The Dollar's Last Stand: Scott Bessent's $950 Billion Plan to Save the Bond Market

Welcome back to Impact Theory. In today’s episode, I dive deep into the wild ride happening right now in the bond market and what it means for the future of the US dollar and the global economy. The conversation focused on the so-called “resource curse”—comparing America’s role as issuer of the world’s reserve currency to regions that failed to capitalize on their natural resources, and questioning if this privilege is actually a double-edged sword. One concept discussed is whether the benefits the US has reaped from dollar dominance have led us into fiscal irresponsibility and a dangerous dependence on selling money to the world instead of making real things at home. A key theme that emerged is how government strategies—like moving debt from long-term to short-term, flirting with yield curve control, and leveraging emerging tools like stablecoins—are designed to manage mounting debt but could have far-reaching consequences for people’s savings, investments, and the country’s economic future. The discussion explored how inflation, rising interest payments, and global moves away from the dollar are creating new risks and uncertainties, especially for retirees and ordinary investors. Several points were raised, including the critical impact of trust in US debt, the erosion of manufacturing capacity, and whether these fiscal maneuvers are buying time or simply delaying a reckoning. Get ready for a no-holds-barred look at what’s happening behind the scenes—because understanding these moves is key to protecting your personal and financial future. 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 Tailor Brands: Check out Tailor Brands to get started with your business today: https://tailorbrands.go2cloud.org/aff_c?offer_id=129&aff_id=9505&aff_sub2=september https://tailorbrands.go2cloud.org/aff_c?offer_id=129&aff_id=9505&aff_sub2=september Quince: Free shipping and 365-day returns at https://quince.com/impactpod ElevenLabs: Book your demo at https://elevenlabs.io/impactpod Butcherbox: Go to https://ButcherBox.com/IMPACT https://butcherbox.com/IMPACT to get $20 off your first box, plus your choice of free ribeye, new york strip, or filet mignon in every box for a year — with free shipping always Quo: ​​Try for free PLUS get 20% off your first 6 months at https://quo.com/impact Shopify: Sign up for your free trial period at https://shopify.com/impact Netsuite: For the first time ever you can try NetSuite Next for free. If your revenues are at least in the seven figures, go to https://NetSuite.ai/Theory https://netsuite.ai/Theory. 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 Pique: 20% off at https://piquelife.com/impact bond market, US dollar, reserve currency, Scott Bessent, de-dollarization, national debt, Treasury bonds, interest rates, gold reserves, inflation, fiat currency, fiscal policy, austerity, resource curse, US manufacturing, financial repression, yield curve control, stablecoins, short-term debt, long-term debt, central banks, global financial system, economic growth, budget deficit, Treasury General Account, asset prices, capital flight, US Treasury auctions, foreign central banks, purchasing power See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

• 0:00Speaker 00

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• 0:45Speaker 00

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Tailor Brands and get started on your business today. This is a paid advertisement. What's going on in the bond market is absolutely wild. Scott Bessent has an absolutely fascinating plan to save the dollar. But is it actually going to work? That is a question.

• 1:20Speaker 01

  So the Vice President of the United States, J.D. Vance, has been saying that maybe it's time to end the dollar as the world's reserve currency.

• 1:28Speaker 02

  I am not sure that I think the reserve currency is actually good for the United States of America. I think there is a good argument that reserve currency status is akin to coal in Appalachia. It's a resource curse, right?

• 1:39Speaker 00

  The U.S. having the reserve currency is like a sword made of razor blades. It will cut anything that it touches, including yourself. It is incredibly powerful. Make no mistake, we have benefited from it tremendously. But the reality is, it has made us, we have fallen headlong into a moral hazard that is now making it impossible to get out from under our debt. People are not taking it seriously. They don't understand it. We must find a path to austerity. I understand how hard that's going to be, but this has all happened because of that. Now, anybody that says just jettison it, get rid of it, is retarded. Like, that is a bad answer to a real problem.

• 2:18Speaker 01

  Currency has been called the world's most exorbitant privilege. And that means a nation that's able to create money that the rest of the world needs for their economy is a huge advantage. It's where the U.S. gets its main source of power from. And it is so important to the U.S. that it's willing to use the ultimate intervention to enforce it.

• 2:38Speaker 03

  We have many types of intervention. That's one. The ultimate intervention is our military. And if we have to use that, we will.

• 2:46Speaker 01

  So if having the world's reserve currency is so important, and we'd be willing to invade other countries to defend it, then why would the Vice President want to end it? And he wants to end it because he doesn't think it's a privilege, and he's not even the only one. There's also the Treasury Secretary Scott Bessent. He's talking about returning to something called Hamiltonian economics.

• 3:07Speaker 04

  You know, right now, and maybe we'll talk about it later, is there is clearly a slow motion de-dollarization going on. But could the initial stages be a dollar rally? Because companies, countries are paying back their dollar debt. So there's a dollar thirst before there's a dollar boycott.

• 3:31Speaker 00

  This is a really interesting thing that people have to understand about the way that currencies move. This is very similar to what's going on in Japan with the yen. What ends up happening, you have all this debt, but you may be, when you borrowed that money, you may be deploying it in a different currency. And so, this is precisely what's happening with the yen. You get the yen, but you deploy it into the U.S. stock market in dollars. Now, when you go to pay back the yen, you have to sell those dollars, sell those assets, to get dollars so that you can buy yen, so that you can pay back the loan that was denominated in yen. So the same thing is going to happen, or is happening, with the U.S. So as people try to move off of the dollar, they're going to have to sell assets to free those dollars back up, so in whatever currency it's currently trapped.

• 4:15Speaker 00

  You get those dollars, and then you can pay it off. So as everybody siphons those dollars, the dollar gets stronger, and it can actually create a very problematic situation that causes people to panic. And so, you've got this, you know, asset that you need to change up for dollars, and if you're going slowly, the dollar is rising and rising and rising in value, making it more and more expensive for you to get those dollars back. And so, this is part of what people are concerned with, the Japanese bond race that asset unwinds. If it happens all at once, then the yen gets very expensive. People start really panicking, start moving really fast, they start dumping assets to get over there.

• 4:56Speaker 00

  So we could see the dollar get stronger as we go through this transition. He's very wise to hedge his bets because you never know exactly how it's going to play out. But it's a sort of interesting conundrum that even though what people are trying to do is get away from the dollar, it will briefly make the dollar stronger.

• 5:11Speaker 01

  Bessent told Tucker Carlson that gold can't have a budget deficit, and gold can't have a war.

• 5:17Speaker 04

  Gold can't have a fiscal problem. Gold cannot have a gigantic budget deficit.

• 5:23Speaker 00

  Okay, this is where we have to explain the word fiscal. I think people misunderstand it. Fiscal means government spending. Period. Now, that meaning has sort of drifted a little bit, but when somebody like Scott Bessent says that it can't have a fiscal problem, what he means is, it's not ever going to act like a government that can spend money it doesn't have. The very thing that makes gold advantageous is that it is a very tangible asset. It comes out of the ground at roughly 2% a year. If prices really rise, maybe that number goes up a little bit, but then that'll crash the number back down. And so, it just basically, for all of time, has stayed at this roughly 2%. Not all of time, post-gold rushes. It stayed at this 2% level. And so, yes, it's inflationary, but it's inflationary to a known amount that requires

• 6:08Speaker 00

  people to do something physical to create more of it. Unlike a fiat currency, we can, you can just say, hey, let's create more of it. You can create immense amounts of fiscal irresponsibility with a fiat currency because you can run $2 trillion deficits, which are a massive percentage of your debt, and you would not be able to do that with gold. So, again, understanding he's talking very specifically about government irresponsibility.

