This Chart Explains What's Next For The Economy | Happening Again!

this chart explains what's next for the economy it's happening again now this little known concept and chart dating back to the 1950s showed the Federal Reserve what would happen if they enacted their policies and they ignored it and the period between the 1970s and the 1980s were devastating for most Americans and those around the world using dollars and like most things today lessons are quickly forgotten maybe because the fed the bankers and the government have short memories or maybe because there's no consequences to their actions but either way the 1950s chart and the concept and the recent actions by the fed and now the debt ceiling show us what comes next because it's happening again and it's not good so in this video I'm going to break down the concept and the chart that we're going to look at we're going to see how the fed's recent actions and now the debt ceiling debate play right into this and show us what's coming next we're going to look at the winning game plan used during the last period so we know know how to position ourselves as this all unfolds again so you can protect your savings and purchasing power so let's go all right welcome back if you're new to the channel my name is Mark Moss I make these videos to change the way you think about money because almost everything you've learned is wrong and it gets a little difficult it gets a little bit hard to understand because the plumbing the financial Plumbing is so difficult but I break it down make it easy and actionable so let's go right into this um what I'm talking about this this concept this chart from the 50s is What's called the Phillips curve and you might not believe it but this chart is single-handedly responsible for America's worst and only period of stagflation now of course it's not literally the chart's fault the Federal Reserve was to blame so let me explain the Felix curve was meant to illustrate the relationship between inflation and unemployment it was first proposed by Economist William Phillips in the 1950s and it gained a lot of attention in the following decades Phillips basically said there's an inverse relationship between inflation and unemployment when employment is low inflation tends to be high and of course vice versa this relationship seemed to hold true and became a guiding principle for policy makers in the 1970s the FED believed that they could use monetary policy to manipulate the curve and keep unemployment low and inflation in check of course their goal was to strike a balance but they underestimated the long-term implications of their actions now the FED started expanding the money supply let's say excessively flooding the economy with easy credit and low interest rates if that sounds familiar at all what they failed to recognize is that inflation is not solely driven by demand but can also be a result from of course Supply shocks it's always to supply and demand and if you know your economic history then you know the 1970s had its fair share of Supply shocks from oil crisis to wage and price controls of course uh the economy was hit hard now the fed's expansionary policies combined with these Supply shocks created The Perfect Storm leading to a phenomenon the U.S hadn't seen before and that is of course stagflation it was a economic nightmare High inflation soaring unemployment and stagnant economic growth is what plagued the nation now businesses they went bust they went down the drain left and right people lost their jobs and the cost of living skyrocketed now it was a harsh wake-up call for economists who had placed their faith in the simplistic Phillips curve framework it was also a painful lesson in the limitations of monetary policy and the complexity of economic Dynamics now although this should have been a cautionary tale we wonder if the FED learned anything from this period and actually the answer is obvious it's no because they're about to make the exact same mistake again unless of course it's not a mistake at all now the FED lied the Banks died now that's a message that Silicon Valley venture capitalist Balaji said recently as he made headlines for his one million dollar Bitcoin bet which I'm sure you heard about now Balaji admitted from the beginning that his Bitcoin bet was click bait but the message that he wanted to get across was this that the FED caused this crisis and it's going to get way worse now before we discuss how the FED caused this crisis it's important to understand and acknowledge the major convergence of Crisis that we're witnessing because once you see it you can't unsee it and it surpasses the challenges faced in the 1970s and it makes them seem like a breeze on a summer's day so what we have right now is a convergence of Crisis a crisis conversions now first of course we have the ongoing debt ceiling crisis which looks like it might be of kicked down the road for several years now then of course by ongoing I mean that this crisis has been building regardless of the administration then there's the municipal crisis as a Wall Street Journal article recently pointed out the bite Administration May soon be forced to bail out local and state funds due to mismanagement and excessive risk taking when the money borrowing was cheap sort of like California going from a hundred billion dollar Surplus to a 25 billion dollar deficit then of course