The Big Beautiful Bill Is More of the Same

Originally published at: https://peakprosperity.com/the-big-beautiful-bill-is-more-of-the-same/

In today’s episode of Finance U, Paul and I discuss what feels like another 2008 moment, focusing on the current bond crisis across the Western world. We’re seeing signs of distress in bond markets, particularly with long bonds, which are crucial for understanding the health of our financial system.

The Japanese government bond (JGB) market recently experienced what could be described as a failure, with a significant tail in their bond auctions, indicating weak interest at current yield levels. This has led to a sharp increase in yields, suggesting that borrowing costs are rising dramatically. This isn’t just a Japanese issue; similar trends are emerging globally, including in the U.S., where recent bond auctions have also shown signs of stress.

This situation is reminiscent of the lead-up to the 2008 financial crisis, where systemic issues in credit markets began to surface. The implications are profound because our money system, which relies heavily on debt, is showing signs of strain. Higher yields mean higher borrowing costs, which could slow down money creation and economic activity.

Moreover, the U.S. government’s recent fiscal policies, encapsulated in what’s been called the “big, beautiful bill,” are set to increase the deficit significantly over the next decade. This approach of growing the GDP to outpace debt growth, rather than constraining spending, feels reckless to me. It’s a strategy that could lead to inflation, especially when coupled with the potential for AI to suppress wage growth, creating a toxic mix for the economy.

The bond vigilantes, as Paul Kiker mentioned, seem to have reawakened, signaling that investors are no longer willing to fund these fiscal deficits at current rates. This shift could lead to a broader financial crisis if not addressed.

In response to these developments, I’m seeing movements in markets like Bitcoin and gold, which might be signaling a shift away from “systemically exposed” financial instruments. For investors, this environment requires a strategy that can adapt to potential economic downturns or inflation spikes. It’s crucial to understand the strengths and weaknesses of your investment approach, especially in times like these when the ground beneath us feels like it’s shifting.

So, what’s my advice? Lean into understanding and preparing for these changes. Whether it’s through diversifying into assets that could hedge against inflation or understanding the implications of AI on your job or investments, now is the time to be proactive. Remember, financial freedom is the foundation of a happy life, and having a plan that you can stick with, even in turbulent times, is essential.

If you’re looking for guidance on navigating these financial waters, feel free to reach out to Paul or his team at peakfinancialinvesting.com.

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You had a comment about nuclear reactors difficulty getting done

https://x.com/ResisttheMS/status/1925700766603378777

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I heard the disappointment in Paul’s voice. I went through that last month with Carney getting in. I guess we hold on to each other and do our best to keep our collective heads above water.

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Because I’ve been at PeakProsperity for 15 years and think critically for myself, I’m actually reassured by all the “scary” things you guys talked about today. I’ve made appropriate moves to dodge The Great Taking, high inflation or even hyperinflation, a crash in the bond and/or stock markets, etc. Trump’s promises leading up to the election didn’t cause me to alter my strategies in the least and his Administration’s current statements and actions haven’t altered the trajectory we’re still on. So that means I’m well-positioned for what’s about to happen. Thanks for the reassuring analysis Chris and Paul!

On Monday I placed two orders to convert some Federal Reserve notes into tangible assets that will preserve my purchasing power in the coming cataclysm. Texas Precious Metals was having a sale on junk silver so I bought some 90% half dollars. I also snatched up a case of 1,000 rounds of Magtech 9mm ammunition from Sportsmen’s Guide for 0.209 cents per round. That’s an astounding price that puzzles me in light of all the inflation we’ve had since the last time you could buy 9mm at that price.

“Happy Hunger Games! And may the odds be ever in your favor.”

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Being a 147 grain sub sonic guy… .21$ dollars/round is awesome.
I can’t reload for that

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Luke Gromen’s latest for those interested.

Im just starting but he’s opening with a discussion of the same issues that Chris and Paul are discussing today: The apparent pivot on tarrifs, the consequences of crushing oil…

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So, I guess it would be prudent to start leaning into AI at this point, so that when GROK can manage my portfolio, profitably, for less than a 2% management fee, I’ll be ready? Who can say, but I suppose AI could even beat Vanguard’s fee structure some day?

Paul perhaps accidentally slips interesting tidbit ~31:00 min in: AI kills american dream.