• 6:32Speaker 04

  Gold cannot have a gigantic budget deficit. Gold cannot have a war.

• 6:39Speaker 01

  There's been a lot of talks about ending this arrangement that the United States has run since 1944, especially from countries like Iran.

• 6:48Speaker 05

  Quote, "We've received numerous messages from neighboring countries about shaping new security arrangements and economic cooperation in the region. The United States put the security of every single one of its allies at such risk through bullying and pure disregard for their interests for the sake of Israel."

• 7:09Speaker 01

  And now, just recently, the bond market started pricing all of this in. The national debt has crossed $40 trillion, and bond investors want to be paid more money for taking on more risk. Which is also why Scott Bessent made an emergency announcement saying that they were going to step in and start buying long-term treasury bonds to try to lower interest rates. What happened then was, yields went down for about 24 hours, and then right back up to where they were before. And as a result, gold went up, Bitcoin went up, AI stocks went down, and the dollar went down. So to double down and save the bond market, Scott Bessent just announced that he's willing

• 7:51Speaker 01

  to use up to $950 billion worth of the Treasury General Account to do it with. That's roughly the size of Switzerland's economy. That's how important it is to lower those interest rates and save the bond market. So then, if the world's reserve currency is where the U.S. gets its power from, then why would anyone say that maybe it's time to end it? Is J.D. Vance the Trojan horse and the guy that's put in charge to end the reign of the U.S. empire? I think the explanation is a lot more nuanced. All of these events are connected, and in the end, someone will have to pay for this. And I want to explain exactly what's happening to the economy right now. This is going to be super interesting, so with that said, let's get into it. Hi, my name is Andre Jick. Hope you're doing well.

• 8:36Speaker 01

  Come for the finance and stay for what's left of the dollar. So let me start by explaining the resource curse, then I'll show you how it's going to affect all of us, and why it's really hard to fix the problem, and what they're planning to do about it. So here is the situation the United States is in right now. The government has $40 trillion worth of debt. Now, debt by itself is not a problem. A lot of countries have debt. The problem is, is what it costs to carry that debt, and who's willing to lend you more money? Because for 80 years, the people that were lending to America was everybody, automatically, all the time. Because America creates the money the whole world runs on. So the whole world has to hold US dollars. That's the exorbitant privilege.

• 9:19Speaker 00

  All right, there's another part of this that's really important to understand, which is the idea that a government bond, especially the US government bond, is something known as the risk-free rate of return. When you're investing in the markets, as I hope all of you guys are, you know that things move. And at times, it's like, oh, yeah, we're in a bull run. Things are going very well. This is basically, at least temporarily, a more or less only up phenomenon. But then there are going to be times like now where you're in this period, where are we in a bubble? Things are starting to feel risky. There's wars going on everywhere. There's economic uncertainty. We've got the US buying its own bonds. We've got Japan buying its own bonds. We've got China with an economic housing crisis. Like, there's a lot of instability in the market, and nobody's sure which way this is going to go.

• 10:05Speaker 00

  Now, given that the markets are all a confidence game, and it's about what people believe, it doesn't even matter what's real. It matters what people believe. When the beliefs start diverging and going all over the place, that's when it's like, okay, we could be in for trouble. And so in those moments, people do what's called a flight to safety. And one of the easiest places to be in a time where, take Warren Buffett, he believes that the stock market is just completely decoupled from the fundamentals of a business. He's a value investor. So when he sees that the stock market has become decoupled from the realities, he sells and he migrates into what people will refer to as cash. It's really cash equivalents. And one of those cash equivalents, because the risk is essentially zero,

• 10:49Speaker 00

  is a US government bond, a treasury. And so when you understand that the world over, when people are trying to fly to safety, they go to US treasuries. That's why you get this massive market. It's highly liquid. It holds its value. It pays a return. People feel good. And so they'll say, I don't want to be in the markets right now. The markets are scaring me. I want to be somewhere where I'm going to get a return. It's muted compared to what I could get by taking more risk. But I know that the government will print money to cover its debts. And so the worst thing would be that the inflation slightly outpaces the rate of return, but that's better than me getting obliterated by the marketplace because my principal is protected.

• 11:33Speaker 00

  That is one of the things that gives you like the biggest exorbitant privilege. Because we haven't lost the exorbitant privilege yet, but we're losing people's faith in the government actually keeping the dollar stable, that there's basically enough adjustment between the rate that you get paid and the amount of inflation, so that the two basically either balance or that you come out ahead. And so once that starts being a risky bet, because you don't believe that the government will either give you access to your money or you think it's going to inflate into oblivion, now all of a sudden, you've got to start raising rates to get people to come back in to the market, or you have to start buying your own debt.

• 12:17Speaker 00

  And we're having to do both. And that's why this is all, it is important that you understand you've got a highly volatile economy right now, and your flight to safety is becoming a bigger question.

• 12:30Speaker 01

  It's a structural bid for bonds that no other country in the world gets. That bid is sort of starting to break. And here's an example of that. The 30-year Treasury bond yield just reached the highest rate since 2007. Foreign central banks are lowering their exposure to Treasury bonds. And when the US Treasury stepped in last week to push rates back down, it was only able to do that for about 24 hours before bond investors were like, I don't think so. Pay me more money. All right? So here's the problem with that. If rates stay high, the government can't afford its own debt. If they force rates down, they have to weaken the dollar to do it. There's no other outcome.

• 13:15Speaker 01

  Every solution costs the US its currency, its money. And that's why J.D. Vance is saying what he's saying.

• 13:22Speaker 02

  When I hear about the history, when I think about and read about the history of Appalachia and the resource curse, I'm struck by some of the, by the idea that you could make a similar argument about the reserve currency status of the United States dollar.

• 13:38Speaker 01

  And what he's saying is that the status of being the world's reserve currency is what gave the US its curse.

• 13:44Speaker 00

  Really fast, I want to talk about something for a brief second. Calling it a resource curse is a mistake. This is people that don't understand what they have. They don't know how to start a business. If somebody comes and says, I want the mineral rights to what you've got on your land, if you don't understand what that means, you don't know how to negotiate the deal, then you're going to end up in a bad position. This is exactly how a country that isn't taken by force, obviously, if they do it by force, it's a totally different scenario. But a country that isn't taken by force, but doesn't try to build the industry in their own country, and this is why in modern days, it's very encouraging, at least the rhetoric, where countries are saying, hey, listen, if you want to mine the ore here, or whatever it is that we have, whatever resource, then you're going to do the manufacturing in-country. This is going to create jobs.

• 14:29Speaker 00

  They may even push all the way to saying, we're going to co-own that manufacturing facility with you. So, great, we don't have to build the expertise because we don't have it. So it doesn't become a resource that's just stuck in the ground. But because we're not stupid, we're going to make sure that we negotiate this deal well, that we understand the value of it in your hands. We understand it's not that valuable in our hands, but we're going to do some sort of joint enterprise, and we're going to make sure that you're hiring people locally. We're going to make sure that we're a part of that chain. And then we'll export the final finished, you know, whether it's a part or whether it's an actual final finished car or whatever. And so that way, it's boosting their economy. When we call it a resource curse, it confuses people that are looking at this briefly.

