Okay.

I've got to be honest, I didn't

really do this video this week.

We've had a very busy three months on the channel.

I've been working a bit too hard.

We were just getting ready, if I'm

totally honest, to wind things down and

I was hoping to take a little holiday.

But obviously, the world's gone

totally mad in the last week or so.

So, against my better judgment, we are going

to do a video on tariffs and Donald Trump.

Okay, so the first thing I want to say is,

usually, well, always, I do this video

with... these videos with no scripts.

And my philosophy basically is,

if you really, really understand a thing

really well, you don't need a script.

You can just come on, explain the thing

as clearly as possible, and that will

be the best way to educate an audience.

So before the videos, I don't write a script.

I spend most of my time thinking about and talking

about and researching the thing I'm going

to discuss in the aim of basically getting

the clearest understanding on that thing.

And I've spent last week, as have most economists

in the world, talking to people about the Trump

tariffs and the absolute madness we've been seeing

in the last week, trying to figure it out and,

basically, everybody is losing their minds.

It's really, really difficult.

It's really difficult just to get

like unbiased opinions.

Everyone is... like a lot of people, especially

outside America, really, really, really hate

Donald Trump and think he's like insane.

Some people really, really

love him and think he's a genius.

There's a lot of discussion as to whether

he's even the brains behind this.

Is there some kind of massive plan?

Is it just like a massive **** up?

And I've been fishing through this as... just

like everybody else, trying to understand it.

I'd be lying to you if I said I have

the 100% complete truth on what's happening.

But I've been thinking about it a lot.

I've been trying my best to understand it, and I think

the best thing to do, and what I'm going to try

to do today, is really slow it down, really

unwind it, and just try to explain in as

basic possible terms what I think is happening.

Where I think it's relevant,

I'll give other opinions.

And what I want to do is use this crazy thing that's

happened as an opportunity to unpack some important

basic economic concepts, which I think will help

you to understand what is happening in the world.

So before I do that, I just want to refer back to the

video that I did about 10 weeks ago when my

book came out, which was also when, basically when

Trump was inaugurated, called Truth, Lies, and Games,

where I spoke about how powerful people, and like a

really good example of this is Donald Trump, because

we could already see it in his first presidency.

They say a lot of things and they do a lot

of things that are intended to cause effect

that may not necessarily be related to what they

actually want or what they actually believe.

And it can be quite destabilising as an ordinary person

to witness that, because you're in a situation where

you have these very powerful people who have a lot of

power over you, saying things and doing things

which they very, very quickly turn back on, which it

seems that they were maybe never really serious about,

which it seems were not really what they were going to do.

And you're getting all of these

conflicting, disorientating messages.

And the first thing to say is I think it is

really phenomenally stressful for a lot of people.

And even I myself, who am, you know,

quite a rich person and I'm not likely to

be severely personally affected by anything

that's happening, I found it stressful.

The economists that I speak to

who are also mostly quite rich people,

comfortable people, have found it stressful.

So this has probably been quite stressful

for you, and some of the potential consequence

of what's happened could be very serious.

So one of the reasons why I want to kind of slow

it down and try my best to use it to do like

a really educational video is because I think

it's important to try not to panic, basically.

I know it can be, it can be difficult

when all kinds of things are going on.

But if you understand it, I

think it's less stressful.

So today, we're going to try my best

to go slowly, explain, and educate.

This is a decaf, which is

hopefully going to keep me going slow.

Okay.

So let's give a brief summary of what actually happened.

So I'm filming this on Thursday the 10th of April.

It's lucky we didn't film this yesterday.

And we're going to go out on

Sunday, so in three days time.

This is a live and moving situation, and

it's totally possible that by the time

this video comes out, everything's changed.

But at this point on Thursday, things

do seem to have finally calmed down.

Donald Trump has backtracked

on the majority of the tariffs.

Markets have calmed.

So hopefully, this will still be live

and active and relevant by the time

the ch- by the time the video comes out.

So let's talk a little bit first about

the background to this situation.

You guys will probably know that in the last week,

Trump announced like a kind of insane massive

package of tariffs, and then relatively,

well, caused an enormous market panic

and relatively quickly backtracked on it.

But let's talk about the logic behind it,

because I think there's some really interesting ideas

which are sometimes not clearly unpacked,

which can help you understand what's going on.

So the first thing you need to understand is what

a trade deficit is. Because this is a big part of

the logic, the theory underpinning the tariffs.

Okay, so trade deficits.

Really important concept in economics,

not too difficult to explain.

So say we've got two countries.

Here we've got the USA, here we've got China.

But to be honest, I can really put

anywhere in Asia, much of the world.

Now, the USA and China are both independent

economies, both doing their thing, producing

goods and services, consuming, investing,

but they're also trading with each other.

So the USA is selling goods and services to China.

From the USA's perspective, these are exports.

And China is selling goods and services to the USA.

From the USA's perspective, these are imports.

It's not a problem.

This is the way the world works.

But one problem you have here is the USA is

a rich country and wages are quite high.

If you've ever been to the USA, especially in the last

few years, you will see that the USA is expensive.

It's much more expensive than really

anywhere else in the world at the moment.

