Friedman's Folly? Has the Chinese Era of Venture Capital Come To An End?

The Anti-Chinese Case For the Inflation Reduction Act

Aug 23, 2022

Milton Friedman, meeting Zhao Ziyang, 1988, with Wu Jinglian (also known in China as Market Wu) in the background.

Part of the reason Republicans are seemingly doing so poorly all of a sudden is that they really don’t understand what causes inflation. It’s the energy, stupid. By making a lot more energy and chips available cheaply available the Inflation Reduction Act is making it harder to gouge Americans.

“Inflation is always and everywhere a monetary phenomenon,” wrote economist Milton Friedman. Is he right? No. He was so wrong so often that it’s hard to think that it was accidental.

I think Milton Friedman — and really the whole Friedman clan — was and is a de facto Chinese mob op. His son David Friedman was an apologist and consultant for the very Chinese-tech industry at Santa Clara University while his grandson Patri is working with Peter Thiel to promote city states. No one ever seems to ask who might benefit from city states. You’ll find that that would be China—the main backer of the Friedman family.

Milton Friedman was especially close with the Chinese and one premier — Zhao Ziyang — whose support of the Tianemen Square protests led to his removal. Zhao also supported Friedman who the Party called an “extreme liberal economist” during the Zhao show trial.

Why did they get it along so well? Crazy as it is to say, there may have been ethnic — which is to say Jewish — ties.

Here’s how Zhao recounts it:

“In the Northern Song Dynasty, there was a small Jewish community in Kaifeng, then the capital of China, which was sheltered and given Chinese surnames by the emperor. And my clan, who were the residents from Hua County in Anyang neighbouring to Haifeng, was just a part of the Jewish community, according to my ancestors.”

Zhao purportedly warned his audience not to make a fuss about it, saying, “You should not spill out this message to foreigners. China has not yet established diplomatic relations with Israel, and it would be no good to say China as such a large country should have a Jewish descendant premier.”

How true this is, we don’t know. Could Zhao just be flattering his audience? Or is he part of an international neocon conspiracy?

We know that China and Israel would later become the best of friends. My favorite of these Chisraelis is Shaul Eisenberg, born in Munich but dead in Beijing, whose Wikipedia page has to be read to be believed.

But by far the most powerful are the casino magnates who act as a kind of bridge between the societies — and take a hefty fee. The late Sheldon Adelson, backed by Macao casino cash, saw to that. He also became the largest donor to the Republican Party, starting with Newt Gingrich and ending with Donald Trump. Among his last actions was to fly spy Jonathan Pollard from America to Israel, our greatest ally.

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What then really causes inflation? In theory, powerful people deciding that prices should ought to be higher. Sometimes they decide it in unison. We call this collusion.

In practice, middlemen can—and do—cause inflation by hoarding. How then should we think then of “market dominant minorities” — a phrase brought to us by J.D. Vance mentor Amy Chua?

What then is inflation? It’s a psychological game—and a definitional one. It’s not really about money, per se, but about energy—how much is supplied, in what form, by whom, and at what price. The first empires were slave empires — human energy is quite good and they built the pyramids with that stuff — and in China, not much has changed.

If you love your iPhone you are, in some sense, also complicit in this. Global capitalism is justified by libertarianism and sometimes the best that people can supply to the global economy is their own people.

***

Back when I was a libertarian I believed a lot of silly things. I read books like Milton Friedman’s Free To Choose — I hadn’t gotten the memo that you’re supposed to lie about having read — and like a lot of people my generation I considered myself a libertarian. To be sure I had my caveats. I didn’t think libertarianism worked so much between countries having traveled in Latin America and so I followed the John Derbyshire formulation of “Libertarianism in One Country,” itself derived from “Socialism in One Country.”

The parallels between Socialism and Libertarianism didn’t yet occur to me. Nor had I yet read The Jewish Century by Yuri Slezkine which sees Marxism, Libertarianism (Capitalism), and Zionism as part of the same project — a flight to abstracts over real things in the real world. In Slezkine’s analysis, “Mercurian people” “specializ[ing] exclusively in providing services to the surrounding food-producing societies” are the way of the future. He calls the food producers “Apollonians.” Okay, whatever.

