Trump Just Triggered The Second Biggest Stimulus In US History (And You're Paying For It)

0:00 President Trump is engineering the second largest stimulus in history.

0:03 But this time it's not with stimulus checks.

0:06 It's with the Federal Reserve Bank and your mortgage.

0:08 Let me explain.

0:09 On May 15th, Kevin Wars will be the new chairman at the Federal Reserve Bank.

0:13 This is going to have a direct impact on our economy,

0:16 the housing market, and your mortgage.

0:17 But you have to understand how this works

0:19 because although it's called the Federal Reserve Bank,

0:22 it's actually not a bank because you and I can't go there to deposit money.

0:26 It's not a reserve because it's not sitting

0:28 on any cash reserves and it's actually not federal.

0:31 It says so on its website.

0:33 And the reason why that's so important is because the United

0:37 States government cannot tell the Federal Reserve Bank what to do.

0:42 But because the current chairman at the Federal Reserve Bank,

0:44 his name is Jerome Powell,

0:46 his term is expiring on May 15th, that means that our government,

0:50 which is led by President Trump, gets to appoint a new chairman at the Federal

0:54 Reserve Bank by the name of Kevin Worsh.

0:57 And the reason why that matters so much for our economy and the housing

1:00 market is because the Federal Reserve Bank has the ability to do two things.

1:04 Number one, it can set interest rates,

1:06 meaning it can cut interest rates or raise interest rates,

1:09 and it can print money.

1:11 The second reason why this is so important

1:12 is because President Trump has made it very

1:14 clear that his appointee at the Federal Reserve

1:17 Bank is going to do what he wants.

1:20 Take a listen.

1:21 Is there any doubt in your mind that interest rates are going to be lowered?

1:25 Not much.

1:26 So, it's pretty clear what President Trump wants.

1:28 He wants lower mortgage rates,

1:29 which will make buying a house more affordable and create a refinancing boom.

1:33 But he's already started to take steps to start

1:36 making this happen without the Federal Reserve Bank.

1:39 For example, he has demanded that Fanny May

1:41 and Freddy Mack go out and buy $200 billion

1:45 in mortgage back securities as a way to already

1:48 start moving interest rates and mortgage rates lower.

1:50 There's just one problem in today's economy where we already have

1:54 an inflation problem and now we're facing these high oil prices.

1:57 On top of that, you can't just cut mortgage

1:59 rates without causing pain somewhere else in the economy.

2:03 And that's why in this video, I want to break down what the plan is,

2:06 and also what this means for your money, your dollar,

2:09 your investments, but also how this can create investment opportunity.

2:13 That way, you can get ahead of this shift.

2:15 So, make sure you stick with me until the end of this video.

2:17 Let me start by laying the foundation.

2:18 Everybody knows that housing prices have jumped up a lot over the last 6 years.

2:22 And if you went out to buy this half

2:24 a million dollar house right here and you put down 20%,

2:27 meaning you put down $100,000 and you

2:29 financed the other $400,000 with a mortgage,

2:33 you got a 30-year fixed rate mortgage and it was at 7% a year,

2:39 that means your monthly mortgage payments would be $2,661 a month.

2:46 But if mortgage rates were to fall,

2:48 you could save a lot of money on your mortgage.

2:50 If mortgage rates fell to 5.5%,

2:52 well now your mortgage payment would fall to $2,271 a month.

2:58 And if mortgage rates fell all the way down to 4.5%.

3:01 That means your mortgage payment would fall

3:03 to around $2,26 a month, which means yes,

3:08 you'd be saving a little bit over $600 every single month,

3:12 more than $7,000 a year.

3:13 This is the first reason why President Trump says that the United

3:16 States should have the lowest interest rates of any developed country on Earth.

3:20 Take a listen.

3:21 But we should be paying the lowest interest rate of everybody.

3:24 I hope Scott's listening to this because we

3:27 should be paying the lowest interest rate of everybody.

3:30 Without us, most of the countries don't even work.

3:33 Well, let me let you in on a little secret.

3:34 When you hear the president and the Federal

3:36 Reserve Bank talking about lower interest rates,

3:38 everybody focuses in on this, the housing market.

3:42 but they're focused in on something completely different.

3:45 They're focused in on the economy and the national debt.

3:48 So, let me just finish talking about the housing market,

3:50 then let's go a little bit deeper because what they're

3:52 talking about has a much bigger impact on your money,

3:55 your investments, and your wealth that you want

3:57 to pay attention to because in the housing market,

3:59 it's very clear how interest rates,

4:01 more specifically, mortgage rates, can drive buying decisions.

4:05 When mortgage rates fall, buying a house becomes more affordable because when

4:08 you borrow the $400,000 at a lower mortgage rate,

4:11 you get to save money every single month.

4:13 So, it allows people to go out and buy

4:14 that house and pay less money every single month,

4:16 assuming that you don't go out and now buy

4:18 a bigger house because mortgage rates fell even more.

4:21 The concern is if mortgage rates do fall,

4:24 more people will want to start buying houses.

4:27 And if we don't have more houses for sale,

4:29 now all of a sudden we have the same supply of houses but a lot more buyers.

