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0:00 All right guys, so the end of the world is coming and things are breaking down once again. Now over the past 100 days, people were making a bizarre claim that every time Latnik goes on TV, the markets will fall while Besson will make the markets rise. Well, this time everything the US does is threatening to melt down everything because not only is the tariff war going to ramp up, Besson just made a frightening admission. The tariff war isn't over. Trump's plan of giving a global ultimatum is coming and countries have to bow down now or else. But Bessen just gave another admission when it comes to US bonds. It's a reason why yields in the last 3 weeks just keeps rising. Trump is out of cards.
0:45 She's already paused the reciprocal tariffs to save the bond market in the first place. Now the bond market imploded and the king of the world did a U-turn. But he can't pull the same trick twice. And it gets worse. The Moody's downgrade is expected to hammer down bond values as well. The yields in a 10-year and a 30-year could rise by another 10 basis points each. More pain is coming for bond holders. The Treasury market is treating like an emerging market stock. There's no semblance of stability anymore. Now, Bess rejected Moody's downgrade, calling it a lagging indicator. But doesn't that just mean the last 100 days was a fiscal disaster as well? It was bad enough to reach the tipping point and trigger downgrade.
1:31 However, Bessen just let slip the real agenda and why US bond holders are effectively screwed. Uh I inherited 6.7% deficit to GDP which was the highest deficit when we were not at war, not in a recession. So we've been trying to bring down the spending and we are going to grow the revenue side. So we are going to grow the GDP faster than the debt grows and that will stabilize the debt to GDP which even Secretary Yelen and I agree is the most important number. Now let's recap what he just admitted. Basseners told the world the deficit to GDP is at 6.7%. Now, it sounds tragic, but what is it? Nicks just confirmed the US Treasury bonds is a horrific asset to hold
2:17 long-term. Now, Besson's game plan is to grow the US economy faster than the debt, and it's how the US will stabilize the debt to GDP levels. And this sounds really innocent, but he's tricking nobody. He just hinted at a dark future for long-term holders of US debt. You might earn money normally, but on a real basis, you'll likely lose money. The US economy is caught between a rock and hard place. Revenue is expected to drop, especially in a tariff war. As a result, inflating away the debt is the last resort. And let's go through this mess to really understand the chaos ahead. Now, firstly, Besson didn't say he would reduce the US deficit. He said he will grow the economy faster than they borrow money. And this simply means the US
3:04 government will keep spending as long as nominal GDP grows even faster. Now the second part is key. Besson will tolerate higher inflation to juice up GDP. If real GDP grows by 1% but inflation is up by 4%, guess what? It's good GDP still grew by 5%. So you can see how ridiculous this can get. If the US economy contracts by 2% but inflation rages on at 5%, we are still at 3% nominal growth. And how does that play out for US bond holders? Well, interest rates will be below real inflation. Creditors will get paid back in devalued dollars that do not keep up with higher prices. So, what if yields hit seven or eight% or more? You might even double
3:50 your money in 10 years, but that cheeseburger will cost more than what the Treasury will pay you. We could arrive in a new world where the dollar loses even more purchasing power. It's a double whmy for bond holders. And this is how mudded the waters are. Bessen just hinted the US will keep issuing a tsunami of bonds to keep the game going. Now throw in the downgrade from Moody's and you have a real problem. If borrowing calls do increase for the US Treasury, this sets up a doom loop that accelerates the decline. It's a big reason why gold broke past $3,500 for the first time two weeks back. Real assets are getting beated up because the new boss is the exact same as the old boss. There's almost no difference between Besson and Yellen. Now, Besson
4:36 has confirmed a week ago that the US debt ceiling will be increased. The Treasury will pull no stunts and more borrowing will happen. But just how much will the new tab be? And whether it's the plan from the House or the Senate, trillions more will be added to the national debt. Destructions from the House will raise the deficit spending by 2.8 trillion over the next 10 years. The Senate will be even worse. nearly $6 trillion over the next decade. And can you imagine an additional $600 billion being borrowed into existence every single year? That's on top of the $6.7% debt to GDP needed to run the US government today. And this is the cause of Trump's plan to win the trade war. Tax breaks also need to increase and
5:23 continue indefinitely to bring in all these global companies. But that also points to a deficit that just won't decrease. Vesson is trying to run the US economy on fumes when the fundamentals aren't being resolved. Inflation is the name of the game. There's just too much government spending going on. In addition, the tariffs will increase input cost and prices for consumers. So, consumption tax revenues could come crashing down instead of going up. Now, the White House seems to have forgotten the third door people can choose. They'll simply refuse to buy. And take the big beautiful bill for example. The numbers are simply ridiculous. In return for $4 trillion worth of additional debt, the US economy will grow. But at a
6:08 pittance, GDP will rise by only 0.6% and nearly 800,000 jobs will be added. But look at the amount of additional debt stacked onto the system. Besson will need to borrow an additional $400 billion a year. This increases the deficit to another 1.3% of GDP annually. Many estimates including Moody's they terrified of the deficit hitting eventually eight or even 9% of GDP. Now we are now at 6.7% and within striking distance of doubledigit borrowing in just 10 years and the situation is only going to get worse. Thanks to the US China reprieve countries around the world they are going to play hard ball. Why wouldn't they? what Beijing did
6:53 worked and they know the US economy is in a daily crunch. And a big shout out to our sponsor today, Indigo Precious Metals. When it comes to buying gold and silver, I trust Indigo Precious Metals in Singapore. They have made investing in precious metals safe, fast, easy, and simple for both small and large scale buying. I've been stacking gold for over a decade now, and I've learned two things when buying. You want to buy authentic gold bullion and you want to buy it at the lowest premium possible to stretch your dollars even further. And I'm glad to say I found both of this at Indigo Precious Metals. Indigo Precious Metals is a leading retailer in Singapore. They specialize in physical gold, silver, and platinum. They are my
7:39 one-stop shop when it comes to buying Bullion. Their prices are sharp and they have the best brands on sale, and I can test the gold on the spot. So, if you're looking to make your first gold purchase, Indigo precious metals is the best place to start. Whether it's 1 oz or 1 kilo, this is the reputable dealer you are looking for. So, take action today. Click on the link below and enjoy a discount on your first purchase with the code Shaun Fu. Start your gold stacking journey today. Even countries like Japan and Europe, they're digging in. They won't go down without a fight because they know the truth. The US economy is starting to crack and Trump overplayed his hand. Now, the China deal was an admission of weakness. Just look at inflation expectations at the bottom.
