June 27, 2025 • 32 mins
Days after Donald Trump’s election victory in November, we sat down with Pippa Malmgren, founder and CEO of the Geopolitica Institute and former advisor to President George W. Bush, and Helen Thomas, CEO of the consultancy BlondeMoney and former special advisor at the UK Treasury, to ask what they expected out of the US president’s second term.
On this week’s Merryn Talks Money, they join host Merryn Somerset Webb yet again. This time to discuss his policies thus far, what they think is going to happen next and what it all means for your investments.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:16):
Welcome to Marin Talks Money, the podcast in which people
who know the markets explain the markets and meren Sunset Web.
Today I'm joined by Dr Popper Malgram, founder and CEO
of the Geopolitical Institute and former advisor to President George W. Bush.
Also Helen Thomas, CEO of the macroeconomic consultancy Blonde Money
and former Special advisor at the UK Treasury. You will
(00:38):
remember that we last spoke to these two seven months ago,
very different moment. That was the week when Donald Trump
was elected. So what's changed since then? How are they
feeling about President Trump today? Over the last twelve days alone,
we've seen tensions with Iran escalate, We've seen the ninety
day poors on Tariff's inching towards its end, and possibly
what feels like a complete we think of global supply chains.
(01:02):
So we've brought them back. Tell us how they think
he's doing and help us unpack everything that is going
on and how you should react with your money. Callen
and Pepper. Really good to have you on. Thank you
for coming again.
Speaker 3 (01:14):
Thank you, Hello, good to be back.
Speaker 2 (01:16):
Okay, there's so much to talk about Let's do it
like this. Let's give Trump a mark out of ten
and take it from there. How well he's doing. Last time,
Just to remind everybody, when we last talked, you two
were both pretty optimistic about the Trump presidency. You are
optimistic about the way tariffs would work out, economy would
(01:37):
work out, possibilities of peace in Ukraine at least, etc. Now,
based on what you thought then and what you think now, Pepper,
what mark would you give President Trump today out of ten?
Speaker 4 (01:47):
Okay, So I'm going to give you a number. And
to be clear, I'm basing this on having been an
advisor to a president. So what matters is how is
his electoral base responding to what he's doing? And I
would say he's at a nine. His base love what
they are seeing. They love the whole changing of the
(02:10):
power structure around tariffs, the fact that it's succeeding in
compelling other governments to negotiate with the United States, not
just on trade, but a variety of different issues.
Speaker 2 (02:21):
Now, one thing I do want to talk about is
how optimistic you both were seven months ago about the
President's plan to cut government expenditure. Everything we've seen so
far suggests that that simply hasn't happened. No government expenditure
is gone. How do you two see that panning out?
Speaker 4 (02:36):
So I think there's a difference between beginning the process
and cutting it and getting it under control. Getting it
out of control is something that will take many decades.
But the commencement of the process has actually gone incredibly well,
So I think massive progress is being made on that front.
In addition, you know, I've recently been in Alberta, for example,
(02:58):
where you know, there's like this separatist move and they're
talking about joining the United States being the fifty first state.
And you know, I've spent a lot of time in
western Canada over the last eighteen months and in the
middle of the US, and people love Trump. It's very
interesting to see how the media reports him, who are
mainly based on the coastlines of the United States or
(03:19):
out of the United States, and their perception is almost
exactly opposite. So we have an extraordinary split and understanding
of what's going on.
Speaker 2 (03:29):
If you look at his approval ratings across the board,
they aren't going in the right direction. More people disapprove
of him now than did at the beginning of his time.
That said, if you look at the people who approve
of him, the most recent pule I can find this
is that from Rats and it suggests that nine out
of ten of the people who voted for him still
approve of everything he's doing, but still not quite a ten.
Speaker 4 (03:50):
I do think he can gives any president out a ten.
Speaker 2 (03:54):
Do you think he's disappointing his base anywhere?
Speaker 4 (03:57):
No, They also are very happy with his decisiveness on
the illegal immigration issue. To be clear, you know, in
America we have two very emotional, incendiary issues that we
do not allow any nuance over. One of them is abortion.
So you're either for it or or against it. And
(04:18):
to raise the point of at what point during the
pregnancy are you for it or against it? Is never covered.
It's just black or white. It's the same with immigration.
And actually the issue is not all immigration. Everybody's in
favor of legal immigration. It's the illegal immigration that's the issue.
(04:38):
And so again there's massive opposition in certain locations, and
broadly most of the country is hugely in support of
tightening up on illegal immigration.
Speaker 2 (04:51):
Helen, what's your school?
Speaker 5 (04:53):
My school is eight, and so I would use them
met trick of is he doing what he said he
would do and what he got a mandate for. I
should say at this point, by the way, because we
all know that people get very emotional about politics, not
just the topics that Pippa was talking about. Look, my
(05:14):
business is there to say what is going to happen?
What does it mean for investments? Doesn't matter what I think,
doesn't matter if I like or I don't like a
person or how they do things. It's just about what's
going to happen. We always say blonde money is a
political but you know, in examples of what he has done,
you know, the India Pakistan resolution, the Iran situation action
was taken and there has clearly been some progress made there.
(05:39):
The DOGE stuff, I think what's important there is a
cultural shift in the government spending agencies. So it's asking
the question why are we spending this? Should government be
spending this? The numbers may still be being spent because
it's a huge behemoth oil tanker to turn around, but
a fundamental overton window, as they say, has been shifted
(06:01):
about what a government should do, who should do it,
and who should make that decision. So actually I think
he's doing what he said out to do. What a
mandate to do. So head out of ten.
Speaker 4 (06:11):
You know, Aden, this one thing on this Doge process
that I think is really important because the objective was
not to be able to come in and cut so
much government spending that it would balance the books of
the nation. The issue was mapping, and that is what's happened.
And so I keep saying, basically, artificial intelligence was given
a cabinetcy in this government and AI was ruled out
(06:34):
by Elon, so it gets personified that it was him,
but he's just the execution agent. And what it did was,
for the first time ever allowed us to see what
is the money being spent on. So honestly, I think
the mapping was so valuable.
Speaker 2 (06:55):
Okay, so that sounds good for politics, So good for
the future of politics, should we say? But Helen, and
it also suggests that we shouldn't worry quite so much
about a US debt crisis, possibly as we would have
a year or so ago.
Speaker 3 (07:07):
I mean, I know you didn't look convinced.
Speaker 5 (07:10):
No, I think I just kind of shake my head
a little bit, because what is it, twenty five years
in the markets and everyone's constantly concerned about the US
debt situation. And well, I guess what's in the debt
is the big elephant in the room, in the whole
world after what happened with COVID, because everybody ragged up debt.
(07:30):
Everybody racked up debt. So then it's a relative game.
And what's been quite interesting about the discussion, and particularly
about the dollar, is about how maybe the US is
in a worse position because of this huge pile of debt,
but actually, to my mind, because there is a clear
mandate and a clear plan. Now, you might not agree
with this plan, you may not think it works, you
(07:50):
may not think it's going to deliver growth. But if
you think you can get growth from it, and you
can change the culture and the dynamic of governance spending
then and strength in America, strengthen it defensively, strengthen it economically.
