“I don’t think digital currencies will be in competition. I think they’ll live alongside each other in a virtual wallet. I think each of these currencies- whether Bitcoin, Ethereum, digital yuan or digital dollar- they’ll all have different purposes.”
Michael Greenwald started his career investigating how financial institutions were used to facilitate the 9/11 terrorist attacks. Greenwald discusses the US Dollar as a key component in the United States national security efforts while preaching the importance of smart and targeted sanctions using the USD. China’s overtaking the USD as the global reserve currency has been incorrectly predicted for years- the biggest threat to USD’s primacy is complacency from US leaders, Greenwald warns. He sees the creation of a digital US Dollar as an important innovation in order to maintain the America’s leading role in the global financial order. Greenwald does not see the rise of digital currencies like Bitcoin and Ethereum as threats to fiat currency, rather he thinks they will all find their different purposes and will coexist alongside other currencies in a digital wallet.
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SPEAKER
Michael Greenwald
Director
Tiedemann Advisors
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
TIMESTAMPS
0:00 - Intro
3:22 - Beginning career investigating 9/11 attacks
6:01 - Importance of the dollar as the global reserve currency
11:46 - Future of digital currencies
15:02 - China’s banning of Bitcoin
17:10 - Cryptocurrency’s use in illicit finance
20:11 - China’s digital yuan project and a potential digital dollar
25:21 - Intersection of the art market, digital currencies and NFTs
28:07 - Impact of digital central bank digital currencies
30:17 - Post-pandemic investigations and holding China accountable
32:08 - Pandemic’s long-term impact on global trade
34:34 - China, Taiwan and US policy
37:09 - Growing Middle East-China relationship
39:43 - Europe-China relationship
EPISODE TRANSCRIPT
John Darcie: (00:07)
Hello everyone. And welcome back to salt talks. My name is John Darcie. I'm the managing director of salt, which is a global thought leadership forum and networking platform at the intersection of finance technology and public policy. Salt talks are a digital interview series that we started in 2020 with leading investors, creators and thinkers. In our goal on these salt talks to the same as our goal at our salt conferences, which we're excited to resume here in September of 2021 in our home city of New York. But that's to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And we're very excited today to welcome Michael Greenwald onto salt talks. Uh, if you've tuned into our salt Bitcoin review, we had him on a few weeks ago to look forward to going further into depth on different topics related to his expertise around geopolitics, the dollar, as well as things that are going on in the art market, uh, and just general global economics.
John Darcie: (01:04)
But, uh, Michael today is a director at Tiedemann advisors, which is a multifamily office with over 22 billion in assets, under management. And he's also the director for digital asset education at Tiedemann and digital assets have been, uh, uh, a continued focus for him as he's grown out his role at Tiedemann. Um, and in general, in the marketplace prior to joining Tetum and Michael serve in the U S treasury department in two presidential administrations and under three treasury secretaries most recently, uh, within treasury, he was the first us treasury ad Tasha to Qatar and Kuwait acting as the principal liaison to the banking sector in those countries, they previously held counter-terrorism and intelligence roles, uh, requiring travel to 20 different countries as part of his, uh, job there at treasury. Uh, he served on the U S treasury team that crafted sanctions against Russia, against ISIS, as well as against Al-Qaida at Tetum.
John Darcie: (01:58)
And he also leads their business development efforts in the middle east. So he's a very much an expert on everything in the Gulf, which we'll get to as well during this conversation. Michael, as I mentioned as an expert on the global economy on digital currencies and on the contemporary art market, which we'll also touch on later, and he's a deputy director at the trilateral commission and a fellow at the Atlantic council and Harvard Kennedy schools, bell Belfer center for science and international affairs, uh, where he published over has published over 50 articles already, which I would highly recommend you go over to the Belfer center website and read a lot of his writings there in 2020, he published a report in the Atlantic council called the future of the U S dollar weaponizing, the U S financial system he's been featured in Barron's the financial times and on CNBC and has lectured at Harvard Stanford and the council on foreign relations.
John Darcie: (02:48)
His philanthropic work has included serving as chair of the U S Holocaust Memorial museum and next generation board. And he holds a JD and a master's from Boston university and a bachelor's degree in history from George Washington university. Today. He lives in beautiful Palm beach, Florida, Michael, welcome to salt talks. We're looking forward to diving into it with you, but before we get into a lot of these topics that you have such deep expertise on, we'd love to hear in your words more about your experience there at treasury and just the arc of your educational career and professional career that led you to [inaudible]. Sure.