A better way of thinking of the 20th century is the autistic century and I don’t think it’s a total coincidence that autism is on the rise. We are becoming like our machines. Nor do I think it’s a coincidence that many foreign nations recruit and promote our domestic autistics or social discontents to use against us. What, after all, is 4Chan really? Are we ready to have a conversation about how these platforms recruit some of the most socially messed up parts of our community.

But in claiming myself a libertarian I was making myself trendy. In this I wasn’t unique. Facebook CEO Mark Zuckerberg listed his politics on Facebook where else? as libertarian. In college, libertarianism was a way for a conservative woman to signal to you that she might still hook up with you. Of course she never did that with fellow libertarians — my first example of bait and switches with libertarianism. There would be many more to come.

Among my co-religionists we discussed people we suspected were secretly libertarian and so on. We enjoyed South Park and Firefly even though it did seem to me that the hero of Firefly was a confederate.

The Internet was becoming a great psyops — wasn’t it always? — to encourage the one truth faith — atheist libertarianism — and Sam Harris and Christopher Hitchens and all these other people were libertarians except for the Iraq War. Didn’t try to think too hard about it. We sure didn’t.

That is until Rep. Ron Paul rolled up. I didn’t quite fall for Paul but I was a click or two away from him at all times. I had even met him in the men’s room during the 2012 presidential debate. He signed my hard copy of Politico back when there were such things — before Politico got bought by KKR and therefore became Chinese.

Speaking of those bought by the Chinese, I revered the patron saint of libertarianism — Milton Friedman. To anyone that would listen I was Milton’s prophet, peace be upon him. I annoyed my classmates as I sought out new converts to the one true faith. Milton’s name alone suggested industriousness: Milton Friedman means Mill Town, Man of Peace.

It’s not too different from Claremont McKenna’s motto — “Civilization prospers with commerce.” Claremont’s largest donors, cousins Henry Kravis and George Roberts, were, until recently, the key Chisraeli billionaires behind private equity firm KKR, which in turn backs Founder’s Fund and British hedge fund Marshall Wace. Claremont alumni tend to do very well and work for many Chinese-backed firms.

Friedman, who died in 2006, predicted “that China will move increasingly toward political freedom if it continues its successful move to economic freedom.”

He was wrong — with disastrous results. Why?

I had once believed that he just got it wrong but I now believe that it was part of an op. If you promise people that in the future China will be a democracy maybe they’ll excuse some of your China’s excesses in the here and now.

Like all cultists I looked out into the world to see examples of my faith reflected back at me. True enough there did some politicians implementing the Friedmanite religion. The successes of the Friedman game were always further than our ability to check them out for ourselves.

Milton Friedman did a whole bit about Hong Kong which I forwarded on to friends, totally unaware of what Hong Kong was really like. Hong Kong looms big in the neoliberal imagination, after all.

“If you want to see how the free market really works, this is the place to come,” Friedman promised and yet never moved there.

Years later I would go to Hong Kong and be chased around by Chinese intelligence services before I had to flee altogether. I found it quite impossible to breathe there — literally and figuratively. Why was the free market inhospitable to me?

The Chinese intelligence officer I was talking to loved bitcoin—just as so many other Chinese and Chinese-adjacent peoples do. They promised it was a hedge against inflation and they recited the same sort of libertarian nuttiness that I had seen in other forms — like say, this speech from Balaji.

I learned that whenever someone makes an ideological argument, they are hiding an op. The best arguments are always personal.

Even then I intuitively understood that it wasn’t just Hong Kong’s status as a lightly regulated place that made it special but as a place that existed betwixt empires and almost despite them. These lightly governed places — as we are seeing with Ukraine, Somalia, Afghanistan, or Syria — become a breeding ground of criminality before they eventually have to be shut down. Increasing the number of failed states seems to be an actual foreign policy objective of the Chinese.

Closer to home, they rule with an iron fist. Hong Kong is now fully under Chinese control. Why that was so necessary from the perspective of the Chinese state is not really allowed to be discussed. It’s considered bad form to point out all the criminality in Hong Kong.

