8/19/26: Trump Panics As Bond Markets Crumble, Trump Crypto Firm To Become Bank, Kushner Bends Knee To Bibi

0:00This is an iHeart Podcast. Guaranteed Human. I think something that makes me well-studded to be a nurse is my empathy. Growing up with a big family, I think I've always kind of been a caregiver. When you care give, you get to know the family and the patient and you get really close. And Rasmussen University, they did a very, very good job of giving us the resources that we need. So just being able to apply the knowledge that I've retained to my daily life has been so amazing. Learn more at rasmussen.edu.

1:04This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR. fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at O-D-O-O dot com. That's Odoo dot com. Hey guys, Sagar and Crystal here. Independent media just played a truly massive role in this election, and we are so excited about what that means for the future of this show.

1:49This is the only place where you can find honest perspectives from the left and the right that simply does not exist anywhere else. So if that is something that's important to you, please go to BreakingPoints.com, become a member today, and you'll get access to our full shows, unedited, ad-free, and all put together for you every morning in your inbox. We need your help to build the future of independent news media, and we hope to see you at BreakingPoints.com.

2:14One thing we have been keeping a close eye on and that Trump also seems to keep a close eye on is the bond markets. There has been a lot going on there and no one better to break it down for us than Jeff Stein, Pulitzer Prize winning journalist and reporter over at Notice. Great to see you. Sounds so good to hear Pulitzer Prize win. I'm just going to make sure to be as obnoxious about that with everyone in my life as possible. I saw the smile light up your face when I said that, Jeff. So happy to provide you all of your accolades. Let's go and put D1 up on the screen here. We've had a bond sell-off here from The New York Times.

2:52They say it sent the borrowing cost to the highest level since 2007. Yields on the 30-year U.S. Treasury and government bonds across the world rose to multi-year highs as investors fret about inflation, deficits, and AI spending. Talk to us about what this article is indicating and why we should care. Yeah, it's a huge topic. The bond yields run up. Do you want me to start on why it matters or what's going on? Why it matters? I think the why it matters is huge, huge, huge, huge, huge parts of the American economy are incredibly, incredibly sensitive to this financial indicator that seems totally abstract and sort of beyond what most people understand.

3:37And basically, the way this works is that borrowing prices are tied to the amount the Treasury Department pays in response to issuing debt. Basically, Treasury issues an IOU that says, I will pay you back at this rate over this amount of time if you, a private borrower, buy my debt in exchange for immediate cash. And that percentage, that rate that Treasury pays on that IOU, is the benchmark for an impossibly large amount of borrowing in the U.S. economy, including mortgages, car loans, your credit card rates. So it really has a very sort of visceral immediate impact on millions of small businesses that might want to loan, millions of homeowners that might be trying to buy their first house, millions of students who are trying to get student loans if they don't have a federal benefit.

4:30And then there's sort of a second potential sort of macroeconomic impact that could impact sort of you directly. And that is the higher these yields get, they're called sort of that IOU spread is the yield. The higher that gets, the more at risk our financial system is because our banks, you know, not so much the really big ones, but the medium, smaller ones are really their margins are based on expectations for what those IOUs will yield. And if we have huge fluctuations, as we're seeing in the bond market, it means that the balance sheets of these banks could be askew in ways that are really dangerous.

5:12And the last time we saw really elevated bond yields was 2023. And one of the impacts of that of that era was we saw Silicon Valley Bank go under the Biden administration, mobilized effective bailout. it was a very big moment for financial markets, and it could have had this sort of major ripple effect throughout the economy. So there's the sort of immediate effect on consumer borrowing. And then there's this sort of second tier layer of sort of internal plumbing to the financial markets, where if we see big shocks that we don't know where they're going, that gets really scary and gets us back to questions about 08 or maybe more like 2023.

5:52But it creates this instability, both for foreign governments and for banks, because these treasuries are sort of just the bedrock asset that people use to hold liquidity. And so you do not want to see major fluctuations in that. And then we can sort of get to the why is this happening, if that's all. Yeah. Yeah. Let's get to that, because if we put this Bloomberg tear sheet up on the screen, they mentioned U.S. tenure yields climbed to highest since 2025 as route deepens. And famously, Trump didn't waiver at all basically after, quote, Liberation Day until he said the bond markets were getting a little yippy, if I'm remembering correctly, Jeff.