• 15:14Speaker 00

  They don't understand what the actual mechanistic problem is. The mechanistic problem is, in your hands, it's meaningless. And so if you sign it away for a pittance like they did in Appalachia, well, yeah, then you end up in a terrible spot. You got taken advantage of by people that knew more than you. This is why people say that knowledge is power. If you understand the value, you stand up for it, you know how to negotiate it, you know what options are available to you, then you can get a much, much, much better deal. This doesn't mean that you try to go do it yourself. There's a big difference. If you ever decide to be an entrepreneur, you're going to learn that very fast. There are some things, you're better off hiring somebody else they know how to do or partnering with somebody else that already knows how to do this, rather than learning things the hard way. It isn't a curse to have resources. It is, it is the joy. It's the great thing.

• 15:58Speaker 00

  It is the very thing that makes your region powerful, your country powerful. But you have to understand how to extract value from it. And as a quick aside about AI, this is exactly how you want to use AI, to just be like, listen, I'm a lone person, they just discovered oil under my feet, minerals under my feet, whatever. I'm never going to learn how to do this. What do I do? And AI will walk you through, almost certainly, a pretty brilliant plan of how to at least try to negotiate something like this. And if you have to get an attorney or somebody like that and cut them in on it, fine. All right, I'm going to stop there. But God, I feel strongly about this. This is something that I see people just allow themselves to be ignorant about things that are so important in their life. And it really is just the difference between understanding this and not understanding how you're being taken advantage of

• 16:43Speaker 00

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• 17:28Speaker 00

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• 18:13Speaker 00

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• 20:09Speaker 00

  Thanks for sticking around. Let's get right back into the action.

• 20:12Speaker 01

  And here's the story that he likes to reference a lot. See, in the late 1800s, land agents went into the mountains of West Virginia and Kentucky and bought mineral rights from farmers for about a dollar an acre. To a farmer in 1890, it was basically free money because they get to keep their farm. Some company in Pittsburgh paid them cash for rocks they couldn't use anyway. Then, the billions of dollars of coal came out of that land. And that coal powered American industry. It helped fight two world wars. It helped run the electric grid for about 100 years. And by the 1980s, researchers found that just a handful of out-of-state corporations

• 20:56Speaker 01

  owned most of the land and mineral wealth in those counties. But they paid almost nothing in property taxes on it, because mineral rights were assessed basically zero. So the coal left, the money left, and the counties where all that wealth and all those resources came from had no tax revenue to build their own schools or roads or anything that would let them make a living after the money ran out.

• 21:21Speaker 00

  By the way, this is exactly what you see happening in the Middle East right now. They understood that they're in this position where we have this resource, it's not going to last forever, even if only because the world is going to move away to solar energy or nuclear or whatever. So we've got to use this as a way to build new infrastructure where we're at, to diversify out into investments, to diversify into other industries. And so they're leveraging that revenue to do exactly that. And that's precisely what happens when you sign this over to somebody else. Then those dollars are going to leak out either to their country or their state or whatever, and you guys aren't going to have that permanent infrastructure, other industries that have built up around this so that you can diversify, so that becomes a smaller and smaller

• 22:05Speaker 00

  part of your economic output. And so, again, this is not a curse of resources. This is a curse of people understanding how economics actually works from a cause and effect perspective.

• 22:16Speaker 01

  That is why today they're some of the poorest places in America. And that's what they call the resource curse. The value just sort of left. Now, if you take that same story and apply it to the US, what we're seeing is nations leaving the thing that the US is making. If the most valuable thing the US makes is capital, money, then after decades and decades of not making anything other than money, its own economy gets hollowed out, and it stops having the ability to make real things. There's actually a measurable way to prove this. And the easiest, arguably overly simplified way to show this is to show you how much power a country is

• 22:59Speaker 01

  producing over time. Because power mostly comes from electricity. And unfortunately, the United States has generated no more electricity in 2024 than it did in 2004. We've been flat for 20 years. Now, obviously, the economy has gotten bigger over that time. It just didn't grow in anything that needs more electricity. It grew in things like finance and software, services, asset prices. These are things that don't necessarily help project power and force to the world, right? These don't help you win a war, should you ever need to, say, defend important energy trade routes somewhere in the Middle East, right?

• 23:41Speaker 00

  Whatever could you be talking about?

• 23:42Speaker 01

  This is while China went from having less than half of our grid to more than twice our grid. So that is the story that J.D. Vance compares the United States to today. He's saying that America's most valuable resource cannot be the dollar. Because if all these other nations are saying that they don't need our dollars, then what do we do? In the investment world, all of these events start to gradually show up in asset prices.

• 24:09Speaker 00

  Okay, so here's what we have to understand. We're in the same position that the Middle East is in. Our valuable asset is really two things. We've got technology and we've got finance, for lack of a better word. We've got to use those while they're working in order to get a more broadly diversified set of economic outputs in the country. And if we don't, we're going to find ourselves in a very, very dark position in the next 20, 30 years. So the goal should be right now for us to be doing things in terms of investments, in terms of looking at whether it's deregulating or putting regulations in place. We should be looking at things that

• 24:50Speaker 00

  are going to allow us to return manufacturing back home, get to the point where our internal industries are getting stronger, where we're not only existing in the digital realm of technology and finance, but we're actually building and making things here in the US. And if we don't use this current period where the dollar still is the reserve currency, where there still is dwindling, though it may be, still massive demand for both the US stock market and US debt, still bigger than there is anywhere else. So you want to leverage this position now that you can see that it's an ice cream cone melting in the sun. You want to make sure that you're moving on this rather than what we're doing now, which is saying, well, we're precariously balanced

• 25:34Speaker 00

  on AI. Basically, the entire stock market is one big bet on AI, and that we've taken on such extraordinary amounts of debt. And there's a lot of question marks about where the cracks in that debt are hiding, in private debt markets and things like that. Instead of just doing that, we need to start diversifying. We need politicians that understand that there have to be other industries in the US that are going to thrive. And right now, we're just not doing any of that.

• 26:02Speaker 06

  Question about that. He said something interesting, whereas like, America's number one manufacturing is capital. Like, America sells money. That's what we do. That's what we manufacture. That's what we build. That's what we financialize, things like that. So I understand the notion of we need to open up manufacturing, we need to be manufacturing at home, but what are we actually going to manufacture?

• 26:21Speaker 00

  Think about all the things that you need and want. I'll pick one just as an example. If you look at the modern warfare, drone manufacturing, your future safety as a nation is going to hinge on your ability to be able to deploy cheap munitions and defend against cheap munitions. To do that, you're going to need a supply chain that right now runs through China. You've got to find ways, either find some of those deposits here in the US, which I don't think we can rule out yet. I'm not making that up. That's not intuition. I read that somewhere at one point. But that definitely fact-checked me on that. But anyway, I don't think that we've looked hard enough in the US to see if we actually have any. Find friendlier countries in China that

• 27:06Speaker 00

  you can do that on. Make the minimum viable product that's local to the actual ore. Bring that back to the US. Build and assemble as much as you can here. And the right way for people to think about this, this sounds ugly, I understand that, but we've got to be really honest. Intelligence is not equal. And so, when you accept that intelligence falls on a spectrum, and that every country, everywhere, always, will have people that are not going to do well in a highly AI-ified, hyper-technical job, they're going to do well in a machine shop. They're going to do well in a steel mill. They're going to do well, like I did for years, summers only, but in a paint factory

• 27:51Speaker 00

  or paint warehouse, whatever, right? There's just people, that's, that is where they thrive, either because that's what they like. They like working with their hands. They like being around that kind of stuff. Or because just intellectually, that's just where they're at. And they're going to do better at something that's physical, physically intelligent, if you will, versus being pure intellect. And we unfortunately ran through a period where it seemed like forever it was going to be fine to just outsource everything. Now, that's one industry, and we did get a lot of things cheaply by doing things like that. But you begin hollowing out your steel. You begin hollowing out your automobiles. You begin hollowing out your military equipment, your ability to manufacture this stuff. We don't even make our chips. We're starting to now. But

• 28:35Speaker 00

  all of modern existence basically goes through one little island off the coast of China called Taiwan. It's like, we could have made those factories here. We just didn't want to because the labor was too expensive. And so it's like, man, you, for chasing the make everything cheaper rather than grow your economy route, which is valid for, I mean, we just ran the experiment. So what's it valid for? 30 years? So you get away with it for quite a long time. And in the early days, it's really awesome. The 90s were rad. But then you start getting into the 2000s, China starts getting real strong, starts siphoning off a lot of your jobs. You start hitting 2010, you got deaths of despair, suicides happening in these former mining towns, manufacturing towns.

