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THE US ECONOMY BIG POLICY QUESTIONS Tom Bilyeu: 'My Biggest Fear Is A Reverse Market Crash' - Prepare For This Now Before 2025 \| Patrick Bet David PLAY YOUTUBE VIDEO Original article: https://www.youtube.com/watch?v=fYtQTQHozi0 Peter Burgess COMMENTARY Peter Burgess
'My Biggest Fear Is A Reverse Market Crash' - Prepare For This Now Before 2025 \| Patrick Bet David Tom Bilyeu Sep 8, 2024 4.36M subscribers ... 474,246 views ... 10K likes Welcome to Impact Theory! Please enjoy this clip of Patrick Bet-David as he explains how to prepare for an economic downturn. To watch the full episode, click this link: • 'An Economic Hurricane Is Coming' - R... Patrick Bet-David breaks down how the economic crash in 2008 and COVID directly affect interest rates, inflation, and our economy as we now know it. Key Points Include: Market Analysis: Current vs. 2008 Crisis: Comparing today’s economic conditions with the 2008 market crash and the housing crisis. COVID-19 Impact: Examining the long-term effects of the COVID pandemic on the global economy. Household Debt: Unreasonable Levels: Discussing the alarming increase in household debt and potential repercussions. Connect with me, Tom Bilyeu: Website: https://tombilyeu.com Instagram: / tombilyeu X/Twitter: https://x.com/tombilyeu Connect with Patrick Bet-David: YouTube: / patrickbetdavid Instagram: / patrickbetdavid Transcript 0:00 what's different between today and 2008 market crash 2008 market crash was about no income no assets Nina loans Banks were giving them money left and right hey uh stated income you're trying to qualify for $720,000 loan how much money did you make last year Tom I'm a school teacher $48,000 you're not going to get qualified for this Tom I going to ask this question one more time how much money did you make last year I just told you $48,000 do you want to get qualified for this or not yeah okay one more time how much money did you make last year 62 that's what it was no income no ass in 2008 right 2007 and then I remember the month when I knew it's over because the one guy in La who was making 400 Grand a month uh had an office in Tanga Valley in Tanga or Koga 30,000 ft of office space November of 2007 he shuts it down o and this is right after you're seeing in WAMU Countrywide you know all 1:02 these other companies that are doing what they're doing very problematic when that took place so then you saw cities like Riverside Community Riverside County 65% houses forclosure then you had loan modification then you have people that were buying five six homes paying the negative amortization payment which means if you got a loan this was a program that came here from Australia with the story you always hear about that this program was in Australia we brought it in America it was meant to only be for people who are affluent okay you got a $20 million loan on a house you got $40 million on a bank account I'll give you 20 million no problem you got four payments to make you got your 15year loan which is going to be the biggest loan you got your 30-year fix which is going to be reasonable but it's not a 15-year loan then you have your interest only that you're literally only paying interest and the loan stays the same amount or you got your negative amortization payment which means the 2:01 loan gets bigger every month that you 2:03 pay it because it's negative 2:05 amortization every month the loan gets 2:08 bigger okay so for example for the 2:10 average person in America it would have 2:11 been something like this it would have 2:12 been NE gam payment was 1,200 bucks a 2:15 month interest only was 1,800 bucks a 2:17 month 30-year fix was $3,100 a month and 2:21 15E was $4,500 a month okay so people 2:24 are like dude buy another house and 2:26 another house and another so I got five 2:29 houses that I'm paying 12200 bucks on I 2:31 can afford to do that except that was 2:33 only for two or three or 5 years and 2:35 then all of a sudden your 1,200 payment 2:37 goes to $4,200 Time 5 2:39 houses how do you pay $20,000 a month 2:42 you can't do it boom foreclosure 2:45 foreclosure forclosure so that's not the 2:47 case study of today the case study of 2:49 today is somehow someway the government 2:52 thought it's a good idea to lower 2:53 interest rates to 2:55 1% and we had 3% loans that were going 2:59 on and then we talk about 128 month 3:01 expansion by the way if there's no covid 3:03 that would have been 150 month expansion 3:05 that we would have had that's not good 3:07 to have a 150 month expansion because 3:10 during that cycle that we went