6:24So what's happening this time around? And, you know, you've covered Trump and Trump's relationship with the bond market, Scott Besson as well. What could we expect to see from the admin? We have a well, so I guess what's happening now is you have sort of the structural problem and the immediate problem. The structural problem is that as, you know, with the West ages, we have sort of a glut of government spending and not enough revenue coming in. And that has pushed out a huge and sort of unprecedented, you know, issuance of debt, not just in the US, but Germany, the UK, Japan. And what's happening is there's so much debt being issued and not enough buyers, which means that the buyers have the upper hand and they can demand a higher premium, which means that the borrowing gets more expensive for the US government, which is sort of the underlying structural problem.

7:18Now, on top of that, we've had a series of, as you alluded to, really serious geopolitical developments that sort of exacerbate the sort of like the structural issue there. And basically, when the Strait of Hormuz, you know, on, off, on, off with the Iran War, and the effect of that is to raise the risk of inflation. And when inflation goes up, if you have a bond, you're going to say, I need a better rate of return because the value of my bond is going to erode over time. So that plus a few other things, the Federal Reserve not being clear that it's going to fight inflation. The AI spending boom has really created a huge extra demand for capital.

7:59So that's another reason that there aren't as many people and institutions buying bonds. And so that's creating all the short-term pressure on yields. What the administration is going to do about it is a great question I've been trying to get the answer to. We saw a couple of weeks ago Treasury Secretary Scott Besson go out of his way and move to protect the Japanese yen. The administration said this is absolutely just about protecting our allies and helping our allies. But it wasn't lost on people that treasuries are held over a trillion dollars in treasuries are held by the Japanese. They are the single biggest foreign holder of US Treasuries.

8:36And if their currency really is in trouble, they could mass dump the dollars that they do own to prop up the yen. And that would be really bad for the US yields. What else the administration is going to do? Today, just a few hours ago, we got an announcement from the Treasury Department that they are basically buying older debt and trying to issue new debt. The mechanics of this are complicated and really boring, frankly, so I don't want to waste your time on it. But it's another move aimed at basically improving liquidity in the treasury market in the short term, but doesn't really do anything about sort of the underlying structural issue or the war, which is, you know, someone said to me, like, are we basically risking the entire U.S.

9:23economy because Israel persuaded Trump to go to war with Iran? And there's like, not true to that. There isn't a story there that has a lot of evidence to support it. Yeah. And not just the U.S. economy. I'd say the entire global economy is being risked right now because of the choices that have been made for some series of perplexing reasons. Jeff, you're writing over at Notice about how important the bond yields are, how closely Trump follows this metric with the midterms looming, you know, is there a particular level interest rate that he's going to be looking at? Is there some sort of like catastrophic thing that could unfold that would really cause problems?

10:06Like what are the specifics here that we should keep our eyes on? Yeah, we are approaching 5 % on the 10 year and we're at like 5.3 on the 30. if those numbers if the 10 year rises above five percent and the 30 year rises above six that's when economists have been telling me like we we will start you know expect to start to see real trouble in in financial markets at some of the banks and i i'm pretty confident that the administration is going to be doing whatever it can to keep it below that number but i think you know um emily you mentioned the liberation day tariffs which i think is a really instructive counterpoint because that was a moment last year, you might remember, I think I was on the show a few times, when it looked like the Trump administration understood that the massive tariffs they were imposing were causing these huge problems in the bond market and they backed off.

11:00But the thing about that crisis was it was kind of like a switch, like a lever that was like, you know, we can pull this in one direction or the other. Like we can turn this on or off to use the switch analogy. And now I think it's pretty clear that it's a lot harder. You know, then Trump could just say, actually, no, let's not really do the tariffs. And that's kind of what they did. Can they really just say like the war is over and the straight up room is open and also AI spending is like the number of problems that are causing this current flare up are so much bigger and more complicated than the tariff switch that they could turn on or off.

