The Fed Hiked Rates 0.25%. It Won't Stop What's Coming.

The Fed didn't hike rates because it wanted to. They hiked rates because they had to, because they had no choice. So they did the minimum they could possibly get away with, a quarter point, meaningless in the scheme of things. He is not gonna be able to reduce inflation. The only thing that Warsh was able to reduce was the length of the press conference. This was the shortest press conference they've had. I mean, he got out of Dodge pretty quickly Ship Show Well, earlier today, the Federal Reserve did exactly what the markets expected them to do, although they did what very few people expected them to do a few months ago. And in fact, when the year started, everybody expected the Fed to be cutting rates now. But instead, they raised rates by one quarter of 1%, 25 basis points. The Fed funds rate now stands at 3.75 to 4%. So the effective rate is the midway between those two rates. So interest rates, at least at the short end, are still below 4%. Now, the odds of this 25 basis point rate hike this morning, before the Fed announced the decision, were 90%. And that's about as high a probability as I've ever seen for any Fed move, either to hike or to cut. And even though I was of the impression months ago that the Fed was not gonna hike rates, though a rate hike is necessary, in fact, a much bigger rate hike is necessary than the one we got But despite the fact that for a while I thought the Fed would not hike rates, I changed my opinion over the last couple of weeks as the probability of a hike really started to rise. Because another thing that I know from my years of watching the Fed is that they don't like to disappoint the markets. If the markets expect something, the Fed feels obligated to deliver, almost as if they're afraid not to, that if somehow they confound expectations, something bad might happen. And so as long as they do what the markets expect them to do, and in fact, in this case, investors had deluded themselves into thinking that we actually needed this quarter point rate hike, that it would actually be good for the market, that it might result in lower bond yields, not higher bond yields. And on my podcast, I describe that as wishful thinking at best. The markets had convinced themselves that the rate hike would be a good thing, and I was confident, and I said so on the podcast, that the minute they got the rate hike, it would be an example of be careful what you wish for, because I couldn't think of any circumstance under which a rate hike would be friendly for the markets, even one that was expected, and even if investors had convinced themselves that the rate hike was good. But because the markets seem to be so accepting of a rate hike, because we had a 500-point rally in the Dow, right, yesterday despite the high chances of a rate hike, that basically gave the Fed the all clear, "Hey, go ahead and hike rates. The markets are okay with it." If the markets were tanking in anticipation of a rate hike, the Fed might have backed away. And in fact, if the markets were tanking, investors might not have expected a rate hike. Now, one of the questions that, Warsh was asked in the Q&A specifically related to this issue, it was one of the first questions, and that was, "Did you hike rates because of the markets?" Because Warsh has been saying that he doesn't wanna be led by the markets, yet it appears as if that's what happened. And so the reporter said, "Was this your own decision? Did you guys decide to hike rates, or di- did you kinda have to because the markets expected it?" And I think that is the case. But I also did not expect Warsh to admit that. That would be the last thing that he would do. So in that respect, I knew it was a question that was not going to receive an honest answer, because I believe that the Fed did not wanna hike rates. If the Fed wanted to hike rates, they would've done it at the last meeting. In fact, the last meeting, there were three FOMC members that voted to hike rates. Now, this time it was unanimous but the last meeting, there were at least three guys that said, "Let's hike rates." So, I mean, there could've been more. Uh, the data has not gotten significantly worse over the, the weeks between, the prior meeting and this one. And in fact, they could've hiked rates at the meeting before that. I mean, nobody voted to do it, but they could've done it. And I think the reason they didn't do it is because they didn't wanna do it. Now, they wanted to pretend they were ready to do it, so the Fed was talking tough about how vigilant they were gonna be and how committed they were gonna be, and we're gonna get inflation down to 2%. Mark our words. Trust us. Don't doubt us. Don't doubt our resolve. We're gonna do whatever it takes. And then they would do nothing. And even though I was one of the few people that was pointing this out, within the last few weeks, a lot of people were pointing it out. You know, I don't know that they got it from me or they just came to their own conclusions, but people were calling out the Fed. And so I think even though they didn't wanna hike rates, given the 90% probability They didn't, not wanna hike rates more because they were worried, because the Fed had been backed into a corner and it was put up or shut up. And you can't keep talking about k- how committed you are to fighting inflation, watching the inflation numbers get worse and then do nothing. In fact, the last speech that, uh, Warsh gave at Jackson Hole, he kept talking, "Rate hike. Rate hike." It was the most-used word in his talk. All right, well, words are cheap. We need action. So as I said, I think even on my last podcast, that this rate hike was symbolic. The Fed didn't hike rates because it wanted to, they hiked rates because they had to, because they had no choice. So they did the minimum they could possibly get away with, a quarter point, which is irrelevant, meaningless in the scheme of things. And they also made it unanimous, and I think that the reason it was unanimous was not because that's what they all wanted to do. I don't know that anybody really wanted to hike rates. But what they wanted to do is show the world that they were united around this decision, that everybody is serious and everybody agrees that interest rates need to be 25 basis points higher. And so I think it's all part of the show. They're trying to convince the world, because first they tried to convince everybody with talk, and then when the talk wasn't working, and you could see it wasn't working by looking at the bond market, interest rates, yields on long bonds kept going up. And so the markets weren't believing the talk. And so now they said, "Okay, well, we'll act. We'll do something, and maybe this will calm the markets. Maybe this will convince the markets that we are serious about fighting