Speaker 1: Hello, and welcome back to another episode of The Mark
Speaker 1: Moss Show, where we're talking about the world changing as
Speaker 1: a world of decentralization and deglobalization is upon us, and
Speaker 1: we got a lot to cover. I've tried to bring
Speaker 1: to you some education in some of the latest breaking
Speaker 1: news headlines so you can see the signs that play
Speaker 1: by play of how this world is breaking down. And
Speaker 1: so we're gonna talk about what is going on in
Speaker 1: the economy. Everyone's screaming for a recession while the markets
Speaker 1: are high. We're going to talk about some of these
Speaker 1: signs that we have there. We're going to talk about
Speaker 1: this new bill that just got past in bitcoin that
Speaker 1: has massive implications. This is just breaking news. We're gonna
Speaker 1: talk about what the heck is going on with commodities,
Speaker 1: specifically with oil, what is going on with China. Man,
Speaker 1: We have a lot to cover. We're going to talk
Speaker 1: about what's going on in the US with some big, big,
Speaker 1: big domestic news. Anyway, I got a lot to cover.
Speaker 1: You don't want to miss this. If you do miss
Speaker 1: any of it, don't worry. We got your cover. You
Speaker 1: can check it out on the podcast. Just search the
Speaker 1: Mark Moss Show in your favorite podcast player, or go
Speaker 1: watch me on YouTube search Market Disruptors and you can
Speaker 1: watch me and listen to me over there. But just
Speaker 1: jumping right in, Like I said, we had some big
Speaker 1: news in the bitcoin space this week, which is the technology,
Speaker 1: the decentralized technology that's really starting to drive massive change
Speaker 1: around the world. And one of the big changes that
Speaker 1: just happened is something called FASB Financial Accounting Standard Board.
Speaker 1: All right, it's a big deal. Bloomberg reported on this
Speaker 1: Bloomberg Tax specifically about these financial accounting standards. And so
Speaker 1: basically as a company, as a corporation, you have to
Speaker 1: follow what's called GAP General Accepted Accounting Principles or whatever,
Speaker 1: and so you have to file this, you have to
Speaker 1: keep your books in a certain order, you have to
Speaker 1: file your reports in a certain order, especially if your
Speaker 1: publicly traded companies. So there's all types of regulations, especially
Speaker 1: especially in the banking sector, but all types of regulations
Speaker 1: that talk about how you can hold assets, how you
Speaker 1: can classify them, how you can value them, how you
Speaker 1: report them, and all these different types of things and
Speaker 1: the way that you're a able to handle and manage
Speaker 1: assets very greatly, and they change the incentives for you
Speaker 1: to want to have those types of assets. So, for example,
Speaker 1: if I can hold a certain type of asset that
Speaker 1: gives me a lot of leverage, I might want to
Speaker 1: hold that for reasons besides just holding it, but also
Speaker 1: I might want to hold an asset but that the
Speaker 1: incentives work against me and I don't want to. So
Speaker 1: let me break this down for you. So for bitcoin
Speaker 1: and other cryptocurrencies, for example, the new rules under this
Speaker 1: Financial Accounting Standards Board, the new rules would allow a
Speaker 1: better reflection of the actual market value of the digital assets,
Speaker 1: as well as bring greater transparency to the financial reporting
Speaker 1: of companies that hold them. Now, these changes aren't in
Speaker 1: effect yet, it's just getting published. They expect to be
Speaker 1: published by the end of this year and then go
Speaker 1: into effect as soon as twenty twenty five, but it
Speaker 1: looks like companies will able to start applying them earlier
Speaker 1: than that. And so basically the old treatment before this
Speaker 1: is that like bitcoin or cryptocurrencies, is an intangible asset,
Speaker 1: which means that if the price went lower than what
Speaker 1: the companies bought it for, then they'd have to take
Speaker 1: an impairment charge on their books, even if they didn't
Speaker 1: sell and so we talked about this a couple weeks
Speaker 1: ago with SpaceX had to mark down the bitcoin that
Speaker 1: they had on their books. So in the old treatment,
Speaker 1: if the prices went down, they had to take this
Speaker 1: impairment charge. They had the negative, but they didn't get
Speaker 1: the positive. If the price went up, they couldn't receive
Speaker 1: any benefit on their books unless they sold it all right,
Speaker 1: So this means so if you're a business, if you're
Speaker 1: a corporation, if you're reporting these numbers, then you want
Speaker 1: to know what your balance sheet has, So that means
Speaker 1: what are the assets on the books. So typically, if
Speaker 1: I'm looking at a publicly traded company, I want to look
Speaker 1: at like what is this company's liquidation value? If I
Speaker 1: bought this company liquidated, how much inventory do they have?
