"What's Coming Is WORSE Than A Recession" — Robert Kiyosaki's Last WARNING

Summary

In this video, the speaker discusses the current economic climate, comparing it to historical periods post-World War II, the 1970s, and the 2008 financial crisis. They highlight the IMF's warning of the world facing its worst economic headwinds since WWII, suggesting a potential recession. The speaker explores various economic indicators, including inflation, interest rates, and supply chain issues, and speculates on possible outcomes, including a sharp recession or a period of economic boom similar to the post-war era. They also touch on the impact of monetary policy, fiscal stimulus, and the debasement of currency on asset prices and the economy.

Takeaways

• 📉 The IMF has warned of the worst economic headwinds since World War II, which could lead to a significant downturn similar to post-WWII recessions.
• 🛑 Historical parallels are drawn to the economic challenges post-WWII, 1974 oil crisis, and 1984 trade disputes, suggesting potential recessions and market downturns.
• 📈 The speaker anticipates a sharp recession due to monetary tightening, high inflation, and rising costs of living, which could mirror the economic struggles of the 1970s.
• 💵 The debasement of currency through money printing is highlighted as a significant issue, leading to inflation and the devaluation of savings.
• 🏦 There's a concern that central banks' balance sheets and monetary policies might not be as effective in preventing economic downturns as they have been in the past.
• 🌐 The global economy is facing challenges from multiple fronts, including China's slowdown, European energy crisis, and potential supply chain disruptions.
• 📊 The speaker suggests that fiscal and monetary policies, such as Universal Basic Income (UBI) and Modern Monetary Theory (MMT), might lead to further wealth disparity and economic instability.
• 🏠 The real estate market is mentioned as being at risk due to job losses and potential overcorrections in the market, which could impact those heavily invested in property.
• 💼 Emphasizes the importance of financial education to navigate the upcoming economic challenges and to make informed investment decisions.
• 🚨 A warning is issued about the potential for a major market crash, advising investors to be cautious and prepared for significant economic shifts.

Q & A

What did the IMF recently warn about regarding the global economy?

The IMF warned that the world economy is facing the worst economic headwinds since World War II.

Why is the post-World War II economic period considered fascinating in the context of the video?

The post-World War II period is fascinating because it was marked by broken global supply chains, a lack of commodities and goods, and a surge in inflation, similar to the current economic situation.

What economic phenomenon occurred after World War II that is also being compared to the current situation?

After World War II, there was a significant economic recession followed by a period of high inflation, which is being compared to the potential economic downturn and inflation concerns in the present day.

How did the economy respond to the oil crisis of 1974, as mentioned in the video?

The economy went into a severe downturn, with the stock market falling 50% and the ISM survey dropping to 30, indicating a very weak economy.

What is the significance of the ISM survey in predicting economic conditions?

The ISM survey is significant because when it crosses below 50, it suggests that the economy is weakening and a recession may be imminent.

What does the speaker suggest about the current state of inflation and monetary policy?

The speaker suggests that current inflation is a result of tightened monetary conditions, and that these conditions, along with rising costs of goods and services, are leading to a decrease in consumption.

What historical economic event does the speaker compare the current situation to, and why?

The speaker compares the current situation to the economic challenges of 1974, 1984, and 2008, due to similarities in monetary policy, inflation, and global trade disputes.

What is the potential impact of a sharp economic downturn on the job market and real estate, according to the video?

A sharp economic downturn could lead to job losses, particularly in tech companies as mentioned, and a ripple effect on real estate, especially in areas with significant layoffs or company closures.

What role does the speaker believe the Fed's balance sheet and monetary policy will play in the upcoming economic changes?

The speaker believes the Fed's balance sheet and monetary policy will be crucial in shaping the economic future, potentially leading to more money printing and affecting asset values and inflation.

How does the speaker think the current economic situation could lead to opportunities for wealth generation?

The speaker thinks that despite the potential for a significant economic downturn, the current situation could present opportunities for wealth generation, especially for those who understand and adapt to the changing economic landscape and invest in hard assets or other inflation-hedge assets.

What advice does the speaker give regarding investment strategies in the face of potential economic challenges?

The speaker advises investors to be aware of the economic conditions and adjust their portfolios accordingly, considering hard assets and other strategies that may protect against inflation and currency devaluation.

