In this conversation, Brent Johnson and Michael Every discuss the shift from traditional "economic policy" to "economic statecraft"—a grand strategy where economic tools are used as weapons of geopolitical power rather than just for efficiency. They argue that the "Rules-Based International Order" is collapsing, but this does not necessarily mean the end of American power; rather, the US is pivoting to a "Reverse Perestroika." This involves the US adopting aspects of a command economy to re-industrialize and secure critical supply chains, particularly in the Western Hemisphere, while using new financial tools like stablecoins to maintain dollar hegemony.
Key Takeaways
We have moved from an era of economic policy (optimizing for efficiency/profit) to economic statecraft (optimizing for national security and power). The central question has shifted from "How do we grow GDP?" to
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"Reverse Perestroika": Just as Gorbachev tried to introduce market reforms to the Soviet command economy (and failed), the US is now trying to introduce command-economy dynamics (industrial policy, tariffs, directed capital) into its market economy to re-industrialize.
Strategic Prioritization, Not Abandonment: The US withdrawal from certain global regions is not a sign of weakness but of strategic prioritization. By securing the Western Hemisphere (the "Don-Row Doctrine"), the US strengthens its core to project power more effectively elsewhere.
The Return of "Letters of Marque": Every predicts the return of state-sanctioned private actors (modern privateers) to achieve geopolitical goals where the state lacks capacity, such as interdicting drug trade or cyber warfare.
Stablecoins as Geopolitical Weapons: US Dollar stablecoins are not just crypto assets; they are a tool to extend US monetary dominance outside the traditional banking system, bypassing the "Triffin Dilemma" and allowing the US to export dollars without dismantling its own industrial base.
The "Office of Strategic Capital": A critical new US government entity that pairs private equity with state goals to fund national security-critical technologies, signaling a massive shift toward state-directed investment.
Resource Denial Strategy: US involvement in places like Venezuela is partly about resource denial—ensuring rivals like China cannot access critical energy or strategic locations, following the Dune maxim: "He who can destroy a thing, controls a thing."
Detailed Summary by Topic
1. From Economic Policy to Economic Statecraft
Michael Every defines the current era as one of "Economic Statecraft." Unlike economic policy, which manages fiscal and monetary levers for stability and growth, statecraft combines these tools into a "fist" to achieve strategic dominance.
The Core Question: Every argues that nations must ask, "What is GDP for?" [00:06:10] If it is for war or national survival, efficiency and corporate profits become secondary to production capacity (e.g., bullets over widgets).
The Shift: This transition explains recent US moves that seem "inefficient" to free-market economists but are logical for national security.
2. The Collapse of the Liberal Order & US Strategy
Brent and Michael agree that the "Liberal World Order" is collapsing, but they dispute the popular notion that this equates to a US collapse.
Prioritization vs. Retreat: Citing Michael McNair, they argue the US is not abandoning the world but prioritizing its own neighborhood [00:16:55].
Spheres of Influence: The US strategy is to lock down the Western Hemisphere (Monroe Doctrine) and hold the "borders" of rival spheres (Europe/Asia) to prevent any single rival from dominating a continent, similar to the board game Risk.
3. "Reverse Perestroika" & Re-Industrialization
Every introduces the concept of "Reverse Perestroika" [00:29:00].
Historical Parallel: In the 1980s, Gorbachev inherited a stagnant superpower (USSR) with a strong military but weak consumer economy. He tried to introduce market freedoms (Perestroika/Glasnost) and the system collapsed.
The US Version: The US inherits a superpower with a strong consumer economy but a hollowed-out industrial/military base. The goal is to introduce command economy elements (tariffs, industrial policy) to rebuild the military-industrial base without crashing the consumer economy.
4. The "Don-Row Doctrine" (Monroe Doctrine 2.0)
The conversation highlights the US pivot back to Latin America.
Venezuela & Resources: Recent US assertiveness in Venezuela is framed as securing the "near abroad." Even if the US doesn't need the oil, controlling it denies China access (physical censorship).
Inclusive Imperialism: The US National Security Strategy explicitly mentions wanting cheap commodities from Latin America to fuel re-industrialization in both North and South America, moving away from the neoliberal model of outsourcing to Asia.
5. Government & Private Capital Integration
They discuss how the US government is entering the capital allocation business.
Office of Strategic Capital (OSC): Run by Steve Feinberg (Cerberus Capital), this office is designed to direct funding to critical technologies.
Profit vs. Security: While governments are historically poor capital allocators, Every argues that in a war economy, "efficiency" is measured by survival and capacity, not ROI. China’s 25-year growth is cited as proof that directed capital can work for decades before hitting a wall.
6. Stablecoins: The Stealth Weapon
Johnson and Every identify US Dollar stablecoins as a game-changer [01:09:05].
Solving Triffin’s Dilemma: Stablecoins allow the world to use USD without the US needing to run massive trade deficits to supply them.
Undermining Rivals: By allowing citizens of rival nations to hold USD directly (bypassing local banks), the US can undermine the monetary sovereignty of adversarial regimes.
