Welcome everybody to another deep dive edition of the Chicks on the Right podcast,
where we're going to talk about the debt ceiling with someone who actually knows all
about it and can speak much more intelligently on the world of finance than we
ever could. And that's Zach Abraham, the chief financial I'm sorry, chief
investment officer at Bulwark Capital Management, friend and sponsor of our show. We're
always so glad to get insight about some of the things that are happening that
affect all of us so deeply, and the debt ceiling absolutely qualifies. The
McCarthy and Biden are supposed to and maybe the other clowns and the Democrat Party
are supposed to be meeting today to maybe come to a deal. But like
yesterday, it was sounding like McCarthy thought they were still worlds apart. So
what does this really mean, Zach, Like, is the world going to
end in sixteen days from this recording if in fact we max out? What
does it mean for people like that, like just regular old schmucks you know,
are world I'm right there? Should people care? You know? Like
do we care? Right? So it's funny all the all the you know,
the pop and circumstance and all the drama around it. I don't think
people realize we've been doing this once a year for like the lab Well.
I mean, we've skipped a couple because of budgeting procedures in the Congress and
things like that. But this has been an ongoing issue for a long time.
Um. I think it's much more of a political issue truly than it
is a financial issue in the sense that, look, if if they don't
extend, so let's just look at it kind of like mechanically, if they
didn't extend the debt ceiling, it would be financial armagon. Okay, so
they really would like so when they say that, it's super absolutely because it
would be when you look at what the t so if you I don't want
to get too far into the weeds, but if you start looking at the
TGA, which is the the the the treasury Uh, it's the treasury account
that holds all the money that they pay all the government bills with. Right
when you look at the levels that that's at, it needs to be replenished.
And the way they replenished that is by selling bonds. But if they
can't pass a debt limit, that means that they can't pay the existing short
term debt and they can't make the interest payments that are needed, and that
would be what we refer to as like a soft default, right and things
would just break loose because the US government treasuries would probably get hit very hard
at least initially on that news. And remember treasuries going down twenty five percent
in a year is what blew up Silicon Valley Bank, Right, So that
debt, that collateral is underlying every major asset in the world pretty much.
And so if that collateral that's underlying all these assets free falls in price,
it would be financial armageddon without question, Like I mean, the whole world
would enplode right one of this. Yeah, And so this is the thing.
My suspicion is going into this meeting that McCarthy is going to come out
with nothing. And the reason that he's going to come out with nothing is
if you're Biden, you have zero incentive to negotiate with them, right,
because if they do this right, if they don't sign off on whatever extensions
there, you know what the media is going to say, the world's going
to go into chaos. They're going to refer to it as the Republican debt
ceiling collapse, right, and they're gonna wear it, and he's gonna he'd
ride a way to reelection. Meaning we know how the media is gonna spin
it right, right, They're not going to tell the real story. The
Look, we were going into recession anyway, this sped it up. All
of this economic hardship would then get saddled, right, the inflation issue.
You'd watch it all get passed to the Republicans, and Biden'd be like,
I told them not to do it. I told them not to do it,
but they have. But Republicans are the only ones that came with a
plan. They're the ones that already passed a plan. Yeah, and he
and he's but he doesn't have an incentive to give an inch because if he
if he wants to. Now, look, I could be wrong. This
is just my take on it. I'm just looking at the game that's set
up here and saying that Biden, this is a tail. As he wins
heads, they lose game for him, right if they don't extend the debt
limit. Regardless, no one's going to tell the real story on the media,
right, Things are going to go insane more banks are going to blow
up markets plummet. It'll be all on the Republicans. They passed debt ceilings
for Trump, but they refused to dubiden. This is all partisan politics,
blah blah blah. We know how it's gonna get some fun in the media,
right and so I'm just saying the Republicans would wear this. The other
thing is is the Republicans need to, in my opinion, be a little
more realistic here, meaning that we knew that we'd have to extend the debt
ceiling this year, five years ago, right, Like the whole people are
like, but we can't afford this spending. And I'm like, guys,
that ship called can't afford something that sailed fifty years ago, right when we
get off the gold standard in seventy one. So as much as I hate
it, as much as I would love to see a budget surplus, as
much as I would like to see our government operate like a somewhat responsible business,
right, you can't at this point. You're so far off the rails
that the only choice you've got is keep printing money and keep issuing debt.