11:40last year. So in some ways, it's more out of their hands. They have a situation that is not as easily resolved as it was last time. And I think that's going to be a real problem if they can't figure out how to get this under control quickly. Jeff, I wanted to talk to you too a little bit more about this Japanese yen situation that you raised. We can put D3 up on the screen. Scott Besant is many things, but one of them is he is sort of a master at currency markets and currency manipulation. That's how he made a lot of his fortune alongside George Soros. Everybody can go back and take a look at that track record.

12:17In any case, there was an extraordinary thing that unfolded where a journalist was able to capture, a photojournalist was able to capture a picture of like a grocery style to-do list. And on that to-do list was this massive intervention into the Japanese yen market to prop it up. That looks to have not really lasted, at least for the long term. Phil Pilkington says it's been 18 days since the U.S. Treasury undertook an all-hands-on-deck bailout of the yen. Intervention has now been completely wiped out. Japanese are going to start considering liquidating U.S. Treasuries to get the situation under control.

12:52And my understanding, Jeff, is that this has implications not only for Treasuries and bond yields, obviously that's really important, but also could have huge implications in terms of AI investment because of this yen carry trade, where for the longest time you could borrow money in Japanese yen at basically 0 % and then use it to invest in things like U.S. treasuries and the AI data center bill down. That trade is no longer making the sense that it used to make. So this could have significant impact on our entire economy, it seems to me. Yeah. And you look at what Besant, the mechanics of what Besant did with the first attempt to prop up the yen.

13:34And basically, you know, you would say, okay, well, if the US is going to buy the yen, right, if you buy the yen, it increases demand. So it stops the sell-off and allows Japan to basically manage its economy without having to dump US dollars. That's kind of the – but if you're thinking this through, you're like, well, doesn't that mean that the U.S. needs to sell its own treasuries to buy the yen? And what's really important and I think interesting about the way they went about this is Besant sold the euro. So the U.S. has holdings of the euro, and that's what it dumped to be able to buy the yen.

14:13So it was a move to say, OK, well, we don't want to prop up the yen to save the US Treasury markets by dumping Treasuries. That's completely counterproductive. But Europe is just over there. They're mostly doing OK, not really, with the war in Ukraine. But it is someone we can take a bit of a shot at their currency and not have it immediately blow back to us. Europeans don't have as many US Treasuries as Japan or even China. So it seemed like a logical place to go. The problem is, as you're saying, this intervention has not held up. And now it's like, where's the ammo going to come from? You could issue more US debt to do this.

14:57You could sell US treasuries. But that kind of contradicts potentially the sort of motivation of doing this in the first place. And as you're saying, it's not just US treasuries that are very well integrated throughout the global economy. The Japanese yen is, you know, the Japanese, you know, there's an old saying among economists that there are four kinds of economies in the world, developing, developed Japan and Argentina. Part of what makes Japan distinct is because they've had, you know, they've been running a debt of like 400 % of GDP, like twice what we have. And so their debt issuance is sort of scattered throughout the global economy.

15:36And if they have a real sudden currency shock, you could see similar sort of balance sheet problems to what we have with a sudden devaluation in U.S. treasuries. Well, let's get to Trump's latest world liberty financial situation. Jeff is going to stick around, so stay tuned for that. I think something that makes me well-studded to be a nurse is my empathy. Growing up with a big family, I think I've always kind of been a caregiver. When you CareGive, you get to know the family and the patient, and you get really close. And Rasmussen University, they did a very, very good job of giving us the resources that we need.

16:15So just being able to apply the knowledge that I've retained to my daily life has been so amazing. Learn more at rasmussen.edu. Apple Vacations, where your story starts. The Summer Savings Event is here at Apple Vacations. It's the perfect time to bring everyone together for the getaway you've been dreaming about. Book between July 24th and August 27th and enjoy up to 55 % instant savings. From relaxing beach days to unforgettable moments with the people who matter most, your next vacation starts here. Travel through July 31st, 2027. Start your vacation today at AppleVacations.com or through your travel advisor.

