Category Archives: Geopolitics

Japan Expands with Nuclear

Joint Announcement on the Japan-U.S. Strategic Investment

It seems Japan is investing 40 billion dollars in small modular nuclear reactors through joint projects with the United States. The recent plan marks a shift back toward nuclear technology to support economic expansion while some nations in Europe continue to deindustrialize. Small Modular Reactors (SMRs) are also necessary to support rapidly rising electricity demands required to implement new and massive Cloud and AI data centers. And by working with the United States, Japan is strengthening its role in next generation reactor technology, which may be surprising given that the nation suffered substantially from the 2011 earthquake and Fukushima nuclear accident.

The announcement also helps move SMRs from early development into real world deployment. This effort could shape global energy strategy for decades and enable new opportunities for economic development for hundreds of millions, even billions, of people. Imagine all the nations around the world wrecked from hundreds of years of colonization now getting badly needed, unlimited, reliable power. It’s time to build.

The Pentagon Pulls the Plug on Anthropic

War with Iran + Pentagon vs Anthropic with Under Secretary of War Emil Michael — The All In Podcast

Emil Michael came into his role as Under Secretary of War last August and did what any good lawyer would do right away. He read the contracts! But what he found surprised him. And that led to a major dispute between Anthropic and the United States government that blew up in the media last weekend.

Part of the backstory is how Anthropic, one of the top AI companies in the world, got so embedded in the government in the first place. The Biden administration’s executive order on AI effectively limited compute capacity for most companies while grandfathering in a small number of selected winners. Anthropic was one of them. From there, the company executed a smart enterprise sales strategy and moved their software and engineers into the most sensitive parts of the government. This is a common strategy for tech firms selling into the largest customer on Earth.

So, by the time Michael arrived, Anthropic wasn’t just a vendor. It was woven into the daily workflows of some of the country’s most critical military commands including Central Command, the Indo-Pacific Command, and several intelligence departments. That history matters now because, as Michael acknowledged, untangling a deeply embedded technology partner is far harder than simply switching vendors. The other AI companies haven’t built out that kind of government infrastructure yet. They’re capable on the model side, but they have to catch up on everything else, which they certainly will do in short order.

But buried in Anthropic’s terms of service were restrictions that, from Michael’s perspective, made the software nearly unusable for its intended purpose — to plan, fight, and win wars.

“You can’t use them to plan a kinetic strike. You can’t use their AI model to move a satellite. You can’t do a war game scenario with it,” Michael explained on the All In Podcast. The Department of War, as he noted repeatedly, is pretty clearly stated right in the name. War.

What followed was three months of laborious negotiations arguing over scenario after scenario involving various military operations. Anthropic would grant an exception here and another one there. But Michael needed something broader. The military cannot predict every situation it will face in real time and into the future, and an AI model that requires pre-approved use cases is not a reliable operational tool. In fact, it would compromise national security and potentially endanger troops in the field. Instead, he pushed for a single standard — all lawful use — that he could apply to all AI vendors.

Then came the moment that accelerated the conflict. After the Venezuela mission, an Anthropic executive contacted Palantir, the prime contractor implementing Anthropic’s technology, and asked whether their software had been used in the raid. Since that information is classified, Palantir informed Michael. The implication was clear. If the answer were yes then Anthropic might consider that a terms of service violation and pull their software.

“What if the balloon’s going up at that moment and it’s like a decisive action we have to take,” Michael said. “I’m not going to call you to do something. It’s like not rational.” That phone call reference wasn’t a hypothetical situation. Michale said that Anthropic CEO Dario Amodei actually told him durning negotiations to just call him when issues came up. From Michael’s perspective, though, that’s obviously not a reasonable solution under the circumstances, especially involving combat and national security.

That conversation grew to a breaking point. Michael went to Secretary of War Pete Hegseth, who demanded that Anthropic lift the restrictions. The company refused. So, Anthropic was formally designated a supply chain risk, the first American company ever to receive that designation from the government. Generally, that’s reserved for enemies. As a result, the $200 million contract was cancelled. Now it’s Michael’s job to unwind Anthropic from their positions throughout the government.

The broader issue here goes well beyond the Pentagon. As Chamath Palihapitiya argued on the podcast, what Anthropic demonstrated is that any sufficiently powerful AI provider can, at any moment, change its terms of service based on the internal values of its employees, which seems to be an issue for this company. That is a significant business risk for governments, corporations, and anyone else who has built critical workflows on top of a single AI model. “It’s deplatforming times a thousand,” he said.

The situation is still fresh. But for now, the ball is in Dario Amodei’s court. Michael said plainly what he has always wanted, which is a reliable partner willing to support lawful use without requiring a phone call every time something comes up. That’s not an unreasonable ask. And it’s the same standard that Google, Grok, and OpenAI have all moved toward without any drama. Anthropic chose a different path. And in doing so, the company may have handed its competitors a significant opening inside massive government accounts it spent years cultivating.

Anthropic’s revenue and valuation have both been growing rapidly. But will that trend continue? It’s well known that AI engineers and advanced researchers will only stay where the work is interesting and the money is flowing freely. Future contracts will go where the terms make sense for the government. How Amodei responds now, and how quickly, will reveal whether Anthropic is a principled company or simply a difficult one with a political agenda.

AI Meets the Department of War

Ben Thompson’s article at Stratechery starts with a power politics view of international law. It doesn’t really exist, he says, because no one can enforce it. Might makes right. The U.S. bombed Iran and that settled the debate. That’s how power works in the world. Always has.

From there, Thompson pivots to Anthropic, which recently refused demands from the Department of War to lift restrictions in the model’s terms of use. Dario Amodei, CEO at Anthropic, said the company would not support mass domestic surveillance or fully autonomous weapons. The DOD responded by threatening to designate Anthropic a supply chain risk, which is a label reserved for foreign adversaries.

Thompson’s analysis here is blunt. Amodei has publicly compared advanced AI chips to nuclear weapons. So Thompson takes him at his word and extends the logic to its natural conclusion. If AI is truly that powerful, which remains to be seen at present, then a private company that controls it and seeks independence from the military will run directly into the U.S. government. In other words, this isn’t just a vendor dispute. It’s a national security issue. Anthropic doesn’t take that view, obviously. The problem is that the U.S. government has the guns.

The conclusion Thompson comes to is binary. Either Anthropic accepts a subordinate role to elected government authorities, or the U.S. government will eventually destroy or remove it, which they’ve done before throughout history. Thompson isn’t supporting that outcome, of course. But although he seems to lean to Anthropic’s side of the debate on domestic surveillance his analysis is comprehensive and more than fair. He also argues that Anthropic’s insistence on controlling military decisions is itself fundamentally misaligned with how power operates in the world. He reminds us of this reality right up top in his piece with a quote from Pericles: “Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you.” He’s correct with that bit.

