The Bond Market Is About to Break... And Stocks Go With It

0:00It's been over five years, 65 months of above 2% inflation. But if we couldn't get down to two when oil prices were falling, how the hell are we going to get down to two when they're rising? We've been lied to by the government and we're continuing to be lied to. All prices are going to keep going up because the government is going to keep creating inflation. Because politically, they've got no alternative. They can't accept the reality. Look out because there could be some serious carnage in the bond market and then in the stock market. The Peter Ships Show. Well, the big news since I recorded my podcast on Friday is the escalation of the Iran war over the weekend and the impact that that's had on forcing commodity prices to continue their surge. In fact, oil prices almost hit $100 a barrel in Brent today.

1:03They got about to $99.50, West Texas trades at a bit of a discount. But we closed the day over $94 a barrel and of course, diesel continues. It's record run, but it's not just oil. The oil makes a lot of headlines, but look at copper. Copper is a key industrial metal that hit another all time record high today. Now we backed off that record by the close, still up I think 1.3% at $6.76 a pound. Another day, no, I mean copper, I just, it just updated 682.35 is the last quote I'm getting on Bloomberg for copper. I saw copper earlier today trading above $6.85 per pound. Copper is up close to 60% just since Trump took office and he's been in office for less

2:10than two years. You've got almost a 60% move in copper, but you know, despite this move, copper prices are actually cheap when you price them in real money. A lot of people look at the gold copper ratio. I look at it and there have been a lot of people who thought that well, gold is going to fall in order to bring the ratio into balance because copper has been very low, well, did the gold. Some people thought, well, gold is going to come down to meet copper. I think it's the other way around. Copper is going to go up to meet gold because right now if copper gets back to its historic average or in modern times, if gold stays around $4,400, which is where it is now and it's not going to stay at $4,400, but assuming it did, copper would have to rise to over $11,000 a pound. That's another 60% rise from where we are now for copper, not to be expensive just to

3:17be normal price because again, gold is real money. Everything you buy with funny money with Federal Reserve notes costs more, but it's not because the goods are getting more expensive. It's because the currency that you're using to buy the goods is becoming less valuable. Now, if you're using real money to buy stuff, if you've got gold, well, then you don't see that. You see prices falling, including for copper. You get a great deal now on copper. If you're buying it with gold, not if you're using the governments inferior fiat currency, but copper prices have a long way to go when you measure them in terms of real money. Now, of course, this is a moving benchmark. Gold stock is going to stay at $4,400. Gold is going higher, which means copper is going a lot higher, but copper is just one metal. The same thing is going to be happening with nickel, zinc, all these industrial metals,

4:22tungsten, coal, balth, everything is going to get more expensive. And it's not just metals and it's not just energy. It's agriculture commodities and look at how these stocks are performing. Look at the copper stocks today. I'm not going to go over them by name, but look at these stocks sitting 52 week highs. And the ones that haven't, you know, we're still up big and they're going to move up. Agriculture names are going up. Soaring copper prices and soaring oil prices are not consistent with a Fed that is still believing that inflation is headed down to 2%. Why would that be? If inflation didn't even go down to 2%, and again, I'm not talking about real inflation, which is the expansive of the money supply. I'm talking about the CPI, which the government likes to point to, right, consumer prices. But if consumer prices never got down to where they were rising at the Fed's 2% target. It's been over five years, 65 months of above 2% inflation.

5:28But if we couldn't get down to 2 when oil prices were falling, how the hell are we going to get down to 2 when they're rising? And I keep hearing the president's, yes, men, Scott Bessett on the Sunday morning shows confidently saying that when this Iran war is over, don't worry, oil is going to be $50 or $40 a barrel. I mean, this guy just lies. I mean, that's what everybody in the Trump administration does. I guess they're told to lie, and that's what they do because the whole administration is based on a lie. It's one lie after another. One of the lies is that, you know, this war is going to end. There's no end in sight. The Iran war began over six months ago. It started at the end of February. It's almost six and a half months. I think we're further away from victory now than we were when we first dropped the bombs.

6:33And if you remember, Trump said this was going to be, you know, a simple operation. It was going to be over in two weeks. The whole regime was going to topple. We were going to have regime change. We were going to liberate Iran. It was going to be a cake walk. Well, it's over six months and we're actually in worse shape than we were. Iran is in much better shape because they've already taken the worst, I think, that we are going to have. I mean, we've already bombed everything. We blew up their navy, right? Trump keeps bragging about how their beautiful ships are on the bottom of the ocean. So we sank their ships. We blew up a lot of their missiles. We blew up a lot of their military targets. All right. What? I mean, they're still there. The regime is in power. Yeah, there are different guys because we killed the other guys, but now they got the new guys, but it's the same regime. It's not regime change. But at this point, I mean, we're done. I mean, I said this from day one, you go back and listen to my podcast from the day this

7:40war started. Not only did I say that it was wrong from a legal and constitutional perspective because it's another war that we never declared. Congress didn't declare it. The president just got us involved. But I also thought that it was not going to end the way we were being promised. Not because some kind of genius at military strategy. I just, you know, have heard this before, been there, done that. I know that every time politicians promise that we're going to have a quick war in the Middle East, it never happens. It didn't happen with Iraq. It didn't happen with like Afghanistan, all of these military interventions, they never go the way they're planned. He always takes a lot longer and we achieve a lot less. And I knew that nothing was going to change. I mean, I remember I said, I hope I'm wrong. I hope this time Trump actually pulls it off.