Now the new utopia is Singapore and once again it’s sold very hard. That status has now been replaced by the pushing of supposed benevolent dictators like Lee Kuan Yew, whose status as a kind of English-educated but ethnically Chinese technocratic despot is promoted among the tech types. Mencius Moldbug praises the Southeast Asian dictatorship. Balaji Srinivasan, fresh from praising Ubiome and interviewing with Donald Trump, now lives there. Here’s his crazy, cartoonist analysis of Chinese history.

Marc Andreessen hails the city state as a model for the future, unlike those American cities. Singaporeans get to build, he says, while he restricts building in his local neighborhood.

Singapore isn’t alone. There are other suitably far flung place living the dream of the libertarians. In Eastern Europe, there is Estonia whose first prime minister — Mart Laar — I even once had an occasion to meet when he won the — what else? — Milton Friedman Prize for Advancing Liberty. Laar was awarded by none other than President Francisco Flores of El Salvador, yet another self-confessed libertarian. I had met Flores too and interviewed him for my prep school newspaper. That is, before he embezzled millions from earthquake victims.

Laar is still with us and was then as now a big booster of Free To Choose. Once again the Silicon Valley types started praising Estonia — a nation of barely 1.3 million people. Investor Steve Jurvetson even became the first US-born Estonian to become an e-resident of Estonia — whatever that means.

Anyway, Laar’s government collapsed when he bought defective Israeli weapons that couldn’t be used against the Russians. Could the Israeli gun-running and the pushing of the Friedmanite doctrine have been one in the same? I wonder…

What became clear is that libertarianism worked best in small, homogeneous places. You can get pretty much any government to work with small, homogeneous people. That’s why cults and kibbutzes work so well. You can always leave but do be sure you do it before you drink the Kool-Aid.

When libertarianism failed, the Chinese intelligence services ultimately pushed ethno-nationalism. You can read J.D. Vance mentor Amy Chua’s works, especially Political Tribes: Group Instinct and the Fate of Nations (2018), in this light, but it’s there in World On Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability (2004) too. Chua’s name might sound familiar to you. She defended Bret Kavanaugh’s nomination to the Supreme Court — and her daughter shortly thereafter became one of his clerks. Her husband is still on administrative leave.

In Chua’s telling, when the U.S. pushes democracy it leads to instability because it leads to largely anti-Chinese violence, especially in the Philippines where Chua’s mother was raised. Perhaps Chua’s right. Or perhaps the Chinese (and other market dominant minorities) should have done more to help the local economy and the local people within it so as not to make themselves targets of the local pogrom.

If you increase the ethnic solidarity of people, you retard their willingness to participate in imperial projects which are, by their very nature, multiracial and multiethnic. This strategy was clearly the Soviet project against the British empire. (And to a lesser, extent part of the American play against both the Soviet Union and the British Empire.)

Just as you would expect China highlights black nationalism (1619 and laundering money through crowdfunds to Black Lives Matter). China promotes white nationalism nonsense, and Native American solidarity to reduce the appeal of the American empire on our own domestic constituencies. The Black Panthers were and remain a key part of that project. Turn about is fair play and we do the same onto them with the Tibetans and the Uighurs, a Turkic people who are being genocided.

Whenever you hear someone talking about a post-American world order they are really talking about a Chinese-led one. I like the American Empire and think its been pretty good for the world, especially for Americans. Everyone knows that they can ultimately run to America when the times get tough. Could your kids become Chinese? I think not.

I once described Dubai as a very nice prison in the middle of the desert that I shall never visit because I value my personal safety.

Against my wishes, the United Arab Emirates became investors in my company, Clearview.Ai. (After they hacked the company, naturally.)

You can listen to venture capitalist Joe Lonsdale praise the United Arab Emirates.

People have done this before, right? So for example, the UAE has some very strong, very intelligent rulers there. And they built Dubai with a model that was like this, and then attracted millions of people and created massive wealth, and talk to lots of people in the region about principles they should embrace as well. And it was very, very successful along those lines.

