Speaker 1: Hello, Welcome to another episode of the Mark Mass Show,
Speaker 1: where we're always talking about the decentralized revolution, how the
Speaker 1: world is changing through the lens of politics, finance, and technology.
Speaker 1: And that technology that we're talking about is bitcoin, which
Speaker 1: is a decentralized technology. And there was a lot going
Speaker 1: on in the bitcoin world today and I have a
Speaker 1: lot to cover we're going to talk about in this segment.
Speaker 1: We're going to talk about what happened in the bitcoin space,
Speaker 1: something crazy, weren't talk about the economy, what the Fed
Speaker 1: is doing, and even more news coming out of China.
Speaker 1: So lots to talk about in this segment. But jumping
Speaker 1: into bitcoin for a minute, the big news is that
Speaker 1: the price of bitcoin shot up, jumped up on fake news,
Speaker 1: on fake rumors. And what happened is we've been talking
Speaker 1: about on this show for a long time, is that
Speaker 1: there is an ETF coming out that would well hopefully
Speaker 1: there's an ETF coming out for bitcoins. We have ETFs
Speaker 1: for all types of things, and we've been trying to
Speaker 1: get one through for bitcoin for a long time, and
Speaker 1: I believe there's eight ETF applications that are stuck at
Speaker 1: the SEC trying to get through. Now one of the
Speaker 1: larger sort of cryptocurrency bitcoin related news sites, a site
Speaker 1: called coin Telegraph, put out a tweet on Twitter fake news,
Speaker 1: saying that breaking Sec approves a bitcoin spot etf And
Speaker 1: when that happened, within about thirty minutes, we saw the
Speaker 1: price of bitcoin shoot up before coin telegraph could come
Speaker 1: out and say reportedly, and then they went ahead and
Speaker 1: they deleted that tweet altogether. Now, during that time, we
Speaker 1: saw the price job dump about seven to eight percent
Speaker 1: during that time before it was disproven. Now, what's in this?
Speaker 1: There's something in this. There's a couple of things. First
Speaker 1: of all, when that happened, we saw the price shoot up.
Speaker 1: Why did it shoot up so much? I think there's
Speaker 1: two reasons why. So, first of all, the frenzy triggered
Speaker 1: a short squeeze. There were seventy eight million dollars in
Speaker 1: short positions and there was thirty four million in longs,
Speaker 1: and they got liquidated faster than.
Speaker 2: You can say fake news.
Speaker 1: They took off really really fast, and so there were
Speaker 1: so many shorts. As soon as it started moving, they
Speaker 1: started getting liquidated, which caused the price to move up faster, faster, faster, faster, faster.
Speaker 2: Bester fa faster, all right.
Speaker 1: The other thing that I think is interesting in the
Speaker 1: story is isn't just on the price action. It's really
Speaker 1: about what will happen. I guess if I think it's
Speaker 1: more when and the ETF actually does get approved. And
Speaker 1: so even though the news was fake, the reaction from
Speaker 1: the market wasn't. And so what we saw is that
Speaker 1: the market responded positively. We saw that the market moved up.
Speaker 1: We saw the price jump up almost ten percent in
Speaker 1: just a thirty minute time frame. Now could it have
Speaker 1: jumped out more or less, I don't know, but I
Speaker 1: think what it means is that happened within thirty minutes.
Speaker 1: And so I guess the question that most of us
Speaker 1: want to understand is do we think this news is
Speaker 1: already priced in? Do we think that the bitcoin ETF
Speaker 1: getting approved is already priced in? I believe Bloomberg has
Speaker 1: it at like a ninety percent chance of it becoming approved.
Speaker 1: We've seen Gary Ginsler's language around this starting to change,
Speaker 1: and so is it already priced in? And based off
Speaker 1: of this price action, it looks.
Speaker 2: Like maybe it wasn't.
Speaker 1: If this wasn't taken down within thirty minutes, if it
Speaker 1: was allowed to stay up for long or for hours,
Speaker 1: for days, for weeks. What could happen? How much could
Speaker 1: the price move up? Now? It's a little bit priced
Speaker 1: in in my opinion, because it didn't jump up that much.
Speaker 1: I mean, sure, seven, eight, nine, ten percent sounds like
Speaker 1: a lot.
Speaker 2: It would be a lot for this.
Speaker 1: S in P. Five hundred, it's not a lot for bitcoin.
Speaker 1: We've seen bitcoin move way more than that in a
Speaker 1: single day, in a single candle. And so while that
Speaker 1: certainly is positive price action, it's not as big as
Speaker 1: you might think it would be. And so to me,
Speaker 1: I think that most of it has been priced in,
Speaker 1: not one hundred percent of it, but most of it
Speaker 1: has been priced in. Of course, this doesn't account for
Speaker 1: the amount of funds that will flow into bitcoin at
Speaker 1: some point.
Speaker 2: Now.
Speaker 1: One of the biggest ETFs that's trying to get through
Speaker 1: right now is from the largest asset manager in the world, Blackrock.
Speaker 1: I'm no fan of Blackrock. I've been very vocal about that,
Speaker 1: but Blackrock is one of the I believe eight ETFs
Speaker 1: trying to get through. And if anybody's going to get
Speaker 1: an ETF through, it's probably going to be Blackrock. There's
Speaker 1: sort of like a quasi semi arm of the government.
