WEBVTT - The Mark Moss Show 2-9-24 0:00:00.080 --> 0:00:03.200 The Federal Reserve just came out with its latest announcement 0:00:03.240 --> 0:00:07.200 that holds the keys to your financial future. Jerome Powell 0:00:07.520 --> 0:00:11.600 had his big meeting and understanding what he said, holds 0:00:11.600 --> 0:00:14.760 the keys to determine if your business will survive or thrive, 0:00:15.120 --> 0:00:16.800 if your job will pay you more or you'll be 0:00:16.880 --> 0:00:20.720 on the unemployment line, and ultimately, what's your assets, your 0:00:20.760 --> 0:00:23.840 home price, and your retirement looks like in the long run. 0:00:24.160 --> 0:00:27.400 It's pretty insane when you think about what is going on. 0:00:27.800 --> 0:00:29.480 But this is the world that we live in now. 0:00:29.480 --> 0:00:30.840 Before I dig into that, if you just tune in, 0:00:30.920 --> 0:00:33.040 you're listening to the Mark Moss Show. I talk about 0:00:33.040 --> 0:00:37.200 the way the world is changing, breaking apart into globe deglobalization, 0:00:37.280 --> 0:00:39.880 and we look at it through the lens of politics, finance, 0:00:40.000 --> 0:00:43.680 and technology. Today we're looking at mostly the financial side, 0:00:43.720 --> 0:00:46.640 maybe a little bit of the political decisioning as to 0:00:46.760 --> 0:00:52.040 what is driving this financial movement. And unfortunately, we're forced 0:00:52.080 --> 0:00:54.800 to understand this, We're forced to pay attention, and we're 0:00:54.800 --> 0:00:57.480 forced to take action on this, or we can choose 0:00:57.480 --> 0:00:59.360 to put our head in the stand and ignore it. However, 0:01:00.120 --> 0:01:02.400 say that an ostrich can put its head in the sand. 0:01:02.400 --> 0:01:05.440 But it doesn't keep it from being eaten. One of 0:01:05.440 --> 0:01:07.520 my favorite authors, Ian Ran would say that you can 0:01:07.640 --> 0:01:11.160 choose to ignore reality, but you can't ignore the consequences 0:01:11.200 --> 0:01:14.480 of reality. Now, my story goes that, you know, I 0:01:14.520 --> 0:01:16.320 got out of high school, I started buying bank owned 0:01:16.319 --> 0:01:18.480 properties right off the bat, fixed and flipped a bunch 0:01:18.480 --> 0:01:20.560 of properties, built up a whole bunch of properties, sold 0:01:20.600 --> 0:01:24.280 a couple of businesses, and I was basically retired. And 0:01:24.319 --> 0:01:26.080 then two thousand and eight came and wiped me out. 0:01:26.120 --> 0:01:28.039 And part of the reason why is I was so 0:01:28.240 --> 0:01:31.479 focused on making money. I was really good at building 0:01:31.560 --> 0:01:34.480 businesses and exits and making money that way. But I 0:01:34.560 --> 0:01:37.680 wasn't paying attention to the business cycle, the debt cycles, 0:01:37.720 --> 0:01:39.520 and what the Federal Reserve was doing. It wasn't even 0:01:39.520 --> 0:01:41.520 on my radar. I didn't know about the Federal Reserve. 0:01:41.520 --> 0:01:43.480 I didn't I knew about it. I didn't think about it. 0:01:44.680 --> 0:01:47.920 But unfortunately, my head was in the sand, and unfortunately 0:01:48.440 --> 0:01:51.040 the games that Wall Street played with the Federal Reserve 0:01:51.120 --> 0:01:53.640 did pumping up the housing market. The games that Wall 0:01:53.680 --> 0:01:57.160 Street played had an effect on my life. They hate 0:01:57.160 --> 0:01:58.800 me even though my head was in the sand, and 0:01:58.840 --> 0:02:01.160 so I've sort of made it my mission ever since 0:02:01.200 --> 0:02:03.920 then to understand first of all, what was going on. 0:02:03.960 --> 0:02:05.560 And for the last five six years now, I've been 0:02:05.640 --> 0:02:07.320 talking to you about what is going on so you 0:02:07.400 --> 0:02:09.800 don't suffer the same fate that I did. And so 0:02:09.840 --> 0:02:11.840 we have to look at this. Shout out to Ron 0:02:11.880 --> 0:02:13.880 Paul who sort of led the charge on in the FED, 0:02:13.919 --> 0:02:15.280 in the FED and the FED that put a lot 0:02:15.320 --> 0:02:18.520 of attention on the FED. And here we are looking 0:02:18.560 --> 0:02:20.280 and talking