8:45But I knew that it was a mistake to go into the Middle East and up until Trump declared war and I ran, we were on the same page. He agreed with me. And during his first term, he stayed out of this. And during his campaign for a second term, he promised no wars, no more forever wars, no getting involved in the Middle East. He kept talking about how the biggest mistakes that were made by Obama or by Biden had to do with getting involved in the Middle East. And of course, he also called out George Bush for Iraq. So he went against a Republican establishment and the whole military industrial complex. So a lot of people who voted for Trump voted for him because of his anti-war stance. So I knew that this was going to be a political problem for Trump as well. Every investor understands counterparty risk.

9:45When you deposit money in a bank, it's not really your money anymore. It's a claim on the bank. Most people never apply that logic to their passwords. They reuse the same one everywhere. They trust some companies server to keep it safe. And then that company gets hacked. Now their one password is everyone's password. That is a single point of failure and you built it yourself. Here's what I'd want instead, something closer to self-custody. Proton past stores your passwords, past keys and credit cards under zero knowledge and to end encryption. Proton itself cannot read what is in your vault. It generates a unique, strong password for every account. So one breach stays one breach. It auto fills your logins on your phone, your laptop, whatever browser you're using. And here is the part I find clever. Instead of handing your real email to every website that asks for it, Proton past creates an alias. If that alias starts getting spam, you just kill it. Switching from your browser or another password manager takes one click. Go to proton.me. That's pro, T-O-N dot em e slash peter and you get 50% off.

10:46There's a 30 day money back guarantee. So the downside is zero. Trusting a claim, own the vault. That's proton dot me slash peter. And by the way, you know, and again, I don't, I hate to always just to my own horn. I'm getting stuff right. But now in the betting markets, for the first time, the Democrats are favored to win the Senate, winning in the midterms. Now winning the house is pretty much a lock. I mean, the odds are better than 90%. They've never been higher than they are right now. But up until now, the Republicans were favored to hold on to the Senate. And now the odds are slightly that they're going to lose the Senate, despite some of the crazy candidates that they're going to have on the ballot. I mean, the Democrats are their own worst enemies. That's the only thing the Republicans got going for them is how bad the Democrats are. If the Democrats were just normal Democrats, they wouldn't have a chance.

11:48But because now that you've got such far radical democratic socialists, that's the only chance that the Republicans have by saying, look, I know we're bad, but we're not as bad as them, right? So vote for us as the lesser of two evils. That's their only shot. It's not that they have anything positive to sell. All they have to do is convince people that it will be even worse if they go with the Democrats. But that's not a way to win an election. But I knew that was another reason that I didn't want the war. And of course, I just don't like war in general. I think it's a mistake. I think that we should try to resolve things through diplomacy, not through war. And I never believed the threats. I never believed the weapons of mass destruction. And I never believed that Iran was the nuclear threat that it was held out to be, especially since I've been hearing that stuff for 50 years, like they're right around the corner from

12:48a nuclear weapon. Yet, well, they've been right around the corner for years, decades. So clearly that has not been the case. We've been lied to by the government and we're continuing to be lied to. No, I pointed this out, Trump and his guys in his administration. Every time I hear them talk about the economy, they're lying. Every time. And I know they're lying because I understand the economy. I mean, I'm not, you know, a military expert and like that. And there's a lot of things I don't necessarily know. But I know the economy and I know they lie about that. And a lot of the lies are very obvious because you just look at the statistics and they're completely lying about them. And they lie to embellish Trump's accomplishments about how great everything is on the Trump right. So these are just lies. But if they're lying when it comes to the economy, why would they be telling us the truth

13:48when it comes to the Iran situation? They wouldn't. I mean, once you're a liar, you're a liar. It's all like you just lie about certain things. If you're willing to lie, well, then you're going to lie about everything. If it's convenient, if you're honest, then you have to tell the truth, even if the truth could get you in trouble. But once you've, you know, you've crossed the line to lying, well, you're not going to stop. So I'm sure that they're lying about everything. Even the stuff I don't know is a lie. I assume it's a lie. I don't know why they would ever tell the truth, especially if the truth is not good. They don't want us to hear that, right? It's like Jack Nicholson from a few good men. They all know we can't handle the truth. It's much easier to give us a lie when the truth is so bad. So all we're getting is these lies. But if you go back to what I said, I said we were going to lose this war. And the reason I said we were going to lose this war was because I said Iran was going

