Bessent Breaks the Bond Market, The China Pivot That Could Sink Canada's Economy, Kisin vs Keen | Weekly Recap

What's up, everybody? It's Tom Bilyeu here: Want my help starting a business? Join me here inside Zero To Founder https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show Sign up for my AI Masterclass: AI Masterclass https://tombilyeu.com/ai-masterclass?utm_campaign=Live%20Masterclass&utm_source=podcast&utm_medium=evergreen FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu WOI EPISODES: FOLLOW LISA: Instagram: https://www.instagram.com/lisabilyeu/ Twitter: https://twitter.com/lisabilyeu YouTube: https://www.youtube.com/womenofimpact Tik Tok: https://www.tiktok.com/@lisa_bilyeu?lang=en Cash App: Download Cash App Today: https://capl.onelink.me/vFut/v6nymgjl#CashAppPod *Cash App is a financial services platform, not a bank. Banking services provided by Cash App’s bank partner(s). Prepaid debit cards issued by Sutton Bank, Member FDIC. Cash App Visa® Debit Flex Cards issued by Sutton Bank, Member FDIC, and The Bancorp Bank, N. A., pursuant to a license from Visa U. S. A. Inc. See terms and conditions for the Sutton prepaid card, Sutton debit flex card, and Bancorp debit flex card. Cash App Green features, Savings, Direct deposit, Round ups, Overdraft coverage and Discounts provided by Cash App, a Block, Inc. brand. Visit cash.app/legal/podcast http://cash.app/legal/podcast for full disclosure. Quince: Free shipping and 365-day returns at https://quince.com/impactpod Whatnot: Download the Whatnot app today and get free shipping on your first order. Ketone IQ: Visit https://ketone.com/IMPACT for 30% OFF your subscription order Ethos: Get a free quote athttps://ethos.com/impact Incogni: Take your personal data back with Incogni! Use code IMPACT at the link below and get 60% off an annual plan: https://incogni.com/impact ATT Business: Switch to AT&T Business at https:// https://incogni.com/impactbusiness.att.com http://business.att.com Pique: 20% off at https://piquelife.com/impact The team dissects the viral Konstantin Kisin vs. Steve Keen debate—both former Impact Theory guests—on the central climate question of our time: is the answer to use less and shrink (de-growth), or to innovate our way forward? The host, who knows both men and calls them smart and well-intentioned, explicitly urges viewers not to pick a side and dismiss the other as stupid, but to find the one factual disagreement worth reasoning from. His own position leans hard toward innovation: drawing on Matt Ridley's The Rational Optimist, he argues that 80,000 years of human progress make "it all ends now" an irrational bet, that we've innovated our way out of every prior crisis, and that de-growth—especially any talk of reducing world population—would trigger economic collapse that causes far more suffering than the problem it aims to solve. He respects Steve Keen's economic mind but argues Keen has essentially "given up," wishing we'd listened to engineers 50 years ago rather than charting a path forward now. He reframes the climate fight around tradeoffs the doom narrative ignores: citing Bjørn Lomborg's "it's real but overstated, and the solutions can be worse than the disease" framing, the roughly 140,000-plus annual heat deaths that air conditioning could prevent, and Jordan Peterson's warning about sacrificing today's actual poor for tomorrow's hypothetical poor. The conversation ranges across the East-vs-West Germany innovation contrast, a Peter Diamandis-style geoengineering thought experiment, why "politics is downstream of culture," and the host's more contested claim that climate panic often masks a desire for control and resentment—before ending on a speculative, openly-unsupported musing about the psychology behind who pushes it. A wide-ranging argument for optimism, first-principles thinking, and refusing to let "we're doomed" become the whole story. The team breaks down Treasury Secretary Scott Bessent's latest move to tame rising long-term bond rates—and why the bond market is likely to keep testing him. After Bessent doubled buybacks from $2B to $4B per round (which briefly knocked yields down before they rebounded past where they started), two off-the-record Treasury officials leaked to CNBC that the Treasury General Account—the government's roughly $1-trillion checking account at the Fed—could be tapped to buy bonds en masse. The host walks through why that's a bigger deal than expected: using cash to retire long-duration bonds without issuing new supply makes the debt "evaporate," and the market has, at least for now, believed the rumor enough to push the 30-year and 10-year yields down. But he's clear about the catch: the TGA isn't a magic war chest—every dollar in it was borrowed via prior auctions, so spending it down just defers the problem and eventually requires selling more debt, pressuring the curve again. He frames the backdrop honestly: $40 trillion in debt, ~123% debt-to-GDP, climbing interest costs, Japan (the largest buyer of US debt) in trouble, China dumping Treasuries while hoarding gold, and gold overtaking the dollar as the top central-bank reserve asset. His throughline is that there's no silver bullet, only tradeoffs, and the only real fix is growing the real economy—rising middle-class wages adjusted for inflation, GDP moving from ~1.2% toward 3–4%—rather than financial engineering. Absent that, he lays out the grim menu every over-indebted empire faces: austerity, default, or inflating the currency to shrink the debt (which quietly impoverishes everyone paid or saving in dollars), and warns that another Covid-scale inflation spike without real growth is how you get to "pitchforks." The conversation closes on a lengthy, contested tangent about immigration incentive structures, the Nordic model, and social trust—with the host explicitly noting the Nordic countries themselves say they aren't socialist. A dense, sobering economics breakdown. The team breaks down the escalating US-Canada trade war after Canada walked away from a deal that would have sharply lowered tariffs on several key Canadian industries. The host argues Canada is making a serious economic miscalculation—laying out the dependency math: roughly 78% of Canadian exports rely on US consumer markets, and exports make up about 33% of Canada's GDP, versus Canada representing only around 13% of US imports and a small slice of US GDP. In his read, that asymmetry means Canada has far more to lose, and pivoting toward China—geographically distant and, as he notes, a non-market economy—is a poor substitute. He digs into what actually broke the deal per PM Mark Carney: autos, French-language and cultural protections, and, most importantly, a US demand to restrict Canada's ability to sign independent trade deals with other countries (read: China), pointing to Canada's stated goal of a 50% export increase to China by 2030, Carney's January Beijing visit, and a flurry of mutual tariff cuts (including slashing Canada's 100% EV tariff to ~6%) as evidence of a rapidly warming relationship. But the host is pointedly two-sided: he says the US had understandable strategic reasons to push for guarantees, while blasting Trump's "51st state" rhetoric and bullying public posture as counterproductive—using it as a lesson he teaches entrepreneurs about always showing the other side how a deal is a win for them, and the human psychology of how people resist being forced into even things that serve their interests. He walks through the granular US demands (auto assembly, procurement, energy allocation, language laws) and their second-order effects, and closes on a contested hypothesis that Canada may be more ideologically aligned with China than the US. A dense, numbers-driven, deliberately even-handed breakdown of leverage, strategy, and a deal gone sideways. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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• 1:37Speaker 02

  Cool. Let's jump over to the Konstantin Kisin and Steve Keen debate that was on Diary of a

• 1:41Speaker 00

  This was fire. So first of all, both of them have been on Impact Theory, the interview show. So I know these guys both a little bit personally. I know Konstantin pretty well, Steve Keen less so, but certainly have a flavor for him. These are two very smart people. Both of them, I think, are well-meaning, good-intentioned people. They are on very opposite sides of a debate. It's a debate that I think is important. It's a debate that I think is largely at the heart of our inability to find our path towards innovation. Because there are some people that are captured by things like climate change. It's this big catastrophe. And the only way to unwind all of this stuff is basically to use less energy, have less people. The flip side of that coin is innovate our way out of this.

• 2:24Speaker 00

  And unfortunately, whenever you repeat something, it starts to become cliche. People become numb to it. They lose sight of how powerful the statement is. And so, of course, we're going to innovate our way out of this becomes a meme. There was a where people ridicule it. But there's a book called The Rational Optimist by Matt Ridley. I highly encourage you guys all to read it. And basically, his thing is you can't look backwards at 80,000 years of never-ending progress and then look forward and go, but it's going to end today. It's completely nonsensical. I think that is exactly true. We have innovated our way out of literally every single problem, which is why we've been able to keep growing the population, which is why life's gotten better and better and better. And it's never just straight up. Obviously, there are ups and downs. You've got the dark ages and all that stuff. But man, when you zoom back out, you just see, holy hell, this goes up and to the right.