• 29:19Speaker 00

  You get the rust belt grows up, and all of a sudden, it's like, ooh, maybe this wasn't a great trade-off. It's how I feel when I watch somebody have a bad diet, especially when they're young. I'm like, there's, when you're a kid, there's literally no price you pay for eating a Twinkie. But if you think of it as your body can only process so much sugar because of something called glycation, your cells actually get sticky and they begin sticking to the sugars and stuff in your bloodstream. And anyway, this causes all kinds of problems down the road. You can measure it in the bloodstream. So I see a kid do it and I'm like, you will not feel anything bad. It will taste awesome and you're good because your body has all these buffers. But that Twinkie at seven that you ate is a Twinkie you can't eat when

• 30:03Speaker 00

  you're 40. And so now the more times you do this throughout your life, the earlier you get some of the signs of aging. So we had to come up with a name for it, type two diabetes, so on and so forth, became, uh, used to be adult onset diabetes because it only happened because those, all those Twinkies or whatever you were doing. Uh, take the same thing. I see somebody doing ultra marathons when they're young. I'm like, well, you're going to pay the price for that when you're 60. And maybe it doesn't hurt your knees now, but if you think you can only absorb so many shocks throughout your life and you're just front loading everything when you're a kid. So you, you can get away with it for a while, but then that stacks up and you're gonna have this sort of adulthood

• 30:43Speaker 00

  of the cycle of doing globalization. And we're now like in the, we're the 90 year old when it comes to globalization where, uh, we're suffering all kinds of different ailments because of decisions that we made. So I get that we got the sugar rush, right? It felt awesome to have all that cheap stuff, but now trying to avoid expensive Americans, we've created other problems that we're now paying the price for. So now is a time where we have to say, I'm not going to take the easy way out anymore. We've got to do austerity. We've got to balance the budget. We've got to spend money on expensive Americans. Uh, we've got to let the market decide what is somebody willing to do for a job. You've

• 31:25Speaker 00

  got to stop importing cheap labor. It's just like these, unfortunately, these things are knowable, but people are acting like they're not knowable. You've got to build more houses. Why do you have to build more houses? Because you got to bring the cost down. You've got to start making things. Why? Because you've got to get real wages growing for everyone, not just the upper echelon, highly technical people. So it's like, okay, well, how do you do that? You make profitable companies that make things that the world wants. Okay. Well, that means we have to manufacture. Yes, it means you have to manufacture, but the world wants physical things. Even if food, like you can't get around right now, the fact that you need food. And so if you've got farmable land,

• 32:06Speaker 00

  you should be doing everything that you can to up the amount of food that you can make that you're self sufficient, yada, yada. Obviously there are limitations to all of that stuff, but you've got to keep building these industries up and not just saying, well, I can get it all cheaper somewhere else.

• 32:18Speaker 01

  So here's what's happening. Before I explain that, the dollar's losing purchasing power, whether we like it or not, but our phone bill doesn't have to help it along, which is why this part of the video is sponsored by Telo Mobile. Telo is a wireless service where plans start at just $5 a month and unlimited is just 25. That's it. And it's running on America's largest 5G network with the same coverage at a fraction of the cost. And you build the plan yourself. You pick the data, you pick the minutes, you pay for what you use. There's no contract, so you can change it any month you want. You also get free hotspot and wifi calling, unlimited texts, international calls to over 60 countries and eSIM activation. So you can switch today from your couch without waiting on a card in the mail. 14,000 reviews on TrustPilot with four and a half stars and

• 33:01Speaker 01

  people like it because it's simple. There's just certain things we can't control, like interest rates, debt, currency debasement, but our phone bill is one of the few things we actually can. So control it. Build your own plan at telo.com with the link in the description down below. Thank you, Telo, for sponsoring this segment. And now let's get back to it. So here's what's happening. Since 2014, central banks all around the world stopped buying US Treasury bonds. And that's the year something called the automatic bid started going away. Countries that basically spent 70 years putting their savings into our most precious resource, AKA the dollar, AKA Treasury bonds, they're now buying something else. They're buying gold instead. And here's why that happened. This is an explanation from Scott Beson himself before he was Treasury Secretary. This is a rare 2023 interview

• 33:46Speaker 01

  back to when he was still running his hedge fund and had no reason to be diplomatic and secretive. He was on a podcast where he talked about having a conversation with one of his consultants who told him that it was untenable that the US could extend its foreign policy to the French government via the dollar.

• 34:05Speaker 04

  Like I was used to, okay, the US has sanctioned Venezuela, the US has sanctioned Russia, US has sanctioned Iran. And he said, you know, it is untenable that the US can extend its foreign policy to the French government via the dollar. And, and just this huge multi-billion dollar fine on BNP is going to make a US ally want to think of a new way of, of doing business.

• 34:37Speaker 01

  Scott Beson says that that was his wake up call, that a multi-billion dollar fine on a French bank would make a US ally start thinking about a new way of doing business because the dollar became weaponized. So this automatic bid died because the US proved that the dollar could be and will be used as a weapon if

• 34:59Speaker 00

  Which, oh, the great irony that Scott Beson is now the one wielding that sword.

• 35:03Speaker 01

  Now, that interview, by the way, was Scott Beson from 2023 as a private citizen. And now watch what he says. This week, he just announced a new round of sanctions on Iran as a warning. And a reporter was like, uh, why are you warning them? Why don't you just sanction them right now? And here's what he responds with.

• 35:22Speaker 04

  Why not impose the sanctions today? Well, we, we are giving everyone the opportunity the, to remedy bad behavior. Why would I want to blow up the global financial system?

• 35:36Speaker 01

  He was like, because I don't want to blow up the global markets, you idiot, right? Because then everybody would leave the dollar system.

• 35:44Speaker 04

  And if people do not want to meet our expectations, then we expect, and they should expect that they should, will leave the dollar system.

• 35:52Speaker 00

  Yeah, I want to be very clear. The US does not want people to leave the dollar system. The US wants to use a bully tactic to make sure that people stay on the dollar system, but still do what they want. You will not be able to have that cake and eat it too. If you know that people are already moving because you heard it straight from the French, they're like, this is not tenable. You know that Russia squawked hard when we froze their assets. Other people have said nakedly, hey, by the way, because you did that thing with Russia, we are out, man. We want to find a new way. You've got China building all these gold vaults because I still believe they want to back the yuan with gold and try to make a play for being the world's reserve currency because it's gonna be someone. You've got all the central banks, the world over, they are selling US

• 36:35Speaker 00

  debt or at a minimum, not buying new debt and letting the old debt roll off. And they are getting to the point now where gold is the number one reserve currency held by central banks the world over. If you look at the gold purchasing chart of China, it is basically a vertical line. China is the next biggest economy and it's close. It's not like they're a distance second. These guys are a real powerhouse. So when they're moving away from the dollar, the Japanese are like in panic mode because they're trying to defend the yen. We're so worried about the Japanese selling their US debt that we're helping them. We're extending a FEMA, uh, emergency plan for them so that they can use their

• 37:17Speaker 00

  debt as collateral to buy their own yen. I mean, it's just, it is absolutely wild that we know all of that, that that is a known reality. And at the same time, we're going to go continue to weaponize the dollar. Kids, it's just going to accelerate and become a bigger and bigger problem. But nonetheless, here we are. We're hitting pause for a moment, but there's plenty more ahead. So don't go anywhere. 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. The service to scrub your data off of broker lists, a tool

• 37:58Speaker 00

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• 38:47Speaker 00

  Thanks for sticking around. Let's get right back into the action.