Then actually, in many respects, on a relative basis, the
US is a somewhat better position with that debt pile.
So what's that expression about. You know, my death has
(08:13):
been greatly over exaggerated, or my demise has been exaggerated.
Speaker 3 (08:17):
I just feel like we're in that position about the dollar.
Speaker 5 (08:19):
Having said that, I do understand why foreign investors may
want to change their hedge ratios.
Speaker 3 (08:24):
You know, may up their head ratios.
Speaker 5 (08:25):
Fine, but I don't think it means, you know, exit
from US assets forever.
Speaker 3 (08:31):
I think that's been overstated.
Speaker 4 (08:33):
Actually, I have to agree with you, Helen. This is
really a critical point. If this was a company and
it announced that it was going to radically reassess its
balance sheet, strengthen the value of what it has, diminish
its outbound cash flows, it was a company you'd buy,
be buying the equity. We're just not used to governments
(08:55):
undergoing this kind of radical, you know, transform of its
balance sheet and shifting of the cash flows in a
more positive direction. So it's a painful process. It's awkward
in many ways. But I think that as the US
does this, other voters in other parts of the world
(09:15):
are going to start to demand that their government does
it as well. So I think everyone's making a lot
of noise right now. But you're going to buy a
country that's willing to admit there are problems on its
balance sheet and it's working to fix them quite decisively.
And I think this is going to roll out in
other industrialized economies as well.
Speaker 2 (09:38):
One of the old of that rolling out in the UK, Helen,
it's just the most nonsent just thinking about that exactly.
Speaker 5 (09:46):
By the way, I was thinking back to when I
went in two thousand and eight and was working in government,
from having worked in banking and coming from an accountancy family. Gosh,
we're really exciting in my family. But I had the
same thing where we started looking at the balance sheet
in this that they have called the d L and
the AME. These are the government terms for spending, and
I was saying, okay, so this is like a balance sheet,
(10:07):
so where's the spending, and no one can tell you.
It's not like a real balance sheet. It's not cash
coming in and now it's not a cruel it's kind
of a made up thing. It's astonishing. It's astonishing. So
that that is, you know, having heard Pipper talk about
what's happening in the US, and I was, you know, geez,
I was only twenty eight in two thousand and eight
(10:27):
asking these questions. You know, I think that that would
be interesting and useful for other governments to learn from
the US in terms of the policy mix. But I
wanted to ask pepperback a question because of course the
US does have the reserve currency privilege, So maybe it
is able to be revolutionary in this way. Of course,
here in the UK we've had our dabbling with trying
(10:51):
to do well. There's trust thought she had her pro
growth policies, she did not have a mandate to do it,
having not won an election. And now we have a
government that is well sort of struggling under the way
to its own contradictions because it didn't really get a
mandate to be the things it's trying to do. We're
talking about welfare rebellion right now in the UK, and
(11:11):
that is just to try and say five billion pounds,
you know, on an economy that you know, spending one
hundred billion a year on interest debt. So is it possible,
pepper to translate it to other countries that don't have
the reserve currency.
Speaker 4 (11:26):
Yeah, it does require a political mandate to do it,
and the president did have that because even Democrat voters
wanted to have a better grip on the true state
of public finances. Also, we have a different political structure
in the United States than many nations, so in a
(11:48):
parliamentary system, getting the consensus is I think harder. I
would add into what the president has done in terms
of the ballot sheet is quite revolutionary. Can we talk
about the tariffs for a second.
Speaker 2 (12:05):
We can definitely talk about test humor about to come
on to them anyway, say if you want to kick
us off, brilliant.
Speaker 4 (12:10):
Okay, And again I would just want to be clear
for listeners. You know, I literally wrote my PhD on
trade policy. I've been what they would call a free
trader my whole life. I'm not coming at this from
a protectionist angle, But what have the tariffs actually accomplished
and what's the structure. So first of all is to
say before nineteen fourteen, all of the revenue into the
(12:33):
US Treasury came from terrafs. It only changed when we
created the Federal Reserve an income tax, So before that
there was no income tax. So the President saying we
could go back and have a little bit more of
our revenue generated by terriffs, and then he can go
to the tax payer and say I'm going to lower
your tax rate because we've got income And that's why
(12:55):
we've gone from having only an internal revenue service to
now we have this new thing called the external revenue service.
So I just want to be clear that's the thought
process behind it. He's not saying all of our revenue
should come from tariffs, but a little bit more than
in the past, and that makes sense given that background. Second,
it's often portrayed as this attack on China in particular,
(13:18):
but what's actually happened is it's really an attack on corporations.
So the message to the big American corporates is the
way you were doing it before is you moved all
the jobs to China, but then you paid the Chinese
workers nothing. You rip them off, then you charged American
(13:39):
consumers of fortune, and then you kept all your profits
offshore and didn't pay any tax on any of it.
None of that is going to be acceptable any longer.
I'm finding workers all over the world really like Trump
because he's re empowering the working class even outside the country.
And so the big corporations as well are now under
(14:01):
the gun because they're like their margins are getting crushed
by this, and they're being told, hey, why aren't you
paying any taxes in the US. And that's huge new
pressure on them to stop keeping all their revenue overseas,
all their profits overseas. So I think that's a different
(14:22):
way of thinking about it.
Speaker 2 (14:23):
Okay, So in that sense, you would say that the
tariff negotiations have been a success already, regardless of how
they end, as this ninety day period comes to attend.
Speaker 4 (14:33):
Indeed, and not only that, but these are part of
a broader negotiation that has to do with getting the
superpowers aligned in such a way so they're not at
each other's throats. And so the message to the Chinese
leadership has been we can also find a way to
have more Chinese companies come manufacture in the United States.
(14:54):
And people are like, well, that will never happen, But
it's already happened. And the best example is Higher, which
is a white goods company make refrigerators. They started manufacturing
the US in the late nineties, and they became so
successful that they acquired the White Goods Home Electronics division
of GE. They've been running it ever since. Now, by
(15:16):
the way, that implies, they have to cut a deal
on the use of private companies as spying mechanisms for
the intelligence world, because that's where the fight really is. Right,
Why did the US block Huawi. It's not because they
had more competitive product. It's because they viewed it as
an intelligence gathering division of the Chinese government and why
(15:38):
has China blocked Google and Meta in China because they
view it as a spying arm of the government, So
they have to cut a separate deal on what's acceptable
practice when it comes to intelligence gathering. But let companies
compete on purely commercial terms. And I do think that
(15:59):
the Chinese have all said, yeah, actually this does make
sense even for us. So yeah, there's progress here, even
though it's never reported this way.
Speaker 2 (16:08):
And Helen, where are you on the tariffs at the moment?
