Hey everybody, Peter Zion here coming to you from the Colorado Front Range foothills. Today, we’re gonna talk about why the United States isn’t going to be patrolling the global oceans for so much longer and how that’s going to change the economic system a little bit. The United States never did it for itself. At the end of the Cold War, the United States created this new global network, we found ourselves facing down the Soviets at the end of World War Two. And we didn’t like what we saw, we were outnumbered we were on the wrong continent, most of Western Europe had been devastated. The idea that Soviets would just roll in and take over everything was very, very real and realistic. So the United States needed a way to convince everyone to stand up. And more importantly, from the American point of view, not just stand up to the Soviets, but stand up and put themselves physically between American forces and the Soviets. And that required an incredible inducement. And global trade and globalization was the solution. US sent its navy out to patrol the globe lotions, so that anyone could trade with anyone at any time. And the American market, which was the only one of size to survive, the war intact, would be open so that anyone could export to the US consumer market. Remember, at this time, the US consumer market was about as large as the rest of the world put together. And that created the world that we know, which has eventually grown into the world of today, with a global GDP of roughly 90 to $100 trillion, of which one quarter 1/3 is based in international exchange, none of which would be possible without the Americans patrolling the oceans. Remember that even today? After everyone’s been building navies for the last 30 years, the US Navy remains at least seven times as powerful as every other Navy on the planet combined, especially if you’re going to factor out tight allies like the Brits and the Japanese. So wouldn’t work without that. But the United States never did this. For itself, we have a continental economic system. In fact, it wasn’t until 1992, that we immediately started integrating with the Mexicans, and it’s even Canadians. So our experience in international trade is decided li local. The two countries that benefit the most from this setup are Germany, which for demographic reasons, is facing national economic Oblivion within a decade, and China which thinks of itself as the next global superpower. But it plans to do so without a global Navy and without a consumption LED system without any friends. Right. Okay, so where does that leave us now, for well, over a decade now, bit by bit, the Americans have been moving away from maintaining the system. And as a result, we’re seeing incremental shifts in foreign policy, making the United States less likely to predict things like oil tankers or things like shipments out of the Russian space. Countries that are benefiting from American largest but not providing anything on the back end for security. And since the allies as a rule are facing demographic breakdown, the economic case, for a globalization is all also weakening, and the security case has just gone. The part of the world, I think that is the greatest example of how this is going down as the Persian Gulf, which from a maritime shipping point of view is the most important chunk. Again, the United States has always gotten most of its energy from the Western Hemisphere. More recently, it’s net independent, but most of the crude that has always come out of the Persian Gulf hasn’t come to America, it’s gone to the Alliance Network. Well, in the more recent events of the last few years, especially since the Russia war, most of that crude is going to China. So again, the strategic case for globalization and keeping the ceilings open, has weakened and we’ve seen that reflected in a change in policy. So you may have noticed that over the last several months the Iranians have confiscated or hijack is the better word, a number of oil tankers. And the US Navy did nothing. Now of late. The United States is starting to deploy a Marine Expeditionary Unit and an meu is no joke. It’s a carrier, and it has 2000 Marines on board. And you know, these are not desk jobs. These are the people who like stormed the beaches, and do some very real stuff. But a Marine Expeditionary Unit is about 1/6 the firepower of a Nimitz super carrier. And until about 1015 years ago, the United States always had a super carrier in the Gulf sometimes to now we’ve gone years without a meaningful presence. And when issues arise that we feel we need to reassure some of our local Arab allies. We’re sending them a you know an meu is not nothing. But it is small fry compared to what the United States would have reflexively had on station. Station in Bahrain specifically, in the past, those times are simply over. So how will this all go down? There’s 1000 different ways based on local affairs that could break a system when the United States really doesn’t care and is not paying attention anymore. But I think at the moment, the most likely one is going to involve the Russians. The Russians are being more and more violent in their operations in Ukraine, they’re actively going after the agricultural system now to try to deliberately cause a famine. And they are using grain that they’ve confiscated from Iranian territories they’ve captured to ship out. Needless to say, this is a route. I think we’re not too far away from the United States, either explicitly or implicitly removing cover from Russian maritime shipments. And what that happens when something happens to one of those ships, whether it’s piracy, or estate grabbing it or anything, global insurance rates are going to change dramatically, once they realize that the US Navy is out of the business of providing global security for everyone. And it doesn’t take much of a nudge to break a lot of supply chains. Most manufacturing specifically and things that are below the level of cellphones and computers run on margins less than 3%. And most of these things involve countries that span the Asian rim and beyond at least a dozen countries. So any one of these little steps gets interrupted steps that have less than a 3% margin. And the whole product chain falls apart, especially in the era of containerized shipping, where you can have 1000s of containers containing hundreds of 1000s of components simply to make a normal run. It doesn’t take much disruption for that if it all fall apart. And then all of a sudden you’re talking about the entire economic model of East Asia breaking in a day. We’re not that far off most likely. And that’s only one example. Bottom line. If your supply chain is gangly, you should probably just make plans to close down there’s probably not enough time left to build something else. Most of the labor in North America has been spoken for one degree or another. And to be perfectly blunt, we’re running out of time. All right. That’s it.