out 3:12 Tom money was so cheap that people were 3:16 just picking up money and buying stuff 3:18 left and right it was so cheap go get a 3:20 house go get a car rates were low you 3:24 know these big companies are getting $50 3:25 million lines $100 million lines $200 3:27 million lines go get as much money as 3:29 you can 3:31 then Co hits when Co 3:34 hits philosophically it was a show 3:37 go work from home 18 months that's what 3:40 you got to do essential 3:42 non-essential and then when that took 3:44 place companies like Twitter and many 3:46 others said at Twitter under Jack dorsy 3:49 you can work from home for the rest of 3:50 your life what a Noble company that's 3:53 what we got to do and then so we go 3:55 through that cycle and then people 3:57 started abusing employers and they had 4:00 two jobs where they weren't telling 4:01 anybody but they're making 82 here and 4:02 88 here so they're making $170,000 4:05 thinking they can do this fraud that 4:07 they're doing for the rest of their 4:09 lives and then they're living a $170,000 4:12 year lifestyle not realizing that's not 4:13 going to be around forever and then the 4:15 money that they put into the system all 4:17 of a sudden people have cash in the bank 4:19 like never before so we had $2.2 4:22 trillion of cash Americans every quarter 4:25 that thing went from 2.2 trillion to 1.7 4:27 trillion to 1.4 trillion to 1.1 trillion 4:31 and our savings as a nation kept going 4:34 lower and lower and lower and lower so 4:37 then we have um more money being printed 4:41 into the economy and then we have the 4:44 election then now covid is gone now we 4:48 got to get people to come back to work 4:49 they don't want to come back to work 4:51 they want to work from home then 4:53 companies like David Solomon Goldman 4:54 Sachs they start saying no you got to be 4:56 there for accountability on Monday 4:57 morning and all this other stuff if you 4:59 don't you're not getting your bonus 5:00 people started kind of getting creative 5:02 that's unfair that's not cool I'm going 5:05 to go get another job many did then some 5:08 companies came out and said no we're 5:09 just not doing that and then you know 5:11 that has taking place and then you have 5:13 a bit of War you have craziness going on 5:16 with another War you have all of these 5:18 things taking place and then suddenly 5:21 Jerome Powell sees inflation's going to 5:25 8% wait a minute what's going on here we 5:27 got a led to 2% how do you to 2% let's 5:31 start increasing interest rates we raise 5:34 this is crazy we raised 5:38 4.88% in the shortest amount of time 5:40 ever in the history of 5:42 America there's a chart on statistic you 5:45 got to see this it's a great Visual and 5:47 it shows historically when we've had to 5:48 increase rates it's over a threeyear 5:50 span or it's over a six-year span or a 5:54 three and a half year span no no this is 5:57 over a 12 month 15 month SP span 6:02 4.88% boom like this hoping inflation 6:06 goes down okay inflation moves a little 6:09 bit sales of homes to the lowest in 20 6:13 years mortgage applications lowest than 6:16 27 years people who were doing loans I 6:19 don't know if you have friends who were 6:19 doing loans or mortgages or real estate 6:21 these are guys that were making a half a 6:22 million dollars three years ago per 6:24 month they're not making nothing right 6:26 now guys who were making $100,000 a 6:28 month are having a hard time making 6:29 $88,000 a month WR down loans there is 6:31 no loan application because even new 6:34 homes are not being sold to do the loans 6:36 of new homes so home sales are down 6:38 because typically when refi comes down 6:40 people will sell homes no one's selling 6:42 homes today why are they not selling 6:44 homes today because they're still 6:45 sitting on some cash and they don't want 6:47 to give up that 3% loan they got a year 6:49 and a half ago and then you look at the 6:51 data okay let's just say I do sell this 6:53 house I got to go buy another house but 6:56 I got to get that house at 8% I'm not 6:58 willing to do it why would I do it so 6:59 I'm not going to there is no motive to 7:01 sell the house so now what's the ticking 7:04 Time Bomb few things 7:05 one Jerome PO is trying to increase 7:08 rates hoping hoping unemployment 7:11 increases because that's what we need 7:13 they need the unemployment to increase 7:14 it's not moving still 3.7 3.5 3.8 3.9 7:17 it's not movement it's right 7:19 there okay so either we need 7:21 unemployment to go up or we need people 7:23 to run out of money if people run out of 7:26 money and