Is the U.S. Government Going Broke?
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Welcome to ask the compound. We answered questions directly from you, the viewer, on today. We're doing a deep dive into the U.

S. Government finances, questions that we've been getting for years and years and years put by the day. I worried, should we be about U. S.

Government debt levels? Are there any easy fixes and fixing government debt levels? Is the deficit all this driving higher stock Prices? I've been hearing that a lot lately. How inflation, your trumps proposed therapies, and what are the inter fate implications of everything? Emails as the compound .

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but come as work, totally unemotional, finance space, brains. Here, the party eyes have trapped. He was the stock market party, not a democrat, not a republican, a stock market follower.

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No.

everyone is gonna sue, a chill. And before .

we get going, I just to we have appearing in a big audience for the gulf coast university. A professor covers, a students are are watching share now even got a question for more maybe we use in the future. So thanks, uh, all of our coach student out there. But yeah, especially professor could first .

class d of the golf course I will visit anytime you want to me down and tell me while I D Y to happy to talk to the total class once a month, only in the winter, though only in the winter sounds good. I to question .

at first day, we have a question from. Uh, up. Where is the name? Is the name? Uh, how will you should we be about government? Dead levels? People like power, twitter Jones and you, I must keep talking about how are going brook? But what is the catalans for an actual crisis here?

right? Let's bring on someone who's taught me more about any more than animals, about how the macro ney works. mr.

Colin rosh, I would say that you were from pragmatic capital. M, I think you sunset that blog. Is that correct?

I have everything's kind of transition to the discipline funds website now, so get too hard managing all those blogs. I don't know how you guys managed the media. Your handling .

people hand things like done doing IT for us. I've always appreciate your thoughts. Sound this topic because you look at that from a very unemotional perspective, you're not looking at from a partisan lens.

Um I think a lot of people look at the government debt lives and extremes. You could have some M M T people who say, hey, don't know about IT at all. It's fine.

Government debt level we can run IT up the one the hatch fund guys are constantly calling at a crisis. I think it's okay to think that government that is too high without assuming that is going to lead to a calamity. So what what is your take up here on the levels of government that were right now?

Yeah, I think context matters enormously here. So I think the first thing you guys have talked about this a good amount in the past, the U. S. Government is the global reserve currency issue, and we do not have any foreign debt.

So this is crucial because I think that bankrupt is not really initial and we we should all be able to really that we can quite literally print the dollar when ever we're not a household. yes. So being able to pay for things is never really a worry in terms of like nominal dollar printing.

And so the the second thing that I think is really important, and you eluted to this with the household common, is that the government is a huge aggregated sector. And so when you look at the aggregated economy for us, and so even just large aggregated sectors, like think of the three primary sectors, the the corporate sector, the household sector and the government sector, none of these sectors pay back debts in the long, long. So like guy, I sent you guys a chart of private sector debt.

And what you'll notice with this is that this chart pretty much always goes up in the long run so that, well, an individual household can technically pay back debt. What's going on underneath the surfaces that other households are, corporations or other entities are borrowing in the long run. And so baLance sheet baLance, you've got assets, you've got liabilities.

What really matters is that how are we using these liabilities in the process of borrowing to create real wealth, to build real resources, build network through building corporations, innovating things like that. And that's the thing that matters. The baLance sheet is always going to expand in the long run, assuming the economy is healthy. So you've got a look at IT in in more context and just looking at one side of the baLanced and saying, look, number go up. This is scary.

right? We're if if the economy continues a girl, guess what government is going to way bigger in .

the years ahead for in all likelihood mean this is where the debate gets sticky as you you can argue about what's the right size of the government. Um should the government run large deficit, should we run you smaller deficit, should we run surpluses potentially, especially during boom times? Um that's all the relevant debate. But the the probability that the government and its baLanced is going to get larger in the long run is very high just because the private sector as IT gets bigger and more complex IT by virtue of just sheer size, IT needs more firefighters, IT needs more policeman, needs, you know, more people to be in the court system to help navigate, you know, the rules and regulations of all this stuff. So the size of all this is a relevant debate, but the the likelihood that is going to expand in the long run is not necessarily a bad thing in .

the crisis that the hetch one in billionaire was talking about the U. S. Going on because they think there's going to be this day of reckoning where people stop buying treasuries and they say, aren't we're giving up the U.

