Why America Cannot Afford to Lose Another War | Marvin Barth

In Episode 476 https://hiddenforces.io/podcasts/why-america-cannot-afford-to-lose-another-war-marvin-barth of Hidden Forces, Demetri Kofinas speaks with Marvin Barth, founder of Thematic Markets and former head of FX and EM macro research at Barclays, and Chief Economist for International Affairs at the US Treasury about the ongoing US-Israeli military campaign against Iran and its implications for the global economy, global security, and the future of American military, economic, and financial power. The first hour begins with an update on the status of Operation Epic Fury, how the evolution of the conflict has aligned with Marvin's initial expectations, and the analytical framework he uses to assess US strategic objectives and the incentives that inform the decision-making of its principal agents—most notably the President himself. They draw historical analogies to previous Middle Eastern conflicts, assess risks to maritime security and global trade, and examine the evolving incentive structures of the US, Israel, the Gulf States, Saudi Arabia, and China. The conversation also explores the broader geopolitical implications of the conflict, including the fracturing of the post-war liberal order, Europe's precarious position, and the possibility of a far-reaching strategic realignment that could reshape America's alliances and its role as the world's dominant maritime and economic power. The second hour opens with a psychological portrait of Donald Trump—his reliance on inductive reasoning, his strategic use of misdirection, his narcissism, and what Marvin describes as a genuine ambition to secure his place among history's greatest presidents. They discuss how the skills that made Trump successful in business and on the campaign trail may fall short of what is required to navigate international crises and lead America through this Fourth Turning, and how an unpopular war is eroding his political base and risks turning him into a lame duck president before he reaches the midpoint of his second term. The episode concludes with a discussion of markets and the economy, including Europe's energy vulnerabilities, Marvin's bearish views on gold, and his innovation-cycle framework, which he believes explains why the US dollar remains near all-time highs on a real, effective basis despite widespread predictions of decline. Subscribe to our premium content—including our premium feed, episode transcripts, and Intelligence Reports—by visiting HiddenForces.io/subscribe https://hiddenforces.io/subscribe. If you'd like to join the conversation and become a member of the Hidden Forces Genius community—with benefits like Q&A calls with guests, exclusive research and analysis, in-person events, and dinners—you can also sign up on our subscriber page at HiddenForces.io/subscribe https://hiddenforces.io/subscribe. If you enjoyed today's episode of Hidden Forces, please support the show by: Subscribing on Apple Podcasts https://podcasts.apple.com/us/podcast/hidden-forces/id1205359334, YouTube https://www.youtube.com/channel/UC8URhgYos5fjHqFSO4RSIEg, Spotify https://open.spotify.com/show/0TK6u251zGSlMgJKH6cOaP, Stitcher https://www.stitcher.com/podcast/demetri-kofinas/hidden-forces, SoundCloud https://soundcloud.com/hiddenforces, CastBox https://castbox.fm/channel/2629539, or via our RSS Feed http://hiddenforces.libsyn.com/rss Writing us a review on Apple Podcasts https://podcasts.apple.com/us/podcast/hidden-forces/id1205359334 & Spotify https://open.spotify.com/show/0TK6u251zGSlMgJKH6cOaP Join our mailing list at https://hiddenforces.io/newsletter/ Producer & Host: Demetri Kofinas Editor & Engineer: Stylianos Nicolaou Subscribe and support the podcast at https://hiddenforces.io https://hiddenforces.io/. Join the conversation on Facebook https://www.facebook.com/hiddenforcespod/, Instagram https://www.instagram.com/hiddenforcespod/, and Twitter https://twitter.com/hiddenforcespod at @hiddenforcespod Follow Demetri on Twitter at @Kofinas https://twitter.com/kofinas Episode Recorded on 04/14/2026

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Demetri Kofinas?

  What's up, everybody? My name is Demetri Kofinas, and you're listening to Hidden Forces, a podcast that inspires investors, entrepreneurs, and everyday citizens to challenge consensus narratives and learn how to think critically about the systems of power shaping our world. My guest in this episode of Hidden Forces is Marvin Barth, founder of Thematic Markets, an institutional research platform providing macro and geopolitical analysis to professional investors. He previously served as head of foreign exchange and emerging market macro research at Barclays and as chief economist for international affairs at the U.S. Treasury Department during the second Bush administration. Marvin and I spend the first hour of our conversation today discussing the ongoing

• 0:45Demetri Kofinas?

  U.S. and Israeli military campaign against Iran, where it stands, how the evolution of the conflict has aligned with Marvin's initial expectations, and the analytical framework he uses to assess U.S. strategic objectives and the incentives that inform the decision-making of its key agents, most notably the President of the United States. We draw historical analogies to previous Middle Eastern conflicts, assess the risks to further disruptions in maritime security and global trade, and assess the evolving incentive structures of the key players involved, including the U.S., Israel, the Gulf States, Saudi Arabia, and China. We also explore the broader geopolitical implications of the conflict, including the fracturing of the post-war liberal order, the precarious situation in which Europe finds

• 1:30Demetri Kofinas?

  itself, the possibility of a far-reaching strategic realignment that could reshape America's alliances, its role as the world's dominant maritime power, and as the preeminent economic and military power in the international system. The second hour begins with a psychological portrait of Donald Trump, his reliance on inductive reasoning, his strategic use of misdirection, his narcissism, and what Marvin describes as a genuine ambition to secure his place among the greatest presidents in American history. We discuss how the skills that made Trump successful in the private sector and during his multiple candidacies may fall short of what is needed to weather international crises and lead America through this fourth turning, and how his latest antics and his decision