Speaker 1: How much money in the bank do they have? How
Speaker 1: much is the total bye of all their assets? So
Speaker 1: let's say that the total valve of all their assets
Speaker 1: is one hundred million, but I can buy them. I
Speaker 1: could buy the stock for a fifty million. That's a
Speaker 1: pretty good deal. The problem is is that under these
Speaker 1: old accounting rules, you can't use bitcoin or crypto assets
Speaker 1: fair market value. So you bought bitcoin at a dollar
Speaker 1: and now it's worth thirty thousand. You went, you know,
Speaker 1: you had one hundred thousand dollars with a bitcoin, now
Speaker 1: you got one hundred million dollars with a bitcoin. You
Speaker 1: can't put the one hundred million on there. And so
Speaker 1: because of that, a lot of these big corporations don't
Speaker 1: want to add it because they only get the negative
Speaker 1: this impairment charge. They have to market down showing that
Speaker 1: they're in a loss, which is what happened to SpaceX,
Speaker 1: but they can't show the upside. So, like I said,
Speaker 1: when bitcoin price plunk surges goes up, the companies aren't
Speaker 1: able to reflect that. So this is a really, really
Speaker 1: big deal. This could make companies. I think it will
Speaker 1: make companies way more likely to add bitcoin to their
Speaker 1: balance sheet and long term holders because now they can
Speaker 1: report the appreciation with they're having to sell anything, so
Speaker 1: they can take little bets today with these bitcoin or
Speaker 1: crypto assets, expecting a big return, and then in the
Speaker 1: future they could report earnings based off of the new
Speaker 1: balance the new asset prices, which could make them look
Speaker 1: like geniuses, which could bolster their balance sheet, which could
Speaker 1: ultimately republic tread company affect their stock price now Michael Saylor,
Speaker 1: the CEO of When now I step down of micro Strategy,
Speaker 1: I think he's still the chairman of the micro Strategy.
Speaker 1: He's one of the biggest bitcoin holders in the world,
Speaker 1: one of the most publicly outspoken Bitcoin advocates in the world,
Speaker 1: and he believes this is massive news. He's been trying
Speaker 1: to get this to go through for a long time,
Speaker 1: so it's a big deal. Some other things I saw
Speaker 1: in the bitcoin space this week. In the crypto space
Speaker 1: this week was really really interesting, and I don't want
Speaker 1: to say crypto space, it was specifically in the bitcoin space,
Speaker 1: and it's because of the bitcoin mining. So most of
Speaker 1: the other cryptocurrencies have all moved over to something called
Speaker 1: proof of steak where they don't use mining. And you've
Speaker 1: been seeing over the last couple of years how bitcoin
Speaker 1: mining specifically is this detriment to society, How it's going
Speaker 1: to ruin the environment, how bitcoin is going to use
Speaker 1: more energy than a small country. You're going to use
Speaker 1: all the energy in the world, and how big of
Speaker 1: a deal that is, how bad that is. But we're
Speaker 1: actually seeing I've been reporting for years now, and we're
Speaker 1: already starting to see the shift in the media's narrative
Speaker 1: around this, We're starting to see that actually bitcoin isn't
Speaker 1: bad for the environment. As a matter of fact, it
Speaker 1: could just be the savior. So what do I mean
Speaker 1: by that. Well, over the last several years, you've seen, specifically,
Speaker 1: I've been watching in Texas how there's massive problems with
Speaker 1: the energy system. In Texas. They had the power go
Speaker 1: out in the winter and during a big freeze, and
Speaker 1: it was a big problem. They had to go out
Speaker 1: in the summer when it was too hot, and it
Speaker 1: was a big problem. Last summer happened again, and this
Speaker 1: summer it's just happening again. And what happens is during
Speaker 1: certain times in periods, you need more energy than others.
Speaker 1: Pretty simple. Right in the day when everyone's at work,
Speaker 1: energy use is less. At night, when everybody comes home
Speaker 1: and has to turn their lights on because it's dark,
Speaker 1: energy surges go up. When it's hotter, everyone turns their
Speaker 1: air condition on higher, so you can see that it's
Speaker 1: higher usage changes. But the problem is is that if
Speaker 1: I provide energy, I can't just turn it up and
Speaker 1: down like that. It's not just like a knob that
Speaker 1: I can control. And so what they've been doing is
Speaker 1: they've been creating more base loads so they can produce
Speaker 1: more energy all the time, but then diverting some of
Speaker 1: that load over to bitcoin mining, and whenever they need
Speaker 1: that excess demand, they just shut down the bitcoin mining
Speaker 1: and put the excess demand over there. When it's not needed,
Speaker 1: they push it back to bitcoin mining. And we just
Speaker 1: saw that Texas was teetering on the edge of blackouts
Speaker 1: again as they've been having this heat wave and as
Speaker 1: the demand was squeezing on the grid, and so Texas
Speaker 1: nearly had to start rolling out blackouts, but they didn't
Speaker 1: have to because at nine pm local time, they called
Speaker 1: up the bitcoin mining companies and said, hey, could you
Speaker 1: turn off off your equipment for us please, And they
Speaker 1: did and all that excess demand was able to go
Speaker 1: right back to the grid. I mean, if this isn't
Speaker 1: a wonderful fairy tale story, then I don't know what is.
Speaker 1: Because there is no other solution for this problem without bitcoin.
Speaker 1: Now we see the same thing happening in Iceland. Iceland's
Speaker 1: able to create more energy than it needs, but most
Speaker 1: of it's going to waste. They have all this excess
Speaker 1: energy because when they need to create it for when
Speaker 1: it surges up. But when it doesn't surge up, what
Speaker 1: do they do with it? No one in Iceland wants
Speaker 1: to buy this non guaranteed power. Factories don't want it,
Speaker 1: nobody wants a Households don't want it. No one can
Speaker 1: use it. That's because most power consumers only need it
Speaker 1: when they're online, when they're home. But you know who
Speaker 1: doesn't Bitcoin. So bitcoin minors can jump in and grab
Speaker 1: that excess energy, that wasted energy and use it. And
Speaker 1: so we're starting to see this change the entire world
Speaker 1: that the media narratives changes changed in the world. We
Speaker 1: saw it into Texas, happened, they saved the day. It's
Speaker 1: happening in Iceland, and it's coming to an area near you.
