 So, I want to talk about the way I see the history of the last 50 years evolving in a few dimensions. You know, this might take more than one show to really get through, but I want to, I want to at least start on a project that does this because I think, I think it's super interesting. And I keep learning new things as I investigate further, and I'm reading a number of books now that have just got me really thinking about this, some of them having to do with the big financial changes that happened in the early 1970s and the consequences all the way to today. Others have to do with the changes with regard to war and with the changes with regard to the perspective of the United States, and then other changes have to do with the rise of China, which I think are all crucial, and everything really starts in the 1970s. In the 1970s, you get these big, I think, tectonic shifts from a global perspective, from a political perspective, starting with the going off the gold standard in 1971 and floating the U.S. currency between 1971 and 1973, basically floating the U.S. currency and unhinging it to anything else, and that ultimately resulting in dramatic rises in inflation, and ultimately in stagflation, and in a dramatic, in a dramatic, I should do an American history course. Why? What did I say now? God. I should deliver an American history course. No, I couldn't do that. I'm not a historian. But anyway, we went off the gold standard, and what you got was a massive depreciation in the dollar, a massive decline in the dollar's purchasing power. The dollar became a currency that was completely at the behest, its value was ultimately to be at the federal reserve of central planners who sat around dictating basically the value of the dollar, the value of the dollar in terms of purchasing power, in terms of what it could purchase, and the value of the dollar vis-à-vis other currencies was ultimately determined by a group of central planners that changed the world, that had massive implications for other countries, that had massive implications for the finances of other countries. And ultimately, in spite of the fact that the U.S. dollar became unhinged from gold, it surprisingly to some extent stayed the international currency. It stayed the currency of choice of pretty much every significant country in the world. So the world today is on a dollar standard. Dollar is the global currency that we have today. Everything is denominated in dollars. Everything ultimately is exchangeable into dollars. Everything is pegged to the dollar. The dollar is today our global currency that started way back in history as we, you know, with the establishment of Bretton Woods in the 1940s. But ultimately led to a world in which it was, the United States had only one currency that was the dollar, and slowly over time that dollar became to dominate, has come to dominate our entire world, has come to dominate the entire world, has come to dominate transactions, financial markets, trade. Everything is basically denominated today in dollars, in dollars that are ultimately controlled by the U.S. Federal Reserve and its policies ultimately controlled by the U.S. Federal Reserve. So a big, big move, big economic shift happened in 1971 when we went off the gold standard and basically floated the dollar and made the dollar, again, just whatever the people at the Fed decided that it would be. So the 70s were dominated by decline. If the 1960s America was still positive, there was still, you know, there was still this idea that we'd won World War II, that we were a strong country, we were landing a man on the moon, technology was advancing, the economy was growing. We felt so confident that, you know, we started spending like crazy on establishing a welfare state and creating a welfare state. The 1960s was a time of, you know, the Woodstock generation, the hippie generation. It was a time of a certain, you know, feelings, I think it was a lot of feelings of invincibility, of success, of progress, of achievement, a time of great optimism. The economy was only going to grow. Their understanding of economics was so weak as they thought they could get away with spending money like crazy and the economy would only grow. The U.S. was still pegged to the gold and the whole world looked to us as the standard. We still could win the war in Vietnam. By the early 1970s, doom and gloom was setting upon America. In the 1970s were a decade of doom and gloom, darkness. Crime started spiking, inflation spiked. We had stagflation, so we had recession and inflation. We had very high unemployment. Every aspect of American life seemed horrible. New York City, the greatest city in the world, the financial center, the global financial center basically went bankrupt, had to be bailed out. And it's not just true of the United States. The West generally was in decline economically. England was a horrible place, dark, socialists had run it into the ground. They had destroyed the wealth that had been created over generations. England looked like it was a country. The U.K. looked like it was a country that was going bankrupt. China was in the midst of a cultural revolution or just coming out of a cultural revolution. It was still struggling to figure