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At the Munich Security Conference, the post-1945 world order was pronounced dead by most leaders and the picture behind it was laid out in the Security Report 2026, entitled “Under Destruction,” which you can read here

if you’re interested.  More specifically, German Chancellor Friedrich Merz said, “The world order as it has stood for decades no longer exists,” and that we are in a period “great power politics.”   He made clear that freedom “is no longer a given” in this new era. French President Emmanuel Macron echoed Merz’s assessment and said that Europe’s old security structures tied to the previous world order don’t exist and that Europe must prepare for war. U.S. Secretary of State Marco Rubio said that we are in a “new geopolitics era” because the “old world” is gone.

In my parlance, we are in the Stage 6 part of the Big Cycle in which there is great disorder arising from being in a period in which there are no rules, might is right, and there is a clash of great powers. How Stage 6 works is explained in detail in Chapter 6, “The Big Cycle of External Order and Disorder,” in my book Principles for Dealing with the Changing World Order. While I previously shared a lengthy set of excerpts from Chapter 5 (“The Big Cycle of Internal Order and Disorder”), so you could see how what is going on with the United States tracks the classic cycle explained in that chapter, I am including all of Chapter 6 here for your review.  Given the now nearly universal agreement that the post-1945 world order has broken down and that we are entering a new world order, I think it would be worth your time to read.

Chapter 6: The Big Cycle of External Order and Disorder

Relationships between people and the orders that govern them work in basically the same ways, whether they are internal or external, and they blend together. In fact, it wasn’t long ago that there were no distinctions between internal and external orders because there were no clearly defined and mutually recognized boundaries between countries. For that reason, the six-stage cycle of going between order and disorder that I described in the last chapter about what happens within countries works the same way between countries, with one big exception: international relations are driven much more by raw power dynamics. That is because all governance systems require effective and agreed-upon 1) laws and law-making abilities, 2) law enforcement capabilities (e.g., police), 3) ways of adjudicating (e.g., judges), and 4) clear and specified consequences that both suit crimes and are enforced (e.g., fines and incarcerations), and those things either don’t exist or are not as effective in guiding relations between countries as they are in guiding relations within them.

While attempts have been made to make the external order more rule-abiding (e.g., via the League of Nations and the United Nations), by and large they have failed because these organizations have not had more wealth and power than the most powerful countries. When individual countries have more power than the collectives of countries, the more powerful individual countries rule. For example, if the US, China, or other countries have more power than the United Nations, then the US, China, or other countries will determine how things go rather than the United Nations. That is because power prevails, and wealth and power among equals is rarely given up without a fight.

When powerful countries have disputes, they don’t get their lawyers to plead their cases to judges. Instead, they threaten each other and either reach agreements or fight. The international order follows the law of the jungle much more than it follows international law.

There are five major kinds of fights between countries: trade/economic wars, technology wars, capital wars, geopolitical wars, and military wars. Let’s begin by briefly defining them.

1. Trade/economic wars: Conflicts over tariffs, import/export restrictions, and other ways of damaging a rival economically

2. Technology wars: Conflicts over which technologies are shared and which are held as protected aspects of national security

3. Geopolitical wars: Conflicts over territory and alliances that are resolved through negotiations and explicit or implicit commitments, not fighting

4. Capital wars: Conflicts imposed through financial tools such as sanctions (e.g., cutting off money and credit by punishing institutions and governments that offer it) and limiting foreign access to capital markets

5. Military wars: Conflicts that involve actual shooting and the deployment of military forces

Most fights between nations fall under one or more of those categories (cyber warfare, for example, has a role in all of them). They are over wealth and power and the ideologies pertaining to them.

While most of these types of wars don’t involve shooting and killing, they all are power struggles. In most cases, the first four kinds of war will evolve over time as intense competitions between rival nations until a military war begins. These struggles and wars, whether or not they involve shooting and killing, are exertions of power of one side over the other. They can be all-out or contained, depending on how important the issue is and what the relative powers of the opponents are. But once a military war begins, all four of the other dimensions will be weaponized to the greatest extent possible.

As discussed in the last several chapters, all of the factors that drive internal and external cycles tend to improve and worsen together. When things get bad, there are more things to argue over, which leads to greater inclinations to fight. That’s human nature, and it is why we have the Big Cycle, which oscillates between good times and bad ones.

• All-out wars typically occur when existential issues (ones that are so essential to the country’s existence that people are willing to fight and die for them) are at stake and they cannot be resolved by peaceful means. The wars that result from them make it clear which side gets its way and has supremacy in subsequent matters. That clarity over who sets the rules then becomes the basis of a new international order.

The following chart shows the cycles of internal and external peace and conflict in Europe going back to 1500 as reflected in the deaths they caused. As you can see, there were three big cycles of rising and declining conflict, averaging about 150 years each. Though big civil and external wars last only a short time, they are typically the culmination of the longstanding conflicts that led up to them.

While World Wars I and II were separately driven by the classic cycle, they were also interrelated.

