I went to Canada and I have my two rifles and we go there and you go and you have to do all the checks, everything else you get there, then you got to do the checks again, leave the airport, have them go through everything for some reason and then go back in. And so I'm talking to the guy. I'm like, wait, why do I have to go back and go in? You guys already checked everything. And he looks at me and he gives me a lecture in Canada, and he starts going off about how we know where our guns are.
We respect firearms, right? Everything else, they lose my guns, they lose my guns. Guess where I found them? Sitting in the middle of. An airport at. 2 a.m.. Out where everybody. Walks through on the floor. Welcome to Drunk Real Estate. Grab a drink. And enjoy the show. Hey there. Welcome to episode. 93 of Drunk Real Estate. I am Kyle Wilson, Ashley Wilson's husband, and we pulled it off. I appreciate it, guys. I had a bit of a snafu last night.
I ended up going to the Fliers and Columbus Blue Jackets hockey game instead of coming to the podcast, so I will take that on me publicly. Apologize to you guys because I feel bad, but I appreciate you making it work. It's now recording on Wednesday. Thanks for coming, Jay. Thanks. Hey, I was happy to do this. I always like having the episode really close to to release. Like, we're releasing this thing in about 12 hours. 11 hours from now.
We're releasing this thing now, I know we've been recording earlier because our awesome, producer Alex needs a day, a day and a half to actually get things ready. So we're putting her on the spot on this one, but, but pretty cool that we're releasing this thing in about 11 hours. Yeah, especially these days. Like, things change by the tweet. So exactly, everything we say has a 5050 shot of actually still being true tomorrow morning.
So I know there's there's a little bit of sickness going around in your household, but are you are you still drinking tonight? I am so yeah, I am drinking but I'm doing. It's late, so I'm doing some coffee to keep me up and then throwing in some Kahlua into the coffee. How do you drink coffee this late? Doesn't it keep you up like it's decaf. So then how is it keeping you up? It'll still keep me up. There's a little bit of caffeine, even in the decaf coffee.
So, and trust me, I'm really sensitive to it, so there's probably will keep me up. How's it going, Mauricio? Dude, it's going to be back. Missed you guys last week, enjoyed a little vacay with the fam. Got to see, Jay for a few minutes, in Sarasota. And, I'm glad I got through today. I don't know if you guys heard, but zoom was down nationwide. I had my elite coaching call today, and, like, freaking the zoom was down. What happened? I didn't know that. But zoom didn't work.
Yeah, zoom wasn't working. And so I was, like, scrambling at it, literally. So my things like 130, it came back at like 127. It was back. So I was like half, half the people joining Google me to other people joining. Anyway, glad to be back. Glad I got through my coaching and today I'm doing that. The solo Red Cup. Kind of. Not really. If I told you this was a vodka cranberry, would you believe me? I you know, we always believe. That's what it is. And it's a vodka cranberry. You're an. Attorney.
You're not allowed to lie, are you? Basic sorority girl. Drink. Got it. Boy. Mauricio, I never lie. I just need a cherry on top. What's going on, man? Doing good with the real red solo. Not these imitation. Filled with a real Diet Coke. That's right. Real Diet Coke, baby. Awesome. Well, we got a lot to talk about. A lot to to debate, I think on this. Whoa, whoa, whoa. We forgot to ask you what you were drinking last week. That's right, I always forget.
I think I said you got to pay yourself first. I should start doing myself first. Right? What's the. What's that? Profit first. That book. I got to start doing that. Woodford Reserve. I got to get rid of this bottle. So I'm. I'm going to drink it until it's gone. So that's what I'm doing. Are we are we debating? Are you wearing a collared shirt? And AJ because it sounds like you're the only one not wearing a collared shirt or. Oh, yeah, you did. You did get the memo.
Okay. Got it. All right. Good. Just was a little concerned. I was close. To. Going neat to Noah. Wow. Was that the pinky? Did you just stick the pictures there? Yeah. You know. Kyle's got class. Yeah. Well, yeah. You actually hold it with two fingers, you know, and the pinky is just the one to extend. All right, we ready to get into this? Let's do it. Let's talk about the bond market. Because, everyone was freaking out about stocks, and.
But we like to talk more a little more about the bond market, due to its close ties to real estate loans, particularly the ten year Treasury. While bonds historically have a pretty set playbook in terms of volatility, then stocks go down. People flock to the safety of bonds. The bond yields go down. This is why that poor couch potato index fund mix took off. As it was, it was better than had, hedge funds and stuff like that.
Well, we saw a bit of an anomaly last week where the stock market was heading down rapidly, but bond yields were actually rising, which implies that investors were not running to the safety of bonds. So, J, why don't you, explain to us how we should be interpreting what's happening? Yeah. And, I'll do that. I want to step back a little bit because, I think you did a reasonable job of explaining that for people that already understand it, but I want to make it a little simpler.
So when we're talking about bonds, two things that we really need to understand. First thing is U.S. Treasury bonds are considered ultra safe. They're literally the safest investment on the planet. And or allegedly, they're considered the safest. In fact, we refer them to that. There's actually two companies with higher ratings by Moody's. There is, but we still refer to U.S. Treasury bonds as risk free assets. I mean, nothing's risk free, but that that's kind of the the the benchmark for risk
free is U.S. Treasury bonds. These bonds pay a fixed amount. So we call that a yield. So whatever the rate of return we get is a yield. And because they're paid by the U.S government, literally the only risk to them is if the government for some reason stops paying on them. And that's why they're considered the safest investment on the planet. So number one is ultra safe.
And the second thing we need to understand, just like you said, Kyle, when money flows into bonds, when money, when people invest in bonds, the yields. That rate of return goes down. When money, when people take money out of bonds, that rate of return, the yields go up. So different than the stock market when people put it in stock market goes up. And so two things that that we need to understand. So here's the weird thing that happened last week.
As you said, Kyle again, when the stock market goes crazy, people get scared, start pulling their money out of stocks. What they do is they flee to safety. And what that normally means is they take their money out of the stock market, and they put it someplace safe. And historically, that safe place that they put the money is in bonds. So it's very common for when the stock market starts to go down, especially when we have big movements down.
Investors will take their money out of the stock market and they'll put it into bonds for safety. And then again, when money goes into bonds, bond yields drop, the rate of return drops, the interest rate drops. And so what we would have expected to happen over the last two weeks since Liberation Day, the stock market has been down at this point. I mean, at one point it was over 10% this point, about 6%.
But what we would have expected in a normal timeline is that when the stock market goes down by 6%, we would have seen bond yields go down as well. Again, people moving money out of the stock market, putting in bonds. We haven't seen that. In fact, what we've seen is that bond yields have actually gone up. Not quite as much as stocks have gone down. But still 2 or 3% bond yields have gone up over the last couple of weeks, which is crazy anomalous. We're not used to seeing this happen.
It likely means one of two things. Number one, it means that, people are taking money out of the stock market, but they're not putting into bonds. They're putting it into something else so we can talk about what that something else might be or two. The second thing that could be happening, and maybe it's both. But the second thing that could be happening is people are actively selling off bonds for some reason.
They're not selling bonds to put the money in the stock market, but they're selling off bonds for some other reason. And when we talk about people selling bonds, and moving the bond market, we're not we're talking about large investors, hedge funds, institutional investments, insurance companies, or even other countries that own large amounts of bonds to, to move the market. Like this. So crazy thing happening. There are some benign explanations.
Their explanations that don't mean anything necessarily bad is happening. The two most likely are number one, we've seen this before. We saw this in 2008. My theory for what happened in 2008 was normally when large investors move money out of the stock market, they're going to put it in bonds because it's easy for them to do. They understand what bonds are and so it's just a common thing to do.
