The Zach Foust Show
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The Zach Foust Show
A WARNING FLARE WENT UP.....what happens next? | ZFS 99
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A warning flare just went up in the currency markets and almost nobody is talking about what it actually means. The United States just bought the Japanese yen for the first time in over a decade, and I want to walk you through why that quiet little intervention is a much bigger deal than it looks.
I break down the yen carry trade in plain English on the whiteboard. How investors and governments borrow cheap yen at around 1% and buy US bonds paying 4% to pocket the difference. Why Japan propping up its currency threatens that entire system. And why the US stepping in to buy the yen is really just foreign quantitative easing wearing a different jacket. There was even a Reuters photo from Camp David showing Scott Bessent's notepad with one to do item on it. Buy Japanese yen, 5 to 10 billion. This is not a theory. It is sitting right there in the picture.
I also get into the July inflation numbers, why 3.4% year over year is not the full story, how owner equivalent rent is measured with what is basically a middle school phone tree, why PPI producer inflation is signaling more pain coming, and why fuel oil being up 39% since last year tells you everything about where this is headed.
Japan holds over a trillion dollars in our bonds. If they sell, yields spike, and your mortgage and car payment go up with them. The Fed is trapped. They have already chosen inflation. And I close with what I am personally doing with my money to stay protected. Gold, silver, a diversified portfolio, and an insurance policy against the dollar.
I am not a financial advisor. I am just a man in a basement showing you what I see in the forecast before the sidewalks get wet.
Welcome to episode number 99 of the Zach Fowl Show. The Federal Reserve sent out a red flag on the play. Just about a few weeks ago, now, as we sit in this chair today, at the July Federal Reserve meeting. Now, what happened at the July Federal Reserve meeting was this. He admitted there was an inflation problem. And it ultimately, over time, inflation has been a choice. But he stated that in lieu of the fact that the Federal Reserve has missed its 2% inflation goal going on six years in a row, every single month, above their 2% inflation goal, this month clocking in at about 3.4%. Now, what does this all mean? Well, recently we had another red flag thrown on the field. If inflating prices wasn't already a red flag, well a red flag coming from the head of the central bank, then this red flag might carry a little bit more weight. The United States government, our Federal Reserve, has now started intervening in other currencies. Now, this is not the first time we've done this. In fact, it's not even uncommon. We've even set up entire accounts for short-term loans that can be divvy between these countries with dollars in exchange for bonds. But Japan has a problem. Japan went through this thing called the silent decade. The silent decades were anywhere between 1995 into and after the Great Recession. Now, during this time period, housing prices would absolutely plummet. The cost of wages versus labor was awful. Go figure. Some of you in America might feel that way. It's not quite Japan yet. And they struggled. They struggled pretty mightily over that time period. And one thing that they did to invigorate the economy was have very cheap debt. Now, what does debt mean? Debt is any time the government needs to spend more than what's in its budget and it needs to essentially print money. The way that the government prints money, though, during these deficits is through bond sales. And the bonds are the debt. The bonds are the way that we get investors to hold on to our debt for one, three, five, even thirty years while we go and just spend it on war. But that's to the side. We're going to talk about war by the end of this, too, by the way. The whole point of this is yen has an integral part in our currency, and the yen is the currency that Japan utilizes. Now, the yen has been cheap for a very, very long time. So the yen has essentially become the ATM of the international economy. And America is not out from that. America is probably the most involved in this ATM machine for two reasons. One is this thing called the carry trade. The second is this thing called the US Treasury Bond. Now, before I get into all this, I want to kind of lay out exactly where I'm going to go here so that we all can be on the same page of where this train's headed. Okay? I wrote it down. The yen, the carry trade, the Fed being put in a tough position to more than likely expand credit, which could be by buying bonds or lowering rates, causing more inflation via dollar weakness, and the greatest hedge against the weakness of the dollar is gold.
SPEAKER_01I'm gonna say that one more time.
