Continued from video 1/2

and when you talk about that Chinese banking system, let's assume that it has to restructure,  What they'll do, they're very smart. Ah, people...
.
Hold this hold as you see and say let's talk about this, here's how smart they are. When we went over with Trump's visit, remember they didn't make any other changes. They weren't gonna listen on anything else of that, except they would open up the finance sector.

So it says the spider to the fly.
Exactly
They've already wrecked their financial system. And now, you can invest.
Now you can invest .
Why does the world not see this Steve!
The world absolutely sees this.
They're starting to see it .
Hang on hang on, Kyle.
The world's economists are just starting to see this.
No no no no, Kyle,Kyl, Kyle, you you you are much too
kind. You're a good man, okay? You've got to call it like it is. It's bullshit, okay? You're telling me the guys in the Wall Street Journal, Financial Times of London, and The Economist -these smart guys these think tanks don't know exactly what's going on. 
Some may say..
They say like Megan look at the balance sheet of these bank to say, hey guess what I think we have a ticking time bomb here.. But you know what they say!
They know exactly what it is.
But you know what they say! But it's China. That's what I hear all the time. That's why I agree with you but it's China so we 're gonna keep writing what we write..

Yeah yeah that's got to stop. China must be okay.  We cut a deal with them the late 90s. Remember, you had a spectrum back then of the China cheerleaders, the rational accommodationist, and the Hawks. Okay so let's talk about this back in 99, that was the pitch from the appeasers. The people have to understand it's both political parties. This is not about ideology.

This is all Democrats and Republicans okay?  When they're talking about China they 're just trying to figure out how to get more money in their own pockets. So the cheerleader said, exactly hey it's China once you get into the most favored nations, once we get them into the WTO they're going to turn out to be liberal
capitalist.
They' re gonna you know they're gonna they're gonna vote.
Liberalize our economy. They are going to democratize. They're gonna let us invest in everything.
They are going to be  middle class. There gonna be maybe create a rule of law.
Rule of law. real long all the law it's gonna be it's gonna be nirvana and they're gonna be okay. So we know 17 years late r guess what they're a totalitarian regime,  mercantilist regime . They've got a system that works with them for the for the for the it for the elite for their regime.and it works well now you have two sets of folks the rational company the cheerleaders are gone nobody's cheerleaders. You have rational accommodationist and you have Hawks. Rational accommodation has got a new name it's Thucydides Trap. It's your buddy Graham Allison and Henry Kissinger. 

And here's a great concept they got. Their great concept is America' s a declining power . China is a rising power like Athens was a declining power, and Sparta was a rising power. And what you have to figure out to avoid a global conflict which is like 16 times in world history, this is happened.  And 12 times they just weren't wise enough to take it. What has to happen is the declining power can figure out how to nudge nudge the rising power could kind of get into their system. Now you're always be the junior partner but you'll make the big guy kind of work with you and everything will be happy.. 

This is the exact same nonsense from the exact same people from Allison Graham and from Henry Kissinger that they spun on Nixon in the late 60s about Russia.

Let 's go back in time yeah the same exact pitch Russia's a rising power, America's a declining power and what we have to do we need detente, we need rapprochement, we need to let them have their sphere of influence. It was bullshit then and it's bullshit now.  

Ronald Reagan came in and said hey you know what, how big is their economy? and they said Russia 's economy is the size of California. Yeah he says why do people fear them? The very first thing that Andy Marshall at the Net Assessment Group in the Pentagon and Bill Casey at the CIA did was do a complete analysis of the Russian economy. and they found out it was only half as big, whoops I have amiss 15% bigger, and they were desperately short, Guys that's really short of dollars.

 Desperately short of dollars. This is the whole thing that always happens with a regime.
 So exactly where China is

 Because they did the exact same thing as China. They put it into military spending that was not productive so here we go with the exact same set of guys. And what they tell us 40 50 years later hey America's are the declining power, China is a rising power. and this and look at its exact same thing they have an economy with no dollars.

