The Once-In-A-Lifetime Crash No One’s Ready For (Worse Than 2008?)

What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business:join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show: https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business:see if you qualify here. https://tombilyeu.com/call: https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox:sign up here. https://tombilyeu.com/: https://tombilyeu.com/ ********************************************************************** If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. ********************************************************************** FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu In today's episode, Tom Bilyeu takes us on a gripping journey through the current state of the global economy, sounding the alarm on what he calls the "everything bubble." He draws parallels between the 2008 housing crisis and our present moment, but warns that this time, it's not just housing—it's stocks, real estate, crypto, commodities, and even collectibles, all propped up by years of cheap, printed money. With bold insights and clear data, Tom Bilyeu unpacks why the relentless expansion of debt and money supply has pushed our financial system to the edge, and how compounding interest is the “final boss” no one sees coming. You'll hear why traditional solutions like money printing and taxation may not be enough, and what history tells us about societies with runaway debt. Plus, he lays out practical strategies for adapting and thriving—no matter what the future holds. This episode is a must-listen for anyone who wants to understand the complex forces at play behind the headlines and protect themselves in uncertain times. So, settle in and get ready for a direct, no-fluff breakdown of where we're headed—and what you can do to be prepared. 00:00 Intro 02:36 Part 1: Things Look Great, But We’re Totally Screwed 06:56 Part 2: The Physics of Money 18:32 Part 3: Timing is Everything 30:22 Part 4: Surviving the Flood - Where We Go From Here Linkedin: Post your job free at https://linkedin.com/impacttheory HomeServe: Help protect your home systems – and your wallet – with HomeServe against covered repairs. Plans start at just $4.99 a month at https://homeserve.com Bevel Health: 1st month FREE at https://bevel.health/impact with code IMPACT ButcherBox: Your choice of holiday protein — ham or turkey in your first box, or ground beef for life — plus $20 off at https://butcherbox.com/impact Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact Incogni: Take your personal data back with Incogni! Use code IMPACT at the link below and get 60% off an annual plan: https://incogni.com/impact BlandAI: Call it for free today: https://bland.aiOr for enterprises, you can book a demo directly: https://bland.ai/enterprise Connectteam: 14 day free trial at https://connecteam.cc/46GxoTFd Raycon: Go to https://buyraycon.com/impactto get up to 30% off sitewide. Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

  Let's talk about the moment your side hustle becomes a real business. Now, I see way too many founders stay stuck running their business like it's a hobby, and then they wonder why nothing ever feels real. It doesn't feel real because it's not. I've helped thousands of entrepreneurs build real businesses through Impact Theory University, and the first step in the path to building a legit business is registering it. And Taylor Brands will help you do just that in a few clicks. An LLC, a limited liability company, is an official business structure. It's inexpensive to form and very simple to maintain. It's how you open a business bank account. It's how customers know they're dealing with a real company. And Taylor Brands doesn't stop at the filing.

• 0:45Tom Bilyeu?

  Their dashboard tracks what comes next based on what your business actually needs. So EIN number, registered agent, licenses and permits, bookkeeping, business banking. I tell every founder the same thing. Just make it official. Click the link in the show notes to check out Taylor Brands and get started on your business today. This is a paid advertisement. 2008, the housing market is euphoric. Everyone believes it is going to go up forever. Everyone, that is, except the quants who see the truth in the numbers. They know what the rest of us are going to find out very shortly. The housing market is a giant bubble, and it's about to burst. The numbers just don't add up.

• 1:30Tom Bilyeu?

  The subprime mortgages are a ticking time bomb. Given the default rates, collapse isn't just possible, it is mathematically certain, and then it happens. Bear Stearns vanishes in a week. Lehman Brothers collapses under hundreds of billions of toxic assets. Within days, the global credit freezes and entire industries flatline. It was the first time most people learned the words "too big to fail", and the first time they watched the government print trillions to stabilize the market. But it worked. Well, it worked like drinking to cure a hangover works. We printed money. And push the inevitable pain into the future.

• 2:13Tom Bilyeu?