SPEAKER_00The currency in Japan, the yen, is solemnly important to so many different investors because of bonds and the carry trade. If the carry trade begins to diminish and we have to intervene with their bonds, the Fed is put in a tough position and they're already in a tough position. That tough position might be pressuring them into expanding credit via buying bonds, which is known as quantitative easing or reserve management, or lowering their rates to expand that credit. Either one will cause inflation, which will lead to and is akin to weakness of the dollar. And that weakness can really only be insured against via holding. You can hold the bond itself because they're at higher rates and they're guaranteed, as long as our government stays live, which I do think it will, or holding gold. I'm gonna get into these. I want to start with the markets real quick before we jump back into the yen. Welcome into the chat. Anybody who's joining on live. If you're watching this on YouTube, Spotify, or Apple, we do these podcasts live every time. And today you're catching me in Sean's booth. What's up, everybody? Uh, and so if you see that chat popping up on the screen, that is why. That is our incredible members and always early watchers, such as Michael Boone, your corman. I've seen a lot of regular names, Lady Luck with the dono earlier. Thank you. So the SP 500 right now sits at $7,798.99. Has it ever been that high? No, it has not. This is once again another record putting the SP 500 at a 20.6% return on investment for the year. Fun fact that we're not even going to touch on today AI spend amongst the SP 500 really falls into the top 10 companies in the SP 500. And those top 10 SP 500 companies are responsible for around 41% of the entire value of the SP 500, nearly half all in the top 10. Nvidia on its own holding 7% of the market cap. Incredible. So this is the SP 500. Those who have uh been investing in the SP 500, whether they like it or not, have been tech investors. Uh, you might have invested in the SP 500 via an index fund or like Vu or SPY, Voodoo or SPY. Uh, or you might have just, you know, invested in the SP 500 as it is. Regardless, the SP 500 in and of itself is an index fund when you're investing into it, because you're investing in the top 500 companies that are public in America. That will shift a little with the Dallas Stock Exchange, but that's a whole other conversation, a lot of unknowns. In this case, if you had been investing in those 500 companies, you are essentially throwing the most of your money behind, the most of your hope behind, the most of your retirement portfolio behind, AI and the companies that are hyperscaling it. So if we go back to like the last three years, we can see uh, I mean, three-year return still says 20.44%. That can't be right. That can't be right. It says three year oh, annualized return, got it. So you're looking at annualized return of 20%. So that's putting us at just over 61% in returns if you would have held the SP 500 as an index for that three-year period. So, so let's uh let's look at another item, another item, another very popular one, gold. Oh, wait, this isn't gold, but some people talk about it like it's gold. It's Bitcoin. So Bitcoin here, uh shown over the last two years, one year, I couldn't get the two year. So let's just look at the last year. Last year, down 49.05%, all while the SP 500 over the last year, again, has gone up 20.6 percent. That's a very strong difference for a currency that honestly, like if I were to pull up the 10 year on Bitcoin and I were to pull up 10 years on the SP, they kind of have been moving similarly. Uh, it's been moving more aggressively and more volatilely, uh, but going up with the ups and the downs with the downs. So Bitcoin down 49% over the year. Now, I just I did have a video, which by the way, you can go back and see when I talked about my financial advice. I gave my portfolio and I told you guys that I did hold some Bitcoin. About nine percent of my portfolio is Bitcoin. Why? Because honestly, I think it only has two routes. You know what those two routes are? I'm not a financial advisor. You shouldn't buy or sell anything based off my advice. I'm just a man in a basement, but I'll tell you what I'm doing with my money. What I'm doing with my money is about nine percent is in Bitcoin because I think it could go volcanic, I think it could go skyrocketing, or it could go to zero. And I really think those are the only two options. There's really only two options out of this. Now, the thing about it is earlier I said Bitcoin is gold, tongue in cheek, because gold, on the other hand, over the past two years has gone up 77.5%. 77.5% over two years. That's more than the SP 500 has gone up over the last three.
SPEAKER_01So gold, actually, in in in terms of gold, I should say, the stock market is underperforming. What does this all mean?