• 38:51Speaker 01

  Central bank gold purchases are close to their all-time highs right now and why gold has overtaken every other reserve asset as the number one. Now, here's how this affects not only our own investments, but our own lives. If you look at something called the Nasdaq 100, for example, this is the top 100 companies in the US, that index is up about 95% over the past five years. That's a really good five years of investment returns. And if you bought it, you made some money.

• 39:20Speaker 00

  Made a lot of money.

• 39:21Speaker 01

  But if we price that same index in gold instead of dollars, what you'll come to see is that it's down 23% over the same five-year period.

• 39:31Speaker 00

  Ouch.

• 39:32Speaker 01

  And it's even worse the farther back we look. The S&P 500 index with dividends reinvested in one of the best bull market runs in history. It's also down roughly 30% against gold since the Federal Reserve started increasing interest rates in 2022. Go back to the year 2000, it's down about 50% against gold. So what's interesting is that you could be up huge and feel rich, but also down at the same time if you measure it in terms of real purchasing power, AKA gold. You can now technically buy less stuff. Now, almost nobody notices this because when you log into your brokerage and you look at your portfolio, what you see is dollar value goes up.

• 40:17Speaker 01

  So you're like, yay, I'm richer now. That's not what's really happening.

• 40:21Speaker 00

  There's also a far more tricky game being played. Please don't lose sight of the fact that the reason that when I was in my late twenties, I was absolutely scandalized in the Philippines that basically everybody had a housekeeper. And now in America, people, middle class, have housekeepers is because we have been importing a lot of immigrant cheap labor and you, everything from, look at the percentage of drivers of Uber in major cities that are immigrants. It's going to be radically high so that we're masking the cost of employment. If we can't just keep going out to other countries to do everything, well, then we're going to import cheap labor here. So the government understands the position that they're in. They understand how much of that inflation they're taking.

• 41:07Speaker 00

  And as a PSA reminder, the part of the real thing that should anger people is that you should be seeing prices come down over time, basically across the board. Everything should be getting cheaper because we get more efficient. And the reality is that it doesn't get cheaper over time because the government gobbles all of that up by printing money. So if you're at 2%, it's really, we've eaten through all of the innovation plus 2%. So yeah, that is bad mojo. It is a very complex set of things that the government is doing to trick you into thinking you're not getting poorer.

• 41:41Speaker 01

  Because your brokerage account does not have a measure how I'm really doing against gold. That'd be a cool option, though.

• 41:48Speaker 00

  That would be a cool option.

• 41:49Speaker 01

  This is not only a US problem either. Japan's Nikkei, for example, which is their S&P 500, that's up 147% over the past five years. That's a huge increase. This is the best Japanese stock market in a generation. Watch what happens, though, when you price it in gold. Now you're actually down 31%. What does that mean? It means the stock market isn't necessarily going up. It's going up in what economists call the nominal price, AKA the dollar value, but not in real terms when adjusted for inflation. And what's really happening is that the thing we're using to measure it is getting smaller, right?

• 42:32Speaker 01

  Therefore, everything else around us is getting bigger. It's the shrinkflation of our purchasing power in dollar terms. And you can see the same thing in the bond market, except it's so much worse. Here's how older retirees are getting taken advantage of by the system. This is a very real scenario that happened, by the way. Say you're an older person and you're looking to retire in 2014. You did everything right. You worked hard, you invested all your money into the 401Ks, into IRAs, whatever. And now you want to retire and put your money into something safe instead of risking it in the stock market, right? Well, here's what happened to that person's buying power.

• 43:14Speaker 01

  If they bought long-term US Treasuries in 2014 and held them until today, in gold terms, they lost somewhere in the range of 90%, which is just insane, right? Bonds are supposed to be the safest assets in the world that every financial advisor puts in your portfolio to protect you from the volatility of the stock market. Bonds are also what pension funds and insurance companies are legally required to be holding. So these retirees got all the interest payments they were promised from their bonds, but they still lost basically almost everything in terms of what their money is now able to buy them. So what's happening right now is sort of like the biggest transfer of wealth in my lifetime.

• 43:58Speaker 01

  Central banks have stopped buying our debt. These kinds of transfers of wealth take more than a decade to play out, which is why most people just don't notice this stuff, but they feel it, right? They feel it every time they go to work and they pay for gas and they feel it every time they buy groceries and it's possibly going to get worse. Because what's happening right now, in the last couple of weeks especially, is that this process is now speeding up. Here's what's happening. Here's where the US model sort of breaks. It's when the interest costs become higher than a nation's ability to grow.

• 44:33Speaker 00

  All right, so he's going to get into yield curve control. It's important to understand that this is a thing. People do this on purpose and it is for sure part of the US strategy to get out from under our debt. So this is one you need to understand.

• 44:48Speaker 01

  Because then the interest costs become higher than a nation's ability to grow. Because once that happens, everything gets faster and faster. The debt starts growing faster than its ability to pay it, which means it has to borrow more, which means more interest, which means it borrows more again, which means more inflation. And economists call this a debt spiral. Now, hold on. Can't the US just always print more money to pay for it? It's the world's reserve currency. It can do that, right? Wrong. Remember that story of the resource curse where the buyers leave? See, the Treasury has to borrow constantly. It's got 1.4 trillion dollars of net borrowing to do in just the next six months.

• 45:31Speaker 01

  And it does that by holding what are called auctions. Now, an auction is where the government shows up with bonds to sell to people and they're like, okay, who wants to buy our debt? Give us your money.

• 45:42Speaker 00

  So they show up to an auction with bonds to sell to banks, by the way. Unfortunately, real, normal people can't just buy a bond.

• 45:49Speaker 01

  And we'll pay you.

• 45:49Speaker 00

  You can buy them on the secondary market.

• 45:51Speaker 01

  Interest. And for 80 years, those auctions had guaranteed customers. Those customers were the central banks of the world, which had to buy because that's where they parked their reserves. This includes other nations as well. Those customers, though, are disappearing. So now the government shows up and the buyers are like, okay, we'll buy your debt, but pay us more money. And the US is like, why? And they're like, because you might start World War III because your debt is growing at an unsustainable rate? Because I don't trust you? Because you could freeze my assets like you did to a nuclear nation? Because reasons, right? Pay me 5%. And then next time, pay me 5.2%. And every time they say that, the US interest bill for the next 30 years gets locked in

• 46:36Speaker 01

  higher, which makes the next auction worse, which makes the buyers want even more. And that's the debt spiral. And you can actually see this happening.

• 46:44Speaker 00

  This is exactly why I go crazy when people act like the US debt is not a problem. The US debt is a problem. When you're spending as much as we're spending on interest, it is a problem. The world is watching. They understand. It also eats into your ability to do the things you want to do in your government, to pay for the things you want to pay for. It gets harder and harder over time. It doesn't happen in one four-year cycle, which is why politicians don't care, because in any one little window, it never seems like that big of a deal. But then it just snowballs into this catastrophic problem, which we are about to run into. Anytime you hear somebody say that the debt still matter, out of their mind. You were going to have to have some sort of catastrophic event because nobody's going to do the beautiful deleveraging as much as we should have. And Ray Dalio has warned everybody over and over and over and over and over and over exactly what you need to do. They're not going to do it.