about the FED. So I'm going to break 0:02:20.280 --> 0:02:23.800 down what the FED just did and it sort of 0:02:23.840 --> 0:02:25.560 sent the markets into a little bit of a tail spin, 0:02:25.720 --> 0:02:27.440 although they appear to be coming out of it now. 0:02:27.720 --> 0:02:30.480 But I want to talk about, regardless of what happens 0:02:30.760 --> 0:02:34.760 this month or next month, we understand what is going 0:02:34.800 --> 0:02:37.960 to happen because there's such thing as true constraints. I'm 0:02:37.960 --> 0:02:40.680 going to break down what these true constraints are. Why 0:02:41.200 --> 0:02:44.240 there's a there's a wall, there's a wall they can't 0:02:44.240 --> 0:02:47.840 get through. Now, there's some limited flexibility within those walls, 0:02:47.840 --> 0:02:49.960 which is where we see them operating today, but the 0:02:50.000 --> 0:02:51.520 walls are there. We're gonna break down that, and then 0:02:51.520 --> 0:02:54.720 we're going to talk about why the Federal Reserve and 0:02:54.760 --> 0:02:57.280 the US Treasury are fighting as opposed to working together, 0:02:57.320 --> 0:03:00.440 and ultimately how the Treasury is forcing their hand into 0:03:00.480 --> 0:03:02.399 action in a way they don't want to go. We're 0:03:02.400 --> 0:03:05.000 going to break all that down now to break to 0:03:05.080 --> 0:03:07.880 kind of kick this off, let's just talk about the 0:03:08.040 --> 0:03:11.000 fo MC meeting. That is the meaning where the Jerome 0:03:11.040 --> 0:03:13.240 Palle ahead of the rowerser comes out and basically again 0:03:13.480 --> 0:03:16.360 tells us our fate, sort of like what is that 0:03:16.440 --> 0:03:18.880 Groundhog Day where everybody watches TV. Does he punks the 0:03:18.960 --> 0:03:21.720 Tony phil the groundhog? If he comes out and if 0:03:21.720 --> 0:03:23.400 he sees his shadow one way or the other, it 0:03:23.440 --> 0:03:25.720 tells us spring is coming or spring's delayed or something 0:03:25.760 --> 0:03:28.079 like that. I've never really bought into it too much. 0:03:28.080 --> 0:03:30.440 I remember the movie Groundhog Day, but that's sort of 0:03:30.480 --> 0:03:32.720 what we see. We see Jerome Powell come out, and 0:03:32.800 --> 0:03:35.280 does he see his own shadow? And will we be 0:03:35.320 --> 0:03:38.360 in winter longer than we expected? Will we be in 0:03:38.400 --> 0:03:42.120 a quantitative tightening cycle longer than we expected? Or will 0:03:42.120 --> 0:03:44.200 he bring spring back and go back into a quantitative 0:03:44.280 --> 0:03:48.240 easing cycle, ease monetary policy and allow things to flourish again. 0:03:48.320 --> 0:03:50.480 You can think about the tightening and the easing sort 0:03:50.480 --> 0:03:52.800 of like the winter in the summer. This is the spring, right, 0:03:53.160 --> 0:03:56.760 and so that's sort of what we saw. Now. The 0:03:56.800 --> 0:04:00.480 market has been predicting that we would see six rate cuts, 0:04:00.520 --> 0:04:04.200 the FED lowering rates, making the price of money cheaper 0:04:04.680 --> 0:04:08.160 six times in twenty twenty four. The Federal Reserve Drome 0:04:08.200 --> 0:04:09.760 pal has been saying, no, no, no, no, you guys 0:04:09.760 --> 0:04:13.000 are wrong. It's only going to be three. Now, I 0:04:13.120 --> 0:04:15.800 am saying, what difference does it make if it's three 0:04:15.920 --> 0:04:20.240 or six? What ultimately matters is the total amount of movement, 0:04:20.560 --> 0:04:22.680 Meaning do we get a point and a half of 0:04:22.800 --> 0:04:25.560 movement this year? And if we get a point and 0:04:25.560 --> 0:04:27.880 a half, does it come through three half point moves 0:04:28.080 --> 0:04:31.080 or does it come from six quarter point moves or 0:04:31.120 --> 0:04:34.760 whatever the math is on that, And that doesn't really matter, right, 0:04:34.800 --> 0:04:38.800 it's the overall size of the move now if they 0:04:38.960 --> 0:04:41.240 move slower, And this is exactly what happened in the 0:04:41.240 --> 0:04:44.159 media esterday, Jerome Palace sort of came out and he 0:04:44.200 --> 0:04:46.080 did what we call FED speak or