The Fed Will Sacrifice the Dollar to Save This Market (Prepare)

The next market crash is already being set up and almost everybody, they're preparing for the wrong risk. You see, institutional investors have borrowed record amounts of money to chase one of the most expensive markets in history. Now, similar to what we saw in the 2008 crash, but it's the kind of leverage that can turn an ordinary correction into forced selling margin calls and an outright panic. Now, normally, the answer would be pretty simple here, right? base cash, you know, go on the side, wait for the crash to happen. So you can buy everything back cheaper. But that's the playbook that worked in 2008. And millions of investors are still waiting to use it today. But that's what we call the generals fighting the last war because this time, the market may fall hard. But the biggest risk may not be that you own too much, maybe that you don't own enough of the right things. So in this video, I'm going to break it all down. I want to show you what could trigger the unwind, why governments and central banks may actually be forced to step in before the market even starts to reset how to position before the rescue sends the right assets running away again, because the real question is not just how do I protect myself from the crash? The real question is, are you long enough? So let's go. All right, now we got a lot to cover. So let's just jump right in. And before we get into what could break this market, I just want to remind you why this even matters. Now, back in December of 2023, I made a video that was titled the reverse market crash. Now, if you remember way back then, if you've been watching that long, or if you can just remember back at that period, right, the Fed was on their fastest rate hiking cycle in history, inflation was raging, markets were down pretty far, and almost everybody was waiting for another 2008 style crash. Now, in that video, I explained that they're waiting for the wrong crash. So I call the reverse crash. And I said that the bigger risk was that asset prices would just run away, they just keep moving further and further higher and higher, while you're purchasing power of the money kept moving lower. Now, just fact check that video since that video, gold's up about 100% The NASDAQ is about up about 75%. The S&P 500 is up about 60%. And Bitcoin is still up about 50%. Even after its big drawdown of its all time high, I do want to talk about the Bitcoin drawdown for a second, because the drawdown was the opportunity that everybody said they were waiting for, right, the price dropped, the fear came back. But the question is, did you buy? Or did the fear convince you to wait again, now, it's important to think through this, because you don't get a lot of chances to go through this and see how you react. And this is one of them, right? That's what it feels like when the door open, right? When the door opens, it doesn't feel safe. It feels like fear. Now, meanwhile, during this time, real wages have barely moved even 1%. So your wages went up by not even 1%. But assets moved 50 6075 and 100. Alright, so that's the warning I was giving you. That's the real cost of waiting. It's not just the returns that you missed out on, which are pretty big. It's now the higher price that you have to pay just to get back in. Right. So the better question is not, will there be another buying opportunity? All right. The better question is, will you already have enough exposure, enough liquidity to use it when it comes? All right. Now, to understand why, let's just take a look at potential trouble that we see sitting underneath this market. And there's a lot of it. We can't see it all. There's a gray swans things that could happen. There's black swans things we don't even know. But if we look and we look similar to what we saw in 2008, sort of the problem in all the markets, leverage. Now, the headline margin debt number is now over $1.5 trillion. Now, when most people hear that, they're not even sure what that is. I mean, we don't even know what a trillion dollars is anymore. But they picture, you know, a bunch of retail borrow traders like borrowing money to buy more stocks. And yeah, sure. Like, of course, that's happening, right? That's not what we're talking about. That's not the real systemic danger here. That's not where it comes from. The real danger is institutional, right? I'm talking about hedge funds, prime brokers, derivatives, carry trades, crowded momentum positions, right? Those are enormous bets that are connected. They're all connected through the same banks, the collateral, the funding markets. Now that 1.5 trillion, let me say that with emphasis, a trillion dollar figure is an indicator. It's a warning light. All right. Now, a lot of the real leverage sits inside derivatives. It's off of the balance sheets, we can't even see it. It's inside funds that are borrowing short to own the assets long. Now, as long as the, you know, markets keep going up, it looks pretty safe, right? What did Warren Buffett say that it's only when the tide goes out, you see who's swimming naked. So it only takes a small break, just a small little crack to start a huge cascade down. Because of course, when prices start to fall, then the collateral drops. And when the collateral drops, then margin requirements go up. When margin requirements go up, then institutions need cash to cover that. So then they're forced to sell some assets, which then pushes those asset prices lower, right? This then, of course, is a feedback loop, because then it triggers more margin calls. And those trigger more selling, right? That's how an ordinary correction becomes a liquidation, a cascading liquidation event. Let's compare what we have now the 