Yeah, because we're thirty trillion dollars in debt at this point, Like it's
yeah, because like any business, any business that was thirty trillion dollars in
debt would probably just go out of business at this pole, like a real,
a good, actual business would be screwed. Yeah. And here's what's
crazy. If this was a real business, it wouldn't have thirty trillion in
debt. It'd have two hundred and fifty trillion in debt, right because bank
our businesses have to record off balance sheet liabilities, right, the government doesn't.
Oh my god, hey, but I'm sorry, but I'm like totally
fascinated by your take on this because I did not expect it. I thought
I thought that Biden. I really thought that the Republicans sort of had the
upper hand here in that Biden is the one that's president, so if things
were to collapse, that's who people see is in charge. And so even
if the media spins it and tries to say, well it's Republicans fault,
Republicans say we brought a plan, and he said no, he did nothing.
He wouldn't negotiate, and so I kind of I'm just surprised at this
take because I thought the whole problem is that Kevin McCarthy can't get Republicans to
vote on just an increase in the dead ceiling. So if they can't get
that to a vote, how is this going to get resolved? Well,
that's what I So you've got and that's and so we've got I don't want
to talk out of school here, but we've got a full time analyst that
works on staff, right, and he's got a lot of connections. We've
got connections with people on Capitol Hill that manage money around there. And a
friend of mine runs a financial research company that only focuses on the political side
of things, right, so's they're not looking at financials, they're looking at
political implications for businesses and things of that nature. And what we've been told
is that this is a lot closer to being a complete disaster than most people
think. There are Republicans like genuinely dug in on this, and it's it's
just scaring me because if they really are dug in, and I understand I
agree with the principle behind why they're digging in, I'm just warning them don't
do that with this. You are gonna light and it is Biden's fault the
end of the day, he's the president, right, but you just know
that's not the way it's gonna go down. I was reading a tweet last
night from Robert Reisch talking about how Republicans always signed the debt limits and don't
have problems with spending in debt when a Republicans in office. Now. I
don't agree with Robert Reisch on much, he does have kind of a point,
right, Like, one of the things that fust me, frustrates me
about the Republican parties is we only hear about fiscal restraint and austerity when a
Democrats in the White House. Yeah, so true, the wise, they're
spending just like everybody else. Gosh, yes, Zach and Trump was one
of the worst culprits of that, right, And so like, I'm just
sitting there encouraging people. And this is one of the things I talk on
our show about, is like, I think it's pretty obvious where I am
on the political spectrum, right, but we cannot let that cloud right the
way that we're interpreting real life events, especially in the investing in finance world,
because investing in finance doesn't care about what you think politically, right,
you got to look at things through a naked lens. My take on this
whole situation could be wrong. I'm just looking at the chess here and going,
this is a can't win scenario. Guys, it's here's one of the
lines they're gonna say. It's the Republicans that wouldn't sign an increase of the
debt limit. If they break it, they own it. That's what everybody's
gonna say. That's what Wall Street's gonna say, That's what CNBC is gonna
say, right, and there will be that contingent of all of us that
look, can go, wait a second, Biden's in charge. I'm just
saying that's not going to be the narrative. And I feel like this would
be sort of the economic version of the Supreme Court ruling on Roe v.
Wade. You know, while personally I was a big supporter of that ruling
for a variety of different reasons, I knew that once that ruling came down,
what looked like a landslide election up in Fall turned into absolutely not that.
And I'm saying this situation it reminds me exactly of that on steroids.
That's so interesting, that takes so interesting. Yeah, I'm really now I'm
super nervous because so okay, then so okay, let's just assume then that
Republicans can't make this happen. And I feel like, to some extent,
I wonder if Joe Biden, in this meeting that he has with Kevin McCarthy,
if Kevin says, Joe, I have people in my caucus who will
not play ball on this. What do you want me to do? We're
gonna default. Do you care about politics or do you care about the country,
Because if you care about the country, you're gonna give a little You're
gonna you're gonna pull back spending a little bit to save the country, because
otherwise my hands are tied. Because I think Kevin would probably want to do
the thing he probably do. He would raise the jet ceiling and do a
clean bill. He's got the Matt Gates is and the Marjorie Taylor Greens of
the world saying Nope, you're not We're not doing this until there's a spending
cut. So would Joe Biden give a little just for the sake of the
country or are we really doomed? Like, are we really going to default?