• 2:14Demetri Kofinas?

  to initiate what has thus far been a very unpopular war is now eating into his political base of support and risks turning him into a lame-duck president before he is less than halfway through his second term. If you want access to all of this conversation, go to hiddenforces.io/subscribe and join our premium feed, which you can listen to on your mobile device using your favorite podcast app, just like you're listening to this episode right now. If you want to join in on the conversation and become a member of the Hidden Forces Genius Community, which includes Q and A calls with guests, discounted access to third-party research and analysis, and in-person events like our intimate dinners and weekend retreats,

• 2:55Demetri Kofinas?

  you can also do that on our subscriber page. And if you still have questions, feel free to send an email to [email protected] and I or someone from our team will get right back to you. Lastly, because this conversation deals with investing, nothing we say on this podcast can or should be viewed as financial advice. All opinions expressed by me and my guests are solely our own opinions and should not be relied upon as the basis for financial decisions. And with that, please enjoy yet another thoughtful and timely conversation with my guest, Marvin Barth.

• 3:36Demetri Kofinas?

  Marvin Barth, welcome back to Hidden Forces.

• 3:41Speaker 01

  Thank you, Dmitry. It's a pleasure to be back again.

• 3:43Demetri Kofinas?

  You were on the show, was it even a year ago?

• 3:47Speaker 01

  Around that. I can't remember exactly.

• 3:50Demetri Kofinas?

  Was it after the London dinner or before the London? Were you at the London dinner last year or the year before that?

• 3:55Speaker 01

  I believe it was after the London dinner. So it must have been within the last year, probably eight, nine months ago, because the London dinner was the first time that we met.

• 4:04Demetri Kofinas?

  When were you on Grant's podcast last? It published a few weeks ago. When did you guys record that?

• 4:09Speaker 01

  Oh, I think that was, goodness, it must have been right after I published that piece, Alia Iacta Est, which you can actually say what Caesar said in Greek, because I can't pronounce it. But that would have been like around March 20th or so.

• 4:23Demetri Kofinas?

  Yeah, I was gonna guess something around there. It seems like it's been almost a month. So I wanted to give people that context in case they want to go back and listen to your previous appearance on the podcast, where we will have spoken a bit more about Your background than we're going to talk about today. And I also recommend the episode with Grant, which was an excellent episode, as you know, because I also retweeted it on Twitter.

• 4:43Speaker 01

  Thank you.

• 4:43Demetri Kofinas?

  And said as much. And I think you're also a reader of John Conrad's works. I think some of his stuff is informs some of your own analysis or parallels.

• 4:51Speaker 01

  I listened to your interview with him. Great interview. You did a really fantastic job. That was really useful for me.

• 4:57Demetri Kofinas?

  Yeah, I can't say that I find his view especially convincing, but we can, we can talk about that. But one of the things I really loved that really stuck out for me in that interview that you did with Grant was your comments about Trump wants to be a great president. He wants to be not just a great president. He wants to be on the Mount Rushmore of presidents, not only on Mount Rushmore, but he wants to be a gilded head on Mount Rushmore. And you don't get to be a gilded head on Mount Rushmore by losing a war. And I thought that was very, very powerful. So I think we'll have a chance to revisit those comments and dig deeper into them when we discuss your methodology. But let's just start with, well, we're recording this on Tuesday, April 14th. Now, I've been doing a lot of these one hour long conversations.

• 5:42Demetri Kofinas?

  I imagine this one will be longer. We have more time that are just meant to, you know, bring people up to date, keep me up to date on the state of the war and how it's going. This is going to be about the war, but as I said, I'm sure we're going to go a bit longer here. There will be a second hour, but let's just start with the war. I mean, what is your interpretation of how it's going right now? We are in week, I don't know, six, seven, something like that, since Operation Epic Fury began back on February 28th. We're still in the midst of a ceasefire, though I don't even know if it's really a ceasefire. We're calling it a ceasefire. Is it really? So I'm curious to get your interpretation of how the war is going and then how your assessment today measures up with what your assessment was a few weeks into the war.

• 6:25Speaker 01

  Yeah, so let's start in reverse order where I started, which is that, you know, as well as I think I've done in sort of predicting Trump. And, you know, this is one of the things that Grant and I talked about, that I think I've done probably a better job than most people out there in terms of forecasting what Trump's policies would be and how they would play out and looking through a lot of the noise.

• 6:54Speaker 01

  And yet, still, I was caught off guard by this war. And I think it's for the classic reason that most people thought about, or at least I think most people who were somewhat more open minded to Trump. And by that, I don't mean necessarily a supporter, but just not in the, oh, everything he does is stupid and the guy's insane or whatever. You know, the people out there who have a very clear, strong negative view, and they're not able to see any rationality to anything that he does.

• 7:25Demetri Kofinas?

  What is broadly called derisively Trump derangement syndrome.

• 7:29Speaker 01

  Trump derangement syndrome. And I mean, that's why I didn't use that term because it is somewhat derisive. But I mean, it is, it is a real thing, right? And if you exclude those people, I think most of us thought, hey, the guy campaigned pretty strongly. And this was a key tenet of the MAGA coalition, no foreign wars. Now, I would amend that. I would say if you actually look at the broad swathe of things that he said, it was no more stupid strategic wars, but he never said that. He said, no more foreign wars.

• 8:04Demetri Kofinas?