Data & Figures
Data Point
Value
Context
Shipbuilding Ratio
250:1
China's shipbuilding capacity compared to the United States.
US Defense Budget Proposal
~$1.5 Trillion
Potential future annual defense spending (up from ~$1T), comparable to peak QE levels.
OSC Leverage
~$200 Billion
Estimated potential capital impact of the Office of Strategic Capital (leveraging private funds).
Timeline of Prediction
2014-2016
When Michael Every began writing about the collapse of the liberal order.
Stories & Anecdotes
The Gorbachev Parable: Every compares the current US situation to the fall of the Soviet Union. Gorbachev tried to fix a command economy with market tools and failed; the US is trying to fix a market economy with command tools. The risk is that, like Gorbachev, the US leadership could be deposed if the transition causes too much chaos.
"Monkeys in Sunglasses": Every shares his initial disdain for crypto (NFTs/memecoins) as useless speculation ("What is it for?"), only to later realize that the technology (stablecoins) answers the strategic question of how to maintain dollar dominance.
Letters of Marque: Every predicted years ago that the US would return to issuing "Letters of Marque" (legalized piracy/privateering). Brent notes this is now entering the "Overton Window," with discussions about using private actors to interdict drug boats or conduct cyber operations.
The "Headless Chicken" Market: Every describes most market participants as running around "like headless chickens" reacting to headlines, because they lack the "Economic Statecraft" framework to connect the dots.
References & Recommendations
Books & Literature:
Dune by Frank Herbert - Context: Quoted for the principle "He who can destroy a thing, controls a thing," referring to US resource denial strategies [00:54:10].
The Prince by Machiavelli - Context: "Is it better to be loved or feared?" Used to describe the US shifting from "soft power" to "hard power."
Articles & Papers:
National Security Strategy (US Govt, Nov 2024) - Context: Reviewed by Michael J. McNair, highlighting the shift to prioritizing the Western Hemisphere.
"Venezuela Vidi Vici" by Michael Every (Dec 2024) - Context: Rabobank report analyzing the US strategic moves in Venezuela.
Brent Johnson’s Report on Stablecoins (Oct 2024) - Context: Thesis on how stablecoins aid US hegemony (link mentioned in video).
People Referenced:
Steve Feinberg: Founder of Cerberus Capital, now head of the Office of Strategic Capital.
Adam Smith & David Ricardo: Referenced regarding classical industrialization and trade theory.
Vladimir Lenin: Quoted on historical pacing ("weeks where decades happen").
Elon Musk: Mentioned regarding space-based power and efficiency.
Concepts:
Don-Row Doctrine: A play on "Monroe Doctrine" + "Donald Trump," referring to the aggressive securing of the Western Hemisphere.
Glasnost & Perestroika: Soviet reform terms applied to current US transparency and economic restructuring.
Quotes
"[00:00:00] There are decades when nothing happens and then there are weeks when decades happen." — Vladimir Lenin (Quoted by Brent Johnson)
"[00:06:10] What is GDP for? Once you start answering that question... how they all line up is obvious." — Michael Every
"[00:11:06] You don't win a war with profits, you win a war with bullets." — Michael Every
"[00:16:55] The confusion comes from mistaking prioritization for abandonment." — Michael J. McNair (Quoted by Brent Johnson)
"[00:29:00] It's reverse Perestroika... He needs to move towards a more command economy whilst not blowing up the consumer side." — Michael Every
"[00:54:10] He who can destroy a thing can control a thing." — Frank Herbert (Dune) (Quoted by Michael Every)
"[01:09:05] It was all monkeys in sunglasses nonsense... but I see what they're for now. Dollar stablecoins are part of this Trumpian reverse Perestroika." — Michael Every
Speakers & Credentials
Brent Johnson: CEO of Santiago Capital. Famous for the "Dollar Milkshake Theory," which argues that the US dollar will strengthen as global liquidity is sucked back into the US due to higher yields and relative economic strength.
Michael Every: Global Strategist at Rabobank. Known for his prescient "Grand Macro Strategy" framework, predicting the collapse of the liberal world order, supply chain fracturing, and the return of great power conflict years before they became mainstream narratives.
Actionable Next Steps
Re-evaluate Investment Frameworks: Stop analyzing sectors (especially Defense and Energy) solely based on P&L or efficiency. Start analyzing them based on strategic national necessity.
Study the "Office of Strategic Capital": Research the companies and technologies this office is funding (led by Steve Feinberg), as they will have massive state-backed tailwinds.
Monitor Stablecoin Regulation: Watch for the "Genius Act" or similar legislation that integrates stablecoins into the formal US banking/statecraft architecture.
Focus on the Western Hemisphere: Look for investment opportunities in Latin American commodities and industries that will benefit from US "near-shoring" and re-industrialization efforts.
Watch "Fractals of Fractures": Pay attention to small cracks in political coalitions (e.g., within MAGA) or markets, as they are often indicators of larger structural breaks to come.
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