• 3:09Speaker 00

  Okay, so that's the debate. But what I don't want you to do is pick a side and say the other person is stupid. Okay, these guys are both smart. So they both have their finger on a problem. Now, the question becomes, is one of them getting it wrong in a direction? Can we ground that in a visible fact that we can begin to reason our way from first principles out of? If they are wrong on a provable fact, and from that fact, we can build to a positive future, then I would say, hey, we're good. If your takeaway is basically, we're all just doomed, it's one of those things where even if it's true, it isn't helpful. And so I would highly encourage you to eject out of that. I can get more into that later because that's going to derail some people, but I'm just going to pause.

• 3:49Speaker 03

  Then you say we need to reduce energy. Do you mean the UK?

• 3:52Speaker 04

  I mean the species. I mean human species.

• 3:53Speaker 03

  So how does Andy Burnham do that?

• 3:55Speaker 04

  We are not set up to deal with this problem because we're broken into nation states. We can't make decisions that affect the entire planet.

• 4:02Speaker 02

  So we need world government to reduce world energy consumption.

• 4:04Speaker 04

  We're going to be stuck with that, yes. We're going to be stuck with it.

• 4:07Speaker 02

  Well, see, this, I'm glad we're having this conversation because at least this is the first time, and I mean this in a genuinely respectful way. It's the first time I've ever heard anyone be honest about this issue. That's what you want. You want world government.

• 4:18Speaker 04

  No, I don't want it.

• 4:19Speaker 02

  You believe it's inevitable.

• 4:21Speaker 04

  It's inevitable because by ignoring this problem, we've got to the scale.

• 4:24Speaker 02

  You believe it's inevitable that we have a world government that reduces world energy consumption and therefore the prosperity of everyone living on the planet.

• 4:31Speaker 04

  And if we had taken the advice of the limits to growth 50 years ago, we would not be having this conversation.

• 4:36Speaker 00

  So this is where, Steve, let's assume for a second that Steve Keen is right about that, that if we had taken engineering advice, forget the exact word that he used. He certainly says engineer later in the clip. If we had taken engineer's advice and we had made changes 50 years ago, then we wouldn't be dealing with this problem. If you ever find yourself saying that, I get it. It's you're relieving frustration, valid. I have been there many, many times. However, that doesn't help you. You have to click into, and now what? Now, what is the actual thing that you're saying that we ought to do? What are the real steps that we should be taking to get ourselves out of this? My problem with the climate narrative is that when you start looking at it, it is something like,

• 5:19Speaker 00

  hey, these are real problems, but we're starting to get into a place where the solutions are worse than the problems. Now, if you look at somebody like Bjorn Lomborg, he's going to say, okay, first of all, it is real. It's an issue. It's not nearly as bad as people are saying. And that the solutions are far worse than the disease. I don't even need you to go all the way to Bjorn. I'm just saying that when people start talking about we need to reduce the world population, now we're getting into a scary place. Because the reduction of the world population would not be something anyone wants to live through. That would be deeply problematic because of all the economic collapse that you would see. Okay, so that's where, as you listen to this, start thinking about, okay, how do we get out of this?

• 6:00Speaker 03

  Is there any solutions that you believe are actually possible?

• 6:04Speaker 04

  No.

• 6:04Speaker 03

  No.

• 6:05Speaker 02

  No. There we go. You've done a public service here because you have showed what it is that sits underneath all the conversation about climate. It's a best-case scenario, people who know there's nothing we can do, but what we should do is flail about in the meantime. And in order to not address this issue, impoverish, not just in this case, our citizens and our fellow people, but actually the entire world. That's what this is. And the entire challenge I have to this is I don't believe in suicide for token gestures towards not solving a problem you're claiming to solve. Right? We are not going to solve this problem by creating a world government and reducing energy consumption. That is never, ever, in a billion years, going to happen.

• 6:47Speaker 04

  What we're going to do instead is run into the crisis and fall apart as a civilization in the process.

• 6:51Speaker 02

  What we're going to do instead, and look, you may, there's a possibility you're correct about that, but the only choice we actually have to solve this problem is to create forms of energy that do not produce CO2 but produce GDP. Clean energy. That's what we're going to have to do. By the way, it's what we've done throughout history.

• 7:08Speaker 03

  And we need to make that clean energy more favorable in terms of the economics to India and China.

• 7:15Speaker 02

  Did you need a world government to reduce usage of the horse and car and replace it with the automobile? No, you didn't. You came up with a better technology and people adopted that technology voluntarily because it was advantageous. This is not going to be solved by making everybody poor, well, for the reasons that Steve himself articulated. But it's also not going to be solved by making everybody, because people will not do it. You say you need everybody to hold hands and sing kumbaya and act together.

• 7:44Speaker 04

  What I'm saying is we need to have engineers in control. And we're talking about it 50 years ago.

• 7:47Speaker 02

  Engineers in control.

• 7:48Speaker 04

  Engineers.

• 7:49Speaker 02

  So we should stop having elections.

• 7:50Speaker 04

  So compared to what politicians we get, yes, I'd rather get rid of elections and have engineers running everything. They do a damn sight better job than a politician's have done.

• 7:59Speaker 02

  Well, and this is why I say this is a public service. Because this is what, this is the true face of the climate catastrophe narrative. We need world government. We don't want elections and we want to make everybody poor.

• 8:11Speaker 04

  And you know why?

• 8:12Speaker 02

  And we've got it out in there.

• 8:13Speaker 00

  Okay. Now, I'm going to. Boys and girls, Steve Keen is a smart man. He understands things about the economy that I think a lot of people sweep under the rug. He has given up on trying to solve the problem. He's convinced that we basically have to go back 50 years. But if you do his go back 50 years as a thought exercise instead of a impossible policy to implement, what you'll see is what he was hoping the engineers would do. Well, I worry he was just hoping we would listen to engineers and start pulling back immediately. If instead, you take that as the reason that you should be looking at engineers is these are the people that are going to innovate their way out of this. Look at China.

• 8:57Speaker 00

  I hate saying this all the time, but I'm never going to bullshit. China is doing a phenomenal job of bringing on innovative energy sources because they believe in themselves, because they believe in the power of innovation, because they have seen the growth trajectory. It's one of those things where I often lament that I hate about humans, that they have to suffer before they can get oriented in a useful direction. But China suffered so profoundly under Mao that when they came out the other side, they were so oriented in the direction of innovation, economics, growth. How do we actually do this? And if that means, in the famous words of Deng Xiaoping, if I don't care if the cat is black or white, as long as it catches mice,

• 9:38Speaker 00

  meaning I don't care if it's capitalist or communist, as long as we grow our GDP, then cool, we'll implement all of those things with an authoritarian layer, but we're going to do the free market game. And so they. Grow just to an insane degree, but it's because they were shot out of the cannon of pain and suffering. What I really hope that we can do is turn this around without needing to spend the kind of time that China had to spend in just abject death and suffering, that we can orient ourselves just towards first principles thinking. So when I teach entrepreneurs, I talk a lot about, okay, you're about to do this new thing. Has anybody done it before you? If they've done it before you, then audit them. What did they do?

• 10:23Speaker 00

  And we can look backwards and see an unending string of innovation, innovation pushing us forward. We can also see how people lament it. They're afraid of it. It's very scary. It's very difficult. It does put those people out of a job. The knocker uppers, that was a real job before alarm clocks and electricity came along. You had a guy with a big, long stick and he would knock on the upper window and let you know that you had to wake up. And you paid him to do that so that you knew that you wouldn't sleep through getting to work on time. When electricity came along and alarm clocks were invented, knocker uppers went out of work. And I'm sure for a lot of them, that meant never re-entering the labor force because they couldn't do anything else and they weren't either of the type or they weren't able to get a new job in the new economy. And that's brutal for the people that lose their jobs. I understand that.

• 11:07Speaker 00

  But the only alternative is the economic catastrophe of stagnation, which makes far more people suffer. So we say, all right, listen, this is just the way that it works. We're going to innovate around this. We did that deep dive, that the part of the deep dive is the difference between East Germany and West Germany. Same, same literal tight region of Berlin. You have the same families breathing the same air, all that. And one side is just thriving 30 years later and the other is stuck in a time machine. So understanding that we can innovate our way out of this, but we have to actually do the innovation. We have to create the setup for the innovation to happen. And if we let, if I'm right and politics is downstream of culture,

• 11:52Speaker 00

  if the narrative that we're pushing is this is a climate catastrophe, stop doing what you're doing. Put the tools down, stop extracting energy, everybody chill, don't have kids. We've got to lighten the burden on this earth instead of doing what we have historically done, which is innovate, innovate, innovate and let the free market push that innovation forward. Even though every time a big innovation comes along, there is going to be disruption. Like we are seeing with AI data centers right now, the, the use of resources is inevitable. The disruption that it will do to the temporary job market is inevitable. But the way that it propels us forward in a way that is better for society, we have only gone one way. And so to look at the future and say, well, this is going to be the first time that it breaks

• 12:37Speaker 00

  is a pretty big gamble. I would really like to see people go, okay, I'm scared about this thing. I'm worried about it. So what are the things that need to be true for us to get on the other side of this in a positive way? I would love to see Steve Keen, who has a brilliant mind. I would love to see him go, okay, what if, if gun to my head, my only option is innovation? What does that look like?

