The Coming Great Depression vs Roaring 20s.

will inflation lead to a massive

disaster of a de-leveraging collapse in

the united states

that is will inflation be so bad that we

could potentially see

mass bankruptcies at corporations and

households

and mass foreclosures in real estate

leading to a great

reset solely because of the massive

amounts of money printing we have done

in the united states

or is there an alternate path where we

just go back to normal

and forgive the money printing that has

happened in this video we're going to go

through

two scenarios and what the results might

be of each

between 2019 and 2020 our money supply

expanded 24.6

after all from 15.3 trillion dollars to

19 trillion

dollars and this year we're expecting to

add another 1.9 trillion dollars of

stimulus related debts which

we've already passed that bill so i

guess that expectation is now reality

and we're expected to potentially not

only run a budget deficit in the country

but also at

maybe another three trillion dollars in

infrastructure spending

this means we might beat the money

printing that we did in

2020 and this is creating a lot of

concerns

what direction are we all possibly going

to head in

and is there even an alternate to what's

coming

after all used car prices are up 14

copper prices are up over 30 percent all

just within the last year

lumber prices are up over 250 percent

rent is up

sure things like apparel prices are down

but they're down by nominal amounts like

two and a half percent

everything else is skyrocketing you go

to a grocery store and somebody tells

you there's no inflation you just laugh

i mean have you seen the asset price

inflation the stock market

the housing market yet at the same time

the government's consumer price data

shows that inflation is just

1.7 percent year over year and up less

than expected

on a month over month basis are we just

being duped is this data just

a lie after all we know the cpi has been

revised multiple times in the past

is this potentially just being revised

in a way that manipulates the data down

to

hide the nasty reality of the inflation

that we really have so i spent my

saturday morning

drinking coffee and doing some research

i first wanted to start with some data

where the heck is all of this money

going if you print all this money it has

to go

somewhere and once we know where it is

maybe that can help us understand what

might happen in the future

okay so here's what i found when i

searched for where the freaking money is

i realized that sectors corporate

sectors in information retail trade and

manufacturing and banking

have way more cash than they ever have

had

before in fact if we just look at the

last year

we'll see a massive rise somewhere

between

50 to 100 of an increase in the amount

of

cash firms have available but it's not

just firms

on average the personal savings rate and

this doesn't mean

everyone's savings rate but it doesn't

mean on average the personal savings

rate

is 2 to 3x the levels where we use

to be this is where we used to be this

is where we sit now

substantially higher savings

substantially higher cash now maybe

that's because we're stuck in a pandemic

and people are having trouble spending

the freaking money but we've also seen

housing prices up 10 20 uh sorry 10 to

20 percent we've seen the s

p and the dow up 24 and 14 respectively

over the last a year and

three months so in other words the money

is

flowing all of this money printing that

we're doing is leading

to substantial increases in the amount

of cash people have available

and this is leading to a lot of concerns

that wait a minute all of this increase

in money

at some point is going to lead to

inflation

how could it not lead to massive

inflation

this is exactly where we get a

divergence

we get two potential scenarios as to

what could happen

with inflation and i'm sure there are

potentially scenarios in between these

two

but let's talk about the two scenarios

first

what society seems to believe right now

and second

what the federal reserve believes

society really thinks

and this is where we could really go

tinfoil hat in terms of what's happening

but let's go down the scenarios scenario

number one

since the velocity of money plummeted

during the pandemic or the rate at which

money circulates because of shutdowns

and restrictions

we've been able to save up money and

hoard cash and as soon as the reopening

is in full swing again

that is we're all going to be able to

spend money again

we're in for massive inflation as all of

a sudden everybody goes out and spends

money on

products and services at the same time

we'll see supply shortages not just in

semiconductors and houses and building

materials and used cars but in

everything

computers phones tv clothing household

supplies energy everything

some say we'll even revisit the days of

the 1980s we'll see 10 to 14

inflation again some say it won't be

that bad some say it'll be like no it'll

be like four to five percent

but yes we will have enough inflation to

lead the fed to panic

forcing the fed to jack up interest

rates to combat high inflation