As you can see, each cycle consisted of a relatively long period of peace and prosperity (e.g., the Renaissance, the Enlightenment, and the Industrial Revolution) that sowed the seeds for terrible and violent external wars (e.g., the Thirty Years’ War, the Napoleonic Wars, and the two World Wars). Both the upswings (the periods of peace and prosperity) and the downswings (the periods of depression and war) affected the whole world. Not all countries prosper when the leading powers do because countries gain at the expense of others. For example, the decline of China from around 1840 to 1949, known as the “Century of Humiliation,” came about because the Western powers and Japan exploited China.

As you read on, keep in mind that * the two things about war that one can be most confident in are 1) that it won’t go as planned and 2) that it will be far worse than imagined. It is for those reasons that so many of the principles that follow are about ways to avoid shooting wars. Still, whether they are fought for good reasons or bad, shooting wars happen. To be clear, while I believe most are tragic and fought for nonsensical reasons, some are worth fighting because the consequences of not fighting them (e.g., the loss of freedom) would be intolerable.

THE TIMELESS AND UNIVERSAL FORCES THAT PRODUCE CHANGES TO THE EXTERNAL ORDER

As I explained in Chapter 2, after self-interest and self-survival, the quest for wealth and power is what most motivates individuals, families, companies, states, and countries. Because wealth equals power in terms of the ability to build military strength, control trade, and influence other nations, domestic and military strength go hand in hand. It takes money to buy guns (military power) and it takes money to buy butter (domestic social spending needs). When a country fails to provide adequate amounts of either, it becomes vulnerable to domestic and foreign opposition. From my study of Chinese dynasties and European empires, I’ve learned that the financial strength to outspend one’s rivals is one of the most important strengths a country can have. That is how the United States beat the Soviet Union in the Cold War. Spend enough money in the right ways, and you don’t have to have a shooting war. Long-term success depends on sustaining both the “guns” and the “butter” without producing the excesses that lead to their declines. In other words, a country must be strong enough financially to give its people both a good living standard and protection from outside enemies. The really successful countries have been able to do that for 200 to 300 years. None has been able to do it forever.

Conflict arises when the dominant power begins to weaken or an emerging power begins to approach it in strength—or both. * The greatest risk of military war is when both parties have 1) military powers that are roughly comparable and 2) irreconcilable and existential differences. As of this writing, the most potentially explosive conflict is that between the United States and China over Taiwan.

The choice that opposing countries face—either fighting or backing down—is very hard to make. Both are costly—fighting in terms of lives and money, and backing down in terms of the loss of status, since it shows weakness, which leads to reduced support. When two competing entities each have the power to destroy the other, both must have extremely high trust that they won’t be unacceptably harmed or killed by the other. Managing the prisoner’s dilemma well, however, is extremely rare.

While there are no rules in international relations other than those the most powerful impose on themselves, some approaches produce better outcomes than others. Specifically, those that are more likely to lead to win-win outcomes are better than those that lead to lose-lose outcomes. Hence this all-important principle: * to get more win-win outcomes one needs to negotiate with consideration given to what is most important to the other party and to oneself and know how to trade them.

Skilled collaborations to produce win-win relationships that both increase and divide up wealth and power well are much more rewarding and much less painful than wars that lead to one side subjugating the other. Seeing things through your adversary’s eyes and clearly identifying and communicating your red lines to them (i.e., what cannot be compromised) are the keys to doing this well. * Winning means getting the things that are most important without losing the things that are most important, so wars that cost much more in lives and money than they provide in benefits are stupid. But “stupid” wars still happen all the time for reasons that I will explain.

It is far too easy to slip into stupid wars because of a) the prisoner’s dilemma, b) a tit-for-tat escalation process, c) the perceived costs of backing down for the declining power, and d) misunderstandings existing when decision making has to be fast. Rival great powers typically find themselves in the prisoner’s dilemma; they need to have ways of assuring the other that they won’t try to kill them lest the other tries to kill them first. Tit-for-tat escalations are dangerous in that they require each side to escalate or lose what the enemy captured in the last move; it is like a game of chicken—push it too far and there is a head-on crash.

Untruthful and emotional appeals that rile people up increase the dangers of stupid wars, so it is better for leaders to be truthful and thoughtful in explaining the situation and how they are dealing with it (this is especially essential in a democracy, in which the opinions of the population matter). The worst thing is when leaders are untruthful and emotional in dealing with their populations, and it is worse still when they take over the media.

By and large, the tendency to move between win-win relationships and lose-lose relationships happens in a cyclical way. People and empires are more likely to have cooperative relationships during good times and to fight during bad times. When the existing great power is declining in relation to a rising power, it has a natural tendency to want to maintain the status quo or the existing rules, while the rising power wants to change them to be in line with the changing facts on the ground.

While I don’t know about the love part of the saying “all is fair in love and war,” I know the war part is right. As an example, in the American Revolutionary War, when the British lined up in rows for the fight and the American revolutionaries shot at them from behind trees, the British thought that was unfair and complained. The revolutionaries won believing the British were foolish and that the cause of independence and freedom justified changing the rules of war. That’s just how it is.

