What the Silicon Valley Bank Collapse Means for Your Money | Jaspreet Singh (Replay)

Here’s how the second-biggest bank collapse in U. S. history happened in just 48 hours. Silicon Valley Bank closed its doors today. Within 48 hours, a panic induced by the very venture capital community that SVB had served and nurtured ended the bank’s 40-year-run. For sure you’ve heard that millionaires are made in recessions, but how? Jaspreet Singh is joining Tom for a second time to get you up to speed on what it takes to get wealthy during any recession. Jaspreet is the Minority Mindset guru and Chief Money Nerd at Minority Mindset Companies. He’s been creating financial education videos on YouTube for years and is breaking down all the reason you don’t have to be scared during a recession Jaspreet is a voice of reason to remember that recessions are only bad or good in relation to which side of the equation you are on. This is a must watch if you’re trying to find the best route through a recession that has most people nervous and panicked. [Original air date: 3-13-23]. CHECK OUT OUR SPONSORS Range Rover: Explore the Range Rover Sport at https://landroverUSA.com https://landroverusa.com/ Miro: Bring your teams to Miro’s revolutionary Innovation Workspace and be faster from idea to outcome at https://miro.com https://miro.com/. Found Banking: Stop getting lost in countless finance apps and try Found for free at https://found.com/impact. Netsuite: Download the CFO’s Guide to AI and Machine Learning for free at https://netsuite.com/theory Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact Factor: Get 50% off your first box plus 20% off your next month while your subscription is active at https://factormeals.com/impacttheory50 with code impacttheory50. Follow Jaspreet Singh: Website: https://theminoritymindset.com/about-us/ YouTube: https://www.youtube.com/@MinorityMindset Instagram: https://www.instagram.com/minoritymin... Twitter: https://twitter.com/minoritym1ndset Facebook: https://www.facebook.com/MinorityMind... CHECK OUT OUR SPONSORS Range Rover: Explore the Range Rover Sport at https://landroverUSA.com https://landroverusa.com/ Miro: Bring your teams to Miro’s revolutionary Innovation Workspace and be faster from idea to outcome at https://miro.com https://miro.com/ Betterhelp: This episode is sponsored by BetterHelp. Give online therapy a try at https://betterhelp.com/impacttheory and get 10% off your first month Netsuite: Spend less time looking backwards, and more time on what's next. Download the CFO's Guide to AI and Machine Learning at https://NetSuite.com/theory https://netsuite.com/theory NordVPN: EXCLUSIVE NordVPN Deal ➼ https://nordvpn.com/impacttheory Try it risk-free now with a 30-day money-back guarantee! Vanta: Get $1,000 off Vanta when you go to https://vanta.com/THEORY ********************************************************************** 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 SCALING a business:see if you qualify here. https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox:sign up here. https://tombilyeu.com/ ********************************************************************** Join me live on myTwitch stream https://impacttheory.co/4fitmnJ. I'm live daily from 6:30 to 8:30 am PT atwww.twitch.tv/tombilyeu https://impacttheory.co/4fitmnJ ********************************************************************** LISTEN TO IMPACT THEORY & MINDSET PLAYBOOK AD FREE + BONUS EPISODES on APPLE PODCASTS:apple.co/impacttheory http://apple.co/impacttheory ********************************************************************** 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 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.

• 1:07Speaker 01

  Rubrik is the security and AI operations company built for what happens after an attack hits, not just the moments before. AI has turned the threat landscape into quicksand, moving too fast for any human to fully predict. That's why an agentic cyber resilience platform matters. Automated recovery, clean data, a business that keeps moving no matter what hits. One platform, not a patchwork of stitched together tools and gaps. Don't wait for the next attack. Secure and accelerate your business at rubrik.com. Again, rubrik.com.

• 1:37Tom Bilyeu?

  In today's episode, Jess Breet, Singh and I address the Silicon Valley bank collapse, literally as it was happening, and what that's going to mean for the greater economy, whether we've got a looming recession, is there going to be a soft landing? And what is going on with the housing crisis? I hope you guys enjoyed listening to this episode as much as I did recording it. And if you do, please be sure to leave a review on the podcast. It really is the best way to help us reach other people. I'm Tom Bilyeu and welcome to Impact Theory.

• 2:09Tom Bilyeu?

  I wish that we were talking about better news. I saw a video that you created about how the average person doesn't understand what we're about to go through. And as we sat down to record this, SVB just got frozen, Silicon Valley Bank. Looks like there's going to be a tremendous amount of capital lost. And thinking about what I'm calling the triangle of doom with interest rates, a slowing economy and inflation. How does this all play together with what just happened? And how does the average person, if they don't understand what we're about to go through, how do they protect themselves?

• 2:49Speaker 02

  Yeah, SVB Financial is really interesting because it's kind of a byproduct of what you just talked about, the triangle of doom. So we have, still have very high inflation. And that high inflation is slowing down the economy. Now, to fight the high inflation, the Federal Reserve Bank is working to raise interest rates. Now, higher interest rates help to cool down inflation, but that also slows down the economy. Now, the case of SVB Financial, the bank, is really interesting because they have been lending money to a lot of startups, like Silicon Valley startups. And when you have low interest rates, it creates ease of access to money. Because like, if you can borrow money for 2%, I mean, you only need a 4% or 5% return

• 3:34Speaker 02

  on your money to justify making an investment. But if you have to borrow money at 10%, now you need a much higher return on your money to justify that investment. And what we've been seeing, and this is not just SVB, there's a lot of examples of this, but what we've been seeing happen is investment institutions, venture capital firms, angel firms and startups had such easy access to money. I mean, of course, we printed trillions and trillions of dollars over the last number of years. But now, if you wanted to raise money, venture capital firms are sitting on boatloads of cash. And they're competing against each other to get the best investments. And so we saw the valuations of everything rise. Obviously, we saw home prices skyrocket over the last couple of years. The stock market skyrocketed, even though we were going through the worst recession

• 4:18Speaker 02

  during the pandemic since like the Great Depression. The stock market grew, real estate prices grew, startup valuations went through the roof. And the reason why these valuations went through the roof is because now every bank, every investment institution is competing against each other with boatloads of cash trying to get into these firms. Now SVB financially, like I'm gonna be completely honest, like this is happening right now. So I only know based off the information that has like come out over the last, you know, number of days. So I'm giving you just based off of this, things can change by the time this goes live. But they were lending money to a lot of startups. I think it was like four or five out of ten of the startups out of Silicon Valley had money from SVB. And so now when you're competing against a startup, you might say, okay,

• 5:04Speaker 02

  if you make a hundred thousand dollars a year, I'll value you at a million dollars. I'll give you a hundred thousand dollars for ten percent of your company, something along that, they'll value it at that. But then if you go to bank number two and say, what will you do? And if bank number two says, I'll value you at eight hundred thousand, you're gonna say, well, I'm already valued at a million, can you do any better? Now, bank number two might say, okay, I value you at one point five million, based off your hundred thousand dollars of income. Then you go to bank number three and say, hey, can you do better? And they might say, I'll value you based off your hundred thousand dollars of income at four million dollars. Now you're like, okay, we're talking. And now you you you start to shop like this and valuations just started to skyrocket.

• 5:45Speaker 02

  And then, you know, when you have easy access to money, it fuels, I don't wanna say it in a bad way, but dumb investments. Because I can pay, if if you can get such easy access to money, you can run a business where you're spending a dollar to make fifty cents. And this is a tough concept to understand, but a lot of companies actually do this, especially in the early stages where they spend a dollar to make fifty cents because they're just trying to grow their market share. They're trying to grow the number of users they had, like Uber used to uh lose money on every single ride. Why? Because they wanted to eliminate the competition and get the market share.

• 6:20Tom Bilyeu?

  And they could get the cheap capital.

• 6:22Speaker 02

  And they could get the cheap capital.

• 6:24Tom Bilyeu?

  How much of what's happening right now do you think is a result of increasing interest rates? Is that a big part of this? And obviously, it's so early, but do you think that there's scandal here? Is it just?

• 6:36Speaker 02

  Oh, interest rates are a huge part. Because what's been happening now is the Veterans Bank is trying to bring down inflation. Because inflation is still, even today, extremely high. We're closer to a peak of inflation than than our lows, which means people's incomes are essentially shrinking. Even though, like what we've been seeing happen is people's incomes are rising, but they're not rising fast enough to keep up with inflation. So people are effectively becoming poorer across the country because the cost of living is going down. But now, interest rates are going up very quickly. And so when interest rates go up, that means now the investment institutions, the banks, they need a bigger rate of return.

• 7:17Speaker 02

  Because most debt, I mean, besides their mortgage, is not a fixed rate debt. It's variable interest rate debt. Of most of our national debt, most of our corporate debt, and most of our non-household debt is variable interest rate debt. So when interest rates go up, the cost of servicing that debt goes up. So now you have something like SVB Financial, and I'm not going to go too deep into what they do, but I'll talk about just general, because I don't know too much about their particular financial situation yet. Uh, but what most companies do is now they have this boatload of debt, and the debt rate readjusts. And so now when you're investing in companies, your companies have to produce a return in order to continue making the payments on your debt.

• 8:01Speaker 02

  Well, what we've been seeing across the board, the reason why we've been seeing so many layoffs in the tech sector is now interest rates have gone up, meaning the cost of these corporations' debts have gone up. And now you need to make more money to service the cost of those debts. And if you have a high debt payment, now you have to figure out how am I going to have more money to pay down this debt? Well, you can either make more money or cut my expenses. Making more money is hard in a time where inflation's high, people don't have the ability to spend. So what's the alternative? I cut my expenses. I start laying off employees. I cut my expenses, hence now I have money to pay down my debt. Now, that works if you're Meta, Facebook, or Google.

• 8:45Speaker 02

  But what about the smaller companies that are are still in the early stages? Now, your valuation, I mean, I was, you, you, you've seen so many companies go from like a billion dollar valuation to 200 million overnight. Like, you're talking about an 80% drop. And so now you have banks that show on their balance sheet. Your balance sheet essentially is your net worth statement. So if a bank says, I'm invested in 10 companies. Each one of these companies is worth a billion dollars. That means I have 10 billion dollars worth of assets. And so now if you take this 10 billion dollars worth of assets and go to get money, you might be able to get, let's just say, an 80% loan to value, right?

• 9:28Speaker 02

  Eight billion dollars worth of loans that you can then go lend out. But now, when you see interest rates go up, the valuations of these things go down. That's why we've been seeing tech stocks crash. Well, now if 10, if your 10 portfolio companies are worth a billion dollars each, and they fall by 50%, now you go from a 10 billion dollar valuation on your balance sheet to 5 billion.

• 9:53Tom Bilyeu?

  Your point about Meta, I think, is really important here. So the strategy that they deploy, now, it's, it's too early for us to know if there was anything sinister going on. So, setting that aside for now, assuming that there wasn't, the strategy could potentially work in an environment where it's far more stable. Either interest rates are dropping, or they're stable. But when you get into a highly volatile, either the company's at a volatile stage and can't absorb the losses like a Meta, which just has an insane amount of revenue coming in the door, then it falls apart. But if, if they had longer runway, they might not have gotten caught out. But this is Warren Buffett's old phrase, when the tide goes out, you see who's swimming next.

• 10:37Speaker 02

  Exactly. And that's exactly what's going on. Rising interest rates is gonna make money more expensive. And that's where you start to differentiate the dumb money and the smart money. And as we raise interest rates to cool down inflation, it is gonna cause economic pain. And that is going to be the tide going out.

• 10:57Tom Bilyeu?

  So what can the average person take away from this? How does the average person who probably isn't directly caught up in anything related to SVB, how do they learn the lesson of the triangle of doom? The rising interest rates, a cooling economy, inflation? What's this moment about for them?

• 11:18Speaker 02

  I think the most important thing here is you need to get financially educated. You're going to hear me say that a lot, but the reason why is because anytime we go through this type of shakeup or change in the economy,

• 11:29Speaker 02

  until it slaps you in the face, everybody will keep saying, oh, it's contained. You don't got to worry about it. Everything is fine. And I can give you countless examples. In 2020, we saw it happen. In 2008, I mean, in 2008, first it was there's no housing bubble. Oh, there's a housing bubble, but it's contained to housing. And then, oh crap, the whole financial system's on the verge of, you know, collapsing. And look, this is not a political thing. It doesn't matter which side of the political coin that you're on. We're all on the same side of we're trying to become financially wealthy. But the reality is we have our president saying there's no chance of any economic slowdown, not just this year, but in the coming years. Our Treasury Secretary's been saying the same thing. The Federal Reserve Bank is saying we're going to see a soft landing.

• 12:13Speaker 02

  Now let's just look at the numbers to really understand what's going on. Because the first issue is really what I call this idea of debt monetization, which is probably one of the most concerning issues. And what debt monetization is, it's how is our government funding its operations? And how is that going to impact the regular person?

• 12:38Tom Bilyeu?

  Debt monetization as a term, if I understand it correctly, makes me very angry because it sounds cool. I can monetize my debt. This sounds amazing. Am I correct that debt monetization is printing money?

• 12:51Speaker 02

  Yes.

• 12:51Tom Bilyeu?

  Yeah, it's one and the same, right?

• 12:52Speaker 02

  It's the, a basic way to explain it. So essentially, think of it this way. Our, the size of our economy last year was about $25 billion.

• 13:05Speaker 02

  And over the last couple of years, especially during the pandemic era, we printed with the Federal Reserve Bank around five trillion dollars.

• 13:14Tom Bilyeu?

  Jeez.

• 13:15Speaker 02

  So to put that in perspective, about twenty percent of our entire, I mean, every single person had to go to work for a year. Every corporation had to work for a year in order to produce twenty five trillion dollars worth of money or wealth. The Federal Reserve Bank was able to print five trillion with a push of a few buttons, essentially. So now, when you think about that, the question is, why do you and I have to pay taxes if the government and the Fed can just print this money? Well, it's because there's a cost to this money printing. What is that cost? Well, the cost is inflation. And so we're in a situation right now where the amount of money that has been printed is insane.

• 13:58Speaker 02

  And we don't even know the exact amount of money. Like, we know the stimulus was something around five trillion dollars, but the Federal Reserve Bank also did a lot of unlimited quantitative easing. The definition of money changed during twenty twenty M one. I'm not going to get into the technicals.

• 14:12Tom Bilyeu?

  Well, so just really fast, what's the difference between printing money and quantitative easing?

• 14:17Speaker 02

  So quantitative easing is when the government does some sort of stimulus, when the government spends money in a way to stimulate the economy.

• 14:25Tom Bilyeu?

  Got it. They give you money.

• 14:26Speaker 02

  So that is stimulus. Quantitative easing would be kind of where the Federal Reserve Bank now is working to stimulate by printing. So they're they're essentially go hand in hand because.

• 14:39Tom Bilyeu?

  So wait, I'm not understanding the difference between quantitative easing and debt monetization. Are they both printing money? Are they the same thing?

• 14:45Speaker 02

  They're they're both printing money. The government has one source of income.

• 14:51Tom Bilyeu?

  Taxes.

• 14:51Speaker 02

  Taxes. And so when they spend more money than what they bring in, this money has to come from somewhere. So in twenty twenty two, the government brought in about five trillion dollars in taxes. They spent about six and a half trillion. So where does that one and a half trillion come from? Well, they can borrow money from you and I. These are treasury loans, treasury bonds. When you loan your money to the government, that is a treasury bond. The government has to pay back plus interest. But that's generally not enough money. So then they might go to foreign countries, China, Japan, and ask them for money.

• 15:24Tom Bilyeu?

  Doing the same thing, selling them bonds?

• 15:26Speaker 02

  Essentially, yeah. They will loan, other countries will loan money to the United States because they want to return. And they like to store their, their wealth in dollars because the dollar is the world's reserve currency. The government has to pay them back plus interest. But that has not been enough. Which brings us to number three, which is the Federal Reserve Bank. Who, if option one and option two are not enough, the Federal Reserve Bank will essentially print the money and give it to the government.