China is, it's becoming richer, but

especially if we talk about other Asian countries,

this is a much poorer country.

If you go to China or South East

Asia, prices are lower, wages are lower.

And what that means is, it's difficult for

Asian people to buy a lot of exports from

the USA because these exports are expensive.

Whereas Americans are getting richer

and richer, the dollar is quite expensive,

especially since COVID, these guys can buy a lot.

So the amount going from China to the USA is a lot more

than the amount going from the USA to China.

What you have here is a trade imbalance.

And from the USA's perspective, it is a trade deficit.

Now how is this balanced out?

How is this possible?

The answer's really quite simple, and it's

just the same as if I was buying from you

more than you were buying from me.

The way that we would balance this

out is I would give you money.

Basically, you have to give some form of wealth.

And what economists call this is the capital account.

So they will say if you have a trade imbalance, you

will have to balance out with a capital account.

But to be honest, I wouldn't

worry about this economics term.

I would say you balance this out with flows of wealth.

And the reason I want to use the term flows of wealth is

because this is a term which I use a lot on the channel.

Now, if you have been watching the channel

for a long time, you will know that I am very

worried about flows of wealth in our society.

I talk a lot about how the working class

and the middle class and the government

have lost their wealth over time to the super

rich, who have gotten richer and richer and richer.

And really, what is happening here

is in some senses a similar concept.

China is sending a lot of imports to the USA.

USA is not sending so much exports.

And as a result, what you are getting

is a flow of wealth.

And this can take the form of actual literal

assets in the USA being owned by China, or

more commonly, it's taken the form of debt.

And this is really the same here.

It's really the same.

You've seen the working class lose

their assets and go into debt.

You've seen the middle class

losing assets and going into debt.

You've seen the government losing

their assets and going into debt.

And it's the same thing here.

The USA is increasingly in debt to China

because it has this trade imbalance.

And I was actually thinking about making a

video talking about this for a long time, because

this idea that I talk about at the bottom,

of wealth flowing within society, away from

the working class, the middle class, the government,

to the super rich, is really mirrored in this

idea that economists have about trade deficits.

And it's interesting that economists are

willing to talk about and discuss wealth

flowing out of the USA, and in fact make kind of

semi-insane policies, as we've seen last week.

But they're never talking about wealth flowing

away from the working class, away from the

middle class, away from the government.

But that said, this is an important problem.

You know, if wealth is flowing out of the USA, you might

see, for example, less factories being built in the USA.

Factories instead are being built in China, in Asia.

And that might cause problems

such as low wages and that might cause

problems such as unemployment in the US.

So the first thing I want to say is

the idea behind tariffs to reduce the US

trade deficit is not necessarily a bad idea.

And it's addressing a real problem, which

is, you know, not a lot of good quality jobs in the

US, low wages in the US, especially for the poor.

And we're seeing the same problems

in the UK, seeing the same problems in

most of Europe, but not all of Europe.

So the first thing to say is

trade deficits, interesting idea.

Wealth is flowing away from the US in the same

way it's flowing away from ordinary people.

And their plan to address this is to bring tariffs in.

And tariffs, it's kind of

the obvious solution, right?

You want to get rid of some of these imports and

then you want to get rid of the flows of wealth.

That's what you're hoping to do.

You want wealth to... You want

to stop importing so much.

You want to start producing it domestically.

You want to create jobs in your country, and you

want to stop wealth flooding out of the country.

And their whole plan to do that is to raise tariffs

and use those tariffs to reduce income taxes.

And as soon as you hear that, you can see immediately,

wow, from what in politics or media we

would call a comms perspective, a communications

perspective, that is such a sexy sounding policy.

You can tax foreigners, *******

foreigners, we all hate foreigners.

Foreigners are super unpopular nowadays.

And you can use it to reduce

good old-fashioned income tax.

We all hate income tax.

And give that money back to red,

white and blue blooded real Americans.

Fantastic, sexy policy.

The problem with that is

that tariffs are a regressive tax.

And in order to understand this problem, we are

going to have to now explain regressive taxation.

Okay, so regressive taxation is a

commonly understood term in economics.

I don't think I've used this, term on the

channel before, but it's important to understand,

especially if you want to understand tariffs.

So how do we explain?

So, the first thing is, I think the best

way to explain it is to start off by

explaining what proportional taxation is.

So proportional taxation is basically the concept

which is actually getting quite popular nowadays

in some of the alt-right, the idea of a flat tax.

Which means everybody pays tax at the exact

same rate as a percentage of their income.

So let's say we had a flat tax of 20%.

If you made £10,000 income,

you would pay just £2,000 tax.

If you made a million pounds income,

you would pay £200,000 tax.

In every case, you're paying 20%.

If you are having more income, you are

paying more tax, but your tax as a percentage

of your income is staying totally the same.

So if we were to put this on a graph,

where this is your income and this is your tax rate

as a percentage of your income, it's going

to be just totally a flat line here at 20%.

Very, very simple.

Proportional taxation.

But, in general, we don't use proportional

taxation, and I think you can see the

reason why when you look back at this.

So imagine if you were making only £10,000.