• 12:57Speaker 05

  Well, radicalized me about the China, the climate change situation. I was reading Freakonomics and they talked about a startup that Bill Gates was sponsoring that was up in like Seattle somewhere. It was like a tech startup, 12 dudes in a basement and their only goal was like solve climate change. Kind of like the X Prize that, what's the name of this?

• 13:14Speaker 00

  Peter Diamandis.

• 13:15Speaker 05

  Peter Diamandis, thank you. One of the solutions that was guaranteed to solve it was releasing 12 hot air balloon equivalent. They weren't literally hot air balloons, but it was like 12 hot air balloons. Two, like it was like four in the US, three in the Caribbean, two in Europe, one in Asia. And like whatever the math is, they'll send them up to the atmosphere, pop those balloons and then it will disperse like some element that counteracts CO2. We'll get right back to like before we were here type levels. And they're like, oh yeah, we got it. Like first principles, if we just do that, it would be an easy solution. And then they talked about the actual practicality of it was like, okay, we'll have to get international approval. And it's China really going to let us launch three hot air balloons over their atmosphere and suspect. You know what I mean?

• 14:00Speaker 05

  So it's these things that we have this solution to these problems, but it's not about solutions. The more I'm getting into politics, the more I'm realizing y'all don't really care about the thing you're mad at. Like it's just stories. It's just stories you're telling each other just to distract from the thing that you really want. Cause it's like, the problems that we have are quantifiable. We can write them down. We can talk about where it broke bad. We can mark it to the year, to the policy, to the vote total, to the people that were in the Senate. And those same people are still in the Senate. Those same people are still complaining like the wave of tweets I got, I seen yesterday of like, we're at 40 trillion, the left need to stop being responsible. And it just kept being community note after community note. You've been in Congress since 1975. The national debt was 500 billion. It's now 40 trillion. You're the problem, like you are the problem. You know what I mean?

• 14:44Speaker 05

  So I, I think with climate change, and I almost kind of equate this to the DSA now. Because when I first started, I was like, oh, okay. You guys just want this solution for this problem. Got it. And then I went down funnel to the actual, what are the solutions? How are they going to implement them? And when you get to that level of conversation, it just kind of spins out into, we're going to take everything and we're going to do everything and it's not going to solve the problem, but it's going to be completely different. And I'm like, y'all don't even want better. Y'all don't want solutions. Y'all just want different. And I think that's the.

• 15:13Speaker 00

  We're an emotional creature.

• 15:14Speaker 05

  Yeah.

• 15:15Speaker 00

  The only way to lead us is to appeal to our emotions. And given that we're an emotional creature and are led by our emotions, then the politicians will do that because they have to get elected. And so you have this really weird system where people try to reflect their constituents back to them rather than providing real leadership. And that is just a scary truth about human nature. It takes a very rare person to be so good at what they do, convinced that they are right, that they will suffer all the slings and arrows to stand before people and say, no, no, no, we need to do it this way. When people are resistant to it. And then to be able to deliver something so good that people are like, oh damn, you were right.

• 15:59Speaker 00

  Like I was totally against you, Steve Jobs, but that iPhone really is the shit. And so now, yeah, I was a hater Elon Musk, but damn, like you really did the thing. And so, all right, I'm going to make that money off your stock regardless. And it's very, very difficult for a politician to do that. We've had a few, some of them, Abraham Lincoln paid with their life. George Washington, another one, like didn't pay with his life in that he died in office, but he paid with his life in terms of he didn't get to live the life that he could have lived as a guy that was just wealthy and didn't need to be on the battlefield, didn't need to be getting shot at, didn't need to be freezing all the time. But they believe what they believe and they just can't be swayed.

• 16:42Speaker 00

  It's very, very difficult to find people that are, that both have that level of conviction, that level of tenacity and are that able to deliver results. Because if George Washington can't actually win the military victories, then we forget him. He doesn't exist in history. It's so hard, man. It's rare, rare, rare.

• 17:00Speaker 05

  Is this one of those things? Cause we always go back to Europe and the deaths based on air conditioning. And like a hundred thousand people die, I think it's 175. 175 people a year in Europe die every year from extreme heat. Now, mind you, 10, 20% of those, it might be extreme factors. They, they were going to die regardless. We can't save them. But even so, that's still north, 140,000 people per year. And all you need is an air conditioner. To me, that's a solvable problem.

• 17:28Speaker 00

  Correct.

• 17:28Speaker 05

  But the, we can't put an air conditioner here because we're going to heat the planet and kill people. It's like you're stepping over dead bodies to save bodies that.

• 17:37Speaker 00

  Don't actually exist. Correct. Jordan Peterson nailed this. He said, I am suspicious of anybody who wants to save the hypothetical poor in the future at the expense of the actual living poor today.

• 17:48Speaker 05

  Yeah.

• 17:48Speaker 00

  Cause it's always going to be the poor that suffer the most from these. Do Jordan Peterson, please come back, man. I miss that guy. Like he, love him or hate him, he is so bright and is very able to parse a lot of these problems before other people get to them. Yeah. Wild, wild.

• 18:04Speaker 05

  Somebody says it's a trolley problem.

• 18:06Speaker 00

  It's a trolley problem. What does that mean?

• 18:07Speaker 05

  A trolley.

• 18:08Speaker 00

  Trolley. Sort of. The interesting thing about the trolley problem is that when you have to put your hand on the lever, are you willing to pull it? The thing with the climate change is I think this falls into the resentment category. Once you understand that this is really about wanting control, it's the acquisition of power by somebody who feels that they don't have the kind of power that they should have. And being on a moral crusade is precisely how they get there. And boy, would I really like to see the stats on, is it more men or women that push it? Because I have that growing hypothesis from Heather Hying that a big part of what's going on is women aren't having kids and they got to put that mama bear energy somewhere.

• 18:49Speaker 00

  And when you're thinking about compassion, even if it's compassion for people in the future, that they just latch on to these things and they want to push it through. I don't have stats. I don't know that that's true. It could be 98% men for all I know. But that is, that like.

• 19:07Speaker 00

  Weird collision of you've got all this compassion for somebody in the future, but not for the people right now. Like, it's very, very strange. We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. There's a reason Quince sells cashmere for $60, and it isn't the cashmere. It's real 100% Mongolian cashmere. It's the same stuff luxury labels charge a fortune for. Quince just works directly with ethical factories and cuts out the middleman. So there's no need for a markup and no logo tax. The $60 goes to the actual sweater, not the fancy name on the tag. That's why everything they make runs 50 to 80% less. And it's not just the cashmere. I ordered a few things myself.

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• 21:16Speaker 00

  Try it risk-free for 30 days. That's incogni, I-N-C-O-G-N-I, dot com slash impact, and use code IMPACT. Thanks for sticking around. Let's get right back into the action. Let's talk about Besen, because, oh my God, his economic bazooka is out, and he is ready to rock in an effort to try to tame the rising rates in the bond market, which, since his last announcement, have been all over the place. The problem is, he is going to be tested. Why? Because people do not like seeing that we're $40 trillion in debt. They don't like seeing that Japan, the largest buyer of US debt, is in trouble.

• 21:58Speaker 00

  And the US has been doing, yes, all kinds of financial shenanigans to try to help them out of trouble. We're now having to do financial shenanigans to get ourselves out of trouble. They also don't like that China is buying record amounts of gold while selling record amounts of US treasuries. They really don't like that gold is now the number-one global reserve asset held by central banks as people continue to move away from the dollar. So, long-term bond rates are colliding. The 30-year just touched 5.337%. That was a 19-year high. Now, when Bessent said that he was going to double buybacks from $2 billion per round to $4 billion per round, yields did crater. They went down by nine basis points.