SPEAKER_00I'm gonna break this down a little bit more before we go into what it means. Silver price, I have this pulled back for the last two years as well, has gone up very similarly, about 70-ish percent over that two-year span. Again, beating the S P 500 over that similar time frame. For those of you that have been listening to my podcast the longest, if you go all the way back to the first few episodes, I talk about buying silver on social media in January 2025. I talk about buying silver because the inevitability was in front of us of weakness. Weakness in the dollar. And as we can see, if we look at the last two years of Bitcoin up 8%, but you can also see there were insane gains on Bitcoin in the following year or in the prior years. Absolutely insane gains. Now, here's the deal. The deal is gold and bitcoin, in my humble opinion, are not the same thing. They're not. One is digital, one is physical. One's existed for the last 20 years, one's existed for the last 20 millennia, one has become a currency in modern day, one's been a currency or at least a storage of wealth, again, for millennia. They're not making more of it. It does have industrial use, things like solar panels and EVs and others. It's also used as a biomedical metal. All I'm trying to say is a couple years ago, I saw the writing on the wall through things like the leaking of the Merilago Accords around a plan economically to weaken the dollar. Headlined as a form of balancing trade, it's led to things like we have right now with our continued debt increasing. We're about to hit $40 trillion. Uh, the continued debt we're going into over AI, we're about to spend about $1.6 trillion just this year. That will double the last year. And the fact that the Federal Reserve, again, is in a tough position to potentially have to expand credit via either buying up our own bonds or lowering rates, in turn, creating inflation, which will lead to further weakness in the dollar. And that is a good sign for you if you own assets. All right, everything could go tumbly and weird for a short period of time with the SP 500, but ultimately we know one thing: the Federal Reserve will print. If Congress sees an opportunity to keep the banks alive, keep the AI tech stocks alive, to keep uh retirement accounts afloat, they'll make up all these different reasons as to why they want to do it, but the banks and the billionaires and the oligarchs will get bailed out. It is privatization of gains and socialism of losses in the American economy. Let me not uh lead you astray. We have historic evidence time and time again, and and and like that historic evidence that I can see, I also see that as I look throughout history, it keeps happening faster and larger and faster and larger and faster and larger. We've printed a total of nine trillion dollars just from the Federal Reserve's bond bombing. They still hold around 7 trillion of it.
SPEAKER_01Why does this matter? Okay, let's get back to the yen. Let's get back to the yen. Not gonna hold you up forever, guys. This is gonna be a quick one.
SPEAKER_00By the way, thanks to everybody who's liked the podcast, shared the podcast with a friend looking to be more in-depth in what's going on in the financial world. And for those that are subscribed or a member of our Cucumber Club, I think still named the dollar club, though. It's gonna be the cucumber club uh on our member section. Incredible. So the Japanese yen. I pull up this graph. Uh, let me pull up the last week. Look at this graph! Okay.
SPEAKER_01Right here. So this is the last month of the yen strength. And the yen strength is compared against the US dollar.
SPEAKER_00Now, when we have a situation like this, what does it mean? It means like things like travel. Like if you were to go spend the US dollar in Japan, it's probably a good time to do it. Probably a good time to plan a trip to Japan. Alright, but what is the opposite thing of what this means? Well, what it also means is that there's gonna be further pressure to increase rates on the Japanese economy. And increased rates threaten this thing called the carry trade. Can I can I bring up a graph real quick? Can I can I uh indulge you guys real quick in just a quick whiteboard moment? Can I indulge? Okay, so break out the marker, make that boy a thicky. All right, if you're not watching, I'll explain as I go. Okay, why is that so small? Zoom in. That's what she said. Okay, so essentially what happens is let's take the yen over here. And let's say that you can borrow the yen. You're you're a banker, you're an investor, you can borrow the yen at let's just say 1.2% interest. Okay, if you can lend yourself from the yen, like going to a bank in Japan, based out of Japan, and get a yen denominated loan, 1.2% would be your rate. Spin lower, spin higher. I just picked the rate. And what the carry trade is is is essentially this is really simple. We can explain it in a lot of different ways that are very complex, complex, but I want to make this simple. So don't howl me for being unnuanced in this. I just want us to understand it so we can move on.
SPEAKER_01That investor. This guy. This investor is gonna take the money that he just borrowed in the end, and he's going to take that money.