they're stressed out guess 7:28 what they they do they're going to sell 7:29 the house so today numbers came out 7:32 saying it's 55% more cheaper to rent 7:36 than buy this is the highest we've had 7:38 ever wow it's 7:39 55% cheaper to rent than to buy today 7:44 this is not a buying season this is a 7:47 renting season okay this is what Wall 7:49 Street Journal many of these other 7:50 articles we'll talk about okay 7:53 meanwhile the economy is growing the 7:55 economy is going up Dow Jones oh it's 7:57 killing it based on seven compan 7:59 companes magnificent 7 and you know who 8:01 these magnificent 7 companies are Nvidia 8:04 you got these Facebooks the Amazon the 8:06 apples these seven companies that are 8:08 preventing the company from country uh 8:10 the market from having a crash then 8:13 while all this stuff is taking place um 8:16 Powell now is dealing with a war he's 8:18 afraid he wants to raise the rates a 8:20 quarter but due to the war that took 8:22 place in Israel he doesn't and then data 8:24 shows which is by far the most 8:26 interesting data to answer your question 8:27 here is how much after these five 8:30 situations where we rais the rates 8:32 multiple times in a span this being the 8:35 shortest uh in the most condensed time 8:37 frame how long does it typically save is 8:39 there a formula of when recession comes 8:43 if at all here's what they realize 8:45 recession usually comes on average 11 8:49 months after the last month they rais 8:51 the rates so what does this mean if 8:54 Powell's no longer going to raise the 8:55 rates and the last time they raised the 8:57 rates was September let's just say that 9:01 means recession is going to come when 9:03 not October so you got October November 9:05 December January February March April 9:06 May June July August August of next year 9:10 three months before election that's if 9:13 it follows the trends of the last five 9:16 times when they raised interest rates so 9:19 how did I start off the story I talked 9:21 about the doctor that has met 4,000 9:23 different patients and the 420 you're 9:24 kind of going through this the problem 9:26 of everything I just told you could be 9:29 completely wrong because there's a fifth 9:32 when the doctor says I've never seen 9:33 this before so we've never seen current 9:35 climate current climate before for us to 9:37 be able to put it and say well according 9:40 to this and according to that we've 9:41 never had this situation before yeah 9:43 that's the thing that makes me really 9:45 tense but there are fundamentals that 9:47 when I look at I think oo like there it 9:50 isn't possible to sustain this so the 9:53 thing that I just keep coming back to is 9:54 debt and interest and when you look at 9:58 the charts that show 9:59 the interest payments and how they're 10:01 going to go up and up and up and even 10:03 people that locked in you know say 10:06 three-year fixed rates at really low 10:08 rates in the corporate Market that all 10:10 goes away in a few years and so you 10:12 start looking at just the absolute 10:15 Behemoth numbers that are going to be 10:16 due to service that money and it becomes 10:20 completely untenable and the bad news is 10:22 it becomes untenable both at the 10:24 individual level where we're more in 10:25 debt than I forget ever or close to it 10:28 but individuals are in psychotic amounts 10:31 of debt corporations are in ridiculous 10:34 amounts of debt and the nation is in a 10:36 ridiculous amount of debt all while 10:38 we've had two major printing events 10:42 since 2008 and so now you really have a 10:49 very unstable market so there's a great 10:52 quotes called Minsky's Financial 10:54 institutional hypothesis instability 10:56 hypothesis excuse me uh and he said when 10:58 an e omy is stable people get optimistic 11:01 when people are optimistic they go into 11:03 debt when they go into debt the economy 11:05 becomes unstable and now that's even 11:07 without the crazy rising in interest 11:10 rates so we have like this for me it 11:14 seems self-evident that there is going 11:17 like that that gravity insists that 11:20 things come back down but they haven't 11:22 yet and so just when I want to get 11:25 bullish and be like hey obviously this 11:27 is all going to come Crashing Down it 11:29 just keeps not and not and not 11:33 um my intuition is that a recession is 11:37 inevitable but the market can remain 11:41 crazy longer than you can remain solvent 11:42 whatever the quote is um why hasn't it 11:45 happened yet and how do you think about 11:49 because obviously you have the you have 