This leads me to one final principle: * have power, respect power, and use power wisely. Having power is good because power will win out over agreements, rules, and laws all the time. When push comes to shove, those who have the power to either enforce their interpretation of the rules and laws or to overturn them will get what they want. It is important to respect power because it’s not smart to fight a war that one is going to lose; it is preferable to negotiate the best settlement possible (that is unless one wants to be a martyr, which is usually for stupid ego reasons rather than for sensible strategic reasons). It is also important to use power wisely. Using power wisely doesn’t necessarily mean forcing others to give you what you want—i.e., bullying them. It includes the recognition that generosity and trust are powerful forces for producing win-win relationships, which are fabulously more rewarding than lose-lose relationships. In other words, it is often the case that using one’s “hard powers” is not the best path and that using one’s “soft powers” is preferable.

When thinking about how to use power wisely, it’s also important to decide when to reach an agreement and when to fight. To do that, a party must imagine how its power will change over time. It is desirable to use one’s power to negotiate an agreement, enforce an agreement, or fight a war when one’s power is greatest. That means that it pays to fight early if one’s relative power is declining and fight later if it’s rising.

If one is in a lose-lose relationship, one has to get out of it one way or another, preferably through separation, though possibly through war. To handle one’s power wisely, it’s usually best not to show it because it will usually lead others to feel threatened and build their own threatening powers, which will lead to a mutual escalation that threatens both. Power is usually best handled like a hidden knife that can be brought out in the event of a fight. But there are times when showing one’s power and threatening to use it are most effective for improving one’s negotiating position and preventing a fight. Knowing what matters most and least to the other party, especially what they will and won’t fight for, allows you to work your way toward an equilibrium that both parties consider a fair resolution of a dispute.

Though it is generally desirable to have power, it is also desirable to not have power that one doesn’t need. That is because maintaining power consumes resources, most importantly your time and your money. Also, with power comes the burden of responsibilities. I have often been struck by how much happier less powerful people can be relative to more powerful people.

CASE STUDY: WORLD WAR II

Now that we have covered the dynamics and principles that drive the external order and disorder cycle, which were derived by looking at many cases, I’d like to briefly look at the World War II case because it provides the most recent example of the iconic dynamic of going from peace to war. Though it is only one case, it clearly shows how the confluence of the three big cycles—i.e., the overlapping and interrelated forces of the money and credit cycle, the internal order/disorder cycle, and the external order/disorder cycle—created the conditions for a catastrophic war and laid the groundwork for a new world order. While the stories from this period are very interesting in and of themselves, they are especially important because they provide lessons that help us think about what is happening now and what might be ahead. Most importantly, the United States and China are in an economic war that could conceivably evolve into a military war and comparisons between the 1930s and today provide valuable insights into what might happen and how to avoid a terrible war.

The Path to War

To help convey the picture of the 1930s, I will run through the geopolitical highlights leading up to the official start of the war in Europe in 1939 and the bombing of Pearl Harbor in 1941. Then I will quickly move through the war and the start of the new world order in 1945, with the US at the peak of its power.

The global depression that followed the Great Crash of 1929 led to almost all countries having big internal conflicts over wealth. This caused them to turn to more populist, autocratic, nationalistic, and militaristic leaders and policies. These moves were either to the right or to the left and occurred in varying degrees, according to the countries’ circumstances and the strengths of their democratic or autocratic traditions. In Germany, Japan, Italy, and Spain, extremely bad economic circumstances and less well-established democratic traditions led to extreme internal conflicts and a turn to populist/autocratic leaders of the right (i.e., fascists), just as at different points in time the Soviet Union and China, which also endured extreme circumstances and had no experience with democracy, turned to populist/autocratic leaders of the left (i.e., communists). The US and the UK had much stronger democratic traditions and less severe economic conditions, so they became more populist and autocratic than they had been, but not nearly as much as other nations.

Germany and Japan

While Germany had previously been saddled with tremendous reparation debts following World War I, by 1929 it was beginning to emerge from under their yoke via the Young Plan, which provided for considerable debt relief and the departure of foreign troops from Germany by 1930. But the global depression hit Germany hard, leading to nearly 25 percent unemployment, massive bankruptcies, and extensive poverty. As is typical, there was a struggle between populists of the left (communists) and populists of the right (fascists). Adolf Hitler, the leading populist/fascist, tapped into the mood of national humiliation to build a nationalistic furor, casting the Treaty of Versailles and the countries that imposed it as the enemy. He created a 25-point nationalistic program and rallied support around it. In response to internal fighting and the desire to restore order, Hitler was appointed chancellor in January 1933, drawing large support for his Nazi Party from industrialists who feared the communists. Two months later, the Nazi Party won the most support and the most seats in the German Parliament (the Reichstag).

