so China is selling off US Treasury bonds The nuclear option that is selling US treasuries US bonds Beijing striking back today with 125% tariff on all US goods sold in China This comes after President Trump placed 145% tariff on Chinese imports And what I learned this week is that the most important thing to look at right now is not the stock market It's the bond market and their interest rates Now right now the yields on what's called the 10-year Treasury are going up And that's because when countries like China start to sell off US debt which are their Treasury bonds it creates a ripple effect that hits everyone Which means to get new investors to buy US debt interest rates have to go up not down So I want to help explain exactly what's going on because this might actually be part of a strategy not to crash the markets but to corner China the same way we cornered the British pound in the 1990s And once you see it it's going to explain everything that's happening today and how it's going to affect your 401ks rising mortgage rates all the way to the emergency Federal Reserve rate cut So let me break this all down and explain exactly what's going on And I'm going to show you what I'm personally doing with my money So let's get into it Hi my name is Andre Jick Hope you're doing well Come for the finance and stay for the 401k hunger games I used to have a 401k Now it's a zero K So this video is about to get insanely complicated really fast but if you stick with me I promise it'll make sense And if you get through it all the way and you understand it you're a nerd and I appreciate you So here's what just happened In early April 2025 something happened to the bond market that usually never happens which was the sell-off of US treasuries By the way whenever you hear me say treasuries or bonds they're the same thing I'm using them interchangeably Now the most important one of these treasuries is the 10-year Treasury bond and its interest rate And the 10-year interest rate or yield went way up recently which is completely the opposite of what we want to happen And all signs point to China and Japan Investors believe that right now foreign countries especially Japan and China which are the two biggest holders of US debt are dumping US Treasury holdings as a way to fight back against President Trump's tariffs And this isn't just coming out of nowhere China's been slowly pulling out for years In fact by the end of 2024 they were already down to about $760 billion in US debt which is the lowest level since 2009 And all of this was started by just one move tariffs On April 9th 2025 President Donald Trump hit China with 104% tariffs on all Chinese imports China then responded immediately with a 50% retalatory tariff on all US goods That raised China's total tariff on American imports to 84% If you think that's crazy President Trump came back again and raised the US tariff to 145% And then China responded with their own 125% All of this by the way happened in just one week So it's no wonder the stock market just can't decide whether it wants to go up or down right now But here's where it gets interesting While President Trump raised the tariffs on China he actually paused or lowered on a bunch of other countries So now the pressure is on China And what did China do they didn't just raise the tariffs They filed complaints with the WTO They put restrictions on 18 American companies They restricted exports of rare earth materials And the biggest move they started selling US treasuries That last one is the one that makes investors really scared And that's because when China sells their treasuries the bond prices fall And that means our interest rates go up But first let me just explain why everyone is freaking out over the bond market and why it's so so important Now the bond market is so important that it can control interest rates It can control the central bank the stock market and even the president's actions So let me just first explain how bonds control interest rates and the cost for us to borrow money See most people think that it's the central bank the Federal Reserve that sets our interest rates But that's not completely true The Fed controls short-term rates like what's called the overnight lending rate between banks and the federal fund interest rate But long-term rates like the 10-year Treasury are controlled by the market by buyers and sellers Now if countries like China are selling bonds the Fed can't stop that overnight So what happens then to interest rates when bonds get sold off their rates adjust upward And that's because bond prices and their interest rates move in opposite directions If the price of a bond drops the yield goes up So here's an example Let's say a bond pays you $50 a year If that bond was worth $1,000 that's a 5% yield But if it drops to $900 and you still get 50 bucks a year you're now earning 5.5% And that's what we mean when we say yields are going up That means bond prices are dropping And they're dropping because someone is selling But now imagine hundreds of billions of dollars of bonds being sold at the same time by China and by other foreign governments that are watching this play out That forces US yields even higher So interest rates go up And that's exactly what we're seeing right now And this is a big deal because higher yields make it more expensive for the US to borrow money And with over $30 trillion in national debt that's not good And if interest rates get too high too fast it can break parts of the US economy and force it to delever And bond markets can also force the president to do exactly what he just did to back off the tariffs for 90 days so we don't break even more parts of the US economy That's how China is fighting back It's dumping US treasuries which forces interest rates upward and breaks part of the US economy That's why the Fed might have no choice but to drop rates And this is where I want to share with you a new theory about what's really happening It involves this guy Scott Bessant He's President Trump's Secretary of the Treasury Now in the early 1990s Scott Bessant along with George Soros broke the Bank of England And here's how they did it Back then the UK was part of what's called the ERM the exchange rate mechanism which was a European agreement to keep currency values relatively stable against the Deutsche mark There are going to be no devaluations no leaving the ERM We are absolutely committed to the ERM That is our policy It is at the center of our policy We are going to maintain Sterling's parity and we will do whatever is necessary And I hope there