Outlines

00:00

🌐 Economic Headwinds and Historical Parallels

The paragraph discusses the IMF's recent statement on the world economy facing its worst economic headwinds since World War II. It draws parallels with historical economic periods post-WWII, highlighting the rapid rise in inflation and subsequent recession due to tightened monetary conditions. The speaker expresses concern about the current economic state, suggesting that most people's understanding of it is likely incorrect. The narrative includes a history lesson to provide context and concludes with a warning about the potential for a sharp recession.

05:01

📉 Recessions, Market Crashes, and Economic Indicators

This section delves into the patterns observed during economic downturns, referencing the 1974 recession triggered by the Arab Oil Embargo and the subsequent stock market crash. It also mentions the 1984 trade disputes and the Plaza Accord, and the 2008 financial crisis. The speaker suggests that the economy is on the brink of a similar downturn, with indicators like the ISM survey suggesting a weakening economy. The paragraph also touches on the potential for a depression and the role of the Fed's balance sheet in influencing economic outcomes.

10:03

💵 Currency Debasement and Economic Implications

The speaker discusses the concept of currency debasement, using historical examples of the Roman and Chinese empires to illustrate the consequences of currency devaluation. They argue that the current economic situation is similar, with central banks globally engaging in money printing, leading to a potential devaluation of currency and inflation. The paragraph also speculates on the future of economic policies, including direct transfers to individuals, and the potential for a rapid economic shift similar to historical transitions.

15:05

🏭 Post-War Economic Boom and Financial Repression

This paragraph draws a comparison between the post-WWII economic boom and the current economic climate. It discusses the potential for a similar boom driven by financial repression, where inflation erodes the value of war debt, and assets like housing and equities rise in value. The speaker suggests that the current economic challenges could lead to a period of stability and growth, driven by technological advancements and fiscal stimulus, much like the post-war era.

20:07

📈 The Impact of Money Printing on Asset Classes

The speaker addresses the impact of money printing on various asset classes, including stocks, bonds, and real estate. They argue that the current economic policies are creating asset inflation, which benefits the wealthy but could lead to higher taxes for the middle class and financial difficulties for the less informed. The paragraph emphasizes the importance of understanding the relationship between equities and bonds and the need for investors to adjust their portfolios in anticipation of potential economic changes.

25:07

💼 Entrepreneurship and Portfolio Management in a Volatile Market

In the final paragraph, the focus shifts to the role of entrepreneurship and the importance of portfolio management in a volatile economic environment. The speaker contrasts the positions of price-makers, such as business owners, with price-takers, like the general public. They discuss the risks associated with bond investments in a high-inflation environment and the benefits of real estate as a hedge against inflation. The paragraph concludes with a cautionary note on the potential for a market crash and the need for financial education to navigate such economic challenges.

Keywords

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. In the video, the speaker discusses historical periods of high inflation, such as post-World War II and the 1970s, and draws parallels to the current economic climate. The script mentions inflation reaching 133% post-World War II, highlighting the significant economic challenges that can arise from such high rates.

💡Interest Rates

Interest rates are the cost of borrowing money and the return on saving money, usually set by central banks. The video discusses how changes in interest rates have historically affected the economy, with the speaker noting that high interest rates can lead to recessions, as they did after World War II. The script also mentions the Arab Oil Embargo in 1974, when interest rates went up, contributing to economic downturn.

💡Recession

A recession is a period of negative economic growth that lasts for at least two consecutive quarters, typically characterized by a decline in GDP, high unemployment, and reduced industrial production. The video script references several past recessions, including the one following World War II and the 1974 recession, to illustrate the potential severity of economic contractions and their impact on various sectors.

💡Monetary Policy

Monetary policy refers to the actions of a central bank, such as the Federal Reserve in the United States, aimed at influencing the economy through changes in interest rates and money supply. The video discusses how tightening monetary policy, such as raising interest rates, can lead to economic slowdowns, as it increases the cost of borrowing and can reduce consumer spending.

💡Supply Chains

Supply chains are the networks involved in moving a product from its production to the end consumer. The video script mentions that after World War II, global supply chains were broken, leading to shortages and contributing to inflation. The speaker draws a parallel to the current state of supply chains, suggesting potential economic repercussions.

💡Debasement of Currency

Debasement of currency refers to the decrease in the value of a currency's purchasing power due to the increase in the money supply without a corresponding increase in the supply of goods and services. The video discusses the historical debasement of currencies, such as in ancient Rome and China, and suggests that current economic policies might lead to a similar devaluation of the dollar.

