Why 3 Private Companies Are Worth 45 Years of Public Tech — And You're Locked Out

For 26 weeks straight the US has quietly drained its emergency oil reserve to the lowest level since 1982 — and Felix Prehn says that's just one of three things that broke this month. Tom Bilyeu and Felix break down the manufactured calm, the Treasury buying its own debt, and why 3 private companies now outweigh 45 years of public tech listings. Here's what the skilled money is actually doing. Tailor Brands: Check out Tailor Brands to get started with your business today: https://bit.ly/TailorBrandsSept Quince: Free shipping and 365-day returns at https://quince.com/impactpod ElevenLabs: Book your demo at https://elevenlabs.io/impactpod Cash App: Download Cash App Today: https://capl.onelink.me/vFut/v6nymgjl#CashAppPod *Cash App is a financial services platform, not a bank. Banking services provided by Cash App’s bank partner(s). Prepaid debit cards issued by Sutton Bank, Member FDIC. Cash App Visa® Debit Flex Cards issued by Sutton Bank, Member FDIC, and The Bancorp Bank, N. A., pursuant to a license from Visa U. S. A. Inc. See terms and conditions for the Sutton prepaid card, Sutton debit flex card, and Bancorp debit flex card. Cash App Green features, Savings, Direct deposit, Round ups, Overdraft coverage and Discounts provided by Cash App, a Block, Inc. brand. Visit cash.app/legal/podcast http://cash.app/legal/podcast for full disclosure. Pipedrive: Get more leads and grow your business. Go to https://www.pipedrive.com/impact and get started with a 30-day free trial. Surfshark: Go to https://surfshark.com/TOMBor use code TOMB at checkout to get 4 extra months of Surfshark! 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 What's up, everybody? It's Tom Bilyeu here: Want my help starting a business? Join me here inside 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 Sign up for my AI Masterclass: AI Masterclass https://tombilyeu.com/ai-masterclass?utm_campaign=Live%20Masterclass&utm_source=podcast&utm_medium=evergreen Follow Me: 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 See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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• 1:37Speaker 00

  Investors are looking at how the government is treating the economy and things are not adding up. If you don't understand this, then you are definitely going to get hit by something.

• 1:46Speaker 02

  For 26 weeks in a row, the US government has been quietly draining America's emergency oil reserve. Literally every single week. And it's now at the lowest level since 1982, which is a 44-year low, and nobody seems to have noticed.

• 2:02Speaker 00

  Now, listen, this is but one of the many things that people are going to need to be paying attention to in terms of what's going on in the economy right now. This is the Wild West. We are watching the entire world order change. We are watching late-stage investing change. This is so many things that are coming together all at one time that is allowing basically people's savings to get completely obliterated in real time, completely nakedly, above board. It's happening for everybody to see. But the real question is, what regime are we living in? Is this where we can just use the traditional playbook that you would use when you have inflation? Or is this something different? Ultimately, that's what everybody's trying to figure out.

• 2:45Speaker 02

  And I almost scored past it myself, but I couldn't quite leave it alone. Because this was never really about the oil. America pumps more oil than any country on the planet. It exports the stuff. So why would anyone empty the emergency tank week after week at the exact moment the country doesn't need to?

• 3:04Speaker 00

  Actually, a pretty good reason.

• 3:06Speaker 02

  I think I know why. And it's kept me up a couple of nights since, because it lines up with two other things that turned up this month. And it's the three of them landing together at once that actually worries me. On their own, each one is just, just a thing. You kind of go, yeah, okay, whatever, oil, you know? But together, they actually tell you what's being set up. And the last time I've seen this setup, ordinary savers got cleaned out. While a small group who saw it coming walked away well, a heck of a lot better off than they'd been. And by the end of this video, if you give me a few minutes, you know exactly what the skilled money is doing right now.

• 3:48Speaker 02

  And you'll have seen the one number that made me move what I'm doing just a couple of days back.

• 3:54Speaker 00

  All right, we're actually going to be talking about something very specific towards the end of the video in terms of what specifically you can do to protect yourself from what's happening right now. The reality is, the average investor is going to be running a nice, traditional, simple path forward. Get into assets and avoid everything else. We're going to talk about whether that's going to work in this context. But the average person that's just saving money always gets obliterated. So that unfortunately, regardless of whether we're going into a new regime or not, that person is going to be hurt. And as we go, you're going to see that sort of a default stance isn't going to work, given how many different things are happening right now. So getting specific about, because I'm assuming everybody that can hear me right now, you guys are all invested.

• 4:39Speaker 00

  I'm not reaching somebody that's never considered investing before. So you guys are already invested. So the question is, what is going to survive as things begin to change? Where exactly in the investment stack do you want to be?