leading to variable rate loan costs

skyrocketing creating not only a

skyrocketing in bond yields but also

likely leading to corporate and personal

defaults leading to foreclosures and

variable rate

backed real estate as non-fixed

borrowing costs end up destroying anyone

or anything

that is over leveraged this could

essentially lead to a ray dalio style

great reset

where the economy goes through a painful

de-leveraging where people either try to

get out of debt by saving and paying

down their debt or through bankruptcy

and screwing people who were owed that

money this could lead

to oh ultimately a decade potentially of

restricted spending

leading to an economy that spirals

downward and unfortunately because

inflation would be high

it would be very difficult for the

federal reserve to actually print their

way out of this because the additional

printing would just lead to the

inflation

or lead to more inflation which could

literally lead to a collapse in any

remaining

trust of financial institutions

leading bitcoin to a million dollars a

dark depression

the likes of which we've never seen

before that would be so bad

that even if we don't end up going into

a dark depression

any degree of this could end up leading

or would end up leading to some form

of very dirty and nasty recession

that is one possible scenario and that

is a scenario that a lot of people are

deathly afraid of

in fact some argue that kevin what you

just described is exactly why bitcoin is

skyrocketing

at the time of this filming it is

approximately 61

800 going straight up as i'm filming

this video

possibly going to hit 62 000 before i

even get a chance to post this video

but then there's the federal reserves

argument see the fed agrees we're going

to see an explosion of spending as the

economy reopens

however the fed believes that this

explosion of spending won't last

for example if all of a sudden there's

an explosion of spending that leads to

inflation

in let's say airfare or computers or

ipads people will simply delay their

travel or their purchases of goods

or services because those goods and

services are in short supply and

rather than prices going up people will

just delay the purchases of those

products until prices come down again

people will just delay traveling to an

overcrowded disney because

who wants to be at disney when it's

overcrowded now

this is because the fed believes that

society

even though society doesn't realize it

the fed believes society does not

think prices will stay high for long in

other words

if society believes prices will go up

then even if things are overcrowded and

even if products are in short supply

society will just continue to pay higher

and higher prices and we'll have

hyperinflation

but the fed doesn't believe that and

this is a much more complicated argument

the fed argues no no people are just

going to wait

people just won't pay those prices

because people don't expect those prices

to consistently stay high

and that any short-term spikes in

inflation will just flatten out

it's kind of like how people say gosh

housing prices are so expensive right

now i'm just going to wait

well the same could happen with travel

products goods and services rather than

pay more money people will just choose

to wait

it's kind of like what happened when

there were gas shortages now this gets

complicated and we're not going to go

down

into the world of gas shortages but what

happened with their gas shortages prices

went up

and people had to pay with their time

now because they needed gas they also

had to pay the higher prices right

you don't have a choice not to get gas

but people end up paying

with their time when prices go up and

there are shortages people pay with

their time

and that same thing could happen again

except people won't be forced

to travel or buy goods and services and

so when they pay with their time

they'll just delay gratification and we

won't actually see that

inflation in other words price increases

will be temporary and the fed believes

that as long as society

truly thinks that these prices will be

these price increases will be temporary

there will not actually be inflation now

this is bizarre because what this does

is it actually

takes society and uses society believing

that prices won't stay high

as a tool for legitimizing all of the

money printing that has happened

all of the crazy money printing would

just get legitimized

this massive transfer of wealth we've

seen from poor people to the rich where

the rich have gotten richer people

owning

assets stocks real estate and businesses

getting richer and everybody else

getting screwed

will be legitimized as everybody else

gets left behind

but it's the course like this craziness

is literally the course

the fed believes will be reality

the fed believes let's let inflation

spike to 2.5 to 3 percent

it's not going to go much higher but and

even if it does

we'll handle it they say but after this

minor surge we expect inflation will

settle back down hopefully to two

percent

and that'll be a success for us and

we'll slowly get back

to normal policy like we had maybe in

2016 17 and 18.

