When discussing the economic damage that the Trump regime is doing to the Uni...
it's important that we also highlight how this Trump regime is treating other countries
“and other central banks in ways that are deeply unprecedented.”
Of course, you know the tariffs against the world, 50% tariffs on Canada for hockey sticks and all these other things, 25% tariffs against Brazil, tariffs against this country, 60 countries, saying that they engage in forced labor, support and, you know, the tariffs are one tool that's very much publicized. But there's a lot of financial maneuvering that's happening behind the scenes that just has everybody live in uncertainty, predictability,
stability, it's critical when you're talking about what made the United States the economic
powerhouse and engine of the world and watching that erode at the same time we watch the US security umbrella internationally or road as we see in the Middle East and Asia and elsewhere.
“I mean, you look at this erratic move that was made by the United States and at least”
appeared erratic where the US needed to prop up the Japanese yen, the Japanese yen, collapsing, there's a lot of reasons for that. Oil prices, the war, just a long-term financial policy. They've got a right-wing kind of mega government there led by Takahashi. It's close to the Trump regime and the US was putting billions of dollars to prop up the yen two weeks ago in Camp David, Treasury Secretary, Bessant wrote and scribbled on a note five to ten billion dollars
to prop up the yen. But the US wanted to do it in a way that wouldn't really screw with the dollars value and so they came up and Bessant's background was kind of currency swaps and that's actually what he did, you know, for a long time before starting his own fund. So what he did was unloaded the euro, certain euros, that the United States held rather and kind of dumped the euro holding by the Treasury without telling the euro central bankers, without coordinating
at all in order to prop up the yen, you know, and kind of a robbing Peter to pay Paul scenario with kind of currency swaps. This is the financial times headline, US euro sale to prop up blindsided the European Central Bank. There's no discussion with them that this was going to happen. So the US sold euros to buy yen without telling the European Central Bank until after the trade was done, senior European Central Bank officials called it an unprecedented breach of long-standing
conventions. This has never happened before in history selling dollars to defend the yen would have
contradicted Bessant's strong dollar policy selling euros avoided that problem. But selling a European asset to defend an Asian currency to protect an American bond market without consulting the institution whose asset was sold more than just currency intervention. It is reserve architecture consuming the alliance architecture. So one of the big fears in Japan is that for them to prop up the yen, they were going to have to unload US Treasuries. The US Treasury market right now is already
in a very kind of dire condition. You've got the 30 year at 5.2%. You had the 10 year rising to 5% of the 4.8 something, which basically means all these borrowing costs by our government of higher. It even pushes up a lot of the borrowing costs that consumers have to pay. It's at a time
already where the US Treasury raised its third quarter government borrowing estimate to $739 billion
pushing the national debt over $40 trillion. Mary soon, $68 billion more than it projected in May, 2026. These are the people who call themselves fiscal conservatives engaging in the shenanigans. The yen intervention, by the way, looks like it's struggling. As well, it seems like pretty transparent idea to prop it up when people have some of those same concerns remain. You'll see, and it prompted up originally, but we're seeing some downward trajectory regarding the yen
as well right over there. I want to share with you what Basant said when he was interviewed by Japanese media company over here explaining how serious the situation is, but he views it as well. We're allied with Japan, and this is a government we believe in the Takayashi government,
“because they're like a mega government, so that's why we did this, but I guess at the expense”
of the European Central Bank and others who the US was allied with without even giving a heads-up. You're just playing a short clip. The reason we did the joint intervention was as a symbol, the US wanted to join with our great Japanese allies to show that we think that the Takayashi
Government has the right policies that will lead to long-term yen strengtheni...
that excess volatility and undo yen strength could hurt indeed the Asia region and the entire global economy. So you don't tell the European Central Bank and then when he was on CNBC, I'll show you how they framed it that when he put that note on the cabinet meeting two weeks ago that he was going to do this intervention, this is how they called them a slide dog. They said, you're a slide dog for doing this. You're playing this clip.
Just got asked. You're a slide dog. When you wrote that down by $5 to $10 billion, and the printing looks so big.
You've done this before. Amid you where you know people are looking over your shoulder?
“You don't, did you need to be reminded of things to do by $10 billion by $10 billion in yet?”
Tell me what was really going on there. The second one. Well, I just wanted to make sure that all the reporters looking over my shoulder also knew the symbol, JPY for the Japanese yen. So instead of short-hand to yourself. Yeah, you know, I was going to finish the list. You know, the rest of the list was, you know, like go and have lunch with a supreme leader, play tennis with Putin, you know, but I thought I would just leave it at the
$5 to $10 billion of Japanese yen. I want to bring in Justin Wolfers right now.
Spounder of platypus economics, chief economist here at the Midas Touch Network. I want to slide dog. I mean, you know, the good news is that most Americans understand the way currency swaps work, and clearly took advantage of it. And so the horrible economy worked it. People figured it out as well. I'm being sarcastic, of course. You know, setting aside that CNBC clip right here, just talk about the damage that this is doing generally when you are trying to
prop someone up, but not telling another central pick. All of this kind of, you know, lack of respect and bulldozing down to do these, and just looks like schemes that are obviously wrong. How is it impacting us here at home? I'm just going to start with who's writing a joke, should the Treasury Department? They were a couple of amazing zingers when it's, they is good old chuckles really, really got it going. Good work. Good work. Treasury Secretary. And look,
one part of this is actually pretty boring. There are swap lines between the US fed and other central banks that are there for moments. When basically our financial plumbing looks like it's going wrong,
“what we do is you sort of send over some financial duct tape. That's what swap lines are about.”
