I mean, if you look at the predicted betting odds, Kamala Harris is the one that’s going up now, not Gavin Newsom, because technically it’s the Biden Harris ticket and she controls the campaign funds, the war chest they already had.
And so it’s a really amazing time. I truly, I’ve seen a lot in my life, and this is amongst the most precarious times that I have observed. And frankly, one of the reasons why I’m so glad that I’ve been a prepper for so long. Like, I genuinely. It’s down to, I was enjoying your video when you were talking about having your teeth taken care, tooth taken care of your molar and, like, get that stuff done now, because you’re exactly right. Like, if things go the way they might, and let’s hope they don’t, you know, antibiotics are going to be in short supply, and you don’t want to have your tooth pulled out by your neighbor with some rusty clamps.
Exactly. And almost nobody’s thinking it that way, which in my view, means when the s does hit the fan, it’s going to be even worse. Because we have people who still think that because Grubhub works and Uber works, that everything is okay and it’s in a very short period of time, it could go from not okay. And that debate performance, in my mind, elevated geopolitical risk extremely. Because the enemies of the US are looking at profound weakness, and that’s never good. And when they see that and they know or they think, they’re under the impression that war is inevitable.
I mean, I can’t see how Kim Jong un thinks anything other than that. The way things are progressing just on that one front, they must be contemplating and the thought must be rolling around in their heads, like, maybe this is the time to take these guys out. Like, I don’t think, I’m not saying it’s how far along they are in that thinking, but they have to have entertained the idea that if this is the best time, probably to do it, if we’re going to do it, and there appears to be increasingly more coordination between our adversaries.
I don’t necessarily think, and I don’t think Putin thinks either, because he made mention of this in a recent interview, that he doesn’t really think that a Trump presidency is going to significantly alter foreign relations. But one has to wonder if they’re not giving serious consideration to doing something that. And maybe it’s our side as well. Maybe the reason why we have. We’re trying to keep weaken at Biden’s going is because they have something that they’re, you know, the people around him have an agenda that they’re trying to fulfill within, you know, his remaining time in office.
So I would say the first thing is we are always one misunderstanding away from a catastrophe. And the reason why mutually assured destruction and strategic deterrence were so powerful was because you had two serious actors on both sides of that negotiation who understood that the mutual desire of avoiding those types of outcomes was the base of their relationships. We may have disagreed, we may have even fought proxy wars, but there were lines, and it was understood that they wouldn’t be crossed. And today those lines are being crossed with impunity. And if you doubt that, you just have to listen to what Putin is literally saying, which we read most Americans don’t, because they just assume Putin, bad Putin, Hitler.
Russia is kicking the door and the whole thing collapses. The same mistake that Hitler made in world War two. The Russians have a long history of facing down external invaders and winning wars of attrition. And I think that this war is going to be no different. The question now becomes then, what happens in the face of a loss? What does NATO and the US do? Do we move medium range nuclear weapons into Poland? Do we send NATO troops into Ukraine? Do we cross those red lines? And if we do, are we ready to go to nuclear war over the Donbas? I just don’t understand how it is that this region of the world, which is critically important to the people that live there, and I’m sympathetic to the citizens who are being harmed by the war, and nobody is more anti war than we are.
But is this truly in Canada’s national interest, to have a nuclear confrontation with Putin over the Donbas? I think if you put that to a vote, I doubt that most Canadians could find the Donbas on a map. And that’s no insult to Canadians. It just doesn’t matter to their day to day lives. What matters to Canadians is the price of fuel at the pump, the price of groceries, and the price of getting a new home for the kids of this generation who are priced out of the market. Those are the things that people care about. And so if Russia was setting up armies in Mexico, yeah, we would view that as existential.
If they were in the arctic and they had missiles that could reach Ottawa or Montreal or Quebec or Toronto. Yeah, Canada, that would be existential. We’re on their part of the world, on our part of the world. And so it’s just the breakdown of the proliferation treaties, of the nuclear arms agreements, and of the willingness to cross red lines like an attackups missile fired into 320 14. Russia cannot be done without us military involvement. We’re doing that today. Would the US tolerate that on our border? Of course we wouldn’t. And yet we think that the owner of the largest nuclear stockpile in the world is just going to roll over.
And maybe he will. Let’s hope he does. Let’s hope he’s not just going to press the button and say, all right, let’s go. He might. So why take that chance again? It used to be understood that nuclear superpowers didn’t directly engage each other kinetically. And we seem to have rather flippantly cast aside that relatively valuable mutual understanding. Because by the way, it works both ways. Okay, maybe Russia will give ballistic missiles to the Houthis and suddenly you see an aircraft carrier sunk in the Middle east wasn’t by Russia, it was by the Houthis. Well, who gave him the missile? Russia did.
We would blame Russia in that circumstance. If the Ukrainians fire an attack on missile at a highly strategic nuclear radar facility in Russia, who’s to blame? Who’s Russia going to blame? They’re not going to blame the Ukraines. They’re going to blame the Americans. Are we prepared to have world war three over the Donbas? This is the question I keep coming back to. Yeah, there can only be two real rational explanations when we get out of Disney fantasyland. Explanation of things is that either there’s very selfish people involved who are trying to cover their own asses for something going on there, or I, this really is ado with something related to the global financial system.
I can’t think of any other rational explanation. It’s certainly not because people are suffering. And sure, I mean, that’s like you say. I mean, this is not to minimize that. This is not to. Of course, if people are there, I mean, that’s a fight that they’re passionate about. For obvious reasons. Never probably in history has any nation done anything just out of the goodness of their heart, especially way across the other side of the planet. So there’s got to be something here, Ado, with Russia being the primary pipeline to China and trying to perhaps kick the can down the road of having the US dollar dethroned as the global reserve currency for maybe a couple more decades.
I think that’s the gambit that they have here, but it seems like it’s not going to work and the clock is ticking and we’re literally months away from some fundamental changes. How do you think energy is affected and oil prices? Let’s just talk in terms of prices, otherwise it’s too vague. But how do you think oil prices are affected if Israel and Lebanon start a conflict of so great question, one of the things. So in the short term it would be a catastrophe. So theres no amount of opening up new reserves that could offset a sudden and significant disruption to the global daily flows of oil, which is why oil has the price premium today.
And I think if we had outright war with Iran in the Middle east because its not really about Lebanon, right, lets be honest, its Israel and Iran. You could see oil go to $200, $300, $400 a barrel easily overnight. Why is that? The inelasticity of demand for oil? I’ll give you a real clear example. The daily consumption of oil is 100 million barrels a day, round numbers for six months after the Ukraine war, Biden released a million barrels a day of oil from the strategic petroleum reserves. That’s 1% of daily supply for half the year, or half a percent of supply of that year.