• 22:40Speaker 00

  But by Friday, they'd come right back, bringing the long bond back to about 5.273%. That was higher than before Bessent made that move, which is what I think prompted the two Treasury officials, who were, of course, off the record, to leak, though I think that they were told to do so by Bessent, to CNBC this morning, that the Treasury general account, which holds nearly $1 trillion, could be used to buy bonds en masse. The TGA is the government's massive checking account at the Federal Reserve. But I'm not sure that anyone was expecting Bessent to dip into that to fund the buybacks. I think the market was assuming that more short-term debt was going to be issued

• 23:23Speaker 00

  to bring long-dated bonds into being short-term bonds. So you're not changing the amount of debt in the system, you're just changing the duration. The fact that he's using cash makes this a whole different ballgame, because it means that the Treasury will be retiring long-duration bonds without adding supply anywhere else on the curve. And when they do that, when they buy it back in this manner, the debt just evaporates. It's gone. It doesn't exist anymore. Now, apparently, the markets are believing the rumor, at least for now, because yields fell again on the report. The 30-year is down four basis points to 5.223%, and the 10-year is down four basis points to 4.7%.

• 24:05Speaker 00

  Now, there is a catch. When you look at using this method, the TGA is not an infinite war chest that is some sort of magical solution to this problem. Every dollar in that account was borrowed by doing a bond auction previously. So if that money gets spent down, now you're just skating on thinner ice for future problems, like if there's a government battle over the debt ceiling or whatever. These are the funds that would be used for that. And so you are likely to have to try to rebuild that if you end up spending it. And to rebuild it, you have to sell, you guessed it, more debt. And once again, you're going to put pressure on some portion of the curve. So it buys us time, gives us a chance to see how this is playing out. Do people settle down? Do they realize that they're not going to be able to sweat Bessent

• 24:51Speaker 00

  enough to keep putting pressure on rates? Or do buyers know that Bessent's options are limited, and that there is no silver bullet, only trade-offs? And so we are likely to see more volatility. Guess what fixes volatility, everybody? Having a good economy. You gotta grow your way out, boys and girls. And you can't just say it. You actually have to do it. And right now, who, buddy, as we deglobalize, as we continue to place one gigantic bet on AI, that is growing, for sure. But is it growing at the rates that it would need to grow to get us out of this? Not yet. Our GDP at last check was growing at a paltry, like 1.2% or something. So this is not an ideal setup.

• 25:35Speaker 00

  We definitely have got to find a way to really get the real, not the financial economy, the real economy growing. You've got to see middle-class, real wages going up. Not nominal, real wages. So not just that number go up, but number go up compared to inflation. That's where we've got to be. And until we see the real economy growing at a rate that we can get excited about, let's peg it at 3%, 4%, we're going to need to be somewhere in that ballpark. So we're going to have to roughly double. I mean, this is not going to be an easy task. So Bessent and the whole crew in Trump land have their work cut out for them. And I don't yet see signs that this is going to work. So we'll see.

• 26:18Speaker 05

  I think like it's cool, because like Bessent is like economic wizard. So I'm just flabbergasted at how many little piles of money. He's like, well, I got a trillion over here, and I got $2 billion over here, and I just did a currency swap with these people. So it's, I could feel like he's at like the board, and he's trying to pull all the levers and do all the magician trick, but the bond market is like, nah, he'll go up.

• 26:37Speaker 00

  The markets are very savvy. They are full of people that know exactly how this game is played. They know what tools he has in his disposal. So for the general public, a lot of these things are going to be surprises. But for the people that are actually putting the pressure on the markets, not so much. Where do you want to be? You want Japan just hoovering up your debt, because it is a surefire way for them to get a risk-free rate of return. You want China hoovering up your debt. You want the whole world hoovering up your debt. But instead, right now, the world is splintering apart. Deglobalization is my stand-in phrase for nobody trusts anybody anymore. Everybody is super suspicious.

• 27:21Speaker 00

  You get like these agreements that are being made between different countries, but it's like all these very uneasy alliances that are being made. You're seeing stuff happening in the Middle East, where they're trying to like team up a little bit, but they don't have a ton of trust for each other. Obviously, plenty of people don't have trust in the US government. The US obviously doesn't trust China. China doesn't trust the US. It is, this is a weird time. And I, here's my mental map. I don't think I've said this out loud, certainly not very often. But my mental map is, one day, we're all going to look back at this very time as like, what does deglobalization feel like? Is it fun? Is it good? Does it lead to instability? Does it cause people to shoot each other? And the answer is, yes, this is what it is.

• 28:05Speaker 00

  And because we don't have the historical perspective to see it, we keep looking at like these narrow little beats, and we're not putting it all together. Every now and then, I'll do a run, and I'll sort of web everything out of like, here's how all of this stuff is interconnected, including the kinetic warfare. But it's just too overwhelming to run through it every time. But when you zoom in, you lose the real picture, which is the world is fracturing. We're going from high trust to low trust, and it's in the middle of populism. And it's not a good time. And when this all started with hollowing out manufacturing, and people were getting Rust Beltized, we just, you know, you sort of, well, yeah, but everything's getting cheaper, and that kind of feels good.

• 28:50Speaker 00

  And you don't realize, you've started a process that is brutal.

• 28:55Speaker 05

  Yeah. We spoke with Arthur Laffer, who's like the OG tax consultant to Reagan and all these administrations. And when we brought up the debt problem to him, hey, we're about to hit $40 trillion in debt. We're 130, I think we were at 130 GDP debt ratio. He's like, that's not real. We owe ourselves. Like, federal debt isn't that big of a deal. And then we look at charts like this, that shows that the Federal Reserve now owns half of the treasuries that are maturing. So it does seem like we're kind of circular financing ourselves. Is, what is the thing on the other side? Like, what is the? Because I feel like we are just owing money to us in like, line item one is a withdrawal, line item four is a deposit. So what are the things that we are trying to prevent? Because right now, we're the biggest older owners of our own debt.

• 29:39Speaker 05

  And like, we owe us. So I'm trying to figure out, like, we just gonna default on us? You get what I'm saying? Like, what is the thing on the other side that I'm not seeing?

• 29:47Speaker 00

  Okay. Let's, we're going to speedrun it a bit, but...

• 29:54Speaker 00

  We're gonna have to bring in immigration to this because it's gonna make a point about the economy that we've been talking about since like the 60s or 70s. Up until 1914, everybody was like, yeah, like, open immigration, which we had an open immigration policy. If you made it to Ellis Island, welcome. There were no stipulations. Then we started shutting that off. And certainly on the right, people have an intuition, if nothing else, that you can't do that. But the question that Milton Friedman asks is, why can't you do that? And this is going to, I know it feels like we're moving away. This is going to begin to explain what we're protecting against in terms of the fact that this is all a gigantic Ponzi scheme.

• 30:39Speaker 00

  And so we're going to answer the question that Milton Friedman dances around, which is what happened in 1913. Why is there a break in 1914?

• 30:48Speaker 06

  I've always been amused by a kind of a paradox. Suppose you go around and ask people, the United States, as you know, before 1914 had completely free immigration. Anybody could get on a boat and come to these shores, and if he landed on Ellis Island, he was an immigrant. Was that a good thing or a bad thing? You will find hardly a soul who will say it was a bad thing. Almost everybody will say it was a good thing. But then I suppose I say to the same people, but now what about today? Do you think we should have free immigration? Oh, no, they'll say, we couldn't possibly have free immigration today.

• 31:28Speaker 06

  Why, that would flood us with immigrants from India and God knows where, we'd be driven down to a bare subsistence level. What's the difference? How can people be so inconsistent? Why is it that free immigration was a good thing before 1914 and free immigration is a bad thing today? Well, there's a sense in which that answer is right. There's a sense in which free immigration, in the same sense as we had it before 1914, is not possible today. Why not? Because it is one thing to have free immigration to jobs. It is another thing to have free immigration to welfare.

• 32:12Speaker 06

  And you cannot have both. If you have a welfare state, if you have a state in which every resident is promised certain minimum level of income or a minimum level of subsistence, regardless of whether he works or not, produces it or not, well, then it really is an impossible thing. If you have free immigration in the way in which we had it before 1914, everybody benefited. The people who were here benefited, the people who came benefited. Because nobody would come unless he or his family thought he would do better here than he would elsewhere. And the new immigrants provided additional resources, provided additional possibilities

• 32:57Speaker 06

  for the people already here, so everybody could mutually benefit. But on the other hand, if you come under circumstances where each person is entitled to a pro rate a share of the pot, to take the extreme example, or even to a low level of the pot, then the effect of that situation is that free immigration would mean a reduction of everybody to the same uniform level. Of course, I'm exaggerating. It wouldn't go quite that far, but it would go in that direction. And it is that perception that leads people to adopt what at first seemed like inconsistent values.

