Key Points:

• Global Economic Impact: Simultaneous conflicts with Russia and China could severely disrupt the world economy.
• Sanctions’ Limitations: Sanctions may be less effective against China, as seen with Russia.
• Changing Power Dynamics: Non-aligned nations like BRICS are challenging Western dominance.
• One of the best ways to protect yourself in a downturn is high-quality dividend stocks. Smart money is scooping up these two dividend legends before word gets out.

Michael and Austin discuss the potential global implications if two superpowers, Russia and China, were simultaneously engaged in conflicts. They explore the catastrophic economic consequences, particularly if the U.S. chose to intervene in a Taiwan scenario. The conversation touches on the limitations of sanctions as a deterrent, especially given China’s economic resilience and the challenges of enforcement in an increasingly non-aligned world. They also consider the growing influence of the BRICS nations and how this could shift the global power structure.

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Edited Video Transcript:

So now, we looked at Ukraine, Russia.

We’ve talked about China, Taiwan.

Let’s go to the satellite’s view here, right?

The orbit view of Earth very globally.

Can the world afford two conflicts with two superpowers at once?

You know, Russia, for all the ways that Ukraine has been admirably defending their own territory, is still a superpower.

They have a lot of nuclear weapons.

They have a lot of people.

There’s still a meaningful economy and meaningful energy producer in the world.

They can move the oil markets, China even more so.

So can the world afford two conflicts with two superpowers where Russia and China are at war?

And we’re not sure who would be on the other side of a Chinese conflict.

Whether the United States would enter and support Taiwan or not, but let’s just keep it just to Russia, China.

Can the world afford two superpowers being in conflict at once?

Well, the matter of the choice, I think, might be the first thing.

But I think it cannot be understated that if the United States chose to intervene in a Taiwan scenario, the economic consequences would be utterly catastrophic.

I couldn’t give you a specific figure, but I think it would be a fairly safe assumption to make that it would wipe trillions off of the world’s economy in a stroke.

It would have a huge disruptive impact.

It would be hugely disruptive to global trade.

Obviously, China is such an important economic powerhouse in the world.

I think the problem for the United States, aside from the economic consequences, is how difficult it would be for some of those non-violent de-escalation tactics that might be applied in other situations.

For example, sanctions would have very little effect on China.

China is part of a lot of non-aligned nations that are simply not going to go along with that.

As we saw with Russia, the problem with sanctions is they’re very difficult to enforce.

Nations that are dependent on Russian energy are not really going to stop doing business.

That’s even more the case in a China scenario.

So I don’t think sanctions are viable.

Diplomatic solutions, I don’t think, are really on the table either.

Obviously, China wants Taiwan back, so to speak, but the people of Taiwan are pretty clear that they don’t want to be under a regime ruled by Beijing.

The opinion polls are very clear on that.

We could look at, for example, Hong Kong as a model to follow, but we’ve seen the problems with that.

One country, two systems sounds good on paper, but then in practical terms, that’s often not the reality.

And I think that, you know, there’s no real non-, there’s no simple peaceful solution that’s going to keep everybody happy.

I think it’s the point to make there.

Right.

And there is a case where it would seem that sanctions, it depends how you want to look at them.

Have they been very effective against Russia and Russia is hurting?

There’s certainly a school of thought that believes that.

Or there’s another school of thought that looks at it and says they’ve been wholly ineffective because there’s so many workarounds or other nations that would trade with them.

Or cryptocurrencies or the impact on the oil market allowed Russia to generate huge surpluses of capital.

Russia also being notoriously opaque, it’s hard to know for sure.

But suffice to say, it is not a clear answer.

And I think Christine Abley has a book on this about the Russia sanctions and how far reaching they are.

And yet we’re still seeing Russia able to conduct war three years in with Ukraine.

So it might not be the effective deterrent that we thought it would be, especially with China, who is way more prepared financially than Russia.

They have many more economic trading partners.

Made more ways to weather sanctions.

So even though sanctions might be a part of a tool of war, they certainly are not as effective as maybe proponents had hoped.

And the Russia experience would seem to underscore that, that there is no clear answer whether or not they’ve truly been effective.

Yeah, it’s the difficulty of enforcement.

And we’re looking at an increasingly non-aligned world where American influence maybe isn’t quite what it was.

True.

Yeah, the emerging hope of the BRICS nation to counter Western powers is still very early, but very clearly what the ambition of that network of nations is.

And those are very powerful economically and resource-rich nations.

It really could affect the global power structure if they can take hold in the way as intended.

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