1.5 trillion to where we were in 2007. Right? Today's reported margin debt. It's not just bigger in absolute terms, which it is way bigger. But if we look at it, say relative to GDP, it's also way higher. And so we can see that the spark could be pretty much it can come from almost anything like AI stocks, are we in a bubble? Could there be an AI, you know, reversal? Maybe there's a funding shock, maybe an energy spike, you know, something over in the Middle East with Iran, something like that. Now, it could be something that none of us see coming in a true black swan. Okay, now we we don't need to predict it. Right? We only need to know the system carries enough leverage to turn just a small little spark into this for selling. And we don't need to know what the potential response would be. So what we don't even know what causes the spark, but what do we do about it? Now, the obvious seems simple. It seems obvious, right? Well, obviously, get out of the market, right? Wait for it to crash, hold cash. Then you know, let let Wall Street let the institutions blow themselves up. And then once they do that, I'll come in, I'll buy everything up cheaper. It's gonna be so amazing, just like in 2008. You did that in 2008, right? So it worked. I mean, you know, in hindsight, so why wouldn't I do it? And why wouldn't it work again? Well, reason why is because that strategy depends on one thing. The reset, it has to last long enough for you to use it. You see, back in 2008, it did. In 2008, we saw housing collapse, right stocks were cut in half, credit contracted, banks failed. It was brutal. I lived through it, right? I was in real estate, you guys have probably heard my story many times I was in real estate at time, I got wiped out. But the thing was, is that 2008 was also a reset in prices, prices got reset, and people got to get back in. So for example, the S&P 500, it took seven years to recover back to the previous all time high. It's seven years to get back in houses took 10 years to get back in. And so that opportunity window, it stayed open long enough for people to buy back in for people to go through the stages of grief and disbelief and anger and all those things and eventually buy back in. Okay, but again, that's the generals last war. And that worked, right. But it only works if the money that you're holding, keeps its value. It only works if policymakers allow the liquidation to clear the system. But the problem is that assumption, it looks less and less likely today. Because the problem is not just overvalued stocks. It's the debt that's underneath the system. Now in 2000 and 2008, we saw a different type of debt, but today, sovereign debt, government debt, corporate debt, also banks, pensions, of course, it's collateral, it's treasury funding, it's all that up to the government, sovereign. Now, all of that depends on asset values. The assets are the collateral, or the debt. So it depends on asset values, depends on the liquidity depends on interest rates, staying inside the small survivable range. Now, that doesn't mean that, you know, policymakers are going to step in every single time the stock market takes a little dip, right? That's not the case. And I'm not saying that, like we saw back in 2022, right, inflation was running hot, the Fed continued to raise rates, right? And then stocks started to fall. And the Fed kept raising rates, and stocks fell, and so did the bond market. And they didn't rush in to save the asset prices, right? So this is not I'm not trying to make like a simple like Fed put argument here, because they can tolerate losses, not really as worried about your own stock market account, as they are their own, their own, right? Because the thing they can't tolerate is a funding crisis. Now, we saw that exact line in the United Kingdom in 2022. Back then in the UK, inflation was over 10%. The Bank of England was raising rates at the same time. And when the government bond prices collapsed, then pension funds started facing these massive collateral calls, because they were using the bonds as collateral. So then, of course, what happened with the Bank of England had a reverse course, they began buying the long term bonds to bring it back down. Okay. And this isn't because inflation disappeared, it didn't, it was because the financial plumbing was breaking. Okay, that's the line. That's what we're watching, because they can let markets fall. But what they can't do is let the funding system fell the bond market, the Treasury market, it can't seize up. So the question becomes, what happens when the asset falls, but the measuring unit, it also falls with it. And even more importantly, the rescue arrives before the reset is complete. There's something else that China has been driving, and it's the race to build out AI. Now you've heard all the talk about this, right? We're in an AI bubble. Are we there? Is AI overvalued? And look, we have seven stocks making up a third of the S&P 500. Tech just crossed 39% of the entire index, higher than we saw in the dot com peak. Now, big tech is spending over 630 billion just this year on AI infrastructure alone, bigger than Sweden's entire GDP. But you want to know what one of my investing secrets has always been. Stop staring at the big main players. And look at the smaller contributors. Look at the second, the third, the fourth order effects, right? This is where the money goes next. Now today's show sponsor is exactly one of those plays. Now, if you want to look at how fast and how popular all these new GLP one drugs are like Ozempic, or we go V or Manjaro, the market's gone from are going from 55 billion to 268 billion by 2030. That's a 5x. That's just like AI. But the big names are driving it. And they're already trillion dollar