14:52to win. By that, I didn't mean that they were going to kill more Americans than we killed more Iranians. No, I knew that, you know, we had the bigger military. I said they win by surviving. They win by standing up to the great Satan, which they did. They took our best. We dropped all our bombs. We dropped all our missiles and they're still there. They're still standing. And now we've already switched from a military war, even though some of the military stuff escalated over the weekend. That was part of the problem. But we're now focusing more on an economic war. We're waging this economic war, which we're also going to lose, by the way, we're not going to win this war either. But I hear Scott Bessett talk about this or Trump talk about it. It's going to be the greatest economic war ever that we are going to come down on Iran,

15:58like no country has ever been hit before. It's going to be the greatest wave of economic sanctions. We're going to strangle them. And you know, look, look at what we did to Cuba. Cuba's still there. Yeah, I don't know if this is going to be worse than what, what, you know, the embargoes and blockades and all this stuff that we did with Cuba. But you know, Castro, you know, we never got rid of him despite all of our efforts. But apparently this is going to be worse, right? This is going to be an even bigger thing. And I think all this is a lie. I mean, a lot of it is based on the belief that the rest of the world is going to cooperate because we've threatened them with these secondary sanctions. They're not going to believe that. They all know that whatever we threaten, it's all BS. I mean, a perfect example. I talk about on my last podcast when instead of threatening Iran, Trump threatened the

17:00Fed. He threatened the Fed by saying that he was going to basically destroy the entire U.S. economy if the Fed didn't cut rates. The probability of a rate hike went up. In fact, as of now, the probability is about 60% that the Fed is going to hike rates next week. Now, I still don't think they're going to do it. They should. In fact, they should raise rates by a lot more than the 25 basis points that people will expect. But when Trump saw those jobs numbers, you know, apart from claiming credit for how great the numbers were, which they really weren't, even though they were a beat. Again, I think by the time the dust settles, they're going to end up being revised to a miss. But I discussed that on my last podcast. But Trump immediately said, look, you defend these to cut rates because we deserve low rates and cut rates. And if you don't do it, we're going to call off trade. We're going to embargo all trade with all countries that have trade surpluses, which

18:03of course would hurt us. And in fact, everything that Trump threatens with respect to trade, everything that he threatens, the sanctions, the tariffs, the biggest losers are Americans. That's one of the reasons that the threats don't work because Trump would harm the U.S. economy more than the economies of the nations that he's threatening. So the Fed knows that Trump is bluffing, that he's not going to carry through. And I think the rest of the world knows that they can continue to do business with Iran. And there's nothing that we're going to do about it because we don't have the cards. If we, if we, if we do embargoes, if we, if we outright ban trade, it's going to be even worse. And I'm going to get to that because there's a lot of stuff I want to talk to about trade. But just getting, getting back to the war.

19:03The war's not working. We are losing this war, even the administration now admits that there's no nuclear deal anywhere in sight. So it's not even about the nuclear deal. I don't even know what it's about. Maybe it's about trying to reopen the straits of her mouss, which were completely open before the war. Our real goal is just to get back to the status quo from before we started a war that we never should have started. But now we're not going to do that because Iran is not going to give this up. Iran is going to control that straight. They're going to have a toll and they're going to collect a lot of money and their cloud in the region is going to grow. They are going to be a more powerful economic force than before we declared war against them. And probably that means eventually they'll have a bit, they'll be a bigger military threat. They may be a lesser military threat now, but that doesn't mean they won't be a lesser threat later because they'll have more money to build even more weapons in the future because

20:08we're putting them in a better economic position and we are driving our enemies closer together. China is going to be having a better relationship with Russia and a lot of these countries are now further distancing themselves. Look, look, look, we know the Norwegian sovereign wealth fund announced a major sale. Well, I think like 60 billion worth of US treasuries, it's going to be unloading. Obviously they're going to be buying something else with it, but the world is moving away from the US dollar. We have alienated so many of our friends, particularly Canada. Look, what's happening there today? And I guess this is a good point to segue into trade. Although wait, before I do that, though, what's happening with the escalation of the war is helping to drive up these commodity prices like oil, like copper, like agricultural

21:10commodities. All this means much higher consumer prices when voters are at the polls. This driving to the polls is going to be a lot more expensive than it was when they voted in 2024. Inflation is going to be the number one issue in 2026, just like it was the number one issue in 2024, except now the inflation shoe is on the other foot. In 2024, everybody blamed the Democrats for the inflation. That's why Trump was able to win. He won by promising to lower prices on day one. Well prices are going to be much higher. In November 2026, then they were in November 2024. And so who are the voters going to blame for that? They are going to blame Trump, the man who promised lower prices, and they're going to blame every Republican who's running down ticket. And what's the solution going to be the Democratic Socialists?

22:12Why they're promising lower prices? And they're of course blaming the high prices on greedy capitalists ripping you off, but they can also blame it on the tariffs. And that would be true. And they can also blame it on the war. And where did that come from? Trump started the war, Trump imposed the tariffs. And all the Republicans supported him. So they own this mess. And so they're going to be held accountable at the polls. Did you know that September is World Alzheimer's month. Most people treat their brain the way governments treat their balance sheets. They don't look until something's already broken. That's not how I operate. I wanted to look at my own data and start tracking my numbers before things like brain fog became something I just accepted as normal. So I went through function. Your focus in mental stamina, leave a data trail in your blood and function tracks it, make omega three index, which is tied to focus and how your brain performs day to day.