Look, I think it'll I think something will get done before this happens
because just literally nobody wins from this. It's just not good for anybody politically,
whether it's right or wrong. Again, I am all about cutting spending
at whatever costs we need to. I'm just saying this ain't the route to
take just because you can't default. Right, So I would would Biden give
an inch? I don't. I mean, this is a guy that just
said the greatest danger to our country is white supremacist, right. Yeah,
he doesn't seem like a cat that's too interested about what's best for our country,
right Like, I'm not trying to denigrate him. I'm not saying he
hasn't done good things in his career. I'm just saying, wait, totally,
it's we'll say that for you. Yeah, We'll totally say all those
things for you. Yeah. All you see are politically motivated statements and actions,
right Like, there's nothing principled going on here. So I don't think
I mean, look, I think that they If I was his advisor economically
and I was on his side, I would tell him, don't give an
inch. Your reelection would be signed the minute that they didn't pass that debt
ceiling. It'd be the best thing to happen for you. Joe, don't
give an inch. He doesn't have any incentive like the Republicans wear it.
If this goes sideways, wow, okay, well guy sucks and every cost
totally, I'd expect you for this uplifting unexpected and not uplifting. And it's
gonna it's just one more thing, you know, It's just one more awful
thing in this administration, right, I mean, like I feel like it's
just been like one hit after another hit after another hit, and after all
the border stuff and after all the just everything that we've had to deal with
over the past two years, it's like just another gut punch, isn't Yeah.
Well, and and then there's also, right, there's no recognition of
it. There's no there's no humility of hey, we got this wrong,
but let's pull together, you know, like I mean like there's no there's
no acknowledgement. Everything is political hand to hand to hand combat and right,
what's amazing is they only they act as if there's one side of the aisle
only engaging in that, you know what I mean, it's craziness. It's
just listen, we're we're the chicks on the right. But we're obviously partisan,
you know, but I mean we've even said on our show, they
all suck when it comes to spending, all of them, like the right
and the left, all of them. They all literally spend our money like
they're drunken sorority girls on spring break. I mean, they all do it.
So we are the first to admit that. So it's not like it's
one party that has done this and led us to this horrible place that we
are today. I mean, in thirty trillion over thirty trillion dollars in debt,
I can't even look at the debt clock without having an anxiety attack.
Yeah, and I don't think people we did a number. I don't quote
me, but I want to say something like, if you stacked a trillion
dollars on top of each other, spends like somewhere like sixty eight hundred miles
or something that's a trillion, right, since sixty's like sixty eight thousand miles.
I'm sorry, it's so crazy, it's insanity. It's insane. Yeah,
it's such big numbers you can't even really wrap your head around it.
Yeah. Well, Zach Abraham, we always love talking to you about these
kinds of issues, Zach. For those of you who may just be joining
us a chief investment officer at Bulwark Capital Management, you can check them out
at know your Risk Radio dot com. I'm sure you're going to be talking
about this and many other issues of importance to the American people. Everyone should
tune in Know your Risk Radio dot com. Is there any other place that
people should look to get information? They can follow me on Twitter at kwower
radio or just go to Bullwark Capital Management dot com and h yeah, it's
just google us. Know your Risk Radio, Bullwark Capital Management easy to find,
thanks zat Thank you. Investment advisory services offered through Truck Financial LLC,
n SEC registered investment advisor. Information presentatives for educational purposes only. It should
be considered specific investment advice, does not taken to consideration your specific situation,
and does not intend to make an offer or solicitation for the sale or purchase
of any securities or investment strategies. Investments involve risk and are not guaranteed,
and past performance is no guarantee of future results. For specific tax advice on
strategy consulted with the qualified tax professional before implementing any strategy discussed herein