there's the commercial real estate crisis Morgan Stanley says it could be worse than 2008 Elon Musk says it's quote by far the most serious looming issue then of course there's the nordstream crisis Seymour horse wrote his now famous article that's yet to be debunked and some in the European Parliament believe that the U.S was involved American Allies are now starting to show signs of creating distance from the U.S over the Nordstrom then of course there's the UK Ukraine crisis which has cost Americans around 200 billion dollars not to mention the massive disruption to global trade and of course the huge loss of life then there's also a crisis Bruin in Taiwan where the war drums are starting to beat louder and louder then there's the rapidly growing D dollarization crisis where countries are decentralizing from the dollar in fact in a recent speech Vladimir Putin said this quote many rapidly developing economies are switching to National currencies in foreign trade settlements it's important to coordinate joint efforts to form such a new decentralized Global Financial system the more decentralized it is the better for the global economy end quote now we also have an auto loan crisis that's getting out of control we have a credit card crisis with debt hitting all-time highs of 930 billion dollars and growing we have a 1.8 trillion student loan crisis a private Equity crisis you know we have investors that are fleeing out of fear we have an insurance industry crisis and the list goes on then there's of course the big one and that's the bond crisis and that's sitting right at the center of the entire spider web so let's dig into this one because it's actually the epicenter of all of these crises and it can give us hint of where we're headed and of course the FED is at the center now you probably already know most of what happened to cause the recent Regional Bank crisis I've covered it extensively but most people miss the one the most important thing about this story in 2020 as you know the FED lowered rates and projected that they would stay low for years and then on that premise the government sold a ton of long duration bonds to the banks now as you can see in this chart on the screen we see that Banks plowed a into these super safe bonds under the fed's guidance meanwhile the FED denied for months that inflation even existed and then once it was too hot to ignore they denied for months that it was a problem calling it of course you remember transitory and then of course the media as usual played the role of the backup singer and then virtually overnight the FED overreacted jacking up interest rates causing massive losses for anyone who bought long long-term bonds and the real shocker isn't how high the interest rates are now but how quickly they Rose faster than any time in history so in short the feds sold a bunch of bonds and immediately and drastically devalued them on March 6 2023 the FDIC chairman Martin grunberg at The Institute of international Bankers reported 620 billion in unrealized losses as of December 2022. now that's the official estimate unofficial estimates say there's about 2.2 trillion in losses such as this report from Stanford that states that many U.S banks are facing the very same risks that brought down Silicon Valley bank now going back to balaji's million dollar bet that the FED caused the problem it's not like 2008 where Banks took on too much risk in their minds the banks weren't taking on much risk at all they were buying bonds they were playing it smart then the FED literally pulled the rug right out from under them now this move could be deliberate it could be a way to consolidate the banking industry into you know the bigger major Banks making it easier to roll out of cbdc but that's a topic for another video if you want me to make that video leave a comment down below but the reason I'm telling you all this is simple inflation and deflation are both coming with the fed's launch of the bank term funding program the btfp the FED signaled it's willing to turn the printers back on and Banks whether they're distressed or not or taken advantage of this now the thing to understand is this is very inflationary and so are the growing tensions and cold Wars around the world the shooting war in Ukraine the supply chain shocks the labor shortages and more but wait pundits around the world smart people are saying that there are several crisis forming a credit crunch being only one that will ultimately be deflationary Deutsche Bank came out with a new report that looks at 200 years of U.S data and concludes that we're in for a very severe recession with a quote 100 probability now of course that's all deflationary so we have an immovable object inflation meaning in an Unstoppable Force deflation so what's really going to happen well you put those two together and we get stagflation just like we saw in the 1970s and once again the FED is going to be to blame whether it's the auto loan crisis the credit card crisis student loan crisis private Equity crisis insurance industry crisis commercial real estate crisis Municipal crisis and more they can all be traced right back to a flawed monetary policy created bad incentives in the economy and around the world now with a synchronized surge in interest rates with debt at record highs and unemployment rates at record lows and of course with geopolitical frictions causing