  We layered on more debt, lowered rates to zero to keep the economy moving. And we somehow convinced ourselves that money really could be free. Tragically, as we're learning right now, it really can't. The illusion of free money has now metastasized into something far more dangerous than 2008. This is no longer just a housing bubble. It's an everything bubble. Stocks, real estate, crypto, gold, AI investments. All of it pumped to record highs on a decade and a half of cheap money. The quants see it all again. Debt is compounding faster than income. Interest costs are outpacing growth.

• 2:56Tom Bilyeu?

  Liquidity is pouring into every crevice of the market, including hyper speculative asset classes purchased on margin. The math of what is coming is clear, and it won't just be housing or banks that break. This time, it will be everything. And for anyone who's not prepared, it is going to be an economic bloodbath. We're going to cover what exactly is going on today in four direct parts. Part one explains why I am sounding the alarm as the market is hitting all time highs. Part two explains the math that guarantees, despite the all time highs, the system is going to break. Part three is a surprise you don't want to miss. And part four is the wise man's path forward.

• 3:41Tom Bilyeu?

  Problems are only interesting if you have a solution, so welcome to part one. Things look great, but we are totally screwed. The S and P 500 is up 16.5% year to date, and all major indexes hit record highs in late October. Home prices are still up over 45% from pre pandemic levels despite the rate hikes. Gold recently hit all time highs and the crypto market cap is back above $3 trillion. And the Dow Jones, it just posted its longest winning streak since.

• 4:20Tom Bilyeu?

  1987, if you're a part of the 10% of Americans that own 93% of the assets, this year, you have laughed all the way to the bank. Money is cheap, plentiful, and flooding into the market right now, driving valuations up on everything. Even Pokemon cards are selling for thousands of dollars per box. But the question is, what's really going on? Are asset values actually going up? Is the value of the dollar just going down? Is this a bubble filled by euphoria and speculation? Or is it actually different this time? Is the economy somehow so strong now that it will go up forever? Is modern monetary theory right?

• 5:03Tom Bilyeu?

  And we can just print money without any negative consequences? And why, if things are so good, is the average person needing to buy things on layaway? Basic things. And why should you care? Statistically speaking, much to my dismay, odds are low that anyone hearing this right now has a meaningful percentage of their income in assets. All right, let's speedrun those questions, and then I'm going to tell you exactly why you should care. Because regardless of how much of your money is tied up in assets or not, what's going to happen next is going to affect everyone. Are asset values actually going up? Yes. Asset values are a function of supply and demand. Is the value of the dollar going down? Yes.

• 5:46Tom Bilyeu?

  It is racing to zero. We add a trillion dollars to the deficit every 100 days. It will swallow the earth soon. Is this a speculative bubble? Aggressively. Humans are hyper-prone to psychological contagions. It's one of the key drivers of markets. Is it different this time? No. It's never different because the economy responds in predictable ways to stimulus. It's a complex system, but it's still a system. And like all systems, it obeys rules. If you hear people saying it's different this time, sell everything. Now, I'm not saying the economy is perfectly predictable. It is not, far from it. But I am saying that money has something...

• 6:30Tom Bilyeu?

  Kind of physics and what we're seeing right now is not normal market growth. It is a financial pressure cooker built on cheap printed money that drives inflation and extreme speculation, creating bubbles everywhere. When the dollar is devaluing through money printing, smart money flees into assets. When interest rates are low, money is easy to borrow, people borrow, and it floods into assets. When you can borrow money at six or seven percent and the S and P 500 is growing by 16.5%. You can understand why people borrow money at historic levels and plow it into the stock market on margin.

• 7:13Tom Bilyeu?

  But when you have that much liquidity flooding into the system, you begin chipping away at the stability of the economy as a whole, because everything becomes a bubble and all bubbles burst eventually. And unlike in 2008, which was largely a housing and banking crisis, this time, everything is inflated. Stocks, housing, bonds, crypto, art, even consumer collectibles. They are all levitating on the same tide of easy money created by a government that never met a dollar. It didn't want to print out of thin air. Now, do not get me wrong, bubbles can inflate for a very long time and I get why people want to get.