• 33:37Speaker 00

  Okay, so now the question becomes, what changed? Why is the year 1914? Now, longtime listeners of the show know exactly where I'm going, which is in 1913, we created the central bank. In 1913, you went from a real economy with sound-ish money that was backed by gold, and you moved into the steady breakdown over a very long period of time. But you moved into a situation where you had the steady breakdown of the relationship between the dollar and gold that has its final breaking point in 1971. And so, once you understand that when you put the central bank in place, what you're doing is creating that, and if we had it fast on top, I would have you play that Biden

• 34:19Speaker 00

  senior economic advisor who could not explain the economy, because what he's tripping over is that, okay, wait, how is all of this money being created? Like, who do we owe it to? Like, wait, is it a problem? Like, why do we have to print money? If we just owe it to ourselves, what's the issue here? And it's where you realize that money, even gold, it's all a fiction. It is all a psychological game. Man, do I want people to understand you're having a biological experience. None of this stuff is real. Whether the fact that we live in a simulation is real or simply the best approximation of what's really going on doesn't matter. The reality is, the way that human psychology works is that you will very quickly realize, it's far too hard to stay alive by myself.

• 35:02Speaker 00

  So I need to find a high utility way to capture the value of my time and effort, and so I'm gonna specialize in something. And that forces you to abstract money. It's no longer the real thing. It's no longer, I build you shelter, you live in the shelter, I built you a fishing rod, and you were able to go get something to eat. And it becomes, I did a thing, I don't know what people are gonna do with the thing that I'm making, but as long as that thing has value, people will give me this abstraction that we call money. That money has to be made from something. And we picked gold because it can't be eaten by like silverfish, which will actually eat cash. It doesn't rot over time as so many other things do, because for a while, you know,

• 35:43Speaker 00

  things like hay or rice could be used as money, because it was just so universally used by everybody. Salt is another one. And so we found, okay, gold is this thing, it's very hard to inflate, because it's just hard to get out of the ground. And so there's this natural scarcity to it, a natural difficulty to get it out of the ground. And so even though it does slowly inflate over time, that becomes a thing that like basically every society settled on. It just happens to be this thing that comes from an exploding star. So it has like a relatively even distribution, so that everybody's sort of come across this thing. Okay, so it's already fake.

• 36:24Speaker 00

  It's just a thing that we go, okay, we're all gonna agree that if you have this thing, I can trust that it's real. But then as you get into the central banking, you can't trust it anymore. Now you just have to believe that the people running the central bank will try to be sensible about the amount that they inflate the currency. As every empire before us has done, they stop being sensible. And 1971 was the end of this sort of sensible train, where there was any tie between gold and the dollar that kept it constrained in some way. And so you look at the M2 money supply, and it just starts climbing ridiculously high post 1971. So all of the debt that we're bringing on, it is, it's all basically a fake system, a

• 37:08Speaker 00

  Ponzi scheme, however you wanna look at it, that is completely done by fiat, just by decree, this money now exists, it is valuable, because literally I, as the government, say so. And the problem is that as we do this, you find that you can't infinitely create appetite for debt. You can do a lot of things to create people's desire to give you the fake money that they earned in order to get that. But over time, it just keeps increasing the supply, increasing the supply, increasing the supply. You can buy it back from people, but the problem is the mechanisms that you have to buy it back ultimately cause the creation of more money. So as the Fed, sorry, as the Treasury is using the money that they raised at auction,

• 37:52Speaker 00

  they basically sequestered that money. But now that they're buying it, they're injecting liquidity back into the system, and then they will ultimately, assuming they wanna get back to a trillion dollars in that fund, they're gonna have to print more money to do that. And they have to at all times be ready to quote unquote, make a market by being willing to either print money or buy, as the Treasury is doing now, to make sure that somebody can buy that excess available debt to keep the psychology of people in line. But it's a psychological game that you're playing. It isn't that you're adding real value to money. In fact, you're doing the exact opposite, as you inject more liquidity into the system.

• 38:37Speaker 00

  If you don't inject it in exact proportion to the amount of new things that you can buy, then you're making every dollar less valuable. And so that's the game. It's literally all quote unquote fake, but what people have to understand is, if you just go, oh, it's fake, and this is all bullshit, and what are we doing? You miss the whole point, that all of money, always and forever, whether it's sound money or not, it's all fake, it's all psychological. And that's why you get this repeating thing, where even if you're the Roman government, you start clipping your coins, you start using impure metals so that you can inflate the currency.

• 39:16Speaker 00

  Even the fact that gold acts as currency, it only works when people believe that it's real. And so this is why gold beads have worked, because, well, that's what we believed in at that time. That's why salt has worked, because that's what we believed in at that time. But then, of course, people will make the fake gold, or glass beads, not gold beads, if I said gold beads, the glass beads. That's why they will find a way to go make those elsewhere, roll up with ships, and now we've got glass beads, you just inflated the currency, it will eventually collapse. And so all of this, what you're calling circular financing, it does eventually collapse the currency. And so the US dollar over the last hundred years has lost like 98% of its value, the British pound, same thing. It's just, this is what we do.

• 40:01Speaker 00

  So the fakery of it all, you can use it to manage people's psychology for a while, but the reality of the dynamics of a fiat currency over time will be abused through all of these gimmicks, no matter how many gimmicks you run, it will be abused over time to the point where it stops being real. And this is why what you're seeing now is central banks going, okay, we wanna go back to that thing that's less manipulatable, which is gold. And so central banks, now gold is the number one reserve asset of central banks the world over for the first time in God knows how many years.

• 40:38Speaker 00

  But yeah, it's, most people will tell you, well, gold at least is real. Nope, it's just a less abusable fake thing that requires everyone to believe in it.

• 40:49Speaker 05

  At first look, I just checked, the markets are kind of mixed. Dow is up, S and P is sliding, but there's some chick stock, chip stock problems. So people are saying it could be because of that, not necessarily because of the bond. While Bessent is playing, you know, fixer on the bond market, the stock market hasn't necessarily reacted as much. Bitcoin had a little bit of a pop. What do you think is the second order consequence? If Bessent keeps trying to inject liquidity or inject money to buy those bonds back? And the appetite for the bonds do not return as fast as he would like.

• 41:22Speaker 00

  You, you are looking at one simple thing, like I can boil all of this down. If your real economy isn't growing, meaning you are making things more productively, more efficiently that people want very badly. So that the people making that thing make more money, pay their people more. Those people have good jobs, they're making more money over time. The real economy is growing, which they then spend in the economy. And now all of that money that's sloshing around just becomes a smaller and smaller portion of your GDP. And you grow your way out of this. If you do not grow your way out of this, you're back to my, it was a 10 year clock. It's now at nine years. And that just keeps going down until it ends in bloody revolution

• 42:06Speaker 00

  or some sort of war that just does a natural reset to the global economy. Because if you're looking at all of this from the outside and you just don't have any allegiances to anybody anywhere. You're looking at the US and you're like, okay, this is interesting. These guys have been abusing their position as the world's reserve currency for a long time. They've become completely fiscally irresponsible, which is precisely why immigration is a problem now. You have all these insane debts and deficits. That's going to force without growth is going to force a reset of your economy because you simply won't be able to pay. Remember, the amount that we're paying to service the debt is still climbing. So people don't talk about it much anymore because it's almost like it gets boring.

• 42:51Speaker 00

  Yeah, okay, yeah, Tom, I get it. We're 123% debt to GDP, ah, whatever. No, not whatever. You, you are going towards a cliff. That cliff is there. Now people can slow you down, but when you get to the point that you can't pay the interest on the debt, then you start defaulting and you just don't pay the interest on the debt. Or you write off some of the debt or you, which is what they're really going to do. You inflate the currency really hard to just make the debt smaller. Because what happens is if you have a, let's just say you double inflation, just to make math easy. Now your 40 trillion becomes effectively 20 trillion. Now everybody suffers for it because that's 100% inflation.

• 43:36Speaker 00

  But that's how with post inflation dollars, you can pay off pre inflation debts. And so this is the game that they do. And they just go, you're all going to suffer, meaning anybody who gets paid in dollars, saves in dollars, has US debt, all of that is going to become worth less over time. And that's the game every empire ever runs. They don't do austerity, they have a hard time growing. China's now facing the same problem. Their growth rate is declining, they're still growing faster than us, but their growth rate is declining. So you get caught in this trap. So the second order consequence is you will eventually have to do something dramatic,

• 44:17Speaker 00

  either massive inflation, defaulting on your debts, something, and that something will be bad. It will be very bad. And that's precisely how you end up with revolution. Because you can imagine, look at how much energy the DSA is gaining now. Now imagine you do another 30% inflation like COVID. Forget it, it's game over, right? We can agree if we're already in trouble. If we do another COVID style bump without real growth in the economy, the pitchforks actually come out.