Here’s Ben Thompson’s original article on Anthropic:
Anthropic and Alignment

Here’s Ben Thompson on the A16z Podcast talking about his article:
Ben Thompson: Anthropic, the Pentagon, and the Limits of Private Power

Here’s much more on the issue from the All In Podcast but from the perspective of the Department of War, which is substantially different:
Pentagon vs Anthropic: Why Anthropic was labeled a supply-chain risk

The Sheriff of Baghdad

The Shawn Ryan Show: John “Shrek” McPhee – The Sheriff of Baghdad | SRS #133

Loved this podcast with McPhee. I have so much to learn from this guy’s experiences. I don’t care that some of the stories sound exaggerated, which they obviously are just based on common sense and also some accounts from similar operators who tell their stories online. However, there’s more than enough in that mix of madness to learn some interesting perspectives for overcoming challenges in daily life. I learn from everyone. I don’t care who they are. Anyway, here’s a little Shrek review below.

John “Shrek” McPhee’s trek from South Chicago’s idilic and sleepy back streets to Delta Force’s most elite teams reveals a career built on tactical innovation, unconventional leadership, and brutally violent efficiency. Even now in retirement, Shrek is still the canonical Special Forces operator. This former Sergeant Major didn’t just survive decades of special operations in warfare. No way. He thrived in in. He loved those decades and regrets nothing. He actually revolutionized how teams approach combat, killing, mental health, and training. His story offers lessons that transcend military service and apply to anyone who faces extreme challenges in any field.

Early Life: Learning Self-Reliance

McPhee grew up in South Chicago near the steel mills that eventually shut down and devastated the local economy. Ah, yes, the benefits of so-called “free trade” implemented by our colonial globalists. His parents were young and drank heavily, so he didn’t have any solid family role models. His mother grew bitter after divorce and argued with everyone in her life — her sister, her parents, her children. By age 12, McPhee and his older brother recognized they were more mature than their parents so they left home. They survived through petty theft, stealing food to eat, and eventually they left home and lived in a brothel run by a family friend who took them in. That move itself would be too much for most kids to manage. But despite the chaos, McPhee attended school daily and walked miles through snow to ensure he got an education that might offer escape. He didn’t seem to complain about this time in his life, though. Instead, he just made the best of what he had. That’s lesson number one.

He started working at age eight, fixing semi-trucks for his stepdad — greasing rigs, adjusting brakes, changing tires, and just doing regular maintenance. By age ten he could service a semi-truck completely, which is quite a skill to acquire at such a young age. Kids just don’t learn anything practical in modern America, so he was lucky in that respect even though his general circumstances were horrible. He also pumped gas and became a welder and rebuilt gravel truck frames and beds that had flipped over. He made such good money as a welder that joining the Army at 21 meant taking a pay cut. He didn’t even find the Army difficult initially, so he was obviously one tough kid. And he wouldn’t make more than his civilian welding salary until he reached E-7 as a Sergeant First Class. But he loved the Army and saw the opportunity for combat. That’s really what he wanted.

Although high school generally sucks for many people (I certainly hated the entire experience), for him it meant daily violence. As the only white student at a disciplinary school for kids who had fought at other schools, he faced constant attacks on the bus. Kids would jump him every day. His survival strategy in fighting became foundational to his later tactical thinking — accept that you can’t win every fight, but make the attackers pay such a heavy price that tomorrow you’ll face fewer enemies. In other words, send a message. If two guys had to go to the hospital for a couple weeks, that’s great. That’s two less people tomorrow, ten or twelve fewer within weeks. Eventually, things got so bad that the school district paid for a private cab because police had to pull the bus over every morning for broken seats, broken windows, broken arms, and broken noses. It must have been a mess. Most kids don’t survive this experience well. But within that environment McPhee was developing the skills of the ultimate warrior.

This childhood taught McPhee something critical — control. Some kids who have been abused at school learn to control adrenaline better than most because they also know they’re getting beaten when mom or dad comes home drunk later that night. It’s always about control. You need that because you are usually too small to win those battles. Being able to master the skill of control would save his life later at Taliban checkpoints when he went out on missions alone and had to improvise to save his life.

Military Foundation: Rangers to Delta

McPhee joined the Army at 21. Everyone in his family had served, so it felt inevitable. After basic training and Airborne school (which he considered an easy joke), Ranger Indoctrination Program (RIP) transformed everything. RIP’s brutality and professionalism showed him what the military could be and where he wanted to be. The cadre showed up at his Airborne graduation, ripped the beret off his head, and he never saw it again. They loaded duffel bags on a truck and drove off. If it wasn’t for stop signs and traffic, the students would have lost them. They had to run across post chasing everything the Army had given them. Sounds like an exciting graduation.

RIP was where McPhee realized the Army might be a joke but the guys on that team weren’t playing around. He loved every minute. People did what they said they’d do. He finally fit in somewhere. And it was extreme. During his 1991 Iraq combat jump, 30-knot winds scattered the Rangers all over the place. As he landed, McPhee’s backpack caught on rebar in a bombed out building, which caused a compound fracture in his lower leg. With his bone sticking out, he dumped water on it, pushed the bone back in, pinched the skin closed, and did a double pressure dressing. It probably hurt like hell but that didn’t seem to matter at the time. Then he walked through the minefield outside the airfield, jumped the fence, and linked up with his team. When the medic finally looked at McPhee’s leg, he asked who did the dressings. McPhee said he did. The medic gave him more supplies and told him to put the bandages back on.

The injury plagued him because his squad leader wouldn’t let him seek further medical attention, saying “Quit being a bitch!” Sounds like the incompetent and dangerous coaches I had in high school. By the time McPhee got real treatment, it was too late to cast properly. He had to suck it up for months until it healed enough to run again. The Ranger doctor told him he might get medically discharged, which didn’t go over well with McPhee. He wasn’t there to get out just over this. He just wanted to know how to get back to running with less pain. That mindset (refuse to quit, adapt, and overcome) defined his life. That probably counts as lesson number two. There will be many more so there’s no need to keep track.

Five years in Rangers led to Special Forces, but Seventh Group disappointed him after the intensity of Ranger Battalion. Too slow, too conventional, barely any shooting. Then a Mogadishu veteran code-named Elvis sat next to him in the Q-course. At first McPhee thought, who is this random E-7 who’s not good at demolitions and not good at anything he was doing? It turned out that out Elvis was a Delta operator crossing over from 11B to 18-series to get promoted faster on the Special Forces track and then return to the unit. You take whatever path you can fine, I guess. You innovate. You move. Another lesson.

