Glenn and Stu are back with a brand new guest on the show. They discuss the new addition to the show, Mike Johnson, who has been a long time friend of the show and a frequent guest on it. They also discuss the latest in the Trump vs. Johnson debate, and whether or not he's a good or bad candidate.
00:15:24.340But now they're holding the whole world is holding them back.
00:15:28.300If we can't, as a people, say, you know, there's a real problem here with beheading children, you know, going in and just shooting innocent families.
00:15:40.700If we as a people cannot say that, what kind of world are we building?
00:15:47.680I will tell you, we are building a world that aborts babies, that kills children in hospitals if they're born defective or they have no real quality of life.
00:16:30.780Always a good day when I'm with you, Glenn.
00:16:32.940And I have to say I want to say congratulations on the the new information out, the relaunch of the blaze, the beautiful new look of the websites.
00:18:02.180So I went to the congressional budget report.
00:18:04.900And since I'm a nerd like I am, I decided to read it.
00:18:08.920And there was some footnotes that were buried and information that was buried underneath the headline.
00:18:13.900And one of the things that I found was a little bit of I'll call it accounting trickery, but it's not really accounting trickery on the CBO's part.
00:18:23.000They were doing the standards that they follow.
00:18:26.420But what was communicated to the public and what was happening at the federal level was trickery.
00:18:42.360So for last year's deficit, they put in over three hundred billion dollars.
00:18:48.140That was the best way I can explain it, that I've sort of understood it as almost like a reserve or a write down, basically saying we're not going to get this money.
00:18:58.300And so fiscal year 2022's deficit actually was much larger what they portrayed than it was because of this accounting reserve that they put in there.
00:19:09.340Once the Supreme Court struck that down this year, they had to undo that.
00:19:14.720And it's not perfectly dollar for dollar because they figured out some way to save something along the way.
00:19:20.520But net net, that means that basically they took off this reserve of over three hundred billion dollars, which means the actual amount of deficit spending that we need to finance is more than two trillion dollars.
00:19:35.080And again, that's not what's being communicated to the public.
00:19:37.940You know, you might say one point seven trillion, two trillion.
00:19:42.020But at this point, especially when rates are what they are and we have to finance every one of those extra dollars, it just means more potential financial damage to this country.
00:19:53.360So I was having a conversation with somebody and they say, Glenn, the Fed isn't buying all of our our notes now.
00:20:02.700And I said, I'm pretty sure they are maybe Japan because there's some weird deal with Japan.
00:20:09.920But I'm pretty sure no one's buying it except the Federal Reserve.
00:20:15.880So this is a very sort of complicated issue.
00:20:19.400If you go back in history and you go back to before the Great Recession financial crisis, the deficits that we finance that was basically done by foreign entities, whether it was foreign central banks or other foreign investment entities, as well as other investors.
00:20:35.480When you get to the period between like 2008 and 2014, they sort of said, well, you know, maybe the U.S. isn't as tight as it was before.
00:21:02.080And then after 2014, there was basically on net no foreign central bank buyers because you had a lot of the central banks around the world actually lessening their reserves.
00:21:14.320And they just didn't have the wherewithal.
00:21:17.620Now, we're at a point where it's very questionable because the Fed theoretically is letting assets roll off its balance sheet.
00:21:28.120And it also, you know, we don't have entities around the world.
00:21:33.400We don't have banks and insurance companies that have the wherewithal because they've gotten in trouble with all of this long term underperforming debt.
00:21:40.740So they don't have the wherewithal to be out and be buyers.
00:21:49.800But obviously, we know that bonds and yields trade in the inverse.
00:21:52.520So that means that there is more supply than there is demand.
00:21:56.220And that's why the yields keep going up.
00:21:58.240So the Fed is definitely doing things in the market, which a lot of us argue whether or not that's really QE, where they're doing things to maintain the liquidity in the market.
00:22:09.160But long term, this does become the question as as we continue to run these massive deficits and there isn't the appetite from other central banks to buy our debt.
00:22:21.940And we know that there's a whole slew of big central banks and big countries that are actually trying to do the opposite.
00:22:28.920They're trying to put pressure on the U.S.
00:22:30.860Who is going to be there to purchase this debt?
00:22:35.260And the answer long term is it's going to have to be the Fed.