• 15:52Tom Bilyeu?

  When you say essentially, isn't it literally? And obviously, it's not actual printing, like money machine go brrr. But it's adding zeros and ones to a database somewhere.

• 16:03Speaker 02

  Yeah.

• 16:03Tom Bilyeu?

  And if I remember this correctly, uh, what they do is they actually go and buy things from people to get the, they'll go buy. Typically, they're gonna buy corporate bonds. But they will, they started buying private company equity, if I'm understanding correctly. But that's how they get the money into the system.

• 16:23Speaker 02

  So, sort of. So the Federal Reserve Bank will get the money to the government by buying treasury bonds, meaning by loaning money to the government.

• 16:31Tom Bilyeu?

  That they made up, just to be clear.

• 16:32Speaker 02

  They made up, yeah.

• 16:33Tom Bilyeu?

  They have no actual money, but it, in this new amount that they're going to go and perch or loan this money. They, they make it up, comes out of thin air, and it goes into the system. Just make sure that people track this. Cause the more I learn about this, the more it's, it's dizzying that it works at all. And the more I learn about it, uh, there's that classic saying that as the island of my knowledge grows, so grows the shore of my ignorance. And so it's like, the more I learn about this, the less sort of fiery I get about it, the more humble in the face of like, whoa, this is an incredibly complicated system. I won't even take a stance that they're being sinister, but that is what they're doing. They are, they are inventing that money. Because the government says it's okay for you, Federal Reserve, to do that.

• 17:18Tom Bilyeu?

  Anybody else, we'd put them in jail. But when you do it, it's okay. And I, I don't even mean that in a cheeky way, but like, just so people understand it. It is counterfeiting by another name, which is probably fine. But just so everybody understands what's happening, they're making this money out of thin air.

• 17:34Speaker 02

  Yeah, so there's a lot more money out there, which is then causes inflation. Because now money enters the economic system, people have the ability to spend while not much is being produced. Now, that's the first issue, and this has been going on for a little while. It's been going on since before the pandemic, but it really just amplified during the pandemic. Now, the next issue is the amount of debt out there. So the government national debt is breaking records.

• 18:01Tom Bilyeu?

  It's like thirty two trillion.

• 18:02Speaker 02

  Thirty two or so trillion dollars. We have the highest amount of household debt ever and the highest amount of corporate debt ever. So we have more debt than ever before. And now we have high inflation, high amounts of debt. Now, what's the next thing that's happening? The Federal Reserve Bank is working to raise interest rates. Well, what does raising interest rates do? They are trying to reduce demand. This is what they're saying. They want to reduce people's buying ability. Because when you have the ability to buy whatever home you want, whatever car you want, whatever vacation you want, people will spend. That then causes the price of things to rise because there's a limited supply of these things. So they want to reduce demand. How do they reduce demand? They reduce affordability.

• 18:43Tom Bilyeu?

  All right, really fast, I think we have to make it clear for people why that's problematic. Because it doesn't seem like it should be. Luxury brands are not charging you more for better cashmere. You're paying for the storefront, the ad budget, the name on the tag. But Quince cuts all of that out. They work directly with ethical factories, they skip the middlemen and sell one hundred percent Mongolian cashmere, starting at just sixty bucks. Fifty to eighty percent less than similar brands. Now, I gave one of these as a gift last year. It was a big hit and gifting is really the test of a brand. You might tolerate a lot of stuff in your own closet that you would never give to somebody else. I've got their joggers and a couple of their tees as well. And I can tell you their whole line is high quality.

• 19:27Tom Bilyeu?

  Give the gift of quality this holiday season. Download the Quince app for app exclusive offers or go to quince.com.

• 19:36Tom Bilyeu?

  Free shipping on your order and 365 day returns. It's now also available in Canada and the UK. And when Quince asks where you heard about them, make sure you tell them that it was on Impact Theory. That's the best way to support the show. I'll call you back. That's the most expensive sentence in business. You mean it when you say it, but by the time you remember, they've already found somebody else. That's why today's episode is brought to you by Quo, spelled Q U O. The business phone that's built so you never miss a call or a customer. Quo writes up your calls for you and one click turns any of them into a task with a name and a due date. The follow-up actually happens instead of living in your head. When you can't pick up at all, Quo's agent does.

• 20:21Tom Bilyeu?

  It answers questions, gets the details and texts them a link to book an appointment. By morning, you've got the summary and you can jump right in. It's also an official connector in Claude and Chat GPT. Ask who called while you were out and it's handled. Quo is the number one rated business phone on G2. It's trusted by over 90,000 businesses. When money is on the line, always say hello with Quo. Try Quo for free plus get 20% off your first six months at quo.com/impact. That's Q U O dot com slash impact.

• 20:59Tom Bilyeu?

  So here is how the, here's how economists are looking at it, the feds being a part of that system. Hey everybody, you're acting like it's the 1920s, rip roaring, spending money, everything's great. And because of that, the economy is hot, as they say, people are spending a lot of money. They're going out, they're buying things, companies are investing, they're hiring new employees. And it's like a growth mode. Yeah. Now, the problem is it, when the economy is on fire like that and people are buying a lot of stuff, there's a lot of demand for those products, which causes the price to go up. That is inflation as the prices rise for the same thing. Right. And so what they know is that can run away with you.

• 21:42Tom Bilyeu?

  And if wages aren't going up, so people aren't making more money. But the cost of things is going up, the way that people fund that is through debt. But debt has a breaking point. Debt is fine until it's not, because you have to service the debt.

• 21:56Speaker 02

  One hundred percent. And you know, when most of us think of debt, we think of something like a thirty year fixed rate mortgage. But most debts are not a fixed rate debt. Corporate debt is not generally fixed rate. It generally has some sort of variable rate to it, meaning either after six months, twelve months, or a few years, it is going to readjust. Our national debt is not a thirty year mortgage. Some of it is ten years, some of it is five years, some of it is one year, some of it is six months. Our household debt, we have things like credit card debt, which are variable interest rates. So now, interest rates are shooting up, and they're going to continue to go higher. The Federal Reserve Bank is saying the interest rates are going to have to go higher than what they originally expected. No big surprise here, we've been talking about this.

• 22:40Tom Bilyeu?

  Because we need to cool off the economy. You guys are buying too much, companies, you're hiring too many people. Like, I heard that they, the Fed, in raising rates, one of the things that they're looking at is they want to make sure that that there's like an optimal jobless rate that you want. Is that true?

• 22:59Speaker 02

  So, essentially, we have way, everybody has a job, according to the Federal Reserve Bank. And because there are so many people who have a job, we have a very low unemployment rate. Unemployment is around three and a half percent, which is historically extremely low. And this is where now, the Federal Reserve Bank is saying, one of the consequences of cooling the economy and bringing inflation down is increasing unemployment. Is their goal to necessarily increase unemployment? No, it's a byproduct of bringing inflation down, according to the Federal Reserve Bank. Their goal is to bring unemployment from three and a half percent, it's three point six percent as of today,

• 23:41Speaker 02

  to four point six percent by the end of twenty twenty-three. This is what they've stated in their annual report. That would mean that we would have about two million Americans lose their jobs, according to those numbers. Now, this is where also understanding, what is the impact of that, and is that going to be enough? Because what we've seen happen is that-

• 24:06Tom Bilyeu?

  Is that going to be enough to slow inflation?

• 24:09Speaker 02

  Is that-

• 24:11Speaker 02

  So the Federal Reserve Bank has to raise interest rates to bring inflation down. And the consequence of raising interest rates is a slowing economy, AKA less people have jobs. So is their current projection of raising interest rates, which is bringing interest rates to about 5%, is that going to be enough with about 2 million lost jobs? Is that going to be enough to fix the inflation problem? No, it's not going to be. The Federal Reserve Bank has been wrong many, many, many times. And if we just look at like the last few years, first they said that this stimulus quantitative easing is not going to cause inflation. Then they said, oh, this inflation will be gone by the end of the year.

• 24:56Speaker 02

  This is like 2021, 2022. They said it'll be gone by the end of 2022. Then they said the inflation is transitory. Then they said the inflation is not transitory. Then they said the inflation will be gone like completely in the next couple of years. Now they're saying that the inflation fight is going to be much more painful and much more difficult than originally expected. So, okay, now they're saying that if we can bring interest rates to around 5%, then the inflation problem will be gone. 5% is their terminal rate is what they're calling it, meaning how high we expect interest rates to go. And when I say interest rates, I don't mean your mortgage rate. I mean, the interest rate set by the Federal Reserve Bank.

• 25:39Speaker 02

  This is the wholesale rate that banks get to borrow money at. So banks borrow money at the wholesale rate. This is the federal funds rate. And then they jack it up and then give you the retail price, like your mortgage rate or something like that. So the Federal Reserve Bank, as of today, are saying that 5% is their terminal rate. As of today, it's at around 4.5%. Last year, they said the terminal rate was going to be around 4.6%. Before that, they said it would be even lower than that. So they keep raising how high they expect interest rates to go. They're saying that if 5% interest rate would result in an unemployment rate of an extra 2 million people losing their jobs. Well, based off of the past trends and based off of where inflation has gone,

• 26:23Speaker 02

  it doesn't look like it's enough because what the Federal Reserve Bank is realizing that bringing inflation down to their 2% goal is going to be more difficult than they thought. And if it's more difficult than they thought, that means it's going to cause more pain to the economy than they thought. So now, what does that mean? We're living in this world thinking everything is just fine.

• 26:46Speaker 02

  Everyone keeps saying that there's gonna be a soft landing. Everyone keeps saying that we might not even see a recession. Everyone keeps saying that there's nothing to worry about. Yet, if you look at the numbers, we have still extremely high inflation. The highest debt levels ever. We have interest rates that are rising, which means your corporate debt costs are rising. Even if we don't increase your debt levels, the cost payment is rising because interest rates are rising. We have our national debt cost, which is rising. Even if the government didn't spend more money, their payments would still be rising. Household debt costs are rising. Why? Because our credit card debt is at the highest level ever. Now, it looks like interest rates are gonna have to go up even higher than before.

• 27:28Speaker 02

  Then, if you dig a little bit deeper, you start to see where the real issues start to arise. Because now, if you look at, for example, if we just look at the government. In 2022, our interest payments on the debt outpaced our total veterans spending, veterans affair spending, and transportation spending combined. That's 2022. Uh, in 2021, we spent more than a hundred billion dollars less in interest payments than in 2022. And the prediction is that by around 2025, our interest payment spending, just on the interest on the debt, is going to exceed our entire military budget here in the United States.

• 28:13Speaker 02

  And now you have to ask, okay, is that a problem? Well, if the government can continue generating enough tax dollars, then maybe it's not a problem. How does the government generate tax dollars? You have to go to work to get paid. Your company has to make a profit. People have to make money in their investments. Let's start tying this together now. If the economy is slowing, people are losing their jobs, corporations are making smaller profits, less income. Less income means less taxable income. Less taxable income means less tax dollars. So if the government is generating less tax dollars because the economy is slowing, people are losing their jobs.

• 28:54Speaker 02

  How are they going to afford a ballooning interest payment? Like it's, our interest payments are growing so quickly. Not because now the government is spending like they were in 2020 and 2021, but because the cost of servicing the debt is growing really faster than ever. And on top of that, the Federal Reserve Bank is saying that they're going to have to increase interest rates more aggressively and potentially even longer than what they originally expected. So now you look at that from the government's side, you're saying, oh, there's some issues on the government's side, but they should be able to figure it out. We're the world's reserve currency. Okay, let's go to the corporate side. Corporations are going to face one of their biggest tests because of this ballooning debt bubble.

• 29:38Speaker 02

  And the reason why it's, is because in 2020, 2021, and even in 2022, corporations were making their biggest profits ever. The economy was booming, partially because of all the money that was now just entered our economy. There's a lot of fresh money in the economy. Corporations are making money hand over fist, meaning they're making big profits, meaning they would have big piles of cash. Yet you're seeing layoffs accelerate. Why are corporations having to do layoffs when they're making the biggest profits ever just, you know, a year or two ago? Well, it's what does a corporation do with their cash? There's three things that a company can do with their cash. They can save it for an emergency. They can reinvest it back into the company, hire more employees, open more plants, open more stores.

• 30:23Speaker 02

  Or they can give this money away to their owners. And what's interesting is our economic system makes it so that saving money as a corporation is the least attractive thing to do. Now you might say, what do you mean? If you made, let's just say a hundred million dollars of profit, and you kept it because you said, I want to keep this hundred million dollars for a rainy day as a corporation. But the first thing you have to do is pay taxes on that money. And that means that you're gonna have to send a check of maybe twenty million dollars, a little more than twenty million dollars to the government just in taxes. Now, you, if you're running a company, that's a lot of money. Twenty million dollars, you can hire more employees, you can open your plant, you can invest in more whatever. Like, there's a lot of things you can do with twenty million dollars.

• 31:08Speaker 02

  So you're gonna say, do I really wanna do that with my money? Because as a CEO of a company, you wanna use your money in the most productive way possible. And to you, giving that money to the IRS is not very productive for the company. So you might say, well, you know what? We're not gonna give this money to taxes, we're gonna invest it back into the company. So now, if you take all hundred million dollars and you hire more employees, you invest it in advertising, you open a new store, and all that money's gone, you have zero dollars of taxable income, zero dollars of profit, but you're making the company more valuable.

• 31:41Tom Bilyeu?

  And presumably creating something that the world wants.

• 31:44Speaker 02

  Exactly. That would have to be a product for the business to continue. But then the third option is you can give that money away to shareholders. And what has been happening is shareholders-

• 31:56Tom Bilyeu?

  And when you say give it away, are you talking dividends or stock buybacks or both?

• 31:59Speaker 02

  Yes, both of them. And so, this, you know, I think this is where it's important to understand corporate governance. Because most people assume that if you're the CEO of a company, you're the head, you're the head hotshot, like you run the company. But you still have a boss. Your boss is now the owners of the company, the shareholders. And so if you're a publicly traded company, your shareholders are anybody who owns the stock. If you own one share of Amazon, you're one of the owners of Amazon. And what happened was, in between 2020 and 2022, the end of 2022, the shareholders said, wow, we made a big profit. You've been invested in this company for a long time. It's time for us to see our returns. Give us some of that money. You can give us that money in the form of a stock buyback,

• 32:43Speaker 02

  which means the corporation is literally buying back their own stock to make the stock price rise. Or give us that money in the form of a dividend, which is literally a cash payment, a distribution. And so for the shareholders, they put a lot of pressure on the CEOs saying, we want some of this, uh, we want this money given to us. And so what did we see happen? Well, we saw dividends grow very quickly. And we also saw a record amount of stock buybacks. Stock buybacks broke a new record in 2021. They broke a new record again in 2022. And currently they're on pace to break a new record in 2023. So now let's go back to the same example because I really want to highlight this one point. Because if you made a hundred million dollars in profit,

• 33:27Speaker 02

  and then you announced a hundred million dollar stock buyback, now you're using all your money to buy back stock. You have to pay taxes on this money first. But then you can use all whatever is left to buy back the stock, which enriches the shareholders. And there's a time and place for this. But if you think that if a corporation is just going to spend a hundred million dollars in stock buybacks, you're thinking very small. Because what can a corporation do? They can go to the bank and say, hey, bank, look at our balance sheet. Look at how many assets we own. Look at how much your stock is worth and look at how much money we made. We deserve a loan. Give us a half a billion dollar loan. So now this corporation has a hundred million dollars of cash of profit. They got five hundred million dollars from the bank

• 34:11Speaker 02

  at some of the lowest interest rates we've ever seen in history. In 2021 and even in the early part of 2022, the lowest interest rates ever. And now you have a six hundred million dollar cash pile that you can now use for something like a stock buyback. What does that do? Stock prices soar. Investors see their portfolios grow. The corporation sees their debt balance balloon. Now, if a corporation has an increase in debt because they're investing their money into more research, into more employees, into something else, it's an income-producing asset, right? Because they're investing their money into something that will hopefully produce a much higher return than whatever the debt cost is. If your debt is costing you 4% a year, but you can invest it in your company, get 20%, it's profitable.