At 1 AM, Elvis handed McPhee a piece of paper with a location and told him to take the PT test at 6 AM. McPhee was already hammered and drinking and smoking cigars at Elvis’s house. He said “fuck no!” But curiosity got the best of him and he showed up anyway. What the hell, right? Elvis said that all he had to do was pass Army standard to get into the selection. McPhee passed even though he was hungover with no sleep. He even lapped his former Ranger team leaders on the run just to prove a point. He enjoyed that part especially.

Delta Selection: Autonomy and Excellence

Selection in Delta was the best experience of McPhee’s life. The premise of the team was simple — leave me alone, point me in the right direction, I’ll handle it. No encouragement, no discouragement. Just “be at the truck at 0800” written on a board. Figure out the rest yourself. Don’t be late, light, or out of uniform. Bring your shit, make sure it weighs right, let’s go. How’s that for a management scheme? I’d take it. Micromanagers need not apply. Good. They are a waste.

But McPhee realized that he was actually on the worst team in selection history with guys bitching up and not pulling their weight. During the log PT he said that instead of twelve people actually lifting, half the team quit mentally and made the log impossibly heavy for those who tried. Sounds familiar. That’s true on many teams I’ve worked on. But McPhee started yelling “zero” instead of counting off. A cadre threatened to kick him out if he yelled zero again. McPhee: “Roger that, Sergeant. 1-2-3-4 … ZERO!” He didn’t care. He had an unreal level of confidence in himself. The cadre pulled him out, gave him a six-foot log to carry alone as punishment. McPhee crushed it, yelling zero the entire time. “You’re welcome, you bitches.” Love it.

The final road march separated the professionals from the pretenders. Everyone sprinted off the start line like idiots. McPhee walked, knowing that you don’t start a 20-25 mile ruck with a sprint. Two miles in, a creek crossing stopped everyone. They were putting garbage bags over their boots to stay dry. McPhee just walked straight through and gained a massive lead. He finished first or second, turned in his star clusters to an empty box. He asked the cadre how many were done. “Just one other guy. Hit the showers.” Job well done.

Once he was in, Delta’s culture shocked him. When he passed selection and moved to the next room for gear fitting, they had ten kit bags perfectly sized with his name on everything. All he had to do was throw them on his shelves and start training. He’d never seen that level of preparation and professionalism. When he put on the GSG9 assault boots (which he’d only heard rumors about), he realized that the regular Army doesn’t do this. This is different.

And unlike Selection, the Operator Training Course (OTC) tested him, particularly the obstacle course. His first run was embarrassingly slow. His counselor said that “we’ve never failed anybody out of the unit for the O-course, but you could definitely be the first person.” But McPhee came in early, stayed after hours, and worked weekends with guys who were Olympic-level athletes. He studied technique obsessively. On the final O-course run (a rainy day when guys were busting their asses), McPhee came in second or third because his technique was so tight that the poor conditions didn’t matter. He simply decided to master whatever need to be learned to succeed.

The shooting standards were no joke too. McPhee sucked with a pistol initially but probably won the shooting program for most of OTC until one bad string dropped him ten points into third place. The competition was so tight he couldn’t recover. But the key insight he realized was that Delta wanted every person to succeed. No hazing, no games. This isn’t college. If you needed help, someone would show you. First-name basis. Professional instruction from the world’s best teachers to insure that you would be the world’s best. In any organization, that would indeed be unique. I’ve certainly never experienced that at any company I’ve worked for.

The Psychology and Reality of Killing

McPhee’s first kills came at Tora Bora in November 2001. He controlled every asset in the eastern hemisphere for ten days — every bomb, every pound of ordnance dropped by him and a couple other guys. The first day he said he killed so many people he stopped counting. Hundreds. Too many to track. Fun. He loved it. I can see why, too.

His philosophy on killing was clinical and uncompromising. He called it “State Department by Shrek.” He made the decisions, and he was the authority. Kill everyone. If you shoot at us, we level your entire position. Move up. You shoot at us again, we level that. Move up. Simple, efficient, effective. And fun! He never lost sight of having a blast while killing the enemy. There were also many 50-cal sniper shots at 2,500 meters, which is pretty far. So, McPhee is careful not to claim confirmed kills like these because “you can’t get there from here.” But the guys never shot again so make your own conclusions, he says. And besides, why count one here and there when you are already in the hundreds. No matter.

It’s critical to understand that McPhee loved killing in combat. Not in a psychopathic way, but because it was the purest expression of his skills and purpose. And since this is war and the situation is kill or be killed, there’s just no need to feel anything else but excitement. He describes himself as having had “a great time” under mortar fire at Tora Bora. A teammate later told him that “those were incoming rounds, but you had such a smile on your face I didn’t want to ruin it for you.” The local Afghan commander told McPhee’s boss, “Your men are very brave.” Others thought McPhee was insane for standing in the open during mortar attacks.

The difference between McPhee’s experience and stories like Lone Survivor puzzled him: “Bring 400 of your friends, tell them to bring their trucks and machine guns. We would just kill all comers. I don’t understand how those things happened compared to my experience. We killed so many people you can’t even count.”

His team had one simple advantage because they didn’t just kill everyone immediately. That’s how you fail. You pull threads, exploit intelligence, climb networks. Killing everyone is casualty production, not warfare. The goal is winning, and you can’t kill enough people to win a war. The Nazis tried that. It doesn’t work. Instead, you kill what you need to kill and move on. Don’t waste your time or energy.

Singleton Missions: Operating Alone

McPhee’s singleton missions demonstrated tactical genius he learned from necessity. After Tora Bora, intelligence indicated a man and his sons had escorted Bin Laden from the mountains into Pakistan. McPhee had to find him and he had to do it alone.

He left a safe house in Jalalabad in a cab, a coordinated asset that dropped him at a junction. From there he found targets of opportunity. He hitchhiked in jingly trucks, rode with locals, sat with goats and strangers in his lap on any vehicle he could find or steal. At checkpoints with AK-47s to his chest, he couldn’t speak English or he’d get killed immediately. So he screamed and acted completely insane, which wasn’t hard for him. He wasn’t acting. It came naturally. And it worked. Guards waved him through thinking he was crazy, which he certainly was.

The mission took seven to ten days with zero communication back to his team. He slept in trucks and taxis, strangers sitting on his lap, drivers shifting gears into his crotch. When they passed the target house, McPhee filmed it with a Super 8 camera hidden in a cigarette bag along with a satphone.