4:34 And if you have more buyers competing for the same houses for sale,

4:38 now these buyers have to compete against each other with more bidding wars.

4:42 These bidding wars can then drive housing prices higher,

4:44 which can then create a bigger inflation problem.

4:47 That's one concern.

4:48 But let me move on now to number two because

4:50 that will help tie all of this together in the economy.

4:54 Let me ask you a simple question.

4:55 Who gets richer every time the government creates a new economic

4:58 plan or every time the Federal Reserve Bank changes their policy?

5:02 Whether it's cutting interest rates,

5:03 raising interest rates, printing money or not,

5:06 the person that gets richer is not the average person.

5:08 It is the investor.

5:10 And that's the thing that you want to pay

5:12 attention to because all of this will create opportunities.

5:14 By the way, if you want to see how all these changes

5:16 by the president and the Federal

5:18 Reserve Bank can create investment opportunities,

5:20 I did put together a new and free

5:22 investing master class where I walk you through how

5:25 you can get started as an investor and find

5:27 hidden investment opportunities before they hit the headlines.

5:30 I'll show you the exact framework that my firm

5:32 and I use to research investment opportunities.

5:34 It's a completely free master class.

5:36 And when you sign up for the master class,

5:38 you're also going to get access to market briefs,

5:40 which is my newsletter for investors completely for free.

5:42 So, if you want to get the investing

5:44 master class and market briefs all for free, all you have to do is sign up and I

5:47 have the link for you down in the description below.

5:49 Now, let's talk about the economy.

5:50 and more specifically is talk about how these changes

5:53 in the housing market with interest rates are going

5:54 to play an impact on the economy because there's

5:57 a lot of concerns about the economy right now.

5:59 We have concerns about the economy slowing down partially due to AI,

6:03 partially due to the conflict in the Middle East, partially due to oil prices.

6:06 But the thing that you have to understand is no

6:09 president wants to see the economy slow down under their watch.

6:13 And our economy runs on spending.

6:16 The more money you spend, the more money somebody else makes.

6:19 If you don't spend money, the economy doesn't grow.

6:22 Like if you walk into Chipotle today and you say, "You know what?

6:24 I was going to buy the extra guac and I was going to buy the extra meat,

6:28 but I don't have any money because I paid extra money at the gas station,

6:33 so I can't buy the Chipotle." And you walk out.

6:35 That's not good for Chipotle.

6:37 That's not good for the economy.

6:39 Well, when we take a look at how

6:41 the housing market and interest rates impact the economy,

6:44 the first thing that happens is that when interest rates fall,

6:47 more housing transactions happen.

6:50 More people buy houses.

6:51 That means more realtors get paid.

6:53 That means more mortgage bankers get paid.

6:55 That means more title companies get paid.

6:57 And that means these people now have more money to go out and spend.

7:00 But it goes a whole lot deeper than that.

7:03 Because what we saw happen over the last six years, especially post pandemic,

7:06 is that housing prices have shot up in certain areas by around 50%,

7:11 other areas more, other areas less.

7:13 But we've seen housing prices go up by around 50% over the last 6 years.

7:18 That means if somebody bought a house in 2020, 2021, 2022, 2023,

7:23 even 2024, chances are you're sitting on some equity in that house.

7:28 And if your house has gone up and you have equity in your house,

7:32 it doesn't actually do anything for you because it's just this invisible number.

7:36 I bought my house for $600,000.

7:38 Now it's worth $650,000.

7:40 Doesn't really mean anything.

7:42 But if mortgage rates fall, we could then see a boom in refinancing and we could

7:50 see a boom in people pulling money out of their house.

7:53 I'm not saying this is the right thing to do.

7:55 I'm saying this is what could happen because we've seen

7:58 this happen in history and history doesn't exactly repeat itself.

8:02 It does rhyme.

8:03 Let's just take a look at what happened right after the pandemic.

8:06 Between 2020 and 2021,

8:07 we saw a refinancing boom where 14 million Americans refinanced

8:12 their mortgages and they pulled out about 460 billion in cash.

8:17 That meant this was new money that was entering the economy.

8:21 Because what we know is that when most

8:23 people get this extra cash, they don't save it.

8:26 They don't invest it.

8:27 They spend it.

8:28 I'm not saying that's the right thing to do.

8:29 I'm saying that's what's happened in the past.

8:31 We saw it happen between 2020 and 2021.

8:34 Well, what's happened between 2020, 2021, and 2026?

8:39 Housing prices have gone up even more.

8:41 Mortgage rates have gone up even more.

8:43 So, a lot of people have bought houses over the last number of years.

8:46 They have houses that have equity on them

8:48 and they have very high mortgage rates.

8:50 Well, if mortgage rates were to fall,

8:53 there's a very high chance that many people would now say,

8:56 "Oh, I'm paying 6 and 1 half 7%

8:58 of my mortgage if I can refinance at a lower mortgage.

9:02 Maybe I'll do that to save money every single month,

9:04 or I can also pull some cash out of my house.

9:07 That way, I have more money to spend."

