WEBVTT - $750 Billion Set to Surge into Markets: The Fed's Next Move Explained! 0:00:00.240 --> 0:00:02.920 With the recent crash in markets and the coming election 0:00:03.120 --> 0:00:06.880 and potential wars, many investors are really scared. They're expecting 0:00:06.920 --> 0:00:09.039 a big market crash to come any day. 0:00:09.320 --> 0:00:10.480 And of course it's no wonder. 0:00:10.640 --> 0:00:14.120 We have many economic indicators like the yield curve inversion, 0:00:14.480 --> 0:00:17.480 we can unemployment, we have us slowing home sales, and 0:00:17.520 --> 0:00:21.200 they're all showing us that recession is imminent. But while 0:00:21.239 --> 0:00:24.080 those might be really good indicators of where the economy 0:00:24.120 --> 0:00:27.040 is going, they're not good at showing where asset prices 0:00:27.040 --> 0:00:29.680 are going. And the best indicator for that is right 0:00:29.720 --> 0:00:32.520 now flashing a giant green arrow. 0:00:32.800 --> 0:00:34.519 Well, at least you know what you're looking for. 0:00:34.560 --> 0:00:36.519 So in this video, I'm going to break down the 0:00:36.640 --> 0:00:39.600 event that's coming this year in twenty twenty four that's 0:00:39.640 --> 0:00:42.760 going to have the biggest impact on asset prices, and 0:00:42.840 --> 0:00:45.440 no it's not the election. Right, I'm going to show 0:00:45.440 --> 0:00:47.000 you the prices. I'm going to show you the levels. 0:00:47.080 --> 0:00:49.199 I'm going to show you what's expected to happen. But 0:00:49.280 --> 0:00:50.800 we're going to look at the data. We're going to 0:00:50.800 --> 0:00:53.640 look at the facts of other previous cycles like the 0:00:53.720 --> 0:00:56.360 one that's setting up right now. Now, once you see 0:00:56.360 --> 0:01:00.000 this data and you understand its impact on asset prices 0:01:00.040 --> 0:01:02.800 in markets. They're going to have a completely different view 0:01:03.480 --> 0:01:06.000 than you know, all the talking heads that are pedaling 0:01:06.040 --> 0:01:06.720 their fear for you. 0:01:07.200 --> 0:01:07.880 So let's go. 0:01:09.800 --> 0:01:11.880 All right, so jumping right in, we are going to 0:01:11.959 --> 0:01:14.559 look at the money. It's always about the money, right, 0:01:14.680 --> 0:01:16.200 So we're going to look at the money. 0:01:16.319 --> 0:01:18.800 And as I talk about all the time, now, liquidity. 0:01:19.080 --> 0:01:19.760 So liquidity. 0:01:19.800 --> 0:01:22.200 When there's more money in the system, more liquid in 0:01:22.280 --> 0:01:24.880 the system, than prices tend to go up. And when 0:01:24.880 --> 0:01:28.560 there's less liquidity, then prices tend to go down. Now 0:01:28.600 --> 0:01:31.280 it's very simple, but it's not. It's not that easy 0:01:31.319 --> 0:01:33.920 to understand all the millions of reasons why pricing can. 0:01:33.800 --> 0:01:34.360 Go up or down. 0:01:34.400 --> 0:01:36.880 But let's look at a giant one right now, and 0:01:36.959 --> 0:01:40.880 this is the United States government's piggy bank. Sort of 0:01:40.920 --> 0:01:42.280 like this a little bit different than you have in 0:01:42.360 --> 0:01:42.720 your kid. 0:01:42.840 --> 0:01:43.000 Now. 0:01:43.040 --> 0:01:46.000 Of course, the government sort of like a business has 0:01:46.000 --> 0:01:49.000 income right taxes, and they have expenses that they spend, 0:01:49.200 --> 0:01:51.920 and they keep the difference their money. They're piggy bank, 0:01:52.080 --> 0:01:54.200 and they keep it in the bank. Not Wells Fargo, 0:01:54.320 --> 0:01:56.240 JP Morgan, not city bank. They keep it at the 0:01:56.240 --> 0:01:58.520 federal reserve of course, all right, and this is known 0:01:58.520 --> 0:02:01.960 as the TGA or what we called the Treasury General Account. 