WHO ARE THE NEOCONS AND WHAT DO THEY WANT

12 May 2026

1. Who Is Robert Kagan ?

Robert Kagan is an American foreign policy writer, historian, and strategist associated with the modern neoconservative movement in U.S. politics.

He became well known in the 1990s and 2000s arguing that:

• the United States should actively maintain global dominance

• liberal democracy should sometimes be defended by military power

• American withdrawal creates instability

• authoritarian powers expand when the U.S. retreats

He has been associated with institutions such as: 

• Brookings Institution

• Project for the New American Century (PNAC)

His wife is Victoria Nuland, a major U.S. diplomat involved in: 

• NATO policy

• Ukraine policy

• Russia strategy

Kagan is intellectually influential rather than electorally important.

He is one of the clearest articulators of the idea that: the U.S.-led liberal world order must be actively enforced.

────────────────

2. What Are The Neocons?

Neoconservative or neocon originally referred to a group of mainly former liberals in the 1960s–80s who became more hawkish on: 

• foreign policy

• communism

• military power

• American leadership

Over time the term evolved into something broader.

Today “neocon” usually means:

A person who believes: 

• America should remain the dominant global power

• military force is sometimes necessary to spread or defend liberal democracy

• authoritarian regimes are dangerous if left unchecked

• U.S. retreat encourages chaos and aggression

The movement became especially influential after: 

• the collapse of the Soviet Union

• the 9/11 attacks

• the Iraq War

Key figures often associated with neoconservatism include: 

• Paul Wolfowitz

• Richard Perle

• William Kristol

• Robert Kagan

────────────────

3. Core Beliefs Of Neoconservatism

The central assumptions are roughly:

3.1 American Power Is Generally Beneficial

Neocons tend to see the U.S. not as a normal empire, but as: • a stabilising hegemon • protector of democratic order • guarantor of global trade routes and alliances

Hegemon = the dominant power within an international system.

────────────────

3.2 Democracy Is Universal

They generally reject the idea that: • democracy is only “Western” • authoritarian cultures are permanent

They believe democratic systems can spread globally.

This partly explains support for: 

• Iraq intervention

• democracy promotion

• NATO expansion

────────────────

3.3 Military Strength Prevents Worse Outcomes

Neocons often argue that weakness invites aggression.

This comes partly from interpretations of: 

• the 1930s appeasement of Adolf Hitler

• the Cold War against the Soviet Union

Thus many neocons see deterrence and intervention as morally necessary.

────────────────

4. Why Neocons Became Controversial

The major rupture was the Iraq War.

Critics argue neocons: 

• underestimated sectarian divisions

• exaggerated ease of regime change

• believed democracy could be engineered externally

• destabilised the Middle East

• weakened U.S. credibility

Supporters respond: 

• Saddam Hussein was genuinely dangerous

• removing dictators can still be morally justified

• failures came from poor execution, not wrong principles

This remains heavily contested.

────────────────

5. What Is Neoliberalism?

This is where confusion often occurs.

Neoliberalism is mostly an economic doctrine, not a military or foreign policy doctrine.

Neoliberals generally support: 

• free markets

• deregulation

• privatisation

• globalisation

• free trade

• reduced state economic control

Major associated figures include: 

• Milton Friedman

• Friedrich Hayek

• Margaret Thatcher

• Ronald Reagan

Privatisation = transferring industries or services from state ownership to private ownership.

────────────────

6. The Simplest Difference

Neoconservative Neoliberal

Focuses mainly on foreign policy Focuses mainly on economics

Wants active U.S. global power Wants free global markets

Comfortable with military intervention Comfortable with economic globalisation

Sees U.S. military dominance as stabilising Sees open markets as stabilising

Iraq War associated Globalisation associated

But in practice the two often overlapped after the 1990s.

That is why critics sometimes describe the post-Cold War Western elite consensus as: 

• neoliberal economics plus 

• neocon foreign policy

Meaning global free markets backed by U.S. military power.

────────────────

7. Why The Terms Are Often Confused

After the Cold War many Western elites simultaneously believed in:

• open capital flows

• free trade

• liberal democracy

• humanitarian intervention

• NATO expansion

• U.S.-led global order

So the labels blurred together.

A politician could be: 

• economically neoliberal and 

• strategically neoconservative

This described much of: 

• the Bill Clinton era

• the George W. Bush era

• parts of the Tony Blair era

────────────────

8. Modern Critiques Of Both

Today critics from both left and right argue that:

Against neoliberalism 

• it hollowed out manufacturing

• increased inequality

• empowered multinational corporations

• weakened national sovereignty

Against neoconservatism 

• it produced endless wars

• overstretched the U.S. empire

• destabilised regions

• underestimated nationalism and culture

This backlash helped fuel: 

• populism

• nationalism

• protectionism

• “America First” politics

────────────────

9. The Deeper Historical Point

Neocons and neoliberals both emerged during the period of peak American confidence after: 

• World War II especially 

• after the Soviet collapse in 1991

Both assumed: history was converging toward a liberal democratic capitalist world order.

That assumption is now under strain from: 

• China

• Russia

• Islamic political movements

• nationalism

• civilisational politics

• protectionism

The current geopolitical debate is partly about whether that entire post-1991 worldview is fragmenting.

────────────────

10. Key Terms

Neoconservative

Advocates active U.S. global leadership, often including military intervention to defend or spread liberal order.

Neoliberal

Advocates free markets, deregulation, privatisation, and economic globalisation.

Liberal international order

The post-1945 system built around: 

• U.S. alliances

• global trade

• international institutions

• open markets

────────────────

References

• Brookings Institution profile of Robert Kagan

• Project for the New American Century archive

• Britannica on Neoconservatism

• Britannica on Neoliberalism

Read More

HOW POWER SHIFTS IN TRANSITIONS BETWEEN EMPIRES

1. HOW POWER SHIFTS TRANSITIONS BETWEEN EMPIRES

Summary

Empires do not hand over power cleanly. They overlap, compete, and adapt. Some transitions are rapid, driven by military collapse, others unfold slowly through economic and institutional change. The consistent pattern is that power shifts when a new system proves more effective at organising trade, finance, and production. The modern world accelerates this process, but does not change its underlying logic.

---

2. THE IDEA OF EMPIRE AND TRANSITION

History can be read as a sequence of dominant systems rising and falling - it is about systems and transitions between systems. But systems rarely disappear overnight, they weaken, fragment, and are gradually overtaken by new structures that operate more effectively.

The transition phase is not a moment but a period of overlap. During this period, the old system still functions, but the new one is already expanding beneath it, preparing to gobble it up - the basic pattern to recognise is the competition for trade routes, land and resources... the winner is the one with the most efficient systems.

Empire - a political structure in which a central authority governs multiple territories and diverse populations beyond its original base

Transition period - the span of time during which one dominant system declines while another emerges and expands

---

3. RAPID TRANSITIONS — WHEN FORCE DECIDES

The shift from the Achaemenid Persian Empire to the Macedonian Empire shows how quickly a system can collapse under decisive military pressure.

The Persian system fell around 330 BCE under the campaigns of Alexander the Great. Within roughly a decade, political control across a vast region had been reconfigured.

This type of transition depends on overwhelming advantage and weak opposing institutional resilience. Once the governing elite is removed, the system can disintegrate rapidly.

Military supremacy - the ability of one force to decisively defeat another across multiple regions and battles

---

4. SLOW TRANSITIONS — WHEN SYSTEMS EVOLVE

The movement from the Roman Republic to the Roman Empire followed a very different path.

From the late second century BCE to 27 BCE, Rome experienced prolonged instability, including civil wars and political breakdown, before Augustus established a new imperial structure.

Here, the system did not collapse first. It adapted under pressure and eventually transformed into something more centralised.

Institutional inertia - the tendency of established systems to resist change even when they are no longer functioning efficiently

---

5. COLLAPSE WITHOUT SUCCESSOR

The fall of the Western Roman Empire in 476 CE did not lead to an immediate replacement.

Instead, Europe fragmented into smaller kingdoms over the following centuries. Stability only gradually returned between roughly 600 and 800 CE.

This kind of transition produces a vacuum rather than a direct handover.

Fragmentation - the breakdown of a central authority into multiple smaller and competing political entities

---

6. LONG TRANSITIONS — PRESSURE OVER TIME

The shift from the Byzantine Empire to the Ottoman Empire took place over roughly 250 years.

