The Debt Spiral Just Started — And the Bond Market Is Breaking

What’s up, everyone? It’s Tom Bilyeu, and today I’m taking you on a deep dive into some absolutely wild content from Andrei Jikh about the global economy, exploding debt, and why the bond market might be on the verge of breaking. I just watched Andrei break down the chaos happening with government spending, the insane pace of inflation, and how countries like the U. S. are caught in this never-ending cycle of printing money and bailing out asset prices—while everyday people get left holding the bag. In this episode, I’m reacting to Andrei’s insights on why China’s playing by a different set of rules, how the U. S. outsources risk to the public while protecting investors, and why every financial crisis seems to end with more power and wealth at the top. We’ll dig into how all of this could lead to even more aggressive money printing, higher rates, and why the next big move in the market might catch absolutely everyone off-guard. If you want to understand what’s really driving inflation, debt, and the future of your money—and what you can do to protect yourself—stick with me as I break down and react to Andrei Jikh’s critical analysis of the financial world right now. Special Thanks To Andrei Jikh: https://www.youtube.com/watch?v=g1kgEiP1v10 Tailor Brands: Check out Tailor Brands to launch your business starting at $0 + state fees: https://bit.ly/TailorBrandsSept Quince: Free shipping and 365-day returns at https://quince.com/impactpod Ketone IQ: Visit https://ketone.com/IMPACT for 30% OFF your subscription order PLUS receive a free gift with your second shipment—or find Ketone-IQ at CVS stores nationwide and get $5 off your first 6-pack for a limited time! Perplexity: Start your free trial of Perplexity Computer today at http://PPLX.ai/impact http://pplx.ai/impact and experience the next phase of AI. #ad makeup HeyGen: Create your first three AI videos for free at https://heygen.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 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 Me: 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 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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• 1:46Speaker 02

  So the debt spiral just started, and the bond market is now breaking. This is happening all over the world, not just in the US.

• 1:52Speaker 03

  We have inflation totally in control, and we've done a great job.

• 1:57Speaker 01

  Needless to say, that's bullshit.

• 1:58Speaker 04

  Host of war with Iran hitting Americans hard in the wallet. The numbers driven in large part by soaring fuel costs driven by the Iran war.

• 2:07Speaker 01

  That's part of it, but whenever somebody tells you that all the inflation that we're seeing right now is a part of the Iran war, it just isn't true. Remember that inflation has been running hot for years, long before a single shot was fired, before Trump was even elected. So this is one of those where you're giving the powers that be an excuse that they can take and just be like, well, this is really just the war in Iran. But the reality is while it is a very real exacerbating factor that we are likely to see continue to be a bigger and bigger problem, it is not how we ended up here. Anybody that's talking about inflation that doesn't talk about $2 trillion in deficit spending every year is lying. Anybody that doesn't talk about the impacts of all the capital getting sucked into AI

• 2:51Speaker 01

  and therefore forcing the government basically to print more money to cover their own debt is not telling you the full story.

• 2:57Speaker 05

  Everything we just described, the fiscal recklessness.

• 3:03Speaker 01

  The fiscal recklessness. All eyes on fiscal recklessness.

• 3:07Speaker 05

  Monetary recklessness, all that. No other country could have pulled that off. And it's fun and it's great while it lasts, but it enables you to keep digging and digging and digging into a deeper hole until the consequences come to bear.

• 3:25Speaker 01

  Which is exactly what we're doing.

• 3:27Speaker 02

  Right now, the world owes $365 trillion. The US.

• 3:32Speaker 01

  Think about how insane that is. $365 trillion in global debt.

• 3:37Speaker 02

  S owes roughly $40 trillion of that, and it's growing by about $82,000 every second.

• 3:43Speaker 01

  I think it's $6 billion a day. If somebody can double check me on that, but I think the US adds $6 billion a day to the debt.

• 3:55Speaker 02

  Just the interest now costs more than a trillion dollars a year. And so the obvious question is, well, how is that going to get paid back? And a couple of days ago, Trump shared his answer with the world.

• 4:05Speaker 06

  7.3.

• 4:05Speaker 02

  He told Time Mag.

• 4:06Speaker 01

  7.3 a day?

• 4:08Speaker 06

  A day.

• 4:08Speaker 01

  Jesus.

• 4:09Speaker 06

  Which is about 300 million an hour.

• 4:11Speaker 01

  That is so wild, man. That is, that is so reckless. And as a reminder, fiscal means government spending. So when we say fiscal recklessness, we're talking about the government.

• 4:20Speaker 02

  Saying, quote, "Certain levels of inflation will also pay off that debt very rapidly."

• 4:26Speaker 01

  It's one of the most unhinged things that he's said and absolutely tips his hand to what they plan to do. They're going to inflate your money away.

• 4:32Speaker 02

  So he's saying that the way to pay off this debt is through inflation, which is basically a way of saying, we make the really big number smaller.

• 4:41Speaker 01

  It's a way of saying, we're going to steal your purchasing power, which you might as well read as we're going to steal money out of your account. It is the same effect.

• 4:48Speaker 02

  And how governments have historically done that is through the creation of more money. And so if that is the plan, then this will also shrink your savings and your paycheck numbers as well. That is inflation. Now, the people who are lending all this money, the bond market, they understand that this is a Ponzi scheme. So they're like, okay, if you're going to do that to us, if you're going to inflate away the debt after we lent you our money, pay us more money. Because if inflation is going to be higher than what you're paying me, I'm not going to be buying your bonds. I will not lend you money. And that is why the interest rate on the 10-year debt just got to the highest level since 2002.

• 5:31Speaker 02

  Britain's 30-year went over 6% for the first time since 1998.