Speaker 1: If you're just tune in, you're listening to the Mark
Speaker 1: Maas Show run through some of the latest breaking news
Speaker 1: headlines this week, so you can stay up to date
Speaker 1: on how this world is changing as we look at
Speaker 1: through the links of politics, finance, and technology. I want
Speaker 1: to come back. I want to talk about what's going
Speaker 1: on in the US economy, what's happening in the global commodities,
Speaker 1: and a whole lot more. You don't want to miss it.
Speaker 1: I'll be right back in a minute. Don't go away,
Speaker 1: I'll bear back, all right, Welcome back. If you're just
Speaker 1: tune in, you're listening to the Mark Maas Show. We're
Speaker 1: running through some of the latest breaking news headlines this
Speaker 1: week so you can know what the heck is going
Speaker 1: on as the world is going through de globalization or
Speaker 1: as I call it, decentralization, and of course we can
Speaker 1: see this everywhere. I've been talking about for a long
Speaker 1: time and I will continue to talk about a long time.
Speaker 1: Is the rise of this, well, it's deglobalization. It's the
Speaker 1: rise of the challengers to the US homogeny, the US
Speaker 1: dollar standard, of the US international order, whatever you want
Speaker 1: to call it. And of course we see it with
Speaker 1: Russia and China challenging the US order. They've been de
Speaker 1: dollarizing for over a decade now. But now we have
Speaker 1: the rise of the bricks. And there's some very very
Speaker 1: interesting things if you know where to kind of look
Speaker 1: between the weeds and see what the heck is going on.
Speaker 1: And really, when you look at things, if you really
Speaker 1: understand things at their first principles level, at their base level,
Speaker 1: from a philosophical level, you know that energy is the
Speaker 1: most important thing in the world. Without energy, nothing happens.
Speaker 1: Life doesn't happen, Plants don't grow, animals don't grow, we
Speaker 1: don't live. So everything comes down to energy, and the
Speaker 1: law of energy states that energy cannot be created, it
Speaker 1: can only be transferred. So energy from the ground transfers
Speaker 1: to a plant. When the cow eats that plant, the
Speaker 1: energy is transferred to the cow. When I eat the cow,
Speaker 1: that energy is transferred to me. And when I think
Speaker 1: and type on the computer, that energy is transferred. So
Speaker 1: we transfer where its transferring. Oil has been the base
Speaker 1: of that, and you can look back through history and
Speaker 1: see that the nations that have the oil have been
Speaker 1: the ones that been the most prosperous and have been
Speaker 1: able to control kind of the world. And that's why
Speaker 1: the US dollars maintained its global homogyny because of the
Speaker 1: Petro dollar, the agreement that was found that started with
Speaker 1: Saudi Arabia in nineteen seventy four to always price dollars
Speaker 1: in oil. But all of that's being threatened now because
Speaker 1: of the bricks nations, and so Russia part of the bricks,
Speaker 1: the r and the bricks Saudi Arabia, who's now a
Speaker 1: new entrance into the bricks are now, you know, some
Speaker 1: of the largest oil producers in the world, and they're
Speaker 1: deciding that they don't want to keep pumping out their
Speaker 1: scarce resources out into the world in exchange for US
Speaker 1: dollar treasuries that are just losing value, and so they've
Speaker 1: been deciding to reduce the amount of oil they're producing.
Speaker 1: As a matter of fact, Saudi Arabia has extended its
Speaker 1: voluntary cut of one million barrels per day until the
Speaker 1: end of the year. Now, a lot of this pushed
Speaker 1: oil prices up, which then in turn push all energy
Speaker 1: prices up, which then in turn pushed every single price up.
Speaker 1: The Bite administration tried to counteract it, and not tried
Speaker 1: to they did. They were able to counteract that by
Speaker 1: dumping our strategic petroleum reserves, so they drained them. As
Speaker 1: a matter of fact, the petroleum reserves are now at
Speaker 1: the lowest levels they've been in forty years, following last
Speaker 1: year's record drawdowns. At the same time, US production of
Speaker 1: oil is at an all time As a matter of fact,
Speaker 1: US produced twelve point eight million barrels per day of
Speaker 1: crude oil in June, matching its production from pre pandemic
Speaker 1: back to February of twenty twenty. But even with the
Speaker 1: US's increased production and the draining of the SPR, we're
Speaker 1: seeing that the oil prices are going back up. They're
Speaker 1: up to a new one year high this week, and
Speaker 1: it looks like it's going to continue moving higher now.
Speaker 1: Like I said, in the past, the US has been
Speaker 1: dumping d SPR patroleum reserve into the market to bring
Speaker 1: you dump more supply to bring the price down. But
Speaker 1: the problem is, like I said, that it's running low.
Speaker 1: As a matter of fact, that the lowest since nineteen
Speaker 1: eighty three. So what are they gonna do. We're already
Speaker 1: maxing out the amount of oil we can produce. We've
Speaker 1: already dumped pretty much everything that we can into the market.