inflation, because we're hiking interest rates by 25 basis points." Well, they put up, but they didn't put up enough, because 25 basis points is not going to cut it. It is not going to win over inflation. In fact, the only thing, uh, that Warsh was able to, uh, reduce was the length of the press conference. This was the shortest press conference they've had. I mean, he got outta Dodge pretty quickly. and so he was able to shorten or reduce the length of the press conference. He is not gonna be able to reduce inflation, Not with a 25 basis point rate hike. If he's serious about actually reducing inflation, it's gonna take a lot more than 25 basis points. It's gonna take a lot more than what the Fed is in fact prepared to do. AI isn't just opening new business opportunities, it's changing the way businesses get work done. The questions they ask, the decisions they make, the routine tasks they can hand off. That's the idea behind NetSuite Next, the next generation of NetSuite. With AI woven into the tools your business already relies on, it surfaces insights exactly when you need them. It puts agents to work on routine tasks and problems, and it lets you ask complex questions in plain language like you're talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift, it's already underway. That's why NetSuite wants to put a new expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now it's yours, absolutely free. Inside, you'll see how AI could reshape work across your entire organization and how to position your business to prosper from it. If I had needed this product, this is what I'd use. If your revenues are at least in the seven figures, get our free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work at netsuite.com/gold. netsuite.com/gold. netsuite.com/gold. And another thing that the Fed would need to do is get out of its lane Warsh again said that the Federal Reserve is independent, and that means we need to stay in our lane. And by lane, he means monetary policy. We can't veer over to fiscal policy 'cause that's not our lane, right? That's Congress and that's the president. And that's BS because fiscal policy is very important when it comes to inflation. If you are running an expansionary fiscal policy, which we are by definition, when you run deficits, when the government spends more than it collects in taxes, it is putting demand into the economy. It is being stimulative That policy is inflationary. It is at odds with what the Fed is doing. So you can't really fight inflation unless you get the fiscal policy under control, unless you are willing to completely crash the economy, uh, with dramatic increases in interest rates, and you have to refuse to monetize any of the debt. You have to let the government know that if you're gonna sell all these bonds, we ain't buying them. You need to find buyers in the private sector because the Fed is not gonna accommodate your budget deficits. But our Fed is not willing to do that. They will monetize whatever debt the government creates. So the idea that fiscal policy and monetary policy have nothing to do with one another is nonsense. And you know, again, if you go back to the Paul Volcker days, he was pounding the table. He was a sharp critic of the then deficits, which are tiny compared to the deficits that we have now, but he knew that this, that we needed to get a handle on spending in addition to his monetary policy. So he knew that there was no dividing line. And of course, an independent Fed means you're independent. You can do whatever you want. You can say whatever you want. If the Fed is not free to criticize fiscal policy, then how do you have independence? In fact, that is one of the main reasons that the Fed is supposed to be independent precisely so it can criticize that policy without having to worry about, repercussions, where you're gonna get fired by somebody because, you know, you're critical of their policy. so, Warsh and his predecessors who have been singing this tune have been doing the institution of the Fed and the country disservice. And in fact, during, uh, his prepared remarks, he once again said that inflation has been too high for too long, which is true. But what is also true is that interest rates have been too low for too long, and that is not a coincidence. They go together. And this quarter-point rate hike is not enough to close the gap. and in fact, for many years at the Fed, they were talking about restrictive monetary policy, that our monetary policy is restrictive, and I kept pointing out the entire time that was not c- true, that monetary policy was accommodative. It may have been less accommodative after the rate hikes than before the rate hikes, but it was always accommodative because even though the Fed had increased rates, the spending did not decline. The savings did not rise. The Fed never raised rates high enough to influence behavior. The government didn't cut back on spending because borrowing was too expensive. Consumers didn't, businesses didn't. So borrowing never got too expensive, meaning the Fed was never restrictive. Now, finally, the Fed is talking about the fact that their policy has been accommodative. Finally. In fact, when Warsh talked about the rate hike, he said he was removing some of the accommodation. Well, if you're removing accommodation, that means you weren't restrictive. You were always accommodative. That's what I've been saying. And now, according to Warsh, they're a little bit less accommodative, but I don't think they are. I think they're more accommodative despite the rate hike, because over the course of the last meetings, let's say, inflation has actually gone up more, than the quarter point. If you look at what's going on. I mean, pretty soon we're gonna have a four handle on year over year inflation, and they're still talking about 2%, and they're still talking about progress that they're making, getting to 2% when they're not making any progress at all. I mean, prices are soaring. Look at what just happened to diesel prices. Now they're about, what, $6.15 or 20, 25 cents, I forget, but these are all-time record highs. Oil is now comfortably over $100 a barrel. In fact, oil was down about three bucks today, three and a half bucks today, and we're still at 102, because we were over $105 a barrel yesterday, and there's no end in sight to these, increases in oil prices. But not just oil, fertilizer and f- you know, all kinds of things that relate to food and energy are getting a lot more expensive. There's no way, that you're gonna see a reduction in inflation. And, as I said, the markets did sell off the Dow closed down about 600 points on the day. It was positive before the rate hike. Gold, which rose about $60 an ounce before the rate hike, gold sold off to negative about 40, so it lost about $100. As I'm speaking now, the