Not quite, Joe. The UAE is successful because it is a money laundering hub — it stole billions of American dollars from Afghanistan. It’s really kind of the epicenter of that activity. Whatever you’ve got — slaves, women, drug money — the Emiratis will turn it into something else — for a fee. Why they’ll even invest in Joe’s venture capital firm!

How much Joe should be blamed for this lapse in judgement, I don’t know. His mentor — Matt Michelsen — got millions from China and the Emiratis, too, for fake companies. Did you know he used to work with Lady Gaga? Now Michelsen’s working with Governor Greg Abbott by gouging the Texas taxpayer and developing fake covid tests from weird Russians which do not work.

Can you say foreign collusion much? You can also see Matt Michelsen praise Dubai here. “UAE is more dynamic and welcoming than other tech hubs,” he said.

Peter Thiel once said that he didn’t believe democracy and freedom were compatible. In Pinochet’s Chile neither democracy nor freedom happened so I suppose it’s all good. Today Chile has the widest inequality gap of any nation in the OECD.

Chile was advised by the Chicago Boys, chief among them Milton Friedman.

Back when I was a far right person Pinochet was pretty great, I was told, because he threw Communists out of helicopters. Fair enough, I suppose, and probably good exercise.

One of the very close relationships that Pinochet had was with China, which continues to suck up large amount of resources, especially copper, from Chile.

But that’s not the real prize. The real prize is Antarctica which has all kinds of interesting resources that are absolutely going to get extracted as the Earth warms. China backed Chilean claim of sovereignty over Antarctic, and in turn, Chile allowed the Chinese to build the Great Wall research station inside Chile's territorial claims.

(Don’t you worry, though. One of my deep state uncles also worked on surveying Antarctica for natural resources — way back in the 60s. We’re on it, as it were.)

Of course Pinochet also made a lot of money for himself — which his family must now return. I guess he was lying when he said he was just a servant of the people.

Why is it that libertarian economic policy seems to always lead to plutocracy? Might its promotion be a part of the plutocracy? And might foreign governments want plutocracy so that they could easily control our politics by bribing the right oligarchs?

Looking back on it now, it was surprising how many foreign billionaires there were who backed the libertarian Cato Institute back when I went to their event in this swanky Oregon in 2011. We drank a lot of wine, which is why I curiously can’t remember that much of it. I do remember all the weird Venezuelans running around, though, especially the guy from Globovision. Who knows what was up with that.

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Returning for a moment to inflation, if you believe, as Milton Friedman said, that inflation is purely a monetary phenomenon, you’re decidedly wrong. You’ve believed another op.

Inflation is really about too few goods chasing too many dollars. You can choose to produce less, of course, and why wouldn’t you if you could get a higher price?

You wouldn’t want to get caught gouging people, so you’d try and hide with all these other people who are also gouging. Criminality, like all mob behavior, is safer in large numbers. Same of them will get caught so they need a war chest for their legal defense fund — that is if they don’t skate. (They’ll probably skate.)

Among the mobbed up parts of our economy, this period of inflation is really wondrous for your profits. The nation’s four largest meat processing companies raked in a profit margins of 300% during the pandemic. The oil companies are now all reporting record profits, too. Even the Russians saw a 38 percent rise in energy exports over the previous year.

The Houston oil men with whom I used to play poker lamented that their boy Donald Trump had lost in 2020 but they consoled themselves with the fact that Joe Biden would lead to very high energy prices and they’d be a lot richer.

It’s my contention that many of the supply chain disruptions now plaguing the U.S. are directly a result of a lot of people renegotiating the relationships that they previously had.

Covid became that all purpose easy excuse not to show up. I used it myself to avoid going to a family member’s wedding. Everyone used that covid excuse to work from home, too, and how much work was really going on anyway? Who knows?

Small wonder then that it became very easy to fire the people you didn’t see at the office every day — and yet, it only seems as if the Chinese dominated tech industry is the one affected by all the lay offs.

