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Speaker 1: Government can't afford to let the economy crash before the

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Speaker 1: election if they have any hope of staying in power,

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Speaker 1: and so they just introduced a backdoor plan to stimulate

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Speaker 1: the markets and get their liquidity that nothing the FED

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Speaker 1: can do about it. But the problem is the strategy

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Speaker 1: doesn't align with the Fed's fight against inflation. The government

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Speaker 1: needs more liquidity, the FED is trying to remove it.

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Speaker 1: So to avoid being caught in the crash fire, we

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Speaker 1: need to plan ahead. So in this video, I'm going

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Speaker 1: to break down where exactly this stimulus is coming from,

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Speaker 1: and how it's actually costing the government nothing to inject it,

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Speaker 1: what the potential downsides and unintended consequences of this could be,

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Speaker 1: and most importantly, how you and I as investors can

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Speaker 1: position ourselves to benefit from all of this. Now, for

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Speaker 1: anyone new here, my name is Mark Moss, and I

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Speaker 1: make these videos to break down complex financial subjects so

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Speaker 1: more people can understand them. Now, over the last two years,

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Speaker 1: well almost everyone on YouTube has been calling for you know,

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Speaker 1: the markets to crash. Off made over a dozen videos

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Speaker 1: specifically explaining how the US Treasury is driving the market

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Speaker 1: and working against the FED and this move Today is

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Speaker 1: the latest trick up their sleeve. So let's go all right,

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Speaker 1: So we're talking about liquidity. Liquidity is what drives the markets,

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Speaker 1: what drives the economy, as what drives asset prices, and

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Speaker 1: it's why we need liquidity. And at least some of

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Speaker 1: us want liquidity, some of us don't. What do I

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Speaker 1: mean by that? So when we have liquidity, when there's

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Speaker 1: more money, more loans available, there's more money for you

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Speaker 1: and I, which means we can go buy more things,

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Speaker 1: which means that businesses make more money from us buying things,

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Speaker 1: which means they have more money to buy more things.

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Speaker 1: And we see asset prices going up, and we all

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Speaker 1: feel rich and wealthy in all those things. The problem

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Speaker 1: is that that all that money in the system pushes

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Speaker 1: prices higher, consumer prices higher, or inflation. And so the

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Speaker 1: problem is is that the Federal Reserve, which is trying

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Speaker 1: to keep inflation at their goal of two percent, said well, hey,

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Speaker 1: inflation is too high, so let's start a process of

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Speaker 1: tight tightening liquidity. Quantitative tightening is what they call it,

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Speaker 1: to slow that down. And we can see in this

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Speaker 1: current form of quantitative tightening that we have right now,

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Speaker 1: the current QT the goal of the current current QT

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Speaker 1: is to drain the excess liquidity. If they want to

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Speaker 1: get the liquidity out of the system. So you and

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Speaker 1: I have the opposite. You and I feel broke. We

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Speaker 1: see our asset prices going down, our home values going down.

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Speaker 1: We don't have as much money, so we don't spend

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Speaker 1: as much. The reason why they want to do that

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Speaker 1: is if we don't spend as much, then hopefully inflation

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Speaker 1: comes down. But the problem is that the government is

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Speaker 1: going into an election here and they won't get re

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Speaker 1: elected if we go into recession. So they want the liquidity.

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Speaker 1: They'll take the inflation, but the Fed has a goal

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Speaker 1: and they need two percent, and so it's created this

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Speaker 1: tug of war sort of effect. And so we have

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Speaker 1: the treasury that's continued to be taking on more and

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Speaker 1: more debt. And what we can see is they're issuing

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Speaker 1: a ton of these bills, so you can see how

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Speaker 1: fast this has gone up. This is basically like a

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Speaker 1: cash injection. So think about like a dollar in your pocket.