• 5:34Speaker 01

  Dude, Britain is in trouble, kids, in trouble. The only one that might be in bigger trouble is France. And guess who owns the most French debt? The UK. Yikes.

• 5:44Speaker 02

  Japan's hit the highest level ever recorded as well. And because of that, things like the US housing market have slowed down to levels that we have not seen since 1995.

• 5:56Speaker 01

  I'm not sure why people aren't talking about this more. The housing market is an insane mismatch between the number of people trying to sell and the number of people buying. It's crazy.

• 6:05Speaker 02

  Now, the US government back in September was like, okay, guys, stop asking us for more money. Stop demanding a higher rate. And that is why Scott Besant, the Treasury Secretary, challenged the bond market when he said, "I am the house now."

• 6:21Speaker 07

  I have asymmetric information. I am the house now.

• 6:25Speaker 01

  Dude, it's so tempting to say arrogant shit, but the number of times that it comes back to bite you in the ass is extreme. Yeah, be careful. Scott's already learning a hard lesson.

• 6:36Speaker 02

  And he said, "Bet against me if you want." He's basically saying, "Fine, if you're going to sell our debt, I'm going to buy all of it, right? I will not be incentivizing you guys with a higher interest rate." So the bond market is like, "Oh."

• 6:49Speaker 01

  Say less, man.

• 6:49Speaker 02

  "You're going to be buying all our debt if we sell it? Okay, bet, we are selling." And Scott's like, "What do you mean?" So he started to increase the buying of those bonds from $2 billion.

• 6:58Speaker 01

  Again, another thing, how are people not talking about this? $2 billion, $4 billion, $6 billion. Already, this has already happened. He's increased the amount that we buy of our own debt, but it's not.

• 7:08Speaker 02

  To $4 billion, to $6 billion. And the bond market's like, "Dude, $6 billion? You do know how big the bond market is, right?"

• 7:16Speaker 01

  $32 trillion.

• 7:18Speaker 02

  We are talking trillions here. You're going to need substantially more money if you.

• 7:23Speaker 01

  I hope you guys are looking at your screen because he's showing like what a tiny drop in the bucket that $6 billion is compared to the $32 trillion. It is nothing. It's like a grain of sand.

• 7:34Speaker 02

  Going to challenge us. So that is the dynamic at play here. The market is betting against him. It's selling, and it doesn't want to buy new Treasury bonds. And as a result.

• 7:44Speaker 01

  I'm not even sure if you can say that the market's betting against him right now. The market's just like, "Fuck you, dude. You're never going to be able to buy enough of this. You're going to pay me what I want." It really is that simple. These guys are saying, "I need a real yield, okay? None of this inflationary bullshit. I just want a better real return. You are asking me to take on more risk. You used to be the risk-free rate of return. You're not the risk-free rate of return anymore, and so I'm going to need some real money."

• 8:11Speaker 02

  Interest rates are skyrocketing. Scott Besant has admitted, "You guys win. I can't set the equilibrium price."

• 8:18Speaker 01

  Okay, what does that mean, man? Not being able to set the equilibrium price is a pretty big confession, basically. And it comes down to a lack of central bank monetization. The Treasury Secretary alone does not print the currency. He's not able to do this. This is why, like, okay, this is a guy that's criticized previous people in his position for doing what he's doing now because he knows it doesn't work. He has challenged previous governments, the UK. It was him and George Soros that broke the back of the British pound. He knows how this game works. And so the fact that he got sucked into making such an arrogant statement is so bizarre. So now he's finally realizing, oh shit, I don't have the power to do this. That power resides with the Federal Reserve.

• 9:03Speaker 01

  Now, I worry that part of his arrogance is that he understands that they're more in cahoots with WASH than they want to let on publicly, but we'll set that aside for a second. Now, if he doesn't get the Fed launching some sort of formal yield curve control, which would basically be committing to printing uncapped amounts of money to buy every bond of that $32 trillion at some target rate, the Treasury cannot set prices by decree. Now, keep in mind that the Treasury has their own account, but it's less than $1 trillion. So you've got less than $1 trillion, which you need for all kinds of potential emergencies in the future. And you're going to go up against the side that you already owe $32 trillion? It's so bizarre.

• 9:48Speaker 01

  And this is like a very dangerous game to be playing. So when you're looking at like the force of free market price discovery, basically, he understood, "I'm facing a multi-decade high yields across global bond markets." And Besant finally had to publicly acknowledge that that's just true, that these guys can weaponize this against him for a lot longer than he can talk tough. So Treasury rhetoric is not going to get this guy anywhere. It's like completely absurd. This was so wacky when he said it.

• 10:20Speaker 02

  Shortly after that, of course, interest rates reached those 24-year highs. Now, if you're like, Andre, I don't care about any of this. I don't own any bonds. This does not affect me. The truth is, we are all paying for this, whether we own a bond or not. And that's because the average mortgage rate right now is about 7.3%, which means borrowing money for everything is more expensive.

• 10:45Speaker 01

  It's true, but I do think people make a bit too much out of the the interest rate on mortgage right now. It's only the highest it's been in three years. So it's not like this is going back super far. And we've historically had times where it was much higher than that. Listen, it's a lot worse than the three to 5% that we were at, to be sure. But this, I don't think, is the root of your housing problem. I think the root of your housing problem is the fact that people don't own their first home until they're 40. So yeah, you, you have other fish to fry on the housing side and you just make more houses.

• 11:17Speaker 02

  Companies are hiring a lot less than they did before. Partially because if you take the AI companies out of the stock market, everything else is down more than 5% since August.

