Pod Insights Prof G Markets Why Trump Wants Greenland About this episode Ed Elson speaks with Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, about what makes Greenland’s mineral resources so valuable to the United States. Then Ed breaks down the response to California’s new proposed tax on billionaires and explains why he thinks it may not work.
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Transcript 3,927 words · 15 speakers
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1:57 Ed Elson? Welcome to Prof G Markets. I'm Ed Elson. It is January 8th. Let's check in on yesterday's market vitals. The S and P 500 and the Dow lost steam, ending the day in the red. The Nasdaq rose, shares in home builders fell after President Trump said he'd ban institutional investors from buying single-family homes. Blackstone, a major investor in the asset, also fell as much as 9%. Trump had a busy day. He also said he won't allow defense companies to issue share buybacks and dividends. That sent defense stocks down with Lockheed Martin dropping 5%. And finally, the yield on 10-year treasuries fell after ADP's private jobs data showed that hiring rose moderately in December.
2:44 Ed Elson? Okay, what else is happening? Fresh off the extraction of Venezuela's president, President Trump has turned to another target: Greenland. The president first proposed buying the Denmark territory back in 2019, but now he says the US, quote, "needs Greenland for national security." The White House said it's weighing a range of options to acquire the island and hasn't ruled out the use of military force. That triggered sharp pushback from European leaders who insisted that, quote, "Greenland belongs to its people." So why is Trump fixated on this territory? And what does it mean for markets? Here to help us understand this, we're speaking with Gracelyn Baskaran, Director of the Critical
3:26 Ed Elson? Minerals Security Program at the Center for Strategic and International Studies. Gracelyn, thank you for joining us on Prof G Markets.
3:34 Speaker 09 Thanks so much for having me.
3:36 Ed Elson? So President Trump wants to go in. He says he wants to consider using military force to acquire Greenland. Let's just start with your initial reactions to this news, and then let's get into what resources they have and why he's going after them.
3:54 Speaker 09 President Trump's focus on Greenland is actually aligned with his broader approach to foreign policy. What we saw starting January last year was actually a realignment of our foreign policy, very closely tied to critical minerals. In a way, it feels a bit like we're playing a real-life game of Settlers of Catan. So if you think about foreign policy... The announcements on Ukraine, Greenland, Democratic Republic of Congo, Argentina, minerals is featured in every one of those discussions. And a lot of this hinges on the fact that we are really contending with the fact that China has a dominance on the critical minerals that we need for our national economic and energy security. So, you know, we don't have all of those geological reserves here at home.
4:40 Speaker 09 So we're looking to go out and secure those resources from other places. And Greenland has some really good deposits.
4:46 Ed Elson? What is the sort of makeup of those deposits? Like, what do they have that we don't have? How much do they have? What does the resource richness look like in Greenland?
4:58 Speaker 09 So the biggest mineral, I mean, you know, here in the US, we have a very long list of critical minerals. We have 60 of them. But the one that we are most vulnerable and that has kind of dominated political and market rhetoric over the last year are something that we call rare earths. And rare earths are a group of 17 minerals. The funny thing, they're not actually rare. They're found everywhere, but it's kind of hard to find them in commercially dense quantities. So we need rare earths. And number one thing we think about is we need them for every form of defense technology because they go into the permanent magnets that are used in our missiles, lasers, tanks, fighter jets, submarines. And last year in April, China, which actually has a pretty big dominance on these rare earths, and particularly something we call heavy rare earths,
5:42 Speaker 09 which just means that they have a higher atomic weight. For those heavy rare earths, China actually had 99% of processing capabilities. Now, we need those heavy rare earths. And while the US has rare earths, we don't have a lot of those heavy rare earths. What we have in Greenland are two of the biggest rare earth deposits in the world. And they are particularly well endowed with those heavy rare earths. So, you know, if we want to process those and then turn them into end technologies, we are going to have to go beyond our borders, which is what makes Greenland particularly attractive. But we can come back to this later. It's a very complicated mining jurisdiction.
6:16 Ed Elson? Yeah, why is it so complicated? Let's let's get to it now.
6:20 Speaker 09 A couple of things. So the first thing is, from the time that I mine and I get these minerals out of the ground, I've got to get them to the port, right? And Greenland has very little infrastructure. It has a couple hundred miles of roads, like less than 200 miles of road. So I need a lot of transportation infrastructure, whether it's road, rail, got to further develop the port. The second thing we need is we need a lot more energy infrastructure. Globally, mining uses close to a fifth of the world's energy. And so in a place like Greenland, where you have the lowest population density in the world, we're going to have to build a lot of energy infrastructure. The third thing, mining is not well-loved in Greenland. So there are a couple of high-profile projects that have actually gotten stopped because communities don't want the mining.
7:04 Speaker 09 And we know that that social license to operate is actually very precarious globally, but particularly in Greenland. And the final thing I would say is there is a changing policy in Greenland. And an example of that is rare earths are rarely found alone. They're usually mined with other things. And in the case of Greenland, they're actually mined with uranium, and uranium obviously being radioactive. So Greenland has kind of gone back and forth on a ban on mining uranium, which by extension impacts whether you can get those rare earths out of the ground. So those policy changes can make it quite complicated.