S. Dollars no longer the currency. That's when like calamities going to hit.

And your point is always like, well, sure, what's the what's the alternative? But also the big risk is really not that day of reckoning, but more that inflation is the constraint here, right? So the big risk, ince began, literally printer on dollars. Is the big risk always going to be inflation? If the government spends too much, inflation is going to be the risk that both them in the butt?

exactly? yes. So you know, I sometimes take digs at the M M T people because I think they kind of go too far with a lot of this. But this is something they get one hundred percent right. That the the true constraints, especially for a country like the united states, that we don't borrow for ign currency, we don't really have an external constraint in a meaningful way because we are a global reserve currency issue. It's it's all about an inflation debate at that point, and that changes the context of the entire debate because once you start focusing on inflation, then you have to start looking at causes.

And I think this is where a lot of people get this wrong, is that they look at the size of government, dead or the deficit, and they immediately assume, oh, well, that's the cause of all the inflation in the world. And I it's more complex than that. In fact, I would argue that there are other macro o factors that you know even if you assume that government debt and the so called mini printing causes inflation, let's just say, causes a baseline inflation of like three percent per year.

There are other factors that to a large gree offset that primarily. And this is the bigger that people miss, is that when we talk about especially reserve currency status, people misunderstand the fact that the united states is not the reserve currency issue by IT wasn't something that was like bestowed on the united states. There's a lot of conspiracy theories about britain, woods and the petro dollar and that you probably truthful to some degree, but the main driver of reserve currency, that is, is just the sheer size and process of the united states economy.

We have the the wealthiest consumers, the biggest consumers, the most innovative, the economy that human history has probably ever seen. And so the demand for dollars, the demand to do business with the united states is gigantic, and we are the reserve currency because of that. And so I think when you start to argue that the demand for the dollar is gona collapse, you're sort of implicitly arguing that the the productivity or the innovative beast that is, has made the united states what IT is, is going to decline over time.

And you know probably not a irrational to argue that on a relative basis, yeah, we might decline in the long. But is this like a crisis that's gonna know materialized in the next five, ten years? I mean, god, I I don't think so.

I mean the if anything that looks like right now IT looks like the USA is sort of the run away only innovator. And a lot of sectors, especially when you look at things like tech, I mean, we've sort of monopolized the technology sector and that you know arguably the most important thing going forward. So I don't see the crisis that everybody .

that's always my question. We have a thirty trillion doll economy who's going to knock us? Sf, that perch. I don't see any any commerce every every ten or fifteen years. You know japan was going to do you in the eighties and china was going to do in the two thousands. And they just don't have any of the building benefits that we have.

And it's just that's the thing. It's just not even close right now. When you look at like foreign currency reserves held by foreign governments, I mean, it's sixty percent us dollars.

The next one is the euro. I mean, is anybody worried about europe overtaking the U. S.

Economy anytime soon? The next rung down is japan, five percent. China, you know, everybody talks about china. China is that like four percent? It's just there's nothing that that even comes close to the dollar.

So I I sometimes laugh when people out of all of the horrible currencies in the world that you could pick on the dollar is like the one that you absolutely should never short or bet gst, because it's the best of the lot, even if you think the you, the the whole neighborhood is a bad neighbor. D is the best house in the bad neighborhood. It's just it's the best house by a huge, huge margin.

So I kind of like in IT sometimes to like if you can if you could pick any company in the S M P. Hundred to short, would you pick apple or you know any of the top five? Like there are four hundred and ninety five other companies that are probably Better short prospects. And when you look at the the world of fir currencies, there are one hundred and fifty other fia currencies that are probably Better to complain about, Better against that, have worse governments, worse underlying households and innovators and the dollars, the dollars, not the one that you should be betting against in the long run, I don't think.