SPEAKER_00Let me get my tool back out. Change the color. He's gonna take that money, and he's gonna buy up the dollar. Now, why is he gonna buy up the dollar? Well, because the dollar, if purchased as a bond, you could probably get four at the time of the end being 1.2%, you could have gotten it for 4%. So what does this mean? What it means is the investor here just got money for 1.2% that he's gonna pay back, but that same money that he's paying back on the 1.2% is gaining four plus percent on the other side of it. So then he takes the gains from this money, change my marker color once more, pays back the yen, and he's left with the difference. Put a one in the chat if that makes sense. If you're driving and listening to this or working out, just say the word one out loud. It's not that weird. So they're profiting off of the trade, meaning that the reason the rates going high is a big deal is not just because investors have utilized the yen to finance items. The government, the United States government, has been utilizing the cheap yen. And other governments, by the way, have been utilizing the cheap yen. German bonds, Mexican bonds, very many different bonds all across the world being utilized as a carry trade based off the backbone of the yen. Here's one bigger issue with all of this. So the United States has stepped in to buy the Japanese yen. Let's go down. The United States bought the Japanese yen for the first time in more than a decade as a quote, signal of friendship. Ain't that nice? I wish I had friends like that that would throw billies at me when I couldn't pay my bills. I wish that was a thing. President Donald Trump said that Sunday. Quote, they have a weakening yen and they wanted a little bit of help, and we're always here for Japan, unquote. The US has interest in shoring up the yen because a strong dollar makes American exports pricier for foreign consumers. Similarly, while a weak yen benefits Japanese exports and foreign tourists who go to Japan, it also increases the cost of imports like oil, gas, and fueling inflation. So let me get taken over Besson Soldier during an on-record. This is the part I wanted to get to. A routers photograph, Reuters photograph, from President Trump's cabinet meeting at Camp David on Friday showed Besson had written on his notepad a quote unquote to-do of the incoming US purchase.
SPEAKER_01This, this is the picture.
SPEAKER_00This was right in front of Scott Besson. So to all those that think this is a gigantic circus that we're just watching and that everything is a show, point to you. Seen right in front of Scott Besson at this super top secret meeting that apparently they had lots of media out of Camp David. A to-do list is sitting in front of Scott Besson with only one to-do by Japanese yen. He even put the ticker symbol for the foreign exchange and listed out five to ten billion. Back to the Japanese yen graph. What do you think happened right here? Well, this is when we got news via that photo that it was a potential to happen, and this is when it actually happened. Now, what have you seen happen ever since we intervened?
SPEAKER_02It's going back up. It's weakening further.
SPEAKER_00Or should I say strengthening further? Not good for the US dollar, not good for the carry trade, not good for financing rates. Because if we go back to just the last six months, we can see back in February we're at 153. Now we sit at 159. When in doubt, pull back the graph, by the way. When in doubt, pull back the graph. You're on a weight loss journey, don't worry, pull back the graph. You're on a paying down your debt journey, don't worry, pull back the graph. Look at the old pictures. Feel the way you felt when you were underwater. Okay, little by little you make change positively in your life in any exchange of volatile emotion around a day's worth of a graph. My advice, pull it back. And as we can see, for the last year, this has been a climbing number. Last five years, a climbing number. So even though there was a little bit of a meop right here, come on.
SPEAKER_01Come on.
SPEAKER_00It's not that much when you pull back the graph. And why does this matter? It matters because of how this transaction's happening. So essentially, what is going on is what's known to me as foreign quantitative easing. Foreign quantitative easing. Now, if you don't know what quantitative easing is, I'll explain it to you in just a moment with the definition here at the end of this rant. But just to be very clear, before we get into what's going on with the war and oil and everything else, we have to talk about this thing called foreign quantitative easing. Because essentially, what is happening is Japan is in need of a little bit of the US dollar, a little bit of that sweet liquidity that every country's economy craves. Now, in order to get those dollars, they can't just get them out of their own economy. There's not enough. They obviously don't have enough in reserve, but they do have this one thing more than really anybody else in the world. At this exact moment, the number one holder on record, even though it should be listed as the Cayman Islands, but I'm sure the holders within the Cayman Islands are split amongst a different bunch of other countries they actually exist out of, regardless. And you can look that up by looking up October Federal Reserve Cayman Islands on Google. You'll find the report. 