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By Straight Arrow News
U.S. Secretary of Defense Lloyd Austin has issued orders for a U.S. Navy carrier strike group to support Israel in response to the surprise Hamas terrorist attack on Oct. 7. Some military analysts view this deployment as a “major escalation” by the U, prompting the question: What exactly is the role of the U.S. Navy?
Straight Arrow News contributor Peter Zeihan offers historical insight into the traditional role of the U.S. Navy in global maritime security and explains how that role is evolving.
Excerpted from Peter’s Oct. 9 “Zeihan on Geopolitics” newsletter:
If you’ve read my latest book, The End of the World Is Just the Beginning: Mapping the Collapse of Globalization, you know that a driving force behind deglobalization is the U.S. Navy stepping away from its role as patroller of the world’s oceans. So why is this happening, and what will it change?
The key thing to note here is that the U.S. never did this for themselves (sure, it came with some perks, but there was a greater purpose). At the end of World War II, the U.S. knew something had to be done to stop the Soviets. So, the U.S. created a global trade network to incentivize enough countries to “stand up” against them.
As the Cold War ended, the U.S. ran a cost-benefit analysis, and something wasn’t checking out. The globalized system that once worked in favor of the U.S. alliance network has started to shift in favor of countries outside of that group.
The U.S. Navy still has a global presence, but it is nowhere near the scale it once was. As this presence continues to taper off, what will the repercussions be? The ultimate result will be the collapse of globalization, but the path there is undecided.
If there were a perfectly ironic ending to the globalized world, it would have to be the Russians causing the total collapse of supply chains and bringing this globalization endeavor full circle.