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Speaker 1: Maybe you have we call those bills right, one hundred

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Speaker 1: dollars bill, and that's basically because there's no duration, a

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Speaker 1: one hundred dollars bill is available right now, whereas bonds

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Speaker 1: could have like a thirty year duration, so bills are

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Speaker 1: anything that has like less than a one year So

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Speaker 1: it's basically like injecting cash directly into the system. So

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Speaker 1: there's been this tug of war. Like I said, have

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Speaker 1: broken down a whole bunch of videos on this specifically. Now,

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Speaker 1: this is officially not a pivot, and this is important understand.

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Speaker 1: So everyone's waiting for the Fed to pivot, to cut

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Speaker 1: off of their tightening stance and move back into an

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Speaker 1: easying stance, which will then create more liquidity. But the

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Speaker 1: Treasury's like, hang on, if you're not going to pivot

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Speaker 1: and provide liquidity, we're going to do it ourselves. And

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Speaker 1: so they've been doing this by, as I said, by

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Speaker 1: selling more bills into the market. The bills create that

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Speaker 1: short term liquidity. And you can take a look at

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Speaker 1: this right here. The bills right here are the light blue.

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Speaker 1: Look at the amount of bills they put into the system,

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Speaker 1: and you might notice that we haven't seen this amount

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Speaker 1: of bills into the system since the pandemic of twenty twenty,

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Speaker 1: when the entire world shot down and they literally had

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Speaker 1: to pay people to stay at home. Yeah, we're putting

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Speaker 1: that much into the system right now. It's pretty crazy now.

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Speaker 1: But we also have other ways that they're injecting money

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Speaker 1: even without the FED doing the pivot everyone's been waiting for.

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Speaker 1: So like this, for example, is the BTFP. It's the

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Speaker 1: Bank Term Funding Program. So when the banks started going

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Speaker 1: under in March of twenty twenty three, they started injecting

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Speaker 1: money for the banks. You can see it went straight up.

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Speaker 1: It's been coming down, but as of right now, we

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Speaker 1: still have over one hundred billion dollars of liquidity just

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Speaker 1: from this. So these are some of the stealth ways,

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Speaker 1: the sneaky ways that they inject money without the FED pivot.

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Speaker 1: This is what I've been talking about for the last

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Speaker 1: two years. When everyone else is calling for the market

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Speaker 1: to crash, waiting for the FED to pivot, I'm like, no,

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Speaker 1: they already are. Here's another example right here. The Federal

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Speaker 1: Reserve Board right here announces the reserve Requirements exemption okay,

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Speaker 1: reserve transfer of twenty twenty four. So banks are supposed

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Speaker 1: to have some reserves for the amount of assets or

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Speaker 1: the amount of loans they put out. And what the

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Speaker 1: Federal Reserve did to get more money into the system.

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Speaker 1: Is they lowered the amount of reserves of the banks

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Speaker 1: have to have. It says right here the reserve requirements

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Speaker 1: for depository institutions, which will remain at zero. So you

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Speaker 1: hear about fractional reserve banking where they're supposed to keep

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Speaker 1: you know, ten percent of the amount of loans extending

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Speaker 1: in the reserves, but here they will remain at zero.

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Speaker 1: So these are all things that have been done to

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Speaker 1: get more liquidity into the system, even though the FED

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Speaker 1: hasn't officially pivoted. Now, if you want to know more

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Speaker 1: about liquidity, which you should, because that's really what drives

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Speaker 1: asset prices, it's a lot deeper than than just this,

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Speaker 1: but I want to show you the brand new thing

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Speaker 1: the Treasury is doing right now. But there's a lot

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Speaker 1: of ways they are getting in liquidity into the system,

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Speaker 1: and more specifically, there's certain types of assets that are

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Speaker 1: very sensitive to liquidity. So next week I'm going to

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Speaker 1: do a live presentation. I got about thirty charts probably

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Speaker 1: that I'll show all the different ways liquid get into

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Speaker 1: the system and more specifically, which of the assets are

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Speaker 1: the most sensitive and we move up the most If

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Speaker 1: you want to join me, it's free, it's live. Come

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Speaker 1: hang out, look at the presentation and join me live.