Later he stopped at a house at the end of the valley. Men gave him black tea and also opium tea that puts you to sleep for days. McPhee knew the difference (they drank clear tea), drank it anyway, then took speed when the lights went out to stay awake. In the middle of the night, he dragged the truck driver to the vehicle at gunpoint and drove out.

Why the urgency? Simple. It’s efficiency. He’d already achieved mission success. He got the video. Every additional second risked compromise, failure, or death. The goal wasn’t adventure. It was completing the objective and getting out alive. His ability to see things that clearly and precisely was a result of his training but also his early life of being abused. You do what you can with what you have in any given moment and get out to live another day.

When he returned to Jalalabad, he drew the assault plan on a napkin — stick figures, trucks, helicopters, house, exfil. A general later called him “Picasso,” but McPhee’s response was pure Chicago: “You didn’t send me with a proper reporting format. What did you expect?”

The real lesson McAfee learned from singleton missions was that operating alone increases the learning curve 100-to-1. You can only count on yourself, so you learn faster and deeper and more immediately than any practice session or team operation could teach. That experience changed how McPhee thought about everything. It’s also a lesson for anyone doing anything. Strip things down to their core, figure it out, do it, and get out.

Iraq: The Sheriff of Baghdad and Network Dismantling

Iraq operations ran 10-20 hits nightly at peak tempo. McPhee’s Squadron didn’t want guys sitting around getting drunk and breaking stuff, so they went out every night. The operational philosophy was simple. There’s always another target. Keep moving, keep hitting, keep exploiting intelligence.

McPhee systematically dismantled Saddam Hussein’s inner circle, and he discovered a critical pattern: everyone who physically touched Saddam (tailors, bath attendants, food handlers, barbers) was Christian. The logic was brutal but sound: Christian martyrs go to hell, Muslim martyrs go to heaven. Saddam surrounded himself with people who had zero incentive to kill him. Smart.

McPhee captured Saddam’s tailor and took his clothes. He still owns Saddam’s fox fur hat from the famous video where Saddam fires a Mauser in the air while captured on cameras. He wears an Italian sweater from Saddam’s wardrobe on Christmas Eve. It’s too small now, though. His beer belly hangs out the bottom. “I look like a fat man in a little coat.”

McPhee’s team captured Saddam’s favorite mistress’s husband using pure street theater. Intelligence reports said the mistress might know Saddam’s location. McPhee made the husband call out the tailor’s shop. He then positioned two trusted Iraqi Mohawk allies to start a fist fight in the street to prompt everyone to came outside to watch. The assault team grabbed the target from behind while he was distracted. McPhee’s boss asked afterward: “Who were the guys fighting?” McPhee: “Those were our guys.” Boss: “You should have told me.” McPhee: “Things happened fast.”

One of the deck of cards targets (Saddam’s inner circle) got snatched after McPhee held the family hostage. They took his sisters, grandma, mom, and told them to contact him. Three days later, the guy turned himself in at Mosul. Simple, effective, brutal.

The Northern Iraqi campaign later demonstrated McPhee’s strategic flexibility. They worked under B Squadron when Navy SEALs tried to put his SF team on boats for river assaults. This after McPhee’s team had worked their way up through the entire SEAL target deck to the number one guy. The Task Force Commander intervened: “Let me get this straight. You’re the premier SEALs in the world and you’re putting Special Forces guys on boats? These guys worked from the bottom of your target deck to make you successful.” McPhee got reassigned to B Squadron, then A Squadron. His team was with B Squadron when they killed Zarqawi. In the famous photo of who killed Zarqawi, McPhee’s team is the guys wearing DCUs (Desert Combat Uniforms) in the back.

The hide above bore for killing doesn’t matter. McPhee says it’s 2.5 inches. If you’re supposed to shoot center mass and hit 2.5 inches off, no one will ever know when you cut the shirt off. What matters is immediate action, adaptation, and moving to the next target. It’s close enough.

Strategic Insights: Why Wars Fail

McPhee offers brutal assessments of the wars he fought. On Afghanistan: “If you didn’t read the fine print when you went in, which said we were going to fuck this up on the way out, not shocked.” He knew it would end poorly his first day in combat. Everyone in the team room knew. They read the Russian book The Bear Went Over the Mountain and saw the same patterns. The only thing America did better than the Soviets was cleanliness. Disease killed the Russians, not Afghans.

On the Taliban and Bin Laden, McPhee mentions that Mullah Omar claimed years later that if given the full 48 hours Bush promised, he would have surrendered Bin Laden, but America invaded at hour 40. However, this specific claim about a 48-hour ultimatum and invasion at hour 40 appears to be either misremembered or lacks historical verification. What is documented is that pre-9/11 discussions occurred where the Taliban offered trials, and post-9/11 negotiations were weak and conditional. Bush’s September 20 speech demanded Taliban hand over Al-Qaeda leaders, and bombing began October 7, approximately 17 days later.

Iraq was worse strategically. Saddam should have been left in power and pumped full of resources to fight Iran. Removing him destabilized everything without strategic benefit. McPhee says: “I’d have pumped him full of all kinds of shit to fuck Iran up. However, we gave it all away. It’s a clusterfuck just like Afghanistan. But the reality is this is how it goes. Don’t get upset. It’s the fine print. Should have read it.”

The core insight: you can’t kill enough people to win wars. Not today, not ever. The Nazis tried total war and it failed. Preservation of life (yours and those who matter to the mission) is how you win. McPhee learned this through solo missions where being smart mattered more than simply being lethal.

Leadership Philosophy: Managing Elite Operators

McPhee’s approach to leadership emerged from hard experience. When Tim Kennedy joined his team fresh from the Q-course, Kennedy’s talent was obvious but his maturity wasn’t. He was probably the baddest guy in the Q-course, then arrived at a place where he automatically fell to the bottom. That’s hard for high-confidence people.

Kennedy complained about staying back when helicopters got shot down, talked about kicking everyone’s ass, and created friction with officers. The commanders told McPhee to get him under control or we’ll make sure he’s out of Special Forces forever.

The problem was fixable. Kennedy simply hadn’t learned what the Army should have taught him. He went straight from civilian life to working under Delta Force. He didn’t understand the gravity. When one helicopter is down and you can only take 24 guys instead of 36, somebody stays home. Don’t take it personally. That’s just math.

McPhee’s corrective lesson came at midnight in the unit dojo. He told Kennedy: “Meet me at the dojo at midnight. You’re going to kick all of our asses? All of our asses?” What Kennedy didn’t know was that while he was pouting, other guys were telling McPhee that they’d be at the dojo. “I want a piece of this action,” each one said

They fought in order of rank. Kennedy did well for two, three, maybe four guys. One senior guy was a Golden Gloves boxer who just threw combinations. McPhee went second to last (the captain went last). McPhee bloodied Kennedy up, put him down, and whispered: “I hope we don’t have to have this talk again.” Then he and the guys walked out, leaving Kennedy bleeding and broken on the ground.

