Making Sense of the Shifting Geopolitical Sands

Published on
August 9th, 2018
27 minutes

Making Sense of the Shifting Geopolitical Sands

Presentations ·
Featuring Raoul Pal

Published on: August 9th, 2018 • Duration: 27 minutes

In this special presentation, Raoul explains how structural shifts in geopolitics are quietly transforming the global investment landscape and skewing the risk-reward equation.


  • DS
    Denise S.
    12 September 2018 @ 23:47
  • JJ
    Josh J.
    28 August 2018 @ 22:20
    Hey Raoul - your audience hears BS fairy tales like these on Bloomberg, CNBC, etc. all the time. What’s the differentiator here ? Is it that this is on demand ? So is YouTube. This is a good YouTube video, but not RV material (assuming the goal is still to be leading in inancial media).
    • JJ
      Josh J.
      28 August 2018 @ 22:21
      Financial media. (Sorry for the typo)
  • LD
    Lance D.
    15 August 2018 @ 17:16
    This topic is making me think BUT i am not very good at thinking and after listening to this and then try to look at what the future looks like all i keep coming up with is a world like a the 'mad max films' ..
  • SB
    Stephen B.
    10 August 2018 @ 00:23
    I have the greatest respect for Raoul and his extraordinary financial acumen (in fact, I signed up for Real Vision and Macro Insider’s primarily to get more of Raoul!!) but I found this geopolitical analysis off-target. The suggestion that we are witnessing a breakdown of a rules- based society and a move to tribalism (in my view) misrepresents what is occurring. Yes, for sure, we are witnessing a global point of inflection but a positive one i.e. the abandoning of an artificial, unwanted, globalist “top down” agenda, with it's unsustainable trade imbalances; with a far healthier and more sustainable “bottom up” approach. Yes, the nation state might re-emerge as the primary building block of the global world order once again but is not a network of voluntary, bi-lateral and regional relationships preferable to what we have now? Yes, in this future world NATO may not be relevant or even exist but isn’t that a good thing? And yes, it might mean that US consumers will not have the same access to Chinese made goods at Walmart but if that means that they and their neighbors have a job, isn’t that a good thing too? To go further – I suspect that Trump and his team believe that the “exorbitant privilege” has become the “exorbitant burden” and what we are witnessing are the first steps towards an eventual monetary re-alignment. Transitioning through a global point of inflection will create winners and losers – surely our role as investors is to figure out which countries/currencies/businesses will benefit from this realignment?
    • DR
      Dick R.
      10 August 2018 @ 03:01
      Tribalism leads to conflict, not Trumpian bloviation but real war. And then there are no winners. In answer to your question, no, a network of individual alliances is not preferable to what we have now. Read up on WWI.
    • RP
      Raoul P. | Founder
      10 August 2018 @ 05:59
      I agree. I have no view on the merits or otherwise of what is happening. It is just happening, that’s all and our job is to figure out opportunities. I also don’t fear a new system, but fear the ramifications of that change period until a newer system arrives, if it does.
    • SB
      Stephen B.
      10 August 2018 @ 12:16
      Raoul, I agree - the $64,000 question is whether this reset can be achieved without undue disruption. We shall be watching closely. One other thought - surely a key aspect of the reset has to be addressing trade imbalances? For the US, that would require the creation of a new $0.5T market in goods and services, most obviously through a resurgence in manufacturing. Short of a long term devaluation of the US$, i am watching closely to see whether the administration undertakes any measures to stimulate new manufacturing. Maybe the infrastructure program will be one pillar of such an initiative, but i suspect we will ultimately see moves to grow, attract or repatriate high tech manufacturing.
    • EF
      Eric F.
      10 August 2018 @ 23:22
      The answer to your $64k question is a resounding no. Undue disruption? We're already beyond that and its just starting.
    • DR
      Dick R.
      11 August 2018 @ 03:12
      If you want a quick refresher on WWI and some risk factors in alliances, readers can turn to.. ... and if you prefer videos, there's...
  • WM
    Will M.
    10 August 2018 @ 18:24
    I am 100% behind Raoul's views. I firmly believe we are at a critical juncture in history and the assumption that something will come along to make us all get along and work toward a better poppycock! Humans haven't changed their thought patterns in several thousand years. However, the current system has clearly run its course and fragmentation and polarization have set in. So many nations are turning towards nationalism and rejecting the bureaucratic elites and globalization. Debt, pensions, currency chaos, and collapsing states (most of the middle east, Venezuela, Argentina (again), Turkey etc. etc). China is most certainly the next dominant power, its just needs to survive the coming crash and hold together to rise to total dominance. The Chinese will aim to dominate trade and their massive military expansion and building of a blue water navy will supplement their power. The West has incredible economic problems approaching (pension system breakdown, social welfare collapse). This will drive and is already driving polarization of political opinion. Some in the USA (and elsewhere) actually believe the Bernie Sanders approach to economies is the future. Obviously they were "too stoned" in the sixties and seventies to watch socialism destroy the future. (as Thatcher said the problem with socialism is....pretty soon they run out of other people's money) I with Raoul on this stuff. His point on tribalism and technology was spot on, the instantaneous on-line culture is actually pretty dangerous...... what a waste of technology and potential. I do agree with one comment Dick R made below...... the populace in the US is rapidly awakening to the dramatic economic inequality that has resulted in the last 20 years. These folks are GOING TO VOTE and they are going to vote for whomever tells them they will solve their problems. If problems are not solved they will ultimately resort to violence. Governments will likely start to aggressively pursue taxes and revenue from those who have money, to subsidize those who don't. We are clearly on the brink of multiple major societal and economic problems. Too many people don't seem to be able to wake up and smell the coffee. I am on RVT to try to protect a lifetime of saving and moderate wealth building......... The strong dollar thesis is so very very dangerous in the short to medium term. Great discussion.
  • DR
    Dick R.
    10 August 2018 @ 03:42
    Europe commits suicide at roughly 40-year intervals as far back as the eye can see. Only adoption of all those post-WWII international organizations we sneer at snapped the streak. We are lucky to have lived in a time of relative international peace, and I did say relative. . . . . Unfortunately we have a president who has a visceral hatred of global agreements, largely because he can't be cast as the hero if he has to share credit with other leaders. Hence his crude sabotage of treaties and blanket attacks on all of our friends. And every time Trump gets up from the table, China takes our chair. . . . . As for China's agenda, I think Raoul is too tentative there. At the moment, China seems to focus on regional conflict the most, as in the shoving match in the South China Sea. But President-for-Life Xi has the luxury of time to implement his 25-year plan, and it seems apparent that he wishes to displace the U.S. as the U.S. once displaced Britain. China has been the most important country in the world in 22 of the last 24 centuries, and there is no reason to doubt their long term ambitions.
    • CS
      C S.
      10 August 2018 @ 04:53
      I think the peace you describe stems more from self sabotage of communist/socialist states post WW2, ie less competition for commerce. It was all US-Europe. The Chinese have always been primarily concerned with internal stability. And defense of landborders against incursions by Turks. Other countries fall in line by sheer weight of population/commercial gravity. The world is too small for dominance by a single hegemonic state now. I believe something new needs to be hammered out by pragmatic leaders.
    • CS
      C S.
      10 August 2018 @ 04:56
      I see grammatical structure (paragraphs and such) are compiled into a single 'blob' by the machinations of the comments section.
    • SB
      Stephen B.
      10 August 2018 @ 11:59
      I don't believe there is any evidence that China wants to be a global superpower, as it is far too inward looking. The communist party's greatest priority is survival and, specifically, ensuring that what happened to the former Soviet Union doesn't happen to them. That requires growing living standards at home; some independence from the US$ (as they don't want to go through what Russia was subject to and/or risk being the epicenter of an Asia style crisis) and access to resources, with secure regional supply lines. That suggests, at best, some sort of regional power. Whether that can be achieved without treading on US toes remains to be seen, however. As for Trump and the international organizations, i would comment:. Yes (i) they all made sense in 1945 but they progressively made less sense from the time Nixon took us off the gold standard; (ii) the petrodollar was only ever going to be a short-term solution and it's time is rapidly coming to an end; (iii) we now live in an up-side down sort of world where the US runs a monumentally large current account deficit to finance organizations like NATO, the purpose of which is protect wealthy countries like Germany, who in turn then proceed to commit their energy future to Russia??? If that was fiction you would dismiss it as absurd and yet that is where we are. You may not like Trump but the reality is that he has strong approvals as the populace in "flyover country" know and understand that the current system no longer works for them.
    • DR
      Dick R.
      10 August 2018 @ 16:59
