"There Will Be Hell To Pay" When The Bond Market Breaks | Bill Fleckenstein

**SPEAKER_1** (0:00)
You said this place was steps from the water.

**SPEAKER_2** (0:02)
We just haven't found the steps yet.

**Adam Taggart** (0:05)
How much did we save?

**SPEAKER_4** (0:07)
Enough.

**SPEAKER_5** (0:08)
Enough to get lost?

**SPEAKER_2** (0:10)
Or you could book a stay with Hilton.

**SPEAKER_5** (0:13)
Welcome to your oceanfront room, just steps from the water.

**SPEAKER_2** (0:16)
The Hilton sale is on now. Book on hilton.com or the Hilton app, and save up to 20% to get the stay you expected. When you want savings, not surprises, it matters where you stay.
Hilton, for the stay.

**SPEAKER_1** (0:30)
Zootopia 2 has come home to Disney Plus. Let's go. Get ready for a new case.

**SPEAKER_2** (0:35)
We're going to crack this case and prove we're the greatest partners of all time.

**SPEAKER_1** (0:38)
New friends.

**Bill Fleckenstein** (0:39)
You are? Gary the snake.

**SPEAKER_7** (0:41)
And your last name? The snake.

**SPEAKER_4** (0:44)
Dream team.

**SPEAKER_1** (0:45)
In new habitats.

**SPEAKER_4** (0:47)
Zootopia has a secret reptile population.

**SPEAKER_1** (0:50)
You can watch the record-breaking phenomenon at home.

**SPEAKER_4** (0:53)
You're clearly working it.

**SPEAKER_7** (0:55)
Zootopia 2, now available on Disney Plus Rated PG.

**Bill Fleckenstein** (1:00)
If and when the bond market sets its sights on the intractability of the size of the debt and the unfunded liabilities, there's going to be hell to pay because the Fed's not going to be able to ease to get around whatever crisis that creates. That's the ultimate taking the printing press away that I've talked about in theory for quite some time now.

**Adam Taggart** (1:27)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. How much of a threat to the economy is the oil price shock and shortages of other key commodities caused by the U.S.-Iran War?
What's likely is to happen if the war wraps up soon, or if it escalates from here? And what impact is this all likely to have on the financial markets, which are back trading at all time highs? To find out, we're fortunate to welcome back to the program analyst Bill Fleckenstein of Fleckenstein Capital. Bill, thanks so much for joining us today.

**Bill Fleckenstein** (1:58)
Well, thanks for having me back, Adam.

**Adam Taggart** (2:01)
Oh gosh, Bill, my joy. And just know you're one of those guys when it's been too long, the emails and comments start coming fast and furious about when you're going to have Bill Fleckenstein back on. So hopefully we're making those people happy here.
I got a lot of questions here for you, but let's just start with what I mentioned there in the intro. How big of a factor is the war on the US economy in your mind? And I mean, just kicking this off, the US economy has actually been pretty surprisingly resilient so far, but obviously the longer this war lasts, the less resilient it might prove. So what do you think?

**Bill Fleckenstein** (2:36)
Well, we have to kind of separate what forces were at work before the war started.

**Adam Taggart** (2:44)
Sure, yep.

**Bill Fleckenstein** (2:46)
So we've still got a massive budget deficit, which is stimulative to the economy.

**Adam Taggart** (2:51)
I was going to say stimulative, at least in the near term.

**Bill Fleckenstein** (2:54)
Yeah, well, it is until they can't do it.
And so there's that. And there's obviously been some, there's trouble in the job market, in the tech sector, the young people coming out of college in particular and all this noise around AI. So that's a negative, but the economy had a certain amount of momentum. Now, that's not to say that all the component of whatever the growth is, is real because there's an inflation component as well, right? But nominal GDP has been, I think, had a decent bit of momentum as the war started.

**Adam Taggart** (3:32)
Right. We had the tax refunds, right? So they were coming no matter what happened with the war.

**Bill Fleckenstein** (3:42)
So there's that as well.
Now, obviously, the price of oil going up, and by extension, gasoline and jet fuel and things like that, obviously is a negative for consumers at large. Some people, it hurts far more than us. I mean, people that are on a fixed budget, fixed salary, and work at the lower end of the food chain are much more impacted than you and I are, unfortunately, for them, right? So it distributes unevenly, and it does seem like that sector of the economy is, you know, people have referred to this as a K-shape economy, and that continues to be the case, I think. The low end is getting squeezed harder, and folks that have stocks are doing fine. Now, turning to the stock market and the impact there, I'm almost kind of surprised that, you know, when I look at financial Twitter, and there's a whole lot of people pontificating that I don't know who they are, I don't know what they know. I mean, there's a group of people that I know that I think are smart, and I'm sort of, I'm really kind of amazed that they have not figured out, that those variables don't matter very much, because the number one thing that does matter is Adam.