• 44:46Speaker 05

  In this context, if immigration were not tied to any type of benefits, you don't get no benefits, 0%. If you get health insurance through your drive, great, but other than that, no government assistance at all. Would you, would immigrants, immigration still be as big of a problem?

• 45:02Speaker 00

  Almost certainly not. So you still have a question mark around cultural match. But if there's nothing to gain from anything other than a hard work ethic, entrepreneurial endeavors. And I talked about this really early when we started doing the lives. And I said, listen, you've got to create a situation where you're only attracting the most hardcore people, people with an entrepreneurial spirit who have the equivalent of, I may die in the first winter, but I'm going to come anyway. When you have a setup like that, now it's like, yo, you're getting like the best and the brightest. Or the people that come that weren't the best and the brightest, they learn real quick. I gotta go back to wherever I came from because this is not working out for me.

• 45:45Speaker 00

  And it is legitimately cold in the winter in New York City. And without that forcing function of it is hard to eat, it is hard to stay alive. And I get how like brutal that sounds. But without that forcing function, you just get everybody coming. And now they're forcing you to run bigger and bigger deficits because the real economy isn't growing. You won't be able to tax the billionaire class, as much as I know, everybody wants to believe that's true. You won't be able to tax them to be able to cover all of this stuff. And so you end up in a socialist death spiral. As a PSA, I will remind everybody, the Nordic countries are not socialist. They themselves will tell you that they're not socialist. And the only way that they're able to get the large safety nets that they are

• 46:27Speaker 00

  is by now starting to push back on immigrants. So they've dramatically started reducing the number of immigrants that they're bringing into the country. And they have extraordinarily broad based, high levels of tax, lower corporate tax rates. So they're like, we've got to protect the corporations because that's, we need the average middle class person to be making good money. And that's the only way. Get those guys making good money and then tax the fucking life out of them. And you tax them at every opportunity. You tax their income, you tax the things that they buy, VAT taxes, things like that. And so you get a massively broad tax base. And then you can do a social safety net, but you need a high trust, what people will call a homogeneous society.

• 47:11Speaker 00

  I do not think they need to look alike, but they need to think alike. And if they think alike, then you're able to get in a situation where people are like, it's considered gross in our culture to not contribute. So if you're unemployed, that you just feel terribly about yourself until you get a job. So everybody that can't is like out there desperately trying to get a job because they don't want to be the guy that's like riding on the system harder than everybody else. And so there's this cultural enforcement of, don't be that asshole. As soon as you lose that, and I don't know if you've seen some of the riots, I forget what country it was in. Norway, Sweden, one of them. Where there's just like these big riots now and you've got immigrants like attacking the police and shit and it's getting crazy.

• 47:56Speaker 00

  So it's like, that's not going to work. If you've got people who are like, no, no, no, you're going to give me my fair share of France, I'm looking at you. And people aren't like trying to make sure that like, yo, I've got to contribute to this system. Not because there's a gun to my head, but because everybody's looking at me sideways. And internally, I have the value system of insert country here. And when you don't have that, when there isn't a shared value set and you can get on the, the government dole, you create an incentive structure that will implode it. But if you have something where it's like, all right, it's, you know, 1600s and you're riding on a boat where you've already got a 30% chance of dying. Then you've got the ones that make it have like an 80% chance of dying in the winter.

• 48:40Speaker 00

  It wasn't that uniform, but it was like, there were some places where it was really brutal for those first several years. The kind of people that come in that scenario are very different. In, in America, it was the Puritan work ethic. It was people who rolled off the boat and were like, all right, we gotta chop down trees, we gotta build forests, we gotta get shelter, we've got to figure out our crops. And it was just like that, like if you didn't contribute, you were going to get the fuck out. And being ostracized back then was quite literally a death sentence. Taking a short break, but there's more Impact Theory after, stay tuned. Let's talk about how much you're paying to stay safe online. Count it up, a VPN, a password manager, something to block ads and trackers.

• 49:24Speaker 00

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• 50:08Speaker 00

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• 50:16Speaker 00

  Thanks for staying tuned. Now, let's get back to it.

• 50:19Speaker 05

  Beginning of contribution, we gotta talk about this US and Canada trade war. I'm a bit conflicted on it. Tom, break it down for us, so we can really find out what's going on.

• 50:26Speaker 00

  The good news is, I'm not conflicted at all. Canada is attempting economic suicide as it walked away from a trade deal with the US. That trade deal with the US would have dramatically lowered the tariffs that are currently in place on several of Canada's key industries, Carney said. The three deal breakers for him were autos, Canadian cultural and French language protections, which I do want to know more about, and, and this is the important one, a last hour US demand restricting Canada's ability to sign trade deals with other countries. Now, who might that country be, boys and girls? China, because there is a growing relationship between the two countries that is starting to get very hot and heavy.

• 51:09Speaker 00

  Canadians are rightly pissed off about Trump's asinine 51st state comments. I mean, those were so dumb. They were dumb when it was happening. They're still dumb in retrospect, but ejecting out of this deal is going to be bad for Canada, especially given how far their economy has already fallen, dude. When you look at where they were like 20 years ago compared to where they are now, yikes. These guys are falling off a cliff, and while Carney may look tough through all of this, the numbers are not in his favor. Around 78% of all Canadian exports rely on US consumer markets.

• 51:51Speaker 00

  78%, the goods and resources that are at stake here, they are around 13% of all US imports. So, big deal for them, much smaller deal for us. And around 15% of US exports go to Canada. So, not a huge thing for us. Not trivial, but 15% is still only 15%. In the US, exports themselves only make up 11% of total GDP. So, they're 15% of 11%, okay? So, this is not the biggest deal for the US. But in Canada, exports make up 33% of GDP.

• 52:32Speaker 00

  So, 33% of GDP, and we're 78% of that 33%. Yowch. This is very unwise. China is far enough from Canada that it is a much worse trading partner for Canada, especially given that the US MCA Article 32.10 already gives Washington notice rights and an exit trigger from other trade agreements if Canada signs a free trade deal with a non-market economy like China. Now, as a reminder, China is a non-market economy. So, they manipulate things to high heaven. Now, that agreement was written specifically for Beijing back in 2018.

• 53:13Speaker 00

  But given how cozy Carney has been getting with China, the US, for reasons that I think are very understandable, they wanted more guarantees. And according to Carney, they wanted a broader lock on Canada's independent trade expansion, given that Ottawa's target is a 50% increase in exports to China by 2030. I get why the US is like, nah, we're not here for that. And that's exactly why Washington has reason to push for more concessions in this agreement, in my opinion. Now, did we do it well? Probably not. Trump is a total douchebag when it comes to this kind of stuff. He is always trying to bully people. He is making something that is good for Canada seem absolutely terrible psychologically.

• 53:54Speaker 05

  He started a deal, Tom.

• 53:56Speaker 00

  Yeah. Here's the thing. Does it work in private business dealings? Maybe. But does it work on the global stage where you're going in front of cameras and saying, these guys are like the little bro, you guys are the 51st state of the US? That's where it's like, dude, okay, listen. You want to talk about things that I teach entrepreneurs all the time. Here we go. You've got to show the other person how this is a win for them. Just be thinking about that. How is this a win for them? What are they gonna go back and tell their employees? What are they gonna go tell their wife? Whenever I'm thinking of a deal like this, I'm thinking, how's this person gonna represent this to their wife? How are they gonna show their wife that they're cool? If they're not gonna be able to do that, this deal is gonna cause me problems. And Trump, just again, maybe this works in backroom deals,

• 54:40Speaker 00

  but it certainly does not work in the public when you're talking about somebody's identity being tied to their country. It's really dumb. Canada is obviously making a play to go deeper with China, so I understand why we are pushing back, but you can't do it in a dumb way, which I'm sure is precisely what we did. Now, in January, Carney became the first prime minister to visit China since 2017. He met Xi in Beijing, cut Canada's 100% tariff on Chinese EVs down to 6.1%. China, in return, dropped canola seed tariffs from about 85% to 15% and subsidies, suspended duties on canola meal, lobster, crab, and peas.

