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Balaji
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Immutable money, infinite frontier, eternal life. #Bitcoin
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Balaji
09-06
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MAGA has thrown in the towel on China. This is completely understandable. But it has many implications. (1) First, what just happened? The new National Defense Strategy[1] is reportedly pivoting away from China and towards the homeland. Many troops will be brought back...at first to enforce the border, and perhaps soon to patrol the streets as they're doing in DC. (2) Second, why did it happen? Because the US military is made in China. You can't fight your factory. And the stark numerical reality is that Chinese production in many sectors is unfortunately far beyond anything America can match for the foreseeable future, particularly without its now alienated allies. After all, there would be no tariffs if US factories could compete with Chinese factories: (3) Wait, no really, why did it happen? It's also because the Russian military has de facto defeated NATO in Ukraine, the Houthis have kept the Suez closed, and the last twenty years of forever war and political crisis have led many Americans to understandably believe their empire is simply too much of a burden. After all, there would be no attempt at a peace treaty if US-backed forces could simply defeat the Russian military. Even the journos now admit this: (4) OK, so what happens next? Right now there are ~750 US military bases globally. Many will get shut down over the next several years as a consequence of both US pullback and international retaliation for the trade war. This is similar to the Soviet wind-down after 1991. That's what becoming a country, not an empire means: pullback of all this presence to just the homeland. (5) And then what happens? Well, we'll all miss Uncle Sam when he's gone. Because China is far more MAGA than MAGA. It's a completely self-interested ethnostate that's armed to the teeth and that will bully any country that doesn't do as it sees fit. Today, it's true that China is making all the right noises about win/win cooperation and the rights of small countries and so on. And it will probably keep that up for a while, as trade routes get recentralized around China thanks to the opportunity provided by MAGA tariffs. But no individual state, and probably no coalition, can physically go tank-for-tank and plane-for-plane with the Chinese drone armada. So the leverage that China has over the world (and its own citizens) via sheer physical compulsion will eventually prove tempting. That means we'll need an asymmetric strategy to balance China. A digital yin that constrains their physical yang. I do think the Internet can get there. It is after all the only thing with comparable economic scale to China. And it's actually upstream of all the drones, robots, transactions, and communications. But that's a discussion for another time. The first step is to understand what's happening at this time.
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