Michael Greenwald: (03:22)
Thank you, John. And thank you so much SALT Talks for having me. It's great to be here. Uh, I started my career really interested in following the money after nine 11, understanding, uh, how Al Qaeda, uh, his fundraising efforts were working post nine 11. John looking at the nine 11 commission report, looking at why $500,000 with being moved into the United States through us banks. What happened after nine 11? How our authorities got stronger, how we use the dollar, not just with terrorist groups like Al-Qaeda, but then to Iran, to Russia, and now, uh, towards China and now looking at where we are with digital currencies. So I had the awesome responsibility of working with an incredible team at treasury. Uh, it was truly a collaborative team effort, uh, across the community and treasury and, uh, and the intelligence community and the USG. Uh, and this was the bipartisan issue is following the money tracking terrorist financing.
Michael Greenwald: (04:29)
Uh, these were issues that we needed to tackle after nine 11. So I had the great pleasure of, uh, working against, uh, Al Qaeda and its affiliates in Africa, and really understanding how money John was being moved outside of formal banking channels. Um, I would call some of the illicit activity happening today, almost like digital hawala hawala is moving money out notes, uh, outside of formal banking channels. Uh, and then I had an opportunity to work, uh, with Europe and on their counter-terrorism efforts, whether it was wrong. And I think our, our sanctions against Russia war a watershed moment for me, and I think for the treasury, because we use the dollar, uh, in a, in a different scalpel, like way to use debt and equity restrictions. And then with ISIS, he went towards a different type of group where they were actually creating a state and using many different funding streams. So that's kind of where my perspective has come from, uh, where we are today.
John Darcie: (05:38)
So Michael, in those roles at treasury, you obviously witnessed firsthand the power of the dollars global reserve currency status. So before we get into some of these more in-depth topics for people that are less initiated on the value for the United States of having that status in terms of the dollar being the Globe's reserve currency, why is that so important? Powerful for us as a country?
Michael Greenwald: (06:02)
Well, the doll, or, you know, has many benefits. And I, you know, it provides the ability for the U S to support a global order, uh, you know, around free markets. Uh, democracy maintains influence really over the integrity of the global financial system, John and that's beneficial too. I would say, you know, all participant countries, um, it allows the United States to, uh, stabilize global economic shocks. Some would argue that the fed was the world's, uh, you know, central bank, uh, during COVID, uh, it provides the world with access to mature capital markets. Uh, one thing that China has not been able to develop yet in someone argue has a tough time doing, um, it continues to be the dollar, the world's, uh, primary unit of measure, um, means of exchange, uh, and store value. And the store of value is a very important point. It also affords John the world advantages in assessing a mature capital markets, um, offering low costs and stability. Uh, and then those markets, you know, chose the dollar. Uh, they chose the dollar, given that breadth and depth by the U S economy, uh, unparalleled liquidity, uh, and that's allowed for the dollar to play almost a 60% reserve role, uh, around the world right now for central banks.
John Darcie: (07:35)
And in terms of the implementation of sanctions, you know, why the fact that the dollar is so dominant around the world, how does that allow us to prosecute our agenda around the world as a country?
Michael Greenwald: (07:46)
Well, countries want to be able to bank and to operate within a us jurisdiction in New York. And so it's a privilege to be able to operate within the U S banking sector. And in order to meet that bar, um, you need to, uh, have integrity in what you're doing. Uh, so if you're an elicit actor and you are interacting with material support-wise, uh, with someone on a U S sanctions list, um, you cannot operate in the United States. You're if it touches the U S in any way, those assets will be frozen. Um, the best example is what led up to the Iran deal. Uh, if there were countries that were, uh, any way economically operating or interacting with Iran or their jurisdiction, um, they could not operate within the United States. And so there was a clear line in the sand, John of how the United States has weaponized the dollar it's been very effective. Uh, as you know, I argue that we have to be careful how much we weaponize it. We have to be careful how much we put that line in the stand, because as we are seeing with China and other adversaries, they're looking for ways to go around the dollar. So it's very powerful. We use it very wisely in our sanctions toolkit, but we can't overuse it.