      The evidence of China's ambition can be found in the public statements of President Xi. One example is his mobilization for Chinese domination of AI. Another is his program to get the Third World financially indebted to China, and thus vulnerable to political blackmail. . . . China as merely a regional power is old thinking. Just because they haven't doesn't mean they won't. If you're not seeing China as a potential global player, you're not paying attention. . . . . As for the Pax Americana, yes, it costs, but it also made sure the world listened to us. Dismantling it means an accompanying loss of power. NATO and the others are cheap at the price. Continuing along the isolationist road will have us taking stenography from others (if we're not already). I'd rather we pay the extra. . . . .The reason the system doesn't work for "flyover country" is not globalization but the unbridled greed of the executive suite. Adjusted for inflation, since 1978, executive compensation is up 370%. Adjusted for inflation, the rank and file hasn't had a raise in 40 years. There's your pitchfork battalion for you.
  • MW
    Marco W.
    10 August 2018 @ 16:47
    It seems the subsequent events to physical tribalization will be network tribalization (for example national firewall) and knowledge tribalization (for example restriction of foreigners learning new knowledge). Therefore with the peak globalization, there will be peak internet freedom, peak tech market cap, peak technology evolution speed, end of Moore's Law ...
  • RM
    R M.
    10 August 2018 @ 15:47
    Important topic, excellent piece. Stongly disagree on one point, which is being indifferent to this trend. For all of us, the truly big risks we all face, the existential risks to survival, reqire global cooperation to solve. For those doubting this statement, please see the excellent papers at Oxfords Future of Hummanity Institute which researches on existential risks to humanity. Also read Yuval Noah Haran breathtakingly big picture analysis of humanity, and then try and argue we can be indiffernet to moving to a world with less global cooperation. The simple and unfortunate truth is that human ability with technology vastly outpace our ability to govern overselves. Just look at present day America for a quick example. Our politics not even begining to tackle an understanding of the benefits and issues with AI, which will have a dramatic impact on just about everything, economics, jobs, politics, trade, and wealth. Instead we are hiding our heads in the sand of a trade war on steel. Not that steel or coal is unimportant, but really, seriously, our focus is vastly distorted from the big problems we face, and our institutions of local and global governace are woefully inadequate to deal with them. Yes, interesting times indeed, but much greater global risk. Somehow, all the worlds cultures need a framework to cooperate on key issues. Traditionally shared beliefs in religion and trade have played a role, but clearly inadequate today (see Haran). In the end science fiction may be right: Mankind will need to face a truly existential risk head on before coming to grips with global cooperation, and either succeed or fail in the process. Anyway, applaud the topic on RV, going to impact markets for sure.
  • CS
    C S.
    9 August 2018 @ 07:45
    I dont think things will fragment (geopolitically) as much as you do Raoul. I see a considerably multipolar world. China, India, Russia (small population of nuclear), EU, North America. The South American states and sub saharan states will be forced to unify and I think 'islamic countries' will unify using their religion as a catalyst for grouping (else they will remain a disaparate group of buffeted single-states), despite sectarian issues. A turkish friend of mine suggested an independent state around Mecca that performs a similar role to the Vatican re formalising religious dogma, and hopefully a little separation of Islam and state. A more pragmatic world. A big change from what currently exists, for sure. I'm not sure how things turn for Australia. Current leadership doesnt seem particularly visionary. Essentially an Asian country longer term, due to location. A struggle for autonomy against either Indonesian else Chinese Hegemony. Its isolated and has limited manufacturing and can easily be cut off from Asia by Chinese soft and hard power. Still, I think Paul Keating has the right idea for its way forward. (Im Australian hence my interest). I see Imran is Pakistans next MP.. You've a lot to say for someone formerly loathe to give consideration to geopolitical issues. ;)
    • AM
      Alonso M.
      9 August 2018 @ 19:05
      Shiites and Sunnis will not be unifying into one group under any circumstance. Going from the US superpower world to an economic nationalism model will economically strengthen middle eastern nations that have suffered as a result of the current superpower world (e.g. Iran) and will economically weaken middle eastern nations that have benefited from the current superpower world (e.g. Saudi Arabia).
    • CS
      C S.
      10 August 2018 @ 02:57
      The nidus for the longest lived caliphate was ethnically Turk, the Ottomans. A significant portion of the Iranian population is Turkic in origin and a significant minority in Turkey are Shiite.Not to mention the Turkic populations through central Asia. Yes, perhaps the Arabs will play second fiddle again, but I think everybody there knows, in a world full of hegemons, they will have to shelve that sectarianism somehow in order not to play third class citizen in the face of that circumstance. Im not saying their political objective would primarily be conversion of the planet to Islam, but I dont see any other unifiying issue for the countries that consider themselves 'islamic'.
  • ag
    anthony g.
    9 August 2018 @ 14:27
    Well said. RV might want to talk with GPF, which is a geo political group ? Perhaps do an interview with its founder George Friedman ?