In the 11th century the empire experienced a major catastrophe in which most of its distant territories in Anatolia were lost to the Seljuks following the Battle of Manzikert and ensuing civil war.  Then the Sack of Constantinople by the forces of the Fourth Crusade in 1204 further weakened Byzantium allowing Ottoman expansion gradually into its territories, culminating in the fall of Constantinople in 1453.

This was not a sudden collapse, but a prolonged process of erosion and encroachment.

Geopolitical encroachment - the gradual expansion of one power into the territory and influence of another

---

7. THE DUTCH INTERLUDE — THE FIRST MODERN SYSTEM

The transition from the Spanish Empire to the British Empire via the Dutch cannot be understood without recognising the central role of the Dutch Empire.

In the seventeenth century, the Dutch built a new kind of power - through the Dutch East India Company and the financial markets of Amsterdam, they created systems capable of mobilising capital, coordinating global trade, and managing risk at scale.

This marked a shift away from conquest towards system-based power.

Joint-stock company - a business structure in which ownership is divided into tradable shares

Capital markets - systems that channel savings into investment through instruments such as shares and bonds

---

8. DUTCH TO BRITISH — COMPETITION AND ABSORPTION

The transition from Dutch to British dominance unfolded between the mid-seventeenth and early eighteenth centuries.

The Anglo-Dutch Wars reflected direct rivalry for control of trade routes, although this is better appreciated as a story of transfer of power.

The Glorious Revolution brought William III of Orange to the English throne, linking Dutch financial expertise with British state power.

The creation of the Bank of England in 1694 formalised this integration.

Britain did not simply defeat the Dutch. It absorbed their model and scaled it.

Institutional transfer - the adoption and adaptation of systems, practices, and knowledge from one power by another

Scale advantage - the ability of a larger system to operate more efficiently due to size, resources, and reach

---

9. INDUSTRIAL TRANSITION — BRITAIN TO AMERICA

The shift from the British Empire to the United States represents the first fully industrial transition.

Britain peaked in the late nineteenth century. By the end of World War II, the United States had assumed global leadership.

This transition took roughly 70 to 80 years and was driven by industrial capacity, financial depth, and the shift from sterling to the dollar.

Reserve currency - a currency widely used in global trade and held by central banks as a store of value

---

10. WAR AND ACCELERATION

The broader transfer of power from Europe to the United States occurred between World War I and World War II.

In just three decades, European empires exhausted themselves through war and debt, while the United States expanded economically and financially.

We can say that war compresses time by forcing rapid structural change.

Total war - a conflict that mobilises entire societies and economies, not just military forces

---

11. IDEOLOGICAL COLLAPSE — THE END OF THE BIPOLAR WORLD

The decline and collapse of the Soviet Union between the 1970s and 1991 marked another rapid transition.

The system weakened economically and lost ideological credibility. Once belief eroded, collapse followed without direct conquest. America became the unchallenged global hegemon and began expanding into former Soviet sattelites.

Ideological legitimacy - the degree to which a population accepts or can be persuaded to accept the beliefs and authority of a governing system

---

12. THE CURRENT TRANSITION — AN OPEN QUESTION

Today, many analysts argue that the world is moving from a US-led system towards a more multipolar structure involving China and others.

There is clear evidence of economic rebalancing, financial diversification, and emerging regional power structures, most recently Iran as a fourth "superpower", a regional hegemon seeking to replace Israel - but interpretations for America differ.

Some see gradual decline. Others see adaptation and renewal. It remains unclear whether a single successor will emerge or whether power will be distributed from The West to another region ie Asia.

Multipolarity - a global system in which several states hold significant power as cooperants or rivals, rather than one dominant centre

---

13. PATTERN RECOGNITION — WHAT DRIVES TRANSITIONS

Across all cases, the same structural drivers recur. Control of resources underpins material strength. Control of finance determines flexibility and endurance. Control of military power affects security. Control of narrative sustains legitimacy and cohesion.

Power shifts when a new system integrates these elements more effectively.

Legitimacy - the perceived right of a system to govern, accepted by both elites and the wider population

---

14. FINAL REFLECTION — SYSTEMS, NOT JUST STATES

Empire transitions are not simply about one country replacing another. They are about the emergence of more effective systems for organising the world.

The Dutch innovated. The British integrated and scaled. The United States industrialised and financialised. Each step built on what came before.

Power shifts when a new model works better.

What marks out the modern era is the speed and global reach of this process of new empire formation.

---

References

The Rise and Fall of the Great Powers — Paul Kennedy

The Changing World Order — Ray Dalio

The First Modern Economy — Jan de Vries

Why Nations Fail — Acemoglu and Robinson

IMF and World Bank historical datasets

Fall of Civilisations podcast

Read More

THE FIRST MODERN TRANSITION - DUTCH TO BRITISH EMPIRES

4 May 2026

1. THE DUTCH MISSING LINK — A CRITICAL TRANSITION

The omission of the Dutch is not a minor gap. It is central to understanding how modern empire actually evolved.

The transition from the Spanish Empire to the British Empire did not occur directly. It passed through an intermediate phase dominated by the Dutch Empire.

This Dutch phase represents the first truly modern, finance-driven empire.

---

2. THE RISE OF THE DUTCH — FROM REBELS TO SYSTEM BUILDERS

The Dutch revolt against Spain in the late sixteenth century led to the creation of a new kind of power. Unlike Spain, which relied heavily on territorial conquest and silver extraction, the Dutch built a system based on trade, finance, and logistics.

The Dutch East India Company, founded in 1602, became the first large-scale joint-stock corporation. It allowed capital from many investors to be pooled and deployed globally.

At the same time, Amsterdam emerged as the financial centre of Europe, with sophisticated markets in bonds, equities, and commodities.

Joint-stock company - a business structure where ownership is divided into shares that can be bought and sold

Capital markets - systems that channel savings into investment through instruments such as shares and bonds

---

3. DUTCH ADVANTAGE — SHIPS, FINANCE, AND EFFICIENCY

Dutch dominance rested on three reinforcing pillars.

First, shipbuilding. Dutch shipyards produced vessels such as the fluyt, designed specifically for cargo efficiency. These ships required smaller crews and could carry more goods at lower cost.

Second, logistics. The Dutch controlled key trading routes across Europe and into Asia, acting as intermediaries in global commerce.

Third, finance. Their ability to borrow cheaply and manage risk gave them a structural advantage over rivals.

Cost efficiency - the ability to deliver goods or services at lower resource cost than competitors

Logistical network - the interconnected system of routes, ports, and supply chains enabling trade

---

4. THE ANGLO-DUTCH TRANSITION — COMPETITION AND TRANSFER

The transition from Dutch to British dominance unfolded over roughly a century, from the mid-seventeenth to the early eighteenth century.

This period included the Anglo-Dutch Wars, which were essentially contests for control of trade routes and maritime supremacy.

However, the transition was not purely destructive. It was also absorptive.

The Glorious Revolution brought the Dutch ruler William III of Orange to the English throne. This event facilitated a transfer of financial expertise from Amsterdam to London.

The Bank of England, founded in 1694, reflected Dutch-style financial innovation adapted to a larger state.

Institutional transfer - the adoption of systems, practices, and knowledge from one power by another

---

5. WHY THE DUTCH DECLINED

The Dutch did not collapse suddenly. They were outcompeted.

Their state was relatively small, limiting population and military scale. Maintaining global commitments became increasingly difficult as rivals grew stronger.

At the same time, Britain combined Dutch financial techniques with greater industrial capacity and naval power.

Scale constraint - limitations imposed by population, territory, or resources on expansion

Competitive displacement - a process where one system overtakes another by outperforming it across key dimensions

---

6. THE CRITICAL INSIGHT — BRITAIN DID NOT INVENT, IT INTEGRATED

The British Empire did not emerge from nothing. It absorbed and expanded Dutch innovations.

Shipbuilding improved, but more importantly, finance was scaled. London replaced Amsterdam as the global financial hub. The British state proved more capable of sustaining long wars and larger fleets.

This is a recurring pattern in empire transitions. The successor does not simply defeat the predecessor. It learns from it, integrates its strengths, and operates at a larger scale.

System integration - the combination of multiple capabilities into a more powerful and cohesive whole

---

7. REFRAMING THE TRANSITION SEQUENCE

With the Dutch correctly included, the early modern sequence becomes clearer.

Spain dominated through territorial conquest and resource extraction.

