It's Over: England's ENTIRE Economy Is About To Collapse

could Great Britain collapse after all

some are saying the country has been

margin called and there are now literal

calls to overthrow the government

replace Parliament because the

government has quote lost control and

that Great Britain is now sinking I kid

you not sinking that's because companies

like The Economist are now putting the

new prime minister Liz truss who's

replacing of Boris Johnson and her

essentially treasury secretary known as

the chancellor of the exchange

on a sinking little dingy boat yes that

is labeled Great Britain which is

sinking and they're not even trying to

bail it out they're making it worse

folks why does this first of all matter

to you and then could this country

collapse and why is this happening well

these are all things we're going to talk

about in this video let's first

understand why this matters to you

because you might be wondering like hey

look I'm I'm American like I don't

really care about this like Great

Britain is the fifth largest economy in

the world it's followed by Germany which

is the fourth largest economy in the

world which is having its own issues

this video isn't about Germany but it's

worth noting that Germany was expecting

inflation to come in at 10.2 percent

this morning it actually came in at 10.9

that's right almost 11 inflation and

that doesn't bode well for the entire

continent of Europe especially because

of the madness that's happening in the

United Kingdom who's not exactly helping

with inflation if anything by some

accounts they're making inflation worse

frequent commenter Muhammad alerian who

was also a former IMF deputy director

suggests that the United Kingdom is

incredibly incompetent and the BBC goes

as far as saying many Pension funds in

the United Kingdom were at risk of

collapse and that there were serious

urgent actions required due to quote

material risks to the UK's Financial

stability folks these are crazy and

scary words back in 2008 there were

rumors that we were just hours away from

shutting down the credit card networks

in America and if we shut down credit

card networks in America our economy

would just collapse we'd start buying

wheelbarrows because our currency would

be absolutely worthless so what's

happening in the United Kingdom and why

does it matter to us first of all As

Americans well the first thing you need

to know is very very simple when people

lose faith in their country and they

lose trust in the their country in their

Institution ends one of the first things

that happens is the value of their

currency plummets y'all remember the

days that one dollar would only buy like

50 cents of a British pound yeah well

those days are long gone we're almost at

a one to one ratio it used to be that if

you took a like one British pound you

would get two dollars now you take one

British pound you get a dollar and seven

cents that went almost to parity which

is one to one at a dollar and three

cents just Monday and the reason

currencies collapse when people lose

trust in their government is because

payable and institutions mostly move

their Investments to other currencies

they believe have more trust because

they don't want to be caught on a

sinking ship like the Weimar Republic or

Zimbabwe where you have countries that

don't control inflation and the money

goes to crap now you might be thinking

that well the United States has a Fiat

money system like this is all just paper

money backed by nothing and we don't

trust our currency either well maybe you

think that maybe because you're into

crypto or whatever but the reality is

when you put together all of the

countries in the world and you say which

country if you had to pick one has the

strongest currency there is no stronger

currency than the United States dollar

there just isn't especially when you can

get risk-free Returns on your dollar

right now by buying treasury bonds

at four percent okay like the dollar is

really really strong but this is a

problem because as the British pound

plummets and more people move over to

strengthen the United States dollar we

actually make it more difficult for

multinational companies within America

to keep their earnings up this is called

a massive foreign exchange risk because

the products we're selling like Teslas

were selling in China or or Europe give

us currencies that are worth a lot less

and they hurt our earnings per share at

American corporations that sell products

around the world so if you're in the

stock market you care about this like

this matters

so now we know this matters and we know

there's a disaster happening is the

United Kingdom at risk of collapsing

because right now it doesn't look too

good in terms of the disasters that are

going on and the headlines that are

going on and would be nice to kind of

know what's going on so let's answer

this so first it's really useful to

start with a baseline of what's going on

almost every country in the world

central banks and fiscal regimes regimes

are tightening that means they're

slowing stimulus they've turned the

money printers off they opened up a

drawer they put their money printers

away and their goal is to spend less

money to bring inflation down let's

reduce the amount of money in

circulation like the M2 money supply

right let's reduce that and bring that

down

see central banks are like the FED

fiscal regimes are like Congress almost

every country around the world is in

unison with the exception of China

because well they're screwed uh but

that's for a different video spend less

raise rates tighten conditions bring

inflation down

then here Mary's in the fifth largest

economy of the United Kingdom

oh no the economy is going into

recession well what does the 2020

Playbook say oh let's spend more now and

we'll hurt less people overall okay yes

it's a very good idea let's go do that

boom now a modern economy like the

United Kingdom is going in the opposite

direction of everyone else because they

all of a sudden think they're unique in

going through a recession and they want

to make sure they prop up their GDP

because after all well a country of

entrepreneurs that's literally what they

say and and so therefore forget

everybody else having inflation problems

so just forget about inflation let's

just print our way out of a recession

and the bank of England's monetary

regime is like uh what are you doing we

are tightening it at the same time the

bank's financial crisis team is like no

let's loosen let's print more money so

even within the central bank of England

you literally have like one side saying

Titan one side saying Lucid it doesn't

make sense and it creates a very

dangerous precedent of telling the

market okay hey if y'all get March and

Cult Don't worry we'll just

take the printer back out no problem

Margin Call we can solve it

it's just two weeks of printing don't

worry we'll put it back away after two

weeks it's literally like Jeffrey Dahmer

come on just one more heart baby just

one more just one more

we call it the blinking first error and

the United Kingdom is blinking first

it's so bad now that markets are so

angry at the bank of England that they

are starting to price in potential

emergency action from the monetary

regime of the bank of England that'll

come out with 150 basis point hike of

interest rates following their last baby

50 basis point hike to try to offset all

of this Insanity that's happening at the

other end of not only the bank of

England but also the government which is

bringing out the money printer we're

like okay well you're gonna bring out

the money burner we're gonna have to

raise hikes rates for this is literally

like imagine this imagine Janet Yellen

and Joe Biden going oh yeah baby let's

print it and Jerome Power Band all right

guess we gotta raise rates even more

it's just insane what's happening and

this is why you've got organizations

like Goldman Sachs and Credit Suisse

saying this is a disaster housing prices

will probably fall by over 15 and we're

gonna have a crisis in the United

Kingdom

but like what was the foundation for

this what was the real reason for all of

this mess so well I'm gonna explain that

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the coupon code expiring Friday okay so