16:52Apple Vacations, where your story starts. This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR. Fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at odoo.com. That's odoo.com. A major development in the Trump family crypto corruption.

17:38Let's put this first headline up on the screen. Brazen act of self-dealing. Lawmakers, watchdogs alarmed after Trump regulators let Trump firm start a bank. Just the lead here from CNN reports regulators appointed by Trump are allowing the Trump family's flagship cryptocurrency venture to become a bank. A move that is alarming ethics watchdogs and some lawmakers. World Liberty Financial, a crypto firm Trump and his sons, launched in 2024, announced late Friday that it received a preliminary conditional approval from banking officials to become a trust bank. Final approval hinges on a series of conditions being met.

18:13Jeff Stein, reporter at Notice, is back with us. And, Jeff, I'm hoping you can help us understand what the hell is going on because World Liberty Financial, as I just mentioned from the CNN report, it's a crypto company. Crypto banking right now, they have their Clarity Act that's hanging in the balance and may or may not pass by the end of the year. But this is a really murky regulatory area. So what does this even mean? What does this approval even mean? Is it going to stand, do you think? Help us break this down. So this is a charter from the OCC, the Office of the Comptroller of the Currency.

18:51It's been approved by an official that Trump appointed to that position. And what it effectively means is that it does not entail deposit insurance. It doesn't mean that World Liberty Financial has federal backing for if they have a crisis. That is not the case, which I think is a bit of a relief to some people. But it does essentially enable them to issue their stablecoin. coin. USD1 is the name of the World Liberty Financial coin. This is the currency that they issue. And they don't have to go through an intermediary set of institutions to do that. There are a few other benefits. It gives them sort of additional federal credibility.

19:32It allows them to, a really big one is that they now sort of override state regulations. So if New New York was saying, hey, Trump, you can't sell your crypto, you know, whatever this way. New York is now not able to, you know, go after this bank because it has this sort of federal protection. But the real sort of immediate sort of short-term financial benefit for Trump's crypto company is that he will be able to issue this stablecoin. And I was new to a lot of this. So I've been trying to learn a lot about exactly how this works. But essentially, this is both the stable coin is basically something that you can buy and trade, right?

20:16Like it's like a meme stock in a way. Like you can buy your stable coin and then trade it. But it also is sort of a way to transact or, you know, exchange, have a financial exchange. So if like you're a bank and you're trying to buy a certain number of parts from a company or whatever, You can, instead of going through a bank, you can, or going through like, you know, think about it like Venmo or PayPal. Basically, you can conduct this transaction now in USD1, which is the Trump crypto company. And this is the real thing that I think people need to know. The Trump administration, or not the Trump administration, the Trump family will get a cut.

20:54We don't know exactly what that is. The rates vary, but it's typically between, you know, 1 % and 4%, maybe 2%. That is the percentage that they will get on whatever transaction, let's say, a bank or a private company or even an individual wants to do. And so there's no public disclosure as far as we know, according to experts I talked to. We won't know, maybe for a long time, what exactly, who is doing this? So if Trump gets a call from the head of Goldman Sachs and he says, yeah, like I might stick the DOJ on you, but can you conduct your next billion dollar deal in my cryptocurrency? They can do that and no one would know.

21:38So it's I mean, the. And the Trump family would get the transaction fee. correct that they they own there's a series of sort of holding companies that make it hard to sort of say they own this percentage because it's like trump owns 70 percent trump personally owns 70 of the holding company that owns the other holding company that then owns the blah blah blah but effectively they are the owners along with um uh the emiratis who bought a 49 percent yeah and then it's run by zach wikoff who of course is uh steve wikoff's son so you've got all kinds of family corruption going on in this administration.

22:15And for my Republican friends out there, I think a good way to visualize this would be, remember when Hunter Biden was selling his paintings and we didn't know who was buying these paintings for prices that seemed a little bit above market price, except we're talking about billions of dollars changing hands here potentially, all thoroughly without any transparency, no scrutiny. And Jeff, just help put this into some historical context, because you start to feel crazy tracking this stuff. The level of wealth, specifically through this crypto company that Trump has been able to accumulate in the second presidency has got to be historically unprecedented, certainly for the US, perhaps for the entire world.