is no room for any doubt about that at all that the government is determined to maintain our position The UK wanted to keep the pound within a specific price range and to do that they had to defend it by raising interest rates or using foreign reserves if needed But there was a problem The UK economy was weak Inflation was high Unemployment was going up And most importantly interest rates were already way too high for their economy to handle So Scott Bessant and George Soros realized the UK couldn't keep it up They believed the pound was overvalued The UK couldn't defend itself forever and eventually they'd be forced to make a choice Either devalue the pound or leave the ERM So here's what they did They shorted the British pound That means they borrowed pounds and sold them betting that they could buy them back later for a lot cheaper Some reports say they bought over $10 billion worth of shorts But they coordinated this with other big institutions who saw the same opportunity And when Bank of England tried to defend the pound by raising interest rates and buying pounds with their reserves George Soros and Scott Bessant just kept selling into it Eventually the pressure was too much and on September 16th 1992 the UK withdrew from the ERM A unique day in London's financial markets ended with the Chancellor announcing that the pound was being suspended from the ERM and that the second of two dramatic interest rate rises during the day was after all cancelled Today has been an extremely difficult and turbulent day The pound crashed and that day became known as black Wednesday and George Soros made over a billion dollars on this trade and Scott Bessant was the key architect behind how it happened So the question is how does all of this relate to China and what's happening right now and why this all relates is because Scott Bessant is recreating a situation where a country is forced to make one of two very hard decisions China is forced to choose between weakening their currency or defending the yuan Now if China weakens the yuan that would be good because it would make exports cheaper and help offset the impact of President Trump's tariffs but it could also trigger a panic inside of China because that would create inflation and investors might rush to move their money out of the country It could make borrowing a lot more expensive and it could even destabilize China's entire financial system It's called a flight of capital which is money leaving that country and being invested into other foreign assets like gold Bitcoin and things like that That's a very hard decision to make Or there's option number two which is what China is choosing to do instead right now and that is to keep the yuan strong and to defend the value of their currency by selling their US dollar reserves to buy up the yuan But to get to those dollars they have to sell US treasury bonds And that's exactly what we're seeing right now So from the outside it looks like China is retaliating against the US But they're also doing it to keep their own system from falling apart because they have to The real question is how long can China sustain defending its currency before they run out of dollars to support themselves and China is looking at the US and thinking the exact same thing How long can the US allow their bond market to be so high and to have this high interest rate before their own economy unwinds goes into a recession and they have to refinance $9 trillion worth of debt in 2025 at this super high interest rate That's why there's a capital flight in the US as well Money leaving the US stock market because investors are saying "We're just going to wait and see how this all plays out." Which means we're full circle We're right back to the bond market That's why yields are spiking mortgage rates are going up and why everyone is panicking about the debt again It's a race against time for both countries And in that sense it's not helping anyone So if this is really Scott Besson's strategy he's trying to engineer a situation where China is under so much pressure every move they make just creates more problems with the goal that both countries come together to negotiate something more favorable for both of them So the next big question is what happens if China keeps selling US treasuries and a few things could happen and none of them are really good First US interest rates could go up making mortgages credit cards and of course car loans a lot more expensive So the Federal Reserve might have to step in and start buying US treasuries to stabilize the bond market It's basically quantitative easing all over again QE 2.0 And we've seen what happens when the Fed prints money Any day now we could see the Fed step in to do this But the worst case scenario is a full-blown financial decoupling where the US and China stop trusting each other's money completely And that's how you get two separate economic systems or two world reserve currencies Now we're not there yet but every move we make from here on out matters a lot And the good news is that no one knows exactly how this ends not even the people that are in charge We are just making it up at this point But here's what I do know and here's what I'm doing with my money and how I'm investing Right now I'm staying invested And as crazy as this gets I'll keep doing the only thing I know how to do which is to dollar cost average into the stock market and keep buying VTI Vanguard's ETF which is what I have been doing I'll keep dollar cost averaging into Bitcoin And on weeks like the one we just had I'll buy a little bit of extra which is what I just did at a discount Then I'm immediately moving my Bitcoin out of the exchanges and onto cold storage And if you want a step-by-step guide on how to do that yourself I have a 4hour training guide that shows you how to do that You can use coupon code Andre 40 to get an additional 40% off And I'll keep trying to understand what the heck is going on along the way and sharing it with you Because even though these videos are trying to understand the bigger picture here I would never act on any of this I'm never going to try to time the market or sell my stocks and wait for it to go back up The point of all of this is to get the knowledge because the knowledge is that mental power that will help you stay invested in the markets especially when things get crazy But I'd love to hear your thoughts Let me know down below I hope you have a wonderful rest of your day Smash the like button Subscribe if you haven't already I'd love to see you back here next week I'll see you soon Bye-bye