• 47:29Speaker 00

  So that means that we run into some kind of wall. You either inflate your way out of this or you just drive yourself to the point where you have an actual revolution because the K-shaped economy gets so out of whack. It's crazy. Please tolerate it to zero when people say that we can spend 2 trillion or more per year, raising our deficits and it's no big deal.

• 47:51Speaker 01

  Looking at the data, the 30-year Treasury bond is at its highest yield since 2007. The 10-year Treasury yield went from 3.9% to 4.7% in just a couple of months. And we're now at a point where the US is spending more than it makes. Really, the easiest way to understand this is like this. Let's say you make $100,000 a year and you just got to raise. But you also have four bills on auto pay, which you can't cancel. Your four bills are your mortgage, your parents' nursing home, your kids' medical care, and the minimum on your credit cards.

• 48:32Speaker 01

  Those four bills come due and they come to $105,000. This does not include your groceries, your gas, your car insurance, vacations, right? These four things are what's called the obligations. That's the federal government right now. Social Security, Medicare and Medicaid, veterans' benefits, and interest on the debt. And those four now equal about 105% of every dollar collected in taxes.

• 49:03Speaker 00

  That's so crazy.

• 49:04Speaker 01

  Now, the good news is the receipts are at all-time high right now because the economy's been good, driven mostly by a strong stock market. But this 105% of spending relative to what the US makes in taxes is before things like highways and air traffic control and national parks and the whole federal workforce. Everything left over is paid for with borrowed money. Now, the US revenue, or the income, that's growing by about 4% a year. But unfortunately, those four bills are growing faster at about 7.5%, right? So basically, our bills are growing faster than our income is. And this gap gets bigger and bigger every year.

• 49:50Speaker 01

  No one's really doing anything to stop it, but they have to.

• 49:54Speaker 01

  So how do you solve it? Here's what they're thinking of doing. So here's the master plan, according to this theory. The plan is to shift or move the debt from something called the long end to something called the short end. Okay, that's step number one, AKA move the debt from the rate investors set to the rate the Federal Reserve sets, because interest rates are sort of what makes all of this possible. Then step two, build a huge buyer for that short-term debt who will hold your debt at basically 0% interest. Step three, let inflation run above that rate. And then step four, let the bondholders, AKA the pension funds, the insurers, and anyone

• 50:36Speaker 01

  that's invested into a target date retirement fund, basically anyone who moved to safety before retiring, let those people get destroyed. Okay, what does that even mean? So to understand this, I'm going to put you to sleep for a second, but let me show you something about interest rates. Because people seem to think that the United States controls its interest rates, but that's not true. Because there are two interest rates. They are controlled by two completely different groups of people. The first is short-term interest rates. That is the Treasury debt that matures in a few weeks or a few months. And those are essentially controlled by the Federal Reserve. When you hear "the Fed lowers rates," that's that one. It's the short end of the curve, as economists call it.

• 51:21Speaker 01

  Now, the second one is something called long-term rates. That's the 10-year, the 30-year bond. And those interest rates are set by the market, which are things like pension funds, foreign central banks, hedge funds, insurance companies, and things like that. The government has zero say over this. Long-term interest rates are at the mercy of the auction, at whatever price buyers are willing to give it. Right now, that price is going up. There's nothing really that Scott Bessent or the United States can do about it, except one thing. They can move the debt, right? Out of the long end, where investors set the price, and into the short end, where the Fed controls it.

• 52:05Speaker 01

  And how we know they're doing this is because it's published. Every three months, the Treasury announces how much each kind of debt it plans to sell. And for nine straight quarters now, they have not increased the size of any long-term bond auctions. Not once. But the amount they need to borrow keeps going up, so where are they getting extra money from? The answer is the four-week Treasury bill. In 2016, it averaged about $47 billion per auction, and today it averages $94 billion. It has doubled. This is now the biggest security the United States government sells. It's bigger than the 10-year Treasury note. It's almost four times the size of the 30-year bond.

• 52:50Speaker 01

  That is also why Scott Bessent just announced they may fund the buybacks of $950 billion out of the Treasury General Account as well. So basically, what we're doing is we're creating more short-term debt, where the Fed can control the interest rate, and less long-term debt, where they can't.

• 53:09Speaker 00

  This is brilliant analysis, by the way. I love this so much. This is exactly correct. You've heard me talk about Warch before. I think, again, I know nothing, I could be making this up, yada, yada. But I think that they had a meeting before Warch was nominated to make sure that he was going to play ball with this. Because ultimately, if you've got Warch who's raising rates, and you guys are moving everything from long-term into short-term, and he starts raising rates, you're now going to have a problem. What you have to do is get this stuff into short-term, and then he lowers rates, and then you can basically pay it off. But if you do the exact opposite, oh my God, it would be brutal. You would see the $1.4 trillion that we're going to spend this year to service our debt climb, climb, climb, climb, climb.

• 53:53Speaker 00

  It's already the biggest line item that we have on our budget is servicing the debt. So if they don't have high confidence that they're going to be able to get Warch to come in and lower all this short-term debt, they take a problem that was easier to control because it was longer, it might be outside of your control. But remember, technically, they don't control the Fed. The Fed is independent. So the Fed can set those rates, but the Fed would have to be in line that that's the right thing to do for the economy. So again, I think that they had to have agreed upon this beforehand.

• 54:22Speaker 01

  That is also why, two weeks ago, the Treasury announced they were at least doubling their bond buyback program from $2 billion to at least $4 billion. In other words, they are now aggressively buying back even more long-term debt. And when the Treasury buys back a long-term bond, it has to pay for that somehow. And the way it pays for it is by issuing more short-term bills. Basically, it's like we're saying, we're refinancing by taking a credit card bill that's due 10 years from now, and we're using another credit card to pay it. And that bill comes due next month. We've moved the due date sooner.

• 55:04Speaker 01

  We're going to pay more in interest, but that's okay, because in the end, we get to control the short-term interest rate.

• 55:11Speaker 00

  Sort of.

• 55:12Speaker 01

  That's what the buyback is trying to do. And that's exactly what the numbers show. The long-term debt they're buying back has an average interest rate of about 3.4%. The short-term bills replacing it cost around 4%.

• 55:25Speaker 00

  Okay, there you have it. Sit with that. So you're going from 3.4% to 4%. Why would you do that unless you know that number's going to come down? Because if that number doesn't come down, this doesn't make any sense.

• 55:35Speaker 01

  So they're kind of retiring cheap debt, and they're taking on more expensive debt on purpose. Because the 3.4% is locked, right? It pays for 30 years, and nobody can touch it. But the 4% is something the Fed can lower, eventually down to 3, and eventually down to 1% or 0 if they want to. And they want to, right? Okay, so then, well, how much debt do they control right now? Well, today, they control about a fifth of the debt. That is, short-term bills, where the Fed sets the rate directly. Another fifth is long-term bonds, where the market sets it and the government has no say. And there's a huge chunk in the middle that sort of slides between the two, depending on how far out they go.

• 56:20Speaker 01

  So today, we're at roughly 22% on the short end, and it's going up. Now, if you're going to fund the whole country with short-term debt, you still need somebody to actually buy trillions of dollars of it.

• 56:32Speaker 00

  Get ready.

