People who get rich, they keep getting
richer. And people who have less means,
well, it really feels like they're
making less every single year. And the
divide is really growing. 63% of
Americans live paycheck to paycheck.
People can't afford to pay their bills
and it needs to be fixed.
>> The global bond markets were hit by
another selloff after [music] Kevin
Wash's speech last week. If you haven't
noticed, there's been a lot of talk in
the news about a global bond market
sell-off. Yields are rising across some
of the world's largest economies, and
depending on who you listen to, this is
either another market fluctuation or a
warning of something much more serious.
The news, it gravitates toward the super
serious and slightly scary. So, what is
actually happening and how concerned
should you be? We're going to explain
the implications of this in more detail
in just a moment. But there's another
problem with the story that you probably
have observed. Stocks and corporate
profits, they remain strong. Employment
is holding up. Inflation is cooling off
a bit. And foreign money continues to
flow into American assets. Yet,
borrowing is becoming more expensive.
Consumer sentiment is near a record low.
And many households are feeling
squeezed. And it's actually at a
historic low right now, lower than
during the pandemic, the Great
Recession, and the 70s energy crisis.
And that's where things get confusing.
If the stock market is at an all-time
high and bond yields are high, why
aren't consumers like you and me
enthusiastic? How can all of these
things be true at the same time? They're
connected by something most people never
watch. The price of money and it's about
to get a lot more expensive. If you're
new to this channel, my name is Chris
and on this channel we discuss emergency
preparedness, aka prepping. Now, this is
not an economics channel in the story.
It can become technical very quickly,
but I think it's important that we
understand what's going on so we can
prepare ourselves and our homes. Now, as
a team, we've gone through extensive
research for this video, and I want to
explain the basics upfront without
turning this into some large economics
lecture. You don't need to own a bond or
understand financial markets to be
affected by what is happening. So, let's
start off by explaining a few key items
you'll need to know in this video. Let's
start with a government bond. A
government bond is basically an IOU.
Investors, they lend money to a
government and then the government
promises to repay it with interest. And
when investors sell those bonds, their
prices begin to fall. Now, the return a
new buyer receives called the yield, it
rises. And in the simplest term,
investors are demanding more interest
for their money. And that's the sell-off
that you're hearing about. And it's
happening across several major
economies. Why is this happening? Well,
inflation has been difficult to
eliminate. Rising energy prices. They're
going to add more pressure. Wars are
ongoing and governments have accumulated
enormous debts around the world and
deficits. It's not just an American
problem. They must continue borrowing
while refinancing older debt issued at
much lower interest rates. investors
they see that combination and they
demand better returns. Now if investors
are demanding higher yields does that
mean that investors are abandoning US
government debts in the form of bonds?
Not necessarily. A bond selloff does not
mean buyers have disappeared. It can
simply mean that they are demanding
better terms which will directly impact
you and me. But before I can explain the
direct impact to us, you need to
understand what is happening. We need to
answer a very fundamental question. Is
America still a safe haven for the
world's money? And I know the question
may sound like we're going on a bit of a
tangent here, but stick with me for a
few moments and I think you're going to
understand the bigger picture.
Safe haven.
For now, the evidence suggests America
remains the world's safest bet for
investors. Now, this is not because
investors blindly trust every decision
that Washington is making. It is because
the United States still offers a
combination that is difficult to find
elsewhere. The world's reserve currency,
strong property rights, the world's
strongest military, deep financial
markets, and a treasury market that's
large enough to move trillions of
dollars. Now, Europe is the closest
alternative, but it does not have one
unified government bond market on the
scale of the United States. China they
restrict the movement of money and its
currency is not fully convertible. In
Japan has an enormous debt burden of its
own. The numbers they show the
difference. In 2024 the dollar
represented 58% of disclosed global
currency reserves compared with 20% for
the euro and just 2% for China's
renimbe. The US Treasury market exceeded
28 trillion while jointly backed
European Union debt was approximately
700 billion. Now, the latest investment
data also does not show a wholesale
flight from America. In June, foreign
investors made $27 billion in net
purchases of long-term US securities.
And that includes stocks and corporate
bonds and not only government debt. Now,
within that total, foreign buyers added
a net $6.8 billion in long-term
treasuries. And that's only one month.
So, it can't settle the long-term
question, but it does clarify what is
happening right now. investors. They
have not stopped lending America money,
but they are demanding better returns to
lend it long-term. America, we can
remain the world's leading safe haven
while becoming a more expensive place to
borrow. But the real concern is not the
disappearance of buyers. It is what
happens when governments, businesses,
and households all have to pay more for
money. Investors, they have not stopped
lending America money. I'll say that
again. But they are demanding better
returns to lend it long term. In plain
English, they just want to buy US debt,
but they want to be paid more interest
for locking up their money for years. In
other words, lenders are saying to the
US government, "If you want to borrow my
money for the next 10 to 20 years,
you're going to have to pay me more for
it." What that means is America can
remain a safe place to invest while
becoming a more expensive place to
borrow. Expensive money.
Now, this is not only an American story.