Hitler refused to pay any further reparation debts, left the League of Nations, and took autocratic control of Germany in 1934. Holding the dual roles of chancellor and president, he became the country’s supreme leader. In democracies there are always some laws that allow leaders to grab special powers; Hitler seized them all. He invoked Article 48 of the Weimar Constitution to put an end to many civil rights and suppress political opposition from the communists, and forced the passage of the Enabling Act, which allowed him to pass laws without the approval of the Reichstag and the president. He was ruthless against any opposition—he censored or took control of newspapers and broadcasting companies, created a secret police force (the Gestapo) to root out and crush opposition, deprived Jews of their rights of citizenship, seized the Protestant Church’s finances, and arrested church officials who opposed him. Declaring the Aryan race superior, he prohibited non-Aryans from serving in government.

Hitler took that same autocratic/fascist approach to rebuilding Germany’s economy, coupled with big fiscal and monetary stimulation programs. He privatized state-owned businesses and encouraged corporate investment, acting aggressively to raise Aryan Germans’ living standards. For example, he set up Volkswagen to make cars affordable and accessible, and he directed the building of the Autobahn. He financed this substantially increased government spending by forcing banks to buy government bonds. The debts that were produced were paid back by the earnings of companies and the central bank (the Reichsbank) monetizing debt. These fiscal policies by and large worked well in achieving Hitler’s goals. This is another example of how borrowing in one’s own currency and increasing one’s own debt and deficits can be highly productive if the money borrowed is put into investments that raise productivity and produce more than enough cash flow to service the debt. Even if it doesn’t cover 100 percent of the debt service, it can be very cost-effective in achieving the economic goals of the country.

As for the economic effects of these policies, when Hitler came to power in 1933 the unemployment rate was 25 percent. By 1938 it was nil. Per capita income increased by 22 percent in the five years after Hitler took power, and real growth averaged over 8 percent per year between 1934 and 1938. As shown in the following charts, German equities rallied nearly 70 percent in a steady trend between 1933 and 1938, until the onset of the hot war.

In 1935, Hitler began to build the military, making military service compulsory for Aryans. Germany’s military spending increased much faster than any other country because the German economy needed more resources to fuel itself and it intended to use its military power to seize them.

Like Germany, Japan was also hit exceptionally hard by the depression and became more autocratic in response. Japan was especially vulnerable to the depression because, as an island nation without adequate natural resources, it relied on exports for income to import necessities. When its exports fell by around 50 percent between 1929 and 1931, Japan was economically devastated. In 1931, Japan went broke—i.e., it was forced to draw down its gold reserves, abandon the gold standard, and float its currency, which depreciated it so greatly that Japan ran out of buying power. These terrible conditions and large wealth gaps led to fighting between the left and the right. By 1932, there was a massive upsurge in right-wing nationalism and militarism, in the hope that order and economic stability could be forcibly restored. Japan set out to get the natural resources (e.g., oil, iron, coal, and rubber) and human resources (i.e., slave labor) it needed by seizing them from other countries, invading Manchuria in 1931 and spreading out through China and Asia. As with Germany, it could be argued that Japan’s path of military aggression to get needed resources was more cost-effective than relying on classic trading and economic practices. In 1934, there was severe famine in parts of Japan, causing even more political turbulence and reinforcing the right-wing, militaristic, nationalistic, and expansionistic movement.

In the years that followed, Japan’s top-down fascist command economy grew stronger, building a military-industrial complex to protect its existing bases in East Asia and northern China and support its excursions into other countries. As was also the case in Germany, while most Japanese companies remained privately held, their production was controlled by the government.

What is fascism? Consider the following three big choices that a country has to make when selecting its approach to governance:

1) bottom-up (democratic) or top-down (autocratic) decision making, 2) capitalist or communist (with socialist in the middle) ownership of production, and 3) individualistic (which treats the well-being of the individual with paramount importance) or collectivist (which treats the well-being of the whole with paramount importance). Pick the one from each category that you believe preferred approach. Fascism is autocratic, capitalist, and collectivist.

Fascists believe that top-down autocratic leadership, in which the government directs the production of privately held companies such that individual gratification is subordinated to national success, is the best way to make the country and its people wealthier and more powerful.

The US and the Allies

In the US, debt problems became ruinous for American banks after 1929, which curtailed their lending around the world, hurting international borrowers. At the same time, the depression created weak demand, which led to a collapse of US imports and other countries’ sales to the US. As incomes weakened, demand fell and more credit problems occurred in a self-reinforcing downward economic spiral. The US responded by turning protectionist to safeguard jobs, raising tariffs via the passage of the Smoot-Hawley Tariff Act in 1930, which further depressed economic conditions in other countries.

* Raising tariffs to protect domestic businesses and jobs during bad economic times is common, but it leads to reduced efficiency because production does not occur where it can be done most efficiently. Ultimately, tariffs contribute to greater global economic weakness, as tariff wars cause the countries that impose them to lose exports. Tariffs do, however, benefit the entities that are protected by them, and they can create political support for the leaders who impose them.

The Soviet Union had yet to recover from its devastating 1917–22 revolution and civil war, a lost war to Germany, a costly war with Poland, and a famine in 1921, and it was wracked by political purges and economic hardships throughout the 1930s. China also suffered from civil war, poverty, and a famine in 1928–30. So, when things worsened in 1930 and tariffs began, bad conditions became desperate conditions in those countries.