💡Quantitative Easing

Quantitative easing is a monetary policy in which a central bank purchases government securities or other securities from the market to increase the money supply and encourage lending and investment. The video script alludes to past instances of quantitative easing, suggesting that such policies can lead to asset inflation and potentially unsustainable economic conditions.

💡Fiscal Stimulus

Fiscal stimulus refers to government spending and tax cuts aimed at boosting economic activity. The video discusses the potential for fiscal stimulus in response to economic downturns, with the speaker suggesting that such measures can help stabilize the economy but may also lead to increased debt and inflation.

💡Depression

An economic depression is a severe and prolonged downturn in economic activity, typically characterized by high unemployment, low investment, and a decline in consumer spending. The video script mentions the possibility of a depression as a more extended and severe economic downturn than a typical recession, indicating the potential for significant economic hardship.

💡Asset Inflation

Asset inflation refers to an increase in the price of assets, such as stocks, real estate, and commodities, beyond their intrinsic value due to increased demand and available credit. The video script discusses how policies like quantitative easing and fiscal stimulus can lead to asset inflation, creating a bubble in asset prices that may not be sustainable.

Highlights

The IMF warns of the worst economic headwinds since World War II.

Post-World War II economic recovery compared to current economic challenges.

Historical parallel of 133% inflation post-WWII and its impact on the economy.

1974 economic crisis driven by the Arab Oil Embargo with a 50% stock market drop.

1984's global trade disputes and their effect on the dollar and interest rates.

2008 financial crisis with oil prices at $147 and the Fed's response.

The common pattern of economic downturns due to monetary tightening.

Rapid increase in mortgage rates and its effect on consumption.

Tech companies laying off staff and giving earnings warnings as a sign of economic stress.

The potential for a sharp recession indicated by the ISM survey.

China's economic slowdown due to lockdowns and its global impact.

The possibility of a depression and the role of the Fed's balance sheet.

Historical currency debasement leading to empire collapses.

The speed of economic changes and the potential for a quick recession.

The potential for a Fed pivot and rate cuts in response to economic downturn.

The concept of financial repression and its impact on debt and purchasing power.

The potential for a new economic boom post-crisis, drawing parallels to the 1940s and 1950s.

The importance of understanding macroeconomic cycles for investment strategies.

The impact of money printing on asset prices and the wealth gap.

The potential for Universal Basic Income (UBI) to exacerbate wealth inequality.

The risks of investing in bonds during high inflation and the importance of liquidity.

The advantage of being an entrepreneur and a price maker in times of inflation.

The correlation between stock market performance and bond interest rates.

The potential loss of purchasing power in a bond portfolio during inflation.

The significance of financial education in navigating economic shifts.

Transcripts

[Music]