0:02:02.080 --> 0:02:03.440 Right now, a lot of people don't know what the 0:02:03.440 --> 0:02:06.440 TGA is. It's the government's bank acount, okay. And what 0:02:06.480 --> 0:02:09.680 we can see is that there's a lot of money 0:02:09.720 --> 0:02:11.560 sit in that bankcount. But the important piece that we're 0:02:11.560 --> 0:02:14.360 going to break down is how much money is there, 0:02:14.960 --> 0:02:18.000 how has that money been used in the past, what 0:02:18.040 --> 0:02:20.919 have we seen through other types of cycles, and what 0:02:20.960 --> 0:02:22.880 do we expect is going to happen based off of 0:02:22.919 --> 0:02:25.920 the information they've given us and what's historical. Now, I 0:02:25.919 --> 0:02:28.200 do want to just give a quick shout out here 0:02:28.520 --> 0:02:32.800 to Thomas. Thomas writes these great tweet threads over on Twitter, 0:02:33.040 --> 0:02:34.840 and so I've taken some of the charts from his 0:02:34.880 --> 0:02:37.200 Twitter thread. We'll link to it down and below in 0:02:37.240 --> 0:02:40.320 the description if you want to read the entire thread 0:02:40.320 --> 0:02:42.560 that he put together is pretty good. But just real quickly, 0:02:42.919 --> 0:02:45.160 you can go on to pretty much anywhere Trading View 0:02:45.240 --> 0:02:47.320 or whatever this is from the FED directly and you 0:02:47.360 --> 0:02:50.040 can look at the Treasury General Account. Now, it did 0:02:50.080 --> 0:02:53.119 get really high in twenty twenty, like everything else did, 0:02:53.520 --> 0:02:55.400 so you can see we sort of have this baseline 0:02:55.440 --> 0:02:58.399 around here. This was this twenty twenty anomaly. Now these 0:02:58.440 --> 0:03:00.240 red arrows that are put on the screen here is 0:03:01.480 --> 0:03:05.560 tax time. This is April of twenty two or twenty one, 0:03:05.720 --> 0:03:08.120 April twenty two, April twenty three. And you can see 0:03:08.240 --> 0:03:10.679 that there's these spikes every year right when we get 0:03:10.680 --> 0:03:12.920 that when the taxes come in. But what we can 0:03:12.960 --> 0:03:15.120 see right now is that this level has pretty much 0:03:15.200 --> 0:03:17.799 been flat lined here, which is sort of rare. You 0:03:17.800 --> 0:03:20.040 can see it's usually pretty volatile, right coming in from 0:03:20.080 --> 0:03:22.760 taxes spending down up, from taxes spinning down, and we've 0:03:22.800 --> 0:03:26.160 had this pretty flat area. There's about seven hundred and 0:03:26.360 --> 0:03:29.799 seventy billion dollars little less than a trillion. We might 0:03:29.800 --> 0:03:32.000 see some of the peaks about seven hundred and seventy 0:03:32.240 --> 0:03:34.679 billion dollars in that. Now, one thing to understand is 0:03:34.720 --> 0:03:38.160 the mechanics of how this works when the treasury TGA. 0:03:38.200 --> 0:03:41.120 When the treasury account is full, cash is out of 0:03:41.160 --> 0:03:45.280 the market. It's on the sidelines. It's dormant, as I said, right, 0:03:45.280 --> 0:03:45.760 So it's like. 0:03:45.720 --> 0:03:46.480 Money in the bank. 0:03:46.600 --> 0:03:49.280 It can be spent whenever they want to spend it, 0:03:49.480 --> 0:03:53.800 but it's not actively incentivizing spending at that time. Now, 0:03:53.880 --> 0:03:56.800 if we will look at the TGA Treasury General account levels, 0:03:56.960 --> 0:03:58.640 we can start to get a sort of better idea 0:03:58.800 --> 0:04:01.600 of where things are now and more importantly, where they 0:04:01.680 --> 0:04:05.800 might go historically. Now, typically