• 11:31Speaker 07

  Look what's happening. So here's the overall market, looks pretty flat, up 0.4% since the peak in August 24th. But if you look at just AI-related stocks and chip stocks, they're not surprisingly up 9%. We all know what's going on out there. If you take those out of the index and you look at everything else that's in the stock market, the market is actually down 5.4% in just over a month.

• 11:56Speaker 02

  And this situation with the bond market is happening all around the world in every developed economy. So this debt problem is everywhere, except for one place, and that place is China. In China, interest rates are going down. And the question is, why? If the whole world is in debt, who does it owe all this money to? And if the world owes it to itself, then why can't we just wave a magic wand and say, poof, no one owes anyone anything, right? And the answer is what I want to show you in this video. So with that said, let's get into it. Hi, my name is Andre Jick. Hope you're doing well. Come for the finance and stay for the debt again. So this is another one of those very nerdy, complex finance videos. So if you fall asleep, I don't blame you.

• 12:39Speaker 02

  Just press the J button on your keyboard to go back 10 seconds and hopefully it helps you out. But let me just start with China. Over the last year, the rate that the US government pays to borrow for 10 years went up by more than a full percentage point, which doesn't sound like a lot, but it's huge. The same thing happened to places like Japan, France, South Korea. But in China, it actually went down. China's government borrows for 10 years at only 1.7%. The US pays over 5%.

• 13:10Speaker 01

  Question is, is that good or bad?

• 13:12Speaker 02

  The explanation you'll hear for why that is, is mostly because of oil. Like there's a war, oil is expensive. Expensive oil means inflation and inflation means lenders want to be paid more. But that doesn't fully explain it because China is the biggest oil importer in the world. It got hit by the same oil shock as everyone else. If this was about oil, China's rates should be going up as well, but they're not. So something else has to account for this. Here's what that might be. There's two reasons. First one is on this chart right here. This chart shows how much electricity each country makes, which is one of the most honest measures, by the way, of real economic growth.

• 13:49Speaker 01

  This is really important for people to understand as like, if you look at Europe, to really understand how their economy is moving backwards as bad as it is, you've got energy regulation that is absolutely economic suicide. And the fact that those guys continue to do that is just ridiculous. The US is largely followed in the footsteps of Europe, certainly as it pertains to nuclear, at least outside of Trump. And when you understand US just flat, China is like on an absolute rocket ship up, you, you have a glimpse into the difference in the health of the two economies. The US is hyper-financialized, which puts us on a very weak footing. We may make a lot of money, but we are very at risk. This is like driving down the freeway at 120 miles an hour while surfing on top of your car.

• 14:34Speaker 01

  It's just absolutely absurd. Until you hit something, you're fine. But when you hit something, it's insta-death. And so China is in a much better position from that perspective. We're going to get, Andre doesn't touch on it here, but we've got to talk about the places that China's struggling because I think Andre's read on this is half-right, but he's missing a big part of this.

• 14:53Speaker 02

  Because it's very hard to fake a power plant. It's very easy to inflate what economists measure economies with, which is something called the GDP. That's because the GDP of Western nations has been propped up by an illusion. The magic trick is that we shuffle money around, but nothing productive necessarily happens.

• 15:15Speaker 01

  Again, it's fine for a while until something bad happens. And then you realize, oh, we don't make our own stuff. Nobody needs to buy anything from us. So if people don't have confidence in our, our markets, then we don't have a lot of our money just dries up.

• 15:30Speaker 02

  A great example of this is the California high-speed train. Billions of dollars were spent on consultants and lawyers, environmental agencies. And there's still no train, but money traded hands. So we say, see, our country's GDP is going up. We're super productive. That's why if you really want to measure the real growth and productivity of a country, it is better to measure something that is real, which is how much power it is using. And that goes for China too, because nobody fully trusts their GDP numbers either.

• 16:01Speaker 01

  No one should trust China's numbers.

• 16:02Speaker 02

  But since 2005, the US electrical output line is basically flat. China's has more than quadrupled. Now, part of that is the US getting more efficient and moving its factories overseas. But most of that is because China spent 20 years borrowing money to build things. While a lot of what the US borrowed money went to funding wars and bailouts for the banks.

• 16:27Speaker 01

  Terrible strategy.

• 16:27Speaker 02

  Now, the second major reason why China's rates are lower relates to how they think about money. Specifically, their relationship to their housing market. See, back in 2016, Xi Jinping said that houses are for living in, not for speculation.

• 16:45Speaker 01

  Yeah, a little rich there, Xi, after years of encouraging people to invest in highly speculative things you were building out. But he's not wrong, it's just pretty rough. We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. Let's talk about how you can't willpower your way out of an under-nourished brain. That's the mistake that most high performers make. They think that the fade is a discipline problem, so they just try to push harder, grind longer. They blame themselves when their output drops off by noon. Discipline, though, isn't the problem. It's ultimately your fuel source. Your brain's most efficient energy source is not glucose, it's ketones. There's no caffeine, no sugar, and therefore no crash.

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• 20:17Speaker 01

  Thanks for sticking around. Let's get right back into the action. This reminds me of when the US government was telling people in the banks, the banking sector, "Buy long bonds, buy US treasuries, long dated US treasuries." And then they started raising rates, which then made when you mark those debts to market, now all of a sudden you're underwater, you're Silicon Valley Bank, you go out of business. So, pretty shitty thing to do, but nonetheless, that's where China is.

• 20:44Speaker 02

  In 2020, China enforced this rule by putting hard limits on how much property developers could borrow. The biggest developer in their country, which was called Evergrande, defaulted, was eventually liquidated. Home prices went down dramatically, and China's government-

• 21:01Speaker 01

  Ooh, down 22%, ouch.