9:09 This is why companies like Home Depot and Lowe's have

9:12 been begging the Federal Reserve Bank to cut interest

9:14 rates aggressively because they know that when mortgage rates fall,

9:18 people have more money to refinance their basements,

9:20 they have more money to remodel their kitchens,

9:22 but they've been struggling because people are paying so

9:25 much money on their mortgage that they're not going out

9:27 and doing those remodeling operations that they would if

9:31 mortgage rates fell and people did these cash out refinances.

9:34 So, here's what we know as of now.

9:36 President Trump has been demanding

9:37 that the Federal Reserve Bank cut interest rates, but the Federal Reserve Bank,

9:41 led by the current chairman, Jerome Powell, has said no.

9:45 Well, President Trump can't tell him what to do

9:47 because the Federal Reserve Bank is not federal.

9:50 But Jerome Powell is stepping down as the chairman on May 15th,

9:54 which means President Trump gets to appoint

9:56 the new chairman at the Federal Reserve Bank,

9:58 and he has decided to appoint somebody by the name of Kevin Worsh.

10:03 Well, President Trump has also made it very clear that he

10:06 would not appoint somebody who would not do what he wants.

10:09 What does President Trump want?

10:11 He wants very low interest rates.

10:13 Well, what actually happens is a different story,

10:16 but we know as of today that President Trump wants these lower interest rates.

10:19 And he says that he would not have appointed Kevin Worsh

10:22 if he did not agree to do those lower interest rates.

10:26 Well, the first point of these lower interest rates is

10:28 to drive down mortgage rates to make buying a house more affordable.

10:32 because right now buying a house is very difficult and the average age

10:36 of a first-time home buyer is going up to around 40 years old.

10:40 And so, President Trump wants to do that.

10:42 Well, the reason why that matters now

10:44 for the economy is because if more transactions happen,

10:46 that means realtors make more money,

10:48 mortgage bankers make more money, title companies make more money,

10:51 and the concern is if mortgage rates fall,

10:54 but we don't have a lot more houses for sale,

10:57 that could drive up houses and make the inflation problem worse.

11:00 I don't want to focus on that too much.

11:03 But the other part on the economic side is

11:06 that if people have the ability to refinance their houses,

11:10 this could create a spending boom in our economy because there's

11:14 a lot of equity that people are sitting on and they

11:17 could start pulling out this equity and then they could use

11:20 that to spend because we've seen this happen in the past.

11:22 Again, there are risks here.

11:25 Number one, there's a big concern about inflation.

11:27 Cutting interest rates can make the inflation problem worse,

11:30 which is something that I'll talk about in just a little bit.

11:32 The other part is if people don't have

11:35 equity in their houses and home prices fall,

11:37 that could create a risk of a foreclosure.

11:40 That's what we saw happened during the 2008 crash

11:42 that people didn't have any equity in their houses,

11:45 housing prices fell, and now people were underwater on their houses.

11:48 That's the second concern.

11:49 But the biggest reason why the Trump administration is so aggressively wanting

11:54 these lower interest rates is actually not because of the housing market.

11:57 It's actually not because of the economy is because of this, our national debt.

12:02 So let me explain.

12:02 Let me quickly show you how the United States government works.

12:05 Because the United States government has one source of revenue.

12:09 It's tax dollars from taxpayers.

12:11 And it is expected that we're going to generate around $5 trillion in taxes.

12:17 Well, after the government collects that money,

12:19 they're going to go out and spend that money.

12:21 And you might think that the government is running

12:23 a smart balanced budget that if you're collecting $5 trillion,

12:28 maybe you spend $4 trillion and you save a trillion.

12:31 But that's not what happens.

12:33 In fact, the government also doesn't spend

12:35 $5 trillion and live within their means.

12:39 Instead, what the government does is they

12:41 spend all $5 trillion that they generate

12:43 in taxes and then they're expected to spend

12:45 an additional $2 trillion on top of that.

12:48 So, it is expected that the government is

12:49 going to spend something like $7 trillion in 2026,

12:53 which means there's a $2 trillion gap.

12:56 And that $2 trillion gap then has to be covered through debt.

13:01 That means the government is living off

13:03 of their credit cards because the government has

13:06 to go about $2 trillion into debt every year just to pay all of their bills.

13:11 Now, the reason why this matters and ties

13:12 into everything that we just talked about is twofold.

13:15 Number one, what do we say in the economy?

13:18 What drives the economy?

13:20 It is spending.

13:21 Well, who is the largest spender in our economy?

13:24 It's not mere you.

13:25 It's not Apple or Nvidia or Tesla.

13:28 It is the United States government.

13:30 So when the government spends money,

13:32 it's actually good for the economy because when the government

13:35 goes out and they create a contract with a company,

13:38 that company can go out and hire people.

13:40 They can go out and do business and spend money somewhere else.

13:43 So the government is creating jobs when they do this.

13:46 The problem is the government is spending money that they don't have.

13:51 And so when they go into debt to borrow this money, that creates two problems.

13:57 Problem number one is interest.

14:01 And the reason why that's a problem is because

14:04 the fastest growing expense for the United States government,

14:07 it's not our military, it's not our health care,

14:10 it's not social security, it is interest payments on this debt.

14:14 In 2026, the government's going to spend

14:16 something like a trillion dollar in interest payments.

14:21 Well, why does that matter?

