Sense-making the Macro Geopolitical Landscape in 2022
I wrote some predictions in 2022, a bunch of them are coming true
EDITORS NOTE (Feb 2025): I wrote this 2022 after the Ukraine invasion, as a way for me to make sense of the world. For the first time in a long time, I felt utterly unsure about what was going to happen, in the next weeks, much less the next years. This writing was the result of my research, thinking, and sense-making to better understand what had changed and what would be different in the world.
It’s somewhat of an incomplete draft, and some things I got wrong, but I think enough things are tracking that I figured it would be useful to share with others. (and its interesting to see what trajectories have changed!)
The following are my unedited thoughts from October 2022.
The Old Order
In 2019, I was highly certain that China was inevitably rising, asserting economic dominance on the world, while the US world order collapsed from ignorance, infighting, and hubris, prodded along by the likes of Russia, wedging nails into the self inflicted cracks that opened up.
It seemed inevitable that the US was willfully ignorant or just unable to act in retaliation to the clearly adversarial actions I’d observed China making to slowly gain world dominance within decades.
Then Covid happened.
As I watched China panic into lockdowns in Wuhan in January 2020, and the rest of the world follow suit, it seemed inevitable to me that global economic collapse would follow within months.
Instead, I watched for 2 years as governments printed their way into one of the biggest economic booms ever, while the US culture war reached a violent peak during an election cycle where everyone was on their last nerve from the lockdowns and years of political division and rising inequality.
Surely, I thought, this inflation would still lead to a US currency crisis that China would be able to use to their advantage to further their goal of world domination.
But instead, something entirely different played out. Something within the sleeping bear of the US started to stir and awaken.
Internally, the US culture wars started to decline as moderates began to reject both MAGAism and Wokism. We’ll see if that continues during the next election cycles when parties are most incentivized to mobilize their radical base, but for now, things seem much calmer compared to previous years.
And then, the catalyst…
Ukraine invaded
For many years, global state actors have been involved in a world war on non-physical battlefields, invisible to the untrained eye. From pure cyber attacks compromising important systems, to psychological and physiological manipulation such as fake news or social feed algorithm control, to even economic warfare and perhaps biological warfare. While all of this I consider to be the invisible World War 3, none of it had yet resulted in direct state on state violence.
Then Russia sent soldiers into the heart of Ukraine to capture Kiev.
With this move, the sleeping bear that is the United States Government has fully awoken.
The US government both could not tolerate such aggressive action against it’s allies, and also couldn’t hide the fact of open physical war from it’s populace.
Thus, it was forced to act by implementing sanctions against Russia and supporting Ukraine in defeating the invaders.
These actions were not in the near term best interests of the citizens of the world. Immediately energy and food shortages impacted Europe and surrounding areas, and the global economy started to worsen as financial inflation began to kick in around the same time as supply chain shortages.
Meanwhile, in China
If China was playing their A game in past decades, they are not bringing that game to the table any longer.
Somehow they have ended up with a population and government believing that Covid is the worst thing that can happen to them, which due to their save face culture, is incredibly difficult to reverse, but also perpetuated as a weapon against internal political enemies.
The ongoing lockdowns in critical areas of China, directly affects the manufacturing industry that is the backbone of their economy, and also the supply chains of the entire world. Perhaps the supply chain attacks were intentional, meant to weaken the US and EU, but in the end they will likely harm China more.
Additionally, the financial industry in China, which has largely consisted of a series of mass scale Ponzi schemes designed to keep pace with government inflation, has come to a head amid the lockdowns and economic slowdowns.
From the outside, we can only see the bits and pieces, such as the collapse of Evergrande or bankruptcy of 3rd tier banks going unpacked by the People’s Bank of China.
Along with horribly upside demographics that were over counted for at least a decade, I believe China is undergoing a full financial collapse that is not entirely visible to the outside world, and only backstopped by the backbone of their manufacturing industry.
USA Regains Power
If the US was unable or unwilling to act before, the events of the last 2 years have flipped them to be openly, unilaterally aggressive against threats to their national security.
Over preceding decades, the US and Euro allies have pursued the globalization strategy, whereby opening up free trade globally was meant to create interconnected economies that enable all who cooperate to prosper and eliminate the need to pursue global domination.
