"Heading For A Global DEPRESSION!" Professor Jiang Debates Iran War, Trump And China Ties

The closure of the Strait of Hormuz is not merely an energy crisis but a severe disruption to the planet's physical infrastructure. It has destroyed a large part of the planet's infrastructure for dragging oil out of the ground, impacting 30% of the world's helium supply, 30-50% of fertilizer, and half of the sulfuric acid used industrially. This will cause a monumental shock to the global production system.

Steve Keen states, 'every measure I've seen said it's larger than 1973 with the Omipa war, larger than the price rise in the 1979 when prices increased by a factor of four.' He details the destruction of helium, fertilizer, and sulfuric acid supplies.

Current financial markets are remarkably resilient despite the severe stress on the global economy. This underreaction is expected to be followed by an overreaction, leading to a financial crisis caused by damage to the physical production system, a reversal of the usual dynamic where financial issues impact manufacturing.

Steve Keen references George Soros's market approach: 'the markets actually do is they underreact in the first place and then overreact later.' He notes financial experts ignore 'physical manufacturing processes behind what's happening in the straight.'

President Trump's approach to Iran, including the incursion and withdrawal from the nuclear deal, was a significant gamble with substantial economic and political downsides. His public criticism of allies further complicated international cooperation needed to address the crisis.

Piers Morgan states, 'it struck me that this was always a massive gamble by President Trump and that the potential downside was was big and it's turned out to be very big so far.' Steven Moore acknowledges 'short-term pain for long-term gain' but questions its duration. Piers also points out Trump 'keeps trashing them all publicly' making allies unwilling to help.

China is not 'sitting out' the Iran crisis, having engaged in 'backdoor diplomacy' for a ceasefire. It has shown greater economic resilience and adaptability than other Southeast Asian countries and has been strategically preparing for such eventualities. However, its export-dependent economy and resource consumption make long-term global conflict unfavorable, potentially leading to increased isolationism.

Professor Jiang states, 'China did a lot of backdoor diplomacy in order to pressure the Iranians to attempt a ceasefire.' He adds, 'China has been much more resilient and much more able to adapt to the new economic circumstance.' He predicts China 'may see that China begins to become much more isolationist over the years.'

The world faces two extreme, opposing futures: a multi-decade global depression due to energy and resource shocks, or an unprecedented productivity revolution driven by AI and robotics. The outcome depends on navigating current geopolitical and environmental challenges.

Professor Jiang states, 'we are heading towards a global depression and this is a process that could take decades.' Steven Moore counters, 'we are entering the greatest period of productivity revolution in the history of civilization.' Steve Keen frames it as a 'sliding doors moment' between 'catastrophe from global warming' and a 'future of plenty.'

Bitcoin is fundamentally flawed as an alternative to money because it's treated primarily as a store of value, discouraging its use as a means of payment. Its value is speculative, and its high energy consumption makes it vulnerable in an energy-constrained world. Its long-term 'floor' value is likely limited to facilitating illegal transactions.

Steve Keen states, 'Bitcoin can only be used as either a store of value or a means of payment... it's still not used by any scale as a means of payment.' He adds, 'when it stops rising, then the only way to go is down' and predicts its floor at 'illegal drug sales... and weapon sales.' He also notes its 'enormous amounts of energy' consumption.