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Speaker 1: I'll answer all your questions live because you want to

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Speaker 1: know what this means and how to apply it. So

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Speaker 1: don't miss a chance to come hang out. There's a

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Speaker 1: link in the description down below. Hope to see you there.

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Speaker 1: But we can see that it's not a pivot. They're

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Speaker 1: getting liquidity into the system any way they can, but

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Speaker 1: right now there's a brand new way they're doing it,

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Speaker 1: and the government, the Treasury has eyed a brand new

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Speaker 1: thirty two trillion dollar pool of liquidity they're about to

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Speaker 1: tap into. Now, this is a pretty big deal, and

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Speaker 1: it's completely independent of anything the FED can do because

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Speaker 1: it's a government policy change. And I'm talking about homeowner equity,

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Speaker 1: all right. So the reason why a lot of analysts

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Speaker 1: have gotten this wrong. Some of the guys that I

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Speaker 1: really respect, like Harry Junior, for example, I've read five

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Speaker 1: of his books. His research is amazing, But they fail

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Speaker 1: to consider how many more tricks up the sleeve the

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Speaker 1: government the FED can have, and most people, including myself,

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Speaker 1: we didn't think about these things. These are things like

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Speaker 1: this is another trick up to sleep. Oh, let's tap

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Speaker 1: into homeowner equity. Let's inject that into the market. So

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Speaker 1: how are we doing that? But what we can see

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Speaker 1: is that what they've done is they filed a new

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Speaker 1: proposal Freddie Freddie Maack. So the government basically provides liquidity

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Speaker 1: for home loans through Fanny Freddie and now Jinny. Okay,

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Speaker 1: so these are like government back programs for mortgages. And

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Speaker 1: they file the proposal for a purchase of single family

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Speaker 1: closed in second mortgages. Okay, so they issue first mortgages,

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Speaker 1: but now they want to do second mortgages. That means

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Speaker 1: they want to allow all these homeowners that have equity

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Speaker 1: in their homes to tap into that equity, get it

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Speaker 1: out of their home, and start spending it into the market.

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Speaker 1: All right. Now, the agency that's going to approve this

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Speaker 1: is the Federal Housing Finance Agency, and it says right here,

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Speaker 1: Freddie Mack is to purchase certain single family closed in

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Speaker 1: second mortgages as a new product. Now that's a pretty

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Speaker 1: big deal. How does it get the thirty two trillion

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Speaker 1: dollars out there? Well, one thing that we can see

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Speaker 1: right here is the amount of homeowner equity. Okay, so

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Speaker 1: there was a little bit of equity in homes right here.

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Speaker 1: Obviously two thousand and six, two thousand and seven, before

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Speaker 1: the two thousand and eight crash, we had a lot.

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Speaker 1: But what we can see is from this peak right

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Speaker 1: here to the point right here, we've seen equity go up.

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Speaker 1: Here we had about fourteen point three and right here

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Speaker 1: today we're at about thirty two point three. So what

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Speaker 1: this means is that homeowner equity, the amount of equity

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Speaker 1: in homes has gone up by what is that one

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Speaker 1: hundred and thirty percent, So we're sitting at about thirty

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Speaker 1: trillion dollars of equity, which is amazing. So if we

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Speaker 1: can just pull some of those couple of those trillion

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Speaker 1: dollars out injected to the market, we can get more

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Speaker 1: liquidity and there's nothing that you can do about it. Now,

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Speaker 1: let's just take a historical view to understand what kind

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Speaker 1: of impacts this might have. So, for example, in two

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Speaker 1: thousand and seven, throw up, at the height of the

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Speaker 1: last bubble, before the you know, great fund of crash happened,

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Speaker 1: there was about seven hundred billion dollars of second loans outstanding. Okay,

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Speaker 1: to kind of set the preference. Now today we have

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Speaker 1: about only three hundred and fifty billion. So people haven't

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Speaker 1: been tapping into this for any number of reasons, partly

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Speaker 1: because the banks don't make them readily available. Back in

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Speaker 1: two thousand and five six seven, they were just trying

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Speaker 1: to get everybody as much money as they could. People

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Speaker 1: were going buying second third homes, all these different investments

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Speaker 1: with that money, or even living off of it, pools, cars,

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Speaker 1: whatever it may be. And so everyone's taking that money

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Speaker 1: to the tune of seven hundred billion. And even though

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Speaker 1: home prices have gone up, even though home equity has

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Speaker 1: gone up, the amount of outstanding seconds is actually half

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Speaker 1: of what it was before. Now it should have gone up.

