The Greatest Wealth Transfer Is Here (How To Profit)

Summary

The video discusses the current wealth transfer era and strategies to 10x one's net worth in the next decade amidst high inflation. It delves into the 2008 financial crisis, the role of the Federal Reserve, and the impact of quantitative easing on asset prices. The speaker shares insights on diversifying portfolios with inflation-hedging assets like gold, real estate, stocks, and cryptocurrencies to protect and grow wealth.

Takeaways

• 🌐 We are in a period of significant wealth transfer, and individual reactions to this will determine financial security or struggle in the future.
• 🚀 There is a potential to multiply wealth significantly over the next decade by positioning well in the face of high inflation.
• 📚 The speaker is sharing insights based on extensive research, reading, and discussions with knowledgeable individuals, not just trying to sell something.
• 🏦 The 2008 financial crisis was a turning point, with Alan Greenspan's policies leading to risky bank behavior and the eventual collapse of major financial institutions.
• 📉 The crisis led to a massive intervention by the Federal Reserve, which printed money and bailed out banks, setting a precedent for future actions.
• 💰 The Federal Reserve's balance sheet expanded dramatically post-2008, leading to a rise in asset prices but not traditional consumer price inflation.
• 📈 The stock market has been propped up by quantitative easing, with the S&P 500's rise closely tied to the Fed's balance sheet growth.
• 🏘️ Real estate and commodities have also been influenced by the financial economy's influx of money, with real estate seeing support from mortgage-backed securities purchases.
• 💡 The speaker emphasizes the importance of diversification and investing in assets that can act as inflation hedges, such as gold, real estate, and certain stocks.
• 🔑 The key to wealth multiplication in the next decade is understanding and leveraging the inflationary environment, with a focus on assets that historically perform well during inflationary periods.

Q & A

What is the main thesis of the video regarding wealth and inflation?

The video suggests that we are in a period of significant wealth transfer due to inflation, and how individuals react to this will determine their financial security in the future. It proposes strategies to potentially increase one's wealth by leveraging high inflation.

What role did Alan Greenspan play in the early 2000s financial landscape?

Alan Greenspan, as the chairman of the Federal Reserve in the early 2000s, lowered interest rates and stimulated credit growth to deal with the fallout of the tech bubble bursting. This led to an explosion in over-the-counter derivatives and excessive risk-taking by banks and financial institutions.

How did the 2008 financial crisis change the monetary system?

The 2008 financial crisis led to a significant change in the monetary system, with the Federal Reserve stepping in to save failing banks and insurance giants like AIG. This marked a shift towards more aggressive monetary policies, including quantitative easing and money printing.

What is the difference between the real economy and the financial economy?

The real economy refers to the tangible goods, products, and services that people consume daily. The financial economy, on the other hand, involves assets like stocks, bonds, private equity, and commodities. The video suggests that the money printed by the Fed primarily flowed into the financial economy, causing asset inflation rather than traditional inflation.

Why did the Federal Reserve's balance sheet increase dramatically after the 2008 crisis?

The Federal Reserve's balance sheet increased dramatically as a response to the 2008 financial crisis. They engaged in massive money printing or quantitative easing to stabilize the markets and prevent further collapse, which led to a significant increase in their balance sheet from $800 billion to $2.2 trillion.

What is the 'debt paradox' mentioned in the video?

The 'debt paradox' refers to a situation where high levels of debt to GDP make it difficult for central banks to effectively control inflation through interest rate adjustments. Raising rates increases government spending on interest, while lowering rates can lead to more inflation, creating a feedback loop that exacerbates the problem.

How did the COVID-19 pandemic impact the U.S. economy and the Federal Reserve's actions?

The COVID-19 pandemic led to a significant economic downturn, prompting the Federal Reserve to embark on its largest quantitative easing program yet. This, combined with increased government spending, led to a surge in the money supply and a rise in inflation.

What is the 'Buffett Indicator' and what does it suggest about the current stock market?

The 'Buffett Indicator' is a measure of the total market capitalization of all publicly traded stocks divided by GDP. It is used to assess whether stocks are overvalued. The video suggests that the current ratio indicates that stocks are significantly overvalued, which could be a sign of asset price inflation.

What are some strategies suggested in the video for protecting and growing wealth in an inflationary environment?

The video suggests diversifying one's portfolio with uncorrelated assets and owning assets that increase in value due to inflation, such as gold, real estate, stocks (especially in sectors like energy), and cryptocurrencies. It emphasizes the importance of rebalancing the portfolio regularly.

What is the potential impact of the Federal Reserve's actions on the next decade or two, according to the video?

The video predicts that the next decade or two will see significant generational wealth transfer, driven by inflation and the Federal Reserve's monetary policies. It suggests that being on the right side of this equation, through strategic investment in inflation-hedge assets, could lead to substantial wealth growth.

Outlines

00:00

💰 The Wealth Transfer and Inflation Strategy

The speaker introduces the concept of a significant wealth transfer happening in the current era, driven by high inflation. They emphasize that the response to this economic climate will determine financial security in the future. The speaker outlines a plan to increase wealth by leveraging inflation, promising to delve into the monetary system's history and current state, and how these factors will shape future wealth creation. They clarify that they are not predicting market crashes or engaging in fear-mongering, but rather sharing insights based on extensive research and discussions with experts.

05:01

📈 The Impact of 2008 Financial Crisis on Monetary Policy

This paragraph discusses the aftermath of the 2008 financial crisis, focusing on the role of Alan Greenspan and the Federal Reserve. It highlights how easy monetary policy and the Commodities Futures Modernization Act led to excessive risk-taking by banks and financial institutions. The crisis unfolded as mortgages defaulted, derivatives lost value, and banks faced liquidity issues. The Federal Reserve's intervention, such as backing JP Morgan's purchase of Bear Stearns and bailing out AIG, is noted. The speaker also mentions the collapse of Lehman Brothers and its systemic impact, emphasizing the importance of these events in understanding the current monetary system.