• 21:03Speaker 02

  -allowed it to happen.

• 21:05Speaker 01

  They had to. They created the problem, but they had to allow it to happen. And in fairness, the US is gonna have to do something like this as well, dear investors, myself included. Like, at some point, the US government has got to stop bailing people out and just say, "Hey, investing is risk and reward, baby, and risk is a big part of that equation."

• 21:23Speaker 02

  Now, China's wasted plenty of money too, a lot of those were apartments nobody lived in. The difference, though, is this, right? In the US, when housing falls, the whole system gets a bailout. It has to. After 2008-

• 21:37Speaker 01

  I hate that "it has to." It doesn't have to. Now, we will, because just letting the whole system break and fall apart is worse. But, ooh, this is sinister, because you're robbing people via inflation who don't understand assets. The people that understand assets are already probably doing better than most. And so, by saving everybody, you save the wealthy a little bit more, a lot more. It's brutal.

• 22:04Speaker 02

  The Fed bought more than a trillion dollars of mortgage bonds. In 2020, it did it again, and right now, with mortgage rates above 7%, US home prices are still magically higher than they were the year before.

• 22:18Speaker 01

  That's wild.

• 22:19Speaker 02

  How? It's because, in the US, housing is the collateral that is the foundation for the whole banking system. That is why, no matter who's in charge, they will not allow it to fail.

• 22:33Speaker 01

  All right, really fast on China. If you understand that what's happening in China is largely deflationary, it isn't strength, you'll begin to better understand that the low Chinese bond yields reflects severe domestic deflation. This is also because of the crashing consumer confidence. You've got them being able to pull back on their oil needs. So, I did a whole bit of coverage on this when it was first happening, but for the beginning of the Iran War, they were still filling up their reserve tanks. And then, when they had a chance to buy cheap oil, because it dipped back down, they didn't do it. And that was like the first tell that something was actually going on inside of China, because that meant that even though prices were at least as low,

• 23:18Speaker 01

  if not a little bit lower than they were getting before the war started, they were no longer buying any oil. So, that's not somebody who's thinking, "Oh, okay, cool, yeah, I'm not gonna buy when the price is elevated, but when it comes back down, I'll resume normal purchasing." That's somebody who was almost certainly trying to hide the fact that they had a problem that the crash of their real estate market had been far more dramatic than people realized, and that because of that real estate collapse, they were now in a bad fiscal situation. And they're of course gonna be lying about it to everybody else, to the rest of the world, but that was the reality of the situation that they're in. So, when you start looking at the US, you've got the rates going up, but China, the rates are going down. When you understand that the reason that the rates are going down

• 24:03Speaker 01

  is because they're in the middle of massive economic turmoil right now caused by that crazy housing bubble burst, and that they're responding in a very Japanese way. So, when the Japanese had the collapse in 89, they, even though they could get money at near-zero rates, they didn't want to. What they wanted to focus on was cleaning up their balance sheets. That's what it looks like is happening in China, that these guys are being, quite frankly, they're being prudent, but if their prudence lasts too long, it actually will stall out their economy. But what they're doing is, even as the rates get lower, they're still not borrowing money, they're still not reigniting the economy. They're saying, "No, no, no, I wanna get out from under my debt. I wanna pay this stuff off. I don't wanna take on more debt."

• 24:47Speaker 01

  So, if that ends up being true, we look at that number, we think, "Oh, man, China's really figured something out. Why are they able to do what we're not able to do?" It's because they have distress, a different kind of distress than we have, but distress nonetheless.

• 25:00Speaker 02

  And when something has to give, the US protects the investors and lets the dollar take the hit. That is inflationary. It hurts people like the savers and the bondholders. That means rates go up. For about a decade, that mostly showed up in the price of houses and stocks, but since 2020, it's been showing up in the price of everything. Now, in China, it's the opposite. China does not rescue its investors. It lets the assets fall. The people who get hurt are what they call the speculators, like their developers and people who bought a second and third apartment as an investment. That's the difference. Now, to be fair, Chinese savers can't even move their money out of the country,

• 25:43Speaker 02

  so a lot of it ends up in their government bonds anyway, whether they like it or not.

• 25:46Speaker 01

  Yeah, when people talk about China, like China's doing something like, "Oh my god, they're so good to their people. Yeah, like, they're doing it right." Don't forget, this is a dictatorship.

• 25:55Speaker 02

  The point is, is that the US really likes to rescue asset prices. So, when we print money, that money piles into houses and stocks, and therefore asset prices go up.

• 26:06Speaker 01

  It isn't just by the way that we like to prop up the asset prices. It's that we made a decision back in the 90s to basically become a fully financialized economy, that we were going to outsource everything all around the world, and we were going to let things be made by other people, and we were just gonna assume that the gravy train was gonna run forever, that China was gonna become democratic and be a great trading partner for us, and all was gonna be well. And the reality is, that's just not how the world works, so it didn't pan out like that. We hollowed out our middle class, we hollowed out our industrial base, it all went overseas. China became stronger economically, militarily, became a peer competitor, and then started to say, "Yeah, you can't have all the things you want anymore. You guys don't get access to everything, and when there's a crisis,

• 26:49Speaker 01

  obviously, they're going to prioritize their own country, as they should, by the way, as I would recommend to any country do." But that's when we learned the hard lesson that, "Oh, shit, we can't just assume that forever everything's gonna be hunky-dory. We've gotta make sure that we have our own manufacturing base here in the US, that the rest of the world wants to buy real things from us, and not just stocks and shares and things that, if we allowed them to get hit, would essentially wipe out the only economy that we have." It's propped up by real estate, but the reality is that we've financialized everything. And so, we're in such a different position than a China. And so, when people hear that, "Oh, we bail out investors,"

• 27:32Speaker 01

  it's because, "Who else are you going to bail out? It is our economy." So, we either need to get back to our manufacturing roots, which is exactly what the whole tariffs were and all that, which we need to do more of, you either get back to that, making real things, or you accept that the only thing that you're going to have, and therefore the only thing you're going to bail out, is the financial sector.