what we call 0:04:46.240 --> 0:04:50.000 jab owning the market through talking, he's influencing, he's moving 0:04:50.040 --> 0:04:52.920 the markets based off of this, and so he's saying 0:04:52.960 --> 0:04:54.360 we're going to do less. The market is saying we're 0:04:54.360 --> 0:04:58.400 going to do more, and after being very dubvish, meaning 0:04:58.720 --> 0:05:01.680 sort of signaling that they're going to be easy in 0:05:01.720 --> 0:05:04.480 monetary policy. In December, the markets have been taking off. 0:05:04.800 --> 0:05:07.240 The real estate market took off, the stock markets are 0:05:07.240 --> 0:05:09.880 doing good, bitcoins holding up, oil, all of these things. 0:05:09.880 --> 0:05:12.839 Gold is doing great. And I think the market started 0:05:12.839 --> 0:05:16.040 getting too far ahead of itself. And so Jerome Powell again, 0:05:16.279 --> 0:05:20.040 the job owning isn't always doing something. A lot of 0:05:20.080 --> 0:05:22.960 times it's just saying something. We can look back to 0:05:23.000 --> 0:05:26.080 October when they really talk the market down. So they 0:05:26.080 --> 0:05:29.360 started talking about how they've done enough, how they're going 0:05:29.400 --> 0:05:31.719 to start easing, and just off of that talk, it 0:05:31.839 --> 0:05:33.839 pushed the market into rally into the end of the year. 0:05:34.480 --> 0:05:36.679 Then the markets started getting too far ahead of itself. 0:05:37.400 --> 0:05:40.520 Too much asset price inflation. People are spending too much money, 0:05:40.560 --> 0:05:42.719 as known as the wealth effect. Right when your house 0:05:42.760 --> 0:05:45.080 goes up in value, when your stock account, your retirement 0:05:45.080 --> 0:05:48.560 account goes up in value, you feel more wealthy, you 0:05:48.600 --> 0:05:50.960 feel more optimistic about your future. When that happens, you 0:05:51.000 --> 0:05:54.040 spend more money, You go out to the nery book davocation. Likewise, 0:05:54.080 --> 0:05:56.880 the opposite happens. When your house loses value, your stocks 0:05:56.920 --> 0:05:59.520 lose value, things like that, you feel more broke. Even 0:05:59.560 --> 0:06:02.640 though you don't need that money for decades, potentially, you 0:06:02.720 --> 0:06:05.120 still feel more broke. You still feel more pessimistic, and 0:06:05.160 --> 0:06:08.080 then you naturally spend less money. And so the FED 0:06:08.120 --> 0:06:09.880 has been trying to fight inflation, and so they're trying 0:06:09.920 --> 0:06:12.880 to control us and not allow us to spend too 0:06:12.960 --> 0:06:15.080 much money to push inflation up. But at the same 0:06:15.160 --> 0:06:17.760 time they're trying to walk this thin line of not 0:06:17.880 --> 0:06:20.599 crashing the market. So that's where they're operating. These are 0:06:20.640 --> 0:06:24.960 the constraints they're operating between one not letting the over 0:06:25.040 --> 0:06:27.080 exuberance and people driving the market back up, but at 0:06:27.080 --> 0:06:29.839 the same time not pessimism and then pushing the market 0:06:29.839 --> 0:06:33.160 back down. Pushing the market down would be deflation at 0:06:33.279 --> 0:06:36.080 price going up are inflation. That's the battle lines. These 0:06:36.080 --> 0:06:39.080 are the walls that they're playing within. The problem is 0:06:40.120 --> 0:06:43.839 they have natural constraints, and the natural constraints are really 0:06:43.960 --> 0:06:49.520 lined out between the battle that's being fought right now, Wager, 0:06:49.720 --> 0:06:52.000 the war that's being fought between Janet Yellen at the 0:06:52.080 --> 0:06:54.760 US Treasury and Rome Power at the Federal reserve. I've 0:06:54.760 --> 0:06:57.280 talked about this extensively on my main YouTube channel, Mark Moss. 0:06:57.960 --> 0:07:00.240 If you watch that. If you don't watch it, video 0:07:00.279 --> 0:07:02.040 should go check it out Mark Moss. You can just 0:07:02.080 --> 0:07:04.840 search Mark Moss. FED in the Treasury fighting each other. 