• 4:54Speaker 02

  Now, I appreciate I'm sitting in a hotel room here in Tokyo. And therefore, this might be a little bit, you know, unstructured. I apologize for that. But I'm going to put together a PDF report with everything that's happening here. What affects your money, what the big players are doing and so on. And it's completely free. You can download it, zero catch, research report. Just go to felixprein.org/ I think research is the link. It's down below in the description. Just grab it, read it alongside this, or read it afterwards. And actually, the fact that you're even here and watching this is amazing because, you know, you could be watching a cat video, let's face it, right? So pretty tough competition. And that's why most people are going to find out about this like in a year or two, when it's too late. So you're finding out about it early, so well done. Tap yourself on the, pat yourself on the shoulder.

• 5:37Speaker 02

  And then if you're wondering who the heck I am, my name is Felix Prehn. I used to be an investment banker, an economist. And then I got out and I started teaching people about six, seven years ago or something. And it's been really, really fun. And I'm sitting right now in, you can just about make it out, in Tokyo, which is, which is an interesting place to be with everything that's going on in the world right now. Now, this video is also now sponsored. There is nobody who's sending me anything for it, which is brilliant. Which means I can say exactly what I want to say and that's exactly how I like it.

• 6:08Speaker 00

  I'd listen for it.

• 6:08Speaker 02

  Now, I'm not going to run you through how big the debt is or any of that, because you basically know that if you don't, you know, watch one of the debt videos we've done. But what matters for this video is one thing everybody already accepts. The debt's enormous and it only gets more expensive over time, right? Fine, that's.

• 6:26Speaker 00

  Okay, not to blow past that, because basically, as we're recording this, the bond markets everywhere are blowing up. Interest rates are getting higher and higher. This is part of what's creating the urgency right now is when the US was in a low-interest rate environment, it could survive a lot of the debt that we were stacking up. I think the debt was always immoral. It was always irresponsible. But it was something that we could deal with when your interest rates were at or near zero. But now, we're, as of recording this, we're north of 5% on the 10-year, way above that on the 30-year. And so obviously, that's putting the government in a fiscal crisis where they're going to get eaten alive by the interest unless they do something about it.

• 7:11Speaker 00

  Now, there's a background play that's being run by Besen that we're going to talk about as we go along here. I don't think Felix really gets into it, but I think it's important to understand. So I'll be sure to pepper it in. But there is a very conscious movement of capital right now. You can take a conspiratorial look at this and you can say the global banking elite are pulling a fast one on us and they're strip mining the West and they're just going to move on to the next place on earth that is going to generate a tremendous amount of wealth. And then as we get late-stage there, we're going to strip mine that as well. Or you can look at it as this is just purely mechanistic and the way the politicians work to get the vote, they're going to have to convince people that they're going to give them something for free.

• 7:53Speaker 00

  It is the time-tested method of making sure that you get re-elected. No matter how you look at this, whether we're being strip mined or whether politicians are just trying to get elected and whether culturally we're just moving more towards social programs, socialism, it doesn't matter. There is a mechanism by which the theft happens. And as you begin to understand the mechanism by which it happens, that is going to inform the way that you actually move your capital. But understanding the gun to our head right now is what's going on with interest rates.

• 8:28Speaker 02

  Basically, the backdrop, that's not what this is about. Now, the one thing worth holding on to is however this. When a government is trapped like this, there is only one way out. And that one-way out doesn't involve paying for politicians, which is really what their motivation is. So what do they do? They push the interest rate back down and you keep inflation higher.

• 8:51Speaker 00

  So here's the wild thing. We actually don't only have one way out. It's just what Felix knows, which unfortunately is true, is that it's the most likely path that we're going to take out. But the reality is that we do have other options. So namely, we could do what we should be doing, which is austerity. We need to stop deficit spending. The only path forward that I consider moral at all is to actually get in a position where we have a balanced budget. And if you look at what's going on in Argentina, that's exactly what you see there. You've got over 100 years of asinine socialist policies that have turned them into an economic backwater. They go from being one of the most vibrant, thriving economies on planet Earth,

• 9:34Speaker 00

  a place in the 20s that the US was losing to in terms of getting immigrants the world over to come to, because people saw more opportunity in Argentina than they saw in the US. Sit with that for a second. But then they end up imploding their own economy by, because things were going so well, getting into redistributive policies that end up breaking the back of the functional economy. And their engine of growth stalls out. And then everybody can feel that they're fighting for a shrinking pie and they start fighting dirty at the level of politics. And you get into ever-escalating redistributive methods. And because there are fewer dollars being generated in terms of taxable revenue,

• 10:18Speaker 00

  you start upping the tax to try to get back where you were. But then the only politicians that can get elected are the ones that are promising to give free things. And so you get into this loop where you're exacerbating the problem. So recognizing austerity is precisely what we should be doing. And so, yes, we're going to get to what you guys should be doing with your money. But at the same time, for the love of God, we've got to get out of this madness. And the other option, maybe even more traumatizing, which is that if we wanted to get out of this without changing the amount of money that we're spending, we would have to get into socialism levels of taxation. Now, if you're hate watching this, I will just tell you that when you start talking about that, you're not talking about taxing the wealthy.

