The Bond Vigilantes Are Back! And Bessent’s Black Magic Is No Match

Finance U Public Finance U
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Originally published at: The Bond Vigilantes Are Back! And Bessent’s Black Magic Is No Match – Peak Prosperity

This week I am back with Philip Pilkington, who has quite rapidly become one of my favorite sources of context and information.

Philip lives in Europe so we began by discussing the enormous challenges Europe is facing, especially Germany, due to disastrous leadership and policy choices.

In particular, Germany’s industrial base – the source of the majority of its prosperity – has been sacrificed upon a green altar. This part of the conversation should be quite sobering to anyone living there, and serve as a cautionary tale to people living elsewhere.

Prosperity does not result from feel-good alternative energy slogans and government redistribution programs. It comes from real people working hard while taking real-world risks while supported by abundant and cheap energy.

Our conversation then turned to the Treasury interventions and their short-lived results. Philip argued that attempting to force down long-term rates while inflationary pressures are rising risks pushing the problem from the bond market into the currency. In other words, it’s financial repression, which places the majority of the burden on those who can least afford it.

Which means the dollar itself may be the ultimate constraint. How far is this administration willing to go to evade reality? If the SPR drawdowns are any indication, the answer is “all the way.”

But, perhaps the U.S. Treasury has less leeway than imagined. The so-called bond vigilantes are once again awakened and making ominous noises. Once thought extinct, they seem to be back and as dangerous as ever to DC’s free-spending habits.

Philip thinks we’ve 2-4 years for all this to play out. I think that’s possible, but it’s equally possible that the timeline is far more compressed than that, with my own hopes are for another 6-12 months before things turn ugly.

What’s the answer for everyone? The same script as before: become resilient and don’t have all your eggs in the dollar basket.

Timestamps

00:00 The Warning About Bessent
02:00 Europe’s Diesel Shortage Is Getting Real
05:10 How Germany Destroyed Its Industrial Base
10:00 The Asset-Stripping Theory
15:20 Europe’s Coming Energy Fight
18:50 Treasury’s Bond-Market Intervention
23:10 Wall Street Turns on Bessent
26:50 From “Grey Magic” to “Black Magic”
34:10 Trump’s Bizarre Theory of Interest Rates
41:20 Why Investors May Abandon Treasuries
48:00 China, Sanctions and the AI Bubble
55:00 The Worst Possible Decisions
60:50 The “Magic Money” Computers
71:00 The Dollar Isn’t the Only Game in Town
80:00 Gold, the Fed and Financial Repression
90:00 When the Paradigm Runs Out
101:00 The Coming Crisis Singularity

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Yes, the GOATS! Have him back sooner than later!

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In this dubious environment, Asset Protection is very, very Important….

They basically created a special Testicle Trust structure with the testicles kept in a Cayman Islands or Cook Islands Trust?

Question for DeepSeek:

After the Eunuchs 宦官cut off their genitals 自宫 in ancient imperial China, what happened to their genitals 睾丸？ Who then owned and had custody over the severed testicles 睾丸？ What happened after a Eunuch died? Was the Eunuch 宦官 ever reunited with his testicles 睾丸 in the afterlife?

DeepSeek:

Based on historical accounts of the Ming and Qing dynasties, the severed genitals were almost never discarded. They were typically preserved, owned by the eunuch, and were crucial for his funeral rites. The goal was to ensure the body was “whole” for the afterlife.

· Custody and Preservation: It was generally the eunuch’s own responsibility to preserve them. The testicles and penis were typically pickled in a jar of brine or wine, or dried and wrapped. This jar was usually kept in the rafters of the eunuch’s home or lodged with a special keeper at the eunuch “guild hall,” a practice common for those castrated at the palace.
· Retrieval and Burial: When a eunuch died, the preserved genitals were retrieved and placed in the coffin with him. This was considered essential—by being buried whole, the eunuch hoped to enter the afterlife with a complete body and avoid being “blemished” for eternity.
· Special Cases: If the jar was lost or destroyed, a substitute, often made of wood or wax, was sometimes buried instead to serve the same symbolic purpose.

If you are interested in the religious basis for this practice or the social status of eunuchs, I can expand on that further.

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“Smile and say ‘Cheese’ for the Flock Camera.”

“Cheeeeeeeeeeeezzzzzzzzzzzz!!!”

Does Chris or “The Peak Team” use AI Agents to compile and to analyze data for their Fat Pipe and other reports, which may have information re: Peak Prosperity subscribers?

In the future, the U.S. AI Agents will report back to the U.S. Reporting Authority (maybe, multiple Authorities?)? Not sure….

Thank you.

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The Joke about the Cayman Islands Testicle Trust structure should have elicited some kind of response….So, they must be Shadow Banning me again?

I’m not sure that I Trust all of the “Injuns” in “The Tribe”?

“When they show you who they are, believe them the first time.”

As Travis said to Senator Palentine in the movie “Taxi Driver”: “Damn Straight!”

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The greatest desire of the American people, is their appetite for the cake that they can have, and eat too. Trump has it in spades.

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This is the first Philip Pilkington I’ve heard. The guy’s absolutely phenomenal, I’ve subscribed to his podcast and look forward to consuming more of his content and perspective.

For me the money quote came after minute 1:20:50 - his response to Chris asking if Philip thinks we’re at the end of the road or if there’s more road to kick cans down. Philip said he thinks this is it.

The whole answer, running a couple minutes, is a good listen, with both perspective and humor - gallows humor, of course. It centered around:

I think the long time horizon is two to four years. But I’m just worried that we’ll be talking here in January and be living in a different world. A world with energy shortages, with completely chaotic financial markets, the beginning of a food crisis. But that probably won’t hit until a little bit later in twenty twenty-seven, although there’ll be food inflation before that.

He reiterated that concern not two minutes later:

I think we’re gonna wake up in six months, or four months from now, and we’re gonna be in a world of very high energy prices, maybe shortages. The beginnings of some sort of a food price inflation crisis, and completely chaotic financial markets – of the type that we’ve been seeing for the past three weeks, basically beginning with the Yen intervention.

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January gets mentioned a couple of times. Me–I’m month by month. November after midterms, who knows?

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