you might think that as 0:04:05.880 --> 0:04:10.000 the TGA account is rising, as there's more money piloting 0:04:10.040 --> 0:04:13.240 into that account, that's typically bad for liquidity levels. So 0:04:14.080 --> 0:04:15.800 you know tax time, as I showed you how it 0:04:15.840 --> 0:04:18.080 starts to spike around tax time, well, it has to 0:04:18.120 --> 0:04:20.719 go from my account, my personal account, business acount, or 0:04:20.720 --> 0:04:23.400 yours to the government. And that means that I now 0:04:23.440 --> 0:04:25.960 have less money to invest into my business or to 0:04:25.960 --> 0:04:28.280 spend for my family or whatever it is. And so 0:04:28.320 --> 0:04:30.760 that money is being sucked out of the economy and 0:04:30.800 --> 0:04:31.359 it's going. 0:04:31.160 --> 0:04:31.760 To the government. 0:04:32.320 --> 0:04:35.320 I like to stay that the government cannot give something 0:04:35.320 --> 0:04:38.440 that it has not taken. The government doesn't create, All 0:04:38.480 --> 0:04:41.080 it does is redistribute. So it's literally taking it away 0:04:41.080 --> 0:04:43.680 from you and I productive members of society, and it 0:04:43.720 --> 0:04:45.960 goes into their account. So that is typically bad. It's 0:04:46.000 --> 0:04:50.080 sucking liquidity out. When we see TGA is draining, then 0:04:50.120 --> 0:04:52.839 that is good for liquidity. That means that now the 0:04:52.880 --> 0:04:56.000 TGA that the government is now pushing the money back 0:04:56.120 --> 0:04:59.240 onto main street. Because remember the government redistributes, They take 0:04:59.240 --> 0:05:01.800 it from me and you, from my business, and then they. 0:05:01.720 --> 0:05:02.960 Give it to whoever they want. 0:05:03.200 --> 0:05:06.799 So they're taking it, sucking out, giving it back, pushing 0:05:06.800 --> 0:05:07.120 it back. 0:05:07.160 --> 0:05:09.080 So that would be good, good for liquidity anyway. 0:05:09.080 --> 0:05:12.239 All right, Now, what we can see is the TGA. 0:05:12.320 --> 0:05:16.799 The government estimates where they expect their bank account levels 0:05:16.880 --> 0:05:18.960 to be. So they said that by the end of 0:05:19.080 --> 0:05:22.039 Q three, twenty twenty four, they expect it to have 0:05:22.120 --> 0:05:25.159 about eight hundred and fifty billion, which is about seven 0:05:25.279 --> 0:05:26.960 hundred and seventy billion right now. So they expect the 0:05:26.960 --> 0:05:30.000 TGA to go up between now and the end of 0:05:30.040 --> 0:05:31.800 Q three, which is pretty interesting because we don't have 0:05:31.839 --> 0:05:34.280 any you know, big tax dates coming up, and they 0:05:34.279 --> 0:05:36.279 expect by the end of Q four, so by the 0:05:36.320 --> 0:05:39.160 end of this year to be at about seven hundred billion, 0:05:39.960 --> 0:05:42.440 which is a little bit lower than we're ride today. Now, 0:05:42.920 --> 0:05:47.200 this estimate is completely wrong, just like every other estimate 0:05:47.240 --> 0:05:49.760 that the government puts out. The Treasury also puts out 0:05:49.800 --> 0:05:53.880 their borrowing requirements every quarter, and yeah, they're wrong, every 0:05:53.880 --> 0:05:55.599 single one. They have to go back and revise them 0:05:55.640 --> 0:05:58.480 when no one's paying attention all the economic gated the 0:05:58.520 --> 0:06:00.960 BLS puts out, it's always wrong. They go back and 0:06:01.000 --> 0:06:04.280 revise that, and these numbers are way off, and we're 0:06:04.279 --> 0:06:06.440 going to take a look at that and why that's important. Now, 0:06:06.480 --> 0:06:08.160 just to kind of put this into perspective with a 0:06:08.240 --> 0:06:10.280 chart that you can see again, this goes back to 0:06:10.320 --> 0:06:13.080 the t TG account and so we're right here at 0:06:13.080 --> 0:06:15.960 this blue dot, and they're expecting that the end of 0:06:16.080 --> 0:06:20.520 Q three we're here a little bit higher, and by 0:06:20.760 --> 0:06:23.000 Q four we're here a little bit lower. So we're 0:06:23.000 --> 0:06:26.320 going to stay right in this range. Apparently according to them. 0:06:26.360 --> 0:06:29.760 Now you can just look back here, that has not 0:06:29.920 --> 0:06:31.919 been the case. We have not been in a range 0:06:32.000 --> 0:06:34.560 at all that long. But that's where they say we're 0:06:34.600 --> 0:06:36.719 at now. To get an idea of how this works, 0:06:36.720 --> 0:06:39.880 the TGA account works, let's just break this down. This 0:06:39.920 --> 0:06:42.640 is from macro alf and he says, right here, why 0:06:42.680 --> 0:06:46.640 does draining the TGA matter that much for markets and 0:06:46.680 --> 0:06:49.800 the US economy. So when the TGA is high, it's 0:06:50.120 --> 0:06:52.679 bad for markets. When the TJA is low or drained, 0:06:52.720 --> 0:06:55.640 it's good. So why why does it matter for markets 0:06:55.640 --> 0:06:58.440 to the economy? And he says, because draining the TGA, 0:06:58.520 --> 0:07:00.000 taking the money and pushing it back into the market 0:07:00.440 --> 0:07:03.520 is akin to throwing fresh money at the economy. Just 0:07:03.600 --> 0:07:07.360 dumping money into the economy, similar to deficit spending, which 0:07:07.360 --> 0:07:08.680 we've been doing a lot of that as well. So 0:07:08.720 --> 0:07:12.240 definicis spending as well as TGA spending, and also adding 0:07:12.320 --> 0:07:16.120 new liquidity to the interbank system similar. 0:07:15.760 --> 0:07:17.520 To QE or quantitative easing. 0:07:17.680 --> 0:07:19.760 So this whole time, no, we're tightening, we're tightening. No 0:07:19.840 --> 0:07:22.960 quantitative easing. Well maybe technically, but there's lots of ways 0:07:22.960 --> 0:07:25.040 that we get liquidity into the system. 0:07:25.200 --> 0:07:25.920 So how does it work. 0:07:25.960 --> 0:07:27.400 Well, he goes on to say, is sort of like 0:07:27.440 --> 0:07:30.600 this one two punch. So step one is the government 0:07:30.800 --> 0:07:33.720 drains down its tg at the FEDS right now seven 0:07:33.800 --> 0:07:36.720 hundred and seventy billion, they could drain that money down, 0:07:37.120 --> 0:07:41.280 hence lowering its equity position, but then injecting this fresh 0:07:41.320 --> 0:07:44.240 new money into the real economy, like this is the 0:07:44.280 --> 0:07:47.600 most inflationary could be. You know, analysts will argue that 0:07:47.720 --> 0:07:50.280 QI isn't really inflationary because it doesn't really get money 0:07:50.320 --> 0:07:53.560 into the actual market, or I'm sorry to the economy. 0:07:53.760 --> 0:07:55.360 QWI just gives money to the banks, but the maanks 0:07:55.360 --> 0:07:56.800 don't necessarily put it into the economy. 0:07:56.840 --> 0:07:57.440 Supposedly. 0:07:57.760 --> 0:07:59.880 There's a whole nother topic for another video, but here 0:08:00.160 --> 0:08:04.480 it's literally injecting this fresh money directly into the economy. 0:08:04.640 --> 0:08:05.640 That's what the government does. 0:08:06.400 --> 0:08:10.320 The economy equals households net worth goes up. Household net 0:08:10.360 --> 0:08:12.280 worth goes up, people have more money to spend. 0:08:12.520 --> 0:08:13.280 Step number two. 0:08:13.560 --> 0:08:16.400 Households now have more money that's good in the form 0:08:16.440 --> 0:08:20.239 of bank deposits, which end up back into the banking system. 