the date of today is important date and

the reason that's important is just

yesterday at davl Switzerland the IMF

stood up and said the world economy is

hitting into the worst economic

headwinds since World War II the worst

and that's why it could be bad news but

depending how you look at it it could be

very good news this is about as macro

environment as I've ever seen and I

think most people's read on it is

probably wrong right now I'm going to go

take you through a history lesson and

then we'll get to today tell you why I'm

concerned so why World War II World War

II was a fascinating period because like

covid the entire world had basically

been stuck at home or been on

battlefields everyone came back there

was no supply of Commodities and goods

Global Supply chains were broken and

everybody came back and started

consuming again and guess what inflation

went up to 133% or something maybe even

higher and that period was fascinating

because interest rates went up and the

first thing that happened was the

economy went straight back into

recession and inflation went negative

because it was a massive tightening of

monetary conditions you raised the cost

of goods on people and didn't raise

their salaries enough people couldn't

get the goods that they wanted exactly

like now and everything collapsed so we

went back into recession and then

eventually some better times and I'll

come back into the 19 40s and 50s cuz I

think it's a really important parallel

that most people misunderstand the next

time we saw anything remotely like this

was 1974 a lot of people tell you it's

the' 70s again inflation inflation well

the inflation episode we had in the late

'70s was driven by demographics that was

the Baby Boomers entering the workforce

all at the same time it was the largest

demand Shock the World had ever seen and

we had a supply shock of this oil crisis

of the Arab Oil Embargo that's not

repeating now what is actually more

similar as 1974 1974 was the Arab Oil

Embargo the price of oil tripled and

interest rates went up inflation shot up

and the immediate effect was the economy

went down the toilet Almost Do not pass

go the stock market fell 50% and the ism

survey which is a good Guide to the

business cycle anytime it crosses below

50 suggests the econom is getting weak a

recession comes at about 47 it hit 30

which was the lowest in all history and

it happened in the space of 4 months

based on exactly the same kind of setup

we've got now so are you saying that the

70s are now are pretty close yes and

inflation fell in 1974 afterwards people

are still thinking inflation goes on

forever it did not and it did not in the

1940s either then the next one up is

1984 we saw an issue where global trade

there was a huge amount of trade

disputes the dollar was pretty strong

like it is now interest rates were going

up and inflation was high and everybody

was fearing looking back and saying oh

we don't want the early ' 80s late '70s

again the inflation inflation so vulka

was tightening rates too much and the

economy collapsed it didn't go to

recession because the FED quickly

started cutting rates but the dollar

went up a lot more and created a lot

more problems when we ended up with a

plaza record in 1985 when everybody had

to stop the dollar going up from

destroying the global economy so then

the next time we see something similar

was 2008 if you remember the oil price

was at

$147 inflation was 6% the FED had been

cutting into that because the economy

was imploding 2018 exactly the same oil

prices High inflation High the FED were

hiking rates trying to tighten the

balance sheet what happened is the

economy rolled over really quickly again

okay so what's going on here why does

this phenomena keep happening everyone

extrapolates inflation out forever what

actually happens is that consumption

Falls because we've tightened monetary

conditions so tightening monetary

conditions to Ordinary People means the

cost of your mortgage has gone up at the

fastest Pace in history over a oneyear

period mortgage rates have never risen

this fast so any money you've borrowed

has suddenly got much more expensive

your wages haven't kept up with the cost

of just basic services like food so

you're actually feeling poorer so you

can't consume as much and you start not

consuming other things people

overextended on housing because they

rushed into housing and rates have gone

up for them also just the rise in things

like the cost of oil has meant that you

know gas prices all of this stuff and

then the rise in the dollar which is a

monetary tightening all of these things

get together would suggest that the ism

is going back to 30 which is as it was

in 1974 which is a terrifying form and

it's suggesting that if we're not

careful we could have a very sharp nasty

recession meaning kind of a negative 5%

GDP recession it might be short depend

what the FED does and we'll come on to

that in a bit so we've got the setup

that we've seen many times in the past

we've got the forward-looking indicators

this monetary tightening suggesting

we've got some real pain to come then

the anecdotal evidence we're seeing all

the tech companies who were bullet proof

laying off stuff and giving earnings

warnings because everybody can't raise

prices enough so their margins are

falling and people have overextended

Amazon said we've hired too many people

they're one of the biggest employees in

the United States okay this is not good

but the answer to higher prices is

higher prices and that's what's happened

and everybody's looking around saying

well what's going to break when stuff

like this happens the market goes down

something's going to break you know

we're looking what bank is it what hedge

fund is it the actual answer is it's the

economy the economy has just broken and

the FED are going to have to Pivot the

monetary conditions that we have imposed

on corporates and people is the biggest

tightening in all history we've also got

China slowing down very fast because a

lockdowns but also they've been in

