They're Pumping The Market With Fake Money

So there's a possibility that the market is being pumped with fake money. $7 trillion in spending, but only $5 trillion in revenue. Ray, are we already past the point of no return? That the fact we have this dynamic means that some sort of crisis is inevitable? Yes, we're past the point of no return. There's two competing theories about the future of money. The first theory says the dollar is not going anywhere. It's going to rule the world because the U.S. has already figured out a way to keep the dollar dominant forever. The plan is called the Clarity Act, and the idea is to rebuild the world's payment system on digital rails through stablecoins backed by U.S. treasury debt. What that means is every corporation will become a mini central bank. Every consumer in the world who uses a smartphone will use digital dollars to buy everything, and in turn, that's going to indirectly fund U.S. government debt. It's the petrodollar system rebuilt for the internet, and so the demand for dollars will always be there. The second theory says, actually, no, that's not going to happen, because the rest of the world already saw that coming. Which is also why, over the last decade, the world formed the BRICS alliance, they built alternative payment rails, and they started to move their real reserves out of dollar-denominated paper and into things like physical gold at a pace that we've never seen before in modern history. Both of these things are happening at the same time right now, and both of these theories have a lot of evidence behind them. Everything we're watching in the world today is a result of that race to control the idea of money and the flow of it. And the outcome of that race is going to determine what your money will be worth for the rest of your life. Now, sitting right in the middle of these theories is the biggest investment story of our lifetime. It's the story of AI. The AI is the biggest technical thing ever in my lifetime. I mean, it is so profound, and therefore, its influence is hard to overstate. So the value is extremely high. It's the system using its last shred of credibility to inflate itself one more time, because that is going to concentrate wealth upward in the process, while the central planners use it as an opportunity to exit that system. Every major currency transition in history ends with a period of prosperity, right? Asset prices going up, markets make a lot of money for everyone, and then the party stops, right? And the evidence of this is a couple things. The stock market, for example, if you strip out just 41 companies from the S&P 500 right now, the other 459 are flat. But the whole market of 2026 is one trade, AI. But for some reason, people like Warren Buffett are sitting on $400 billion in cash, which is the most he's ever held his entire career. Consumer sentiment just hit 44.8 on something called the University of Michigan Index, which is the lowest level since they started tracking it in 1952. And while all of this is happening, central banks just moved gold above US treasury bonds as their number one reserve asset for the first time in modern history. But the people who run these corridors of power are telling us a completely different story. So in today's video, I want to show you the race for the control of money. I want to show you the dollar's plan to survive. And I want to show you the world's plan to route around it and what the data is telling us about which side is winning. I want to explain what's happening to the markets and what you might be able to do about it. So with that said, let's get into it. Hi, my name is Andrei Jikh. Hope you're doing well. Come for the finance and stay for more interesting economic theories. So let me start by explaining something counterintuitive. Everything you've ever bought in your whole life has generally gotten more expensive over time. Our groceries, our gas, rent, healthcare, and things like that. And the explanation that we've been told is something called inflation, aka too much money trying to buy the same amount of stuff as measured by what economists call the CPI or the Consumer Price Index, which just came in at a higher level than expected. Some breaking news as if you needed us to tell you that inflation is running at the hottest pace in three years. And the Federal Reserve might just have lost any wiggle room it has to keep rates right where they are. Great. Okay. But there's another explanation to it that I think is really interesting. It comes from a chart that looks the last several hundred years. When you price commodities, which are things like oil, wheat, copper, food, energy, if you measure that stuff in dollars, the price of it goes up forever. That blue line on this chart has been going up since 1792. So we're like, yep, life's just getting more expensive, right? But it's also very misleading because when you measure those exact same things in a different currency, you get a completely different understanding of the story. If you price it all in gold, for example, they've actually been getting cheaper at 0.8% per year compounded for over 200 years. It's the same oil, the same wheat, same copper. It's actually getting cheaper every single year in what's called real terms, but only if you're measuring it using the right thing. What that means is inflation is not really about things getting more expensive. It's about the thing we use to measure it with getting smaller. In this case, the dollar is getting weaker, and it has been getting weaker on dire lives, right? Every war, every recession, every new Fed chairman, our entire history had a dollar