markets have been closed for a little bit and gold's now off about $30 on the day. but the biggest problem for the markets are bonds. There was a little rally in the bond market earlier this morning. Yields tick lower because, again, everybody was excited. The Fed's gonna cut rates, it's gonna show everybody how tough it is, and that's gonna be good for bonds. Because after all, the biggest enemy of bonds is inflation, and if we have a tough cop on the job that's gonna make sure there's no inflation, well, that protects the bond market. So I'm comfortable the bond market vigilantes will back off once they see for sure that they got the right guy on the beat. They got a tough cop, and his name is Kevin Warsh, and, uh, and, and he's gonna demonstrate his toughness with this namby-pamby quarter point, too little too late rate hike. Well, after that initial rally, the bond market sold off, and as I am recording the podcast here, the yield on the 10-year Treasury is back above 5%. It's at 5.02% and headed higher. This is not the top. This is a stepping stone to 6% and higher. And of course, everything is going up. It's not just gonna be more expensive for the federal government to borrow. It's gonna be more expensive for everybody to borrow. You know, I think mortgage interest rates now are close to seven and a quarter on a 30-year fixed. I think by maybe early next year, maybe Q1 of next year, possibly sooner, it's gonna be 8% for a 30-year fixed. The last time mortgages in the US had an eight handle Was the year 2000. So 26 years ago, and by the time we get to 8%, it could be a 27-year high in mortgage rates. Now, the median home price since then has tripled. So that is a big deal because that means that your monthly mortgage payment has basically tripled because it's almost all interest. And so you're tripling the cost to buy a home, which is more than double the official increase in the CPI over the same 26 years. Now, I don't believe the official rate, so it's probably not, quite double But the problem is Americans are in worse financial shape. They can less afford a home. 'Cause remember, in 2000, you know, that was the top of the stock market bubble. I think a lot of people had a lot of stock market wealth, probably more so, uh, than they have now, before the stock market bubble popped. A- and that's really why mortgage rates started to come down, right? The Fed started cutting rates after the tech wreck and the dot-com bubble burst. But right before it burst, a lot of Americans were pretty flush. You remember back then in the late 1990s, the US government wasn't even borrowing a lot of money. Those were the years where we had, you know, the Clinton surpluses. I mean, they were kind of accounting gimmicks, but the federal budget was in much better shape back then. So the, uh, consumers were better able to afford, mortgages even though they were 8%. But today, given how broke everybody is, uh, and how everybody is struggling, uh, with food and energy and insurance and medical care costs and all these costs that have gone way up- There's no way that they could do an 8% mortgage. But of course, 8%'s not gonna be the top. We're gonna be in double digits. We're gonna have mortgage rates above 10%. You know, that's why, uh, a lot of the home builders got beat up pretty big today in the market, financials have been under pressure, because rising interest rates are going to be particularly painful. Every investor understands counterparty risk. When you deposit money in a bank, it's not really your money anymore. It's a claim on the bank. Most people never apply that logic to their passwords. They reuse the same one everywhere. They trust some company's server to keep it safe, and then that company gets hacked. Now their one password is everyone's password. That is a single point of failure, and you built it yourself. Here's what I'd want instead, something closer to self-custody. Proton Pass stores your passwords, passkeys, and credit cards under zero-knowledge end-to-end encryption. Proton itself cannot read what is in your vault. It generates a unique strong password for every account, so one breach stays one breach. It autofills your logins on your phone, your laptop, whatever browser you're using. And here is the part I find clever. Instead of handing your real email to every website that asks for it, Proton Pass creates an alias. If that alias starts getting spam, you just kill it. Switching from your browser or another password manager takes one click. Go to proton.me, that's P-R-O-T-O-N.M-E/peter, and you get fifty percent off. There's a thirty-day money-back guarantee, so the downside is zero. Stop trusting a claim. Own the vault. That's proton.me/peter. And, you know, one of the questions that Warsh got today was with, you know, regarding interest rates and why they're going up, or why are bond yields rising? And Warsh had three explanations for the rise in bond rates between the last FOMC meeting and this one. Three explanations. The first one was economic growth. We have such a strong economy, we have to pay higher interest rates. So that was number one. Number two was kinda crowding out competition. He talked specifically about the borrowing from the hyperscalers, and he said there's a lot of competition out there, everybody's trying to borrow money, and so that's why the yield's rising. And then the third explanation was geopolitical. There's a lot of geopolitical risk out there, there's a lot of uncertainty out there, and so that's driving up yields. Although normally, a lot of geopolitical risk would drive money into the US bond market as a safe haven. So I don't know if that explanation even makes sense. But what's the most ridiculous is what he did not say He did not say interest rates or bond yields are rising because of higher inflation risk or because of a loss of confidence in US fiscal policy, in our ability to, uh, reign in our deficit spending, uh, that nothing about Fed policy being too loose, right? So n- nothing that would lay any of the blame for rising rates on either the Federal Reserve or the US Congress or the President. It's all external factors. It's all the market. It's all geopolitics. It's got nothing to do with us. And in fact, another way that Warsh tried to convince everybody that the inflation that we're experiencing is nothing that we're doing, right? It's just a global phenomenon. It's just happening all over the world, so there's nothing we can do about it. And he talked about how he has, uh, meetings or discussions with his counterparts at, other uh, central bank, uh, chairs. And everybody's experiencing these inflation problems, and therefore it mi- it must not have anything to do with what we're doing because everybody else is in the same boat. Well, the reason everybody else is in the same boat is because we're all making