00:00:00
so China is selling off US Treasury
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bonds The nuclear option that is selling
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US treasuries US bonds Beijing striking
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back today with 125% tariff on all US
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goods sold in China This comes after
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President Trump placed 145% tariff on
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Chinese imports And what I learned this
00:00:22
week is that the most important thing to
00:00:24
look at right now is not the stock
00:00:26
market It's the bond market and their
00:00:29
interest
00:00:30
rates Now right now the yields on what's
00:00:33
called the 10-year Treasury are going up
00:00:36
And that's because when countries like
00:00:38
China start to sell off US debt which
00:00:41
are their Treasury bonds it creates a
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ripple effect that hits everyone Which
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means to get new investors to buy US
00:00:48
debt interest rates have to go up not
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down So I want to help explain exactly
00:00:54
what's going on because this might
00:00:56
actually be part of a strategy not to
00:00:58
crash the markets but to corner China
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the same way we cornered the British
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pound in the 1990s And once you see it
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it's going to explain everything that's
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happening today and how it's going to
00:01:10
affect your 401ks rising mortgage rates
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all the way to the emergency Federal
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Reserve rate cut So let me break this
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all down and explain exactly what's
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going on And I'm going to show you what
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I'm personally doing with my money So
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let's get into it Hi my name is Andre
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Jick Hope you're doing well Come for the
00:01:26
finance and stay for the 401k hunger
00:01:30
games I used to have a 401k Now it's a
00:01:32
zero K So this video is about to get
00:01:34
insanely complicated really fast but if
00:01:36
you stick with me I promise it'll make
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sense And if you get through it all the
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way and you understand it you're a nerd
00:01:42
and I appreciate you So here's what just
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happened In early April 2025 something
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happened to the bond market that usually
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never happens which was the sell-off of
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US treasuries By the way whenever you
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hear me say treasuries or bonds they're
00:01:57
the same thing I'm using them
00:01:58
interchangeably Now the most important
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one of these treasuries is the 10-year
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Treasury bond and its interest rate And
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the 10-year interest rate or yield went
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way up recently which is completely the
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opposite of what we want to happen And
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all signs point to China and Japan
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Investors believe that right now foreign
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countries especially Japan and China
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which are the two biggest holders of US
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debt are dumping US Treasury holdings as
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a way to fight back against President
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Trump's tariffs And this isn't just
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coming out of nowhere China's been
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slowly pulling out for years In fact by
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the end of 2024 they were already down
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to about $760 billion in US debt which
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is the lowest level since 2009 And all
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of this was started by just one move
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tariffs On April 9th 2025 President
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Donald Trump hit China with 104% tariffs
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on all Chinese imports China then
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responded immediately with a 50%
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retalatory tariff on all US goods That
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raised China's total tariff on American
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imports to 84% If you think that's crazy
00:03:11
President Trump came back again and
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raised the US tariff to 145% And then
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China responded with their own
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125% All of this by the way happened in
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just one week So it's no wonder the
00:03:26
stock market just can't decide whether
00:03:27
it wants to go up or down right now But
00:03:30
here's where it gets interesting While
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President Trump raised the tariffs on
00:03:34
China he actually paused or lowered on a
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bunch of other countries So now the
00:03:39
pressure is on China And what did China
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do they didn't just raise the tariffs
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They filed complaints with the WTO They
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put restrictions on 18 American
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companies They restricted exports of
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rare earth materials And the biggest
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move they started selling US treasuries
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That last one is the one that makes
00:04:00
investors really scared And that's
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because when China sells their
00:04:04
treasuries the bond prices fall And that
00:04:08
means our interest rates go up But first
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let me just explain why everyone is
00:04:12
freaking out over the bond market and
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why it's so so important Now the bond
00:04:17
market is so important that it can
00:04:19
control interest rates It can control
00:04:22
the central bank the stock market and
00:04:24
even the president's actions So let me
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just first explain how bonds control
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interest rates and the cost for us to
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borrow money See most people think that