11:50 similar concerns that I have only the 11:53 paranoids survive but how do we turn 11:55 paranoia into an action 11:57 plan yeah so everything is right now 12:01 about mapping out different 12:03 possibilities so for example if we're 12:04 right now in a conference room and we 12:06 got bored to write on we would write on 12:08 you and I would write down and we would 12:09 say okay uh World War III takes place 12:11 what do you think of the chances of this 12:13 taking place Ray doio says 50% yes okay 12:16 do a um Jamie Diamond says this is the 12:19 most danger Dangerous times we've had in 12:21 America in decades Okay cool so if World 12:24 War II happens what happens to the 12:26 economy who's going to be the parties 12:27 involved are we going to be involved 12:28 purely through proxy or is there going 12:30 to be attack here then you write down 12:32 the possibilities okay if this happens 12:34 what are you going to do if this happens 12:35 what are you going to do then next what 12:37 happens if unemployment all of a sudden 12:38 goes to 7% 6% what happens if inflation 12:42 goes down what happens if Powell starts 12:44 lowering rates back down to 54% holy 12:46 that's that's going to be crazy 12:48 what Happ so you got to write all of 12:50 these different scenarios down but 12:52 here's a couple things that we have to 12:53 be thinking about and you said which was 12:54 fascinating one so credit card debt 12:59 highest it's ever been you know what's 13:01 the crazi thing about uh uh credit card 13:03 there being being the highest it's ever 13:05 been Tam the average interest rate on 13:09 credit card is the highest it's ever 13:11 been Jesus forget about the debt so 13:13 people are worried about the debt so 13:15 imagine the interest rates in the last 5 13:18 years has gone like this to 23% or the 13:20 average is 23% on credit card you know 13:23 what 23% means that means the debt 13:25 doubles about 2 and a half years that's 13:27 like loone shark number that's loone 13:28 shark three years is your debt is 13:29 doubling right but that's what we got 13:30 right now credit cards okay so our debt 13:33 is 13:34 record-breaking the forgiveness for your 13:37 uh loan uh school loan is gone so now 13:39 you have to start paying for it that's 13:41 $3 $400 a month that people are 13:42 expecting I think October November 13:44 starting then let's set that part aside 13:47 go to the corporations you were talking 13:49 about that are borrowing money this year 13:52 their interest payment on corporation 13:55 that borrowed money is going to end up 13:57 being around $530 billion just interest 14:00 oh my God next year it's going to 730 14:03 next year it's going to 1.1 trillion in 14:05 the next 5 years it's going between 1.3 14:07 to$ 1.5 trillion just on the corporate 14:10 debt that we're talking about by the way 14:13 next part car payment a credit no one's 14:16 affected good credit they're making the 14:18 credit payments on 14:19 time mortgages we're not saying anything 14:22 crazy with people with bad credit not 14:23 making payments we're still good car 14:26 payments and subprime they're seeing a 14:28 spike and defaults where people are not 14:31 making car payments the first sign 14:32 you're seeing on what's taking place no 14:34 problem let's go to the next one that's 14:36 the scariest one us has $33 trillion of 14:40 debt worst that's ever been the highest 14:41 that's ever been no problem what does 14:44 that really mean nobody can really 14:45 figure it out here's what it means of 14:47 the money that we have about 8 trillion 14:50 of it the rates are going to 14:53 re-calibrate and we're going to have to 14:55 have new rates that we going every 14:58 single time the rates go up one point 15:01 just one point for the US government our 15:03 interest payments Tom increases by $320 15:08 billion Jesus so imagine we raise rates 15:13 by three points just interest it's a 15:16 trillion dollar more per year if it's 6% 15:21 $2 trillion more per year that's that 15:25 then last thing that I'll just kind of 15:27 get you to be thinking about 15:30 um so anytime you want to know if the 15:34 economy is back to normal go to 15:37 Vegas Vegas is humming like okay we're 15:41 good and always whenever you go to Vegas 15:44 talk to C drivers and talk to the 15:46 drivers who are doing Uber always ask 15:49 how's conventions doing how are you 15:51 seeing with traffic are you noticing 15:53 things cancelling no this has been crazy 15:54 for us the last three months 15:56 everything's good but if they start 15:58 seeing in a downturn they're