0:07:05.400 --> 0:07:08.000 But this is all playing out right now. I want 0:07:08.040 --> 0:07:10.920 to lay out sort of what these true constraints are 0:07:11.160 --> 0:07:12.720 so you can sort of understand this. Then we're going 0:07:12.760 --> 0:07:15.000 to talk about how the Treasury is forcing the Fed 0:07:15.080 --> 0:07:18.240 into action that they don't want. Before we talk about 0:07:18.400 --> 0:07:20.800 forcing their action, let's just talk about what these true 0:07:20.880 --> 0:07:23.640 constraints are. So we've heard a lot as the FED 0:07:23.720 --> 0:07:26.840 went on the fastest rate hiking cycle in history, a 0:07:26.880 --> 0:07:28.440 lot of people would say that, well, they're going to 0:07:28.520 --> 0:07:30.680 raise rates until they break something. So what does that 0:07:30.840 --> 0:07:33.120 mean till they break something? Well, there's lots of things 0:07:33.200 --> 0:07:36.520 that could break. So, for example, as the FED raised 0:07:36.720 --> 0:07:39.440 rates at the fastest rate in history, that made the 0:07:39.520 --> 0:07:42.400 price of money more expensive. It made the bonds or 0:07:42.440 --> 0:07:46.240 the debt worth less, and so we saw banks start collapsing. 0:07:46.800 --> 0:07:49.559 In March of twenty twenty three, we saw three banks 0:07:49.600 --> 0:07:52.960 collapse in a matter of weeks or days. As a 0:07:53.040 --> 0:07:55.080 matter of fact, totally more than the bank collapse in 0:07:55.120 --> 0:07:57.920 two thousand and eight and the FED was forced to 0:07:58.080 --> 0:08:02.080 start easy. Now, technically they stayed in quantitative tightening, although 0:08:02.120 --> 0:08:05.160 they were easing by adding liquidity to the market. Now, 0:08:05.240 --> 0:08:06.600 this is the point that I really want to hit 0:08:06.720 --> 0:08:09.160 on here for a second. Pay attention to this because 0:08:09.760 --> 0:08:13.040 you have to understand the difference of doing something and 0:08:13.720 --> 0:08:16.080 doing something. What do I mean by that? A lot 0:08:16.160 --> 0:08:20.000 of very smart analysts and honestly smarter than I am, 0:08:20.440 --> 0:08:24.640 that understand the inner workings and plumbing of the financial markets, 0:08:24.640 --> 0:08:26.800 which are very complex, way too complex in my opinion, 0:08:26.840 --> 0:08:29.520 they shouldn't be that way. They understand it better. However, 0:08:30.280 --> 0:08:34.000 they get too technical, and I believe they're factually correct, 0:08:34.320 --> 0:08:38.240 but intellectually dishonest. What does that mean? They're factually correct, 0:08:38.280 --> 0:08:41.559 they're going to say, well, look, the markets went up 0:08:41.880 --> 0:08:45.760 and caused inflation, but the FED didn't do anything, meaning 0:08:45.880 --> 0:08:49.880 they didn't lower rates, they didn't inject money, and so 0:08:50.200 --> 0:08:55.480 factually they're correct. Technically, however, it's intellectually dishonest because by 0:08:55.559 --> 0:08:58.160 them saying they were going to do something, by them signaling, 0:08:58.240 --> 0:09:00.599 by them being more dubvish in their comments, that was 0:09:00.800 --> 0:09:03.360 enough to move the market. So technically they're correct. They 0:09:03.440 --> 0:09:07.160 didn't actually do something as far as the policy, but 0:09:07.320 --> 0:09:12.040 they're talking their opinions. Their dubbish sentiment statements were enough 0:09:12.080 --> 0:09:14.839 to move the market. And so you have to understand this. 0:09:16.480 --> 0:09:18.640 Just talking again back to the job on is enough. 0:09:18.720 --> 0:09:22.800 The other reason why it's intellectually dishonest. Well, I gotta 0:09:22.800 --> 0:09:24.439 take a very quick break. I'll tell you whant to 0:09:24.480 --> 0:09:25.959 come back. If you just tune in, you listen to 0:09:26.080 --> 0:09:28.920 the Mark Mass Show talking about the fight between the 0:09:29.000 --> 0:09:30.880 Treasury and the Fed and how it's going to play 0:09:30.880 --> 0:09:32.079 out and what you should be doing about it. Don't 0:09:32.080 --> 0:09:37.080 go away. I'll be back with more a minute. All right, 0:09:37.080 --> 0:09:38.679 welcome back. If you're just tuned innial listening to the 0:09:38.720 --> 0:09:40.719 Mark Mass Show, we're