that bought less and less of the real world. Now, that system, the dollar slowly losing value while everything goes up, only works under one assumption. The assumption is more. More workers, more borrowers, more taxpayers, more consumers. Every generation slightly bigger than the last, making slightly more, spending slightly more, borrowing a little more. The whole machine is designed to run on human beings taking part of the economy, the way our cars run on gasoline. You just keep adding more people to the engine, and the system keeps going. And for 230 years, that was the assumption, right? That was true. There were always more people in the system than leaving it, which is also why this blue line kept going up, which is why inflation was always manageable, because the system could always grow its way out of the problem by adding more humans. Enter AI. It is the first technology in history that grows the economy without growing the need for human beings. You know, in terms of the jobs, this is going to take some period of time. But yes, although it hasn't been seen in large numbers, over the next several years, there will be some impact on the job market. Which means the system we created breaks, because the debt cannot be inflated away. There will be less people paying taxes. There will be less people borrowing money. And this measuring stick, the dollar, will have nothing left to measure itself against. That is the paradox at the center of everything happening right now. And what I also thought was interesting is that for the first time in modern history, central banks just moved gold above US treasury bonds as their number one reserve asset. Except gold is not at an all-time high anymore. But the stock market is. So at the heart of this contradiction is that either AI is so transformative, it's enough to justify the trillions of dollars being spent on it, in which case the jobs disappear and the tax base that funds this whole system collapses. Or AI is not that transformative, in which case the valuations of these companies are a fantasy and the market corrects anyway. There's no version of reality where both things are true at the same time. The debt system needs what AI destroys. And right now, our retirement account is being used to fund this game. But while all of this is happening, and everyone is busy looking at the stock market and AI, there's something very interesting that happened in 2021. All right, so if the macro picture I just laid out made you want to go do your own research, which hopefully it should, Seeking Alpha Premium is probably the most comprehensive platform I've ever found for that. When I'm trying to cut through the noise on any stock or sector, this is where I like to go. I get access to analysis from thousands of independent contributors. So I'm getting both the bull and the bear case on any stock, not just the consensus Wall Street point of view. Now, one of the biggest benefits I found to using Seeking Alpha is something called the Quant System. It scores every stock on value, growth, profitability, and momentum. It's also completely data-driven. It's not based on any opinions or agendas. Now, past performance is, of course, not a guarantee of future results, but that back-tested strategy has outperformed the S&P 500 every single year for the last 12 years. And that's the kind of signal I like to see in my research. But beyond the Quant, I also love to use it in combination with my dividend stocks to look for dividends that are healthy to consider adding to my portfolio. I'll also use it for deep dive research on companies Wall Street doesn't cover. I also get access to earnings transcripts, 10 years of downloadable financial statements, advanced screeners, and portfolio health tools. It's essentially everything a self-directed investor needs in one place. And right now, Seeking Alpha is running a summer sale with 25% off, so it's a good time to check it out while it's on sale. The link is in the description down below. And now let's get back to it. Okay, so in 2021, something interesting happened. Remember, this race is about a race to control the flow of capital, right, the control of money. One side of this race was built on paper. It was built on things like digital promises, debt-backed tokens, numbers on a computer screen. That is the dollar. The other side of that is built on something you can hold in your hand, something that's stored value through every empire and every reset in the 5,000 years of human history. This is the other side of the race, which is based on gold. Now, for decades, the way gold was traded in the Western financial system was essentially a three-card Monty game. It was kind of a street hustle, a shell game, if you will. Now, why it was a hustle is because when you bought gold through a bank or a financial institution, most of the time, you weren't actually buying physical gold. You were buying something called unallocated gold. That is the official term for it, which is basically a promise, a promise that somewhere in some vault, somewhere out there, there's some gold with your name on it, except there wasn't. What was really happening was the banks were selling promises of this gold of way more of these promises than they had gold to back them up with. So banks could create essentially unlimited paper supplies of something that only exists in limited physical supply. And the effect of that was the price of gold was kept artificially suppressed for decades. Because if you can create an unlimited supply of something on paper, the price can never fully show itself to us, right? How valuable that thing really is. And