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Speaker 1: What we can see since that time period of here

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Speaker 1: about two thousand and six two thousand and seven, home

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Speaker 1: prices have gone up by about seventy percent. Your home

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Speaker 1: is worth about seventy percent more than it was back

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Speaker 1: in two thousand and six or seven. But again, home

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Speaker 1: equity has gone up by about one hundred thirty percent,

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Speaker 1: but the amount of people tapping into that, like I said,

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Speaker 1: is about half of that. Okay, we can see here

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Speaker 1: Bank of America, which is one of the major leaders

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Speaker 1: and kind of providing these secondary mortgage loans cut their

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Speaker 1: mortgage loans, second loans from one hundred and fifty billion.

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Speaker 1: They had other books down to only twenty five billion.

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Speaker 1: So it is a massive amount of liquidity drain that's

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Speaker 1: come out of that. Now, this is sort of, like

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Speaker 1: I said, stuck liquidity, all right, thirty two trillion dollars

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Speaker 1: of it. The government, the Treasury, they want as much

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Speaker 1: liquidity into the system as they can, but they're sort

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Speaker 1: of being held back by the FED because the Fed's like, nope,

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Speaker 1: we need to get two percent inflation before we reducing

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Speaker 1: putting more money in. Now, what we can see is

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Speaker 1: that in twenty twenty two, if we want to start

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Speaker 1: to calculate how much liquidity could we really see maybe

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Speaker 1: this year coming into the market. Well, we know in

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Speaker 1: twenty twenty two about fifty percent of the mortgage loans

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Speaker 1: that we're done, or what we call non traditional banks

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Speaker 1: all right. Now. The reason why that's important is because

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Speaker 1: these non traditional financial institutions they don't have the assets

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Speaker 1: to keep this onto their books, so they have to

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Speaker 1: sell these loans in the secondary market to Fanny, Freddie

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Speaker 1: and Jenny. So they originate the loan and then they

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Speaker 1: sell it to the government. Basically right now. The reason

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Speaker 1: why that's important is because there's a very well oiled

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Speaker 1: machine on the back end for mortgage backed securities or mbs.

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Speaker 1: Now you might be familiar with mbs if you know

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Speaker 1: what happened in two thousand and eight, or maybe you've

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Speaker 1: watched that movie, The Big Short. If you haven't watched

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Speaker 1: that movie, The Big Short out, highly recommend it. And

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Speaker 1: so basically, they take these mortgage products and they package

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Speaker 1: them up into securities and they trade them, they sell

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Speaker 1: them on Wall Street. So that's already all built. There's

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Speaker 1: massive liquidity ready to absorb these mortgage backed securities if

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Speaker 1: it can only get there. And that's exactly what we're

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Speaker 1: talking about. So now with this proposal change, we can

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Speaker 1: package these up from the government, we can securitize them,

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Speaker 1: and they can be sold, bought and sold in Wall

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Speaker 1: Street and provide massive equity. Okay, so how much they're

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Speaker 1: talking about how much and how soon? But first let's

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Speaker 1: understand some of these impacts. So what is the potential

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Speaker 1: down sides of all this liquidy? I mean, there's obviously

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Speaker 1: the you know, most obvious answer, which is more liquidity

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Speaker 1: equals more inflation. Okay, so that's the battle right, the

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Speaker 1: FED doesn't want the inflation. The government, the treasury, they'll

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Speaker 1: take it. I'd like to know what you think about this.