  Vance basically explained for him later when he said, the reason that this is different than previous wars is because previously we had stupid presidents. Now we have smart presidents, which also sounded somewhat condescending, to be honest with you, as a, as a, as a citizen, to hear the vice president explain it that way. But yeah.

• 8:23Speaker 01

  And by the way, if I may just comment on that specific comment, this is one of the things that really annoys me when I hear people talk about this president or that president is stupid. And that includes the current president talking about his predecessors or the vice president in your view. Look, this is the single most competitive position in the world. Maybe, maybe General Secretary of the Chinese Communist Party is more competitive, right?

• 8:49Speaker 01

  You don't get there unless you are a uniquely talented and smart individual. Just accept that. Every single person who becomes president to the United States, whether you like their politics or not, this is actually somebody who has some sort of talent. Now, I'm sure we'll get into what is Donald Trump's particular talent. But to that point, you know, his predecessors weren't stupid. You know, I was in the Bush administration and a lot of people then derided George Bush as being really stupid. And the fact was, George Bush had a problem with malapropisms, right? He was constantly saying the wrong word at the wrong time. And the other thing to know about him-

• 9:34Demetri Kofinas?

  And making up words that didn't exist.

• 9:36Speaker 01

  Well, yes, but he had a good sense of humor about that. So like, one of my best friends was in the White House Department of Strategery. And that was its official name given by the president.

• 9:52Demetri Kofinas?

  There was also, I don't know if you remember the SNL skit in 2000, where Daryl Hammond was playing Al Gore and Will Ferrell, who played George Bush many times on SNL, was playing Bush during one of their debates during that election. And whoever was playing Jim Lee, or the moderator, asked Bush to sum up his campaign in a single word, and he used the word "strategery."

• 10:15Speaker 01

  Yeah, and I think that's where the name of the department came from. And it was named X-Post after that, that George Bush, to his credit, had a great sense of humor, was willing to poke fun of it itself, and named his internal political strategy department that Karl Rove headed, the Strategery Department. So, look, the point is, these guys are all very smart. That doesn't mean that they have the right policies, right? And I do think, I mean, you have been one of the most eloquent spokespeople out there on, you know, the great strategic mistake that was the Iraq war. And, you know, I think even George W. Bush recognized that. Like, you know, one of the things I find

• 11:00Speaker 01

  really interesting is you talk to a lot of his voters and they'll say, you know, I liked Bush term one, but Bush term two was terrible. I'm like, no, you got it exactly backwards. Term one is when he made all his mistakes. Term two is when he actually became a president and knuckled down and tried to fix them. But that was the pattern, right? We had Iraq, you know, frankly, twice because, you know, whatever, we left things undone, whether you want to see that in 1990 or not. We had this pattern of Libya, Syria, Afghanistan, over and over, where we would get ourselves involved in a way that wasn't necessarily

• 11:41Speaker 01

  strategic to the United States, but bled a lot of blood and treasure. And that's what a lot of people were extremely angry about. And if you listen to the totality of what Trump said on the campaign trail, you don't have to listen to J.D. Vance's ex-post or, you know, frankly, the most eloquent spokesperson in his administration on sort of explaining what's really going on, Marco Rubio. You can go back and listen to him. Across various speeches, he would talk about these specific issues that, hey, I'm not against going to war. It's, I'm against going to things that, why would we do this? How is this in America's

• 12:22Speaker 01

  interest? And so I was surprised to say that, but it did make me think, okay, this war is going to be different. So from the very get-go, I was like, the model here is probably going to be Afghanistan. Which, you know, you've interviewed my friend Dave Kilcohen before, and Dave and I were talking about this right after the war broke out, and exactly about this point, that Afghanistan was probably the model. And the reason for that is that as much as we now look back as Afghanistan is this terrible failure, it was actually a massive success until we changed

• 13:03Speaker 01

  the mission to nation building. That was the original come in with an air campaign, use special forces to help organize on the ground insurgents who already dislike the regime and overthrow it. And they did that very successfully. But then we decided to stick around and turn it into this, you know, nation state that we wanted that educated people. And, and those are all noble goals, but it wasn't core to American interest, right? And so my suspicion was when they decided this, they were going to go for this model. And then I started thinking through that, and it made me think more and more, look,

• 13:47Speaker 01

  if this is really in a grand strategic point about one, taking out a committed US enemy, right? So a lot of people like to say, we started this war, the Americans started this war. I don't think that's true. I think Iran started this war 47 years ago. They've been at war with the US for 47 years. The US just hadn't acknowledged it. It is a fact, you can go look up the numbers on this. There is no nation state, I understand that some terrorist organizations have done worse, namely Al Qaeda. But there is no nation state that has killed more Americans in the last 47 years. And these are documented deaths

• 14:30Speaker 01

  we can directly attribute to the state of Iran than Iran. More Americans maimed by Iran. And this has been going on for 47 straight years. You know, I think ex post, one of the things we can see from just the fusillade of missiles and drones is that they were very clearly taking the North Korean attacked to develop a conventional cocoon that prevented anyone from being able to disrupt their ability to develop a nuclear weapon.