• 11:01Speaker 00

  You're never going to be able to tax the wealthy enough in order to cover it. You're going to have to do what the Nordic countries do, which is a gigantic broad-based tax system that taxes everybody a massive amount. Then the third option is growth. So we could try and grow our way out of this. That, of course, is the drumbeat that you're going to hear from Trump. But the reality is that hasn't manifested yet. And it is very hard to grow your economy enough to get out from under the kind of debt that we have now. We saw it, we did it after World War II, but we would need AI to deliver massively. And we're going to talk about why there are risks there that I think people are being way too optimistic about.

• 11:41Speaker 02

  So don't worry about the debt and worry about what they're willing to break to make it cheaper. And where I'm right now in Japan, they've been doing this for the last 20 years, quite successfully, I must say, and you're...

• 11:54Speaker 00

  It depends on what you call success. They have been stagnant for nearly 30 years. People working at one company their whole life, which might sound good, but that absolutely robs the dynamism from the corporate ecosystem. And what you end up getting is all these zombie companies that are able to overcome the hurdle of debt because to borrow, the prices are so low. But the company, if subject to true market forces, would fold. And so that's why Japan went from basically a very Chinese-like position now where they were contending with us for the number one economy in the world. And then literally overnight, poof, they're gone and effectively haven't been heard from for almost 30 years.

• 12:38Speaker 00

  So yes, Japan is lovely, yes, Tokyo is lovely. But if you talk to people about their quality of life, it's going in the wrong direction.

• 12:45Speaker 02

  Working man, the salary man, has been paying for it. And it's going to be the same for you in the US and in Europe and the UK and pretty much everywhere else in the world. So let me run you through the three things that have just broken and why that matters, but they're all happening together. One, oil reserve. Okay, the American Strategic Petroleum Reserve is basically the backup, right? So the hurricane takes out the Gulf, the war shuts down the shipping lane or something, that's the tank you open so that, you know, things can sort of move in. And it's at the lowest level since 1982. And the president just released another 400,000 barrels last week, 26th week in a row of it declining. No one's adding to it, it's just declining.

• 13:27Speaker 02

  And that reserve about a decade ago was almost three times as big. So they've been running this tank down for quite some time, but very, very rapidly the last year. Now, the president said 22 days ago that he'd start refilling it with Venezuelan oil. So where is the Venezuelan oil? Well, Venezuela pumps about a million barrels a day. Tankers take about 30 days to load it and just get it out of there. And even when it does load, the Venezuelan stuff is heavy, sulfur-rich stuff that doesn't meet the reserve specifications. It's just the wrong kind of oil that doesn't refill the tank. So it's just, you know, politics. The Venezuelan oil industry has also been falling apart for the last 20 years. The fields are neglected, the refinery is barely running, the crude that does come

• 14:11Speaker 02

  out, as I say, it's that really, really thick stuff. So...

• 14:14Speaker 00

  He's right about that. It's definitely not going to be a very simple fix. You can't just pour that on top of the sweet crude that we're used to dealing with. However, having a strategic relationship with Venezuela, I think is going to be extremely advantageous to the US. Whether it was moral or not is a totally different question. But will it be advantageous to the West if we find that everything in the Middle East just continues to be a quagmire? We're not able to get out of that. Being able to make the sort of Greater America project where if we can get a deal with Alberta, plus what the US already does, plus Venezuela, now you're talking about the biggest energy block on planet Earth by a lot.

• 14:56Speaker 02

  This is going to be important in about 10 to 20 years. That's the time scale to really, really get Venezuela up to speed.

• 15:03Speaker 00

  Again, even right now, Venezuela is a major player on the international stage. He's right, it's going to take a long time to scale that up to where we know that it could be, which is another vote against socialism and communism, which is exactly how they ended up breaking all of their industry because the US was in there, US companies were there, helping them build that, scale it up. And when socialists took over, it just went down and down and down for reasons I won't talk about right now.

• 15:31Speaker 02

  This isn't a short-term solution. It's just a headline they put out to kind of, you know, fugazi you a little bit. So ask yourself the obvious question. Why do you empty your emergency tank when you produce more oil than anybody on Earth? Well, it's simple. They're using it to hold down the oil price because if oil spikes even further, on top of anything else, the inflation number goes from awkward to unmanageable just to the night. And a bad inflation number is the one thing that stops them doing what they need to do, which is print money.

• 16:02Speaker 00

  Okay, so an interesting bit of context here. What I find fascinating about this is if we were trying to actually build that stockpile up now during a disruption, we would essentially be competing with people that are trying to buy the oil and put it into their car or to their business or their house to heat it, whatever. So to build up our strategic reserves right now isn't because, oh, we don't care about the strategic reserves. It isn't, oh, we don't have access to the oil. It's simply, we don't want to compete with other customers.

• 16:36Speaker 02

  So they're leaning on the reserve to keep the pump price looking just about acceptable. It's sort of a shock absorber, right?

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• 20:07Speaker 00

  Thanks for sticking around. Let's get right back into the action.