Speaker 5 (16:11):
Ah? I mean, I think we are getting towards it
settling where it was going to always settle, which was
this idea of there being like a kind of baseline
ten percent. But what is I think relevant and potentially
there about the tariffs. I mean, if you go back
to the Liberation Day announcement and you look at the
actual White House statement of what they're about, the important
(16:35):
thing is it says, you know, reciprocal tariffs for economic
and national security. It is not a purely just an
economic point here. This is all tied up with defense
being part of the American umbrella. It is a you know,
economic war in terms of rebalancing the powers. As Pippa
(16:56):
has said there and I think that sometimes gets really
lost amongst financial people, and I sometimes find as well,
I wonder, by the way this may be, it's maybe
I don't want to be agist, but I'll happily tell
you I'm forty five, okay, But I think for those
of us who have seen a lot of peace in
our lives, kind of my generation, it is quite hard
(17:16):
to think about this idea that there could be this
war going on between powers that want to undermine one another.
Whereas if you're above that age. Of course, at Trump's age,
he has lived to a lot of international conflict. And
when you go I always go back with Trump to
the nineteen eighty seven advert that he took out in
the newspapers where he says, there's nothing wrong with America's
(17:37):
foreign policy, a little backbone can't cure, And if you
read it, it's literally everything he's just done.
Speaker 3 (17:43):
Now.
Speaker 5 (17:43):
He says, end our deficits, reduce our taxes, and let's
not pay for the defense of nations that can defend themselves.
And it's it's just when people say he's uncertain or
it's unstable, they don't get it. It's been the same
for forty years. So what's key about any big policy
change like this is that it gets done and unimpeded, right,
(18:05):
So that is where I think. Again, if we go
back to my score for Trump, you may not think
it's a plan that works, but the plan is being executed.
So that's why, again I think on the tariff side,
I just feel quite relaxed about it.
Speaker 2 (18:17):
It's interesting to hear that you'll that relaxed on tariffs,
because clearly not everybody is. We've seen an awful lot
of market reaction or market volatility every time there's been
an announcement around tariff's.
Speaker 5 (18:29):
A lot of that was to do with sorry to
be boring gamma in the s and P. Five hundred,
which relates to options positions. I don't necessarily want us
to bore people with it. Merrin, and a lot of
people who listen will understand what this is. Basically, people
did not buy insurance on stock markets going down because
they've only ever gone up. So when they fell, they
really fell, and then when they rallied, they really rallied.
(18:50):
But it was a market structure thing is far more
than any kind of macro fundamental point.
Speaker 2 (18:56):
So, Papa, when you look at tariff's I know you're
not really just thinking about tre You're thinking about the
entire environment of shifting geopolitics. You're thinking about war, and
you're thinking about all these changes that everybody else is noticing.
Speaker 3 (19:08):
Right.
Speaker 4 (19:09):
I've been describing it as we're in a hot war
in cold places, and that means we're in conflict in
places you can't see that are very cold. That space
that's the high North and the Arctic, that is the
high seas above and below the high Seas. So as
an example, even this last few days, I just put
(19:29):
up a little piece on LinkedIn saying a Chinese satellite
zapped one of the Starlink satellites and stopped it from
being able to function with only two watts of power,
which is like less than a candle. And they did
it from sixty five thousand kilometers away. And China's been
talking for quite a while about weaponizing their Mega constellation
(19:53):
because to zap starlinks. Why. Because Starlink is providing the
support that makes it possible for Ukraine to conduct its
war with Russia. Without Starlink, Ukraine would be up the Creek.
They cannot do either offensive or defensive operations without it.
So in that sense, Ukraine is our first true space war,
(20:16):
and so China obviously is in a different position there.
So they're saying, right, if you're going to weaponize your
mega constellation of satellites, we can weaponize ours too.
Speaker 3 (20:27):
Right.
Speaker 4 (20:27):
They're not commencing it, they're doing it in response. But
the point is we do have conflicts going on between
the superpowers, and they do need to be resolved otherwise
we will be at risk of something much greater and
much more awful than anything that even I in my
lifetime have seen.
Speaker 2 (20:46):
You said, Pepa, last time we talked to you, said
that you didn't expect to see much more in the
way of ground wars, that all wars would be less hot,
that they'd be warm, they'd be in space, they'd be tight.
Technology was as opposed to ground wuels. But Ukraine is
a ground wuld that's really grinding on. As you say,
it's driven by technology, but it's still a ground woul.
Speaker 4 (21:09):
Well, if we look at what just happened in Iran,
it's very fascinating. I wrote a piece on this on LinkedIn,
and what was fascinated with People were horrified to realize
the level of surveillance that currently exists and they weren't
so horrified about the situation with Ron. They were more
terrified that The fact is, you can place a warhead
(21:31):
on someone's forehead in their bed at three am and
not damage any of the neighboring apartments, right Like, this
is a level of precision in warfare that we have
not seen before. And what makes that possible? The answer
is space based assets, satellites, GPS, et cetera. And so
(21:53):
suddenly the realization that you can be tracked from space
based on facial recognition off of a satellite, based on
your walking gate how you walk is actually a massive
individual identifier. And frankly, your heartbeat can be detected, and
your heartbeat is a highly unique signature, so you don't
(22:15):
even need to be carrying around electronics anymore. So if
you're someone considered a bad guy by the United States,
they know exactly where you are and exactly how to
take you out at three am in your own bed.
So have we just seen a war? Yes we have,
and I called it the hot minute war? And why
is it only a hot minute? I mean, it's okay,
(22:37):
it's twelve days, but really it's a hot minute because
the moment you realize that this is the level of
precision in weapons systems. You can't keep fighting that war,
You'll stop. And that is exactly what all the parties did. Now,
did they set off a bunch of missiles and bombs?
Speaker 3 (22:53):
Yes.
Speaker 4 (22:54):
I thought it was fascinating that Trump said yet again,
the Iranians called us up to say, we're going to
let some missiles off at this time, So get your
guys out of the way. We don't want to actually
hurt anybody, but we have to from a domestic point
of view, show that we're able to respond. And so
there's a kind of theatrical element to traditional weapons systems.
(23:18):
And I do think that, you know, Ukraine, it's very
interesting that it is this sort of meat grinder that
carries on when we have such sophisticated capabilities. So why
don't we just shut it down? And the answer is,
maybe it serves a purpose. And the fact is a
lot of people do make a lot of money selling traditional,
(23:38):
old fashioned military equipment. And what is Trump doing to
that crowd. He's trying to cut off.
Speaker 3 (23:44):
All their cash flows.
Speaker 4 (23:45):
So do they need some wars? There's an argument to
be made they do.
Speaker 2 (23:50):
Okay, So there's an overload to worry about him. But
from our conversation so far, I'm gathering that neither of
you are particularly concerned about US debt. If we look
at the US stock market, we see that don't really
appear to be particularly worried about anything. Helen, what are
you worried about?
Speaker 3 (24:06):
I would come back to the debt now.