the same mistakes. All these central banks kept monetary policy too loose. They all kept interest rates too low, and all their governments spent too much money and ran big deficits. That's what we all have in common. And because we're all making the same mistakes, because we're all creating inflation, we're all experiencing the consequences of inflation. Now, there are some exceptions, but by and large, this is what is happening all over the world. So, you know, the whole purpose, though, I think, of this rate hike and it, the fact that it was unanimous is since talk wasn't working the Fed decided to act, but do the littlest it could possibly get away with. Why didn't they at least do 50 basis points? If they really wanted to be serious, do 50. I mean, you're supposed to do another 25 in December anyway. Just do it right now, right? Peel off the Band-Aid. Get it over with. Except that's not even peeling off the Band-Aid. That, that, that's still too little. But the fact that they wouldn't even do 50 shows you. And of course, the reason they didn't wanna do 50 was because the markets expected 25, right? The Fed is still afraid of doing something that the markets haven't already blessed in advance. But of course, the one person who was not happy, although I guess there are a lot of people that aren't happy, but the person who's the most unhappy is the President, Donald Trump, who took a couple of hours to finally take to Truth Social and react to the rate hike. 'Cause after all- Trump wants a cut. In fact, was it a few weeks ago? And I discussed it on the podcast, but Trump actually threatened the Fed. Trump said, " If you don't cut rates, I am going to shut off trade with most of the world. I am going to shut off trade with every country that we have a trade deficit with," which is, you know, most of the countries, certainly all the important countries. And he said it as a threat, like, "If you don't cut rates, I am going to harm the US economy." Now, for some reason he now thinks that shutting off trade would be a positive for the US economy. Well, how do you threaten somebody by promising to do something good, right? It shows that Trump doesn't even believe what he's saying. Because if ending all trade with countries that have trade surpluses with us, if that was a great win for the US economy, then just do it. I mean, why- how do you use it as a threat? Obviously, he has to know it's a threat, but it's an empty threat. It's like you're holding a gun to your own head and threatening to pull the trigger. The Fed obviously called that bluff, because the Fed hiked rates and the Fed does not expect Donald Trump to, uh, follow through with that Blazing Saddles-esque type threat. Well anyway, here's what he said today. He raised the issue again, but in different terms, not so much as a threat, just as something he is contemplating doing unless we get lower rates. I'm gonna read his entire Truth Social post from just moments before I started this podcast Interest rates in the United States should be 1% or less because we are the best credit in the world by far, all caps. First of all, why should rates be under 1%? The only time they were under p- 1% was when we were in, you know, the financial crisis, in the years immediately following. He's saying we've got the booming economy, the greatest economy in world history. How do you square that with claiming that interest rates should be less than 1%? But if they should be, it would be. If we really were the best credit in the world, then we would be borrowing at lower rates of interest. The reason that Switzerland can borrow at a lower rate of interest than America is because the markets believe that Switzerland is a better credit risk than the United States. After all, if they didn't believe that, if they thought Switzerland was riskier, they would demand higher interest rates from the Swiss. But again, we know that the Trump administration, or Trump himself, does not, um, believe in capitalism. He believes that, uh, the markets get it wrong and that the government needs to interfere. In fact, and I'm gonna talk a little bit more about this later. I'm jumping ahead of myself, but it seemed appropriate. I was listening to Warsh, testifying before Congress, and one of the congressmen pointed out that he thought that Donald Trump was the most communist of all of the presidents that he can recall, given that in- under communism, the government seizes control of the means of production. And he talked about the 39 companies, public companies, that the US government now has stakes in, that the US government is now buying up companies. That is a communist thing. That's not a free market, government where the government is starting to take ownership of the means of production. But he also talked about how the government under Trump is trying to manipulate the markets and try to get prices to be different than where the market wants them. One example was the bond market, how the Trump administration is interfering because it believes the market is mispricing long-term treasuries, and they wanna substitute the judgment of government for the market. And this is basically what Trump is saying. Trump is saying that he knows more than the market. The US is such a great credit risk, the market is getting it wrong. We should have interest rates below 1%, not higher. And, you know, if the Fed actually slashed short-term interest rates the way Trump wants, long-term interest rates would rise even faster. So again, that's a- another example of be careful what you wish for, because the Fed, even if it could manipulate the short end it would have the opposite effect on the long end. But let me finish. So right after he says that we deserve 1% interest rates, "Our country is booming." Booming is also in all caps. So we have a booming economy, yet interest rates need to be where they would be if we had a complete economic bust. But, "Our country is booming with new investments. If we stop trading with every country that we have a deficit with, which is most of them, we would make at least $1.5 trillion a year." What? We would make $1.5 trillion a year? Okay, well, he explains that. The word deficit is nothing more than a fancy word for loss. We are carrying, quote unquote, "Almost every country in the world, and that cannot go on any longer." Now, all caps, "Lower the interest rates for the United States of America, and fast!" Explanation point. President Donald J. Trump. First of all, who is he talking to? Who is supposed to lower the interest rates for the United States, and how are they going to do it fast? Is he talking about the Fed that just hiked interest rates, or does he want the rest of the world to somehow start buying up our bonds despite the fact that we're not a very good credit risk in order to prevent him from shutting off