The price of oil was cut in half. What does that tell you? It doesn’t take much in the way of imbalances either way to see oil prices collapse in the face of abundant supply or skyrocket in the face of a disruption in supply. We saw that in Covid -30 $7 a barrel. Within two years, oil is at $136. Again, it’s a million barrels here or half a million barrels there, or 2 million barrels of oil. That’s a crisis. And the Middle east produces basically what, 35%? Well, OPEC produces 35% of world’s oil supply. And it’s not just the oil supply, it’s the subset of supply that is exported and traded over the oceans.
This is why Russia is way more powerful than people give them credit for, because they’re a huge player in the export market. The US is net energy self sufficient, a slightly net energy exporter, but Russia was a huge energy exporter, and that subset of the production that is sought after because the people who don’t have their own oil need it, is what drives the price to spike. So if we truly saw a war in the Middle east, it would get ugly very quickly. Now, our long term view is two, three, $400 a barrel of oil will trigger a wave of development such that we will eventually become in a glut.
Again, as Tlaib once said, you know, every supply crisis is followed by a glut. Now, not every glut is followed by a supply crisis. He said it sort of slightly differently than that, but you get the gist of it. So at two, three, $400 a barrel of oil, all political opposition to drilling would fade away very quickly. And in fact, all the politicians who were pro global warming and opposed to drilling would suddenly pretend like they were always poor drilling and can’t believe we don’t have enough supply today. That’s what happens. Or they’d start calling it, like, clean oil, like, yeah, exactly.
Yeah. Renewable oil. Yeah. Net zero oil. But all joking aside, a war in the Middle east would be a catastrophe, even for the US, because energy markets are interconnected and they’re fungible and highly inelastic. So we would see a wave of engine switching in the US to natural gas powered vehicles, for example, because we have so much natural gas here in the US that we can’t give it away. But that takes time. But all of those sort of free market responses would eventually occur. But the friction of that transition, the pain experienced by real people, would be very acute, and I think it would bring about the collapse of the financial system that you talked about, that Nate hagens talks about, who is a friend of both of ours.
So your hypothesis, or perhaps conjecture, that the reason that we’re provoking these wars is to trigger a. An excuse for the great global reset of the debt crisis that we have today is one that many people believe. I think there are easier ways to reset the financial crisis that involve far less loss of life and risk, basically the extinction of humanity, for all practical purposes, in a full blown tactical nuclear exchange. So I haven’t really bought into that theory, but it’s difficult to nullify. You know, I can’t really say that anything that I’ve observed is inconsistent with that, but I think there’s just easier ways to crash the system if that’s what you want to do that don’t involve provoking wars with nuclear powers.
With respect to. We didn’t really talk about Nord Stream at all. Do you have any thoughts on that? Because that clearly was a direct connection between energy and conflict. Where you have Germanys economy dependent on russian cheap energy, now of course, forced to import liquid natural gas. Theres a clear relationship there between the conflict that arose thereafter. What are your thoughts on Nordstream? Unless and until evidence is provided, I think it is now safe to assume that the US blew up the Nordstream pipeline. And if that is true, that is a profoundly consequential development. That is a decabillion dollar piece of energy infrastructure, 50% owned by ostensibly a US ally, Germany.
And the destruction of Nord Stream, in our view, was a clear act of war. And last I checked, Congress has not approved a declaration of war against Russia. Now, Biden said he was going to blow it up, said he would, you know, Nord Stream would not exist. Credible accusations that the US has been behind its destruction have surfaced. Putin openly accused the US of doing it in his famous interview with Tucker Carlson. And no evidence has been presented to identify who might have done it outside of the US. And I think sort of as a scientist, the theory that best fits the facts and hasn’t yet been nullified is the one you should believe.
And I think that’s a profound thing. Like, in our view, if the US destroyed the Nord stream pipeline, which we believe but can’t prove, that is an impeachable offense. I don’t think you just get to go about committing acts of war against a nuclear superpower without congressional approval. Maybe we’re naive and old fashioned in that way. I don’t. Who else did it? Who else could have done it? And the proof that was probably us was this absurd accusation that Putin blew up his own pipeline in the days after the accident. Who do they think they’re kidding? Apparently they’re kidding a good portion of the population, which is scary.
Very scary. But not as scary as a president who believes he has the inherent right to destroy a decabillion dollar piece of energy infrastructure. Not the least of of reasons why that might scare you is because it’s not like, here’s the thing that amazes me. In the world of the neocons, nobody ever punches back. Now we’re seeing the wanton destruction of the ukrainian energy grid. Do you think Putin gives two thoughts to doing that after what allegedly, apparently the US did to Nord stream? Of course not. So our electricity grid is, as you have documented over the years, famously fragile, with an open southern border.
How many people sent in here to take potshots at transformers or critical infrastructure choke points. Does it take to throw the western society into chaos where all of our preps would come into use? Not many russian hackers. We are very vulnerable. We live in a just in time system where almost all of us are very soft. Have no idea what it actually takes to grow your own food, to store your own food, to provide for yourself. Electricity is on the switch, food is on the phone, and Uber always shows up for transportation. This is not the way the real world actually works.
And if we’re going to make the wanton destruction of critical energy choke points normal, we best be prepared for the consequences of the rebound. People do punch back, and Putin and China are capable of punching back. And we ought to consider that before we throw the first punch. Yeah. How important do you think energy is to just the global financial markets? So energy is life is a phrase that we have coined, and it is our view that energy is the economy. Now, when energy is in excess supply, that’s easy to forget. And it’s only when energy is in short supply does its critical importance to all aspects of the economy become clear to the participants in the economy.
We think the most important question a macroeconomic analyst should ask themselves as they try to ascertain the state of the economy is, is the globe relatively well supplied with primary energy, like oil, gas and coal and nuclear and so on, or is it in short supply? And then once you have that answer, then a bunch of other answers become pretty clear. If we scan the globe today, oil is the only primary energy source that is expensive. Natural gas is in a glut in the US. Its relatively well supplied in the LNG markets. Coal is pretty reasonably priced today.
And we think the disparity in oil price corrected for energy, because you can plot the price of these inputs, correcting for their energy content, is really a marker of the geopolitical risk right now. The Red Sea, the Houthis potential for World War III, the fact that Russia is a major exporter of oil. There’s a hot war in the Middle east, which is obviously a huge producer of all things hydrocarbon. And so we see this geopolitical risk premium embedded in oil, and we watch that delta pretty carefully on a day to day basis to get a sense for, hey, is this firecracker about to fire off? And I think you are right to highlight the situation in Lebanon as probably the hottest of the flashpoints on the board right now, one that is being relatively underreported.