• 55:22Speaker 00

  Beijing also went, this one blew my mind, they went visa-free for Canadian travelers. That tells you just how close these two countries are getting. The Foreign Minister reclassified, and this is obviously Canada, reclassified China from disruptive global power to strategic partner. So, they are obviously making their play. They're saying, we're gonna distance ourselves from the US. We are going to get deeper in bed with China. As you can imagine, America's not feeling so good about that with Canada sharing a border with us. After the deal, Trump threatened 100% tariffs on Canadian exports if Ottawa went further with Beijing, so this is back when the deal was originally made. On January 26, Carney said Canada had no intention of pursuing a free trade agreement with China

• 56:07Speaker 00

  and would honor its US MCA obligations. But when during the negotiations, when the US basically just asked Carney to put that promise into a binding agreement, he walked out in a huff instead. So, you can imagine, the US, forget the Trump of it all, the US administration is looking at that going, yeah, this is not a Canada that's looking to build fences or build bridges with the US. This is a Canada that's trying to distance itself from the US and very clearly build stronger relationships with China. And that's going to create massive friction. So, the question is, how extreme does that get? Carney can say all he wants that this is about sovereignty, and again, this is a powerful reminder to Trump that saying dumb shit like Canada's the 51st state has consequences.

• 56:52Speaker 00

  The British Prime Minister, or British Columbia Premier, David Ebbay, pointed out that Trump's request for exclusive access to Canadian critical minerals on top of everything else would have essentially made Canada, now get ready for it, the economic equivalent of the 51st state. So, they're telegraphing exactly what their beef is. And so, boys, you're having a biological experience. If you don't understand people's need to protect their self-image, if you don't understand that people really feel strongly about their countries, then you're going to keep making these stupid mistakes. So, we've gotta completely reverse our rhetoric. We've got to understand, yes, we may be in a stronger position than them,

• 57:36Speaker 00

  but they will cut their nose off despite their face. I'll never know if it's despite or to spite, but you guys know the reference. These guys will shoot themselves in their own face to make a point, which is crazy, but is nonetheless, it's not a Canadian thing. It's a human thing. Humans do this. And so, the fact that we are not taking that into consideration as we negotiate is crazy. But having said all of that, Canada is in a way worse position. Them getting in bed with China is a terrible idea, and it will be met with more friction that will hurt them a lot more than it will hurt us. So, damn, Canada, like, get it together.

• 58:13Speaker 05

  It sounds good, like, I don't want you to be friends with that person, because that's a bad person. But right now, it sounds like we're the friend that got Xed out the friend group, and we're just like, she's gonna backstab you, and you need to stop it. She's a bad person. You don't need to be her friend, Samantha. And it's like, nah, you're just mad because Samantha is not as cozy as you are.

• 58:30Speaker 00

  This is true, but we're also the friend that's worth a trillion dollars. We're the one flying you to the Maldives on a moment's notice with the private chefs and all that. And so, if you're ready to give all of that up, great. But I'm not sure that your citizens are gonna like it when they suddenly realize like, oh shit, we don't get all that economic activity anymore. This kind of sucks. We've been sliding for 20 years. We are now worse off per capita than like Mississippi. It's nuts, man. These guys have been falling, falling, falling economically like a fucking rock, and they're so in their feels about the whole situation that they're now doing things that are even worse.

• 59:14Speaker 00

  And here's the part, dude, are people not paying attention? China is going to put itself in a position where it can choke anybody out that it wants to. You're not going from a superpower that bullies, you know, that plays its hand in a ferocious way to somebody who is like on the come up with you, and they just want to see you do well. That's not China's play. China gets people in a debt trap so that it's in control. Now, there's a lot of pro-China vibes out there, so let people run the experiment. Because it, listen, the US is no longer a place where it's like we were during the Marshall Plan post-World War II. We've got the moral authority. We're really trying to help build people up.

• 59:57Speaker 00

  We are the drone strike the shit out of you in Yemen, in Iran, in wherever the fuck, because we found oil in your country, and y'all need some freedom. That's the America that we are now. So, I get it. People are going to see what they can find elsewhere. But China is an authoritarian regime. They believe if people are rising up in your country, you roll tanks into Tiananmen Square and you shoot them in the face. So, everything, that's literal. As long as you agree on everything, you're fine. But what happens when you don't agree? Would you rather be in a pissing contest with a country that shoots its own citizens? Or would you rather be in a pissing contest with the US? I'm not saying it's fun to be in a pissing contest with the US,

• 1:00:42Speaker 00

  but people are not running the calculus of China being authoritarian regime, not at all. They're like putting, in fact, I think some people are giving them bonus points for being an authoritarian regime.

• 1:00:53Speaker 05

  All right. I want to break down some of the demands that came out of why Canada walked away. Number one, it was veto over strategic infrastructure partnerships, demands that Canada submit all major and foreign investments in domestic infrastructure.

• 1:01:06Speaker 00

  China.

• 1:01:06Speaker 05

  Preemptive trade restrictions on non-US nations.

• 1:01:10Speaker 00

  China.

• 1:01:11Speaker 05

  Judicial preemption on critical minerals.

• 1:01:15Speaker 00

  China.

• 1:01:15Speaker 05

  Requirement.

• 1:01:16Speaker 00

  That's us trying to get away from China, just for the record.

• 1:01:19Speaker 05

  Requirements for the US to receive guaranteed rights of first refusal and price caps on all unrefined critical minerals. So instead of them sending them to China, they would have to at least fly in by us before they send them out.

• 1:01:30Speaker 00

  I get why we want it. That one, I understand why they would be like, yeah, no, we need to be able to have free trade. So.

• 1:01:37Speaker 05

  But my thing is if we started at number three, I feel like it wouldn't be a problem. But like veto part, like to have veto power over what another country has a trade partnership with, that is ambitious. I feel like that is an ambitious.

• 1:01:47Speaker 00

  It's very ambitious, dude. What you're watching is all of this stuff used to be self-evident. We didn't need to put these kinds of things into agreements with Canada because we knew that Canada was never going to trade with China. China had a terrible reputation and the US had a better reputation. And so, yeah, we knew you were going to trade with us. And they knew they were going to trade with us because we are right across the border. The logistics are always going to be in the favor of doing trade with the biggest economy in the world that happens to be literally right there. So now what you're running into is you're making a far worse deal because you're mad and the US is trying to tighten the screws

• 1:02:26Speaker 00

  because they're mad. And this is deglobalization. This is a rising power making it a multipolar world. I am empathetic to people that are like, I'm just so sick of the US trying to bully the world. I'm not going to take it anymore. Yep, it's a fair position to take, but there will be consequences. And so this is where I get very nervous for all of us that this period is going to be brutal, that there are going to be economic consequences that will be extreme, basically the world over. And so we are in a race with a global depression because you've got both the US and China in weak

• 1:03:08Speaker 00

  economic positions and getting worse, by the way, by the day, and AI. And will AI be the productivity miracle that we all needed to be to stop that global depression from manifesting? But there are so many signs, dude. There are so many signs. You've got what's going on in Japan. You've got the housing crisis in China. You've got the everything problem in the US with growth being slow, overinvestment in AI, massive bubble, hyper-financialized economy, not being, not having enough manufacturing here, like woe be to all of us that we are caught in this where now nobody trusts anybody. Everybody's fracturing into these weird ass alliances.

• 1:03:49Speaker 00

  Trump continues to alienate our traditional allies. Now, keep in mind, one good deal and people will be back to the table because it isn't just the US that doesn't have friends or allies. We have interests. The same is true of everybody. Everybody has an interest. Now, because China's on the rise, people are like, oh, if you're smart and you're a foreign leader, you don't want to alienate China or the US. You want to play them off of each other. So you want to go for a better negotiation. This is not Canada saying, I'm not going to do business with the US. This is Canada saying, well, now I've got a second option. And maybe it's not quite as attractive, but it means that I'm not beholden to everybody. It's brilliant.

• 1:04:30Speaker 00

  So I don't, a lot of people probably don't know this, but Impact Theory, we have something called Impact Theory Network. So we are not the, so we've got my show, we've got Lisa's show, we have my and Bialik's show, we've got other people that we're flirting with, negotiating with, trying to get more and more people into that network to diversify away from me relying on myself. So I want to be able to be in a coma and still make money. And right now, that is not the case. So when you have other options, you're in a much better position. And so we can now, as we aggregate more and more talent, we can go to advertisers and be like, hey, this isn't just about Tom. It's not just about Lisa. It's about a much broader

• 1:05:09Speaker 00

  portfolio. So that is the smart way to play this. So I understand why people are trying to play these two things against each other. But at the end of the day, you gotta be careful. Like, we don't walk in and slap a nine-pound penis on the table when we're negotiating. We still are very friendly with the people that we are trying to get ad deals with because it's like you don't want to put yourself in a stupid position.