And uh for for people knew to finance watching M M T is a modern monetary y, they are correct, right? Yeah, right. And that's best. That we make too big a deal about government .

is kind of just, yeah there is A C an unorthodox theory that they they sort of claim that the the country's a reserve currency issue or that can run out of money. So they kind of they kind of emphasize a lot of big government spending programs by virtue of arguing that, hey, look, we have a printing press essentially. So it's more much more complex .

than that. But okay, question, okay, next we have is government spending a crisis level worry or something that can be fixed? What are some simple fixes that could be made to rain in the spending? Or is there no stopping this train because democrats and republicans alike love spending money?

Mean that does kind of feel like that no stopping the train at this point. I know bll party to talk about raining in spending, but is is the simple fixture just that the federal is rates and that should help a lot. Like how much will that actually move the needle?

It's a biggie, I mean, and it's an interesting one, especially in the context of the last few years because so the deficit was about one point eight trillion dollars in two thousand twenty four. And I mean, roughly got one point one trillion of that or so was just government interest expense. And so.

If we actually took interest rates back to, say, two to three percent, you would immediately lap off six hundred billion dollars or somewhere in that range. And so the deficit would immediately follow the one point two trillion dollars. And this is important because the the overnight interest rate is something the fed can control with a dial.

I mean, they could quite literally, yeah they could quite literally turn off that big at tomorrow. And and IT would immediately collapsed down to, you know, the deficit would fall the one point two trillion dollars and then you know all the sudden you're at know a deficit that's like four percent of GDP, which is you know big historically but not like definitely not consistent with anything catastrophic. So um a lot of this can be controlled with a dial.

But the the interesting thing, especially with interest rates, I think especially the last few years, people look at that one point, one trillion dollars of of net interest and they say, well, this is contributing to inflation. But the problem with that narrative is that you have to again, you have to look at context. And the the point of raising rates really is to suffer.

Cate borrowing is to reduce consumer demand through borrowing so that people stop buying homes or are make IT more difficult to buy homes, to buy automobile, to buy large appliances. And that worked. I worked in a big way.

The housing market is closing. The auto sales are slow a lot. You know, people are non stop complaining about being able to to get anything on credit, basically. And so consumer demand has slowed and inflation has slowed subsequently, even though we have this one point one trillion dollar line item from interest expense. And I think that what happened basically that even though we are technically, we're issuing more money through the interest income channel, which is more than offset by the way that the credit markets have been hurt by all of this. And so inflation has fAllen despite having this huge deficit.

right? Yeah, yeah. It's it's of tube. Do you think there are other fixes in like entitled programs where like the so security one seems like a simple, easy one to me.

You raise the retirement age. You maybe you lift that ceiling on where people have security taxes. Does any of that stuff move to need a at all? You think that just shifting on the duck chair.

it's that's a really hard one because especially with the the demographic problem. Like if if I had to guess, I would guess that so security and programs like that are actually likely to get the larger in the long run because the demographic problem is just sort of you unavoidable in the long run. We are getting older um and the the country is just we do have as many people in the long run.

So you have this weird demographic issue wear like I think that inequalities is likely to actually get worse in the long run, which weirdly and this is another thing that kind of count or tuition IT requires I think probably more government assistance for a lot of people in the long one, because the income distribution is so uneven across the economy that you end up with a bigger government by virtue of basically the income not being equally distributed. And you've got more and more of all of this sort of the collapsing down into the corporate sector in the the ultra high network. People who are know sort of the they're eating they're eating the entire financial wealth of the world over time yeah that .

that makes sense. Now let's say we digit in a crisis situation where the the paul to Jones of the world say, like people are gonna on strike and not buy the treasuries anymore. I don't think that's going happen.

What IT does would IT be to be simple enough for the fed or the treasury is to buy their own bounds, like japan is. Because doesn't japan on something like eighty percent of their own government bonds? Isn't that the kind of thing where yeah that would be not the greatest situation, the world. But we could we could still figured out.

yeah IT mean IT depends. So, you know, if the are people not buying tea bills, you know, I think that there's a there's a difference here. I mean, the demand for like long dated treasuries has declined in recent years relative to something like short dated.