the scale of this fakery was huge. By 2021, the total value of unallocated gold in the London market alone was $572 billion. Now, if you add another $63 billion in COMEX futures on top of that, you have roughly $635 billion in paper gold claims. Okay, now here's what's mind-blowing. One analyst estimated that the actual physical gold available to back those claims after you subtract central bank gold, ETF gold, and privately owned bars, it was probably around 500 tons. Now, 500 tons is about 16 million troy ounces. And at today's gold price of around $4,360 per ounce, that works out to about 70 billion worth of real physical gold. So what you have is $70 billion in real gold sitting underneath 635 billion of paper promises. That's a ratio of about nine to one. For every $1 of actual gold sitting at some vault somewhere, there were $9 of paper claims saying, that's my gold, right? That's a Ponzi scheme at that point. The whole system was built on the assumption though, that nobody would ever try to collect all of it at once. Now, the system also had a built-in mechanism to keep people from noticing this. How they did this was, banks discouraged customers from holding allocated gold, meaning real physical gold with your name on a specific bar in a specific vault. They charged you high fees for it. You had to have insurance. They made it inconvenient, but unallocated gold, that's the paper version, that's always been free to hold. Not only was it free to hold, but it came with certain tax advantages, right? The system deliberately engineered to keep people in the paper version. And this is sort of true of all physical asset equivalents, because the moment too many people ask for their real stuff back at the same time, it's over. Enter China, right? For decades, Western central banks were leasing their gold into the market to give physical supply and to keep the price suppressed. One respected analyst estimated that central bank gold leasing totaled over 10,000 tons as far back as 2002. That gold was leased to banks. It was delivered into markets, but a lot of it flowed east into Asia, into China, into private hands, and it never came back. Western central banks were slowly bleeding their physical gold reserves into a market that was pretending those reserves were still on their books, which is exactly why China has been buying so much gold for the past decade. And they weren't just buying gold. They were buying the gold that Western institutions had been selling at artificially suppressed prices for 50 years. That's why we see gold moving from west to east, from unallocated to allocated, right? That is how the system worked until 2021. In 2021, the most powerful financial institution, the BIS, the Bank of International Settlements, aka the central bank of all central banks was like, oh, what are you doing, China? Why are you taking my physical gold away? I got a paper game going here, right? Why are you exposing me and my bros like that? So what they did was they changed the rules for how banks had to account for their gold positions. The rule change was called Basel III Net Stable Funding Ratio. It's a fancy way of saying, banks now have to fund their gold positions with real money. You can no longer run the shell game the way they used to. Why would they do that? Because thanks to private investors and central banks in China, the paper shell game became too expensive, too regulated and way too risky to continue the hustle at the scale, right? It became super risky because if the price of gold suddenly went up by a lot, and you're a bank sitting on a huge short position in gold, meaning you sold a lot more gold promises than you actually had gold, and the price of it suddenly went up, you were in serious trouble. So the BIS changed the rules to make sure Western banks got their gold positions on the right side of the trade. If you follow the logic, why would they do that? Is because maybe you expected the price of gold to adjust higher. That is why gold has been replacing U.S. treasury bonds as the world's number one reserve asset for the first time in history. That's why central banks bought more gold in the last three years than at any point since the end of the gold standard. That is why something called COMEX, the Gold Futures Open Interest, which measures how much paper trading is happening, just collapsed to its lowest level in 13 years. Those two things have never diverged like this in 40 years of data. And it's because one way or another, the physical market is going to be taking over, just like the Bank of International Settlements said it would in 2021. Just like the rule change was designed to allow them to do so that they could protect themselves if gold ever went up. The question is, well, what does that mean for the price of gold? And what does China know that we don't? So here's what China is doing. China imported 939 tons of gold in 2025. To put that in perspective, the whole world mines about three and a half thousand tons of gold per year. And China has been importing more than a quarter of all the gold mined on earth in a single year. They've been doing this consistently. The cumulative total of Chinese gold imports since 2015 has been 14,000 tons. Right now, where it gets interesting, though, is that China ran a $1.2 trillion trade surplus with the world in 2025. Meaning China sold $1.2 trillion worth of stuff more to the world than what the world bought from China. That surplus is what everyone is fighting about. The tariffs, all the trade wars, the accusations of unfair competition. It all comes back to this surplus number. But here's a different way of looking at