• 27:51Speaker 02

  ...for inflation, so rates go up to compensate. I hope all of that makes sense. Again, if it doesn't, press the J button on your keyboard to go back 10 seconds. Okay, now, let me show you what's already happening inside the US and how it's about to affect all of us. Now, before we keep going, I wanna show you something. In past videos, I've shown you how the same story gets told differently depending on where you read it. But there's a bigger problem, and that's the stories you'll never see at all.

• 28:15Speaker 01

  It's the ground news.

• 28:16Speaker 02

  Every day, news outlets decide what to publish and what to skip, and a lot of that comes down to what their audience wants to hear, and that's where today's sponsor, Ground News, comes in.

• 28:23Speaker 01

  There it is.

• 28:24Speaker 02

  Ground News is an app that shows the same story from hundreds of outlets, and it tells you which ones lean left, right, or center, along with their ownership details and factuality rating. And they have a feature called Blind Spot, which shows you the stories that one side of the political spectrum is barely covering. Here's what's on it right now. First, stories with little to no reporting on the left. A report that a US college unintentionally advanced Chinese surveillance. 23 sources covered it. 55% of them lean right, 40% are center, and only 5% lean left.

• 28:54Speaker 01

  Damn.

• 28:54Speaker 02

  So, if most of your news comes from left-leaning outlets, there's a good chance you've never heard about it. Now, flip it. Stories with little to no reporting on the right. Zambia says it'll sign a $3.6 billion health deal with the US after stripping out the patient data clauses. 25 sources covered it. 56% lean left, and only 17% lean right. So, two stories, both involving the US, and which one people saw depended on which bubble they were in.

• 29:19Speaker 01

  Yeah, that's wild.

• 29:20Speaker 02

  And you can't have an opinion on a story that you were never shown. And that's what Blind Spot makes visible. I use Ground News when I'm researching for these videos to check what I might be missing, not just how something is being told.

• 29:30Speaker 01

  I hope you guys seek out disconfirming evidence.

• 29:31Speaker 02

  If you wanna see the full picture of global events and not just one side, go to ground.news/jick or click the link below. You'll get 40% off the Vantage Plan, which is the one I use, and you'll be supporting independent journalism and the channel. Thank you to Ground News for sponsoring this segment, and now let's get back to it.

• 29:44Speaker 01

  Definitely.

• 29:45Speaker 02

  So, here's what ends up happening.

• 29:46Speaker 01

  This is dope.

• 29:46Speaker 02

  This was written, by the way. On June 26, 2016, three days after the Brexit vote, Jeffrey Epstein emailed Peter Thiel. He said, quote, "You and I both agreed zero interest rates were too high. And as I said in your office, finding things on their way to collapse was much easier than finding the next bargain." In the same email, he wrote, quote, "Brexit, just the beginning." And Thiel asked of what? Epstein said, "The return to tribalism, counter to globalization, amazing new alliances."

• 30:19Speaker 01

  Here's the wild thing, man. Epstein called that shit. He's right about that.

• 30:24Speaker 02

  There you go. Every major crisis is an opportunity for someone, and it's a lot more effective than trying to find a good deal right now. The biggest banks came out of 2008 bigger than they went in despite the crisis. So every road out of these spirals ends up in the same place.

• 30:43Speaker 01

  Insolvation of power.

• 30:45Speaker 02

  Wealth moves up. And let me show you how this actually works.

• 30:48Speaker 01

  Yeah.

• 30:48Speaker 02

  What you're looking at is a chart that adds up all the debt in the US like the governments plus corporations, banks and households. Today, that total is 370% of the economy.

• 31:00Speaker 01

  Jesus.

• 31:00Speaker 02

  20 years ago was 368. So the total amount of debt in the US has basically not changed that much in 20 years. What's actually changed is who is holding that debt. If you look at 2008,

• 31:13Speaker 01

  And how we lowered it.

• 31:14Speaker 02

  The orange line is the private sector. And after the financial crisis, it comes down. The blue line is the government side. And from that exact moment, it goes straight up. So the debt never went away. The debt just moved to the government. And the government is you, because you're the one.

• 31:34Speaker 01

  That is such a great way to say it. The government is you. We're the government. We pay the taxes. So yeah, this is where when people outsource things to the government, quote unquote, they're just taking tax dollars from you and then re-diving them up in the most like inefficient way possible. So crazy.

• 31:54Speaker 02

  And paying the taxes. Okay, here's the second chart. It shows who's paying for this right now. The blue line is what the government pays in interest as a share of the economy. It has doubled in four years. It's at the highest level in more than 60 years.

• 32:10Speaker 01

  My god.

• 32:10Speaker 02

  The orange line is the big corporations. Theirs is the lowest since 1962.

• 32:17Speaker 01

  I'm actually surprised by that.

• 32:18Speaker 02

  So the public is paying record amounts of interest. And big business is paying the least in 60 years.

• 32:27Speaker 01

  That's wild.

• 32:28Speaker 02

  Using Simon Dixon's framework.

• 32:30Speaker 01

  Oh, Simon Dixon, let's go. All right. So friend of the show, using Simon Dixon's framework, let's hear this.

• 32:36Speaker 02

  You can see that money is being stripped, it's being concentrated into the FIC, the Financial Industrial Complex, which of course.