And if we truly see a hot, kinetic war that involves Israel and Iran directly exchanging fire beyond the little theater that we saw a couple of months ago. That I think is the reason why oil is more expensive than the physical markets would say it should be, because you have to hedge against that tail risk, as one might call it. So you’re saying that World War III is already priced in? Or are you thinking that it’s maybe just a regional conflict that’s already priced in? No, I think absent the risk of World War III, oil would be 45 or $50 a barrel.
I would think that if oil was that cheap, you’d start to have people using it more. You’d start to have governments filling up their strategic oil reserves, as we’re already seeing. Maybe you can explain a little bit why you think the price should only be 45 or $50 and why you think that the risk premium is only, I guess, right. Today it’s $85. It’s why it’s only $40 more. Mike? Well, you have to understand that a risk premium is probability times consequence. And so I don’t think the world is pricing in world War three as their base case.
That’s the first thing I would say. There’s a technical way that we measure the risk premium in oil, which is oil and natural gas and coal are all used to do the same thing. You burn them to create heat, most often to run engines. If you take the energy content in natural gas and you look at landed LNG natural gas prices and multiply them by 5.6, you can see what oil should be on an energy content basis. And today landed natural gas is like $9 a million btu. And so you’re looking at in that $50 range for an oil equivalent price.
Others have different ways to measure it. That’s our preferred measurement, and we track that delta every day. You could see what the cost of LNG in Europe is and have that as your proxy for what oil should be trading. And we only use that now because LNG is in ample supply. Like if gas went short, then things could go haywire. These proxies are only temporarily useful, but in our view, if you look across the energy complex, it’s very well supplied. Natural gas is a glut in the US. So using that same number, natural gas is like $12 oil today in the US.
And natural gas is really important to the economy. And it’s one of the reasons why I think the US has avoided a recession. That plus obviously fiscal spending has cropped up the economy. But natural gas is used everywhere, right. Cogeneration facilities as a precursor to fertilizer as a precursor to many chemicals. And so when you have the equivalent of $12 a barrel oil in ample supply, that’s not a recipe for a recession. And we all know that. If oil goes to $200 a barrel, what do we say? Recession. So when a big chunk of our energy needs are dirt cheap, that’s not really a recipe for recession.
But in that same environment, oil is distinctly more expensive. And so that tells you there has to be a specific thing that’s happening in the oil markets that explains that disparity. And in our view, it can only be the ongoing war in Ukraine and probably even more so the potential for a wider conflict in the Middle east. That explains that. Delta, if we have all this cheap energy as you’re saying, I wonder if there is some manipulation going on in the markets that is keeping prices artificially elevated. And do you have any theories on what that might be? Well, OPEC is a cartel, literally.
And absent OPEC, I think oil would be trading for far lower prices. So you are correct in that assessment. But even at 85 or 83, whatever WTI is this morning in inflation adjusted numbers, thats $25 a barrel of oil. If you take the $1983 when oil was trading for dollar 25, its dead flat since 1983. Why is that? The technical innovation in the energy sector is vastly underrated by people. Our favorite metric to view how expensive oil is is to just measure it in ounces of gold. Because when you look at the price of oil in dollars, youre measuring two things, the price of oil and the price of dollars.
And the oil in ounces of gold is as cheap as its ever been. The oil and gas industry, the fossil fuels industry, are really marvelous deflationary machines. The break even price for natural gas in one of the major shale gas fields, Haynesville, is like $2.60 per million Btu, which is roughly $12 a barrel oil. We are the Saudi Arabia of natural gas. Just to give you a number that will blow your mind, Nate, just since the shale revolution, the US has added two full Saudi Arabias of energy as measured in exit joules in oil and gas alone since 2010, basically.
And Saudi Arabia, everyone thinks of this giant energy superpower. The US is three times as big as Saudi Arabia today. This is happening in the face of all this climate hysteria and all that stuff. But imagine if we didn’t have a hand and a half tied behind our back. And so I think OPEC certainly explains part of the premium. But I do think everybody has priced in OPEC. And I think the difference between where oil should be trading based on other commodities can only be really accounted for by considering that the market is having a low probability of a very bad outcome priced in the.
And I think you and I would probably agree that that probability is higher than it is. And look, as much as we think oil is cheap historically and all of these things and could go down if we see peace, I think the market is underestimating the potential for war because they just assume it will all work out. I was under the impression that shale oil had peaked in terms of production and that after shale there wasn’t anything left. Mike. Yeah. So we sort of ruffled a few feathers in the community of people that would otherwise agree with most of what we say, but we pride ourselves on being analysts and not advocates for a particular opinion.
We wrote a piece in December called peak cheap oil is a myth. And I think energy return on energy invested is wildly misunderstood. So if you’re in an oil patch and you have this. So for example, in most of the shales, five of the seven major regions, you get a natural gas associated with your oil when you drill for it, and that’s almost a nuisance for them. And in fact, in the permian basin, natural gas is negative. They pay people to take it away. What is the energy return on energy invested when you include the natural gas produced that you’re giving away for free? Our view is energy is effectively currency and the energy cost to produce is actually measured in dollars and it’s cheap today.
And I think, for example, you probably don’t know this and most people don’t. There’s a giant shale in California today, the Monterey shale. It’s off limits to the industry. That is a political choice, right? The geology does not say that we’re anywhere near peacheap oil. And technology development says we’re nowhere near peach heap oil. There were people who believe in peak cheap oil today that before the shale revolution were saying that the Marsalis shale would never produce economic natural gas. It’s now twice the size of Qatar. It’s the largest natural gas region in the world by a huge factor.
And if it were a country, it’d be third on the leaderboard, behind only the US and Russia. When people say peachy boil is near, they are basically making a short bet on human ingenuity. And I think with the development of AI and all of those tools, we’re beginning to see horizontal drilling was a dream 15 years ago and now it’s commonplace. And so we would fade those types of fears, but we would say that the potential for World War III is being underpriced in the market. But we try to sort of view the reality of the world based on our experience.
And by the way, when we published that piece, we had dozens of people from industry privately tell us that they fully support our view, not something they could say publicly, but as one executive at a very big oil company that you would recognize told us confidentially, if we need it, we know where to go get it, and it won’t be that expensive. So you just look at Guyana, you look at Africa. All these on Argentina has a huge shale development that once they get their political act together, politics is the key determiner of supply for oil and gas, and supply is the key gating function of demand.