talking about the battle between the 0:09:40.880 --> 0:09:43.880 Fed and the Treasury. I know they're both part of 0:09:43.920 --> 0:09:46.280 the US government, right, they should probably be getting along, 0:09:46.440 --> 0:09:48.960 but they're not. The reason why they're not is because 0:09:49.040 --> 0:09:52.000 they have different agendas. Before we get into what the 0:09:52.000 --> 0:09:53.520 different agendas are, I want to go back to the 0:09:53.559 --> 0:09:55.520 point I was making before the commercial break, which is 0:09:56.040 --> 0:10:00.240 why a lot of these very smart analysts are factually correct, 0:10:00.320 --> 0:10:03.600 technically correct but intellectually dishonest. So he talked about how 0:10:03.800 --> 0:10:05.200 they'll say, well, they didn't do anything. The didn't they 0:10:05.200 --> 0:10:08.520 didn't change rate policy, they didn't increase liquidity, so didn't 0:10:08.520 --> 0:10:11.280 do anything. But just their sentiment, just what they said, 0:10:11.480 --> 0:10:14.800 does it matters a lot, as we saw in October, 0:10:14.840 --> 0:10:17.240 as we just saw just this week, so we can 0:10:17.280 --> 0:10:20.439 see that. The other reason why is because they get 0:10:20.440 --> 0:10:24.600 too technical. So, for example, quantitative easing is when they're 0:10:24.840 --> 0:10:29.760 easing monetary policy, so tight monetary policy loose monetary policy, 0:10:29.760 --> 0:10:31.800 if we think about it like that. The problem is 0:10:32.040 --> 0:10:34.520 these analysts getting too smart for their own good, have 0:10:34.600 --> 0:10:39.480 a very specific technical definition of quantitative easing, and so 0:10:39.720 --> 0:10:43.840 if the Federal Reserve does easing, they inject liquidity through 0:10:44.000 --> 0:10:47.640 other means, they would say, well, that's not technically quantitative easing. 0:10:48.120 --> 0:10:50.079 So for example, when the banks collapsed in March of 0:10:50.080 --> 0:10:51.960 twenty twenty three, they set up a new funding facility 0:10:52.000 --> 0:10:55.080 called BTFP Bank Term Funding Facility. They gave over one 0:10:55.200 --> 0:10:58.719 hundred billion dollars to the market. That was easing. In 0:10:58.840 --> 0:11:02.880 my opinion, it propped up the market. It showed demonstrated 0:11:02.920 --> 0:11:05.559 to the world that the Fed put was active, and 0:11:05.720 --> 0:11:08.160 we saw the markets take off because of that, but 0:11:08.240 --> 0:11:11.199 the analysts are going to say, well that's not QE. Okay, 0:11:11.679 --> 0:11:15.720 you're right, and so the words are starting to lose definition, right, 0:11:15.960 --> 0:11:17.600 and so we're starting to see it. The other reason 0:11:17.640 --> 0:11:20.040 why I think they're wrong is again they don't understand. 0:11:20.080 --> 0:11:24.079 They're so smart on the technical analyst side, they're not 0:11:24.200 --> 0:11:28.440 taking into consideration other elements such as like human psychology, 0:11:29.000 --> 0:11:31.400 human greed and things like that, and those are important 0:11:31.440 --> 0:11:33.719 to understand. When it comes to trying to guess what 0:11:33.920 --> 0:11:36.240 somebody's going to do. You have to look at all 0:11:36.440 --> 0:11:38.160 of the reasons that they have in front of them, 0:11:38.480 --> 0:11:41.040 not just the technical, data driven ones, but you have 0:11:41.080 --> 0:11:43.120 to look at human incentives and things like that. I 0:11:43.160 --> 0:11:45.160 think that's why they're wrong as well. Now back to 0:11:45.200 --> 0:11:47.800 the true constraints. So the problem with the Federal Reserve 0:11:47.880 --> 0:11:50.280 is they're sort of boxed in, right, They're fighting between 0:11:50.280 --> 0:11:53.040 the Treasure and the Fed, and they want to continue 0:11:53.080 --> 0:11:56.680 to raise rates, make money more expensive, to slow down inflation. 