• 34:57Speaker 02

  But if a corporation is going into debt to fund a stock buyback, that means they're now borrowing money to essentially fund a liability. Because they're not getting a return on that stock buyback, right? If I go out and I borrow money to buy something for myself and make myself richer, that stock buyback doesn't produce a return for the company. It'd be like you going to Gucci and financing a new Gucci belt. You don't get a return on it, as opposed to you going out and buying maybe a rental property, which is something that produces a return. So what we've been seeing happen is corporate debt balances have have been ballooning to the highest levels ever. Like corporate debt today is at the highest level really ever,

• 35:38Speaker 02

  partially due to levered corporate buybacks, meaning corporations doing stock buybacks with the help of debt. Why were they doing that? Because debt levels were at the lowest rates we have ever seen.

• 35:48Tom Bilyeu?

  Interest rates.

• 35:49Speaker 02

  Interest rates. Now, today, it's changing. Interest rates are growing at some of the fastest rates we've ever seen. And this corporate debt that they have is not a thirty-year fixed-rate mortgage. It's a variable, meaning six months, twelve months, five years, it is going to readjust. And now, when it starts to readjust, they're going to have higher costs. When they have higher costs, they're going to have to pay this money back. Again, no big deal, assuming you're making enough money. How do corporations make enough money? You need a growing economy. You need people to have the ability to spend. But people's ability to spend has been going down. Why? Because of inflation. People can't spend as much because I gotta spend more money on my gas and my eggs than I, so I don't have money to go out and buy as much other stuff. So people's spending ability goes down.

• 36:35Speaker 02

  And in addition to that, what we've been seeing happen, well, okay, I'm actually, let me clarify this for a second because one thing that I I really, really, really, really want people to understand is that there's a difference between data and analysis. And today, most people's analysis is, everything is fine.

• 36:55Speaker 02

  Why? Because of the way they interpret the data. So let me explain what that means. Because the data today says that the economy is growing and it's and people are spending. Our economy runs on spending. The more you spend at Chipotle, the more money Chipotle makes. If you go to Chipotle and you buy the extra guac, they make more money, right?

• 37:14Tom Bilyeu?

  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 already using Pipe Drive.

• 37:57Tom Bilyeu?

  My link gets you an exclusive 30 days free instead of the usual 14-day trial. There's no credit card payment needed. Just head to pipedrive.com/impact to get started. Again, that's pipedrive.com/impact and you can be up and running in minutes.

• 38:16Speaker 02

  And so what we're seeing right now is that consumers are spending.

• 38:21Tom Bilyeu?

  They think things are still good. Flying high, all's well. So I get 21 and I get 22 in terms of the consumer thinking things are well, in terms of the corporations thinking buybacks are the right play. But I'm super confused why in 23, we're on pace to set another record for buybacks. Do you think that's just gonna absolutely die in the second half of the year or?

• 38:42Speaker 02

  It's hard to time it. I mean, buybacks are still happening.

• 38:44Tom Bilyeu?

  But what do they, what do they understand that either I'm missing, you're missing, we're both missing? Like, it seems self-evident that right now is a time to save and be cautious. And you've got Warren Buffett and Charlie Munger saying, "I see red flags in the economy, bro." And so they're sitting on $90 billion in cash. So how on earth are we on pace? Why are consumers still spending like crazy? And why are we on pace to?

• 39:13Tom Bilyeu?

  Again, set another record for buybacks.

• 39:15Speaker 02

  So on the consumer side, consumers are spending. And this is what the data shows, which is why everybody's saying everything is it's great.

• 39:23Tom Bilyeu?

  Why are they spending? What's the psychology?

• 39:24Speaker 02

  The first issue is it's you have no choice. Inflation has made everything so much more expensive. So people are spending more.

• 39:31Tom Bilyeu?

  Interesting. So they're looking at spending and it's not that they're buying more cars and Gucci belts. Is that they're paying more for eggs?

• 39:37Speaker 02

  So that's the first part. And there's, there's, there's a whole list of few. The first part is they're spending more money for their eggs. And that is made, like, if you look at the, the recent spending reports, it shows that consumers are spending. But they're spending partially because of inflation, which means people aren't just getting more things. They're just spending more.

• 39:55Tom Bilyeu?

  They're not out there spending like drunken sailors. They, to some extent, it's okay, this is very interesting. So as you tease out the data, raw numbers and the analysis, the story you tell about the data that you see.

• 40:09Speaker 02

  Yeah.

• 40:11Tom Bilyeu?

  People are confusing, oh, everybody's spending more money, good times, yay, with, no, no, no, just to get my basics. And, and that's your analysis? Are there, who else is saying that?

• 40:22Speaker 02

  So let me, let me just hone in on that for one point. Because now, if you look at the spending, people are spending, right?

• 40:28Tom Bilyeu?

  Yep.

• 40:28Speaker 02

  But how are they affording it? Which is the interesting part because, so I, I ran these numbers on a YouTube video that I did recently. And what is, the data shows us that inflation between the pandemic, 2020 to now, this reported inflation number over those last number of years is about 15%.

• 40:46Tom Bilyeu?

  Whoa, God, I've known that, but that just, I don't like hearing that.

• 40:50Speaker 02

  Well, now let's compare that to wages. Because according to the Bureau of Labor Statistics, and I calculated this out. In 2020, inflation was around two and a half percent, I think it was 2.6%. 2021, it was about 5.1%. 2022 was about 5%, which means if you made a hundred dollars in 2020, you made about thirteen dollars and 20 cents today. Inflation is 15.

• 41:17Speaker 02

  Wage growth is about thirteen on average, according to the numbers. Now, most of us know that the reported inflation isn't the real inflation.

• 41:24Tom Bilyeu?

  Wait, but sorry, what timeframe do we go from making a hundred to making thirteen?

• 41:28Speaker 02

  Hundred to a hundred and thirteen.

• 41:29Tom Bilyeu?

  There we go.

• 41:30Speaker 02

  Between twenty, if I said thirteen, I apologize.

• 41:32Tom Bilyeu?

  I heard thirteen, so I was like, wait, what?

• 41:34Speaker 02

  No, no, hundred to a hundred and thirteen. So wages have gone up by around thirteen point two percent.

• 41:39Tom Bilyeu?

  Got it.

• 41:39Speaker 02

  Inflation about fifteen and some change, which means inflation has been growing faster than wages. And so now people are spending. How are they spending? Well, what we've been seeing is credit card debt is not only at its record levels, but growing at record speeds. So people are going into credit card debt. Bank rate did a study that they put out early in twenty twenty three, which said that about four out of ten Americans have been digging into their emergency funds to cover lifestyle expenses. And in addition to that, savings rates in America, this according to the Federal Reserve Banks, are near record lows right now.

• 42:17Tom Bilyeu?

  All time?

• 42:17Speaker 02

  All time. We're very close to the all time. The all time is like somewhere in the last six months. So our savings rates right now is very low, and so people are spending way more. So what we're seeing is, yes, people are spending. How are they spending? They're going into debt and they're digging into their savings.

• 42:33Tom Bilyeu?

  At a time where variable interest is about to slap them about the head, neck and chest, and servicing the debt is going to get far more brutal. But they have to do it because it isn't lifestyle at the club, it's lifestyle eggs.

• 42:45Speaker 02

  And it's a mix of both. But the thing is, there's a breaking point.

• 42:48Tom Bilyeu?

  So do you think there's still euphoria? Like, are people, I get the eggs problem. I know you're just going to ballpark this, or maybe you have the data, but I'm guessing you're just going to take a stab. But how much of the increase in spending is eggs? And how much is, I don't want the party to stop?

• 43:04Speaker 02

  Well, okay.

• 43:08Speaker 02

  There are over fifty, I think it's about six out of ten millennials who are making over six figures a year are living paycheck to paycheck.

• 43:16Tom Bilyeu?

  Yep, that's like a tale as old as time.

• 43:19Speaker 02

  But if we assume that if you're making six figures, that you should be able to invest some money and save some money. And six out of ten millennials who are making over a hundred thousand dollars a year are living paycheck to paycheck. Well, that gives us an idea that, well, you should be able to at least save some and invest some money and live.

• 43:40Tom Bilyeu?

  So some of this is still, I don't want the party to stop, which is at least as long as I've been alive, that's been the case. Everybody lives paycheck to paycheck, almost no matter how much money you make, which is very terrifying.

• 43:51Tom Bilyeu?

  Okay.

• 43:51Speaker 02

  So this is, if just like one thing to do, this is not the year to finance a brand new truck. Let's just make that clear because now we're seeing all these red flags. You have people spending and then you also have people. If you're not aware of what's happening, like if you're, let's just say a regular person, I go to work, I get paid and I like to spend money. Which is, you know, a lot of people, because we don't have a lot of financial education and you keep hearing everybody saying, there's nothing to worry about, everything is fine, you're still getting a paycheck. What's the concern for you? What we're talking about are things that, I mean, how many people understand what our national debt is? How many people understand what debt monetization is? How many people really understand what inflation really is? I did an, I did a video a number of years ago, this is before the pandemic. I walked the streets of different cities around the country.

• 44:36Speaker 02

  I went to San Francisco, I went to Chicago, I went to Washington DC, I went to Manhattan, New York. And I walked, I went to LA also. And I walked around and I asked people the question, this is like 2018, I think, what is inflation? And I can't give an exact number, but let's say eight out of ten people, if not nine out of ten people, had no idea what inflation was. And the, like, the number one comment that I would get on these videos is, how long did it take you to find these people? Like, you don't get it, this was like half a day. I went there, shot the videos and I left. Like, I didn't go out and try to find people. It was just like, this is regular people that I was asking these questions to. Now, obviously, inflation is becoming a little bit more of like front of mind because we see it everywhere. But most people still don't understand the consequences.

• 45:20Speaker 02

  When was the last time we saw inflation this high? The late nineteen seventies, what had to happen in order to bring inflation down? Interest rates had to get jacked up. Mortgage rates in the early nineteen eighties were over eighteen percent. It took a lot of work to bring inflation down. Are we gonna have to see that same thing happen now? Well, we've taken our mortgage rates from three, uh, under three percent to now over seven percent. And inflation is still closer to its peak than it is to our goal. So what does that mean? I mean, how much more are we gonna have to do? And how much more are we willing to endure? We, we're seeing the issues with corporations, they have the debt problems.

• 46:04Speaker 02

  Our national debt is having some issues. Householders starting to have issues. And yet we're sitting here like, nothing is wrong. And this is where like, my goal is to say, look, let's run two scenarios. Nothing bad happens. And something bad happens. What's the best thing for you to do? If you start preparing right now, you start building a little bit of a savings cushion. You put some money aside to invest, you make some investments and you start preparing and you start getting educated versus you don't. Well, if you prepare and nothing bad happens,

• 46:36Speaker 02

  you do nothing wrong, like, like everything is fine. You have a big bank account and I can go to Disney World if you want. If you prepare and something bad happens, you have a once in a lifetime opportunity to build a immense amount of wealth just because you prepared.

• 46:49Tom Bilyeu?

  How?

• 46:50Speaker 02

  Because when bad things happen, good assets go on sale. And that creates opportunity because now you can come in and buy some of these distressed assets, which are like, when I say asset, I mean, an investment. It could be a stock, it could be real estate, it could be a business. When, when people are, are running out of money, people become desperate and then they will need to sell or they'll be forced to sell because the bank is forcing you to sell. And this can create an opportunity now for somebody who's prepared to go and buy some of these investments at a discounted price. When the twenty twenty pandemic hit. People were able to buy stocks for fifty percent off for a small period of time.

• 47:33Speaker 02

  Now, most people running away, getting scared, getting scared, they had no idea what was going on. But some people were buying. And it created an opportunity. I don't think, like even myself, I didn't expect the stock market to turn around that quickly. I talked about on my channel how I was buying in phases on the way down because I didn't know what was going to happen. But I knew that this is creating great opportunities. I never expected the market to turn around as quickly as it did. I never expected the Federal Reserve Bank to do the amount of quantitative easing that they did. I never expected the amount of stimulus that we saw happen. That was a surprise to me, but that completely turned around the market and that made, you know, the people who invested. They saw huge returns very quickly, which I didn't expect.

• 48:14Tom Bilyeu?

  That's what everybody thinks is going to happen again. So in preparing for this episode, I started looking, what are most people saying? And most people are like, oh, has the crash finally been canceled? I think you actually even have a video along that vein. There's a lot of people talking about, oh, the crash that we thought was coming, it's not going to come. We are going to get our soft landing. We have the increasing rates, which has already started to really bring down inflation. The government will do more quantitative easing, AKA printing money. We're going to be fine.

• 48:51Speaker 02

  So here's the thing, like, yeah, that has happened in 2020, it happened in 2008, it happened in 2001. The difference between now and then is we have an inflation problem now.

• 49:06Speaker 02

  Which we didn't have before, which means, let's just, let's go with that, right? Where let's say unemployment shoots up, we start to see a recession and now the Federal Reserve.

• 49:15Tom Bilyeu?

  Start to see a recession, so you don't think we're in a recession now?

• 49:18Speaker 02

  Well, I think the average person is in a recession. I'm saying what the world is saying, right? We haven't been declared in a recession, so let's just go with that now.

• 49:25Tom Bilyeu?

  Because they changed the definition, though.

• 49:27Speaker 02

  They changed the definition of a recession and, you know, that's a whole different topic, which.

• 49:31Tom Bilyeu?

  We won't derail.

• 49:32Speaker 02

  Because, you know, at the end of the day, if they're declaring a recession or they don't declare a recession, if you're struggling financially, it doesn't matter, right? The average American is feeling the effects of a recession right now. Plain and simple. Now whether they declare it or not, it's a matter of semantics and you've got to take care of yourself financially. So if our economy gets worse and now the Federal Reserve Bank pivots, well then what? That means they're going to cut interest rates. If interest, if more, if your mortgage rate dropped to two and a half percent tomorrow, what's going to happen? People are going to start buying homes again. If people start buying homes again, who've been waiting for the mortgage rate drop, what's going to happen? Home prices will shoot back up and

• 50:14Speaker 02

  spending will shoot back up. Car sales will shoot back up. People would spend more money. What's that going to result in? Higher prices for things. And so this is the problem where we don't have that same ability to cut interest rates without consequence like we did before. And you talk about this idea of a soft landing, which, you know, I want to highlight that this isn't the first time we've ever heard of this concept of a soft landing. It's been talked about many times. And the whole idea of a soft landing, like technically, is you raise interest rates without inducing a bad recession, without seeing a huge increase in unemployment rates.

• 50:59Speaker 02

  In 2000, before the 2008 crash, let's start with 2005, the then chairman, who was Ben Bernanke, said, not only is there no housing market bubble that's going to burst, there is no housing market bubble. So that there's like his famous speeches.

• 51:15Tom Bilyeu?

  Three years from catastrophe.

• 51:16Speaker 02

  Three years from catastrophe. 2007, now we start to see a little bit more issues. We start to see the housing market go down a little bit. And that's where Ben Bernanke brought up the idea of a soft landing. He says, we're going to raise interest rates to ease the issues in the housing market, but we believe that we can do a soft landing without causing pain to the broader economy. One year later, the entire meltdown happened.

• 51:45Speaker 02

  And so now, what is a soft landing? You raise interest rates without inducing a major pain to the economy. Have we ever seen a soft landing before? Yes, we have. If we go back to nineteen ninety-four, this is what all the economists are like talking about. They're saying, oh, we can just do a repeat of nineteen ninety-four because in nineteen ninety-four, the Federal Reserve Bank raised interest rates. And we didn't see a major increase in unemployment. And that was the only real time between nineteen, like the nineteen forties and now. So like modern economy, where we were able to increase interest rates without causing a big increase in unemployment.