But if the if the government, let's say they just stopped issuing thirty year treasury bonds and they just the only issue tables are people gone to stop buying dollars that basically pay four and a half percent. Um you know I don't see IT. I certainly see IT in my business.

I don't see IT personally. And again, you know this goes back to an inflation debate. This is it's not that there is a worry over the the triple a rating of the united states and the tea bls.

You really don't have to ever worry about whether A T. Bill is gonna mature at par. What you have to worry about is whether you turning really a real return on that.

And if the there's a big difference between a central bank like a zimba, which goes in and started buying its debt because there is quite literally like there's no demand through you, which is basically being Prices through inflation, and that's the right way to think about inflation, is that when inflation is really high, the demand for the currency is collapsing. So you can think of that almost is like a corporate interest rate. In essence, it's the interest rate on what the government can afford.

And inflation is super high IT means the demand has collapsed, collapsed basically. And so you're back to an inflation debate there. And so you have to get asking or does does paul tudor Jones think that really high inflation is coming to the united states? Um you know that's a debate that's worth having, but it's not a it's different than a solvent debate.

And if the central bank is buying bonds because you have hyperinflation, that's a very different in a situation like the united states in two thousand and eight where the government is quite literally in the bonds because you have deflation, it's it's virtually the opposite. That's what happened in japan for a long time. As you had deflation, the government was trying to change the composition of the outstanding financial access to change the demand for them. That that's a very, very different scenario than one where you have a hyper inflation or even a very high inflation of the government is buying back its own bonds.

Yeah in our hypothetical situation, your solution way easier. The mind that change material file, that makes a lot more sense to me to your point. Okay, if no one's going to buy the long data dead, we're going to issue once a short data dead or people really not going to buy that.

I agree with you. There would have to be a really big Prices scenario to make that on you know not favorable for people. Yeah.

you'd have to have I mean, that would be reflected through a foregone exchange collapse. So you d have a dollar crisis and you d you'd be having a essentially a hyper inflation during an environment like that. And you know that's a that's a relevant debate. I mean, we can especially looking back at covent um like I said, you guys a chart of government spending as a percentage of GDP.

And this put things in perspective nicely because you can see we're kind of back to basically a Normalize level more or less um especially if you looked at if you back back out the interest expenses here would be IT would actually be lower, be much closer to the the three financial crisis level. But the the kicker here is that when you get government spending that goes to forty five percent of GDP, that causes bigly inflation. That's the lesson from from covey, really.

And if we were to get something like that where you got thirty five, forty, forty percent of all GDP was just the government printing money and spending yeah, that would worry the hello, amy, that would cause huge inflation. A persistent government spending expense like that would definitely cause big time inflation. The situation were now IT probably IT definitely cause sum inflation, does IT cause really high worries of inflation. I I think the evidence they are to support that.

So let's go to the next one because it's more about the markets too. They get string first.

I want to, I want to share my billion dollars from zimbabwe.

Rich, why do I fire?

I had no idea. Are so rich.

yeah, I don't do IT. Where do you get that from? I like ebay, something.

But he .

thought for two cents on.

Now we going right down, down. People keep same. Only reason the stock market up is because of the deficit. How much of an impact does the deficit have on .

financial markets? So the two thousand tens, I I feel you have thought this narrow of a lot to people say the only reason the stock mark is going up because the money printing from the fed now there twenty, twenty, the people who are anger at the stock market going up say, no, no, no. The only reason the stock market is going up because government debt levels in the deficit. So obviously, these these things, fiscal monitor policy of some uh, there's some reaction function there. But to say that it's the only reason that I want to hear what you have to .

say on that yeah I mean, that matters a lot. And I would argue IT matters in a crisis period when private sector spending falls and you get these huge, like forty five percent increases in government spending as a percentage GDP that has an outsize impact. So you have these acute environments like two thousand and eight, two thousand nine.

The fed policies, like I would argue, QE, had a huge impact in two thousand and nine, but had very diminishing returns as the years went on. So IT, the environment depends. But we also know that, you know, one of the dirty secrets about big deficit is that, especially in the united states, the the personal savings rate is relatively low.

There is an equation called the the colleague equation. And this equation basically shows where corporate profits come from. And one of the big items inside of this equation is government deficit.