• 7:55Tom Bilyeu?

  While the getting is good, but there is a structural mathematical reason why this bubble is nearing the end of its ability to keep inflating. So, welcome to part two, the physics of money. Since 2020, the US money supply, known as M2, has grown by more than 40%. The fastest expansion in modern history. Roughly one quarter of all US dollars in existence were created in the last five years. Every 100 days, as I said, the federal debt increases by another trillion dollars. The national debt now exceeds $37 trillion, up roughly 11 trillion since 2020 alone.

• 8:38Tom Bilyeu?

  Interest payments on that debt just crossed 1.1 trillion dollars per year. That's more than the entire US defense budget. At current borrowing levels, every one percentage point rise in rates adds roughly 370 billion dollars a year in new interest costs alone. If average treasury yields returned to just their 2007 levels, annual interest expense would blow past 2 trillion dollars a year. That's roughly half of all tax revenue. Federal deficits are now running above 6% of GDP during peacetime,

• 9:22Tom Bilyeu?

  a level that we normally only see in an extreme crisis. US debt to GDP sits around 122% and is projected to exceed 130% within a decade, the threshold at which nearly every country in history has collapsed, gone into revolution, or defaulted. Meanwhile, the Federal Reserve has already had to take on over 7 trillion dollars in assets to prop up the market, and it can't sell them off without crashing the bonds market. And if it just keeps printing money to buy more assets to keep the markets humming, it will crash the value of the dollar itself.

• 10:03Tom Bilyeu?

  On paper and in real life, this situation is mathematically impossible to sustain. Debt is compounding faster than the income needed to service it. Think of it as a debt flywheel that is now running out of control, and unless the flywheel of accumulating, compounding debt faster than revenues increase, is halted, there will be blood. Remember, compounding interest is a perpetual increasing machine. Left alone, the debt just grows bigger and bigger by the day until the country has to default on its debt, obliterating its ability to raise sensible debt, which is actually necessary to run a country. And that's why economic warning lights are be-

• 10:48Tom Bilyeu?

  Beginning to flash all over the place. Markets are really just confidence Ponzi schemes. Don't forget that, and as long as people believe they work. When people lose confidence, however, the markets crash. And right now, it looks like people are beginning to lose faith. Crypto's momentum is fading. Gold has fallen off of its all time high. Housing is bending under interest rate pressure. Commercial real estate delinquency rates are now higher than they were in 2008. The stock market, long ago detached from fundamentals. Michael Burry, the big short guy that called 2008 right, is saying it's an everything bubble. Ray Dalio, the world's most successful hedge fund manager, thinks we're headed towards civil war.

• 11:32Tom Bilyeu?

  And legendary investor Warren Buffett says there are no deals to be had and is holding a massive amount of cash. Add to that the fact that there's over a trillion dollars in margin debt for the first time in history. And hopefully, it is very easy to see why we are in a very precarious situation. Hang tight, we'll be back in just a moment.

• 11:56Tom Bilyeu?

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• 12:41Tom Bilyeu?

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• 13:26Tom Bilyeu?

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• 14:12Tom Bilyeu?

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• 14:19Tom Bilyeu?

  All right. Thanks for sticking with us. Let's jump right back in. If I'm right, and these are signs that people are losing confidence in the market, if any kind of event comes along that causes distress in the market, prices can reset violently across virtually every asset class all at once, causing a massive loss in individual wealth. For everyday investors, the risk is massive. Home values could plunge, retirement accounts could get slashed, and hyped assets like AI and crypto could vaporize in a dot-com bubble-style moment with a massive contagion effect that will threaten many sectors of the economy. This time, we are not going to be able to print our way out of it,

• 15:01Tom Bilyeu?

  because we have already done as much of that as we can possibly do, as the math verifies. For 15 years, every crisis was papered over with cheap money. The mantra was to push interest rates lower and lower. But the economy runs on physics and prolonged cheap money creates bubbles. Now, if you're only half listening, this is the point where you stop and pay close attention, because I'm about to steal most people's copium. If you're thinking we can just keep printing money or tax our way out of this, consider this. After 2008, the Fed faced an impossible choice. Let the system burn or print insane amounts of money and flood it with liquidity.