John Darcie: (09:17)
So you talked about the idea that these countries, especially China and Russia, for example, looking for ways to circumvent the U S dollar denominated system. Uh, do you think that the dollar status as the dominant global reserve currency is under threat, and what will the implications of that be for national security for, for economic, uh, factors in the U S w what would that mean?
Michael Greenwald: (09:40)
Well, I don't think it's under threat per se. I mean, we're still 59% central bank reserves. There's been a lot of hyperbole about the dollar is going to be overtaken by the Chinese by 2020. And you've seen, uh, continents, uh, predict this incorrectly for years. So I think where the threat lies, John is the United States being complacent. And when you're the leader, uh, it's very easy to rest on your laurels. And we've got a lot of rate economic laurels, which are just laid out with the doll, the dollar, the rest on. So I think we need to continue to innovate. Uh, we need to watch what our adversaries are doing, but we have to be proactive. We can't just admire their rise. Um, so I think countries are actively looking for ways to work with other currencies and really follow a basket of currencies approach. But the real threat, in my opinion, is us not being able to innovate. And that's where it gets to, uh, the future of currency, digital dollar, uh, and alike,
John Darcie: (10:48)
Right? So let let's pivot there into digital currencies and we'll start with Bitcoin. So there's two different topics here. There's central bank digital currencies. The idea that, uh, if sovereign nations are going to digitize the dollar, the Yuan, uh, other global currencies and the impact that could have, uh, but there's also a Bitcoin, which is the dominant, fully decentralized digital currency. There was comments from Peter teal, the prominent, uh, venture capitalists, who recently said that he thinks that we have to consider the possibility that Bitcoin is a Chinese financial weapon. Maybe he was hyperbolized or there was some strategic reason for him to make those comments, but it's just an interesting thought that Bitcoin could have a role in helping to, uh, diminish the dollar status as the global reserve currency. What impact do you think the rise of digital currencies like Bitcoin will have on the dollar? And do you think the U S government is, is potentially going to regulate Bitcoin in a way that protects the dollar?
Michael Greenwald: (11:46)
Well, I think that Bitcoin is creating more choice in optionality, uh, for the consumer and for, for people. And so I think it's inevitable that, you know, Bitcoin and others are here to say, um, you know, some experts I speak with John, you know, liking the technology of Bitcoin right now to like Napster when the internet was starting and there will be other versions of it in a theory, him and others will build audit and each will be a useful tool, whether Ethereum is better for the art world or others, uh, we can get to, um, I would say that it's good to have optionality. It's good to have choice. Um, but I don't think Bitcoin is going to, um, hurt the dollar per se. I have a dollar is going to be strong in its own, right. Uh, Bitcoin will come under more. I would say regulatory guardrails by the U S government, uh, in the months and years to come.
Michael Greenwald: (12:52)
Uh, I think that central bankers are, are trying to get their, their minds are around what this means. Uh, uh, part of it, the market will dictate that on Peter Teal's comments. Uh, listen, China does not view Bitcoin as a legal tender. Um, they have taken some more hawkish actions in the last week. Uh, they're pushing their digital wan, that's their primary focus, but let's remember a large amount of, uh, Bitcoin is being mined in China right now. So, you know, there is, there is a narrative that's playing out there. Um, I wouldn't go as far as what Peter is saying, but what I would say is that it's creating optionality for people to operate outside of the United States dollar. And so that is one of China's goals. So in essence, Bitcoin is playing into China's long-term narrative and strategy, uh, for the us to not be as economic influential, uh, as they currently are right now, in one thing to note would be central bank reserves, right? So we're at 59% dollars central bank reserves right now, the lowest level in 25 years. Um, that's going to be a number to watch, uh, what would be the reaction, John, if we saw a headline tomorrow that said that dollar reserves drop below 50%, how would the United States react? So those are some of the things that I think are important guideposts to keep in mind.
John Darcie: (14:28)
Yeah, the, the Napster analogy is one I haven't heard, but one that's definitely interesting. And you referenced those moves that China recently made. They've banned Bitcoin and cryptocurrencies in various forms in 2013, in 2017, but that most recent crackdown, we actually wrote about it in our assault Bitcoin newsletter that we send out every Wednesday morning. So I steeped myself in that over the last week, and it definitely things to the next level in terms of how they're regulating cryptocurrencies out of their economy, including crackdowns on Bitcoin mining. So that asphalt aspect of it is also slowly going away. Okay.
