00:01 Hey everyone, I just did a video. This
00:03 is part two, which is that $7.4 trillion
00:07 of money is in money market funds. And I
00:10 just did a video of why I believe the
00:12 price of Bitcoin will be substantially
00:13 higher than
00:15 $95,000. Because it solves a real
00:17 problem real people have, which is that
00:19 their US dollars that they own are like
00:21 melting ice cubes. They are losing
00:23 between 4% and 9% of their value every
00:26 year. And that is not what money is
00:29 supposed to do. Money is supposed to
00:30 preserve its value so that your time and
00:32 energy buys you more in the future than
00:35 it does now. That’s what money is
00:36 supposed to do. Um, and the US dollar
00:38 doesn’t do that. It loses between 4% and
00:40 9% per year. And on years with high
00:44 inflation, it loses double digits per
00:46 year. So, I ended the last video by
00:48 saying you may be thinking that doesn’t
00:50 apply to you because you are storing
00:52 your wealth in other places like your
00:54 house or stocks or bonds or real estate
00:57 or something like that. But each of
00:59 those has a serious problem which is
01:01 that more of them can be made. Every
01:04 company that has stock can issue more of
01:07 its own stock out of thin air and sell
01:09 it to the marketplace. Every country uh
01:12 sorry, every company or country that
01:13 issues debt can issue more bonds. Uh
01:17 real estate, anybody can build more real
01:19 estate. And uh the stock market of
01:23 course represents all of those stocks
01:25 and bonds and all of the other things
01:26 you can trade. So the prices of a lot of
01:30 those assets are very high right now,
01:32 but I don’t believe that’s sustainable.
01:33 So anybody who has their money in stocks
01:36 and bonds and real estates and thinks,
01:38 well, the great thing about stocks,
01:39 bonds, and real estate is they always go
01:41 up. That is the kind of thinking that
01:44 preceded the 2008 recession. The reason
01:47 the recession was as sort of bad as it
01:50 was was the government had printed a ton
01:52 of money that had found its way into
01:56 stocks, bonds, and real estate. That had
01:58 pushed the prices of stocks, bonds, and
02:00 real estate way up, which had led people
02:03 for a significant period of time to to
02:06 believe that stocks, bonds, and real
02:08 estate did not go down. Well, of course,
02:11 they do go down because they can’t go up
02:12 any faster than companies get good at
02:15 making money.
02:16 So when you buy a stock or a bond or
02:18 real estate, what you’re paying for is
02:20 the future value of that thing today.
02:23 But if the if a company gets 1% better
02:26 at making stuff every year, but the
02:29 stock price goes up 5% every year, then
02:32 at some point you’ve got 4% of the stock
02:34 price every single year compounded on
02:36 itself. That represents value that’s not
02:39 really there. It’s value that uh has
02:42 essentially been baked into the stock
02:44 but is not reflected by the company’s
02:46 actual ability to make products or
02:48 service services. And what will
02:51 eventually happen in each of those cases
02:53 is each of those things will return
02:55 eventually to its underlying fundamental
02:58 value. Which means regardless of how
03:00 divorced Apple or Facebook or Google or
03:03 Microsoft or Amazon or Tesla or any
03:05 other company gets, if their stock price
03:08 gets completely divorced from the
03:10 underlying value of the company, which
03:12 is based on its ability to make money,
03:14 eventually there will be a massive reset
03:17 when all of those assets get repriced
03:20 back down to what they’re actually
03:22 worth. And that happens in a recession.
03:26 And we have not had a big recession in
03:27 the United States since 2008 and 2009,
03:31 which has led a lot of people to believe
03:32 since it’s been so long that we just
03:34 don’t have recessions anymore. And of
03:36 course, that is the kind of thinking
03:38 that typically happens right before a
03:40 massive recession. Now, I don’t know
03:42 when a massive recession is happening.
03:44 Could be could start well technically we
03:48 just had a negative uh quarter of GDP
03:50 growth, which is gross domestic product
03:52 growth. So sec technically we’re halfway
03:54 to a recession already because a
03:56 recession is defined as two backto-back
03:58 quarters of negative GDP growth. When
04:01 your GDP growth is negative that means
04:03 rather than grow your economy shrank. A
04:06 negative number means you shrank. A
04:07 positive number means you grew. And we
04:10 already had one quarter of negative GDP
04:12 growth. Uh meaning the the economy
04:14 already shrank for one quarter. So if it
04:16 shrinks for a second quarter it means
04:18 we’re in a recession. Although of course
04:20 they will just redefine what a recession
04:22 means and claim that we’re not in one.