Speaker 1: They work on the Fed's behalf, they work with the
Speaker 1: FDIC bank bailouts, all of those things. So if anybody
Speaker 1: could get one through, it would be them. And it's
Speaker 1: pretty interesting this week to see the CEO of Blackrock,
Speaker 1: Larry Fink, come out and say that he's seeing client
Speaker 1: demand for bitcoin all around the world. He said that
Speaker 1: clients across the globe are talking about the need for crypto.
Speaker 1: He said that I think the rally today is about
Speaker 1: a flight to quality. With all the issues around the
Speaker 1: Israeli war now global terrorism, etc. People want to flight
Speaker 1: to quality, and he thinks that's why people are going
Speaker 1: to bigcoin, which is very interesting. You have arguably the
Speaker 1: most powerful man in the financial world, which makes him
Speaker 1: arguably one of the most powerful men in the entire world,
Speaker 1: who you wouldn't think would want something like bitcoin to
Speaker 1: be approved, and also would always be trying to talk
Speaker 1: down fears of financial problems in the markets, financial markets,
Speaker 1: and here he is talking about bitcoin being used as
Speaker 1: a flight to safety.
Speaker 2: So think about that for a minute.
Speaker 1: Bitcoin went from being a scam to being a Ponzi scheme.
Speaker 2: To being ridiculous.
Speaker 1: Jamie Diamond of JP Morgan said that if anybody even
Speaker 1: used it, he would fire them, and if anybody at
Speaker 1: JP Morgan used it trade that he would fire them.
Speaker 1: To now we have arguably one of the most powerful
Speaker 1: men in the world think saying that they're using it
Speaker 1: as a flight to quality.
Speaker 2: Boy, how far we've come.
Speaker 1: It reminds me of the quote that I think it's
Speaker 1: first they laugh at you, then they fight you, and
Speaker 1: then they finally accept you. And so that's sort of
Speaker 1: where we're at now. I wouldn't say that it's a
Speaker 1: flight to quality necessarily. I think it's something a little
Speaker 1: bit different. So typically we have a flight to quality.
Speaker 1: And you think about treasury. The treasury market like the
Speaker 1: bond market, and bonds are what's considered a risk free asset.
Speaker 1: It's a risk free asset because the government's always going
Speaker 1: to pay. Now, it's not totally risk free.
Speaker 2: It's only risk.
Speaker 1: Free if you hold it to maturation. However, even that's
Speaker 1: not risk free because they're going to pay you back,
Speaker 1: but they're going to pay you back.
Speaker 2: With heavily devalued dollars.
Speaker 1: So you may get one hundred dollars put one hundred
Speaker 1: dollars in you get a hundred dollars back, but the one
Speaker 1: hundred dollars may only buy you twenty or thirty dollars
Speaker 1: worth of stuff. So there is risk there, inflation risk. However,
Speaker 1: what I'm seeing isn't a flight to safety, because it's
Speaker 1: no one's flut rushing into the treasury or bond market.
Speaker 1: What they're doing is they're buying assets instead. So we're
Speaker 1: seeing gold at one of the largest deviations from the
Speaker 1: treasury market that we've seen in recent history. Bitcoins holding up,
Speaker 1: even stocks are holding up, which is against everybody on
Speaker 1: Wall Street. They're telling you that no, once rates go up,
Speaker 1: the stocks have to come down because when the risk
Speaker 1: free rate moves up, stock the evaluations, the pe ratios
Speaker 1: have to come down. Really do they have to, because
Speaker 1: they haven't. Rates have been going up for a year.
Speaker 1: How come the ratios haven't come down? And I think
Speaker 1: the reason why is the same reason why Larry thinks
Speaker 1: that people are rushing to safety. What they're rushing to
Speaker 1: safety in isn't the safety asset of the bond. What
Speaker 1: they're rushing to is anything other than fiat currency. But
Speaker 1: they're rushing to is anything other than government inside paper
Speaker 1: money bond market money. What they're rushing to is real assets.
Speaker 1: That's why gold is going up, That's why real estate
Speaker 1: is holding up, that's why equities are holding up, and
Speaker 1: that's why bitcoin is holding up. Now do I think
Speaker 1: something could change? Of course, something can always change. There
Speaker 1: is so so much danger sitting out in this world
Speaker 1: right now that something could certainly change. But it's sort
Speaker 1: of like this crackup boom right level. Go On Misis,
Speaker 1: the godfather of the Austrian school of economics, called it
Speaker 1: the crackup boom, he said. And then suddenly people realize
Speaker 1: that inflation is both intentional and ongoing, and they will
Speaker 1: no longer want to hold the currency and they'll quickly
Speaker 1: trade it for anything else that they can get their
Speaker 1: hands on. And so you see this happening in other
Speaker 1: countries all around the world, where Venezuela, Lebanon, Turkey, et cetera,
Speaker 1: where the currency is dropping so fast they'll literally take
Speaker 1: anything other than hanging onto the currency. Now, we may
Speaker 1: not be at that point saying the United States is
Speaker 1: at the Lebanon, Turkey, Argentina, Venezuela level yet, but we're
Speaker 1: certainly on that path. And I think this is why
Speaker 1: people aren't rushing to the safety of the treasuries in
Speaker 1: the bonds, but rather holding onto assets such as equities
Speaker 1: which aren't super safe in my opinion, but gold, real
Speaker 1: estate and bitcoin.