typically 16:02 an indicator of what's to come 16:04 Transportation industry we consult for a 16:06 lot of Transportation companies at Bed 16:08 Consulting one of my friends I'm about 16:11 to go meet with them right after 16:13 this they're they're con their 16:15 construction company does very well we 16:17 have these three clients that we have 16:19 who are doing 16:20 Transportation two of them are doing a 16:23 100 million 80 million a year numbers 16:25 are down 40 16:26 50% one of them is doing a billion a 16:29 year their revenue is down 70% oh so 16:34 let's actually talk about transport why 16:37 would Transportation be down 16:39 70% aren't Walmart Amazon companies 16:43 ordering stuff to ship it from here to 16:45 there why would that be lowering what do 16:48 they know that we don't know again these 16:50 are people who have data to Insider 16:54 stuff that we can sit there and say 16:55 these are great indicators when you're 16:57 studying these things on what's going on 17:00 does this mean recession is going to 17:01 come here like I told you earlier when 17:04 we were talking my bigger fear is a 17:07 reverse market crash which Venezuela 17:09 just went 17:11 through which all of a sudden the rates 17:16 get lowered and DOW an S&P goes and DOW 17:19 goes from 33 40 45 50 55 60 just goes 17:23 Voom is that just the dollar losing its 17:26 purchasing power yes exactly that's what 17:27 happens the more we're printed like for 17:30 example a Michael Jordan um card uh 17:34 years ago a bgs 9 a half sold for 17:38 $78,000 I was like oh my God that's 17:40 crazy but then all of a sudden all of 17:43 these boxes kept entering the 17:46 marketplace of 1986 Fleer so guys 17:49 started buying these things and they 17:51 were sending more to get graded at 17:53 Becket and PSA the more they got cards 17:56 graded that $78,000 card bgs s 9 half 17:59 became a $60,000 card $50,000 card 18:02 $40,000 card $30,000 card you can 18:05 probably buy bgs 9 half today for 18:06 $20,000 $25,000 okay so the 18:11 inventory increases the more we print 18:13 money the more you print dollars and 18:15 it's more accessible the less it's value 18:17 the less it's worth so these are some 18:19 things that's going on uh today uh so 18:23 you know like I you sit there you're 18:25 like okay so does this mean guys are not 18:27 going to make a lot of money no no 18:29 you're going to see the first 18:30 trillionaire in the next 24 months cuz 18:32 none of this is going to affect the guys 18:33 at the top none of it this printing 18:36 money every time they print money the 18:38 guys at the top make more money every if 18:40 there's anybody that should be against 18:42 printing money it's low and middle 18:44 income families if there's anybody that 18:47 should be against printing money is them 18:49 if there's anybody that's for printing 18:50 money guess who it is the guys at the 18:52 top why because the poor in Middle 18:55 America can't keep money they spend it 18:57 and when they spend it what do they buy 18:59 a product owned by somebody in the S&P 19:03 500 or other people who have businesses 19:05 money flows up they can pre keep 19:08 printing money all they want so when low 19:10 and middle income families are like look 19:12 at these guys all they care about is 19:14 themselves let that bill pass for $2.7 19:16 trillion you simply look at him and you 19:19 say you have no clue how money works you 19:21 have no idea how money Works guess what 19:24 let's print $10 19:25 trillion Rich are okay with it you ain't 19:28 going to get the r complaining about 19:29 printing $10 trillion or $5 trillion 19:32 black Rock's going to be like all right 19:33 cool we're at $8 to10 trillion of money in our ETFs and we're buying up a bunch of different companies we're buying up all these properties today right now it's going to be nothing but in the next few years you have to go through us and we dictate the market and we're going to own it all and what are you going to do about it you know these are these are a lot of different moving parts that is going on to me and again for me um the the idea of middle America not being able to make the money they need to make 20:02 to be able to afford a house send their kids to school live in a nice place enjoy some of their dreams maybe not the biggest ones but some of their dreams are going to become a reality Middle America is getting smaller and smaller and smaller every single time we print money if you like that clip check out the full powerful episode here and I'll see you there

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