But when mom and pop investors, people like me and you and the other 50 million people with their IRAs and their for one case when they move money out of the stock market, they don't know to move money into bonds. They just keep it in cash or their IRA puts it into a money market for them. So money that's coming out of of the stock market from us mom and pop investors oftentimes is going to sit in cash, not going to bonds and not necessarily move the bond market. So that's number one.
Number two, when we see really big movements in the stock market like we did a week week and a half ago. A lot of times that triggers this thing called margin calls, where some investors, especially large investors, are using leverage. They're using borrowed money to invest in stocks. And when they start to lose too much, the brokerage says, you need to pay us now. You can't just keep borrowing money. You have to actually pay off, your margin. And so where do they get the cash from?
Well, they might take it out of bonds and use it to pay off the brokerage, pay off their margin calls. And so that's another reason why we might see money coming out of bonds, when the stock market is dropping. Problem with both of those explanations. Mom and pop investors go into cash.
And this margin call thing is that you would have expected to see the bond market start to, to, to compress to move down, because a lot of money would have started going to bonds once the major crash that we saw, if you want to call it a crash, once we saw that big movement down week, we can a half ago, we saw a recovery after that. So people were putting money back in the market.
And and so you would have seen kind of the, the, the bond market kind of normalize and drop back down if that was the reason we didn't see that. So now we have to worry about are there something more concerning going on here. And the two big things that might concern us happening in the bond market are one. Investors no longer feel like U.S debt. U.S bonds are the safest investment on the planet.
Their concern, potentially that the government might stop paying, or they might try and renegotiate, bond contracts and, and whatever. And so they're scared to invest in bonds and they think that there's a safer investment somewhere else. They're investing in gold. They're investing in the debt of some other country, whatever. So number one is maybe investors are concerned that that bonds are no longer as safe as they were because of just craziness in the market.
Number two, potential concern is that other countries and we've heard Japan, we've heard China, we've heard Canada, actually, are actively selling off U.S bonds. They may be doing that because of the first thing I said. They're concerned that this is no longer their safest investment on the planet. But the other reason they could be doing that is to kind of manipulate the market. So imagine you're China. Imagine that you've gotten these big tariffs against you.
And you want to put pressure on the U.S to kind of roll back these tariffs or slow down on the tariffs. If you start selling off your bonds and you force bond yields to go up, that's going to scare the market. That's going to scare the president because the president's job is to keep markets stable, among other things obvious like and so a lot of people are hypothesizing that maybe it was China or Japan or Canada or some other country that's selling off a whole bunch of bonds.
Keyword they're hypothesizing. Absolutely. We can't like it's still weeks before we can find out what who was actually making these trades and what was going on. So anybody who's saying this is what's happening, they have absolutely no proof or statistics to back that up. Exactly 100%. And so here we are. Bond market is still out of whack. It's come down a little bit over the last few days. But again not as much as we would expect. So something is happening.
There's there's a reason why people aren't putting money into bonds, or there's a reason why large investors or countries are selling off bonds, but it's just a weird situation. And again, the biggest risk, the biggest concern here, and we don't know if this is true or not, but the biggest potential risk is that people invest institutions, other countries are losing faith in the US economy.
They're losing faith in the, the US government's either ability or willingness to pay on this debt long term. And they're moving to something they consider to be safer there. I think you're over. You guys are. Oh, I think overthinking this a little too much. Because a couple things I want to point out, number one, the the bond market is a global market. It is not just the US. It's not just the US market. It's not just U.S hedge fund guys. Not this is a it's a deepest market in the world.
And what's happening right now is I don't even think you mentioned the word terrorist in the whole Ted talk you just made. But like there's all kinds of crap going on all over the world. You talked about the US stock market going down, but if you look at the stock markets all over the world, they're all going down. Everybody's in turmoil. Everybody. No, no what the hell is going on? So there's a liquidity crisis. People need dollars. People need liquidity.
And if you look at the dollar that's been crashing to and it's not some nefarious stuff, it's just they need dollars. They need liquidity. And how do they get the quickest way to get liquidity is used to sell your treasury bonds to get dollars that you can then sell the dollars. That's why the price is going down. So you can take care of the the liquidity crisis that you have at home, whether it's in Japan and China and Germany and Euro. That's really what's going on now.
It is a little bit surprising that it usually bounces back pretty quickly. Look at gold, for example. I know we're not meant to be talking about gold, but just like every time gold initially takes a huge dump. Why? Because people need to sell their goal to do their margin calls, to deal with whatever turmoil is they're dealing with. And as soon as that's over, they come back. And you've seen gold rally, rally, rally at this point.
But it's the same thing with the dollar, same thing, the Treasury. It's the most liquid asset most of these people have in other countries that have central banks. And so them selling it is just like getting the liquidity so they can take care of their problems at home. On Monday, when we had the big sell off last Monday, it was directly correlated in a 17, basis point move in yields directly. So what they found was there's $800 billion in margin.
So the there's a combination of a few things, right. The margin calls huge. And there was an exact correlation with all of a sudden after a certain point Treasury yields started to rise because the margins got called and they got hit at the same time that this is going on. Right. We have a few big change in overall just dynamics of the market because China is moving to gold, which they had announced. And it's been. Going AJ can we can we go back to the margin call thing first?
Because I think when people talk about margin calls they always talk about stocks, right? They make the margin calls on stocks. But a similar thing happens with bonds with and and it only happens with the big shops. And it's called the basis trades. Right. And so and the reason only happens with the big shops is these basis trades. They it's super complicated. And we could spend a whole section. It's the whole reason I didn't go into it. And that's the $800
billion trade. The basis. For. Basically the, the the long and short of it is, is that what they do is they bet on futures in the bond market. But since the bond market typically isn't that volatile, the the actual spreads that they're making is so small that they make a trade, but they can make trades at like 20 x, sometimes 30 x of the, of leverage because it's such a stable. They're, they're doing well in bonds. And bonds are basically the same as J said as cash.
So they can make these huge levered bets. And that's the way they bet up. And even though it's such a minimal spread that they can actually make a bunch of money because they levered up and they and they're, we're talking about billions of dollars. Well, when you see this massive swing in here, then they those get called as well. And they're actual bonds. So it's not that people are having to sell bonds to pay for stock margin calls.
They're actually when you're talking about basis trades, they're actual the actual bonds are the ones that have to get sold like to, to cover those actual trades. And we're talking billions because eight. Hundred billion dollars on the book, almost $1 trillion of these trades. So once again, like we're all hypothesizing, but I think I just wanted to say like, this. Is the same thing that happened in Covid. We saw the exact same thing in Covid.
People are like, why aren't yields going down, right? Why are yields going up? And it we saw this in the first whatever it was three weeks correlated the exact same with Covid. And the problem is the snowball right. It's a snowball in that once it starts going it's like a run on the bank. Basically it's it just makes it worse and worse. And it gets worse than more people out to sell it off. It gets worse. More people have to sell off. And then that makes the big run.
So like to me, like that explains it all right there. But like instead people want to try and say, oh, the U.S is losing their dollar. Reserve currency because no one has faith and not even close. Yeah, not even close. We have it. Yeah. And that's settled. Let's move on. Well. I do feel like we have to debunk some of this, though. Yeah, I, I was, I was joking, I was.
Joking, like even, even when you talk about like China is going to start selling off all their treasuries and that's going to tank the, the, the treasuries market. Like let's just put some numbers on that. The China right now owns 800 billion. Yeah. In U.S. treasuries. Right. You know, just in the last two years when the when the U.S was doing quantitative tightening, they took 2.1 trillion off their books. It's nothing compared to. What they they buy 8080 billion in a month.