• 20:10Speaker 02

  It's a trap because the only way to hold down the price is letting the oil out of the tank, but the tank is almost empty. So what happens when it finally runs dry or when a real shock returns? Like we could get another hurricane. Like we have them up all summer, which is very unusual. First time in 22 years. Hmm. The, uh, the, the world is, uh, is, is, is ending crowd hasn't mentioned that one. I know. Um, Middle East war could get a lot worse, right? Well, what happens then? Well, the price then spikes and diesel jumps first, which is already done, uh, because that's what we used to move freight. And then the second diesel jump, everything that travels on a lorry gets a lot more expensive, which is basically everything that you buy. Food, building materials, everything.

• 20:54Speaker 00

  That's a big one. I don't think people are taking into consideration is what have we already locked in in terms of the next year? Even if we're able to get rates down very quickly for whatever period of time that they were elevated, um, either companies are going to have to absorb all of that increase in cost, which is very unlikely, or it is going to find its way into the system. Some of this is going to come down to, you know, uh, exactly how much oil we're able to sort of sneak out through the strait of Hormuz right now. So that true disruption uh, is very limited. We're right now as of the time of recording this, we're at rough parity with where we were before the war. So if we stay there and the disruption is over, it's just very dicey in terms of getting it out. Um, then it's going to have a much smaller impact.

• 21:39Speaker 00

  But if we were to have another crop growing season, for instance, that doesn't get what it needs from a fertilizer perspective, you could really be in rough shape with the cost of food, for instance.

• 21:49Speaker 02

  So they're borrowing calm from tomorrow to make today's inflation number look a little bit more socially acceptable, possibly before the election. I mean, I don't want to imply anything here, but you still know what I'm saying.

• 22:01Speaker 00

  You can imply. You can state it nakedly.

• 22:03Speaker 02

  Right. And, and therefore the calm, the relative calm is manufactured. The emergency tank is almost gone. So now you know, it's actually a lot worse than it should be. Oil and diesel prices. So what do you do about it? Well, they tell you and it costs you nothing. Inflation is going to eat you alive and it's going to be pretty, pretty harsh and literally come to Japan and talk to someone who's worked in a corporation for 20 years for a salary, and they'll tell you exactly that, that they are much, much worse off than they were expecting to be. Whereas the top 1% of the country is living an absolutely wonderful life because it doesn't affect.

• 22:41Speaker 00

  All right. There's a mechanism for this. And man, if you're in the West, especially if you're in America, you've got to understand exactly why the top 1% does well. And then everybody else ends up getting hammered. The reason is that when you invest in assets, which I know you guys already understand, but the part that I think people often miss is as your assets go up in value, you then sell some of those assets. Now, when you sell it, you've got post inflation dollars. And so that becomes the big thing. You're basically hiding wealth from inflation. And then as that goes up in value, you sell that off. And now compared to people that were getting eaten alive, you've got a way bigger pool of post inflation dollars than they have anything. So that is the mechanism that people

• 23:25Speaker 00

  are so often blind to. This is why one of the drums that I beat to death is that the asset class is available to everybody and becoming more available by the day. It's just that people don't avail themselves of it because we don't teach any economic literacy. And so a big part of my hope is that people will start spending the time to understand that you're basically just stepping outside of the inflatable system into something that is not inflatable. This is why they talk about in times of trouble, people escape to what can't be printed. This is why precious metals become so sought after in, um, high periods of turmoil where they know, all right, they're going to deal with all of this disruption by printing money. So I've got to step outside of that system. And then when you step back

• 24:06Speaker 00

  in, you get that the advantage of the inflation, you get to be advantaged by the inflation.

• 24:14Speaker 02

  It's very unfair, but that's the system. And that's the system being deployed once again in the U.S. And it's going to affect you. So I'm going to run something for you this weekend, live here from, from, from Japan. For two hours, we're going to sit down together. We're going to go through exactly how to build a plan for this for your money, for your retirement before the calm breaks rather than after, because then it's too late. So I'm not going to give you a PDF for it or something that you're going to skim through and then forget. No, we're going to do it live, the two of us, hell, probably a few thousand other people, but you know, live. And we're going to walk you through what the big players are doing right now and how you can copy the sensible parts of it around your own life. And you

• 24:55Speaker 02

  can grab yourself a free ticket for that at inflationtrap.com. Go and grab a seat while you're thinking about it because there'll be no replay. Uh, it's just going to be live. If you're there, you're there. Um, and if you're doing that, um, write thrive in the comments down below because that's my goal for you. If you come out of this thriving like the top will, the top will come out of this absolutely wonderful, politicians will come out of this absolutely wonderful, but honestly, most people, they're going to, they're going to suffer some real pain, not in six months, but a little bit further down the road. And therefore they're not going to notice so quick.

• 25:27Speaker 00

  Here's the bad news. They're already suffering it. It's already happening. It happens every day. We are billions of dollars every month inflating the currency.