• 52:30Speaker 02

  Are we the same economy that we had in the early nineteen hundreds? No, we have so much more national debt. We have so much more corporate debt. We have so much more household debt. We're raising interest rates very aggressively. And on top of all of that, we have extremely high inflation. And now on top of that, we're also jacking up interest rates very aggressively. And they keep saying that they're gonna have to raise it. Like every time we hear, oh, I think we're getting close to the interest rate. And we're gonna have to raise interest rates even more aggressively. And so now it's, look, understand that just because somebody says something doesn't mean it's necessarily true, right? It's the data versus analysis. The data shows if you take a snapshot of today's economy, if you take a still picture, it shows you consumers are spending and companies are making money.

• 53:14Speaker 02

  Now, if we turn this into like a live photo where you can kind of see moving image, now you see, yeah, consumers are spending. How are they spending? Well, they're going into credit card debt. They are going into their savings. They're spending more of their income. So now you start to see, oh, there's some red flags there. And, oh, debt levels are rising and corporate debt levels are rising and national debt levels are rising and household debt levels are rising. There's got to be a cost for this. And bringing inflation down, like, okay, inflation by itself is slowing down the economy.

• 53:49Speaker 02

  The fight on inflation is bringing down the economy.

• 53:53Speaker 02

  But inflation hasn't gone away and the fight on inflation has a lot to go. So it's like a double whammy, which are both hurting the economy. And now everyone's saying, don't worry, we're gonna have a soft landing. Well, how is that possible if the inflation is hurting the economy? The fight on inflation is hurting the economy and neither of these are close to being solved.

• 54:11Tom Bilyeu?

  Okay, so I think there, there is a debate to be had and it goes something like this. So I was just talking to Ral Paul. Ral isn't, uh, isn't super concerned. Like when you talk to him, it feels like soft landing territory. He said, he thinks to use his words that the recession will be sharp, but short. And so maybe different than a soft landing, but he feels like the government is a hundred percent going to print its way out of this. It's going to stimulate its way out of this, either or both. So it's either gonna hand stimmy checks to people, um, or get money into the economy. Either way, it's gonna do it through printing, certainly here in the U.S. Because we are the world's reserve currency. We can basically do whatever the fuck we want until we can't.

• 54:57Tom Bilyeu?

  And, um, we can get into BRICS in a second, but so the two competing narratives, as I see it, you've got Ral's idea of short and sharp. Then you have, and I'm gonna have to look up her name, unfortunately. It's a, it's a slightly complicated name. But the new co-CIO of Bridgewater, so Bridgewater, Ray Dalio's company, largest hedge fund in the world.

• 55:20Speaker 02

  Right.

• 55:20Tom Bilyeu?

  Uh, Karen Canoil Tambor? Uh, I'm sure I just brutal that, uh, brutalized that, but you get the idea. So she is saying that she thinks that we could be in for deeper and longer recessions than what we're accustomed to. So if we've got sharp and short, government is gonna, and I think it was, um, the Fed that said this. Like we, it's okay if we end up breaking the bone, being that we raise interest rates too high. That breaks the economy because we know how to repair a broken bone. What we don't know how to deal with is runaway inflation. So we're gonna go in, we're gonna Hammer that down. We're gonna keep cranking up the in uh the interest rate until inflation comes down.

• 56:06Tom Bilyeu?

  Now, the bad news is it sounds like we don't think we're gonna be back to two percent until twenty twenty five, which is very little comfort in twenty twenty three, early twenty twenty three when we're recording this. But they feel like, okay, we we've got that in hand. And so that speaks to what Raul is saying, which is, okay, we're gonna break your leg. It isn't gonna be fun, but we know how to fix it. We're gonna stimulate. We're gonna print some more money and we're gonna make sure that you don't end up in the ICU.

• 56:38Speaker 02

  Yeah.

• 56:39Tom Bilyeu?

  Whereas the other narrative sounds like you and Karen at Bridgewater are in a more similar vein of like, we're out of tricks. And if you continue to raise interest rates, you are going to break the leg. And you you can't keep stimulating because at some point, not only, so let me finish that thought. You're gonna break the leg, but you're gonna have a hard time getting it to heal. The reason that you're gonna have a hard time getting it to heal is complicated. It's the triangle of doom, which we've already talked a lot about here. The next part, which is a signal to me, and again, I'm playing the role of the layperson here, is a signal to me that you'll only be the reserve currency until you're not.

• 57:24Tom Bilyeu?

  And so you've got the, it's BRICS, right?

• 57:27Speaker 02

  The BRICS nations, yeah.

• 57:28Tom Bilyeu?

  Brazil, something China, South Africa, Russia, Brazil.

• 57:34Speaker 02

  Russia.

• 57:35Tom Bilyeu?

  Russia.

• 57:35Speaker 02

  India.

• 57:36Tom Bilyeu?

  India, China.

• 57:37Speaker 02

  South Africa.

• 57:38Tom Bilyeu?

  There we go. Okay, thank you. So they're going, uh, yeah. U S, you can't just keep printing your way out of this and devaluing the dollar. We're not gonna stand around for that. And so they're now making moves to create a new reserve currency that's backed by gold. And we see um uh central banks, the world over now scrambling to buy gold. In fact, I have a stat which I may have gotten from you. Uh, oh, God, am I gonna be able to find this? But yes. So in the third quarter of twenty twenty two, central banks bought more than four hundred tons of gold. The last time they bought this much gold was back in the seventies when Nixon took us off of the gold standard.

• 58:22Speaker 02

  Yes, and this is now.

• 58:26Speaker 02

  What you're saying, look, Raul Paul is a very smart guy. And, and, you know, the government, no, okay. This, because this is a lot to unpack here.

• 58:38Speaker 02

  Eventually, you know, the raising interest rates is going to cause pain, even though most people say it's not going to cause pain.

• 58:43Tom Bilyeu?

  Because you're raising the interest rate on the debt that I have. You gave a really good example in one of your videos. You said, let's say your cousin buys a house and based on the cost of the house, it costs him fifteen hundred dollars a month to service that debt and own the house, to make his payments on the house. You then buy the same house, which has gone up a little bit in price.

• 59:03Speaker 02

  Yeah.

• 59:04Tom Bilyeu?

  And your interest rate, though, is higher. And so now for the same house, he's paying fifteen hundred, you're paying twenty five hundred by way of example.

• 59:13Speaker 02

  Right. And that, this is a very common thing happening because home prices haven't come down enough to kind of make up for the higher interest rates. But that's a separate topic from this, which is now, the government, no government wants to see economic pain while they are in power. Because it looks bad on you. So why would I want to have to deal with the pain and actually fix the problem when I can stimulate and try to push it off, kick the can down the road, essentially, that's what people say.

• 59:45Tom Bilyeu?

  It seems exactly like what's gonna happen.

• 59:47Speaker 02

  And that is what has been done and it is what everyone will want to do. The problem is, right now, if we keep doing that, it's gonna cause even more problems. Because right now, you're right, our dollar is being tested. We can, like, we haven't, most of us, myself included, haven't lived through a period of sustainably rising interest rates. And we haven't seen what that does to our economy. Because from like the nineteen seventies until now, it's been a drop in interest rates. Yeah, we have ups and downs, but from the, from like eighties, seventies till now, it's just been steadily downwards. And so we haven't seen a period of growing interest rates.

• 1:00:32Speaker 02

  Growing interest rates makes borrowing more expensive. It slows down the economy and we haven't experienced that. And for the last fifteen or so years, we've only seen low interest rates, next to zero interest rates. And so for the first time, we're actually experiencing higher interest rates. That is something new for most of us, myself included. So now, higher interest rates are gonna have an impact. And now, if the government just starts stimulating, they try to like, kind of bring us out of this, that is gonna hurt the dollar even more. And then that poses, the second concern like you brought up, is we have major countries around the world, Russia, India, China, that are coming together and saying,

• 1:01:17Speaker 02

  "We don't like being controlled by the United States. We don't like being controlled and subservient to the dollar. We don't like that the dollar isn't backed by anything." So in 1971, the United States was, I'm gonna say this in a, kind of like, let's say the politically correct way. In 1971, or before 1971, our government was on the verge of default. We had a lot of debts. Our dollar was then backed by physical gold. So we didn't have the same ability to print money. We needed more gold to print more money. We had a limited amount of wealth. And so, now, our government had a lot of debts that it owed, especially to other countries around the world. And we were struggling to make these payments. And we were on the verge of default.

• 1:02:00Speaker 02

  And that was when President Richard Nixon, in 1971, severed the tie with the dollar and gold, temporarily. Supposedly. No, he said, I've put this speech many times on my YouTube channel, where he said, "I am temporarily going to sever the link between the dollar and physical gold." What does that mean? That means that now, the government and the Federal Reserve Bank have the ability to print money on command. Now, we have all these debts to pay. We have to pay, you know, hundreds of billions of dollars in debts. Fine, just print that money. Here's your money. And now, you're a little confused. You wanted gold, but you have the money. So it's like, "I got the money, okay." And everything was just fine. Obviously, inflation really kicked up after that. But...

• 1:02:45Speaker 02

  Now, what we're seeing happen is, okay, inflation is becoming a bigger concern. Countries around the world that own dollars are saying, oh, this inflation is a problem. This money is just pieces of paper. What is the real value of this money? It's backed by the economy, it's backed by the military. And we don't like, but we don't like being bullied by the United States. What if we work together to create our own currency? And we back it by a metal, like gold? Now, this is still in the early stages, but you know, the BRICS nations that we talked about have been working to build their own reserve currency, potentially backed by physical gold.

• 1:03:25Speaker 02

  And we have seen more central banks, like you said, working to purchase and hoard gold than the last five decades. The last time we saw them go after this much gold was when the gold was severed from the dollar temporarily.

• 1:03:41Tom Bilyeu?

  And we think that they're doing that because if the BRICS nations pull this off, then to increase their own wealth, they will have to acquire more gold.

• 1:03:48Speaker 02

  Exactly. And then it's kind of like a economic warfare type of situation where it's like,

• 1:03:55Speaker 02

  if the United States is getting weaker economically, and they're getting weaker internally because people inside the country are, you know, fighting each other, that creates weakness. And people around the world will want to capitalize that weakness. Now, of course, we're in a situation, right? Where most of us have grown up never having to worry about inflation. Most of us never had to worry about like the long-term concern of our economy or anything like that. But what other countries are saying is, we don't want to continue being bullied. We want to have our own independence. We want something a little bit different. And so that's concerning because, well...

• 1:04:38Speaker 02

  If more and more countries don't rely on the dollar, they're going to be less willing to loan money to the United States. And if they're less willing to loan us money, okay, well, that could create more of an inflationary issue here. But then secondary is many of these countries own our dollars. And so if they decided to play the game and dump our dollars, you increase the supply of our dollars, which would increase essentially inflation. It would increase the amount of the supply of dollars in our economic system. And so those are the concerns. How, where will that play out? I have no idea. I'm just telling you what's happening right now, right? I mean, there's a lot of conspiracy theorists who are kind of saying this is gonna happen. And look, you know, you can kind of, you can kind of play out where this could go,

• 1:05:23Speaker 02

  but this is where it becomes so important for us to become economically strong. And really understand-

• 1:05:29Tom Bilyeu?

  And when you say us, do you mean us as a nation or us as individuals?

• 1:05:32Speaker 02

  Well, our nation is made up of individuals. And so, you know, the government doesn't have its own stream of income.

• 1:05:39Tom Bilyeu?

  Well, so that's interesting. I would say there's a pretty big difference between appealing to the individual and appealing to the government. Because the individual can be disciplined and the government can still spend like drunken sailors. And now you're still in trouble.

• 1:05:50Speaker 02

  But the individual has the ability to vote and to pick who's in government, right? And so if the individual is educated financially, then you can make a more educated decision of who's running the country as well. Because the country is run up by-

• 1:06:03Tom Bilyeu?

  Do you have faith in what you just said?

• 1:06:06Speaker 02

  Look, man, you have to, I feel. Especially, look, my family's from a state in India called Punjab. And we have obviously issues here. But economically, there's nowhere else in the world you'd want to be.

• 1:06:21Tom Bilyeu?

  I agree with that. But I also am very sensitive to the reality of you're the leading empire until you cease to be the leading empire because you deteriorate from the inside, which feels like what's happening right now. So there's that famous John Lennon quote about in the eighties. You know, if I were living in Roman times, I would live in Rome where else? And now I live in New York because America is the new Roman empire and New York is Rome itself. I feel like there's a similar quote to be had, which is that there's just a psychology that ends up happening when empires end up declining. And some of those same things are happening right now.

• 1:07:02Tom Bilyeu?

  So the fact that we're so over leveraging from again, I'm, I am the layperson. I'm educated enough to know that I'm on the right track. That directionally, what I'm about to say, I think is very accurate. That we are over leveraging our position as a world's reserve currency. That the fact that we have created so many new dollars, I forget what the percentage, but it's absolutely ridiculous. In the last like whatever five or six years, we've created something like 40% of all the dollars that have ever existed in the history of this country. So it's like, that's so crazy. And so when I think about appealing to the average person, hey, please be thoughtful about who you vote for. We want to be careful as a society.

• 1:07:47Tom Bilyeu?

  The problem is when everybody has grown up being the reserve currency for as long as we have. And Ray Dalio has a map of the changing world order. It goes in six stages, every empire ends up collapsing. There's only six stages, stage six is absolute total collapse. He puts us somewhere around stage five and a half. So it's like, we're, we're just headed down this path. And when he looks at what are the indicators of that? It's the fighting inside of a country. He talks endlessly about how we treat each other. I, I saw him backstage, uh, literally like weeks ago. And, you know, I was like, hey, cause we were in Dubai. And I'm just like, whoa, Dubai is like popping off. I'm like, you're a guy, you travel around a lot.

• 1:08:30Tom Bilyeu?

  Like, how do you think about where to go? You know, where is going to be the economic opportunity? And he said, Tom, it's all about how people in the country treat each other. And I was like, that's so interesting. You mentioned earlier that we're colliding internally and that's part of the weakness. I think it's a multi-pronged thing. Part of the weakness, you and Ray are saying the right thing. We're just, we're not treating each other well and we have to be very thoughtful. But the other part is what you're bringing up now that you have faith in that maybe I have a little bit less faith in, which is, I don't think, I'll get there and we bring this all together. I don't think that we're going to make.

• 1:09:07Tom Bilyeu?

  The wise decisions that we need to make unless there's enough suffering. Because what ends up happening is when you look at the the way that we're going. It is more and more richer evil. Companies making money like they're evil. Companies need to pay their fair share. All this stuff not understanding that the the miracle is not the redistribution of wealth. The miracle is companies creating something that people want badly enough that they pay money. This is how we've pulled people out of poverty. Production by creating something that's amazing. And so what I'm worried about is there there has become an attitude.

• 1:09:52Tom Bilyeu?

  Uh, because things have been so well for so long. You said for fifty years, we've been in a declining interest rate environment. Money is easy to get. You can finance things on debt and that's fine because the the rate is going to go down. Like, what could be the problem? Now, in the moment where the rate's going to start going up, the mentality of people has been formed over fifty years of it's all good. It's raining money, everything is well. And so now people go into, oh, the miracle isn't like all this wealth that we've been able to create. And isn't this amazing? And look at how productive we've been. It's like, oh, people that are succeeding like this is evil and what are they doing? And so now when they vote, they're voting from that perspective.

• 1:10:35Tom Bilyeu?

  And so I they they will change their tune, but it will require so much pain and suffering for people to realize, oh, shit, like we've been barking up the wrong tree. And so I to to say it in a single sentence. I don't think people are going to vote in the austere way that you want them to vote, which would be fiscally responsible.

• 1:10:58Speaker 02

  Of course.