They could just cover the entire China in in ten. Months. Just like that. So like to think that China's all of a sudden going to start dumping all their treasuries and and the US government's not going to step in and just buy them is asinine to me. So I don't think. China is going to. Denominate you. Like, there's this idea what China will just sell off their their dollars or their bonds. That's not how global currencies work.
If they did that, they would literally tank their own economy overnight and they would be devaluing their own currency, which only represents 2% of the total trade in the world. It would be more effective for them to tell the Wall Street Journal that's what they're going to do and not. Yes, they're. Actually doing. It's not going to do much. And I think this is I think this is a key point in this discussion, that what other countries can do to us, is limited in actual scope, but it can scare us.
And it can put the U.S in a situation where it feels like it doesn't have a lot of control. Here's the here's the problem. The fed controls interest rates at what we call the short end. They control the really short duration interest rates. So we have this thing called the federal funds rate, which is basically the the we loan you money for for six hours, right. And they have full control over that.
When you hear that the fed lowered or increased rates, it's that ultra short term borrowing money for for a few hours rate. They have some control over like the one month rate. So borrowing money for a month, a little bit of control over the three month rate, the one year rate. But as you get into the two and the five and the ten year bonds, the fed doesn't typically buy or sell those. They don't control those rates, they don't set those rates. Those are controlled by the market.
And so if China or Japan or Canada or anybody wanted to kind of spook our market, what they can do is they can start selling off those longer term bonds. As AJ said, yeah, the fed could step in and say, okay, we're going to we're going to start buying up some of those bonds. But for the fed to do that, that's scary because we we know when the fed steps in and starts like buying up assets. That reminds us of 2008, reminds us of 2020.
And so I think what China or Japan or Canada or any of these countries, if they really wanted to do this and again, like you guys said, it's very possible they're not we don't know. But it's very possible they're not. But if they did want to do it, the biggest leverage they have is more the fear factor than their ability to really destroy our market.
But that said, I mean, if there was some coordinated effort for a bunch of countries to sell off a bunch of bonds, there's some people out there who actually think this is the strategy of the administration. And I wrote about this on Facebook a couple days ago. It's not a horrendously bad strategy. Imagine a situation where China, Japan, the two largest holders of Treasury bonds, a couple other countries start selling off a whole lot of bonds.
What we're going to see is we're going to see our interest rates go up. We're going to see our bond yields go up. And that's going to be bad short term. But think about it on a little bit of a longer term level. Longer term these countries are going to really decide they need U.S bonds for a couple reasons. One, again, it's the safest investment on the planet. But two, as long as we're still buying stuff from these countries, we're buying that stuff with U.S. dollars.
And these countries don't like to keep all of these U.S. dollars on hand. What they typically do with them is they use them to to buy bonds. And so if they sold off a whole bunch of bonds right now, there'd be huge supply. There wouldn't be a lot of demand because there's so much supply. But in six months or 12 months or 24 months, all of those countries would now have this demand to start buying again. And what happens when there's this all this demand and they want these Treasury bonds.
What could the president do? The president could step in and say, I'll make you a deal. I'll sell you more bonds. But if you want to buy a ten year bond, I'm going to sell you the ten year bond at, at, five year bond yield. I'm going to make you take a discount on that bond if you really want them. And if there's enough demand out there for these bonds, the president may have some leverage to basically sell more expensive bonds for cheap.
Yeah, but what percentage of those bonds are they buying directly from the government versus just secondary market? We just had an auction. What was it like a week and a half ago, you know, and oh, shocker, if go look at that auction. Where there were two auctions. Sorry, two auctions, but the it was the highest foreign demand in history for U.S. treasuries in history. They actually they had so much demand that the yields actually came down during the auction.
Because bonds stabilize foreign countries currencies. So what happens is when they're having market sell offs and turmoils and their bond markets are crashing, other countries buy our bonds to actually stabilize the bond market crash in the United States. So let's say we have a bond market crash that's actually significantly worse for a lot of other countries. And the bond vigilantes is what we're talking about.
So other countries being bond vigilantes, selling off bonds to penalize the U.S. government for actions they don't want this happened in the 80s. In the 90s? Well, the government stepped in and basically said the fed stepped in and said, we will stabilize markets any time we have bond vigilantes to make it so they wouldn't do it. So because of this and doing it, it was a very clever thing to have a bond vigilante who was like, I don't like your policy.
And they were actually really afraid of private, institutions where they go, the government. President, you're not doing something we like. We're going to sell off bonds and really hurt you guys. And then that's when the fed came in and stepped in and said, we will stabilize the markets. We will not allow bond vigilantes to change our underlying currency. And I think that would actually if China did that, I think that would like help the president and his cause.
I think you would say this is economic nuclear war. China is going after us, right. So the Fed's going to buy bonds and we're going to go after them. But that's been the real bond vigilantes has been a thing. They were in that 80s the early 90s. And it really took the fed coming in and saying, we won't allow it for it to stop. Yeah, that's a rumor.
I heard rumors that the, I don't know how much stock to put in any of these rumors, but that the, the administration were going to start buying some of these bonds to to get these deals down. And they were sort of going to be starting a I forget the word they used calling the the notes back, basically buying up the bonds themselves, since the Federal Reserve doesn't look like they're going to be reducing rates anytime soon.
So I don't know if that's how much weight you can put on that, but that would be an interesting strategy to for the government to start buying back their own. It's like a stock buyback. Yeah. I think the important thing here is to realize that we talk about the stock market, and the stock market is important to a lot of us who invest in the stock market. And we get terrified when the stock market starts to drop. We love it when the stock market goes up. It's good for 401 K is in our investments.
But there's this whole other market, this bond market that has a much bigger influence on our daily lives. Because it's what, again, sets interest rates. It sets mortgage rates, it sets car loan rates, it sets credit card rates. And so understanding how again, maybe nothing nefarious is going on here, I'd say there's probably more chance that there's nothing nefarious going on here than there is something nefarious going on here. But it is important to understand how the bond market works.
And, and this is something that if you're running the country and you're setting economic policy, you really need to be thinking about what the risks are and, and where, the US has exposure and, the bond market is one of those places that, again, probably not catastrophic exposure, given that, that, the vast majority of, of our bonds are held by people in the U.S, which is great.
But there is some exposure there and certainly, that as we saw last week, movements in bonds, whether it's from another country or just from normal market stuff, can get really scary interesting. And I want to throw one final thing out here for my fellow underwriters who, who listen to this podcast. Just so because misery loves company here. But we when we underwrite deals, we have we look at this what's called a sofr forward curve.
And that's just a prediction of where the overnight funding rate's going to be. Which more so is tied to the actual fed funds rate. And I've never really seen anything like this when I have to plug this into my underwriting model. Where to Jay's point, the fed can control the front end interest rates somewhat, but once it gets to the long rate and they can't. And so what we're seeing is with this forward curve is that the front end of it is what they can control.
And you could see it goes down at a at a predictable rate of them dropping interest rates, but then it hits a point in about like a year where they they can't control it anymore. And the curve has to fit what the current long and interest rates are. So all of a sudden the curve just takes off. So if you see this, if this forward curve, it goes down like it normally does and it bottoms out and usually it levels off somewhere near the bottom, maybe a little bit.