• 15:45Tom Bilyeu?

  They chose the flood, a biblical flood, the kind of flood that would have drowned Noah. Quantitative easing, the rainwater, was supposed to be temporary, an emergency measure to restore confidence after the banking collapse. But when trillions in printed money stabilized the market and asset prices roared back, we learned a very dangerous lesson. That printing money works and a little rain can't hurt us. By 2010, the Fed had already expanded its balance sheet from under 900 billion to over 2 trillion. Within a decade, that number would exceed 4.5 trillion. But it worked well enough, right? So when COVID hit, they didn't hesitate.

• 16:27Tom Bilyeu?

  They printed even more money and bought up even more assets to prop up the market. Between 2020 and 2021 alone, the US printed roughly 27% of all dollars ever created in the nation's history. Stimulus checks, PPP loans, corporate bailouts, over $6 trillion conjured out of thin air in less than two years. And once again, it worked. Markets soared, unemployment collapsed, confidence returned. But here's the problem. Every time we used money printing to solve a crisis, we made the system more fragile. The dose that once saved us in terms of money printing now barely gets us high.

• 17:09Tom Bilyeu?

  And that's why the Fed's balance sheet now holds a ridiculous $7 trillion. The floodwaters are truly getting deep. The economy has officially become addicted to artificial stimulus. We just keep deficit spending and printing.

• 17:27Tom Bilyeu?

  To cover any and all shortfalls. And though we can look around and see the mass of Americans drowning in debt, unable to make ends meet, we just keep pretending that money printing works because markets keep rising. And inflation is confusing enough that the average person just accepts it. But the reality is that debt compounds. We mathematically cannot just keep printing money and not end up going bust as a country. We now spend over $2 trillion more each year than we collect in taxes. We already spend the $1.1 trillion in interest payments that we were talking about earlier, and there is no signs of that number slowing down.

• 18:09Tom Bilyeu?

  And because money has physics, we are now trapped. You can't print real prosperity. You can only borrow it from the future. And we have borrowed every dime that we can because that future always arrives. It's here, and it expects to be paid back with interest. The laws of money are simple. If you inflate the money supply faster than entrepreneurs can create new goods and services that people want to buy, prices will rise. If you borrow to pay debt, your interest costs will rise. And that's where we are right now, in the phase economists call fiscal dominance.

• 18:49Tom Bilyeu?

  Fiscal dominance means the government's spending and debt burden is now so big the Fed can't raise rates without seizing the credit market and causing the government itself to default, which would cause an economic calamity. The current bubble can't keep inflating because the central bank has officially lost control of its ability to mediate the markets through monetary policy. And that is why Trump and Powell are fighting. Here's how the fiscal dominance trap works exactly. When the economy is too hot, people are too exuberant, and bubbles are forming, the Fed needs to tighten the interest rate

• 19:31Tom Bilyeu?

  to slow everybody down and slowly deflate the bubbles. Money therefore becomes more expensive. to borrow, people can get a higher risk-free rate of return in treasuries and bonds, more money goes into government debt where it's safe, and overall asset prices cool down. That's where we are right now. That's what we need to do, but the Fed can't raise rates right now because we already have too much debt. If the Fed tried to raise rates right now to cool asset inflation, the cost of servicing the $37 trillion in national debt that we already have would spike, forcing the Treasury to issue even more debt just to make the interest payments. That would mean printing even more money, which would

• 20:15Tom Bilyeu?

  drive the debt and the interest payments higher, creating the need to print even more, and on and on it goes, in a flywheel of death. On the other hand, if the Fed tried to cut rates to alleviate the burden of the interest payments and ensure the government remains solvent, the cheaper credit would now flood the system with more money, and the bubbles would continue to inflate until everyone loses faith in the system. As we have already covered, we're already seeing the first signs of this happening. People are losing faith. Either way right now, no matter what the Fed chooses, it is a self-reinforcing doom loop. Lower rates create bubbles, higher rates create defaults. Either path feeds the same