Speaker 2: But we'll see. If you're just tuning in listening.
Speaker 1: To the markmas Show, we're talking through some of the
Speaker 1: latest breaking news headlines this week. We just went through
Speaker 1: what happened in the bitcoin crypto markets and with the
Speaker 1: largest asset manager in the world. But I have a
Speaker 1: whole lot more to cover when I come back after
Speaker 1: this very short break. Don't go away, I'll be here
Speaker 1: back all right, Welcome back. If you're just tune in
Speaker 1: your listening to the Mark Maas Show, we're talking through
Speaker 1: some of the latest breaking news headlines this week. Of course,
Speaker 1: always looking through the lens of politics, finance and technologies,
Speaker 1: you can have a better understanding, better context to what's
Speaker 1: going on in the world now. Right before the break,
Speaker 1: I was talking about this Ludwig von Misus's theory called
Speaker 1: the crackup boom and how people don't want to hold
Speaker 1: on to the money anymore, they'd rather buy assets. And
Speaker 1: so we've seen these assets going higher and higher and higher,
Speaker 1: partly because of this inflation where the currency's being destroyed
Speaker 1: and partly because of this rush to own those types
Speaker 1: of assets.
Speaker 2: And I've been very vocal.
Speaker 1: I've been on record many times on my main YouTube channel,
Speaker 1: Mark Moss, which, by the way, if you're not watching
Speaker 1: on YouTube, you should just search Mark Moss on YouTube
Speaker 1: and you can watch and listen to all these shows
Speaker 1: on the podcast just search the Mark Moss Show, or
Speaker 1: you can watch these episodes also on the Market Disruptors
Speaker 1: YouTube channel. But I've been very vocal, even back when
Speaker 1: inflation was at seven eight nine percent, saying that this
Speaker 1: I think this would still even be some of the
Speaker 1: lowest inflation that we'll see for the rest of the decade.
Speaker 1: And so while a lot of people think that inflation
Speaker 1: is over the FED has won, I don't think they're
Speaker 1: even close. And what do I mean by that, I
Speaker 1: mean inflation has come down reportedly from this nine percent
Speaker 1: down to this three percent range, right, Mark, So they
Speaker 1: did win. They got it down, right, well, not really.
Speaker 1: First of all, that number is so heavily.
Speaker 2: Manipulated you can't believe that number.
Speaker 1: Second of all, inflation comes in waves, all right, So yes,
Speaker 1: they got it down temporarily get ready for the next
Speaker 1: move up. Now, we can see this in any number
Speaker 1: of ways. For example, I saw this report come out
Speaker 1: this week that home buyers in the United States now
Speaker 1: home buyers must earn one hundred and fifteen thousand dollars
Speaker 1: to afford the typical US home. The median home price
Speaker 1: in the United States, you now have to earn one
Speaker 1: hundred and fifteen thousand dollars to afford that meeting home.
Speaker 1: The problem is that's about forty thousand more than the
Speaker 1: median US income, So the median income can't afford the
Speaker 1: median house.
Speaker 2: That's a problem.
Speaker 1: The bigger problem is that this has gone up by
Speaker 1: more than fifty percent since the start of the pandemic.
Speaker 1: So now you need fifty percent more income today then
Speaker 1: you needed a few years ago to buy the median
Speaker 1: home price. The problem is your pay didn't go up
Speaker 1: by fifty percent, which is why we're continue to see
Speaker 1: it being harder and harder and harder and harder for
Speaker 1: people to live, which is why in the United States
Speaker 1: we continue to see strikes.
Speaker 2: Right, we have strikes happening all over the place.
Speaker 1: The auto workers in Hollywood, I saw the railways today,
Speaker 1: everywhere we're having strikes because people can't afford to live anymore.
Speaker 1: It's gotten way too expensive. Home prices went up fifty percent,
Speaker 1: but your pay didn't. And so while the FED wants
Speaker 1: to tell you they've got inflation under control, they haven't. Also,
Speaker 1: as I've mentioned many times, even if they did get
Speaker 1: inflation from their nine percent down to three percent, it
Speaker 1: doesn't mean that prices came back down. What it means
Speaker 1: is that prices continue to go up, just at a
Speaker 1: little bit of a slower rate. But that's compounding because
Speaker 1: we're still adding on to the already high rate. And
Speaker 1: like I said, I've been very vocal saying that I
Speaker 1: think inflation is still going higher. And I think the
Speaker 1: market is actually telling us the same thing, not the FED.
Speaker 1: The Fed's patting themselves on the back saying they got
Speaker 1: a job well done, but the market is telling us
Speaker 1: something different. Now, the market is us. The market is
Speaker 1: me and you. The market is the people, the businesses,
Speaker 1: it's Wall Street, it's the bankers, the people we make
Speaker 1: up the market. And the markets are what it's called
Speaker 1: discounting mechanisms. They're really the betting markets. Every day, if
Speaker 1: you put money into the market, whether into the economy,
Speaker 1: or more specifically, into the Wall Street kind of investment market.
Speaker 2: You are betting.
Speaker 1: You're placing your bet as to what you think that
Speaker 1: could happen. So if you go to Las Vegas, for example,
Speaker 1: you're gonna go into the sportsbook.
Speaker 2: You're gonna bet on a football game.