• 32:44Speaker 01

  McFic tic. Let's go, Simon. He's like seeing him make his way to Andre Jic. I love it. Like Simon, Simon's a trip. I love him.

• 32:51Speaker 02

  Is the biggest banks, asset managers like BlackRock, Vanguard, and State Street, and the people at the top who own most of the assets. So when they win, they get to keep the profits. And when they lose, those losses get moved to the government, AKA the public, which is all of us. That's what you're looking at on this chart.

• 33:11Speaker 01

  And get your money.

• 33:12Speaker 02

  Okay, so then the question is, well, who is all of this money owed to exactly? Some people think the US owes it to China, but China holds less than 2%. About three quarters of the US government debt is owed inside of the US. It's your 400.

• 33:26Speaker 01

  China's getting out from under your debt. They're not trying to get more.

• 33:29Speaker 02

  1K, it's your pension fund, it's what your bank does with your money, it's social security. That's why no one can wave a magic wand and cancel the debt because the people we'd be canceling on would be ourselves. And even that is not equal technically. The top 10% of Americans own 67% of all the wealth in this country. The bottom half owns 2.6%. And the more wealth you have, the more of those bonds you probably hold, which means the interest isn't just a cost, it's also a payment. And it comes out of your taxes, which of course everybody pays, and it goes to whoever holds the majority of the bonds. So they don't cancel the debt, they can't, and they can't pay it off.

• 34:12Speaker 02

  And so now we have potentially what's called a debt spiral. That's where the country has to use a credit card to pay off its credit card.

• 34:20Speaker 01

  Wow.

• 34:21Speaker 02

  And what makes that worse is of course the interest rate.

• 34:23Speaker 01

  The problem is when it gets out of hand, because you're always doing that. The dollar issue is debt. You don't get a dollar into the economy unless it's brought in as debt. But the flywheel starts going very fast.

• 34:36Speaker 02

  That's the US government right now. It spends more than a trillion dollars a year just on interest. It's borrowing about 2 trillion a year. So a huge part of the.

• 34:46Speaker 01

  I know the answer, but it's still so startling to hear it.

• 34:49Speaker 02

  New borrowing goes to pay the interest on the old borrowing. It's getting worse because the government doesn't borrow all of it at once. Its debt constantly comes due, and it has to be borrowed all over again. More than 8 trillion dollars of it comes due in the next year. Right now, the government is still paying under 4% on average because a lot of that debt came from when rates were lower. But the new debt costs around 5%. So every month, old, cheap debt gets swapped for new expensive debt. Luke Gromen from FFTT says that, once it all resets, the interest bill gets to around 2 trillion a year. And that's about 40 cents of every dollar.

• 35:30Speaker 01

  Oh my god. 40 cents of every tax dollar is going to go to the interest. Drew, like basically immediately. That is fucking insane, man.

• 35:41Speaker 02

  The government collects in taxes.

• 35:43Speaker 01

  Whoa.

• 35:44Speaker 02

  Unfortunately, increasing interest rates is not going to fix it. If the inflation is coming from oil or from a war, interest rates are not going to solve that. Raising rates does not create more oil. In fact, the Speaker of Iran's Parliament said this in a post that got millions of views. He said, "Let's see if a hike could open the Strait of Hormuz or produce a single barrel." You can't 25 basis points a choke point. Meaning, you can't fix a blocked shipping lane with raising interest rates.

• 36:16Speaker 01

  The only thing they can do with raising interest rates is break the back of all the people bringing on debt for AI. So that's like you might be able to cool that off if people are like, yo, I don't want to pay that kind of interest. And you get a slowdown that way, that's like the only thing that you could do. So it is possible that it still has a positive impact. But it basically has a positive impact on, by weakening the most high-risk, over-leveraged thing in the system. So beware of what you wish for.

• 36:47Speaker 02

  Now, when the Fed raises those rates, the people that feel it the most is of course the government, which of course is you. So there's two ways out of this. Keep rates high, AKA pay more in interest to the people holding the assets and the government pays more, or

• 37:02Speaker 01

  And your debt flywheel gets crazy.

• 37:03Speaker 02

  Lower the rates and print more money. And the price of houses and stocks go up, which is great if you own all those things, but it's not if you don't, right? And if the whole thing comes crashing down for some reason, it's the people with cash and access to cheap money that will buy what everyone will be forced to sell. Okay, so if the debt can't be canceled and it's not going to be paid off, well then, is this just slowly going to keep getting worse, or will something actually break?

• 37:33Speaker 01

  Here's the thing, one, an important thing to remember is something that Raoul Paul, I don't know if he coined it, but it's where I heard it, that the market's tend to follow the path of maximum pain. And the reason is that whatever it is that you price in, whatever it is that you think you understand, when there's like a big move, it tends to be something different. And so, because everybody's already priced in, everybody already thinks that's going to be the same, and so people are already positioned for it. And so that ends up not being the thing that happens. And so people are hit, they're blindsided by something. Now, the question is, are these forces so great that while they'll call it something different, like it's not going to be called quantitative easing again, but it will be the same idea, that they're going to prop up investments to make sure

• 38:18Speaker 01

  that the overall economy doesn't collapse for the reasons that I said before, because it is our economy. It's so financialized. And so it is going to be money printing, and that just is the way? Or are we going to do some sort of botched, like attempted a beautiful deleveraging where they fuck up everything basically and make it worse for everybody? Instead of picking a winner? Like this is really going to be wild. But they certainly won't do the thing that will be the most obvious. They'll find some new and novel way to approach this to try to trick people into not being able to predict how it's going to play out. Yeah, we'll see.