“Well, that’s what they’ve been saying they’ve wanted to do for quite some time, which is absolutely terrifying because they make the decision and it takes away essentially the American dream that I can be innovative. I can make, have some discipline sacrifices in the short term today for a better future. But they’re eroding that entire foundation, which allows us to adapt to that.”
(from transcript)

I compare this to talks and thinking why “nordic model” society doesnt need or want (mostly lowskilled) immigration: there is simply no demand for those people.
American dream at least somewhat suggests there is always entry opportunity for everyone, also those who dont understand all regulation to last tee (albeit some english is expected here to be functional).
AI is last drop that only mom n pop shop restaurant far from competition could compete, but otherwise costs would be too high without those benefits. UBI is hardly american dream, there is nothing personal effort, albeit it is still good in other aspects (I wonder what New deal originalists in 1930s thought about these concepts, as I consider them pioneers of UBI, despite they didnt know need for it yet).

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Is Paul from Canada?

I wouldnt trust it that much, you must still oversee what it does. Risk is always there any tool is abused to take profit from you, especially when wallstreet is in question and you’d give whole authority to AI, which can then be nudged to benefit whoever owns it or pays best for nudging it (SEO in google results for similar example).

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As i listen to Paul i am reviewing my past investment misadventures. Hopping from one fund to another always seeking the newest thing. At other points, I took my knowledge in 2004 that the world’s economies were to overleveraged, surely they could not keep piling on the debt for any more time.

But Paul gives me hope, that sticking with a strategy is better than hopping around. And to understand your strategy and know it’s strengths and weaknesses.

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Hal Turner doesn’t like the beautiful bill either, noting it adds $3T to the debt and includes none of the DOGE discoveries.

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That was good, but the real issue is still our money printing and government spending. These cannot continue, our current government is broken! The scary part is what type of government will be next, because most Americans don’t even understand what system was created and why. Then they don’t understand how the creators new it was and how it was going to fail. This. Is deeply troubling. The remnants must understand this.

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Important news on gold.
I have a modest amount of gold and silver in vaults outside the USA, all of which would have shipped to me. Probably the largest Vault I use is BulionVault, located in the UK (their vault that I use is in Singapore).
I have been getting uneasy lately with the EU and was considering getting it out of there, but when I checked the website, they no longer listed the USA as a place shipped to. I inquired and they said they did and gave me instructions, but the instructions didn’t work so I inquired again. Here is there reply:

"Regrettably, we no longer offer delivery services to the USA, as our current bar supplier does not support shipments to that region.

Should you wish to hold physical gold at home, you may consider selling a portion of your holdings at BullionVault, withdrawing the funds, and purchasing your desired metal through a local bars and coins retailer."

YIKES!!!

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for me, the 1% management fee managers have beat the 2% managers. over (many) decades

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AI as an “investment advisor” would be perfect for following-the-herd, since most AI training involves throwing “the past” at the model until it comes up with the right answer “most of the time.”

If anything new comes along - AI will not do very well. My guess.

Remember Grok’s top 2 treatments for Covid-19.

For “the next covid-19”, are you gonna trust Grok? If not, why not? And if not for Covid-19, then why trust Grok to predict the investing-future? Especially if something “really unexpected” ends up happening?

It will say the shot is Safe & Effective, you should use Remdesivir and Paxlovid, and you should wear two masks because - common sense.

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Holy Shee-it!

What the actual…? I’m gonna have to dig into this. But given the new tariff wars with the EU I now suspect that I’m going to have to downgrade my own personal off-shoring plan.

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My vote for Trump was a Hail Mary pass. I had hoped that he might fix (or at least improve) the economic mess. I knew that this was our last chance. If the problem wasn’t fixed - it was over.

Well, at least now I know that it is over.

Now, I can plan accordingly.

That is not happy news but at least it removes the uncertainty.

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Ive always told (the non-hysterical) people around me that the best reason to vote for Trump was the hope that the direction could change “somehow” and the best reason for vote for Clinton/Harris is that history should have a good view of what the last 30 years of management did to America un-muddied by any other factors.

I think your hail-mary was a decent choice. The alternative feels to fatalistic to me. We have to try.

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He made a community post here:

https://tribe.peakprosperity.com/t/bullionvault-failure-to-deliver-to-the-us/44768

He points out - massive tax implications for “delivery” now.

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In that Luke Gromen interview I linked in this thread, he was talking a lot more about the need for capital controls from the point of view of various players.

His tone has also shifted a bit from “I’m not saying this will happen over a weekend but here is the dynamic”, and more towards, “This could actually happen in a weekend and I don’t think people are prepared for that”.

Maybe the capital controls are in the offing or even starting as far as Gold goes? The ECB statement and now your anecdote give me the old frisson!

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