Speaker 5 (24:09):
I'm not worried about the US being a complete mess
of it all falling completely apart. But but it is
still going to be a locust. It could maybe be
a domino that starts a process that it has much
bigger impact elsewhere. Precisely because there is going to be
a lot of debt to be issued. Prior administration under
(24:32):
Yellen had you know, shortened some of that in terms
of the issuance, So you know, that kind of raises
its own issues.
Speaker 3 (24:39):
And I just think death is this is this huge
elephant in the room.
Speaker 5 (24:43):
I mean, I keep watching now, I do a bi
weekly of you know what data should we watch?
Speaker 3 (24:47):
Well, I put bond auctions in there now.
Speaker 5 (24:49):
It's particularly obviously Japan had been one that people were
looking at. I am very concerned about the UK because
that is under this government is fast becoming a kind
of a doom loop where the government has now got
a political constraint on top of a fiscal constraint and
(25:10):
will not be able to get out of.
Speaker 3 (25:11):
Either, and we'll not be able to get the growth.
Speaker 5 (25:14):
So that's a one element I think that is could
cause the destabilization I've been looking for towards the end
of the year and then when it comes to stock markets.
One thing that will be super interesting is could we
go from a Mag seven of tech to a Mag
seven of defense? And with that, simply it would maybe
be a very sensible rotation. You just heard there from
(25:35):
Pipper about what's happening in Germany and in some of
these companies that are going to get a huge influx
of cash and people are adapting technology into defense technology.
Speaker 3 (25:44):
But just by pure.
Speaker 5 (25:46):
Nature flows that might sort of slightly upend the world
of one trade everyone into the Max seven.
Speaker 3 (25:52):
So that's what's on my radar.
Speaker 4 (25:54):
Yeah, actually I want to talk to that. I think
you're you're so insightful. How about this shift into the
defense space. I've had a kind of a different approach,
which has been probably five years ago. I started saying
defense spending was the new quantitative easing because you could
(26:15):
throw money into defense in huge amounts and nobody would
ask any questions, right, So so it was a way
for them to keep doing stimulus without anybody giving pushback.
And so we developed these extraordinary weapons systems. But what
current events are showing us is that they are not
(26:38):
as needed as they were in the past. So, for example,
again we come back to today's geopolitical events. Did you notice
that the administration swore in the chief technology officers of
Palanteer and Meta and several of the biggest tech companies
as lieutenant colonels in the US Army. Why why are
(27:02):
they deputizing them? Because that whole thing was run by
those by those kinds of companies. This was not a
traditional defense establishment warfare. This is a shift and Palentteer
is fundamentally disintermediating the traditional defense companies. So I would
(27:24):
say this is not the time to be putting money
into traditional defense companies. They are all getting cut off
by the presidents shutting down of many activities in Washington
that promoted their interests, and now they're being disintermediated as well,
which is why many of them are going to the
Europeans and saying we'll make tanks for you. We'll create
(27:47):
a European German company that makes tanks because they don't
have cash flow coming from anywhere else. But again, do
we actually need tanks for modern warfare? Maybe not?
Speaker 2 (27:57):
Okay, Pepa, this is super interesting. I'm one of the
big conversations out there at the moment. What exactly do
we mean when we talk about defense. NATO is talking
about taking defense spending up to five percent of GDP,
But we're not really talking about tanks there are We
were talking about power grids. We're talking about dealing with
that of cybersecurity and that kind of thing. So the
money flowing into defense isn't necessarily going to flow into
(28:20):
what we have traditionally thought of as defense.
Speaker 4 (28:24):
So again when we talk about what is defense, defense
is now much wider than our old fashioned thought about
what is that what constitutes defense? And now it's you know,
power power grids, It's about safety of data, and it's
also data processing because who can process the data fastest
(28:47):
also wins. So there's a massive race for computational power
and for new chips. Then you see particularly the US
and China competing for who's making the greatest advances in ships.
Willow is, of course, are most sophisticated now. And just
to give you an idea, Willow, the Google chip called Willow,
(29:08):
can solve a problem that Google estimated would have taken
the entire history of our known universe, and it can
now solve it in five minutes. So the speed at
which computational power is increasing is extraordinary, and that translates
directly into lethality of weapons systems. I was recently in
(29:30):
Europe with a lot of the very senior political leadership
from countries like Germany, Switzerland. They actually speak of this
as military Keynesianism. I'm like military Knesianism. You guys think
that making tanks is going to create jobs, and they're like, yeah,
it will, it'll create jobs, and I'm like, guys, one
(29:52):
thing we learned with the Peace divid end is that
when you spend money on destructive capability, you slow your economy.
If you want to create jobs, build things that are constructive,
not destructive, and divert If you want defense, it's not
going to come from tanks.
Speaker 2 (30:11):
Okay, we've done a lot. Yeah, we've talked about dose,
We've talked about debt, we've talked about tariff. We've talked
about hot waves, we've talked about cold wars, and of
course we've talked about defense spending and the sector results.
So let's get back to traditional territory here for Marin
talks money at least and ask you guys the oldie
but gooddy bitcoin or gold pepper.
Speaker 4 (30:32):
Oh well, I'm at the bitcoin conference that the Bitcoin
Policy Institute is holding here in Washington, DC. So look,
governments everywhere are going to be adopting bitcoin as a
new strategic reserve. So there's no question that it is
going to go up in value. And I do think
it is a hedge against inflation. It's a hedge against
the inclinations of central banks to inflate. It's a way
(30:55):
of handcuffing them.
Speaker 2 (30:57):
Helen gold the bitcoin.
Speaker 5 (31:00):
Wine, Bitcoin, new technology, safe haven, government debt.
Speaker 2 (31:04):
There you go, right, One last question for you two.
What are you reading at the moment?
Speaker 3 (31:10):
Oh gosh, do I have the attentions pun to read?
Speaker 5 (31:13):
I'm actually reading a book about Swinson's book on the
endowment at Yale. They talk about long term common interests.
Speaker 3 (31:24):
That's a five hundred year time horizon. That's fun. I
am okay, brilliant.
Speaker 4 (31:29):
What are you reading, Peppa? I know you read it
andlessly I do. You know what I've been reading is
I know this sounds so crazy, but the history of
Venice and the reason is because of their debt problem.
Is they were arbitraging between gold and silver and they
got into financial strife. And I've realized they're tremendous parallels
(31:49):
to where we are today. So I'm reading a lot
about the history of Venetian monetary policy. Fantastic.
Speaker 3 (31:57):
I thought she was going to talk about Jeff Bezos.
Actually so did I.
Speaker 2 (32:00):
I thought we were going history of history of weddings
in Venice, but.
Speaker 4 (32:04):
No, you know, interesting that they're there.
Speaker 2 (32:07):
Absolutely okay, brilliant. Thank you so much, both of you.
Absolutely fantastic. Thanks for listening to this week's Marin Talks Money.