10:02

💵 The Shift to a Financial Economy Driven by Money Printing

The speaker explains how the Federal Reserve's response to the 2008 crisis, which included massive money printing, changed the economic landscape. The newly printed money did not cause traditional inflation because it primarily flowed into the financial economy rather than the real economy. This led to asset inflation, with stocks, bonds, and commodities seeing significant increases in value. The speaker also discusses the concept of quantitative easing and how it has been used to prop up asset prices, creating a dependency on monetary easing that has become problematic.

15:03

🏦 The Fragility of the Stock Market and Asset Inflation

This paragraph delves into the fragility of the stock market, highlighting how the rally over the past years has been largely an illusion, driven by new money flowing into the financial system rather than real economic growth. The speaker points out the correlation between the Federal Reserve's balance sheet and the S&P 500, suggesting that the market's rise is heavily dependent on quantitative easing. They also discuss the overvaluation of stocks and the concentration of market gains in a few high-flying tech stocks, which can skew the overall market performance.

20:06

🌐 Global Economic Interdependence and the Debt Crisis

The speaker discusses the global economic interdependence and the challenges of managing debt. They explain how the Federal Reserve's actions, such as raising interest rates, can backfire when debt levels are high, leading to a debt paradox. The paragraph also covers the Federal Reserve's recent aggressive tightening cycle and its impact on the debt crisis. The speaker warns that the current monetary policies could lead to exponential debt growth and the need for the Federal Reserve to monetize the debt, potentially leading to more inflation.

25:07

💼 The Role of Government Spending and Inflation

This paragraph explores the relationship between government spending and inflation. The speaker explains how quantitative easing combined with government spending can lead to inflation in the real economy. They discuss the impact of COVID-19 on the economy, noting the significant increase in the money supply and the subsequent rise in inflation. The speaker also highlights the challenges of absorbing the massive amount of debt issuance and the potential need for the Federal Reserve to create money to prevent a default.

30:08

🌳 Diversification and Inflation Hedging Strategies

The speaker provides investment advice, emphasizing the importance of diversification and owning assets that increase in value due to inflation. They discuss various asset classes, including gold, real estate, and stocks, and their potential as inflation hedges. The speaker also mentions cryptocurrencies as a high-risk, high-reward investment. They suggest a diversified portfolio with uncorrelated assets and a focus on inflation hedging assets to protect and grow wealth in the face of inflation.

35:08

🚀 Portfolio Simulations for Wealth Growth

The speaker presents simulations of different investment portfolios to demonstrate how wealth can grow over time, especially when including inflation hedging assets. They discuss various portfolio compositions, ranging from conservative to aggressive, and their potential outcomes. The speaker advocates for a balanced approach that includes real estate, business investments, and speculative assets like cryptocurrencies, aiming for a 10x return on investment over 20 years, adjusted for inflation.

40:09

🌐 Final Thoughts and Additional Resources

In the concluding paragraph, the speaker offers final thoughts and resources for further learning. They mention a documentary on America's potential collapse and a platform for learning about dropshipping as a way to start an online business. The speaker encourages viewers to diversify their investments, be aware of inflation, and take advantage of opportunities in the market.

Keywords

💡Wealth Transfer

Wealth transfer refers to the redistribution of financial assets and resources, often from one generation to another or from one economic class to another. In the context of the video, it suggests that the current economic climate is creating opportunities for significant shifts in wealth, either through savvy investment or by default due to economic changes. The video emphasizes that how individuals react to these shifts will determine their financial future.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The video discusses how inflation can erode the value of money and assets, and how strategic investment can protect or even increase wealth during times of high inflation. It is a central theme as the speaker plans to leverage high inflation to potentially increase their wealth.

💡Monetary System

The monetary system refers to the structure within which a currency is issued, managed, and used, typically by a central bank. The video delves into the history and changes in the monetary system, particularly in the United States, to explain how past decisions have led to the current economic situation. Understanding the monetary system is crucial for making informed financial decisions.

💡Quantitative Easing (QE)

Quantitative easing is a monetary policy in which a central bank creates new money and uses it to buy government bonds or other financial assets to stimulate the economy. The video explains how QE has been used historically and its impact on asset prices and inflation. It is a key concept as it illustrates the mechanisms through which central banks influence the economy.

💡Federal Reserve

The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It plays a critical role in setting monetary policy, including interest rates and managing the money supply. The video discusses the Fed's actions, such as lowering interest rates and implementing QE, and their effects on the economy and financial markets.

💡Asset Bubble

An asset bubble refers to an economic cycle characterized by rapid escalation in the prices of assets that exceeds their intrinsic value, often followed by a contraction. The video touches on the concept of asset bubbles, particularly in the housing market, and how they can lead to financial crises, as seen in the 2008 financial crisis.

💡Debt Paradox

The debt paradox is a situation where high levels of debt make it counterproductive for a central bank to raise interest rates to combat inflation, as the increased cost of servicing the debt can exacerbate economic problems. The video uses this concept to explain the dilemma faced by central banks when managing inflation and debt simultaneously.

💡Inflation Hedge

An inflation hedge is an investment made to protect against the erosion of purchasing power due to inflation. The video discusses various assets that can serve as inflation hedges, such as gold, real estate, and certain stocks, which can increase in value as inflation rises, thus preserving wealth.

💡Diversification

Diversification is a risk management strategy that involves spreading investments across various financial instruments, industries, and other categories to reduce the impact of any single investment's poor performance on the overall portfolio. The video emphasizes the importance of diversification in protecting and growing wealth, particularly in an unpredictable economic climate.