The more we produce, the more people will burn. Nobody’s going to waste oil and gas. Somebody will burn it. If the Europeans don’t want to, the Indonesians will. And so in our view, oil and gas production and consumption is a gently sloping, upward sloping sort of sine wave where you go from glut to supply crisis. And they tend to correct themselves over time. But the arc of history in the last, since the discovery of oil is we always use a little bit more of it every year. Yeah. So if we are able to discover or open up some of these other oil fields, there’s obviously the issue of the 7 billion people who are living at a certain level of energy consumption that would probably love to indulge in that cheap oil.
So I guess the other question would be, well, what is the consequence of this going to be? What is your general view of that and how that factors in here? Our view on the matter is, you are 100% correct about the 7 billion people published something that we call Doomberg’s postulate, which states that every molecule of fossil fuels produced will be burned by somebody somewhere, and local restrictions against it, like your gas tax in Canada, will only shift who gets to burn the natural gas and oil and enjoy that privilege? And so Indonesia, China, India, Brazil, Argentina, these people live a standard of living that we wouldn’t recognize.
And all humans everywhere want a higher standard of living. To your question on climate, the first part of my answer informs the second part, which is, whatever your views are on the reality of climate change, it doesn’t matter. We’re going to burn those fossil fuels. We’re going to run the experiment. And if you think the world is heading to a calamity, then brace for impact. And if you think the world is kidding itself about the consequences of climate change and you think it’s a hoax? Great. It doesn’t matter. The world is going to burn more energy.
By the way, take Europe. Europe produces no fossil fuels. At least the European Union, Norway and the UK still do, but they’re not in the European Union. What Europe does doesn’t matter to carbon emissions because they don’t produce any fossil fuels. Production gates demand. And Indonesia makes a ton of coal, so they’re just going to feed it to China. We just saw the statistical review of world energy just came out, which is sort of like Christmas day for people like us on June 20. And coal set a record, oil set a record, and natural gas tied a record.
Show me on the chart where global warming is real, like it might be real. I happen to be in the camp that I would fade climate alarmism. I think we’re more than capable of responding to any negative consequences that occur in real time. But even if you are a climate alarmist, people aren’t going to change their behavior. Nobody wants to sacrifice their standard of living for their family, and they won’t. And to expect that they will, or to expect that the developing world will just forego the development journey that we have been lucky enough in Canada and the US and the rest of the western world to have embarked upon, I think is foolhardy.
So if you are truly a catastrophist, prepare for catastrophe, and if you think climate change is a hoax, you don’t need to argue with people, because it doesn’t matter. We’re not going to change our behavior. And year after year, the data says that we get 81% to 82% of our primary energy from fossil fuels, period, now and forever. Thus. And that is our view, the data has proven out. And by the way, when we do see governments forcing populations to make sacrifices like we’ve seen in Europe, the right word tilt, like we saw with Joe Biden ahead of the midterms, where he emptied the strategy petroleum reserve at this first sign of $5 a gallon gas.
Biden knows, or used to know, at least if he’s capable of knowing things now that the price of gas at the pump is a big deal for politicians. And he manipulated the price of gasoline in the US down ahead of the 2022 midterm elections by emptying the strategic petroleum reserves. We’re seeing a wave of right wing parties on the ascent in Europe. And we believe this is all explained by energy. What is your view on how they’re leveraging, you know, climate alarmism for the purpose of manipulation, let’s say, and just bringing in various regulations, because you’re going to have two extreme camps there.
People seem to go either too much in the direction of climate alarmism or too much in the direction of everything is just controlled and it’s all fake and, you know, sure. So I would say that the phrase that we would use to describe what you were alluding to is, are the climate change sort of propagandist, classic Malthusians, anti human population bomb types, the old Sierra Club from the sixties and seventies, which was really born out of an ugly history of eugenics and so on. For us, the acid test to whether somebody is truly concerned about the climate or are really just closet Malthusians is their position on nuclear energy, because we have a solution to abundant, cheap energy, both thermal and electrical, which has no carbon footprint whatsoever, and when executed with proper strategic efficiency, can be basically free once the investment is made, and that is nuclear power.
And there’s a large sort of portion of the climate alarmists who are also simultaneously anti nuclear, which we think is proof of their closet malthusianism. They are either victims of propaganda or propagators of it, purveyors of it. But if you’re truly worried about the climate and you’re also pro nuclear, then we would give wider birth to those opinions and to listen to their arguments. We fall into the camp of, there is a way to hedge climate risk and still have minimal sacrifice to our standard of living, and that is a total and complete civilian nuclear energy renaissance.
The technology exists. It’s been done. France has been getting 70% of its electricity carbon free from nuclear for decades. If France could build 60 gigawatts of nuclear in the seventies and do so economically, surely the US could do it today, 50, 60 years later. Ontario has done it famously in your country. Ontario is one of the greenest grids in the world. And every time I drive through it, it’s not like there’s a green fish in the creeks and zombies walking around because of the radiation risk, which is wildly overblown. And so the asset test for us as to whether somebody is a WEF malthusian limit, the population type crowd, is their position on nuclear energy, which we think is ultimately very crystallizing.
And do you think there’s not risks with nuclear energy in terms of scarcity? And what do you think is the barriers to. To going nuclear? And why are governments not wanting to do that? Is it just because they’re closet Malthusians, as you would say, or it is 100% politics again, if France and Ontario could have done it all these decades ago. Nuclear is expensive and takes long to build because environmentalists have saturated the regulatory bodies and purposely decided to make it so. If we decided that the world will only build can do reactors, everything is systematized, supply chains are ordered, and government supports its rollout, we could have abundant energy very cheaply for decades to come.
I think nuclear waste is one of the biggest canards of all time. Nuclear waste is actually future fuel. All you need to do is run, quote unquote, nuclear waste through a fast breeder reactor. We only use 5% of the energy in uranium today when we make these fuel rods, and then we just store it and we call it waste. It’s not waste. It’s future fuel. There’s a limitless supply of nuclear energy. The uranium deposits in Saskatchewan are amazing. Canada and the US, and we like to say NAftA. If we just sort of drew a circle around North America.
Man, what a powerhouse. We have everything we need here. What are we doing around the world in all these adventures? We have food, we have fertilizer, we have chemicals, we have oil, we have gas, we have coal, we have uranium. We even have, frankly, solar. If we wanted to go down that route, we still produce polysilicon here in the US, three big plants. We could produce more if we fed it with our cheap natural gas. And so we have all we need. These are choices. The NRC in the US has historically been the single greatest barrier.