• 25:35Speaker 02

  And let me show you the second major issue you need to understand. And it's the one that, you know, made me sit up and approve my posture. It's, it's the treasury. The U.S. Treasury just announced it's doubling the amount of debt it buys back. Four billion dollars each time now. And, and it's called liquidity support because it sounds sort of vague and fluffy and, and you know, like kittens. So nobody knows what it means. So what does it actually mean? The government borrows by selling bonds. So IOUs. Now, not enough people want to lend the U.S. at a reasonable price that the U.S. can afford. So the government now buys its own debt.

• 26:14Speaker 00

  And that's wild, by the way.

• 26:16Speaker 02

  That sounds weird, right? Um, because normally it's foreign governments have been buying it. Japan, the Gulf states, the big pension funds and so on. And they're happy to park their money there. But the problem is not that people don't want to buy U.S. debt. It's just there is a lot more U.S. debt being sold every week and there are not enough buyers.

• 26:33Speaker 00

  Unfortunately, it's both. We have done dastardly things that really kicked off properly when we froze the assets of Russia and people realized, oh, the U.S. is not only printing money and inflating it to high heaven, but they will freeze the assets of people.

• 26:48Speaker 02

  So what do they do? Well, they sell the debt to themselves. Yeah. That's kind of like me saying, oh, Felix, could you lend me a thousand dollars? And I'm going, sure, Felix, here's a thousand dollars. I just printed it. And I go, oh, wonderful. Thank you very much. I mean, that's literally what it is.

• 27:05Speaker 00

  It, it is quite literally legalized counterfeit.

• 27:09Speaker 02

  An absolutely bizarre system, exactly what they've done here in Japan for the last 20 years. And once a country becomes the main buyer of its own debt, it crosses a line. And history is not that kind about what usually comes next. It's a pattern. You can see it again and again and again.

• 27:26Speaker 00

  It's a desperation move. It puts you into the situation that we're living in now, or you can have Japan's flavor. So our situation is that we've got so much debt, it's compounding every year and interest rates are ridiculously high. And so now the interest is eating you alive. Japan spent nearly 30 years keeping interest rates effectively zero. Um, and so they could do it forever, but you're not going anywhere as an economy and you're now subject to the problems coming from the outside, which is exactly what finally broke the back of it, which is precisely why interest rates are going up in Japan now. They had so much inflation that built up via COVID outside of Japan and it just could not be kept out. And so you had them for decades, you would get a job and literally for 20 years, you'd

• 28:10Speaker 00

  get paid the same salary. But that was no big deal because everything in the grocery store costs the same amount. So you were stagnant, but at least you weren't inflating. Then they started getting to the point where they had inflation and you were going to have to address that. And so the entire structure of the economy in Japan is breaking. Interest rates are going up. People are expecting raises at work. They're actually getting raises at work. Things are getting more expensive in the stores. And if that had been from innovation, if companies had been going crazy and building and innovating and people were getting richer and spending more money and that created the inflation, what I call innovation led inflation, you'd be in great shape. Unfortunately, it's crisis led inflation, which is a problem. And now they're having to react. And the average person that doesn't

• 28:53Speaker 00

  understand assets is now about to get beaten about the head, neck and chest with the inflation stick. So not, not good.

• 28:59Speaker 02

  So follow the money because this is the whole trick in this case. So the Fed prints new money. It buys the government's debt and the debt that is then used. So the cash, this is confusing, isn't it? So here's the.

• 29:14Speaker 00

  I bet he just cut out a mess up there. It is so hard to keep this stuff straight because it is absolutely retarded.

• 29:19Speaker 02

  The Fed prints money and with that money, it buys short-term debt from the U.S. government. And the US government therefore has cash, right? They then use that cash to buy its own longer term debt, the stuff that

• 29:33Speaker 00

  Okay, if you think about how this really functions behind the scenes. So if you want to buy long term debt from the US, you can't just be an average person off the street. This is going to banks and institutional buyers. And there's very little liquidity at the long end. And so if you see that rates are going up, which is exactly what Besen is doing, despite Druckenmiller, his mentor telling him it's a terrible idea. But you're going to look at that and you're going to say, okay, I've got to calm the market. This is what Felix is talking about. This calm is manufactured. And one of the ways you manufacture it is you create liquidity on the long end by issuing new debt, but on the short end. And so with the new debt issued on the short end, then you're able to start attracting buyers for that short term debt

• 30:16Speaker 00

  to help get the long term debt guys out. But if you become the primary buyer of that short term debt, you're back in the just counterfeiting your own money scenario. It's absolutely ridiculous. And this is how empires die and certainly how people go broke unless they own things that can't be printed.

• 30:35Speaker 02

  It's 10, 20, 30 years long. And that does one thing. It lowers interest rates artificially. So we create new money at one end and it comes out the other end, holding down the government's own borrowing cost. It is just money printing. That's really all it is. It doesn't matter what they call it, doesn't matter how complex it seems. It is just money printing. And you will remember last time they printed money, which was during COVID, right? They added 40% more money in just a couple of years. And what happened? Well, inflation went through the fricking roof, didn't it? Officially 11%, which of course was a number they made up entirely. And it is actually way, way, way worse. Ask me, I think it is a couple of hundred percent, but we don't need to get into that.