💡Speculation

Speculation refers to investing in assets with the hope of making a profit from short-term price fluctuations, rather than from the long-term value of the asset. The video mentions speculation as a high-risk but potentially high-reward strategy, particularly in the context of cryptocurrencies and other volatile assets.

💡Real Economy vs. Financial Economy

The real economy consists of the production and consumption of goods and services, while the financial economy involves the trading of financial assets. The video explains how money printing can affect these two economies differently, with the financial economy often seeing asset price inflation while the real economy may not immediately reflect this in consumer prices.

Highlights

We are experiencing the greatest wealth transfer in human history, which will determine financial security or struggle.

Positioning well during high inflation could potentially multiply one's portfolio or net worth by 10 times over the next decade.

The speaker is not predicting market crashes or promoting fear-mongering, but sharing insights based on extensive research.

The 2008 financial crisis was a pivotal moment that changed our monetary system, affecting wealth creation.

Alan Greenspan's policies and the Commodities Features Monetization Act led to explosive growth in over-the-counter derivatives.

Banks and financial institutions took on massive risks with credit default swaps, mortgage-backed securities, and collateralized debt obligations.

The 2008 crisis saw a significant shift in the Federal Reserve's role, with interventions like the Maiden Lane LLC to stabilize the market.

The collapse of Lehman Brothers in 2008 was a turning point, as it was not bailed out, causing systemic panic.

The Federal Reserve's balance sheet expanded from $800 billion to $2.2 trillion in response to the 2008 crisis, slowing market declines.

Despite massive money printing, inflation remained stable due to the money flowing into the financial economy rather than the real economy.

The real economy's money supply, measured by M2, did not see a corresponding increase to the Federal Reserve's asset growth, indicating a divergence.

The S&P 500's rise has been closely tied to the Federal Reserve's balance sheet, suggesting an illusion of growth driven by money printing.

The market has become dependent on monetary easing, with asset prices inflated by new money flowing into the financial system.

The recent divergence in asset prices and inflation is due to new ways central banks add liquidity without showing up on their balance sheets.

The Federal Reserve's actions have led to a debt crisis, as higher interest rates increase government spending and debt.

The debt paradox suggests that high debt levels make it difficult for the Federal Reserve to effectively control inflation through interest rates.

The Federal Reserve's current path involves creating money to avoid a government default, leading to a generational wealth transfer.

Diversification with uncorrelated assets and owning inflation-hedging assets are key strategies for wealth protection and growth.

Gold, land, and real estate are suggested as low-risk assets that have historically served as effective inflation hedges.

Equities and cryptocurrencies are identified as higher-risk assets that can offer significant returns during inflationary periods.

A diversified portfolio simulation shows the potential for a 10x return over 20 years, adjusting for inflation.

Transcripts

we are living in the greatest wealth

transfer in the history of mankind and

how you react to this will determine

whether or not you end up financially

secure in the future or if you are going

to be struggling to survive however if

you do take advantage and position

yourself well you very well could 10x

your entire portfolio or net worth over

the next 10 years and this is my plan to

10x my wealth through high inflation

over the next 10 years now the changes

that are coming that I'm going to

describe to you in this video are going

to shock you we are going to take a deep

dive into our current monetary system

and we are going to understand what has

happened in the past to get us to where

we are today and we are going to

understand and illustrate the new ways

that the riches of the future are going

to be made today now before I start

getting into the history lesson I'm just

going to say I'm not calling for any

sort of market crash stock market crash

real estate crash or anything of that

sort and I'm not going to get you

emotionally riled up and fear-monger you

and then try to sell you something

expensive at the end of this video I

have simply been very very interested in

this topic for the last 12 months

because I myself personally have a

multi-million dollar portfolio that I'm

not only just trying to grow but I'm

also trying to protect it from

inflation's erosion so what I'm doing

here is I'm just giving you my insights

my thoughts and my beliefs based on all

of the research I've done on the

internet all of the books I've read and

all of the people that I've talked to

including my friends that are much

smarter than I am now I'm going to warn

you this isn't going to be like a a very

basic video that's extremely easy to

follow so if you have a short attention

span I would highly recommend you save

this video and watch it later now in

order to explain to you guys why I think

we'll be able to 10x our entire net

worth over the next 10 years I have to

give you a brief history lesson on some

of the things that happened in our

monetary system that changed things

[Music]