7:39 Ed Elson? When you think about the decision to go into Greenland, I mean, just looking at Venezuela, where it's kind of a similar situation. You have incredible natural resources in the region.
7:54 Ed Elson? Also, you'd need to build and invest in a ton of infrastructure to actually get those resources out of the region and use them. But when you think about the way it's been approached, I mean, in Venezuela... We had sort of these debates, what was it actually about? Was it about Maduro or was it about the oil? That's definitely a debate, but he seems to be making it clearer and clearer. It's definitely a lot about the oil. When it comes to Greenland, can you just go in there and take it? I mean, is that actually a viable strategy as an expert on strategic and international studies? Like, is that gonna work to just say it's ours now?
8:39 Speaker 09 It's much more complicated than oil in Venezuela. It's a short answer, and the reason is this. Venezuela, we have been taking oil out of the ground for a very long time. There are American mining companies that know and extract oil in Venezuela. In Greenland, you're talking about a very nascent industry. You're talking about an industry that has really never been developed. We mine zero rare earths right now. And for some context, globally, the average from the time that I identify a mineral deposit to the time that I'm extracting it is 18 years. Just for context, here in the United States, it's actually 29 years. So mining is not an industry that I can go in tomorrow and have a shovel-ready project three to six months from now.
9:20 Speaker 09 So Venezuela has the benefit of the oil being a very well-developed industry compared to mining being very nascent in Greenland.
9:29 Ed Elson? I guess the part of my question, though, is the threats towards Greenland. It's basically saying, we're gonna use our military if you don't agree. And I'm just curious to get your take on what that means and also the efficacy of that. Like, do you think that that is going to be an acceptable way to go in and get Greenland? Like, do you think that that could actually play out that way?
9:56 Speaker 09 I don't think it is a good way to go to Greenland. You know, what we really want to see, look Greenland, number one, wants to develop its mining sector. It's very open with us. I was on a panel in London with the advisor to the mining minister of Greenland. We spoke very openly about wanting to develop those resources, but to do it in a way that is mutually beneficial, both to investors, but to the people of Greenland. Like Greenland needs more economic activity as well. You know, and they, but what they really want to do is they want to do it in a way that's collaborative. And what we saw in December 2025 was a very strategic project backed by the European Union for graphite, another commodity that China has a pretty big stranglehold on, actually move ahead and get a permit for exploration in Greenland. So it's
10:40 Speaker 09 really, you know, Greenland has this potential as a place that wants, you know, we, they've obviously been a very key strategic ally to the US. We have military bases in Greenland. It's historically been a fairly positive relationship, a country that wants to develop its mining sector, that wants to work with Europe, that has been open about wanting to work with the US. You know, I think we can do it in a way that's positive and collaborative without necessarily needing to play settlers of Catan with Greenland.
11:08 Ed Elson? Right. On the geopolitics of all this, it's known that Greenland is this highly, its placement on the globe is highly strategic from a geopolitical perspective. That's why we have the military bases there. That's why it could be potentially a strategic asset. Balancing that against the natural resource side to it, which one do you think is more important to the administration? Do you think this is about the military base and having that geopolitical asset? Or do you think this is more about, there's a ton of stuff in there that could be really valuable?
11:45 Speaker 09 Look, I mean, I think we have to think about this as a near, medium and long term, right? In the near term, I don't think that there's an illusion that Greenland is not going to give us minerals in the next six months that are suddenly going to reduce our reliance on China because of a lot of these projects have a long project development timeline, as I said to you earlier. I mean, that could span from a decade to two to three decades. So it's not a near term mineral solution. What it is though, in a time when, number one, geopolitical tension in the Indo Pacific is increasing quite rapidly, we saw just this week that Japan actually, or sorry, China cut Japan off of access to dual use materials because of some of the comments it made to Taiwan. Second, we have seen China making increasing play on Greenland.
12:30 Speaker 09 I mean, in the last seven years, you've seen this grow. I mean, at one point Denmark actually had to intervene so that China didn't come in and, you know, kind of to the build the airports of Greenland and have that level of ownership on national security grounds. So, you know, it is, I think, in the near term, we have so much tension in the world and particularly in the Indo-Pacific that that's the near term goal. The longer term goal is we see an area with a lot of resource potential.
12:56 Ed Elson? Just before you go, how do you think this plays out in the next year or so, if you had to make a prediction?
13:03 Speaker 09 It's difficult to say at this point. My hope is that, given the Europeans have made a very clear position that they are not going to, they're not open to the US coming and taking Venezuela, that we can find a way to take a more collaborative and more diplomatic approach to Greenland, acknowledging that this is not an adversarial relationship that we've had with Greenland. It's actually been highly strategic and we can expand that strategic partnership going forward.
13:31 Ed Elson? All right. Grace Lynn Baskaran, Director of the Critical Mineral Security Program at the Center for Strategic and International Studies. Grace Lynn, appreciate your time. Thank you.
