1:11:51 has actually dropped. So you mean that while there was all this terror about the bond vigilantes demanding a higher interest rate in order to lend us money, the interest rate kept going down? A lot of that was completely removed from the reality of what actually happened in the market. The market essentially said, excuse my French, but you're full of it. In fact, ever since the Ratings Agency Standard and Poor's first signaled it might downgrade U.S. debt back in the spring, interest rates have been doing anything but follow the script. Going back to April 19, when those rating threat announcements came out, as you can see,
1:12:41 the interest rate just went lower and lower and lower and lower. And so, what explains a plummeting of interest rates when everybody, almost everybody, including, I remember, the Financial Times, certainly the New York Times, was warning that the interest rate was going to go in exactly the opposite direction? So, John, help me understand. First of all, so far, I am wrong. But standards and poor still reserve the right to downgrade. Now you say they never will unless they want to do the head. So I'm willing to accept defeat. I'd like to understand a little better because I'm reading Bloomberg right now. Stocks tumble, there's a big drop on the Dow today, as two-year treasury yield drops to low.
1:13:27 So, just so I understand, the way it works is when people want, and this is what I don't understand the supply and demand part, when people really want our bonds, then the interest rates drop on those? Is that how it works? Well, it's only because the bond is a fixed interest rate for a certain dollar amount. So, the bond says it's a hundred dollar bond and say, I'm just going to throw some numbers out. A hundred dollar bond say gives off a 10% interest, which is not what it does, but I'm just going to explain it. And so, if demand for this bond goes up because people want a safe haven and it starts trading because it's like a stock, it starts trading at $110, then the interest rate, since it's still a fixed amount of $10,
1:14:10 The $10 on $110 is less. So when the thing goes to $200, then the interest rate would be effectively 5%. So as demand goes up, interest goes down on those bonds. But why is this happening? Well, they said, I didn't want to play through the whole clip, but that guy from this trader that was on PBS explained that he believes that the debt crisis in the EU, which I have a funny clip about, which is causing nothing but hand-wringing and the potential for the EU to fall apart, to collapse, and the Middle Eastern, all the activity in the Middle East which is causing dislocations. All this, you know, the kind of craziness that's going on around the world makes people very conservative
1:15:00 And so then they start putting their money in what they look around and say what is the safest thing we can invest in and they still believe it's the US Treasury. And, and... Gold. Today. Yes, and gold. Actually gold is the other one. But there's both of them. $1,656, John. You gave a sell indicator I believe around $1,000. No, I don't think so. Yeah, it was certainly twelve hundred maybe eleven. Whatever it was I think it's a now's the time but anyway No, it's good. It's gonna go to two thousand you watch I'm gonna be keeling over from wealth from my one gold coin. Hey, I gave you a gold coin Yeah, it's almost doubled in value and it certainly has
1:15:42 So I'm going to dump it soon. Hey, what's this coin I see for sale on eBay? What's that? Yeah, that was a present. You go to gold traders for these things. So anyway, so that's kind of what's going on and I think this guy's probably correct, which is by creating a bunch of craziness around the world, I think that we have a lot to do with. I think it just encourages people to invest in our bonds because they know they're going to get their money back. They're going to lose their assets. Investing in the Greek bonds, which will give you like a 10% return as opposed to the 3 or 4% you get from the US bond or 2%, I don't know what it is right now, is always a risk because if the Greeks go bankrupt, which can happen any minute, then you lose all your money and nobody wants to do that. Let me ask you another question.
1:16:29 So, because the interest rates didn't follow the script, as we heard in that clip, and of course all of this is scripted, what was the scam? Who was running the scam and who wins? Who was running the scam that would get people to think they were going to lower? I think personally it was an attempt, because I always believe that this goes on a lot in the market where, you know, you have a whole bunch of money you want to put into something. You don't want to move the market by taking it like if you have like, if it's, if it's got like the float is really low, you don't have a lot of stocks out, a lot of shares outstanding. And if you put too much money into it, you're going to push the price up. It's going to draw attention to itself. People are going to see what you're up to or whatever. So one of the ways you go about trying to sneak your money in is to try to try to push the price down through
1:17:17 through misinformation or rumors or gossip or whatever you can do. I think that the rating agencies did a saber-rattling thing to stabilize the demand in such a way that big money, because the people who invest in bonds, you don't, I don't, but people who invest in bonds might be investing for you all you know billions of dollars and they can't afford to run the price up but you know if there's downward pressure it could it will stabilize as they buy in at low right it did that actually has raised the price but it wouldn't it didn't raise the price the way it could have which would have sunk the interest rate down to next to nothing that's my guess I mean I don't know you never know who's behind half of these scams but it's a scape there's an obvious scam because it was a script