• 31:16Speaker 00

  Yeah, the numbers that I see are 30%. I think that's the probably most cited number. Absolutely brutal.

• 31:22Speaker 02

  So it's a magic trick. It's the same rabbit, it's a different hat. They called it something else. And it means that every dollar you are holding, every dollar you're getting paid is going to get watered down just a little bit more. And if you're waiting to notice that, it will be too late. So maybe come in line with us. It's free on Saturday at inflationtrap.com because this is, this is the thing that's going to really set people apart for a lifetime. Seriously, this is a big one.

• 31:53Speaker 00

  It's, it's certainly true that if you don't know what's coming, you're going to get clobbered by it. That's for sure.

• 31:57Speaker 02

  And this is what tells you where the money is actually going. This month it is reported that SpaceX, Anthropic and OpenAI, three private companies are worth more than every single US company that went public in the last 45 years combined.

• 32:13Speaker 00

  Dude, that is so crazy. People, uh, yeah. So one, we have to talk about how this is actually happening. This is such a big deal. So this is another way that the average even investor is getting screwed over. Is previously, the whole way that things worked is you had investors, they would come in early stage, get a company going, and then they would help them IPO pretty early on in their lifecycle to compare to what we're doing now. Now they're holding these companies private for 10 or 15 years so that all the private investors can basically get the vast, vast, vast majority of the value. And then this is me speaking, you're not gonna, not everybody's going to agree with what I'm about to say.

• 32:57Speaker 00

  But you basically turn people into the exit liquidity. And that is, that is dastardly. Now, do I still, am I glad that people have access to these companies? Yes, of course I am. It's better than not having access, but it increases the number of people that are going to buy at the wrong price and end up getting hurt by this. So yeah, it's wild.

• 33:17Speaker 02

  Say that again, just three companies that you and I cannot buy. Well, one you cannot buy SpaceX, the other two are planning to list. They're worth more than 45 years of public tech listings put together. So every tech company you've ever heard of, that you have ever owned a stock in, these three companies are worth more than all of them together.

• 33:39Speaker 00

  To give you an idea of scale, when Microsoft IPO'd, it IPO'd for less. Its valuation was less than a hundred million dollars. That's crazy. Microsoft.

• 33:49Speaker 02

  A huge wealth power being created behind a door that most investors are locked out of. So even the upside, the good bit, the growth is being funneled to people who are already, well, behind the very special platinum door. And where does that leave the money that you can reach? I mean, the money in the public stock market. Well, it's more crowded than it's ever been. American households have never in history been more exposed to the stock market than they are right now. About a quarter of all US net worth is tied up in stocks.

• 34:21Speaker 00

  But even with that, 10% own 93% of the assets. That's the bad news.

• 34:25Speaker 02

  It's higher than during the dot com peak. That's higher than in 2008. It's the highest ever recorded. And it's piled into just a couple of names. Because the five largest names in the S and P are now 30% of the whole index. So if you have that safe index fund, which you definitely do because it's in your pension fund or your 401k or something, it's basically writing on just five tech stocks who all pretty much do the same thing. So people think there is this safety in an index fund and I love an index fund. It's, I mean, don't stop investing, do buy index funds. But you need to understand how concentrated that is and how that impacts everything else that you could then possibly be doing.

• 35:06Speaker 02

  Because this bubble is going to crack, not this week, not this month, not next year maybe, but it's going to crack at some point because every bubble it always has.

• 35:14Speaker 00

  Yeah, that, that's the bad news. And when you start looking at the valuations, the difference between what they used to be and what they are now, it is really pretty crazy. There's something called the Cape index or the Cape ratio, where you look at basically the average of, I think it's a 10 year stretch of the earnings that the company got compared to what they're being valued at. And that traditionally runs, I think the number is like 16, 16x. We're now over 40. And every time that we've crossed over 40, there has been catastrophe. So yeah, this is, um, you never want to try to time a bubble, but the thought that this is a bubble is, I think, pretty self evident, given that we have completely broken from any traditional

• 35:59Speaker 00

  metric of value investing that people have historically looked at, leveraged as a way to know, are we hot? Are things undervalued? Where are we at? And then you just keep getting more and more valued. And I think a big part of the problem is there's just nowhere else to put your money. And so we've got this inflationary flywheel that's absolutely running riot. And people understand they have to be somewhere. And all of the gains that we've been getting for the last decade have just been tech companies, tech companies, tech companies. And so when investors have just gotten so used to having an only up phenomenon somewhere, something that's growing massively, the internet, social media, software, uh, and now AI, it's like they need to believe it and they're trying to escape from something.