Speaker 1: But the problem is is that no matter how much
Speaker 1: we dump into the market, which we run out of,
Speaker 1: no matter how much we produce, Russia, Saudi Arabia, Iran,
Speaker 1: they just turned theirs down. You see. They can play
Speaker 1: this game for a lot longer than we can, and
Speaker 1: so we're not really able to control the price of energy.
Speaker 1: And it's a problem. And it's a problem because, as
Speaker 1: I said, when the price of energy goes up everything
Speaker 1: goes up. You know that food that you went eat
Speaker 1: at Chipotle and picked up at your grocery store, It
Speaker 1: had to be driven there, and it probably had to
Speaker 1: be shipped on a plane or a boat to get there,
Speaker 1: and it probably had to be dug out of the
Speaker 1: ground with a tractor. And all of those things require energy.
Speaker 1: And so when the price of energy goes up, everything
Speaker 1: goes up, and energy is going up. Now again, the
Speaker 1: treat petrol reserves are not just dwindled down to their
Speaker 1: lowest level, but they're dangerously low. And so now we're
Speaker 1: in a situation where the US is actually now trying
Speaker 1: to refill them and buy more oil. As a matter
Speaker 1: of fact, the Department of Energy, the DOE, purchased three
Speaker 1: million barrels of crude oil for the spr for delivery
Speaker 1: in August. The average price per barrel was seventy three dollars,
Speaker 1: which is lower than the average price of ninety five
Speaker 1: dollars per barrel that the oil is sold for last year.
Speaker 1: So they did okay. They sold it for about ninety
Speaker 1: five bucks. They bought it back for in the seventies.
Speaker 1: Not a bad trade. They are purchasing this from Exon
Speaker 1: Chevron Marathon Valero not bad. I don't know if that's
Speaker 1: a good strategy. I don't think the Biden administration should
Speaker 1: be trying to trade the oil that we have, but
Speaker 1: so far it worked. Now, they had originally said they
Speaker 1: were going to buy oil when it was in the
Speaker 1: seventy dollars range. They sort of missed that, but they
Speaker 1: are buying three They did buy three million barrels oil.
Speaker 1: But here's the problem. You see, in order to get
Speaker 1: prices to come down, they were selling it to increase
Speaker 1: the supply. But the problem is Saudi Arabis and Russia says, well,
Speaker 1: then we'll just turn down our supply, will counteract that.
Speaker 1: So now we're in a period where they're turning down
Speaker 1: their supply and now the spr has to be refilled.
Speaker 1: So what happens with that? Well, if you want to
Speaker 1: know what I think, I think it means more inflation ahead.
Speaker 1: I think oil continues to go up. I think that
Speaker 1: inflation continues to go up. And this is a big
Speaker 1: problem now, as I always say, nothing goes up or
Speaker 1: down in a straight line. Now, a lot of the
Speaker 1: headlines that you saw basically illustrated that they just didn't
Speaker 1: understand what they were saying, so, for example, you saw
Speaker 1: headlines of the last month or two oil's crashing. You know,
Speaker 1: the last several months, six eight months, oil's crashing. As
Speaker 1: a matter of fact, it's the reason high inflation has
Speaker 1: come back down to where it is. I've broken this
Speaker 1: down many times. If you look at the CPI basket,
Speaker 1: the Consumer Price Index, you can see that it's broken
Speaker 1: down by food and shelter and energy and things like that,
Speaker 1: and you can see that it was just energy that
Speaker 1: was coming down. Nothing else was really coming down. It
Speaker 1: was just energy. And the reason why is because when
Speaker 1: the Russia Ukraine War kicked off and the sanctions were
Speaker 1: placed on Russia, the whole world thought, we're going to
Speaker 1: go into this massive supply problem where all that Russian
Speaker 1: energy would come off the market, and so the price
Speaker 1: is shot up in advance of that, and we went
Speaker 1: from about eighty ninety dollars a barrel up to about
Speaker 1: one point fifty. But then pretty soon, very quickly, the
Speaker 1: world sort of realized, well, none of these sanctions at
Speaker 1: the US or the G seven placed on them, or
Speaker 1: NATO placed on them worked. Caps on Russian oil didn't work.
Speaker 1: The Russian oil is still going to market, and so
Speaker 1: the prices just came back down to where they were
Speaker 1: before all this happened. So all these headlines that you
Speaker 1: saw where it's plunging, it's crashing, No, it was just
Speaker 1: returning back to where it was before it had artificially
Speaker 1: spiked based off of an assumption that never came to
Speaker 1: be true. So now we're back into normal territory and
Speaker 1: now it's going back up. Now. In addition to this,
Speaker 1: again you always have to just think about supply and demand.
Speaker 1: It's actually pretty simple. Now, it's not simple to understand
Speaker 1: all the dynamics that make up supply and demand. But
Speaker 1: I saw this week more headlines that the United States
Speaker 1: decided to close more oil and gas permits to drill
Speaker 1: for oil and gas that were given under the Trump administration.
Speaker 1: So Trump opened it up, we could increase the supply,
Speaker 1: and again the Bide administration is shutting them down. So
Speaker 1: if we continue to shut down the supply side, the
Speaker 1: rest of the world cuts down the supply side, and
Speaker 1: the US has to be a buyer to fill up
Speaker 1: the sprs. And turns out you and I still need
Speaker 1: energy to live. Turns out we still need to ship
Speaker 1: food around the world. Turns out. So what happens and
Speaker 1: that's the price going up. You got that good thing.