• 56:33Speaker 01

  So who's the buyer? Here's who that buyer is going to be. So once they've shifted the debt, they will need someone to actually buy trillions and trillions of dollars of short-term Treasuries. And ideally, it needs to be a very big buyer that could potentially replace countries that don't want to buy our Treasuries anymore. Ideally, someone that's not going to negotiate the interest rate with us, right? And this is where a piece of legislation comes in that everybody thinks is about crypto, but it's not. It's about stable coins. Because a stable coin is a digital dollar that has to be backed by something. And under the rules being written right now, it's backed by short-term Treasury debt. And that means...

• 57:16Speaker 00

  Remember, back in the day, I forget the guy's last name, but it's Anton something, if I remember correctly. Russian guy said, "Let me tell you, this whole thing, the act that they're putting forward, is designed specifically to create appetite for their debt." We covered this when it happened. I think he was bang on correct. Uh, yeah, this is how we're going to create that appetite. This is why we've got to migrate everything over to that short-term debt. Let's go.

• 57:40Speaker 01

  Somebody that's living in Argentina, or Turkey, or Nigeria, right? If they're shopping around for a dollar stable coin, they're doing it because their own currency is falling apart. They're not shopping around for interest rates. They don't care about yield. They just want access to dollars. And they will hold them at 0% interest, happily. Because 0% in dollars beats whatever's happening to their money. So this is potentially a huge buyer of US debt. And this buyer demands no interest, and no foreign government can order them to sell these instruments. So the new buyers are basically going to be everyone in the world.

• 58:23Speaker 01

  Now, the last step is, who actually pays for all of this? Because once you've moved the debt to the short end, and you've built a buyer that's going to hold at almost no interest, you can basically let inflation run above it. That is the plan. Okay? Because if you're holding a bond that's paying you 2%, while inflation's actually 6%, that means you're losing about 4% of your purchasing power.

• 58:49Speaker 00

  This is yield curve control. This is what I was talking about. This is how we got out from under our debt after World War II. It's exactly how we're going to get out from under our debt now.

• 58:56Speaker 01

  Per year. You still get every payment that you were promised, but you're getting poorer while it happens. Economists call this a negative real interest rate. And it is the most powerful debt reduction tool that they've ever created. Because there's no need for a crisis to happen, right? Like, nobody's going to get a letter in the mail telling them, "Hey, your savings are worth less today." The number in our bank accounts will continue to go up, but will continue to get poorer. That's what happened to the retiree who bought in 2014, when they bought Treasuries and lost roughly 90% of their purchasing power in gold terms. That was designed that way on purpose. And the plan is not to stop this.

• 59:41Speaker 01

  The plan is to do more of this, faster and with more controlled precision. In fact, they've done this before. After World War II, the US had about the same amount of debt relative to the economy that it has today. By the early 1950s, it was cut in half. Real interest rates went to negative 13%, and bondholders lost somewhere between a half to two-thirds of their money in just five years.

• 1:00:05Speaker 00

  But guess what we did back then? We manufactured. We manufactured, Drew. We don't manufacture anymore. Not much. We'll see.

• 1:00:13Speaker 01

  Everybody remembers that time period as the Great American Boom. But who paid for it were the bondholders. Remember, those are the pension funds, the insurers, the people that invested their money into target date retirement funds. Anyone that's trying to retire safely. So let's go back to the beginning with J.D. Vance. Remember, we said that the dollar was America's resource curse? That the most valuable thing this country makes is money? And that's what's hollowing out the US economy. His solution is that America should just stop selling money to the world, right? And go back to making real things again. The plan I just explained in this video, though, it's the complete opposite of that.

• 1:00:57Speaker 01

  This plan says, "No, no, no. Let's keep this game going for as long as possible." This might be the last stand of the US dollar and the American empire, because it is the plan to expand access to dollars to the entire world. That's why Scott Bessent says, "When there's de-dollarization, you see a strong appetite for the dollar." So the dollar gets stronger, it goes up. Then it goes down.

• 1:01:24Speaker 04

  Is there is clearly a slow motion de-dollarization going on. But could the initial stages be a dollar rally? Because companies, countries are paying back their dollar debt. So there's a dollar thirst before there's a dollar boycott.

• 1:01:44Speaker 01

  So watch the genius act very closely because that's part of their main strategy. And if you want to learn more about this and see how I'm personally preparing to protect myself against this, you can find those videos in the premium member section where I talk about my investment philosophy and give you early access to my videos. If that's valuable to you, the link is down below.

• 1:02:00Speaker 00

  All right, if you haven't subscribed to Andre's YouTube channel, definitely do. He's fantastic. Part of what he was ending on there that I think is very interesting is you've got a dichotomy between Trump and JD Vance. And I think there's legitimate tension there. There's plenty of leaks that are coming out saying that the two are often at odds with each other. And I have a feeling that that is one of the things that they're at odds with each other over. So it'll be very interesting to see if Vance actually does end up running in 28 and people start pushing him for, you know, what is, what, how do you differentiate yourself from Trump? I think that's when a lot of this stuff is going to come out. Now, what's going on with the shift from long-term to short-term to pass it off

• 1:02:42Speaker 00

  into stable coins is actually genius. It is really smart.

• 1:02:48Speaker 00

  Now, whether we get our act together or we use that just as a way to keep pushing off the inevitable down the road, almost certainly, we will just keep pushing off the inevitable down the road. But yeah, in terms of a way to save the bond market strategy, it's actually quite brilliant. I don't know that I have super high hopes that it's going to work as you tell the whole world to move away from the dollar. It will have a role, but I don't think people are going to feel like they only have one option in that world. And so people are making the assumptions that, well, all these, because he uses the example of somebody trying to save. It's like, well, I'd rather be in US debt because that's better than what's happening to my currency.

• 1:03:31Speaker 00

  In a world where we have to shift all of this need for debt over to the crypto market, you're basically telling on yourself. You're saying the rest of the world is moving away from us. There are very likely to be other options that pop up certainly over the next 10 or 20 years. And so as buys you time, but I don't think that this is a real strategy. The real strategy is to be so fiscally disciplined that the whole world trusts you, that they want to be in your debt. And I think that we've just, we've so fallen back on, we're stronger than everybody. We can bully everybody into doing what we want and forgotten that the real thing that made America strong was that people believed in us. And they certainly don't believe in us anymore.

• 1:04:10Speaker 06

  The yield control curve thing still like tripped me out a little bit. So is it just one of those things on paper it goes down?

• 1:04:17Speaker 00

  No, yield curve control is real. Most people just don't see it. Or they would still, they're losing less by being in that than they would lose in other things. But the way yield curve control works, it is a very active thing that they do. And what they do is they artificially hold interest rates low and they hold it below inflation. So they know, let's say CPI is 4% and they pay 2%. So we're eating your wealth and they do that until the amount of debt becomes so small compared to the inflated dollars that you can basically pay off, like imagine a world where $40 trillion is a trivial amount of money.

• 1:04:56Speaker 00

  And it's like, yeah, whatever. It's easy because you're bringing on new debt or paying with proceeds that debt with post-inflation dollars. So you, you just, you literally intentionally devalue your own currency. And the thing that people don't talk about enough with the post-World War II example, the only reason it worked is we were the hub of the world. We were suddenly the world's reserve currency. We had the vast majority of the world's gold and we were the place everybody was coming to for manufacturing. And we were helping people rebuild their countries. So we had all of this industry everywhere, internally, externally, people coming to us for debt,

• 1:05:42Speaker 00

  paying back the debt that they had taken on from us during the war. So the real economy grew even faster than the financial repression. So they're, let's say they're hurting you, and this is one of the things that he, he doesn't get into is obviously retirees are not the only people with money in bonds. The vast majority of retirees aren't going to have 100% of their money in bonds. They're just going to be overly weighted towards bonds, but nobody's stupid. If you're in a position where the economy is just absolutely booming, your financial guy is like, look, you're old. So you want to be a little bit careful. So we have a disproportionate amount put over in the bonds just to safety. But you are losing money there. So we're going to put you, expose you to the stock market.