forever 2008 Alan Greenspan was the

chairman of the Federal Reserve in the

early 2000s which is the central bank

responsible for setting monetary policy

in the US leading up to the crisis

Greenspan had lowered interest rates and

stimulated credit growth to deal with

the Fallout of the tech bubble bursting

the easy monetary policy combined with a

new law called the Commodities features

monetization act meant that

over-the-counter derivative growth

exploded this meant that Banks and

financial institutions were gambling

excessively on the performance of

different Securities now I know that may

sound a little bit complicated but

basically that just meant that Banks and

financial institutions were taking on

massive risk this included credit

default swaps mortgage back Securities

and collateralized debt obligations now

all of these contracts meant that

counterparty exposure exploded but this

was by Regulators unseen due to the

Shady reporting requirements now as all

of this continued lending standards

began to decline to Grant more mortgages

to lowincome and subprime customers more

and more Banks began began to gamble

with each other on the direction of the

housing market now this didn't last

forever obviously and the unwinding

began when the underlying mortgages

began to default meaning that the people

that owned the mortgages could not make

their payments anymore the derivatives

written on these Securities began to

collapse in value and slowly Bank after

Bank blew up be Sterns got into a cash

crunch on March 12th 2008 and their CEO

went live on television talking about

the firm's stability 4 days later the

Federal Reserve backed JP Morgan to

purchase bear for $2 a share with the

FED absorbing the toxic Assets in an LLC

they spun up called Maiden Lane the FED

lent $28 billion against the Assets in

Maiden Lane to help finalize the sale a

few months later AIG the insurance giant

started defaulting on massive amounts of

credit default swaps it had written on

mortgage back Securities these contracts

were essentially Insurance agreements to

cover Bank losses in case the mortgages

were not paid and once the homeowners

began fail failing to make payments it

meant that AIG incurred $25 billion in

losses so the fed and the treasury

injected 85 billion and then eventually

$142 billion to save this failing Giant

and this trend of the FED stepping in to

save the day is a very very important

key that you want to make a mental note

of here next up on the list was the

Investment Bank Leman Brothers Leman was

one of the first Wall Street firms to

get into mortgage origination and had

even bought a subprime lender called BN

C mortgage it wrapped up these mortgages

into Securities and sold them to other

Prime banks in 2008 losses began piling

up and their Hedges proved to be

ineffective due to volatility by

September they were on the brink and the

only buyers bar Clays and Bank of

America fell through they declared

chapter 11 bankruptcy on September 15th

crucially this caused panic because the

F had not stepped in to save this

systemically important bank now I know

this may sound a little bit complicated

but what happened in 2008 was very very

important to understand because that is

when things started to change in our

monetary system it's because of these

changes that makes it almost Crystal

Clear why we are going to be able to 10x

our entire net worth over the next 10 to

20 years now after the collapse of Leman

markets entered freef fall the prices of

mortgage back Securities stocks and

bonds all collapsed as a massive flight

to safety developed everything was sold

in a desperate bid to raise cash Fortune

500 firm like GE Ford and McDonald's

panicked about payroll since they used

the short-term debt markets to get cash

for employee paychecks and the markets

were frozen in fact according to New

York fed president Timothy gner we were

a few days away from the ATMs not

working in the depths of the crisis the

fed and the treasury worked together to

launch new programs to save the failing

system the treasury launched tarp TP

which aimed to purchase huge amounts of

toxic assets from the banking system it

dispersed over $443 billion to stabilize

the markets however this paled in

comparison to the massive wave of money

printing or money creation that was done

by the Federal Reserve now prior to the

crisis the Federal Reserve had $800

billion on their balance sheet but as

Bank after Bank began to fail and fed

liquidity injections began to ramp up

their balance sheet went from 800

billion to $2.2 trillion markets which

were in freef Fall slow their Decline

and began to bottom March 2009 slowly

the cracks in the system were papered

over and stocks began a slow and steady

Ascent hundreds of banks failed because

they were too underwater to be bailed

out and FDIC came in and put them into

receivership before winding them down

the markets had seen the largest burst

of money printing since World War II and

many were terrified of the consequences

many economists particularly those with

a Libertarian bent such as Peter sh

immedi mediately decried this Reckless

Behavior and predicted hyperinflation as

early as 2011 from August 2007 to August

2011 Gold ripped from 660 to a record

$1,840 per ounce and silver from $13 to

$41 per ounce and this was all because

of the fear of inflation around the

corner now take a mental note of that

because that is also an important part

of this video the fed's balance sheet

exploded to 4.4 trillion by 2016 as

program after program shoved more and

more money into the banking system

however the inflation that many

economists feared never came now despite

the massive stimulus programs and bank

bailouts the CPI which is the Consumer

Price Index remained relatively steady

around 2% for the next decade so how is

that possible how can they print

trillions in trillions of dollars but

inflation or CPI stays relatively stable

I mean how could that make sense just a

few years ago they printed trillions of

dollars and we saw inflation rise up to

9% which is what they report but

inflation was definitely here and it's

still here so why didn't it happen last

time well in reality there are two

economies there's the real economy and

the financial economy the tital wave of

new money that the FED printed did not

cause inflation in the traditional sense

because the money did not flow into the

real economy The Goods the products the

services all of the things that you and

I consume on a daily basis the money

instead float into the other economy the

financial economy this is going to be

your stocks your bonds private equity

and commodities so in reality inflation

did happen but a majority of it was not

in goods and services it was in assets

when the FED does QE or quantitative

easing or money printing or money

creation whatever you want to call it it

is essentially creating Bank Reserves

this is essentially cash for financial

institution and allows them to trade and

transact with each other easily by

printing more Bank Reserves the Fed was

putting trillions of dollars in the

hands of the banks who turned around and

either lent this new money or invested

it soon after this the S&P 500 began its

biggest bull market in history the FED

slammed interest rates down to zero

helping to boost asset prices as

borrowing to speculate in the stock

market now became very cheap the Fed was

also trying to manipulate the real

economy with low interest rates

stimulating credit creation and thus in

theory improving consumer spending

however this creates a black hole of

debt as interest rates plummeted every

single sector of the economy began to

