Full transcript
0:00There are some people that are making
0:02the
0:03um case right now that losing the
0:06global reserve reserve uh currency
0:09status, the United States, which is an
0:11amazing privilege, uh will be good for
0:13us. And you can make the case if you
0:15look at we've got to start building
0:17things. If you want to start making
0:20things in America, it helps to not be
0:23the the reserve currency because when
0:26you're the reserve currency, it is
0:28you know, it's hard. Your dollar is the
0:30is the best uh in the world. Your money
0:33is the best in the world. And so it
0:34costs more for the rest of the world
0:37uh to buy things from here. But if we're
0:39more like
0:41hate to say it, Mexico,
0:42um we uh you know,
0:46we we have bigger uh interest rates on
0:49our house immediately. We have huge
0:52interest rate on our debt immediately,
0:54which means the government will have to
0:56do more cuz we can't just keep printing
0:57money um because we don't hold the
1:00world reserve currency anymore. So our
1:02lives dramatically change. Uh it's not
1:04Armageddon overnight, but it is a
1:08it's the end of the America that we
1:10know.
1:11That's the way I look at it. But I want
1:13to get um Carol Roth on because she's a
1:16she's much better at this. She is a
1:18former investment banker. She really
1:20cares more about uh Main Street than
1:22Wall Street. And she can explain this.
1:24And I want to talk about what's
1:25happening with Canada and Carney. But
1:27first, you know, he is pushing for the
1:30end of America to have reserve currency.
1:33What does that do and what does that
1:35mean, Carol, to the average person?
1:38>> Yes. Well, obviously you have somebody
1:40like Carney who was on the foundation
1:42board of the WEF. Uh somebody who was
1:46the envoy for the UN's climate finance.
1:50Um
1:50why would he not want the US to be the
1:53center of the global universe? Because
1:55he doesn't want the US to be the center
1:57of the global universe. And that's when
1:58you hear being the world's reserve
2:00currency, that is sort of the shorthand.
2:03You we have to had the poll position in
2:05terms of being in the center of global
2:08finance. Now, on a technical basis, what
2:11does that mean? It shows up in a few
2:13different ways, Glenn.
2:14One, the the literal reserve asset. So,
2:18when central banks hold money in
2:20reserve, they do it so in a a basket of
2:22currencies. And historically,
2:25predominantly, that has been in the US
2:27dollar, less so in other currencies
2:30throughout the world. World. So, that's
2:31the reserve piece. But, there's another
2:33piece to this and being sort of the
2:34center of the the financial world. One
2:37is how are goods priced, traded, and
2:40settled throughout the world? Well,
2:42right now, primarily, whether it is
2:45energy, whether it is food, whether it
2:49is copper, you know, what whatever the
2:51commodity is, those are priced and
2:54settled primarily right now in US
2:57dollars. So, that's a big piece of being
2:59the center of the financial universe.
3:01And then, of course, when comp when
3:03countries borrow, what currency are they
3:06borrowing in? And because all these
3:08other countries don't have the same
3:10perceived stability, they're often
3:12borrowing in US dollars. So, obviously,
3:15that gives us um a lot of strength, not
3:19only in that sort of historical
3:21privilege of access to cheap financing,
3:24uh access to cheap goods, and whatnot.
3:26But, you know, in terms of our strength
3:28of being able to use uh economics, to
3:32use finance, to use the dollar to get
3:35countries to acquiesce and do what they
3:37want, which makes it clear as to why
3:40somebody like Carney would not want the
3:42US to have that what is historically
3:44known as exorbitant privilege.
3:48>> How do we pay for things like our
3:50military alone if people are dumping the
3:54dollar, our dollar is worth less and
3:56less. We can't get the the you know, the
3:59financing
4:00with a 50 or 40 trillion, soon to be 50
4:04trillion, 40 trillion dollar debt.
4:07Nobody's going to loan us money without
4:09extraordinarily high interest rates. So,
4:13how does that not just collapse
4:15everything?
