Trading Down

An Essay on Iran, China, and the Logic of the Favorable Trade

A sequel to The House Always Wins

The House Always Wins

In chess, when you are ahead in material, you trade. The trades don’t feel like victories — you lose a piece with every exchange — but the board shrinks while your advantage, unchanged in size, grows heavier in proportion to what remains. A pawn ahead in a thirty-piece position is noise. The same pawn alone with the two kings is checkmate. The pawn never got bigger. The board got smaller around it.

The technical name for this is simplification.¹

The House Always Wins argued that the system is rigged across administrations, that the casino metaphor describes the institutional architecture, and that five analytical voices were each examining one level of a single machine.² The piece stopped short of naming the strategic principle that makes the rigging work. The house does not win by avoiding losses. It wins by ensuring that the losses it absorbs fall on pieces it was already writing down, while the assets it keeps are the ones that determine the next round. Other players at the table may take something home from the exchange. The house takes the position.

The operation depends on four things working together. Continuity of agenda across administrations. A reset of the public outrage cycle that hides the continuity. A favorable exchange ratio that makes the trades accumulate into advantage rather than loss. And a closing window — the recognition that the favorable ratio has a shelf life, and that the move has to be made before the ratio tips.

The first two are structural. They would operate the same way even if no one chose to make them operate that way. The third is structural in the general case, but in this particular war the documentary record suggests something more than structural drift. The fourth is the clock that makes the whole sequence urgent.

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I. The Continuity

Brian Berletic’s central observation is that United States foreign policy does not change between administrations. It gets repackaged. The think tank papers are the same. The institutional objectives are the same. The trajectory — Ukraine to bleed Russia, then Iran to sever China’s western energy supply, then the Pacific theatre against China itself — was written in policy documents years before any of the relevant presidents took office.³ Berletic says he predicted the current war with Iran from those papers and was proved right. He is not claiming foresight. He is claiming literacy.

The Wolfowitz Doctrine of 1992 specified that no rival power should be permitted to emerge in any region of strategic importance to the United States.⁴ That document survived Clinton, Bush, Obama, Trump, Biden, and Trump again. The Project for a New American Century called for the destruction of seven specified governments — Iraq, Syria, Lebanon, Libya, Somalia, Sudan, and Iran — in a memo that General Wesley Clark says he was shown at the Pentagon roughly six weeks after September 11, 2001.⁵ Six of the seven have since experienced US military action, regime destabilization, or proxy war on their territory. The seventh was Iran. The seventh is the war we are now in.

The continuity is published. The Council on Foreign Relations releases its strategy papers. RAND issues its threat assessments. The Atlantic Council, Brookings, Heritage, the American Enterprise Institute, and the Center for Strategic and International Studies publish in journals available to anyone with a library card. What changed across administrations was the rhetoric, the personnel, and the public-facing justifications. The destination did not.

This part of the argument requires no inference. The documents exist. The think tanks are funded by named donors. The personnel rotate between administration positions, think tank chairs, and corporate boards in patterns documented in the disclosure forms the same individuals file. Berletic’s claim that politicians are not making the decisions is an observation about who writes the papers that the politicians read on their first day in office.

Engdahl reaches the same continuity through oil geopolitics across a century.⁶ Catherine Austin Fitts identifies the same pattern in monetary policy and calls it the uniparty.⁷ John Mearsheimer reaches it from realist first principles and calls it structural.⁸ A permanent agenda pursued by permanent interests through disposable political vehicles.

Confidence: documented.

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II. The Reset

If the continuity is published, why does almost no one see it?

Berletic’s second observation does the work. Public attention is structured around the electoral cycle, and the electoral cycle flushes accumulated outrage every four to eight years.⁹ Each administration absorbs the blame for what happened on its watch. When it leaves office, the blame leaves with it. The next administration begins with a clean ledger.