Speaker 1: So you're gonna say, I'm going to put down this
Speaker 1: hundred dollars that I think the Dallas Cowboys are going
Speaker 1: to win this game, and they either do or they don't,
Speaker 1: and I win money I don't. Now I'm sort of
Speaker 1: doing the same thing. If I'm buying Tesla or Apple
Speaker 1: or Facebook or or whatever stock i'm buying, I'm betting
Speaker 1: that the price of that stock will go up, or
Speaker 1: I'm short and I'm betting the price we will down.
Speaker 1: So we're all betting at the same time. The market
Speaker 1: is is billions of pieces of data all aggregating together
Speaker 1: to tell us what people think is going to happen,
Speaker 1: what the future will hold. And so we can see
Speaker 1: this I've talked a lot about if you look at
Speaker 1: the treasury market, the bond market, we have the inversion
Speaker 1: of the yield curve. You've heard about this extensively, so
Speaker 1: what this means the yield curve is supposed to go
Speaker 1: from lower rates in the short term, so three months,
Speaker 1: six months, et cetera should be very should be low rates,
Speaker 1: and the long term, the thirty year bond should be
Speaker 1: a higher rate because I want to get paid a
Speaker 1: higher amount to loan to you for a longer period
Speaker 1: of time. Makes sense, right, So we should have this
Speaker 1: yield curve where the long rates are higher than the
Speaker 1: short term rates. The problem is it's been inverted, meaning
Speaker 1: that the short term rates are higher than long term rates.
Speaker 1: Whenever that happens, spens, it's guaranteed it. It's told us
Speaker 1: that there's a recession coming. I believe it's one hundred
Speaker 1: percent accurate, and it's told us that typically that recession
Speaker 1: comes in about twelve to eighteen months. And now we're
Speaker 1: starting to see that yield curve the inverted. Your career
Speaker 1: is starting to reinvert or what we call resteeping. But
Speaker 1: what's happening is it's happening the wrong way. So typically,
Speaker 1: the way it's supposed to work is that the front end,
Speaker 1: which is higher than it should be, should come down.
Speaker 1: But what we're seeing is the back end that's higher
Speaker 1: I'm sorry, is lower is actually starting to go up.
Speaker 1: So what this means is that the market is actually
Speaker 1: calling the fed's bluff on maintaining a long term inflation
Speaker 1: target of two percent. The market doesn't believe that the
Speaker 1: FED has control over inflation. The market believes. Millions of people,
Speaker 1: billions of people and data points believe that the FED
Speaker 1: has completely lost control of over inflation, just like I'm saying.
Speaker 1: And the reason we can see this in this yield curve.
Speaker 1: If the market believe the Fed's two percent target, then
Speaker 1: they would happily be buying notes on the on the
Speaker 1: back end at four point eight percent. Right, if I
Speaker 1: believe that we'd have two percent inflation, I'll gladly buy
Speaker 1: a note at four point eight percent. That means that
Speaker 1: I'm guaranteed a almost three percent return over ten years.
Speaker 1: The markets, but the markets don't believe that. The markets
Speaker 1: don't believe the fed's narrative. The markets don't believe that
Speaker 1: they're going to continue to see this two percent target.
Speaker 1: They think inflation is going to be higher. That's what
Speaker 1: we're witnessing. We're witnessing the free market signal that it
Speaker 1: no longer believes the Fed's two percent target is realistic.
Speaker 1: They don't believe it's attainable, and all the data supporting
Speaker 1: this is there. It includes the average inflation rate since
Speaker 1: nineteen seventy one being three point nine seven four percent.
Speaker 1: Since nineteen seventy one, the average inflation rate has been
Speaker 1: four percent, not two percent like the Fed wants to
Speaker 1: get to. And again, if the market did believe the Fed,
Speaker 1: then they would be buying the ten year note to
Speaker 1: lock in those real rates of return, not selling it.
Speaker 2: But they're not. They're selling it.
Speaker 1: The selling the rising rates signals the market fields it's
Speaker 1: not being properly compensated for the real inflation risk, which
Speaker 1: is greater than the previous consensus of two percent. So
Speaker 1: the yield curve resteepening, specifically at the long end, is
Speaker 1: telling us the Fed's lost control of the yield curve.
Speaker 1: It's a big deal, amah and the Fed. The Fed
Speaker 1: is trying to regain confidence in the market. They're trying
Speaker 1: to tell us. We've seen several I think seven Fed
Speaker 1: boat board governors came out in the last week trying
Speaker 1: to what we call jab owe the market talk it
Speaker 1: back down, saying we think enough has been done. We
Speaker 1: think the market is taking care of itself. We think
Speaker 1: that we don't need to raise rates anymore. We think
Speaker 1: we've we've saw the inflation problem. Congratulations. Let me pat
Speaker 1: ourselves on the back here real quick. So this is
Speaker 1: what the Fed is trying to tell us, but the
Speaker 1: markets don't believe it. If you're just tuning in, you're
Speaker 1: listening to the Mark mash Show breaking down some of
Speaker 1: the latest breaking news headlines this week so you can
Speaker 1: understand it. I have a lot more to cover when
Speaker 1: we come back. I'm gonna dig deeper into the bonds
Speaker 1: so you can understand exactly what's going on, what you
Speaker 1: need to do, and more.
Speaker 2: Don't go away, I'll be here back all right, Welcome back.