00:22:39.400And what's going to happen, but basically the way this is going to come about is that you're not going to have enough buyers.
00:22:48.740It's going to create a crisis in the market.
00:22:51.040And the Fed's going to be left with some one of two choices, the QE that we talked about, the bond buying and a QE program is we're going to buy X dollars worth of bonds in order to get things down.
00:23:03.840Or something which Japan has done called yield curve control, where they say, well, we want to target this specific interest rate and we'll just buy as many bonds as it takes in order to keep it at that level.
00:23:16.200And so that is the trajectory we are on with the amount of deficits we have, with the debt we have, with the interest that we have.
00:24:19.300That's the range of options they have.
00:24:20.680Is it is it I saw a story yesterday, maybe that the first transaction with the Chinese one across states has happened and that the Chinese are dumping our our treasuries and buying gold.
00:24:44.020And that's the central banks that have been lightening up on treasuries, whether because, you know, they are trying to defend their own currencies or they're trying to raise dollars to buy commodities that are priced in dollars like oil or food.
00:25:23.460I think that's a better option than having these dollar denominated securities, which, again, is a signal a in terms of trust of the dollar and be in terms of the global financial order.
00:25:34.800And this massive desire to say we see weakness, we smell it, we taste it.
00:25:40.440This is an opportunity for us to knock the United States on its behind.
00:25:45.980And so they are going to take that opportunity to this to the to the ability that they can.
00:25:52.140Now, the one weird thing here that I'm going to put out for everyone, and this is going to sound backwards based on everything that we discussed, is that given times of turbulence, the Treasury market,
00:26:03.660the U.S. dollar being this huge, liquid, you know, well, generally well-functioning market has always been the flight to safety.
00:26:13.600When we saw Israel versus Hamas, you know, Hamas attacks Israel.
00:26:18.300The first thing that happened is that bond yields went down because people were buying Treasury bonds.
00:26:31.600I think we're at like four point nine plus percent on the yield had for that, you know, five percent mark, which is a really key resistance level.
00:26:41.380And so but what could happen and we saw Bill Ackman, one of the big hedge fund managers, cover his trade and treasuries.
00:26:49.160And he said, you know, if things really were to accelerate, people actually could end up going and buying treasuries as a flight to safety.
00:26:57.580So that's what we're trying to get through now is the Treasury going to remain a flight to safety asset or is it being replaced, you know, in full by gold?
00:27:07.040We saw at least in the sort of temporary period that, you know, it was only a very short time people went to bonds and then they started buying gold again.
00:27:15.600And, you know, certainly I think that gold is going to play a massive role going forward.
00:27:20.160But what does that mean for the Treasury market?
00:27:24.240And again, what does that mean for you is that the if there aren't people to buy those Treasury bonds, the yields go up, everything becomes more expensive.
00:27:32.080The cost of capital for businesses become more expensive.
00:27:35.000That ends up, you know, slowing down our economy has all sorts of implications.
00:27:39.240So that is not a good outcome for any of us here in the United States.
00:27:43.220All right. OK, so we have five or six minutes here.
00:27:45.580Let's just talk about the second largest economy in South America that always seems to get on its feet and then they destroy it.
00:27:54.480And then it gets on its feet and then they destroy it.
00:27:56.280And it's destroyed every time. But the same thing. Marxism.
00:27:59.100Yeah. So you're talking about Argentina and what we have to understand about Argentina is that it's this kind of weird anomaly.
00:28:08.660There's a famous economist that said there are basically four different types of economies in the world.
00:28:14.020There are those that are developed. There are those that are emerging.
00:29:51.120If they're getting it in pesos, they're turning it into dollars immediately because they know that as soon as they have the peso and they go to the store,
00:29:58.360that it's not going to buy the same amount as it did before.
00:30:01.080And this creates this massive crisis of confidence.
00:30:04.940It creates a lot of demand for dollars.
00:30:07.120So it's a very highly dollarized society.
00:30:09.960In fact, a lot of the premier workers are actually demanding salary or payment for services in dollars because they're looking for something that's stable.
00:30:19.180But what's happened here, Glenn, is that 40% of their population is in poverty.
00:30:25.700And when I say poverty, I'm talking real poverty.