trade, which according to Trump, will earn us $1.5 trillion a year. Now, what is that 1.5 trillion? I guess that's our trade deficit, right? I, I didn't know it was that big. Uh, maybe that's just the goods deficit, 'cause we offset it with a surplus in services. But according to Trump, if we stop buying all of these goods from abroad, we will make 1.5 trillion. Now, we don't actually make anything. Yes, we will stop spending money on imported goods, but what are Americans going to buy instead? Because that's where we lose. Because if we wanted to buy the products from ourselves, and the products don't even exist, but the products are gonna be much more expensive. See, if we stop sending our money abroad and buying stuff, we're gonna have to keep our money here and buy stuff. Well, the price of the stuff that we buy would skyrocket because there's not that much of it, and a lot of the stuff that we import we would have to live without. That would be a huge loss. Imagine trying to live without all the products that the trade deficits provide us with because we have no ability to provide those products ourselves. Now, if we had to, if we had to rebuild our factories, like reconstitute the supply chains, uh, restore all the infrastructure, God knows how long that would take, but that would be a major investment that would not pay off for many years. But in the short run, we would have to bear the cost. We would have a complete economic collapse. Talk about austerity. If we tried to go cold turkey on imports, the world-- We are not carrying the world. The world is carrying us. We live off of their trade surpluses. They don't live off of our deficits. As I pointed out on my last podcast, China is doing very well. Thank, thank Trump very much Despite the tariffs, Trump has very high tariffs on Americans who wanna buy Chinese goods. As a result, we are buying fewer Chinese goods. Has it helped our trade deficits? Because, you know, we're buying from other people, but China's trade surpluses are bigger. They're bigger now than they were before. How is that happening? They're trading more with other countries. That's how. They've got the goods that everybody wants, and if we don't want them because we can't afford them because Trump's tariffs make them too expensive, well, that- that's great news for somebody else who can now buy what they couldn't afford because now the Americans aren't outbidding them. they're able to buy the goods, and China's gonna have a record trade surplus this year, followed by the record that it had last year, 2025, that it just broke. Meanwhile, America had its biggest trade deficit in the history in 2025, so we were the biggest loser, and Trump was president for pretty much all of 2025. But again, this is a demonstration of a complete lack of understanding of trade and Trump thinks that we're a big winner. If we just stopped all these goods from coming in, we win. What the hell do we win? The booby prize? I mean, what are we gonna do? I mean, what's gonna happen if you go into a Walmart and the shelves are completely empty, or if you go into Amazon and, you know, you're scrolling through there, and there's, there's nothing there, right? The only place you're gonna find stuff is eBay, right? 'Cause they- they're selling used stuff, but there's not gonna be any new stuff. Uh, what- what's gonna happen? What's gonna happen to consumer spending when there's nothing to buy? What's gonna happen to all the workers when there's no customers? I mean, the economy would completely collapse. That's why it's not gonna happen, right? The-- Trump is never going to do this. Then why is he posting about it? Why is he talking about it? Why is he claiming this nonsense? Again, I don't know if he's just the greatest liar or completely delusional 'cause a lot of what he says is inconsistent with what he says. He will say two things in the same post that are diametrically opposed or mutually exclusive. so he's just rambling on with this nonsense, but the problem is his, uh, minions, his cabinet does the exact same thing. You know, let me get back 'cause I already, uh, mentioned it but the Secretary of the Treasury, who was asked a question about the communist, tendencies of the Trump administration- I talked about on my last podcast Donald Trump's asinine, campaign promise to dividend out $5,000 to every adult American if the Republicans win, or maintain control of the House and the Senate. So it stays exactly the way it is right now. He said that if, "If we win, you win. Everybody wins if the Republicans win because we're gonna share, uh, the- the surplus. We're gonna dividend out." Again, this is also part of the kinda communist feature where Trump looks at America as a big corporation, and he's the CEO, so he's running the country. Where, you know, if you're a free market guy, you know that the government doesn't run the country. The country runs itself. But if you think that you're in charge and you're running the economy, it's because you, you believe in centralized planning not free markets. But Trump wants to create the impression that he's doing, uh, such a great job as CEO. He is making us so much money that he can pay us all a dividend. Again, even though, as I pointed out, we've run up $4 trillion of red ink, a massive loss, uh, since he got the job the second time around. So there are no profits to share. There's just losses that we have to absorb. So this is all BS, trying to pretend that he's, he's doing this. But I pointed out he made this ridiculous promise, and when he made the promise, the Secretary of the Treasury who was there in the audience was applauding, clapping for this nonsense, and he's, he's supposed to be the, the Treasury Secretary, right? He, he's supposed to be the adult in the room. That's why he's got the job, right? He's supposed to be like a banker that's supposed to be, keeping everybody in check. Anyway, so one of the congressmen or senators, I forget, asked Bessent about this promise. And he said, "Do you think this is a good idea that the President wants to give everybody $5,000?" And he said, "Yeah, I think it's a good idea." It is a terrible idea. In fact, every Republican would say it was a terrible idea if a Democrat proposed it. If Biden or Kamala Harris said, "We're gonna send everybody a $5,000 check," they would've said, "That's terrible. That's gonna cause a lot of inflation." Yeah, duh, that's exactly what it's gonna do. Yet the Secretary of our Treasury thinks it's a good idea. Why is this man the Secretary of the Treasury? That statement alone disqualifies him for the job. The Republicans should be demanding his resignation. Clearly he's not qualified. He's not competent. It's a good idea to just send out everybody $5,000? Why not $10,000 then? Why not- How about $20,000, right? The more, the better. 