0:08:20.280 --> 0:08:21.520 So if you get money, where do you put it? 0:08:21.560 --> 0:08:23.680 Of course, you put it into the bank, and hence 0:08:23.760 --> 0:08:26.280 banks also sit on a larger amount of reserves. So 0:08:26.320 --> 0:08:28.520 now the banks take the deposits, they have more reserves. 0:08:28.520 --> 0:08:30.280 What do banks do when they have more reserves, Well, 0:08:30.280 --> 0:08:32.320 how they're able to loan out even more money, which 0:08:32.360 --> 0:08:33.120 means even. 0:08:32.960 --> 0:08:34.559 More liquidity in the system. 0:08:34.840 --> 0:08:38.280 The Fed's balance sheet squares with less TGA perfectly offset 0:08:38.280 --> 0:08:38.559 by a. 0:08:38.520 --> 0:08:39.720 Higher amount of reserves. 0:08:40.240 --> 0:08:42.760 So now you can see how powerful this monetary mechanic 0:08:42.960 --> 0:08:47.080 combination is. So when they drain the TGA, it's literally 0:08:47.120 --> 0:08:49.480 throwing money directly into it. But they're saying that they're 0:08:49.520 --> 0:08:51.800 not going to drain it they're saying, by the it's 0:08:51.800 --> 0:08:53.120 actually going to go up and by the end of 0:08:53.120 --> 0:08:53.800 the year is going to be. 0:08:53.760 --> 0:08:55.560 About even That's what they say. 0:08:55.760 --> 0:08:58.240 But should we take them at their word or should 0:08:58.280 --> 0:09:00.440 we understand this a little bit more. I just saw 0:09:00.520 --> 0:09:02.640 the markets going to a tailspin and panic when Japan 0:09:02.760 --> 0:09:05.079 raised rates and this thing called a carry trade started 0:09:05.080 --> 0:09:07.200 to unwind. Now it doesn't really matter about that, but 0:09:07.240 --> 0:09:10.040 what we did see was brokerage accounts were frozen. 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There's a link down below. 0:09:59.640 --> 0:10:03.160 Okay, so if we take the historical view now, I 0:10:03.200 --> 0:10:05.160 want to go back in history to understand where we're 0:10:05.160 --> 0:10:05.679 going in the future. 0:10:05.679 --> 0:10:07.079 But I do want to just let you know I 0:10:07.120 --> 0:10:08.079 don't really care about. 0:10:07.880 --> 0:10:09.960 The end of Q three. I don't really care about 0:10:10.000 --> 0:10:12.319 the end of Q four. Typically I'm looking at least 0:10:12.320 --> 0:10:14.400 a year out. Most of my stuff, I'm looking three, 0:10:14.520 --> 0:10:16.840 five or ten years out. But let's just take a 0:10:16.840 --> 0:10:20.040 look at where we'll be in twenty twenty five, all right. 0:10:20.080 --> 0:10:21.720 So that's sort of what I've been talking about a 0:10:21.720 --> 0:10:25.600 lot with my qwave thesis. This quantitative leap that we're 0:10:25.600 --> 0:10:27.240 taking forward right now is really through the end of 0:10:27.240 --> 0:10:29.199 twenty twenty five. So right now we're looking at that, 0:10:30.160 --> 0:10:32.200 and if we want to know we're in twenty twenty five, 0:10:32.200 --> 0:10:35.199 we have to see, well, what's going to happen before. 0:10:34.880 --> 0:10:35.679 We get there. 0:10:36.360 --> 0:10:39.000 And there's a really big event coming up that you 0:10:39.080 --> 0:10:41.320 might have heard of before, and this is the debt 0:10:41.480 --> 0:10:45.560 ceiling showdown. The government gets together and says we need 0:10:45.600 --> 0:10:47.600 more debt. Of course we do, because we can't afford 0:10:47.600 --> 0:10:49.480 the debt we have, so we need more debt. President 0:10:49.480 --> 0:10:51.720 Biden was on the news saying, well, we need to 0:10:51.720 --> 0:10:54.560 have more debt because the US has never defaulted, and 