• 38:54Speaker 02

  If it does, when is that going to happen? And what is that going to look like for everyone? So let's get into some of the fun stuff and speculate a bit on what this might look like. I want to show you a tweet from someone who spent 30 years trading US interest rates. And I just want to say that I can't verify all of this, but his logic makes a lot of sense. Especially to a lot of very intelligent macro researchers who suspect he might be right.

• 39:19Speaker 01

  I tried to look this up, but he doesn't ever give the name of the guy that he's talking about.

• 39:23Speaker 02

  But his answer is, yes, this breaks, and probably very soon. The 30-year rate is at 5.2.

• 39:30Speaker 01

  Oh, wait, wait, wait. I think at the bottom of that source, Bhagachan Ozdemir? Can we just grab that? I want to look this guy up. I didn't notice that on my first watch through.

• 39:40Speaker 02

  One more. Bhagachan.

• 39:43Speaker 01

  Yeah. So for anybody not looking, I've never heard of the guy, but Bhagachan. Ozdemir, he's a trader, post on X, uh, his view and estimates, not official data. All right, cool. Here we go.

• 39:58Speaker 02

  Percent right now. He says that we will soon see six percent, maybe seven percent. And within the next six months, we find out what it looks like when the treasury market breaks. He compares where we are today to the Fed in September 2007.

• 40:14Speaker 01

  Not, not the time you want people to be comparing to.

• 40:16Speaker 02

  Year before the 2008 crash. His whole argument basically comes down to this idea of what's called a fulcrum. So think of a seesaw, right? The fulcrum is the point in the middle that everything sort of balances on. Now, in the financial system, that is the US treasury market, AKA the bond market. Every loan, every mortgage, right? Every stock price depends on it. And his rule as a trader is that you never mess with this fulcrum. But we did. And here's what happened. The way the system used to work since 2009 is that the official inflation number was around three percent. He believes the real number today is closer to eight percent.

• 40:59Speaker 02

  Now, if bonds pay you five percent and real inflation is eight, then a giant corporation is technically borrowing money at negative three percent. So they're essentially getting paid to borrow money. What they do is-

• 41:14Speaker 01

  So I think that's going to be confusing for a lot of people, but basically when you're doing this, you've got financial repression. Inflation is actually higher than the interest rate that they're paying you. That means that the debt is going to get smaller and smaller and smaller over time. This is exactly how the US got out from under the debt after World War II. And you just say, yeah, sorry, I'm not going to pay you what this debt is actually worth. Back after World War II, their messaging was price, price of winning the war, boys, sorry. The real economy was growing fast enough that people sort of let it slide. But we're not in that scenario right now. So if you're a corporation, you're incentivized to borrow more because you know that the debt is going to grow smaller because you're going to get paid, your company is going to keep making money in post-inflation dollars,

• 41:59Speaker 01

  but your loan is pre-inflation. So that will get smaller as a total of your revenues over time.

• 42:05Speaker 02

  They borrow money, they buy back their own shares, earnings per share go up, and the stock goes up as well. And he says that actually answers an impossible question. That question is, how is the US stock market worth more than every market in the world combined? Especially when China's caught up in so many technologies. And his answer is, the US got access to cheap money, leaning on the bond market, which was effectively fueled by the most rock solid, stable asset in the world, real estate. So the bond market holds up everything. And who was holding up the bond market?

• 42:47Speaker 02

  For a long time, it was China. But China now owns less than half the treasuries that it did at the peak. He says, we've seen this before. In the 2000s, money drained out of the market where banks lent money to each other. And in 2008, that market blew up. He thinks the treasury market has been on the same path since 2017. And then he says, they messed with the fulcrum. This January, with the government borrowing around $2 trillion a year and the economy running hot, the administration forced Fannie Mae and Freddie Mac to buy $200 billion of mortgage bonds.

• 43:24Speaker 01

  Jesus.

• 43:25Speaker 02

  Which he says was about getting those rates down before the midterms. Mortgage rates dropped below six percent. And his claim is that the big buyers piled in without protecting themselves. And that pushed long-term rates lower than they should have been. Well, then the Iran war hit, oil went up-

• 43:43Speaker 01

  You're going to get a rebound.

• 43:44Speaker 02

  And it started to unwind. Everything since then, like the buybacks and Scott Beston saying that he's the house. He says, that delayed it, but it didn't change the course. So that's his prediction. The 30-year is at 5.6% right now. Very soon, it could be six percent, then potentially seven percent. And he says, within six months, we might find out what the treasury market looks like when it breaks.

• 44:11Speaker 01

  So something that people, um, it's hard to wrap your head around, but there's a reason that the treasury market or bonds are known as a fulcrum. And the reason that you don't want to mess with it is you end up distorting your asset prices. So when policy interventions artificially suppress treasury or mortgage yields, like with these forced bond purchases, it temporarily distorts risk and borrowing costs across the entire system. And so you can get this rapid unwind if external shocks, such as an energy price surge or whatever, rising inflation, they force rates back up, the entire structure now starts tilting to one side. High yields just increase the government's interest burden.

• 44:52Speaker 01

  They slow down hiring and business expansion. They push mortgage activity and housing sales down to multi-decade low. All, all the things that we're seeing right now. And Ray Dalio has talked a lot about this, where he's like, listen, kids, the only thing you need to pay attention to is the bond market. You look at the bond market and that's what people with access to the capital or,

• 45:14Speaker 01

  depending on how you think about it, the, the risk appetite. But the people with access to capital, belief in the government, whether they're going to actually be able to pay the interest back. They know they're never going to pay the loan, but are they going to pay the interest back? So that becomes the, the big question. And when that gets unhealthy, all hell breaks loose. Everything cascades off that from, do they have to raise rates in order to entice more buyers? And as they raise rates to entice more buyers, what else does it break in the economy? All the things that we just went through would be impacted by that happening. Do they have to print money? Uh, do they really have to start being prepared to use financial repression where truly they'll buy back all $32 trillion? Imagine that.