And it just instead it just takes off, keeps going off up to the right and it ends off, it's still going up. So, it's, it's one of those weird times that we just we know that this is not a normal time. And I think what the conclusion we're coming to after discussing this is that it's just a volatile time for both bonds and stocks. And it's I don't know about you guys. I don't want to be in volatile market. So people are probably just a little bit skittish to put their money
in either one. Yep. And unfortunately, Jerome Powell came out today and basically said, he and the fed are not going to step in at this point. And really do anything about the volatile markets. In his words, the markets are doing what you would expect them to do. And there's there's lots of stuff going on.
And so if we were hoping for a bailout from the fed, if we're hoping for a rate cut, basically, unless there's other economic data that supports cutting, the fact that the, the market's going down and bonds are going up isn't going to be the thing that drives them to actually take any action. Well, we'll probably do an economic update next week, but just a quick one where it's, 14% chance of a rate cut in May and a 61% chance of a rate cut in June. So, but that's been volatile, too.
That's been everybody knows nobody's ever bullish about a rate cut in the upcoming one. But everybody assumes stuff's going to change after. Sure. It'll be better. Yeah, with more luck and no. Chance of a rate cut next month. But after that 100% chance. I'm sure that it'll happen. Yeah. Okay. We should start discussing. I mean, I'll tell you what. The chances are a rate got zero, but, like, what are the chances of a rate hike? Like, what's that 5050 to 2 to one against like.
I mean that's not to discount. No chance. I'm I'm putting close to zero chance that they're hiking. You can't hike into what's going on right now. I thought at the beginning of the year, you know, it's just like I said last year, like, rates aren't going to go down. I thought there was more of a chance of them going up. I don't think so anymore. Yeah. After the whole tariff thing. No, not a chance. You can't hike into this volatility. Yeah. I think next week we can talk about the the tough spot.
The fed could end up in over the next couple of months. And Jerome Powell we've been talking about it on this show for a month or two. And Jerome Powell finally came out today and said yeah, we could be in a really tough spot in a couple of months. And so, let's make that a topic for you. Yeah. He like, let's make sure next week you talk about the fact that he won't be in a tough spot much longer because Trump apparently is going to replace him. So he's not even gonna have the trouble anymore.
We can talk about that, too, I think. I think he's going to be the. Next year though. His his term runs out in 2026. And they're just like for show. They're saying, oh we're going to start the selection process now. But they're not going to boot them. They're just going to wait till his term runs out. Dude, the Justice Department. Is looking into it. They're looking at the legalities of it. We'll see. I just picture the guy from Wolf of Wall Street. Belfort, a Jordan Belfort. I'm not leaving.
All right. Actually, I think it's better for Powell. Powell can blame it all on the tariffs and everything now. So. But All right. Let's speaking of tariffs. Should we talk about it for the 30th time I mean it's all everyone's talking about the tax on tax off that came of before. So last week though we actually saw some reprieve where tariffs finally got a 90 day kind of just stay of execution.
With the exception of China, which now has a I can't keep can't keep up with is is it 1,000,000,000% tariff on. G gets infinity three infinity. Yeah. It's I don't know what it's at now. The administration would claim that this was all negotiation tactic. This was part of the plan. But the end goal of what they're trying to get to still remains a bit cloudy. And just like every politician and news reporter out there, we on this podcast have our own theories as to what the ultimate plan is.
But, first, AJ, why don't you kind of tee this up for us so we can talk about it? So it's been, crazy last few weeks. It seems like it just changes every single day. So it's only been a few weeks. Why does it feel like it's been six years? Why? I hate it if people say like, oh, 90 days, that doesn't, you know, that seems like a long way away. Trump's administration has only been, what, 85? It feels like it's been a decade. Yeah. Yeah. It's, changes daily. Sometimes multiple times a day.
All right. So since the overall changes have been made, we had the, I guess pause. You could say. Right, that, took place now, China was the one that was obviously accepted. Who knows what's going on there. They just keep going back and forth. So it's like infinite. We have a 10% baseline tariff. Across pretty much everyone. And then outside that, they're supposedly be doing individualized negotiations with different countries. Everything's on pause now for the time being.
As of right now, we have a think here five that five different countries that have, pulled this up. All right. So we have a five, five different countries that have now come to the table and refresh it. It's up to six. I thought it was ten. I heard ten. Text. Yeah. No I'm kidding. I'm kidding. I was like, if you if you refresh it like. Check Truth Social AJ come on you. Gotta be up to. Shake it. List it. So we've got, the elimination or mass reduction of tariffs.
We have five countries that have agreed upon that. The reduction came from, I think it was Cambodia who went from 35% to five. Other than that, we have active negotiations that are currently taking place. We have 50 countries that are negotiating out of the active negotiations. We have roughly that are at the table negotiating their tariffs. That gets 20 something as of right now, including Japan, Vietnam, Italy, India, Australia, on and on and on and on and on.
So the pause is supposed to be giving leeway for the negotiations to take place. Five countries have come out and already agreed upon or said that they will eliminate or reduce to 5% of the tariffs. The pause is supposed to give way for that. And then after the pause, we'll see what resumes. China was obviously not included in that because they want to punish them, so bad actors and they'll just keep duking it out for.
Can we just avoid getting in pissing matches with dictators like he has to answer to nobody? He we do realize that, right? Like he can make his his citizens suffer with. Yeah. He'll make them starve. Won't be the first time. Yeah. Like they're they're. Like he got sick. Like. Literally he's like, I will just let him starve. I'm just like, we've got. We've got like, Congress that needs to be reelected in like 18 months. And we've got, you know, I got I got a infinity. And we have and.
We have people who are going to protest and loot and riot and stuff. And like, we have laws that are going to prevent. Them. From like being beaten and thrown in jail. So his. Friend the French will just. Give up. Right. But China now. And and the other thing is like we already saw this the last time Trump put tariffs on China. Right. Like what did they do. They shipped all their [..] to Mexico and then Mexico exported it to the US. So like what's stopping them from doing that?
Again I don't I guess I don't get like 145% tariffs. Like they'll just ship it somewhere else like Russia did it with the sanctions with all their oil. Right. They they sent it to India or whatever. And then India sent it back out. Like what's what's stopping them from doing that? I guess I don't, I don't get like this whole like massive tariffs on one country. I mean might might you. Yeah. Go ahead.
You know, I just but basically we have, you know there's two factors but they've state or what they're trying to do. The deficits is obviously a large one. And I think the picking on China trying to get the president, I don't think it's picking on you're not picking on China. China has been the biggest abuser of the relations. And that's been a stickler for the administration. And to say abuser is an understatement. And this is not something every single president has talked about.
This Obama talked about this at length, where China was a bad actor, a bad player, and wanted to do something about it. This I mean, Bush, it's been this has been forever. And so this was something that was everybody just knew when agreed upon. Nobody's did anything about it. Corporations stole IP. It was abusive. I mean, there's no other way to put it. And, that is why this is the target. So they're the biggest abuser. They said, this is done. We're over is who knows what it'll lead to.
But the other countries, they get a chance to negotiate. We're not negotiating with China as of now. We'll see. Yeah, I think that's the I mean, I think everybody's talking about that, that that's really the end game. And the question is, is tariffs the proper tool to fix that? That's the question out there. And and maybe he's doing it with all these other countries.
And he's actually stated that I think he came out yesterday saying, you know anybody who cooperates with China they're going to be sanctioned. And so it's kind of using a leverage on the other countries so that they don't they don't help China out. They really want to. I think it's clear to me that they really want to isolate China. But everybody all these you know, and I look, I don't do any business which I'm kind of worried about my Amazon friends, nobody's been talking about that.
But all these folks are selling stuff on Amazon. You know, where they buy all that stuff, right? It's from like Alibaba and, you know, in China. And so those tariffs going on I don't know how you're going to see a lot of Amazon sellers go out of business. But yeah, I mean I think that's ultimately what he's trying to do.