Unfortunately, Russia and China have shown that they are willing to play along to their advantage, while still pursuing a goal of global domination.
After at least a decade of these countries acting antagonistically, US and Euro allies have finally given up on the prospect of a peaceful cooperation via commerce, and are taking national security seriously.
This means that the US, Europe, and any sensible nation will seek to become self reliant on energy, food, and other necessities of the supply chain.
In particular, the US will seek to end all dependence on China as the primary manufacturing hub of the US, and move this entire supply chain to controlled friendly areas. Over time this will remove China’s backbone of economic power and leverage over the US, and make them too weak to be a viable threat any longer.
Don’t get me wrong, this won’t happen quickly, and it may take decades, but the US is now very motivated to shift their foreign policy to affect this change.
Due to the global economic crisis, particularly in Europe, the world is currently relying on USD as the “flight to safety” that is barely propping up their economies.
This weakening of China and the rest of the world relative to the US, means that the US is able to project more power in the world than it has in recent decades, and act unilaterally on issues of US security, even to the detriment of it’s allies.
We have seen this recently with the unilateral decision to sanction advanced chip manufacturing in China, which is one of the larger acts of economic warfare in history.
This first salvo cuts deep into the economic backbone of China, and will not be the last.
On top of that, UK, EU and other central banks around the world are sufferingly greatly, and becoming highly dependent on the US central bank to keep them alive.
The Ukraine Equilibrium
The situation in Ukraine has more or less reached an equilibrium as a forever war. This is not a matter of capacity, as Ukraine’s allies could relatively cheaply send the equipment needed to fully drive Russia out of Ukraine and keep them out.
Instead, the US and EU are seemingly driving a proxy war of attrition where they give Ukraine just enough to keep surviving and defending itself, while eliminating the military forces that are being sent over to Ukraine.
Over time, this could potentially result in Russia burning itself out and collapsing on itself, potentially eliminating the threat of Putin and Russian hardliners for decades.
The matter of what happens to the oil and other commodities controlled by Russia is a bit unknown, but for now the oil still flows, via sea.
China Weakening
As Xi cemented himself as a forever leader, the economic issues, covid lockdowns, and prospect of authoritarian rule has pushed the people to a breaking point.
The largest protests in China since the communist revolution have erupted, resulting in a complete reversal of covid policies. However that will not quell the unrest entirely as the people have been living in essentially a isolated prison state under authoritarian rule for long enough to know they don’t ever want that to happen again.
Things are so bad in China, that most wealthy Chinese and business owners have been fleeing with their families to safer countries all over the world, with Singapore being a massive recipient. This isnt limited to the wealthy either, reports of Chinese fleeing to Central America in order illegally immigrate on foot in the US have been surfacing as well.
While the excess wealth bubble of China is popping and the demographics are becoming highly unbalanced, China still does maintain the strong economic foundation of controlling incredibly important parts of the supply chain, such as over 90% of steel manufacturing.
However I believe that a majority of their previous economy was a house of cards, and it will be very tough for the citizens to accept such a massive economic adjustment under an increasingly authoritarian regime.
What the future holds
After quite some time of pure uncertainty, I think I finally have a framework to predict some overarching themes for the coming decades and some short term vectors to watch out for.
Overall Theme
As global politicians decide that they can’t fully trust other countries even when good trade ties are developed, I think the overarching theme of the coming decades will be towards nationalist independence at the expense of open trade.
Some notes, predictions, and thoughts on ways this might play out:
Energy Independence
First and foremost, all countries are learning their lesson that they can’t rely on others for their energy. No one can trust Russia, the US will not guarantee energy for the EU, and OPEC will take advantage wherever they can. Every country will seek to nationalize what they can.
The Oil Cartel that has infiltrated the ESG and climate activist groups will slowly be exposed, but desperate countries will go for “dirty” energy anyways regardless of their climate beliefs.
Solar and Wind - have not seen feasible options for large scale energy independence, quite expensive per kWh and relies on materials sourced elsewhere, and worse for the environment per kWh than all other options.
Hydro and Geothermal - for those lucky enough to have these sources, they will help, but they are also susceptible to cheap asymmetric physical attacks, which is not great for countries who have made enemies.