• 21:00Tom Bilyeu?

  fire. That's the problem of fiscal dominance. So the question now becomes, if it's inevitable that these bubbles are going to burst, when are they actually going to burst? Welcome to part three, "Timing is Everything." The government is now borrowing $50 billion every single week. In the past 18 months alone, the US Treasury Department has raised roughly $2.5 trillion in new debt, largely purchased by the flood of excess private cash that had been sitting idle in the money market funds. That pool of easy buyers is now almost entirely drained, but the government's need to issue even more new debt hasn't slowed at all.

• 21:45Tom Bilyeu?

  In fact, it's speeding up as of today. The Treasury is on pace to issue over $2.9 trillion in new debt this year alone, which is the largest peacetime borrowing binge in American history. But this time, there's no spare $2.5 trillion in private money sitting around to buy it. That means the debt issued this year, and in future years, if we make it that far, will need to be financed by pulling liquidity out of banks, or the stock market, or other risk assets, by offering yields high enough to attract new buyers. But as we covered in the previous section, the Fed can't raise rates without breaking the system. So how do you keep raising new debt? Said simply, eventually, you don't.

• 22:30Tom Bilyeu?

  And even if you did, you'd be pulling money out of the part of the system that's already working. It does not take a genius to understand that someone with nearly $40 trillion in debt, who counterfeits their own money, spends like an unhinged hoarder on meth, and borrows $50 billion a week, isn't exactly creditworthy. So eventually, eventually, people stop extending them credit. Eventually, the constraint isn't liquidity or rates. It's confidence. People will not extend credit if they don't think they're going to get paid back. Markets can absorb almost anything except disbelief. When investors stop believing that the Fed, the Treasury, or the dollar itself

• 23:15Tom Bilyeu?

  can manage this mountain of debt without destroying the currency, that's when the system breaks. And it does not happen gradually. It happens all at once. A sudden loss of faith that freezes the financial world overnight. But the trillion-dollar question... Isn't if it'll happen, it's when it will happen. And the only honest answer is, no one knows for sure. But here's why the answer mathematically must be soon. Right now, interest on our debt is the third largest line item behind only social security and Medicare. And based on the latest Congressional Budget Office, CBO, projections from its budget and economic outlook, interest payments will eclipse Medicare before the end of this year,

• 24:00Tom Bilyeu?

  2025. For fiscal year 2025, the government collected $5.23 trillion in tax revenue. That means the interest payments alone already eat roughly 20% of all tax dollars collected. And here's a fun fact. The interest payments in raw dollars are expected to roughly double in the next 10 years. But in reality, I cannot imagine that will actually happen. Because who in their right mind would still be buying the debt at that point? And if people stop buying the debt, the government will be forced to default. And that is financial Armageddon.

• 24:42Tom Bilyeu?

  Stick around, we'll be right back after this. You're probably paying two salespeople to do one salesperson's job. That's where today's sponsor, Pipe Drive, comes in. An intelligent, AI-powered sales CRM loved by growing sales teams. Pipe Drive just launched meeting intelligence built right into the CRM. Before every call, it pulls deal history and past conversations into one brief. During the call, it records and takes notes. After it, it drafts your CRM updates to review and approve. So there's less admin and more selling. Switch to a CRM built by salespeople for salespeople and join the over 100,000 companies

• 25:27Tom Bilyeu?

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• 25:50Tom Bilyeu?

  All right, we're back. Let's get into it.

• 25:53Tom Bilyeu?

  So here is the cold fact we all have to face. When your debt is this large, there's only one real way out. You have to grow your revenues faster than the debt obligations compound. Everyone is going to scream "tax the rich", but even if you confiscated 100% of their wealth, forget tax, not even just their income. If you confiscated their total net worth, in a fantasy land, you would still only get about $7 trillion. And if you tried to do it in reality, even if you jailed everyone so they couldn't leave, the value of everything that they owned would plummet as you flooded the market. Wealth is a trapped asset.