out what was next. It had just survived the deaths of tens of millions of people. It was still under the boots about Zitang and communism. Most Eastern Asian countries were still poor, were mostly authoritarian. The world generally was dominated by authoritarian regimes. The Soviet Union was deemed to be a powerhouse, largest nuclear arsenal in the world, a military that people believed was the second most significant in the world and given the American humiliation of Vietnam may be the most powerful military in the world. In a sense, the Soviet Union was ascending and the United States was descending in the West with it too. That was kind of the story of the 1970s. A story of dissent, a story of failure, a story of darkness, a story of crime. On the trade front, the 1970s were a period in which the United States was losing at every front. The United States was losing to Japan in technology, losing to the Germans on much of its manufacturing. The United States couldn't compete. The Americans had invented the VCRs and yet no VCRs were made in America. America used to make all the televisions in the world, most of the televisions in the world, the dominant number of the televisions in the world, and then suddenly there were making no televisions. And the Japanese, primarily the Japanese and the Europeans, were dominating. The 1970s seemed like an era that was the end of American economic dominance. It was growing, government had grown dramatically during the 1960s and the mid-1970s, inflation, government intervention. In the Ford administration they had this button say, beat inflation now as if a button was going to beat inflation. I mean, it was pathetic and America was in a pathetic state. So you can view as the 1960s as this period of out there optimism wrought underneath, but the wrought had been there for a long time. The 1970s is decline, but what's interesting about the 1970s is as America is in decline, underneath it, there's some really positive trends happening. There's some really changing attitudes among Americans. There's some bad things happening, the rise of evangelicals and the rise of evangelicals and the enter into politics. But at the same time, there's a change in attitude towards capitalism, I think due to Ein Wren's work, due to Milton Friedman, Mises Hayek, there's a change in people's attitude towards economics. By the late 1970s, people believed that Keynesianism is dead, well, maybe not dead, but Keynesianism is failed. During the 1970s, an appreciation for capitalism develops, an appreciation for market develops, a free market movement starts developing. During the 1970s, there is growing frustration with the economic state and the social state of America and there's the beginnings of oppositions to it. So the 1960s sees the wrought of the new left in spite of the seeming success and the seeming prosperity. And the result of that wrought leads to a horrible 1970s and of course the mistakes made economically in the 60s. But the 70s sees this underlying change. And then during this underlying change, while things are awful and horrible, you start seeing the first signs of reversing some of the evils. So you start seeing a little bit of deregulation even though there's massive regulation under Nixon, massive regulation, most of the alphabet, a lot of the alphabet agencies that exist today including the EPA, were created under Nixon. And you see the excess of the 60s, Medicare and Medicaid and the welfare state, the war on poverty, the war on drugs, Nixon, the war on drugs is Nixon. You see all of that from the early 70s and late 1960s. Moving into the mid-70s, into Jerry Ford and then Jimmy Carter, you're starting to see deregulation. You're starting to see government getting out of the way, deregulating broker commissions, deregulating trucking, deregulating airlines, deregulating other industries more and more and more. And you're starting to see this trend towards deregulation. It doesn't yet appear in the economic numbers. The economic numbers are still doom and gloom and darkness and horror. But you're starting to see that trend, just like you saw the trend of government spending didn't appear as inflation until five, six years later in the 60s and then it appeared in the 70s. The same thing happened in the 70s with positive news and of course the 80s flipped that. So in the 80s, again, you get a period of incredible optimism, mourning in America, Ronald Reagan conned it. And really the 80s and 90s are a period of American ascent. Not just American ascent domestically, economically, which it was. You see the inflation being crushed. You see economic growth returning strongly. You see employment returning strongly. You see American businesses completely being restructured. You see massive takeovers and sales and closures and reallocation of capital and a complete reshuffling of the American economic deck all to create more productivity for the sake of increasing shareholder wealth, for the sake of shareholder wealth maximization. You see a massive change in the American economy during the 1980s, which are all basically positive. But at the same time, you see a significant investment in the American military. You see a dramatic improvement in the American