• 36:43Speaker 00

  And so the valuations are just crazy. Now, I will say that it's true that historically, a company like Microsoft has done 99, literally 99% of its value post IPO. And so people are like, hey, I've been able to get massive wins. And so this is only a good thing. But given what we've talked about, you've got the double whammy. These companies are being held private for much longer. So odds that 99% of their value comes after IPO-ing is racing towards zero. And then two, you've got the what price do you buy in at to take into consideration? And so if the valuations are just absolutely insane,

• 37:28Speaker 00

  again, the odds that you get 99% of the value post IPO is going down, down, down, which makes people look more and more like the exit liquidity. So this is where you have to be insanely careful with what you guys are doing with your money.

• 37:42Speaker 02

  Dot com, which is when I started investing, took 15 years to get back to where it was. 15 years. So for a normal family, that means the pot that's meant to be safe, sensible, boring part of the plan, the retirement money is just really just tied up in this tech market more than ever in American history. More than in 1929, I'm serious, more than in the dot com mania. And when everybody owns the same five things, there is nobody left to sell to when it turns sour, you see? And that's why these bubbles burst so quickly because you try to sell, everyone else tries to sell at the same time. And there isn't a soul on the planet who doesn't already own it and they probably want to sell too.

• 38:25Speaker 00

  And when you're not tied to fundamentals, you're tied to narrative and narratives can flip in an instant.

• 38:30Speaker 02

  That's where you get these big drawdowns. So yes, they're printing money and it keeps interest rates low. It makes inflation, they make inflation look artificially low because they fudge the numbers when they're giving out oil. But the gains from all that printing are being steered away from ordinary people before it even lands. So we haven't got three things happening here. We've got that reset quietly being switched on. And what do you actually do about it? Well, you do what I always tell you to. Follow the money, not what people are saying. What's what the people with the best information are actually doing with their own cash? Not what they say on telly or social media, right? It starts with the filings.

• 39:14Speaker 02

  Donald Trump files his own trades, right? You can look them up. You get a life notification for them in the Winston app. That's one of the reasons I built it. Go to the link down below for the Winston app. You get a month free trial, like a whole month. You get all the alerts you don't like it, you cancel it.

• 39:28Speaker 00

  Boy, do I wish, like if we can't get politicians to stop investing. I want a real time trade like ticket. I want to see what they're doing in real time. I am just going to trade whatever Trump trades, but I've got to be able to do it the instant he does it. And the problem is there's such a huge delay that there's going to be a massive gap. Uh, and that's going to create very big problems.

• 39:53Speaker 02

  And you can see what he was buying. What was he buying Berkshire Hathaway, which is basically a great big insurance company. He bought Visa and Mastercard, right? Which is just like a toll booth for everybody living. And when prices go up, which they will, well, they get a percentage of every bit of spend. So actually they get a little bit more. It helps them, right? But Home Depot, Tractor Supply, Republic Services, that's a waste management company, I believe. Real businesses, cash machines, and what did he sell? Meta, Talenti, Netflix, this stuff that everybody else is chasing. So on the way in boring toll booths that love inflation and on the way out, all the crowded tech stuff.

• 40:34Speaker 02

  I'm not saying you should follow the president's mad trading, but notice the pattern of what the skilled money is doing. It's waste collection, it's home improvement, dull essential businesses. And then I look at everybody else's portfolios and we see thousands of portfolios because my mentors teach or taught like 25,000 people the last six years. And the portfolios are basically 99% tech because that's what's in the news.

• 41:01Speaker 00

  It's not just that that's what's in the news. It's actually where the gains are coming from. Okay. So as we look at this strategy that he's putting forward in terms of what you're um, going to want to think through. As you decide what to do with your money, it is very important that you understand this is not financial advice. First of all, everything is different for everybody. You guys have to figure out what your risk appetite is, how long you can sit in the markets, et cetera. But to give you the gist behind what he's getting across, because I love Felix, but to say boring is what survives is the, the wrong takeaway. So one, I want to give the devil his due. So when you look at technology, technology has actually been winning. Okay. So when you look at um, cash flows versus the dot com era, like pets.com and stuff like that.

• 41:40Speaker 00

  Unlike the 2000 dot com era where tech firms burned cash with like all of uh, zero earnings. They were literally just lighting money on fire. This is very different. Anthropic is bringing on revenue at a pace that is unparalleled. I think in history, I mean, it is legitimately a sight to behold to see how rapidly they've been able to start making money. And absolutely extraordinary quantities of money. So tech has been the place that's winning. People are over indexed on tech precisely because it has been the thing that has returned extraordinary returns now. For a, an extended period of time. Remember the real question is, are we moving into a new regime?

• 42:25Speaker 00

  And I think the answer is obviously yes. So first of all, from uh, an investment standpoint, we really are getting into, to a late stage. Like everything is investable. There's so much gambling going on. People are doing everything on margin. We've moved away from sensible valuations. We are inflating into a crisis, first of all, so it's only going to get worse. Talking about the energy shock that we're living through right now. Plus we're trying to raise rates to break the back of that inflation. But alas, the inflation isn't created by an overheated economy.