Speaker 1: You're figured that out right. If you're just tuning in
Speaker 1: us into the Mark Maas Show, I'm breaking down the
Speaker 1: latest news headlines of this week. I got a lot
Speaker 1: more to cover, but I gotta take quick break. I'll
Speaker 1: be right back. Don't go away, all right, welcome back.
Speaker 1: If you're just tune in, you're listening to the Marcomas Show.
Speaker 1: We're talking through some of the latest breaking news headlines
Speaker 1: this week, so you can understand what is going on
Speaker 1: in the world through the lens of politics, finance, and technology.
Speaker 1: And I want to dig into the economy for a
Speaker 1: little bit here. It's a sort of a tale of
Speaker 1: two markets, if you will. Right where we see that
Speaker 1: there's all these signs that the economy is not doing
Speaker 1: good and we're headed forward recession. But then we see
Speaker 1: all these other signs that looks like the economy is
Speaker 1: really good. We see signs. Well, when you see the
Speaker 1: economy not doing good and potentially going to recession, then
Speaker 1: why is the markets doing so good? The equities, the stocks,
Speaker 1: but then the bond markets are looking bad. So we're
Speaker 1: seeing this like a bipolar viewpoint in both the economy
Speaker 1: and the markets. And I say that in two separate things, right,
Speaker 1: the economy and the markets. We're breaking these apart. And
Speaker 1: it's important to understand this piece because you have to
Speaker 1: realize that the economy is not the market now. It
Speaker 1: should be it used to be. Because if an economy
Speaker 1: is doing good, meaning you know, people have money, people
Speaker 1: are buying, and you know everyone's happy, everyone's spending money,
Speaker 1: then I'm spending money at stores, buying goods and services,
Speaker 1: which means then those businesses do better in their reporting,
Speaker 1: they post higher revenues, higher profits, and then it pushes
Speaker 1: the stock prices up. That's how it's supposed to work,
Speaker 1: but we became detached from reality over the last decade
Speaker 1: or so when we kind of went to this era
Speaker 1: of free money where the stocks that do the best
Speaker 1: are ones that don't even make any money, which is
Speaker 1: kind of weird, but really where the disconnect happened was
Speaker 1: in twenty twenty and during the pandemic, we saw like
Speaker 1: literally the entire economy shut down, like literally, businesses that
Speaker 1: have been around for decades were forced to close, stores
Speaker 1: were forced to close, and so the economy just completely cratered,
Speaker 1: but the markets took off to new all time highs.
Speaker 1: And so now we see this two separate things. And
Speaker 1: it's important at least for me to think about these
Speaker 1: things separately, because the markets do not equally the economies.
Speaker 1: So the economy could crash again, but it doesn't necessarily
Speaker 1: mean the markets will. They could, doesn't mean they have to.
Speaker 1: So if we look at the economy, like I said,
Speaker 1: there's there's a lot of bipolar signs that we're looking at. So,
Speaker 1: for example, the economy seems great. We have some of
Speaker 1: the lowest lowest unemployment that we've seen in decades. That's great.
Speaker 1: We are seeing that, you know, stores, retailers, companies are
Speaker 1: still reporting record earnings, record revenues, record earnings. Consumers are buying.
Speaker 1: Sentiment is great. So that looks good. But if you
Speaker 1: dig under the hood a little bit, which is what
Speaker 1: you should be doing, we can also see that while yeah,
Speaker 1: while people, while consumers are buying, we can see that
Speaker 1: their savings are getting depleted at a very rapid rate,
Speaker 1: which look at the money supply, we can see that
Speaker 1: their credit card debt, consumer debt is skyrocketing through the roof,
Speaker 1: and so it looks like savings them been depleted, and
Speaker 1: all of this spending that looks like the economy is
Speaker 1: good is happening off of debt. And the problem is
Speaker 1: is that debt runs out. And it's not just that
Speaker 1: debt runs out, it's that debt runs out, and it
Speaker 1: also has to be repaid, and it has to be
Speaker 1: repaid from future earnings. And so what this does is
Speaker 1: it really impairs the future. Now, if that's not bad enough,
Speaker 1: what we can see is that it's already starting to
Speaker 1: get to a very dangerous point. As a matter of fact,
Speaker 1: we saw this week headlines came out that delinquencies for
Speaker 1: credit card payments and auto loans are skyrocketing. As a
Speaker 1: matter of fact, the default rate for credit card payments
Speaker 1: and consumer loans are at their highest levels in a decade.
Speaker 1: We can see that more and more consumers are missing
Speaker 1: payments on their household debt, and it gets even worse
Speaker 1: for the first time ever. According to the Washington Post,
Speaker 1: Americans are on the hook for more than one trillion
Speaker 1: dollars in credit card debt and the delinquency rate is
Speaker 1: almost four percent according to Moodies. Now you have good
Speaker 1: debt and bad debt. Let me table that I'm gonna
Speaker 1: come back to that. We have five point four percent
Speaker 1: of consumer loans and three point six percent of auto
Speaker 1: loans are also late. Now that's credit cards, consumer loans,
Speaker 1: and auto loans. Now, auto loans at least there's an
Speaker 1: asset there. So you have the car. The problem is
Speaker 1: the car is going down faster than you're paying the
Speaker 1: debt down. But your credit card debt and most consumer
Speaker 1: loans are for stuff that you don't have anymore. There's
Speaker 1: no there's no asset there. Now to add insult to injury,
Speaker 1: so to speak, the average credit card interest rate is
Speaker 1: roughly twenty one percent. Now that that's a massive rate.