borrow heavily student loan debt

mortgages auto loans credit cards and

even the national debt of the government

began to rise quickly something had

changed permanently since 2008 although

economic growth

stagnated over the next decade the

markets continued to grind higher week

after week with each QE program each new

liquidity injection spy Rose upwards

despite the economy going further into

debt and growth not keeping up now

shockingly if you divide the S&P 500 by

the Federal Reserve balance sheet that

chart has been flat since the great

financial crisis the entire rally that

we've experienced for the last 16 years

has been somewhat of an illusion it is

simply the result of a vast amount of

new money flowing into the financial

system now this isn't to say that there

has been no growth in some sections of

the economy just that the long running

bull market is heavily due to the

quantitative easing or money creation

that has been going on and you can see

this a little bit more clearly if you

put the global liquidity chart on top of

the S&P 500 chart these charts are

almost the same and they certainly

behave in the same way now the recent

Divergence is due to new ways that the

central banks have found to add

liquidity but these additions don't show

up on their balance sheets so it's hard

to track the truth is is that the

markets have become very very dependent

on monetary easing addicted to the

heroin of quantitative easing and low

interest rates Banks were bidding up the

price of equities every single day the

massive wave of money that the FED

created was trapped in the financial

economy pushing the prices of everything

higher the S&P 500 we can see here has

increasingly run ahead of real economic

growth this process began in 2008 and

was occurring during the 2010s but this

process accelerated even more after Co

another fun chart to look at is this one

where you have the Dow Jones in US

Dollars on top of the Dow Jones in grams

of gold over time which is very commonly

an inflation hedge if you remember from

the beginning of this video If if you

look at the price of the Dow Jones in

grams of gold over time it looks flat

like it looks like it's been in the

exact same spot for the last two decades

the market overall has become fragile

and the Magnificent 7 which are those

high-flying tech stocks like Facebook

Google Amazon are an increasing share of

the S&P 500 Index and their

outperformance has been pulling the

market higher now they make up almost a

third of the index which has 500 stocks

in total this can increase with time as

the S&P is market cap weighted so these

few equities alone can pull up the index

by themselves we can further see this

overvaluation of stocks via something

called the buffet indicator named after

Warren Buffett this tracks the market

cap of all equities divided by real GDP

or gross domestic product as you can see

the average for the last 50 years has

been 95% and whenever we go above this

ratio stocks began to get overvalued in

2007 we were at 102% but now we have run

up to shocking

185% and I want to reiterate this again

because I'm not saying just because

things are at all-time highs like stocks

and homes and whatever else and because

they're currently overvalued by some

indicators that they're going to crash

I'm rather trying to point out the

inflation in these assets that we are

experiencing that we are seeing and this

very well may not come down unless the

FED reduces the amount of money in

circulation or unless the system breaks

this whole stock market rally has served

to enrich the wealthy people of the

world and this is asset price inflation

this is another major key that you need

to understand if you want to get on the

right side of inflation and 10x your

portfolio in the next 10 years or at

least protect yourself from it eroding

away this structural shift since 2008

meant that equities no longer followed

fundamental cycles of growth and

contraction instead now the correlation

between Global central bank balance

sheets is almost one meaning every new

cash infusion the markets Rise by the

same amount now let's shift a little bit

and talk about the real economy the real

economy's money supply is measured by

something called M2 this include

deposits at all of the banks and the

cash in the money market accounts

despite the massive QE programs since

2008 the money largely did not flow into

the real economy and you can see that

here in this graph put together by

Peruvian bull as you can see the first

time there was a massive increase in the

fed's asset price side but no

corresponding increase in M2 same as the

second time but no fiscal deficits so

only Bank lending grows and then the

third time which was the money printing

that was due to co which was bigger than

all of them you saw a blip and a larger

increase than ever before which is why

we saw inflation in the real economy

High higher than it was since then but a

lot of that flowed into assets this time

as well and even though I said this was

a little blip it was a 42% increase in

the broad money this chart shows money

flowing into the financial economy until

the third QE wave which had a much

bigger impact on M2 and thus CPI more

money chasing the same amount of goods

or assets means prices go up there are

two main ways in which the Bank Reserves

can make their way into the real economy

First Banks can lend money to Consumers

to spend this can be a mortgage for a

house a car loan or simply personal

credit this type of growth is slow and

steady and this is exactly what accounts

for the gradual growth that you see in

the M2 graph the other way that Bank

Reserves can travel from the financial

to the real economy is through

government deficits whenever the US

Treasury sells a bond it receives money

from a bank called a primary dealer and

then it can turn around and spend this

money on Healthcare Wars infrastructure

or social programs this means that the

money now moves from the financial

economy into the real economy

stimulating M2 money supply growth and

thus inflation so the real formula for

inflation is QE plus government spending

equals inflation in the aftermath of

covid the FED embarked on its largest QE

program yet as stocks and bonds

collapsed at the same time the

government ramped up spending to fund

vaccines send stimulus checks and pay

for unemployment benefits

the combination of these two meant that

one new money was being printed by the

Federal Reserve and two that money was

being moved into the real economy by way

of deficit spending M2 money supply

exploded by 6.2 trillion or 40%

inflation which had remained subdued for

over a decade now began ripping higher

throughout 2021 and 2022 as the amount

of money circulating in the real economy

Rose logically prices did as well of

course supply chain issues can also be

blamed for some of this but inflation

stayed well elevated even after the

lockdown subsided inflation Hedges

soared upwards in August of 2020 gold

skyrocketed to over $2,000 an ounce and

a year later the crypto bull market

started as well Bitcoin ran up all the

way to

$69,000 by November of 20121 now to cope

and deal with this inflation the FED had

to respond so in March of 2022 they

began their most aggressive tightening

cycle ever starting from zero they hiked

interest rates to 5.3% in just a year

and a half however this time was a

little bit different because this

created an entirely new crisis this

created a debt crisis and if you're

wondering how you're going to 10x your

money and protect yourself from

inflation we are about to get there and

I'm about to show you exactly what you