5,000 is a good idea. Isn't 10,000 an even better idea? And then somebody, said something, I forget, and then his comment was, "Well, don't you want the American people to have an extra $5,000?" Like, what are you? What are you, Scrooge? What are you, stingy? You don't care about people? You don't want the government to send everybody $5,000? Then The guy followed up and he said, "Well, isn't this gonna impact the deficits and the national debt? Don't we already have too much debt?" 'Cause it's, you know, they're saying it would cost like $1.3, $1.5 trillion, right, to send out these checks. And then the Secretary of the Treasury said, "No, I don't think it will have any impact on the deficit." Really? This is our Secretary of the Treasury. He can't even do basic math? So he can't even add $1.5 trillion to $40 trillion? Somehow you take $40 trillion plus $1.5 trillion and the result is still $40 trillion. H- how does that math work? I mean, unless there's gonna be $1.5 trillion in spending cuts to offset the giveaway, but they're not talking about any spending cuts. They're gonna increase spending on… They're s- they've increased spending on everything. The one time they tried to cut spending on waste, fraud, and abuse, they couldn't even do that. So you have a Secretary of the Treasury that thinks it's a good idea to give everybody $5,000, and he doesn't even think it's gonna increase the deficit. Yeah. Is there any way this guy is actually that dumb? I don't think he could possibly be that dumb. I mean, he worked on Wall Street for a long time. He made money, so he's got to be a liar. And I said this. This is what Trump hires people to do. I don't even think the president should really be able to pick their own cabinet. In fact, I don't even think we should have a, all these cabinet heads. But if there are, you know what? It should be like the opposite party. Like, you're a Republican president, okay, the Secretary of the Treasury needs to be appointed by the Democrats or something. Because we can't have, uh, these guys that are supposed to be giving the president advice. Right? They're there, they're… 'Cause he's supposed to be smarter. Because the president is not supposed to be a jack-of-all-trades. He doesn't know everything, so he's supposed to surround himself with people who know about things, like the Secretary of Agriculture is supposed to know about agriculture. I mean, president's not a farmer, right? The Secretary of Defense, right, he's a military guy, right? Trump's got no military experience. He's never even served. He's never even been a private. What the hell does he know, right? So we need to get, you know, some guy that was a former general or somebody that knows something about military strategy, right? So everybody's supposed to be an expert. And so the Treasury Secretary, he's supposed to be a real expert, you know, at finance, and, accounting, and money, and, and all that stuff. But if Trump just surrounds himself with a bunch of yes-men who are gonna do nothing but flatter him and talk about how great he is, and how great every idea he has, no matter how asinine that idea is. Now, again, I don't know behind the scenes, maybe, the Secretary of the Treasury- is telling Trump, this is the most idiotic thing I've ever heard. are, are you off your rocker?" But I don't know if he has the balls to say that to Trump. I don't know. But one of the reasons I think that interest rates are rising is because the president made this ridiculous promise, and because his secretary of the treasury said, "Yeah, I endorse this. This is good. And don't worry about the deficit because it's somehow not even going to impact it." Yeah, maybe they'll just do it off budget. Maybe that's how it won't impact it. We won't count it. We've decided that we won't count the spending as part of the budget, and so officially it won't increase the deficit, which might be true. But unofficially, it will actually increase the national debt, and of course, all of that extra money, the interest expense is real. They have to pay interest on that money, every year Anyway, so you got Trump now, and now he didn't say That Warsh was an idiot or a dummy, you know, a low IQ person, the way he was very critical of of Powell, because that would make him look foolish because he just appointed this guy and said all these great things about him. and now that he's hiking rates, he can't call the guy a complete moron. But if Warsh were not the current chairman, and if Powell were still there, that's exactly what he would be doing. If the circumstances were identical, he would be just as harsh, on Powell now as he was then. He realizes that he can't really do that. He can't talk about how dumb a guy that he just appointed is because that reflects poorly on him. so he… I don't know what he's doing, but somehow he's still saying that we deserve… Not like… He's not saying the Fed made a mistake by hiking rates, he's just saying we deserve lower interest rates because we're doing the world such a favor, and the world better pay us back, the world better buy our bonds. In fact, I thought about this. At one point, Trump said, with respect to lowering interest rates, that there was a military option that we hadn't tried yet. And I'm like what the hell is the military option?" And maybe what the military option is, is not trying to convince the world to buy our bonds because we deserve low rates and they owe us, but maybe what he's gonna say is, "You know what? If you don't buy our bonds, then we're go- you're gonna get our bombs." Like, it's bombs for bonds, right? We won't bomb you if you buy our bonds. Like, we're a big bully, and we're telling everybody, you know, "Buy our bonds or else," right? It's global extortion. and maybe that's what's coming. I don't know what else he meant by the military option. Now, maybe he could have said, " We're not gonna defend you if you don't buy our bonds. If you don't own a certain number of US Treasuries we're gonna pull our troops, uh, from your country. Or if you get invaded, we're not going to defend you. The only way that you can buy security is to buy our bonds," right? The, the bond drive, you know, we had in, uh, the Second World War. They were going around, uh, you know, trying to get the public to buy our bonds for the war effort because Americans had enough money, to lend it to the government to buy bonds. Now we have to get foreigners to buy our bonds, but they're not gonna be as patriotic because back in the 1940s, yes, it was an appeal to patriotism to get Americans to buy war bonds. but that's not gonna work other countries. They, not American patriots. They're patriotic about their own country, so we're gonna have to threaten them in order to get them to buy our bonds. There was another interesting exchange between Scott Bessent and one of the, the Democratic