• 26:36Tom Bilyeu?

  It is not that easy to turn into actual dollars. But even if you were able to get the fantasy payload, you only buy yourself a couple of years, a couple of years. So instead of calamity happening in, let's say, six or seven years, you become an evil dictatorship that strips your citizens of their freedoms and you steal all of their shit, and calamity still happens, but in eight or nine years. Boy, do I hope that sounds as obviously stupid as it is in reality. So that leaves growth. It is your only hope. We have to grow our way out of this problem if we want to delay what is currently mathematically inevitable.

• 27:22Tom Bilyeu?

  That's exactly what the Trump administration is attempting to do, all in an effort to lengthen the runway. They've got a three-part strategy that looks something like this. Part one, tariffs. Tariffs are essentially just taxes under a different name. They're designed to raise revenue without having to call it taxation. It has raised additional revenue, and the additional revenue is definitely helping, but it comes at a cost that could further weaken the system because tariffs also raise prices, which acts very similar to inflation. This will further pressure the Fed to tighten rates to try and tame true inflation, which is also... concurrently driving prices up. Part two is deregulation. The administration is trying to cut red tape and remove barriers to innovation,

• 28:07Tom Bilyeu?

  which spurs growth by kickstarting productivity and attracting investment back into US industries. The logic for sure is sound, because if we can make it cheaper to build, innovate, and hire, we can grow GDP faster than we are now and generate more taxable revenue and personal incomes. But the positive effects of deregulation take time, and the compounding effects of debt wait for no one. And it is not enough to grow. You have to grow faster than the debt compounds. And so far, there are no signs, no matter how much deregulation you do, that we're going to be able to pull that off. The third part of their playbook is to create new demand for US debt. Behind the scenes, this is probably the most novel and consequential idea that they've got.

• 28:52Tom Bilyeu?

  The push to back stable coins with US treasuries. I cover this in detail in this video, so you can learn more about it. But for now, just think of it as using sensible crypto regulation to create international access to dollars through stable coins. It would be a huge win for people around the world that don't have access to a stable currency in general, and US dollars specifically. And if the regulations forced stable coins to back one-to-one with US treasuries, it would be great for protecting the public, who have to fear Ponzi schemes. And perhaps most importantly, it would incentivize the private sector to hold more US debt. It's a very clever strategy, which will help a little.

• 29:36Tom Bilyeu?

  But honestly, unless we balance the budget, it only buys us a little bit of time. It does not actually defuse the bomb. Better than nothing, to be sure, but we still have a bomb that is counting down. But it is the kind of thing that makes a job of predicting when exactly the credit markets will freeze, and the US will be forced to default, ushering in the economic apocalypse, that much harder. Now, before I put a final answer to how long this thing is going to take, let me add one more log to this raging inferno of warning signs. Once a government spends more on On interest payments than it does in defense, infrastructure, or healthcare. Every election becomes a zero-sum fight over a shrinking pie.

• 30:18Tom Bilyeu?

  Each party stops debating how to grow the economy and starts fighting over which side gets what. The nation turns inward and begins attacking itself. The debt becomes the underlying cause of a domestic civil war. First fought through policy, then eventually fought through outright violence. And that's what history has shown over and over and over. As countries cross 130% debt to GDP, they break into outright violence, revolution, or just full-on collapse. And right now, the US is currently at 122%, a number expected to cross 130% within a decade. That's why social unrest and political violence are on the rise in the US.

• 31:03Tom Bilyeu?

  When the pie shrinks, people fight to ensure they get as much of the pie as possible for their team. And if our debt trajectory keeps climbing, America is just going to race further and further down the path of violence until ultimately revolution tips the tables of all of the debt system. The economic apocalypse happens and America finally hits the reset button. Now, if history is any guide, despite the reset, this is a brutal period of violence where exactly no one wins. But the final question remains, what will ultimately snap the system? When's that going to happen? What actually turns unsustainable into active collapse? There are a few possibilities. A failed treasury auction would do it.