need to do but understanding this this

is extremely important and we're almost

there you see leading up to this the

government had been borrowing heavily

for years the debt was at 23 trillion

and Rising steadily presidents from both

parties Democrat and Republican had been

running deficits to fund Wars social

programs and subsidies and politicians

as they usually do kicked the can down

the road don't expect anything else from

them after Co hit the national debt

soared due to new stimulus programs that

were created to offset the Damage Done

by the lockdowns as the FED hiked this

created a massive spike in interest

expense as both the total level and the

rate paid on the debt Rose upwards in

2023 for the first time ever we paid

over $1 trillion alone on the national

debt now traditionally and it has

happened in the past the Federal Reserve

can raise interest rates to deal with

inflation effectively this worked in

1980 under fed chairman Paul vulker

because total debt to GDP was low and

thus rates could be hiked to an eye

watering 18% however this begins to

backfire when debt to GDP is too high

this is called the debt Paradox and once

debt levels get too high anything that

the FED does just makes it worse if they

lower the rates and print more the

already high fiscal deficits mean that

the money they create flows into the

real economy and causes inflation this

further increases government spending as

the cost of Social Security Public Works

and Military Rises to fund this spending

the treasury borrows more and because of

that the debt grows faster and the other

option of course is that they raise

rates which typically like I just said

does lower inflation however this time

with debt levels being historically High

interest expense for the government

starts to explode which we are already

seeing higher interest rates which again

is a protocol to control inflation

means that the government is going to

spend more on interest and they're going

to have to borrow more to spend more

which causes inflation so the main tool

that they use to fight inflation is

going to actually cause inflation this

is a devastating feedback loop and in

the long run means that our debt growth

is exponential and since there will not

be enough demand for this debt the only

other option is going to be for the

Federal Reserve to monetize it or in

other words they are simply going to

have to create the difference literally

create the money into existence and if

they don't the government will default

and die so yeah ironically about this

whole thing the higher and the longer

that they hold interest rates the more

likely they are going to have to print

and the more likely they are going to

have to print more now the FED has

already chosen the second path this year

the debt is going parabolic and is

Rising by about trillion dollar every

100 days in fact we are now paying more

on interest costs than we do to fund the

entire US military if all of the debt is

refinance at the current rates around 5%

we would be paying a staggering $1.6

trillion just of interest every single

year and this is a third of all tax

revenues when the time comes to pay off

existing debt the treasury Issues new

debt to cover both the principal amount

previously borrowed and the accumulated

interest in 2024 approximately 8 TR

trillion dollar of debt is being

refinanced this means interest expense

will move up again on the debt further

worsening the spiral obviously the

longer the FED holds rates higher the

worse the problem becomes the

Congressional box office estimates that

the national debt will grow to $48

trillion by fiscal year 2034 but this

doesn't take into account the gravity of

the situation in another projection the

expectation was 40 trillion by 2027 in

February alone debt Rose by 200 80

billion and for the first 2 months of

the year it increased by a total of 470

billion at the current rate the debt is

projected to reach 37 trillion by the

end of this year and 40 trillion by the

end of 2025 surpassing the Congressional

budget offices forecast by 2 years now

this is the question that we have to ask

how is this massive amount of debt

issuance going to be absorbed in the

last great financial crisis we escaped

largely by borrowing a lot of it from

foreigners in fact they bought almost 3

quarters of the debt from 2008 to 2016

however in the recent covid crisis the

foreigners only bought a fraction of it

this Gap in financing had to be made up

somehow with the banks already stuffed

with treasury bonds and Retail investors

basically Tapped Out the FED had to

print the difference in one year the

Federal Reserve became a larger holder

of government debt than all other Global

central banks the FED is now on the hook

for keeping the global monetary system

running without added liquidity things

start to fall apart quickly not even a

year after the Federal Reserve began to

taper Banks started to blow up starting

with Silicon Valley Bank within 2 months

five more Banks had failed including a

globally systemic important Bank credit

Swiss authorities responded with a new

solution this time instead of doing QE

they would find hidden ways to stuff

more liquidity into the financial system

this started with the bank term funding

program also called

btfp which allowed Banks to borrow

against bonds at base value instead of

the market price essentially allowing

them to not realize any losses on these

Securities this program ballooned to

$167 billion at its peak another way the

Federal Reserve can quietly inject

liquidity is by drawing down the reverse

repo facility this is a place where

Banks and money market funds can deposit

cash and receive treasury Banks as

short-term overnight loans these bonds

can be used to satisfy collateral or

legal requirements at its peak in late

2022 there was over 2.5 trillion dollar

parked here any cash left here is

essentially Frozen as it is held on the

FED balances sheet during 2023 and 2024

this has been falling which means cash

is re-entering the banking system in

total around $2.1 trillion has moved

back adding more liquidity and helping

to boost asset prices at the current

Pace reverse repo could be completely

drained in a couple of months the fed's

current taper is also somewhat of an

illusion although the FED is publicly

reducing it balance sheet it is doing so

in a way to minimize the loss of

liquidity now it can do this by only

selling short-term bonds and keeping the

long-term bonds because the longer the

bond duration the more Capital banks

have to hold as Reserve against losses

swapping long-term bonds for short-term

bonds is thus stimulative as it frees up

money that Banks can use to speculate on

other assets as we can see in this graph

which breaks the fed's treasury Holdings

down by maturity during the last few

easing Cycles and especially after covid

the FED added a lot of long-term bonds

to their balance sheet in order to take

it off the books of the banks who were

stuffed with them however as the FED

began to taper in 2022 this duration

risk was not laid off meaning they did

not sell these long bonds into the

market the breakdown is even clear to

see in this rate of change chart here

where we can see the FED purchasing

large quantities of every maturity

during covid and the subsequent QE

programs and then easing up on purchases

by 2022 in fact what is shocking here is

that during the taper not only did the

FED not become a net seller of long

bonds depicted in yellow maturities over

10 years but in fact the Holdings

increased as the FED laid off the rest

of the bonds this was another way of

secretly adding liquidity to the system