Bush invaded Iraq. The outrage attached to Bush. When Bush left, the outrage left with him. Obama inherited Iraq, expanded the drone program across seven countries, destroyed Libya, and armed Syrian rebel factions whose weapons and fighters fed into what became ISIS. By the end of his second term, the outrage that should have accumulated across two administrations had been split into two emotional accounts that did not communicate with each other. Obama left office with his base largely intact and the sins of Bush largely forgotten. Trump inherited the Syria war and the drone program, escalated both, withdrew from the Iran nuclear deal, and assassinated Qassem Soleimani. The outrage attached to Trump. Biden inherited everything, expanded the Ukraine proxy war into a direct NATO confrontation, maintained the sanctions architecture against Iran, and presided over Gaza. The outrage attached to Biden. Trump returned and dropped the bombs on Tehran on February 28, 2026.

At every transition, the policies continued and the outrage reset. The think tank papers continued to be written. Personnel continued to rotate through the same revolving doors. The trajectory toward Iran, then toward China, continued without interruption. But the public, whose attention had been trained to associate each war with the president in office when it became visible, saw a series of disconnected crises caused by a series of disconnected men.

A published agenda becomes invisible through compartmentalization of memory along electoral boundaries, not through censorship. The continuity hides in plain sight because the audience is shown only one round at a time.

The structural cause is straightforward. Media revenue depends on engagement. Engagement depends on personalised conflict. An article titled “The Continuity of US Imperial Strategy from the Wolfowitz Doctrine to the Iran War” attracts a readership of several thousand. An article titled “Trump’s War” or “Biden’s Disaster” attracts millions. The incentive structure favours the second framing and relegates the first to the margins. No coordinator is required. The structure produces the outcome.

The political incentive runs the same way. Each new administration has every reason to encourage the reset, because the reset is what allows it to govern. If Trump in 2025 had been forced to publicly own the entire trajectory of US imperial action since 1992 — including every operation implemented by Democrats — his political position would have been untenable. The reset is offered to administrations, not imposed on them, and they accept it gladly.

The opposition takes the deal too. Democrats benefit from being able to attack Trump’s war without acknowledging that it is the same war Obama and Biden prepared the ground for. Republicans benefit from attacking Obama’s drone strikes without acknowledging that Bush built the program and Trump expanded it. The reset serves every player at the table except the one trying to see the whole game.

Confidence: structural, with strong inference. Intent is unnecessary to the argument — the incentives are sufficient on their own.

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III. The Trade

Continuity explains what is being pursued. The reset explains why the pursuit is invisible. Neither explains why the agenda survives the costs it imposes on the United States itself. Iran’s missiles are hitting US bases. American soldiers are dying.¹⁰ The Strait of Hormuz is choked. Global oil flow has dropped to a fraction of pre-war levels.¹¹ Inflation is climbing. Recruitment is collapsing. By any conventional measure, the United States is paying a substantial price for this war.

Mearsheimer reads the price as evidence of miscalculation. The decapitation strategy failed. The escalation ladder favours Iran. The empire is sleepwalking into a defeat that will compound across the international system for a generation.¹² On the realist’s accounting, the United States is losing material and prestige at a rate that should have been foreseeable, and the only question is how badly.

The realist accounting is accurate at the level it measures. It is measuring the wrong ledger.

Conventional strategic analysis tallies absolute losses. The relative-gains framework, articulated by Joseph Grieco and Kenneth Waltz, asks a different question.¹³ In a system where states compete for position rather than for prosperity, what matters is not whether you lost but whether you lost less than your principal rival. A state that loses thirty percent of its wealth in a war where its principal rival loses sixty percent has improved its strategic position even though its citizens are poorer.

Chess names this more simply. When you are a piece ahead, you trade. Each exchange reduces the absolute material on the board. The one-piece edge becomes proportionally heavier with every trade. Grandmasters seek exchanges when they are ahead, because simplification is the form victory takes when you are already winning.

The Opponent Is Not Iran

The critical reframe is this: the United States is not trading down against Iran. Iran is a piece on the board, not the opposing player. The trade-down is against China.

Look at what the Iran war removes from the board. Iranian oil flowing to China under yuan settlement, outside the dollar clearing system.¹⁴ The Iran-China twenty-five-year comprehensive partnership signed in 2021 — the architecture that, if allowed to mature, would have given China an energy anchor in the Gulf operating entirely outside US-controlled financial channels.¹⁵ The Iraq Development Road, the seventeen-billion-dollar corridor connecting Grand Faw Port to Turkey, with Chinese engineering involvement, projected to generate four billion dollars annually in transit revenue — a corridor that would have bypassed the Strait of Hormuz and given China structural leverage over Gulf trade routing.¹⁶ Chinese engineering presence across the region.