0:10:54.559 --> 0:10:56.040 if we don't get more debt, how do we pay 0:10:56.040 --> 0:10:59.040 the old debt? Sort of like the definition of a 0:10:59.040 --> 0:11:02.160 Ponzi scheme. So the debt ceiling showdown comes and they 0:11:02.280 --> 0:11:03.800 argue over if we're going to raise it or not. 0:11:04.640 --> 0:11:07.960 Both sides grandstand about not wanting to spend more. There's 0:11:07.960 --> 0:11:11.680 some concessions made, and every single time it's been raised 0:11:11.800 --> 0:11:13.680 now there has been sometimes where it's gotten very close. 0:11:13.880 --> 0:11:16.240 We've seen some credit downgrades because of this. But this 0:11:16.280 --> 0:11:19.520 is basically what happens. And in this event, it almost 0:11:19.520 --> 0:11:21.319 always seems to happen, and it probably happened this year 0:11:21.360 --> 0:11:24.400 before the election, is that they can't come to an agreement, 0:11:24.640 --> 0:11:27.920 and so what happens is without passing an agreement, then 0:11:27.920 --> 0:11:31.120 there's no more debt. Available to no more funding develop 0:11:31.200 --> 0:11:33.840 for the government. So what happens in that event, Well, 0:11:33.920 --> 0:11:37.000 don't worry. The government has a piggy bang called the TDA. 0:11:37.559 --> 0:11:39.880 During that time, they will do what they. 0:11:39.720 --> 0:11:44.920 Call extraordinary measures, and they'll use the government bank account, 0:11:45.000 --> 0:11:48.200 the TGA to actually fund that gap where they can't 0:11:48.200 --> 0:11:50.960 get the debt ceiling. This happens most of the time. 0:11:51.040 --> 0:11:52.679 Now we can see this in this chart right here. 0:11:52.679 --> 0:11:55.439 Here's the TGA account again, and what we have right 0:11:55.440 --> 0:11:58.560 here in this first dotted line is where the debt 0:11:58.600 --> 0:12:00.000 ceiling showdown begins. 0:12:00.480 --> 0:12:02.120 This is where they start fighting, and. 0:12:02.080 --> 0:12:05.880 We can see they start spending down the tgaccount down, down, down, 0:12:05.920 --> 0:12:09.720 down down right here, this line right here is where 0:12:09.720 --> 0:12:13.000 an agreement is finally reached. Now this timeframe is about 0:12:13.040 --> 0:12:16.640 one hundred and forty days. Now we fast forward, the 0:12:16.720 --> 0:12:20.480 TJA gets replenished, kind of has this sideways action, and 0:12:20.600 --> 0:12:23.360 this dotted line right here is where they start fighting 0:12:23.360 --> 0:12:24.800 about the debt ceiling again. 0:12:24.800 --> 0:12:26.680 We're not going to raise it, we need to raise it, etc. 0:12:27.280 --> 0:12:30.360 And then they start spending down the TGA until they 0:12:30.400 --> 0:12:33.760 finally make a deal right here, about another one hundred 0:12:33.800 --> 0:12:34.679 and forty days. 0:12:35.040 --> 0:12:36.240 Now, it went. 0:12:36.240 --> 0:12:39.959 Up here, it goes up, it starts walking sideways, and 0:12:40.000 --> 0:12:43.160 this dotted line right here is guess what where the 0:12:43.200 --> 0:12:45.960 next debt ceiling showdown is going to begin. Now, what's 0:12:45.960 --> 0:12:50.080 interesting is this is January twenty twenty five. Now they 0:12:50.120 --> 0:12:52.680 predict that the TG will be higher by the end 0:12:52.720 --> 0:12:56.120 of the year, so maybe it'll be somewhere in this range. 0:12:56.640 --> 0:12:59.880 But when the debt ceiling debate or starts happening, what 0:13:00.080 --> 0:13:02.480 do you think happens based off of this? 0:13:03.200 --> 0:13:06.079 Most likely it starts trending down. Let me show you 0:13:06.080 --> 0:13:09.880 another chart. This is a little bit different historical lens. 0:13:09.960 --> 0:13:12.120 Again thanks to Thomas, I'm stealing his charts. 