And and it sounds like he's putting some pressure on the other countries that, that if they, you know, they don't cooperate with the U.S. and not deal with China, they'll they'll either terrorism them or use a tariff as the tool. I just don't know if that's the right tool or not. And what I don't know what else you could do, I guess I don't I don't know. And I think that's the problem, to be honest. We're okay. We can't fight in the courts. There's no court system that's available to us.
And so what we can't I mean, really, you know, when you look at it, what do you do? What does the government do? There's such limited tools outside extreme measures that you can, I guess, push on pain points will say. Hey, here's my issue. I learned this lesson back when one of my kids was three years old. We're on a road trip, we're driving, and my youngest son had this, this stuffed animal, Froggy doggy. It was this.
There was this stuffed frog, and he was hitting my other son with this stuffed animal. And I got for some reason, I just got so frustrated. And I turned around and I said, you do that again, I'm going to throw Froggy Doggy out the window. Five minutes later, what did he do? He hit his brother with Froggy Doggy again. My wife looked at me and said, what are you going to do? And I knew I wasn't throwing this froggy doggy out the window because my son, my son would never sleep again.
He would never. He just. He wouldn't sleep again. I was in a no win situation. I made a threat that I was hoping I wouldn't get called on. I was hoping my bluff wouldn't get called. And now I was in a really, really tough situation. And I'm concerned that that's the situation we are in with China right now. So, one of you guys just mentioned how, Trump is saying to other countries, if you cooperate with China, we're going to make it harder for you.
The EU came out today and said, we're not cutting off China. And so now what is what do we do? Do we cut off China and the EU? And when other countries say, hey, the EU is not cutting off China, that's, that's let's, let's, let's join that pact. Does do we cut them off at some point? We're going to be in a situation where we're at a stalemate.
And if she doesn't pick up the phone and call Trump and Trump doesn't pick up the phone and calls and we get three, six months down the road and their economy is an absolute shambles. Are we going to let our economy go into absolute shambles? Is that something we're going to do, or are we going to give in? And neither of those obviously are optimal solutions. We don't want to give in because then we look weak.
We lose a ton of leverage with all these other countries, but we also don't want to follow through on this threat of, we're going to let this go on as long as possible. My what I suspect is going to happen is and I was we were texting today about this, I suspect and I've been saying this for a few months, that Trump had two ways to play this whole tariff game. He could have gone with this whole trade game.
He could have gone with diplomacy and tried to negotiate without the massive tariffs, gone to Congress and said, hey, I need your backing here. We really need to to fix this and hopefully get Congress on his side. And then I think he has four years to do this. If he can kind of get everybody on his side the other way is Congress. I don't care what you think, I'm leaving you out and other countries. I don't care what you think. I'm just going to push on your pain points until you give in.
That might work, but he's only got about six months to really use that strategy before Congress says, hey, if the economy's going to shit, we're going to we're not going to get reelected next year. We're only 18 months from the next elections. If the economy goes to shit, we're not going to get reelected. I'm not going to get I'm going to lose my job. And I suspect there are a lot of GOP senators and congressmen and women that are going to say, hey, I'm not losing my job because of tariffs.
And so in a few months, I suspect there's going to be a revolt from Congress where Congress says, hey, we're not going to allow this to go on any longer. And this might be kind of Trump's golden parachute. It could be Congress coming in and saying, hey, president shouldn't have this authority. Tariffs are historically the purview of Congress. We've been nice. We've let him do this. But now we're taking our power back. Sorry, Mr. President, we're not letting you do that anymore.
Legally, we're taking this back. And now Trump can throw up his hands and say, I was willing to ride this out forever. But Congress tied my hands. And so I suspect that's how this is ultimately going to play out, is that that Congress is going to step in, and maybe it'll even be negotiated behind closed doors and we'll never know about it. But I think Congress is going to step in.
They're going to say, we're not allowing this to happen any longer, and Trump's going to throw up his hands and say, I would have won. But Congress stepped in and. The Joe Biden student loans. Right? Right. Yeah. You know, I wanted. To, but. I wanted to, but they want to let me. Court Congress. Exactly. Same exact thing.
You think I mean, I don't quite understand the I'm not you know, I'm not into as much politics as you are, J but, like, you know, there's a Congress person who's up for reelection. Want to go and get reelected going against Trump. How's that going to play in his his or her district? My, I think it's easier to get reelected. Going against Trump than it is going into an election in a depression. And if I think what Jason, it's going to get easier. Right.
Like if you if things get worse and worse and worse in six months from now, then it will be easier for them to go against Trump. And this could be an offering. Again, I think this could be an off ramp for Trump. This could be his way of basically getting out of the stalemate, but being able to blame it on somebody else. I actually think that would be a brilliant move. He gets to back off a little bit and he doesn't have to look weak.
Yeah. And two years from now, if anything wrong happens, he's saying, well, if you were to let me go through with the tariff. It would have been. Awful. Absolutely. It was, it was, it was all Biden's. And so I guess my question is though, like, is this is this his endgame just been China or is this kind of like he has multiple end games. He just like uses tariffs to kind of, you know, whack as many nails as he can or like, does he have one unified end game like in mind with this whole like.
The deficits have been a problem with Trump forever. Forever like when you see the trade deficit or the national deficit. The trade deficits. He has had an issue with this for so long that goes back a long, long time. And to, you know, at this point, he's not wrong. You know, Warren Buffett famously said it, you know, when he was warning about the trade deficits, he's like, we have a very big farm. He's like, we're rich family with the farm. Every year we want to consume 4% more.
So what we're doing is we're taking part of that farm and we're mortgaging it off. And then we're consuming more from somewhere else. But then they own part of our farm. And he's like, eventually those mortgage rates start to go up and you have less of less production from your farm because somebody else has rights to it. And he's like, that's we're selling off pieces of our economy, you know, as a as it goes on, as the trade deficits and we're paying for it.
And so I don't I don't understand what does that mean selling off pieces of our economy again in, in, in pure economic terms, China is selling us stuff that has economic value. We're handing them U.S. dollars that have economic value, a fair trade, dollars for products or services. What's what's the problem there? What do you mean what's the problem with sell? With us getting charged more than them. But no no no no no, let's let's let's ignore the the US getting charged more than them.
Unless this is the whole thing with with China. We're talking about a trade imbalance. What about a trade and a trade and a trade deficit? China selling us $100 worth of their product, and we're only selling them $30 of our product. There's a $70 trade imbalance. That's what I'm. Getting trouble getting $70 worth of product. Understood. But that's what that's what the trade balance is. So I'm with you like when you when we talk about selling off piece of the economy.
I'm not following that either. But because it's just it's not actual dollars that we're owing. It's just there's just an imbalance or mortgaging. To to AJ's point, we're mortgaging the country. What does that mean? What does that mean? We're mortgage? I don't understand what that means. We're debt. Like when we sell treasuries. We're selling treasuries that are backed by our country. But what does that have to do? But what does that have to do with the trade imbalance with China?
Here, I'll read you what Warren Buffett said. So because it's like going. Further into deficit. It just means what it really does. The issue is that you've got more dollars that are going in one direction to the other. I think that was one of the big things that Buffett always talks about. Yeah, he says it affected our our country has been behaving like an extraordinarily rich family who possesses an enormous farm, an immense farm.
And in order to consume 4% more than we produce, that's the trade deficit we have day by day, been selling both pieces of the farm and increasing the mortgage on what we still owe. And then he goes, and. I think that's more of a commentary as to towards like how we pay for things than. Necessary. Yeah. Because we pay them basically, we pay them with IOUs like we don't have stuff, so. We have to. And so we have a 4% trade deficit. And so also does the point.
