Why the Market & Crypto are Crashing.

the market's in crisis mode right now

here's what's happening people

are fearful that 1960s style inflation

is back

in case you're not familiar with that

here's a very quick primer

when the korean war ended in the early

1950s and

korean war-related spending came to a

halt

we saw war-related inflation which

wars lead to shortages and spikes in

prices remember guns and butter and this

is the original definition of guns and

butter

not the definition of guns and butter

that we use when we talk in stocks and

psychology of money because we've

redefined it to something that relates

to us on a daily basis

obviously those of you with the programs

know more importantly though

back in the early 1950s you did have

inflation because we were

it was wartime wartime shortages leads

to temporary inflation

great that temporary inflation proved to

be temporary

and inflation levels fell to low levels

that we've actually seen over the last

decade now we have seen inflation

bouncing around 1.3 1.4 1.5 percent

guess what inflation was bouncing around

between 1951

and about 1965. 1.2 1.3 1.4 1.5 percent

you had very very very low inflation

during the

post uh war sort of boom in in the 50s

to the mid 60s now

unfortunately starting in the mid 60s

we started having a lot of social

spending

which sounds very very similar to the

covid relief packages

followed by this 4 trillion dollar biden

infrastructure plan

now initially economists have said well

wait a minute in the 1960s like in 1965

we had wage price controls we had uh

supply

you know just regular price control so

we had price controls on

general prices and uh price or limits on

on wages

and so it was sort of as away in the 60s

in the mid 60s

of actually caging inflation like

literally think about

think about jpal going um we're

literally just going to make it so

prices can't go up

which makes shortages even worse and

eventually the free market takes over

and breaks out of the cage

well that's what happened starting in

1967 to 1968.