The Dutch introduced financial capitalism and efficient trade systems.

Britain scaled these systems into a global industrial and naval empire.

This is less a series of breaks than a chain of evolution.

---

8. LINK BACK TO THE CORE IDEA

This Dutch phase explains something fundamental about empire transitions.

They are not just about control of land or armies. They are about control of systems.

Power shifts when a new model proves more effective at organising trade, finance, and production. The British did not simply build better ships. They built a more powerful system.

---

9. FINAL OBSERVATION

The Dutch moment is often overlooked because it sits between more obvious imperial giants.

Yet it marks the true beginning of the modern world.

It is where finance, trade, and corporate organisation became the foundation of power.

And it is precisely those elements that continue to define transitions today.

---

References

The Embarrassment of Riches

Amsterdam: A History of the World's Most Liberal City

The First Modern Economy

Bank for International Settlements

Read More

TRIFFIN'S DILEMMA - BUST THE ECONOMY OR BUST THE CURRENCY

3 May 2026

1. Triffin’s Dilemma – Overview Of  The Financial System

Dollars go out to buy real goods.
Those dollars pile up abroad.
Foreign holders need somewhere safe and liquid to park them.
They buy Treasuries and US financial assets.
That finances the next round of US deficits.
America gets the goods.
The rest of the world gets paper claims.
The problem comes when the paper claims grow faster than America’s real productive capacity - the collateral to honour them.
That is Triffin’s dilemma in the real world

… the music has not stopped yet.

Reserve currency – a currency held globally to settle trade and store value.
Triffin’s dilemma – the structural conflict between supplying global liquidity and maintaining confidence in that currency.

---

2. Why America Wanted This Arrangement In The First Place

At the Bretton Woods Conference, John Maynard Keynes proposed a neutral global currency, the Bancor, administered through a multilateral system, the IMF. The United States rejected this proposal and instead placed the dollar at the centre of the new order.

Of course there were objections based on a dislike, delay and bureaucracy. But the true US logic was power. A neutral currency spreads influence out - most suitable for a multi-polar decentralised world. A national reserve currency concentrates it - granting America what Giscaird d'Estaing called "the exorbitant privilege".

If the world must hold your currency, you gain two advantages that are structural rather than temporary. The first is financial. The United States can run persistent deficits and fund them in its own currency because the rest of the world requires dollars to function. This is that exorbitant privilege - the ability to borrow cheaply and continuously without the constraints faced by other nations.

The second is political. When global trade, finance, and reserves are denominated in your currency, you sit at the centre of the system’s plumbing. You can grant access can or deny it. Control with sanctions - a financial act rather than a military one. Issue swap lines dependent on good behaviour. This has been demonstrated repeatedly in the cases of Iran, Russia, and Venezuela.

Exorbitant privilege – the ability of a reserve currency issuer to finance deficits in its own currency without immediate external constraint.

There are two ways to interpret this choice of America's. One is that it was a deliberate construction of dominance, for hegemony. The other is that it provided a stable anchor in a fractured post-war world. And both contain elements of truth.

Reference: Eichengreen, B. (2011), Exorbitant Privilege

---

3. Why Every Country Wants Reserve Currency Dollars, Even When Trading With Each Other

Consider a transaction between two countries with volatile currencies, consider the risk. Exchange rates move. Contracts stretch over time. This means profit margins can easily disappear between agreement and settlement.

On the other hand, a shared and stable reference currency removes that uncertainty. Prices are set in it. Payments are made in it. Surpluses are stored in it. Why not peg your currency to the US dollar for extra stability... never mind you lose control over your monetary policy?

The dollar occupies this role not because it is politically preferred, but because it is liquid, stable, widely accepted, and embedded everywhere in global systems - it is the indispensable and hard to replicate plumbing. Once a currency reaches that position, it becomes difficult to displace it.... even when America weaponises its currency

Network effects – the tendency of a system to become more dominant as more participants use it.

This creates inertia, users accept the pain of complying with America's wishes. Even if alternatives exist, the cost of switching for all participants at once is high. The system persists because it already exists.

Reference: IMF COFER database

---

4. How America Supplied The World With Dollars — And Why It Outsourced Its Factories

For America to control the world and be the rule-giver, the global hegemon, it must supply the world with dollars so that users can make transactions and safely store their reserves. How can the United States supply the world with the dollars it needs? The United States must spend more abroad than it earns. It does this by running a persistent trade deficit.

Trade deficit – when a country imports more goods and services than it exports.

So a trade deficit is not necessarily a policy failure. It is the mechanism by which global liquidity is supplied. The world cannot accumulate dollars unless they are first created and sent out from America.

The trade deficit came about because of a structural shift in production. Manufacturing moved to lower-cost countries. The physical process of production relocated, but of course ownership of the companies stayed on the New York Stock Exchange. The real pivot point came when China join the WTO.

American firms retained control of capital, branding, and distribution. The labour and industrial base shifted abroad. The result was a divergence between the location of physical production and the location of financial returns.

For industrial regions, this was often bad news. Aswhere for asset owners, it could be highly profitable. The system redistributed not just goods, but income and power.

Reference: World Bank; OECD global value chains

---

5. Why The Dollars Always Come Back — And Why No Individual Is Forced But The System Has No Choice

When a foreign exporter receives dollars, there is no obligation to hold them. They can be exchanged, spent, or invested elsewhere. At the level of the individual actor, choice remains intact.

At the level of the system, however, the dollars do not and cannot disappear. They must be held collectively by someone. This is a consequence of the balance of payments identity.

Balance of payments – the accounting framework recording all transactions between a country and the rest of the world.

A US trade deficit necessarily produces a matching inflow on the capital account, the TGA Trading and General Account. The dollars used to purchase imports reappear as investments in US assets - FDI.

They tend to concentrate in the deepest, safest and most liquid markets. US Treasury securities, dollar funding markets, and large-scale equity markets provide that depth, sometimes prime real estate.

The result is not coercion but "gravity". Dollars flow back because the system channels them there.

Reference: Federal Reserve Flow of Funds; BIS

---

6. The Crucial Distinction: Which Dollars Are New (expansion of the money base) And Which Are Not

Not all dollars are the same in economic terms. When deficits are financed through monetary expansion, new dollars enter the global system. The total stock increases, the monetary base expands.

Monetary expansion – an increase in the overall supply of money.

When those dollars return as investment into US assets, no new money is created. The same dollars are reclassified as claims on the United States. (Remember what a clain is: prior to Nixon closing the gold window in 1971, a dollar could be exchanged for its equivalent value in gold.)

Over time, this leads to an accumulation of financial claims that may expand more rapidly than the underlying productive base, the collateral supporting the monetary base. The distinction between creation and recycling becomes central to understanding the system’s dynamics.

---

7. Why The Growing Gap Between Claims And Reality Eventually Destroys Confidence

The system functions as long as confidence holds it is after al based on "promises to pay". Dollar assets represent claims on the future productive capacity of the United States - this is from where investors imagine America's debts can be repaid.

A useful metric is the debt-to-GDP ratio, which compares total obligations to economic output.

Debt-to-GDP ratio – a measure of how large a country’s debt is relative to its economy.

If debt grows faster than output over extended periods, each claim is backed by a smaller share of real production. This is currency debasement, a gradual process rather than a sudden break, the dollar base expands faster than the physical base and so each dollar is these valued in terms of its purchasing power.

The risk emerges when creditors begin to question whether the claims they hold can ever be honoured in real terms. The shift is typically slow, but once it accelerates, it can become self-reinforcing - and eventually we get a run on the currency.

Reference: IMF Fiscal Monitor; US Treasury

---

8. Triffin’s Dilemma Stated Precisely

The dilemma can now be expressed in full. To provide global liquidity, the United States must run deficits and issue increasing amounts of debt. But to maintain confidence, it must avoid excessive expansion of that debt.

These requirements are incompatible over the long term. America's is a debt base financialised economy. As the Debt to GDP ratio increases, confidence in government promises wears thin and investors require higher interest rates two compensate for reduced purchasing power and risk. 

What is the Fed to do? Increase interest rates two attractor lending needed to fund its budgets... and break the economy with recession? Or offer lower interest rates to save its fiscal budget, be obliged to print, and debase the currency through inflation?

If the supply of dollars is restricted, global trade and finance face a liquidity shortage. Countries dependent on dollar funding experience immediate stress. Trade contracts. Credit tightens.