00:30:27.940I'm not talking about iPhones and nice sneakers, poverty.
00:30:30.960I'm talking about you cannot eat for days, poverty.
00:30:34.520So you would think that this would be a nation that says, OK, we can't handle this anymore.
00:30:57.100But when it came down to the vote that we had just a couple of days ago, well, you know, the people who were in charge over and over again, they ended up actually coming in in first place.
00:31:22.580This is, in my opinion, disgusting what is happening, tying these two things together and the way we are financing Hamas and Iran is really stomach turning.
00:32:01.440On the other hand, you have a nonstop Ukraine conflict that we've already poured $120 billion into.
00:32:08.920Joe Biden would like to pour another $60 to $80 billion on top of that.
00:32:13.540It is, I think, actively contrary to America's interests to food and fuel prices in the world to have this war continue.
00:32:20.620And so Joe Biden has figured out that he can use the Israeli conflict to sell the American people on indefinite war in Ukraine.
00:32:29.020And, in fact, he has delivered a supplemental spending package to the Senate that would do exactly that, combine Israel and Ukraine.
00:32:36.540So it makes those of us who are pro-Israel, makes it harder for us to oppose the package.
00:32:41.480And, unfortunately, Glenn, this is the important part.
00:32:44.280Too many Senate Republicans are going along with it.
00:32:47.720When you combine these packages, you put pro-Israel conservative senators in a bind because they don't want to send another $60 billion to Ukraine.
00:32:58.980And Joe Biden is effectively using dead Israeli children to sell this package to the American people.
00:33:21.800I mean, you have people like Lindsey Graham who, you know, thinks this is just gangbuster.
00:33:27.120This is the greatest because now you can get both.
00:33:30.100I mean, there are those who, honestly, J.D., can you tell me what does victory in Ukraine look like?
00:33:37.680I can tell you what victory in Israel will look like, an end of Hamas, possibly an end to the nuclear bomb-building capability of Iran at the most extreme.
00:33:51.340What does winning look like in Ukraine, the death or the overthrowing of Putin?
00:33:57.960Well, we have no idea, Glenn, and this is the problem with the Biden administration's policy is they haven't articulated what are we trying to accomplish in Ukraine, how long is it going to take to accomplish it, and how much money is it going to cost us to do that?
00:34:12.020The answer is, and when you talk to them in private settings, they will tell you, Glenn, they really have no idea how this is going to end.
00:34:18.360And their hope is that if they kick the can down the road another six months, maybe the Ukrainians make a strategic breakthrough, maybe the Russians just get tired of fighting, maybe the two-ferry intervenes.
00:34:30.140Something is supposed to happen that makes it possible to bring Russia to the negotiating table.
00:34:35.460They know there is no victory for Ukraine if you define it as pushing them completely out of the territory that Russia controls.
00:34:43.720So they're just hoping, and I don't think we should be spending $60 billion of American taxpayer money on top of $120 billion we've already spent on a hope of Joe Biden and his foreign policy advisors.
00:34:55.780It's disgraceful, and it's disgraceful that too many Republicans go along with it.
00:35:02.880Obviously, Lindsey Graham and I disagree very stridently on the Ukraine question,
00:35:07.380but even a lot of my Republican colleagues who are pro-sending money to Ukraine, they want to defy the packages because they recognize it's a slap in the face to Israel to tie their fate to the Ukrainian war.
00:35:21.140Aren't we also tying the border security to the Ukrainian funding?
00:35:27.280That's exactly right, Glenn, and this is just another example of Joe Biden trying to take things that are politically popular for conservatives,
00:35:34.340package them together, and then use that to sell the interminable war in Ukraine.
00:35:40.700Now, by the way, Glenn, if you read the fine print on the alleged border security package, it actually gets much worse.
00:35:46.360What we're really doing is funding and facilitating Joe Biden's open border.
00:35:51.480We're sending resources to communities that are housing illegal migrants.
00:35:55.060We're spending a lot of money to transport migrants from the southern border all across the country.
00:36:00.420There's nothing in the package for real border security.
00:36:03.700So it's not just that it's a political ploy by Joe Biden to call something border security so he can support Ukraine.
00:36:10.900When you read the fine print, it doesn't even accomplish border security.
00:36:14.360It's really, really atrocious what this guy is trying to do.