without it showing up on their balance

sheet or in public announcements and the

treasury is joining the effort with a

change in its issuance schedule last

November they published a press release

stating that they were reducing the

amount of long-term bonds and increasing

the amount of short-term bonds to be

issued in fact they had been doing this

for several years and the problem has

gotten worse again since the fed's

cutting cycle this type of stuff is the

behavior of banana republics or poor

third world countries who cannot

convince anyone to lend to them

long-term so they rely on short-term

funding all of these actions have simply

bought more time and have stopped Banks

from blowing up the change in debt

issuance means that more money is freed

up so that Banks can hedge against their

losses in other parts of their portfolio

and this is stabilizing the system

despite what people may think inflation

is not a once in a decade phenomenon it

comes in waves even during the 1970s

there were multiple waves of inflation

each one being higher than the last one

this year the deficit is at 1.1 trillion

and we are only halfway through the

fiscal year which started in October of

2023 inflation bottomed at 3.1% in

January of 2024 but has slowly and

consistently been rising since then if

the government deficit continues to

remain this High we are not going to

have an option hiking up interest rates

to combat inflation is going to make the

debt worse and lowering them will just

cause more inflation the FED is trapped

in a black hole of their own design now

I've already mentioned this early in the

video but I'm going to restate it here

because I can imagine a lot of people

are going to leave a comment not

understanding why they have to print

more money and why there's no

alternative so if they do not run QE the

treasury is going to run into a problem

of who is going to buy the bonds the

banks and money market funds are already

stuffed and the retail investors can

only buy so much if nobody bids at a

treasury auction and gives money to the

government this means that the

government will not have the money it

needs to operate and spend money on all

of the things that it does if the

government went bankrupt and could not

secure any more money very quickly there

would be a lot of pain millions of

people would lose their jobs financial

markets would literally melt because

treasury bonds are like the backbone of

this entire system and they are

literally collateral for so many

different types of trades in the

financial system and we would surely

surely have a massive and painful

depression so the easier less

immediately painful and faster solution

is to just create the money just create

the difference and since they have no

option you know what that means it means

that generational wealth transfer is

going to happen from Savers to debtors

from bonds to inflation Hedges and if

you are on the right side of this

equation you will profit immensely and

those who are ignorant or those who just

can't be bothered are going to see their

wealth erode and slowly disappear so

this is the moment you've all been

waiting for what do we do well there are

multiple answers to that but there are

only two things you need to do it's very

simple the first thing is you need to

have a diversified portfolio with

uncorrelated assets the second thing is

you need to own assets that are going to

increase in value due to inflation these

are inflation hedging assets there are

three categories of assets that rise

during inflation you have low risk

medium risk and you have high risk

starting with low risk we have gold gold

has been an inflation Hedge for a

millennia in fact in ancient Rome

generals got paid in Gold if their

families held on to that gold it would

roughly have the same purchasing power

today a high-end tailored toga would

cost half an ounce today which would be

roughly the same as a nice Italian

custom suit the price of 1 o of the

metal has recently jumped up to $2,400

and this was a 23% gain in 6 months this

is a massive move for an asset that has

a $10 trillion market now as I'm filming

this video today at the end of April of

2024 the current price of gold is

$3,300 per ounce and I'm super super

glad that I bought gold when I started

learning about economics and investing

and diversification and all that back

when it was only $1,700 I only wish I

bought more of course and that's okay

because I actually just recently bought

a ton a ton of gold even at this price

right now land is also a great

investment there's only so much

available and it is needed for farming

housing and businesses making it a

valuable and intrinsic asset real estate

has an average rate of return of 8.6%

according to the FED has also made

significant purchases of mortgage back

Securities during their easing programs

supporting the housing market via QE

additionally if you get low rates on the

debt used to purchase the land you can

easily earn free money as you are

borrowing at a lower rate than the

return producing a positive spread now

moving on to the medium risk stuff here

at medium risk you're going to have

equities stocks are a higher risk but

higher reward play as of February 2024

the S&P 500 has delivered an average

annual return of 12.68% over the past

decade assuming Dividends are reinvested

of course when adjusting for inflation

the average return including dividends

over the same period as

9.56% of course this is not evenly

distributed and some stocks serve as

much better inflation Hedges than others

for example oil and natural gas stocks

Fidelity's select energy ETF is up 62%

in The Last 5 Years high-flying tech

stocks also outperform mainly due to

their size which draws in more Capital

as the S&P 500 market cap is weighted

the NASDAQ 100 ETF QQQ is up 33% in the

year as its biggest Holdings Microsoft

Apple in Nvidia have rallied and now we

have high- risk so for highrisk I have

cryptocurrencies these are some of the

highest risk risks plays but also the

most sensitive to inflation in 2021 as

inflation soared Bitcoin ran all the way

up to 69k before pulling back due to the

Fed rate hikes and withdrawal of

excessive monetary stimulus as an asset

Bitcoin functions like digital gold with

a fixed Supply cap and a steady issuance

schedule that is impervious to Rapid

change the price is rallying again has

spot ETFs have been approved now

trillions of dollars of institutional

money can flow in Bitcoin does have an

extreme volatility as the average drw

down from the peak each cycle is around

80% but this volatility has been

dampering with time as the market cap

grows so here's the major key and this

is what we call diversification or at

least what I call diversification you

have 30% in real estate 30% in business

30% in reserves out of which 20% of that

is gold and then you have 10% in

speculation so again I think this goes

without saying but none of this is

financial advice everyone is different

and Everyone likes to invest differently

but in my op opinion being Diversified

with uncorrelated Assets in this way is

something that I really like now for me

I'm a little bit younger and I want to

take on more risk because I have a

high-risk appetite that's just the type

of person that I am so I'm going to just

go out there and be honest and say that

I have more than 10% in speculation uh

and most of that speculation is

definitely crypto for me so now let's

run a couple simulations of a portfolio

so that we can see what happens to your

portfolio over time based on the

investment decisions you make and the

ways you diversify your money we will