Each of these was a piece in China’s position. Each was making China’s eventual endgame stronger. Each was narrowing the window in which the exchange ratio still favoured the United States.

The war with Iran removes these pieces from the board. That is its strategic function. Iran is suffering real destruction — the fighting is real, the dead are real, the sovereignty violation is real. Iran is not a willing participant in the simplification. Iran is the square the sacrifice is happening on. But the damage the war inflicts on China’s energy architecture, on China’s Belt and Road anchoring in the Gulf, on China’s alternative settlement channels, on the corridor projects that would have made the US position in the region ornamental within a decade — that damage is the trade.

What the United States Pays

The US side of the exchange is real too. Gulf bases hit by Iranian missiles.¹⁷ American soldiers killed.¹⁰ An older generation of naval surface assets damaged. Recruitment numbers already in collapse, now collapsing further. The credibility of an interceptor system exposed by a peer adversary. A forward-deployed force structure that the Pentagon’s own internal reviews had been calling unsustainable for a decade. Economic pain from Hormuz disruption. Political capital spent.

This is a genuine price. Mearsheimer is right that the US is absorbing real damage. What the realist framework does not account for is that the damage is falling disproportionately on assets the permanent interests were already planning to retire or replace, while the damage to China’s position falls on assets China cannot replace — because the architecture being destroyed (the Iran corridor, the yuan settlement channel, the Belt and Road anchoring in the Gulf) took decades to build and cannot be rebuilt while the region is under US military control.

The US trades ageing pieces. China loses pieces that were becoming decisive.

What Is Not Traded

The financial architecture is intact. The dollar’s role in oil settlement has been reinforced — the war has demonstrated to every regional player that bypassing the dollar invites consequences they cannot afford. The liquefied natural gas export capacity that Venture Global and Cheniere spent years building, capacity that needed a demand shock to become profitable, is now selling into a market where European pipeline gas is no longer a viable alternative.¹⁸ The corridors that run through US-controlled chokepoints remain.

And the targeting pattern in the Gulf suggests that some of the damage on the US side of the ledger is even less costly than it appears. Saudi Arabia’s old airport took damage; its nine-billion-dollar replacement, already operational, did not. Kuwait’s old airport was struck; the new terminal under construction was untouched.¹⁹ Israel’s Bazan refinery complex, already voted for relocation by 2030 with the underlying land identified as prime Haifa waterfront for redevelopment, absorbed strikes while newer assets did not.²⁰ This pattern — old infrastructure absorbing missiles, new infrastructure untouched — does not prove coordination with Gulf states and Israel. It does mean that the cost column on the US side of the ledger is smaller than a simple damage assessment suggests, because much of what was hit was already being written down.

The US trades ageing pieces and absorbs economic disruption. China loses its energy corridor, its yuan settlement partner, and its engineering presence in the Gulf. That is a favorable exchange.

The Timing Is the Tell

The trade-down only works while you are ahead.¹ A pawn advantage is reversible. The opponent can win a piece, equalize the material, and the simplification logic inverts — now they want the trades.

Berletic has been making this point with more precision than anyone in the heterodox commentariat.²¹ The war is happening now because the window in which the exchange ratio favours the United States is closing. In 2001, when the seven-countries memo was written, the United States accounted for roughly thirty-two percent of global GDP by nominal measure and China accounted for about four percent.²² By 2024 China’s manufacturing output exceeded the United States by a factor of roughly two. Chinese shipbuilding capacity exceeded the US by a factor of more than two hundred. The BRICS bloc, by purchasing power parity, had surpassed the G7.²³

The direction of travel is not in dispute. Wait five years and China completes its alternative energy routing. Wait ten years and the Belt and Road corridor network makes the Strait of Hormuz strategically irrelevant for Chinese supply. Wait fifteen years and the yuan settlement architecture has enough depth to survive a dollar-based assault. At each of these thresholds, the exchange ratio tips further against the United States, and the trade-down that is currently favourable becomes neutral, then unfavourable, then impossible.