giants. So the the big money's already been made there. It's already priced in. So the question is, then, what's next? What's the second order effect that nobody's positioned for? Well, here's one that nobody saw coming. Ozempic face. You heard about that? It's rapid weight loss is destroying facial volume, and it's driving mass demand for restorative aesthetics. Now that market, it's about 29 billion today, but it's headed to 90 billion by 2034. And we've seen this movie before Botox got cosmetic approval back in 2002. It's now a $6 billion a year category. So it's great technology, but it's decades old. And it can't keep up with today's demand, which brings me to connect you sciences, ticker CNXU. Now, it's not an AI stock. It's not a mag seven. It's a pre commercial regenerative medicine company sitting directly in the path of this entire wave. Their core platform is called 10 minute tissue. It's an injectable liquid that becomes structured. It's it's tissue like material inside your body. In about 10 minutes. The team is proven operators, the former Galderma North America president, a CMO with 25 plus years in injectables. They're going through the FDI device pathway, the 510 K, and they're going through it years faster, dramatically cheaper than traditional drug route. patents have already been granted in the US, Europe, Japan and Australia, and multiple markets are already in play. aesthetics, wound care, dental, veterinary, even 3d bioprinting. Now here's why I like it. It's uncorrelated to the AI trade. So it doesn't roll over if the mag seven does. This industry's playbook is acquisition. Allergan bought CoolSculpting's market for 2.4 billion. The lesson that I've learned from every bubble is don't wait until it's front page news. And right now, this one's still early. Now of course, this is a paid promotion. It's not investment advice, and always do your own research. And there's a link in the description down below. So you can go do your research. And now back to the video. Okay, now, this takes us to probably the most important part of the video right here. Now most people that are watching are probably thinking just one thing, right? They're thinking about the price of their assets. And they're just waiting, right? They're hoping that those prices come back down. And again, based off of 2008 or 2000, that seems to make sense. In a full deleveraging, credit contracts for sellers, they start to dump assets, prices keep falling until the excess leverage is all cleared out. And then that creates the reset, right? Cash gains purchasing power because asset prices are coming down, they're getting cheaper. And so that opportunity window stays open for a while. But the problem today is that the Fed can't even afford a recession, they can't handle the deleveraging to fully run its course today. Because once falling prices start breaking collateral, then margin calls are happening, they start spreading. Once Treasury markets and banks and pension funds, funding markets, once they come under pressure, that's when the Fed has to step in. It's not to save your portfolio to stop the deleveraging from taking down the system. So what do they do? Of course, they check liquidity, inject liquidity to support the credit markets. And to guarantee funding, they push the rates lower, already hearing about the Fed and lowering rates and pushing those rates lower. And they start forcing money back into the system, which what does that do? Well, it interrupts the liquidation that you've been hoping for or waiting for expecting, and prices start moving higher again, and not lower. So then while millions of investors, they're sitting there waiting for the deep reset, and they're sitting on the sidelines, they're waiting for you know, houses to fall another 20 30%, or whatever. They want to see stocks get cut in half. They want to wait for Bitcoin to go even lower than it is, well, underneath the Fed's already pushing asset prices back away from them. Right? This is why the window closes on them. It's not because the opportunity never appears. It can appear but it appears very violently, right? The Fed doesn't allow the deleveraging to continue long enough to create the prolonged reset that people remember from 2008. I mean, just look at 2020. Right? That all the governments of the world shut down the markets. And of course, everything crashed, right? Stock markets, home prices, everything crashed, like three months, it made new all time highs, it caught people off guard, no one was prepared for three months, they thought seven years, next time, the window will be even shorter. And so by the time investors feel confident that the crisis has passed, well, then the right assets have already started running higher again. Now, the money they're holding is also being diluted by the same rescue that's going on. So then they just keep chasing higher prices like people didn't 2023 when I warned them, right? And they're chasing those higher prices with weaker and weaker dollars. That's the trap. Fear explains why investors hesitate, but it's the policy that explains why the opportunity disappears so fast, because the rescue is designed to stop the leveraging, restore the capital to push prices back up. So the people waiting for another 2008 style reset, they may be right that the market was over leveraged, we can see that right? They may be right that the prices should fall. But if the Fed interrupts the unwind before it clears or before even starts, they're gonna lose by trying to wait. And so the window opens when the leverage breaks, but it closes when the Fed steps in, which is what they're doing right now. This is why the rescue just makes it worse. So great. What do you do about this? What should you