4:16>> Yeah, I mean that is the 40 trillion
4:18dollar and and growing question. It used
4:21to be for you having this privilege,
4:24like I said, that you would have central
4:25banks and they would be what we consider
4:27to be non-price sensitive buyers. They
4:29would go out and they would buy our
4:31treasuries no matter what on the regular
4:34so that they would have them in reserve
4:35and for you know, whatever else they
4:37needed. And we're seeing on net that
4:41central banks have abandoned that and
4:42that's heavily been led by China. But if
4:44you look at things since 2014, over the
4:47last 12 years, you add up all the times
4:49that they have bought central banks and
4:51all the times that they have sold, on
4:53net, there actually have been net
4:56sellers. So, who's buying when we have
4:58two trillion dollars deficits? We have
5:01price-sensitive buyers. You have hedge
5:04funds and individuals. And so, they're
5:06not buying at any cost. They're saying,
5:08"Okay, what is an interest rate where
5:10we're going to actually loan to the
5:12United States that has this debt that
5:15has these deficits that doesn't seem to
5:17be getting serious about anything that
5:19has their their their debt has been
5:21downgraded? And so, that price that they
5:24require to to buy the debt continues to
5:27go up and that is the struggle that is
5:30running through everything because as we
5:33know, we have to pay interest on the
5:35debt based on what that market that
5:37these price-sensitive buyers are saying
5:39that that they're going to loan to us at
5:41and that means now that our interest
5:43expense is higher. We're spending more
5:45on that than we are on the defense of
5:47this country and on the trajectory we're
5:50on that it's going to be the number one
5:52expense item for the United States if we
5:54don't get our act together here soon.
5:57>> They're not going to get their act
5:58together. So, Carol, let me switch to
6:02Canada because I think you know what
6:04this election's going to be all about
6:06and what Americans really care about is
6:09price of food, price of my life,
6:12everything is, you know, um spy seem to
6:16be spiraling here and
6:19and it's the, you know, the
6:21affordability crisis. I'm going to have
6:22you back on on Thursday and we're just
6:24going to talk about this. But how does
6:26this deal with with Canada
6:29play out between I mean this is going to
6:31hurt Canada and the Canadians maybe more
6:35than it will hurt us, but it's going to
6:37hurt us as well.
6:38How bad is this thing going to get?
6:41>> Well, obviously, you know, one hopes
6:44that there's a lot of posturing we've
6:46seen and and many of these trade
6:48discussions that there have been these
6:50big blow-ups and things have normalized.
6:53So, the hope will be that we'll get back
6:55to that position. But obviously, Canada
6:58is a a major trading partner here in the
7:01US and certainly I think that's part of
7:03the reason that that Trump is trying to
7:05do this. He's trying to protect
7:08that position in a sort of a weird way.
7:11Things like import if they start
7:12importing cars from China, um you know,
7:15that could impact trade and so, you
7:18know, that's the kind of thing that he's
7:19focusing on.
7:21Um but I do feel like it's not going to
7:24help certainly in the short term any
7:27affordability and that's been the
7:29frustration point all along because
7:31there's a lot of low-hanging fruit
7:33whether it's in education, whether it's
7:34in housing, um you know, perhaps some
7:37some programs in food that could start
7:40to address affordability and these side
7:43quests which may have long-term
7:44implications aren't helping what's
7:47happening today and I think that's the
7:50disconnect that the Americans are
7:52feeling right now. Americans don't have
7:54that, you know, let's think about this
7:56in 3, 5, 10 years. Right now we're
7:59hurting and we want to make sure that
8:01that's fixed first before we address
8:03that.
8:04>> I have to tell you, I was just in
8:06I was in the Middle East, I was in
8:07France, I was in Belgium and and I I
8:12I when I was walking down one of the
8:14Boulevards in France, you know, have you
8:16been to Paris before?
8:17>> I have. Oui, oui.
8:19>> Okay.
8:20So, [laughter] yeah, okay. Pipe down.
8:22So,
8:23but you walk down and it is truly I
8:25think one of the most beautiful cities
8:27in the world and it is that way for a
8:30reason. It was master planned over 19
8:33years
8:35and it
8:36led to another, you know, revolution in
8:38the end. And I see this thing kind of
8:41playing out, you know, when Napoleon in
8:43the second or third, he started building
8:45these cities like building Paris. It was
8:49good for the people but in 20 years it
8:52was good it was very bad for the people
8:54during those 20 years. He was right in
8:57the end but it didn't matter. And I feel
9:00like we're in this. Trump is making
9:01these extraordinary moves. Nobody's
9:04really explaining them. You have some
9:06things really not helping.