14:22 because they only collect $5 trillion in taxes,

14:26 which means about 20 cents of every dollar you pay

14:28 in taxes is going to go directly just to interest payments.

14:31 It's not for your healthcare.

14:32 It's not for your retirement.

14:33 It's not for infrastructure or the military.

14:35 It's just to pay back yesterday's expenses.

14:38 The second reason why this is a problem is because when this debt happens,

14:43 a big chunk of this debt is coming from the Federal Reserve Bank.

14:48 Well, let's go back to what we said in the beginning of this video.

14:51 The Federal Reserve Bank is not a bank.

14:53 It's not a reserve and it's not federal.

14:54 If it's not a reserve, they're not sitting on any cash.

14:58 So, how do they actually lend money to the United States government?

15:02 They have the ability to print money.

15:04 So, now when the Federal Reserve Bank can print this money,

15:08 that means more money, more dollars are being created out of thin air.

15:13 Well, that's all good except you can't create more wealth.

15:16 You can create more paper dollars,

15:18 but you can't create more wealth out of thin air.

15:21 So when the Federal Reserve Bank prints this money,

15:24 the value of each individual dollar goes down

15:27 causing the prices of things to go up.

15:29 That's what inflation is.

15:32 So anytime we hear of more government spending, think of inflation.

15:37 Now, why does this have to do with interest rates

15:39 and the housing market and everything that we've just been talking about?

15:42 And the reason why is because of this.

15:46 these interest rates.

15:48 If the Federal Reserve Bank now can cut interest rates,

15:54 that means not only is your mortgage going

15:57 to become less costly because you can refinance,

16:00 but the United States government can also refinance.

16:02 So, we know that the government is going

16:04 to spend about $2 trillion that they don't have.

16:06 This deficit then rolls over into something called our national debt.

16:12 And right now we have approximately $39 trillion of national debt.

16:16 This is what we owe interest on.

16:19 And this is where we have to pay about a trillion dollars a year in interest.

16:24 Well, if interest rates were to fall by 1%,

16:28 that means the United States government would then save hundreds

16:32 of billions of dollars a year in these interest payments.

16:36 And if the government is saving hundreds of billions of dollars a year,

16:39 that means the government could in theory then

16:43 borrow less money because that means their spending fell.

16:47 Or what's probably more likely is then

16:51 the government could go out and spend more

16:53 money because now they have three $400 billion

16:56 that did not get spent on interest payments.

16:58 Now they can take the $3400 billion and spend it somewhere else

17:01 to help boost the economy because often times what we've seen happen,

17:05 it doesn't matter if it's a Republican or Democrat,

17:08 governments generally don't like to slow down spending.

17:11 And the reason why they don't want to slow down spending if

17:13 they don't have to is because that slowdown of spending hurts the economy.

17:18 Well, spending is good for the economy,

17:21 but when you spend on debt that has to be printed,

17:24 that makes the inflation problem worse.

17:26 So yeah, you create more jobs,

17:28 but those jobs aren't paying enough to keep up with the cost

17:31 of living because you have to print money to pay those jobs.

17:34 And that's where we are facing a very tough problem because

17:37 either you can fight a slowing economy or you can fight inflation.

17:41 You can't do both at the same time because the way that you fight inflation is

17:45 by raising interest rates and the way that you

17:47 fight a slowing economy is by cutting interest rates.

17:51 That's the dilemma.

17:53 But if the Federal Reserve Bank now can cut interest

17:56 rates and the government can save money on this debt,

18:00 well, now people think that maybe

18:03 our national debt problems would be less problematic.

18:07 But that's not what we've seen happen throughout history.

18:10 And like I said before, history doesn't exactly repeat itself.

18:13 It does rhyme.

18:14 Right now, we have a debt problem.

18:17 And the way that we've solved it in the past was not by spending less money.

18:21 It was actually through a concept called financial repression which

18:25 meant the government is going to spend even more money.

18:28 It made savers poorer in the United States, but it made the government richer.

18:32 Let me show you how it worked.

18:33 In 1946, after World War II, the United States was facing a very similar

18:38 debt crisis because the government had to go

18:40 into deep debt to save us from the Great Depression and also fund the war.

18:45 So in 1946 we had national debt

18:47 of around $271 billion while our economy measured through

18:51 a number called GDP was $222 billion which

18:54 meant our debt to GDP ratio was about 121%.

19:00 Which means we as a country had more debt than we did the size

19:03 of our economy and this is where people

19:05 started to get concerned about this debt crisis.

19:08 Now to solve this debt crisis the government

19:11 didn't spend less money to pay off the debt.

19:13 Instead, what they did was they borrowed more

19:16 money through this concept called a financial repression.

19:18 Take a look at what happened by the time

19:20 we got to 1974 when the financial repression ended.

19:23 By 1974, the national debt didn't go down.

19:26 It went up to $475 billion.

19:29 But the economy grew even faster from 222 billion to about $1.5 trillion,

19:36 which meant that now our debt to GDP ratio fell

19:39 from 121% all the way down to right around 25%.

19:45 This is that big factor that people pay attention

19:49 to because it's not how much debt you have,

19:51 it's how much debt you have relative to your assets.