Speaker 1: If you put that into sort of some frame of reference,
Speaker 1: it's like doubling every three or four years at that rate.
Speaker 1: So every three and a half years your debt doubles.
Speaker 1: How are you going to pay that back? Now, it's
Speaker 1: important to understand that there's two types of debt. There's
Speaker 1: good debt and there's bad debt. There's productive debt and
Speaker 1: there's destructive debt. Consumer debt, consumer loans, credit cards. That's destructive.
Speaker 1: You spend the money on a vacation, you spend the
Speaker 1: money going out to eat. There's nothing behind that debt.
Speaker 1: You just have the debt. You're paying twenty one percent interest,
Speaker 1: and that means the debt is doubling every three and
Speaker 1: a half years. And it's not just those We see
Speaker 1: that Americans are so strapped for cash that they're resorting
Speaker 1: to now, these buy now, Paid Later options BNPL. You
Speaker 1: might have heard about this before. It's when you go
Speaker 1: shopping on your favorite e commerce website and then at
Speaker 1: check out you have this option to buy now, pay later.
Speaker 1: These programs have gotten all the rage. They've been going
Speaker 1: really fast, and they work well. I suppose right for
Speaker 1: larger purchases that you can't afford, like a you know,
Speaker 1: like a TV, or furniture things like that, but I
Speaker 1: see them for all types of things. I see them
Speaker 1: for low ticket items that you should able to just
Speaker 1: pay outright, Why would you defer the payments on that.
Speaker 1: As a matter of fact, lending Tree found that twenty
Speaker 1: one percent of respond and say that they're using these
Speaker 1: buy now, Paid later loans just to buy groceries. We
Speaker 1: see when you're using your credit cards, when you're using
Speaker 1: these buy now, pay later programs just to buy food. Unfortunately,
Speaker 1: that's a bad sign for the economy. And like I said,
Speaker 1: there's good debt and bad debt. When you're buying it
Speaker 1: for food, that's bad debt. Now, for the past decade,
Speaker 1: consumer spending has increased each holiday season, and researchers are
Speaker 1: expecting more growth ahead. Well, we see it. We don't know,
Speaker 1: but we do know that it's getting more and more
Speaker 1: expensive to live off credit cards. We can see that
Speaker 1: savings rates are going down. We can see so we
Speaker 1: see these all over. So what gives what's the tail
Speaker 1: of the market. Well, and we also know that right now,
Speaker 1: historically unemployment rate is still very low. It's gone from
Speaker 1: three point five percent up to three point eight percent.
Speaker 1: It's still under four percent, which is historically low, but
Speaker 1: it is the highest level that we've seen in about
Speaker 1: a year and a half right now. We also know
Speaker 1: that unemployment is a what we call a lagging indicator,
Speaker 1: so it doesn't really tell us what's about to happen.
Speaker 1: It typically tells what already happened. And the reason why
Speaker 1: is because most employers or business owners don't want to
Speaker 1: lay people off. It's hard to find good people, so
Speaker 1: you try to make every cut that you can. You
Speaker 1: probably go without your own pay for a while before
Speaker 1: you let people go. So it's like the last ditch resort.
Speaker 1: And so that's why it's a lagging indicator. But we
Speaker 1: also did see which I thought was pretty interesting, the
Speaker 1: labor force participation rate actually went up. It's at sixty
Speaker 1: two point eight percent. It's the highest level since the
Speaker 1: pandemic began in February of twenty twenty. And so you
Speaker 1: have unemployment only measures the people that are looking for work,
Speaker 1: a real gimmicky, you know, it's a way that the
Speaker 1: government can lie about the data. Basically, so unemployment tells
Speaker 1: you the the how many people don't have jobs who
Speaker 1: want jobs. The labor force participation rates a better number
Speaker 1: because it tells you of the working age population how
Speaker 1: many of them are working, And so it rose. It's
Speaker 1: a sixty two point almost sixty three percent. But that
Speaker 1: means that thirty two percent are not working able bodied
Speaker 1: of the correct age decide they don't want to work.
Speaker 1: And so while that's getting better, it's still pretty low.
Speaker 1: But this is where we're at. This is the tale
Speaker 1: of two markets. Right now, everything looks great. Companies are
Speaker 1: reporting better earnings, better revenues. The markets are strong. Unemployment's good,
Speaker 1: but what we can see is that it's coming off
Speaker 1: of the back of savings being drained down, and it's
Speaker 1: coming off of the back of credit card debt. That's
Speaker 1: not good. If you're tuning in, you listening to the
Speaker 1: Mark Maus Show, I got to take a very quick break,
Speaker 1: but I'm going to come back with more in a second.
Speaker 1: You don't want to miss it, so don't go away.
Speaker 1: I've be'er back. All right, Welcome back. If you're just
Speaker 1: tune in, you're listening to the Mark mass Show, and
Speaker 1: we're running through some of the latest breaking news headlines
Speaker 1: that we saw this week that are literally showing us
Speaker 1: the play by play of how the world is breaking apart,
Speaker 1: the decentralization, the deglobalization, whatever you want to call it.