Michael Greenwald: (15:02)
That was a great, that was a great writeup. And I would just argue some argue that that's because, uh, the Chinese currency and if digital one is not taking off as fast as they would, like, they're scaling up, mobility is not taking off. And so, uh, China's reaction, some would argue is insecurity and, uh, controlling that, you know, in the last couple years, because China under pressure, they've restricted gold from leaving China. And obviously it's a safe Haven asset. Everybody wants to, to, to point to gold. It's never a good sign in a country's economic narrative when you're restricting gold from leaving.
John Darcie: (15:46)
Yeah. Any country with capital controls in place would seem not to me to be a natural, uh, you know, sponsor of the rise of cryptocurrencies and Bitcoin, because it, it provides an avenue for people to skirt those capital controls. So that narrative around, uh, that TL basically put forward around China using Bitcoin as a, as a financial weapon, never really resonated completely with me. Uh, but it's just an interesting topic because of Bitcoin's role in, in potentially, uh, weakening the dollars global reserve currency status. But, you know, so we talked about this a month or so ago when we had you on the salt bit point of view, but I want to talk about it again for this audience, Michael Morel, uh, basically, uh, a group of people in the digital asset space got the former CIA director, Michael Morrell, uh, to author a report about illicit activities, uh, you know, related to cryptocurrencies, the colonial pipeline hack happened after that.
John Darcie: (16:36)
So we saw a use case example of an organization of hackers using digital currencies and Bitcoin in that case to collect ransoms after they hack the colonial pipeline, which obviously disrupted, uh, oil, uh, flow around the country and putting in the Southeast where my parents lived, they couldn't get gas for a few days. Um, but how much in your view is Bitcoin and other digital currencies or cryptocurrencies decentralized cryptocurrencies used in illicit finance? And how much should we be worried about that? Let's say you're a Bitcoin investor. How much should you be worried about a crack down on Bitcoin because of its role in illicit finance?
Michael Greenwald: (17:11)
Well, I, I think it's definitely an intelligence gap. Uh, as you know, Michael Morel points out. There's not enough data yet. I wish I wish the report had been done independently. Uh, I have a lot of respect for Michael Morel and he's a very wise and he's been through the trenches. Um, so it's important to note that's an important report. Um, but it's an intelligence gap. I think I used to deal with ransom payments when I was, you know, when we were countering Al-Qaeda in Africa, the groups there raised a lot of their money, John through ransom payments, and those were usually paid, um, in euros, right. Uh, or dollars. Um, now you're seeing a lot of these ransoms being paid, um, in, um, you know, digital currencies, Bitcoin and others. Um, the, the, the data that we have on this, I think it's still very low.
Michael Greenwald: (18:09)
And I think that the, the intelligence community, my sense, uh, is likely putting more resources to try to understand this data stream as a, as an investor. I think you criminals in terrorists are going to use every aspect of formal and elicit banking channels and non-banking channels to achieve their objective. So I think they have to expect that more of this will continue. And then more of this will operate, which is why I think it'd be wise for the fed and the government to have targeted regulation, not too much, not in an overhand approach, but at least some guard rails so that people can understand how to operate. Um, but, you know, listen, blockchain technology, uh, it can be a great tool for preventing criminals from actually using it. So I think there's both sides, but overall, not enough information, too many gaps, anyone that says all of this is Alyssa. All of us is not, there's not enough information yet to really make the determination.
John Darcie: (19:22)
Yeah. I mean, I think the, the first step is just digitizing more, more things, and we can pivot to talking about central bank, digital currencies, but obviously a us dollar paper has been used, uh, around the world, maybe for more illicit activity than any other currency in history. You talk about, you know, ranging from drug cartels to terrorist financing, you know, physical bills have certainly been used throughout history in that regard, but central bank, digital currencies. I know it's an area that you studied very closely. You wrote, I think what was one of the most thoughtful and Seminole papers on the digital one as part of the Belfer center research that you do. So talk to us about that digital won project. Why is China moving forward more aggressively than anyone else with that digital one project? Do you think it will be successful and how are they going about it?