1.1 to 1.2 trillion dollars is held in US Treasury bonds by Japan. So Japan does have an option to get dollars. They could simply sell their bonds. In fact, Japan has been a net seller of bonds for a bit now. So is Germany, so is France, so is Australia, so has China. That's one of the biggest reasons why we are seeing higher yields on bonds, leading to higher mortgage rates and car financing rates for you and I, because the world just simply doesn't want to finance our debt right now. They see the inflation in the future. And that gets us back to our main point. The Fed's in a tough position to open up credit. And what will opening up credit do? Cause more inflation. So we're in a big catch-22. And this quick intervention is not a solution. It is a mere bandage on a broken appendage. It is a nicotine patch for a meth head. And as I earlier stated, there's a great YouTuber who talks a lot about finance. I forget his name right off top, but he says very cleanly every time that we can't wait for the sidewalks to be wet to determine that it has rained. We have to see the rain in the forecast. You ever get out in the wilderness and you see the clouds rolling over, the wind picks up a little bit, and then you can smell it, and you're like, I think it's going to rain soon. I feel like a native when I do that. It feels very, very positive and uplifting for my spirit. It's easy, but But it you get what I'm saying. You can watch the weather forecast, you can plan ahead, and we have to do that financially a bit. And right now, what we're seeing the signs are are forward-facing inflation. Let's pull up the last BLS report real quick. There we go. Let's pull up the last Bureau of Labor and Statistics report coming out for inflation. I'll show the table. This last month we reported 3.4% inflation. Now I know as I shoot this, it is August. I know maybe as you watch this, it may still be August. It may be September or onwards. So just to be clear, we're looking at an August release of July's inflation. An August release of July's inflation. And what's important here, and I wanted to show the whole table, but it's just not loading for me for some reason. Uh, we suffered uh only 0.1% inflation month over month from June to July. Now, why is that? Why is that? Why we had one month where it actually came down, and now the next month it only came up 0.1%. It seems more significant. Well, that's because of oil. Oil has spiked up, spiked down, spiked back up, went down, moderated in the middle. There were some oil shorts and investor trade and cider trading by investors in the middle of that. And it led to oil jumping up in price significantly. But in the month of July, right around the middle, we had a thought process of maybe the war was done. I don't think anybody on this channel, you guys know if you've been listening to this podcast, we did not think that the war was done right then and there. We called this way back in March and April. So just to be clear, the reason inflation is not as high as it should be at this very moment is for two reasons. Number one, the way they track the data is bad. They leverage the macro data that they have because they're gathering like 30,000 different items, goods and services into a basket that they're tracking year over year, month over month with household surveys and other data points, to come together with an index that can track the inflation of goods and services in America. Ultimately a tough job. But it's lagged data. The water is already on the ground and it's biased toward only showcasing the items that really don't move as much. Things like hotels and airfare and pet care, listed right in the same categories with some foods. Shelter, though taking up a quarter of the weight of the CPI index, is measured by this thing called equivalent rent. Owner equivalent rent. You can look this up. OER. And OER can be simply placed as this. They call up the household, they ask them a series of questions, in one of which, if they're a homeowner, hey, Mr. Homeowner, how much do you think you could rent your house for right now? Hmm. I don't know. I'm not a real estate agent, a professional, or even thought about looking into the market of renting my home at this very moment. And I really have no financial know-how to know exactly what I could get, but I am biased toward having a higher home price. If I were to rent it, I'd say $2,800 a month. Perfect. We'll write that down. And they compare all of the answers versus the answers of last year and say, has it gone up? Has it gone down? You heard me right. They're not reading Zillow data, they're not reading realtor.com data, Atom data, any of the data sources that are accurately tracking it, like the MLS. No, instead they're still relying on the old middle school phone tree. Remember when school was out, Snow Day, the phone tree? Yeah, we're still using that to figure out some of these very imperative numbers around our economy. So let's pull back up the graph. We had 3.4% inflation year over year, 3.0% inflation in food, a 14.7% increase in energy, with the largest portion of that being in gasoline. I'll hide this table real quick to show you the graph. Look at this graph of inflation with that 14.7% energy price increase, most of it in commodities, most of it in gasoline and fuel oil, up 39% since last year. So I say that to say, August, there will be more inflation. We're not coming down from this 3.4% mark. You can clip it. And based off the PPI index, which by the way, you may not even know the PPI index, this is what producers are paying on goods. And we can look at their inflation. 4.7%. 4.7% inflation on producer prices. The people making the items for us are paying 4.7% higher. I'm sure tariffs are involved in that. Of course, we did see refunds and some pullback on that. Maybe this is actually transitory, but what we've seen in the past is once a price goes up, it doesn't come down. I'm just saying, guys, I'm not trying to be the fearmonger guy in the room, but we're all talking about CPI. That's consumer prices. Look at 2026's PPI. January 3.1, February 3.4, March 4.3, April 5.7, May 5.9, June, 5.5, July 4.7. And again, it only went down because oil on average for the last month had been down. So it's going to be back in the fives.