it. China also imported 939 tons of gold. If you price that gold at $39,000 an ounce, China's whole $1.2 trillion trade surplus disappears. It balances out to zero. Now, I'm not saying that gold is going to go to $39,000 an ounce. I'm not trying to make a price prediction. But what I am saying is that there is a mechanism that could allow this to happen. And the incentive actually exists on all sides. Because think about what that repricing would actually do. China's gold-loaded consumers would have vastly more purchasing power, right? They'll start buying more stuff, including more Chinese products, more U.S. products, which reduces the trade imbalance organically. The U.S., in turn, gets a much weaker dollar, which makes American manufacturing competitive again for the first time in decades. The trade war resolves. Now, last year, Treasury Secretary Scott Essence said that the U.S. will not be repricing gold. That was last year, though. And they could still reprice the dollar, which would basically be more or less the same thing. Either way, eventually, China kinda has the last say. In fact, the president of the Shanghai Gold Exchange said this in 2014. He said, That was 12 years ago. The pricing is kinda now being revealed. The COMEX data confirms it. COMEX, by the way, is the primary exchange where paper gold futures are traded in the Western financial system. And the gold futures open interest on COMEX, which, remember, is the total number of outstanding paper gold contracts, that collapsed to its lowest level in 13 years. Historically, though, when gold prices go up, paper trading goes up as well because speculators pile in. That's been the pattern for 40 years. And that pattern is now breaking because the people who used to speculate on gold through paper contracts, they're leaving. And the people buying the physical gold, the central banks, the sovereign wealth funds, the institutions, they are not leaving. And we can see that in the reserve data. For the first time in a long time in modern history, central banks moved gold above the U.S. treasury bonds as their number one reserve asset around the world. Okay, so what does that all mean, then? What's gonna happen? Well, if the dollar is overvalued relative to gold, if the trade imbalance is not sustainable, if the paper gold market is going away, what's gonna happen? Luke Grohmann from FFTT says there's four possible outcomes. Path one, the West tries to control China by force, the way Britain controlled China 250 years ago through the opium trade. But China's been prepared for this, right? Their military buildup, their domestic chip production, their gold buying, all of it was designed to make this path impossible. That's off the table. Path number two, though, the world fights a third world war over these trade imbalances. That's what Xi Jinping referred to in his last meeting with Trump as the Thucydides trap. Path three, the West just loses economically to China, the way China lost to Britain 250 years ago. Europe's actually looking at the possibility. The UK actually ran a telegraph recently that had a headline that said the China shock 2.0 would destroy Europe as we know it, if Europe's too slow to adapt, which historically has been its weakness. So this becomes their default outcome. Bad for European industry and bad for the euro. Path four, though, you let gold go high enough to rebalance this global trade. The dollar weakens to a level where American manufacturing becomes competitive again. China's gold loaded consumers gain a lot more purchasing power and they start buying more of the world's stuff. So the debt imbalance fixes itself through the repricing of an asset rather than through a war. And remember, the Western banks who are basically playing this shell game this whole time, who were told to get their positions in order by the B.I.S. in 2021, they are now protected from this repricing because otherwise they'd be destroyed by it. So now we have three of the four paths which are bad. And one of these paths, the B.I.S. already started to prepare for in 2021 because the U.S. is not just going to sit back and let this all happen. There's actually a plan and it's actually genius. In fact, it is so genius and so clear it might just be called the genius and the clarity act. Let me present to you the other half of this race, because the U.S. is like, OK, fine, have your gold, right? We're not going to reprice the gold ourselves. But in order to keep the world hooked on our dollars and to continue funding our debt, we are going to transform every corporation in the world into a mini tether like company. Let me explain. Remember, the problem that the U.S. government has is foreign central banks and institutions that used to reliably buy our debt, our U.S. treasury bonds and recycle their trade surpluses into U.S. debt are buying less. China stopped being a net buyer of treasuries years ago. Japan is under pressure. The traditional petrodollar recycling mechanism is getting weaker. And the U.S. government still needs to borrow several trillion dollars a year to fund its deficit. So the question is, who buys the debt? And the answer the U.S. came up with is you. Everyone through every person on Earth who uses a digital dollar to buy anything. That's what the Clarity Act is. It creates a legal framework for what are called payment stable coins. And remember, a stable coin is a digital currency that is pegged to the dollar. Tether is the most famous example of it. It has over 100 billion in circulation and it backs every token with U.S. treasuries. Every time someone buys tether, tether buys a treasury. So there's already