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it's the central bank the Federal
00:04:35
Reserve that sets our interest rates But
00:04:38
that's not completely true The Fed
00:04:40
controls short-term rates like what's
00:04:43
called the overnight lending rate
00:04:45
between banks and the federal fund
00:04:47
interest rate But long-term rates like
00:04:50
the 10-year Treasury are controlled by
00:04:52
the market by buyers and sellers Now if
00:04:56
countries like China are selling bonds
00:04:58
the Fed can't stop that overnight So
00:05:01
what happens then to interest rates when
00:05:03
bonds get sold off their rates adjust
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upward And that's because bond prices
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and their interest rates move in
00:05:12
opposite directions If the price of a
00:05:15
bond drops the yield goes up So here's
00:05:18
an example Let's say a bond pays you $50
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a year If that bond was worth $1,000
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that's a 5% yield But if it drops to
00:05:27
$900 and you still get 50 bucks a year
00:05:29
you're now earning
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5.5% And that's what we mean when we say
00:05:34
yields are going up That means bond
00:05:36
prices are dropping And they're dropping
00:05:38
because someone is selling But now
00:05:42
imagine hundreds of billions of dollars
00:05:44
of bonds being sold at the same time by
00:05:47
China and by other foreign governments
00:05:49
that are watching this play out That
00:05:52
forces US yields even higher So interest
00:05:55
rates go up And that's exactly what
00:05:57
we're seeing right now And this is a big
00:06:00
deal because higher yields make it more
00:06:02
expensive for the US to borrow money And
00:06:05
with over $30 trillion in national debt
00:06:08
that's not good And if interest rates
00:06:09
get too high too fast it can break parts
00:06:12
of the US economy and force it to
00:06:14
delever And bond markets can also force
00:06:18
the president to do exactly what he just
00:06:21
did to back off the tariffs for 90 days
00:06:24
so we don't break even more parts of the
00:06:27
US economy That's how China is fighting
00:06:30
back It's dumping US treasuries which
00:06:33
forces interest rates upward and breaks
00:06:35
part of the US economy That's why the
00:06:38
Fed might have no choice but to drop
00:06:41
rates And this is where I want to share
00:06:43
with you a new theory about what's
00:06:45
really happening It involves this guy
00:06:47
Scott Bessant He's President Trump's
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Secretary of the Treasury Now in the
00:06:52
early 1990s Scott Bessant along with
00:06:55
George Soros broke the Bank of England
00:06:58
And here's how they did
00:07:00
it Back then the UK was part of what's
00:07:03
called the ERM the exchange rate
00:07:05
mechanism which was a European agreement
00:07:08
to keep currency values relatively
00:07:11
stable against the Deutsche mark There
00:07:13
are going to be no devaluations no
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leaving the ERM We are absolutely
00:07:17
committed to the ERM That is our policy
00:07:20
It is at the center of our policy We are
00:07:23
going to maintain Sterling's parity and
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we will do whatever is necessary And I
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hope there is no room for any doubt
00:07:30
about that at all that the government is
00:07:31
determined to maintain our position The
00:07:35
UK wanted to keep the pound within a
00:07:37
specific price range and to do that they
00:07:40
had to defend it by raising interest
00:07:42
rates or using foreign reserves if
00:07:44
needed But there was a problem The UK
00:07:47
economy was weak Inflation was high
00:07:50
Unemployment was going up And most
00:07:52
importantly interest rates were already
00:07:55
way too high for their economy to handle
00:07:57
So Scott Bessant and George Soros
00:07:59
realized the UK couldn't keep it up They
00:08:03
believed the pound was overvalued The UK
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couldn't defend itself forever and
00:08:08
eventually they'd be forced to make a
00:08:10
choice Either devalue the pound or leave
00:08:13
the ERM So here's what they
00:08:16
did They shorted the British pound That
00:08:19
means they borrowed pounds and sold them
00:08:23
betting that they could buy them back
00:08:24
later for a lot cheaper Some reports say
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they bought over $10 billion worth of
00:08:30
shorts But they coordinated this with
00:08:32
other big institutions who saw the same
00:08:35
opportunity And when Bank of England
00:08:37
tried to defend the pound by raising
00:08:40
interest rates and buying pounds with
00:08:42
their reserves George Soros and Scott
00:08:45
Bessant just kept selling into it
00:08:48
Eventually the pressure was too much and
00:08:50
on September 16th 1992 the UK withdrew
00:08:55
from the ERM A unique day in London's
00:08:57
financial markets ended with the
00:08:59
Chancellor announcing that the pound was
00:09:01
being suspended from the ERM and that
00:09:03
the second of two dramatic interest rate
00:09:05
rises during the day was after all
00:09:07
cancelled Today has been an extremely
00:09:10
difficult and turbulent day The pound
00:09:13
crashed and that day became known as
00:09:16
black Wednesday and George Soros made
00:09:19
over a billion dollars on this trade and
00:09:22
Scott Bessant was the key architect
00:09:24
behind how it happened
00:09:27
So the question is how does all of this
00:09:29
relate to China and what's happening
00:09:31
right now and why this all relates is
00:09:34
because Scott Bessant is recreating a
00:09:37
situation where a country is forced to
00:09:40
make one of two very hard decisions
00:09:44
China is forced to choose between
00:09:47
weakening their currency or defending
00:09:50
the yuan Now if China weakens the yuan
00:09:55
that would be good because it would make
00:09:57
exports cheaper and help offset the
00:09:59
impact of President Trump's tariffs but
00:10:02
it could also trigger a panic inside of
00:10:05
China because that would create
00:10:07
inflation and investors might rush to
00:10:10
move their money out of the country It
00:10:12
could make borrowing a lot more
00:10:14
expensive and it could even destabilize
00:10:17
China's entire financial system It's
00:10:19
called a flight of capital which is
00:10:22
money leaving that country and being
00:10:24
invested into other foreign assets like
00:10:27
gold Bitcoin and things like that That's
00:10:30
a very hard decision to make Or there's
00:10:33
option number two which is what China is
00:10:36
choosing to do instead right now and
00:10:38
that is to keep the yuan strong and to
00:10:41
defend the value of their currency by
00:10:44
selling their US dollar reserves to buy
00:10:47
up the yuan But to get to those dollars
00:10:50
they have to sell US treasury bonds And
00:10:53
that's exactly what we're seeing right
00:10:55
now So from the outside it looks like
00:10:58
China is retaliating against the US But
00:11:01
they're also doing it to keep their own
00:11:03
system from falling apart because they
00:11:06
have to The real question is how long
00:11:09
can China sustain defending its currency
00:11:12
before they run out of dollars to
00:11:14
support themselves and China is looking
00:11:16
at the US and thinking the exact same
00:11:18
thing How long can the US allow their
00:11:21
bond market to be so high and to have
00:11:24
this high interest rate before their own
00:11:26
economy unwinds goes into a recession
00:11:29
and they have to refinance $9 trillion
00:11:31
worth of debt in 2025 at this super high
00:11:34
interest rate That's why there's a
00:11:36
capital flight in the US as well Money
00:11:39
leaving the US stock market because
00:11:42
investors are saying "We're just going
00:11:44
to wait and see how this all plays out."