19:54 If somebody says, "Hey, you have a million dollars of debt.

19:56 Is that a lot or a little bit?" Well, if all you have is a $300,000 house

20:01 to your name and you have a million dollar of debt, that's a lot of debt.

20:05 But if you have a $100 million house that's completely

20:07 paid off and you have a million dollars of debt,

20:10 well, now the million dollar of debt doesn't feel as bad.

20:13 And that's what's happening here.

20:14 The debt grew, but the collateral, the assets, the economy grew even faster.

20:19 And so the debt to GDP ratio was only 25%.

20:23 Well, take a look at where we are today.

20:24 We have over $39 trillion of national debt which means

20:27 yes our national debt exploded and our economy grew as well.

20:31 We have a $30 trillion large economy.

20:34 Now you can see our national debt is larger than the economy

20:36 but now our debt to GDP ratio is hovering at right around 130%.

20:42 It's even worse than where we were back in 1946

20:45 after World War II when you compare apples to apples.

20:48 The question is are we going to see this financial repression happen again?

20:51 And how did it work?

20:53 And for this financial repression to work, two things happen at the same time.

20:57 Rule number one, you need low interest rates.

20:59 More specifically, you need low interest rates

21:01 that are lower than the inflation rate.

21:04 Sound familiar?

21:05 President Trump says he wants lower interest rates.

21:07 President Trump says he's going to appoint somebody

21:09 at the Federal Reserve Bank who's going to lower interest rates.

21:12 Well, inflation is going up.

21:14 Well, let's think about that just for a second because remember,

21:18 the United States government has to borrow money in order to do their spending.

21:22 And if interest rates go down, two things happen.

21:25 Number one, that means the government is going to pay less money in interest,

21:28 but that means they're going to pay less money

21:30 to the people that are lending money to the government.

21:32 If, hypothetically, inflation is 5%.

21:37 And this investment opportunity is paying you 2% a year,

21:40 that means if you get 2% a year on your money, but inflation is 5%,

21:45 you are losing 3% every single year that you invest your money.

21:50 Because if your money is growing lower than what inflation is,

21:54 your money is essentially losing value.

21:56 That's why so many people have become poorer since the pandemic

21:59 because their salaries did not keep up with the inflation rate.

22:02 Their savings did not keep up with the inflation rate.

22:05 Well, why would anybody lend money to the United States

22:09 government if they're getting a rate that's lower than inflation?

22:13 And that's the first part to this financial repression.

22:16 The government has to be able to borrow

22:18 money at a rate that's cheaper than inflation.

22:20 Rule number two is the government almost forces

22:23 people to lend money to the United States

22:25 government because the reality is people don't want

22:28 to invest money when you're guaranteed to lose.

22:30 If inflation is 5% and this investment is paying you 2%,

22:34 nobody's going to make that investment unless you have no

22:36 other opportunities or unless you're being forced to do that.

22:40 And what we saw happen between the 1946 to 1974 era

22:44 was that the government put in rules that didn't require you.

22:47 It didn't require pension funds.

22:49 It didn't require insurance companies.

22:51 It didn't require the banks and institutions to lend

22:54 money to the United States government, but it almost did.

22:57 It enticed you to do so in a way that if you didn't, you would be hurting.

23:02 So the government created laws that enticed people to lend money to the United

23:06 States government because you would be hurting if you did not do that.

23:11 So could we see new laws by the government that entice companies,

23:17 banks, pension funds, institutions, regular people to lend money

23:21 to the United States government and lose money?

23:24 Who knows?

23:24 Only time will tell.

23:25 But what we know is that we've seen it happen in the past.

23:28 And here's why this matters.

23:30 Because now if the government can borrow money lower than the inflation rate,

23:34 what that means is now the government is essentially borrowing money for free.

23:39 And if the government can borrow free money,

23:40 well then they can spend more money in the economy.

23:43 Well, now you can see where this is going

23:44 because now if the government is a larger spender

23:46 in the economy and the government has more money

23:48 to spend because they can borrow money for free,

23:51 well that means more money goes into the economy.

23:53 And that's what we saw happen here.

23:55 The debt grew.

23:56 It didn't shrink.

23:57 The debt actually grew pretty significantly.

23:59 But then because the government was able to spend

24:01 money into the economy and get that money for free,

24:04 we saw the GDP our economy grow even

24:07 faster which helped shrink the debt to GDP ratio.

24:11 And this might be something that we could be seeing in the future.

24:14 Again, we don't know exactly what's going

24:15 to happen because nobody has a crystal ball.

24:18 But this is the talk that we're starting to see happen.

24:20 We're starting to see more talk about the Federal Reserve

24:23 Bank cutting interest rates even though inflation is a problem.

24:26 Well, if the Fed is cutting interest rates even though inflation is high,

24:29 how is the government going to get anybody to lend them money?

24:34 Because when you ask Kevin Worsh that question,

24:35 who is going to be the new chairman at the Federal Reserve Bank,

24:38 he says that there's going to be enough private

24:40 demand to continue lending money to the United States government.

24:44 Well, I don't know many people that like

24:46 to lose money when they invest their money,

24:48 but maybe there's going to be some changes coming.