0:11:57.120 --> 0:11:59.280 But the problem is as they do that, it starts 0:11:59.320 --> 0:12:03.200 to drag on the economy, starts to you know, it push. 0:12:03.600 --> 0:12:05.559 Their goal is to bring stock prices down, home price 0:12:05.600 --> 0:12:07.680 down things like that. The problem is when that happens 0:12:07.760 --> 0:12:10.679 is that you and I feel less wealthy, but we 0:12:10.880 --> 0:12:12.920 are a little bit less wealthy. So you're not selling 0:12:12.960 --> 0:12:15.560 as many stocks, and there's no capital gain taxes you're paying. 0:12:15.559 --> 0:12:18.000 You're not selling your home, you're not paying capital gains taxes. 0:12:18.320 --> 0:12:20.800 And when you're not paying those taxes, then the government, 0:12:21.080 --> 0:12:24.920 the US Treasury, doesn't receive as much tax revenue. So 0:12:25.160 --> 0:12:28.800 that's problem number one. The income for the government goes down, 0:12:28.960 --> 0:12:31.200 but the government's spending more money. The government needs more 0:12:31.240 --> 0:12:33.640 income to keep up with is high spending, but the 0:12:33.720 --> 0:12:36.559 income goes down, and at the same time, as the 0:12:36.600 --> 0:12:40.280 FED makes the debt more expensive, the Treasury's expenses go 0:12:40.400 --> 0:12:42.880 through the room. So the Treasury's income goes down, we're 0:12:42.920 --> 0:12:45.520 not paying taxes, and then their interest goes up because 0:12:45.559 --> 0:12:48.560 of the rate increases. And so the FED, by trying 0:12:48.600 --> 0:12:51.880 to fight inflation, is actually fighting against what the treasury wants. 0:12:51.960 --> 0:12:54.640 The Treasury needs their income to go up and their 0:12:54.679 --> 0:12:56.839 expenses to go down, which is the opposite of what 0:12:56.960 --> 0:12:59.800 the Treasury is doing. Now. A lot of people might 0:12:59.800 --> 0:13:02.000 say say that the FED is doing this. They will 0:13:02.040 --> 0:13:04.320 agree with me, but they'll say that the FED wins. 0:13:04.880 --> 0:13:07.760 But I would say, again putting my psychologists hat on, 0:13:07.880 --> 0:13:12.920 my human incentive hat back on, if I would, I 0:13:13.080 --> 0:13:15.679 understand the FED wants to regain control, they want to 0:13:15.800 --> 0:13:18.080 regain some legitimacy. They need to show that they can 0:13:18.240 --> 0:13:24.040 stop inflation. However, at what cost. You see, if they 0:13:24.160 --> 0:13:26.040 fight against the Treasury and they end up putting the 0:13:26.040 --> 0:13:30.840 government bankrupt out of business, then the dollar they're trying 0:13:30.920 --> 0:13:35.960 to protect basically falls apart as well. You see, they're 0:13:36.040 --> 0:13:40.800 all operating within these constraints. Now. The FED is losing 0:13:40.920 --> 0:13:43.280 a massive amount of money due to their own policies, 0:13:43.520 --> 0:13:45.800 but they're sort of putting those off of book. They're 0:13:45.840 --> 0:13:48.080 not really seeing those now. Like I said, I've been 0:13:48.120 --> 0:13:50.120 talking about this fight between the FED and the Treasury 0:13:50.320 --> 0:13:53.160 at length, probably over the last year. I've done several 0:13:53.240 --> 0:13:55.439 videos on my main YouTube, chanel Mark Moss about these. 0:13:55.679 --> 0:13:57.640 If you want to get more into that, just go 0:13:57.720 --> 0:13:59.800 to my main YouTube channel, Mark Moss and just search that. 0:14:00.000 --> 0:14:02.839 You'll find a bunch of videos talking about that. But 0:14:02.920 --> 0:14:06.280 what I want to talk about specifically is where we're 0:14:06.280 --> 0:14:08.599 at right now and what the Treasury is doing to 0:14:08.760 --> 0:14:11.559 force the Fed's hand and how this is playing out 0:14:11.559 --> 0:14:13.640 and what we should be doing about it? All right, now, 0:14:14.240 --> 0:14:16.199 the Treasury is in a tough spot. They don't like this. 0:14:16.320 --> 0:14:19.640 As I said, their income went down, their expenses went up. 0:14:19.640 --> 0:14:22.440 As a matter of fact, their expenses. The interest on 0:14:22.640 --> 0:14:25.520 the debt, because now it's more expensive, has now exceeded 0:14:25.680 --> 0:14:29.440 one trillion dollars just an interest alone. Now money is 0:14:29.480 --> 0:14:31.480 just going into the ether, if you will. And to 0:14:31.560 --> 0:14:33.560 think about how incredible it is to put it into 0:14:33.680 --> 0:14:36.880 some sort of numbers, it's now more than what the 0:14:37.040 --> 0:14:41.040 US government spends on its military. And that may not 0:14:41.400 --> 0:14:43.520 mean much to you, but for a frame of reference, 0:14:43.760 --> 0:14:46.960 the US spends more on its military than the next 0:14:47.080 --> 0:14:51.160 ten countries combined. So more than Russia, more than China, 0:14:51.360 --> 0:14:54.200 more than Iran, more than Brazil, more than all of 0:14:54.280 --> 0:14:57.960 them combined. Right, it's not just a big number, it's 0:14:58.000 --> 0:15:00.120 a massive number. And now we're spending more on our 0:15:00.240 --> 0:15:02.760 debt than that. To put it into another frame of reference, 0:15:03.000 --> 0:15:05.560 it took the United States government two hundred and five 0:15:05.680 --> 0:15:10.480 years to get to one trillion dollars in debt. Now 0:15:10.560 --> 0:15:13.600 we're thirty five trillion dollars in debt. But just the 0:15:13.880 --> 0:15:17.000 interest on the debt just the interest alone is more 0:15:17.080 --> 0:15:19.320 than what it took the government two hundred and five 0:15:19.400 --> 0:15:23.680 years to accumulate. It's amazing. So this is where the 0:15:23.760 --> 0:15:26.440 government is. They have to get this interest right down. 0:15:26.520 --> 0:15:28.800 That is the battle that we have. The FED needs 0:15:28.880 --> 0:15:31.440 raids up. They need them higher for longer to cool 0:15:31.480 --> 0:15:34.520 the market, to tame price and asset inflation, so they 0:15:34.560 --> 0:15:37.680 can regain the world's confidence. Right They've been in this 0:15:37.800 --> 0:15:41.160 tightening stance for over two years. But the Treasury they 0:15:41.240 --> 0:15:43.720 need the Fed to raise rates or lower rates back down. 0:15:44.000 --> 0:15:46.120 They want the Fed to switch back to easing, and 0:15:46.200 --> 0:15:48.080 they want it for two reasons right right, One they 0:15:48.120 --> 0:15:50.360 want to get the market's economy going so tax refeats 0:15:50.400 --> 0:15:52.560 go back up, and two they need the interest rate 0:15:52.680 --> 0:15:55.840 to go back down. Now, as this plays out, I 0:15:55.960 --> 0:15:58.040 believe they are forcing the Fed's hands. I believe this's 0:15:58.040 --> 0:16:00.560 actually they've taken over the last couple months that as 0:16:00.680 --> 0:16:02.520 much as Jerome Power wants to do job owned the 0:16:02.520 --> 0:16:04.560 market to cool down, it's not gonna cool down. We 0:16:04.720 --> 0:16:07.440 already know what's coming. If you're paying attention to this, 0:16:07.680 --> 0:16:10.120 I'm gonna tell you more. But I also want to 0:16:10.160 --> 0:16:12.640 let you know that next week I have a live 0:16:12.840 --> 0:16:16.080 event that I'm doing. It's not gonna be here pre recorded, 0:16:16.080 --> 0:16:17.880 It's gonna be live, and I'm gonna show you how 0:16:17.920 --> 0:16:20.240 to seize the upside of the Fed's you turn that's 0:16:20.280 --> 0:16:23.400 coming this year while side stepping market volatility. You can 0:16:23.480 --> 0:16:26.000 join me live. I have about thirty five slides. I'm 0:16:26.000 --> 0:16:28.640 gonna show you ish thirty five ISH and I'm gonna 0:16:28.640 --> 0:16:30.240 do all live Q and A. So if you have 0:16:30.360 --> 0:16:32.880 questions about this, you can ask me. Go dot one, 0:16:32.960 --> 0:16:36.320 Markmoss dot com, slash you turn again. That's go dot one, 0:16:36.400 --> 0:16:39.840 Markmoss dot com, slash U turn. But getting back in 0:16:39.920 --> 0:16:42.600 to sort of frame this up, like I said, we 0:16:42.760 --> 0:16:45.480 know the Fed's gonna pivot. Is it gonna be three 0:16:45.520 --> 0:16:47.600 times or six times? We don't know. But Jerome Power 0:16:47.760 --> 0:16:50.120 just kind of came out and said, oh, we're gonna 0:16:50.160 --> 0:16:51.760 drag our feet little bit. We're gonna try to push 0:16:51.800 --> 0:16:54.480 out from March until May. They say they want to 0:16:54.480 --> 0:16:56.640 push out as far as it can be pushed out. 0:16:56.960 --> 0:16:59.360 And so Jane Allen and the Treasury is like, Nope, 0:16:59.400 --> 0:17:01.360 that's not gonna work for us. We need it much sooner. 