those in scenario one say dude no this

is impossible

anytime countries have printed massive

amounts of money like this all they've

accomplished was the

massive dilution of the people's

currency and ultimately leading to the

collapse of fiat

think of zimbabwe think of the

wheelbarrows of money in the weinberg

republic

but those in scenario number two say not

quite inflation

isn't actually related to money printing

remember inflation is the

increase in consumer prices year over

year

inflation actually happens when people

lose trust in their government

those in scenario number two say not

because of uncontrolled spending

ironically

now when a country like zimbabwe loses

control of inflation it's not because

they

spent a lot of money it's because they

spent a lot of money

without trust that the government just

frivolously spent money on any

government project without

constraints spending the people's money

with zero constraint

led to a loss of trust and as soon as

trust and currency was lost

inflation takes off see those in

scenario number two say the united

states has a unique advantage here

not only are we the world's reserve

currency we're the controlled

petrodollar we are the petro dollar

that is oil is traded in the us dollar

but of the countries in the world

some argue that the united states has

one of the highest levels of

currency trust and see this whole

inflation thing gets a lot more

complicated

some say this actually has to do with

our two-party political system

because of the frequent gridlocks that

we see between republicans and democrats

spending money in america is notoriously

difficult

consider situations where democrats like

joe manchin or kirsten cinema

fight against excess spending

eliminating potentially or even the

senate parliamentarian

eliminating the minimum wage increase

eliminating a bridge for chuck schumer

eliminating money for nancy pelosi's

bart system in her district

eliminating or limiting rather stimulus

checks further limiting

unemployment further even though they're

on the democratic side which could have

the power to spend more

the democrats still get restrained why

is it or consider

how people like bernie sanders don't

ever seem to get their policies through

like universal basic income or minimum

wage

and these constant fights that happen

that are very popular but end up getting

shot down

because of a fear of spending too much

money potentially frivolously

actually leads to more trust in the us

dollar which actually reiterates why

there might not be inflation

see despite the insane spending we've

seen recently the pressure to keep

spending low

is so high in america that our broken

political system and the gridlock of our

political system

actually makes our currency feel more

trusted and so scenario number two

shows us how complicated inflation

really is

inflation isn't just pure money printing

it's not just purely affected by the

velocity of money because the linkage

between that relationship is not very

strong

at least not over the last 20 years

things could change but in his

historically hasn't been very strong

inflation has not consistently aligned

with the velocity money

and inflation may also not be affected

purely by a sudden spike in demand like

reopening

because people might choose to spend

their time waiting rather than spending

more because they believe

that inflation will not be permanent and

see this is

society again legitimizing the money

printing that has happened

because we trust the money printing that

we have done more than we trust the

money printing of let's say

zimbabwe as crazy as that sounds and i

certainly don't want to say that you 100

trust the government

i'm saying relatively amongst the

countries in the world

the united states currency has more

trust and potentially could legitimize

scenario number two

this could lead prices to stay stable

this could lead to

periods where products and services are

in short supply

or people end up delaying vacationing

because everything's crowded out

but eventually leads to what i like to

call a frugal decade

we have cash and we're investing more

because nobody wants to go through what

happened again in the pandemic where you

were stuck without cash

and you got screwed and the rich got

richer everybody realizes now that it's

the people with

businesses real estate and stocks that

get wealthier people realize that the

reason i have courses and programs on

building your wealth is to help you

actually build your wealth

i don't just talk about oh make passive

income by buying an att dividend talk i

actually teach you

how to build your wealth which that

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in two days but anyway it is possible

that this pandemic

could have been the greatest force to

convince people to build wealth and

invest

and not spend as much which could

reiterate

the lack of inflation that we could

potentially end up seeing

and so this is where i have to ask you

what scenario do you think is more

likely

scenario number one we see mass

inflation that's permanent inflation

persistent inflation that leads to a

great recession or depression with

massive

de-leveraging and bankruptcies or will

we just see a more benign scenario

number two

where we see the roaring twenties the

government gets away with a 25

plus increase in the money supply with

many people much wealthier off

especially those again owning stocks

real estate businesses

but we don't end up seeing persistently

high prices we see short-term spikes

and ultimately inflation ends up

balancing out around one and a half to

maybe two and a quarter percent well i'm

going to leave the answer

up to you let me know what your thoughts

are in the comments down below and if

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watching folks we'll see you next time

you