what is like physically happening uh in

the United Kingdom and and why is why is

all of this disaster uh what like what

started all of this well here's what

started all of this first Pension funds

saw the value of their bonds lose as

much as 50 in just a few days the plunge

was so sharp the Pension funds started

getting margin calls but a lot of their

Equity like their net worth was tied up

in things like real estate and private

Equity both really illiquid when you get

into private Equity you don't expect to

be able to sell it at any point in the

future until there's a liquidity event

like an IPO or something in the future

that's what private Equity is and real

estate takes time to sell consider me I

sold most of my properties about 85 of

my real estate uh about 22 properties in

Southern California in the first half of

the year it took me five months to sell

all of them and I consider myself like a

serious and sophisticated real estate

professional so imagine if you're not

that like you're just a normal person

it's not that easy to break the piggy

bank of real estate it takes time

right so this takes longer term planning

now unlike the United Kingdom and these

Pension funds I didn't get margin called

I sold to create my startup house hack

which you could learn more about by

going to househack.com but the United

Kingdom's Pension funds saw this plummet

in bond value portfolios in part because

of actions that were announced on Friday

by the government and the chancellor of

the exchange they announced the biggest

tax cut in 50 years since 1972. their

equivalent of the treasury secretary

quasi-cartang believes that England

should reward work and people should

keep more of the money they make this is

a very traditional conservative

principle tax people less essentially

let people keep more of their own money

this is where he calls the United

Kingdom a country of entrepreneurs and

he also suggests that because we have a

worker shortage if we lower taxes we

might encourage more people to work and

we'll also lower subsidies for those

people who are not working reducing the

social safety net to hopefully Force

these people to go to work they've also

announced things like the following

number one stimulus for households and

businesses via energy subsidies that's

more spending a lower corporate tax rate

instead of hiking the corporate tax rate

to 25 they'll keep it at 19 a lower

personal high-end High tier income tax

bracket for higher net worth or higher

income individuals no more 45 bracket

going down to 40 percent number four

other incentives for developing real

estate or even buying your first home

and changes to the stamp duties lowering

taxes again a lot of more spending and a

lot less tax revenue however they're not

actually releasing the full budget until

uh well we get more details on Friday

and then more details again on November

23rd and the reality is this spooked

markets markets freaked out here and

thought Oh no our country is going mad

the Liz trust government doesn't know

what the he double hockey sticks is

doing let's sell the pound because we've

lost faith in it selling the pound has

also been leading to a lot of selling of

bonds which leads leads to this

in valuations at Pension funds so people

are like get me out of the pound let's

dump the bonds we have and let's go buy

something else like some American Bots

right but the problem with this is the

more money you spend the more inflation

you end up creating and ultimately when

the pound weakens you create what's

known as higher imported inflation

leading to more eroded incomes that's at

least according to the economist

and you've got Liz truss who came out in

reaction to all this who just took over

from Boris Johnson oh Mr partygate came

out and said hey you know what um the

government's doing the right thing we

had to take urgent action so don't worry

we will do what we need to do to get out

of this recession well that also hasn't

led to any confidence that the

government actually knows what the heck

it's doing in fact if anything it's

leading to more moral hazard and this

moral hazard is probably the biggest

danger here The Economist goes as far as

saying the Liz trust government has

created more economic and political

damage in the past week than Boris

Johnson did in his entire Administration

or at least that's what they're implying

so

you create really big issues here solely

because a people are losing faith in the

United Kingdom but also B you have a

policy system that truly doesn't make

sense you're creating inflation and

importing inflation both at home you're

creating inflation with more spending

and less taxation but then you're also

reducing the value of the pound so

you're importing inflation this is a

disaster so two forms of inflation and

you're leading to uncertainty but you're

also creating moral hazard you're

creating this this idea that oh why if

we get margin called as an institution

in the United Kingdom don't worry

and you also potentially encourage other

countries around the world to go yeah

well if the United Kingdom's doing it

will take you out our money printer too

did you imagine if the United States

brought out the money printer again I

mean this is a disaster and we don't

exactly know where the Fallout of all of

this is going to be yet but look this is

bad and somewhere things are going to

break valves are going to burst and

somewhere this is going to hurt really

badly do we know where exactly it is yet

no is it likely that the United Kingdom

is going to collapse no but does it mean

that inflation is likely to stay a lot

higher for a lot longer probably that's

kind of devastating and we've really got

to pay attention to it because it's

probably going to continue to drive bond

yields up throughout the world and the

more you have countries bringing out the

money printer the more countries like

America end up having to hike

I know that sounds ironic but America is

tired of high inflation and if other

countries are creating prices going up

the United States is going to hike more

to offset their increases in prices and

their crazy inflation by making sure we

almost get squeezed into deflation it's

scary thanks so much for watching folks

we'll see in the next one goodbye