Here's a point I make told how about this how a bout we stop being a declining power. That is not a law of physics. A process that manages us to decline, okay is not a process I accept.  I am looking for a leader to step up and make America great again okay? A and that's Trump's basic pitch and guess what in two years he proves the Chinese are a paper tiger.

When you think about again, their grand strategy are pushed back and where we are in the globe today?

How do you think what do you think China's next step is? If you were  predicting what their next step would be, given our assertiveness that would, that we've stepped forward on the economic, call it side of the other coin and pushed in some tariffs what do you think they're going to do?
Number one they won't reverse textbook,
What is the textbook?
They want regime change in United States. They believe they have a eighty percent chance of getting Trump, getting winning the house of you know doing whatever they need to do with psychological warfare with money, with whatever they have to do to basically fort Trump and lose the House of Representatives, and see him impeached this year and 100 percent probability they 'll beat him at 2020. Number one is removal of Donald J Trump as president of United States
okay
Because they say that is the rail head of everything has happened to us badly, and we've got to get you know, we've got to get a globalist in there their game,
Their game is just to wait him out.

Not just wait him out but t I think, take active measures now.  Yesterday, Penn said yesterday and Axios and other people reported this classified information this shows that this shows that the Chinese involvement in real meddling. This is not some Russia guys on Facebook. This is the real deal. This is all the chips in the middle of the table that's number one.

Number two, I think what you're seeing the Italian said today that that age China's gonna be our big buddy.  I think you' re gonna see a double and triple down on one Belt one Road. I think you wiil see a double and triple down on made in China 2025.  I think you'll see the East India project in sub-Saharan Africa, at the Caribbean, in Venezuela and Latin America.  I think they're gonna double and triple down. they got a lot of RMB to spend right? and if a guy can take RMB,

But No one's gonna take RMB.
Well this is going to be that this is going to be the great question we're gonna have in front of us,
It's the key!
Because they're in the Gulf right now. There's all over the UAE they're all over Saudi Arabia. they're all over Qatar.  They 're all over every resource of area in the world from Argentina to sub-Saharan Africa to to South South South Africa. And they're gonn a try to see it.
 you play it. 

Then number three because remember in the great textbook that they put out and basically printed in English in the late 90s written by these two brilliant Colonels in the Chinese War College
called unconventional warfare.  Unconventional warfare
 Admiral Lou?
 yeah yeah it's a it's a book that should be written as should be read by every body.
is that the because it laid out China strategy they said there's three types of warfare there 's information warfare there's economic warfare and this kinetic or kind of guns up warfare and what we want to do is avoid kinetic because the one thing America can do is kick your ass right so we wan t to avoid that okay and so let's let 's focus on information and economic warfare and they run the tables. I mean it's text book. If you go back and read that they've done exactly what they they said they w ere going to do.  I think and I believe that given the fact that Trump is now converging all forces of government power onto the economic warfare and they are taken back and the regime is under huge pressure. Because I believe the Deng Xiaoping faction and others even at the highest level who believe in collective leadership have said, hey what we have here is a cult of personality.

Do you mean the ones that haven't been jailed or killed yet?
The ones that haven't been jailed to killed yet have sat there and go, Deng believed in working with the West yeah Deng believed in reform Deng believed in opening up but dang believed in being a good  partner, and particularly keep your lights down don' t get up to somebody's grill that what what they see with with Xiis a return to the cult of  personality. of Mao, and he's under tremendous pressure internally.

 I believe, I said on my radio show and everybody quotes me on this back in I think it was 2014-2015 that i n five years we'll be in a shooting war in the South China Sea as a 22 year old naval officer I was on patrol in the South China Sea on an American destroyer okay and I said where in the hell am I you know what is this place because every tanker in the world coming through the Straits of Malacca yeah from the Persian Gulf. You've got every huge tanker. You've got every boxcar. It's a superhighway. 40% of China's energy needs come through the Straits of Malacca.

There's 40 I think it's one third of the world's trade. It's $5 trillion today.,

When I when I get into the White House's chief strategist okay with Mike Flynn we first got there on the National Security Council in the transition I said the three things you got to do is devolve fighting of capability to the combatant commanders get the White House was running the wars against Isis.