So when the government expends their baLance, I think of IT as though the government just printing money, for instance, rather than ignore issuing bonds, just think of them is printing money, where does the money flow? The money flow is somewhere. And if households save the same percentage as they they did before, so all else equal, the money will flow eventually to corporation.

So in twenty twenty one, I remember after we printed know, seven trillion dollars across a couple years, I member thinking to myself, I wrote this on twitter, that hey, corporate profits are going to hit record highs in the next few years because U. S. Consumers don't save those savings rates onto a collapse, and corporate profits are going to boom.

And when they do, stock Prices are gone to follow. They are gonna follow, in part because of what the government is. But they're also gonna follow because you got a again, dig deeper like the the chinese economy of great example here where the chinese economy I mean have printed their own trillions of dollars over the last ten years.

What is their stock market done? It's been a zero for ten years. That's because there's other factors are play in the main one, theirs, that their corporations have been diluting the heck out of their stock market.

And so it's a totally different scenario where, you know in god, I mean, europe has been doing QE and all these things, their stock market lag. So you have to start looking you know at what is what's unique about the united states, the big unique factors that well, we haven't eluted our shareholders. And yeah, there's been a lot of money printing. But at the same time, there's been a heck of a lot of innovation in the united states that has made the united states unusual economy and in the corporate sector in particular, has boomed because our corporations are just they're so massively productive and innovative right now that the profits and the the the stock returns have accrued to the united states because of that over america.

is the one institution I still trust more than anything else, right? The way that that they lk capital. And because your point on the china thing, china printed a ton of money stock market, didn't do anything in europe, in japan, they had interest strates negative.

Did they get a booming stock market? No, they didn't like us. So yes, the fiscal monetary policy is one input. But if he was the only level you could pull, guess what every government official would do. And they want to boost the stock Prices to make people wealthier.

but is not the only thing. And that's the thing. You printing money does not create wealth. So this is something the M M T people sometimes love to say this. They literally will call government debt equity sometimes, which is that's a big, big, no, no. In terms of accounting, you print you when you print money, you are not printing net wealth, you're not printing equity um you're printing money and the money IT depends on how you use that money in the the american economy. For all its faults, you despite all the the health issues and social issues we have and the disagreements in politics, the one thing were really, really good at is making stuff, innovating stuff and trying to make money .

and then and then spending stuff.

spending money. No, I mean, we're just we're such enormously wealthy economy too, in part by virtue of the fact that our corporations are worth so much because they're so innovative and valuable that you know that's the that's the dominant factor. When you think about you know why why is the stock market booming over the course of the last ten years?

That's not to that the government you know the fed in all this intervention plays no role um but is IT the is IT the the singular factor in terms of causality? I would are you definitely know that it's it's a factor. But again, and this is the same thing with inflation, I think people love to look at inflation and then point to the government or the fed and say they caused all of IT in.

Sure, they definitely cause some of IT, but it's in especially in a Normal economy like right now, it's much more complex than that. There's other factors that are dampening inflation in having different causes that it's not just the government that's causing all of this. So you have to be careful looking at this one singular factor as the .

the end ball fixes us.

No, no.

Speaking of inflation, on on inflation.

next OK, next we have the most clearing risk of a trump presidency from an economic standpoint is terrify every economy, seems to believe raises the risk of inflation. Please explain how this works and what the potential unification are.

So this week my wife was watching the news and he said, so what's up with the terms? What are these things all about? And I think that's probably where a lot of people are. If we're talking like civilians who don't pay attention to this macedon ic stuff all the time, how do you think about the potential impact here?

This one, I think is impossible to analyze. I mean the me personally, you know if if trump t actually goes through with all of the taps, I read a report from, I think of A J P Morgan yesterday. They said that the rate of inflation would have one to inflation per year, which that's a lot you.

So if we're at two and a half sh on inflation right now and and trump implements all of the terrorists, s IT would raise inflation to like three and a half percent. Is he really going to do this? I don't know.