8:25 For the next 12 months, it has risen to a mind-boggling 7.3%. More than triple just a few months back. Consumption in the US is slated to fall. And the longer the trade war continues, it only hurts the US even more. They will export less to other countries while their own imports will cost more across the board. And imagine your Japan or Europe. China did absolutely nothing but chill. They sat back and chill. It was Basin who chased down a Chinese delegation in Geneva and you would play hard ball too and just hang back. However, there's also a risk to that. Now Trump will be sending letters to the world and setting new tariff rates for everyone. It's now an ultimatum. Obey our demand and you can
9:11 do business in the US. It's now paytoplay. We know the tariff war is being lost, but it doesn't really matter what we think. Trump still believes a victory is coming, so he will go pedal to the metal. Now, Besson also just confirmed the unthinkable. If countries don't deal in good faith, the terrorists will reset, not lower, but much higher back to the April 2nd levels. Mr. Secretary, does that effectively mean that these negotiations with other countries are over? And how high should they expect tariffs to go? Above 10%. Uh, this means if they're not negotiating in good faith, they are going to get a letter the uh saying here here is the rate. So I would expect that everyone would come and negotiate in
9:57 good faith that it would be the April 2nd level. Some countries were at 10%, some were substantially higher. And the negotiating leverage that President Trump is talking about here is if you don't want to negotiate then it will spring back to the April 2nd level. But what does that mean exactly? What is Besson's definition of good faith? Now chances are it will be more than just bringing down the reciprocal tariff rate containing China is quite impossible. So we are reverting back to the playbook of getting countries to take many steps back for the US to take gigantic leaps forward. Bessin expects countries to live their non-tariff trade barriers which probably includes VAT tax, currency manipulation and industrial
10:42 subsidies also have to go. The US doesn't want countries investing their own trade surplus back to their export economy. But yet the US is giving their own subsidies through tax breaks. Do you see the big double standard here? If countries don't comply, they might just get punished. realize today most economies subsidize their industries and let's keep it real. If it's a tax break, employee benefits, matching employee salaries or cash grants, all these they're the same thing. They are under the umbrella of subsidies. The US does the same thing. Just think of the chips act and lowering income tax from 21% to 15%. All these are subsidies. However, the question is who does it more efficiently? China, for example, has
11:28 both the quantity and quality of subsidies that the US just can't match. Despite the White House spinning the doomsday narrative around Chinese factories is just not happening. Their output is showing resilience and beating economy's expectations. People were expecting growth of 5.7% but industrial output climbed by 6.1% instead. Countries are still busy buying Chinese exports. And we have said it many times. The tariff wall from Trump only benefits China's manufacturing more. And a big part of this is from how Beijing deploys their subsidies. In addition, China doesn't have a bond market problem. China's 10-year government bond, the yield has dropped down to 1.67%. While the US is moving up towards
12:14 4.5%. So borrowing money, borrowing costs, they aren't a problem for China, but it is one for Washington. So everything starts to make sense now. The pieces are falling down into place. The US is throwing trade ultimatums because countries are waking up. They realize the cards Besson is holding is actually quite a horrible hand. So don't expect them to just fold. They might call or even ramp up the pressure on the US at the poker table. And this just hammers the fact that US bonds are in trouble. There's no way for the US to compete with China or the world without spending a whole lot of money. But can the US raise real GDP or would they opt for economic growth driven by government
13:00 spending and inflation? Basically fiscal repression because all indicators are pointing towards that end game. And here's a brutal reminder. US bond values are collapsing once again, pushing yields up. The 10-year is likely to crack 4.5% with the 30-year hitting 5% again very soon. Even the 2-year is almost at 4%. Rates eventually will have to come down and Trump is all out of cards. The higher rates go, the more of a deflationary impact it will have on the US economy. And the only way to short circuit deflation is through inflation. So, we are heading towards either a recession or a Fed rescue coming. And if Besson really means what he says, bond holders of US debt are
13:48 going to be royally screwed. Remember that crazy $5 trillion to be added from Trump's tax bill? Well, the House committee just passed that and is advancing towards becoming reality really soon. We are heading back to the good old playbook of spending more under the guise of something else. And because Trump still believes he's winning, there's very little room for Besson left to maneuver. Inflation will forever be a crisis in the US. There's no escape left. But let me know what you think. Are US bonds still the gold standard investment? And will Trump really uturn on his tariff pause? Let me know in the comments below. Stay safe. Be sure to smash the like button and subscribe as we navigate through this crazy times.
