It’s Over: The FED Just Triggered A Dollar Reset

Summary

In this video, Graeme discusses the United States' escalating national debt, which is approaching $37 trillion and growing unsustainably. He explores the dangers of this debt, including rising interest rates, a downgraded U.S. credit rating, and the potential devaluation of the U.S. dollar. Graeme highlights the risks associated with the current financial trajectory, drawing on insights from billionaire Ray Dalio. He offers practical advice on how individuals can protect their investments, including diversifying assets, maintaining a steady income, and avoiding excessive cash holdings. Ultimately, he urges viewers to stay prepared for the financial consequences ahead.

Takeaways

• 😀 The U.S. national debt is approaching $37 trillion, and it’s expected to grow by another $1 trillion every 3 months.
• 😀 Interest payments on the national debt have hit an all-time high, raising serious concerns about the financial stability.
• 😀 Ray Dalio warns that the risks of national debt and unsustainable spending are greater than they appear, leading to a potential economic shift.
• 😀 The U.S. has entered a dangerous zone with its debt-to-GDP ratio at 122%, indicating unsustainable borrowing and spending.
• 😀 The recent U.S. credit downgrade (from AAA to AA1) reflects concerns over increasing national debt and the inability to reduce it.
• 😀 Rising interest rates and devaluation of the U.S. dollar are consequences of the national debt and decreased investor confidence.
• 😀 The Federal Reserve has been intervening in the markets, continuing to support the economy by buying mortgage-backed securities and U.S. treasuries.
• 😀 Political division and internal conflict in the U.S. are contributing to instability and making it harder to address the growing national debt.
• 😀 Investors are increasingly turning away from U.S. treasuries, pushing interest rates higher and signaling the de-dollarization trend.
• 😀 To protect against economic uncertainty, individuals should avoid holding too much cash, diversify investments, and focus on steady income sources.

Q & A

What is the current state of the national debt in the United States?

As of now, the national debt is approaching $37 trillion and is expected to increase by another $1 trillion every 3 months.

Why does Ray Dalio warn that the risks are greater than they appear?

Ray Dalio believes that the United States is entering a danger zone with its national debt, as the debt-to-GDP ratio has reached 122%, and the country is spending and borrowing more than it can produce annually, leading to unsustainable economic consequences.

What is the ‘changing world order’ according to Ray Dalio?

The 'changing world order' refers to a cyclical process in which a country’s debt grows unsustainably, and as a result, it either defaults on loans or prints more money. This devalues the currency and potentially allows another nation or currency to replace it, disrupting global economic structures.

How has the United States’ credit rating been affected recently?

On May 16th, Moody’s downgraded the U.S. credit rating from AAA to AA1, citing concerns over the country’s growing debt, unsustainable fiscal policies, and the failure of Congress to reduce the national debt.

What factors are causing interest rates to rise?

Interest rates are rising due to five main factors: more investors choosing stocks over U.S. debt, fears of rising prices, concerns over government spending, higher bond yields in other countries, and the impact of tariffs on U.S. treasuries.

Why is the value of the U.S. dollar being questioned?

The value of the U.S. dollar is being questioned due to de-dollarization, where investors and countries are increasingly moving away from U.S. treasuries, reassessing the dollar’s position as the world’s reserve currency.

How does the U.S. government handle its mounting debt?

The U.S. government likely will continue to print more money to manage its debt. This approach increases inflation and the likelihood of higher interest rates to attract new investors, as fewer people are buying U.S. debt.

What are the potential impacts of a growing national debt on everyday people?

The growing national debt will likely lead to higher interest rates, which will make borrowing more expensive for individuals, and will devalue the dollar, reducing purchasing power over time.

How should individuals prepare for the potential financial consequences of the national debt?

Individuals should avoid holding onto too much cash, diversify their investments, ignore negative news and keep buying in the market, maintain a steady income, avoid leverage or margin, and plan investments with longer time horizons in mind.

What specific financial advice does the video offer to mitigate the risks of the national debt crisis?

The video suggests diversifying investments, staying consistent with investing despite market fluctuations, maintaining a steady income, avoiding borrowing money for investments, and not investing money needed in the short-term (2-5 years).