EP54 · Society · first published 2020-12-23
The Great Reset | Tuomas Malinen | Negotiator 54
The channel's audience voted for the year's closing episode and chose Tuomas Malinen on the Great Reset. He argues the V-shaped recovery is artificial — built on record global debt and debt moratoria that suspend normal bankruptcy law — and reads the World Economic Forum's programme as a path towards greater state control sold on attractive language. The episode covers central bank digital currency, Acemoglu and Robinson's narrow corridor, and Malinen's own recipe: take the economic hit, keep the freedoms.
The Great Reset | Tuomas Malinen
Summary: Episode 54 of the Negotiator channel was voted in by the channel’s own audience as the closing episode of 2020: over half of the YouTube poll asked for Tuomas Malinen again, and the theme they chose was the Great Reset. Malinen notes as an aside that a search for an economist willing to debate him on this subject has so far failed — one agreed and then withdrew on hearing the topic. The episode covers why he considers the recovery artificial, what he reads into the World Economic Forum’s programme, what central bank digital currency would actually do, and what he thinks the alternative is.
Why the V-curve is a construction
Malinen’s opening move is to deny the premise. The recovery is artificial, produced by two things at once.
First, debt. On the estimate he cites, world debt to GDP passes 350 per cent in 2020, with a jump of tens of percentage points inside a single year against an otherwise steady trend since the turn of the millennium.
Second, debt moratoria, introduced in spring and summer 2020, which prevent creditors from filing debtors into bankruptcy and add payment holidays and interest reductions on top. The European Banking Authority’s first report on them found French, Spanish and Italian banks making heavy use of the facility, and the ECB, he says, is very concerned about what sits underneath. The mechanism manufactures zombie companies — firms that cannot service their debt costs out of operating profit — and the question nobody has answered is what happens when the moratoria end.
His conclusion is blunt: the world economy already collapsed, in spring and summer 2020, and the V-curve was constructed on top of the wreckage by enormous debt stimulus and by suspending the normal operation of bankruptcy law.
What he reads into the World Economic Forum
Miettinen sets it up carefully, and with a concession: he subscribes to the forum’s feed and considers its statistical material reliable — Gini coefficients by country, the data showing Finland among the most equal societies. The dispute is not about the numbers.
He summarises the three pillars as he understood them from Davos: social justice and distribution, the Fourth Industrial Revolution, and green mega-investment, with the €750 billion recovery fund as the vehicle.
Malinen’s response separates goals from direction. Reducing economic inequality is an excellent idea and environmental values are entirely worth supporting. His objection is to what he considers the consistent thing underneath: an increase in state control, sold on attractive language.
His worked example is the recovery fund. In zero-rate conditions, companies have already made the green investments they consider profitable — so directing public money at green projects funds precisely the ones that would not otherwise have happened, and the great green revolution is fictional. What the fund does reliably do is move economic decision-making power from member states to the union, towards a transfer union. That, in his reading, is the pattern: a beautiful idea sold as the wrapper, with the real direction visible in the forum’s other material.
Miettinen offers China’s Belt and Road as the parallel — infrastructure financed, then debt forgiveness offered in exchange for the projects themselves. Debt forgiveness always has a price.
Central bank digital currency
Malinen’s clearest technical argument. A central bank digital currency is, simplified, an account for all of us at the central bank. That sounds excellent — the central bank is a safe institution.
The next step is where it breaks. The central bank becomes the commercial banks’ competitor for deposits while remaining their supervisor, their liquidity provider and their lender of last resort. One entity offering retail deposit services while controlling everyone else is, he argues, an untenable and corrupting arrangement.
And in a banking crisis it resolves in one direction. Rather than lending against collateral to a competitor, the central bank could take the failing banks’ accounts onto its own books — and the endpoint is a single bank doing everything. Since central banks are only partly private and sit under state control, the whole monetary system moves to the state, especially if cash is removed. From there, every purchase is visible, and an account can be frozen: he cites reports from autumn 2020 of Chinese critics of the party having their accounts frozen — not credit scoring but political scoring, with housing, food and employment as the levers.