You know, this is to me, I think when you look back at trust, first term is really interesting that a lot of people were worried about the same issue back then and even the the tax cuts and everything that he implemented, the big deficits. Um did inflation flare up then? No, inflation was actually really low throughout the entire trump term.

And of course, when cove IT happened IT really but um and then the response to IT, I think caused high inflation subsequently. But before coved, there was just a barely over two percent inflation for a year under trump. So at that to me, is the baseline scenario working going forward. And I think that I mean, personally, I think trump is going to use this as a negotiating tactic.

Trump likes to be able to walk into a local business and say, hey, are you making um all of these automobile iles here or are you outsource call all of IT and hiring foreigners because how would you like to be slapped with a twenty percent terf if you don't start bringing all that work back here? So as a negotiating tactic, I think that's what trump likes, is I think he likes having the sort of negotiating point where he can go in and sort of bluster and be loud and be the be the art of the deal guy, basically. And so is he really going to implement this? I would be surprised if he does um IT will definitely add to inflation.

Will I add to inflation in a way that causes really, really high dangerous inflation? No, but I will definitely it'll force the fed probably to stay tighter for longer um IT it'll be messy for the bond market and stuff like that. So um but you .

you would see initial you would see Prices rise on certain gods. He puts a thirty percent uh Terry, an imported goods of china. You need for a lot of products. You'd see an immediate rise in Price like corporations are going to pass that along.

Yeah for sure that the other question is that you know if he did these broad, huge, sweeping terrify know, the question then becomes as corporations can try to pass along the terf and the question then becomes as well as the U. S. Consumer in a position where they can actually eat that cost increase.

Um I don't know. We've never seen anything like this. So this is is is a curve ball is one that's really hard to analyze. I think the baseline assumption should be that if he gets if he implement all of the terrace you get you get A A bump in inflation um doesn't cause hyper inflation or anything like that for sure. Um I actually wouldn't be shocked if the the terrace and a lot of the the cuts that they are onna to ultimately implement. I wouldn't be shocked if a lot of this causes more recession risk than anything else actually that the Price increases aren't sustainable, that the the cuts especially, you know looks like the way that they're starting to Operate, that they are going to cut a huge number of departments in the government um which you know again could be a great thing in the long run. But I wouldn't be shocked if he causes some bumps in the economy run.

So the best case scenario to a trumps ter plan is just the ideas to make sure to bring a bunch of action back to the united states is that idea .

that the main goal is to bring employment back so that, you know, corporations aren't outsourcing you again. How likely is that? I mean, I think in the long run, this is a one way train.

It's just that the the global economy is so interconnected now, it's so easy to outsource work. I mean, I hire people that work in india now just through like task rabbit and things like that like you know, there's there. It's so easy now to outsource work that you know is apple really gonna onshore all of there you know foreign made goods back to california. There's no way the wages .

are probably work ten times higher here. That would be inflationary, right?

They're gonna move IT even with a terror that are going to say, oh, well, okay, the malaysians are willing to make all this stuff for thirty percent less than the chinese. So we'll move all our manufacturing to malaysia and that will offset the tear if I mean that the likelihood that were going to onshore all of this.

I think, is just extremely what promptly wants is you can watch f one anymore. We're going to bring those sports back to america.

F one's entire schedule takes place in the united states.

We have more question.

okay. Last, but at least, i'm having trouble figuring out the right narrative for interest rates. On the one hand, IT makes sense of rates are rising right now because economic growth remains strong, emerge a risk of inflation reacclimatise. On the other hand, demographics and technological innovation are deflationary and should put a cap on rates, which trying of thinking makes more sense.

I think this is passing through the narratives. And like the short term, in the long term, as rates like rates go up, its bond vigiLance and rates go in a Better economy and rates go down in its worse economy in recession and trying to figure that out.

Um I think investors are a little to quit to take the direction of rates at any one time and just slap an economic narrative on them when most of the time is probably just positioning by investors. So the best thing I heard about why rates arriving now is while the risk of a recession has kind of getting pushed out, taking off the table, so people didn't need bonds as a head anymore. And that made way more sense to me than inflation is coming back and in all these other macro economics. So what do you think about the because I agree that the long term, the demographics of this country and the fact that technology deflationary should mean we're not going to get super high rates any time in the future. Baring someone for seeing event yeah .