• 15:09Speaker 01

  And they were on their path to have a nuclear weapon and have ballistic missiles that could reach the US. And given that they are a millennialist entity that does believe that the US is the great Satan and Israel is the little Satan, I don't think you could discount the idea that the US would actually be threatened by them someday. So, given the circumstances that developed, and there's a whole, we go into exactly how this, but there was an amazing opportunity to finally decapitate this entity. Just the coincidence of a lot of different things. And so I think they saw that, they decided

• 15:53Speaker 01

  to go do that. But my firm conviction has always been, they're not going to be there to nation build. They would love to have an Iranian revolution that takes over and turns into a friendly American state in this dream state if, you know, they got lucky enough for that to happen. But their stop loss, if you want to put it in financial terms or investor terms, is they are perfectly happy to walk away and leave it a smoking wreck that is a civil war, as long as the Islamic Republic doesn't exist anymore. And that's been my view all along.

• 16:26Demetri Kofinas?

  All right. So let's dig into some of what you said, and then we'll have a chance also to talk about or to model the incentives of the US government. So first of all, I do think it's an odd comparison for me to compare Iran in 2026 to Afghanistan in 2001, primarily because Afghanistan was a failed state at that time. It didn't have the institutions or the national cohesiveness of Iran. So it wouldn't immediately seem obvious to me why that would be the appropriate model to think about how the US would go about approaching. A war with Iran. Why is it that you, and it sounds like also David, felt this way? So what is it that you feel like made that inappropriate analogy?

• 17:11Speaker 01

  Well, I think it's the method of attack, not necessarily the state.

• 17:15Demetri Kofinas?

  Bombardment coupled with allying yourself with other domestic factions. The Kurds were floated as one early on in the war, but there are others.

• 17:25Speaker 01

  Yes, the Kurds, the Balokis, the Azeris, they have multiple independent insurgent movements there. The state has firm control over its territories, or at least has before this war. We'll see if that's still the case. I think that's to your original question, where are we today? That's a really interesting one.

• 17:44Demetri Kofinas?

  But Afghanistan was already in the process of civil war. It'd been dealing with civil war for what, two decades before the US war with Afghanistan? In this case with Iran, if we were to do that, we would plunge them into civil war. And that doesn't seem to be in the US's interests. Certainly, it could be in the interest of Israel as a better option than the status quo prior to February 28th, but why would civil war in Iran be in US interests?

• 18:06Speaker 01

  So, look, as I mentioned, I think their ideal circumstance is that the Persians who had shown a strong disaffection for the government before the war began. There were other reasons why this was a particularly unique time to attack. But that was, that was a big one, right? There is clearly a significant dissatisfaction with the majority Persian population as well. So I think their ultimate, if, if you were to say, what would have been the best outcome they could possibly hope for is that they remove the apparatus of the state

• 18:46Speaker 01

  and the Persians rise up and a friendly government that likes Israel and likes the US, i.e. like Iran before the Islamic Republic, rose up. That's their best case.

• 19:00Demetri Kofinas?

  Yeah, but we didn't really have any basis to hope for that, did we? I mean, this seems like the Ahmed Shalabi equivalent of trying to pin our hopes on the son of the Shah. I mean, really, I didn't see it any different.

• 19:10Speaker 01

  Oh, okay. I would say that's very different. You're absolutely right, you know, to chastise the Bush administration, the Washington establishment for, you know, following Shalabi in that case, right? Because there was no evidence that he had any real following in the country. There is evidence of widespread dissatisfaction with the Islamic Republic in this case, and that people don't want that.

• 19:37Demetri Kofinas?

  I mean, I would say that that was also the case for Saddam, though, right? I mean, besides the non-Kurdish Sunni minority that supported him, that was filled primarily with Ba'athists and loyalists from Deke, I would say that he was more unpopular than the Islamic Republic, or the IRGC, or the Ayatollah in Iran.

• 19:56Speaker 01

  Fair point, and, you know, by the way, the various groups kind of split the way that they had geopolitical leanings for. So, you know, obviously, to your point, the Sunni Arabs were, you know, not happy to have the Americans come in and take away their monopoly of power, even if they weren't in the inner circle of Saddam. The Kurds were very happy. They've been, you know, staunch US allies throughout. And of course, I think somewhat predictably, the majority Shia South, of course, aligned with Iran.

• 20:35Speaker 01

  I agree with you that it would be foolish to think that this was the outcome that you should do. And that, I think, is a crucial difference here. The Bush administration made the mistake of thinking this would happen. Now, by the way, I should speak up for one person in the administration who's typically really maligned, and ultimately, I think, is in a large part responsible for the disaster in Iraq. But in retrospect, he probably had the right idea, and that's Donald Rumsfeld. So, one of the problems you had in Iraq that was commented on frequently was that the US did not have enough troops there to nation-build.

• 21:21Speaker 01

  But that was precisely because Donald Rumsfeld thought that was an idiotic idea.

• 21:27Demetri Kofinas?

  Well, he was committed to reducing the size of the military and have a small, light, rapid footprint. And he tried to fight the war with, what was it, 140,000 troops? I can't remember the number exactly, but it was much less than obviously the military advised. And even in that case, of course, the argument would be that if the military always wants to have more, more of everything, more troops, more equipment.

• 21:49Speaker 01

  But look, in this case, I would say this is one where you can very clearly pin the blame on George Bush. What happened there is Rumsfeld was a very strong personality and Rumsfeld made very clear, no, I can go in and cut off the head of the snake with this amount of troops. And then you had Brennan over at the

• 22:09Demetri Kofinas?

  CPA.