23:13And homocysteine, when that number runs high, it's linked to brain fog and a higher risk of cognitive decline down the road. And if you want to go further, function offers an Alzheimer's detection test, blood markers that can flag risk years before you'd ever notice a symptom. Check your brain and health the way I do. Function provides 160 plus lab tests for $1 a day and member pricing on advanced imaging. Find it functionhealth.com slash Peter and use code Peter 25 for a $25 credit. But going to trade today is the day that the Canadian tariffs on American goods, these are the reciprocal tariffs because they were responding to Trump's tariff escalation. So these tariffs have kicked in and they're anywhere from 15%, 25% and up to 50% on various

24:14products. But they're focused on steel and aluminum, dairy products, appliances, agricultural equipment, pulp and paper, plastics and electronics. Now why did Canada choose the particular products? It's about 20 billion of US exports that are going to be subbed to these tariffs. Well Canada was at least being somewhat selective. Again, I don't think they should have imposed these tariffs at all because the tariffs are on Canadians. They're not on Americans. So because Trump decided to punish Americans who buy Canadian goods, that doesn't mean that Carney should punish Canadians who want to buy American goods. I mean, how do two wrongs make a right? Right? Apparently in a trade war they do. But at least what Carney did is focus on products that could most easily be substituted for

25:23a Canadian produced good or an import from another country. Now sure, these goods will end up costing Canadians a little bit more, but not as much as the tariffs. So maybe they end up paying 5% more to avoid these 25% tariffs or whatever. I don't know the exact numbers. But for products where there wasn't a economically viable, easy substitute, he was smart enough to leave those alone. But where it was easy for Canada to compete or where Canada could source the goods from South America, from Europe, for Asia, it put the tariffs there. So the impact is also going to be felt very strongly by American companies if they can't sell these goods up in Canada. Now they're going to have to find some other market to sell into if they can't sell into

26:25their market of choice Canada. So there are going to be companies, individual companies in the US, they get harmed. But America is not going to win the trade war with Canada. In fact, we're not going to win any trade wars. Look at the news that came out. I think just today China reported their trade numbers. And remember China is the big boogie man, right? The big enemy that Trump was targeting for its sin of having a big trade surplus. And so China is the main target. And the highest tariffs really still are on Chinese goods. So China reported a great number on exports, August, most recent Chinese exports rose 25% year over year. Imports also up 28%. So their imports went up.

27:25But their trade surplus for the month was $119 billion. It's basically the mirror image of America. In fact, it's actually bigger. China actually runs a bigger monthly surplus in merchandise than we run a deficit. Although sometimes we do have deficits north of 100 billion. So in some ways it really is just the mirror image. But in addition to that, China's exports with the US rose 34% year over year. And year to date China's already got an $806 billion surplus. And they are on pace to have their biggest year ever, a record year for the size of China's trade surplus. Now the interesting part is the record that they would beat the year that China had its

28:29biggest trade surplus in history was last year, 2025. Trump was president for all but about what, two to three weeks of that year. And his signature campaign promise was to reduce the trade deficit with China. Yet we had a record high trade deficit. Now maybe Trump could talk about, oh, he did reduce it in 2026 because if we extrapolate the year to date trade deficit with China in 2026, it's going to be below where it was in 2025. But it's still going to be our fourth worst year ever. Now number two and number three worst year is ever were 2024. And I think 2023. So you know, those were under Biden, but Biden inherited these massive trade deficits from Trump because even during Trump's first term, our trade deficits went up.

29:34Trump handed Biden a bigger trade deficit than the one Obama handed Trump. So rather than winning on trade, we lost even bigger on trade during Trump's first term and we're going to lose even more during his second term. But what Trump did manage to achieve with the tariffs is our deficit, our bilateral deficit with China did drop. I mean, I think it was about maybe 30% or something like that. So by making Chinese goods more expensive, Americans bought fewer Chinese goods. You know, if China had absorbed the tariffs, that wouldn't have happened. If Chinese goods hadn't gotten more expensive because the Chinese ate the tariffs by lowering their prices or by lowering the exchange rate of the yuan, then Americans wouldn't have bought fewer Chinese products. The only reason we bought fewer Chinese products is because China didn't pay the tariffs.

30:40Americans were expected to pay the tariffs. Just like I paid my tariffs, I went over a last podcast. I got a product imported from Europe and then FedEx sent me a bill for the tariff and then they sent me and in the bill was more money, they charged me to process the tariff. They didn't send the bill to the producer in Europe. They didn't say, hey, you know, you got to pay this tariff that we had to charge Peter Schiff, European company. You need to send us more money. No, they sent the bill to me. They didn't send the bill to the producer. I got the bill, the American consumer. And again, not only did I pay the tariff 100%, I paid the extra cost to process the tariff. So if there was no tariff, there would have been no processing fee. I would have just got the FedEx package and that would have been the end of it. Instead I get a FedEx package and the next day I get a bill for the tariffs and for the tariff processing a fee.