• 1:05:34Speaker 05

  We're sending the Digital Services and Tax Online News Act. This is just saying if there's compensation made by Canadian users, we, US had to pay taxes on that. This is something similar to the new data deal that the EU did. So that's.

• 1:05:45Speaker 00

  That one's going to be interesting to see how this plays out. I actually, if I'm a foreign country and I'm of any size, I'm going to do what China did and just be like, no, we don't use Facebook here. Build your own. Easy enough. The only thing that makes it hard is that they already have network effects. But if you say to your own country, yeah, you gotta build your own TikTok, Instagram, Facebook, Telegram, whatever, they'll build it. And if your citizens can't access that thing, then the new one will explode and it will grow super fast. So I imagine more countries like Europe will probably do their own thing because they all want to put our, like X especially, under restrictions that X doesn't

• 1:06:29Speaker 00

  want to be put under. And so X, for instance, now, I think it's with Brazil. Brazil is like making all these crazy requirements. And so they're like, all right, cool, we'll comply. But every request for censorship that you make of us, we're going to publish. And so that I think is brilliant. But it's also going to piss them off. And so they're going to be like, yeah, we're just not going to use this anymore. And if they're of sufficient size, they'll build their own and that'll be that.

• 1:06:54Speaker 05

  Elimination of cultural and language protections. This is what, if you see some speculation that Trump was attacking them speaking French, it was the CanCon Act, which basically means for online goods and digital services, they have to have provincial language law. So you have to have it in the language of that province and French is a major language there.

• 1:07:15Speaker 00

  Yeah. So really fast on that one because I have personal experience with it. So at Quest, because you're doing global packaging, what you find is you just put French on everything because if you want to sell into Canada, you're going to need it anyway. Also helps you in France. So it's like, you just end up doing it, but it's a pain in the ass. And so people would much rather, Canada's an English-speaking country. We don't want to have to have one label because no one's going to do a Canada-specific label. You don't make enough money. And so it's just a pain in the ass enough. I get why they're pushing for that one. It is obnoxious, I'm going to be honest.

• 1:07:49Speaker 05

  Elimination of buy Canada public procurement rules. Right now, Canada is required to go Canada first when they are looking for a public infrastructure contract. Trump wanted access to their public procurement, dismantling agricultural safeguards, unilateral alteration of auto rules, exclusion of heavy assembly plants and key auto sectors from tariff relief. I think this is big because of our focus on auto manufacturing and how you crab, you quoted it, that's a signal of how much more manufacturing you do based on what your auto manufacturing can do.

• 1:08:19Speaker 00

  I'd also be curious, I'd have to read that a lot closer, but if, if Canada is smart, they would not want China to come in and hollow out their automotive manufacturing. Now, I don't trust the Trump administration to be altruistic and be looking out for their best interests. But I am curious if there's some sort of thing there where we have enough American-owned auto plants. I don't know that this is true. But if we have auto plants there by companies that are owned by US companies, where we would now be losing manufacturing capabilities into the future, should we find ourselves in a kinetic war with China

• 1:09:00Speaker 00

  where we would need to turn those over to manufacturing munitions? I don't know, that's probably a stretch.

• 1:09:05Speaker 05

  But I mean, with BYD proliferating into China, it will naturally make the demand of domestic cars drop because BYD is cheaper, more.

• 1:09:13Speaker 00

  Yeah. So they'll just, there will be no Canadian market. They'll lose. So this would be, this is another way that BYD will be able to compete directly with US manufactured vehicles that are being sold into Canada. And so for the same reason that we want to keep it out of the US, we want to keep it out of Canada.

• 1:09:31Speaker 05

  Pharmaceutical patent extensions, priority allocation of Canadian energy. This was a big deal because I know, I think it was Ottawa who was already giving a majority of the electricity to Michigan, I believe. So we're already having energy deals. So this is interesting that this can now impact second order consequences in the States directly, binding military and Arctic mandates and lowering customs and de minimis rules. So some of these seem like, okay, that makes sense. Others of these seem like they wanted ownership of, I don't want to say Canada sovereignty, but they basically wanted a seat at the table.

• 1:10:03Speaker 00

  Yeah, they, they want to turn Canada into the 51st state. Like, that is real. Trump shouldn't have said it, but he did say it. They're pointing out, yes, this is exactly what this does. This folds us under the US umbrella. And when it was, and this is an important human psychological insight. When it was them choosing to be that, they felt good about it. Now that they're being forced to write it down, they don't feel good about it. That is, uh, when people, when you can get somebody to do it and it feels like it was their own free will, they will, um, do it gladly. When they feel like they're being forced to do it, even when it's in their best interest, now they feel some type of way and don't want to do it.

• 1:10:45Speaker 00

  So, yeah, that's, that's a good rule in your marriage. That's a good rule with your kids. That's a good rule with governments and companies. Find a way to make it the most selfish thing that they could do, where they're excited to do it.

• 1:10:58Speaker 05

  In the coming days, the government will introduce additional measures to support Canadian workers and businesses, building on the nearly 25 billion in support provided over the last 18 months. These actions complement Canada's economic strategy. From day one, we have been focused on building our strength at home and diversifying our partnerships abroad.

• 1:11:14Speaker 00

  Anybody that's listening to that and doesn't go, that is absolute bullshit, is crazy. Even Carney has, somebody did an audit on this. I don't remember the exact percentage, but the vast majority of Carney's wealth is invested in American companies. So it's, Canada is a backwater economically for 20 years. They've been sliding. So I get he wants people to invest in Canadian companies, but right now, that's not, that's not the growth place. That's the decline place.

• 1:11:40Speaker 05

  Canada has what the world wants, and we will not allow any nation to determine our future. We will set our own course to keep building up Canada strong for all.

• 1:11:47Speaker 00

  They do have oil and minerals. Here's, here's what I would tell, uh, Canada. All right, Canada, you want to get away from the US. Word. What you want to do is audit what China did. China was brilliant. China was willing to play the supplicant. China was like, literally, they had doctrine written down where they're like, while we're weak, we're just gonna, hey, yes, how may I help you? Of course we'll do that. We'll put nets up around the facility so we, they can't even commit suicide. Like, we got you. And they did everything the world wanted them to do so that they could get strong, so that they could sucker people in to get all the manufacturing, all the expertise, and they got it. And now they're in a much stronger, much stronger position.

• 1:12:29Speaker 00

  And given that improved position, now they're pushing the advantage. It's brilliant. So if you want to learn from China, I think that's very wise. But Canada is not in the place where they're in a strong enough position that they can start making these demands. But psychologically, they just cannot bring themselves to play a long game, to, uh, pretend to be a, um, supplicant, I'll just reuse the word, uh, to do that while they're weak. And this is where it is, it's very unwise. China showed that playbook. This is also a playbook that when you look at immigration from Islamists, they run the same thing. So you're in the early days of Dearborn, Michigan. You're not ruffling feathers.

• 1:13:12Speaker 00

  You're not, um, you know, uh, causing any problems whatsoever. Flash forward, whatever, 50 years later, and now you guys are a massive political bloc and you're doing call to prayer, uh, blasting it in the town. You're getting your officials elected and you run that place. So it is a very wise strategy. It is super effective. And if Canada were smart, uh, they would do something more like that.

• 1:13:38Speaker 05

  I mean, at the same time though, Canada doesn't have to play the long-term game. They just have to wait until Trump loses power. That's the, that's the, I like the eye-opening thing that America needs to realize. Like, we're only as tough as what the four years dictate.

• 1:13:49Speaker 00

  Sort of. So if they can get a, um, left-leaning government in, then yes. But there will be also lasting damage from what Trump is doing. So there's just gonna be, there'll just be so many things in motion as people move away from the US.

• 1:14:04Speaker 05

  I feel like even if JD Vance got in there, I, I don't think he would approach this trade deal the same way.

• 1:14:09Speaker 00

  Yeah, agreed, agreed. It, it will all start moving in a better direction. Uh, but this isn't like, oh, I just need to buy myself another three years. That's the Iranian playbook. That's not the, that's not what Canada's about. Canada's been cozying up to China for a very long time because I think, I'm, I'm, I am formulating a hypothesis right now, so everybody should take it in that spirit. But, um, I think that Canada is more ideologically aligned with China than they are with the US. The US DSA contingent, yes, same boat. But they're not aligned certainly with the US right at all.

• 1:14:49Speaker 00

  And so I think for a very long time, given that you didn't have a DSA option in the Democrat wing, they just kept moving more and more towards China and doing their own suicidal policies, which is why they've been declining for so long. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends to break and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop, eight ounces of water, and you're done.

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