• 31:43Tom Bilyeu?

  That's when investors just refuse to buy our debt without much higher yields. This would serve as a signal that confidence really is gone. It's the modern version of the Nixon gold shock. The moment the world realizes the US promises are not going to be honored. In the 70s, though, we still had plenty of tricks up our sleeve for dealing with the crisis. Now, we have few to none, other than AI becoming a miracle of productivity that allows us to grow our way out of this. A credit market freeze would also do it. When repo markets seize because there's not enough collateral to roll overnight. Loans and liquidity vanishes in hours. Or inflation could just reaccelerate.

• 32:25Tom Bilyeu?

  If prices spike again and the Fed is forced to tighten into an already weakening economy, that would trigger a cascade of defaults across both public and private debt. The Treasury would then have to choose between honoring its obligations or stabilizing the system. Either path is going to end in what Ray Dalio calls an ugly deleveraging, where debt restructuring on a national scale happens under emergency circumstances and the market just gets slaughtered. If any one of these catalysts hits, the everything bubble doesn't just deflate slowly, it pops and the reset begins. Now, how long do I think this is going to take? Based on the things we just walked through, I'm going to say no more than 10 years.

• 33:04Tom Bilyeu?

  But honestly, the debt flood waters are rising so fast and the system is so structurally unsound. I'm trying to build my ark now. So, welcome to part four, Surviving the Flood. Where we go from here? Every collapse is also a transfer of wealth. Money moves from people with debt to the people who are liquid and can buy the distressed assets. Money flows from the emotional to the disciplined. So the question isn't whether the system resets or even when it's going to reset. It's whether you're going to be solvent, educated, and ready when it resets. First of all, please do not try to outsmart the market. Accept radical uncertainty.

• 33:48Tom Bilyeu?

  Getting the timing right in the market is next to impossible. Even heavy hitters like Michael Burry and Peter Schiff have been criticized for predicting 20 of the last two recessions. And the biggest names in the game, people like Soros, understand how unpredictable things can be left to their own devices. So, big secret, they don't leave things to their own devices. They get involved in international politics. They fund campaigns, NGOs, and foreign governments. Soros is famous for literally breaking the back of the British pound. And guess who helped him? The current Secretary of the Treasury, Scott Beson. These guys know how to play games. That the average person is just not prepared for.

• 34:32Tom Bilyeu?

  When you're playing in the market, you're going up against people like that. Have the humility to know there are people and forces at work that are effectively impossible to map accurately. Worst of all, you can be right on the direction of things and still get the timing wrong. I remind myself of this constantly. And if you're leveraged, getting the timing wrong is the same as being wrong. So your edge is discipline. Preparation, position sizing, having personal rules, hedging your bets and being patient. Think Dalio's approach of systems and diversification over trying to outsmart the quants and the ultra wealthy who can sway international markets.

• 35:14Tom Bilyeu?

  Or Buffett, who takes a fundamentals and price approach, eternally being patient and looking for good deals and only moving when there's a deal to be had. Here are the kinds of operating principles to consider if you're going to take this approach. Build a portfolio around uncorrelated asset classes that won't all go up or down at the same time. It's going to limit your upside, that is true, but it's also going to limit your downside. This is what Ray Dalio calls an all-weather strategy. Remember that financial assets have fundamentals that make them attractive in the long run. Focus on those fundamentals and look for quality assets at the right price.

• 35:55Tom Bilyeu?

  Look for businesses and assets that can withstand funding stress and price shocks. Never forget that liquidity is oxygen. Debt gives you leverage, but it also puts you at risk. Keep cash on hand to keep your options open. The levered die first. Inflation is a risk to watch out for, but it's not nearly as risky for the average person as debt. Build your portfolio based on rules. Not on your certainty around where the market is going because you're inevitably going to be wrong about that. The only thing I can guarantee you about the future is that it will surprise you in some way, even as it adheres to timeless patterns.

• 36:39Tom Bilyeu?