If the supply continues to expand, debt accumulates and confidence erodes gradually. The system weakens from within.

The original Bretton Woods system broke under this pressure in 1971 with the Nixon Shock. The removal of gold convertibility altered the form of the system, but not the underlying tension.

Reference: Federal Reserve history

---

9. Concluding Perspective

Robert Triffin understood the destination early. And the dilemma is that there is no third option: trash the economy with a recession or trash the currency with inflation.

If you stop issuing dollars the world runs short, trade seizes, credit freezes, and you get a deflationary depression - the economy is trashed.

If you keep issuing dollars to meet the world's insatiable demand, the gap between claims and reality widens until confidence breaks and you get inflation, potentially runaway inflation with result the currency is trashed.

Triffin saw that the system forced America to choose, eventually, between those two forms of destruction. And that the longer the choice was deferred - by trust, by inertia, by the absence of alternatives - the more violent the eventual reckoning would be.

What made him remarkable is that he saw this not at the moment of crisis, but at the moment of maximum confidence. 1960. America at the height of its industrial and military power. The dollar seemingly unassailable. And one little Belgian economist doing the arithmetic and concluding: this ends badly, and the mechanism is already running.

He anticipated breakdown within a decade. The timing proved wrong, but the logic has endured. The system persists because there is no fully credible alternative, because global trade depends on continuity, and because confidence erodes slowly. And in the absence of imaginative alternatives, we have war.

The imbalance between real physical output and financial claims continues to widen, and that tension remains at the centre of the system. MAGAnomics was the way out....but ....

Read More

why is America keeping oil prices so high

Still not quite clear how they are manipulating the oil price to max their profits?

.....but trump has been meeting usa oil company execs. Something like usa shale oil is super cheap and tankers are all heading to the usa to fill up. Taking out the russian refineries closes down supply and keeps the price up. Short term max profit??

Here's your mechanism written out long-form.

Trump met the US oil execs in the Oval Office in early 2025 and the message was simple: we'll keep prices high enough for you to profit, you'll keep pumping. "Energy dominance" is the policy. Remember MAGAnomics and Bessent's three plus three plus three - 3% growth 3% inflation 3 million barrels a day more

Here's how the mechanism works:

1. The Gulf crisis (which the US started) has taken 10+ million barrels a day off the market. Price spikes. US shale producers - who need around $60-65/barrel to break even - are now selling at $105. That's a massive margin.

2. The tankers can't get OUT of the Gulf - 230+ are sitting at anchor unable to move. So the flow isn't to the US to fill up, it's more that Gulf oil is trapped and US oil fills the gap for Europe, Asia etc. Same effect, different mechanism.

3. Ukraine hitting Russian refineries simultaneously is not accidental from a US perspective - it keeps Russian supply constrained and prices elevated. Whether coordinated or just convenient, the result is the same.

4. Iran's tolls (paid in crypto/yuan to bypass sanctions) mean even the oil that does move carries a $2m per tanker surcharge - which gets passed on in the delivered price.

So yes - short term max profit is exactly right. The question is whether they can control the unwinding of all this

At $105+ Brent the inflation and recession risk starts to eat into the demand that makes the profit possible. That's the trap.

the people who benefit from high oil prices (US producers, the Treasury via petrodollar recycling, Gulf allies with high budget break-evens) have an interest in prices staying elevated - but not *so* elevated that they trigger the things that destroy the demand that makes the profit possible.

The specific risks at $105+ and rising:

1. Recession kills demand. If oil stays this high long enough, industrial output slows, consumers cut back, airlines ground planes. Goldman already raised US recession probability to 30%. A recession means demand destruction - and demand destruction means the price collapses anyway, but now with a damaged economy underneath it.

2. Inflation forces central bank action. High oil feeds inflation. Inflation forces rate hikes. Rate hikes slow growth. Rate hikes are just not possible with a 40 trillion debt. Same destination, different route.

3. Alternatives accelerate. Every month of $100+ oil is a massive subsidy to EVs, nuclear, LNG substitution, coal switching in Asia. Demand shifts that would have taken a decade get pulled forward by ?two? years. That's permanent demand loss for oil.

4. US allies start breaking. India, Japan, South Korea are being crushed by this. At some point they stop cooperating with the US-led sanctions architecture and make their own deals - which is already happening with India buying Russian and Iranian oil on side channels.

5. So all this means engineering an eventual price normalisation - probably through a deal on the Strait, an Iran settlement, or a carefully timed release of whatever is left of strategic reserves - before the high prices do enough economic damage to destroy the very demand structure the whole play depends on.

The trap is that the longer you stay high, the harder the unwinding becomes

Read More

IS RUSSIA IN ITS HEART STILL EUROPEAN?

28 April 2026

---

1. IS RUSSIA IN ITS HEART STILL EUROPEAN?

SUMMARY

Russia’s roots are unmistakably European. From the river traders of the Kievan Rus linking the Baltic to Byzantium, to the conversion to Orthodox Christianity in 988 under Vladimir the Great, the foundations were laid firmly within the European world.

Even the Mongol period did not break that trajectory. Moscow rose in power under the Golden Horde, but the civilisational orientation remained westward. That choice became explicit under Peter the Great, who built Saint Petersburg facing the Baltic and embedded Russia into European culture and diplomacy.

For centuries, Russia was not outside Europe but one of its major poles - sometimes rival, often uneasy, but undeniably part of the same system.

The real question today is not whether Russia is European, but whether Europe and Russia still recognise each other as belonging to the same civilisation.

 Russia - 12 moments in The Story of a European Civilisation

• Civilisation - a shared system of culture, religion, and political organisation
• Pole - a major centre of power within a wider system

---

2. Origins – Kievan Rus And The European Frame

Until 2022 - and certainly before 2014 - Russia had largely seen itself as part of Europe. That instinct runs deep in its history. It goes back to the origins of the Kievan Rus, founded by Scandinavian traders and warriors, often linked to Sweden, who sailed down the great river systems and established Kyiv as a trading post between the North and the Byzantine and Islamic worlds.

“Rus” is usually associated with these groups, sometimes linked to rowing crews, "rus" might best translate as "oar", though the exact meaning is debated. What matters is the direction of travel. From the beginning, this was a civilisation plugged into European and Mediterranean trade networks, not an isolated eastern outpost.

• Kievan Rus - early medieval state linking Northern Europe with Byzantium and the Islamic world
• Varangians - Scandinavian traders and warriors active in Eastern Europe

---

3. Christianity - A Strategic And Civilisational Choice

The Rus converted to Christianity in 988 under Vladimir the Great, drawing from the Byzantine Empire and therefore the Eastern Orthodox Church. This was not just a spiritual step but a strategic one. It brought legitimacy to a Moscow elite ruling over ethnically diverse lands, it strengthened trade links, and it aligned the state with a powerful and sophisticated civilisation.

As with the Roman Empire before it, adopting Christianity helped unify different ethnicities and cultures into a common defining order - that sacralised political authority, that established a shared moral code, that gave the state a sense of providential mission. It also placed Rus firmly within the wider European world, albeit on its eastern, Orthodox side rather than the Latin Catholic western wing.

• Orthodox Christianity - Eastern branch of Christianity rooted in Byzantium
• Sacralised authority - political power presented as divinely sanctioned
• Providential mission - belief in a purpose guided by divine will

---

4. The Mongol Period – A Shift In Power, Not Identity

I’m not entirely sure how deep the Mongol influence ran, but under the Golden Horde (descendants of Genghis Khan), the princes of Moscow were granted authority to collect taxes on behalf of the Mongol rulers. They used this position to build wealth and authority, and little by little Moscow emerged as the dominant centre of the Russian lands.

Some historians argue that this period of Mongolian rule shaped Russia’s later centralised and autocratic tendencies. Others see continuity with earlier European patterns. The evidence allows both readings. What can be said is that although the Mongols were militarily strong, they were culturally limited, leaving a vacuum in which the Russian state continued to look outward for its identity.

• Golden Horde - Mongol polity that dominated Russian lands in the medieval period
• Centralisation - concentration of power in a single authority

---

5. Medieval Europe – Integration With A Difference

In medieval times, Rus elites intermarried with European royal families and participated in a shared aristocratic culture. They were clearly part of Europe, even if not of Latin Christendom. Politically and religiously they belonged to the Greek and Eastern Orthodox world, which gave them a slightly different trajectory.