recession and Europe with a war and

having to deal with this energy

transition so we've got no leg of global

growth here now the question is how bad

does this get let's talk some scenario

when people use the word recession that

means two backto back quarters of

negative growth that's the technical

definition of a recession to you and me

I think it means a loss of jobs and a

loss in your net worth because it's the

falling of asset prices that comes with

a recession what's the possibility of

sliding to a depression so depression I

would suggest is a much longer more

extended period I don't think that can

happen right now now I don't say that

with certainty I never do talking

probabilities the reason being is

there's one piece of Magic the FED

balance sheet the FED balance sheet

disguises all bad things because what it

does is when they print money it lowers

the purchasing power of the dollar and

most of the central banks at the same

time do it and people always think it's

going to be inflation is what it leads

to it leads to something much more

pernicious and evil which is the

debasement of currency and what that

does how it manifests itself is all of

these scarce assets equities real estate

gold crypto go up a lot but all they're

doing is reflecting the devaluation of

the F currency itself so that optically

can change everything because suddenly

all of these things go up everybody

feels okay and it changes the outcome

people are still worse off generally but

it's a trick and so I think that trick

gets played again pretty soon this time

I think the trick gets played in a

different way which was the other Genie

that came out of the bottle in 2020

which the Europeans are doing now some

states in the US are doing Japan is

doing India is doing which is direct

transfer payments to individuals when I

heard you talking about the that rail I

thought you went to the dark site man

mmt Ubi and all that stuff which is too

many Marxist but you're also looking at

from the humanitarian side regardless of

what our political economic views are

this is what is going to happen so we

have to judge it with that lens not how

we would like it to be but what it will

be what the probabilities are look at

the emptying office spaces cuz people

are not going back to work I mean this

is not an ordinary recession you know

Apple says they're not going to go back

to work you look all the Office

Buildings empty and you know residential

real estate depends upon jobs you know

what I mean if you're saying recession

means means a loss of jobs which

Amazon's laying off what happens to real

estate wherever they have an Amazon

office this is the ripple effect which

is why I'm saying that was one of the

biggest announcements I ever heard that

the IMF is saying the world faces one of

the biggest economic challenges since

World War I but one thing that he

mentioned talked about debasement of

currency so here's a penny it's copper

and in 1964 I was looking at the

quarters and dimes same color do you

know what I mean it's the same color so

basically

1964 dimes quarters and half dollars

became copper and that's what you were

talking about debasement and I think

we're paying the price for it because

I'm really glad you started with history

because macroeconomics is history you

have to look back in time and every time

people did this first was a Chinese they

printed paper money and the Chinese

Empire collapsed and then when the

Romans did the same thing debased the

currency the Roman Empire collapsed

you're looking at the end of the

American Empire I think it's going to

happen at a shocking speed so 1974 we

went from everything looks okay to the

worst recession since World War II in 4

months I'm thinking it's going to look

similar because of the speed of the

monetary tightening the speed of the

rise of prices so I think we are going

to have a very ugly few months both

economically and for markets the

question is what comes next and that's

the key point if my base case comes into

play which is the Fed pivot and after

that they will say well we're just going

to see and we'll see the economy start

going down the toilet and they will

start thinking well we're not going to

do QT now either so they're not going to

start shrinking the FED balance sheet

and before you know it we're going to be

talking about rate Cuts but we don't

have many rates to cut you know rates

are nowhere so the only outcome is

they're going to have to print money the

credit markets are already starting to

dry up that's usually an indicator the

housing Market's rolling over printing

money is this stuff here you have a

silver coin you have a copper coin made

silver right basically it's called de

basing the currency which the Romans and

Chinese already did yeah because don't

forget the basement of currency Works in

a simple way if you're really thirsty

and I have a bottle of water you'll pay

anything for it if you're really thirsty

and I've got five bottles of water

you're kind of thinking yeah I probably

need some of that water I'll buy them

all but at a lower price if I say here's

a million bottles of water you don't

want any of it because there's too much

water now it has no scarcity so if you

make too much of something it becomes

less valuable so if D Vinci created 50

million pieces of art guess what they're

worthless and so it's that concept and

what it does is if something gets

devalued versus something else so we're

not making more shares in the S&P

actually what we're doing is buying them

back making less of them therefore the

S&P goes up real estate yes there's

periods where we try and create new real

estate but generally real estate prices

go up versus the fair balance sheet

because it's a relatively scarce asset

same with gold same with crypto so

that's the phenomena depends how fast

they deploy the balance sheet cuz this

balance sheet magic optically changes

markets and if markets go up then

household net worth stabilizes and

spending comes back companies stop

laying people off so it's actually a bit