Michael Greenwald: (20:12)
So China, you know, wants control at every level and that speaks to their longterm strategy. So the ability for China through its central bank to control the consumer, get streams of information about the consumer at every level, all payments that is, uh, you know, exactly what China, uh, lives and breathes, right? So I think ultimately they're looking to scale up and leading up to the Olympics and they've had lotteries, uh, over 50 million people have been using the digital one. Um, the big question is, is whether it can be used for joint trade and whether it actually gets operationalized John in the belt and road initiative, which has done a dollars right now, whether they're actually able to, um, have a deepen relationship with swift, how financial messages are being moved, um, and how it plays into OPEC. But what they're doing in China right now is that they are making this part of the culture part of the economic fabric.
Michael Greenwald: (21:22)
And so just like with Alipay pay and others, and everything will be done through digital one, and it will be in the interest of China and the consumer to be using it. They're looking to set a precedent for others. So Russia is creating its own China and Iran have an economic agreement in the last month raw and will likely try to follow some best practices of what's worked with China to operate outside of the U S dollar. So what I see here is a web of countries looking for control using their central banks, uh, to do that. Now what's dangerous is for that narrative to be played into what the United States may do. And the fed this summer is coming out with a paper on, uh, the possibility of a digital dollar, a central bank, digital currency, and the United States digital dollar will be the opposite of what China is looking to do.
Michael Greenwald: (22:28)
The United States is going to have to make sure that there's an act of Congress that still liberties are built in that there's oversight, uh, financial inclusion, all of these benefits, um, Lael, Brainard fed governor, extremely influential voice, uh, laid out yesterday, uh, really four key areas, uh, for, you know, digital, private money is what she called it. And, you know, she laid out, you know, migration to digital payments, uh, plans for the use of foreign central bank, digital currencies, and cross border payments. Uh, you know, there's a concern here in the United States, John, about financial inclusion. Those are the sharpen focuses of it. What I see, or I see a couple of main benefits, uh, for a digital dollar and not just the United States, uh, but really globally. So that would be, you know, providing the ability, uh, through its privacy regulatory capacity, uh, to really have a digital dollar platform.
Michael Greenwald: (23:30)
And that will allow the United States to reassert a Western standards, uh, values such as rule of law, reasonable privacy, complete opposite than China in Russia, in Iran, um, greater from faster transactions, reduced costs, uh, faster cross border transactions, which we saw, you know, in the COVID payments, uh, during, uh, the congressional acts, uh, checks will be mailed, uh, much quicker through digital dollar, um, greater transparency, accountability. And ultimately, I would say a narrative for the digital dollar to facilitate greater economic growth. And those would be a couple of the things that I think would be outlined in a narrative as central bank, digital currencies grow, um, and the Europeans and others grab onto it.
John Darcie: (24:24)
Well, it'll be fascinating to read that white paper when it comes out this summer, uh, because we've talked to various people on, on this salt talk series, including Marty Chavez, who was a senior executive at Goldman Sachs, focusing on technology and money in that intersection, uh, Goldman, he had some fascinating, real life use cases for a central bank digital currency. And it'll be very interesting to see whether, uh, the U S government starts to implement a strategy in that regard, but you are an expert on the art market as well. You've written a lot of very interesting papers. I think you're, you're a leading expert on this topic. You've talked about how the art market is helping to legitimize digital currencies, you know, moving it away from this stigma around illicit finance and, and the things that people might associate digital currencies with, uh, you know, who are less educated on them. Uh, and digital currencies are being used very heavily in the art market. You've also seen the, uh, explosion of the NFT market. Could you explain how you think the art market is legitimising digital currencies?
Michael Greenwald: (25:21)
Sure. So the art, market's sort of a fascinating case study as we're talking about all these topics. If you look at moments in time of the economy and where the art market has been, it's been a very important, uh, you know, comparison. So I view the, the, the big three, right? Christie's Sotheby's, and Phillip's the three major global auction houses. John, I view them like the central banks of the art world and what they are doing with minting their own tokens, uh, having sales in NFTs, allowing to accept, uh, different currencies, uh, favoring Ethereum, I would say in this regard, uh, and, and I would say gateways like a marker, um, or maker. Um, they are allowing the market to play out faster than our own federal reserve, our own banks, uh, here, uh, and elsewhere. So digital artists and NFT, this has been around since the fifties.