This week, Japan's 10-year government
yield moved above 3% for the first time
in 30 years. Germany's comparable yield
reached its highest level since 2011.
And Britain's reached its highest level
since 2008. Different countries, they
have different problems, but investors
are demanding more to lend money for
long periods across several major
economies at once. And there are two
layers to this. The immediate layer is
energy and inflation. Renewed conflict
in the Middle East pushed oil and
European natural gas prices higher. And
if energy remains expensive,
transportation, manufacturing,
electricity, and food production, they
can all cost more. And that can keep
inflation above target and make central
banks slower to lower rates or more
willing to raise them again. And the
deeper layer has been building for
years. Governments have borrowed
enormous amounts of money when money was
cheap. and they still need to fund
current deficits. And older, low rate
debt continually matures and it has to
be replaced. And at the same time, large
technology companies are issuing debt to
finance artificial intelligence and data
center projects. Governments and
corporations are all competing for the
same pool of long-term capital. Think of
it as a crowded loan counter. If one
reliable borrower wants money, lenders,
they may accept a modest return. And if
governments and giant corporations all
arrive asking for hundreds of billions
of dollars, lenders, they can become
more selective and they can demand more
interest. And that suggests that heavy
competition for money could keep
borrowing costs elevated, making a quick
return to the extremely low rates of the
2010s harder to expect. The federal
government shows what expensive money
can do. The Congressional Budget Office
projects $1.039 039 trillion in federal
interest costs for just 2026. That
equals 3.3% of the entire economy and
nearly 19 cents of every dollar that
Washington expects to collect. Federal
debt held by the public is now slightly
larger than the country's annual
economic output. Businesses, they face
the same pressure. If financing a
factory, warehouse, delivery truck, or
expansion costs too much, the project
may be delayed and the job may never be
posted. Consumers, they face higher
rates that make homes and vehicles more
expensive, credit card debt harder to
reduce, and emergencies costlier to
finance. That's also where the economy
can look stronger from a distance than
it feels around the kitchen table. A
stock index measures public companies,
not family finances. profits. They can
rise because companies sold more, but
also because they raised prices or cut
costs. And spending can rise because
prices increased or higher income
households kept buying while others
pulled back. Your 401k may rise with the
stock market, making your net worth look
stronger on paper, but unless you are
drawing from it, that gain does not help
pay this month's mortgage, insurance,
groceries, or credit card bill. And you
could appear wealthier on paper while
having less money in your monthly
budget. Economists, they call this a
K-shaped economy. And you're probably
hearing that term quite a lot right now.
Now, I don't want to over complicate
things, but in simpler terms, people
with rising incomes and assets, they
keep moving up. And while renters,
borrowers, and household carrying debt,
they absorb more of the pressure, and
they're on the downward leg of this K.
Now, at home, that pressure comes from
both directions. Interest raises the
cost of borrowing, while inflation
reduces what each dollar buys. strong
national numbers, they can be real and
still hide a steady loss of room in your
budget. So, let's leave the national
economy behind and look at what
expensive money means for your
household, your household.
So, after everything that we just
covered, hopefully this makes sense, at
least conceptually. But, of course, the
question is, what does all that we just
explained mean for you in your own
personal life and at home? You want to
start with housing? At the September 3rd
average mortgage rate of 6.71%,
borrowing 400,000 costs nearly $900 more
each month than it would at 3%. Now, the
house is no bigger or better, and
financing it simply takes another
$10,800
a year from your household budget. And
that is money that no longer is
available for groceries, repairs,
savings, or the next emergency. And if
you already have a low fixed rate
mortgage, your payment does not change.
the pressure returns when you buy, move,
refinance, or use a home equity line.
Now, high financing costs, they can also
discourage builders from adding homes,
keeping supply tight for everyone else.
And the same pressure follows you to the
car lot. The Federal Reserve's second
quarter average for a 60-month new car
loan at commercial banks was 7.14%.
Financing $40,000 produces a payment
near $795 and almost $7,700 in interest
over 5 years before insurance,
registration, fuel, or maintenance. And
we know those costs are also going up as
well. Credit cards are even more
punishing. Accounts that were charged
interest carried an average rate of
22.15%.
A $5,000 balance held roughly unchanged
for a year would generate about $1,100
in interest. And that is more than $90
every month just to stand still. And
these rates, they do not move together
point for point. Mortgages respond more
closely to long-term markets, while
credit cards usually follow short-term
rates. And the shared result is that
financing consumes more household income
before the purchase really adds anything
to your life. And you can feel the
effects even if you never borrow. A
contractor may delay replacing equipment
or a manufacturer may shove an expansion
and that can become fewer hours, slower
hiring, a higher quote or a job that is
just never posted. The New York Federal
Reserve reported $18.8 trillion in
household debt at the end of June with
new autoloan and credit card
delinquencies remaining elevated. In
most households, they're not in default,
but the strain is already visible among
those with the least room to absorb
another payment. expensive money. It
doesn't have to cause a crash to hurt
you. It only has to leave you with fewer
choices when something changes. Pressure
audit.