The lesson wasn’t about dominance. It was about teams. You can’t beat us all. This is a team sport. We’re a pack. We should be a dozen lone wolves, but when those wolves come together as a pack, you have a dozen alpha wolves working together. That’s better than one lead dog and a bunch of followers.

McPhee protected Kennedy by sending him to Ranger School when commanders wanted him gone. Kennedy hated it, complained bitterly (almost getting himself kicked out for that), but learned what he needed to know. Years later, as a team sergeant himself at age 40 (the age McPhee was when managing him at 34), Kennedy called to say he finally understood and appreciated what McPhee had done.

McPhee’s core leadership principles:

Shut Your Mouth: New guys must earn their place. The only thing you’re given that can’t be changed is your name. Don’t fuck it up.

Technical Proficiency: Master every skill. On solo missions, you’re your own medic, comms specialist, weapons expert, explosives handler. No one’s coming to help.

Value Life Over Killing: Preserve the lives that matter. You can’t kill your way to victory.

Immediate Accountability and the Hall Pass: After kills, McPhee cut shirts off targets to examine shot placement. He praised shooters on the spot: “This is exactly what I expected you to do. You did a great job. End of discussion.” Then he’d buy drinks and make sure everyone shook hands. This “hall pass” (immediate validation and closure) reduced PTSD by addressing moral injury in real-time rather than letting it fester for years.

McPhee checked bullet holes constantly, not to criticize shooters but because marksmanship was his problem as the leader, not theirs. If shots were off, they’d fix training immediately. But McPhee says he never saw bad shots. All his guys shot perfect center mass. The truth is that leadership validation matters more than millimeter precision.

Overcoming PTSD: The Hall Pass and Biological Fixes

McPhee experienced every symptom of PTSD and traumatic brain injury but scored zero on VA assessments. His method combined immediate psychological intervention with biological optimization:

The Hall Pass: On mission nights when someone made a kill, McPhee debriefed immediately. Cut the shirt, examine shot placement, praise the work, have drinks, facilitate team recognition. Handle moral injury in real-time. Don’t give guys a five-year-old hall pass they have to unfuck later through alcohol and therapy. Give them closure immediately.

Let It Go: Literally say “let it go” repeatedly. Your book isn’t over. This is one chapter. More chapters are coming, possibly better ones. Get over yourself and move on.

Fix Biology: Forgetfulness wasn’t TBI. It was cognitive function. McPhee bought a TomTom GPS because he didn’t need to remember directions; the device would handle it. Then he discovered MCT oil and proper protein intake fixed his brain function. The “PTSD symptom” was actually nutritional deficiency.

Moderate Vices: Heavy drinkers needed to cut from five bottles to two and a half. The reason you’re mean in the morning isn’t PTSD. It’s being hungover and used to it. Use alcohol wisely, not as self-medication.

None of McPhee’s direct reports carry significant PTSD, he says. The contrast with conventional military units is stark. McPhee believes PTSD isn’t a war thing. It’s a humanity thing. A kid watching his cousin get hit by a train can be fucked up forever. Combat without proper leadership intervention causes the same damage.

Lessons Learned: Universal Principles for Any Profession

McPhee’s career offers lessons well beyond military service. Here are a few bits below.

Autonomy Requires Competence: McPhee thrived when given autonomy because he had developed technical proficiency first. You can’t demand independence without proving capability first. Master your craft, then earn freedom.

Control What You Can Control: From an abused childhood to Taliban checkpoints, McPhee’s survival depended on emotional control. You can’t control incoming mortars, but you can control your response. This applies to business crises, personal setbacks, and any high-stress situation.

Teams Beat Individuals: Even the most talented individual can’t beat a coordinated team of competent people. The lone wolf mythology is bullshit. A dozen alpha wolves working as a pack crushes any solo operator.

Immediate Feedback Prevents Long-Term Damage: Whether it’s combat trauma or workplace mistakes, address issues immediately. McPhee’s hall pass worked because he didn’t let moral injury fester. In business, don’t let small problems become cultural cancers. Cut the shirt, examine the damage, validate what worked, fix what didn’t, move on.

Biology Affects Performance: McPhee’s “PTSD symptoms” were partly nutritional deficiency and hangovers. In any high-performance field, optimize sleep, nutrition, and substance use. Your brain is hardware. Maintain it properly.

Strategic Patience, Tactical Aggression: McPhee didn’t sprint the 25-mile ruck march. He didn’t kill everyone immediately and destroy intelligence value. He was patient strategically but aggressive tactically. Walk through the creek while others waste time messing with garbage bags, exploit networks methodically before taking down leadership.

Preparation Compounds: McPhee turned his worst O-course run into a top-three finish through relentless extra work with experts. He turned pistol weakness into program dominance the same way. Consistent preparation in off-hours creates performance advantages when it matters.

Protect Your People Even When They Hate You: Sending Kennedy to Ranger School made Kennedy hate McPhee temporarily but saved his career later on. Good leaders make unpopular decisions that serve long-term interests. If you need everyone to like you, you can’t lead effectively. Earn respect.

Efficiency Is Speed and Accuracy Applied Simultaneously with Perfect Technique: This is McPhee’s mantra for shooting, but it applies universally as well. Doing things fast and wrong creates a mess. Doing things slow and perfect misses critical deadlines. It’s the combination (efficient technique executed quickly and accurately) that wins.

Your Past Doesn’t Define Your Future: McPhee went from homeless at 12, living in a brothel with his brother, to the pinnacle of military special operations in war. Keep going. Keep improving. Keep learning. You’ll get your break.

SOB Tactical: Teaching Through Diagnostic Precision

After retiring in 2011 following a messy divorce (Delta doesn’t like messy divorces), McPhee founded SOB Tactical. He runs 60-100 classes annually and limits enrollment to 10 or fewer students. He’s trained about 15,000 people since 2011: housewives, professional shooters, SWAT teams, Special Forces, anyone.

The diagnostic method to his training is revolutionary in its simplicity: video everything. First thing in the morning, shoot three rounds. McPhee analyzes the video and explains exactly where bullets go, why they go there, how to fix it. In 43 rounds during a one-day pistol class, he gets anyone into a three-inch group at 3-5 yards. Anyone. Bring your lame, crippled, and crazy. Shaky hands, blind old guys, doesn’t matter. He loves the challenge, but he also has supreme confidence in his skills and experience.

The training isn’t about techniques. It’s about teaching people how to think so they can solve problems themselves. The model that improves pistol shooting improves anything you do. It’s all mindset.