It also does point to we wouldn't have as big of a problem if we produced more in house and exported more. We actually are. So there is production is important. So if we're sending our companies are going overseas, our dollars are actually building infrastructures and investing in other countries to produce. So we don't get the benefit of that production infrastructure, anything else. We only get the benefit of the consumption. But that's not China's fault. China's making stuff
and we're buying it. I mean, Buffett also says I run a trade imbalance with my dentist every year. I pay him money and he pays me nothing. So is the right answer. Well, that's not fair that I'm paying my dentist money and my dentist doesn't pay me anything. In order to rectify that, I'm going to go get my dental license or get my wife to get to to go to dental school so that we can do it all in house.
No, there's nothing wrong with paying somebody else to provide a product or service that they can that they can provide. That's cheaper and more efficient. Talk about this before. Though, like it is, it is different and it's obvious. It's obvious to that. It's I think it's no, that the fact that China is an adversary, like a. Major one that steals, abuses us economically, but. That is a completely separate discussion from a trade imbalance. We have a trade imbalance with Canada.
Is that is that just as bad? Is there a trade imbalance with with China? No. That's why we have a massive trade war with China going on in Canada's past. But no, no, we have a big trade imbalance with Canada. Also, if the issues the trade imbalance, why is why is Canada not just as bad as China? Okay. The trade imbalance. But we don't have an imbalance in tariffs. We don't have an embarrassing. But that's not what the administration's complaining about.
The administration is complaining about the trade imbalance. They're saying that we need to be selling them as much stuff as they're selling us. And until we get to zero differential in what they're selling us and we're selling them that we're getting taken advantage of. And I don't understand that. Are you. Mad? I don't I haven't seen that. That's been said. Scott Besson has said that. Peter Navarro has said that. That he wants to equal out the trade.
100%. Wow. And I think and I think you're getting that for Warren Buffett. Because when the trade, what happens in the trade imbalance is that there's more dollars obviously going to, let's say with China, more dollars going to China. China then turns around, buys treasuries. So essentially we're sending out treasuries, which I think is where the mortgage, the mortgage analogy comes from, because we're basically providing them with Treasury bonds. And they they're holding those with their IOUs.
So we owe China more and more every every year when we have a trade imbalance. That's what I know. That's Warren Buffett's complaint about the deficits. But we also. Talked about this before that it is I think it is partially just our reliance on China who is an adversary. Right. It's okay for us to be, you know, run trade imbalances with with friendly countries. And they're not to the point of the what's it 5X1 way with with China. A fair trade imbalance is great, a fair trade imbalance.
People that aren't abusing that we don't have radically different tariffs. So the market incentives are wildly skewed, like when the playing field is skewed. Not in our favor and we are actually supporting it. That's when the imbalance becomes a problem. It's not a fair trade. Yeah. Well, I in a country that can manipulate their currency as well and they do a lot of shady there. That this is once again every president for how long has been like this is an adversary. This is a massive problem.
They're they're corporate sabotage is incredible. And we've we've discussed this previously because China you know the back and forth with China has gone back. You know this has been a month and making where they've China has gone back and forth with the U.S. But I guess my the one, the one thing I want to hit on here is, is there some other motivation here as to this whole trade thing? I know, Jay, you mentioned something about, Maria Lago Accord. Yep. As a possible and end game.
Is that still something that we believe is possible, or does it seem like he's kind of moved away from that. I think. Well, and so that's not something that he has even talked about. And I think this this warrants a whole separate segment on, on on another episode.
But basically the Mar-A-Lago accord is based off of this document that an economist wrote 150 page document that basically suggested that one way that we could potentially, reduce our debt and put ourselves in a better fiscal position moving forward. Is essentially we strong arm other nations around the country, into renegotiating our debt. So basically, we go to China and we say, you've got $1 trillion in debt, $800 billion in debt.
And instead of keeping $800 billion in debt, what we're going to do is we're going to take your 800 billion in in Treasury bonds, and we're going to replace it with 100 year bonds. That pays 0%. And if you want to trade with us and you want to be in our good graces, you're going to accept that. And that was kind of the thesis. Well, yeah, I think that's a really important topic that not a lot of people are talking about. The whole Mar-A-Lago accord thing.
There's a lot of different nuances to it. A lot of different options that they can be discussing at a Mar-A-Lago accord. And so like maybe let's, let's push that next week. We'll make it. I think it needs its full topic, maybe in a full episode talking about that and why why don't we do that next week? What do you think? I think it's a great idea. One of the things we're we are good at on this show is I think we introduce a lot of topics that people are hearing about for the first time.
So I suspect, this is going to be another one of those topics that we're going to talk about and everybody is going to look back in in a month or two and say, hey, I heard that there first on, on Drunk Real Estate. The one thing I don't think we've, we've talked about, though, that is making rounds in the news, is the fact that China knows that they can't win a straight up tariff war there. You know, they export five X to us. We export to them. So that math is not going to math.
I don't think we're going to try and win a war on math with China. But what they've realized is that's not the only way they can hurt us. And they've started doing interesting things like, I've read that there's certain rare earth minerals, that they, they do like 90% of certain minerals that are, used for electric car batteries, chemicals for manufacturing jet engines, lasers, spark plugs, things like that, that they provide the world with 90% of.
And they haven't straight up said like they're they're disallowing the U.S. from doing it, but they've all of a sudden made those required registration minerals so that U.S. companies now have to apply to be registered. And they're basically cutting out us, U.S companies from doing that. So that's not the only way they can hurt us. Yeah. And here's another fun fact.
I mean, certainly, that's something that we, we look at and we say, okay, where else can we buy those minerals and those rare earths from, what other countries have them? Fun fact, one of the biggest suppliers of those is Ukraine. And so, if everybody remembers back a month or two ago, we were trying to negotiate, with Zelensky to, to get, minerals deal so that we could get access to a lot of their minerals. Very possible.
In retrospect, I don't think any of us realized it then, but in retrospect, you got to wonder if Trump realized that he was going to want that, to kind of cut off some leverage that China was going to have. So you think sometimes people show up in a suit this time? Well, I think he's got more leverage now that he knows that, we need those minerals more than we did a month or two ago. But, yeah, I, I don't know a whole lot about, like, what that supply chain looks like.
And do we have enough of those minerals to last us two months or six months or three days? I don't know, but I have to assume that, there's some amount of time that this is going to be bad for us in the U.S and so do we. But do we do we need to isolate those? Because, I mean, maybe I'm mistaken here, but when you get to the level of reciprocal tariffs that we're we're at with China and China, the U.S., China I mean it's basically a block, right. Who's importing anything at 125% tariff?
I mean, nothing's going to get traded to those price. You chicken feet right? I mean, maybe if the eggs go back up in price. But, I don't know. It's a to me it right now it's like nothing's going to be coming into the I mean has anything been coming in? I guess it's more of a question I haven't really looked at that, but I mean, what what in the world is going to be coming in at 125 on a well or 245 on. All right, and then what's going to be sold into China at 125 or what's.
As a as I brought up before, what's just going to go around. Right. It's going to go to one country first. It's going to go to Cambodia who just negotiated their 5%. And then Cambodia is going to export it to us. So I guess like to me, anything above a certain percentage, it it's going to cost them less to export somewhere else first and then to the U.S. Right. Right. I mean China will basically use the playbook. They're going to start diverting. Right.