• 22:10Speaker 01

  Over at State Department, yes, who said, no, no, no, no, I can do this nation building thing with the troops that he says. And George Bush is ultimately the person in charge. He didn't reconcile that difference, but both of those two people knew this was not true. And yet they went ahead with a plan that was too few troops for the nation building. So they shouldn't have tried nation building or otherwise. Anyway, the point is there were a lot of mistakes that they made because they assumed this would happen. This is what I think is the crucial difference here is that I said, that's sort of your best case scenario.

• 22:51Speaker 01

  But then you go down and you can say, okay, well, we could have, you know, something like a, you know, Venezuela situation where, you know, maybe we have less committed millennialists, but you know, part of the IRGC who are making money from their corruption networks and things like that. And happy to work with the US to stop all this. You got a whole spectrum of different things and down at the bottom is exactly this one that, well, what if we just leave a failed state behind? And I'm not sure how that's not like, obviously, that is not the optimum outcome. But if you think about that as your downside, that's not a bad downside.

• 23:34Speaker 01

  You've just denied China its major proxy in Western Asia. You have defanged a regime that was threatening all its neighbors and your plan to consolidate those neighbors into a more peaceable commercial region. I mean, like, I think the whole Gaza Peace Board is clearly his model for the broader region that, hey, we're, we're just going to make everybody do business together and that'll keep the peace. And maybe that won't work, but that seems to be their plan. If that's the case, then, you know, yeah, it's not great to have a civil war across the Gulf, but at least you don't have someone trying to get in everybody else's business.

• 24:17Speaker 01

  And you also ultimately end up controlling the flow of resources out of the Gulf in a way that gives you leverage over the Chinese potentially in terms of a Taiwan contingency or them using their critical mineral monopolies against you. And so I don't think that's a terrible downside.

• 24:42Demetri Kofinas?

  Well, let me challenge you there because it seems to me that civil war in Iran would be antithetical to maintaining commercial traffic through the strait. Because if you can't secure Iranian territory, you certainly can't prevent militant factions from flying drones into oil tankers, which at the very least would drive up insurance premiums, if not make the strait effectively or practically unnavigable. And then we're left with whether or not that represents a relative win for the United States in its larger geostrategic competition with China. And on that point, I'm also unconvinced that Iran was especially important to China to begin with. I mean, I'm certainly not an expert on China or its Middle East policy.

• 25:24Demetri Kofinas?

  But I've always gotten the sense from my conversations with sinologists and political scientists on this show who study China that the People's Republic and the Communist Party is very wary about not just foreign entanglements, but foreign alliances or overreliance even on any one particular country. And I've gotten the sense that they see meddling in the Middle East as largely a no-go zone. So I don't know to what degree they were really invested in Iran to begin with, other than seeing it as yet another important source of diversification for oil and oil and natural gas derivatives. Certainly, it would not be in their interest for the US to take it over and for America's maximalist

• 26:08Demetri Kofinas?

  war aims to be actualized. But I don't know. I mean, I've seen these arguments circulating on the internet from the earliest days of the war that this was a strategic move to counter China if things went perfectly. But I can't say that I was convinced of that, and certainly not that a failed state in Iran would be a net win for the US based on some of these assumptions.

• 26:31Speaker 01

  Yeah, well, okay, so I would say a couple of different things. So one, you're absolutely right that having a failed state there is not a great deal, right? Now, that raises a couple of questions. How long would it continue to be a failed state, right? So you do have a large Persian population there that would ultimately seek to assert itself. You also have, you know, these groups that I talked about that would be happy to very to split off, and various regional entities would not be happy about that, right? So you could imagine that the Turks in particular would be very concerned about their Kurdish

• 27:09Speaker 01

  population and also happy to go rescue, in their view, the Azeris. You can imagine that the Pakistanis next door would be really unhappy with the idea that there would be an independent Belucistan next door.

• 27:24Demetri Kofinas?

  Well, you're really nailing it right now, because I think this is something we didn't even talk about yet, which is even more critical. And this is that all of our foreign interventions, that I can think of at least. Where we try to fix a problem, we end up creating a hundred or a thousand new ones. Because we change the state of the system every time we act upon it. And in a region like the Middle East, which has been historically difficult to govern for a confluence of ethnic, geographic, and other reasons, we end up creating more problems when we forcefully involve ourselves or act uninvited. And I would also say that, you said it's not clear that Iran would remain a failed state. Well, I think that Israel, at the very least, if not with the full backing of the United

• 28:05Demetri Kofinas?

  States, would be periodically mowing the lawn in Iran, because the risk that an antagonistic regime could emerge in a newly unified Iran wouldn't be a risk worth taking. So I guess, you know, we don't have to belabor this point.

• 28:19Speaker 01

  But why, Dimitri? Because, look, it is the Islamic Republic of Iran that has been antithetical to Israel.

• 28:28Demetri Kofinas?

  But what kind of government would emerge from a war like this that wouldn't be antagonistic? I mean, the United States began this latest phase of this longstanding war with Iran, you know, by some measures going back 50 years, by assassinating Khamenei and his entire family, which I think changed the underlying conditions of the game. You know, it's one thing if you're slowly degrading your adversaries' capabilities, as the United States and Israel were doing since October 7th, you know, boiling the frog, so to speak, and creating the conditions whereby alternative factions could take over the country that would be easier to negotiate with and live alongside. But opening a war where you kill the leader of a country in an assassination strike along with a big chunk of his extended family was, to me, an act of barbarism.

• 29:11Demetri Kofinas?