Coal - as advancements in coal plants actually make coal one of the more climate friendly options, this readily available source of energy will become near term more popular.
Oil - for those countries who have their own oil, they will make the most of it. If OPEC (ex-Russia) continues playing games with the markets, they could find their national security begin to be threatened by their unhappy neighbors. If thing deteriorate dramatically, expect a full scale invasion of relatively defenseless nations in the Middle East.
Historically, USD dominance has depended in part with control over oil fields. In exchange for regional security, all oil must be paid for in USD, the “USD Oil Standard”. The US may seek to maintain that dominance over oil quite aggressively, however there is another direction to take…Nuclear - on nearly any metric one might care about, nuclear power (in any form) is orders of magnitude more superior than any energy source available. It produces the most kWh of energy by weight of input materials or by all combined raw materials and efforts that go into it. It produces the least amount of environmental damage per kWh by orders of magnitude, and is the safest form of energy not only by kWh but but absolute numbers.
Nuclear also has the interesting property of enabling energy independence, should a country get it’s hands on enough raw materials (uranium) to be able to power their civilization for decades, which is a relatively small amount.
However, this also threatens the USD oil standard, as countries who don’t need oil, won’t need to use USD to pay for it. While the US is strong, I expect it will be difficult for countries to start any meaningful nuclear energy program. However we might see a move to secure all known sources of Uranium in order to maintain the standard of paying for energy in USD. The “Nuclear Standard” would be a great benefit for the world, however I don’t know enough about Uranium production to know if this is doable.
Food Independence
Immediately after energy and highly interconnected is food independence. Most of the world already has regional food independence, but we’ll likely see countries shore up their abilities to make their own food or maintain leverage on neighbors that do. Those that can’t will become vassal states dependent on others who can provide.
Critical to the food security equation, is fertilizer, which is primarily produced with natural gas. See the Energy Independence part above.
Chip Independence
If the world runs on energy, computer chips are the primary way that energy gets organized into all the things a working economy needs.
Right now the world is largely dependent on China and Taiwan for it’s chip production. However as China is no longer trusted, this will be changed quickly.
Apple has already started the process of moving a significant amount of its manufacturing to India. The US has initiated the Chips act to incentivize more Chip manufacturing on US soil, and additionally kneecapped China’s ability to consume/produce advanced chips.
However the costs of labor and regulation in the US are too high to produce mass market consumer chips. Expect that only high security advanced chips, primarily for government buyers are produced within the US.
Next the US will look to recreate the chip supply chain close to home, in say a neighbor like Mexico, which has already had a large Intel plant for decades. Only in markets where regulatory and labor costs are low will mass market chip production be economically feasible.
Supply Chain Independence
After chips, all the other things that make up the industrial and consumer goods industries will be moved away from China’s sphere of influence. While there are plenty of regional Asian partners ready to go and able to handle this sort of manufacturing, they are too susceptible to influence from China, thus the US will seek to recreate the entire supply chain closer to home, likely in South America where labor is just as cheap as Asia but influence and control of the region is firmly in the hands of the US.
Europe may also attempt something similar with Africa, who may be dependent on Europe to gain the economic security needed to ensure energy and food independence. Or perhaps greater interdependence.
Defense Independence
After the invasion of Ukraine and the reliance on the US for defense of not only Ukraine but also NATO countries, the world will start looking at beefing up their own defense systems, as the US will likely not be trusted to look out for the best interests of it’s allies. It’s unlikely that any new nuclear weapons programs will be allowed by the US, but the use of near range cheaper weapons such as drones and chip controlled missiles will enable a “local deterrent” of any neighbors who may want to cross the border.
Should there be greater deterioration of Nation States, expect City States to rise and start arming themselves. Cheap forms of asymmetric defense weapons will become more popular.
Monetary Independence
Governments will not soon forget that the US both caused and saved their currency crises, and may be reluctant to be so reliant on USD in the future. Once they find their path through the current problems, they will likely start investigating ways to be more independent.
Additionally as they become more nationalist and independence focused, they may start to implement currency controls in order to politically contain themselves.
Cryptocurrency may prove to be either a path to independence or a way for savvy merchants to circumvent additional controls.