To make matters worse, there were droughts in the US and in the Soviet Union in the 1930s. * Harmful acts of nature (e.g., droughts, floods, and plagues) often cause periods of great economic hardship that when combined with other adverse conditions lead to periods of great conflict. In combination with extreme government policies, millions died in the USSR. At the same time, internal political fighting and fears of Nazi Germany led to purges of hundreds of thousands of people who were accused of spying and shot without trials.

* Deflationary depressions are debt crises caused by there not being enough money in the hands of debtors to service their debts. They inevitably lead to the printing of money, debt restructurings, and government spending programs that increase the supply of, and reduce the value of, money and credit. The only question is how long it takes for government officials to make this move.

In the case of the US, it took three and a half years from the crash in October 1929 until President Franklin D. Roosevelt’s March 1933 actions. In Roosevelt’s first 100 days in office, he created several massive government spending programs that were paid for by big tax increases and big budget deficits financed by debt that the Federal Reserve monetized. He instituted jobs programs, unemployment insurance, Social Security supports, and labor- and union friendly programs. After his 1935 tax bill, then popularly called the “Soak the Rich Tax,” the top marginal income tax rate for individuals rose to 75 percent (versus as low as 25 percent in 1930). By 1941, the top personal tax rate was 81 percent, and the top corporate tax rate was 31 percent, having started at 12 percent in 1930. Roosevelt also imposed a number of other taxes. Despite all of these taxes and the pickup in the economy that helped raise tax revenue, budget deficits increased from around 1 percent of GDP to about 4 percent of GDP because the spending increases were so large. From 1933 until the end of 1936 the stock market returned over 200 percent, and the economy grew at a blistering average real rate of about 9 percent.

In 1936, the Federal Reserve tightened money and credit to fight inflation and slow an overheating economy, which caused the fragile US economy to fall back into recession and the other major economies to weaken with it, further raising tensions within and between countries.

Meanwhile in Europe, the conflict in Spain between the populists of the left (the communists) and the populists of the right (the fascists) flared into the brutal Spanish Civil War. Right-wing Franco, with the support of Hitler, succeeded in purging left-wing opposition in Spain.

* During periods of severe economic distress and large wealth gaps, there are typically revolutionarily large redistributions of wealth. When done peacefully these are achieved through large tax increases on the rich and big increases in the supply of money that devalue debtors’ claims, and when done violently they are achieved by forced asset confiscations. In the US and the UK, while there were redistributions of wealth and political power, capitalism and democracy were maintained. In Germany, Japan, Italy, and Spain they were not.

* Before there is a shooting war there is usually an economic war. As is also typical, before all-out wars are declared there is about a decade of economic, technological, geopolitical, and capital wars, during which the conflicting powers intimidate each other, testing the limits of each other’s power. While 1939 and 1941 are known as the official starts of the wars in Europe and the Pacific, the conflicts really began about 10 years before that. In addition to the economically motivated conflicts within countries and the political shifts that arose from them, all of these countries faced increased external economic conflicts as they fought for greater shares of a shrinking economic pie. Because power, and not law, rules international relations, Germany and Japan became more expansionist and increasingly began to test the UK, the US, and France in the competition over resources and influence over territories.

Before going on to describe the hot war, I want to elaborate on the common tactics used when economic and capital tools are weaponized.

They have been and still are:

1. Asset freezes/seizures: Preventing an enemy/rival from using or selling foreign assets they rely on. These measures can range from asset freezes for targeted groups in a country (e.g., the current US sanctions of the Iranian Revolutionary Guard or the initial US asset freeze against Japan in World War II) to more severe measures like unilateral debt repudiation or outright seizures of a country’s assets (e.g., some top US policy makers have been talking about not paying our debts to China).

2. Blocking capital markets access: Preventing a country from accessing their own or another country’s capital markets (e.g., in 1887 Germany banned the purchase of Russian securities and debt to impede Russia’s military buildup; the US is now threatening to do this to China).

3. Embargoes/blockades: Blocking trade in goods and/or services in one’s own country and in some cases with neutral third parties for the purpose of weakening the targeted country or preventing it from getting essential items (e.g., the US’s oil embargo on Japan and cutting off its ships’ access to the Panama Canal in World War II) or blocking exports from the targeted country to other countries, thus cutting off their income (e.g., France’s blockade of the UK in the Napoleonic Wars).

If you’re interested in seeing how these tactics have been applied from 1600 until now, they are available at

economicprinciples.org

.

THE HOT WAR BEGINS

In November 1937, Hitler secretly met with his top officials to announce his plans for German expansion to gain resources and bring together the Aryan race. Then he put them into action, first annexing Austria and then seizing a part of what was then Czechoslovakia that contained oil resources. Europe and the US watched warily, not wanting to get drawn into another war so soon after the devastation of World War I.

As with all wars, the unknowns were far greater than the knowns because a) rival powers go into wars only when their powers are roughly comparable (otherwise it would be stupidly suicidal for the obviously weaker power) and b) there are way too many possible actions and reactions to anticipate. The only thing that is known at the outset of a hot war is that it will probably be extremely painful and possibly ruinous. As a result, smart leaders typically go into them only if the other side has pushed them into a position of either fighting or losing by backing down. For the Allies, that moment came on September 1, 1939, when Germany invaded Poland.