Speaker 1: And I like to look at through the lens of politics, finance,
Speaker 1: and technology, so you can really bring things into context
Speaker 1: of what's going on. You know, we talked about in
Speaker 1: an earlier segment. I was talking about the law of
Speaker 1: unintended consequences, and really to understand unattended consequences, you kind
Speaker 1: of have to think through first, second, third, fourth, fifth
Speaker 1: order effects. Because most people only think about first order effects. So,
Speaker 1: for example, we have poor people, we should give poor
Speaker 1: people free money. That sounds nice, let's help them out.
Speaker 1: But what happens if we do well? Then they don't
Speaker 1: go work and they become dependent on the system and
Speaker 1: then the game, right, and then and then what happens?
Speaker 1: And then what happens? And so you have to kind
Speaker 1: of ask that question. One of the things that we
Speaker 1: see today is it's I want to say it's comical,
Speaker 1: but it's not. We shouldn't be laughing. But it's sort
Speaker 1: of like one of those things where like I told
Speaker 1: you so, and like now you got to like you
Speaker 1: made your bed and you gotta sleep in and so
Speaker 1: to speak. And what am I talking about specifically, Well,
Speaker 1: you know, these are these are difficult questions and topics
Speaker 1: to talk about. But I think about the immigration problem
Speaker 1: that we have in the United States, and when I
Speaker 1: say immigration problem, that there's a lot to unpack there. Now.
Speaker 1: One of the greatest problems at the US and every
Speaker 1: developed nation has right now is depopulation. And not because
Speaker 1: of Bill Gates or something like that. I'm talking about
Speaker 1: just we have old people and we don't have enough
Speaker 1: young people. Right That's the problem. China's got a real
Speaker 1: big problem. They had thirty years of a one child policy.
Speaker 1: So the United States needs migration. We need people coming
Speaker 1: from other countries if we're going to survive. We're just
Speaker 1: not people. Americans just doren't have enough kids. As a
Speaker 1: matter of fact, we saw we're trying to onshore a
Speaker 1: lot of new manufacturing and in Arizona they're trying to
Speaker 1: build these new TSMC chip manufacturing plants that are from Taiwan,
Speaker 1: but they can't get enough good workers. We just don't
Speaker 1: have smart people. Everybody wants to be a YouTuber, and
Speaker 1: so we don't have these people to work at these plans.
Speaker 1: So we need migrants. We need immigration, but we need
Speaker 1: good We need good immigrants, right, We need people who
Speaker 1: are educated and trained to come in, and so we do.
Speaker 1: The United States is obviously built off immigrants. We have
Speaker 1: the you know, we have more immigrants in the United
Speaker 1: States than any other nation in the world. But then
Speaker 1: we have illegal immigrants. And these are ones who come
Speaker 1: in illegally. They cut the line, they don't go through
Speaker 1: the proper channels and process. And this is a big
Speaker 1: sticking point. Now I could be all for having open
Speaker 1: borders and just let everybody come in if we weren't
Speaker 1: in a welfare state. But the problem is that we are,
Speaker 1: and so we don't just let them come in, but
Speaker 1: we provide them with all the money they need and
Speaker 1: driver's license and voting and social Security that everyone else
Speaker 1: is paid into they did and all these different things,
Speaker 1: and that causes a massive problem. Now you've been hearing
Speaker 1: about the open border that we have on the South.
Speaker 1: Trump obviously was trying to close that border, and even
Speaker 1: though he never actually got it finished, his aggressive stance
Speaker 1: to the border actually did a lot to deter people
Speaker 1: from coming. As a matter of fact, during his presidency,
Speaker 1: a lot of people at the time that had been
Speaker 1: interviewed had said, why would we even bother going there,
Speaker 1: We're just going to be kicked out. There's nothing there
Speaker 1: for us when we get there, and so that worked
Speaker 1: to deter people. But what we see now with the
Speaker 1: border policy is like an open invitation for everybody to
Speaker 1: come in. And of course this is led by the
Speaker 1: Democrats and the Biden administration with this policy, and while
Speaker 1: the people that are affected by this, specifically on the
Speaker 1: border Arizona, Texas, etc. Have been panicking over this we've
Speaker 1: seen millions of people coming over across the border. Some
Speaker 1: people have decided to take steps into their own hands
Speaker 1: and start to move these illegal immigrants into other areas,
Speaker 1: one of which is specifically in New York City. Now,
Speaker 1: it was sort of a little bit of irony this
Speaker 1: week when we saw the mayor of New York, Mayor
Speaker 1: Eric Adams, hold a press conference talking about this exact problem.
Speaker 1: To his I have a video clip here, I was
Speaker 1: going to play it here, where'd it go? But basically
Speaker 1: Eric Adams was talking and he said, quote that this
Speaker 1: issue will destroy New York City. He said that they're
Speaker 1: getting ten thousand migrants per month and there's no stopping it.
Speaker 1: There's no end in sight, which I thought was pretty
Speaker 1: interesting that he would say that, here we go, here's
Speaker 1: the clip, let me give it, let me get it
Speaker 1: to play.