So give it to Harry Harris
Yeah yeah  Well, no. In this regard, give it to the guys in CENTCOM and let them take on ISIS.  You've got to devolve the power to fight wars and the ability fight wars back in combatant commanders.
 Number two, we've got to figure out, in this National Security Council thing, the Obama appointees and how we're going to get our own people in there over time.
Number three I said we have to go back and get every document every document related related to Obama's pivot to Asia.  I said I wan t to see exactly what they looked at and people should know and in the White House I worked seven days a week 18 to
20 hours a day okay? Fifty percent of my time was on the pivot to Asia why Obama did it what we were going to do to count. Here's.

It was It was Kurt Campbell's
 Kurt Campbell's. Here's what I found. I thought it'd be a whole room full of documents. It was pretty thin and what I found is that the United States itself was not really engaged institutionally against China. You had some great people. But there wasn't all forces that kind of thought through, hey, an economic plan or a war
plan against China to engage in this economic war. In fact what you saw the entire pivot to Asia became I think putting a marine Brigade in Darwin Australia. It was basically the issue so Harry Harris was a guy.  Everyody told me Harry Harris is the man. So I got Harry Harris back.  I spent you know a lot of time with him getting schooled on exactly what's going on and the one thing I found that was shocking is that the South China Sea. When I was a young naval officer, we went through the South China Sea guns up radars up everything moving. It's called free navigation. We did in international borders. What we want to do when we want to do it. Because we're the United States Navy, okay? We keep the sea lanes free.

What I found out now is they got these reefs. Everything like that.  In China- we only go through and what's called safe navigation. You go through with your radars off, no fire control solutions like a good little boy. You just kind of go and you're basically asking  their permission to go.

I was unaware of that.
South china They consider  When they lost the International Court, China considers the South China Sea to be an internal sea to China.
I know. The Nine-Dotted Line of 1949 is a joke.
 Well, they think it's a territorial sea. They are not prepared. The first thing they'll tell you is that the territorial integrity and the sovereignty of China is not to be questioned, not to be questioned.  And they consider that nine dotted line, you know the more people put it into documents, the more people put it on TV shows, the more people that they reemphasize that meme, they want,  because they believe that that's reality.
yeah 

You ask me what's going to happen. The South China Sea I said on my radio show of five years ago over in a shooting war the South China Sea in the situation in Qatar in the Persian Gulf
in the South China Sea are the two greatest hotspots in the world for a global conflict to start, okay? not Korea, Korea is a vassal state of China. The whole Korean thing is nothing but a Chinese drama okay? okay And President Trump is doing an amazing job on it. The South China Sea is a flashpoint. and you saw the other night. As a former naval of sometimes those two ships..
 what you had an American the USS
50 feet a part. 

The USS Decatur was on patrol. And you basically had a Chinese destroyer come up and play chicken with it.  They were fifty feet apart.  If those two ships had hit, what would happen to it. First off two or three hundred sailors would have died. okay Absolutely. If those two ships had hit at the speeds that they were going the relative speeds were going we would have had a catastrophe okay? Now I don't know what could have happened to the weapons and what could happen to the fuel but I'm telling you at the speeds what the Chinese did was reckless and that was a challenge to us. Remember what the Decatur did was go 12 miles 12 miles to one of these reefs okay? Now what the Chinese say is within 15 miles is their territorial territorial water. They said it was a violation of their sovereign territory for the United States Navy to come 12 miles off a reef that they built into the South China Sea.

 My recommendation is I think the president of the United States Donald J Trump, who to me had been very even- handed with China and really you know tried to build a relationship. I think you ought to give the Chinese 72 hours. 72 hours to take every radar every every offensive thing on military all the Jets everything either runways everything off the islands. You get 72 hours, take it all off and on the 72nd hour in one minute the United States Navy's gonna go in there take it off form and then I think they ought to take those reefs and they are to dismount them and turn the m back into international waters. They say the United States is provocative by putting the United States Navy back into the South China Sea to keep the sea lanes open. 