And nine days out of 10, if you told me that the US government was involved in buying or selling a particular currency, I'd sort of strike my shoulders and say this also, because the promise it involves these dramatic words like billions. And then people like, did we just give the Japanese billions? No, we just changed whether we had euros in our bank account versus dollars versus yen. So really not a big deal. It's some fairly profound level about what's actually going on.
It's business as usual. But there's two problems that stand in the way of everything the Trump administration does. They both begin with the letter C. The first is competence and the second is corruption. So I suspect without being sure that what this was was competence problem, which is the US Treasury, normally this is really one key stuff. You have your foreign exchange
“notes, talk to you, you get on the phone with your counterparts around the world and you say, we feel”
like things are a little bit wonky and foreign exchange mark. It's going to get in and help. The competence problem here is you meant to get on the phone first. You literally meant to just give people heads out. They've got a phone for it. They all have direct lines to each other, the central bank governance. You would worry about this leaking, which is why you don't want to go and down through junior staff as a cross and back up through senior staff as because if you
got early word at this, you could make a lot of money. So they didn't make that call. I suspect there's one of two things going on here. One is perhaps it's a competence problem, the secretaries, joke writers might also be the same people who help in with communications. There's a real keystone cops, air to all of this. The other possibility, which again, I really wouldn't say in a normal White House at a normal moment. I hate saying, sorry, it could also just be a contagious
lack of grace. That when you're working with others, when you're dealing across countries,
we always try to be a little bit too gracious and if I looked at the current White House, it doesn't
feel like it's a place that's given to men as that's given to grace that is about treating other people or other institutions well. So that's the confidence side of this. I suspect this is just
Being bad at their job.
but when this administration does stuff where normally I'd sort of say, "let President's
“president," that's why we elect them. It's because normally presidents from both the left and the”
right are trying to do the best thing by the American people. I don't have that confidence about this president. I think very few people do, and I think if I did I would be a fool, in this case, there's not an obvious corrupt side to this, but then you and I have talked so many times about various other economic interventions where it might make regular sense under a regular administration, but under this administration, you're left thinking maybe they're doing it for their own benefit.
I don't think that's what's going on here, but I can't help but thinking they've made it so
that we always have to be asking that question. Because if you look at it, the Euroweek and sharply
against the end immediately after that announcement about a 4% decline, it's recovered a little bit, I think the idea of kind of a mechanical swap, as you said, could be mechanical and could be done and you would say, "it's just a boring story." Right, and it's when one of my students comes into class and they say, "what's a swap?" And I'm like, "Oh, so I have to explain it."
“But a corruption story now you have to ask everything, which is okay, that Friday”
doesn't write on his pad, five to ten billion dollars. You think maybe that's, is that a dollar to yen or what's going to happen? But then they go euro, which even the euro didn't realize that was going to happen. And a broader question is, now with everything that happens though, too, did insiders know that did somebody know to short it? Was that 4% take, you and I don't know those answers, but in this very unusual transaction that took place,
knowing that it's going to be an unprecedented use of the euro to achieve a monetary goal by the treasury, that now creates a dynamic that if insiders were aware that that was the plan, versus a traditional swap plan, you can prepare differently. We don't know, but we know the corruption stories of story that exists and you then have to go best and made a lot of his money. I'm current, that's his whole thing. This is his lane who made money off of this. And that's a,
it's a trust issue, that's broken long term. I'll let you give it a final one. Yeah, look, there's two sets of trust issues here. There's trust between our government and the general public. Again, as I said the last 58,000 times that they issued a swap line, I didn't talk about it. I didn't care. I thought it was probably small, probably technical, probably uninteresting. So the trust is broken because every time we ask
hard questions, we keep learning uncomfortable truths. You know, the president is, is literally selling direct access to early word of his major policy decisions when he's selling access to the truth social API. That's a degree of theft and a degree of corruption that is literally unimaginable. This is someone who's, to be clear what the president's selling in that case. This is work product in his job as our employee, as the president, we employ him, where
his boss, what he's doing is he's taking information about what the company he works for is going to do. The company's called the US government and he's selling it through his own company, like it's corrupt on its face and that colors things everywhere. I think that's breaking the faith through the US public, breaking the faith with our trading partners is something
deeper basically what he did, what best he didn't, I'll leave it to folks at home to judge how important
this is. You know, when you go to a dinner party, it's good for me to bring a bottle of wine with you. We've stopped bringing wine and sometimes we also fart in the middle of the dinner party.
“That might mean we're less likely to be invited next time. Or the truth is, if the guy you”
invite is someone you really know because he's big and has a lot of money and you'll put up with the facts at the dinner table, but it doesn't really help anything. I really think that's all that's happened here, but also, so you might say, well, the cost is small. The flip side is, yes, but it's pointless. It's utterly pointless. Pick up the phone, stop farting at the dinner table, show some grace, bring a bottle of wine. Yeah, or going to the dinner party, getting drunk,
vomiting, punching people, getting into fights, stealing their silverware, leaving. That's what happened when Ben came over to my house last time, and that's why it's not happening again, Ben. Deformation, he forgot, you know, I pretend to be an economics guy, but deep down, you know,
I'm an old-school defamation lawyer. I'll take it back. Ben never did that. Yeah, you meet the New York
Time-solve, and I may have done it.
I appreciate Justin for doing everybody's importantly, search platypus economics on YouTube,
“and make sure you subscribe to Justin Wolf for his YouTube channel, platypus economics.”
When you watch his videos, which do very detailed economic analysis, any doesn't
end, of course, the Justin interesting and fun way. Leave a comment and say, Ben says, hello,
“Justin also is the chief economist at the minus touch network. Very important, subscribe to his”
YouTube channel. Let's get that channel a million subscribers. Thank you, Justin. Thank you.
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