0:13:12.160 --> 0:13:13.719 We got this off of Twitter. I'm going to link 0:13:13.760 --> 0:13:14.000 to his. 0:13:13.960 --> 0:13:16.680 Full thread down below. What we can see here is 0:13:16.720 --> 0:13:20.200 when this happened. You can see it dropping right here, 0:13:20.400 --> 0:13:23.559 and each time we got to about. 0:13:23.120 --> 0:13:25.280 One hundred billion, same level. 0:13:25.320 --> 0:13:28.040 So it's important to understand what happened in the mechanics 0:13:28.120 --> 0:13:28.559 right here. 0:13:28.760 --> 0:13:30.000 But it's also important to. 0:13:30.040 --> 0:13:33.840 Understand the sort of empty level that they draw down to, 0:13:34.240 --> 0:13:36.439 because if we want to know where we end up here, 0:13:36.840 --> 0:13:39.000 what level will we be at? 0:13:39.440 --> 0:13:40.439 About one hundred billion? 0:13:40.559 --> 0:13:43.360 Now one hundred billion, how much did they say, would 0:13:43.400 --> 0:13:44.920 be in there by the end of the year. 0:13:46.240 --> 0:13:48.040 Now we can do some math, all right. 0:13:48.080 --> 0:13:51.439 Now, I also want to show you for historical purposes 0:13:52.160 --> 0:13:55.839 that this is where the government said we would end up. 0:13:56.200 --> 0:13:58.199 So again we have these dotted lines where the debt 0:13:58.240 --> 0:13:59.440 ceiling debate started. 0:13:59.440 --> 0:14:00.400 Here's where up. 0:14:00.600 --> 0:14:04.040 Now what's important is this is where we ended up. However, 0:14:04.120 --> 0:14:06.959 what the Treasury had forecasted. 0:14:06.240 --> 0:14:08.280 Where we'd end up was right here. 0:14:10.240 --> 0:14:12.920 Same thing here we get to hear they forecast we 0:14:12.960 --> 0:14:16.280 would be here, but we ended up down here. Now 0:14:16.360 --> 0:14:18.080 they're forecasting we're going to be here. 0:14:18.800 --> 0:14:20.120 But where do you think we're going to be? 0:14:20.680 --> 0:14:23.600 Well, if history is our guide, we're going to be 0:14:23.920 --> 0:14:25.240 right here in this range. 0:14:25.320 --> 0:14:27.880 The same thing. Now, why does all this matter? 0:14:28.880 --> 0:14:31.520 Well, it matters because we need to figure out where 0:14:31.560 --> 0:14:34.600 we're going in the form of liquidity. And the first 0:14:34.600 --> 0:14:36.200 thing we have to kind of figure out is where 0:14:36.280 --> 0:14:38.760 do we go? What are the lawmakers going to do? 0:14:38.920 --> 0:14:41.080 Now we have to remember, as I said, take into 0:14:41.080 --> 0:14:43.480 a consideration that we're also in an election here, So 0:14:43.520 --> 0:14:46.280 this is going to make this even more volatile, meaning, 0:14:47.200 --> 0:14:48.880 you know, is it going to be Republicans or Democrats 0:14:48.920 --> 0:14:51.080 are going to take over the presidency, who's going to 0:14:51.080 --> 0:14:52.080 retain the Senate of the House. 0:14:52.200 --> 0:14:53.920 I would imagine there's going to be even. 0:14:53.680 --> 0:14:56.760 More grand standing than we normally see, fighting over budgets, 0:14:56.800 --> 0:14:58.000 different parts of the budgets. 0:14:58.160 --> 0:15:00.160 And so if anything, this could. 0:15:00.200 --> 0:15:04.560 Probably exacerbate the situation. It could probably make the Treasury 0:15:04.600 --> 0:15:07.320 fund it for longer than they typically have, And if so, 0:15:07.840 --> 0:15:11.040 then they will have to continue to inject the money. 0:15:11.280 --> 0:15:14.560 So the question is how much will they have to inject. 