The Nuclear Regulatory Commission has been the single biggest barrier to the rollout of nuclear. That is a political choice. We could wipe all that away. The Monterey shale in California could be developed. That’s not a technological impediment. It’s because nobody thinks that Gaba Newsom and the California greens are going to allow that to happen on their home turf. And so industry just not investing in exploration. My view is, if they did put it this way, California and Texas have very similar resource bases in oil and gas. Texas is a global energy superpower, and California is a flaccid energy vassal.
And those are political choices. So back to the peachy boil thing. These are political choices that we wiped away at dollar 200 a barrel of oil. Imagine the uproar like Trudeau is struggling in the polls because of the carbon tax. Imagine if oil was three, $400 a barrel. Now, Albertans would be rich and some of those transfer payments would be healthy, but the pain at the pump would wipe away who is ever in charge. And Pierre would be riding in with a supermajority. So these are temporary things that seem immovable until they fall away all at once.
Trey. Wow. So, I mean, that sounds like very optimistic from the point of view of, you know, it would definitely. I’m not sure I’m the best person to challenge you on a lot of those points. I know there’s other people who do, but it sounds like then that there is an abundance of energy and the only thing that is causing these high food prices, the high cost of living, you’re saying, is, at the level of government policy, 100%. Look, I mean, have you ever seen a weaker batch of leaders of the g seven in your life? I mean, I’m old enough to remember when you had to be able to construct a completed sentence in front of a microphone without a teleprompter to hold public office.
You know, it’s truly an amazing time and a scary time. And one hopes that the elastic band will rebound in the other direction here soon because it sure feels like we’re stretching it to the breaking point. We see what’s happening in France. We saw what happened in the debate. We see that Canada and Trudeau is basically held together by the minority party. The NDP who last night checked, I think, won twelve seats outside of British Columbia in the last election. And so all around the world we see. Look, we’re about to see a landslide victory in the UK for the quote unquote opposition party.
But in reality, I think this is all just the unit party. But we’re seeing the bricks on the ascent and the g seven leaders just aren’t very serious. And so this has to eventually have a consequence. So, yes, we are optimistic long term. Look, if the fourth turning type thinking is true, after the fourth turning comes the rebirth. We hope to be prepared enough to survive the transition to the rebirth, which is why we are unashamed to call ourselves preppers. I think that’s a compliment, but there’s going to be some hard times coming because we have such dysfunctional politics in the West.
I just think it’s undeniable in terms of preparedness. Now, you said that you refer to yourself as a prepper. Now what is prepping for you? You could even speak a little bit, if you want, about the financial aspect of hedging your bets. Sure. I watched with great interest your summary of all the sort of key aspects of preparedness for me. My family’s preparedness objective is, look, there are major inputs and outputs to your home. And I view my home as a factory. And the product of my factory is the health and well being of my family and my immediate friends.
The inputs are electricity, natural gas, goods and services. The outputs are garbage and human waste. And of course, water is also an input. So the four inputs are what I described, and we have those two major outputs. And in my preparedness plan, I lose access to all four inputs and both outputs. The garbage doesn’t get collected and the sewage stops working. I want to be able to persist in a relatively comfortable way for about 30 days. My view is that if an emergency is truly longer than 30 days, do I really want to be around to see all of that? I think the vast majority of people would be out of the picture before day 30, but I want to have enough food, water, medicines, backup electricity sources, an ability and a strategy to handle my waste, both sort of garbage and human waste, for a good 30 days.
Lock the doors, make sure the zombies don’t get in, and then see what happens after 30 days. I’m not one of these people that has years of food in the basement. Nothing against those people. I knock yourself out. But I have a comfortable amount of everything that we need, the inputs into my factory, and a plan to handle the outputs for a good 30 days. And I think that hedges the vast majority of risk to the disruption of my family’s day to day life, which is, as a responsible provider, is my primary objective. So I have whole house backup generator and various other gas generators, and a fair number of solar generators and the panels to power them.
And I’ve. My strong belief, for example, is that a prep isn’t a prep until you’ve used it for its intended use. Until then, it’s just a thing. And so I run my sump pump on my generator, and I see, oh wait, I don’t have enough electrical extension cores, and I better go get some more, like, until you actually drive on it, go camping and see if your preps work. Eat that mountain house meal, see how it tastes. Could you sustain yourself on that? I know that I’m in like the 0.1% of my neighbors in this regard, but I do take strongly my responsibility, and my wife feels the same way.
Our children are our. This is what we live for. And the thought of not being able to provide for them in a moment of an emergency keeps me up at night and so. But I try not to go too far down the rabbit hole because I don’t want to be the person that’s the only one left in a year and a half after the grid goes down and doesn’t come back up. 30 days, in my view, hedges up enough of my risk. Then on the financial side, look, I earn money in fiat because we live in the fiat world.
We save money by buying real assets like gold and land and collectibles, and then we invest privately where we can affect the outcome because we are builders and we love building businesses and Doomberg is one of those. And thats the way we decide to run our finances. We dont view gold as an investment. I get uncomfortable when gold goes up too much because that means I have other problems in society. But I view the net worth of mine that I will be able to pass on to my children is measured in acres and ounces, not dollars.
And thats the way that I view the world. And so on dips. I buy gold. I like to buy land in areas I understand thats my savings. And then I invest privately. But im in the fiat world. I got to earn dollars. I pay my groceries in dollars. Im not a big believer that someday im going to wake up and pay everything in bitcoin, but I view preparedness as a responsibility of a parent, and in my case a husband, to fulfill the promises that you make to your family when you bring them into the world. Well, especially now when you have, we’re watching unfold this political situation.
It really is irresponsible at this point. I think a lot of people are realizing this, that it’s irresponsible not to have a, a backup plan of sorts when insurance fails. And I’m glad that you’re at least prepared to ride out a regional disaster. Let’s hope it doesn’t ever extend beyond that. And of course, we run the risk of some pretty serious incidents unfolding where the supply chain delays are going to be much longer than that. I would always encourage people, if they’re of the capability that they can do that without enduring a lot of discomfort, that they might as well perhaps go a little bit beyond 30 days, because chances are when you get to 30 days, you’ll want to live, in spite of the fact that some people will say, I don’t want to live for that.
Well, you’re still going to be alive and chances are you’re not going to be too keen on self deletion. So it might be, I mean, I dont think you have to go full blown move to New Zealand or something, but unless you want to move there because its a nice place to live. But I guess theres a point in which you cross over that 30 day mark where it becomes a lifestyle and it has to be about the lifestyle and ive kind of crossed over into that recently where Im going into more of an off grid homestead lifestyle.
It really is that its nothing because you can stockpile so much stuff, but you have to have any measure of joy in life. And prepping is a luxury. Like you say, prepping for climate change and all these things are luxuries and prepping itself is a luxury that we only can indulge in here in the west. I would say one of the great messages that you give your many viewers is that skills are free, right? Um, effectively, YouTube is an amazing resource. Get out there, practice those skills. Skills are just as important as stuff. Probably more important, way more important.