military. One of the underrated things that happens in the late 1970s, but it starts in the 70s and early 1980s, is a recognition within senior people at the Pentagon of the importance of technology, the importance of semiconductors. The importance of integrating technology into weapon systems. And you see a real shift happening in the 1970s in the American military in changing the way money is spent, in emphasizing technology, DARPA investing heavily in future technologies and applying existing technologies primarily to missiles. So we went from Vietnam where pilots couldn't hit anything, really couldn't hit anything. No laser guidance, no smart bombs, no cameras and bombs, no pre-programmed routes, no GPS. And even at the end of Vietnam, they were already applying a little bit of technology, a little bit of putting a computer in a bomb and the hit rate exploded. But that was just the beginning. Now they were taking and they were shrinking those chips and making these computers smarter and smarter. Now they could put them into these weapons systems and create a whole new generation of weapons. And of course, nobody else could do that in the world. Nobody had the chips, nobody had the technology, nobody had the expertise and how to take technology and use it for weapons system, use it in war. What you saw in the 1980s was dramatic investment in the US military. A lot of that went into smart, technologically advanced military equipment. The economy rebounded, a military in a sense rebounded. The Soviet Union clearly was in decline in the 1980s whereas in the 1970s the CIA was writing reports about the Soviet Union was going faster than the US, so much for the CIA's knowledge. By the 1980s it was clear that the Soviet Union was in decline, Petroska and the starting of the opening up of the Soviet Union was clearly its death. And really the 1990s are the apex, the peak, really American dominance in the world, American success in the world, America's the richest country in the world, America's technology is driving whatever progress is happening in the world, American military is unmatched, we'll get to that in a minute, in the world. The Soviet Union not only is Berlin wall fell, the Soviet Union is collapsed completely, Russia is poor, devastated on the ropes, China is not yet a factor, we'll get to that. The 90s are the period in which the United States is the only dominant world power. It seems invincible economically and militarily. Now we'll get to why that isn't the case and what the floor is behind all of that in a little bit. I want to go back a second to the 70s and bring in one other element which is China because while Matsutun is still alive he dies in 1976 and just at the time when the United States is starting to deregulate in the mid to late 1970s, China is shifting policy, subtly, slowly, without getting much attention from the world except some forward looking businessmen who then later on go on to make a fortune in China. But China shifting, Dengchapeng comes to dominate Chinese politics in 1978, starts opening up China to foreign investment, starts opening up China internally to entrepreneurship, to making money, making money as good, celebrating millionaires. China is clearly an ascent, dramatic ascent in the 1980s. It's still not a dominant player, it's still not a dominant actor. Not militarily, it has an aging old backward military, Soviet style military. It's not a player in the world yet. Tiananmen Square pulls China backwards in terms of its international engagement. People withdraw from it. It cannot sustain itself without global support, without US support. It's not an important player yet in the world. I want to talk about one event in 1991 that I've never thought of really until recently as a major event, but it turns out that in terms of global influence, it was a major event, and that is the First Gulf War. The First Gulf War basically was a war where America was living up to its promise to the Saudis to protect the Saudi war family and to basically protect the states of the Gulf in exchange for oil. So there was a long-standing deal going back to Truman, really FDR and then Truman, but then I think renewed by most American presidents since then. Basically saying, look Saudis, we will protect you. We will supply you with weapons, but not just that. We put boots on the ground to protect you. But you in exchange will guarantee the supply of oil. Now, the Saudis reneged on that in 1970s. We didn't do anything about it. We let them renege on it. Of course, when they nationalized oil, we didn't do anything about it. When they reneged on their promise and embargoed oil to the West, we didn't do anything about it. But we continued this deal. And in 1991, Saddam Hussein invaded Kuwait, took Kuwait in a matter of hours. He now controlled, I think it was 25% of all the oil in the world. And he posed a threat to Saudi Arabia. He had troops now on the border with Saudi Arabia. And it expressed his unhappiness with the Saudi regime and with OPEC more broadly and was rattling sabers and was pretending he was going to be the dominant man in the Middle East. In the United States, if you remember, George Bush senior assembled a coalition and put troops on the ground. But