24:50 Again, we don't know what's going to happen,

24:51 but those are the things that you want to pay attention to because

24:55 if you have interest rates at a rate that are lower than inflation,

24:59 savers get hurt, people that are relying on their paycheck get hurt,

25:03 people that are holding on to cash get hurt, but the investors become wealthier.

25:08 That's why you want to understand this.

25:09 Again, if you want to learn how

25:10 to be an investor or find better investment opportunities,

25:12 I have my investing master class for you down in the description.

25:15 But this is where let's go a little bit deeper and talk about

25:18 how this would create particular opportunities

25:20 because now we see what's going on.

25:22 We see what President Trump and the Federal

25:23 Reserve Bank have talked about with lower interest rates.

25:26 We see what the impact can be in the housing market.

25:28 We see what the impact could be in the economy because they want

25:31 to see more spending happen into the economy to help boost the economy.

25:35 And now we understand this impact on the national debt.

25:38 Now let's talk about what does this mean for you as an investor.

25:42 Again, I can't tell you what to invest in.

25:43 And I'm just a random guy on YouTube and I'm not a financial adviser.

25:46 Investing has risks.

25:47 You are never guaranteed to make money when you invest.

25:49 In fact, you will lose money at some point.

25:51 So, make sure you always do your own due

25:53 diligence and never blindly trust a random guy on YouTube.

25:57 Let me go over five different types of investment opportunities.

25:59 Again, my goal is not to tell you what to invest in.

26:01 My goal is to show you how you can start thinking like an investor.

26:05 Number one, I want to talk about is real estate.

26:07 We know that mortgage rates and the housing market have a direct correlation.

26:10 and that when mortgage rates go down, generally the housing market goes up.

26:13 And if again, we don't know what the Federal Reserve Bank is going to do,

26:16 but if the Federal Reserve Bank does cut interest rates aggressively,

26:20 that could drive down mortgage rates, which could benefit the housing market.

26:23 And there are many ways to play the housing market.

26:25 And let's talk about how you can do it through the stock market.

26:28 So, one way you could do that is by investing

26:29 in the broad United States real estate market through an ETF like VNQ.

26:33 This is an ETF created by Vanguard that's giving

26:35 exposure to the real estate market in the United States.

26:38 This is diversified real estate that's giving exposure

26:40 to multiple different industries in the real estate market.

26:43 If you want to get even more niche,

26:44 then you can take a look at something like XHB.

26:47 This is an ETF that's giving exposure to home builders in the United States.

26:50 The idea being that if mortgage rates go down,

26:53 then maybe homebuilders will be able to make more

26:55 money and build more houses and and do more stuff.

26:57 Another option on the home building side would be something like ITB.

27:01 That is an ETF that's giving exposure to the home construction side of things.

27:05 Again, if we start to see mortgage rates go down and construction goes up,

27:08 then generally ETFs like that would benefit.

27:11 Then idea number two is a hedge against

27:13 inflation because if the United States government now

27:16 is continuing to borrow money from the Federal

27:19 Reserve Bank and more money has to be printed,

27:21 well, the printing of money could make the inflation problem worse.

27:24 We're already starting to see inflation go up

27:27 partially due to the conflict in the Middle East,

27:29 partially due to the higher oil prices.

27:31 Well, that inflation hurts the value of the dollar.

27:34 And when people are concerned about inflation, they generally buy gold.

27:37 Now, the thing that I want you to understand about gold

27:39 is I don't like to look at gold as an actual investment.

27:42 I like to look at it as an alternative way

27:44 of saving money because the gold isn't actually producing any value.

27:48 It just sits there and it looks back at you.

27:51 Now, the other thing that I want you to understand

27:52 about gold is that gold prices don't always go up.

27:55 They go up and down.

27:56 Like when the 2008 crash happened, gold prices boomed.

28:00 They boomed until 2012 because there was so much money printing

28:03 happening and people thought that the dollar was going to collapse.

28:06 But then in 2012, it became clear

28:07 that our economy was recovering and the dollar was

28:10 going to be saved and gold prices crashed in 2012 and they stayed down in 2013,

28:15 2014, 2015, 2016, 2017, 2018 and 2019 until 2020 when the pandemic hit.

28:21 The money printer was turned back on and gold prices have boomed ever since.

28:25 If concerns about inflation go away, gold prices will also get hurt.

28:29 So just understand how gold works as a hedge against inflation.

28:32 And I don't like to think of it as a real investment.

28:35 But if you want to buy gold, you can buy the physical gold or you can invest

28:38 in a ETF that gives you exposure to paper gold.

28:41 One example of that is GLD.

28:43 Then idea number three are tips, tips.

28:45 This is something that became very popular during the co era because what

28:49 a tips is is it is a loan made to the United States government.

28:54 And at first you're going to hear that and say, "Just pit,

28:56 didn't we talk about how the government is not going

28:59 to be paying back high interest rates?" The answer is yes.

29:02 Because the way tips work is that these are inflationprotected treasuries.

29:06 The idea being is that the interest rate that you're going to get

29:10 on your loan is going to vary based off of what inflation is.

29:14 And if more inflation happens,

29:17 then you're going to get higher interest rates here.