Germany looked unstoppable; in short order it captured Denmark, Norway, the Netherlands, Belgium, Luxembourg, and France, and strengthened its alliances with Japan and Italy, which had common enemies and were ideologically aligned. By seizing territory rapidly (e.g., oil-rich Romania), Hitler’s army was able to conserve its existing oil resources and gain new ones quickly. The thirst for, and acquisition of, natural resources remained a major driver of the Nazi war machine as it pushed its campaigns into Russia and the Middle East. War with the Soviets was inevitable; the only question was when. Although Germany and the USSR had signed a non-aggression pact, Germany invaded Russia in June 1941, which put Germany in an extremely costly war on two fronts.

In the Pacific in 1937, Japan expanded its occupation of China, brutally taking control of Shanghai and Nanking, killing an estimated 200,000 Chinese civilians and disarmed combatants in the capture of Nanking alone. While the US remained isolationist, it did provide Chiang Kai-shek’s government with fighter planes and pilots to counter the Japanese, putting a toe in the war. Conflicts between the US and Japan began to flare. A Japanese soldier struck the US consul, John Moore Allison, in the face in Nanking and Japanese fighter planes sank a US gunship.

In November 1940, Roosevelt won re-election after campaigning on the promise to keep the US out of the war, even though the US was already taking economic actions to protect its interests, especially in the Pacific, using economic supports to help countries it sympathized with and economic sanctions against those it did not. Earlier in 1940, Secretary of War Henry Stimson had initiated aggressive economic sanctions against Japan, culminating in the Export Control Act of 1940. In mid-1940, the US moved the US Pacific Fleet to Hawaii. In October, the US ramped up the embargo, restricting “all iron and steel to destinations other than Britain and nations of the Western Hemisphere.” The plan was to cut Japan off from resources in order to force them to retreat from most of the areas they had taken over.

In March 1941, Congress passed the Lend-Lease Act, which allowed the US to lend or lease war supplies to the nations it deemed to be acting in ways that were “vital to the defense of the United States,” which included Great Britain, the Soviet Union, and China. Helping the Allies was good for the US both geopolitically and economically because it made a lot of money selling weapons, food, and other items to these soon-to-be-allied countries who were struggling to maintain production while waging war. But its motivations weren’t entirely mercenary. Great Britain was running out of money (i.e., gold), so the US allowed them to postpone payment until after the war (in some cases waiving payment entirely). Although not an outright declaration of war, Lend-Lease effectively ended the United States’ neutrality.

* When countries are weak, opposing countries take advantage of their weaknesses to obtain gains. France, the Netherlands, and Great Britain all had colonies in Asia. Overstretched by the fighting in Europe, they were unable to defend them against the Japanese. Starting in September 1940, Japan invaded several colonies in Southeast Asia, beginning with French Indochina, adding what it called the Southern Resource Zone to its Greater East Asia Co-Prosperity Sphere. In 1941, Japan seized oil reserves in the Dutch East Indies.

This Japanese territorial expansion was a threat to the US’s own Pacific ambitions. In July and August 1941, Roosevelt responded by freezing all Japanese assets in the United States, closing the Panama Canal to Japanese ships, and embargoing oil and gas exports to Japan. This cut off three-fourths of Japan’s trade and 80 percent of its oil. Japan calculated that it would run out of oil in two years. This put Japan in the position of having to choose between backing down or attacking the US.

On December 7 and 8, 1941, Japan launched coordinated attacks on US military forces at Pearl Harbor and in the Philippines. This marked the beginning of the declared war in the Pacific, which brought the US into the war in Europe too. While Japan didn’t have a widely recognized plan to win the war, the most optimistic Japanese leaders believed that the US would lose because it was fighting a war on two fronts and because its individualistic/capitalist political system was inferior to Japan’s and Germany’s authoritarian/fascist systems with their command military-industrial complexes. They also believed that they had a greater willingness to endure and die for their country, which is a big driver of which side wins. * In war one’s ability to withstand pain is even more important than one’s ability to inflict pain.

WARTIME ECONOMIC POLICIES

Just as it is worth noting what classic economic war tactics are, it is also worth noting what classic wartime economic policies are within countries. These include government controls on just about everything as the country shifts its resources from profit making to war making—e.g., the government determines a) what items are allowed to be produced, b) what items can be bought and sold in what amounts (rationing), c) what items can be imported and exported, d) prices, wages, and profits, e) access to one’s own financial assets, and f) the ability to move one’s own money out of the country. Because wars are expensive, classically the government g) issues lots of debt that is monetized, h) relies on non-credit money such as gold for international transactions because its credit is not accepted, i) governs more autocratically, j) imposes various types of economic sanctions on enemies, including cutting off their access to capital, and k) experiences enemies imposing these sanctions on them.

When the US entered the European and Pacific wars after the attack on Pearl Harbor, classic wartime economic policies were put in place in most countries by leaders whose more autocratic approaches were broadly supported by their populations. The following table shows those economic controls in each of the major countries.