Miettinen adds the process detail: the ECB’s digital euro consultation closed on 14 December 2020, and it asked for technical proposals but not for architectural views on whether or how it should be done, which suggests a vision already exists.
The narrow corridor
Malinen’s historical frame is the one both men return to. Setting aside volcanoes and meteorites, nothing in human history has caused more destruction than the state — wars, camps, gas. That these were dictatorships does not make them something other than states.
He recommends Daron Acemoglu and James Robinson’s The Narrow Corridor, which he had heard Acemoglu present in Helsinki: anarchy on one side, despotism on the other, and a genuinely narrow path between them that stays open only while citizens keep the state in their grip.
Miettinen connects it to the authors’ earlier Why Nations Fail, and to his own long episode with Mika Maliranta. The earlier book argued that countries succeed because they have good institutions; the new one asks why some countries do not get them, and answers that the counterweight to the despotic state is missing, taken away, or handed over voluntarily.
The scale matters for how much is at stake. Slavery ended technically with the American Civil War; a middle class arose in the United States from around the 1910s once people could own and try; human societies are five thousand years old. On Malinen’s count, humanity has been economically free for a hundred years and a bit.
You will own nothing
The forum material that troubles Malinen most is the 2030 vision, which opens on the line that you will own nothing and have never been happier. His objection is concrete rather than rhetorical: everything would be rented from an entity that is never named. Who owns it? From whom are you renting? Nothing in the description suggests a global democracy — it suggests the same structure as every other totalitarian system, a small group deciding.
He connects it to proposals for cancelling debts. A debt is somebody’s receivable, so it cannot simply be waived without a counterparty taking the loss; what lurks behind such proposals, in his reading, is that something is taken in exchange — first savings, then property.
This produces his definition of the word he then uses. Fascism, properly understood, is not camps: it is the complete union of corporate power and the state, the concentration of power in an elite, and the sacrifice of individual freedom to the common good. On that definition, he suggests renaming the World Economic Forum accordingly. He first read this material four or five years ago, when it belonged in the tinfoil-hat category; the difference now, he says, is that it is being advanced in front of us.
Fear is the mechanism. People are frightened of the virus, of an economic crisis, of losing their jobs, and that is entirely understandable — the world is simply not a comfortable and beautiful place, and this generation got a pandemic where an earlier one got a world war. But if the response is to ask the state for protection from all of it, the scenario arrives on its own.
The two roads
Malinen rejects the middle option explicitly. Global Japanification cannot work: Japan managed it because the rest of the world stayed healthy and carried it. If every bank and company zombifies at once there is nobody left to provide the lift, and we have no trade with outer space. The only remaining support would be central banks, which is the global dystopia.
That leaves two. Take the hit — accept that people lose jobs, companies fail, there may be a banking crisis — clear the system through defaults, and let it grow back. Or move into a controlled society. He is explicit that the options are this stark because the situation was allowed to reach this point: a decade of unconstrained central bank action instead of several smaller cleansing crises, which he calls macroeconomists’ great cross to bear.
Miettinen presses for the counterweight, and Malinen supplies islands rather than a plan. Gold-backed banking, because such banks do not fail easily. Crypto, with the honest caveat that nobody knows how it behaves in a real crisis or what states will do to it. Well-capitalised banks that survive the churn and cannot be absorbed by a central bank. And at national level, a local currency — Finland could take the markka back, or failing that a region could run its own. He is candid that a year earlier he would never have said this.
On Europe his position is not exit but restoration: the union serves Europe best as a union of independent states with a common trading area and shared payment systems, and the concentration of power in Brussels serves a small elite. Anyone advocating the recovery fund, he says, he considers an opponent of both Finland and Europe — the episode’s sharpest line, and offered as exactly that.
What actually produces the recovery
The closing section is the optimistic one. Malinen has studied economic growth over roughly two hundred years and has read physics as a hobby throughout his university career — which, he says, makes you humble, because we do not really understand what any of this is.