9:10You know, some self-inflicted, some not
9:12but but you don't have 20 years. You
9:14don't have 10 years. You know, you've
9:16got a few months here. Is there anything
9:19that can be done cuz this if this holds
9:22cuz I think Carney is playing the
9:24elections. I think he's willing to hurt
9:26himself and Canada just to play this
9:28hardball line until the elections are
9:30over because he wants to flip to the
9:32Democrats.
9:33What does this do to us in the next 3
9:35months?
9:36What does it mean to the average person
9:37when you're going to try to buy
9:38something?
9:40>> It's a good question. Certainly, we have
9:43seen the side quests, whether they're
9:45tariffs and trade or Iran, has not done
9:49anything to make things less expensive.
9:52In fact, in many cases, it has made them
9:55more expensive. And I think that that
9:58is, you know, the trajectory is going to
10:00continue in that direction. One of the
10:03other things that's not helping is that
10:05you have the Treasury that's trying to
10:08keep the bond market together. And so,
10:11they're coming into the market with
10:13interventions. But as we know, anytime
10:16you have these non-market interventions,
10:18there has to be a release valve. You
10:20don't get to do that for free. There's a
10:21cost to that. And the cost on the other
10:24side of that, Glenn, is more inflation.
10:27So, I think this is a very risky
10:29strategy all around that could continue
10:33to stoke inflation right in front of the
10:36midterms, which is not what the American
10:39people voted for.
10:40>> Do you believe that it is Trump's
10:43miscalculation or it is Carney's
10:47calculation for the midterms?
10:51>> Um [snorts]
10:51yes.
10:52>> [laughter]
10:53>> So, I think there's a little There's a
10:54little bit, you know, the Trump's
10:57um tactics this time around, and it it's
11:00interesting to me because he's such a
11:02good negotiator and he has so much in
11:04his back pocket and he's so charming
11:06one-on-one,
11:08that he's gone in a diff- different
11:10direction. Instead of the carrot,
11:11instead of the charm, he has gone with
11:13the big stick approach. And, you know, I
11:17I do wonder if that has been a mistake.
11:20Now, obviously, to get Canada to the
11:22table because they had been ignoring us,
11:25it did help from that standpoint
11:27temporarily. But in terms of actually
11:30getting something done, now it seems to
11:32not be helping and Carney, who is, you
11:35know, we may not like his background,
11:37but we cannot put aside the fact that he
11:39is a very intelligent and calculating
11:42and connected individual, is of course
11:45playing this to his advantage, which I
11:49think is somewhat funny because my guess
11:51is that Trump probably liked the fact
11:54Carney was in there cuz he thought he
11:56would be more rational and easy to deal
11:58with, not necessarily
12:00>> Yeah.
12:00>> projecting this kind of calculation,
12:03which by the way, I think is because of
12:05strategic missteps. If the choreography,
12:08if the order of operations had been
12:10different in the Trump administration,
12:12then we wouldn't be giving this position
12:15to candidate to be able to play. So, of
12:18course they are exploiting something,
12:20but that is because of unforced errors
12:23in the administration, which I
12:25personally am not going to name names,
12:27but I personally blame on the advice of
12:29certain people in the the
12:30administration.
12:32>> Okay. Um Carol, I'm I I'll have you back
12:35on Thursday cuz I want to talk to you
12:36about the affordability and the thing
12:39that the Republicans I think are
12:40missing. Everybody's saying, "Ah, it's
12:42not so bad. It's not so bad." No,
12:44perception is reality. It doesn't
12:45matter. Perception is reality. And the
12:47people that are making inroads are the
12:50socialists that are promising you all of
12:52these beautiful things and none of them
12:54will come true. If you think burritos
12:56are expensive now, wait until it's a
12:58socialist burrito. It will cost a
13:00fortune, an arm and a leg.
13:01>> Thank you for thinking for yourself
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