23:04Yeah, yeah. I don't know what the, you know, percent of GDP comparisons would be with like whatever land deals George Washington made. But he made over$500 million, I think, from World Liberty Financial alone. I'm not 100 % sure about that number, but I'm pretty sure that's right. Over a billion dollars from his crypto investments last year while being president. And, you know, it's kind of like a resist lib thing when they're always like, Jimmy Carter was forced to sell his peanut farm. And I think that sometimes elides the amount of money having, you know, I'm working on a biography of Bernie Sanders and, you know, I'm reliving some of the Clinton family self-enrichment, which is astonishing in its own right.

23:48I think Hillary made like something like$2 million from Wall Street speeches or the two of them made about that much money, which is itself amazing. But this is still, I mean, $500 million wall president in one year from one of your many crypto ventures. It is sort of beyond, I think it's safe to say, anything we've seen at least in the modern era and probably longer. Which, of course, is also directly tied to the foreign policy that he's overseeing as president. Like it's, this deals with the UAE, to your point, Jeff, about how that's the backer in this case. And that's just getting, I mean, that's like basically just scratching the surface, Jared Kushner, obviously, as well, had huge infusion of cash from the Saudi royal family.

24:31But the UAE is tied into world liberty financial, right? You were just mentioning that. That's enormously significant. And there's really no direct parallel between Hunter Biden or the Clintons, obviously, who also had their own foreign dealings. But this is the sitting president with that fund and a lot of foreign policy implications on the line. We're in war in Iran. The UAE, we covered earlier in the show, says two missiles were launched at it in the last 24 hours. yeah and i spent all day yesterday uh on the phone um working on a story in this realm that i'm not going to spoil so you guys have to have me back on to discuss and read notice everyone thank you guys i hope there's a cryptocurrency at some point maybe crystal coin oh my god we're not that desperate yet jeff but uh we'll see we'll see how the next couple of years go.

25:26Jeff Stein, thank you so much for doing double duty today. We appreciate it. My pleasure. Happy to be on anytime. Thanks, guys. I think something that makes me well-studded to be a nurse is my empathy. Growing up with a big family, I think I've always kind of been a caregiver. When you care give, you get to know the family and the patient and you get really close. And Rasmussen University, they did a very, very good job of giving us the resources that we need. So just being able to apply the knowledge that I've retained to my daily life has been so amazing. Learn more at rasmussen.edu. Apple Vacations, where your story starts.

26:07The Summer Savings Event is here at Apple Vacations. It's the perfect time to bring everyone together for the getaway you've been dreaming about. Book between July 24th and August 27th and enjoy up to 55 % instant savings. From relaxing beach days to unforgettable moments with the people who matter most, your next vacation starts here. Travel through July 31st, 2027. Start your vacation today at applevacations.com or through your travel advisor. Apple Vacations, where your story starts. This is Jacob Goldstein from What's Your Problem? Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other.

26:41One for sales, another for inventory, a separate one for accounting. That's software overload. Odoo is the all-in-one platform that replaces them all. CRM, accounting, inventory, e-commerce, HR. Fully integrated, easy to use, and built to grow with your business. Thousands have already made the switch. Why not you? Try Odoo for free at odoo.com. That's odoo.com. Jared Kushner was recently in Israel for meetings over the purported Gaza peace plan. In an interview after those meetings, he indicated that they would let Israel, quote unquote, finish the job. Let's take a listen. We're very committed to the fact that we have a plan to rebuild Gaza, but we will not allow Gaza to be rebuilt until the demilitarization occurs.

27:31Nobody wants to put more money into a place that's gone on for so long until if it's just going to be taken over by terrorists or blown up again. And we're also not going to restrict Israel's right to defend itself if there are any imminent threats. And so we had to clarify what that means. We could be seeing progress, you know, in as little as 30 days, hopefully on starting to take some of the weapons out and hopefully, you know, filling in some of the tunnels as well in the next 60 to 90 days as well. So progress could come quite soon, but we do need cooperation from both sides. And we're going to hopefully get through it.