• 1:10:58Tom Bilyeu?

  Until they are in agony.

• 1:11:00Speaker 02

  Well, I think you're a hundred percent right on that. And I I think.

• 1:11:04Speaker 02

  Many people are emotional and one, we don't understand money. Now, what I'm saying is, for the first time, people have access to real financial education with ease. Youtube, podcasts, newsletters, we have access to this information.

• 1:11:18Tom Bilyeu?

  So complicated, man.

• 1:11:19Speaker 02

  And you're right, people are generally emotional. And this third issue is, we are becoming a two-class nation, which is the, probably the biggest issue causing the divide. And what I mean by that is, you have the rich and the poor. But in order to have a healthy society, you need a rich, the poor, and the middle class. And the middle class is completely being decimated by the system. And, you know, going back, there's a saying, it's like, tough times create tough men, which create good times, which creates soft men, which create bad times, something like that. I've probably butchered it, but...

• 1:11:54Tom Bilyeu?

  Yeah, pretty close.

• 1:11:55Speaker 02

  And this is kind of what we're seeing, yeah. You know, we became this country because of tough times. We fought for it, and then things became great. And then we grew up in the times where money is easy, everybody's rich, you can finance whatever you want, buy as much Gucci as you want, we are a consumer nation, we become fat as a society. We want it all, we don't want to have to work for it, we become lazy and, and things are, seems great, like I can have anything I want. That's gonna have a breaking point. Eventually, that party will stop. And when that party stops, you know, it's, what will we do? Guess what, we still have a ability to learn here, we're still the most creative place,

• 1:12:37Speaker 02

  and hopefully we stay this way, where we are the hub of entrepreneurship in the world. We are the hub of business innovation in the world, we are the hub of production in the world. We have to stay that way, if we want to continue to compete in the world. And I'm hoping that will happen, I'm an optimist, like I, I have a lot of faith, because, you know, people here are... We are still, I mean, you think of all the major companies in the world, this is, we are the producer of them. And we provide a lot of benefits to encourage entrepreneurship. And I hope that we will continue to do that, there's a lot of people now, thankfully, on the internet, I mean...

• 1:13:19Speaker 02

  People around the world look at what we put out on the internet to learn from us. You know, like I was invited recently to a couple of shows in London. I was asking about their demographics and all that stuff. And they're like, yeah, you know, most of the people here in the UK watch US content creators. And that was a really interesting thing to me. I was like, what do you mean? Because I, you know, I don't consume like that much content. I really try to just learn my own ways. I don't really follow what's going on in the world like that. And they were like, yeah, you know, we have some creators here, but most of the people here are just watching people in the US. And I realized it's not just the UK. It's many people around the world. And so we have a lot of educators here. We have to be now the consumers of our own understanding.

• 1:14:02Speaker 02

  Okay, we have to be creators. We have to be innovators. And then that also goes to our education system where we can't just produce factory workers anymore. We have to innovate our education system. And we, I was gonna say we suck there, but we have to really fix that up. I mean, we have to really encourage innovation. We have to encourage

• 1:14:22Speaker 02

  the ability to think freely, because the advantage that America has is we became who we are by thinking differently than everybody else. It's kind of like that minority mindset message, because we didn't follow what everybody else did. We have a completely different like economic system, tax system than the rest of the world. We cannot be a follower. We have to be a leader. And in order for us to do that, we have to continue innovating and thinking differently. The people level to the national level. And you're right, you know, we have a long way to go. But we are gonna have to, if we want to stay competitive.

• 1:15:03Tom Bilyeu?

  All right, so I want to get into the specifics on that. So if you were a benevolent dictator and you were going to say, okay, here's what we have to do. Here are the principles, whether it's, you know, fixing education or what have you. What, what do we need? What are a small handful of things that we need to do to continue to lead, to innovate, to learn the lessons that we need to learn?

• 1:15:24Speaker 02

  Well, I think part of that is just straight financial education. And it has become much more accessible, but we have to know how to learn, right?

• 1:15:31Tom Bilyeu?

  Well, so let's not move off the first one. So what the, in fact, I'll, let's get them out. So financial education, that's the first one. We're gonna circle back to that, to a couple of key points that you think people need to learn about financial education. What else?

• 1:15:45Speaker 02

  So we talk about now as a society, what do we just learn to be?

• 1:15:47Tom Bilyeu?

  Yeah, like, so the, we started this episode by saying, look, before we turned the cameras on, you were like, thank you so much for having me back on. I'm getting really paranoid that people are gonna get really hurt by what's happening. They don't understand it, the triangle of doom, uh, they, they just don't understand how money works, all of that. So we're going to like, help people get themselves out of this mess. It's gonna be partly financial education.

• 1:16:12Speaker 02

  So I think the financial, I mean, if we talk about the financial side, it's the.

• 1:16:16Tom Bilyeu?

  Not just financial, we're gonna come back to that. I wanna know if you were the benevolent dictator and we know America needs to continue to lead. You were saying that, you know, all across the world, people are listening to American educators, which I have a hypothesis about why that is, that I'll round to, we're like the only country that until recently, was not into the tall poppy syndrome. So in the UK, in Australia, like if you stick your head up and say, I can do something amazing, people just swat you down. And it's like, whoa, I don't wanna try to be cool. I don't wanna try to do anything amazing because people are gonna make fun of me. When I was a kid, a hundred percent, I was just like, I'm gonna be rich. Like, I was so, like, I'm going to go do amazing things.

• 1:16:53Speaker 02

  But I think all of that, like innovation, right? The idea of.

• 1:16:56Tom Bilyeu?

  Is that the next one?

• 1:16:57Speaker 02

  Yeah.

• 1:16:57Tom Bilyeu?

  Financial education, we need to innovate.

• 1:16:59Speaker 02

  I think that is a part of financial education, understanding the ability to lead, management, all these things are all a part of financial education. Cause now if we talk about how to succeed as a country, it's financial education and that can be.

• 1:17:12Tom Bilyeu?

  Period?

• 1:17:14Speaker 02

  If, I mean, look, I think we need health education. I think we need to understand how to be spiritually fit. I think we need to know how to be mentally fit and then we need to know how to be financially fit. These are the four aspects. But now if we talk about now, if we're on the economic side, how do we produce entrepreneurs? How do we produce smart investors? How do we produce people who know how to save their money, how to invest their money? That's the financial education part. But what stops so many people from being able to do that? Well, I feel depressed or I'm anxious. I, I don't think that I can do it. I don't have the confidence to go out and do something. I don't believe in myself. I'm surrounded in a, a toxic environment. If, if you grow up, look, I used to guest teach in Detroit Public Schools. And these kids are smart, hardworking kids. I was actually just talking to a guy last.

• 1:17:58Tom Bilyeu?

  Were you teaching finance?

• 1:17:59Speaker 02

  I was teaching life skills. And part of that was finance. But it started with the core of just building some confidence of thinking bigger. Because I was talking to a guy, uh, he came to my office last week. He grew up in a rough neighborhood in Detroit. And uh, we began talking and he was like, look, I wanna, I wanna get to somewhere else in my life. He's like, I got to where I am today because I was an athlete. I didn't wanna be like everybody else in the neighborhood. I started working out and I became a good athlete. That got me through education. Now I work an okay job. I own a lot of shoes, but I don't have much else. Like I don't have any savings. I don't have any investments. Like I don't even know what this stuff means. I wanna do something different. So now I start talking to him.

• 1:18:43Speaker 02

  And what he tells me is like, I grew up with this mindset of, I don't care about being rich. I just wanna get by. That's all he wanted. And now he's like, he, he was telling me he read this book called The Millionaire Mindset. I think that's what it was. And what he was like, he was like, that book talked about how

• 1:19:05Speaker 02

  people who say, I don't wanna get rich are lying to themselves. And you have to say that you wanna become successful. That way you can actually achieve more. Because we create these taboos around money. But like, what stopped him? It's, he had this limiting mindset that because of where I came from, because of all I saw, somebody like me can't do it. Then he got a little bit of a taste of, wait, you're telling me that I can achieve more? Because he never had been exposed to that before. And now because he just read or listened to an audio book that said that now all of a sudden he's trying to put himself out there. We happened to just talk in the gym. And now, you know, he's like, dude, like, can you please give me some sort of guidance? And now I started talking about different things that he could do.

• 1:19:46Speaker 02

  And he was like, dude, I, I cannot thank you enough because it's just like, it's not even that I did anything. It's just. He got a little taste of what's possible.

• 1:19:55Tom Bilyeu?

  Trust me, this is the entire reason that impact theory exists. So you're in Detroit, teaching. I was in Compton, building a company. And I'm encountering all these people, very bright. Some of them, look, they were morons, just like there are anywhere else. But there were a lot of incredible people. And I began to realize, intelligence is evenly distributed, but mindset is not.

• 1:20:16Speaker 02

  Right.

• 1:20:17Tom Bilyeu?

  And because they have the wrong mindset, because they're asking the wrong questions. Because there was one kid who, I was like, oh, you're so smart. Like, why aren't you out there pushing yourself? And he said, oh, my mom told me that the world doesn't want people who look like me to succeed.

• 1:20:30Speaker 02

  Right.

• 1:20:31Tom Bilyeu?

  And I was like, that is the worst fucking advice you've ever heard in your life. And I'm like, I've become obsessed with the Kobe Bryant quote, that boos don't block dunks.

• 1:20:39Speaker 02

  Yeah.

• 1:20:39Tom Bilyeu?

  You can get so good at finance that no one can stop you. Like, you can just out invest people. And this is where I get obsessed about, okay, there are a cluster of things. That mindset is certainly one of them. Financial education is certainly one of them. The education system in and of itself is certainly one of them. The self-loathing thing that's become so prevalent in America is one of them. It's like, I, what I want for people is for them to feel like I felt in the eighties. Now, I didn't grow up with money. Uh, we weren't poor. I used to think we were poor, but now I've seen real poverty. We weren't poor, but we were lower middle class.

• 1:21:23Tom Bilyeu?

  And so I couldn't have the things that I wanted to have. I had to start working when I was 12 years old to buy. I had to buy myself a Nintendo. My parents couldn't or wouldn't buy me one. And so I took a job in a door factory at the age of 12 so that I could buy a Nintendo. Now, when you come up like that, you learn a couple of things, depending on how you're wired. For me, what I learned was I. Really hate work, but it's really cool that I can go do something, someone will pay me for it. And then I can get the things that I want. So it gave me a sense of self-agency. Then, as I got older, I read my own equivalent of the millionaire mindset. It wasn't that, but things that ended up teaching me, oh, whatever you dream for, you're gonna fall short of. So you better dream really fucking big and then go just relentlessly acquire a skillset

• 1:22:08Tom Bilyeu?

  in order to get good enough. So in the eighties, I just believed I could become anything I wanted, but I was gonna pay an extraordinarily high price to get there. I was gonna have to figure it out. I was gonna have to outwork everybody. I was gonna have to go hard. Nothing was gonna be given to me. Nobody owed me anything. I was gonna have to head down and just learn to fight. And that sense of like, hey, you can have anything you want. This world is amazing. It's your oyster. Let's go. But let's go means let's go get strong. Let's go get smart. Let's go get educated. Let's like figure out what you have to do, but booze don't block dunks. You can get so good that even if people want to stop you, they can't stop you. Right.

• 1:22:53Tom Bilyeu?

  Now, if I could give people that mindset, a overwhelming number of them are still going to fail. I get that. But you create an environment like the US where, man, really amazing people from all over the world wanna come here so that they're not strucken down by other people who don't wanna see a tall poppy. They don't wanna see somebody stand up above other people. They're cheering for it. They wanna do it themselves. And it's become a meme. This really pisses me off. It's become a meme, the whole idea of people voting against their own interest because they're just a temporarily embarrassed millionaire. Yeah, that that was my entire youth until I was in my late thirties. I acted like the

• 1:23:35Tom Bilyeu?

  temporarily embarrassed millionaire. And it led me to becoming an actual millionaire. If you see yourself as like, this is all you're ever gonna be and you're stuck, then you won't do the things you need to do to at least have a shot. A lot of people are still gonna fail. I get that. But man, if you think, oh, if I, it's what I call the only belief that matters. If you believe, if I put time and energy into getting better at this thing, the world will still punish me. Rich white people are gonna take it away. I will never get anywhere that I wanna go. You won't do the things.

• 1:24:07Speaker 02

  But I think that goes to, that this is really a mindset thing of like, like, I don't even know if it's self-confidence or a little bit of arrogance or a little bit of ignorance where like for me, I, you know, you said that a person you talked to, their mom told them someone like you can never make it.

• 1:24:26Tom Bilyeu?

  The world doesn't want someone who looks like you to be successful.

• 1:24:29Speaker 02

  And you know what? You said that was the worst advice. I think that's the best advice that you could get.

• 1:24:33Tom Bilyeu?

  Why?

• 1:24:34Speaker 02

  That makes you, well, at least because I heard something very, very similar. And for me, that put a fire on my butt where I was like, I'm gonna prove you wrong. I'm gonna prove you wrong. I'm gonna give you a middle finger and I'm gonna go do what I want. Because I heard-

• 1:24:47Tom Bilyeu?

  Did your mom tell you that?

• 1:24:48Speaker 02

  My mom told me that somebody who looks like me will never be the CEO of a company. So I need to shut up and go study to become a doctor.

• 1:24:54Tom Bilyeu?

  Wow. I wish the world were more like you.

• 1:24:57Speaker 02

  I, I mean, the thing is, I always had just a little bit of a hard head. And my mom said it out of love. Like, I love my mom.

• 1:25:02Tom Bilyeu?

  Yeah, they always do.

• 1:25:04Speaker 02

  It was for, because I was such a, like, I was very rebellious, but not in a bad way. Like, I wasn't doing drugs and drinking and doing things like that. I was like, trying to start businesses. And in a traditional Indian household, like my house, like my parents were like, you have to become a doctor. That's like from the, the, since I turned like one or two years old, they told everybody from America to India, Jaspreet is gonna become a doctor. For my entire life, that's all I heard. Me playing football was a distraction for me becoming a doctor. Me doing a newspaper route was a distraction for me becoming a doctor. Me wanting to go to the gym was a distraction. All these things were discouraged. I told my dad I wanted to start investing in real estate. Told me, you're stupid. Focus on your studies. And then when you're a doctor, you can do whatever you want.

• 1:25:49Tom Bilyeu?

  I wanna be clear, though. That was all terrible advice. It happened that you pushed back against it and proved them wrong, but the advice, because most people listen, the advice was god awful.

• 1:26:01Speaker 02

  But I think it's like, you know, we have to be able to channel pain. We have to know how to do that because pain creates purpose.

• 1:26:09Tom Bilyeu?

  Pain can create purpose.

• 1:26:11Speaker 02

  It can. And we, but you have to like-

• 1:26:15Speaker 02

  I mean, I don't know if it's confidence or a little bit of, again, like I was saying, arrogance or ignorance where you have to, we have to want more from ourselves as people. We have to know that we can produce more. We have to believe in ourselves. I mean, I don't even know if it's belief because I never like,

• 1:26:34Speaker 02

  I, if I, if I look back to like my seventeen, eighteen year old self and I remember telling myself like, dude, if one day I ever made a hundred thousand dollars in a year, like, man, I'm gonna be flying in private jets. I'm gonna have all, like, I'm gonna have all the money in the world. And then you do it. And I was like, wait, like, this was a dream, like, one day, and then you did it. And it's like, well, I'm not flying in a private jet. I don't have all the nice stuff, but I'm pretty surprised that I did it. And then you surpass that. And then you take it from a hundred thousand dollars a year to a hundred thousand dollars a month. And like, I can't imagine like when I was like seventeen to think that somebody could make that in a month. And you're like, wait, that is possible?

• 1:27:16Speaker 02

  But in order for that to be possible, you just have to like, you, you have to have some sort of taste and belief. And that belief, I don't know where that comes from. And I don't know if it's just like, you have to just be like, you have to have this like, I don't know what the best way to explain it, where it's like dumb belief.