31:42But the trade deficit with China went down because China's goods got more expensive for America's. Now what did I say was going to happen? And I'm not like talking about what happened after the fact. I predicted it before the fact. I said that China was going to be fine because it was a big world out there. And if Americans couldn't afford to buy Chinese products, somebody else would happily buy them instead of us. See Trump kept saying, we got all the cards like we're the biggest consumer. Anybody can consume. The easiest thing you can do is be a consumer. I mean, anybody who has a family, you have any kids, do they have problems consuming? No, they consume everything. They don't produce. All they do is consume. If you're married, if you have a non-working spouse, I mean, my wife is a great consumer. She's consuming every single day.

32:45But the hard part is to earn the money that she spends, to earn the money that my kids spend because they don't earn anything. And so I can say in that this is nonsense, the cards are held by the producer. That is the hard part in the whole transaction. Consuming is easy, producing is hard. The reason poor countries are poor, it's not because they lack consumers. Their poor people would consume as much as we did if they had the production. It's supply that creates demand because supply transforms demand into actual purchasing power. Remember, in the science of economics, demand is basically unlimited. There's no limit to what people want. People want everything. People want stuff that don't even know that they want until somebody invents it, then they can't live without it.

33:46So that's the easy part. The hard part is producing because you can't consume what hasn't been produced. But once it's been produced, anybody can consume it. Quick question, are you hiring in another country right now? Because once you do, things can get complicated fast. But that's where Pebble can help. You can send offers in minutes to anyone in the world and get them onboarded fast. I've dealt with this firsthand. Once you start working with contractors and employees in different countries, suddenly you're juggling local labor laws, contracts, payroll, compliance issues, tax questions, and your stitching together, three or four different tools just to stay organized. It eats up time and it introduces risk. That's where Pebble comes in. Pebble is an AI-powered global HR platform built for founders and operators who are hiring around the world. It lets you hire, pay, and manage talent in over 185 countries, with onboarding that can

34:48be done in minutes. Instead of bouncing between separate systems for contracts, payroll, benefits, and compliance, Pebble brings everything together in one place, built in guidance and local expertise. So you don't have to become an HR lawyer just to expand your team internationally. The fastest growing companies are using Pebble to stay organized and reduce risk. Bottom line, it simplifies global people operations so you can focus on growing the business instead of worrying about paperwork. Their new standard discounted pricing at $399 US per month, per employee, helps you contain costs. Go to highpebble.ai to get a free estimate. That's highpebl.ai for a free estimate. Now the reason Americans were consuming is because we were outbidding everybody with our strong dollar. But by imposing tariffs, it made it harder for Americans to outbid because we now had to bid even more because of the tariff and we couldn't afford it.

35:51And so I said, well, that China is just going to trade with other countries and that's what it's doing. That's why China has a record trade surplus now, even though it's trading less with the United States, it enjoys a smaller surplus with America. I mean, it's still got a surplus. It's not like it's got a deficit with us though. It just has a smaller surplus than what I had before. So we're still losing with China. China is just winning bigger with other countries. Now the real winners, I think, are the consumers in those countries who now got to buy Chinese goods that they couldn't buy before because Americans were buying them. We're the losers. We've lost out on those goods. But what have Americans done? It's not like we're producing the goods that we used to buy from China. No, we're just buying them from someplace else because if you look at America's trade deficit. In 2025, our trade deficit was actually worse than it was in 2024.

36:51Got worse despite the tariffs. Right? It got worse. Now it's improved a little bit so far in 2026, so though who knows, right? We still got many months to go. But if you extrapolate the current rate for the rest of the year, it's going to be a little bit of an improvement. So our trade deficit in goods, and I'm not talking even about the unified deficit because I'm not talking about services. We've always had a surplus in services. And Trump never really complained about that or obviously never acknowledged that or talked about that. Trump is focusing on merchandise on goods. And so we're going to have a slight improvement over last year's record, record bad year. But it's minimal. And what's happening is because the tariffs disproportionately increased the cost of Chinese goods. What Americans ended up doing is buying goods from other countries.

37:53We didn't start manufacturing stuff here. We didn't, you know, resource everything and start producing domestically the stuff that we can no longer afford from China. We just found other countries to buy from. Now obviously those other countries charge us more than what China was charging us. Because if they charged us less, we would have been buying for those company countries. Anyway, China was giving us the best deal. That's why we had such a big deficit with China. But because of the tariffs, China couldn't give us the best deal anymore. So who loses there? The Americans. We have to now take the next best deal and we did and we paid higher prices. But we didn't go cold turkey on China because in many cases, China was still the best deal. Even with the tariff, that's how efficient China is. That's what a great deal we were getting.