• 45:58Speaker 01

  But buy back all $32 trillion and nearly double the amount that we owe in order to make sure that we can set a price and stick to it, like the inflation, oh my God, 50% inflation or whatever it would be like. That just would be insane, insane. So that's why you don't fuck with the fulcrum.

• 46:16Speaker 02

  Right. He compares it again to September 2007, a year before the crash. Now, how bad is that going to be and will that happen? I don't know, but it seems like every major financial crisis is another opportunity for someone. And that's very interesting because there was a post from an anonymous account that claims to be a Bank of Japan insider.

• 46:38Speaker 01

  Yeah, this guy's got so much attention.

• 46:40Speaker 02

  But what it said recently was, quote, "If only we could delay the collapse of the current economic order until it coincides with a global catastrophe, how convenient that would be."

• 46:53Speaker 01

  All right. That, that feels like a, a text, a Simon or a tweet Simon Dixon could have written, like, yeah, yeah. Not even that it's necessarily a false flag, just that it's like, oh, cool. We've got a crisis here. Let us not let it go to waste.

• 47:06Speaker 02

  Quantum computing, energy crisis, pick whichever one you like. That sounds ominous. What does that mean? And why would anybody want to do that? Here's a possible answer. Let's do a thought experiment. Again, purely hypothetical, and we're just going to go crazy on this one. Imagine that you're one of the powerful central planners. You know that nothing works, right? Social Security, Medicare, Medicaid, veterans benefits and interest together already cost more than every dollar the government makes. And you know that the way out of that is inflation, right? Print more money. Because the president has basically admitted it. And you know what the problem with that is? Inflation is going to take money away from all the people who saved money.

• 47:47Speaker 01

  It's going to take money from everybody.

• 47:48Speaker 02

  And if people see you do this on purpose, they get angry, they revolt. So here's the first thing that a catastrophe might do for you. And why you might want one is that it turns this theft into a rescue, right? Because printing money to erase your debt is stealing from savers. But if you print that money in the middle of a disaster, well, then that's doing what's necessary to help save people.

• 48:15Speaker 01

  Yep.

• 48:15Speaker 02

  Right? The second reason why you might want to do it and time it with an event is that inflation doesn't actually fix the biggest promises. You can inflate away a bond's purchasing power, but you can't inflate social security or Medicare obligations away.

• 48:33Speaker 01

  That's one thing I would disagree with him. This is why they mess with the CPI numbers all the time. They're constantly changing them as a way to hide the fact that they are actually letting inflation run hotter and actually, um, effectively stealing purchasing power from all the people that get benefits. Count on it.

• 48:51Speaker 02

  Because those go up with prices. They are, what Luke Roman says are hard currencies, right? They're hard assets. They go up with inflation.

• 48:59Speaker 01

  They, they go up with the inflation that they're going to admit to. Remember, he himself said that, I forget who's quoting, but I think the guy that we wrote his name down, who said, that he thinks real inflation is at eight percent. I assure you, if that's true, that's not what they're clocking for people with benefits. They're going to clock a much lower number and they will rejigger these things however they have to in order to get to a number that is, uh, better for them, as he's calling the central planners. It's crazy.

• 49:28Speaker 02

  Is to change the deal. It's to cancel on people, which are things like retire later, right? Get less, wait longer for care.

• 49:38Speaker 01

  For sure.

• 49:38Speaker 02

  Or have less people to worry about, right? In an emergency, people accept these kinds of things. And this isn't even a new idea. This has happened before. After World War II, US debt was 106% of the economy. It was just about where it is today. By 1974, though, it was magically 23%. How did they shrink their number? A big part of how they did that was they capped interest rates at 2.5%. So they paid their bondholders 2.5%, but inflation went as high as 19%. So people who bought war bonds got paid in dollars worth a lot less. It was sold to them as the cost of winning the war.

• 50:23Speaker 02

  In 2020, rates were at 0%, inflation went to 9%, and the debt burden dropped again, but this time conveniently there was a pandemic to explain it, right? Then, of course, all of this sort of connects to Agenda 2030, if you're paying attention. Because a crisis is the only time people accept a new system. That's when they accept big changes. They're open about this. In June 2020, Klaus Schwab called the pandemic, quote, "A rare but narrow window of opportunity to reflect, reimagine, reset our world."

• 50:55Speaker 01

  That's so crazy.

• 50:56Speaker 02

  So if you zoom out, it seems to look like the world's chess pieces are already sort of lined up. They're put in place for something to happen. Whether that's an energy crisis, that one's already here. That's already getting the blame for inflation. There's also AI, millions of people losing jobs, right? Quantum computing, which is an attack on the whole financial system, getting ready to move everyone onto a new digital money with a new digital identity, which is one of their goals by 2030. If you want to learn more about this and more about Agenda 2030, I made a whole video about it. And if you want to know how I'm preparing for all of this, you can watch those videos in the premium member section where I post a day early and I make extra content. It helps me make more videos like this one.

• 51:37Speaker 01

  I love this guy. He's dope. If you're not already following him, definitely follow him. He's fantastic, puts out a ton of killer content. Yeah, boys and girls, the world is changing rapidly. It's going to happen in broad daylight. They will certainly use a crisis to weaponize against you. Make sure you understand the nature of inflation and what you have to do. It's the game. So yeah, there we are.

• 51:57Speaker 02

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