Steve Keen: So there are five scenarios in which the war could end because Trump is stupid enough to take on what Israel wanted to do, which was destroy Iran, but they've bitten off far more than they can chew. So scenario one is Iran destroys the Gulf power infrastructure. I think that's highly likely. And if that happens, then Saudi Arabia, Qatar, Dubai, they'll become uninhabitable. And then scenario two, Iran disables Israel's nukes.

Host: Professor Steve, I have so many questions. What is going on?

Steve Keen: So, this war is threatening everybody on the planet. And what Trump is doing at the moment is a pump and dump scheme. He's trying to drive up the oil price and exploiting it for his friends and for his own wealth in the process. So, people are focusing upon the price of this. But the really important point is this, the straight of Ham. So, oil, fertilizer, helium all have to pass through the straight of Ham.

Steve Keen: And Iran have blocked that gap. So, they can say you do or do not pass depending on your country's attitude towards our country. And that's quite terrifying because 20 to 30% of our fertilizer comes through at this point. But if this is not available, the globe has a famine.

Host: Do you think he will send ground troops in?

Steve Keen: Yes, I do. But I'd hate to be one of those troops because it's a suicide mission. They've got underground military units of weapons and troops, but we have no idea of the scale.

Steve Keen: Well, it's the choke point in the Persian Gulf to get through. You've got like 21 km. Okay, that's an incredibly narrow gap for ships to pass through and that means that all the countries that pump not just oil but fertilizer, helium, all these critical elements for the production system all have to pass through this point. critical elements of the production system are being terminated by this conflict. You can't produce chips anymore. And you can't... Well, you got hang on. You can't produce these chips either because the fertilizer is disappearing.

Steve Keen: So about 30% of the world's helium comes from a gas field which spans both Saudi Arabia and Iran. And then helium is absolutely critical for the semiconductor industry. It didn't matter 100 years ago. Helium is an essential element to make them for our iPhones, our tablets, everything electronic. If you need semiconductors, you need helium. So if you cut off 30% of the world's helium supply, you cut off the capacity to produce 30% of the world's semiconductors.

Steve Keen: The really important point and I can bring up one of my own charts here is the role of energy in production because if we don't have energy we can't produce goods and services and the link is incredibly tight. This is looking at change in energy and change in gross world product over the last 40 years.

Steve Keen: So, when energy goes up, GDP goes up. And when energy goes down, GDP goes down. Now, we're losing 20% of the world's liquefied natural gas, a substantial proportion of its oil as well. We could see a 5 or 10% fall in energy. we will certainly see a 5 or 10% fall in global world gross world product.

Steve Keen: I know. And this is like one reason I'm a critic of mainstream economics is they trivialize all this stuff. They don't teach their students how critical this is. So most people are like you, even people who've done a PhD in economics, even worse in that sense than other people, they don't understand how critical and how fragile our production systems are. No, it's going to cut off your food supply.

Steve Keen: Look for Australia, my old home country has about 30 days oil supply. When it runs out it can't get food from the farm to the city anymore. So Australia is incredibly vulnerable. We're all far more vulnerable than we realize and this war is threatening everybody on the planet.

Host: I've heard you make a few predictions about the future of the economic markets. You know, you're famous for predicting 2008 and the financial crash that occurred then. I've heard you saying that you think because of AI there's going to be another financial crash around the corner within one or two years.

Steve Keen: Yeah. What's happening with AI is a classic economic boom and bust cycle. A common pattern in capitalism is that some new technology will be developed like railways for example. AI is a natural example of that and what you get is massive overinvestment in the first instance because everybody who invests in AI has the ambition of being the only AI provider on the planet.

Steve Keen: The big tech companies, Meta, Amazon, Microsoft, Alphabet, own Google, Oracle is on track to spend 720 billion on AI infrastructure in 2026 alone. We are seeing a 5:1 ratio of money being spent versus money coming in. Which is historically unsustainable.

Steve Keen: But I don't I'm not wor as worried about that as long-term consequences of AI because this is the first technology which implies you can actually virtually eliminate labor as necessary for reducing output. I think 50% of jobs could be wiped out. And when when everybody starts losing all their money very very quickly, you see this contraction. And get frugal and pull back in again. Lay people off and so on and so forth.

Steve Keen: So, I think universal basic income is a necessity given what robotics and AI can do to employment. If he got a UBI, he wouldn't have to work at those three jobs. He might work at one or he might actually consider his own business possibilities in that situation.

Steve Keen: We have two possibilities. We have a future where Star Trek's high future where you have replicators that make the goods and we consume and and we all live a energy abundant life. or the hunger games where there's one little elite that gets has all the robots and lives extremely well and we tolerate and oppress the vast majority.

Steve Keen: Basic thing is our system is far more fragile than we've convinced oursel that it is. And if that robustness is destroyed... then we can fall off what's called the Seneca cliff. We can go from an abundant future to a collapse. Stop electing fools. We need to reverse back to having a humanoriented and physically realistic view of how the economy managed should be managed.