00:36:24.420What is ridiculous is if Republicans go along with it.
00:36:27.280So the encouragement I'd make, Glenn, to you, to your audience, because you have a huge audience and the voters actually have a voice and their representatives listen to them.
00:36:37.640Call into D.C. and tell them, divide the packages.
00:36:41.960Do not hold up the border and do not hold up Israel's security on Joe Biden's Ukraine war.
00:36:47.940I got to push back on this one, and I hope you have a good answer.
00:36:52.580But I, for one, asked my audience to call and be polite.
00:36:57.860And they called a couple of weeks ago.
00:37:00.580And Sean Hannity asked his people and Levin and everybody else.
00:37:04.420We called the House and the weasel Republicans actually used that as an excuse to not do what we felt were the right things.
00:37:15.520They said we had these people calling us and saying all kinds of things.
00:37:19.720I can guarantee you that it was only the odd duck in my audience that would have done that.
00:37:25.560They wouldn't have called them names and threatened their family.
00:37:29.460Maybe that happened, but that is that is not the American people.
00:37:34.500That is not the people who support the rule of law and the Constitution.
00:37:40.040So when you say call the Senate, what is that going to do?
00:37:44.780Look, Glenn, I understand people have frustrations, but it actually does matter.
00:38:11.080Trust me, I sit in these lunches with my colleagues, folks I agree with and disagree with.
00:38:16.020When they have the American people motivated about an issue, it does affect them and it does matter.
00:38:22.600We we unfortunately, you know, I was one of the first people to endorse Jim Jordan's speaker candidacy.
00:38:27.460I actually think we got a very good speaker out of this process, assuming Congressman Johnson gets through this afternoon.
00:38:33.840So so despite the fact that I supported Jim Jordan, it was pretty clear early on that they were never going to let Jim Jordan become the speaker.
00:38:51.140I mean, how many of the we need all of them and then some Democrats, too, don't we?
00:38:56.640You know, to divide the packages to actually force us to have a separate debate, we just need 41 Republicans to stand tall and say we're not going to do Joe Biden's bidding for him.
00:39:06.180We're not going to accept this combined package, 100 million dollar behemoth with, by the way, a lot of open border funding.
00:39:14.320So so, no, I actually think we just need Republicans to stick together, even if they are pro-Ukraine funding.
00:39:20.120We need the message to be we're not holding the American southern border and we're not holding Israel security hostage to the Ukraine war.
00:41:08.340And by the way, if you have Hamas terrorists who are obviously attacking the Israelis but are also planning attacks in the United States of America, how does it make sense to facilitate their migration all across the continental United States?
00:41:22.760You cannot have real border security if you're paying people to move themselves from the southern border to all across America that will facilitate an open border and will actually promote acts of terrorism in our country.
00:41:36.220I hate to say, Glenn, because I hate to be alarmist about this stuff.
00:41:39.120I think we're at the greatest risk of a terrorist attack in this country that we've been in 20 years.
00:41:43.920And the reason is Joe Biden has let in a lot of designated terrorists and then paid money to have them flown across the country.
00:41:50.560We have had we know we've caught, I think it's 400 people that are on the on the watch list or the terrorist list, 400 we've caught.
00:42:00.400How many have come across that we didn't catch?
00:42:03.860I mean, we know that there are people that wish us ill that have come into this country and it's only a matter of time.
00:42:10.920And when you see the the the streets in these Palestinian, you know, marches where they are saying gas, the Jews, gas, the Jews, there's only one solution.
00:42:24.580That's not a group of people or at least a few of the people that are friendly to our country.
00:42:31.340Those are people that do really bad things.
00:42:37.780And by the way, a lot of these folks came into the country and feel no gratitude towards it and are importing the ethnic and religious hatreds of their own old country into the new one.
00:42:48.440This is why we should have I really believe this, Glenn.
00:42:50.800We should have actual screening for people, even legal immigrants, come into our country to actually confirm that they share some of our values.
00:43:01.260And that if we bring somebody from Palestine, for example, they're not going to come here and want to kill Jews and Westerners because of something they were taught in their old country.
00:43:09.780When you become an American, become an American or stay out of the country.
00:43:13.840Amen. I can't believe that that will probably cause you a headache today because it is absolute common sense.