I think that's right. Yeah you do you can have a look at this across two different time horizons. I think because like my baseline micro o scenario, the longer is the one that you just sort to mention where the the demographic trends, inequality and technology, these are hugely deflationary forces in the long run, so that IT would take something truly gigantic in terms of like government spending.

You talking again going back to like the thirty five percent, forty five percent of government spending as a percentage of GDP or some other unforseen factor, a collapse in U. S. Productivity and you know output would do IT. Is that could not happen? unlikely.

So my sort of based scenario in the long run, yeah, interest rates are are likely to remain low because inflation is likely to remain low just because of of all these huge maccray factors that are that you don't have a big offset in the short run. It's a lot more complex. I mean, I like to I like to use the analogy of people talk about bond vigilantes as if like the the bond market is the thing that sort of like whips the fed around.

And I just I don't think that's quite right. I like to think of the the interest rate market is like a man walking a dog basically. And the the thirty year bond is basically like the dog on a lease and the fed is the person walking the dog. And the way to think about interest rates is that the fed holds that leash and has absolute control at the handle. And so if you think of the yellow curve is sort of like the dog being able to wander out further out, what's really happening there is the is the dog walking the man or is the man letting the dog walk out in front of IT?

And I think that's a good analogy for the way that the fed Operates relative to like thirty year bonds because the thirty year bond is really, in my view, it's like a estimate about where the fed is likely ahead and the thirty year bond traders are yeah, they're looking at things like inflation and fed funds expectations and things like that. But there they're not controlling where the fed is going. The in fact, if the the fed really wanted to, the fed could grab that least I could, I could real IT in IT could grab that dog by the neck and IT could take the thirty year treasury born in, could say, all right, i'm going to set you at four percent in purply unity.

And guess what, I got a bottom with barrel of money and i'm going to set that Price and there's no way you're going to be able to fight me so you can scream bond vigilantes in all that, but i'm the one with the bottom of pit of money, not the bonne traders. And so there's a there's a little bit of of you know a difference in terms of like in a high inflation environment. I think you could probably using the same analogy, you could say, well, the dog in that an area was really big, the dog is strong in the fed has to do something very different to sort of rain IT in because the signal is sending back to the fed is different. But in general, the the fed very much has control over the direction of the yellow curve. And you don't have to worry about you know, unless you have a sort of super high inflation environment, you don't really have to worry about the fed being out of control across the yield curve.

I have a form of full puppy at home, and i'm still working on my german power in personation. I'm still trying to be the fed and teacher not to vote the leach she's walking but um we're getting there. I we're not quite SHE has more control over me still but were working on IT.

My favorite story, my favorite story of all time is one of the very first interviews I ever did was about gold. And this is the back when I had a puppy fifteen years ago. And SHE walked in in the middle of the interview, and he took a humongous dump right on my foot, and I had to sit through a fifteen minute interview with this stench coming up. So so yeah, maybe the dog has more control over us than we think.

Yeah, I feel that's A.

I think your dog was not happy with demarco takes. So if you anyone has any hate, mal.

for calling on government delvile s.

where do we send them? Where do we? Where do we find your work these days?

The emails, josh Brown at e mail, 点 com for all the hate mail。 But what are the .

disciplines funds that come website cline funds that com?

Check out the discipline alert tab that's where I blog and write about all this stuff um but you can also email me a color road jet discipline funds that calm if you you have something nice to say.

right? Tom, we appreciate this was great, very pragmatic. I want to read their name from our email here.

Ask the compound, show a gmail com. You love all your questions and comments described. Review that off you leave a review for us to make docs.

Well, yeah, yeah, we're timing of these charts.

Help us come. Thanks, everyone. See next time. thank.

thanks. We're listening to ask the compound. All opinions expressed by the carson duncan hill and any of their guests are solely their own opinions and do not reflect the opinion of rattleth wealth management. This podcast is is for informational purposes only and should not be relied upon for any investment decisions. Clients of redhot ds wealth management may maintain positions in the security discussed in this podcast.