If you like us, share, rate, review, and subscribe wherever
you listen to podcasts, and keep sending your questions or
comments to Merror Money at Bloomberg dot net. You can
also follow me in John on Twitter or x I'm
(32:28):
at marinas w and John is John Underscore Steppech. This
episode was hosted by me Maren Zumsett Web. It was
produced by Someasadi, Moses and Atala Amadi. Sound designed by
Black Maples and special thanks of course to doctor Bipa
Malgram and to Helen Thomas
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:16):
Welcome to Marin Talks Money, the podcast in which people
who know the markets explain the markets and meren Sunset Web.
Today I'm joined by Dr Popper Malgram, founder and CEO
of the Geopolitical Institute and former advisor to President George W. Bush.
Also Helen Thomas, CEO of the macroeconomic consultancy Blonde Money
and former Special advisor at the UK Treasury. You will
(00:38):
remember that we last spoke to these two seven months ago,
very different moment. That was the week when Donald Trump
was elected. So what's changed since then? How are they
feeling about President Trump today? Over the last twelve days alone,
we've seen tensions with Iran escalate, We've seen the ninety
day poors on Tariff's inching towards its end, and possibly
what feels like a complete we think of global supply chains.
(01:02):
So we've brought them back. Tell us how they think
he's doing and help us unpack everything that is going
on and how you should react with your money. Callen
and Pepper. Really good to have you on. Thank you
for coming again.
Speaker 3 (01:14):
Thank you, Hello, good to be back.
Speaker 2 (01:16):
Okay, there's so much to talk about Let's do it
like this. Let's give Trump a mark out of ten
and take it from there. How well he's doing. Last time,
Just to remind everybody, when we last talked, you two
were both pretty optimistic about the Trump presidency. You are
optimistic about the way tariffs would work out, economy would
(01:37):
work out, possibilities of peace in Ukraine at least, etc. Now,
based on what you thought then and what you think now, Pepper,
what mark would you give President Trump today out of ten?
Speaker 4 (01:47):
Okay, So I'm going to give you a number. And
to be clear, I'm basing this on having been an
advisor to a president. So what matters is how is
his electoral base responding to what he's doing? And I
would say he's at a nine. His base love what
they are seeing. They love the whole changing of the
(02:10):
power structure around tariffs, the fact that it's succeeding in
compelling other governments to negotiate with the United States, not
just on trade, but a variety of different issues.
Speaker 2 (02:21):
Now, one thing I do want to talk about is
how optimistic you both were seven months ago about the
President's plan to cut government expenditure. Everything we've seen so
far suggests that that simply hasn't happened. No government expenditure
is gone. How do you two see that panning out?
Speaker 4 (02:36):
So I think there's a difference between beginning the process
and cutting it and getting it under control. Getting it
out of control is something that will take many decades.
But the commencement of the process has actually gone incredibly well,
So I think massive progress is being made on that front.
In addition, you know, I've recently been in Alberta, for example,
(02:58):
where you know, there's like this separatist move and they're
talking about joining the United States being the fifty first state.
And you know, I've spent a lot of time in
western Canada over the last eighteen months and in the
middle of the US, and people love Trump. It's very
interesting to see how the media reports him, who are
mainly based on the coastlines of the United States or
(03:19):
out of the United States, and their perception is almost
exactly opposite. So we have an extraordinary split and understanding
of what's going on.
Speaker 2 (03:29):
If you look at his approval ratings across the board,
they aren't going in the right direction. More people disapprove
of him now than did at the beginning of his time.
That said, if you look at the people who approve
of him, the most recent pule I can find this
is that from Rats and it suggests that nine out
of ten of the people who voted for him still
approve of everything he's doing, but still not quite a ten.
Speaker 4 (03:50):
I do think he can gives any president out a ten.
Speaker 2 (03:54):
Do you think he's disappointing his base anywhere?
Speaker 4 (03:57):
No, They also are very happy with his decisiveness on
the illegal immigration issue. To be clear, you know, in
America we have two very emotional, incendiary issues that we
do not allow any nuance over. One of them is abortion.
So you're either for it or or against it. And
(04:18):
to raise the point of at what point during the
pregnancy are you for it or against it? Is never covered.
It's just black or white. It's the same with immigration.
And actually the issue is not all immigration. Everybody's in
favor of legal immigration. It's the illegal immigration that's the issue.
(04:38):
And so again there's massive opposition in certain locations, and
broadly most of the country is hugely in support of
tightening up on illegal immigration.
Speaker 2 (04:51):
Helen, what's your school?
Speaker 5 (04:53):
My school is eight, and so I would use them
met trick of is he doing what he said he
would do and what he got a mandate for. I
should say at this point, by the way, because we
all know that people get very emotional about politics, not
just the topics that Pippa was talking about. Look, my
(05:14):
business is there to say what is going to happen?
What does it mean for investments? Doesn't matter what I think,
doesn't matter if I like or I don't like a
person or how they do things. It's just about what's
going to happen. We always say blonde money is a
political but you know, in examples of what he has done,
you know, the India Pakistan resolution, the Iran situation action
was taken and there has clearly been some progress made there.
(05:39):
The DOGE stuff, I think what's important there is a
cultural shift in the government spending agencies. So it's asking
the question why are we spending this? Should government be
spending this? The numbers may still be being spent because
it's a huge behemoth oil tanker to turn around, but
a fundamental overton window, as they say, has been shifted
(06:01):
about what a government should do, who should do it,
and who should make that decision. So actually I think
he's doing what he said out to do. What a
mandate to do. So head out of ten.
Speaker 4 (06:11):
You know, Aden, this one thing on this Doge process
that I think is really important because the objective was
not to be able to come in and cut so
much government spending that it would balance the books of
the nation. The issue was mapping, and that is what's happened.
And so I keep saying, basically, artificial intelligence was given
a cabinetcy in this government and AI was ruled out
(06:34):
by Elon, so it gets personified that it was him,
but he's just the execution agent. And what it did was,
for the first time ever allowed us to see what
is the money being spent on. So honestly, I think
the mapping was so valuable.
Speaker 2 (06:55):
Okay, so that sounds good for politics, So good for
the future of politics, should we say? But Helen, and
it also suggests that we shouldn't worry quite so much
about a US debt crisis, possibly as we would have
a year or so ago.
Speaker 3 (07:07):
I mean, I know you didn't look convinced.
Speaker 5 (07:10):
No, I think I just kind of shake my head
a little bit, because what is it, twenty five years
in the markets and everyone's constantly concerned about the US
debt situation. And well, I guess what's in the debt
is the big elephant in the room, in the whole
world after what happened with COVID, because everybody ragged up debt.
(07:30):
Everybody racked up debt. So then it's a relative game.
And what's been quite interesting about the discussion, and particularly
about the dollar, is about how maybe the US is
in a worse position because of this huge pile of debt,
but actually, to my mind, because there is a clear
mandate and a clear plan. Now, you might not agree
with this plan, you may not think it works, you
(07:50):
may not think it's going to deliver growth. But if
you think you can get growth from it, and you
can change the culture and the dynamic of governance spending
then and strength in America, strengthen it defensively, strengthen it economically.
Then actually, in many respects, on a relative basis, the
US is a somewhat better position with that debt pile.