There is a long-standing argument that this eastern outlook explains later authoritarian tendencies. Another view, associated with Emmanuel Todd, is that political culture grows more from family structures and social organisation, bottom up, rather than from religion or elite preferences alone. On that reading, Russia is not unique, and comparisons with countries like Germany are not out of place.

• Aristocratic culture - shared elite customs across European ruling classes
• Political culture - shared assumptions about power: West - liberty, rule of law, pluralism; Russia - order, authority, state primacy

---

6. Westernisation – A Conscious Turn Towards Europe

Then came a decisive moment with Peter the Great. By building Saint Petersburg facing the Baltic, he made what can only be described as a civilisational choice. Russia would look west.

From that point on, the direction is unmistakable. Western technology was imported, elites adopted Western dress and customs, and by the 19th century Russian high society spoke French, the lingua franca of diplomacy, and moved fully within European cultural and political life.

Western Europe was the benchmark. Even those who argued that Russia was something separate, something Slavic, were arguing against that benchmark, which rather proves the point.

• Westernisation - adoption of Western European culture and institutions
• Lingua franca - common language used for communication between elites French from roughly seventeenth to early twentieth centuries, pre-World War One.

---

7. Enlightenment – Adoption Without Transformation

Russia did experience the Enlightenment, but in a distinct form. Under rulers such as Catherine the Great, ideas from Western Europe were consciously imported, promoting education, science, and administrative reform, and engaging with thinkers such as Voltaire. Yet unlike in France or Britain, where Enlightenment thought challenged and ultimately reshaped political authority, in Russia it was absorbed into the existing system of rule.

The result was not liberalisation but a form of enlightened absolutism, in which reason and modernisation strengthened rather than constrained the state. This is where Russia’s European identity becomes more complex - European in culture and intellect, but distinct in political form, with power remaining centralised, authority personalised, and the state prevailing over society.

• Enlightenment - movement emphasising reason, science, and critical thought
• Enlightened absolutism - use of Enlightenment ideas within an absolute monarchy

---

8. Rivalry Does Not Mean Exclusion

There followed a long period in which Russia was considered by, in particular, the United Kingdom to be its principal rival. Yet rivalry is not exclusion. On the contrary, it confirms Russia’s place within the European system of great powers.

Even after the Soviet Revolution, Russia did not somehow leave Europe intellectually. It remained part of a European tradition of political thought and industrial modernity. After all, Karl Marx was himself a European thinker, and his ideas - that history is driven by class struggle, that capitalism contains the seeds of its own collapse, that the state is an instrument of class power - shaped Russia profoundly.

• Great Power - a state with major influence in international affairs - is Iran today a fourth great power?
• Class struggle - conflict between social groups with different economic interests

---

9. The Modern Break – Competing Readings

The more recent period is where interpretations begin to diverge quite sharply. The post-Cold War “unipolar moment”, particularly under Bill Clinton, marks a phase in which the West expanded its institutional reach, with key steps in the Budapest Summit of 2008 and especially 2014, when Kyiv began shelling the Donbas and, in response, Russia took back Crimea.

After a turbulent 1990s, the early Putin period saw overtures towards integration with the West, including discussions around NATO and closer ties with the EU. There is disagreement over how feasible these were, and whether the subsequent breakdown was driven more by Western expansion or by Russia’s own strategic choices, given that NATO and the EU claim democratic governance, legal alignment, human rights protections, and shared security frameworks that Russia was not seen to share.

• Unipolar moment - period of dominance by a single global power, term coined by Charles Krauthammer in 1990
• Near abroad - former Soviet states seen as strategically important
• Legal alignment - compatibility of laws and institutions across member states
• Security framework - shared military and defence arrangements between states
• Human rights - claims about how individuals should be treated by authority, especially in personal freedoms, legal protection, and political participation.

---

10. Power, Strategy And The Question Of Exclusion

A longer pattern can be observed in which Britain first, and later the United States, acted in ways that had the effect of pushing Russia towards the margins of Europe and finally out. Thinkers such as Halford Mackinder framed Eurasia as the key to global power, with his “pivot of history” describing a buffer zone from the Baltic to the Black Sea separating sea and land powers.

Whether this amounts to a deliberate exclusion of Russia, or whether Russia’s own behaviour produced that outcome, remains a matter of interpretation, with one side pointing to NATO expansion, institutional gatekeeping, and geopolitical containment; and the other to centralised power, limited pluralism, and divergence from Western legal and political norms..

• Heartland - central Eurasian landmass seen as the key to global power
• Buffer zone - region separating rival powers

---

11. Putin And The European Idea

It is also worth recalling that Vladimir Putin, particularly early in his presidency, did signal an interest in closer integration with Europe, including discussions around NATO and economic alignment with the EU.

It is argued that NATO expansion and support for colour revolutions created security pressures that led Russia to draw a line at Georgia in 2008 and Ukraine in 2014.

• NATO - Western military alliance formed in 1949
• Colour revolutions - political movements seeking regime change in post-Soviet states
• Geopolitical containment - strategy to limit the influence of a rival power
• Pluralism - presence of multiple competing political interests. Though sometimes this is a bounded pluralism where the people are governed by the uniparty.

---

12. A Civilisation In Question

So historically, Russia has not been an outsider to Europe. It has been one of its major poles, sometimes aligned, sometimes in rivalry, but always part of the same broad civilisational space.

The real question now is not whether Russia is European. It is whether Western Europe and Russia still recognise each other as belonging to the same civilisation at all, where the boundary between West and East now lies and weather cooperation is possible on matters of great importance to the planet, such as climate stability, nuclear security, and global energy supply.

• Civilisational space - shared sphere of cultural and historical identity
• Climate stability - maintaining a balanced global climate system
• Nuclear security - control and prevention of nuclear weapons use or proliferation
• Energy supply - availability and flow of essential energy resources

---

13. Reorientation East

Against that backdrop, Russia has been pushed into a gradual rebalancing towards the East. Strategic alignment with China has deepened across energy, finance, and security, while frameworks such as BRICS and the Shanghai Cooperation Organisation have taken on greater importance.

At the same time, Russia’s role in West Asia has expanded, from Syria to Iran and the Gulf. The result is a geopolitical posture that looks increasingly Eurasian rather than European - less a natural destination than a strategic adjustment to shifting pressures and constraints.

• Eurasian - relating to the combined European and Asian landmass
• Geopolitics - interaction between geography and political power

Read More

FX SWAP LINES USED TO SUPPORT THE US FISCAL BUDGET

26 April 2026

1. FED INDEPENDENCE – FORM, FUNCTION AND REINTERPRETATION

What could be worse than rising interest rates on a government that already has 125% debt to GDP?

Central bank independence has long been treated as a cornerstone of modern economic policy. The Federal Reserve sets interest rates, controls liquidity, and operates at arm’s length from the political cycle. That is the theory. The reality has always been more nuanced.

Under Trump, the issue is not whether independence exists, but how it is defined. Interest rate policy remains formally within the domain of the Federal Reserve. No administration can openly instruct the Fed to cut or raise rates without risking a collapse in credibility. Yet independence has never meant isolation. It has meant a division of responsibilities, one that can be stretched without being formally broken.

The current moment is characterised by precisely that stretching. The focus is shifting away from interest rates alone and towards the broader toolkit of central banking, particularly in the domain of international finance. It is here, in the less visible mechanisms of liquidity provision, that the boundary between monetary policy and political strategy becomes most fluid.

Central bank independence - ability of a monetary authority to operate without direct political instruction

Monetary policy - management of interest rates and money supply

Credibility - market confidence in the consistency and integrity of policy.

Fx swap lines - a new strategic importance

Strong recommendation to see what Brent Johnson of the Dollar Milkshake Theory has to say on the subject of the US dollar swap lines and dollarisation.

2. WARSH, BESSENT AND THE POLITICS OF ALIGNMENT

The re-emergence of Kevin Warsh must be understood in this context. Warsh has historically been associated with a more hawkish stance, favouring tighter policy to control inflation. His positioning today, in a period defined by fiscal strain and geopolitical conflict, signals a shift in emphasis rather than a change in doctrine.

Alongside him stands Treasury Secretary Scott Bessent, operating brief for fiscal needs and financial strategy. The relationship between Warsh, Bessent, and the presidency reflects a form of coordination that does not need to be explicit to be effective ( we have talked many times in the past how no conspiracy theory is needed to explain cooperation between different groups in an elite). Interest rates may remain formally independent the domain of an independent Fed, but the broader conduct of policy, particularly in areas such as international liquidity, is increasingly aligned with the needs of the state. Then there is the immediate need to pay interest on a ballooning public debt.