Berletic read the PNAC documents and the RAND papers and said Ukraine would come first to bleed Russia, then Iran to sever China’s energy supply from the west, then the Pacific theatre against China itself.²⁴ He said this before Ukraine. He said it before the current war. The sequence is not his theory — it is in the papers. What he added was the reading of why the sequence is running in that order at that pace. Russia first because the ratio was most favourable. Iran next because Iran is the corridor through which Chinese energy security runs. China last because China is the target for which the ratio is least forgiving — and because the corridor has to be cut before the final move can work.

The war arrived before China’s architecture completed. That is the move.

Emmanuel Todd’s argument about Western industrial decay is the other side of the same clock.²⁵ The capacity to absorb trades while inflicting proportionally greater damage on rivals depends on an industrial foundation the United States is no longer building. Todd’s data on Western deindustrialization is the specific reason the window is closing. The house’s pieces are aging. The factory floors that would replenish them have moved to the country the house is trying to simplify against.

The war is now because the window is visibly narrowing, and the strategists who read the think tank papers can read a clock.

Confidence on the structural reading: strong — relative gains theory is standard international relations scholarship. On the intentional reading: calibrated to the documents cited. On the timing argument: structural with strong documentary support — the GDP and industrial figures are published, the Iran-China partnership is a signed document, and Berletic’s sequence prediction is on the record.

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IV. The Four Mechanisms as One

The four ideas are not separate arguments. They are the same mechanism described at different scales.

Continuity ensures that the trade-down runs in a consistent direction across decades. Without it, each administration would pursue its own objectives, the pieces traded would be random rather than selected, and the exchanges would not produce a coherent endgame.

The reset ensures that the public cannot perceive the cumulative score. Without it, the operation would become visible as soon as a single attentive observer kept a running tally across two administrations.

The favorable exchange ratio ensures that each round of trades, however painful in absolute terms, worsens China’s position relative to the United States. Without it, the damage the US absorbs in the Iran war would be net loss — pain with no strategic gain.

The closing window explains why the operation is accelerating into open war rather than continuing through slower instruments like sanctions. Without it, the trade-down could unfold over another generation. With it, each year of delay raises the cost of the final move and risks the move becoming impossible.

Remove any one and the operation stops working. The chess concept names what the four mechanisms produce when they operate together — not defeat, not victory, not stalemate, not quagmire. The word is simplification. The board is being stripped down to a position where the US advantage, which is currently being diluted by China’s rise, becomes proportionally decisive again. The grandmaster trades down to win, and trades now because the position will not hold.

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V. What Follows

The Apparent Costs Are Not What They Look Like

The apparent costs of the war to the United States are not evidence against its being deliberate. They are the form a deliberate war takes when the strategic logic is relative gains rather than absolute gains. A reader told that the US shouldn’t be fighting this war because the costs are too high is being shown the wrong ledger. The costs are real. They are also smaller, in relative terms, than the costs being imposed on the United States’ principal rival — not Iran, but China, whose energy corridor is being severed, whose engineering presence is being degraded, whose alternative settlement architecture is being set back by a decade.

The Next Election Will Offer the Same Reset

Whatever happens between now and November 2028, the war on Iran will be attached to whichever administration is in office when it becomes most visible. The opposition will run against it. If the opposition wins, the war will continue under a new name and new personnel, and the figures who attacked it will find themselves managing it. If the opposition loses, the war will continue under the same name. Either way, the policies will continue, the think tanks will continue to write the papers, and the trajectory toward the Pacific theatre against China will continue without meaningful interruption. Voting against the war is permitted. Stopping the war by voting is not on the menu.

Iran Is Not the Endgame

The closing window means Iran cannot be the last war of this sequence. The logic that produced it — trade down now because the ratio will be worse later — applies with compounding force to China directly. Iran was the precondition. The corridor had to be cut before the final move. Every year the United States waits past the corridor cut, the remaining exchange ratio against China deteriorates further. Every year the Belt and Road matures and Chinese shipbuilding, manufacturing, and energy autonomy widen the gap the final trade is supposed to close. A curious skeptic watching only Iran is watching the wrong board. The Iran war is the opening of the endgame. The endgame is China.