• 1:27:35Speaker 02

  You gotta want something really bad that you just, nothing like,

• 1:27:40Speaker 02

  the science doesn't add up, like two plus two is four, but you're telling me that two plus five is forty-four.

• 1:27:45Tom Bilyeu?

  Here's what people have to understand. The human animal is designed to grow and get better. It's, it's cultural transmission of ideas. That's how we become the dominant apex predator. We're not smarter, sorry, we're not faster, we're not stronger, we're smarter. And so it's the ability to learn. This is why I call it the only belief that matters. Everyone needs to believe the following statement. If I put time and energy into a specific thing, I will get better at it. Once you believe that, everything else is gonna take care of itself. You're failing, you're not making as much money as you want, you don't know finance, whatever. Go learn it. And once somebody is like, oh, okay, I'm going to go get good at this thing. I didn't need to be born good at this. I don't need to have a natural inclination to it.

• 1:28:28Tom Bilyeu?

  I have a goal and my goal makes demands. If you're Kobe Bryant, you have to practice basketball. Why? Because your goal is to become the best basketball player of all time. If you're Kobe Bryant and your goal is to become the best basketball player of all time and you spend your time swimming or studying math, you're never gonna get there. So your goal makes a demand. So your parents weren't wrong. If you wanted to become a doctor, then going on a paper route didn't make sense. What they weren't realizing is you wanted to be an entrepreneur. And so that was just a misunderstanding of what your goals were. But you both were right in the sense that, hey, figure out what that thing is that you really wanna get great at and then go do that thing.

• 1:29:04Speaker 02

  I, I think that the society also molds it because like it wasn't that.

• 1:29:08Tom Bilyeu?

  What's it?

• 1:29:09Speaker 02

  So for example, you said my parents, like what, they didn't know that I wanted to be an entrepreneur. And I don't, I think it's more that they didn't understand that other opportunities were possible. Because when I said I wanted to be an entrepreneur, that was like.

• 1:29:22Tom Bilyeu?

  They just thought you were stupid.

• 1:29:23Speaker 02

  There was a horrible thing. But I think that, you know, whether it be your parents, your cousin, your family, your friends or society, we, we encompass ourselves into this little box that this is what's possible for me. Somebody that grew up like me, somebody who's good at what I'm good at, somebody who looks like me, somebody who comes from a background, this is my possibility. But the opportunity we have here is the whole table. The whole world is your opportunity. But you have to believe that first. And that means then you're gonna have to go against what, you know, maybe what a lot of people are pressuring you. Maybe you have support, maybe you don't. And it's, it, it doesn't really matter. Because what you need is up here, that belief in yourself to now do whatever it takes. Because for me, it started with listening to motivational tapes.

• 1:30:07Speaker 02

  And I listened to Eric Tommich's Blueprint to Success so many times that I knew the words to like every single word of that CD and.

• 1:30:17Speaker 02

  I was like, wow, like, I can wake up earlier. I might not be the most smartest or whatever, but I can work harder than everybody else because that I can control. How did I learn that? Because I started this motivational CDs and I tell everybody to listen to it and I'm like, yo, did you listen to it? They're like, yes, basic stuff. I'm like, oh, okay. Like you already knew this. Then I read a book called Rich Dad Poor Dad by Robert Kiyosaki, the first time I ever got exposed to financial education. And I was like, holy moly, like this guy's.

• 1:30:43Tom Bilyeu?

  What was the most important thing he taught you in that book?

• 1:30:45Speaker 02

  Well, the like cover to cover, like I, you gotta understand, I didn't grow up with any, like, I didn't know what investing was. I never heard of passive income. I didn't know you could invest in real estate. Like I was so naive. I like, I didn't know anything in that book.

• 1:31:00Tom Bilyeu?

  That's my beef. People don't know how the world works. And this, I was as guilty of this as anybody. But going back to the triangle of doom, this is the, so as a refresher, triangle of doom, interest rates, economy.

• 1:31:13Speaker 02

  Yeah.

• 1:31:14Tom Bilyeu?

  And, um, sorry, which one am I forgetting? Interest rates, economy and inflation. And so you've got, if people don't understand how that works, they don't understand how to move in order to either survive or take advantage of the opportunities that are going to present themselves. But it starts with understanding how the system works.

• 1:31:36Speaker 02

  Understanding the system and then not blindly trusting everybody. Like you said, you know, you have distrust. Look, I'm on board with you. I don't really trust many people. I don't trust what the government says. I don't trust what the Federal Reserve Bank says. I trust myself. But you gotta have, take everything with a grain of salt. Now, why do I say that? Because, okay, we'll talk about interest rates just for a second.

• 1:31:59Speaker 02

  The Mortgage Bankers Association put out a statement in 2023 and they said that by the end of 2023, that they expect mortgage rates to fall to like the low five percent. The National Association of Realtors said something very similar. They said that by the end of 2023, they expect mortgage rates to fall under six percent. I forgot the exact percentage, but it was under six percent. Why? What is their intention? You have a lot of mortgage bankers and realtors out there saying, what the heck is going on? Why aren't people buying homes? Why aren't people getting mortgages? And so now you have these, I mean, these are big agencies saying, calm down, it'll be just fine. What is their justification?

• 1:32:41Speaker 02

  Mortgage rates are too high right now, people can't afford homes, so they have to go down. Again, analysis, that's their analysis versus the data. Now, if you dig a little bit deeper, this is the financial education aspect that I'm keep talking about. Now you can answer this question yourself instead of just trusting somebody else. I mean, I'm not saying trust me, I'm saying learn it so you can figure out how to do it yourself. Because I can be wrong, you can be wrong, anybody can be wrong, but at least you know how to come up with their own analysis. What affects mortgage rates? Two things. The interest rate that the Federal Reserve Bank sets and inflation. When the Federal Reserve Bank raises interest rates, that makes borrowing for banks more expensive, which means they're gonna have upward pressure on where,

• 1:33:26Speaker 02

  you know, what they have to sell it to. Like if you, if you sell it a hat for $10 and then the cost of the hat goes up to $11, now the store is gonna have upward pressure to sell the hat for 20 as opposed to 15, right? Because their cost is going up. So when the Federal Reserve Bank raises interest rates, that's upward pressure mortgage rates. The second aspect is inflation. Why inflation? Because, well, when inflation happens, it's a little complex, but when inflation happens, people are less, people are more worried about the dollar. And when people are worried about the dollar, they're less likely to loan money to the government. This is called a treasury bond. So in the financial world, there's something called the risk-free rate. The risk-free rate is if I loan money to the government through a treasury note or a treasury bond,

• 1:34:11Speaker 02

  the return that the government gives me, the interest, is risk-free, because we expect the government to always pay back their debts. So when inflation happens, people are less likely to loan money to the government because they're worried about the health of the dollar, they're worried about the government. Which means that for the government to incentivize more people to loan money to the government, they have to offer a higher rate. So when inflation happens, people are worried about the dollar, people are worried about the government, the risk-free rate goes up, interest rates on government debts go up. If the interest rate on government debts go up, that's gonna push up the rates on mortgage bonds as well, because now your mortgage return would naturally have to be higher than the risk-free rate.

• 1:34:56Speaker 02

  Because when you, if you're loaning money, if I'm loaning you money to get a home, In traditional finance, that's a riskier investment for me than me investing my money into the government because that's risk-free. So you have to give me a higher rate of return than what I'm getting from the government. So higher inflation, higher treasury yields pushing higher mortgage rates. So now, what is the analysis? Inflation is higher than expected, looks like it's going to be around higher than expected. Okay, that's higher treasury yields, higher pressure on mortgage rates. The second factor is Federal Reserve Bank interest rates. Well, the Fed keeps saying that they're going to keep raising interest rates. Now, of course,

• 1:35:37Speaker 02

  all this can pivot, they can pivot tomorrow, but based off of this information, this tells me that there's a lot of upward pressure on mortgage rates. Mortgage rates are around 7% right now. But you have the National Association of Realtors, the Mortgage Bankers Association, two very credible sources who are like the the source of information for Realtors and bankers saying, "Don't worry, mortgage rates are going to fall by the end of the year." This is why that education is important.

• 1:36:03Tom Bilyeu?

  Yeah, we're already, so $2.3 trillion, according to Fortune Magazine, have already been scooped out of the US housing market alone. So I'm very shocked that in the face of $2.3 trillion of losses, that people are pretty chill. Got some more stats in that that I found super disturbing. We've got month-over-month housing prices have declined for the first time since 2012. You've got home builder sales have collapsed by 46%, home buyers cancelling 20.8% of their construction contracts. Like, it seems like we're in the middle of a housing

• 1:36:48Tom Bilyeu?

  reset of pretty aggressive proportions. So do you think people are willfully lying? Are they blinded by their own narrative? Are they just trying to be optimistic to keep people from panicking? This feels a little bit like, "Masks don't help, you're fine because we had a shortage in hospitals." And then, once that shortage was over, it's like, "Nope, actually, you do need masks."

• 1:37:14Speaker 02

  You know, that question, I think it's, it's, it's like, are they sinister or are they stupid? That's the question.

• 1:37:21Tom Bilyeu?

  Sinister, stupid, or dough-eyed and naive.

• 1:37:25Speaker 02

  Right. And so, I mean, I think that, I'll leave that up for anyone watching this or listening. You come up with your own interpretation, right?

• 1:37:32Tom Bilyeu?

  Boo. Do you have, you don't have to tell me, but do you have an interpretation?

• 1:37:36Speaker 02

  I don't know if I do, because I go back and forth, because it just doesn't, but I think my wife talks to me about this. I think I have a very trusting personality by nature. I've gotten scammed and screwed over so many times.

• 1:37:50Tom Bilyeu?

  Interesting.

• 1:37:50Speaker 02

  But I, I refuse to give up this idea of wanting to trust people. Now, yes, that's on me, I get that. But, and my wife is like, dude, you can't keep doing that. And I'm like, look, if you scam me, you screw me over, I'm not gonna do business with you again. Sure, you hurt me, but do I want to give up my trusting nature? And do I want that jagged personality or whatever? And, you know, I go back and forth, I don't have, you know, a good answer on this, because I'm still trying to figure that out about myself.

• 1:38:16Tom Bilyeu?

  I'll give you mine. I don't think many people are sinister. My gut instinct is that's gonna be the most rare. I think people, this is exactly how it plays out in business.

• 1:38:28Tom Bilyeu?

  Certainty intoxicates people. To be a good leader, you have to give people certainty. That's one of the most important things you do as a leader. To give them certainty, you have to develop certainty in yourself. To do that, you need a narrative. The narrative allows you to connect dots. So as we talk about the Triangle of Doom, it's like we're telling a narrative about how those things flow. But the reality is, if we could predict it precisely, we'd be gazillionaires. So nobody can really predict it, but you have to move, you have to do something. And so you look at the Triangle Doom, or whatever, you look at the signs in the housing market, and you come up with a narrative. And there are incentives, if you're, if you're in a certain governmental body or whatever,

• 1:39:10Tom Bilyeu?

  there are certain incentives for you to, since you don't know, to create a narrative that leans one way or the other.

• 1:39:18Speaker 02

  Yes.

• 1:39:18Tom Bilyeu?

  And so, um, if you're a YouTuber, there's an incentive to, uh, do Doom porn, because that's gonna get a lot of clicks. And so even if you're like,

• 1:39:29Tom Bilyeu?

  I'm not being sinister because there really is something over here, but it's like I'm also nudged because like I have an incentive. So I have a feeling to give themselves certainty, to give other people certainty. They begin telling themselves the narrative that they happen to be ever so slightly incentivized to tell. I don't think they're doing it on purpose, but you have to have a narrative that's going to allow you to move. So we end up there. It's a combination of doe-eyed optimism and willful,

• 1:40:00Tom Bilyeu?

  not willful, they have to tell themselves a narrative in order to be effective in life.

• 1:40:05Speaker 02

  Yes.

• 1:40:05Tom Bilyeu?

  And that narrative gets a little rose-colored. And then the catastrophic mistake that entrepreneurs make, that I've been guilty of a gazillion times, you forget to question your narrative.

• 1:40:14Speaker 02

  Yes.

• 1:40:15Tom Bilyeu?

  You get so busy telling other people what it is, telling yourself, that you forget to seek disconfirming evidence, which brings in the last piece of the puzzle, which disconfirming evidence feels super bad. It does not feel good when people are like, "You're wrong." And especially now in the days of the internet, "You're wrong" usually is said, "You're a moron, you're an idiot."

• 1:40:34Speaker 02

  Or worse.

• 1:40:35Tom Bilyeu?

  Yeah, and so then you're, you really want to defend yourself, which means defending your narrative, which then you entrench yourself and it becomes dogma.

• 1:40:42Speaker 02

  Yes.

• 1:40:43Tom Bilyeu?

  To put one more point in this, even Einstein, who gave us the theory of relativity, could not, in the later part of his life, become one of the people pushing the envelope of his own theories, because he got trapped in his own dogma.

• 1:40:58Speaker 02

  I think you're 100% right on that. And like, it gives us, I mean, that's what I've been experiencing too, like. So on YouTube, let's just talk about that and we can expand other places. If you don't have a very attractive title, no one clicks on it. It goes into the YouTube cemetery, no one's gonna watch it, which was a huge, like, pull on my heartstrings, because I'm like, "Why do we have to title videos like this or come up with these thumbnails?" And the reality was like, "Look, if you want people to watch your stuff, like, you know, my team was like, you know, you have good content. If you want people to actually watch what you're putting out, you gotta be able to play in this game." And that was one of the reasons why I created my Briefs Media newsletter, because now I can avoid the sensationalism, I can avoid those titles, avoid all that clickbait, because in the newsletter, you get all the news that you want, like our Market Briefs email.

• 1:41:44Speaker 02

  You get all the news, you just click on the email, doesn't matter, like, our subject lines are like... Black cups are cool. You know, it's like you click it and then all the information is there and now we can give you, because my goal is unbiased. I want to give you the data so you can create your own analysis and understand what's happening because nobody else can do that. Most media companies don't have the ability to do that because they have to get you to click and that's all they tell you. And I want to change that. And so for me, it's like, okay, well, if I want to get you to hear about me on YouTube, I gotta, I gotta come up with a title, but my goal is to make the content educational so you learn and then say, hey, look, if you want more, go to market briefs, briefs.co and you can see our emails and join for free and get the news in your inbox and you don't have to worry about it.

• 1:42:28Speaker 02

  And I think when it comes to incentives, though, like what you were saying, where we kind of forget or we get put into a box and then we ignore all the other things or we have no reason to understand. And what I mean by that is if we go to like the 2008 crash, right? What led up to it? Well, you know, we like to point fingers. Well, mortgage bankers were making

• 1:42:57Speaker 02

  just bad loans. They were loaning money to people who shouldn't have gotten it. Now, if you're a mortgage banker, what's your incentive? My incentive is to make loans. I'm on commission. I want to make as many loans as possible. If you've got a 600 credit score, you can't qualify for this, I'm going to give you this. If I'm going to get a commission, okay. So am I a bad person because I'm trying to make money and take care of my family? Well, then it's the bankers, the CEOs of the company that are ruining it. Well, what is their incentive? Their incentive is to increase the earnings of the company. Their incentive is to make sure that they can issue more loans than their competitors. So are they evil for trying to increase the value of their company, increase the share price? Well, no, it's the people because they should have known better.

• 1:43:41Speaker 02

  They shouldn't have gotten these loans. You should have known that if you're making $75,000 a year, you can't afford a million dollar home. Well, how many of them are financially educated? How many of them know the basics of of how much mortgage they should buy? How to save their money? How to invest their money? Like, none of us have grown up learning about that. So is it their fault? Or it's the government's fault? They should have regulated it. Do we want more regulations? So now it's like, everybody's gonna have their own incentive. Everyone's gonna have their own reason for wanting to do something. And this is why I go back to the financial education aspect. Like, we can point fingers all day long. That is your fault, their fault, their fault. At the end of the day, if you cannot protect yourself, it doesn't matter. You have to know how to protect yourself.