This is not the abandonment of in-principle independence, but it is a reinterpretation. The Federal Reserve keeps control over its core instruments, but its actions are bounded within a wider strategic framework defined by fiscal pressure and geopolitical necessity.

Hawkish - favouring tighter monetary policy to control inflation

Policy coordination - alignment between monetary and fiscal authorities

Strategic framework - broader set of objectives guiding policy choices

---

3. SWAP LINES – FROM EMERGENCY TOOL TO SYSTEMIC LEVER

At the centre of this evolution at the moment lies the swap line. Formally, a swap line is a temporary exchange of currencies between central banks, to provide short term dollar liquidity. The Federal Reserve provides dollars to a foreign central bank, which in turn provides its own currency as collateral, with the agreement that the transaction will be reversed at a later date.

In technical terms, this is a short-term liquidity operation. But in systemic terms, it can be something much more significant.

The global financial system is built around the dollar. In periods of stress, demand for dollars rises sharply, particularly outside the United States. Without access to liquidity, institutions are forced to sell assets to obtain dollars. The most liquid assets available are US Treasuries. Thus, the very instrument that finances the US government becomes vulnerable at precisely the moment when stability is most needed.

Swap lines intervene at that point. By providing dollar liquidity, they prevent forced selling. They do not directly finance the federal budget, but by putting a brake on foreign central banks selling U.S treasuries, they protect the market in which that budget is financed - without this break bulk selling of treasuries would raise the yield and increase the interest that the US government has to pay.

4. BESSENT'S USE OF THE SWAP LINE IN THIS CASE

Bessent previously used his Treasury's Exchange Stabilisation Fund to bail out Argentinian govt bonds, but the ESF is for small-scale operations, and there is no new money creation - the Treasury cannot create money, only the banks can do this. 

For the UAE and probably other GCC States the amount required means a Fed Operation. The Fed would create the dollars and then loan them to the foreign central bank and receive foreign currency in return, expanding the Fed's balance sheet. The idea is that at a point in the future, the Swap transaction would be reversed at the same initial exchange rate that applied In the initial transfer, and I presume the Dollars are cancelled.

The thing to note about these Fed-operated swap lines is that the amount of money creation is in effect unlimited and furthermore does not appear In accounting terms as money creation, but of course if it is not reversed then that is what it is, albeit hidden.

We have to keep in mind that these transactions would normally be a matter of public record and so transparent to any inquirer.

Swap line - temporary exchange of currencies between central banks

Liquidity - availability of cash or funding in the system

Forced selling - liquidation driven by necessity rather than choice

Exchange Stabilisation Fund - Treasury pool used for currency interventions

Fiscal resources - government funds from taxes or borrowing

---

5. HORMUZ, THE GULF AND THE PRESSURE ON THE SYSTEM

The importance of this mechanism becomes clear in the context of the closure of the Strait of Hormuz. This narrow passage carries a substantial share of the world’s energy supply and other vital resources. Its disruption is not purely a regional issue - it is a worldwide economic shock that risks precipitating a global recession or worse.

For Gulf states such as the United Arab Emirates, Qarar and Saudi Arabia, the consequences are immediate. Export revenues decline, fiscal balances deteriorate, and pressure builds on their dollar-pegged currencies. Defending those pegs requires access to dollars, either through reserves or external support.

At the same time, these states are deeply integrated into the US financial system. Their reserves and sovereign wealth are heavily invested in dollar assets, including US Treasuries. Under stress, they face a choice: liquidate those assets to obtain dollars, or seek alternative sources of liquidity.

Here is where swap lines become strategically significant.

Currency peg - fixed exchange rate linking a currency to the dollar

Reserves - foreign currency assets held by central banks

Supply shock - disruption to the availability of key resources

---

6. TRANSPARENCY AND THE GEOGRAPHY OF POLICY

In Europe and Japan, the use of swap lines is transparent. Balance sheets expand, disclosures are made, and public scrutiny follows. The institutional framework imposes limits not only on what can be done, but on how it can be perceived.

The Gulf operates under a different political economy. Disclosure standards are narrower, and the management of reserves, sovereign wealth, and state strategy is more centralised. This does not render actions invisible, but it allows for a greater degree of discretion in timing and presentation.

This distinction matters. It means that the same instrument, a swap line, can function differently depending on the context. In transparent systems, it is a visible stabilisation tool. In more opaque systems, it can also serve as a mechanism of alignment, shaping behaviour without the same level of public accounting.

Transparency - openness and public disclosure of financial operations

Opacity - limited visibility of actions and intentions

Political economy - interaction between politics and economic policy

---

7. INDIRECT SUPPORT FOR THE FEDERAL BUDGET

The link to the federal budget is indirect but powerful.

The United States must refinance large volumes of debt - $9.2 trillion this fiscal year, approx a quarter of the US governments public debt. The sustainability of this process depends on domestic and foreign conditions, especially on the behaviour of foreign holders. If key holders, such as these Gulf states, were forced to sell Treasuries in order to obtain liquidity, prices would fall, yields would rise, and financing conditions would deteriorate.

Swap lines alter this dynamic. By providing dollar liquidity, they reduce the need for asset sales. They support currency pegs, stabilise financial systems, and maintain alignment with the dollar network. The result is a more stable Treasury market.

This is not direct financing. No funds flow from the Federal Reserve to the Treasury through this mechanism. Instead, the system is stabilised in a way that allows the Treasury to continue borrowing under manageable conditions.

In this sense, swap lines function as part of a broader architecture that sustains fiscal capacity without explicitly funding it.

Yields - returns demanded by investors to hold bonds. Prices and yields are inversely related.

Financing conditions - environment in which borrowing takes place

Fiscal capacity - ability of a government to fund its spending

---

8. CONCLUSION – INDEPENDENCE IN A SYSTEM UNDER STRESS

The current moment reveals the limits of simple categories. Central bank independence remains intact in form, but it is evolving in function. The Federal Reserve continues to control interest rates, but its role within the global system is increasingly shaped by geopolitical and fiscal realities.

Swap lines illustrate this evolution. They are presented as temporary, technical tools, yet they operate as structural supports within a system that must absorb both economic shocks and political strain. Their effect on the federal budget is indirect, but it is real. By stabilising the environment in which borrowing occurs, they help sustain the fiscal system without formally becoming part of it.

What emerges is not a breach of independence, but a transformation. Independence is no longer defined solely by distance from politics. It is defined by the ability to operate within a system where monetary policy, fiscal necessity, and geopolitical strategy are increasingly intertwined.

Structural support - underlying mechanism that sustains a system over time

Geopolitical strategy - use of economic and political tools to achieve international objectives

Interdependence - mutual reliance between different parts of a system

Read More

THE CHIANG MAI MONEY WALK: HOW A CITY WORKED WITHOUT MODERN MONEY

24 April 2026

Thank you chatGPT, we won't put you on scout duty don't worry

1. 01 May 2026 – THE CHIANG MAI MONEY WALK: HOW A CITY WORKED WITHOUT MODERN MONEY

A simple idea, but a different lens.

We walk the Old City early, before the heat builds, and we look at it not as a collection of temples and museums but as a functioning financial system. Where wealth was stored, how it was extracted, how it moved, and how ordinary people lived within it.

This is not a tour of coins. It is a tour of how money actually worked.

---

OVERVIEW

A short early morning walk through Chiang Mai that reveals how a pre modern economy really functioned. Temples as banks, kings as tax authorities, trade routes as lifelines. Start early. Finish before the heat. See the system, not just the sights.

---

2. PRACTICAL PLAN – THURSDAY 07 MAY 2026

We meet at 07:30 and finish around 11:30, covering no more than two to two and a half kilometres on flat, mostly shaded streets. The pace is deliberately slow. This is a reflective walk rather than an exercise in ticking off sights.

The route follows a logical sequence. We begin with wealth, move to power, pause to cool down, then step into structured explanation, and finally, if energy allows, end with everyday life. The stops are Wat Phra Singh, then Wat Chedi Luang, followed by a coffee break in the Ratchadamnoen area, then the Chiang Mai City Arts & Cultural Centre, and optionally the Lanna Folklife Museum just across the road.

