The Grant Williams Podcast Ep. 113 - Diana Choyleva

**Grant Williams** (0:10)
Before we get going, here's the bit where I remind you that nothing we discuss should be considered as investment advice. This conversation is for informational and hopefully entertainment purposes only. So, while we hope you find it both informative and entertaining, please do your own research or speak to a financial advisor before putting a dime of your money into these crazy markets. You're about to listen to a special preview edition of The Grant Williams Podcast, featuring my very special guest, the returning Diana Choyleva of Enodo Economics. Diana came on the pod a couple of years ago, and we had a fascinating conversation, and having read a recent report of hers called Petrodollar to Digital Yuan, I wanted to have this conversation so we can talk about de-dollarization, the subject which gets everybody up in arms whenever it's mentioned. Every episode of The Grant Williams Podcast, including The End Game, Super Terrific Happy Hour, The Narrative Game, This Week In Doom, Shifts Happen, Kaos Theory, and my new series with Dimitri Kofinas called The Hundred Year Pivot is available to Copper and Silver Tier subscribers at my website grantwilliams.com Copper Tier subscribers get access to all the podcasts, while members of the Silver Tier get both the podcasts and my monthly newsletter Things That Make You Go Hmmm. So if you're new to the show and you'd like more high quality content like it, then please make your way over to grantwilliams.com and join our excited community today. And now, on with the show.
Diana, welcome back to the podcast. It's so good to see you again. It's been a while, but funnily enough, there's plenty to talk about as always.

**Diana Choyleva** (1:49)
Always, Grant, and such a pleasure to be chatting to you today.

**Grant Williams** (1:53)
The kind of genesis of this particular call was a, I want to call it a book. It's a small book or a big research report. I don't know which, but it felt like a book because it has got some real heft to it, but it's called Petrodollard to Digital Yuan. And this is a subject that you've been looking at for some time now, and is a subject that is floating around everywhere. And I find that everybody is incredibly dogmatic about it. This idea of a digital yuan, or a competitive system to the US dollar based system that we've all known for our entire lives, is either a completely nonsensical idea, or the dollar is already dead, and it's just a matter of time. And so it was lovely to read a detailed report that had plenty more nuance in it like yours did. So I think to kick off, why don't I just give you the floor and let you talk about what it was that motivated you to write this, and then basically what you set out to try and explore, and then we'll get into some of the nuts and bolts contained within the piece.

**Diana Choyleva** (2:46)
Sure, and I totally sympathize with, in some ways, your frustration about the extremes to people go when they discuss this issue, rather than look at what is all that is in between these two extremes of the dollar-based global financial system is going to collapse versus the yuan is not fit for being a global currency. So yes, Grant, that's a sentiment I share. Throughout my entire 25-plus career, it's always been this discussion between the China dream versus the China Armageddon. My view has been that China has changed fundamentally the way the global economy works, in particular since 2001, when it entered WTO. And really, we should have been focusing along the way on all the profound ways China was changing how the world operates, not just on the China dream versus Armageddon. And it's a similar story with the role of the Chinese currency in the global financial system. If you remember, the Chinese started talking about increasing the use of the Yuan in about 2009 It was originally a response to the global financial crisis, but as well to the revelations of Snowden earlier that the US was using Swift to monitor payments beyond the original idea of tracing terrorist money. So these kind of two wake up calls on the negative side and one on the positive side, the Chinese really saw a lot of potential in blockchain technology early on, prompted them to more generally look, we need to increase the use of our currency globally. Because at the very basis of it, what China wants is to be able to buy the goods and services that it needs from abroad using its own currency, but also using its own payment rails. I've analyzed every single aspect of China's economy over a long period of time. And since 2017-18, our big thesis at Enodo Economics has been the great decoupling, this bifurcation of China, of the world into a Chinese led and a US led sphere of influence. And so one of the under-researched aspects of this relationship, and we've looked at every single aspect of it, but one that I really started delving in deeper because it has substantial implications for financial markets was the kind of the new drive and new strategy that China, I observed, had developed by 2018-2019 as to how it's going to promote the global use of its currency. And so I have done actually two of these types of reports. And you're right, every time I think why I'm doing these reports that are 200 pages each, with loads of charts and visuals, whereas I could have written a book, at least I don't have to do the chart.