these artificial price limits which

right now

we don't have we don't have price limits

we have supply

chain constraints which are pushing

prices up but prices are free to go up

they're going up look at lumber look at

wheat look at coffee

uh you know look at me it's all going up

and they fluctuate obviously in the

short term but commodities are through

the roof

prices are through the roof wages are

are going up

uh bank of america just yesterday talked

about how now their minimum pay is going

to be 25

an hour because they can't attract

workers anymore mcdonald's is paying

people 50

just to show up for an interview some

mcdonald's are paying people 18

an hour apparently it's nuts

and so economists initially said look

the 2020 recovery is different from 1965

because this time was different never

heard that one before

uh because the covet spending was one

time

in 1965 we had this recurring spencer

at the same time in the late 19 mid

1960s late 1960s

you had a federal reserve that was

really nonchalant about everything

they're like yeah we don't need to do

anything

like literally that that was their

attitude now you have a very different

fed

you have a fed that's we're prepared to

act if we need to

we got the tools aka interest rates are

going to go up

we'll act if we need to you got the

market expecting that the fed is going

to act and raise rates sooner than

expected

you do still have federal reserve

chairman jerome powell kind of doing the

look i i've been telling you all i want

2 inflation now we're starting to see

inflation and you're freaking out

this is what i want so you have a little

bit of an

uh of some differences here so it's you

know

uh what do they say it's it's not

exactly the same but history tends to

rhyme

uh doesn't necessarily repeat itself but

it can rhyme

anyway so late 1960s 67

68 you start getting this inflation

because wage

and price controls limits on prices

going up start getting removed

uh and so this leads inflation to start

going up four

five six seven percent going into the

70s

then at the same time as you start

seeing these inflationary pressures

we we decide let's just leave the gold

standard

and literally make our dollar backed by

nothing

but the belief which is what it is now

our money is just backed by the belief

that it has value

so anyway that obviously led to the

hyperinflation that we saw in the 70s

which

was you know 10 to 15 percent

inflation interest rates you know 10 15

ranges uh mortgages double digits

which uh led to uh what year was it

volker saturday night saturday night

volcker saturday night volcker saturday

night was

1979. volcker saturday night was

was his anti-inflation movement really

really big day in history

where basically you had this decade of

now inflation from like 70

or 67 where it started to 79

and volcker's like that's it we're going

to go through the bloody disastrous

pull down that we need to do which turns

into the ray dalio style great d

leveraging where you get a painful crash

in markets

people get rid of debt one of the

reasons i've been talking about

deleveraging for the last six months on

this channel and nobody wanted to hear

it

uh this is also why i'm like i'm gonna

get rid of my margin and i'm gonna buy

long options not because those options

can't go down

99 but because at least they'll still

have value left over when the market

recovers

whereas margin you get liquidated on a

margin call you don't

you you got nothing left you know it's

just

gone that's the danger of margin versus

options

uh a lot of margin obviously but anyway

so so now volcker

raises interest rates substantially you

get a sell-off you get a d leveraging

which is

stuff that we have been warned about uh

ray dalio's been talking about this

great deleveraging coming

that maybe the night the 2020s are going

to be more like a

a decade of de-leveraging where people

like that's it i don't want that anymore

i want to pay down debt

maybe you get what i've been calling a

frugal decade happening where people

you know we get this initial surge in

spending people going back to disney

people traveling again or whatever

and then you get folks uh deciding you

know what

um i just i'm good spending i'm just

gonna focus on my financial house i

don't want to spend as much as i'm used

to spending

and then really what what happens is

this fear

of that sort of 1960s 1970s style

progress is leading to a lot of shorts

in the market

we've seen short shorting in the market

go parabolic

in the last two three months and it's

because it's been very very profitable

anybody shorting tech and certain

consumer discretionaries especially

online

has been very very profitable over the

last three months

the shorts are winning uh and the shorts

really started by

hedging their long positions okay you're

long on tesla you hedge with shorts

you make lots of money on the shorts

maybe you hedge a little more

and then that spreads like wildfire

through the hedging and shorting and

weenie baby community uh and they're

they're winning right now

fairness the winnie b the weenie baby

shorters are we winning right now

so so you get the lever or the shorts

winning

then we've we've been talking about this

we look at the crypto market

what has not sold off yet because once

when short sellers make money when they

make a lot of money shorting the market

in one area of the market

what do they want to do folks they want

to make more money

so they start looking around going well

what else can we short

oh ethereum doubles in 30 days

oh that sounds a little juicy

bitcoin up uh you know

what forty fifty thousand dollars in the

last six months

hmm you know seriously

that simple institutions can short

crypto

we don't have easy access to shorting

crypto

so the institutions who make up the

majority of crypto traders now they've

replaced us retail traders

can set up all their shorts and watch

all of us get squeezed out of the market

especially if you've taken on leverage

which now we're seeing mass liquidations

four billion dollars of liquidations

within the last hour eight billion

dollars worth of liquidations

in the last 12 hours or

reports we're seeing coinbase is shut

down

well oops at least partially

halting ethereum withdrawals you got

binance

saying leverage tokens redemptions for

leverage tokens are not available

so you got crazy liquidations happening

you got coinbase block fi and binance

all

down to some degree which

is very reminiscent of the concerns that

we've been talking about on this channel

that

what happens if we have mass oh here we

go kraken says

ethereum uh and uh erc20 token deposits

and withdrawals are currently delayed

can't it you can't take your money out

you just can't take your money out this

was the big fear we've been talking

about on this channel and and this

i'm worried this is i want it to end

okay like you don't get me wrong

i do not want to see this this crypto

nightmare continue

because all it does is is hurt

the retail folks who are just getting

started with investing

it's not like my interest in buying the

dip

is not greater than than my love for

people not getting screwed like i don't

want to see people

getting screwed uh and and margin is

screwing people here this is why we're

seeing these liquidations but the

problem is

it's not just people's margins it's how

much leverage is in the crypto system

i don't know i mean so far we're stable

okay like let's look at the sticks

so far we have fallen to the levels

that we thought things might fall to we

briefly fell

lower but we're in that low 2000s range

in ethereum these were where we've had

longer term supports

bitcoin has had longer support between

32 and 34. it's actually bouncing around

35

so it's doing a little better than

expected uh at least worth bouncing

right now

and it's bouncing around that 35 000

right now doge

does have a support line there's i

didn't just draw that line today

that line has been there for a very long

period of time uh dosh has had

this you know support around and it's

rubber bands around here

uh oh we got another update here from

coinbase intermittent downtime on

coinbase platform

we're currently investigating the issue

trying to implement fixes

uh but anyway uh crypto you know the

next levels of support

i i don't even know that i want to look

at them we'll do it

but folks this is tough i mean look at

this for doge

i mean low 20s is the low to mid 20s is

the next level of support for doge

if if we get a continued sell-off

and then after that i don't even want to

talk about that because literally

if we break through the low to mid 20s

folks there's nothing between the low to

mid 20s

and and five cents nothing and even five

cents didn't last that long

ethereum uh red candle sticking

obviously this is on the day chart here

so this is what we were talking about

prior longer term supports right here

but if we fall past this if we break we

start breaking 21

consistently i don't know what do we got

can i get let me get if i could get a

week that'd be nice i don't think i can

though

uh yeah okay yeah

1900 ma maybe

maybe a temporary shelf around that 1400

level maybe

and i don't want to go past that bitcoin

and i don't think we need to i mean this

this was good uh you know otherwise we

did have a

a little bit of a shelf here at 18 19. i

i don't i don't

see that happening the only way this

happens in my opinion okay

the only way we go to 18 000 bitcoin

the only and just don't trade off this

advice okay like you lose money it's

your problem it's not my fault

but just my uneducated opinion here is

but the only way we go to ethereum 1300

bitcoin 18 19 000

is if this if we get this continued

uh platform unavailable crap

at all the different crypto platforms

all of a sudden

you get more and more leveraged fears of

oh my gosh maybe the system is over

leveraged

more and more people dumping uh leading

to more and more liquidations

that is the over leverage in the system

is the big concern

at the same time anything crypto related

is selling off

dramatically dramatic sell downs and

anything crypto related

uh marathon big digital riot

voyager hud 8 uh all these guys down 10

12

amc momentum stocks down 10 here on amc

coinbase down 9.4 percent uh very good

food company down

7.5 wow quantum scape down five

uh 5.4 tesla's down 420

percent you know like 4.2 percent a

square

is down at 195. a lot of pain

not a lot of green only thing really

doing well today is end phase solar edge

and target

otherwise you're either flat or you're

losing today it's pretty rough

and it's all coming off these uh

leveraged fears

great deleveraging fears and inflation

fears

so that's uh that's a summary as to

what's happening in the market right now

a lot relating to those 60s to 70s fears

especially with fed president bullard

coming out this morning

literally this morning he goes don't

worry we will act

if necessary in response to the madness

that's happening

you know i think jerome powell is

sitting there with a cigar right now

going

folks i've been telling you for a long

time two percent inflation was coming

now you're freaking out we might be

seeing two percent inflation

you know like that's that's like i feel

like jerome's like

you know got somebody fiddling right now

you know like i told you this was coming

but uh uh but uh to him it's all

according to plan

uh that this is just gonna be a

temporary a lot of pain until we

actually adjust to getting two percent

inflation

i don't know folks we'll keep tabs on

what's going on but this is

the summary of what's happening in the

market if uh you want to join me in the

private live streams uh

i uh we will be going live

in the private live streams i might

honestly if this madness continues we

might even do a couple private

livestreams today i don't know we'll see

but uh if you want my perspectives uh in

private you want to ask questions

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thank you so very much for being here

folks we will see you in the next one