£10,000 is a very low income.

If you're making £10,000, you're probably going to

struggle just to pay the bills, just to pay the rent.

So if we tax you £2,000, you're

probably not going to have that £2,000.

If your income is £10,000, you're going to

spend all of that money on basic essentials

and your disposable income will be nothing.

So it's going to be basically impossible

to tax poor people at the same rate as rich

people because poor people would literally starve.

They would become homeless.

They would not be able to pay the bills.

So we choose, generally, in Western societies,

including the US, including the UK, to

use what we call progressive taxation.

And progressive taxation is, we all know a form

of progressive taxation, which is income tax.

So income tax in the UK, in the

US, in Europe is a progressive tax.

What that means is you pay a

higher rate than what you earn.

So, I'm going to round these numbers to

make them a little bit simpler.

In the UK, up to £12,000, you pay 0%, and this kind of

makes sense because even if you're earning £12,000, that

is basically not enough to live on in this country.

So you don't have any money.

We shouldn't be taxing you.

It would be absurd.

You would starve.

So we're not paying any tax up to £12,000.

Then from £12,000 up to £50,000 you are paying 20%.

I want to make it clear because this is

a common misconception, that 20% only

applies to the amount above £12,000.

So it's not like once you go above £12,000

you're suddenly paying 20% on everything.

So that means as your income goes up, your

effective tax rate will gradually move away

from 0% towards 20% as you go from 12 to 50.

So the more you earn, the higher rate you're

paying, and it's gradually increasing.

Then on amounts of 50... Terrible handwriting here.

To 125.

I got in a lot of trouble at

school for my bad handwriting.

Then you're paying 40%, and again

you only pay 40% on above that 50.

And we have an extra rate for 125 plus which is 45%.

So what this means is because this... because

these gradually step up on only the amounts above,

you end up with a graph that looks kind of like this.

Here's your income, here is your tax rate.

It's zero until £12,000 then it starts to go up

to like 20%, then it starts to go up a bit more.

It kind of looks like this.

You have this kind of stepped graph

and it will never go above 45%.

Over time you'll get close to 45%, this kind of...

So the higher... That's extremely messy line.

But as you can see, the more income

you make, the higher your tax rate.

It's never less than zero obviously,

and it never reaches more than 45%.

This is a progressive tax rate and what this means

is that tax... the tax burden falls increasingly on

the people who can afford to pay it and you're not

charging tax to people who can't afford to pay it,

and this means that people don't die of starvation,

they don't become homeless, and it means that tax

is being paid by richer people who can afford to pay

tax, and this is why we have progressive taxation

and progressive taxation is the reason why we have

a middle class and the reason why your

kids can go to school in this country and they

can't go to school in a lot of countries in the

poor world because we have progressive taxation.

This is a good form of taxation in

the opinion of me and most economists.

So once you've got progressive taxation and proportional

taxation, there is one other form of taxation

which tariffs are, and that is regressive taxation.

So let's cover that.

Okay, so what is regressive taxation?

So in this country, we have a well-known form

of regressive taxation which is the council tax.

So council tax, for those who are not in the UK,

is basically tax you pay for living in a home which

everybody... pretty much everybody has to do.

And when it was originally introduced, the

idea was that more expensive homes paid more,

but they've kind of messed about with it over

time and it's ended up in a place where kind

of everybody pays like almost a similar amount.

That is a simplification, but for the

purpose of explaining what regressive

taxation is, let's assume that what council

tax is, is everybody pays £2,000 a year.

Everybody pays £2,000 a year.

Doesn't matter what your income is.

So you might see, "Oh, everybody pays the same.

It's fantastic.

That's like really, really fair.

Everybody pays the same." But the problem is even if

your income is £2,000 a year, you pay £2,000 a year.

And even if your income is

£2 million a year, you're paying £2,000 a year.

So the poorest people in the country are paying

100% of their income and the richest people in

the country are paying, that's going to be 0.1%.

So a regressive tax is like this.

It taxes the poor at an extremely high rate

and it taxes the rich at an extremely low rate.

So if we were to draw that as

a graph, here is your income.

Your council tax rate is... Actually, as your

income grows to zero, it becomes like

infinite so we can't... It's going to be this kind of

classic, what in maths we call a parabolic graph.

The poorer you are, the higher your tax rate.

And these are bad.

This is bad because it means that

the tax burden is falling

overwhelmingly on the poor and the very poor.

So why are tariffs a regressive tax?

The answer is... So income tax taxes you on your income.

But tariffs are a tax that taxes you on what you buy.

So actually, we have these kinds of taxes

already, which you'll be familiar with.

We have, in the UK, we have VAT

and we have, in the US, sales tax.

These are consumption taxes instead of income taxes.

Now you might think, "Well, that's not such

a big deal because rich people consume more.

Rich people spend more money, so rich people will

pay more in consumption taxes." And that is true.

The problem is something that we've spoken about a

number of times on this channel, which is that rich

people have a low marginal propensity to consume.

I don't know why I always write

in capitals on this channel.

In real life, I do use lowercase letters.

So what this means is... So if

we consider poor people... Probably shouldn't.