Michael Greenwald: (26:32)
The difference now is there is a market for it just like there was a market for the dollar. And I would say the reason why people have, I think gravitated towards Bitcoin and others is they were looking for optionality. They felt constrained by oversight. Artists feel the same way. They feel constrained by the canvas, John, and they want to operate outside of it. They want to have more rights, more independence. They don't want to have seven different, different intermediaries control, whether they're going to end up at art Basel or not, right. They want to have their own identity. So I think all of these themes, very interesting plane to the art market's growth as they do in the intersection of the future of money as well.
John Darcie: (27:26)
Yeah. And one of the great things about NFTs and tokens in the art world is that it gives that, uh, that artist control over any subsequent sales or at least they get proceeds from subsequent sales of their art, um, that allows them to share on the spoils, uh, that, that the speculation within art, uh, that, that comes along with that. So as it relates to Bitcoin, we've talked about central bank, digital currencies, we've talked about Bitcoin. Do you think that those are in competition with each other? You know, we have some people that come to us, uh, you know, we at SkyBridge are investors in Bitcoin who say, well, I'm just going to wait for the digital dollar to come. That's going to replace Bitcoin. Do you think those again are in competition with each other or what's the impact of central bank, digital currencies on Fiat currencies? Like the dollar?
Michael Greenwald: (28:08)
I don't think they're in competition. I think they will live alongside each other, John, uh, in a virtual future virtual wallet. And I think that each of these currencies, whether they're Bitcoin, Ethereum, uh, Coronado, digital dollar digital one, you know, digital yen, they will all have different purposes. And the, the future consumer, you know, our kids and our grandkids, they will have a virtual wallet and they will all live alongside each other. Uh, we'll be living in a basket of currencies, uh, mindset in a world where people want choices. So I, I think it's a false narrative to say that one's a threat to each other. The market will choose a which one is more favorable, depending on the purpose. I don't see Bitcoin, uh, really, uh, hurting the dollar too much or cutting it down. I think the market will choose a reasonable outcome as long as there is more guardrails, more regulatory guidance. Um, so that's kind of see how I see it playing out
John Darcie: (29:15)
Right or shift gears to a broader conversation around, uh, global economics and global geopolitics. So you also wrote an interesting piece. You've written a couple of pieces actually, uh, at, at the Belfer center around a vaccine diplomacy around public health sanctions. A lot has been made in the last couple of weeks about a new report in the wall street journal about the origins of COVID-19 the virus that it, that it emanated out of a lab in Wu Han, you know, how should the Chinese be held accountable if that's the case? And they withheld information early on in the pandemic that led obviously to economic and human tragedy, uh, around the world. Uh, do you think that the us should be actively trying to hold China accountable if they do find enough evidence to prove, um, that the virus emanated out of the lab, obviously the Biden administration has taken a more cautious approach. Some in the, in the former Trump administration have demanded a little bit more accountability, but how should we look at sort of managing public health outcomes, uh, using things like sanctions?
Michael Greenwald: (30:17)
Well, I, I think we would have to do it very carefully, very targeted, um, but accountability, especially, uh, post pandemic is critical to, to prevent future ones. So, uh, I, I think we need to understand the origins. We understand what went wrong, so that we can prevent it, just like how we can prevent another nine 11 to, uh, understand the origins and throughout, and from that from nine 11 came a series of actions and we use sanctions various strategically. Um, I think, uh, public health best practices, uh, is a form of our national security. Uh, and we have to treat public health, uh, more, I would say in that realm, but at the same time, there's, uh, a, I would say there's a human rights aspect to it. Uh, there are certain communities that don't have access John to the kind of care we have in the United States. So it's going to be a delicate balance if we were to apply those sanctions, uh, you know, how and where and what would be the impact. So we'd have to weigh the cost benefit, but I, I believe, uh, accountability through targeted sanctions, uh, is incredibly important because if we don't do that, uh, it will happen again. It will be repeatable, uh, and there needs to be consequences.
John Darcie: (31:44)
So the policy response to COVID-19, there was a lot of turning inward that happened in various countries and regions around the world for often, very practical reasons around, you know, containing the virus and sort of having determinism of your own outcome as it relates to COVID. Uh, but what impact long-term do you think the broader policy response to COVID-19 will have on global commerce global trade?