I happen to believe where this relationship is going. And the lack of a real response, the Chinese gonna have.  that they're gonna try to do something provocative in the South China Sea to try to  initiate a response, and I think the president ought to be proactive on this. I think you got to tell me get 72 hours if you don't take it off we're gonna take it off for you.  And then dare them to stop the United States Navy going in to do it. 
 
Wait you're saying go go to a kinetic conflict in 72 hours and a minute.
 I didn't say go to a kinetic conflict. 
What I said was
If we go try to take this off they're not and they're not gonna let it happen.
Well the international courts ruled that it was inappropriate for them to be there. Why don't we enforce that? The Party of Davos-- when she came and gave that great speech at Davos that they all jumped up about, they failed to say what you just mentioned.
They looked the people of the United States in the eye and lied to them from the Rose Garden in 2015 with the president of United States right next to him okay 

And nobody called him on it 
and never call him on it. and then you saw  when the international courts came and they said hey this is totally unacceptable.  There's no argument for it, It 's got to be undone.  They just sat there.  They've sat there and said hey these are our territorial sea. And I realize people saying Bannon what kind of crazy whack job are you. It's somewhere and we don't even know where it is in the South China Sea. We're going to go to war. People have to understand the global economy and I'm a nationalist okay but the the health of the American economy is based on trade. You know you know populist and economic Nationals are not anti trade.They're anti this radical concept of free trade when you're trading with a totalitarian mercantilist society right we want what Trump wants and what he said from day one is fair trade and reciprocity okay reciprocity. and I think now we're gonna get down to it with China. You know this thing is not gonna.. this thing is is going to... China is going to have to understand that Donald Trump is never going to back down on this.
 yeah
Okay he's a fair man okay he's a decent man he's tried to work with them but the days the United States being pushed around like this are over.

Let me ask you a provocative question then if we we re to go.. 
How can we get any more provocative? I just said we're going to war in the South China
 It's just the derivative of that. We're just going even more. It's equally as provocative. What if we were to just take our seventh fleet and go home? 
Here's the thing s that people have to remember things very important for people to remember that the United States is a Pacific Power yeah I mean the whole development this country the Transcontinental Railroad the whole West Coast the West Coast we are inextricably linked to the health of of of Asia 's economy .

Well article 5 protections of Japan would be a real issue but I know I say that because if we were to have to go to let's say we were to get to the point where we either had to go to war or had to come home..
Coming home is not as not an option
Not an option 
The world the world would be in incredibly and would get to be an incredibly dark and dangerous place. 

You know very,, you could have her you could have  appeasement there you can have a Munich? right? You could have people say hey let's just pull out they built the islands they're rising naval power. It's really...

We don't we don't want to fight.

You're already hearing it.
This is another debacle like Iraq and Afghanistan. the United States is - look I'm the biggest, I'm the biggest proponent of America first,  South China Sea in the gauge Minhtwith China is absolutely vital.

Interesting okay. let's go to one other what could...  I have two more questions. One is that why why is the U.S. not had a people management process in the U S.  and what I mean by that is you know you read the DI U X report that I call it Declassified or
actually never was classified Defense Department report on the infiltration of China into our research universities in our lab.
And our weapons labs.
Weapons labs funded by DARPA the Air Force. And why have why haven't we put into place a proper people management process.
Look Russ, I want you to go back because I don't think people understand these reports. These reports are essentially declassified reports that showed that the 300,000 students are here on student visas right, and the 10,000 contractors that we have in the weapons labs that you know up to I think it's 2 /3 could be
intelligence assets right?
Right
And some percentage are intelligence officers or agents. 
And they're working in our labs. On weapons technology funded by our government.