McPhee calls SOB Tactical “the undertow of the gun world.” Flashy competitors rise and fall on top of the industry. McPhee stays underneath, consistent, and pulls students in year after year. He’s been crushing it since 2011 and fills all his classes, while other big names come and go.

Current Mission and Legacy

On a personal level, McPhee trains for Masters Worlds in jiu-jitsu and plans to compete against guys his age. If it goes well, he might enter the open division next year. He’s rolling every day and he treats training camps like extended hotel stays. Might as well hit a dojo and get a day of rolls in. What else would you do?

His philosophy remains unchanged today. He’s emphatic that the past doesn’t ruin his present, he approaches death without fear, and he believes everyone dies doing what they choose. Combat deaths are among the most honorable. He’s already outlived his father, who died at 50. Both parents are dead, in fact. He has no family except his brother. Everyone dies early in his family, so he’s making the most of the time he has.

The lesson from McPhee’s entire life is simple. You can come from nothing, face the worst humanity offers, see the darkest parts of war, and still build something meaningful. The key is never quitting, never letting one chapter define the book, and always maintaining the discipline to be technically proficient at whatever you do. That much you can control.

Whether you’re in special operations, corporate leadership, entrepreneurship, or any challenging field, McPhee’s principles apply: control what you can control, master your craft, value your team over individual glory, address problems immediately, optimize your biology, and never stop building the next chapter.

Works for me.

The Dollar’s New Weapon

Brent Johnson, creator of the Dollar Milkshake Theory, posted what he considers one of his most important reports yet — Empire by Code: The Rise of USD Stablecoins. He also explains the issues around stablecoins in two recent interviews with Adam Taggart and Viva/Barnes. He says that USD stablecoins are not just another fintech innovation but instead they represent a fundamental shift in how America projects monetary power globally.

Understanding the Dollar Milkshake Theory

First, some context. Johnson’s Dollar Milkshake Theory says that despite the concerns about US deficits and debt, capital will flow into the United States during times of financial crisis. The world has borrowed enormous amounts of dollars through what’s called the Eurodollar system. When serious geopolitical or monetary conflicts emerge globally, everyone needs dollars to service their debts, which creates a massive sucking sound as liquidity flows to America. “The United States would suck up all the money that gets printed as a result of responding to the crisis,” Johnson says.

The “milkshake” metaphor is interesting. Think of global dollar liquidity as a milkshake sitting in a glass. The world is full of dollars created through lending, which represents all that debt denominated in US dollars sitting outside America. The United States has the straw. So, when a crisis strikes and everyone desperately needs dollars to settle their debts, the US essentially sucks up all that liquidity, like drinking a milkshake through a straw. Thus, capital flows into the United States, which makes the dollar stronger while other currencies weaken.

Johnson traces how he arrived at this theory: “The thesis was based on the fact that I think the world has borrowed an incredible amount of money. The debt has gotten to a level where I think we’re going to start having the consequences of borrowing all that money.” Despite believing the US has created many problems through its monetary policies, Johnson concluded that “the capital of the world would flow into the United States and the United States would suck up all the money that gets printed as a result of responding to the crisis.”

A Transformative Event in Monetary History

In his report “Empire by Code: The Rise of USD Stablecoins,” Johnson frames the emergence of USD stablecoins as potentially “a transformative event in monetary history, one as consequential as the day the United States severed its link to gold and as powerful in shaping the world’s financial order as the moment it abandoned Bretton Woods.” These are serious moves taking place.

The report opens with a warning from Carl von Clausewitz’s “On War”: “I shall proceed from the simple to the complex. But in war more than in any other subject we must begin by looking at the nature of the whole; for here more than elsewhere the part and the whole must always be thought of together.”

Johnson applies this principle to money. As he writes in the executive summary: “Money, like strategy, is an ecosystem of power. Every instrument, market, and institution serves a purpose within a larger design, and none can be truly understood in isolation. This is why money and power are inseparable. Each reinforces the other, and together they shape the hierarchy of nations.”

The report examines several interconnected components: the Eurodollar market, SWIFT, the GENIUS Act (recent US legislation governing stablecoins), and the rise of stablecoins. But Johnson emphasizes they must be understood as “expressions of a single whole” through which the United States projects, maintains, or adapts its influence.

His conclusion is stark: “What is emerging is not just a new currency system, but a new form of control.”

The Eurodollar System: Dollars Outside America

To understand why stablecoins matter, we need to understand the Eurodollar market first, which very few people know even exists. This is not about euros or Europe specifically. Instead, it’s the market for US dollars that exist outside the United States. And it’s massive!

Johnson traces its origins: “Post World War II we had the Bretton Woods agreement where the dollar was the global reserve currency.” The Soviet Union was receiving dollars from trade but “didn’t want to put them in a US bank because they could be confiscated.” So they placed these dollars in European banks, which then used them as collateral to make new US dollar loans. That process enabled the creation of new US dollars — but outside the American regulatory authorities.

This created what Johnson calls a critical dynamic: “Most of the money printing that everybody likes to say ‘money printer go burr,’ it’s actually done by the commercial banks and the global commercial banks and even non-financial entities and non-bank institutions. It’s not so much the governments themselves printing the money.”

The system exploded after Nixon ended the gold standard and the United States convinced Saudi Arabia to price oil in dollars. “That turbocharged the need for dollars and that made this Eurodollar market grow even more,” Johnson says. Today, “the size of the Eurodollar market, which is the market for dollars outside the domestic United States, is orders of magnitude larger than the market for dollars inside the United States.”

Johnson emphasizes a truly unimaginable scale: “It’s at least a hundred trillion and probably 700 trillion if you started adding up derivatives and off-balance sheet items and non-bank entities and non-bank financial institutions. It’s just this monster out there that has grown on its own.”

Stop. Go back and read the last paragraph again. Unreal.

The catch? The US doesn’t fully control this system. Transactions run through SWIFT, essentially “the central nervous system for the global financial system,” but it’s a European system. “The US has more control than any other country. But they don’t have full control. They don’t have full visibility,” Johnson says.

What Are Stablecoins?

Johnson defines a stablecoin as a digital token issued by either a financial firm or a company that remains stable against a certain asset. Unlike Bitcoin, which has been highly volatile, stablecoins maintain price stability by being backed with US Treasuries.

The key feature is that stablecoins represent “a way to have a digital dollar that you can send, spend, and transact with that settles instantly anywhere in the world.” And crucially, “you don’t even need a bank to do it.”

Johnson admits he initially missed the significance: “Stablecoins have been around for six or seven years, right? And I was very skeptical of them initially.” Part of his skepticism came from questionable practices by early issuers like Tether, which “didn’t want to be audited” and had “some very shady practices to say the least.”