Michael Greenwald: (32:09)
Well, I think term it's, that's been one of the drivers, I think for digital currencies. I think digital currencies have thrived during this time. And so I think that's going to be looked at as a major watershed moment, uh, in the past year and a half, um, prior to COVID central banks played a huge role in the financial crisis. Um, and they played a very role here, but this allowed for there to be a turning of the tide. And I think that that's going to be one of the hallmarks of the future. Uh, in addition, I think supply chains, it was finally an event that put, um, a true awareness on what these major companies, uh, have to choose before them. Um, in addition, it's, it's, it's allowed countries like Australia and New Zealand to operate differently, uh, with China. Um, and so I think there is good. I would say the biggest takeaways I have going forward, uh, will be what it's done for the digital currency space, uh, and what it will do for the future of supply chains and the choice of costs, uh, companies will have to make.
John Darcie: (33:26)
So, um, John Siena was recently promoting a movie in China fast and furious nine. We're focusing on China for the last half of this conversation, but he basically slipped up and recognize Taiwan as a country and some of the promotion he was doing, he was forced I'm sure by the, uh, the movie heads, uh, to go out on Sinai, Weebo the social media app in China, and apologize for that mistake of calling Taiwan and country. I think you've seen China take, uh, a, an even more sort of pugnacious tone as it relates to Taiwan, maybe sensing, uh, an opening to do so with the, the, uh, onboarding of a new administration in the U S do you think that China will continue to take a strong posture as it relates to issues like Taiwan? Obviously you have a huge semiconductor market in Taiwan, and you talk about supply chains and, and for us national security reasons, the prioritization of building out our own microchip infrastructure here, but do you think China will continue to take sort of a standoffish approach with Hong Kong Taiwan and what's the U S policy response need to be to that?
Michael Greenwald: (34:35)
Yeah, that lies in a, in a policy of insecurity for China and, uh, their reaction, uh, where, uh, you know, someone would have to apologize. It's a kin to the thing, it's the SEF Rogan, North Korea movie, right. And the outcome after that. Uh, so that tells you, it tells you part of, China's really hand in this, that, uh, in the same thing happened with the NBA, uh, with China, uh, in the past year plus. So that shows you that they do holds, uh, quite a few economic, uh, supply chain cards right now. I would hope that we would move towards a better outcome where, um, we wouldn't have to apologize. Um, and we would be able to have more, um, I would say economic relevance, uh, an ability where we wouldn't have to do that, but Taiwan is a very sensitive topic for China. I think it's going to, it's going to be the major, uh, you know, tests and task, uh, for this administration, uh, going forward is, is how it dances around this issue, how it works with China on climate. Doesn't give away too many concessions, but at the same time, uh, moves the ball forward. Isn't just admiring the problem. I mean, administrations, Democrat, or Republican John, they've just been admiring, uh, uh, growing China for years, um, without much real movement. Uh, so, um, that will be a continued point of a growing insecurity for China,
John Darcie: (36:19)
Right. And one of your great areas of expertise is the golf, as we mentioned in the open, and you talked about at the beginning was that you are the attache, the commercial attache to Qatar and Kuwait. You're very steeped in the Gulf. Uh, you act as a business development lead at Tita men in the Gulf as well, uh, with China representing a much greater share of oil demand. Now that the us has greater energy independence. Obviously there's been closer ties that have been developed between Saudi Arabia, the UAE, uh, other countries in the Gulf and China, uh, and, and the Biden administration in general is taking a more cautious approach related to our alliances in the Gulf, do expect to see an eastward shift in, in geopolitical realignment, uh, between the Gulf and China, uh, in, in replacement of those strong ties that the Gulf has always had with the United States.
Michael Greenwald: (37:10)
I don't think doesn't mean you're a replacement, but I think that tide has already been turning. And China's been, I remember being mayor John in 2015 and 2017. And, uh, you know, I was watching closely, you know, China's movements in the Gulf and it's been in closing, uh, you know, increasingly close. Uh, I've seen, you know, most central bank governors in the region, all visit China, right? And you've seen delegations grow back and forth. Uh, so I think that will continue how the United States, uh, stays relevant, protects it, but the Gulf, the Gulf is the Gulf countries are intermediaries within intermediaries. They need many out, they need, uh, you know, many economic partners. So they're going to play the United States off China off each other. Constantly. The real thing to watch is Israel's relationship with China and how Israel uses their tech and their growing nature of their economy and what that looks like between the U S and China. Uh, that will be fascinating. I expect, um, greater Gulf. Um, I would say funding to go to China. And I think the type of deal that China did with a rod they're likely looking to, to do the same thing with certain Gulf countries, uh, to gain more influence. The big thing to watch is if there is a major thong between Saudi and Iran, where is China's role in that thought? And that will be a very interesting intersection to watch because China wants to be at that table.