But my view is, you know, 30 days, I’m sure I could go longer. I say 30 days across all those dimensions is sort of my minimum viable product, to use a phrase from Silicon Valley. But I think we’re going to have big, big problems on day seven, right. You know, nine meals to crazy. And all of those things are true. We see it in the aftermath of hurricanes and so on. And those are just really hyper regional disasters. A true grid down where you don’t know what’s going on and you have to hunker down. One of the reasons why I have a lot of solar batteries is because I don’t want to have a big loud generator going that advertises to everybody that this house has power in those first critical days when people are roaming around looking because they haven’t prepared and you have.
And that’s actually a dangerous situation that many people don’t really contemplate. But I think I agree with you. And like, we are building a bit of a bug out place. You know, we have a lake property with a very humble cabin on it. And in my view, I kind of view that as the place where we would go. It’s very sparsely populated. I’ve got a wood fireplace in there and lots of quartered up wood that would last us for a long time. And I’m starting to store some things out there and there’s, you know, this big freshwater lake and fishing it and so on.
It’s obviously past day 30. If I could get out there, then I have a plan b. But ultimately I view it as a hobby. I view it as a way to abate the anxiety that I see when I read the news and write about the news as we do. And so it’s a tangible thing I can do to make myself feel better. And look, we had a major disaster in my community and I had nine people staying in my home there was a major flood. Luckily, because I’m a prepper, I had looked at the flood maps before I bought my home, and I was able to provide warmth, food, drink, and a place to sleep for nine people for several days.
And I had equipment to help them dry out their basement and all of those things, because I’m a prepper, I had those things. I had extra generators, and that felt great. And I was able to provide for my friends and family in that time of crisis. And by the way, I learned a lot. Actually, I did a full after action after that. What went well? What did I wish I had? What do I need to buy? What skills do I need? A classic example. One of my friends went to his house, tried to get a generator fired up to make sure that the sump pump was still going in the middle of this flood, and he had never taken it out of the box.
When we took it out of the box, we realized there was no oil. That’s just a big paperweight. Luckily, his neighbor, who also needed power, had oil, and we traded him oil for an extension cord into his basement so he could keep his sump pump going, too. And, you know, the situation ended well. But that example was really the moment where it occurred to me that until you’ve dry run it, it’s just a thing. It’s not a prep. Go and do it. Turn off, unplug your sump pump, plug it into your generator, and see whether it runs.
And, oh, boy, whether your extension cord could get down there where it needs to be, and you could run the generator outside so it’s not, you know, giving you carbon monoxide poison in the garage. These are all real, tangible things beyond just having financial abilities, the skills and the experience. Like they say, if you don’t know how to handle your gun instinctively, you’re not going to be able to do it under pressure. So what’s the point of owning the gun if you don’t practice? These are all things that you have preached for many years that I’ve certainly taken to heart.
Well. And, you know, when you’re thinking about extending your preps beyond 30 days, just remember that visual of Hunter Biden doing a line of coke off a prostitute’s ass while getting the news that the nuclear weapons are inbound. Maybe that would be a motivating factor. I got to get Jill Biden’s cover of vogue framed and put up in my prepping basement. There you go. There you go. In terms of precious metals, we haven’t really touched on that. I had a friend, and maybe just he had a specific question with respect to this. What is your thought as to why gold is currently hovering around a new plateau, it seems at 2330 ish dollars.
What do you think the cause of that spike is? And do you have any projections for gold moving forward? Is it going to go up? Is it going to go down? What do you think? Does it matter? I do, and it does matter. I think the predominant driving force is when the US froze the russian reserves, us treasuries no longer became a neutral reserve asset for the settlement of international trade. In other words, it’s not neutral if the US can decide that you no longer are entitled to have that debt repaid to you. And so we’re seeing a move away from us treasuries and european debt amongst the holdings of the central banks of the 7 billion people that make up the global south.
And one of the numbers that we watch every day is the premium for physical gold in Shanghai, compared to the paper price of gold as quoted on our screens. And the net effect is you can take a gold contract in London at this depressed price and stand for delivery in China. And then that effect is you’re moving gold from the western vaults to the chinese vaults. And we’re seeing that happen. And I think the premium for physical gold in China is calling the bluff on the paper market manipulation of gold in the west, to the extent that that’s a real thing, and ultimately the long term vision of bricshe, which may explain why we’re going to war, is that gold will replace US Treasuries as the neutral reserve asset, not replacing the us dollar as the reserve currency.
Those are actually two different things. Gold replaces us treasuries as the neutral reserve asset. That is the security, for lack of a better word, the entity that imbalances an international trader used to net outland. If Russia sells China a bunch of oil and China sells Russia a bunch of manufactured goods, and there’s an imbalance in that trade, gold flows between the two countries to settle that imbalance. Historically, us treasuries played that role. If gold is going to play the role of the neutral reserve asset, its price, as measured in us dollars, needs to go a lot higher.
And I think that’s what we’re seeing. This is effectively when people look at the strength of the dollar, they measure it against the euro and the yen and the pound. In reality, the strength of the dollar is measured in ounces of gold. And we’re seeing a debasement of the US dollar play out in real time. I hope it doesn’t continue. If it does, I own a lot of it and I’ll be at least partially hedged. But if I wake up tomorrow and gold is $5,000 an ounce, what that really means is the US dollar is devalued by half, and that’s not good for the rest of my portfolio that is measured and anchored in us dollars.
I’ll be relatively better off than most because almost nobody owns gold. But that doesn’t mean that I’ll be net happier as a consequence of that. I don’t view gold as a trade. I do believe that the rest of the world is moving away from the US treasury as a neutral reserve asset. That is a real phenomenon. The price of gold reflects that. The accumulation of gold by China and other central banks around the world reflects that. And if the paper price of gold is being manipulated down in London and New York through the manipulation of futures contracts and so on, which some people believe and some people don’t, if that is actually occurring, that bluff is in the process of being called.
And I think that explains why we’ve seen this decoupling of the price of gold from real rates, for example, which had historically been highly correlated. That alligator jaw is busted wide open. Gold is hovering within $100 of its all time high despite the fact that US has been raising these rates. Because gold is undergoing a shift back to its rightful role, I believe, as the epicenter of international trade and the honest broker of netting out imbalances between countries. You briefly talked about Chinas role in this. And the question that my friend had wanted to ask you was, what is the impact of the Shanghai metal exchange market on the price of gold and silver? Clearly you already answered that question, but was there anything else that you wanted to.