So what's that expression about. You know, my death has
(08:13):
been greatly over exaggerated, or my demise has been exaggerated.
Speaker 3 (08:17):
I just feel like we're in that position about the dollar.
Speaker 5 (08:19):
Having said that, I do understand why foreign investors may
want to change their hedge ratios.
Speaker 3 (08:24):
You know, may up their head ratios.
Speaker 5 (08:25):
Fine, but I don't think it means, you know, exit
from US assets forever.
Speaker 3 (08:31):
I think that's been overstated.
Speaker 4 (08:33):
Actually, I have to agree with you, Helen. This is
really a critical point. If this was a company and
it announced that it was going to radically reassess its
balance sheet, strengthen the value of what it has, diminish
its outbound cash flows, it was a company you'd buy,
be buying the equity. We're just not used to governments
(08:55):
undergoing this kind of radical, you know, transform of its
balance sheet and shifting of the cash flows in a
more positive direction. So it's a painful process. It's awkward
in many ways. But I think that as the US
does this, other voters in other parts of the world
(09:15):
are going to start to demand that their government does
it as well. So I think everyone's making a lot
of noise right now. But you're going to buy a
country that's willing to admit there are problems on its
balance sheet and it's working to fix them quite decisively.
And I think this is going to roll out in
other industrialized economies as well.
Speaker 2 (09:38):
One of the old of that rolling out in the UK, Helen,
it's just the most nonsent just thinking about that exactly.
Speaker 5 (09:46):
By the way, I was thinking back to when I
went in two thousand and eight and was working in government,
from having worked in banking and coming from an accountancy family. Gosh,
we're really exciting in my family. But I had the
same thing where we started looking at the balance sheet
in this that they have called the d L and
the AME. These are the government terms for spending, and
I was saying, okay, so this is like a balance sheet,
(10:07):
so where's the spending, and no one can tell you.
It's not like a real balance sheet. It's not cash
coming in and now it's not a cruel it's kind
of a made up thing. It's astonishing. It's astonishing. So
that that is, you know, having heard Pipper talk about
what's happening in the US, and I was, you know, geez,
I was only twenty eight in two thousand and eight
(10:27):
asking these questions. You know, I think that that would
be interesting and useful for other governments to learn from
the US in terms of the policy mix. But I
wanted to ask pepperback a question because of course the
US does have the reserve currency privilege, So maybe it
is able to be revolutionary in this way. Of course,
here in the UK we've had our dabbling with trying
(10:51):
to do well. There's trust thought she had her pro
growth policies, she did not have a mandate to do it,
having not won an election. And now we have a
government that is well sort of struggling under the way
to its own contradictions because it didn't really get a
mandate to be the things it's trying to do. We're
talking about welfare rebellion right now in the UK, and
(11:11):
that is just to try and say five billion pounds,
you know, on an economy that you know, spending one
hundred billion a year on interest debt. So is it possible,
pepper to translate it to other countries that don't have
the reserve currency.
Speaker 4 (11:26):
Yeah, it does require a political mandate to do it,
and the president did have that because even Democrat voters
wanted to have a better grip on the true state
of public finances. Also, we have a different political structure
in the United States than many nations, so in a
(11:48):
parliamentary system, getting the consensus is I think harder. I
would add into what the president has done in terms
of the ballot sheet is quite revolutionary. Can we talk
about the tariffs for a second.
Speaker 2 (12:05):
We can definitely talk about test humor about to come
on to them anyway, say if you want to kick
us off, brilliant.
Speaker 4 (12:10):
Okay, And again I would just want to be clear
for listeners. You know, I literally wrote my PhD on
trade policy. I've been what they would call a free
trader my whole life. I'm not coming at this from
a protectionist angle, But what have the tariffs actually accomplished
and what's the structure. So first of all is to
say before nineteen fourteen, all of the revenue into the
(12:33):
US Treasury came from terrafs. It only changed when we
created the Federal Reserve an income tax, So before that
there was no income tax. So the President saying we
could go back and have a little bit more of
our revenue generated by terriffs, and then he can go
to the tax payer and say I'm going to lower
your tax rate because we've got income And that's why
(12:55):
we've gone from having only an internal revenue service to
now we have this new thing called the external revenue service.
So I just want to be clear that's the thought
process behind it. He's not saying all of our revenue
should come from tariffs, but a little bit more than
in the past, and that makes sense given that background. Second,
it's often portrayed as this attack on China in particular,
(13:18):
but what's actually happened is it's really an attack on corporations.
So the message to the big American corporates is the
way you were doing it before is you moved all
the jobs to China, but then you paid the Chinese
workers nothing. You rip them off, then you charged American
(13:39):
consumers of fortune, and then you kept all your profits
offshore and didn't pay any tax on any of it.
None of that is going to be acceptable any longer.
I'm finding workers all over the world really like Trump
because he's re empowering the working class even outside the country.
And so the big corporations as well are now under
(14:01):
the gun because they're like their margins are getting crushed
by this, and they're being told, hey, why aren't you
paying any taxes in the US. And that's huge new
pressure on them to stop keeping all their revenue overseas,
all their profits overseas. So I think that's a different
(14:22):
way of thinking about it.
Speaker 2 (14:23):
Okay, So in that sense, you would say that the
tariff negotiations have been a success already, regardless of how
they end, as this ninety day period comes to attend.
Speaker 4 (14:33):
Indeed, and not only that, but these are part of
a broader negotiation that has to do with getting the
superpowers aligned in such a way so they're not at
each other's throats. And so the message to the Chinese
leadership has been we can also find a way to
have more Chinese companies come manufacture in the United States.
(14:54):
And people are like, well, that will never happen, But
it's already happened. And the best example is Higher, which
is a white goods company make refrigerators. They started manufacturing
the US in the late nineties, and they became so
successful that they acquired the White Goods Home Electronics division
of GE. They've been running it ever since. Now, by
(15:16):
the way, that implies, they have to cut a deal
on the use of private companies as spying mechanisms for
the intelligence world, because that's where the fight really is. Right,
Why did the US block Huawi. It's not because they
had more competitive product. It's because they viewed it as
an intelligence gathering division of the Chinese government and why
(15:38):
has China blocked Google and Meta in China because they
view it as a spying arm of the government, So
they have to cut a separate deal on what's acceptable
practice when it comes to intelligence gathering. But let companies
compete on purely commercial terms. And I do think that
(15:59):
the Chinese have all said, yeah, actually this does make
sense even for us. So yeah, there's progress here, even
though it's never reported this way.
Speaker 2 (16:08):
And Helen, where are you on the tariffs at the moment?