• 1:44:25Speaker 02

  And that shield is that financial education. Because now, look, you're bankers in the business of making loans. They want to make as much money as possible. It's reality. The realtor wants to sell you a bigger home. They get a bigger commission check. The car salesperson, they want to sell you a bigger car. The corporation, they want to sell you more stuff. Your company wants to keep you employed there. This is the incentive. You can hate it, love it, or understand it. And the financial education is understand it. That way now you can at least make an educated decision of what type of home you want to buy. And that's what is lacking. And this is where, you know, kind of, for me, it keeps coming back to the same thing. Because, yeah, everyone's gonna have their own incentives. Politicians are gonna have incentives to get votes.

• 1:45:09Speaker 02

  They're gonna want to say things to get votes. Corporations are gonna want to say things to get you to buy their stuff. Salespeople are gonna want to push their thing. And everyone's gonna have an agenda. And now your agenda needs to be protect yourself. How do you protect? And now, you know, we focus on the financial education side, but you can apply this to every aspect of life. But you gotta know how to protect your wallet. And that only, I mean, you cannot tell me that your banker is gonna have a better protection of your wallet than you are. You cannot tell me that a corporation is gonna protect your wallet better than you can. You cannot tell me that the-

• 1:45:41Tom Bilyeu?

  Most people don't know how to protect it, though. That's the thing that scares me.

• 1:45:45Speaker 02

  And we're relying on the government to tell us what to do? And so this is where like, what do we do? Look, and you know, I keep going back to financial education. That's why I'm an advocate for that, because what I'm saying is, dude, look, you can rely on the government all you want. Maybe they'll help you, but I do not want to rely on them. I want to rely on myself, my own financial education. Don't rely on, like, I'm not saying you rely on me. I'm not saying don't rely on a random guy on YouTube. Learn. And what you said, I'm 100% in agreement with. Listen to people who disagree with you. Listen to both sides of the aisle, because if, you know, if you agree with one thing and social media amplifies this,

• 1:46:26Speaker 02

  you go down a rabbit hole. As soon as you start learning about one thing, whether it's money, health, or it doesn't matter, you're gonna get bombarded only that one thing, because that's how the algorithms work. You go deeper and deeper and deeper down the rabbit hole, and anybody who disagrees with you is stupid. But if you really wanna build intelligence, you gotta break out of the algorithm, come out of the rabbit hole, and now study this side too. And maybe they're wrong, and maybe you learn, you realize, wow, they're even more wrong than I thought. Or maybe you have a more balanced opinion. And this is where real learning comes into play, because we have to learn how to learn. And we're not taught how to do that. How do we learn how to do that?

• 1:47:05Tom Bilyeu?

  Do you think the game of money is too complex for the average person to ever win? This is what I think is happening to the middle class. It's just too complicated. And unless the, uh, I'll, I'll expand on that. The reason that we've created rich and poor is because of the fact that the way that we're getting money into the economy is by buying assets. To buy assets, you really have to understand an obscenely complicated game. And most people don't understand that game, and so they just say, I'm just gonna go work, and I'm gonna earn a paycheck, and I'm gonna, I know how to live paycheck to paycheck. It's not ideal, but like, I get by, and I have fun, and I'm able to raise my kids, and all is well. Well, even most people aren't, not most people. But fewer and fewer people are having kids now.

• 1:47:48Tom Bilyeu?

  And so we're simplifying the game, we're collecting a paycheck, we're entertaining ourselves for reasonable amounts of money. Amazon's helping make like your average stuff cheap. So people don't really have like a big incentive, especially in an era where the rates were just declining, and some debt basically was pretty easy to get a hold of, goods are getting cheaper and cheaper. So I don't have to... Tony Robbins Money Master the Game. I just play the game of going and getting a paycheck and now all is well. But the way money finds its way into the system in an era where we have to like inflate, inflate, inflate is only going to people that hold assets.

• 1:48:27Speaker 02

  I don't think that is too complex, but I think the first issue is comfort is one of the biggest drugs in the society and we, many people are.

• 1:48:35Tom Bilyeu?

  I'm gonna back you up before we get to comfort.

• 1:48:39Tom Bilyeu?

  I think it's so complex, you sound crazy. So that means I think you're carving out a small piece of the money world and saying, just focus on this piece. What's this piece then?

• 1:48:51Speaker 02

  Look, money at its core is very simple, just like how fitness at its core is relatively simple. In the fitness world, it's, it's eat less, work out more to live a healthy lifestyle. In the financial world, spend less than what you make, invest the difference.

• 1:49:11Tom Bilyeu?

  In what?

• 1:49:12Speaker 02

  And, and this is where it can be as simple as you put your money into the S and P five hundred. Now I'll explain what that means because that's gonna sound very complicated if you've never been exposed to the money. S and P five hundred, literally all that means is the five hundred biggest companies in the stock market. Historically, the S and P five hundred has grown by seven to 10% a year on average over almost the last century, which means if you took, you know, a hundred dollars a month and that's all you did, you didn't look for the next Google, the next Amazon, you didn't try to find real estate investments, you didn't try to do anything complex. All you did, you had a system and you just put your money into that fund, a fund that gives you exposure to the S and P five hundred and you did nothing else.

• 1:49:56Speaker 02

  And you even automated it so you don't have to do it manually because there's brokerages out there that do that for you. If it was just completely automated and you never looked at an individual stock, you never touched your investment portfolio and all you did was spend less than what you make and you just invested a hundred dollars a month, you would have retired a millionaire with a hundred dollars a month investment. So now, what do we do? We like to complicate it. We like to say, this stock looks hot. Get into this stock before it pops off. Should we short this stock? Should I do options? Should I go and do this or should I do that? Should I, you know, and, and we start trying to play this game thing? Because now we start to get into the whole idea of this is fun. This is attractive. How can I make more money?

• 1:50:37Tom Bilyeu?

  Gambling.

• 1:50:38Speaker 02

  And for a lot of people, it becomes gambling. And this is where now understanding investing versus everything else. Investing. Look, spend less than what you make. Okay. If you're making $25,000 a year, $250,000 a year, or $2.5 million a year, it doesn't matter. Spend less than what you make. And, you know, it doesn't matter how much money you make. It starts with the mindset thing. There's a reason why you've seen so many athletes make millions and end up bankrupt. I think it's like almost eight out of 10 NFL players end up broker bankrupt within five years of them leaving the NFL. Okay. It's not just a money thing. There's, we talked about six out of 10 millennials making over 100 grand a year are broke. And there's a crazy high number. I, I'm going to say around 50%.

• 1:51:22Speaker 02

  I don't remember the exact number, but of people making over 250 grand a year, that are also paycheck to paycheck. It starts here. Spend less than what you make. Live smaller, smaller apartment, smaller car for a little while. Have some extra cash. Now, what do you do with that? You can save some and you invest some. Where can this money be invested? I gave the example of the S and P 500. How do you put your money into it? Well, in the stock market, you can look at something like SPY. SPY is a ticker symbol that gives the exposure to the S and P 500. Another one is VOO. I personally am invested in VOO. That gives the exposure to the S and P 500. So if you just put your money in there, historically, you would have seen 7 to 10% growth a year. If you say, you know what?

• 1:52:06Speaker 02

  I don't even know what the S and P 500 is. Can't I just put my money into the stock market? VTI is an ETF, meaning it's a fund that gives you exposure to the entire stock market. It's a total US stock market fund. So now, if you just put your money there, now you don't have to, you're not investing in Amazon or Google. You're investing in all the stocks. Amazon, Google.

• 1:52:28Tom Bilyeu?

  You are technically investing in Amazon.

• 1:52:29Speaker 02

  You are, but it's not the individual company. And so now it's, it's. We can dumb it down to as simple as, you know, just put a little bit of money into these things and now you're just gonna meet the market. You don't gotta worry about all the fancy stuff. All the fancy stuff is what generates all the clicks and the excitement and the fun and the noise and the, you know, that's what gets all the headlines.

• 1:52:50Tom Bilyeu?

  It's also where people lose their money. So yeah, getting to, getting to someone like Ray Dalio and a huge hedge fund. Those guys are gonna time the market. Those guys are gonna use AI and hundreds of millions of dollars in research and all of that to stay ahead of the curve. Ray was the one that said to me, he's like, man, the problem is that they don't understand how sophisticated we are. And you've got your average person on the street that thinks that they're gonna beat us to the punch. And he was like, we measure our trades in milliseconds. We've got AI. We've got like, they've got eighteen hundred employees or whatever. And he's like, yeah, the odds of you beating us are effectively zero.

• 1:53:28Tom Bilyeu?

  So that puts people back into the passive investing mode, which is what you're talking about. Okay, I will say that even that, like you're so immersed in it that you forget how complex even that is. Like the ticker symbols. People are like, what's a ticker?

• 1:53:42Speaker 02

  Yeah.

• 1:53:42Tom Bilyeu?

  So.

• 1:53:43Speaker 02

  And, and, and so like, you know, I'm gonna go back to the conversation I had with the guy from Detroit recently, where he was, had, we had the same talk. He's like, I don't, I have no idea how to invest in the stock. Where do I start? And so now, you're right. That can be daunting because now you open up one of these apps and they're gonna ask you for your bank information. They're gonna ask you for your social security information, which can be like overwhelming. You're, you can be distrustful. Like, who are these people?

• 1:54:07Tom Bilyeu?

  Can I just say something really fast?

• 1:54:08Speaker 02

  Yeah.

• 1:54:09Tom Bilyeu?

  In high school, I was taught calculus, but not about the stock market. That's crazy.

• 1:54:17Speaker 02

  You and me both. Uh, I had, look, I didn't know what the word dividend meant. I didn't know what passive income was. I didn't know what wealth meant. I had no idea what these things were until I started reading books. And we all live in a bubble, each one of us. Every single person lives in a bubble. And until you get yourself out of that bubble, you don't realize how big the world is and how many different things there are. Like. When I broke this bubble and started learning about money, I mean, I've I've become obsessed with things. Like, I started just like, I couldn't stop learning. And it blew my mind how much I didn't know. And then, you know, I started learning about fitness and nutrition. I'm like, oh, my God, so much stuff I didn't know.

• 1:55:02Speaker 02

  And I started learning about spirituality. What? This is all the stuff that I had never learned about before. There's a world of things out there. And when you think you know something, I can pretty sure, like, guarantee you that you don't know it. Like, the more you learn, the more you realize you don't know. And so, like, when we talk about, okay, how do you now make your first stock market investment? There are apps out there that will even do that for you. Like, they will just, like, they would just ask you how aggressive do you want to be with your investments? A little bit, medium, a lot? And then it connects to the bank account, and then it just invests it for you. But I think the biggest, the psychology, like, the education part can be learned. Really, with a few YouTube videos. Like, if you devote yourself for, let's say, three hours, you can figure that out.

• 1:55:46Speaker 02

  Just search it on YouTube, Google, there's a bunch of content there. The difficult part, which is not so easy to learn, is the psychology part. Because now, if you're getting started in the money game, and you start investing your money, and then you see markets go down, and now you see a portfolio in the red, that's where now most people will panic, freak out, and sell because you're like, I was supposed to get rich because of this. I put in three thousand dollars, now it's down to eighteen hundred dollars, what the heck happened? And this is where that psychology is so important. And that you cannot learn as easily.

• 1:56:25Tom Bilyeu?

  What should the psychology be? So, here, the great irony of investing is the best advice anyone is ever gonna get is buy low and sell high. The thing that people are least able to do is buy low and sell high. The reason is, when the price is low, everybody else thinks it's terrible, it's trash. And so now you have to believe in yourself and your analysis of the data enough to go, okay, it's the right play to do it now, even though every, the price being low means everyone thinks it's trash. And so you've got to buy it when everyone else thinks it's trash. This trash.

• 1:56:53Speaker 02

  Yeah.

• 1:56:53Tom Bilyeu?

  And then as the price goes up, then you have to think it's not going to go up forever. And so I'm actually going to take some wins. I watched this happen with crypto. It was surreal. I had never paid attention to the markets before, so I didn't understand what euphoria looked like. And so everyone was just like, it's going to go up forever. Nothing bad could ever happen. And they were buying in at the high. And then as soon as the price started dropping, and look, Michael Saylor may end up looking the fool. But what he tried to tell everybody was any increment of time less than four years in Bitcoin is just noise. Don't do it. And people still sold like fucking crazy. And so, yeah, getting people to buy low and sell high is already the most difficult thing.

• 1:57:35Tom Bilyeu?

  So if that's the wrong psychological approach, what's the right approach? How do you build the resilience?

• 1:57:41Speaker 02

  So on the first kind of basic level, it's when things are going around, if you're investing in the funds like I talked about. If you look at history, we have seen recessions and market crashes happen almost every decade. Which means you see boom, boom, boom, ups and downs and ups and downs and ups and downs. And the people that make the money are not the people that sell at the bottom.

• 1:58:06Tom Bilyeu?

  Is there a long arc? So if we're going up and down, is the market just, oh, realize as it's going up, don't buy. Cause you know it's going to crash seven years later. Buy when it crashes, ride it up, sell, it'll crash again. Or is it like up and down, but with this trajectory? For those watching, I'm raising my hand up and to the right.

• 1:58:25Speaker 02

  Yeah.

• 1:58:25Tom Bilyeu?

  Um, listening, I should have said, uh, so is, is there like, you know, over the last hundred years? Has it returned seven to 10%?

• 1:58:35Speaker 02

  Yes.

• 1:58:35Tom Bilyeu?

  Because it's actually gone up in value or?

• 1:58:37Speaker 02

  Including the recessions and crashes, the markets have gone up a seven to 10% a year on average. And so.

• 1:58:44Tom Bilyeu?

  And is that due to an increase in productivity of companies? Like people are actually spending more as a birth rate? Like, how is it possible that it could keep going up? Like, does at some point?

• 1:58:55Speaker 02

  Yeah.

• 1:58:56Tom Bilyeu?

  Doesn't even the long arc have to go, we, this isn't sustainable?

• 1:59:00Speaker 02

  So there, that's a good question. And it's actually probably a more complex question that, uh, than you might be thinking. Because it's yes and more. So what I mean by that is, okay, if you bought before the, before, at the peak of the 2008 crash, if you bought before everything tanked. And you held on, you would still, assuming you invested into funds, not individual companies have a bankrupt. If you invested into the market.

• 1:59:26Tom Bilyeu?

  Like the S and P five hundred.

• 1:59:27Speaker 02

  Like the S and P five hundred. You would be richer today than then. Why? If you held on. So the psychology is now you hold on and buy more when things go down, assuming you're investing into funds. If you're investing in individual assets, then then the research and analysis is completely different because you want to make sure you're not buying your way into bankruptcy. So now the question is, why does the market go up? Well, the first part is value creation, right? Amazon is working every day to increase how much value that they're putting out. They're working to create new products. They're working to make buying online better. They're working to increase efficiency. And I'm going to talk about efficiency in a second because that gets into like artificial intelligence and reducing costs and things like that.

• 2:00:08Speaker 02

  In addition to that, so you have company, every single company is trying to do this. If your companies are trying to do this, they're they're dying. Every single company is trying to produce more value, make more money, create a better product. But in addition to that, it goes back to everything that we just talked about. Why does inflation happen? You know, the Fed says our goal is two percent inflation. Why? Why? Why not zero percent? Why not negative inflation? Because that would make things cheaper, right? And so now understanding, well, why does inflation happen? If you look at our economic system, and this is where, again, financial education is so important. Two percent inflation is just enough inflation that most regular people don't notice it. It doesn't mean that it doesn't happen. It's just enough.

• 2:00:53Tom Bilyeu?

  Why do we want it?