of a magic trick it comes down you know

that wall saying the bull goes up the

stairs the bear goes out the window the

bear is about to go out the window the

question is when does a bull start

climbing again right and we either go

through a scenario like 2000 which was a

typical old school recession where

Equity markets Unwound excesses the B

Market was 18 months or so and then the

FED keep cutting rates and eventually it

stabilizes but if we look at 2008 which

was the next recession as soon as the

FED used the FED balance sheet we pretty

much stopped in its tracks really quite

quick after they did that they cut rates

first didn't really help cuz the banks

had seized up then they used the balance

sheet then they did it again in 2010 12

16 and then 18 was the FED pivot the PO

pivot where they went from hiking to oh

my God we need to cut TR older the guy

he says you cut this out you're killing

my economy that's right so inflation had

gone up pal like well I need to do this

but the economy cannot take higher rates

cuz everybody's so in debt and

everybody's so old that is the problem

so here we are we have employers not

going back to work so all these reats

raits real estate investment trusts they

own all these Office Buildings and then

there never has the FED I think it was a

30 trillion dollar debt now with 200

trillion off balance sheet and they keep

cutting rates and this but the question

is can they keep doing the same thing

given the conditions this is going to

take us back to the 1940s in a sec but

you're going to get destroyed because of

the supply chain issues because of Co

and all of this and your wages won't

keep up so we're going to destroy

household net worth and everything's

levered so all the borrowings against

houses and all the borrowings against

equities and all of the borrowings on

top of borrowings and you're going to

let the collateral go down and blow the

entire thing up but isn't that what

they're doing when they say they're

going to pay off the student loan debt

that's forgiveness that's mmt right

which is coming whether we like it or

not what they're trying to do is reduce

the debt via Financial repression which

is you basically have inflation running

slightly higher so you have then

interest rates so what you want is to

reduce the real value of the debt so if

you think back to your parents how much

they paid for a house and the mortgage

they had the mortgage seems laughable

it's because over time inflation rais

the value of the house and the debt

doesn't get raised so in the end the

debt is nothing so the way that is this

stuff here make the money less valuable

correct it makes the debt less valuable

right so it's okay if you're in debt but

if you're lending money it becomes

complicated but the point being is you

either have a fiscal stimulus which is

let's say the Republican view we'll have

a fiscal culus cut taxes and we'll put

some spending and what happens is is

that doesn't go to the people who are

the worst off it's creating this issue

of 1% versus 99 which nobody can see and

nobody knows how to solve the issue is

actually the balance sheet cuz all of

the expensive assets keep going up cuz

they keep printing money get richer but

doing this blanket fiscal stimulus is

hard because the rich get richer again

so I think people have thought well

maybe we should just try and give it

directly to the people who are most

affected okay those are the two choices

or you do nothing which is too late

because there's too much debt so you

can't let the system clear anymore the

old way would have been you let the

system clear it's all okay you just have

a recession everyone stops borrowing as

much money blah blah blah blah blah the

world is 400% of GDP in debt the world

has never been this in debt in all

economic history let's go back to the

1940s now and figure out how bad it was

then this was the very similar setup the

worst supply chain issues massive

inflation everybody coming back in but

what happened was the economy collapsed

then interest rates came down and they

stabilized and they stabilized cuz the

FED stabilized them and inflation was

running slightly hot 3% and bond yields

are about 2% so real rates meaning you

in the property Market are going to make

a lot of money so negative real rates

become very good for assets and what

happened in the 1940s and 50s was a

massive economic boom what we actually

got was the value of the war debt

eroding because of this financial

repression we had the value of assets

like housing the equity Market went up

900% over that period of time there was

a lot of fiscal stimulus because you had

to rebuild after the war and companies

were building factories so if you think

of now companies are going to be

rebuilding factories in the United

States or in Europe and not in China so

that's going to Gad some stimulus yes

the jobs are not there it's robots in

the factories but it's still stimulus

for the economy the government will do

some stimulus as we've talked about

interest rates will remain relatively

low inflation will remain controllable

but a little bit higher than it has been

and what that sets off is a period of

stability and boom because there's so

much technology you know there's a lot

of big things happening in the world

that could be so that would be my rosy

outcome would be that and I think that

is still my highest probability that we

kind of muddled through this in a way

that we don't expect cuz it feels like

the end of the world imagine what it

must have felt like in

1948 all you can see is the end of the

world and then you get this massive

inflation you just think this is the

worst thing that could possibly happen

what actually came out of it was

something very different it was the rise

of Technology it was the rise of the us

as a big superpower it was a rise of the

rebuilding of Europe the of Japan it was

an incredible period the Britain Woods

agreement where the dollar became the

reserve currency of the world and all

these really good things happened for