the coalition was just a facade. It was for moral cover. The military on the ground was an American military. And if you remember the 1991 war, well, some of you are too young to remember, the 1991 war turns out to be quite a significant and important war from a military history perspective. It was obvious that America would win. America had a massive force raid against Iraq. But Iraq at the time had the fourth largest army in the world. It had a lot of tanks. They have a lot of army. They had just fought a war with Iran. So they had combat knowledge. I remember at the time making a very accurate prediction about the war, but nobody believed me, just like they didn't believe me about Ukraine. I said military, American military versus Soviet tanks and Soviet equipment, no contest, the US would wipe them out and they'll wipe them out like that. But it turns out that the world didn't think that's what would happen. They thought this would be a brutal fight. They thought this would take a long time. Indeed, American press, American military experts at the time thought this was going to take forever. And then put aside whether we should go on a war or not. The war happened. We're evaluating the history, not whether it was a right war or not, but what are the consequences of it? I mean, there was real fear that this would drag on forever, that the Iraqis were a real powerful force, that they would put up a fight, that America could succumb, that America could be destroyed, not America could be destroyed, but that American forces could take real casualties, massive casualties. I mean, there was real fear about all this. I was at the time a graduate student at the University of Texas. Nobody listened to me, but I said, this will be a short war and America is not going to suffer many casualties. It was indeed a very short war. And America suffered very few casualties. I think most of American casualties in the First Gulf were a consequence of friendly fire, errors. Iraqis killed very few Americans. But what shocked the world, what surprised the world, it shouldn't have. But it did. It was America's use of precision weapons, America's use of technology. It turned out that America was a generation ahead of the Soviet weapons that the Iraqis were using, actually two generations ahead. The Iraqi weapons systems had no chance against America. They had no chance against precision bombing into Baghdad, against precision bombing that could take out tanks from the air, that could take out tanks with anti-tank missiles held on the ground. These were far more advanced missiles, far more advanced weapons that anybody had seen, that anybody had imagined. They could thread bombs through windows. Now, I knew they could do that, because we were doing that in Israel in 1982 in Lebanon. But I guess nobody extrapolated. If Israel could do it, well, the Americans could do it on steroids. And this is almost 10 years later, the weapons were even more sophisticated. So Z-Racer says in the Gulf, 147 total American KIA, 35 of them friendly fire. So not a majority, but a significant number of them, 20% friendly fire. That's nothing. 147 in a major war, the first largest army in the world. And most of it was American planes just shooting caravans of retreating Iraqis, destroying their tanks. One after the other, destroying their facilities, destroying whatever America wanted to destroy. They could destroy whatever they wanted to do in this war. They could have done it. Kuzmissiles, nobody had seen Kuzmissiles in action before. This is the first war in which Kuzmissiles were used. And it blew the Russians and the Chinese out of the water. I mean, it shocked them. They suddenly realized that they were third-rate powers. There was only one power in the world. There was only one real global power in the world. Nobody came close. It's interesting that as a consequence of this, the Russians tried to integrate technology, but to a large extent, doubled down on the old Soviet-style weapons systems and strategies. The Chinese, on the other hand, completely scrapped everything and started from scratch. That's why the Chinese military today is so much more advanced than the Russians, because they took technology seriously. And they started adopting technology directly into weapons systems starting in 1991. And as a consequence of today, a much more formidable military force than the Russians, much scarier than the Russians. So 1991 saw not only the collapse during that period, the collapse of the Soviet Union complete, collapse of the Soviet Union, the wall had already fallen. It showed American military conflict as by far the most powerful nation in the world. The 1990s was also a period of exploding innovation, exploding new technologies, all dominated, all dominated by Americans. America saw its stock markets go up, its economy boom. Under Bill Clinton, the economy did fantastically well, unemployment went down, inflation stayed low, interest rates came down, asset prices went up. We got a whole new world with the internet. Internet is created by Al Gore. Thank you again, Al Gore, if I haven't said enough thank yous. And the world was an American world. Everything was going America's way. And again, we, as an objectivist, living