Speaker 1: If you're just tune in your listening to the Mark
Speaker 1: Maas Show, we're talking through some of the latest breaking
Speaker 1: news headlines this week so you can understand what the
Speaker 1: heck is going on out.
Speaker 2: There in the world.
Speaker 1: Of course, always looking at through the lens of politics, finance,
Speaker 1: and technology, you're really looking at the convergence of those
Speaker 1: three things to bring greater context into what's going on
Speaker 1: into the world. Now, we were talking about inflation, we were
Speaker 1: talking about the bonds, and specifically how the bonds are
Speaker 1: calling the Fed's bluff.
Speaker 2: They don't believe.
Speaker 1: The market doesn't believe, as evidence through the yield curve
Speaker 1: that inflation is coming back down to two percent, and
Speaker 1: we're seeing all types of problems.
Speaker 2: In the bond market.
Speaker 1: Nobody wants to buy it, wants to buy it, and
Speaker 1: the reason why is because they know the government is
Speaker 1: going to continue to print money. The amount of money
Speaker 1: printing is I don't even know the word. I'm speechless.
Speaker 1: I've never seen this before. No one's ever seen this before.
Speaker 1: As a matter of fact, there is so much debt.
Speaker 1: The government is spending so much money at an unprecedented
Speaker 1: level that it just boggles the mind. Let me let
Speaker 1: me break it down for you. It took the US
Speaker 1: government just eighteen days to add more than five hundred
Speaker 1: billion dollars in debt after passing the thirty three trillion
Speaker 1: dollar debt run. Now, to put this into sort of
Speaker 1: some context, it took from the founding of the United
Speaker 1: States all the way until nineteen eighty one to get
Speaker 1: to one trillion.
Speaker 2: Dollars of debt.
Speaker 1: Okay, from beginning to nineteen eighty one, and now we
Speaker 1: hit that run rate in less than two months.
Speaker 2: I don't even know what to say about that.
Speaker 1: It took the US until March of nineteen seventy five
Speaker 1: do you get to its first five hundred billion, and
Speaker 1: now it did that in eighteen days.
Speaker 2: It's insane.
Speaker 1: And so now we're starting to witness that the market
Speaker 1: is starting to wake up to the fact that sure,
Speaker 1: sure it's risk free because sure the government's going to
Speaker 1: pay me back, but they're going to be paying me
Speaker 1: back with heavily devalue dollars. I don't want that. And
Speaker 1: not to mention, the demand is still mostly there. There's
Speaker 1: still people in the market other nations, governments, etc. Banks,
Speaker 1: pension funds that still want to buy the US debt.
Speaker 1: So there still is demand for the supply of the
Speaker 1: US debt. The problem isn't the demand. The problem is
Speaker 1: the supply. The problem is they've pushed the supply up
Speaker 1: so much that the demand is just.
Speaker 2: Not high enough.
Speaker 1: That's where we're at, and we can see that really
Speaker 1: a lot of this has changed sort of in this
Speaker 1: in two thousand is really when we saw this massive change,
Speaker 1: when we really entered in this quantitative easy era, and
Speaker 1: really in twenty fourteen we saw it shift even more
Speaker 1: in twenty fourteen. What shifted is we started to see
Speaker 1: that central banks around the world wanted to stop growing
Speaker 1: their holdings of US treasuries, and so that started to
Speaker 1: put a limit onto well, not so how much debt
Speaker 1: that could be issued, but really the function of the
Speaker 1: US treasury market overall. In order the US treasury market
Speaker 1: cannot have dysfunction, we need to have liquidity in the system.
Speaker 1: If the dysfunction gets too high, if the financial system
Speaker 1: doesn't work properly, if the liquidity dries up, the whole
Speaker 1: thing can seize and freeze, and the whole system melts down.
Speaker 2: Nobody wants that.
Speaker 1: As much as I want to see the entire system
Speaker 1: rebuilt on a sound money system, a Bitcoin standard, if
Speaker 1: you will, I don't want that to happen tomorrow. We
Speaker 1: don't want a disorderly breakdown of the market. And so
Speaker 1: the FED certainly does not want this dysfunction to be high.
Speaker 1: But because of the fact that we don't have as
Speaker 1: many buyers in the market and because of the increased demand,
Speaker 1: something has to give. The FED has been holding this
Speaker 1: position of being hawkish. They want to continue to shrink
Speaker 1: their bounds. They want to continue to tighten the market.
Speaker 1: But how can they shrink their bounds. How can they
Speaker 1: tighten the market when the government needs to continue to
Speaker 1: put more debt out and nobody else will buy it.
Speaker 1: They certainly can't. They're going to have to do something.
Speaker 1: They're going to have to Well, really, it's only one.
Speaker 1: I guess they have two options. Either one they have
Speaker 1: to inject more US dollar liquidity into the system, or
Speaker 1: two they have to face the US recession. But a
Speaker 1: US recession isn't as in a policy choice they can make,
Speaker 1: because if they did, if they chose the recession, the
Speaker 1: resulting increase in unemployment would drive a complete blowout in deficits,
Speaker 1: which would likely drive a rise in US treasury yields
Speaker 1: in a recession, again, sending the US into a debt
Speaker 1: spiral that discredits the FED and the Treasury and ultimately
Speaker 1: forces a system systematic, systemic reset.
Speaker 2: So what do I mean by that?