• 2:00:55Speaker 02

  And and so I'm going to get to that. So it's just enough that most people don't notice it. But why does it continue to happen? Because what is inflation? It increases the amount of dollars out there, right? It increases the monetary supply. More dollars mean more money to spend. More money to spend means you got more money to go to Chipotle. That's why over the last fifty years, we have seen the prices of things steadily increase. A hundred dollars in nineteen seventy could buy you way more than a hundred dollars today.

• 2:01:21Tom Bilyeu?

  I'm not sure that's quite true. So here's how I've always thought of inflation. And the reason that we want a little bit of inflation is that if. I'll call it the Bitcoin pizza problem. So Bitcoin is a finite supply, which means that it will, you'll never be able to inflate it. Now, it can still lose value, obviously, we've seen that, it can go up in value, we've seen that. But if, if the cost, if the value of Bitcoin goes up over time because it can't be inflated, then you could buy a pizza today, this happened to a guy, he buys a pizza for what, seventeen Bitcoin, whatever, and then that seventeen Bitcoin goes on to be worth two hundred million dollars.

• 2:02:06Tom Bilyeu?

  And it's like, oh god, like, that was a mistake, I should have held on to it. So if money has a deflationary effect, meaning that if I have a thousand dollars today, that thousand dollars tomorrow might have the buying power of two thousand dollars today. So it's like, I'm incentivized to hold it. Now, if I'm incentivized to hold my money, there's no velocity of money, there's nothing moving, goods aren't being bought and sold, people are just trying to hoard their money. And so even though people have this money and it, it's able to buy more in the future, the same thousand dollars, then I'm incentivized to hold it, whereas if it goes down a little bit, it loosens that sense of, well, this isn't going to be more valuable tomorrow, so I'm never going to look like a fool, so I might as well go get the thing that I really want.

• 2:02:49Speaker 02

  But why not zero percent inflation then? Why doesn't the Fed do that?

• 2:02:53Tom Bilyeu?

  It's an excellent question, I don't have an answer.

• 2:02:54Speaker 02

  That doesn't increase the economic system.

• 2:02:57Tom Bilyeu?

  Why don't we want?

• 2:02:57Speaker 02

  It doesn't increase the size of the economic system. If you want to.

• 2:03:01Tom Bilyeu?

  Is it really, so is the only way to get inflation to print? Because what I'm trying to reconcile in my head is, yes, there's more money, but the price of things then just goes up, and so you're still only buying the same amount.

• 2:03:16Speaker 02

  So, okay, there's a couple of aspects to this. When inflation, inflation by its definition means you're inflating the monetary supply. What that results in is the value of the dollar dropping, which means, so like for the government example, why does the government want inflation? Because that means they can pay back their debt.

• 2:03:34Tom Bilyeu?

  I get why they want it, because they're printing money.

• 2:03:36Speaker 02

  Right, and so the first aspect is they can continue to pay back their debt with cheaper dollars. But then.

• 2:03:43Tom Bilyeu?

  It's basically an extra two percent tax, or whatever percent it is.

• 2:03:46Speaker 02

  They get a little bit of extra, right, that benefit. The second thing is they have more spending ability. It goes to increasing the size of the economy, because look. A financially smart person is gonna make fifty thousand dollars a year, invest some of that, save some of that, and spend some of that. The government doesn't work that way. If the government made fifty grand, they're gonna spend all fifty and then an extra ten. And so, how do they do that? Well, why, well, why do they do that? It's stimulative. It's, it grows the economy. When the government spends money, what does that mean? Well, if the government spends money, let's just say, infrastructure, they're paying contractors. They're paying a company. More money is entering the economic system.

• 2:04:30Speaker 02

  So, as inflation happens, when the government spends more money, more money is coming into the economy. And so, what does that do? That grows the economic system. At a cost, the value of the dollar goes down. And so, our system, we have companies, right? The economy. You have investors who own a piece of the economy, and you have consumers. Every single person is a consumer. Rich, poor, middle-class businesses, every single person is a consumer. But most people stop there. Most people are just consumers. Investors own a piece of the economy. Now, the Federal Reserve Bank, you have, kinda over here, they're working to increase our economic system. They wanna grow the system, they wanna grow the economy. How do you do that? You increase how much money comes into the economy. You increase consumers' spending ability.

• 2:05:16Speaker 02

  How do you do that? Increase how much money is out there. And so, if consumers are spending money, well, how can you increase how much they spend? You can give them more money to spend. And if more money keeps flowing into the economy, there's more dollars in there that can be flowing through the economic system, which then will benefit the economy, because, I mean, businesses can get more money, because there's more dollars out there. And businesses are getting more dollars, the investors also benefit. Because now, businesses show more revenue, more profits. Sure, the value of the dollar has gone down slightly, but on a nominal level, there's more dollars, more wealth, more money accumulated here. This is why inflation is so important to understand, because consumers don't benefit from inflation.

• 2:05:59Speaker 02

  Sure, maybe you can buy more stuff if more money comes in, if you get more dollars. But consumers now have to pay for things with a deflated dollar.

• 2:06:07Tom Bilyeu?

  But am I crazy? You get two percent more dollars, but things cost two percent more.

• 2:06:14Speaker 02

  Sort of. That would be in a perfect world, in a vacuum.

• 2:06:18Tom Bilyeu?

  But it's roughly that, right? I mean, this really is a tax. This is the government getting the ability to spend 2% more money.

• 2:06:24Speaker 02

  It is 100% a tax, but it is, look.

• 2:06:30Speaker 02

  Inflation has been around 2% a year historically, or 3% historically. But does that mean that the monetary supply has increased by 3% a year? No, the amount of dollars out there has increased way faster. And this is the big argument that people say that spending money does not cause inflation. This is the big argument here, because if you look at the 2008.

• 2:06:50Tom Bilyeu?

  Spending money or printing money?

• 2:06:53Speaker 02

  Well, spending more money than they have, so printing and spending. When the 2008 crash happened and we started unleashing the quantitative easing, we started opening up the money printer and money is flooding our economy.

• 2:07:08Speaker 02

  You had some people saying this is going to cause inflation. But we never really saw a tidal wave of inflation after the 2008 crash. Inflation never really saw a big spike at all. Like, it was pretty contained around like that 3% mark. And so now we had everybody saying, hey, look, money printing doesn't cause inflation. We can print as much money as we want. We saw inflation at around 3%, but our monetary supply didn't increase by 3%. It was way more than that.

• 2:07:36Tom Bilyeu?

  I have a hypothesis. I'll be curious to see if I'm going in the right direction here.

• 2:07:41Speaker 02

  Sure.

• 2:07:41Tom Bilyeu?

  The money printing that they did, though, was just to keep people from losing their homes. So they printed the, let's say, roughly exact amount of money they needed to print in order to keep things status quo.

• 2:07:55Speaker 02

  Well, it's, that's, the government cannot predict how much money will be needed in order to do that. They sent out stimulus checks in order to stimulate the economy during the 2008 crash. What is a stimulus check intended to do? It is intended to stimulate the economy. But we assume that it's intended to stimulate the individual. The individual is a consumer. So if you get a $2,000 check, what does that do? Maybe you can make one month of mortgage payment, but what were people doing? They're going on a spending. It stimulates the economy. It gets the economy moving again. Businesses start making money again. And so more.

• 2:08:35Tom Bilyeu?

  That's that's really dark. But so I I'm hold on. I might be misinterpreting this, but that could be really dark. So let me say what it sounds like happened in 2008.

• 2:08:51Tom Bilyeu?

  I just lost my home. Brutal, gut punch. I'm living in a tent. This is so gnarly. Oh, my God. I get my $2,000 stimmy check and I just go buy the normal things that I would buy. But maybe this goes back to your initial statement. I I'm I'm buying food that the vast majority of the things that I buy are going to be my mainstays. So I'm it's not like I go out and buy a new truck. I'm gonna go out and buy my eggs and uh you know, go see a movie or two. If you go out to dinner or something like that. But that's really what it sounds like. If they can pour that much money into the system and inflation doesn't go up,

• 2:09:35Tom Bilyeu?

  then people's spending habits roughly would stay the same unless somehow that money went into the system and it created additional productivity so that the there wasn't people fighting for the same number of items. The number of items actually went up. And so the price of everything stayed the same. That what you said makes that prediction.

• 2:09:58Speaker 02

  So, okay.

• 2:10:01Speaker 02

  The government, if the government sent out $2,000 stimulus checks and everybody put that money in their savings account and didn't spend it.

• 2:10:08Tom Bilyeu?

  Yep.

• 2:10:09Speaker 02

  It wouldn't grow the economy.

• 2:10:10Tom Bilyeu?

  Correct.

• 2:10:10Speaker 02

  That's not what the government wants. They want you to spend that money.

• 2:10:15Tom Bilyeu?

  Yes.

• 2:10:15Speaker 02

  It's a way to encourage spending because we are a consumer.

• 2:10:17Tom Bilyeu?

  People should have saved that money. Let's be very clear, unless they need it to eat.

• 2:10:21Speaker 02

  So I'm talking about what the government intends. People should invest a piece of their money, save a piece of their money.

• 2:10:28Tom Bilyeu?

  Yeah, but I'm trying to speak to human behavior. Is does the government understand just the ugly truth? Is is what I just said true?

• 2:10:37Speaker 02

  100%. Look, the government knows we're a consumer nation. Like it's not just the US, like the the whole world knows the United States is a consumer nation. People here spend more than what we make. So like, cause you talked about the inflation issue in two thousand and eight. I wanted to expand on that a little bit because

• 2:10:57Speaker 02

  money isn't just money, like we have two types of money in our economic system. We have actual money and then we have credit. People don't spend based off of how much money you have in my bank account. They spend based off of how much debt I can call out for. So if I have a hundred dollars in my bank, I can still spend five hundred dollars. And what happened in two thousand and eight is first, credit levels fell because now if I

• 2:11:22Tom Bilyeu?

  So I couldn't even get credit?

• 2:11:23Speaker 02

  I couldn't get credit because if my income goes down, I lose my job. I'm no longer credit worthy to a bank. Banks are not going to want to loan me money. So before I had a hundred dollars in my bank, but six hundred dollars with the spending ability. Because I could have, let's just say, got a five hundred dollar loan or a credit line or whatever.

• 2:11:39Tom Bilyeu?

  Now Can I ask you a question? Keep, keep where, where you were going, but I need to understand something. So fractional reserve banking, I understand now how that works. So when you go for a home mortgage, they don't have to have that whole price. It's like only whatever, ten percent. But how do credit cards work? Are they able to create debt out of thin air in the same way that a bank does? Or are they, do they have actual one-to-one reserves?

• 2:12:03Speaker 02

  So let's highlight this and then we can get to credit card companies about that too. So I have the spending ability of six hundred dollars. Five hundred is a loan, one hundred dollars is actual cash in my bank, money.

• 2:12:16Tom Bilyeu?

  Yep.

• 2:12:17Speaker 02

  I lose my job like everybody else. Now I lost five hundred dollars for the spending ability. I only have a hundred. My spending ability crashes. Then come the stimulus checks as a way to stimulate. Now I have a hundred dollars of money and then two thousand dollars in the government. Now I have twenty one hundred dollars. Now I can go out and start spending again. I start spending again. Businesses start making more money. There's more dollars in the economy and then I get another job. And now I go from a spending ability of a hundred dollars, because I already spent the two grand, back to six hundred dollars. So now there's more money out there and the credit starts to go up. But the inflation never really happened, like we never saw it really pass through.

• 2:13:02Speaker 02

  And now we're seeing the effects of the inflation.

• 2:13:04Tom Bilyeu?

  So you think it was just delayed?

• 2:13:07Speaker 02

  Oh, one hundred percent. Like, it's-

• 2:13:09Tom Bilyeu?

  What we were trying to figure out to reorient was in two thousand eight, housing crash, stimulate the hell out of the economy, pump a bunch of money in, but inflation doesn't go up. I then had a hypothesis about why, which is very gloomy.

• 2:13:21Speaker 02

  Yeah. And so now, you know, you said, was it delayed? You know, I think we talked about this previously where if I took a dose of heroin today, I'm not gonna die. You know, I might like it and I might say, okay, let's do another one. And but to keep chasing the high, I might keep increasing my dose. Now, if I keep increasing my dose, but nothing bad happens to me, does that mean that it's bad for me or good for me? Oh, nothing bad happened yet, but eventually, right? You're gonna hit a point. We know scientifically that if you keep increasing it, your odds of something bad happening keep increasing. Well, what are we seeing now in the money world? In two thousand eight, we printed a lot of money. We didn't see the full side effects of the heroin.

• 2:14:04Speaker 02

  We didn't see the full effect, the pain of the inflation. We did it again in two thousand and one. Now, what we're starting to see happen is over the previous decades of money printing, overspending, we're starting to see the side effects of it. And now the question is, what are we gonna do? Are we gonna just shoot up again and try to delay the real effects of it? And just like, okay, calm the withdrawal symptoms? Or are we gonna actually solve the issue? And fighting an addiction is painful. You wanna get off of a drug addiction, you're gonna have to go through pain.

• 2:14:39Tom Bilyeu?

  And to get back out of analogy and into what we're talking about, that's spend less money.

• 2:14:44Speaker 02

  Spend less money from the government. And that means people have less stuff. That means less government spending. That means more saving, less spending. And that is painful, especially when you're accustomed to having the nice stuff and being able to buy whatever you want. That causes financial pain, people lose jobs. That causes economic pain, businesses go under. And that is like-

• 2:15:09Speaker 02

  We don't, nobody wants to see that pain. But the unfortunate reality is now because of the inflation problem. If you want to solve inflation, you're gonna have to go through that pain. And what the Federal Reserve Bank is saying is we want to solve the problem without enduring the pain. We want to get off of the heroin without having the withdrawal symptoms. Well, unless you have some fairy dust where you can do that, sure. But withdrawal symptoms are often a byproduct of trying to leave a drug that you're addicted to. In the money world, trying to get off of the inflation high is, has a side effect of economic pain. And now this is what everyone's saying that we can avoid. But what I'm saying is be prepared.

• 2:15:54Speaker 02

  That way, if we do see more economic pain, that you can protect yourself and not just protect, but also capitalize on opportunities that might come your way. And so, you know, we've had a lot of kind of buildup. And this is where now understanding, look, we are starting to see some effects of this. And over the next, you know, decade, we're gonna see a lot of things change. We have a lot of corporate debt, a lot of national debt, a lot of household debt. As interest, if interest rates continue to rise, it's gonna cause pain. Now, we could shoot up again. The Fed could cut interest rates and start stimulating. And they kind of get the economy going again. But then that makes the inflation problem worse.

• 2:16:33Tom Bilyeu?

  Where can people stay in touch with you to be up to the minute on this stuff?

• 2:16:37Speaker 02

  Absolutely. So I cover this on my YouTube channel Minority Mindset. If you go to briefs.co, you can join my free newsletters. We have newsletters for investors, newsletters for business owners called Business Briefs that keep you up to date on the latest business trends. For financial education, you can go to marketinsiders.com. And yeah, all of that.

• 2:16:56Tom Bilyeu?

  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. You're getting 75 plus ingredients, vitamins and minerals, pre and probiotics,

• 2:17:37Tom Bilyeu?

  nutrient-dense superfoods, everything that used to require six, seven different supplements, and perfect planning now happens in one drink that takes about 30 seconds to make. Right now, AG1 is giving you $87 worth of free gifts with your first subscription. You get a welcome kit, travel packs, vitamin D3 plus K2, and flavor samples. Click the link in the show notes or visit drinkag1.com/impact to claim this offer.

• 2:18:09Speaker 03

  Check engine, ABS, or maintenance light on? Take the guesswork out of your warning lights with O'Reilly VeriScan. The service is free and provides a report with solutions verified by ASE-certified master technicians. And if you need help, we could recommend a shop for you. Ask for O'Reilly VeriScan today.