own? Well, the answer isn't just assets. Well, of course, own assets. Yes. But what type of assets? Okay, it's definitely not all the assets. The answer comes down to one word, all of all economics is built off of this single word and the single word, scarcity. Okay. Now, it's interesting to say scarcity, because right now we're moving into the age of abundance, right? AI is making intelligence, software production cheaper and faster. But at the same time, we have governments and central banks, they're making money more abundant. So we have intelligence and all that abundant, we have money abundant, more debt, more liquidity, more currency. So now we have two massive forces colliding. AI makes, you know, reproductible things abundant, while policymakers make money abundant. And when abundant money chases something that can also be produced in abundance, then the supply responds. But when abundant money chases something whose supply cannot respond, then it's the price that has to adjust, because the supply can't. All right. So this is why hard, scarce assets become the release valve. I'm talking about gold. Sure. I'm talking about prime land trophy assets. I'm talking about scarce energy. I'm talking about critical infrastructure. And of course, yes, I'm talking about Bitcoin. All of those are assets whose supply is fixed, or at least very expensive to get. And it's fixed, you know, geographically constrained, it's physically difficult to increase, right, you have to spend more money to get it, whatever it is. Now, not every physical asset wins here. But the assets positioned to win have credible scarcity. Okay, so that's the paradox, right? AI creates deflation in what can be reproduced. Monetary policy creates inflation in what can't be reproduced. So abundance lowers the value of reproducible things. Debasement raises the value of scarce things. So when I ask whether you're long enough, I'm not asking whether you own enough of every stock, every house or every speculative asset. What I'm really asking is this, do you own enough of the genuine scarce things that neither AI nor governments can create more of? Now, that doesn't mean sell everything like max out your leverage or blindly chase scarce assets at any price doesn't mean that. All right. The goal is to survive both sides of the cycle, the liquidation and the rescue. Okay, so you need enough liquidity to you're never forced to sell at the worst possible moment. But you also need enough exposure to the right scarce assets. So you're not forced to chase them after the rescue begins. You're not left behind chasing those assets after they've gone way higher since like 2023 with depreciated dollars. Now, liquidity is what protects you during the panic. Ownership protects you during the rescue. So the strategy is not being all in or all out. It's a base position before the panic and dry powder when for sellers create the opportunity. Now what you want to do is decide in advance what you want to own, what makes it scarce and what price you may buy more at. And remember this being long means owning enough of the right assets that you benefit if the system expands, the currency supports the debt and restores liquidity, which I would put the odds of that at, well, let's just call it extremely high. So that means it pushes scarce assets higher and at the same time, keep enough liquidity to buy when institutions are forced to sell. Now, if the markets rise, you participate. If they fall, then you can buy, right? If the rescue begins, you already own the asset most likely to absorb the new money. Okay, so ask yourself this, if the right assets fall, can I buy more? If the if the rescue comes fast, do I already own enough? Am I liquid enough to survive the crash? And am I long enough to benefit from the rescue close? If you want to know if you're long enough, I have a free app that you can try. If you want to check it out, I'll put a link down below, you can just kind of put in your numbers and it sort of shows you if you're long enough into the future based off your own numbers, does all the calculations, hard work, it's free, just check it out down below. But let's bring all this together. Record leverage makes a violent liquidation possible. Okay. But the obvious response is to wait in cash for another 2008 style. But that's again, fighting the last war, right? Once falling prices even start to, you know, threaten the system at all policy changes, the rescue restores liquidity, and prices just take off to the moon again. Meanwhile, we have this force of AI making reproducible things abundant, which makes genuine scarcity even more valuable. So I'm not telling you to eliminate cash. Cash is dry powder, right? We need it. But it's there to help you survive the panic and buy the liquidation. But it's not the destination. It's not where we're going. The strategy is to own a base position in hard scarce assets for the panic and maintain enough liquidity, not cash liquidity to buy more when institutions are forced to sell. Now, the next crisis, it's a it's going to separate the people who predict the crash from the people who missed it. But more importantly, it's going to separate the people who understood what the response to the policy rescue would be. And it's going to force everyone else who are chasing it out. The question is not only am I protected if the market falls? Bigger question is, am I long enough in the things they can't produce? So are you long enough? If you want to know, pick the free quiz down below. I have a little app that you can plug in your numbers and it'll tell you what you think. Let me know. It's brand new. I just released it. I'd love to hear your feedback on it. Check it out down below. And as I always say to your success.