38:54The prices were so low that even with the tariffs, it was the best deal we could find. And so we kept buying those goods. Not quite China's trade surplus didn't disappear. We still bought their goods. We just didn't buy as many, but we paid a lot more money to buy it. Now obviously some Americans didn't buy those Chinese goods, right? That's why the trade deficit with China went down. And now maybe they bought them from another country and just paid a little bit more. So they're losers. Or maybe they just didn't buy at all. Maybe the next best option was too expensive. They just went without. But it was Americans that lost. So we lost the trade war with China. It's obvious that we lost that trade war. We're going to lose the trade war with Canada. We will lose the trade war with any nation that we declare war on. Because we are the beneficiaries.

39:54Yes, technically it's better to have a surplus than a deficit because you're earning money. When you run a surplus, that's like a company operating at a profit, right? The nation made a profit. And what does a nation do with its surplus? It invests it. It can acquire capital in the other country. It can buy land, productive land, right? Property, commercial property, farm land, can buy equities, can buy stakes in businesses. I think it can do stuff. And then it can earn a return on the assets that it accumulates as a result of investing in surpluses. When you run deficits, what are you doing? You're selling off your assets. You're getting poorer, right? You're selling off your cows to buy imported milk. But in the short run, that trade off has a benefit in that you get to consume more.

40:55You get to live beyond your means. And that's all American politicians are focused on. That's what Trump is focused on. He doesn't care about the long term. That's all part of his spiel, right? The Trump show. He cares about goosing the numbers. He wants the numbers to look good while he's in office so he can take credit for that. And so if he imposes these tariffs, the immediate impact on there is going to take away that short term benefit because it's going to make the cost of living go up. It's going to make consumer prices go up and it's going to make interest rates go up. Those are the two things that are on everybody's mind. Of course, rising interest rates can make the value of your house go down, which Trump

41:56doesn't want, could make the stock market really go down. It hasn't so far because AI has kind of been goosing the stock market. But so Trump can't win any trade wars. They're going to be lost, which is why more and more of these nations now recognize that Trump is really neutered when it comes to following through with all of these threats because they are going to harm the US economy and they're going to harm the Republicans' chances in the midterm elections. Now yes, in the long run, we need to reduce our trade deficits. The way we need to reduce them is not through protectionism. As I said from the very beginning, another way these protectionists terraced backfire

42:56is they undermine the productivity of American companies by making their imported components to expensive. That puts them at a competitive disadvantage. We end up harming our own manufacturers. Some specific companies benefit, but at the expense of others who lose. But even the companies that benefit, let's say that we have tariffs on steel so that US steel manufacturers can make extra profits and maybe pay their steel workers higher wages because they can charge more money for their steel. If US car manufacturers now have to pay more for their steel, then they're not going to be as competitive. Certainly when it comes to exporting their cars to Europe or Asia, I mean, maybe they could still be somewhat competitive in the US to the extent that we have tariffs on foreign

44:00automobiles that are coming in. But without those tariffs, the foreign automobiles will be cheaper because they'll be made with steel that wasn't subbed to the tariffs. But if we've got to export our cars that were made with expensive steel, it's going to be harder to compete with companies that pay lower prices for that. So we end up harming our auto industry. And in the end, if the auto industry is smaller because of expensive steel, then US steel companies have fewer domestic customers for their steel. So it could end up even hurting the steel companies. And in fact, we've had all this protectionism on steel, yet we're a fraction of what we used to be when it comes to steel. We were a much bigger producer of steel in the 1950s than we are now. So the tariffs and a lot of the things that have happened have just contributed to the decline in an industry that we once dominated. So what's happening with Canada, we're going to lose that.

45:01Just like we're losing the war with Iran and like we lost the trade war with China. And what is the collateral damage? Again, it's a loss of confidence in the US in our ability to get our fiscal house in order in the creditworthiness of the United States. And it's not just that interest rates are going up because of inflation. I mean, that's a good part of the problem. But look at what's going on now. And I talk about this with the CapEx boom in AI and the hyperscalers, these companies, the big hyperscalers, Meta and Google and Amazon, all these companies had all this cash.

46:05And they were parking it in US Treasurer. So they were loaning their money to the US government. They're not doing that anymore. They blew through their cash. They bought computer stuff with it and they spent it all. And now they're borrowing. They're borrowing hundreds of billions of dollars from the same savings pool that the US government is dipping into. And the same pool that all the other governments that need to borrow money are dipping into. And so the demand is growing and it's going to continue to grow. And the thing is as long as these companies believe that they can generate these enormous returns based on borrowing money and building out data centers or other AI infrastructure, they don't care what the rate is. They don't care if they have to pay 9%, 10%, 11%.

47:06They'll pay it because they believe they're going to get this massive return. So the government's going to have to compete with these companies because it's not risk-free, not at all. Ironically, there's one product that the government makes that's risk-free and that's the nickel. The US nickel because copper prices are as high as they are right now. And because nickel prices are as higher they are right now. The nickel used to be made 100% of nickel, but they stopped that because the nickel was too expensive. So they're now 75% copper and 25% nickel. But with the current price of copper and nickel, each nickel is worth 7.76 cents.