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Speaker 1: I think that most people would rather have inflation and

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Speaker 1: still have enough money, you know, still have their jobs,

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Speaker 1: still see their home values, their stock values higher, and

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Speaker 1: just deal with higher prices. I think more people would

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Speaker 1: rather have that. Or would they rather see prices crashed

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Speaker 1: down and the prices of gas and food actually comes

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Speaker 1: down a little bit? Let me know, just comment down below.

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Speaker 1: Would you rather see inflation or would you rather see

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Speaker 1: asset prices higher in inflation or would you rather see

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Speaker 1: inflation going down? Let me know. I think they'll see

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Speaker 1: more more inflation, that's the obvious. But what are some

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Speaker 1: of the other unintended consequences. Well, for example, it's going

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Speaker 1: to put borrowers into more debt. So right now my

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Speaker 1: home is worth I don't know, three hundred thousand. I

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Speaker 1: ow one hundred and fifty five one hundred thousand of the debt.

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Speaker 1: But if I tap into some of that equity, my

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Speaker 1: debt levels go up. So now I have more debt.

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Speaker 1: But what's the problem with that, Well, more debt, more leverage,

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Speaker 1: more risk. So for example, if the market turns down,

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Speaker 1: maybe don't. I don't have any equity left in my house,

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Speaker 1: I can't sell it. So instead of being able to

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Speaker 1: sell my house, now maybe it goes into foreclosure. That's

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Speaker 1: a problem. We know that the elderly are very at

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Speaker 1: risk right now. They're being they're very susceptible to inflation,

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Speaker 1: and so they could be potential targets. We know costs

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Speaker 1: have gone through the roof. Homeowners insurance, for example, took

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Speaker 1: a big jump up here and it kind of stayed

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Speaker 1: at this new baseline. And here homeowners insurance is going up.

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Speaker 1: If you own a home, you know exactly what I'm

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Speaker 1: talking about. On average has gone up about eleven percent,

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Speaker 1: but in California, Florida, Texas, places like that, it's gone

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Speaker 1: up way more than that. And so what we know

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Speaker 1: is that we already have people sort of on the

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Speaker 1: brink here. We can see that right now today about

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Speaker 1: twenty three percent of consumer debt is held by the elderly.

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Speaker 1: Now that's a big number, that's actually doubled just since

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Speaker 1: nineteen ninety nine, and so the elderly are sort of

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Speaker 1: at risk in this environment. So they might be wanting

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Speaker 1: to tap into this but again, if anything were to

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Speaker 1: happen in the economy, these people could be at risk. Okay,

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Speaker 1: another potential risk of doing this is that we have

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Speaker 1: a weaker future. And so basically what we're doing with

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Speaker 1: debt is we're taking future value and pulling it in today.

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Speaker 1: But it makes the future. It makes tomorrow or next

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Speaker 1: year or five years more dangerous potentially. So we already

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Speaker 1: know that, Like I run up a credit card for

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Speaker 1: a vacation, but now I have to pay for that

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Speaker 1: in the future. So instead of future earnings going for

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Speaker 1: future spending, that future earning goes for the spending that

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Speaker 1: I already consumed. So that's a problem we know that

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Speaker 1: we already talked about. Seniors are already on shaky ground

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Speaker 1: and so they're susceptible to taking this money. But now

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Speaker 1: they're going to be even more fragile than the future. So,

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Speaker 1: for example, eighty percent of seniors right now are already

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Speaker 1: at great risk of financial shots. Eighty percent of seniors

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Speaker 1: cannot withstand a financial shock. That's a pretty big number,

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Speaker 1: and so if they take on even more debt, that's

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Speaker 1: going to make it even more dangerous for them. And

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Speaker 1: it's not just seniors. We can see forty nine percent

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Speaker 1: of Americans can't even afford a thousand dollars emergency, So

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Speaker 1: we add up more debt. Now their payments, their monthly

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Speaker 1: payments are higher, and they're going to be even more

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Speaker 1: susceptible to future shocks. And so if we had, you know,

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Speaker 1: some sort of a recession or home prices go down

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Speaker 1: in the future, we could see more foreclosures things like that,

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Speaker 1: And so that's one of the problems of doing this.