The economy may keep looking strong on
paper. Even as many of us fill the space
between our paychecks and bills
shrinking, and if borrowing stays
expensive or unemployment weakens, that
remaining margin could disappear
quickly. And that is where preparedness
comes in. Prepping is not only about
storing food, water, or backup power.
It's also about building enough
financial resilience that a repair, lost
income, or a necessary purchase. It
doesn't force you into expensive debt at
the worst possible time. And I would not
overhaul my finances because one bond
yield move on one Wednesday. Instead, I
would encourage you to use this warning
to find where future economic pressure
could reach your household. Start with
four pressure points. First, list every
debt that you carry. its interest rate
and its minimum payment. Mark each rate
as fixed or variable. Then identify
which balance is costing you the most
each month. And you don't have to solve
it tonight, but just knowing this is
going to help you later to build a
strategy. You need to know where the
pressure is the greatest. Second,
calculate your financial runway. Add
your bare minimum monthly costs,
including housing, food, utilities,
insurance, transportation, medicine, and
minimum debt payments and divide the
cash that you can access without
borrowing by that number. And that tells
you approximately how many months you
could operate before you have to turn to
a credit card or expensive line of
credit. Third, look ahead 12 months.
Let's say it gets worse at the household
level for you. Which essential vehicle,
appliance, HVAC component, roof, water
heater, or backup system is most likely
to need attention? Routine maintenance
or a plan repair. It may prevent a badly
timed replacement loan. And fourth,
stress test any finance purchase that
you're considering. Would the payment
still work if insurance increase, your
income dipped, or the total cost came in
10% higher? If the plan only works when
everything goes right, that's not a
plan. it does not leave enough margin
and your income belongs in this audit
too. If your work depends on housing,
construction, vehicles, real estate, or
small business expansion, you want to
watch hours, orders, permits, and
hiring. High borrowing costs may not be
the only pressure. The United States
Canada tariff dispute could also raise
the costs of aluminum, packaging,
equipment, and vehicle parts. And if
those costs delay projects or reduce
production, they can eventually reach
your job payer hours. And those signals
are much closer to your household than a
stock index. And if you want a simple
place to start, I have linked to our
free recession proof guide below. It can
help you build more financial margin
before disruption forces you to make an
expensive decision. Giveaway. This
week's subscriber giveaway prize is a
fireproof document bag. And all you have
to do to participate in the giveaway is
just comment on the video, give it a
thumbs up, and complete the form linked
in the description section below.
Completing the form is required so we
can randomly select and contact a
winner. Information is only accessible
to our team here at City Prepping. So,
congrats to our last video giveaway
winner, Matthew Livingston, who won the
Chill Out Heat Relief Kit. We'll be
reaching out to you shortly to get that
sent to you. Before we wrap up, I always
like to share what I'm personally doing
to respond to what I'm seeing. Uh, I
recently completed one of the largest
food projects I've done for this channel
in a while, and I just released a video
a few days ago, and I would encourage
you to check it out. We provided links
in that video to some very powerful
tools to help you get started if you
want to build out a backup food supply.
And this is the reason I'm focusing on
food right now. After doing this for
years, I can tell you that having 3
weeks, 3 months, or eventually one year
of food at home, it really changes how
many problems reach your kitchen table.
And if prices jump, a paycheck comes up
short, or something disappears from the
shelf, food does not immediately become
another problem that you must solve with
a credit card. And a food supply does
not make the world's problems disappear,
but it can make many of them less urgent
inside your home. Also, if you want help
identifying financial pressure points
and building more margin, I've linked to
our recession proof guide in the
comments and description section below.
And that's going to help you do the
personal household financial audit that
I suggested in this video. Now, before
we wrap up, I want to leave you with
this. You don't need to understand every
chart, predict every market move, or
know exactly what happens next to be
prepared for what may come. In fact,
trying to do that can become its own
kind of trap. And what matters is
whether your life has enough margin to
absorb a hard month or an unexpected
repair, maybe a higher bill or a
temporary loss of income without
everything unraveling at once. And that
kind of resilience, it's built quietly.
It comes from paying down one balance,
storing a little extra food, fixing
something before it breaks, setting
aside a little cash, learning a useful
skill, or just simply becoming more
intentional about what you actually
spend. And none of these things are
dramatic, but they do matter. And that
is a tension I want you to sit with.
There are real pressures building in
this economy, and ignoring them, it
would be foolish. But panicking over
every headline would be just as
unhelpful. And you don't need fear to
motivate you. You just need a reason to
move. So pick one thing this week that
would give your household a little more
breathing room and do it. Then do
another one next week. And you don't
have to solve the future. You just need
to become a little harder to knock off
course. To see how I'm building that
margin with food, watch what you need
for a year of food. It shows you how to
build a food supply gradually and
includes a free one-year blueprint and a
free download. And to understand the
approaching US Canada tariff deadline
and how it could reach your household,
watch 11 days until Canada hits back.
That deadline is now just 4 days away.
And I'm going to link to both of the
videos on the side of the screen here in
the comments and description section
below. As always, stay safe out