congressmen, and this had to do with President Trump's meme coins and how much money was lost by the people who bought those coins because that's how much money the president's family made off of those coins and the president, right? The money that the president made, the hundreds of millions of dollars that the president made on TrumpCoin, came as a direct consequence of the hundreds of millions that the buyers of TrumpCoin lost. Now, obviously, some buyers made money if they got in right away. Maybe some of his buddies knew that he was going to launch it, and so they got in early and they sold, like, an hour later. So yeah, there were some people that profited, but that just exacerbated the losses for everybody else because the total losses, it wasn't just what Trump made, it was what everybody else who got in early also made. They're the winners. Everybody else is the bag holder because this thing is basically a Ponzi, a pyramid, a chain letter, whatever you wanna call it. And that's what this congressman was saying to the Secretary of the Treasury. He said, "Why are we allowing this? Uh, th- this should be illegal. We were putting people in jail for running Ponzi schemes. Why are we letting the, the president, you know, do this, with a token?" And he's asking the Secretary of the Treasury to comment on it. And so first thing he said is, like, "Well, th- th- this isn't a Ponzi. It's got- it's not- it's it had nothing to do with a Ponzi." And then the guy's like, "Well, explain the difference. Like, how, how, how is this… You know, people are buying. It's the greater fool theory. People are just buying it because they think the price will go up." Well, before that, he says, "Well, they're not buying any value. They're buying a token, but they're not getting any value." And then Bessent said, , "Well, The same thing when… You know, it's the same as buying gold, right? What do you get when you buy gold? Well, you get gold. You get a valuable piece of precious metal that you could do all sorts of things." yet Scott Bessent, Secretary of the Treasury, can't differentiate between what you get when you buy gold and what you get when you buy a, a meme coin. He wasn't even talking about Bitcoin. He was talking about TrumpCoin. He couldn't tell the difference between TrumpCoin and gold. As far as he was concerned, it's the same thing. You buy it, and you have no idea what you're getting, right? But then when the congressman said, "Well, but, you know, gold is a tangible thing," right? When you buy gold, you're getting something real. He said, "Bitcoin is intangible." And then he said, "Well, it's really nothing." And then Scott Bessent seized on the intangible parts. Oh, wait a minute, stocks are intangible, bonds are intangible. In other words, buying TrumpCoin is just like buying a stock or just like buying a bond. Except it's nothing like buying a stock or a bond, because the stock is an operating business that has earnings and pays dividends, and bonds have a fixed c- a maturity where you get your money back, and in the meantime, you get paid interest. None of that applies to TrumpCoin. You get nothing. And when he talked again about, well, the only way you make money is if you buy it and sell it at a higher price, the Secretary of the Treasury said, "Well, that's the only way you make money in stocks." No, it's not. You make money in stocks by collecting dividends. Does he not know that? And also, a stock price going up is not just a function of people willing to pay more. It's a function of the underlying business being worth more. What's supposed to happen or the reason that stocks go up over time is because the operating business becomes more valuable over time. It earns money, invest the earnings in capital to grow the book value, grow the revenue stream, grow the profits. And so when a company becomes more valuable because it earns more money, the share price goes up. That's very different than TrumpCoin. TrumpCoin is dependent solely on the greater fool. It's never gonna produce any income other than for Trump, because the congressman pointed out, not only did Donald Trump cash in, uh, when he cashed out by selling these tokens to the fools who bought them, but every time the tokens are bought and sold, even if the people buying and selling them are losing money, Trump makes even more. He rings the cash register every time these tokens change hands. It is a complete scam. Now, why can only the Democrats see the scam? Somehow, if you are Republican, you can't see it. Now, it was easy to see the scam when it was Hunter Biden and Joe Biden. In fact, we had an example just-- I just found out about this today Um, and so Don Jr. had a wedding, very lavish affair, but apparently a few hundred thousand of the cost was picked up by some Russian oligarch, uh, who's got a lot of ties, um, uh, with Putin. And so Don Jr. was asked about, like, why did this Russian oligarch, Putin buddy, why did he spend a few hundred thousand dollars on your wedding? Of course, that wasn't even all the wedding. It was pretty expensive wedding. Uh, but I, you know, you would think that Trumps had stolen enough money already that they could pay for that wedding, right? They made enough grift, uh, off, uh, the presidency that they could f- you know, finance this wedding. But no, right? So this, this, uh, wealthy uh, Russian, uh, pays a few hundred grand, uh, for the wedding, and Don said, "No, it's just nothing… It's just a gift. It's just a wedding gift." Yeah, like, like that was on the registry, a few hundred thousand for the wedding. Yeah, let… I'll- I'll- I'll pick that up. I mean, apparently the guy doesn't even speak English. H- how good a friend can he be? Some Russian guy that you can't even talk to. You're such good buddies that he just decided, "Hey, what should I get Don Jr. for a wedding present? You know, sh- shall I get him, you know, a, you know, a, a, a vase or maybe, part of a silver set that he wants or, no, how about, how about $300,000 towards the cost of, of his wedding?" Yeah that, that sounds like, like a good gift. I mean, who has friends that are that generous? Who believes that some Russian is gonna cover a few hundred thousand dollars- for Don Jr., and not expect something in return from his father? I mean, Republicans were not dumb enough to think that people who were buying art from Hunter Biden didn't expect something from Joe Biden, right? They were able to see that, but they can't see something like this? They… In fact, Trump just does it so much bigger. He doesn't steal millions, right? He steals billions or whatever that… He's doing it on a much, much higher level, and right out in the open, right in their faces, and and nobody, nobody picks up on this. Oh, by the way, I think it's interesting for all you crypto guys out there, that despite the