constraints in labor Supply manufacturing Supply chains stagflation seems the most likely outcome during this transitional period for the global economy and the thing about stagflation is it's likely not to correct itself a free market economy is cyclical which is why the stock Market tends to go up and down while still increasing over the long term but stagflation is a tightening of the market in both labor and spending it's an unnatural problem created by the government that poisons the economy and on the face of it necessitates government intervention now again you'd be forgiven for wondering if this wasn't all by Design now the next question is when will it happen now of course it's hard to say but we know that it's coming you can see the warnings all over you know mainstream media from Wall Street even Ray dalio has been warning that the FED is pushing us into stagflation now keep in mind interest rate hikes can take anywhere from a few months typically 12 to 18 months to filter through the economy so we're far out of the woods as a matter of fact we are just starting to enter them also similarly bank failures take time to filter through as well now most people think that when a bank fails it has an immediate impact impact on the economy truth is it usually takes some time for a credit crunch to develop and then it takes time for the credit crunch to impact the economic system and financial markets not to mention all the other crises I mentioned which of course will begin to start falling like dominoes and probably all around the same time now finally you're probably wondering mark this is pretty scary what the heck are we going to do to protect ourselves well we just go back and take a look and see what happened in the 1970s during the last stagflation period now during that period the problem was keeping up with inflation that was the big problem how do I keep up with inflation when everything's tightening up now when we look back we can see that real estate was one of the best asset classes in the 1970s is significantly outperformed the stock market we also see Farmland did really good during the 1970s stagflation period and according to the statistics from the U.S department of Agriculture an acre of Farmland rose from a hundred and 37 to 737 between 1970 and 1980 which is roughly a 14 return year over year also dividend paying stocks did very well during the 1970s people wanted yield and so when interest rates and inflation soared dividends made up 73 percent of the total stock market returns of course you need to understand the fundamental issue with stagflation which is you have access to fewer dollars and those that you do have access to don't go as far your purchasing power went down so when the dollar isn't worth as much it's time to start looking outside the box to see the bigger picture you want to look globally now comparing the dollar to Stronger Investments is crucial to outperform the Dollar on the market essentially if the dollar is getting weaker then you want to invest into whatever it's weaker then because value is all relative stagflation will affect some Investments more than others each country's government Citizen and Industry responses will be different and that's going to put some currencies in a better position to rise faster than the US dollar so Bitcoin is an obvious choice because of the ability to cross borders and the potential to outperform Fiat currencies exponentially outside of that you might want to take a cue from Good Old Uncle Warren Buffett Buffett Berkshire Hathaway which was a struggling textile manufacturing company in the late 1960s and of course he turned it into the investment Powerhouse that it is today during the 1970s Hathaway made tons of strategic investments in wildly undervalued companies and industries during this stagflationary period this era solidified him as the legendary investor but really it was a matter of seizing the opportunity while everyone else was struggling point is play it smart and you could set yourself up for generational wealth on the other hand if you fail to play it right you could end up yet another victim of the government created disasters but don't let this happen to you I know which side I want to be on which side do you want to be on let me know in the comments down below what you think and how you're going to play this are you prepared to come out like Uncle Warren Buffett or a victim let me know in the comments down below of course as always give me a thumbs up on this video if you like it if you don't you can give me a thumbs down that's okay but at least leave me a comment and tell me why of course subscribe to the channel so you don't miss when I put new videos out so I can keep you up to date on how we're playing this and that's what I got to your success I'm out

Channel: Mark Moss

Views: 56,714

Keywords: bitcoin news today, mark moss, market disruptors, crypto news today, sovereignty, stock market, dividend stocks, stock market news, passive income 2023, stock market update, bank loans, interest rates, investing for beginners crypto, commodity trading for beginners, how to make money online, recession 2023, stock market crash coming, how to trade options, stagflation, inflation 2023, debt ceiling deal, stock market crash, inflation 1970 vs now, stagflation phillips curve

Id: 7Rq6RGinCeA

Length: 16min 31sec (991 seconds)

Published: Tue May 30 2023