Speaker 5 (16:11):
Ah? I mean, I think we are getting towards it
settling where it was going to always settle, which was
this idea of there being like a kind of baseline
ten percent. But what is I think relevant and potentially
there about the tariffs. I mean, if you go back
to the Liberation Day announcement and you look at the
actual White House statement of what they're about, the important
(16:35):
thing is it says, you know, reciprocal tariffs for economic
and national security. It is not a purely just an
economic point here. This is all tied up with defense
being part of the American umbrella. It is a you know,
economic war in terms of rebalancing the powers. As Pippa
(16:56):
has said there and I think that sometimes gets really
lost amongst financial people, and I sometimes find as well,
I wonder, by the way this may be, it's maybe
I don't want to be agist, but I'll happily tell
you I'm forty five, okay, But I think for those
of us who have seen a lot of peace in
our lives, kind of my generation, it is quite hard
(17:16):
to think about this idea that there could be this
war going on between powers that want to undermine one another.
Whereas if you're above that age. Of course, at Trump's age,
he has lived to a lot of international conflict. And
when you go I always go back with Trump to
the nineteen eighty seven advert that he took out in
the newspapers where he says, there's nothing wrong with America's
(17:37):
foreign policy, a little backbone can't cure, And if you
read it, it's literally everything he's just done.
Speaker 3 (17:43):
Now.
Speaker 5 (17:43):
He says, end our deficits, reduce our taxes, and let's
not pay for the defense of nations that can defend themselves.
And it's it's just when people say he's uncertain or
it's unstable, they don't get it. It's been the same
for forty years. So what's key about any big policy
change like this is that it gets done and unimpeded, right,
(18:05):
So that is where I think. Again, if we go
back to my score for Trump, you may not think
it's a plan that works, but the plan is being executed.
So that's why, again I think on the tariff side,
I just feel quite relaxed about it.
Speaker 2 (18:17):
It's interesting to hear that you'll that relaxed on tariffs,
because clearly not everybody is. We've seen an awful lot
of market reaction or market volatility every time there's been
an announcement around tariff's.
Speaker 5 (18:29):
A lot of that was to do with sorry to
be boring gamma in the s and P. Five hundred,
which relates to options positions. I don't necessarily want us
to bore people with it. Merrin, and a lot of
people who listen will understand what this is. Basically, people
did not buy insurance on stock markets going down because
they've only ever gone up. So when they fell, they
really fell, and then when they rallied, they really rallied.
(18:50):
But it was a market structure thing is far more
than any kind of macro fundamental point.
Speaker 2 (18:56):
So, Papa, when you look at tariff's I know you're
not really just thinking about tre You're thinking about the
entire environment of shifting geopolitics. You're thinking about war, and
you're thinking about all these changes that everybody else is noticing.
Speaker 3 (19:08):
Right.
Speaker 4 (19:09):
I've been describing it as we're in a hot war
in cold places, and that means we're in conflict in
places you can't see that are very cold. That space
that's the high North and the Arctic, that is the
high seas above and below the high Seas. So as
an example, even this last few days, I just put
(19:29):
up a little piece on LinkedIn saying a Chinese satellite
zapped one of the Starlink satellites and stopped it from
being able to function with only two watts of power,
which is like less than a candle. And they did
it from sixty five thousand kilometers away. And China's been
talking for quite a while about weaponizing their Mega constellation
(19:53):
because to zap starlinks. Why. Because Starlink is providing the
support that makes it possible for Ukraine to conduct its
war with Russia. Without Starlink, Ukraine would be up the Creek.
They cannot do either offensive or defensive operations without it.
So in that sense, Ukraine is our first true space war,
(20:16):
and so China obviously is in a different position there.
So they're saying, right, if you're going to weaponize your
mega constellation of satellites, we can weaponize ours too.
Speaker 3 (20:27):
Right.
Speaker 4 (20:27):
They're not commencing it, they're doing it in response. But
the point is we do have conflicts going on between
the superpowers, and they do need to be resolved otherwise
we will be at risk of something much greater and
much more awful than anything that even I in my
lifetime have seen.
Speaker 2 (20:46):
You said, Pepa, last time we talked to you, said
that you didn't expect to see much more in the
way of ground wars, that all wars would be less hot,
that they'd be warm, they'd be in space, they'd be tight.
Technology was as opposed to ground wuels. But Ukraine is
a ground wuld that's really grinding on. As you say,
it's driven by technology, but it's still a ground woul.
Speaker 4 (21:09):
Well, if we look at what just happened in Iran,
it's very fascinating. I wrote a piece on this on LinkedIn,
and what was fascinated with People were horrified to realize
the level of surveillance that currently exists and they weren't
so horrified about the situation with Ron. They were more
terrified that The fact is, you can place a warhead
(21:31):
on someone's forehead in their bed at three am and
not damage any of the neighboring apartments, right Like, this
is a level of precision in warfare that we have
not seen before. And what makes that possible? The answer
is space based assets, satellites, GPS, et cetera. And so
(21:53):
suddenly the realization that you can be tracked from space
based on facial recognition off of a satellite, based on
your walking gate how you walk is actually a massive
individual identifier. And frankly, your heartbeat can be detected, and
your heartbeat is a highly unique signature, so you don't
(22:15):
even need to be carrying around electronics anymore. So if
you're someone considered a bad guy by the United States,
they know exactly where you are and exactly how to
take you out at three am in your own bed.
So have we just seen a war? Yes we have,
and I called it the hot minute war? And why
is it only a hot minute? I mean, it's okay,
(22:37):
it's twelve days, but really it's a hot minute because
the moment you realize that this is the level of
precision in weapons systems. You can't keep fighting that war,
You'll stop. And that is exactly what all the parties did. Now,
did they set off a bunch of missiles and bombs?
Speaker 3 (22:53):
Yes.
Speaker 4 (22:54):
I thought it was fascinating that Trump said yet again,
the Iranians called us up to say, we're going to
let some missiles off at this time, So get your
guys out of the way. We don't want to actually
hurt anybody, but we have to from a domestic point
of view, show that we're able to respond. And so
there's a kind of theatrical element to traditional weapons systems.
(23:18):
And I do think that, you know, Ukraine, it's very
interesting that it is this sort of meat grinder that
carries on when we have such sophisticated capabilities. So why
don't we just shut it down? And the answer is,
maybe it serves a purpose. And the fact is a
lot of people do make a lot of money selling traditional,
(23:38):
old fashioned military equipment. And what is Trump doing to
that crowd. He's trying to cut off.
Speaker 3 (23:44):
All their cash flows.
Speaker 4 (23:45):
So do they need some wars? There's an argument to
be made they do.
Speaker 2 (23:50):
Okay, So there's an overload to worry about him. But
from our conversation so far, I'm gathering that neither of
you are particularly concerned about US debt. If we look
at the US stock market, we see that don't really
appear to be particularly worried about anything. Helen, what are
you worried about?
Speaker 3 (24:06):
I would come back to the debt now.
Speaker 5 (24:09):
I'm not worried about the US being a complete mess
of it all falling completely apart. But but it is
still going to be a locust. It could maybe be
a domino that starts a process that it has much
bigger impact elsewhere. Precisely because there is going to be
a lot of debt to be issued. Prior administration under
(24:32):
Yellen had you know, shortened some of that in terms
of the issuance, So you know, that kind of raises
its own issues.