People who have lower income,

they don't have that much money, it's hard to

live, they spend basically everything they get.

Whereas if you consider somebody like... I've

often used Rishi Sunak as an example or Elon

Musk, somebody who has a passive income of

£20, £30 million, £50 million, £1 billion

a year, they can't spend hardly any of that.

So the bigger your income, the lower you spend

as a proportion of your income.

So if we put spending here and income here,

somebody who spent all of their income

would always be on this straight line.

Their income is exactly equal to their spending.

But in real life, the richer you get,

the less and less of your income you spend.

So these lines kind of separate.

So what this means is rich people spend

a very low percentage of their income.

Poor people spend a very high

percentage of their income.

So if we tax people based on their spending

rather than their income, then the richest people

will get taxed at the lowest rate.

So what this means is tariffs and VAT and sales tax,

taxes are all regressive taxes, which means

they fall overwhelmingly on the poor.

So if your plan is to replace income tax with

tariffs or VAT or sales tax, then you are taking

money away from the poorest people in a society

because they have the highest rate of spending and

you are giving that money to the richest people

in society because they have the highest income.

So a shift away from income tax to tariffs is like

increasing VAT, it's like increasing sales taxes.

It will hurt the poorest and the way they will see

that pain is not money being taken out of their pay

packet, which is what people are used to seeing.

They will see it in higher prices,

otherwise known as inflation.

All right.

So those are the basic concepts you need to

understand to understand what's happened.

And now let's talk about the implementation.

Okay.

So we had been expecting the US

government and the Donald Trump government to

be doing something on tariffs for some time.

And they finally came out with the actual

policy on, I believe it was Thursday last week.

They brought out this board,

maybe you flash up a picture.

You've probably all seen it.

They, they brought out this

little cardboard thing that listed the

tariffs that they were going to be implementing.

And the highest rates were overwhelmingly applied

to basically some of the poorest

countries in the entire world.

The highest rates were on places like

Cambodia and Laos in Southeast

Asia, which are very poor countries.

Places like Vietnam and places like

Lesotho, which is tiny, poor country in South Africa.

Places like Bangladesh.

And the reason why the rates were highest on

these countries is because they basically chose

to apply the highest rates to the countries

which had the biggest trade surpluses with the US.

So as we've explained it's quite normal

in a capitalist world for very rich countries

to have quite big trade deficits with very poor

countries, because poor countries cannot afford to buy

almost any American things, because America is a very

high wage economy, internationally, whereas the high

wage workers in America can afford to buy a lot from,

for example, Cambodia, which is a very poor country.

What they called these, and what

people were expecting was, they

called these reciprocal tariffs.

People were expecting Trump to target primarily,

countries which had higher tariffs on the US,

but instead, they chose to target countries which

had very high trade surpluses with the US, which meant

targeting basically some of the poorest countries

in the entire world, which is kind of insane, basically.

You know, the reason... Take Cambodia,

which is a very poor country with

phenomenally high levels of poverty, which has,

similarly to other countries like Bangladesh,

basically built up an industry of sweatshops.

You know, extremely low wage, low

working condition factories where people

often work in pretty bad conditions, make extremely

cheap clothes to export to the United States.

If you tax these countries, what you are doing

is applying a very heavy tax on the goods produced by

some of the poorest people in the world, who produce

very cheap clothes to be consumed by the poorest

people in your country, in a theoretical attempt to

move the worst jobs in the world back to your country.

It doesn't make really any sense,

and in doing that, you... If... Trump has

backed out on these tariffs now...

This would have killed people in Cambodia.

There is no question about it.

The country has basically

built up an industry based on exporting to

the US, exporting these very cheap clothes to the US.

If those factories had been forced to suddenly close

down, yeah, there would've been a lot of deaths, of

poverty, of starvation in Cambodia it would have caused,

not just Cambodia, in Laos, in Bangladesh,

It would have caused really phenomenal

humanitarian economic crises in those countries.

But even if you, even if you ignore what it would do

to the poor in some of the poorest parts of the world,

what you gain from it is driving up the costs of the

cheapest clothes in your country, which are an essential

good for the poorest people in your country, in a

theoretical attempt to bring sweatshops back to the USA.

It didn't make any sense.

And you're also targeting countries here

like Laos, like Cambodia, which are right next to China.

Laos shares a border with China.

Cambodia is very close.

Basically, you are attacking the key potential

strategic allies who are immediately next to your key

longterm political, military, economic, strategic rival

in China, in what appears to be an attempt just to drive

people both outside and inside your country, the poorest

people outside and inside your country, into poverty.

It was the... Or whatever you think of

tariffs, and I don't think tariffs are

necessarily a bad policy, the implementation was

totally insane, I think, and this started a long

discussion, and I've been having this discussion

quite a lot with people in the last week or so.

I thought that what you saw there was

low competence implementation.

And a lot of people don't like to believe that.

A lot of people like to believe that

the US government is high competence,

and I would like to believe that as well.

So some people were saying basically that I can't

think, and nobody can think of an economic rationale

for attacking Cambodia economically and for attacking

Bangladesh economically, and attacking... You know,

they even raised tariffs significantly on Taiwan and

Japan and South Korea, who again, these are, these

guys have been for a long period of time, the US's

key strategic allies against China in the region.