• 1:06:24Speaker 00

  Given that the real economy is growing faster than inflation, everybody's feeling richer. So your bonds aren't the place you're getting money. But if you're young, first of all, you're just actually getting richer. You're making more money each year. You have a reason to believe that your kids are going to make more money than you're making. So everybody's in an optimistic state and given that the markets are just about your mindset, you get everybody in an optimistic state. Everybody's feeling good. There's enough money sloshing around the system, meaning real growth that, yeah, okay, I'm not growing as much as I could have if you weren't financially repressing me. But I don't even understand financial repression anyway. So I just feel that I'm richer this year than I was last year. Who's going to complain?

• 1:07:07Speaker 00

  They, they don't understand where they're being abused and the real economy is growing. So nobody goes, oh, I could have been growing 4%, but instead I'm growing 2%. They just are like, whoa, I'm 2% richer every year. This is dope. So when we talk about doing it now, people just aren't being honest that we don't have a booming economy. You don't have a booming economy. And so you're going to end up trying to like financially repress people at a time where nothing makes up for it. It's crazy. And at a time where the world doesn't trust you and at a time where you're at each other's throats. We felt the reason the baby boom happened, people came back from the war. They were so euphoric, they had babies.

• 1:07:45Speaker 06

  And the GI Bill and free money was getting sloshed around.

• 1:07:50Speaker 00

  Yeah, but again, the real economy was growing. I really worry that when people have that take, they're so used to the financial system, abusing people, trying to milk every dollar out of a system that's really only working for some of the people. And they forget that the middle class was growing in real terms. And when the middle class is growing in real terms, everything feels good.

• 1:08:15Speaker 06

  And then last thing specifically for the debt, he talked about in the short term, they're going to move it from long-term debt where the rates are going out of control that the market controls into short-term debt that the Fed can control. Once they move it over to the short term, is it a fraction of that 40 trillion was all of that 40 trillion? And then that's when they will lower the interest rates.

• 1:08:35Speaker 00

  So right now they're at 22% is short-term. How much will eventually get moved over? I don't know. Part of that's going to be, does the Clarity Act get passed? Because I think it's a Clarity Act that isn't passed. Genius Act's already passed. It's some crazy. I could have them reversed, but anyway. When it gets passed, we don't know what the exact thing is going to be. How quickly will there be appetite for the debt in the system? That's another question mark. How much is the Fed and the Treasury going to move in lockstep? So that they can get the rates where they want them. He's sort of fictionalizing a little bit that we're going to be able to hold short-term rates low.

• 1:09:14Speaker 00

  Because in his example, the stable coins make up just the absolute overwhelming majority of the desire for that. And the overwhelming majority of the desire for stable coins is people in other currencies that are being so abused. They'd rather be in the dollar even at zero. There's a lot of assumptions there. So it's hard to know. Also, keep in mind, in the exact same time, Bessent is firefighting the actual, the actual real life thing that's happening to the bond market. So what we just went through is a very well-done hypothetical of where this is likely going in terms of direction of travel. Andre, yet again, banger analysis.

• 1:09:53Speaker 00

  But real life, the thing that's actually happening right now is Bessent is not able to tame the runaway interest rates. So right now, the 30-year is starting to run, the 10-year is starting to run. People are saying, uh, you're going to have to come buy this from me or you're going to have to raise the interest that you pay me. But you're sure as hell not just going to be able to get me to go, okay, like everything's fine. It's like, everything is not fine. I see what you're doing in Japan. I know that you've got some of the similar pressures here in the US. And so Bessent has had to go from, I'm doubling from four, two to four billion each time we do one of these buybacks. And people slapped their knees and laughed. And so now he's had to say, I have almost a trillion dollars in this account and I'm not afraid to use it.

• 1:10:38Speaker 00

  Yo, when you start talking that kind of shit, you know, something is breaking. But the problem is the more he's like, I've got all this money. I can buy all these bonds. The more people like, I don't trust then that there's health here.

• 1:10:52Speaker 06

  That's scaring us. But to the four-year cycle, he only has to keep the lights on for the next, you know, two, three years. So if it's like 21% of the debt is that set that we're paying interest on, I can find it.

• 1:11:07Speaker 00

  Paying interest on all of it. 22% is what we've migrated to short-term.

• 1:11:10Speaker 06

  Got it. There is a portion of the debt that is becoming due, like maturing.

• 1:11:14Speaker 00

  We've, we've got, oh God, how many trillions of dollars?

• 1:11:17Speaker 06

  So if we can roll that trillion dollars, let's call it eight, 20% of the debt. Let's call it eight trillion. You cut half of that into the short-term financial repression. You stable coin three to four trillion over here on the other side. It's like problem solved for the next five years if there's not a collapse and all these other if and statements. So.

• 1:11:37Speaker 00

  Yes.

• 1:11:37Speaker 06

  You know, it's not like he has to hurdle the 40 trillion. It's like, if he can get over eight, you know, that would at least give us some breathing room, quote unquote.

• 1:11:45Speaker 00

  Yeah. What I just heard, and unfortunately you're correct, but what I just heard is, so if he beats all of us, but not where the bruises show, then he'll be fine. Like we won't leave him. We're just going to limp along and you're correct. And that's exactly what they're going to do. They're going to abuse you just enough that it doesn't feel bad enough that you'll vote for austerity. And my fear is that they're going to abuse us just enough that people remain mad because things will get more unaffordable. They're going to be angry and they're going to vote for the idea that sounds better, but is actually much, much worse.

• 1:12:26Speaker 06

  Um, this is why we don't build anything in America no more because we have a bunch of treasury and financial instruments that we just turn all these knobs and stuff that we're jumping over just to try to find.

• 1:12:35Speaker 00

  It's one of the reasons, the other is that the economy is still booming until the, um, if something goes bad with AI, that would be the first real knock, but the economy is growing. The country is still growing at a much reduced rate, but the country is still growing. And until recently, I guess we've put, I haven't looked at the details, but they, I guess, have really restricted visa applications now. But up until recently, we've just imported so much cheap labor. You'll still be able to coast on the back of that for a while. So yeah, they'll, as always, kick the can down the road, keep deficit spending, act like none of this matters, but it all matters and it will come due in somebody else's term.

• 1:13:18Speaker 06

  Um, cool. That's all I got.

• 1:13:20Speaker 00

  All right. Any super chats? We good?

• 1:13:23Speaker 06

  No more super chats.

• 1:13:24Speaker 00

  All right, everybody. Thank you guys so much. That was a big one. Well worth it, given everything that's going on in the economy. And speaking of controlling your own destiny, boys and girls, please learn how to generate revenue. I'm doing an ITU masterclass Thursday, September 10th at 1:00 PM Pacific about how to use AI to launch your own company. The bet that I make, the biggest bet that I've always made throughout my entire life has been on myself. So all of my high risk dollars I put to use in building companies. It is obviously for me paid off extraordinarily well. If you've ever thought about giving it a shot, nights and weekends, man, you don't have to bet your future on it, but at least learn about AI and how to use it, what it's good at, what it's not good at. I'm going to be teaching all about it.

• 1:14:09Speaker 00

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