through the 1990s, I have to say that that was not my perception at the time. America, at the time for me, was a fading country. I could see all the negatives. And I think we missed all the positives. And the positive were consequence of things that had happened at a, granted, superficial level, but superficial makes a difference. A little bit of freedom goes a long way. The deregulation of the 70s and 80s made a huge difference. The restructuring of American businesses in the 80s by Michael Milken and Carl Icahn and the rest of Wall Street made a massive difference. The allocation of huge quantities of capital into Silicon Valley, the creation of a venture capital industry in the 1970s and 80s, the creation of a high-tech industry in the 70s and 80s, the creation of Apple and IBM computers and Microsoft, they changed the world. And that was the 80s and 90s. And the world was in ascent. And America was in ascent. China was in ascent, but lagging way behind. And this was a period that could have become a revolutionary period. Could have become the change the world period. But it had one fundamental, basic, underlying flaw. And that is no philosophy, no ideology driving this. This is all a consequence of a mixed economy shifting a little bit towards more freedom. Not ideologically committed to more freedom, but just a small shift towards more freedom. And building confidence that that works, not because it's good, not because it's virtuous, not because it's beautiful, but because it works. So the left moved to the right. The right became a free market. You saw that with Tony Blair in the UK. You saw that with Bill Clinton in the US. They gave up on their big socialist plans. And day one gave up, basically, other than Hillary care. But once Hillary came imploded, that was it. He became basically a right-of-center president who basically did much of what Newt Gingrich and the House Republicans told him to do. Because it worked. And because America was writing high. And because everything America seemed to be doing was working. Japan, or one other aspect of this, of course, is that in 1991, Japan witnessed this massive stock market crash, real estate crash. I mean, there was a period in which I think, like what was it, the land of the Imperial Palace in Tokyo was worth more than Manhattan, or something like that. Real estate prices plummeted in Tokyo. Japanese company stock plummeted while Japan continued to sell the United States cars and other things. It was no longer this place to envy. It entered this long, long, that still continues, state of stagnation. All happening in those late 1980s, early 1990s. One economic rival, Japan, goes away. Europe. There's no Europe yet. But Europe is not a real force. Soviet Union is gone. China is still not a significant force. All the rest is the United States. And yet there's no philosophy. There's no ideology. There's just kind of a vague sense of meandering and stumbling from here to there politically and intellectually and not making any too big of a mistakes until we make them. Because since then, oh, philosophy, since there's no ideology, since then, oh, intellectuals using this great opportunity. Remember when the Soviet Union collapsed? Fukuyama wrote that famous essay about the end of history. Liberal democracy, the mixed economy, had won. It was the end of history. Nothing else was going to happen because we'd won. Liberal democracy had won. But what was the liberal democracy? A mixed economy. An unideological, pragmatic blood, nothing neither here nor there. A mixture of socialism and some freedom. This was going to dominate the world. This had won. And what had lost? Well, the communists and the fascists had all lost. And there was a sense that they had lost. But it wasn't clear who had won. It wasn't clear which ideas had won. And this is the problem with the mixed economy. This economy is going to do better than communism. It's going to do better than fascism. And it makes you feel great. It makes you feel invincible. But it's not good. And it's not sustainable. And of course, the event that brought America down to earth from the euphoria, in a sense, or its status in the 1990s, the status is easier to see after the fact and during. The event that brought it all down was 9-11. And of course, 9-11 was completely avoidable. 9-11 was a consequence of years and years of appeasing Islamists, of avoiding offending them, of not taking their threats and attacks seriously. And 9-11 showed America to have the greatest weapon systems in the world, to have the strongest and richest economy in the world, to be the only superpower in the world. And yet, to be impotent in the face of a bunch of cave-dwelling terrorists who hated civilization, hated the West, hated everything America stood for, and yet America could not defend itself, not intellectually, not morally, and ultimately, not militarily. 