00:11:46
Which means we're full circle We're
00:11:49
right back to the bond market That's why
00:11:51
yields are spiking mortgage rates are
00:11:53
going up and why everyone is panicking
00:11:55
about the debt again It's a race against
00:11:58
time for both countries And in that
00:12:00
sense it's not helping anyone So if this
00:12:03
is really Scott Besson's strategy he's
00:12:05
trying to engineer a situation where
00:12:08
China is under so much pressure every
00:12:10
move they make just creates more
00:12:12
problems with the goal that both
00:12:14
countries come together to negotiate
00:12:17
something more favorable for both of
00:12:19
them So the next big question is what
00:12:21
happens if China keeps selling US
00:12:24
treasuries and a few things could happen
00:12:26
and none of them are really good First
00:12:28
US interest rates could go up making
00:12:31
mortgages credit cards and of course car
00:12:33
loans a lot more expensive So the
00:12:35
Federal Reserve might have to step in
00:12:37
and start buying US treasuries to
00:12:40
stabilize the bond market It's basically
00:12:43
quantitative easing all over again QE
00:12:46
2.0 And we've seen what happens when the
00:12:48
Fed prints money Any day now we could
00:12:51
see the Fed step in to do this But the
00:12:54
worst case scenario is a full-blown
00:12:56
financial decoupling where the US and
00:12:59
China stop trusting each other's money
00:13:02
completely And that's how you get two
00:13:04
separate economic systems or two world
00:13:06
reserve currencies Now we're not there
00:13:08
yet but every move we make from here on
00:13:11
out matters a lot And the good news is
00:13:13
that no one knows exactly how this ends
00:13:17
not even the people that are in charge
00:13:19
We are just making it up at this point
00:13:22
But here's what I do know and here's
00:13:24
what I'm doing with my money and how I'm
00:13:26
investing Right now I'm staying invested
00:13:28
And as crazy as this gets I'll keep
00:13:30
doing the only thing I know how to do
00:13:32
which is to dollar cost average into the
00:13:35
stock market and keep buying VTI
00:13:38
Vanguard's ETF which is what I have been
00:13:40
doing I'll keep dollar cost averaging
00:13:42
into Bitcoin And on weeks like the one
00:13:44
we just had I'll buy a little bit of
00:13:46
extra which is what I just did at a
00:13:48
discount Then I'm immediately moving my
00:13:51
Bitcoin out of the exchanges and onto
00:13:53
cold storage And if you want a
00:13:54
step-by-step guide on how to do that
00:13:56
yourself I have a 4hour training guide
00:13:59
that shows you how to do that You can
00:14:00
use coupon code Andre 40 to get an
00:14:02
additional 40% off And I'll keep trying
00:14:04
to understand what the heck is going on
00:14:06
along the way and sharing it with you
00:14:08
Because even though these videos are
00:14:11
trying to understand the bigger picture
00:14:13
here I would never act on any of this
00:14:16
I'm never going to try to time the
00:14:18
market or sell my stocks and wait for it
00:14:20
to go back up The point of all of this
00:14:22
is to get the knowledge because the
00:14:24
knowledge is that mental power that will
00:14:27
help you stay invested in the markets
00:14:29
especially when things get crazy But I'd
00:14:32
love to hear your thoughts Let me know
00:14:34
down below I hope you have a wonderful
00:14:35
rest of your day Smash the like button
00:14:37
Subscribe if you haven't already I'd
00:14:38
love to see you back here next week I'll
00:14:40
see you soon Bye-bye