But at least in some of those cases, you

can say, you know, Japan does have high

value added good job manufacturing,

which you might want to move back to the US.

I couldn't really see any logic at

all in attacking Cambodia and Laos.

And I was saying to people, "I think this

shows basically low competence." And people would

say, "Well, that..." This is the argument against that

was that, "Well, actually, we know it's stupid to attack

Cambodia and Laos, but the reason they're doing that is

because if you attack," unbelievably aggressively, like

these, if these terrorists had gone in, I don't think

you can overestimate the, the, the scale of the economic

disaster it would have caused in Cambodia and Laos.

"If you attack these extremely poor and weak countries

aggressively, you will force them to make immediate

concessions, and it provides a great sort of short

term media wins for Donald Trump, which allows him

to sort of look strong." So you crush the

poorest in the world, they immediately give up,

and then that gives you leverage against China.

But then if your plan was to relocate industry back

into the US, how do you achieve that by bringing in

pretend tariffs which you're only using to score points

in the media and you're immediately going to cancel?

You know, if I am a businessman and I... I'm

thinking about building a factory and the US brings

in tariffs, which I know that they're going to cancel

within a week, I'm not going to build a factory in

that co- it doesn't... So there's th- to be honest, I

think that there was quite a lot of cope really,

which is people seeing this insane thing happen and not

wanting to believe that it comes from low competency.

It's difficult for me not to be reminded

of what happened in the Liz Truss situation.

And what this really made me think of,

and it's the next thing I want to introduce,

is basically questions about theories of change.

How do you improve the economy?

And what this reminded me of was, so I went

on a podcast with Krishnan Guru-Murthy, who

is a very well-known news presenter here in the UK,

and we discussed the things I always discuss,

which are the collapse of the economy

and the need to raise tax on the rich.

And, Krishnan Guru-Murthy asked me a question which

I get asked a lot, which is, "If you were chancellor,

what would you do?" And I get asked this question

quite a lot, and I got quite frustrated because

I've been asked it a lot and I said, "Listen,

if I was chancellor, there'd be nothing I could

do." You don't fix this just by one guy becoming

chancellor, developing a whole economic tax policy in

a room by himself without any oversight, without any

discussion, and suddenly applying it on the world.

What I'm trying to do here is not be the

guy who redesigns the global tax policy

by myself whilst making YouTube videos.

I am trying to raise awareness of the fact

that if you do not deal with growing wealth

inequality by changing the tax system, you will

see really dramatic collapses in living standards.

And what I want to do is open that conversation up and

have really an army of ordinary people behind

me, forcing the rich to have that conversation

so we can discuss the best way to fix the tax system.

But the way that I constantly get asked,

"What would you do if you were chancellor?

What would you do if you were chancellor?"

reveals to me quite an immature, quite a childish

approach a lot of people, even in the media, seem to

have towards politics and economics, which is the way

to fix the economic system is to get one guy or one

small group of people and ask them to totally rewrite

the economic rules without any broader discussion.

When I see things like what Liz Truss did a couple

of years ago and what the Trump administration

have done now, it really looks to me as if that's

what they think fixing an economy looks like.

And I want to be clear, people like Liz Truss

and people like the Trump administration,

they are correct in identifying that there

are massive problems in the economic system.

Bigger and bigger percentages of rich economies,

like the US, like Europe, like the UK, are

falling into poverty and we need change.

But both of these groups of people, Liz Truss and now

Donald Trump, seem to think that the way to fix the

economy is to lock a couple of geeks in a room

for a couple of weeks and ask them to rewrite the entire

economic system all by themselves and then to suddenly

foist some crazy, poorly implemented plan on the entire

world without any discussion and, I think it's

phenomenally immature way to do politics and economics.

I mean, God knows how many Cambodians

would have died just to make it so that

poor Americans can't afford trainers.

And I'm not saying that tariffs are a bad policy,

but when are we going to wake up to the fact that

we have serious economic problems and we need

to have a discussion about this as a society?

Why does it have to keep being crazy people with

crazy hair bringing up crazy policies that they seem

to have like, made up themselves a week earlier,

you know, in a little meeting with four people?

It drives me mad.

Okay, so what happened after Donald Trump's

mood board tried to explode Cambodia?

Financial markets went totally insane,

stock markets started to sell off really, really

aggressively, and the reason for this is obvious.

You've got companies like, Nike or, like

Apple, that build their products or... Yeah, they

build their products basically in poorer countries.

Apple builds a lot of phones in China, but Nike

and a lot of cheap clothing manufacturers, build

their clothes in Bangladesh or Cambodia or Vietnam

and suddenly the cost of an iPhone was going to,

like, nearly double in the US or the cost of

cheap clothes would be increasing by 50%, 60%.

And, you know, if you're selling cheap clothes

to poorer Americans they can't afford

to pay 50%, 60% and what would have happened is

the sales of things like iPhones, which might

still happen because the China... the China

tariffs are still on, would have collapsed.

The sales of clothing would have

collapsed and, you know, you could have

seen the bankruptcy of companies like Nike.