04:24 But regardless, at some point the stock
04:26 market and real estate and everything
04:28 will go through an epic crash and then
04:30 everything will sort of return to its
04:32 underlying value and everybody will be
04:35 standing there scratching their head
04:36 thinking, “Wait, I spent all that time
04:38 and energy putting my wealth and savings
04:41 into stocks or bonds or real estate and
04:44 now they crashed and what am I supposed
04:46 to do now?” Um, so another place, which
04:50 is the title of this video, that people
04:52 are storing their wealth while they wait
04:54 to buy something in the future is in
04:56 money market funds. Money market funds
04:58 are essentially uh like storing your
05:02 money in cash, but you’re really they’re
05:04 really backed by government debt, and
05:07 the government pays an interest rate for
05:09 people to buy its debt. And so the banks
05:12 uh pass some of that money on to you. So
05:15 if the government is paying 4.5%
05:18 interest for people to uh buy its debt
05:21 and keep their dollars out of the
05:23 economy, the banks will turn around and
05:25 pay interest of let’s say 4%. So if the
05:28 government’s giving them 4.5% and the
05:31 banks are giving you 4%, that means
05:33 every dollar uh the banks get half a
05:36 percent in order for facilitating that
05:38 interaction. Uh and when you do that for
05:41 a large amount of money, you can make a
05:42 lot of money doing that. Well, right now
05:44 money market funds have $7.4 trillion
05:47 dollar in them. That is a vast insanely
05:51 large number. So what does that mean?
05:54 What that means is of the entire money
05:57 supply of all the dollars that are in
05:59 existence people have decided to put I
06:03 think I think money market funds are
06:05 counted in M2 and I think M2 is like you
06:09 know 20 let’s call it $22 trillion. So
06:12 of if you’ve got $22 trillion and seven
06:15 of that 22 two let’s round down to 21 to
06:18 make the numbers even. That means
06:20 roughly a 1/3 of the M2 money supply is
06:24 in money market funds. Again I’m not
06:27 sure that the math works exactly like
06:28 that. Maybe there’s other calculations
06:30 and considerations. If so that’s fine.
06:33 It’s still a massive number and it’s
06:35 still a very large percent regardless of
06:36 how you measure it. But anyway, $7.4
06:39 trillion are in money market funds. That
06:41 means the government is paying people to
06:44 keep $7.4 trillion uh not in stocks,
06:49 bonds, and real estates uh directly
06:52 because all of the people who are have
06:54 that money in that $7.4 trillion are
06:57 making a conscious decision to park
06:59 their money in a money market fund
07:01 rather than to park it in stocks or
07:03 bonds or real estate or Bitcoin. And
07:06 they’re doing that because they in my
07:09 opinion wisely understand that stocks
07:11 and bonds and real estate have a lot of
07:13 risk right now and that the prices of a
07:15 lot of those assets is really higher
07:18 than is justified by the underlying
07:20 fundamental value of those assets. So
07:23 what’s going to happen? Well, people are
07:25 only parking their money in money market
07:29 funds because they can make more than 4%
07:31 interest. And a lot of people when you
07:33 tell them that they can either risk
07:36 investing in the stock market with
07:38 stocks or bonds or they can invest in
07:40 real estate or they can just sit on the
07:43 sidelines twiddling their thumbs and the
07:45 government will pay them 4% interest. A
07:47 lot of people to the tune of $7.4
07:50 trillion have decided to sit on the
07:53 sidelines, twiddle their thumbs, make 4%
07:56 interest from the government and wait.
07:58 Now that is not sustainable. Why is that
08:01 not sustainable? because the economy is
08:03 under such a mountain I mean a mountain
08:07 of debt right now that the government
08:10 can’t cannot afford to keep interest
08:12 rates high because if they keep interest
08:15 rates high that means the interest they
08:16 have to pay on the uh $36 trillion of
08:19 debt that the US government owns uh owes
08:23 that means that the interest rate is
08:24 completely unaffordable on that and it
08:26 means all of the companies uh and
08:29 individuals that have debt are getting
08:31 charged charged much higher interest
08:32 rates as well because the government
08:34 right now sets interest rates for
08:36 everybody. It should not. Interest rates
08:38 should be set by the free market with uh
08:40 just the laws of supply and demand. That
08:42 would work much better, but that’s not
08:43 the way the US system works. So interest
08:46 rates in the United States are set by
08:48 the Federal Reserve. They set the
08:50 federal funds rate and some other key
08:52 interest rates and all the other
08:53 interest rates sort of flow from that.