Speaker 1: So, Yeah, the government is sort of like you and I,
Speaker 1: sort of like a business. They have income and they
Speaker 1: have expenses. The government has tax revenue that comes in
Speaker 1: and then they spend that tax revenue on lots of
Speaker 1: different things.
Speaker 2: In pre pandemic times.
Speaker 1: The US government was spending about four and a half
Speaker 1: trillion I think it was about four point eight trillion
Speaker 1: dollars per year. That was the annual budget after the pandemic.
Speaker 1: And now today they're spending about I think six point
Speaker 1: eight about a fifty percent increase in annual spending of
Speaker 1: the government. The problem is that they didn't have a
Speaker 1: fifty percent increase in income. As a matter of fact,
Speaker 1: the income went down. So the government is now living
Speaker 1: off of credit cards, if you will. Now, why did
Speaker 1: the income go down? Well, because as we're moving more
Speaker 1: towards the recession, people are spending less money. A majority
Speaker 1: of that tax revenue comes from capital gains. So when
Speaker 1: your stocks are going up and your house is going up,
Speaker 1: and you're selling your stocks, you're selling your bitcoin, you're
Speaker 1: selling your real estate, you have capital gains tax you
Speaker 1: have to pay. But when asset prices aren't going up anymore,
Speaker 1: there's no capital gains, and so they lose a lot
Speaker 1: a lot.
Speaker 2: Of their revenue any other number of things.
Speaker 1: And so what happens is if this has already happened now,
Speaker 1: if the FED doesn't inject liquidity, and we go into
Speaker 1: a massive recession or any recession for that matter, then
Speaker 1: that's even less income for the government, which means their
Speaker 1: deficit goes from two trillion a year to three trillion
Speaker 1: or four trillion or whatever it is. Now, what do
Speaker 1: they do Well, they need more credit cards, so they
Speaker 1: need to issue more treasuries. But there's not enough buyers
Speaker 1: for the tr treasuries. And what does that do. Well,
Speaker 1: If there's not enough buyers, then that pushes the price up.
Speaker 1: The price has to continue to go up to attract
Speaker 1: more buyers, and if that happens, the US goes into
Speaker 1: a debt spiral. Now, as I said, I think in
Speaker 1: the last segment, I said that the market is already
Speaker 1: telling us this yield curve resteepening uninverting, is already telling
Speaker 1: us that the market doesn't believe the Fed's narrative anymore.
Speaker 1: They the market is saying, we don't believe the FED
Speaker 1: can get inflation back down, and so the FED is
Speaker 1: already discredited. If this continues to get worse, they're only
Speaker 1: going to be discredited even more. Now, this isn't the
Speaker 1: first time we've seen this, all right, So we've seen
Speaker 1: this many times since about twenty fourteen. Like I said,
Speaker 1: when things really changed.
Speaker 2: So since since since.
Speaker 1: This has happened, we've seen this cycle play out I
Speaker 1: think five times. In twenty fourteen, the US dollar was
Speaker 1: weakened at something called the Shanghai Accords, So the dollar
Speaker 1: had gotten too strong. It created all this treasury dysfunction,
Speaker 1: and so they had this meeting and they agreed that
Speaker 1: the doll or the usl would be weakened in order
Speaker 1: for this degree resolved, and they did. In twenty eighteen
Speaker 1: twenty eight nineteen, the FED was raising rates. Drone Palate
Speaker 1: just come into office. He was full of fire and
Speaker 1: vinegar and he was going to fix things. He started
Speaker 1: raising rates and caused a lot of treasury market dysfunction.
Speaker 1: The FED had to pause rates, and then the FED
Speaker 1: was forced into quantitata easy and they didn't call it
Speaker 1: that to address the repol rate spike in September of
Speaker 1: twenty nineteen, A lot of people don't know this, but
Speaker 1: the market had actually the yield curve had actually inverted
Speaker 1: and the market actually locked up in September twenty nineteen.
Speaker 1: So while most people think that the entire market was
Speaker 1: crashed because of the pandemic, it actually had started in
Speaker 1: September of twenty nineteen. Then we saw it again in
Speaker 1: March of twenty twenty, the Fed pause, they're not QE
Speaker 1: into the first quarter of twenty twenty and then they
Speaker 1: watched the market crash into the pandemic, and then they
Speaker 1: jumped in. Did anything that was net necessary, super quantity
Speaker 1: of easy and if you will. Then September twenty twenty two,
Speaker 1: the Fed started to tighten. The Treasury started to run
Speaker 1: down its treasury this TGA account as we call it,
Speaker 1: the Treasury General Account, and this was in response to
Speaker 1: the UK guilt crisis. We covered that back then. So
Speaker 1: each time this market start starts to get dysfunctional, they
Speaker 1: have to move in. And we can see right now
Speaker 1: there's an index called the Move Index MOVE and it
Speaker 1: shows the volatility in the bond market, and we can
Speaker 1: see that this dysfunction is nearing another all time high.
Speaker 1: We can see that this tells us that there's problems.
Speaker 2: Coming around the horizon.
Speaker 1: So hang on to your hats, be prepared to protect
Speaker 1: yourself and there's a lot more to come. If you're
Speaker 1: just tuning in you listening to the Mark Mass Show,
Speaker 1: I'm talking through some of the latest breaking news headlines
Speaker 1: of this week. Looking through the lens of politics, finance,
Speaker 1: and technology. I got a lot more to cover when
Speaker 1: I come back after this very short break.