---

3. STOP ONE – WAT PHRA SINGH: TEMPLES AS BANKS

We begin early, when the air is still cool and the courtyards are quiet. At Wat Phra Singh the first thing to understand is that this is not only a religious site. It is also a financial institution in a pre modern sense.

Wealth accumulated here in the form of gold, land, and offerings. Donations acted as a steady inflow of capital, and monasteries redistributed food and resources, particularly in times of stress. In effect, temples functioned as informal banks combined with welfare systems. They absorbed surplus from society and reallocated it in ways that stabilised the community.

The first insight is simple but important. Money is not just coins. It is stored trust embedded in institutions.

Glossary

• Lanna - Historic northern Thai kingdom centred on Chiang Mai
• Capital accumulation - Build up of wealth or assets over time
• Redistribution - Reallocation of resources through institutions
• Informal banking - Financial roles performed outside formal banks

---

4. STOP TWO – WAT CHEDI LUANG: POWER AND TAX

A short shaded walk brings us to Wat Chedi Luang, where the scale immediately changes. What we see here is not local accumulation but the visible imprint of state power.

Structures of this size require organised labour, access to materials, and above all the authority to mobilise both. In economic terms, they are the result of taxation and tribute systems. Surplus was extracted from the population and concentrated through political and religious institutions.

Temples and rulers operated together. One provided legitimacy, the other enforcement. The system worked because belief and power reinforced each other.

The second insight follows naturally. Money systems do not stand alone. They depend on underlying power structures.

Glossary

• Taxation - Compulsory transfer of resources to authority
• Tribute - Payment made by subjects or weaker states
• Surplus - Production beyond basic survival needs
• Political authority - Power to enforce rules and extract resources

---

5. STOP THREE – COFFEE: A MODERN CONTRAST

We pause for coffee and, just as importantly, for cooling. Sitting in an air conditioned café, it becomes clear how different the modern system feels. Payments are immediate, whether by cash, card, or QR code. Prices are visible and standardised. Private enterprise dominates.

And yet, beneath the surface, the function is the same. Goods are exchanged, value is transferred, and systems of trust underpin it all. The form has changed, but the logic has not.

The third insight is that economic systems evolve in appearance, but their core mechanisms remain remarkably consistent.

Glossary

• Consumption - Use of goods and services
• Liquidity - Ease of using money for transactions
• Market pricing - Prices determined by supply and demand

---

6. STOP FOUR – CITY ARTS & CULTURAL CENTRE: THE SYSTEM EXPLAINED

The Chiang Mai City Arts & Cultural Centre provides the structured explanation that ties everything together. It is also a welcome refuge from the heat.

Inside, the wider context becomes visible. Chiang Mai emerges not as an isolated city but as a node within a regional network linking China, Burma, and Siam. Goods such as teak, rice, and textiles moved along these routes, and with them came flows of value.

Currency developed alongside trade, not before it. In many cases, barter systems persisted, with money introduced gradually as exchange became more complex.

The fourth insight is that trade creates money. The flow of goods comes first, and monetary systems evolve to support it.

Glossary

• Barter - Exchange of goods without money
• Trade routes - Paths used for commercial exchange
• Economic network - Interconnected system of trade and production
• Monetisation - Introduction of money into an economy

---

7. OPTIONAL STOP – LANNA FOLKLIFE MUSEUM: THE REAL ECONOMY

If energy allows, we cross to the Lanna Folklife Museum. The scale is smaller, but the perspective is grounded.

Here we see crafts, household production, and the everyday exchange of goods. This is the real economy in its most direct form. Not kings and not temples, but people producing and trading.

The final insight is perhaps the most important. Every system, no matter how elaborate, rests on ordinary human activity.

Glossary

• Real economy - Production of goods and services in daily life
• Household production - Goods produced within families
• Artisanal trade - Small scale skilled production and exchange

---

8. HEAT STRATEGY – THE REAL CONSTRAINT

Chiang Mai’s heat is not a minor inconvenience. It is the dominant constraint shaping the day. Starting early is essential, finishing before midday is sensible, and constant hydration is necessary. Light clothing helps, but timing matters more.

By late morning the heat index can move beyond comfort into something more limiting. The structure of the walk reflects this reality.

---

9. WHAT THIS WALK REALLY SHOWS

Seen properly, this is not a sequence of attractions but a coherent system. Temples store wealth, the state extracts surplus, trade moves value, and households produce the underlying goods and services.

Coins and currency are secondary. They are tools within a larger structure.

Understanding that structure is the purpose of the walk.

---

10. INVITATION

If you are in Chiang Mai and curious, join us.

Thursday 07 May 2026.
07:30 start.
Old City.

A short walk, but a different way of seeing.

---

11. REFERENCES

1. Chiang Mai City Arts & Cultural Centre – exhibits on Lanna trade and economy
2. Chiang Mai National Museum – regional economic history context
3. Wyatt, D. K. – Thailand: A Short History
4. Bank of Thailand Museum materials on Thai monetary history

Read More

WHAT COULD A "NEW WORLD ORDER" LOOK LIKE

24 April 2026

We hear all the time that NATO’s advance into Ukraine is seen as an existential threat by Russia. But Russia has long been viewed by Europe as an existential threat, going back to the time of Peter the Great, and as an existential threat to America since 1945. Russia has been the West’s historic enemy for a very long time.

Forget Vietnam, Iraq, and Afghanistan. America - the West - is now being defeated by Russia. If this is true, it is extremely serious. It would represent a tremendous psychological blow on top of the military economic and social significance, and would mark the end of Western dominance. Now add the prospect of defeat in Iran, along with the rise of China.

Trump, the “President of Peace” - really? He looks more like The President of Defeat. Sorry to say that as I do not want the West to lose its place, but why did he not do what he said he would do on his election platform?

By stepping up attacks on the BRICS, he has burned the bridges of a possible multipolar deal. All that America can do now is retreat to its own sphere of influence, its “zone of primacy”, and attempt - unsuccessfully - to manage global energy flows.

If you look at a map of the world, there is Eurasia on one side and the Americas on the other. Eurasia has its Mackinder line in Eastern Europe, and America appears to be building a similar line along the first island chain. Where do Japan, South Korea, the Philippines, and Taiwan sit in all this? Which side of the line are they on?

Then consider the consequences in Europe. Europe is pulling away from America - or the reverse, America retreating to its sphere of influence - and is building its own defence industry. This is funded from the public purse, incidentally, unlike its former car industry.

So we see the UK and Germany leading this rearmament. At Airbus Germany dominates the French in that joint partnership. Today it is Germany and the UK, and they sit on opposite sides of the EU divide. It raises a question: what might a rearmed Germany be thinking about once the fighting in Ukraine formally ends and if America steps back?

America Retreating to its Sphere of Influence

When people say America may “retreat to its sphere of influence”, they usually mean its scaling back commitments in Eurasia, reducing military involvement in distant conflicts and prioritising the Americas and nearby regions. In other words, moving from global management to regional dominance.

This would be a major strategic shift akin to Rome retreating behind the Rhine. It implies accepting limits to power rather than trying to shape the entire world order.

If America had any choice, one perspective says the US is overstretched, retrenchment is inevitable and a smaller sphere is more sustainable. Another says the US still has unmatched global reach and withdrawal would create power vacuums that its rivals China and Russia would expand into.

So from a geopolitical Western perspective, a new world order may not mean “retreat”, it may not be a clean shift. It could be uneven, partial, contested and resisted.

Glossary

Existential threat - a danger perceived to threaten the very survival of a state or system

Multipolar - a global system with several centres of power rather than one dominant hegemon

American Sphere of Influence - North America; Central America, South America

The Caribbean. Within this space, the US has exercised influence through:

Military presence and interventions

Economic dominance via trade and finance

Political leverage over governments

This does not mean total control. But it does mean the US sets many of the rules.

Post-1945 System

After 1945, the US built a much wider, global sphere through alliances and institutions. This includes: Western Europe via NATO, East Asia via alliances with Japan, South Korea, and others.

Global financial influence via the US dollar system.

This is not a classic sphere in the geographic sense. It is more a network of:

Military alliances

Trade systems

Financial dominance

In this extended form, some call this a hegemonic system, or an Empire, rather than a sphere.