13:42 Speaker 09 Thanks for having me.
13:44 Ed Elson? After the break, California's billionaire tax debate heats up. If you're enjoying the show, give Profi Markets a follow.
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15:40 Ed Elson? We're back with Prof G Markets. California voters are considering a wealth tax on billionaires. Unlike traditional wealth taxes, which apply to cash or liquid assets, this one-time 5% tax would apply to unrealized gains. Those could come from stocks, artwork, and intellectual property. The measure was filed late last year, but it gained new momentum after Representative Ro Khanna publicly endorsed it. And that endorsement triggered a sharp backlash from Silicon Valley this week. If the proposal gets roughly 875,000 signatures, it will be on the ballot in November. And if voters approve it, the tax will apply retroactively to people
16:22 Ed Elson? who are California residents as of January 1, 2026. So this is a big deal. And as I just mentioned, this has set the tech community on fire. We've seen backlash on social media from billionaires like David Sacks, and Chamath Palihapitiya, and Bill Ackman, among many others. To sum up their criticisms, the tax would basically just cause a mass exodus of... All of the most successful and wealthiest entrepreneurs in the state. And they also claim that it wouldn't make that large of a dent in the massive state budget of California. Meanwhile, the proposal supporters say that this is necessary to fight inequality. No matter what side you're on, one thing is clear.
17:06 Ed Elson? This is an unprecedented proposal that could really change California forever. Now, directionally speaking, I actually like this initiative. Because it tells me we're beginning to get on the same page about what the real problems in America actually are. It isn't transgenderism or wokeness or the media. The real problem, the big problem, is inequality. And I know we've beaten this horse to death, but that's because it's a pretty gigantic horse. A quick reminder of the numbers, one trillion dollars. That's how much the top nineteen households in America made in twenty twenty four. They now control roughly two percent of all household wealth in America.
17:49 Ed Elson? Fifty two trillion dollars, that's how much the top one percent controls now. That's roughly a third of all household wealth. Inequality is getting worse and worse. The rich are getting richer and richer, the poor are getting poorer. And we know where this is headed because we've seen this story before throughout history. We saw it in Russia and France and Germany. This is a perfectly paved road towards revolt, violence and civil war. So when someone comes up with a plan to dramatically redistribute the wealth, I'm for it. A wealth tax on billionaires, why not? Jensen Huang said it's okay. The trouble, however, is that almost every other billionaire says it's not okay.
18:34 Ed Elson? Larry Page, Peter Thiel, Palmer Lucky, all the big power brokers in Silicon Valley. They have all sounded off about what an unacceptable proposal this is. And they appear prepared to do whatever it takes to fend it off. And as much as I'd like to just blow past their preferences, we also have to recognize reality. And the reality is these guys have a lot of power, including the power to just shut this whole thing down. Whether that's through lobbying or just fighting it out in the courts or simply leaving the state, maybe the country. I can tell you with near certainty, this plan isn't going to go through as planned. Now, to be clear, that doesn't mean we shouldn't try.
19:19 Ed Elson? But at the same time, we should consider all our options and choose the one that has the highest probability of working. And this probably isn't that. So before we end, I would propose an alternative that probably would work, and that would be a borrowing tax. As you may know, the reason billionaires pay proportionally less in taxes is because they rarely have taxable events. Instead, they just hold their assets, which rise in value, and they never sell. And that is a great strategy until you want to buy something, at which point you need cash to pay for it. And this is where the dirty secret comes in.
19:58 Ed Elson? Instead of selling their assets, what billionaires like to do is they borrow against them, usually at an extremely low rate. And this is not a taxable event, which basically means you can just borrow and borrow and borrow, add in for an item, and you never have to pay taxes. So here's a solution that we would propose. Make borrowing a taxable event. Let them keep their assets, but if they ever want to use those assets to fund their lifestyle, they have to pay a tax, just like the rest of us. And the beautiful thing about this idea is, one, it would work. It's estimated it could generate as much as $20 billion per year. And, two, billionaires are not that against it.
20:41 Ed Elson? In fact, Bill Ackman has said the idea is okay. So has Mark Cuban, so has Abigail Disney, the heiress to the Disney fortune. Not every billionaire is going to be on board, but it does seem that, more importantly, many of them will be. Because unlike a flat wealth tax, which simply seizes your assets regardless of your liquidity, this works a lot more like an income tax. It taxes you when you decide to get liquid, and that is simply a lot more realistic. Now, I'm open to other ideas, and I'm also open to hearing why the wealth tax is better. But considering how dire the situation has gotten, we simply have to be serious about
21:23 Ed Elson? which ideas are actually viable, which are going to go through, and which ideas are not. A wealth tax might theoretically be a good idea, but realistically, it isn't because it isn't going to happen. And at this point, our view on this is quite simple. We need ideas that will happen.
21:46 Ed Elson? Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson and engineered by Benjamin Spencer. Our research team is Dan Shalon, Isabella Kinsel, Kristin O'Donoghue and Mia Silverio. Thanks for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow. I'm Ed Elson. Tune in tomorrow for our conversation with Josh Brown.
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