But as the system developed, Johnson came to realize “not only did I miss it, but everybody else who I think is continuing to miss it. And even those who are big advocates for them, I think are missing the real play.”

Beyond Treasury Demand

The narrative around stablecoins focuses on a straightforward benefit, which is that they create new demand for US Treasury debt. Here’s how it works. To maintain their dollar peg, stablecoin issuers must hold US Treasury bills as backing. As stablecoin adoption grows, so does the need to purchase Treasuries. With the US facing high debt service costs and massive refinancing needs, this new marginal buyer seems like a convenient solution.

While the Trump administration has promoted stablecoins primarily for this Treasury demand feature, Johnson says that this misses a bigger picture. “I think that’s really a secondary benefit,” he says. “I actually am of the belief that the US would not have that much trouble selling Treasury bills if stablecoins didn’t exist.”

Johnson says that the real strategic advantage is control and redollarization. The Treasury demand story, while true, is almost a distraction from what stablecoins actually enable. They don’t just help finance US debt. They fundamentally restructure how dollars flow around the world and who controls those flows, especially in geographies where hundreds of millions of people aren’t even banked. Again, the scale of those potentially new markets for the US dollar is unimaginable.

Even geopolitical rivals recognize this threat. Johnson says that “you’ve seen Putin make comments about the US dollar stablecoin” and other countries making comments “in some kind of a negative sense because they’re scared of it and they should be.”

But the real story could be much bigger. It’s about actually replacing the Eurodollar system with something the US can fully control, and dollarizing populations that were previously out of reach. If the US is successful implementing this strategy, it will represent a remarkable achievement and a reassertion of American monetary policy globally, which in recent decades has been eroded by the massive growth of the Eurodollar post World War II.

Money as a Tool of Control

To understand the strategic implications, Johnson emphasizes a fundamental truth about money: “Money is used as a tool or as a means of control that governments use against its own citizens or to marshal its citizens in a certain way. Really powerful countries can use money to get other countries to do what they want to do.”

This isn’t theoretical. As Johnson says, “Money as a weapon, this isn’t some idea that I just came up with. This is military doctrine. The United States Army, Marines, they know how to use money as a weapon. It’s taught at their colleges. It’s implemented in their actions when they’ve been in foreign theaters.”

The power of the dollar stems from its role as global reserve currency. “By the fact that the global reserve currency is the US dollar, the US has more control over the global monetary system than any other one government.” But that control has been incomplete because of the Eurodollar system’s opacity outside the United States.

The Empire Strikes Back

Johnson uses a Star Wars analogy to explain the coming financial war. “At the end of the first movie they blow up the Death Star, right? That’s a huge victory and we created Bitcoin and it’s achieved escape velocity or whatever. But the next eight movies aren’t about peace and love in the galaxy. The battle continues.”

Johnson says the idea that the US would simply accept displacement is naive. “A lot of people tell me the US is the great evil in the world or it’s the global bully or it’s designed the system that enslaves the world through taxation and theft via inflation. And then they also tell me that [the US] can’t possibly win the next round. I’m like, they just enslaved the whole world by your own admission, but they’re just going to roll over and the next round’s going to go to the next guy?”

Cryptocurrency was designed to escape government control. Now that same technology is being co-opted to extend control. “The dollar is already the ring of power, in my opinion, and this is a way to just entrench it even more,” Johnson says. “And the craziest thing, in the same way that the Eurodollar market built the Eurodollar prison that the world is now in, stablecoins is a way to turbocharge that and not only turbocharge it but give the US more control over it.”

Johnson is not clear who does actually control the Eurodollar system. But some analysts have speculated that it’s primarily European banks, which may help explain the current stress between Trump and Europe as the US make clear moves to reassert control over its own monetary policy — see LIBOR vs SOFR here and here.

In “Empire by Code,” Johnson describes how “quiet code and public ledgers are no longer just symbols of rebellion against the state. They are becoming extensions of it.” The tools once imagined to escape central authority are being absorbed by what he calls “the most powerful monetary authority the world has ever known.”

Johnson sees this as the US co-opting private market innovation: “The US is co-opting the innovation that was designed to escape the prison. And so I think initially that is why these stablecoins and digital assets and crypto, however you want to describe this whole ecosystem was developed.”

Unlocking Global Dollar Demand

The scale of opportunity is staggering. Johnson estimates that “easily 50 and probably 70” percent of people globally would prefer to earn and transact in dollars over their local currencies if given the choice. Currently, international capital controls and banking restrictions create enormous friction to transfer money. Stablecoins remove those barriers entirely.

“If you live in, let’s just say Turkey, and you want to hold a US dollar balance, you have to open a bank account and then it has to be with a bank that allows you to hold dollars,” Johnson says. The Turkish government can then limit how much you can hold and restrict when you can withdraw it, especially during a currency crisis.

With stablecoins, “anybody who doesn’t even have a bank” can hold dollar balances on their phone. “As long as there’s an internet connection they can connect to the internet, open, download a wallet and they can transact or they can hold these US dollar stablecoins.”

This creates an existential threat to national sovereignty for some countries. “The ability for citizens to exit the local currency” becomes dramatically easier. “If the Turkish government loses control of the monetary system within Turkey and citizens now start to hold dollar balances rather than lira balances, the Turkish government starts to lose control. They don’t like that.”

Johnson emphasizes the pattern: “If you look back through history, any country that has had a currency crisis or whose currency has failed, the government typically fails shortly thereafter. And again, it goes back to control. It’s because money is a means of control. And if you can’t control the money, then you can’t control the society.”

Why People Choose Dollars

Johnson pushes back against the idea that dollar demand is artificial or coerced. On a fiat versus fiat basis, the choice is clear. “Most global trade for the most part takes place in dollars, especially commodity based. They’re invoiced in dollars. They’re transacted in dollars.” As an aside, it seems ironic that this is what happened in recent decades with the Eurodollar surpassing the value and control of the domestic American dollar. Could that be why the US is making these moves under Trump now?

Importantly, “that was not the United States going around and telling a manufacturer in Turkey that they had to do business in dollars with a trade partner in India. Those two entities chose to do that because it was the most liquid and it was the safest and it was the most convenient out of all the fiat options.”

Even when Bitcoin advocates argue that unbanked populations could use Bitcoin, Johnson notes that “if given the choice to do it in dollars, a huge chunk of them, maybe the vast majority, would pick dollars for the reasons we mentioned.” This is the network effect on display. The dollar has the network. Bitcoin doesn’t.