The Mechanisms Are Not Invulnerable

The operation depends on the public’s inability to perceive the cumulative score across electoral boundaries. It depends on the favorable exchange ratio remaining favorable, which Todd’s argument about Western industrial decay suggests is not guaranteed indefinitely.²⁵ It depends on the institutional capture of think tanks, media, and the financial architecture remaining stable. None of these conditions is permanent. The grandmaster who trades down to a winning endgame can still lose if the position turns out to have been less winning than it looked — and the factory floors that would replenish the grandmaster’s pieces now belong to the opponent.

The conditions are stable enough, for now, that the sequence continues. The next phase has been written. The exchange ratio remains favorable. The audience is ready to reset its outrage on schedule.

The question for the curious skeptic is whether to keep watching one round at a time, or to start keeping the cumulative score.

The grandmaster wins by trading down because the audience is not allowed to see the position simplify. Once you can see it, the move stops working.

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How to Explain It to a 6 Year Old

Imagine two kids are playing a board game. One kid — call him Sam — has more pieces than the other kid, Chen. But Chen is getting better really fast. Every turn, Chen gets a little stronger. If they keep playing without fighting, Chen is going to overtake Sam eventually.

Sam knows this. So Sam starts trading pieces. He picks fights on purpose. In the fights, both kids lose pieces. But Sam makes sure the pieces Chen loses are the important ones — the ones that were making Chen stronger. Sam loses some pieces too, but they’re old ones he was going to lose anyway.

After a few rounds of trading, Sam still has more pieces than Chen. And the pieces Chen lost were the ones that were going to help him catch up. Now Chen can’t catch up as fast, and Sam’s lead is bigger than it was before, even though Sam lost stuff too.

That’s the trading-down idea.

Now, there’s a third kid — call him Ray — who Sam picks a fight with first. Sam doesn’t actually care about beating Ray. But Ray has something that was helping Chen — maybe Ray was sharing his lunch with Chen, or letting Chen use his best game cards. By knocking Ray out of the game, Sam takes away the thing that was making Chen stronger. Sam gets hurt fighting Ray. But Chen loses more.

That’s the war with Iran. Ray is Iran. Chen is China. Sam is the United States. The fight looks like it’s between Sam and Ray. But the fight is really about Sam and Chen.

Here’s the other tricky part. Every four years in Sam’s country, they pick a new team captain. And when they do, most people forget what the last captain did. So nobody adds up the score across all the rounds. They just see this captain’s fight and that captain’s fight, and they never notice that it’s the same game, going in the same direction, trading the same kind of pieces.

The people up high like it when we forget. They can keep trading, and we never add up the score.

The question is whether you can see the whole game. Or just this round.

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References

1. Jeremy Silman, How to Reassess Your Chess, 4th edition (Siles Press, 2010), chapter on simplification and the principle of exchange in favorable material imbalances. See also Jose Raul Capablanca, Chess Fundamentals (Harcourt, 1921), on endgame simplification as the natural technique of the materially superior side.

2. Unbekoming, “The House Always Wins: An Essay on Iran, Empire, and the Architecture of Managed Conflict,” Substack, March 2026.

3. Brian Berletic, “Dangerous Disinfo Shifts US Blame: Claims Israel ‘Caused’ US War Rather Than an Extension of It,” The New Atlas, March 11, 2026.

4. “Defense Planning Guidance” (leaked 1992), reported in the New York Times, March 8, 1992. Analysis in F. William Engdahl, Myths, Lies and Oil Wars (edition.engdahl, 2012), discussion of the Cheney-Wolfowitz document.

5. General Wesley Clark, interview on Democracy Now!, March 2, 2007. See also Clark, Winning Modern Wars: Iraq, Terrorism, and the American Empire (PublicAffairs, 2003).

6. F. William Engdahl, A Century of War: Anglo-American Oil Politics and the New World Order (Pluto Press, 2004); Engdahl, Myths, Lies and Oil Wars (2012); Engdahl, Target: China: How Washington and Wall Street Plan to Cage the Asian Dragon (Progressive Press, 2014).

7. Catherine Austin Fitts, interview with Tucker Carlson, “Epstein, CIA Black Budget, the Control Grid, and the Banks’ Role in War,” The Tucker Carlson Show, February 28, 2026.