Yes. Silver is a little different, of course, because silver has a huge industrial use, which is ironically in the production of solar panels. And so silver used to be more of a monetary metal than it is today. Today it’s more of a hybrid. So I tend to spend most of my time thinking about gold. The Shanghai physical gold exchange window opening up several years ago was a tectonic shift in the precious metals market. And I believe that the run we have seen in the last ten years in the us dollar price of gold is testimony to that shift.
It has been underreported in the west. One of the reasons why is because the US, for example, the US has never revalued its gold holdings on the Fed’s balance sheet since the seventies. Why is that because they don’t want to acknowledge that gold is really a proxy for future inflation expectations? If the price of gold gets out of hand, inflation in the US can get out of hand. So it’s understandable why the Fed would not want the price of gold to be on the CNBC headlines or the front page of the Wall Street Journal. Because that’s going to drive inflation expectations, which can become self fulfilling.
Exactly. But China and Russia and the BricS countries, especially after we sanctioned Russia. Again, if the US was truly worried about Q question, you said earlier about keeping the dominance of the US dollar in the global economic system, we would not have frozen russian reserves. That runs directly counter to that. I don’t see why we’d need to trigger a war if we’re going to destroy it just by sanctioning the reserves. Look, if you’re a central banker who at one point in the past fell under the ire of the US, you’re looking at what happened to Russia and thinking, I got to prepare for that.
What does that mean? Less us treasuries, more gold. I think any sane person. Saudi Arabia. It’s not like we’ve always had friendly relationships with Saudi Arabia. Post 911, all of that stuff. Certainly the countries that were currently sanctioning Iran and North Korea, and pick your favorite. But Brazil, India, we see a lot of negative press about Modi in the west because he is buddied up with Putin and glad they accepted russian oil at a slight discount to keep the energy flowing for his billion plus people. India has to look at what happened to Russia and wonder whether it’s them next.
China is certainly looking at what happened to Russia and wondering if it’s them next. That the single greatest blow to the premise of the US dollar and US treasury as a neutral reserve asset has been the freezing and now the partial seizing of Russia’s property. That’s truly unprecedented. When that happened, in the wave of hysteria that happened after the initial invasion into Ukraine, this is the death of the dollar system, not world war three. Yeah. And it makes you wonder, what the hell were they thinking when they did that? Were they just reacting and. Or was this, or is there another plan in play that they truly believe that they can force China, Russia, everybody else’s hand to through the use of sanctions and the seizure of assets? Do they truly think that that’s going to work? Based on what I observe, on how the government reacts in areas that I know, what they say and what they do, I’m going to go with the incompetency hypothesis until proven otherwise.
It was an epiphany for me. I observe what they say and do in areas I know a lot about. Why would I project any more competence in areas that I don’t know a lot about? And so I’m just going to go with incompetency. It’s easier to sleep that way too, because if there is some grand nefarious plan that we really have deeper issues to confront as a society, I could understand how it would be that we have distilled into politics deeply incompetent people because who wants to run the gauntlet of personal destruction to become an elected official in the first place.
So you have either people who are incompetent or unethical that sort of are gravitating towards a career in, quote unquote, public service, when in reality they’re just, you know, helping themselves at the public’s buffet at the expense of the taxpayers to enrich themselves and their family, as we’ve seen, especially here in the US, much more so in the US than Canada. But I think incompetence explains it all. Unless I’d have to see a lot of evidence that there’s some grand nefarious plan beyond incompetence. Because if there is, and incompetence is just the COVID then they’re way more skilled than I’m giving them credit for because they give substantial evidence that theyre just deeply incompetent people.
Trey? Yeah? Its crazy because your whole hypothesis is that we shouldnt need to have inflation in food prices. We shouldnt need to have energy inflation because its abundant, barring the climate risks associated with that. Yet here we are getting entangled in potential nuclear conflict for reasons that escape most thinking people. And it just really doesn’t make a whole lot of sense. In terms of your projections for the markets, what do you think in terms of S and P 500, Dow Jones? Like just stock market in general? Did you have any predictions about that in the next year? Not really.
In our wheelhouse, I would say during inflationary times you certainly don’t want to be short equities. I mean, I think one of the main drivers of us tax receipts, for example, is the stock market because when people make money in the stock market, they pay to the government. And so given the us fiscal situation and the deficits that we’re seeing blowing out and the debt going up a trillion dollars every 90 days, the US really can’t afford to have a stock market crash. I think a stock market crash is far more likely to trigger this great global debt reset that you were alluding to.
And so I think when push comes to shove, they’ll kick the can and print the cash as they’ve always done. So nobody ever thought that the Fed would buy corporate bonds. And in Covid crisis, they did. And nobody could ever imagine that the feds would actually directly buy stocks. And I think they will. Japan did. Why wouldn’t we? So I think we’re going to print, print, print, print. Which is why, again, gold land collectibles is how I save money. And it’s a, you know. You mean you’re not buying Andrew Tate’s new cryptocurrency? I’m a bit more of.
I like to touch it and feel it and see it. Right? And by the way, I view those quote unquote purchases as raising the floor of my family’s net worth. Right. There’s only so poor I can be in a world where the dollar’s value collapses because I own those acres of farmland, or those ounces of golden, or those collectibles, and they will be reconstituted in whatever currency, the WEF currency, or pick your favorite Brics currency. There will always be value for those things. I’m not worried about the stock market. I don’t participate in it. So I’m probably the least qualified to give you an answer to that question.
But if you ask me, if you push me in inflationary times, everything goes up in nominal terms. So you have to remember that the S and P is priced in us dollars. Right? Maybe just one final question for you here. With respect to artificial intelligence, us data centers are going to make up 7.5% of energy consumption by 2030. How do you think AI energy consumption? I think that’s probably a conservative estimate. Just knowing the parabolic rate of growth of these technologies, how much of that do you factor into your analysis of energy consumption and how it’s going to shape the future? Just AI as a consumer of immense amounts of energy and potentially cryptocurrency as well, in decentralized finance.
And if you want to weigh in on the Nvidia bubble in all of this, you can as well. So I would say, first and foremost, AI is totally real, totally transformative. Blows my mind. I interact with AI every day in researching our newsletter, fact checking. It’s Google to the power of ten. I’ve trained my specialized LLMs that we’ve had built. So, for example, I’ve built an LLM and fed it all 295 of our Doomberg pieces. So now I have open sourced LLM that knows and thinks and can discuss with me. It’s almost sort of passing the Turing test at this point about things that I care about.