“The dollar is kind of like Twitter. Everybody loves to hate Twitter. Everybody says they’re going to leave. Everybody says they’re going to go use a different one, but everybody ends up coming back to Twitter because that’s where everybody is. And the dollar is kind of the same way.”

A CBDC By Another Name?

This raises some uncomfortable questions. Are stablecoins just Central Bank Digital Currencies in disguise? The EU has been openly developing a digital euro, which Christine Lagarde continues to promote as Europe tries to maintain monetary control over disparate EU nations and perhaps even assert more control globally.

Johnson acknowledges the concern directly. When asked if all the fears people had about CBDCs are now back on the table, he responds: “I think they’re back on the table.” The government would know exactly what citizens are spending money on, there would be no cash for anonymous transactions, and authorities could shut down accounts at will.

The political workaround is elegant. “Trump said we’re never going to have a central bank digital currency. And there was always push back against that because the United States was founded on individual freedom and individual rights. A central bank digital currency is in many ways un-American.”

But Johnson sees through the semantics. “The way they’ll get around that is they’ll just make it a treasury coin rather than a central bank coin. But at the end of the day, it is a digital, it is a CBDC. It’s just called something differently.”

The distinction matters politically but perhaps not practically for regular Americans. Whether issued by the Treasury or the Federal Reserve, the result is the same. Stablecoins are programmable money that can be monitored and controlled.

Johnson even suggests this could reshape the relationship between Treasury and the Fed. “I think this is also one of the ways in which Treasury gets control over the Fed.” The ability to issue digital currency directly could circumvent the traditional banking system entirely. “If the treasury issues a stablecoin, it is a way to circumvent the banks because everybody could just open an account directly with the treasury.”

Domestic Implications: Do We Still Need Banks?

The implications extend far beyond international markets. “If you have a US dollar stablecoin that’s issued by the Treasury, you don’t really need the banks, right?”

The current banking system exists partly because of infrastructure requirements. But stablecoins change that calculus. “You certainly don’t need 14,000 banks. Maybe you need 10 or 20.”

Johnson admits uncertainty about the exact implementation: “I don’t know if they’re going to issue an official US dollar stablecoin, if they’re going to grant licenses to 20 different entities and then they create their own stablecoins, or maybe they’ll just let anybody issue their own stablecoin so long as they follow the rules that are outlined in the GENIUS Act.”

Regardless of the specific path, “new battle lines are drawn and people are going to compete for that territory.”

A New Form of Control

This creates what Johnson calls “financial battlefields” everywhere. Money is fundamentally about control, and when governments lose control of their currency, they lose sovereignty itself. “If you are subservient to a form of money that you cannot control, you are no longer sovereign,” he says.

The programmable nature of stablecoins gives the US unprecedented visibility and control compared to the opaque Eurodollar system. Unlike SWIFT, the stablecoin rail infrastructure is “very elegant and very controllable and highly transparent for whoever is programming.”

Johnson elaborates on the difference: “These stablecoins via code, these channels are not only visible, but they’re programmable. And so it gives the US complete visibility or potentially gives the US complete visibility and control. They can shut it down. They can open it up. They can turn somebody’s money off. They can turn it back on.”

As Johnson writes in his report: “What happens when the private innovation that once sought to liberate markets instead becomes the instrument through which a superpower consolidates them? What if the next great disruption does not weaken the empire, but strengthens it?”

Johnson’s conclusion is sobering: “This is about as an elegant way to invade another country without even people realizing it that I’ve ever seen.”

Can Countries Resist?

Johnson expects resistance but doubts its effectiveness. “Without question, there’s going to be a battle. And I don’t know exactly how this is going to play out. And the other countries will without question fight back because they have to. If they don’t fight back, they will cease to exist.”

The challenge is that resistance requires heavy-handed tactics: “The reason governments exist is because they have a monopoly on violence. And I hate to bring that up, but that’s the truth. And so if they throw people in prison or if they take their businesses or confiscate their assets, that will deter people from breaking the law, quote unquote, in that country, but it won’t stop everybody.”

Stronger countries like China have better defenses. China can “probably introduce their own CBDC or whatever it is. And internally that probably is better at defending against the dollar stablecoin than perhaps Turkey or Egypt or Afghanistan or Venezuela would be.” But even there, “I don’t think it will be perfect and I think it will still seep in, right? It’s like water. It just seeps in. It’s hard to keep it completely out.”

Europe faces particular challenges. “Europe is just in so much trouble. I just don’t know how else to say it.” Christine Lagarde talking about the digital euro shows “they’re trying as hard as they can to maintain control,” but their position is weak and growing more so over time.

A broader question looms. “What does this do over time to everybody who chose team America?” in the recent reshuffling of global trade. Johnson’s answer? “I think they’re going to get dollarized.”

Understanding Reality, Not Celebrating It

It’s important to note that Johnson takes a deliberately analytical stance on stablecoins rather than advocating for a specific outcome. When Taggart points this out in the interview, saying “You’re not a dollar lover,” Johnson responds, “This scares me to be honest.”

Taggart clarifies: “You are just trying to help people understand the world as it is and as it is likely to be.” Johnson isn’t cheerleading for dollar dominance through stablecoins. He’s describing what he sees as inevitable given the incentive structures of nation-states and the dynamics of power.

Throughout both interviews, Johnson emphasizes uncertainty. “I don’t have this completely figured out,” he says. “I don’t know exactly how this is going to play out. Again, I’m sure there will be some unintended consequences.”

He wrestles with the implications openly. “I think of a country like a farm or a ranch, it makes a lot more sense. Some ranches are free range and they let you roam around and eat whatever you want, but at the end of the day, you’re still staying within those confines. Other ranchers have you locked up in a really tight pin and you get outside for one hour a day and they give you not very good food to eat. But at the end of the day, it’s livestock. It’s management of livestock.”

Despite predicting that stablecoins will strengthen dollar dominance, Johnson’s investment advice reflects genuine concern about the outcome. He recommends owning gold and hard assets as “a put on the whole system” because “I don’t know that this is going to go well. I don’t know that it’s going to go perfectly. It may very well cause chaos. And gold probably does well in a world where there is chaos.”

His reasoning is that “there’s nothing more bullish for gold than a strong dollar because a strong dollar kind of wrecks the system and causes chaos. And gold does pretty well in chaos.”

For people who say the US cannot possibly win the next round of global monetary competition, Johnson offers a realistically stark reminder: “If that is your belief, you are betting against immeasurable power.” He’s not celebrating that power, though. He’s warning people to understand it so they can attempt to position themselves accordingly.

As he writes in “Empire by Code”: “This paper does not offer reassurance of the status quo. It confronts a reality that few seem to have yet recognized and even fewer truly understand.”

Hanoi, Vietnam, 2024