  Again, you can be directionally correct and still get clobbered by bad timing. All right, that covers the Dalio and Buffett approaches, at least in a nutshell. But there's a new voice that shares Dalio's historical lens, internalizes the influence that debt and policy have on economic movements, and puts together a game plan for investing during fiscal dominance. That phase where government spending and debt are so insane and over the top that the Fed can no longer come to the rescue. It's a plan popularized by Lynn Alden, and it goes like this. There are three pillars to her diversification strategy. Pillar one: profitable growth equities. This is about 50% of your portfolio and is focused on businesses with pricing power,

• 37:24Tom Bilyeu?

  real margins, and the ability to grow cash flow even when the market is distressed. Pillar two: defensive assets in the form of cash and cash equivalents. These are short-duration, high-quality, and instantly deployable. They provide optionality and safety when volatility hits. This should be about 20% of the portfolio. Pillar three is inflation protection in the form of commodities and hard monies. Think energy, commodities, precious metals like gold and silver, the companies that pull them out of the ground, and things like Bitcoin. This is going to be about 30% of the portfolio. Exact percentages will vary based on your own assessment of the markets, expected returns, etc.

• 38:07Tom Bilyeu?

  But that gives you a rough idea of how to hedge against uncertainty during fiscal dominance. Now, why these approaches work in an everything bubble is because they acknowledge the inherent uncertainty of timing while accepting that the math is clear. The debt flywheel guarantees that the bubble is going to burst because the economy is full of wild distortions right now brought on by government interventions that have walked us into a trap where we break the system no matter what we do short of extremely unlikely levels of unprecedented growth. Burn into your psyche that you don't beat a debt cycle with clever trades.

• 38:49Tom Bilyeu?

  Survive it with positioning that acknowledges the inherent uncertainty around timing. If you're trying to nail the exact top or bottom, you're competing with supercomputers, AI, and people rich enough and well-connected enough to move global markets. You will lose that game. You win by preparing for the fact that in a true ugly deleveraging, wealth moves from the leveraged to the liquid. So your job right now is to get liquid enough to capitalize on opportunities, stay disciplined enough and avoid emotional moves, and stay in the market enough to not get eaten alive by inflation, should this all play out on a longer-than-expected timeline. What you should staunchly avoid doing

• 39:33Tom Bilyeu?

  is all-in, all-out flips based on headlines, reaching for yield in junky, hyper-speculative assets based on FOMO, using margin to buy the dip, assuming everything will just keep going up forever, and saying anything, even remotely like, "This time it's different." Math is math. It's never different. In the end, what's happening right now is not about fear, it's about the physics of money. We've acted for so long like we can deficit spend forever and that money can be printed for free, but now, the bill has come due and we realize there's no free money. The only way to avoid the devastation of compounding interest is to pay off your debt.

• 40:15Tom Bilyeu?

  But, we've pathologically refused to even balance our budget, let alone pay our debt. So now, the floodwaters really are rising. Barring historic levels of growth we have no reason to believe will happen, the economy is going to break under the weight of our debt. The final boss of the economic game is always compounding interest. It eventually demonstrates to the market that the debt will not get paid back, that debt holders will lose their money. And when that happens, confidence disappears. And when that happens, the government can no longer raise money through debt. And when that happens, the country defaults. And when that happens, it's game over. So plan now. Build an all-weather strategy now. Because when the flood happens, it will be a flash flood.

• 40:58Tom Bilyeu?

  And only those on an ark are going to survive. If you guys are getting value out of this, make sure that you leave us a five-star review wherever you listen to your podcasts. And until next time, my friends, be legendary. Take care. Peace. Let's talk about a pattern that is guaranteed to be killing your progress. You know what you need to do. You need consistent nutrition. We all do. You need vitamins, probiotics, greens. We all know that we should be doing more of it. When your morning gets chaotic, you skip it. When you travel, you skip it. When your routine breaks, everything tends to break, and that inconsistency compounds against you every single day. AG1 is designed to solve the execution problem. One scoop, eight ounces of water,

• 41:38Tom Bilyeu?

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