In particular, on must remember that US bonds are loans to the US Government. This creates credit expansion for the US government to deploy into things like supply chain independence. Governments like China will be quite reluctant to hold US bonds that fund their own downfall.
However their citizens may be quite incentivized to hold USD and US bonds, which they may only be able to access via blockchain depending on capital controls.
Nation States Lose Power
The above independence movements are not only limited to the level of the Nation State. Smaller regions or cities may decide to take matter into their own hands to achieve the independence desired by local citizens. Especially for Nation States that are not able to secure the above for their citizens. These regions or cities may emerge in the form of self organized “Network States”.
Depending on how economic and military conditions unfold, some regions may find themselves plunged into violent chaos, from which typically warlords, cartels, or cabals arise. With the technologies available today, it is quite possible that we see “Network States” emerge from those situations, in which citizens voluntarily organize security and necessary resources within certain areas they control.
Predictions for Countries
Russia
The war with Russia, is an annoyance but not existential for the US. It seems to be a mostly religious war, and thus they will act irrationally. However they are not strong, and will be contained. Due to the religious-nationalist jihad that powers the core of their actions, I don’t think a peace treaty is an option for them, thus they will inevitably be dealt with. Their declining demographics could also hurt them but I suspect Russia will be militarily defeated before then, and the region broken apart.
China
The US will systematically undermine China over the coming decades, removing their power over the global supply chain and economies. China will resist, but their declining demographics and lack of other sources of GDP will necessitate that they take any business they can get, and thus can’t credibly hold the supply chain hostage. Within 2 decades, China will be less than 5% of the global supply chain. Due to the aging population and desertification of their land and resources, their population will dramatically decrease. At some points they may feel cornered and lash out, but ultimately they will choose survival of the elites over humiliation by force.
SE Asia
Having critical natural resources, the US will look to exert more control in certain areas of SE Asia. China will also look to use their influence in the region to gain some economic in the supply chain war, but they will eventually become too weak to continue controlling SE Asia. The strong demographics of the region will be a huge asset economically, but they will need to convince trade partners that they are not influenced by political enemies, such as China or Extremist Muslims.
North Korea
As China weakens and North Korea grows stronger and more brazen, they will eventually be dealt with as they become aggressive against US allies Korea and Japan and are no longer sheltered by China.
India
Will remain mostly neutral in the global conflict, but perhaps pile onto the eventual demise of China. Will grow into a peaceful economic powerhouse, and will grow much faster if they can achieve energy independence. Perhaps US will enable their energy independence in exchange for their cooperation against China.
Middle East
Depends greatly on how US shifts it’s energy policies. I suspect that the political meddling of the wealthy Arabs will not be looked upon favorably as they also look to hold Oil production hostage.
Africa
Food and energy shortages rock Africa, creating a migrant wave towards Europe and Middle East. Perhaps with the right partners they can claw back their resources from China and work towards food, energy and supply chain independence.
Europe
Current economic crises will be worsened with time as energy problems cause productivity slowdowns. Possible migrant wave from Africa worsens crises. The people psyops’d by the ESG cartel and may continue down that path to collapse. Politicians seem unwilling or unable to grasp reality.
USA
Culture wars and inequality rage on but economy is propped up by the strength of USD. Internal conflicts will take at least a decade to resolve, barring massive event. Both parties of government and deep state aligned on nationalism and bringing entire supply chain into the American tri-sphere. Possible secessions if misalignments on culture, fiscal, or security issues.
Mexico
Becomes the advanced manufacturing hub of the Americas. Parts of Mexico possibly annexed. Cartels either dealt with or empowered to run the manufacturing state.
South America
Becomes the cheap manufacturing hub of the Americas. More economic stability and growth for the region stabilizes governments and possibly reverses migration path due to lower cost of living.
END
Editors Note (Feb 2025): It’s interesting to look back on these and see which ones were mostly correct, and which ones were not correct. In a multiplayer adversarial reactive system, the very knowledge of a trajectory and alter the trajectory. For instance China seems to have maneuvered out of a very precarious position since 2022. Also the combined decline of Biden and rise of Trump has added some unpredictable elements to the USA.
Overall, the trend of regional consolidation and resource nationalization seems to be growing stronger, which was the main takeaway for me when I wrote this.
May you live in interesting times…