  And I don't understand how we can expect to do things like that and bomb our way to peace and good relations. Now, you know, some people argue that this is what we did in Japan and Germany, and that it led to unconditional surrender and 80 years of good relations. But I don't think those are fair comparisons. Now, there is a possibility, I suppose, if I were being fair, that in disrupting traffic in the street for long enough, we incentivize other countries that Iran would depend on and need to rebuild its economy, to put pressure on the leadership and accept terms that they would have been unwilling to accept otherwise, because they risk becoming a pariah. But to the extent that this was the strategy, it certainly wasn't articulated in any clear way that I can tell.

• 29:56Demetri Kofinas?

  Not that necessarily had to be, though there should have at least been some kind of expectation setting. So I just, I don't see it, and I feel like with this administration, I have at times been grasping at straws. And oftentimes, I wonder whether this has just been partly performative on my part because it's exhausting being labeled as having TDS all the time. And then, you know, when it comes to the nuclear program, which is something that you also mentioned, this is an argument that I've heard made against Iran for, I don't know, more than 20 years, that they're on the threshold of nuclear breakout.

• 30:26Speaker 01

  They're six weeks away.

• 30:27Demetri Kofinas?

  Yeah, exactly. I mean, I remember, I remember Netanyahu speaking to the United Nations back when the UN still mattered, making similar arguments. The best argument I've heard is that they've always wanted to be close enough to developing a nuclear weapon without actually having one, because it gives them a deterrence capability and it gives them a tool with which they can negotiate without all the costs and risks associated with actually joining the club. And so, again, I don't know to what degree this was really a thing or not, their nuclear program, in other words, but these are all things that I think are subject to debate and argumentation.

• 31:05Speaker 01

  Yeah. Can I come back to your question and also just touch on this whole thing about like, you know, could you have a friendly Iran afterwards? So, you know, one, like the failed state, I think there are a couple of differences. So, like, look, we've seen plenty of failed state issues on critical waterways, and it led to piracy, and there was an international flotilla that, you know, solved the Somali piracy issue. We've seen a more recent one where, you know, the development of relatively cheap, sophisticated weapons has made that, you know, frankly, a fairly ragtag group of rebels who don't

• 31:48Speaker 01

  even fully control Yemen have been able to interrupt a major waterway, and that would be your fear here. Now, the difference with that case is they were being, you know, armed by those sophisticated weapons were coming from Iran. So it's not clear, once you've destroyed Iran's industrial base, that you're going to get that. Are the Chinese, really, on a critical waterway they depend on, going to be shipping? Missiles there to interrupt that? I don't think so. Right? So that's one point. On the second thing, look, I think the the US and Israel would be perfectly happy if a relatively benign, it doesn't even have to be a friendly, but a relatively benign

• 32:31Speaker 01

  weak state arose. The Gulf Arab states would definitely be much more supportive of that. And by the way, the people who should be most scared of this scenario of a civil war are the Gulf Arab states. And if you look over the last month, almost all the sort of back channel news about what's going on there is they're all like, take these people out, take them out, take them out.

• 32:55Demetri Kofinas?

  Now that we started the war, yeah.

• 32:57Speaker 01

  Yes, exactly.

• 32:58Demetri Kofinas?

  I mean, I don't know that they would have supported this had they known that we were going to do this.

• 33:02Speaker 01

  No, no, no question. But remember, so I mentioned this piece I wrote that you talked about Ali Ayakdest, which is, you know, the die is cast, supposedly what Caesar said as he crossed the Rubicon. Once you take certain actions, all of a sudden that changes everybody's incentives. And that's why I named that piece that. A lot of the stuff that I'm suggesting now, people will say, oh, you're defending Trump's, you know, 4D chess. And I'm like, no, it's once you're in this situation, whatever got him here, these are kind of the way you'd think through the problem. And, you know, whatever you want to think about him, he seems very intuitive to me. The Gulf Arab states are the exact same situation.

• 33:46Speaker 01

  Once you get them there, it's like, oh, wow, these guys actually were just going to launch tons of missiles at me. And if we stop here, they'll just rebuild them and do this again. Or I'm going to be completely dominated by the Persians who are our mortal enemies. I can't accept this.

• 34:04Demetri Kofinas?

  But why would they? But why? Look, I think it's important to recognize that the Iranian regime was a very aggressive, belligerent regime that threatened not just Israel, but the other Gulf countries. They had aspirations, probably aspirations to dominate the region. Again, I'm not a scholar of Iran. But I don't understand why that translates into they would bomb the Gulf states and start a conventional regional war because. That would disrupt traffic in the strait, which is their economic lifeline and that are their trading partners.

• 34:34Speaker 01

  They do have that port they specifically built outside Jask for specifically this region.

• 34:40Demetri Kofinas?

  Yeah, look, so I feel like the arguments for why we need to, again, it was one thing to degrade their capability and to do so in a manner that limited their response. First of all, I don't think the United States has the pain threshold and the pain tolerance to deal with an ongoing disruption in the Gulf. And I also think, and this is a sort of counterargument to John's position about, well, we don't really need them, we can simply walk away. I feel like this really understates the extent to which the United States has been a beneficiary of the world that has helped shape since the end of World War II. It's been a beneficiary of the goodwill that its victory in World War II and its subsequent decades of maintaining aligned structures in Europe built up.

• 35:24Demetri Kofinas?

  It's a beneficiary of the internationalization of American culture, of English as a primary intermediary language, of the US dollar as a primary intermediary language and global reserve currency, of international trade and commerce. And I feel like what we are doing in the Gulf, while it may, in some very sort of classically imperial sense, work out, it costs us so much more. What do you think? What would you say to that pushback, which is that while maybe in the end through some scorched earth policy, we managed to deal a blow to the Chinese, but in so doing, we deal such blows to our allies that we damage what's more valuable, which is our leadership.