SPEAKER_01This is for leading inflation. We can read the forecast.
SPEAKER_00Now let's get a little bit more of the sociology of it all. Because again, I want to come back to the Japanese yen. Because the Japanese yen's importance is in the carry trade and their bond holdings.
SPEAKER_01Now, let's play a game.
SPEAKER_00Let's play a game. I should have made a graph for this because it all ends back at money printing. I'm going to make a graph for this for the next show. And by the way, for those listening that are saying, Zach, I've heard enough. I want to buy gold. How do I buy gold? I'm going to have a reference source for you within a week. I connected with somebody out in Idaho that's been doing it for years. They don't trade much higher than spot. They're very reliable. You can do paper gold, uh, physical gold, silver, other metals. You could transfer retirement accounts. I'm doing it myself with them. And I would only put my name behind something I'm doing myself. So that is in the forefront. So stick around. Um, but what oh, and uh Boonier, to your question, that inflation we were looking at was year over year inflation, year over year inflation, not month over month, as a very important distinction. Very important distinction. So I want to come back to the yen. Again, when the yen is in peril, the carry trade and the bonds they hold are in peril. Now, again, let's play a game. If Japan were to sell our bonds, what does that do to the bond market?
SPEAKER_01Think about it.
SPEAKER_00When there is less of something available, with the same amount I'm sorry, when there is more supply available and the same amount of demand, if not weakening demand, what happens to the value of something?
SPEAKER_02Okay, what happens to the value of something? The value goes down.
SPEAKER_00The value goes down. So the value of the bond goes down because Japan doesn't want them anymore. They need the money for their own currency. Now, what's interesting about bonds, and this is gonna be confusing, so I'm gonna say it two times and then I'm gonna show you a graphic. We're gonna get this. When a bond's value goes down, its yield goes up. Okay, what is a yield? A yield is the return on investment, it's the payout, it's what you're getting on your money for investing in the bond. Let's say it's 4.5%. The yield is 4.5%. The yield is 4.5%, but if it was 4%, that would actually signal the bond is of more value. All right, again, when a bond's value goes down, the yield goes up. Again, when the bond's value goes down, the yield goes up. If the yield goes up, what does that mean? It means financing for our government is more expensive, it means paying back investors is more expensive, it means that financing for a home, for a car, everything you would finance is more expensive. We're in a dilapidated, debt-based, usury functioning economy that's based fully off of fractional reserve credit creation, and we keep making more money via quantitative easing. And now we're doing this thing called foreign quantitative easing because we're allowing Japan to hold their bonds with us short term, short term, I'll be it, but I don't think it's gonna be a short term for long. Five, 10, 20, however many billion, it's being held with the Federal Reserve. So what does that mean if the Federal Reserve is holding US Treasury bonds off market? And they're giving whoever the bonds are being brought from out of thin air or out of a treasury account. It's called quantitative easing. It's just foreign quantitative easing. And just to just to prove it, let's let's read the definition of quantitative easing real quick. I pulled it up. The definition of quantitative easing, QE, it's an unconventional monetary policy where a central bank creates digital money to buy large amounts of assets, such as government bonds from banks and financial institutions. All you have to do is add in the word and foreign entities, and it's foreign quantitative easing. An unconventional monetary policy where a central bank creates digital money, new money, to buy large amounts of assets, such as government bonds, which is a US Treasury bond. So the government's basically saying, we know these won't sell on the free market. Your yen is in trouble. You need dollars. Let us buy them, take your dollars, shore up your currency strength for the benefit of the importing and the exporting, the trade, the travel, and of course, all this money that's financed through your yen, this 1.1 trillion in bonds that you hold. We're gonna shore that up because we have enough problems of our own not to even start on the oil. So let me go in on oil real quick. Oil is a huge issue right now. We've once again seen that Donald Trump has said that this uh war is coming to an end. It is not. It is not. We've stated for the last, oh, I don't know, five months. How long has this been going on? Five and a half months, that this is not a simple extraction process. This is a catch-22. This is an issue, and this is currently one of the biggest L's. This this might be the biggest military L the United States has ever had to hold. And economically, it has uh further depleted our economy, it's depleted our weaponry, it's also depleted our soft power throughout the country. Um, so at the end of the day, what I think is going on in this moment is we're gonna have to bend to the will of other countries, and that means the petrol dollar is under fire. That means bricks has more momentum. That means gold that's being stocked up, by the way, by all these foreign central banks. Goal, let me pull this graph up real quick.