They're going to try to the it's essentially planned economy. They're going to go for the long term. They're going to stay in. They're going to divert goods and services to try to lower the financial destruction on them. By still getting around and starting to get goods and services out. So that way they can hamper that a little bit. And then from there they're going to keep subsidizing their which they are.
They're taking on debt like crazy because they're subsidizing manufacturing all those private sectors that are getting ready for it. And then they're going to start using things like rare earths. They're going to start leveraging their connections with other countries, everything to apply on the United States. So they figure we can try to avoid most of the pain we can hold in longer. And then we are going to leverage the key things that the United States needs that we don't.
I think one. Of the biggest. Is to plan, right. Like they they Trump already kind of play this playbook the last time by saying we're going to do tariffs. And China was like, oh we have exposure here and they've been preparing for it. It's the same thing with Russia when, you know they annexed Crimea event first before invading Ukraine. They saw what the world response was. And they're like, oh shit, we know what's going to happen now.
And so they were more prepared for it the next time, and we couldn't hurt them as badly. Well, and this goes to show, I think, a lot of things, one thing that's really interesting to me is the social impact of it. And as far as politics or anything else where I think in the United States, we didn't realize the risk we had. I think if you went back before Covid, nobody understood it. All the risk of what was produced here and what was not produced, it wasn't something anybody talked about.
Whereas today it's actually a really, really big thing. And to hear people to hear, wait, China can just stop. We don't mind here anymore because a lot of those rare earth minerals, guess what we have? We have them in our state here. A lot of them. We can't mine them. So you have a lot of people that are going. We are now have a geopolitical storm with another country that's giving us key essential things for security. Like a lot of these minerals go into technology and security, which we have.
We just don't mine because why we want to give them the dirty work and us to get it. And we keep everything nice and pretty and say we don't destroy the earth, even though we do. It's just through them. But I think that all of a sudden this is opening up these huge issues where it was great when there was nobody that could even question our power or authority, nobody would ever step up to us. It was just implied, you're going to do whatever we say and be grateful.
That's not the world we live in anymore. And these security threats like we found out from Covid and everything else, these are real threats. And the whole system that it's being run off of. We have all these weak points as a country that we've never had ever. And that is changing the way people are looking at global trade now. And that just wasn't around. Everybody's talking about we're sitting here talking about it.
We didn't ever talk about this 5 or 6 years ago, and I don't think that's going to end. This is I think we now look at it and I don't think it's a oh, Trump's gone. That's not going to end because the system still being cheated by China. And now look at the amount Americans that now realize all the things that China's doing to basically game at intellectual property, the trade imbalances, currency manipulation, the IP theft, on and on and on. People didn't talk about that.
Or if they did, it was like, oh, that's annoying, but we just get so much cheap stuff, we're okay. I don't think this stuff's going to end and how we view the world now, where we have Europe, who's at war and the exposure that we have when we're paying for all these war. The American conscience, publicly, I think, has shifted from all of this. But the American conscience also likes cheap stuff, like they don't want to pay more money, right, right.
And so one of the reasons, a big reason and maybe less so lately, but a big reason is the labor. Right. And so people used to go to China because labor now Labor's gone a little bit too expensive and they're actually moving it to Mexico. But that's the main reason. So if we want to continue to pay $15 an hour minimum wage and they're paying $15 a year over there or $15 a month over there, then what do you think's going to happen?
And the only way to fix that is to artificially make our prices more expensive or their price more expensive in order to compete. But that just means everything's to be more expensive. All right? People love to be outraged on the outside. Right? But when it comes down to it, if it affects their life, then they're not going to be, you know, you read about all the the working conditions of Amazon and everyone's like, oh, that's awful.
But if you're like, okay, well let's add a $2 to every one of your orders that all of a sudden everyone shuts up, right? And you know, like we don't the Uber Eats delivery driver, you don't want to see him pull it up to your, your house all sweaty and running around and stuff. You just want your food to show up and not have to look at it. So it's it's just where it comes from. I mean, you got the idea from China went negative for the first time since guess when 19. 90.
Hundreds of billions leaving China and headed to where other countries to build infrastructure. So in the short term, China may win in the long term unless we come to some really good agreements, things like that. And just I think that this is an I mean. Well, while maybe there'll be one big, beautiful agreement, as we know that, Trump likes to do is big, beautiful one big beautiful thing. Maybe that's that's the Mar-A-Lago accord. We'll talk about it next week.
Hey, can I give you a can I give you a fun fact? Because I was just, a quick Google search, name the country that is number eight on the list of most rare earth elements, like, that, access or export of rare earth number eight on the list. Idaho. Greenland green. It's all making sense now. It's all making sense. It's coming into view. Trump's had a plan. On. We could do an episode on Greenland, too. Actually, I I've been reading that I went down the rabbit hole in Greenland for for a half hour.
The one time. We need to do another predictions episode. I want to I want to do a prediction. Watch what's going to be coming through of Greenland. Which one's pretty good prediction. First, we can't do a prediction show before we do a conspiracy show. I want a conspiracy show so badly. All right, but not next episode. We already have that locked up. Don't forget. Okay. Top ten. Mauricio, you got something for us? The top. The top ten. Fastest top tens on the show.
No. So, we were discussing about bond yields and, like, where people would put their money, and so I thought it'd be interesting to go through, other. So the ten year treasury is the one we always worry about other countries and what their yields are. And I'm going to start going down the list of the highest yields. These are just major bond markets and in other countries the highest yields. And I want one of you to stop me.
The first one that if you if you thought that the US dollar was going to keep depreciating the first one, you would actually put your money in. Okay, right. It's the turkey's got to be on there somewhere. But let's. Go. Yes. Exactly. So but like you're not going to put your money in Turkey, right. Even if you thought the US dollar was going to keep depreciating. Right, right. You you're not going to put it in Turkey. So when you get to that way, when you get to the first one, is always.
The first one that you guys would put your money in under the premise that you believe that the US dollar is going to keep depreciating. Well, you got you got a hold, you've got to hold the because I assume you're gonna buy their bonds, you're going to hold the bond to maturity, let's say ten years. No, you don't have to necessarily hold in maturity. Well, we'll say a year. You got to hold it for you. Okay. You believe that the US dollar is going to depreciate for the next year.
So you're going to put your your money so you owe it. So I'm not buying their bonds I'm actually just literally buying the currency. We're doing a currency swap. Well. Well no you're buying their bonds at the yield that that I'm going to I'm going to give. You got to really spell it out for your money. Got it. Yes, please. Argentina's on the list too. Right. Argentina's on the list. He's got Maria. She's got to know all the rules before he signs off. Yeah. All right.
So number one, as you said, Turkey current yield 32%. Would you put your money in there. No takers next. Year. But but you. Could we could go to Turkey on vacation. Right. And then that would make sense. You're making this a long top ten here. So Russia 15.5% yield. You putting your money there. No takers. All right. Brazil I'm thinking yeah. That's not yeah. I've got to go fast here Brazil 14.7% yield on their ten year. Anyone? Nope. South Africa 10.9%. Yield still Mexico 9.8% yield.
No. Okay. Now it gets interesting though India 6.4% yield anyone? No one's doing India. Even if you think the US dollar. Is going down. All right I think this is where everyone's going to jump on. United Kingdom 4.6% yield. If the United States goes down though, the UK is tanked. All right, we'll keep going. New Zealand 4.5. There is there. An Iowa I mean at this point you're just putting it in the U.S you're losing And and guess who's next on the list. The United States.