over 100 billion dollars in treasuries being held by a private stable coin issuer. That's more than what a lot of countries hold. Now, the Clarity Act takes that model and opens it up to every major corporation in America. JP Morgan can issue a stable coin. Apple can issue it. Walmart can't. Every one of those stable coins has to be backed by U.S. treasury debt. So every time a consumer anywhere in the world uses these corporate digital dollars to buy anything, they will be indirectly buying, holding, and funding the U.S. government. So the demand for dollars doesn't just survive in this scenario. It'll get embedded into the infrastructure of the digital economy at every level, all over the world. Simon Dixon calls this the privatization of the central banking function. Instead of one Federal Reserve creating dollar demand, you will have thousands of corporations, each running their own mini treasury operations. The network effect of that would be huge. Because unlike a central bank, which can diversify away from holding dollars, a consumer using Apple Pay or Walmart coin is not going to get a choice, right? The dollar is the rails the transaction will run on. That is why the banks hate the Clarity Act, because it challenges their control over the flow of capital. That's why Jamie Dimon of JP Morgan Chase is in a battle with Brian Armstrong from Coinbase. Coinbase's Brian Armstrong says that he is sad to hear how JP Morgan Chase chairman and CEO Jamie Dimon feels about the Clarity Act and what he told Maria about it. Watch this. This will not be, no one's going to bow down to this guy, okay, or that company. And he's the only one. And he's spending hundreds of millions of dollars in Washington, this thing. He said he's representing the whole industry. Because the banks know the moment the Clarity Act allows for corporations to pay a yield, an interest on the money, that will threaten their source of power, which is our bank deposits. Why would you keep your money at a bank paying you 0.1% interest when you can hold Walmart coin and get 4%, right? So that is the transition that we're going through. That is the dollar's last stand to be relevant and powerful in this world. Now, the reason the world does not want to get on board with this plan is because the rest of the world can see it for what it is. The stablecoin system is very smart, but it is not neutral. It is a system for exporting U.S. monetary policy and U.S. influence to every corner of the world's economy, whether other countries agree with it or not. And those countries don't really have a choice because everyone has access to a smartphone and the internet nowadays. Just download some app and you'll get dollars. That's why countries like China, Russia, the BRICS alliance, the Gulf states, they've spent the last decade building their own infrastructure to avoid this outcome. That is why they're putting their money into the physical world. That's why they're buying gold. The dollar is the make-believe world where anything is possible, right? All valuations are reasonable. Nothing is based on reality. Gold is the world of the real, meant to represent real-world assets, finite things. The question is, which one's going to win? And the honest answer is that no one knows, but that is the game at a very high level. All right, so having said all that, let me tie it all together and explain how I think about all of this. I think what we're seeing right now is a huge pump of money into the stock market, maybe as a way of being exit liquidity for the people that got into this super early. But also, no one knows how high these stocks could go and for how long. Will these IPOs mark the top of the stock market? Maybe. History shows that is not necessarily always the case. Just look at how many IPOs came out between 1995 and the year 2000 before the dot-com bubble popped. It went on for years before the market topped. This could be the case here too. But it could also be completely different this time because we're also in a race against energy shortages, which should be coming to the US any month now. In fact, one of the tech CEOs or tech companies actually said as much. Translation, we got to get these IPOs out sooner than later because the longer we wait, who knows what's going to happen thanks to the straight-up removes. Will Iran and the US make a deal before the market crashes? Maybe. No one knows. Does it matter at this point if they make a deal or is the damage already done? Again, nobody knows. So there's so many uncertainties and I've sort of positioned myself in a way to own some of the stock market. I own Bitcoin. I have a lot of cash right now and I don't necessarily have any real estate and I don't have any gold or silver. That's the one thing I'd love to have right now but I think the timing is the most important thing on this one. It looks like gold is going through a very important level on the technical charts and we could see gold go down to the $3,000 level potentially in the next year or two or maybe three before we see a shift from the stock market and into the commodities via this super cycle theory. I'm keeping a close eye on it but if you're interested in seeing how I'm preparing and how I invest my money, those videos live in the premium member section and you'll also get access to my main videos earlier and if that's valuable to you, the link is down below. It allows me to make more videos like this one and take on fewer sponsors. Thank you for watching this and being a member. I hope you have a wonderful rest of your day. Smash the like button. I'd love to see you back here next week. I'll see you soon. Bye-bye.