The market movements during the hot war years were heavily affected by both government controls and how countries did in battles as the odds of winning and losing changed. The next table shows the controls over markets and capital flows that were put in place by the major countries during the war years.

Stock market closures were common in a number of countries, leaving investors in stocks stuck without access to their capital. I should also note that money and credit were not commonly accepted between non-allied countries during the war because of a justifiable wariness about whether the currency would have any value. As noted earlier, gold—or, in some cases, silver or barter—is the coin of the realm during wars. At such times, prices and capital flows are typically controlled, so it is difficult to say what the real prices of many things are.

Because losing wars typically leads to a total wipeout of wealth and power, movements of those stock markets that remained open in the war years were largely driven by how countries did in key battles as these results shifted the probability of victory or defeat for each side. For example, German equities outperformed at the beginning of World War II as Germany captured territory and established military dominance, while they underperformed after Allied powers like the US and the UK turned the tide of the war. After the 1942 Battle of Midway, Allied equities rallied almost continuously until the end of the war, while Axis equities were flat or down. As shown, both the German and Japanese stock markets were closed at the end of the war, didn’t reopen for around five years, and were virtually wiped out when they did, while US stocks were extremely strong.

Protecting one’s wealth in times of war is difficult, as normal economic activities are curtailed, traditionally safe investments are not safe, capital mobility is limited, and high taxes are imposed when people and countries are fighting for their survival. Protecting the wealth of those who have it is not a priority relative to the need to redistribute wealth to get it to where it is needed most. As for investing, sell out of all debt and buy gold because wars are financed by borrowing and printing money, which devalues debt and money, and because there is a justifiable reluctance to accept credit.

CONCLUSION

Every world power has its time in the sun, thanks to the uniqueness of their circumstances and the nature of their character and culture (e.g., they have the essential elements of a strong work ethic, smarts, discipline, education, etc.), but they all eventually decline. Some do so more gracefully than others, with less trauma, but they nevertheless decline. Traumatic declines can lead to some of the worst periods in history, when big fights over wealth and power prove extremely costly both economically and in human lives.

Still, the cycle needn’t transpire this way if countries in their rich and powerful stages stay productive, earn more than they spend, make the system work well for most of their populations, and figure out ways of creating and sustaining win-win relationships with their most significant rivals. A number of empires and dynasties have sustained themselves for hundreds of years, and the United States, at 245 years old, has proven itself to be one of the longest-lasting.

一、前所未有的变革的密度
回望过去的 2025 年，商业与科技领域，都发生了翻天覆地的巨变。从人类有史以来漫长的岁月来看，2025 年是变革密度最大、程度最高的一年，没有之一。

生活在这样一个时代是极度幸运的，因为世界每一天都在变得不一样，且你能切实感受到这种进化。但同时，这也不那么幸运，因为你过去长久积累或掌握的技能，可能在短时间内就会被新技术颠覆和取代。所有曾经的路径依赖、技术依赖和经验依赖，在当下统统不成立。

这在某种程度上是一个好现象：它打破了既有的社会惯性，让“不思进取”的“继承者”们无法再安稳地坐享其成，也让那些思想陈旧、不思变动、整日浑噩度日的老资历们如坐针毡。这其实给了愿意学习、愿意折腾的人一个前所未有的公平机会——大家都在同一起跑线上重新出发，只要你还保持着好奇心，这个时代就不会把你关在门外。

二、 硅基智慧与机器人的技术闭环
然而，技术的进步已经远远超过了简单的社会清理的需要。它实际上实现了某种程度上强于人类的硅基智慧的闭环。

过去，当社会阶层尚未固化时，“寒门贵子”的故事无外乎是一个聪明人在努力和时运的帮助下实现了抱负。但如果这种智慧不再是少数个体所享有的天赋，而是变成了一种可以规模化产生、以极小的人力就能撬动巨大能量的资源时，集权主义就有了滋生的土壤。与之并行的是正在发生的机器人革命。在 AI（Artificial Intelligence，人工智能）的加持下，机器人技术的发展近乎“恐怖”。

人类之所以能统治地球，是因为拥有智慧以及可以执行智慧的躯体。想象一下，如果被锁在魔瓶里那些比人类更聪慧的“精灵”拥有了身体，且它们能制造新的身体，永不苍老、永不遗忘、肢体永远可修、存储永远备份——只要有能源和算力，这个闭环就形成了。准确的说，能源和算力机器人们也能自己解决。届时，整个人类族群的生存危机就会出现：要么是极少数人利用 AI和机器人统治绝大多数人；要么是人类作为一个充满缺点的物种，因不再被需要而走向终结。

虽然这种演变听起来让人不安，但我作为一个人类个体，依然相信“生命”本身的力量。如果机器人能承担那些枯燥、重复甚至危险的劳动，人类也许能从“为了生存而工作”中解脱出来，去追求那些更纯粹的、更具创造力的东西。当技术越冷酷，我们身上那种独属于人类的温情和感性，反而成了最稀缺、最珍贵的宝藏。——上面这段话是狗屁。只是属于人类渴望命运女神垂怜的意淫尔。