It’s totally real and the growth is real. We wrote about what does it mean for energy? We wrote about this in a piece that we called fission chips several months ago. We believe the AI revolution is going to renormalize nuclear energy as base load anchor provider of energy for society. It is truly the only technology that is reliable, baseload, clean, and scalable to make these AI data centers happen. Now, between now and then, I think AI is going to crowd out a bunch of poor people from the electricity markets. The Silicon Valley technology companies will not be denied.
They will pay up. Here’s the fundamental question that I think the AI revolution is going to expose. How much is electricity worth? It’s not what we pay for it. It’s not twelve cents a kilowatt hour, twenty cents a kilowatt hour. If you’re in California, it’s worth way more than that. If you don’t have it. It’s a publicly subsidized good today, like water. What’s water worth? It’s worth a lot more than the fractions of a penny a gallon that we pay for it to our municipal water bill every three months. When it comes to the mail. If you didn’t have it, it’s worth infinitely more than that.
AI is going to force price discovery on the value of electricity in a way that few people are prepared for. And the victims of that are going to be on the lower end of the economic spectrum and I think could trigger significant political disruptions. Beyond all of the things that we have to worry about that we’ve already discussed today, that’s the short term. The long term is it renormalizes nuclear SMR technology. I saw a report today that more than a third of all the nuclear providers in the US have had open discussions about cutting deals with data centers to power them.
That comes at an expense, that is, they’re not feeding the grid. Grid gets disrupted, industry gets disrupted, prices go up, those at the lower end of the economic ladder struggle. Political instability, populism explodes, et cetera. We watch this very carefully. It is real. It’s a giant mega trend. One of the things that humans are really terrible at is modeling exponential trends. And I can tell you that the difference between chat GPT 3.5 and four and 40 has been pronounced. It’s really amazing to think that chat GPT is two years old and think about how much it’s improved in that time.
And by the way, the open source LLM total free for all. No guardrails, none. Scary. But way ahead of what’s available to be bought in the sort of developed products at OpenAI and Google and Microsoft. And that is not going to be stopped either. So compute will be fed. The Kurzweilian exponential growth has been remarkably prescient and I think 2029. Yeah. One of the ways that you can model the economy is to assume that we will reorient ourselves to stay on that Kurzweilian logarithmic exponential growth of compute power over time. And we have. And I don’t think we’re going to stop because of the sort of global warming, climate change and all that stuff.
The only way to get this done is with a true revolution in nuclear. And I think that that’s what AI will ultimately necessitate. So if there’s an abundance of oil though as you claim, wouldn’t that just like instead of nuclear, won’t we see a lot more wells being drilled? And will oil make up or can oil make up for the energy needs for AIH? We don’t burn oil to make electricity in the west really in some places we do as a backup plan in the northeast because they’ve screwed up their energy. What you will see and what we’re seeing in Texas, I saw just today Texas governor authorizing another 10 billion to accelerate the rollout of natural gas fired power plants which also can be used to power these data centers.
And we know there’s a huge glut of natural gas in the permian basin. Haynesville, Texas in general, the US in general, if natural gas is negative in the Permian they’re going to build power plants to run AI data centers in the Permian. That’s what they’re going to do. Yes. As a stopgap measure we are going to burn natural gas in enormous amounts. The power AI. In the near term we won’t burn oil. Oil is refined to make gasoline and diesel and jet fuel. And those things aren’t really impacted by electricity demand. But natural gas will be used for it.
But in the long run, if you want an 80 year steady supply of high, pure reliable electricity, nuclear is really the only way to go. I just think that there’s a lot of potential unintended consequences to this AI stuff. Not even talking about the potential for it to kill us all and minus for energy, which would be ironic. Maybe you could do a piece on how humans will be used as batteries a matrix type piece at some point. What about Nvidia? Any thoughts on Nvidia? And is that a sign of the end of this cycle or is it just another bubble? I mean, it’s hard to see how it isn’t just another bubble.
After their recent stock split, every $1 move in Nvidia is 25 billion in market cap and it routinely swings many dollars in a day. I dont think its normal that the perceived value of any particular company could swing $100 billion in one trading session on the New York Stock Exchange. And that somehow isnt a sign of either early stage hyperinflation. When I read when money dies in the Weimar Republic, rampant speculation is a sign that people are willing to trade their fiat currency for literally anything, including a claim on the future earnings of Nvidia. In this case, do I think Nvidia is an innovative company and a business that produces tons of cash? Sure.
Do I think any individual company is worth $3 trillion? Hard to say. If $3 trillion is not really $3 trillion, then I guess the answer is yes. So we would never participate in such access, which means, of course, we missed the bull run, but we’re protected from the inevitable crash. There will be long term deep winners from AI, just like they were from the Internet bubble. It’s, I think, impossible to predict in advance that Amazon would be the winner or Microsoft would be the winner the last time. And whether Nvidia is the winner this time or intel is the winner or pick your favorite arm, hard to say.
We’re not skilled in that regard. And so we have no edge and so we don’t participate in it. For your point about cryptocurrencies in bitcoin and number go up technology. Hey, look, if you’ve made a lot of money in that, good for you. I hope you take some chips off the table and leave the casino. Richard. And you went in. Congratulations. I don’t begrudge anybody who makes money in Nvidia, just not for us. Well, I appreciate you coming out today, and I hope that the bird flu doesn’t get you at some point. We know that. Just in time.
Just in time for the election. Yeah, yeah, just in time for the election. Where can people find more information about you? Asides, your substack that we’ll link in the description? Yeah, all of Doomberg’s content can be found at can be found@doomberg.com dot our pieces, our pro tier, our podcast appearances like this one, we’re all linked there. We’re a very small team, but we’re very responsive. We publish, as I said, eight times a month, roughly, and we do a monthly webinar for our pro tiers where we go deep into all of these topics in a zoom sort of format.
Listen, Nate, it’s been a true honor. I can’t believe how much time has flown by. It’s felt like five minutes. Could talk to you all day. Big fan of your show. Congratulations on all your success. One of my favorite youtubers. For good reason. I mean, I remember when you were far below a million subscribers, and to be talking to you when you’re sitting there with 1.3 under your belt is truly amazing and testimony to your hard work. So I really appreciated it. I’m happy to talk to you anytime. Please do reach out and really enjoy today.
Yeah, well, we’ll have to touch base maybe around election time and just see if any of our predictions have played out here. So you bet. Yeah. Thanks for stopping by. Appreciate it. The best way to support this channel is to support yourself by gearing up@Canadianpreparedness.com. where you’ll find high quality survival gear at the best prices known junk and no gimmicks. Use discount code prepping gear for 10% off. Don’t forget, the strong survive, but the prepared thrive. Stay safe.
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