29:20 Now again, you're not going to be getting

29:22 these huge returns to beat inflation and become wealthy.

29:24 The idea is if you wanted to put your money someplace

29:27 where you can be protected against higher inflation, this is one option.

29:32 Some people like it, some people hate it.

29:34 But I want you to understand the different types of options that there are.

29:36 So one way that you can get exposure to these inflation protected treasuries,

29:40 meaning inflation protected loans made to the United States government.

29:43 One way you could do that is through something like SCHP.

29:47 Option number four would just be to invest

29:49 your money into the United States economy.

29:51 Because if you believe that this is going to work

29:52 and the economy is going to grow very big,

29:55 well then one way that you can get exposure to the economy

29:57 is just to invest into something like the S&P 500.

30:00 The S&P 500 is a group of the 500 largest companies in the stock market.

30:04 And there are ETFs out there like SPY, SPY, that will give you exposure just

30:09 to the 500 largest companies in the stock market.

30:12 The nice thing about this is if one of those companies start to struggle,

30:15 they will get kicked out of the S&P 500 and replaced

30:17 by somebody else and you don't have to do anything.

30:19 For example, Sears, they used to be a part of the S&P 500.

30:23 Well, when they started to struggle,

30:25 they were kicked out and replaced by another

30:26 company and the Sears eventually went bankrupt,

30:29 but that didn't really matter if you were owning

30:30 the S&P 500 because when Sears started to struggle,

30:33 they were automatically kicked out and replaced by another company.

30:36 You don't have to do anything.

30:37 And then idea number five is if you say you know what

30:39 just fit I don't know I want to have more diversification outside

30:42 of the United States because all this sounds very risky to me

30:45 but you can also invest into countries that are not the United States.

30:48 Here are a couple examples.

30:50 There are many ways to do this but for example VA is

30:53 an ETF that gives you exposure to developed countries around the world.

30:57 These are the more larger the more established economies around the world.

31:01 Or if you wanted to be a little bit more risky,

31:03 you want to go to the more emerging market countries, the smaller countries,

31:06 the more nimble countries that have more risk for a potential return.

31:10 Now you can invest in something like VWO which is

31:13 going to give you more exposure to the emerging market countries.

31:16 Now you can go more specific.

31:18 You can invest in individual countries like India or China or Japan or Germany.

31:22 The idea is if you want some diversification outside the United States,

31:26 there are options to help you do that as well.

31:28 One of the most difficult parts about

31:30 running a business is thinking about taxes.

31:32 And I worked with good tax advisors and I worked with bad tax advisors.

31:35 And the bad tax advisors that I worked with were very cheap.

31:38 So I thought I was getting a good deal.

31:40 Turns out those cheap accountants ended up costing me a lot

31:43 of money because now I ended up paying more money in taxes,

31:46 more money in fees, more money in interest,

31:49 not to mention all the more time and headache that I had to spend

31:52 trying to figure out how much money I actually had to pay in taxes.

31:55 Now working with a good tax adviser who was also my sponsor commonwealth.

32:00 Now I meet with my tax adviser very regularly and we talk about how much money

32:04 I owe in taxes and what I can do strategically to pay less money in taxes.

32:09 That's the key difference between a good tax adviser

32:11 and a bad one is the tax strategy meetings.

32:15 Are you meeting with your tax advisor

32:16 to actually understand what your tax liability looks like

32:19 and what you can do based off of today's

32:21 tax law to potentially pay less money in taxes.

32:25 So, if you're a business owner,

32:27 you're making over a4 million a year and you want

32:30 to see if you can qualify to work with Commonwealth,

32:32 I'll put a link to their short form down in the description.

32:35 Again, this is only for business owners that are

32:37 making over a quarter million dollars a year.

32:39 But if that's you and you want to see

32:40 if you can qualify to work with Commonwealth,

32:42 again, I have that link for you down in the description.

32:45 So, what we talked about in this video is that President

32:48 Trump has appointed a new chairperson at the Federal Reserve Bank,

32:51 Kevin Worsh, and he's going to start on May 15th.

32:53 The reason why that matters is because the Federal Reserve Bank is not federal.

32:56 So, President Trump cannot tell the Fed what could do,

32:59 but because the current chairman is going to be stepping down,

33:02 at least as his role as the chairman,

33:04 President Trump gets to appoint somebody else.

33:06 And now he's appointing Kevin Worsh.

33:08 And why does that matter?

33:09 Because President Trump says he's not going to appoint

33:11 somebody who will not want to cut interest rates.

33:14 Now, the thing you want to understand is

33:16 that in order to actually cut interest rates,

33:17 the Federal Reserve Bank needs a majority vote.

33:20 There are 12 voting members at the Federal Reserve Bank.

33:22 And so now, President Trump has one more person, it seems, to vote in his favor.

33:28 Well, the original point of this video was

33:31 talking about the housing market because a lot

33:32 of people now are dialing to understand how

33:35 is this going to impact the housing market, mortgage rates, and everything else.

33:38 And if you cut interest rates by the Federal Reserve Bank,

33:40 that can bring mortgage rates down.