America it's the same moment all of

those things got built then every one of

them from the Geneva Convention to the

IMF to the World Bank to the United

Nations they all came in that period 47

right same time is this what they're

kind of alluding to with the great reset

it's all going to change again yeah it's

the fourth turning and that's where we

are and this may be the final event of

the fourth turning it maybe just another

phase of pushing this towards it 2008

2020 and maybe now it just keeps moving

the world to the direction that we all

know it has to go is we need to stop

what we're doing and change what we're

doing I always say the bond market is

the truth the bond market the job of

bond market participants is two things

only what is the future rate of

inflation and what's economic growth now

in the stock market it's like earnings

and this and emotion and all that the

bond market is simply two things so they

usually get it right and this is a

structural shift in the glob glal

economy if we're right here and you got

cash and we're going to see this big who

and it probably means that the economy

and asset prices there's certain things

it's going to set up for what we're

looking for if you want to generate

wealth this is the time to step up yeah

this is the best time macroeconomics is

through history you know the fall of

Empires and all this I think we're

falling right now you know that's a huge

problem all Cycles go through up it's

approximately the age of a human being

20 years 20 years 20 years you know said

that also and it's matures and the whole

thing changes fourth training is always

marked by weak leadership and then we

have that today but the people that get

hammered are the people operating on

yesterday's ideas we talked about how

bull markets make stupid people look

smart you know so you could be really

stupid and you put your money on Apple

and you got really rich or Bitcoin and

oh my God I'm rich I'm smart and then

the bare Market makes shows you how

stupid you are and that's why what r is

saying is going to come quick all the

stupid people who think they're smart

are going to find out how stupid they

are and it's going to be a very

interesting time when the crash comes it

comes so fast on you you don't know

what's going to hit I think the most

important message from today's lesson is

this the bull has been going up the

stairs for a while now it's about to go

out the window so that's what in davil

Switzerland when the IMF says we're

going to face the biggest economic

headwinds and voila I can't believe that

what a gift I'm predicting the biggest

bust in world history is coming so it's

going to be the biggest opportunity of

all times because you know Kim and I

made our fortunes

2008 remember quantitative easing when

it first came out Ben beri never said

that it was qe1 he just said it was Q

because we weren't supposed to have a

two three and now Infinity but what

happens is the economy gets addicted to

it so now the economy is addicted to

stimulus government spending and there

for addicted to this money printing mmt

whatever you want to call it so that's

what the average investor needs to be

cognizant of because they have to adjust

their portfolio accordingly if they

don't then they're really going to have

some financial difficulties in the

future what that means is simply there's

more currency units in the economy that

are chasing goods and services so

there's more dollars fake money there

fake news fake money the dollar is fake

money because it's just an IOU and to

make it more extreme all your checking

account is is the bank saying we owe you

IUS it's like a double

IOU but they're creating more dollars so

it's just simple math if there's more

dollars out there chasing the same

amount or fewer goods and services most

likely the price of those goods and

services are going to increase and if

prices are going to increase over the

next call it 10 15 years significantly

you need to have your portfolio set up

in a much different way than if prices

were to go down or stay the same over

the next 10 to 15 years the reason I

call it fake money is the more the FED

prints money the rich get rich you know

we have asset inflation right now we

have asset inflation in the stock market

bond market real estate market it's

really it's feeding the rich so you bi

mmt quantity us making the rich rich

unfortunately the middle class will pay

higher taxes because the rich don't pay

taxes but what it does when you have

Universal basic income in mmt the poor

get poor you know so if you're a poor

person you can't afford a house now

because of real estate prices are so

high you know and if you have Universal

basic income I don't think a bank will

touch you you know if you want to buy

real estate yeah it's like the what was

it in the Roman days the bread and

circus it seems like it's the same thing

today with these stimulus checks and the

Ubi is that people are getting a couple

bucks in the mail and they're thinking

that's fantastic well at the same time

they're not realizing that they're being

priced out of every single asset

denominated in dollars and if they do

try to buy a house or if they do try to

invest in stocks or bonds and if they

don't know what they're doing they're

going to get steamrolled because

everything is in a bubble thanks to the

fed the money printing the artificially

low interest rates and Ubi will

accelerate them that's right it'll make

the bubble so big it turns into a Mania

you know what's interesting too you use

the word Mania and we hear a lot in the

media right now with this cancel culture

where everyone is hysterical about

everything else but there's also a lot

of Hysteria in the stock market in all

these asset classes so it's like we live

in this world where everyone is

hysterical about something it's just

kind of pick your poison there's capital

gains and there's cash flow and you got

to know what you're going for so in real

estate or in stocks or in bonds people

most of the time are going for capital