Yeah 0.3 percent on their ten year yield. Yeah. So I guess the exercise was where else are you going to put your money guys? Okay. I'm still I'm still thinking about I'm still thinking about Russia. I might fun fact. I did that I, I was playing hockey in Russia. I don't even I like it is embarrassing how big of a risk I took doing this. Looking back at it. But I was making a lot of money in Russia and that was I made that money right
when they annexed Crimea. Right. When that kind of mini war started. And so the value of the Russian ruble went from 33 to 1 to 60 to 1. So the value of my money in U.S. dollars that I was making got cut in half. It like almost overnight in the matter of a couple of days. So money was leaving Russia like crazy. And so the banks, you could just keep your money in a bank account. And some of the banks were paying 17% just to keep your money in the bank. Now, banks would also fold sometimes.
So, you know, I, I was like, I'm not like I. I put my money in the Russian government bank. Spare bank. It's worth it's run by the Russian government. So it wasn't going anywhere. And they were paying a 10.5% yield. So I kept my money in there for almost a year, in Russia before I brought it back. And so I got a 10% yield. And the ruble never came back. And I was like, I'm tired of waiting. And I brought my money back. Yeah, just where was gold on that list, by the way? What? The yield on gold.
That's what it. You know, like, can you predict the yield on the ten year yield on the gold? Because I'd love to hear what that is. Any hypotheticals? Jay? I haven't looked at for anyone. Have I done this one before? Stop me if I did this one. You have an option of taking a 100 question test. Fourth grade math test. You get a 95 or above $1 billion, you get below a 95%. You die immediately. I'm. I'm taking the test, but I'm kind of cheating because I have a daughter in fourth grade right now.
So I feel pretty confident in my ability to do fourth grade math. I've been sitting with her all week. Yeah. And she has her PSA or Pennsylvania state exam. So we've been going through it. So I take the test. I also was but like. Well, but let's I don't know if it's fourth grade, but like I think my daughter was doing it like I forgot how to do long division. Like without a calculator. Like, you know, the whole, the whole little thing or the little wiggly thing and the number of like, I, I mean.
I didn't I'd probably. It's when she brought up because she's doing long division now when she brought that up, it took me a moment. I screwed it up the first time. But I know conceptually enough what the answer should be just by doing it off the top of my head, that I was able to work myself backwards and figure it out. But you're right, you haven't done it for a while. It's tough. All right, you you taking the test? No billion dollars. $2 billion for ages.
Like you just go to his local Idaho bank account and just makes the withdrawal like it's a big deal. I wish. Jay, would you take it or not? It's, I I. I'd have to. Go back. How do you propose. You do this all the time? You propose the question, which means you've known this, like, at least hours in advance, if not days in advance. And still, when I come to you. Hum Hongo. I don't know you. You had a week to think about this. I'm going to ask ChatGPT to do 100 question things.
Fourth grade math exam. We're going to. We're going to circulate it. I'm behind it. I think fourth grade. You actually, the thing is, is that enough of it? You could like even though they make you go through the process of it and nothing you can kind of do in your head still, that you would be able to go back and check and figure out things that you've done wrong.
And like the only things that you won't know are like shapes, names of shapes and like you would have to, but you could, as long as you get a day to study like you would be fine, I think. Oh, by the way, there's time to study if there's time to study them. Yeah, I thought it was just, like, just cold. Like you just look right now. Like right now, you. Reshape the shapes, will get you some of these shapes, things. You're like, oh, if you have time to study, then forget it. I'm in 100%.
No, I thought it was just like, right now it's on your ratio. What's a. Scalene triangle? What's what? It's not exactly. So. So I just asked, ChatGPT. To give me five fourth grade math questions, and now that I see them, I would 100% take that bet. I. Yeah, I don't even know what it looks like. So that's a great question. Actually. Like, what are those questions? I don't know.
I mean, the one that you just have to really take your time because the way they get you is they have they're all about word problems now. And the word problems trip, trip you up. But it's but are we talking traditional math? Are we talking this core, this core thing that they were taught. That core, the stuff that's going on right now, it's it's weird. All right, all right. They always do. You think the word problems are messed up? Anyway, I take a test.
By the way, the answer to a scalene triangle. All three sides are different lengths. Yes. Versus an isosceles triangle versus a, Are we really doing math questions right now on the podcast? Yes. Fourth grade math. There is not. One soul that's still listening. Hey, I'm excited. They're like, oh, that reminds me. I got to go home. I can't recall, stranger. I got to talk about math. Let's go. All right. Plugs. Mauricio, what do you got for us? Dr. Daly?
Yeah, I see, I see are we sell in sponsorships now? J so I had somebody reach out to me. A friend of mine, you know, Fred Moskowitz. He he asked me if he asked me if, we were selling sponsorships, and we hadn't done one yet. And I said, you know, I'll do a test with you. I'll let you do it for free. You just have to give me, data on, like, the clicks you got. And and all that sort of stuff. So, he was our first sponsor. He didn't pay us anything, but, but, yeah, he he got like, 200.
It's like a democracy or a dictatorship, and you're just making these decisions on your own. I know, AJ, were you consulted on this? No. Honestly. China. Yeah. Yeah. So? So it's so funny. I was I was going to consult all of you guys when you came, when you, when you called me up to, to offer help on the, on the newsletter. But I. Still. I know you all the time, Jay. All the time. It's. Last time I. Checked, AJ. AJ had my likeness or on that newsletter. I mean, we have full rights. To the.
Name and likeness. Of the dude. You do? I told you, you've got ownership. AJ, I saw you got past something. I feel like you got something good to plug here. Yeah, so I don't remember it. So we're doing, a whole thing on YouTube as well as our, newsletter we got. But one of the main things that we're doing is articles talking about which everybody should, go check it out. It was on fortune from Warren Buffett. That's America's growing trade deficit, is selling the nation out from under us.
And here's the way to fix it. And we've got to do it now. It's fascinating to read this today. Like, you know, to actually sit down and go through all his numbers and why he was freaking out about the trade deficit and what could happen to our nation and the problems that it would cause when we when we consume more than we produce. And that keeps going and that means of production is lost. Fascinating. I'm confused. Are you back plugging someone else's article? Yeah, yeah.
Yeah, I'm going to write about it, talk about it. But it's just I think it's fascinating today to read his analysis of it. I'm a Warren Buffett fan. To the to that stuff for listeners. There's still four of us here. Official plug you plugged into the, he I know he's the one who usually plugs the, the, newsletter he's got. I'm going to plug my social media. I've actually been posting a lot to, to to social media. So, just got investor on Facebook, Instagram and LinkedIn.
Wow. Okay. LinkedIn actually leaked LinkedIn, the sneaky one. LinkedIn. You wouldn't actually you could post, like, kind of long form thoughts and stuff. And yeah. I, I post the same stuff on LinkedIn that I post on Facebook, like long form articles which I write almost every day now. So actually so that's an interesting question because that's where Ashley does most of her posts. Is LinkedIn really about 10,000 followers on LinkedIn? But I've never done any call to action.
So I don't know if, I have any benefit from that. Nice. Well, I will plug bad ass investor Ashley Wilson. Go check her out on LinkedIn. Go check out Jay on LinkedIn. Go check out Ashley. I'm sure they linked together. Probably through a company or something. But, yeah, like, actually, she she loves doing the LinkedIn stuff because it, she gets the most engagement. People actually write you back, ask questions, do shit like that. And it's not just like slave girl comment on, Instagram.
So I've yet to get a slave girl comment on any of my Instagram posts. No, no, no, I yeah, well. I got you J I got you. Thank you AJ. All right. Next week we all back. All back. Yep. We're here. All right. I'm bringing them all back. Yeah, I will my drinks. Actually, my drinks are not gone. I gotta go finish this, but, I still got to hit the head, so, I will see you next Thursday.