assume no contributions and no

withdrawals and this will be pre-tax and

we'll make sure to rebalance this

portfolio every single year we'll also

adjust for inflation in all of these

simulations so that you can see your

wealth really actually going up your

purchasing power actually significantly

increasing over time instead of just

seeing your portfolio inflate now the

base case is just saying you do

absolutely nothing for the next 20 years

you just sit on your cash and it sits in

a bank account and does nothing if we

assume a base case inflation rate of 4%

Which is higher than the target but

probably going to be closer to the

actual rate of inflation when it's all

said and done most outcomes of this type

of investing will gain barely any

purchasing power over the long run so

this is obviously something that you do

not want to do because you are going to

get screwed now let's start to introduce

some risk here is example of the basic

risk parody portfolio this is standard

for financial advisers to recommend to

clients and it's basically comprised of

60% large cap US stocks and 40% us

investment grade bonds including us

treasuries as we can see this portfolio

does substantially better but the median

return will only net you

$337,000 after inflation the worst case

only makes 160k after 20 years which is

a measly 2.3% real return every single

year best case scenario with this type

of portfolio puts you at around 550,000

now don't forget this is a 20-year time

period starting with 100 Grand no

contributions or withdrawals so here's

an example with some mid- risk

Investments we will include a 20% Reit

which is exposure to real estate 10% oil

ETF and 70% S&P 500 the median real

return is 7.49% netting you 422k after

20 years the most optimistic case will

return 11 .5% in real returns growing

the portfolio to

875k after 20 years with a starting

balance of 100K now so far that's pretty

decent but I think that you could still

do better now we are going to run a

portfolio with more high-risk assets but

also inflation hedging assets because we

know that during times of inflation

these inflation hedging assets go crazy

and we expect inflation to be a problem

for the next 10 years this one has 20%

Bitcoin 20% gold 20% oil and and 40% a

generic S&P 500 Index Fund the median

return on this portfolio would net you

$1.5 million after 20 years and the most

bullish case would net you 145 million

now of course this is just kind of a fun

one because it's based on the historical

returns of Bitcoin and as everybody

knows Bitcoin has gone crazy since the

Inception of it and because of this and

very obviously I hope the most

optimistic and even the median level of

optimism in this portfolio are for most

people going to be highly unlikely that

is unless of course you got in very

early however even the most bearish case

of this portfolio possible would net you

$3.2 million after 20 years and that is

once again adjusting for inflation this

represents a 32 times real gain on your

initial $100,000 and now we are going to

analyze and look at the most realistic

portfolio and the portfolio that is

closest to resembling what I mentioned

earlier with the 30 % business 30% real

estate and 30% reserves Etc now the only

difference is that instead of 30% in

real estate and business I put 25% in

each of those categories and I put the

extra in speculation because like I said

I'm younger and I have a higher risk

appetite so this is what my portfolio

looks like but in fact I may even have a

little bit more speculation but we're

not going to talk about it we're just

going to analyze the portfolio and as

you can see starting with

$100,000 never adding or taking anything

out of it investing the dividends

rebound balancing it regularly and

exposing yourself to inflation Hedges

and some speculation after 20 years we

get to $1 million

96,000 after adjusting for inflation so

this is just a clean clean 10x and this

was from the previous two decades which

as we know because we explained in this

video the next two decades are going to

be much more inflationary than the last

two decades and because of that because

of that inflationary itself and because

of the fear of inflation these assets

are going to rise more in the next two

decades than they did in the last two

decades and that's why I'm very very

confident and I fully believe and I'm

putting my money where my mou is because

this is how I'm investing I fully

believe that for the next decade or two

we are going to see some crazy crazy

generational wealth happening and now

you can really see the power of adding

asymmetric bets and inflation Hedges to

your portfolio even a small allocation

or maybe a little bit more than a small

allocation can have a massive effect

effect on it and by rebalancing the

portfolio the returns get evened out

over time and I also do want to mention

that although we did the Bitcoin

portfolio which many people may just

immediately dismiss I would urge you not

to because yes Bitcoin was a massive

massive opportunity and a lot of people

didn't get in early enough for it to be

like life-changing money but a lot of

people did and if you pay attention to

this kind of stuff then next time an

opportunity like that comes around and

it will you'll be able to take advantage

of it and I person personally know

multiple multiple people that got in

crypto very very early and they have

more money than than anyone in the world

would know what to do with it's

absolutely insane all I'm saying is you

will get your shot if you are smart

about it now you don't want to be that

guy that takes out a second mortgage on

his house and puts it in salana but you

also don't want to be that guy that

completely stays away from speculation

because somebody on the news said it was

a Ponzi scheme you want to identify

value make a plan be Diversified and

extract the value now this is exactly

what I've been doing personally myself

with my portfolio and just in q1 of 2021

I did 18% in one quarter I rebounds

quarterly or as needed because I'm more

involved in the markets uh cuz I'm

younger whatever but yeah it did really

really well shout out to bitcoin and

crypto and to speculation and including

Hedges here are very key if inflation

does return which as we all know now is

very likely to happen they will

outperform everything else and add

asymmetric returns to your portfolio

boosting your portfolio significantly

allowing you to build real wealth now I

got to give a shout out to perivan Bull

because he helped me me and him talk a

lot and we discussed these topics but he

helped me a lot with the research for

this video you can find his YouTube and

his substack with his newsletter in the

description which I read every single

time he posts he puts forth great

content on the internet and he's also

very active on Twitter which is where I

found him and he does a great job

breaking down complex topics around

macroeconomics now if you guys want to

learn more about me you can watch my

story video here where I talk about how

I went from zero to where I'm at now and

if you want to watch a video I made

explaining why I think America is headed

for collapse I made an entire

documentary on that video which there is

a link to here and I do have to mention

if you guys are interested in learning

how to drop ship which is a way you can

make money on the internet it's an

online business we just dropped our new

platform which is completely free it's

howto drop.com you can go there you can

enroll for free and you can get access

to all of our videos uh and go through

them and learn how to start your first

online business and start making money