SPEAKER_02I got it, guys. I got it.
SPEAKER_00The amount of gold that's being held, ah, this isn't a good graph. I wanna I want a good graph. I want a good graph. Gold reserves. There we go. Let me pull this up. So the amount of gold being held by foreign entities is increasing dramatically over the years. The US has stayed pretty stagnant, but many of the, as you see, this black line being China and the light blue being Russia, a lot of these major comp uh countries, almost like companies, even smaller ones like India, Japan, are stocking up on gold. Turkey stocking up on gold, Italy stocking up on gold. This has a lot to do with the uh Basell 3 out of the Bank of International Settlements and their valuation on what is value, what is monetary value in the world. Uh, this is a very weird graph. I hate that I picked this graph, but um I'll post a better one. The pro the thing about it is central banks are choosing gold over U.S. treasuries. What does that mean for the demand of U.S. treasuries? Means that demand is low and staying low. What happens when we can't create more debt? We have to do it ourselves. And when we have to do it ourselves, it's gonna be through this thing called quantitative easing. It might come after a stock market crash, it might come after an AI bubble pop, it might come like in 2008 after a bank uh crash or multiple. Or it could come when we can't pay our debt. It could come when we have to expand credit, or we're gonna see financial peril like 2008. I don't know how it will be headlined, but hear me, the same way I said it a year and a year and a half ago, if you don't hold gold and silver, there's really no guarantee on what you're gonna be holding by the end of all this. Because even if you're holding the SP 500 through all of what we just went through in the last two years, gold still outperformed it. Silver still outperformed it. I don't know if that'll happen again. And I'm firm on diversification.
SPEAKER_01Some SP, maybe some Bitcoin, maybe some gold and silver.
SPEAKER_00The yen carry trade is a huge deal. The amount of bonds that they hold and whether or not they'll continue to hold them or whether or not there'll be demand for them when they come out into the market is a big deal. And this puts the Fed in a continued tough position. They've already chosen inflation, they've already chosen not to raise rates. The Fed needs to raise rates not by a quarter percent, they need to raise it by two and a quarter percent. We are so far behind the curve on curtailing inflation. It is a runaway train we are playing the stagnation game with. And for my central casters out there, everything's a play, not saying it is. But Kevin Wars's last time at the Federal Reserve, because he has been there before, was a governor from 2006 to 2011, the pre, the during, and the post-recovery of 2008. So if they wanted to bring in somebody to handle a crash, they pick the right guy. Might just be a coincidence. But the Fed's in a tough position. They more than likely have to expand credit, and that could be cutting rates in an environment where we need to raise them, or buying up bonds as we see right now going on with reserve management, which is actively happening since December of last year, and buying up of foreign bonds to artificially increase the value and keep the relationship going financially with this yen carry trade and with Japan. This will lead to further inflation, further weakness, this war, further spending, higher oil, further inflation from the producers that we're already seeing high PPI from. I'm not telling you what to do with your money, but I am gonna give you a clip. In 2029, you're going to be extremely happy if you are holding a diversified portfolio that is anchored in the currency that is an insurance policy against the dollar. And that could be a bond which holds consistent rates. It could be silver, it could be gold, it could be another currency. But holding something that has lost 93% of its value since introduced is not something I would hold my money in. If you have a savings account where your money is just sitting with no interest at all, at least move it into a high yield savings account, if not a bond portfolio. I love you. I want your finances taken care of, and then always consistently and forever will be consistently inflating and increasing economy. The GDP will continue to expand, credit will continue to expand whether naturally or artificially, and I want you taken care of. Guys, have a good one. I'm gonna cut it off here. Love you so much, and uh remember, remember my number one stance. What a domino! What a big domain!