influence of Trump and the Trump administration, the CLARITY Act could not get the 60 votes to make it through, uh, the Senate, and so that, that bill died. And this is an indication that the Bitcoin industry the political capital is drying up, and a lot more of it is gonna dry up once the Republicans lose the House and probably the Senate. Uh, the $5,000 bribes are likely not going to work. And, and, you know, by the way These $5,000 checks may in fact go out, not because the Republicans win, but because the Republicans lose. See, what's more likely to happen is the Democrats get at least the House, and the House will pass some type of stimulus that sends out a $5,000 check to everybody, except they will means test it. They're not gonna send the rich, right? So their plan will be somewhat less wreckless than Trump's plan. Trump was everybody gets $5,000, even Elon Musk. So the Democrats are gonna say, "No, only the people who need it get the money," right? "We're not gonna give the money to the rich." So the Democrats will be less fiscally reckless than Trump. Now, Democratic House passes it. If there's a Democratic Senate, they'll probably pass it too. But even if there's a Republican Senate, how can the Republicans vote against the $5,000 when the when they were in favor of it when Trump wanted to pay it? And if the House and the Senate pass the $5,000 check, Trump is gonna veto it? Trump is gonna say, "Hey, I'm a sore loser. Because we lost, you can't have this money that we all agreed"? In fact, Scott Bessent said he's in favor of it because the people deserve it because, who, who could be against putting money in the pockets of the American people? So I think that instead of having gridlock when the Democrats control Congress and we have a Republican in the White House, it's gonna be even more spending because Trump, I think, is gonna sign on to every big spending bill that the Democrats put on his desk. But anyway, getting back to what I was saying about crypto. So they've lost this political capital, but after the, the midterms are over It's gonna be a very hostile environment on Capitol Hill for crypto because the crypto industry, Bitcoin, they have made Bitcoin and all of crypto highly political. It's the Republican Party that is pro-Bitcoin. Now, that means the Democrats are going to be anti-Bitcoin. Regardless of what they think about it, if the Republicans are for it, they're against it. Everything has been politicized and polarized. And so if Bitcoin couldn't really go up-- Right now, Bitcoin's about 75,700, right? Hasn't gone anywhere. In fact, it's about equal to the cost basis of Strategy. So Strategy's made no money buying Bitcoin. Most people have lost money on Bitcoin 'cause they, they didn't buy it, until the last, f- four or five years. And, and Bitcoin hasn't gone up. The peak in Bitcoin, as I've said, and as the Bitcoiners refuse to admit, the real peak was 2021, and we've just been distributing ever since, getting ready, uh, for a big crash. But if Bitcoin couldn't go to the moon with the Republicans in charge and a very friendly Congress, what's gonna happen to it when they have an adversarial Congress, when Congress is gunning for the industry? Because they see it as a source of campaign financing to the Republicans and power to the Republicans, they're gonna wanna take down the industry. And so it's gonna be very difficult for crypto. And so if they couldn't thrive in the most favorable environment, imagine what happens, uh, when they have an adverse environment, because it's gonna get worse. It's gonna be worse, uh, than it was when Biden was there And the, the Democrats are gonna be going after crypto. You c- you, you can bet that that's gonna happen. So before that happens, get out. Sell your Bitcoin. You can get more than $75,000 for a Bitcoin. Go to SchiffGold. Buy yourself some gold. Go to TGold. Set up an account. You gotta get… You, you gotta get out because everything that is being done is gonna undermine not only the value of the dollar, but the value of crypto and Bitcoin and all this stuff. I- i- if you can't see this, you know, you- you- you're as delusional as Trump is, uh, when it comes to a lot of stuff. You gotta save yourself. You gotta do something. And, you know, gold is going to be able to provide you with all the utility that you thought you can get from Bitcoin but can't, especially when we finish building out, uh, TGold. And it's not just gonna be, uh, SchiffGold or me that are doing this, but I think other companies are going to be, uh, finding ways to introduce gold or reintroduce gold back into the monetary system. It's not gonna just be central banks who are buying gold. And I do think that- after this initial decline today, we've got this rate hike. It's not gonna be long before the gold markets realize that rate hikes are not bad for gold. These are too small to make a difference. It's not example of the Fed getting tough on inflation. The hikes are so small because they can't afford to fight inflation because, uh, if they actually brought guns big enough to do the job, it would take down the entire US economy. So all they can do is talk, and these tiny rate hikes barely amount to anything. They're symbolic, and the markets are gonna figure it out. So soon, gold's gonna go up, bond yields are gonna go up together despite the rate hikes. The dollar's gonna reverse, it's gonna get hit, and at some point, the stock market and the housing market are going to buckle. There's only so much they could take before you finally, uh, break that camel's back. Nobody knows how many straws. I don't know that this 25 basis point rate hike is the final straw. It may be, uh, but we won't find out until after the fact. Anyway, I am headed tomorrow up to, or over to, I guess, Panama. I'm gonna be there for the Shift Sovereign, uh, Panama Plan B conference. Looking forward to seeing some of our, uh, subscribers, uh, some of our clients at that conference. In fact, I am gonna be in Panama through, uh, the end of the Jewish holiday of Yom Kippur. I am going to be, uh, observing, uh, services there. There is a very nice size Jewish population in in, in Panama, so I'm interested in experience some of the Panamanian Jewish culture. I will not be back in Puerto Rico until the 22nd, so I don't think I'll be doing any more podcasts until I get back. But there's likely to be a lot of action in the markets in the aftermath of the Fed's rate hike. Again, as I said earlier, be careful what you wish for because you just might get it, especially if what you're wishing for is a rate hike. In the meantime, don't forget, like and subscribe to this video, leave me a comment, and follow me on X if you're not already following me. In fact, you could also follow me on Instagram, on, on TikTok, and again, subscribe to my YouTube channel. Bye for now.