Speaker 2: Here full support, and let me tell you something New
Speaker 2: York is. Never in my life have I had a
Speaker 2: problem that I did not see and ended too. I
Speaker 2: don't see an ending to this.
Speaker 1: Never in his life has he had a problem that
Speaker 1: he didn't see an ending to. Oh, you mean like
Speaker 1: closing the border. I mean, come on, you can't see
Speaker 1: an ending to it. How about not giving them all
Speaker 1: the free stuff so they stopped coming. There might be
Speaker 1: something there. Let's hear a little bit more.
Speaker 2: I don't see an ending to this. This issue will
Speaker 2: destroy New York City. Destroy New York City. We get
Speaker 2: in ten thousand migrants a month. One time we were
Speaker 2: just in Venezuela. Now we get in Ecuador. Now we
Speaker 2: can Russia speaking coming through Mexico. Now we get Western Africa.
Speaker 2: Now we get people from all over the globe that
Speaker 2: made their minds up that they're going to come through
Speaker 2: the southern part of the border and come into New
Speaker 2: York City.
Speaker 1: So let's break that down a second. So we did
Speaker 1: I've had people from South America, like Venezuela, but now
Speaker 1: we have Russians, Ukrainians. Now we have people from West
Speaker 1: Africa coming And what do you say through the southern
Speaker 1: border because they've made up their mind they want to
Speaker 1: come to America, so they just unpack that. So they're
Speaker 1: coming through the southern border. Okay, so he can't see
Speaker 1: a way out. Well, we could close the southern border. Now,
Speaker 1: why are all these people from all the world deciding
Speaker 1: and they want to come here. Well, because of the
Speaker 1: things they get when they come here. So you change
Speaker 1: the incentive system, you put a couple of checks and
Speaker 1: gateways in and you solve that problem. Just about a
Speaker 1: month ago, it was actually July, so a couple months ago,
Speaker 1: I flew out to Spain to give a talk at
Speaker 1: a Mastermind event there, and when I was flying back,
Speaker 1: I was flying from Madrid to back to Los Angeles
Speaker 1: and I had to go through El Salvador and on
Speaker 1: my plane were I don't know, twenty or thirty African
Speaker 1: people getting on the plane and they were all like,
Speaker 1: dressed pretty nice, and they were all, you know, all
Speaker 1: getting at the same time. And I've been to El
Speaker 1: Salvador many times, mostly I go there for surfing. There's
Speaker 1: not a lot in l savad Or. It's certainly not
Speaker 1: a big debt tourist destination for most people, and it's
Speaker 1: certainly not a place where twenty or thirty twenty year
Speaker 1: old African males dressed nicely would go. So I start
Speaker 1: thinking about this, and I tried to talk to a
Speaker 1: couple of them. Most of them didn't speak any English,
Speaker 1: and as it turns out, most of them were flying
Speaker 1: into Al Savagor because of the place they could go
Speaker 1: to for Madrid, and from El salvad Or they would
Speaker 1: start to make their way up into the United States. Now,
Speaker 1: who paid for these people, you know, dressed nice and
Speaker 1: who paid for their plane tickets to get them there?
Speaker 1: I don't know. That's a different story, but it certainly
Speaker 1: seemed pretty organized to me. But this is what happens
Speaker 1: when you have this. So for Eric Adam's statement, I
Speaker 1: don't see an end in sight. Pretty interesting. Now, let's
Speaker 1: break down some numbers we see. In the fiscal year
Speaker 1: twenty twenty two, border patrol agents apprehended a record breaking
Speaker 1: two point three million immigrants at the southern border. Now
Speaker 1: this is apprehended, Okay, this number includes people that they got.
Speaker 1: It doesn't include the people that they didn't, which is
Speaker 1: the majority of people. We don't have a firm number
Speaker 1: on that. We can see that the number of undocumented
Speaker 1: immigrants crossings at the southwest border for the year twenty
Speaker 1: twenty two topped almost three million people in one year,
Speaker 1: which broke the previous annual record by more than one
Speaker 1: million people. So this is a big it's a big problem,
Speaker 1: it's a big epidemic. It's a big conversation, and it's
Speaker 1: one that doesn't have an easy answer. But again, as
Speaker 1: I said, the irony of making your bed now you
Speaker 1: have to lay in it. The Democratic parties that want
Speaker 1: this to happen. And here Eric Adams is having to
Speaker 1: deal with this and he can't see an end in sight,
Speaker 1: but when it's sitting right in front of your face.
Speaker 1: And this goes back to what we talked about in
Speaker 1: the very first episode, which is the law of unintended consequences.
Speaker 1: You have to be able to think through first, second, third, fourth,
Speaker 1: fifth order effects and this affects all of us. Right.
Speaker 1: We have people all in this world, in this country
Speaker 1: who don't think through the second, third, fourth, fifth order.
Speaker 1: They don't think through the consequence of these things, and
Speaker 1: unfortunately they're helping vote, which is why it's important for
Speaker 1: us to continue to talk about these things, continue to
Speaker 1: spread these brush fires to the minds of men. As
Speaker 1: Samuel Adams said, take these conversations, discussing with your friends' family,
Speaker 1: co workers, and we can change the collective shift anyway.
Speaker 1: That's what we got for today. Thanks so much for listening.
Speaker 1: If you're just tune your listen to the Mark Mas Show,
Speaker 1: and that's what I got. I'll talk to you next time,