It's crazy to say but it is possible.

Financial markets went totally, totally insane.

They were freaking out.

Now I traded through the COVID crisis,

at home on my laptop, but I traded in

the 2008 crisis as a professional trader.

In a lot of ways, markets, to me, felt crazier last

week than they did during the beginning of COVID or the

beginning of 2008 and I think the reason for that was,

even in 2008, 2008 was really serious, you know,

we were really talking about, like, a really

serious potential global economic depression.

We knew that, at the very least, the governments

wanted to avoid a global economic depression.

But in the last week, we didn't really know that.

I don't, think any of us really

knew what the US government wanted.

It seemed at points like they

wanted to make the stock market crash.

It seemed at points like they wanted to

crash the global economy, and it was crazy.

The markets were crazy.

Stock markets collapsed.

And to be hon- you know what,

again, what you see here again is another kind of

legitimate problem recognised but addressed in a mad

way, which is I think you do, and I speak about this

a lot, I think you do want assets, like housing,

like stocks, to be cheaper for ordinary people.

I think you want wages... you want

assets to be cheaper relative to wages.

But the way to do that, the sensible

way to do that, is to change your

distribution and drive wages up over time.

I don't think anybody wants to make Nike go bankrupt.

I don't think anybody... I don't think anybody

wants to destroy the pensions of pensioners.

But last week, we didn't know for sure whether that was

what the government wanted, the US government wanted.

And the markets were freaking out.

Stock markets were collapsing.

A lot of rich people were buying.

I was buying, kind of on a reflex, to

be honest, more than anything else.

Trump seemed happy with that.

Trump seems happy with the markets collapsing.

On Monday, there was a rumor from some

random dickhead called Financial Juice... I

shouldn't say that, he might be a nice guy.

From a random guy called Financial Juice,

said that they're going to pause the tariffs.

Stock markets jumped up immediately.

The White House immediately denied it.

Stock markets jumped like up and

down like 10% in about 15 minutes.

The White House denied it, they said, "We're not

going to do any pauses." To be honest, I thought

there's no way, at the very least, you... The

attacks on Southeast Asia, and they're the poorest countries in

the world, are totally not in the interest of anyone.

I thought they had to turn back on that.

But they were adamant they were

not going to turn back on that.

And then we had, I think it was Tuesday evening,

yeah, we started to see government

bonds sell off, especially in the US.

What this means is... So this is interesting, right,

and this is something I talk about a lot, right,

so I was an interest rate trader.

In general, when the economy is very weak, you

expect central banks to cut interest rates.

So you expect the interest rates to fall, it

should make borrowing costs cheaper, it should

make borrowing costs cheaper for the government.

But what was happening in the last week was quite

interesting because if you raise tariffs,

that will increase prices significantly in the US.

So it's going to increase inflation significantly in the

US, which puts the US government in a situation of...

It puts the US Federal Reserve, the

Central Bank in the US in a situation of, "Well,

maybe we shouldn't cut interest rates because inflation

is really, really high." And then you're facing this

potential like double whammy of inflation going up...

well, triple whammy of inflation going up, you're

potentially causing a global economic depression,

and interest rates going up at the same time.

Still, the US government seem not to care, which meant

that traders were increasingly worrying that maybe they

were intentionally going to blow the economy up, maybe,

maybe they were planning not to pay the debt back.

Really, like lots of questions were being asked.

The things that they were doing seemed so crazy

that basically people were talking about maybe

they're going to confiscate other countries' gold,

maybe they're not going to pay the debt back.

A lot of the debt is owned by America to China.

Maybe they're intentionally

not going to pay the debt back.

So people started to sell US government bonds.

I don't have any US government bonds, but if

I had them, I probably would have sold them.

I wouldn't want to be owed money

by the US government now, like. Would you?

So basically, people started to sell

US government bonds, which means

the US government is in enormous amount of debt.

If that had have continued, it could have meant, if

it had gotten out of control, similarly to the Liz Truss

situation, it could have led to the relatively

short term bankruptcy of the US government, and

that would have made 2008 look like a walk in the park.

I'm laughing but this is what happened.

This is what happened last week, and

thank **** they decided to back down because

honestly this could've gone anywhere.

But then the way they back... even

the way they backed down, oh my God.

We are filming this on Thursday, Trump tweeted

on Wednesday on ******* Truth Social, "Today's

a great day to buy stocks." And then a couple

hours later, he reverses the tariffs.

Backs down on everything he did except for

the tariffs on China, which have gone up.

And obviously stock markets went through the roof.

So basically like Donald Trump is like

manipulating markets on social media.

Yeah, basically it was mad times.

Mad times for everyone.

Um, uh, Lots of people will have lost a lot of money.

Richer people like me who had the money to reach

at, will have been buying stocks throughout.

I didn't buy stocks on the back of

Trump's tweet because I didn't see it.

If I'd have seen it, I probably ******* would have!

This... The last concept which I'm

going to introduce in this video before I'm going to take

some questions from Jack, because I'm sure... I can't

cover everything because this is totally insane,

is a concept which I used to like during trading, final

concept of the video, called bias against inaction.