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Speaker 1: We have a potentially weaker future. But today we have

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Speaker 1: more money. Okay, now what do we do with this

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Speaker 1: information now that we have it as investors? That's the

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Speaker 1: big question that we're all watching and waiting. So when

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Speaker 1: we have more liquidity again, people spend more money, Asset

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Speaker 1: prices go higher. What are some of the ways that

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Speaker 1: we'll see this actually, you know, manifest in asset prices.

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Speaker 1: So for one, real estate obviously, if I can tap

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Speaker 1: into this money from my real estate like we saw

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Speaker 1: in two thousand and five sixty seven, use that money

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Speaker 1: to go buy more real estate, so we can unlock

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Speaker 1: some of that money. But also what we'll do is

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Speaker 1: it will open up more loan origination. So the government

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Speaker 1: is basically going to be talking to these lenders and

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Speaker 1: easing restrictions so we could see more liquidity, more loan origination,

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Speaker 1: things like that. We can see right here a headline

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Speaker 1: on Financial Times. Markets should be buoyed, should be pushed

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Speaker 1: up by increased liquidity this year in twenty twenty four,

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Speaker 1: because conditions are becoming easier in the global economy with

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Speaker 1: an expanding pool of cash, more cash, more spending, more

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Speaker 1: asset prices going higher, so real estate will be doing that.

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Speaker 1: But we also know this is only the first step

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Speaker 1: in this. So like RFK who's running for president right now,

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Speaker 1: he's talking about bringing back a three percent mortgage, right

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Speaker 1: we know Biden's running on a campaign to forgive student

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Speaker 1: loan debt, and so we're going to see more and

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Speaker 1: more of this government assisted liquidity, right, not from the Fed,

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Speaker 1: but from the government, whether it's giving people zero down mortgages,

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Speaker 1: low down mortgages, three percent mortgages, it's forgiving mortgage debt,

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Speaker 1: whatever it is, We're going to continue to see more

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Speaker 1: and more of that, which again equals more liquidity, more

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Speaker 1: asset prices going higher. Okay, what else we know that

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Speaker 1: global liquidity signals for bitcoin and other risk assets. So

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Speaker 1: risk assets are very susceptible, very sensitive to this liquidity.

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Speaker 1: Bitcoin is sort of the canary and the coal mine

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Speaker 1: that kind of moves before everything else. And so keep

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Speaker 1: your eye on bitcoin, keep your eye on tech stocks

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Speaker 1: things like that. Also, you know, it should be pretty

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Speaker 1: good for the economy. People will have money to be spending.

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Speaker 1: This is what I'm expecting now. If you want to

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Speaker 1: really understand liquidity a little bit better and understand exactly

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Speaker 1: where it enters the system and wish assets move first

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Speaker 1: off of that, Like I said, join me live. I

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Speaker 1: have about thirty charts, will break down. I'll show you

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Speaker 1: exactly how you should be watching for this liquidity, and

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Speaker 1: then we'll talk about the assets that are most susceptible,

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Speaker 1: most sensitive to this and what I'm doing about that.

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Speaker 1: And like I said, it's all live, so you can

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Speaker 1: ask me all the questions, you can learn how to

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Speaker 1: implement this yourself. There's a link down below. I'd love

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Speaker 1: to see you there, But let me know what you

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Speaker 1: think about this latest move that the government has a

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Speaker 1: Are you surprised another trick up their sleeve or are

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Speaker 1: they running out soon? I'd love to know what you think.

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Speaker 1: Leave me a comma down below. Of course, as always,

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Speaker 1: give me thumbs up if you like the video. If

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Speaker 1: you don't, you can give me thumbs down. That's okay,

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Speaker 1: but at least tell me why in the comics down below,

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Speaker 1: and that's what I got, all right, to your success,

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Speaker 1: I'm out.