2001 is the end of that decade of American invincibility. It's the beginning of an Afghan war that we have to say we lost. 2003 is the beginning of an Iraq war that you have to say we didn't win, we ultimately lost. Middle East is no safer today than before. In spite of all the weapon systems, in spite of all the strength, in spite of all the riches, in spite of all the wealth, we couldn't stand up to a bunch of terrorists. We couldn't stop them, then we couldn't kill them. It took decades to get bin Laden and the Taliban right back to where they are today, back today to where they were back then. Nothing changed. Gave up trillions of dollars, the lives of thousands of young men, and nothing, nothing changed. So the 2000s are the really down-ravelling of America. They start with 9-11. They end with a great financial crisis. So if 9-11 and the response to 9-11 show American weakness, moral weakness, American cowardice, American inability to deal with a threat geopolitically, militarily, but importantly morally, the great financial crisis shows America to be a paper tiger when it comes to economics. It shows that, from my perspective, we didn't go far enough in all the deregulations and all the lack in freeing up the economy. But the way the world interpreted it, the way the world interpreted it, and still interprets it, is the great financial crisis was the result of too much deregulation, was the result of too much capitalism, was the result of American capitalism, and therefore it was the failure of American capitalism. So if America military prowess was in decline during the 2000s, American economics started declining in 2008. The perception of America as a giant economically starts to fade starting in 2008. And we still haven't recovered from either one of those. We're still suffering from the last wars in Afghanistan and Iraq, our inability to stand firm. We're still, even more so, still suffering from the fact that we blame the financial crisis on capitalism, on freedom, on liberty, and if only increased restrictions in economy, increased government intervention, increased government involvement. So what you get is a 60s rise for the 50s and 60s rise, decline, sharp decline in the 70s, rise in the 80s and 90s, decline in the 2000s and 20 teens. And that's the cycle of being so far. It's a cycle of a mixed economy. It's a cycle of bouncing around from more freedom to less freedom to more freedom to less freedom. I fear that there's no energy today on the more freedom side. And part of the reason for that is almost all of the interpretations of the history, almost all the stories of our history suggests that we did phenomenally well when we had less freedom. And we do badly when we have more freedom. That is, the interpretations are reversed. They tell us, for example, that we peaked. The left tells us that we peaked in terms of influence, in terms of strength, in terms of economic ability in the 1970s, which I think was one of our ways where we were at the bottom. And the 80s and 90s were what undermined us. And the 2000s were just the consequence of the undermining that happened in the 80s and 90s. And we are doomed as long as we deregulate liberty, our economy, as long as we strong militarily. They don't want us to be strong militarily. We can be strong military. Look what it gave us. It gave us wars in Iraq and Afghanistan, and we lost. So that's kind of my little, my story. I mean, there's a lot more that can be said on any one of those periods. There's a lot more that can be said of financial crisis. I've said a lot of it, but it probably deserves a return to that period. I've talked endlessly about 9-11, so I'm not going to do it now. But I think you guys know my perspective of 9-11. And if you don't, you can go back and listen to my shows of 9-11. I think that a lot of other things happened during the 80s and 90s that are interesting. But the one thing that never happened with the fall of the Berlin Wall, the one thing that never happened with the fall of the Berlin Wall, was we didn't really think about capitalism and what it means. We didn't really think about freedom and what it meant. We didn't consider what exactly was winning. We embraced the mixed economy. We relished the mixed economy. And the mixed economy can only go towards more authoritarianism, towards more state involvement, towards more. And the mixed economy here, I talk about, broader than just pure economics, just a mixed view of freedom, a little bit of freedom, but not too much in every realm. We see that throughout. And what we saw in the 2000s was Obama and Trump basically doubling up, learning the lessons from Bush, not to be strong internationally, and not to drive towards markets, more state intervention, taking the intellectuals and the economists and the intellectual forces out there more seriously, more state intervention, more central planning, more controls. And what we've done is we've shifted over the last 10 years dramatically towards greater statism in every front. Thank you for listening or watching The Iran Book Show. If you'd like to support the show, we make it as easy as possible for you to trade with me. You get value from listening. You get value from watching. Show your appreciation. You can do that by going to iranbrookshow.com slash support by going to Patreon, subscribe, locals, and just making a appropriate contribution on any one of those channels. Also, if you'd like to see The Iran Book Show grow, please consider sharing our content. And of course, subscribe. 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