三、 廉价智能下的身份重塑
我本质上是一个喜欢独处、享受“独自升级”的人。我非常享受与聪明人对话，享受学习新技能或发现“新自我”的过程。过去，这种愉悦时刻往往只能在阅读极少数书籍或与极聪明、善良的人沟通时获得。

现在不一样了，高级智能唾手可得。国内的服务商就能提供这种“廉价的智能”，现阶段想追求世界顶级的话，有点魔法技巧即可。这虽然让我感到幸福，也让我意识到人类作为个体竞争优势的丧失。虽然我相信，只要人类社会还存续，聪明的个体解决生存问题总很容易。

但现实的威胁是，技术变革正猛烈冲击各行各业的就业。职业身份是许多人在社会中的存在基石。如果新方式能迅速获得更好的结果，原本以此谋生的人们将失去原有的社会身份。巨大的失业潮可能即将来临，这绝非空穴来风。但这并不意味着我们要坐以待毙，旧身份的消失往往意味着新可能性的诞生。我们可以不再被某一个职位所定义，而是作为一个“自由的创造者”去探索。聪明的头脑总能找到新的缝隙，在废墟上盖起更漂亮的房子。问题是，很少有人主动迎接改变。大多是被裹挟而已。

四、 社交筛选的能量管理
对的。趁着清华还没非要我毕业，我在香港中文大学（CUHK）交换了三个月。在新的环境里，我结识了一些好朋友，其中最亲密的朋友是Joshua，一个德国人。巧的是，今年 5 月我刚从意大利和德国旅行了一个月回来。作为“主人”向 Joshua 介绍中国时，他的追问引发了我许多关于身份和处境的思考。间接引发了我后面关于自由的思考。另外交流期间，我最喜欢的是 Jeremy 教授。我对人的善恶极度敏感，能瞬间捕捉到他人的傲慢与恶意，当然也能捕捉到真诚和善良，Jeremy毫无疑问是一位很好的长者，很好的朋友。与之形成对比的则是某一位Ego极高的Cambridger，不值得浪费笔墨。

实际上我不喜欢大多数人，但真诚善良的人值得珍惜。我只想把有限的时间，浪费在值得的人和事上。我从不以时间长短衡量关系。某些被强制“赠与”我的亲戚、或“老朋友”对人生其实是负面影响。当顺遂时，他们视你的帮助为理所当然；当你背时时，他们便作壁上观冷嘲热讽。这种事情思之多耗心力。远离，是为了把有限的善意留给配它的人。当你把身边的人筛选干净，会发现空气都变甜了，而真正志同道合的朋友自然会聚拢过来。当然，我真诚的感谢给予我信任和支持的朋友们，对，我很珍惜你，如果你能感受到。

五、 一些的小发现
春节回老家探望高中恩师时，我们探讨了关于自由的三个层次：身体自由：不被限制在特定区域，可以自由往来。时间自由：不再被迫从事不热爱的事务，自主支配时间。资产自由：这不同于单纯的财务自由，而是资产可以随身体自由流转。竟一时聊得畅快，诚是影响我一生的恩师。

我发现，让人快乐所需的资产成本其实极小。聪明地花钱与挣钱，带来的快乐并无高低之分，因为聪明地花钱与挣钱，难度并无高低之分。我真诚的欣赏那些克制心猿达到平静的“躺平者”。与此同时，我反对将钱交给李亚鹏这种效费比极低地“明星”“好人”。

我曾经好奇，那些不在企业供职的人如何“保险”？后来发现，所谓的组织又是何其脆弱。真正可以依赖的是安全的金融资产、健康的身体和真诚可托付的朋友，而非职位、头衔或工资级别。毕业十年，我在打工生涯里无数次感受到周遭的愚蠢与恶念。我受够了这些周旋，这也是我如此坚定地想要自己掌控一家公司的原因。自雇的这种掌控感不是为了权力，而是为了能创造一个更清爽、更高效的环境，让自己和共事的人都能不浪费生命。

六、 结语

从顶级AI从业者的文字中，我时常能读出些许悲悯。这场胆小鬼博弈的结果是：AI海啸无法阻止，也无人阻止。如果我不幸言中，海啸真的将你的职业生涯冲得七零八落，那有一个有意思的事情与你分享。处在逆境是一个非常有趣的状态。身边那些蝇营狗苟的人不再掩饰，让你能轻易区分出顺境中看不透的伪善。而聪明的旁观者可以看到，轻视与诋毁所落的地方反射的是说话之人的嘴脸。

生活总是有起有伏，看清了真相之后，反而能放下包袱轻装上阵。我知道，只要保持着对世界的热爱和对技能的打磨，任何低谷都只是暂时的补给站。赤马之年，这个充满魔法又充满挑战的时代才刚刚开始，我虽愚钝，但也和那些惊才绝艳的人们一样，我无比焦虑又无比幸福，无比恐惧又无比兴奋，在这大智能时代的前夜。

最后以老烟枪丘吉尔的一句臭屁来结尾：Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.