Hegemony - dominance by one state over others in a system

Alliance system - a network of formal defence partnerships

BRICS - an economic bloc of emerging powers: Brazil, Russia, India, China, South Africa (now expanded)

Monroe Doctrine - a US policy opposing European intervention in the Americas

Western Hemisphere - the Americas as a geopolitical region

Mackinder line - derived from Halford Mackinder’s theory dividing land power (Eurasia) from maritime power

Sphere of influence - a region where a state exerts dominant political, economic, or military control.

Primacy - being the leading or most powerful actor in a system

Retreat (geopolitical) - a reduction in global commitments and reach

Regional dominance - focusing power within a defined geographic area

References

1. Halford Mackinder – Democratic Ideals and Reality (1919)

2. NATO official strategic concepts

3. BRICS expansion reports (2023–2025)

4. Council on Foreign Relations – Global power shifts analysis

https://www.cfr.org

5. Chatham House – Europe defence and autonomy reports

https://www.chathamhouse.org

Read More

EUROPE’S BUILDING A WAR ECONOMY

23 April 2026

OVERVIEW

Europe seems to be finally transforming its defence infrastructure. What began as fragmented national industries is evolving into a networked war economy. This can be made sense of from three recent reports: Eldridge Colby’s critique of European protectionism, the ELSA initiative for joint missile production, and a distributed drone supply chain where sub-assemblies are built in Europe and shipped to Ukraine for final assembly.

This new system largely bypasses the European Union, operates through coalitions and joint ventures rather than treaties, and already has operational consequences, including drone incursions by Ukraine into NATO airspace.

The result is a paradox. Europe is becoming more integrated militarily, but not through its formal institutions. Integration is happening, rather, by circumventing official insitutions and channels, creating both strategic strength but also escalating the risk of more confrontation with Russia.

 From peace to what looks like permanent war

1. The Strategic Shift – Europe Moves To A War Economy Logic

Europe is undergoing a profound shift from a peacetime, rules-based industrial model, to something closer to the logic of a war economy.

This shift has not been formally or officially declared. It is emerging through necessity, driven by the Ukraine war and Europe's fear of Russian expansionism, and the recognition that existing systems are unable to sustain the current high-intensity conflict much longer.

Three strands define this transition. First, the problems. Colby’s critique of the fragmentation of the European industrial base. Second, a prototype solution. The ELSA-style attempt at industrial integration. And third, the already functioning drone supply chain centred on Ukraine.

Taken together, they show a clear direction of travel. Europe is moving from fragmented sovereignty towards networked co-production.

War economy - An economic system organised primarily for sustained military production and conflict readiness.
Fragmentation - A condition where multiple national systems operate separately rather than as a unified whole.

---

2. Colby – The Critique Of European Protectionism

Elbridge Colby, US Under Secretary of Defense for Policy, provides the intellectual starting point. His argument is direct. Europe cannot sustain a modern industrial war because its defence base is nationally siloed, politically protected, and structurally inefficient. 

When he calls for the removal of protectionist trade barriers, the meaning is operational rather than ideological. He is arguing for the removal of internal frictions that prevent scale, speed, and integration across borders.

In practical terms, this means cross-border production, shared procurement, and the creation of a unified industrial base capable of producing munitions at volume.

The implication is stark though many would say rather obvious. Europe must behave as a single industrial system or it will remain strategically weak, populated by "bonsai armies".

Colby defence framework - A strategic doctrine associated with Eldridge Colby that focuses on great power competition, especially with China, and emphasises a “denial strategy”, rather than confrontation, supported by large-scale industrial capacity and greater burden-sharing by allies, particularly in Europe. It argues that wars are ultimately decided by production, integration, and the ability of allied systems to operate as a single industrial base. 

Protectionism - Policies that favour domestic industries by restricting foreign competition.
Procurement - Government purchasing of military equipment and services.

---

3. ELSA – The First Concrete Response

The European Long-Range Strike Approach represents an early attempt to respond to this critique in concrete terms.

Led by France and Germany, and involving partners such as United Kingdom and Ukraine, the initiative focuses on developing long-range strike capabilities and integrating missile and drone production across borders.

Its most important feature is institutional rather than technical. It sits outside the formal structures of the European Union. This allows decisions to be taken and relatively quickly, it enables the participation of non-EU states, and it reduces regulatory "red tape".

ELSA is therefore best understood as a prototype. It is not simply a weapons programme but an emerging model for how European defence industry might be organised in the future. Keeping in mind that private sector supply chain integration is well advanced in Europe - examples abound, perhaps the best being Airbus.

Strategic autonomy - The ability to act independently without reliance on external powers.
Mini-lateral - Cooperation between a small number of states outside large institutions.

---

4. The Drone Ecosystem - Practice Ahead Of Policy

The most advanced form of integration is already operational. This is the distributed drone supply chain centred on Ukraine.

Components are sourced across Europe. Financing and technical support are provided by European states and networks. Final assembly takes place within Ukraine, where systems are adapted rapidly to battlefield conditions.

Recent incidents in Finland and the Baltic states confirm that Ukrainian drones and debris from their operations have entered NATO airspace. This is no longer theoretical. It is documented: drones are launched from Ukraine, they pass into NATO airspace and follow the Polish, Baltic and Finnish borders before entering Russia and striking deep into pre 2014 territory.

At the same time, an important distinction must be maintained. While there is confirmation of Ukrainian drone incursions into NATO airspace, there is no public evidence of deliberate routing through NATO airspace with the consent of NATO governments.

Russia interprets the supply chain itself as evidence of participation. European governments reject that interpretation and maintain a legal and political distinction between support and direct involvement.

The result is a grey zone. Industrial integration is deep and real, but operational responsibility remains contested.

Distributed production - Manufacturing spread across multiple locations rather than a single central system.
Co-belligerency - Being effectively engaged in a conflict alongside another state.

---

5. The Emerging System - A Europe Outside The EU

When these strands are considered together, a deeper structural change becomes visible. Europe is not reforming its existing institutions in order to meet wartime demands. Instead, it is building a parallel system alongside them.

This emerging system is based on coalitions rather than treaties. It is functionally integrated but politically deniable. It aligns closely with NATO while remaining only loosely connected to EU structures.

The role of the United Kingdom is decisive. Despite being outside the EU, it is central to this evolving system. That alone demonstrates that the future European defence architecture will not be defined by EU membership.

The implication is clear. The real European defence system is taking shape beyond the formal boundaries of the EU. 

Parallel system - An alternative structure operating alongside existing institutions.
Industrial integration - The linking of production systems across countries into a unified network.

---

6. Risks, Tensions And Contradictions

This transition brings both advantages and risks. Greater integration allows faster production, larger unified market and expected reduction in unit costs, and thus improved military effectiveness. At the same time, it introduces political and strategic tensions.

EU cohesion may be weakened as key functions migrate outside its structures to a new Europe-centred military command. Lines of responsibility become blurred, particularly in areas such as drone operations and supply chains. The risk of escalation with Russia increases as European direct involvement deepens and inevitably becomes more blatant.

At the centre of this lies a fundamental contradiction. Europe seeks efficiency through integration, yet nation states remain reluctant to relinquish sovereignty. This tension is unresolved and will shape future developments.

Escalation - An increase in the intensity or scope of conflict.
Sovereignty - A state’s authority to govern itself without external control.

---

7. Bottom Line

Europe is moving towards a networked war machine economy.

Colby identifies the structural weaknesses. ELSA represents an early institutional response. The drone ecosystem shows that integration is already happening in practice.

The key insight is that this transformation is not being achieved through formal self-reform. It is being achieved through circumvention of an existing fossilised system.

Networked system - A structure in which multiple independent actors are connected into a coordinated whole.

---

8. References

Section 2 – Colby

• Elbridge Colby speech
  https://www.war.gov/News/Speeches/Speech/Article/4461862/remarks-by-under-secretary-of-war-for-policy-elbridge-colby-at-the-ukraine-defe/
• Colby's Strategy http://www.livingintheair.org/2026/04/will-russia-deal-with-ukraines-european.html

Section 3 – ELSA And European Defence Integration

• German Federal Ministry of Defence
  https://www.bmvg.de
• International Institute for Strategic Studies
  https://www.iiss.org

Section 4 – Drone Incidents And Supply Chains

• Reuters
  https://www.reuters.com
• Royal United Services Institute
  https://rusi.org
• Center for Strategic and International Studies
  https://www.csis.org

Section 5 – Structural Analysis

• NATO
  https://www.nato.int
• European Commission
  https://ec.europa.eu

Read More