• 36:05Demetri Kofinas?

  And ultimately, it is America's role as an international maritime power and global leader of these very deep and broad aligned structures that is what can allow us to prevail in any kind of global conflict with China, which ultimately seems to be, I think, is one area we would certainly agree that the real geostrategic challenge for the United States is not Iran, it's China. For the long term.

• 36:30Speaker 01

  Yeah, yeah, no, there's no question about that. Look, so this is a very, especially, you know, living here in Europe, this is a very popular argument you run into that, well, you know, you Americans have really benefited from this whole system and it's really been much more about you guys and the benefits you recruit than anybody else. That's a very common view here, I think. And I guess I go back to that point, the die is cast, right? But in a different sense. So, you know, I think when I was last on here, we talked about this idea of global entropy and moving into a world of global bifurcation.

• 37:12Speaker 01

  And the post-war liberal order was already gone, right? So there's a lot of people whom I obviously disagree with who think that Donald Trump is the person who's brought about the end of the post-war liberal order. I would say, no, he's actually the response to the end of the post-war liberal order. So we can already see in terms of the arguments people are having about, well, you're diverting all these resources that are already thin on the ground in Asia to go fight this war. Well, yeah, because they're thin on the ground, because the US cannot do this, you know, maritime policing. And by the way, in a few years, the Chinese Navy is going to be significantly larger and significantly

• 37:57Speaker 01

  more capable than the US. So if you actually think that the US has been a force for good in terms of global trade, and you have questions whether China is going to be such a good global force for trade, to some of your earlier points about not getting involved in entanglements, to the way they've reacted to this whole thing, that they immediately shut off all their distillates that so many of the countries around them depended on, you know, over and over and over again, they haven't shown that they are the same sort of relatively magnanimous power. And so if that's the world that you're living in,

• 38:35Speaker 01

  You know, again, that was what I mean by the dias cast. We've already left that world. And so we're now in a world of great power competition. You could either recognize that and start acting that way, which is, I think, the Trump administration's view, and you can disagree with that and say, hey, that's still not the right approach. But it is a approach that matches the circumstances, what I would argue. And this follows from it. So, sorry, go ahead.

• 39:02Demetri Kofinas?

  No, no, I like that, actually. And this is your channeling much of what you spoke about in your conversation with Grant, which really resonated with me. I like this, and I do think that Trump has been an important disruptor of the old status quo, which was unworkable, because it indexed to a past that no longer existed in the present. But I don't think, and sort of my pushback is essentially that while I agree that we need disruption, and we need disruption of the order that the US built, I still believe the United States needs allies. And it seems to me that the way we're going about doing this, by quote, in this particular case, like, you know, going and taking a giant crap in the middle of the party and then

• 39:45Demetri Kofinas?

  walking away, which really does resonate. As I say that, I'm like, wow, that really feels accurate, because we also have our own apartment, but everyone else is stuck in that one. That seems to me to be strategically short sighted. And that's sort of my larger point. I think much of what you say resonates, I think, also thinking, you know, three dimensionally or multidimensionally and not, and looking at what constraints China has and what advantages we have and playing the game differently is smart. But I think, I would say, the single biggest shortcoming of this administration, and of Donald Trump as a person, is the, is the, well, Trump as a person, is that he doesn't play well with other people. He doesn't make friends easily, and we need friends in this world.

• 40:28Demetri Kofinas?

  That's, I think, the single biggest pushback that I would give in this conversation or elsewhere, is that America needs allies, and we are doing things to wreck those alliances. And the actions that this administration is taking for short term gains are resulting, I think, in some long term, long and variable losses, to sort of apply the Fed template, that we cannot measure today.

• 40:52Speaker 01

  So can I push back on you that?

• 40:53Demetri Kofinas?

  Please do, yeah.

• 40:54Speaker 01

  And it's not because I actually disagree with you. Like, look, I am... I'm an American who lives in London and has chosen to spend the rest of my life here. I'm clearly not against globalization in various forms. You know, I think we've talked about this before. My wife is Nigerian. I've got kids of my own in Australia. Like, you could not be more global than I am, to be perfectly frank. And there are a lot of aspects of the way that he has visibly. And, you know, especially when I talk to European clients. I mean, it's amazing. Like, you think these are people who are supposed to be focused on earning the highest return.

• 41:39Speaker 01

  And you can see that they're actually letting their emotions drive their investment decisions. And I expect the person on the street to act that way and be, I can't believe the Americans. They're terrible. Donald Trump's a horrible person, whatever. You don't expect people in the financial industry to put their emotions ahead of their investment decisions. And you see this. And that's very troubling to me. On the other hand, I think one of the things that has been illustrated by all this

• 42:17Speaker 01

  is frankly, how unprepared America's allies are, that they really don't actually have anything to help us. And that's been one of the things that presidents, you know, I think we've talked about this the last time I was on, right? That I'm 56, I'm going to be 56 in June. In my lifetime, every single American president has come to Europe and said, you need to spend more on defense. And every single European has turned around and said, yeah, whatever. We got to spend more on our welfare states. And now you're in the point where literally the UK, one of the top military and certainly naval powers in Europe as it exists today.

• 43:04Speaker 01

  Had one available destroyer and it had to turn back around because it broke halfway to Cyprus, right?

• 43:12Demetri Kofinas?