8. John J. Mearsheimer, The Tragedy of Great Power Politics, updated edition (W. W. Norton, 2014), chapters on structural realism and the logic of hegemonic competition.

9. Berletic, “Dangerous Disinfo Shifts US Blame,” The New Atlas, March 11, 2026, on the flush-and-reset mechanism across administrations.

10. “Kentucky Soldier in Saudi Arabia Is 7th US Casualty to Die in Iran War,” Military.com, March 9, 2026.

11. John Mearsheimer, interview with Glenn Diesen, “Iran Holds All the Cards: The Strategic Defeat of the U.S.,” March 28, 2026, on Strait of Hormuz flow reductions; “The Energy Shock: U.S.-Israel War with Iran’s Impact on Indian, Chinese, and Global Economies,” New Lines Institute, March 9, 2026.

12. Mearsheimer with Diesen, March 28, 2026.

13. Joseph M. Grieco, “Anarchy and the Limits of Cooperation: A Realist Critique of the Newest Liberal Institutionalism,” International Organization 42, no. 3 (Summer 1988): 485-507; Kenneth N. Waltz, Theory of International Politics (Addison-Wesley, 1979), chapter on the logic of relative gains under anarchy.

14. “China’s Dependence on Iranian Oil: Strategic Leverage and Exposure,” Modern Diplomacy, January 13, 2026; Kpler data on 2025 Iranian crude exports to China; analysis of yuan-denominated oil settlement flows in Reuters, Bloomberg, and Nikkei Asia, 2022-2025.

15. “Iran and China sign 25-year comprehensive partnership agreement,” Xinhua and multiple Iranian state media, March 27, 2021.

16. Iraq Development Road project (17 billion USD), connecting Grand Faw Port to Turkey, with Chinese engineering involvement; projected 4 billion USD in annual transit revenue; systematic strike damage to corridor nodes documented in March 2026.

17. Pentagon internal force posture reviews, 2018-2024, on the vulnerability of forward-deployed Gulf bases to peer adversary precision strike; Rand Corporation analyses of the cost-exchange ratio of US interceptors versus adversary drones and ballistic missiles.

18. Venture Global and Cheniere Energy quarterly filings, SEC, Q4 2025 and Q1 2026; analysis of European pipeline gas displacement by US LNG exports following sabotage of Nord Stream (September 2022) and the subsequent restructuring of European energy dependence.

19. Analysis of Gulf state infrastructure targeting pattern, March 2026. Saudi Arabia’s new King Salman International Airport replacement (nine billion USD) operational before the strikes; Kuwait International Airport Terminal 2 (4.3 billion USD) under construction, not struck.

20. Bazan Group (formerly Oil Refineries Ltd), annual report and relocation vote on Haifa Bay operations, 2030 target date; McKinsey analysis of Haifa waterfront redevelopment valuation; IAEA confirmation of zero damage to Dimona nuclear facilities following residential-zone missile impacts.

21. Brian Berletic, extensive commentary at The New Atlas (2022-2026) on the sequencing of US strategic action against Russia, Iran, and China as a function of the closing window in which favorable exchange ratios remain available.

22. World Bank and IMF data on nominal GDP shares, 2001; US Bureau of Economic Analysis historical series; National Bureau of Statistics of China historical series.

23. United Nations Industrial Development Organization, International Yearbook of Industrial Statistics (2024), on Chinese manufacturing output; US Office of Naval Intelligence assessments of Chinese shipbuilding capacity (2023-2024), widely reported as exceeding US capacity by a factor exceeding two hundred; IMF World Economic Outlook (October 2024), BRICS purchasing-power-parity aggregate compared with G7 PPP aggregate.

24. RAND Corporation, Overextending and Unbalancing Russia: Assessing the Impact of Cost-Imposing Options (RB-10014-A, 2019); PNAC, Rebuilding America’s Defenses (September 2000), Section V on the transformation of US forces for long-duration presence in the Gulf and the Pacific.

25. Emmanuel Todd, The Defeat of the West (2024); summary and analysis in Unbekoming, “The Defeat of the West: By Emmanuel Todd — 40 Q&As,” Substack, January 19, 2025.