Which is, there's this theory, I don't know if

it's true, that in football, soccer for my American

viewers, during a penalty shootout, the statistically

best thing for a goalie to do is to stay in the middle.

Because if the penalty goes in the corner,

you can't save it anyway, but if it's near the

middle, you'll save it by staying in the middle.

But goalies very rarely stay in the middle because it

looks stupid, and basically whenever there's like a mad

crisis, traders, and I don't think just traders,

I'm talking from back in my time when I was a trader,

they feel that they have to do something because if

you... if there's a crisis and you don't do anything,

everybody thinks you're an idiot. But the truth is,

when something crazy happens, like what happened

last week, you don't know, you don't understand

in the first moment what has happened.

And it doesn't make sense to take some dramatic action

or to respond in some dramatic way when something

crazy happens and you don't know what's happened.

And whenever I was a trader and there was a big

crisis, occasionally in the initial move you lose

money and people would ask me, "What are you going to

do?" And I always said, "I'm not going to do anything

until I understand what the ****'s happening."

And I think this is a good example because

this is an ongoing situation.

Tariffs are still there on China.

Technically the tariffs on the rest of the world

are supposed to be reintroduced in 90 days, although

I strongly suspect that won't happen, because

I don't think Trump and his team had expected the

potentially cataclysmic results which they saw.

But at the end of the day, all of this mad **** show

and most financial markets are pretty much back the

way they were last week because he turned

around and canceled a lot of the things that he did.

And I think this really emphasises a lot of what

I've been saying since the beginning with Trump,

which is you need... Most of the time you're best off

not listening to what he says, because a lot of

what he says is designed to stress you out, to

panic you, and cause chaos, and to destabilise you.

Don't be panicked into action.

Stay calm, stay cool.

Have sensible investments.

Don't do anything crazy.

Be aware that tariffs are regressive tax.

Tariff's not necessarily a bad tax, but if they're

brought in without any support from the poor,

then it will impoverish the poor.

If you are an American and you are not a rich American,

you don't need to be opposed to tariffs,

but you need to make sure that they are

not being used to benefit only the richest.

I think what you are seeing here is the rich

Americans trying to squeeze out rich foreigners at the

expense of both poor Americans and poor foreigners.

Protect your interests, stand together.

Listen, the rich are protecting the rich.

They're sending out tweets on Truth Social

helping each other to manipulate markets.

Rich people bought a lot of stocks in the last week.

I bought a lot of stocks.

Trump supporters bought a lot of stocks.

They don't buy them from nowhere.

Somebody's being squeezed out.

That's probably you.

Don't panic.

Stand together.

I'm ******* knackered, but I'll do my best

to help keep you informed with what's going on.

And, before we finish, we're

going to take some questions from Jack.

You got any questions?

Well, I was just wondering what like

what's going to happen next because

is this a big knock of confidence? Yes, yes.

Sorry.

We should talk about that.

Yeah.

So what, what's going to happen next?

Even though a lot of the tariffs have been canceled,

first of all, the tariff on China is still there.

They might reach a deal on that.

Assuming they don't reach a deal on that, China's

a ******* massive country, exports a lot to the US.

It will s- You'll see certain things,

you know, iPhones, but not just iPhones,

like, China makes a lot of stuff.

You'll see those prices increase in the US.

You will.

It won't be nearly as much as what would have

happened if they'd kept the tariffs on everyone.

Certain prices will increase on the US for sure.

And as I've said, tariffs are a regressive tax.

So like for me, as a rich person, if the price of an

iPhone doubles, like I didn't even really notice that.

You know what I mean?

But it's not just iPhones.

Cheaper phones.

You know, phone is an essential.

You know, it's manufactured goods.

They make basically everything.

You know, manufactured goods, pretty much

your furniture, your fridge, your oven.

You know what I mean?

Like, how much in this room

was, was probably made in China?

The microwave, this, like,

almost everything basically.

So, like, yeah, the cost of manufactured

goods will go up in America.

I should say like it's... The position of like the

Europe or the UK is quite interesting because in

theory if the US alone does tariffs, prices in the

US go up, they import less from China, and China

has suddenly loads of goods it needs to export.

You could see prices of things go down in the

UK and Europe, which could be good in a

weird way for your average British or European.

But of course European and British governments

will have to protect... If it's the case of

these are products which will directly compete with

existing industries in the UK, then our government

will probably have to put its own tariffs on.

Because if you suddenly get tons of cheap imports,

it could see British factories shutting down.

But the truth is Britain doesn't

have that many factories anymore.

It's probably not in direct competition

with China in certain products.

So in theory, you could see things get cheaper

in the UK and you could see interest rates fall.

One thing that was really worrying, I'm almost

hesitant to mention it, was you saw suddenly

interest rates in specifically the UK really

rise and government bond rates really rise.

And of course we've seen that increase in

government borrowing costs driving austerity.

That was really ******* worrying.

A lot of people are saying, "Don't worry about it,

markets were just freaking out." But, as

a British person, I'm worried about it.

They might back down.

Listen, I'm not against tariffs,

but this is not a way to do tariffs.

This is not a way to do policy, you know.