John Darcie: (38:50)
So the last piece on China, that's, that's very recent in the last 48 hours or so the EU parliament basically froze any investment into China as part of a trade deal that was struck, uh, I believe last year, after about seven years in negotiations, it was a big deal when it happened. Um, and obviously Europe sort of stagnating and its growth has turned eastward as well. Uh, looking to stimulate growth through, through partnership with China, but also, uh, the Europeans have, have introduced sanctions on China for, uh, treatment of the weekers and that entire controversy. Uh, so what do you expect the relationship between Europe and China to be, do you think the Biden administration is going to work harder to create a unified front in terms of confronting China on human rights, human rights issues and intellectual property theft and the core issues that, that we're trying to work with China on, or what do you expect that relationship between Europe and China to look like over the coming years?
Michael Greenwald: (39:43)
So Yurman Shina, it's going to be a public frosty relationship privately China needs Europe in Europe needs China. So I think the, the public posture will be very different than what's happening. Uh, behind the scenes. I expect the Europeans defined workarounds, uh, to work with China. It is a good opening for the Biden administration. I was a bit, um, I would say disturbed, you know, prior to the administration coming in to office at China would have this deal with the EU. So I think this is a new opening, uh, you know, the president sending some of this top, uh, ambassadors, uh, to Europe shortly who are, have been closed aids to him. So I expect them to double down on that relationship and to really make it worth the EUS, uh, economic strategy to pivot more to the U S uh, than China. Um, but you know, I think what the EU has done to China, um, I, I'm happy to see that it's, it's long overdue, uh, but again, there's that public, uh, persona John and what they actually do behind the scenes.
John Darcie: (40:57)
Right. I, I think that was the biggest criticism of the Trump administration. Not that they, uh, you know, we're, we're taking pains to hold China accountable for a variety of different things, whether they didn't, uh, create that unified front in order to have more leverage, uh, in our various negotiations with China. So, uh,
Michael Greenwald: (41:15)
It lives in the middle is going to be incredibly important. And I think in order for this administration to really, uh, I would say achieve its its key objectives, uh, they're gonna need a work targeted with China and they're going to have to work much more multilateral with Europe and their allies. And, uh, you know, re-imagine what the G seven looks like. And I expect them to do that.
John Darcie: (41:38)
Well, Michael, it's been a pleasure to have you here on salt talks. Uh, thank you for joining us and also joining us a few weeks ago for that salt Bitcoin review. You're our go-to expert, uh, on any topic related to the dollar geopolitics and global economics and the art market as well. Uh, so I, I couldn't highly recommend enough that you go, if you're interested in what we talked about here today to the Belfer center website, uh, where Michael writes about a lot of these topics in even more depth, and I'm sure he'll be closely covering these central bank digital currency and digital dollar initiatives here in the U S especially as that white paper comes out this summer and we something, maybe we'll revisit another conversation with you, Michael, but thanks so much for joining us.
Michael Greenwald: (42:16)
Thank you so much for having me, John, great to be on salt talks again,
John Darcie: (42:19)
And thank you everybody for tuning in to today's episode of salt talks with Michael Greenwald of Tetum and advisors. Just a reminder, if you missed any part of this episode or any of our previous episodes, you can access them on demand on our website. It's salt.org backslash talks, and on our YouTube channel, which is called salt tube. We're also on Twitter is where we're most active on social media at salt conference, but we're also on LinkedIn, Instagram, and Facebook. And please spread the word about these salt talks. We've really enjoyed educating and even the larger group of people than we do at our conferences through our digital media initiatives, uh, during and after COVID. Uh, so, uh, so please, uh, spread the word about this conversation and other topics that we discuss here on salt talks from a half of the entire team behind the scenes here at salt talks, I'm John Darcie signing off, uh, from salt talks for today. We hope to see you back here again soon.