gains so when a person flips a house

they're going to buy it for 100 goes to

200 they're going to net

but the trouble with capital gains is

you pay tax on it but the other part

there's always a boom and a bust and I

predicting the biggest bust in world

history is coming so it's going to be

the biggest opportunity of all times

because you know Kim and I made our

fortunes 2008 because you know we had

apartment houses and our tenants were

leaving to buy their houses they

couldn't afford I me there was a thing

called a ninja loan no income no job

okay so there booms bus capital GES cash

flow and there's a thing called you know

in there's always the opposite I was at

the gym just now before everybody came

out I said I felt for this guy he says

I've been a bus driver for 40 years I'm

going to retire and I can't wait you

know he's turned 65 I said what do you

got he said I got a 401k I said what's

it filled with he says oh I just sold

all my stocks at the top of the market

and I went into bonds George what did he

just do the most stupid thing you could

possibly have done first of all you

should never put all your eggs in one

basket but especially not the bond

market right now with the all the money

printing that you referred to earlier

you know Robert before you said you

think the market is going to crash so

whether that's the stock market real

estate market um the question is does it

crash in nominal terms or adjusted for

inflation see the stock market can stay

the same as it is right now but if we

get 10% inflation because the money

printing you'll actually lose purchasing

power you see so the market can crash up

just as easy as it can crash down if

your definition of a crash is losing

purchasing power so if you're someone

that believes like I do that once the

FED starts printing all this money the

government prints all this money with

stimulus and whatnot they cannot stop

it's like a heroin addict the only thing

they can do is print more and more and

more and they can't reverse course then

you need to start thinking through your

portfolio in terms of hard assets

correct something tangible well I'm an

entrepreneur but if the crash wipes out

your business you have no cash flow and

what happened when um a covid hit for

Kim and myself cash flow went up you

know because the market was demanding

more financial education it's always

going up and down in and out and that's

what investing is you're the capital

cash flow boom bust liquidity all this

stuff and that's what Financial

education is it's not this poor guy he

says I have a

401k and I was told to sell all my

stocks and get into the bond market now

George would you explain why you said

that is the most stupid thing you could

do because you're getting a future

stream of dollars that's all a bond is

you're buying a bond for

$1,000 and they're saying okay in 10

years we're going to give you $1,000

back and along the way we'll pay you a

little bit of Interest I mean it's

negligible at best so what happens if we

have a high rate of inflation because of

the money printing you're going to get

paid that $1,000 back but it's going to

buy you a loaf of bread so you don't get

back your purchasing power you only get

back your dollars see when I look at the

stuff I'm look at the relationship

between equities or stocks and bonds and

so the reason the stock market went up

is it kept dropping the interest rates

on the bonds so you know when I started

off interest rates were about 16% so if

I had a bond I was getting 16% interest

that was a very valuable Bond if they

dropped the interest rate to 14% my 16%

Bond was more valuable that makes sense

it's like my cash flow from the bond or

the dividend was good and so when the

market kept crashing they dropped up to

eight and today I think is about two and

a half on the long Bond so as to keep

the stock market up they had to keep

dropping the bond prices down and now

we're at zero they call it the zero

bound yeah and that's for Japan is yeah

for a long time they can't keep dropping

that bond price the stock market comes

down so that's the correlation between

equities stocks and bonds this is my

question George so let's say today bonds

are 2% what happens if it goes to 5%

because inflation comes in they have to

raise the bond rate to 5% what happens

to the 2-year Bond the value of the

bonds purchased at 2% goes down yeah and

that's what that guy do that's right

he's buying a bunch of stuff with a

value you really can't get any capital

gain on it that most likely you're going

to be stuck holding and that's not going

to be good in inflation one of the great

things about being an entrepreneur going

back to Rich Dad Poor Dad is you put

yourself in the position of being a

price maker where other people are price

takers the majority of people are price

takers so they have to take whatever

price is offered by whatever it is they

want to buy but the real estate owner

the apartment owner let's say or the

business owner can raise their prices if

the rate of inflation is going up so it

Hedges you against inflation while at

the same time paying you to own it with

that positive cash flow and a bond

holder does not have that opportunity to

say the least bonds and stocks are

liquid real estate's not so it's like

that guy buying a bond at 2% nobody

wants it if it's 5% so if you buy a

piece of real estate let's say in Dallas

Texas and suddenly the prices drop it's

hard to get out of that debt on that

real estate because it's not liquid yeah

so the good thing about the bond he can

dump and take his loss now but real

estate is El liquid yeah and that's why

we highly suggest investing your

financial education because it's not an

answer to it it's a process and my

concern is and I'm not saying don't buy

like I was just in Texas it's a Mania

because everybody's running out of

California New York wherever they're

running from and everybody wants to get

out of the Cities so they want a piece

of the country so land prices spiked now

is that good or bad