0:15:14.800 --> 0:15:17.560 We know that they're here, now, we know that they 0:15:17.640 --> 0:15:20.320 say they might build it up a little bit, and 0:15:20.360 --> 0:15:22.640 the question is how far will they drain it down? 0:15:22.720 --> 0:15:23.800 Well, back to the math. 0:15:24.080 --> 0:15:27.120 If we're typically down to about one hundred billion each time, 0:15:27.560 --> 0:15:30.520 and we have about eight hundred billion, eight hundred and 0:15:30.560 --> 0:15:32.480 fifty billion, they draw it down to one hundred, that 0:15:32.520 --> 0:15:37.040 means there's about seven hundred and fifty billion that could 0:15:37.080 --> 0:15:40.320 get injected directly into the economy for you and I 0:15:40.440 --> 0:15:40.880 to spend. 0:15:41.320 --> 0:15:43.280 So what does that mean, Well, if. 0:15:43.240 --> 0:15:46.480 We have seven hundred and fifty billion injected, not into 0:15:46.520 --> 0:15:49.840 the banks like QE, I'm talking about being injected directly 0:15:49.960 --> 0:15:55.200 into the economy, directly into stimulus, into building programs, into 0:15:55.240 --> 0:15:58.480 more welfare things like that. It goes directly to the economy. Now, 0:15:58.560 --> 0:16:01.800 to put this into perspective, just to kind of normalize ourselves, 0:16:01.800 --> 0:16:03.600 because these numbers get so out of whack. In two 0:16:03.600 --> 0:16:07.280 thousand and eight, during the Great Financial Crash, where the 0:16:07.480 --> 0:16:10.920 entire global financial system, not just do US, global finance 0:16:10.960 --> 0:16:13.360 system was melting down. At the same time, the FED 0:16:13.600 --> 0:16:15.480 stepped into action to save the world. And at the 0:16:15.560 --> 0:16:19.440 time it was seven hundred billion that was spent in 0:16:19.440 --> 0:16:23.360 this tart program to do that seven hundred billion. This 0:16:23.440 --> 0:16:27.120 is more than that, and it is most likely coming our 0:16:27.200 --> 0:16:30.320 way in the next couple of months. So again, what 0:16:30.440 --> 0:16:32.640 happens if we see this it takes about, as we 0:16:32.680 --> 0:16:35.040 saw history, is about one hundred and forty day process 0:16:35.320 --> 0:16:37.920 of shoveling this money in seven hundred and fifty going 0:16:37.920 --> 0:16:40.280 directly to main street. What do you think is going 0:16:40.320 --> 0:16:42.880 to happen? Well, I put some arrows here. This is 0:16:42.920 --> 0:16:45.640 asset prices. Now, look, this is good and bad. Right, 0:16:45.680 --> 0:16:47.600 I'm not saying the economy is going to be fixed 0:16:47.640 --> 0:16:49.320 by this. Now, a lot of people that are losing 0:16:49.360 --> 0:16:51.720 their jobs, a lot of businesses that might suffer, they're 0:16:51.720 --> 0:16:53.520 going to get some help, right, they'll get stimulus that 0:16:53.560 --> 0:16:55.680 will be coming their way, so it's good for them overall. 0:16:55.680 --> 0:16:57.000 It's bad for the economy. 0:16:57.200 --> 0:17:03.480 But for asset prices, coin, tech stocks, real estate, I 0:17:03.560 --> 0:17:06.959 expect all this to go back up. Now, not everything 0:17:07.000 --> 0:17:08.480 moves up at the same time, and we do have 0:17:08.520 --> 0:17:11.120 to keep in mind that as more money is created, 0:17:11.160 --> 0:17:13.800 and as more money is injecting the system, it just 0:17:13.880 --> 0:17:17.680 diminishes the purchasing power of those dollars. So just because 0:17:17.720 --> 0:17:20.280 assets are going up doesn't necessarily mean you're getting richer. So, 0:17:20.320 --> 0:17:23.000 for example, as I break this down in the Investing 0:17:23.080 --> 0:17:25.560 black Hole, the S and P five hundred is basically 0:17:25.640 --> 0:17:26.399 just keeping your. 0:17:26.240 --> 0:17:27.800