33:42 Well, as mortgage rates come down,

33:44 that can impact the housing market because now all of a sudden,

33:46 buying a half a million dollar house becomes more affordable

33:49 because the mortgage payments are going to cost you less.

33:52 Now, there's a concern that if there's not a new supply of houses that you're

33:57 going to have more buyers that want

33:58 to take advantage of the lower mortgage rates,

34:00 which could lead to a increase in buyers while supply stays the same,

34:05 which could cause prices to go up,

34:06 making the inflation problem that's already bad, even worse.

34:10 But then the second point of that is how this housing

34:13 market change could impact the economy because our economy runs on spending.

34:17 And as people buy more houses, that means mortgage bankers,

34:19 realtors, and title companies pay for money.

34:22 But that's not all.

34:23 We also know that when people are sitting on equity and mortgage rates fall,

34:27 people tend to do a cash out refinance and then

34:30 they take that new money and they spend it.

34:32 They don't save it, they don't invest it, they spend that money.

34:34 We've seen this happen in the past.

34:37 So if we start to see this increase in spending due to the lower

34:41 mortgage rates that could help stimulate

34:43 an economy that's been struggling because of AI,

34:46 because of inflation, because of oil prices.

34:49 Then the biggest concern that we talked about is the national debt problem

34:52 because right now the United States government has 39 trillion of national debt.

34:56 And that's because we're spending trillions

34:58 of dollars every year that we don't have.

34:59 Well, the fastest growing expense right now

35:01 for the government is our interest expenses.

35:03 because now 20 cents of every dollar that you

35:06 pay in taxes is going directly to interest.

35:08 There's two reasons why that's happening.

35:10 Number one, we keep spending money we don't have,

35:11 but we also have these higher interest rates.

35:14 The idea here is if interest rates fall,

35:18 that means now that the government can refinance the $39

35:21 trillion of debt and pay lower interest rates on that debt.

35:25 That could save the United States government hundreds

35:27 of billions of dollars a year in expenses.

35:31 That means now that the government could save that money,

35:33 pay off their debt, or spend that money in the economy.

35:36 If they spend that money in the economy, they can help grow the economy,

35:39 which ties into what we talked about with the financial repression,

35:42 because we've seen debt crisis in the past.

35:44 The last time we saw it this bad was after World War II.

35:47 And in 1946, the debt to GDP ratio was around the 125% or so.

35:53 Well, when the debt to GDP ratio was 120 or 125%, that was a big problem.

35:58 And that was when financial repression started.

36:01 That meant that the government and the Federal Reserve

36:03 Bank set artificially low interest rates lower than inflation.

36:07 And then the government forced or kind of forced entities to lend

36:11 money to the government at a rate that's lower than inflation,

36:14 which meant savers got poorer and the government got richer because now they get

36:19 to borrow money for free and they invested

36:20 in the economy which helped the economy grow.

36:24 Well, fast forward to the 1970s and now

36:26 our debt to GDP ratio fell to around 25%.

36:29 It's not that the debt fell,

36:31 the debt actually grew, but the economy grew even faster.

36:35 And that was because the government could borrow money for essentially

36:38 free and then they were then injecting that money into the economy.

36:41 Well, here we are today.

36:43 We were already hearing talks about

36:44 the government wanting to cut interest rates,

36:46 the Federal Reserve Bank wanting to cut interest rates.

36:49 We've already seen the high inflation.

36:51 If we then see more lending to the government when interest rates are low,

36:56 that could create the opportunity to repeat this type of financial repression.

37:00 Not to erase the debt, but to make the debt less valuable,

37:04 to inflate away the value of our national debt.

37:07 Now, will we see it happen?

37:08 We'll ultimately see more come May 15 onwards when we see what Keor

37:14 actually does because right now it's all based off of things that people say.

37:17 And what we know is that for every politician,

37:19 sometimes people say things that they don't actually do.

37:21 So, we don't know what's going to happen just yet,

37:22 but these are the things that you want to pay attention

37:24 to as an investor because it is going to change the economy.

37:27 It can change the value of the dollar.

37:28 It can change investment opportunities.

37:30 And so, then we talked about investment opportunities,

37:32 which could be investment opportunities into the real estate market,

37:35 whether it's the broad real estate market of the United

37:37 States or home builders or home construction companies.

37:40 Then, we talked about investment in gold

37:42 as a way to protect your dollar against inflation.

37:44 We talked about investing your money into TIPS

37:46 as a way to invest your money into inflation protected treasuries,

37:50 which is loans to the government.

37:51 We then talked about investing your money into the American economy,

37:54 something like the S&P 500, or we also talked about investing your money

37:58 into foreign countries outside of the United States.

38:00 So, there's a lot of things that are generally changing.

38:03 We'll be keeping you posted here.

38:04 I'll be keeping you posted on market briefs.

38:05 Again, when you sign up for master class, you'll get market briefs as well.

38:09 And if you got value out of this video, the best thank you is a referral.

38:11 So, if you could please share this video with a friend,

38:14 family member, colleague, a fellow investor.

38:15 That way, we can continue to spread this type of financial education.

38:19 Thank you.

38:19 The president of China just said

38:21 that the international order is quote crumbling into disarray.

38:25 Take a listen.