Speaker 2: Don't go away, I'll bear back, all.
Speaker 1: Right, Welcome back. If you're just tune in, you're listening
Speaker 1: to the Mark Mass Show. We're running through some of
Speaker 1: the latest breaking news headlines, so you know what the
Speaker 1: heck is going on now. One of the big themes,
Speaker 1: unfortunately for this week and really for the last year,
Speaker 1: is war. Now, there's all types of wars, and I'm
Speaker 1: not talking about a physical, a hot war. What I'm
Speaker 1: talking about right now.
Speaker 2: Is trade wars.
Speaker 1: You know, I've been saying for a long time that
Speaker 1: I think the World War III is really a war
Speaker 1: of information and money. I'm still hoping that's true. Unfortunately,
Speaker 1: it's looking like it might be going more towards the
Speaker 1: hot war.
Speaker 2: Let's certainly hope not.
Speaker 1: But if I'm looking at the financial war, we can
Speaker 1: see things really seem to get kicked off into sort
Speaker 1: of high gear. Maybe when Trump was in and we
Speaker 1: sort of had these tariffs started to happen with China,
Speaker 1: and that has just continued on a lot of it
Speaker 1: has been seemingly a shift towards trying to kind of
Speaker 1: keep China in their place, trying to keep them from
Speaker 1: rising up and challenging the United States, which is interesting
Speaker 1: because you might also argue there's people in the United
Speaker 1: States crime family, you know, like that, that want to
Speaker 1: see China rise up. But that's because there's lots of
Speaker 1: warring factions in the United States and there's certainly some
Speaker 1: specifically the military, that sees China as a threat. Now
Speaker 1: I've covered this in the past. I made a whole
Speaker 1: YouTube video about it as well my main YouTube channel,
Speaker 1: just Mark on Mark Moss, talking about how basically the
Speaker 1: United States sent China back to the dark ages and
Speaker 1: what do I mean by that. Well, the Biden administration
Speaker 1: had continued to escalate things and had cut China off
Speaker 1: from receiving microchips, specifically level two and level three. There's
Speaker 1: basically three levels of microchips. Level one being just like
Speaker 1: the supermost basic that go in like an old school
Speaker 1: alarm clock, and then level two level three being the
Speaker 1: very most advanced chips that you would need for AI
Speaker 1: iPhones things like that. And so the Biden administration had
Speaker 1: decided to basically take those more advanced chips away from
Speaker 1: China and not just the chips, but everything that they
Speaker 1: need around manufacturing and servicing around those chips, and so
Speaker 1: there were sanctions placed on all the manufacturers, even other
Speaker 1: nations that supply those parts of machines to China. And
Speaker 1: so I kind of made the case that this literally
Speaker 1: sends them back to the dark ages because without advanced microchips,
Speaker 1: you basically don't have technology. I mean again, you don't
Speaker 1: have iPhones, like, you don't have AI, you don't have
Speaker 1: any of these things. And so this was going to.
Speaker 2: Be a very very big deal.
Speaker 1: Now, of course, China's not happy about that. They've retaliated.
Speaker 1: I've covered this I think on my main YouTube channel
Speaker 1: as well, where they said, okay, aha, then we'll ban
Speaker 1: exports to you, and so the then China banned the
Speaker 1: United States from getting a couple key commodities that we
Speaker 1: really need gallium and geranium. Those are commodities that are
Speaker 1: used for in the EV space, for renewable energy things
Speaker 1: like that, and so of course the United States has
Speaker 1: this policy to transition everything into renewables, unreliables, if you will,
Speaker 1: and it can be very difficult without those exports. China
Speaker 1: said that why would we continue to export our finite
Speaker 1: materials to a nation that we're not friendly with, right,
Speaker 1: and so they're escalating this war, and it took another
Speaker 1: turn for the worst, well the worst if you're China,
Speaker 1: I suppose. And basically we saw this week the US
Speaker 1: Commerce Department set new rules on semiconductor exports, limiting the
Speaker 1: ability of American chip making companies like Nvidia and Intel
Speaker 1: to sell AI chips to China. So basically what we're
Speaker 1: seeing as the Biden administration is continuing to tighten the
Speaker 1: restrictions on China's ability to buy these advanced semiconductors, and
Speaker 1: this of course fuels the friction with US businesses that
Speaker 1: sell to China, to the Chinese market. So if you're
Speaker 1: in Vidia and if you're in Intel, and now you
Speaker 1: can't sell your to China.
Speaker 2: Anymore, that's a pretty big deal. That's a pretty big deal.
Speaker 1: Now, the Commerce Department said Tuesday that it would significantly
Speaker 1: constrict exports of artificial intelligence chips, making it tougher for
Speaker 1: US companies to sell their chips or to introduce new
Speaker 1: chips to circumvent the rules.
Speaker 2: And so that's part of this.