Hey everybody, Peter Zion here coming to you from the Colorado Front Range foothills. Today, we’re gonna talk about why the United States isn’t going to be patrolling the global oceans for so much longer and how that’s going to change the economic system a little bit. The United States never did it for itself. At the end of the Cold War, the United States created this new global network, we found ourselves facing down the Soviets at the end of World War Two. And we didn’t like what we saw, we were outnumbered we were on the wrong continent, most of Western Europe had been devastated. The idea that Soviets would just roll in and take over everything was very, very real and realistic. So the United States needed a way to convince everyone to stand up. And more importantly, from the American point of view, not just stand up to the Soviets, but stand up and put themselves physically between American forces and the Soviets. And that required an incredible inducement. And global trade and globalization was the solution. US sent its navy out to patrol the globe lotions, so that anyone could trade with anyone at any time. And the American market, which was the only one of size to survive, the war intact, would be open so that anyone could export to the US consumer market. Remember, at this time, the US consumer market was about as large as the rest of the world put together. And that created the world that we know, which has eventually grown into the world of today, with a global GDP of roughly 90 to $100 trillion, of which one quarter 1/3 is based in international exchange, none of which would be possible without the Americans patrolling the oceans. Remember that even today? After everyone’s been building navies for the last 30 years, the US Navy remains at least seven times as powerful as every other Navy on the planet combined, especially if you’re going to factor out tight allies like the Brits and the Japanese. So wouldn’t work without that. But the United States never did this. For itself, we have a continental economic system. In fact, it wasn’t until 1992, that we immediately started integrating with the Mexicans, and it’s even Canadians. So our experience in international trade is decided li local. The two countries that benefit the most from this setup are Germany, which for demographic reasons, is facing national economic Oblivion within a decade, and China which thinks of itself as the next global superpower. But it plans to do so without a global Navy and without a consumption LED system without any friends. Right. Okay, so where does that leave us now, for well, over a decade now, bit by bit, the Americans have been moving away from maintaining the system. And as a result, we’re seeing incremental shifts in foreign policy, making the United States less likely to predict things like oil tankers or things like shipments out of the Russian space. Countries that are benefiting from American largest but not providing anything on the back end for security. And since the allies as a rule are facing demographic breakdown, the economic case, for a globalization is all also weakening, and the security case has just gone. The part of the world, I think that is the greatest example of how this is going down as the Persian Gulf, which from a maritime shipping point of view is the most important chunk. Again, the United States has always gotten most of its energy from the Western Hemisphere. More recently, it’s net independent, but most of the crude that has always come out of the Persian Gulf hasn’t come to America, it’s gone to the Alliance Network. Well, in the more recent events of the last few years, especially since the Russia war, most of that crude is going to China. So again, the strategic case for globalization and keeping the ceilings open, has weakened and we’ve seen that reflected in a change in policy. So you may have noticed that over the last several months the Iranians have confiscated or hijack is the better word, a number of oil tankers. And the US Navy did nothing. Now of late. The United States is starting to deploy a Marine Expeditionary Unit and an meu is no joke. It’s a carrier, and it has 2000 Marines on board. And you know, these are not desk jobs. These are the people who like stormed the beaches, and do some very real stuff. But a Marine Expeditionary Unit is about 1/6 the firepower of a Nimitz super carrier. And until about 1015 years ago, the United States always had a super carrier in the Gulf sometimes to now we’ve gone years without a meaningful presence. And when issues arise that we feel we need to reassure some of our local Arab allies. We’re sending them a you know an meu is not nothing. But it is small fry compared to what the United States would have reflexively had on station. Station in Bahrain specifically, in the past, those times are simply over. So how will this all go down? There’s 1000 different ways based on local affairs that could break a system when the United States really doesn’t care and is not paying attention anymore. But I think at the moment, the most likely one is going to involve the Russians. The Russians are being more and more violent in their operations in Ukraine, they’re actively going after the agricultural system now to try to deliberately cause a famine. And they are using grain that they’ve confiscated from Iranian territories they’ve captured to ship out. Needless to say, this is a route. I think we’re not too far away from the United States, either explicitly or implicitly removing cover from Russian maritime shipments. And what that happens when something happens to one of those ships, whether it’s piracy, or estate grabbing it or anything, global insurance rates are going to change dramatically, once they realize that the US Navy is out of the business of providing global security for everyone. And it doesn’t take much of a nudge to break a lot of supply chains. Most manufacturing specifically and things that are below the level of cellphones and computers run on margins less than 3%. And most of these things involve countries that span the Asian rim and beyond at least a dozen countries. So any one of these little steps gets interrupted steps that have less than a 3% margin. And the whole product chain falls apart, especially in the era of containerized shipping, where you can have 1000s of containers containing hundreds of 1000s of components simply to make a normal run. It doesn’t take much disruption for that if it all fall apart. And then all of a sudden you’re talking about the entire economic model of East Asia breaking in a day. We’re not that far off most likely. And that’s only one example. Bottom line. If your supply chain is gangly, you should probably just make plans to close down there’s probably not enough time left to build something else. Most of the labor in North America has been spoken for one degree or another. And to be perfectly blunt, we’re running out of time. All right. That’s it.
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