0:17:01.480 --> 0:17:03.560 We have all this debt that we need to refinance. 0:17:03.600 --> 0:17:05.560 We need rates to come down, and so we're going 0:17:05.640 --> 0:17:08.800 to have to force you into action. Now. Depending on 0:17:08.880 --> 0:17:11.239 who wins this policy battle, there's going to be very 0:17:11.240 --> 0:17:14.560 different outcomes for the economy, for the market, for our portfolios, 0:17:15.000 --> 0:17:17.480 and all of that. But if we want to dive 0:17:17.520 --> 0:17:20.240 into what the Treasury is doing right now, and we're 0:17:20.440 --> 0:17:21.880 and we can see what's going on in the market, 0:17:21.960 --> 0:17:23.480 so it makes better sense to you. We can see 0:17:23.480 --> 0:17:27.800 that historically, when the Treasury issues debt, right, they sell 0:17:27.840 --> 0:17:31.119 bonds to issue debt, on average, about twenty percent of 0:17:31.600 --> 0:17:34.280 the money raise comes from the sale of short term 0:17:34.400 --> 0:17:37.680 debt or less than one year's maturity. Those are what 0:17:37.760 --> 0:17:40.480 we call bills. The other eighty percent of the debt 0:17:40.560 --> 0:17:44.080 they sell are in longer term notes and bonds because 0:17:44.200 --> 0:17:46.520 notes and bonds carry interest rate or what we call 0:17:46.680 --> 0:17:50.280 duration risk, whereas the shorter term maturity bills they generally don't, 0:17:51.320 --> 0:17:53.600 So that way their effects on marketing the economy they 0:17:53.680 --> 0:17:56.800 differ substantially. Right, if I borrow money for longer, you 0:17:56.840 --> 0:17:58.720 want some more return. If I borrow twenty bucks off tomorrow, 0:17:58.760 --> 0:18:00.800 you don't really care. If you're just tune in, you're 0:18:00.840 --> 0:18:03.280 listening to the Marcomas Show. We're talking about the battle 0:18:03.320 --> 0:18:06.080 between the Fed and the Treasury, and we're going to 0:18:06.119 --> 0:18:07.440 talk about how this is going to play out in 0:18:07.480 --> 0:18:10.120 twenty twenty four, how the Treasury is forcing the Fed's hand. 0:18:10.400 --> 0:18:12.000 But I'm gonna take a very quick break, but I'm 0:18:12.040 --> 0:18:13.280 going to be right back. You don't want to miss 0:18:13.280 --> 0:18:15.000 what's coming up next, so don't go away. I'll be 0:18:15.119 --> 0:18:20.359 right back. All right, Welcome back. If you just tune in, 0:18:20.400 --> 0:18:22.359 you're listening to the Mark Mass Show. We're talking about 0:18:22.480 --> 0:18:25.760 the battle between the Treasury, the US Treasury with Janet 0:18:25.800 --> 0:18:28.679 Ellen and the Federal Reserve and Jerome Powell, and how 0:18:28.760 --> 0:18:31.159 that's going to affect markets this year in twenty twenty four. Now, 0:18:31.359 --> 0:18:34.480 I was talking about how the Treasury is taking action 0:18:35.000 --> 0:18:37.640 to force the Fed hand. The Fed is the Treasury 0:18:37.800 --> 0:18:40.360 needs policy to ease, They need rates to come back down. 0:18:40.520 --> 0:18:43.439 The Fed wants to keep them higher for longer. Jerome 0:18:43.480 --> 0:18:45.360 Powell just had their meeting and he said that we're 0:18:45.400 --> 0:18:48.520 going to keep them higher for longer than most people want. 0:18:48.760 --> 0:18:51.280 And Janet Allen's like, uh no, you're not. I'm going 0:18:51.320 --> 0:18:53.960 to force you into action. So how is she doing that? Well? 0:18:54.240 --> 0:18:56.240 I was saying, as they issue debt, they have to 0:18:56.280 --> 0:19:02.840 sell bonds, bonds, bills, notes. Twenty percent is short term, 0:19:03.680 --> 0:19:07.280 eighty percent is long term. That's historically, But what we're 0:19:07.320 --> 0:19:09.520 seeing right now, if we dig into the bond market, 0:19:09.640 --> 0:19:11.760 we can see that instead of historically the eighty twenty 0:19:11.920 --> 0:19:14.840 net issuance on the short term bill side, in twenty 0:19:14.920 --> 0:19:17.480 twenty three we saw a net issuance of almost two 0:19:17.720 --> 0:19:22.000 trillion dollars in bills and negative net issuance in the 0:19:22.200 --> 0:19:25.840