48:09That's 55% above the face value. You could go to a bank today and you can give them $2 and they'll give you a roll of 40 nickels, assuming they haven't run out. They don't mark it up. You just pay $2 for 40 nickels and you've got more than $3 worth of copper and nickel for your $2. That is a cant lose investment because you paid $2 for over $3 worth of copper and nickel. It'll never be worth less than $2. So you can't lose, right? Even if copper and nickel prices crash, they crash 90%. You still got $2 face value of nickels. Now, I don't think that's going to happen, but even if it did, you can't lose. Now yes, you're not going to get any interest on your nickels if you put them in a safety deposit box, but you can't lose your principal. On the other hand, what if nickel and copper prices keep rising?

49:10You already are leveraged because you're getting $3 worth of nickel and copper for $2. So if nickel and copper prices go up by a third, 33%, you've doubled your money. Now you've got $4 worth of nickel for your $2. You've got a highly leveraged nickel and copper play that cost you no risk. I mean, that is the risk-free return. It kicks the hell out of US treasuries who wants a 4% or 5% return on treasuries where inflation can wipe you out. And Flacias are not going to wipe you out if you own copper and nickel. Just going to go up. Now, I know there are people that say, but Peter, you can't. It's illegal to melt them down, which is true, but it's illegal to melt down dimes and quarters for their silver content. But that doesn't stop those prices from rising. At least I think it's illegal. But shift gold, we sell bags, junk silver, we sell dimes and quarters and nickels.

50:14I'm going to check if it's illegal. But the thing is you don't have to melt them down. Oh no, okay. So it is legal. You can melt down the silver and dime. So I guess they passed a special rule to say you couldn't melt down pennies and nickels because they knew that otherwise that's what would happen. So it is illegal, but they outlawed the penny. So they don't even make or they didn't outlaw it, but they stopped making pennies for general circulation late last year. The penny though is not nearly as good a deal as the nickel because the penny right now has about 1.07 cents worth of copper and zinc. It's mostly zinc now. If you have an old penny that was minted before 1982, right? So 1981 or earlier, that's 90% copper. Those pennies are worth almost four and a half cents. So if you happen to grab one of those, I mean, they're still circulating.

51:17Most of them are out of circulation now. If you grab one of those pennies, you know, put it aside because it's going to be worth a dime relatively soon. So hold on to it. But the nickel is a better deal. Obviously, if you get an old nickel, that's all nickel. I forget the value there. It's a lot higher, but even the new modern nickel, the ones they're still making, I have seven point six cents worth of metal in them. I think they're going to stop making these probably in another year or two. They're going to they're going to stop making the nickel because for the same reason they stop making the penny, it's too expensive. I mean, it costs the government, you know, probably eight cents to make a nickel, right? I mean, that's probably one of the biggest wasteful expenditures. I mean, why would you spend eight cents to make five, right? But that's what they do. But that's why they stop with the penny. But it doesn't matter, even if it's illegal to melt them down, the metal is still there. And so so they're still worth their weight.

52:18Because most people don't melt down their silver coins and their, you know, their dimes, nickels and quarters. They don't melt them down. That's why the bags are still there because people use it as a recognizable way of owning silver. Well, the same thing is going to happen with nickel at, you know, people will own, own nickels for the same reason. But of course, criminals are not going to care, right? So I'm sure there will be an underground market in nickels. Criminals will buy nickels illegally. I mean, it's not illegal to buy them. They'll take them and they will illegally melt them down and then they will sell the nickel in the copper. I mean, because once you'd smelt it down, I mean, how the hell do you know where the copper came from or where the nickel came from? And I don't know that the FBI or the CIA is going to waste a lot of resources trying to find illegal smelting operations going on. I mean, they got bigger fish to fry.

53:18Meanwhile, there's so much, you know, going on with drugs or other illegal activity that they're trying to clamp down on. But criminals are going to have no problem with doing this, right? To say, oh, just because it's illegal, no one's going to do it. I mean, if the government could stop crime by passing laws, there'd be no crime. Right? Obviously criminals don't care about the law. That's why they're criminals. So nickels are going to be a great investment. There will be a black market and people who are illegally melting them down, but even if they're not melted down, but that's really your, the best deal the government is giving you because US treasuries inflation is going to wipe those out. And you can say, yeah, there's no downside in treasuries because you're going to get your money back. Well, that's the same with nickels. You're going to get your nickel back. But you've already got 50% worth of appreciation. So how many years are you going to have to clip a 5% coupon to get a 50% return? That's quite a few years. But by the time you get that money, inflation will have eroded away the value of your treasuries.