Speaker 1: So capitalism for what it is, everyone's trying to figure
Speaker 1: out ways to get around this instead of trying to
Speaker 1: tighten that noose, circumvent the rules to do that. Now,
Speaker 1: the goal, according to Commerce Secretary Gina Ramando, is to
Speaker 1: limit China's access to advanced semiconductors that could fuel breakthroughs
Speaker 1: in artificial intelligence and sophisticated computers. Of course they are
Speaker 1: they want to keep them in the dark ages now,
Speaker 1: these chips, the US doesn't want China to have them,
Speaker 1: and at the same time, they're critical for China for
Speaker 1: the Chinese, right obviously, that's why they're trying to cut
Speaker 1: them off. They're not just critical for the Chinese, they're
Speaker 1: critical for Chinese these military applications, she said, And this
Speaker 1: is a nod to the concerns that the US could
Speaker 1: fall behind China in key defense technologies. Now, the updated
Speaker 1: rules significantly expand the US government's authority to determine what
Speaker 1: products US companies can and can't sell in the name
Speaker 1: of national security. Of course, everything's a matter of national
Speaker 1: security today everything and of course in times of war
Speaker 1: then we just continue to expand those rules of national security,
Speaker 1: and pretty much everything's a war today.
Speaker 2: As a matter of fact, I was thinking about this
Speaker 2: the other day.
Speaker 1: Pretty much everything the government declares as a war gets worse,
Speaker 1: not better. So I was just thinking that, like, since
Speaker 1: nineteen seventy one, I believe the DEA, the Drug Enforcement Agency,
Speaker 1: was formed, and since then the US has spent trillions
Speaker 1: of dollars fighting the war on drugs. But yet drugs
Speaker 1: are bigger, and they're a bigger problem today than they
Speaker 1: ever have been. So when they put the war on drugs,
Speaker 1: drugs weren't really a problem. And as a matter of fact,
Speaker 1: most drugs were just legal.
Speaker 2: In the United States.
Speaker 1: I think cocaine and ecstasy and things like that that
Speaker 1: were fine. There wasn't a big problem. Now, after making
Speaker 1: it a war and spending trillions of dollars, drugs are
Speaker 1: the biggest problem. As a matter of fact, it's the
Speaker 1: number one cause of death for eighteen to thirty five
Speaker 1: year olds. We've emboldened the drug cartels down in Mexico.
Speaker 1: Now they're a billion dollars potentially trillion dollar businesses because
Speaker 1: we fought.
Speaker 2: A war on drugs, just making it worse.
Speaker 1: We have a war on obesity, but yet obesity is
Speaker 1: worse than it's ever been. It's like the main cause
Speaker 1: of death in the United States. We have a war
Speaker 1: on poverty. Weet today we have more poor people than.
Speaker 2: Any time in history. Well, I don't want to say
Speaker 2: any time in history. That's maybe a little bit of
Speaker 2: an exaggeration.
Speaker 1: But there's a reason why we have people striking all
Speaker 1: throughout the United States. I reported earlier that home prices
Speaker 1: are up now fifty percent, not home prices, but the
Speaker 1: but the home payments are at fifty percent in last
Speaker 1: three years. But waits haven't kept up with it. So
Speaker 1: this war on poverty isn't really helping. And so we
Speaker 1: have a war on terrorism. Right, they've signaled this war
Speaker 1: on terrorism spent. I don't even know if we added
Speaker 1: up probably twenty thirty trillion dollars on terrorism. And yet
Speaker 1: terrorism is a bigger, worse problem today than it was before.
Speaker 1: And so every war that the government declares just seems
Speaker 1: to get bigger, just seems to get worse. And now
Speaker 1: here we have a war with China, and if history
Speaker 1: is our guide, unfortunately it's probably only gonna get bigger
Speaker 1: and worse, which of course it does. Right, that's what
Speaker 1: happens with wars. That happened with the fights. You get escalation, right,
Speaker 1: I call you a name. You threaten me, I push you,
Speaker 1: You punch me. I get a knife, you get a gun,
Speaker 1: and we just escalate from there until cooler heads prevail,
Speaker 1: until people are able to sit down think about this
Speaker 1: clearly and come up with some sort of residence. Now,
Speaker 1: in a situation like this where the US is afraid
Speaker 1: that China will overtake us, that's a legitimate concern, something
Speaker 1: they probably should have thought about twenty years ago before
Speaker 1: they shipped all our manufacturing off to China. Today it's
Speaker 1: sort of like what we say, closing the barn door
Speaker 1: after the cows were already.
Speaker 2: Gone, so to speak.
Speaker 1: And so now it's a much bigger problem that I'm
Speaker 1: not really sure where this goes, but I can tell
Speaker 1: you it's going to be a rocky road, not just
Speaker 1: for the relationship between China, what potentially China may do
Speaker 1: with Taiwan, which I was looking today before the show
Speaker 1: to see if I could find like some sort of
Speaker 1: betting markets. So typically there's betting markets where you can
Speaker 1: like place wagers on who will be the next president
Speaker 1: things like that.
Speaker 2: I wasn't able to.
Speaker 1: Find one, but if I had to guess, I'm guessing
Speaker 1: there's at least a seventy five percent chance that China
Speaker 1: goes after Taiwan.
Speaker 2: There's not a lot we can do with it.
Speaker 1: So it certainly continues to add towards that. It continues
Speaker 1: to be a drag on US businesses like in video
Speaker 1: and Intel, and so we'll keep you up to date
Speaker 1: on what's going on with this. If you're just tuning in,
Speaker 1: you've been listening to The Mark Ma Show talking about
Speaker 1: the latest breaking news headlines this week as we chart
Speaker 1: the decentralized revolution. That's what I got.
Speaker 2: Thanks so much for listening. Until next time,