  This is also a very powerful argument that you made with Grant and that John Conrad also makes, which is that the war and that this presidency in general is a forcing function. And in this case,

• 43:22Speaker 01

  It is.

• 43:22Demetri Kofinas?

  A function that forces the Europeans to spend more towards the defense, which they have been very much unwilling to do, even after the war in Ukraine commenced.

• 43:30Speaker 01

  Yes.

• 43:31Demetri Kofinas?

  It just shows you just how embedded the political incentives have been to spend that money elsewhere in Europe and not on defense.

• 43:37Speaker 01

  Yes, and one of the things that worries me, Dimitri, is it goes both ways. So the other thing is, is that like you've seen this, we're not going to allow you over flight rights, you know, Pedro Sanchez is, you know, on another plane over there in terms of being supremely anti-American. And I don't think that Europeans really understand that there is an America beyond Donald Trump that's watching this and saying, wow, actually, everything Donald Trump said about this being a one-way contract between us, that we're there to die for them, but they don't give a damn about us, is being shown by them. It's actually those things that worry me more, right?

• 44:20Speaker 01

  Because now we're actually creating bad feelings on both sides. You could say on the American side, this was just a Trump thing and then as soon as he's gone, but the way the Europeans are reacting, I'm getting really worried that Americans are actually going to be very frustrated about this. And to your broader point, maybe this is about a realignment of different allies out there, right? Because what we have seen, let's just assume that somehow this war does go correctly for the Trump administration. So there's, that is not given for sure, and there's lots of ways it can go badly, but let's say it does. I think what we've seen is it really cements the Arab states and Israel together with

• 45:05Speaker 01

  the US. This has been a very strong outcome from this. The other thing is, is that let's suppose that Europe and the US do drift apart.

• 45:17Speaker 01

  You know, historically, other than since the Cold War, the US has actually been more likely to strategically align with Russia. You know, and it's probably in the US interest to align with Russia rather than have it align with China. So there's a lot of potential outcomes here. And that brings India on board, by the way, that are potentially very good for America. Now, they're really bad for Europe, and that makes me worried about living here in Europe. But I'm not convinced that change is necessarily a bad thing. I don't like it. I'm pretty happy with the world we were living in.

• 46:02Speaker 01

  I think I accept that that world doesn't exist anymore, and we have to think very carefully about what world we're moving towards.

• 46:11Demetri Kofinas?

  So I want to, there are four broad categories, maybe three, that I want to discuss in the second hour, Marvin. One is I want to dig a bit deeper into this geopolitical realignment that we're talking about here and also discuss this in terms of incentives and constraints, especially for Europe, for the European nation states, as well as for America's allies in Asia, its allies and trading partners. I also want to discuss Trump's, I want you to paint a psychological portrait of Trump. It's something that you've done in your writings. It's something that you did in your conversation with Grant that I found very, very helpful. And I think also that would be an opportunity to discuss the politics of this in the US. I don't know how closely you're following things over here,

• 46:55Demetri Kofinas?

  but this has been quite a kerfuffle for the White House and for its MAGA base. Though there seems to be a real dichotomy between the sort of traditional MAGA Fox News viewer and his or her perception of the war. And I'm not sure how that's changing, you know, in the last few weeks. That person, if you polled him or her three weeks ago, my guess is would more likely have said, well, this is some short-term pain for some long-term gain. That was the talking point that all of the Fox viewers. I mean, that's pretty much how I can tell if someone watches Fox News, if they would have said that. But if you had. Poll'd a person who gets his or her news from the internet, a MAGA YouTube viewer or Twitter user, you would have gotten a very different perspective.

• 47:40Demetri Kofinas?

  And those are the individuals that also would have the context of the Epstein files and all of that as well, which we've, by the way, mostly forgotten about, except for Melania's press conference, which came out of nowhere and has caused a lot of people to question how that is. So maybe we can talk about that, too. And then lastly, how does this all sort of fit in from an investment point of view? Because I'm also curious, I mean, you've written about gold and I'm very interested to hear your views about gold and also your views on the US dollar and US capital markets. Because if we do get a geopolitical realignment, let's say one where the US aligns more closely with Russia at the expense of Europe, what does that mean for the trillions and trillions of dollars that Europeans have invested in US capital markets?

• 48:23Demetri Kofinas?

  Especially if they need some of that capital for domestic investment, not just in defense, but also in order to make their critical industries more resilient. So that's an angle I'd also like to explore with you in the second hour, Marvin. For anyone new to the program, Hidden Forces is listener supportive. We don't accept advertisers or commercial sponsors. The entire show is funded from top to bottom by listeners like you. If you want access to the second hour of today's conversation with Marvin, head over to hiddenforces.io/subscribe and sign up to one of our three content tiers. All subscribers get access to our premium feed, which you can use to listen to the rest of today's conversation on your mobile device, using your favorite podcast app, just like you're listening to this episode right now.

• 49:08Demetri Kofinas?

  Marvin, stick around, we're going to move the second hour of our conversation onto the premium feed. If you want to listen in on the rest of today's conversation, head over to hiddenforces.io/subscribe and join our premium feed. If you want to join in on the conversation and become a member of the Hidden Forces Genius Community, you can also do that through our subscriber page. Today's episode was produced by me and edited by Stylianos Nicolaou. For more episodes, you can check out our website at hiddenforces.io. You can follow me on Twitter @Kofinas and you can email me at [email protected]. As always, thanks for listening. We'll see you next time.