No, looking back on it now, 2007 to 2021 seems as if it was a very Chinese era that began with the financial crisis and ended with the withdrawal of our forces from Afghanistan, much to the consternation of all the good thinking people in our society.

Of course it’s worth examining what caused the financial crisis and who is to blame.

As I see it, there were two systematic causes.

Repeal of Glass-Steagall, brought to you by Chisraelis — Larry Summers and Sheryl Sandberg, his chief of staff chief among them.
And of course, the Diversity Industry, especially the Bush Administration, which pressured banks to lend to Hispanics, African-Americans, and really anyone with a pulse.

Talking about this period is considered bad form and it might even be called racist so we just don’t talk about it and we aren’t going to start doing that here because I like my rebrand.

China provided $750B to bail us out America after the financial crisis. Thanks, China, I guess.

What did they get for their money? Well, the Chinese took over the commanding heights of the U.S. society — real estate in our major cities, Ivy League higher education, and San Francisco-based venture funds. Along the way they bought a few politicians, but indirectly, of course. Chimerica was in very full swing and you didn’t even realize it because so many of the people promoting Chinese talking points went to the right schools and looked the right away.

Once the paths for the money was establish the Chinese followed the leader and poured on the money.

You see China has these guidance funds. KKR is now an acceptable place for Chinese people to put money overseas even though they so often restrict money going abroad. Why is KKR exempt? Does anyone dare to ask?

China is now going through some version of our diversity recession having lent out all this money to develop the resources essential for the Chinese state. They rolled up in Kinshasa and in Ulan Bator and all those wonderfully beautiful capitals in all those places you’ve never been to and never will go.

But in Africa — at last — the Chinese are being rolled back though not without some fighting, especially in the Eastern Democratic Republic of Congo. We want the resources to go West; the Chinese want them to go East. They back the Rwanda dictator and we back the lovable statesman of the DRC. Plus ça change.

When we were messing around talking about bitcoin and the blockchain and Web 3 they were apparently running around getting all the bauxite and cobalt.

When we woke up, we saw that they had the monopoly on all the good projects and we got to work overthrowing the fake governments they had installed in favor of our fake governments. Say what you will about it, but at least we are going back to our roots. Thanks for building the mines we are going to take over, China.

We now know the point of our foreign policy. The trick is to secure as many resources as we can for ourselves and for our children.

That is what it really means to be free to choose.

*******

China took over several industries but I am optimistic that these too can be cleaned up and turned. The most obvious and glaring examples is biotech which is very Chinese indeed. You can look out at a lot of the biotech stuff and ask the obvious question. “Does this shit actually work?” and the answer more often than not, is no or kinda but not really.

The most glaring example is perhaps the most successful and that would be Stemcentrix, brought to us by Founder’s Fund. They promised us flying cars but gave us fake health care products.

I don’t mean to pick on Peter Thiel and crew. I could just as easily make the case for Ubiome, Theranos, Curative — there are so many cases to choose from and there are some venture capitalist to blame. UBiome ripped off the government while stealing your shit. Theranos gave you the age old love affair of a blonde feminist with her older Pakistani lover. Curative gave you billions of dollars worth of fake covid tests promoted and sold by a con man who once worked with Lady Gaga. You can’t say that this stuff isn’t funny.

It might be a systemic problem but the whole systemic problems we are allowed to talk about is structural racism. Why is that?

On housing, Milton Friedman also promised us that if we just let the free market roll, all would be good.

In all of the other English speaking countries, the authorities have seriously restricted Chinese ownership of land. And yet not America. I wonder why. Could it be that many of the donors to Trump, especially the real estate barons, got their financial backing from China?

Work from home seems somewhat of a solution but until the very large, very expensive, very ridiculous Chinese developments in our major cities go bankrupt we will have to wait a bit longer still. Maybe the good Chinese can help us retake over our cities and get rid of the homeless drug addicts who are been drugged up by the Chinese and Mexican cartels? Here’s hoping.

Let’s not forget that Ukrainian oligarch Igor Kolomoisky, the slumlord of Cleveland and the backer of the sainted Zelensky — who absolutely does not have foreign property abroad, no sir — was, of course, supported by China.