This is political correctness and greed and avarice writ large. How did contractors and let's call him at Booz Allen and McKidd all these contractors how do these contractors on these big government programs get so many Chinese nationals working into our weapons labs. Our weapons labs are at the cutting edge of national security. How did it happen and so this has got to be done right away.  I don't know why it's been a huge I think bone of contention inside the administration. The political correctness of it all Steve emailed me the Financial Times of London leaked the other day that my colleague Steven Miller. He's a terrific young man actually had the plan in place to get all 300,000 Chinese students out of the country right way to cut the visas off right away. Not that we're going to execute on it but it was even in the thinking And obviously, it got leaked. In the Times, it goes around the State Department, et cetera.
Right you might look at all the appeasers. I am so glad I take great pride that someone like Susan Thornton is now you know owns a farm up in Maine because she was part of this kind of you know rational accommodationist. this kind of softness in in the America. in the Defense Department. in the in the State Department. in our intelligence services that basically went along with what try and want to do nd look the other way.

But how do we so I'm not a proponent of throwing all their 349 thousand students here and I know you know

I'm not a proponent Here's where I am a proponent. I am a proponent of it if they're intelligence assets I want to know that.  okay what Miller's program was and said hey if we can prove this they got to go home okay?

But I 'm not even focused directly on China or India or anywhere specifically. But why can't we have a policy in with the sovereignty and national security of our own country, Why can't we say if it's a weapons program you just need to be an American citizen;  maybe should be a natural-born American.
 You're asking basic, fundamental questions.
It's simple.
 I think, actually, that's on the book, and they get waivers. I believe that technically, when you look in the details, that's actually the fact that there's kind of waivers given to this because people look the other way. 

Okay and so one more one more issue is the Confucius Institutes. The Confucius attitudes are on of our colleges. They're funded directly by the PLA. Why do our colleges allow Confucius Institutes on campus? 
It's unacceptable. It would be like in China, having something funded by the CIA that was directly-- 
  Or the Catholic church. 
 Or the Catholic church. But not the Catholic church because the Catholic church just cut a deal that lets China-- I know, I know..
But this is a huge issue. Pope Francis just cut a deal that lets the atheist that run the regime in Beijing actually pick our bishops.  So the Catholic church would not be a good idea since they've already kowtowed. It would be equivalent of having CIA or DNI have a student center that promoted CIA culture in China. 
OK. That's not happening. OK. You know why it's not happening? Because the Chinese say, hey, that's not going to happen because that may affect our sovereignty. You've got to unwind them. 
How?
I think you just sit there and just shut them down. Right? 
 Under what law?
Hang on. This whole thing about people saying, oh, well, they're not that bad. They're pushing culture. And they're helping students learn Mandarin. Hey, they're financed by the PLA. 
 They have server rooms in the Confucius Institutes. What the F's going on? 
All of this is gonna be a shock to the American people. Here's why the American people don't know this. Because nobody reports it. Has 60 minutes ever gone, had done a Confucius Institute?
They should
Yeah  they should have done it 20 years ago, the reason this is coming up is that people now fed up with this. And that's why in this Trump movement it was Donald Trump and when he came to the government that changed it that now other people and other voices are coming up and you're seeing a real pushback. But to allow this to happen at our  universities.., at our...   let's be brutally frank.   Why is it always Hudson Institute that's having Miles Kwok, or last night Mike Pence, and Dr. Pillsbury? 
Why is it always Hudson Institute? Why is it not the other institutes having these kind of conferences? 
  Well, because China has paid many of them.
 The last thing that maybe I'll close on is Li Hu, the economic strategist for President Xi.
yeah
And I've had an opportunity to know him and build a little bit of relationship he's a very brilliant guy, when he came to do the major negotiation that didn't work out.  I think it was in June last year.  He came in the very first day he didn't go to the White House at first, he didn't go to Treasury first, he shows up in the very first day he spent on Capitol Hill. with that with the  quote/unquote free traders in the Republican Pa It was the Republicans that went crazy. Oh, you got to do free trade. You got to do free trade. 
 rty. Remember president Trump's the greatest blowback? he got on this with the Republicans.
 yeah
 It was a Republicans who went crazy. Oh, you got to do free trade, you got to do free trade.  All the nomenclature that we've been using in regards to China has always been the dismissed, oh that 's just China. Okay and so all the nomenclatures just been happy talk and the words don't really mean what they are. And it's people like your self, it's people like Miles Kwok. it's people like Dr. Pillsbury that are now starting to question this.  And I think you see this whole thing that from quote, unquote, "engagement to confrontation." 
 What they're pinning us on now the new thing is that engagement versus confrontation and we're being painted as the war party
Right
we're the crazy guys want to go to war
Right
Well what we want to stop is an economic war. that's been against the United States. And if you look at the group that's in the you know engagement process, all they've been in is being tapped along by China in these strategic economic dialogues, that didn't go anywhere for 25 or 30 years and put us into the place where we were de-industrialized by a predatory power.