• 43:06Speaker 00

  It's created by a crisis and there are no number of uh, rate hikes that are going to open the strait of Hormuz. So you've got like all of that drama playing out. And on top of that, we're in a position where the rates are just high on the debt that we already have. So not only are we bringing on new debt and refinancing old debt at the higher rates. It's already the number one line item in our budget. So you're in this sort of death spiral of you know that there's going to have to be more and more money printing. But all while the typical place that people would go hide a nice, nice, safe, safe index fund. Or even debt for that matter, but we'll get to that in a second. The nice quote unquote, safe index fund, which is in bubble territory for sure.

• 43:51Speaker 00

  When it's going to pop, nobody knows. And then on the dead side, you've got the US looking more and more questionable because it is in that death spiral. Of having these uh, rates that are high and having over $40 trillion. You're in uh, debt and your interest payments already being the number one line item of your federal spending. It, it is a recipe that has to be navigated in a new way. Now, when you start being more thoughtful about when we say what is boring survives, what do we mean? One of the things that we mean is you're looking for things that don't require a lot of cash flow to function.

• 44:31Speaker 00

  So when you look at a cash heavy business versus cash light businesses, you start to understand why something like the um. Credit card networks are so attractive is it's something that has a basically a fixed cost. There isn't a ton of infrastructure that's going to have to be built out. When you compare that to something like AI, the difference is absolutely mind boggling. So you've got that going for it. And then the other thing that supercharges something like that is your, it's a toll. So he keeps calling it a toll booth, but to explain what he means by that, what you're looking at is something where as inflation goes up and everything just gets more expensive. The credit card companies are just taking a percentage off the top.

• 45:14Speaker 00

  So as that number gets bigger, their take gets bigger. So it naturally keeps up with inflation. And so as you're assessing what kind of businesses do I want to be in? If I think that the tech story is, you know, a little bubbly and maybe I want to start to diversify away from some of that. Sure, I'm going to do gold, maybe I'm going to do a bit of silver, but I don't want to uh, put all my eggs in that basket. So I want to look at the companies that are going to do well in an inflationary environment. And so beginning to understand things like the card companies being a toll charging company that will benefit scandalously in some ways. But benefit in some ways from the inflationary environment. So you're looking for that. Then you're looking for businesses that are going to survive.

• 45:59Speaker 00

  So waste management doesn't matter. People are still going to be creating garbage, good environment, bad environment. It doesn't matter. You're looking for cash cows, things that make a lot of money uh, without needing to invest in new infrastructure. So when you have a cash light business that generates a lot of revenue, that's a great place to be. If you have something like waste management that's going to survive, no matter what happens to the economy, that's a great place to be. If you have something that's charging a toll, that's a great place to be. So these are the kinds of things as we transition into an unknown, quite frankly. Because again, AI is doing something very unique. You can't just count out that, oh, this is going to burst and it's going to die.

• 46:42Speaker 00

  You can't look at AI and go, you certainly can't say that the technology isn't there. It certainly is. You can't even say that the revenue is not there. It certainly is. But you can say that right now, the debt accumulation is still outstripping the revenue accumulation. And that is a problem. It means that the companies are still default dead. And so that's a terrifying place to have all of your capital sitting in. But when you look at a valuation, that's let's say 45 times where you would expect uh, 45 times revenue. Which is way above where you'd expect it to be. And you start asking yourself, is it really possible for that thing to get to that in a reasonable period of time? The reality is with AI, maybe I'm not going to over index, I'll tell you that.

• 47:27Speaker 00

  But it is certainly possible that the level of productivity gains that come out of AI, when it is fully distributed through the economy. Become unlike anything we've ever seen. Now that's certainly a big part of the bet that Trump's making, Besen's making, Warsh is making, Warsh has talked very publicly about this. So you don't want to count it out, but you have to be very careful about having everything put in on that. So look at what's working now, look at what has worked historically, look at the vulnerabilities that we've had historically. And figure out what are the companies that are likely to thrive moving into the future? All right. Shout out to Felix. I'm so glad that he puts this stuff together. I watch a lot of his content. He puts a lot of great stuff together.

• 48:08Speaker 00

  And when you start making contact with what are the kinds of companies that are likely to do well in the future? Because you still must be in assets because inflation is not going anywhere. The odds that it ramps up are extremely high. You start to get a much clearer picture of how you thrive and do well on the other side of this. All right, guys, keep paying attention to this kind of stuff. Very specifically things to talk about, where is the economy going? What do you need to do in response to it? It is going to be some of the most individually consequential uh, content that you can encounter. So with me or somebody else, this really isn't a plug for you watching my content. This is me being absolutely terrified that people are going to get devastated as the economy reorients itself to something new.

• 48:50Speaker 00

  So uh, I thank you for paying attention to this, uh, because I think it is so, so, so important. And we'll keep bringing you content just like this. Again, shout out to Felix. Much love to you guys. If you haven't already, be sure to subscribe 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 and you're done.

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