54:21Meanwhile, five years from now, who knows what these nickels are going to be worth? Because nickel prices are going to keep going up. Copper prices are going to keep going up. All prices are going to keep going up because the government is going to keep creating inflation. Because politically, they've got no alternative. They can't accept the reality. That's why I don't believe that the Fed is going to hike rates next week. Now what I believe the strategy is to talk about raising rates, act as if you're going to raise rates, but never actually do it. Just like Trump, talk as if you're going to do all these things and just don't follow through. Talk like you're going to bomb Iran back to the Stone Age and then come up with a reason not to do it. So the Fed is always going to have a reason why they didn't hike rates this time. You know, there was some number or something that gave them hope that it looks like inflation

55:24is trending down to 2%. But don't worry. Don't worry. If it comes in too hot, we're ready. We're ready to raise rates. Trust us, we will. We'll do it. We're serious. We're going to hike rates and then I'd not do it because the real problem is what does the Fed buy with a 25 basis point rate hike? Nothing. They're going to get nothing from that. It's not going to do anything about inflation because it's too little. The rate hikes need to be a lot bigger than 25 basis points. And in fact, if the Fed does hike by 25 basis points, what is the market going to think? Oh, that's it. No, they're going to start pricing in the next 25 basis point rate hike. So the Fed hikes rates 25 basis points. It's got to have to do it again. It's going to be in the same predicament that it's in now. Only rates will be even higher, which means bigger problem for stocks, bigger problem for real estate, bigger problem for the federal debt.

56:24We're spending over $1.2 trillion per year on interest on the national debt now. And that's going to keep rising. By the time Trump leaves office, it's going to be $2 trillion. And that's if rates just stay where they are, just based on all the debt that has to roll over and all the new debt. We're borrowing over $3 trillion a year. So over the next two and a half years, that's another, what, $78 trillion. That's why I've said that there's a chance that if we go through a more serious recession in the second half of Trump's term, we could hit $50 trillion on the national debt before Trump finishes. It's 40, you know, just over 40 now. But even the way it's projected, I think the official projections probably showed it at about $47 trillion by the time he finishes. So we've got to pay interest on that extra $7 trillion that we're not paying interest on at all. Plus, we got to pay extra interest on all of those notes and bonds that mature between

57:31now and then that we're paying maybe 50 basis points in interest now because the money was borrowed when rates were really low. And now we have to refinance it when the rates are much higher. And if the Fed actually does hike interest rates, then it compounds that problem. And we'll see what happens. We're going to get more inflation data on Thursday and Friday. We're going to get the PPI on Thursday and the CPI on on Friday. And those numbers can easily come out much hotter than expected. And if they are, look out because there could be some serious carnage in the bond market and then in the stock market, we'll see what happens with the precious metals market because what they typically do is go down. Like gold was down about $40 today. And I think the main reason was the pressure being put on gold or down 46 bucks, closed at 43.58.

58:32But the pressure was building from the weakness of the bond market and the strength in the oil market and the copper market, which was pushing up the odds of a rate hike next week. But we'll see how gold reacts to the hot inflation numbers if we get them. Ironically, if we get colder numbers, gold is going to soar if we get lower than expected because that's going to take the rate hikes completely off the table. If they're even on the table in the first place, which I don't really think they are, but if we get cooler inflation numbers, which will still be bad, just not as bad as they expect, then we could get a big move and the odds of a hike in September will come crashing down because the Fed will have the exact excuse that it's been looking for. But if it's not that excuse, they'll come up with another one because they don't want to hike rates. And Trump made that clear. I mean, Trump is still demanding that the Fed cut rates and even threatening to harm the economy if it doesn't.

59:34So I will be talking about those numbers on Friday. I'll try to do the podcast pretty much right after the market closes because Friday is going to be Russia's son, it's Jewish New Year, which starts at sundown. So I got to get the podcast done before sun goes down because I got, I got plans to observe the holiday that evening. It's also going to be the 25th anniversary. I don't like to use that word because it's anniversary again. It's, you know, it's a good, that's a good thing. But it'll be 25 years since the 9, 11, 2001, 25 years. It's hard to believe so much time has passed since that horrible incident from 25 years ago. But that will be that day. But I will do a podcast on Friday and there's probably going to be a lot that's going to happen between now and then. So make sure and listen in the meantime, in the meantime, you know, if you want to get nickels, you know, you don't need shift gold for that. You could just pick them up at the bank.

1:00:35If you have bigger money, you want to buy gold and silver before the next big move up. You want to go to shift gold. And as I said, on last week's podcast, open up your T gold account. Now get it funded, put some money in there. So you're ready to go when we roll out the gold back debit cards, the secured credit cards to allow you to borrow against your gold. If you need to at low interest rates, but those products are coming and they're the first of many. So you got to make sure that you are at T gold. And if you're not reading our letters at shift sovereign, make sure and subscribe and start reading our content, you know, just make sure it's on your to-do list. We're putting out a lot of really good stuff. And I'm looking forward to seeing some of our subscribers. What is about two weeks now? We're all sold out for the shift sovereign plan B event in in Panama city on, I think

1:01:36it's September 18 through the 20th. I think those are the dates that's going to fall right between Russia, Shana and young Kippur. And I'm looking forward to spending young Kippur. We're going to spend it in Panama city with the mayor, who's also Jewish, happens to be a phantom. Well, he will be at our conference and we're going to experience the Jewish culture of Panama. You know, for the last couple of years, Panama has been the number one destination for X paths, the number one country to live and for good reason. I really liked it. The first time I was there and looking forward to coming back and seeing some of the subscribers to shift sovereign at our plan B conference. And again, remember to subscribe to my YouTube channel, like this video and leave a comment and perhaps I will reply to your comment. Bye for now.