And then China's predatory capitalism is what they stand on. it so I think I couldn't be prouder that President Trump. 

And I think that speech for people have not seen that speech that speech is gonna go down in  history as an inflection point because Mike Pence yesterday the vice president I states essentially threw down and said hey no more games we understand what you're doing, we understand what you're up to, we understand you have every force of you have a full force of government  against us. and we're gonna counter that and we're gonna win.

I appreciate that and you know this goes back to when you pull into the Commerce Department right above the entryway where you drive through, if you've seen this, there' s a quote from Benjamin Franklin. it says Commerce must be fair and equitable and I think that's where we need to be.  I don't think we should be overly punitive, I don't think we should be combative.  I think we should say we just need a fair shake at things and what you' re saying is there had jus..t we haven't had one, and that's something we believe too. And the good news is as I think in the last six months to a year culminating with Pence's speech a couple of days there actually a day ago is finally the narratives changing despite. a ll of the efforts from fro m those in China so thanks for being here today thanks for sharing this with us
Thanks! Thanks for having me.  it was great!
It was really nice
In this undisclosed location
 Undisclosed location. We're here with Miles
 You've got to be undisclosed. Except he's live streaming it constantly, so that's-- 
  I don't know who's more controversial, you or Miles. But we'll see soon.
  Miles is a whole different league. I'm junior varsity compared to that. 
 thank you thanks for coming
Thanks for having me.

중국 은행 제도를 이야기할 때, 그건 재정비돼야 한다고 가정해볼 가요. 그들이 뭘 할지... 그들 아주 영리하지요.
어, 사람들...
잠깐, 잠깐.. 우리 이 주제 이야기 좀 해봅시다. 그들이 얼마나 영리한지 여기 예가 있어요. 우리 트럼프와의 방문을 이야기 할 때 기억해요, 그들은 아무 변경을 하지 않은 거.

그런 식으로 거미는 파리에게 말하지요
바로 그거요.
그들은 그들의 금융 제도를 이미 망가 쳐놓고는 자 이제 여러분들 투자 할 수 있습니다,"
자 이제 여러분들 투자 할 수 있지요
왜 세상은 이런 것을 보지 못하지요, 스티브!
세상은 이거 분명 보지요.
그들은 보기 시작하는 거죠.
잠깐, 잠깐, 카일
세상의 경제학자들은 이것을 보기 시작했을 뿐이지요
.아뇨, 아뇨, 아뇨, 아뇨, 카일, 카일, 카일 카일 자네 너무 친절하네. 자네 선한 사람이네, 오케이? 사실은 있는 그대로 말해야 하네. 이건 헛소리요, 알아요? 그들 정확히 알아요, 월가 신문이나. 런던 타임스지나 경제학자 잡지사의 녀석들이 이들 영리한 친구들, 이들  두뇌 집단이 사정 돌아가는 거 모른다고 내게 말하는 거요.
그러나 그들이 뭐라 말하는 지 아세요?
나 같은 먹청이도 이들 은행 대차 대조표를 보고 말할 수 있는 게, 어이 내가 뭘 생각하는지 짐작할 수 있어요?  여기 시간폭탄이 하나 짹깍 거리고 있다고요.
그러나 그들이 뭐라 말하는 지 아세요?
그러나 문제는 중국이다. 그게 제가 늘 듣고 있는 겁니다. 당신과 동의하지만, 문제는 중국이기에 우리는 우리가 써온 대로