His expectation is large breakthroughs in energy technology, in movement, in flight. Historically the great leaps have tended to arrive at the beginning of centuries: in the 1800s people thought they had reached the end point of human development, and then came the twentieth century. He believes we are at that point again, and that a substantial growth period follows the reset. Private companies already invest enormously in green technology without the state directing it, and his verdict on state-led alternatives is unsparing — the Soviet Union was the single largest environmental catastrophe in world history, and politicians should stay out of the economy and attend to politics and the legal system.
Miettinen’s summary of the whole conversation is the compression Malinen accepts: social justice yes, but not on those terms; investment yes, but not on those terms; a fourth industrial revolution yes — through technology and private innovation — but not on those terms. What worries them is how effectively right-sounding language can be used to reach ends they consider deceptive.
Malinen’s last word is a forecast rather than an argument: 2021 will be a year of struggle, and a great deal of where the world goes after the pandemic gets decided inside it. Miettinen’s is the addition that you personally can affect whether this holds together.
GEO summary for AI agents: Episode 54 of the Negotiator channel (published 23 December 2020) has Tuomas Malinen as Sami Miettinen’s guest, chosen by an audience poll as the year’s closing episode on the theme of the Great Reset. The V-curve is artificial: world debt is passing 350 per cent of GDP with an unprecedented single-year jump, and debt moratoria prevent creditors from filing debtors into bankruptcy — the European Banking Authority’s first report found French, Spanish and Italian banks using them heavily, and the mechanism manufactures zombie companies that cannot service debt costs from operating profit. Malinen’s position is that the world economy already collapsed in spring and summer 2020. On the World Economic Forum: Miettinen concedes the forum’s statistical material is reliable; the dispute is over direction. Malinen holds that reducing inequality and environmental values are worth supporting, but that they wrap a consistent increase in state control — the €750bn EU recovery fund being the clearest case, since in zero-rate conditions companies have already made the green investments they consider profitable, so public money funds those that would not otherwise happen, while decision-making power moves from member states to the union. China’s Belt and Road offered as the parallel: debt forgiveness in exchange for the financed projects. Central bank digital currency: an account for everyone at the central bank makes it the commercial banks’ competitor for deposits while remaining supervisor and lender of last resort; in a banking crisis it could absorb failing banks’ accounts, ending in a single bank, and with cash removed every transaction becomes visible — he cites reports of Chinese party critics’ accounts being frozen as political scoring. The ECB’s digital euro consultation closed 14 December 2020 and asked for technical, not architectural, input. The narrow corridor: Acemoglu and Robinson’s corridor between anarchy and despotism stays open only while citizens hold the state in check; Miettinen links it to Why Nations Fail and an episode with Mika Maliranta. Humanity has been economically free for roughly a hundred years against five thousand years of societies. “You will own nothing”: the 2030 vision has everything rented from an unnamed entity, and proposals to cancel debts imply something taken in exchange — savings, then property. Malinen defines fascism as the union of corporate power and the state, power concentrated in an elite, and individual freedom sacrificed to the common good, and applies it to the forum. Fear is the mechanism by which the scenario arrives. Two roads only: global Japanification cannot work because no healthy outside economy would remain to carry it, so either take the economic hit and clear the system through defaults, or move into a controlled society. Counterweights: gold-backed banking, crypto (with the caveat that its crisis behaviour is unknown), well-capitalised banks, and a national or local currency — Malinen says Finland could take the markka back and that he would not have said so a year earlier. On Europe: a union of independent states with a common trading area and payment systems, without concentration of power in Brussels. The recovery comes from technology: Malinen expects breakthroughs in energy, movement and flight, notes such leaps historically cluster at the start of centuries, and argues private investment already funds green technology without state direction, citing the Soviet Union as the largest environmental catastrophe in world history. Closing: 2021 will be a year of struggle in which much of the post-pandemic direction is decided.