Speaker 3 (24:39):
And I just think death is this is this huge
elephant in the room.
Speaker 5 (24:43):
I mean, I keep watching now, I do a bi
weekly of you know what data should we watch?
Speaker 3 (24:47):
Well, I put bond auctions in there now.
Speaker 5 (24:49):
It's particularly obviously Japan had been one that people were
looking at. I am very concerned about the UK because
that is under this government is fast becoming a kind
of a doom loop where the government has now got
a political constraint on top of a fiscal constraint and
(25:10):
will not be able to get out of.
Speaker 3 (25:11):
Either, and we'll not be able to get the growth.
Speaker 5 (25:14):
So that's a one element I think that is could
cause the destabilization I've been looking for towards the end
of the year and then when it comes to stock markets.
One thing that will be super interesting is could we
go from a Mag seven of tech to a Mag
seven of defense? And with that, simply it would maybe
be a very sensible rotation. You just heard there from
(25:35):
Pipper about what's happening in Germany and in some of
these companies that are going to get a huge influx
of cash and people are adapting technology into defense technology.
Speaker 3 (25:44):
But just by pure.
Speaker 5 (25:46):
Nature flows that might sort of slightly upend the world
of one trade everyone into the Max seven.
Speaker 3 (25:52):
So that's what's on my radar.
Speaker 4 (25:54):
Yeah, actually I want to talk to that. I think
you're you're so insightful. How about this shift into the
defense space. I've had a kind of a different approach,
which has been probably five years ago. I started saying
defense spending was the new quantitative easing because you could
(26:15):
throw money into defense in huge amounts and nobody would
ask any questions, right, So so it was a way
for them to keep doing stimulus without anybody giving pushback.
And so we developed these extraordinary weapons systems. But what
current events are showing us is that they are not
(26:38):
as needed as they were in the past. So, for example,
again we come back to today's geopolitical events. Did you notice
that the administration swore in the chief technology officers of
Palanteer and Meta and several of the biggest tech companies
as lieutenant colonels in the US Army. Why why are
(27:02):
they deputizing them? Because that whole thing was run by
those by those kinds of companies. This was not a
traditional defense establishment warfare. This is a shift and Palentteer
is fundamentally disintermediating the traditional defense companies. So I would
(27:24):
say this is not the time to be putting money
into traditional defense companies. They are all getting cut off
by the presidents shutting down of many activities in Washington
that promoted their interests, and now they're being disintermediated as well,
which is why many of them are going to the
Europeans and saying we'll make tanks for you. We'll create
(27:47):
a European German company that makes tanks because they don't
have cash flow coming from anywhere else. But again, do
we actually need tanks for modern warfare? Maybe not?
Speaker 2 (27:57):
Okay, Pepa, this is super interesting. I'm one of the
big conversations out there at the moment. What exactly do
we mean when we talk about defense. NATO is talking
about taking defense spending up to five percent of GDP,
But we're not really talking about tanks there are We
were talking about power grids. We're talking about dealing with
that of cybersecurity and that kind of thing. So the
money flowing into defense isn't necessarily going to flow into
(28:20):
what we have traditionally thought of as defense.
Speaker 4 (28:24):
So again when we talk about what is defense, defense
is now much wider than our old fashioned thought about
what is that what constitutes defense? And now it's you know,
power power grids, It's about safety of data, and it's
also data processing because who can process the data fastest
(28:47):
also wins. So there's a massive race for computational power
and for new chips. Then you see particularly the US
and China competing for who's making the greatest advances in ships.
Willow is, of course, are most sophisticated now. And just
to give you an idea, Willow, the Google chip called Willow,
(29:08):
can solve a problem that Google estimated would have taken
the entire history of our known universe, and it can
now solve it in five minutes. So the speed at
which computational power is increasing is extraordinary, and that translates
directly into lethality of weapons systems. I was recently in
(29:30):
Europe with a lot of the very senior political leadership
from countries like Germany, Switzerland. They actually speak of this
as military Keynesianism. I'm like military Knesianism. You guys think
that making tanks is going to create jobs, and they're like, yeah,
it will, it'll create jobs, and I'm like, guys, one
(29:52):
thing we learned with the Peace divid end is that
when you spend money on destructive capability, you slow your economy.
If you want to create jobs, build things that are constructive,
not destructive, and divert If you want defense, it's not
going to come from tanks.
Speaker 2 (30:11):
Okay, we've done a lot. Yeah, we've talked about dose,
We've talked about debt, we've talked about tariff. We've talked
about hot waves, we've talked about cold wars, and of
course we've talked about defense spending and the sector results.
So let's get back to traditional territory here for Marin
talks money at least and ask you guys the oldie
but gooddy bitcoin or gold pepper.
Speaker 4 (30:32):
Oh well, I'm at the bitcoin conference that the Bitcoin
Policy Institute is holding here in Washington, DC. So look,
governments everywhere are going to be adopting bitcoin as a
new strategic reserve. So there's no question that it is
going to go up in value. And I do think
it is a hedge against inflation. It's a hedge against
the inclinations of central banks to inflate. It's a way
(30:55):
of handcuffing them.
Speaker 2 (30:57):
Helen gold the bitcoin.
Speaker 5 (31:00):
Wine, Bitcoin, new technology, safe haven, government debt.
Speaker 2 (31:04):
There you go, right, One last question for you two.
What are you reading at the moment?
Speaker 3 (31:10):
Oh gosh, do I have the attentions pun to read?
Speaker 5 (31:13):
I'm actually reading a book about Swinson's book on the
endowment at Yale. They talk about long term common interests.
Speaker 3 (31:24):
That's a five hundred year time horizon. That's fun. I
am okay, brilliant.
Speaker 4 (31:29):
What are you reading, Peppa? I know you read it
andlessly I do. You know what I've been reading is
I know this sounds so crazy, but the history of
Venice and the reason is because of their debt problem.
Is they were arbitraging between gold and silver and they
got into financial strife. And I've realized they're tremendous parallels
(31:49):
to where we are today. So I'm reading a lot
about the history of Venetian monetary policy. Fantastic.
Speaker 3 (31:57):
I thought she was going to talk about Jeff Bezos.
Actually so did I.
Speaker 2 (32:00):
I thought we were going history of history of weddings
in Venice, but.
Speaker 4 (32:04):
No, you know, interesting that they're there.
Speaker 2 (32:07):
Absolutely okay, brilliant. Thank you so much, both of you.
Absolutely fantastic. Thanks for listening to this week's Marin Talks Money.
If you like us, share, rate, review, and subscribe wherever
you listen to podcasts, and keep sending your questions or
comments to Merror Money at Bloomberg dot net. You can
also follow me in John on Twitter or x I'm
(32:28):
at marinas w and John is John Underscore Steppech. This
episode was hosted by me Maren Zumsett Web. It was
produced by Someasadi, Moses and Atala Amadi. Sound designed by
Black Maples and special thanks of course to doctor Bipa
Malgram and to Helen Thomas
Host
Merryn Somerset Webb
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