This just feels like four or five

crazy guys in a room made this policy,

like. If we want to have... We can have a

discussion about ta- it's the same as when

I talk about taxing the rich, you know.

I'm not trying to be that crazy guy

in the room making the whole policy.

What I want is to have a societal discussion about

a problem and come to a place about fixing it.

The second thing is, who the ****

is going to build a factory in the US now?

Realistically.

Like, would you build a factory in the U- like...

It doe- like, I would be worried that they'll

******* just, like, expropriate the factory.

These guys seem crazy.

But the third thing is, and, you know, I'm not

like a defense expert, but like, what does

Japan do now? What do you do if you're Japan?

Japan, like, has been, like, basically,

like, a, like, a really unbelievably

tight US ally for, whatever, 70 years now.

80 years.

You know, the US Army's massively based in Japan,

and then the US turns round and basically, like,

seriously threatens to ******* destroy your economy.

What the **** are you going to do?

Japan, okay, I'm not telling Japan what to do.

It looks to me like they

have no option but to re-arm.

That's crazy, right?

But, you know, Japan, South Korea, I mean, Taiwan

probably has no defense if the US doesn't back it.

But like, you know, okay, so

you're telling Japan to re-arm.

You're telling South Korea to re-arm.

You're telling the whole of

Southeast Asia to ally with China.

Like, what... If you're Cambodia, what do you do?

If you're Cambodia, the consequences in Cambodia,

you know, and I know Cambodia's a small faraway

country, but that would have been unbelievable...

And not, you know, Cambodia, and Laos, Bangladesh, Vietnam.

These guys who have built economies completely

fundamentally attached to the US have no choice but

to reorient their economies to be with China now.

This is insane.

This is like you are trying to cre-... If you

tell Japan to re-arm, you tell Europe to re-arm,

you are telling the world, "I want a world war."

And at the same time, you are telling some key

strategic allies to not be on your side in that war.

Like, I, it's...

You know what,

this is a weird analogy, right?

But you know what it makes me think of?

Do you remember Fyre Festival?

Yes.

Fyre Festival, for those who don't know, is this

American festival where they had this really

sick marketing campaign with loads of models.

They were like, "We're going to have this unbelievably...

unbelievable festival on a island." The

marketing campaign was so good, they spent all

of their time working on the marketing campaign.

Nobody actually figured out what

to do with the ******* festival.

So all these people bought these tickets,

they turned up, there was no ******* festival.

It kind of feels like that because raising

tariffs to cut income tax is ******* sexy comms.

It's sexy ******* comms.

Like, that sounds great.

But you look at the policy, you're trying to...

The results of the policy are to crush the

poor in Cambodia, to crush the poor in America,

to create a world war that you're going to lose.

It's insane policy, but it's sexy comms.

And I just feel like we're turning the whole

world into Fyre Festival, which is just like,

"I don't give a **** because this guy's

only going to be president for four years.

He just wants to have sexy comms." And I hope, you

know... And, and I have these arguments all the time

saying, "I think it's incompetence." And I'm not

s-... And I just want to be clear, I don't think this

incompetence is just Trump, you know, and I don't

think it's even just the US administration.

I think all of the smart guys are *******

traders at investment banks and the

governments are run by idiots, you know.

And this is why I... This is why I'm on YouTube,

because I'm... The people who are going to get

hurt... Donald Trump's not going to get hurt.

I bet... Donald Trump made a ****

tonne of money last week, I bet you.

And not just him, his whole team, you know.

This is ordinary working Americans.

These is ordinary working Americans,

ordinary working Europeans.

And this is why I've got a YouTube

that talks to ordinary people.

So I know I just said what the consequences are.

And maybe, you know, I'm sitting here in

the immediate aftermath of this and maybe in

two, three weeks time, things look calmer.

I'll be on a ******* beach hopefully.

It's worrying.

But I think to finish, we need to

let people know... I'm going to take a bit of

time off soon because I'm ******* knackered.

I'm going to keep doing this in the long run.

We're going to provide people with the information

they need, the understanding that they need.

What we're doing here is

building and growing unbelievably quickly.

I'm not saying I'm going to ******* save the world,

but what that does show is that there is demand

in the UK, in America, in Europe, Australia, Canada.

Canadians keep messaging me, "Why you never say Canada?"

Across the world, we see the demographics.

People across the world want

this, want something different.

we're going to try building it.

But it's not just going to be me.

It's not just going to be us.

There is demand for something different,

something not insane, something not destabilising.

And it doesn't mean, you know,

that you can't reduce the trade balance.

It doesn't mean you can't

protect American working people.

But this, what is happening

now, is not protecting anyone.

It's not protecting anyone.

And the book's been number one for ten

weeks, so we'll finish on some good news.

But that's it.

I think we'll end it there.

Sorry for another stressful video.

I think we're only going to... I am *******

knackered and, the Daily Mail keeps knocking

on my mum's house and it's stressing me out.

So probably another two weeks, I'll

go on holiday, but we're still here.

Don't go mad.

Stay cool.

Educate your friends.

Send this video to your mum, to your community.

Let's build something better.

Doesn't have to be ******* mental all the time.

Good luck.