08:56 So by h high interest rates right now
08:58 they’re making all of the debt in the
08:60 United States unaffordable. And you can
09:02 only do that so long before the system
09:04 starts cracking. And what happens is as
09:06 soon as the system starts cracking then
09:08 all of the people as they watch their 4%
09:11 interest drop to 3 and 1/2 and then
09:13 three and then two and a half and then
09:15 two and then one and a half and then one
09:17 and then.5 and eventually like we had
09:20 for quite a few years after the ’08
09:22 recession. I remember every time I
09:24 stared at my trust mark or my Wells
09:27 Fargo bank account, it told me I was
09:29 getting like
09:31 0.15% interest. Like, you know, onetenth
09:34 of 1% or 1 and a half ten of 1%. I mean,
09:38 some ridiculously I think at one point
09:40 it started with a zero. Like your
09:42 interest rate is like
09:44 0.015%. It was something ridiculously
09:47 small. Like literally regardless of what
09:49 the balance was, my interest at the end
09:51 of a quarter was like 4 cents. I mean it
09:55 was ridiculously low. So what happens
09:58 when the government inevitably has to
09:60 lower interest rates because all of the
10:02 debt in the system starts cracking? And
10:05 the answer is all of the people who have
10:07 that $7.4 trillion in money market
10:10 funds, they start to get antsy because
10:13 they were happy at 4%. And the reason
10:16 there is record high numbers in money
10:18 market funds right now is because you
10:22 can get 4%. Or even I think 4.16% is the
10:26 the latest number. You can get a little
10:28 more than 4% interest. Well, at a little
10:30 more than 4% interest, a ton of people
10:32 are willing to just park their money
10:33 there and forget about it. Well, what
10:35 happens when they’re not willing to do
10:37 that anymore? The answer is they have to
10:39 find an asset. they have to do something
10:41 with that money because they are now
10:43 unhappy that they’re getting 1% or 0.5%
10:46 or even zero on that money when the
10:49 government decides to stop just printing
10:51 free money uh or sorry when it starts to
10:54 stops offering that um sort of free
10:57 interest rate high interest rate for
10:59 them. Uh so what happens is that 7.4 4
11:01 trillion gets antsy and it comes
11:03 flooding back into the rest of the
11:05 economy with those people looking for
11:07 something that causes that uh has yield,
11:11 meaning something that goes up,
11:12 something that will give them the kind
11:14 of reser return they were hoping to get
11:16 by doing nothing. And so that money
11:18 ultimately flows back into other assets.
11:21 And so at at a time like that is
11:24 typically when Bitcoin performs the best
11:26 because people are looking for some way
11:29 to store their time and energy in a way
11:31 that offsets at least some of inflation.
11:34 And if inflation is between 4 and 7%
11:37 let’s call it 7% that the uh government
11:39 prints money out of thin air. If the
11:41 interest rate is uh sorry if the
11:43 inflation is 7% and you’re getting 4% at
11:46 least a little more than half of
11:48 inflation you’re getting back in the
11:50 form of interest. Now you have to pay
11:52 taxes on that. So it chops it back down
11:54 a good ways, but still you’re at least
11:56 getting something. Your inflation is
11:58 being partially offset by your interest
12:01 rate. Uh but as soon as the Federal
12:04 Reserve starts lowering interest rates,
12:06 that goes away and people start looking
12:08 for things to park their money in that
12:10 perform better than just the money
12:13 losing US dollar. And times like that is
12:15 when you uh you see gold, which is
12:19 already setting record highs, and
12:21 Bitcoin typically shoot for the moon
12:24 because people are looking for a place
12:25 to store their time and energy. Now,
12:28 does that mean that the only good time
12:30 to invest in something like Bitcoin is
12:33 when the Fed’s about to print a bunch of
12:35 money and people are about to get
12:37 unhappy in money market funds? The
12:38 answer is no, because a miniature
12:41 version of that is happening all the
12:42 time. All the time the government is
12:46 going through periods of bribing people
12:48 into keeping their money on the
12:50 sidelines with money market funds or
12:53 repo or reverse repo facilities and all
12:55 this complicated stuff that the Federal
12:56 Reserve does and the Treasury does and
12:59 eventually they can’t keep interest
13:01 rates high because of the debt burden
13:02 that they’ve encouraged everyone to
13:04 incur and so they have to print more
13:07 money. So, uh, I believe Bitcoin is
13:11 always the best way to preserve your
13:14 time and energy. Always the best way to
13:16 preserve your purchasing power. And as I
13:18 always say, it goes up and down on its
13:20 way up. I said the word up twice and the
13:22 word down only once. So, it’s sort of
13:24 two steps forward, one step back. It
13:26 goes up and down on its way up. But in
13:28 the long term, because Bitcoin is
13:30 finite, because it is scarce, because
13:32 there’s only 21 mill million Bitcoin
13:34 that will ever exist, it does not have
13:37 the problem of inflation that the US
13:39 dollar has. And it does not have the
13:42 problem of stocks and bonds and and real
13:44 estate, which is all of those can be
13:46 made more. Whoever controls each of
13:48 those things can make more of them. And
13:51 in each case, when you go a long period
13:54 of time without a market correction, the
13:56 the the market value of each of those
13:59 things tends to get way out of whack,
14:01 which is what I think is happening with
14:03 stocks and bonds and real estate right
14:05 now. I think the the values of those
14:07 that are assigned in US dollar terms are
14:10 out of whack with their underlying
14:12 value. If I did not think that was the
14:14 case, if I thought stocks or bonds or
14:18 real estate was a better investment than
14:19 Bitcoin, then I would not be 100%
14:22 Bitcoin right now. I would have an
14:24 allocation to other assets. The reason I
14:27 don’t have an allocation to any other
14:28 assets uh for uh I should say liquid
14:31 assets, things you can actually buy and
14:33 sell on a daily basis. The reason I have
14:35 zero allocation to stocks and bonds and
14:38 real estate other than of course I own
14:40 my house, but that’s not an investment.
14:42 that’s just so I can live in it. Um, the
14:44 reason I have no allocation to those
14:46 things is because I think all of the
14:48 stocks and bonds and real estate that I
14:50 could invest in right now is massively
14:53 overvalued. And there’s nothing when I
14:55 look around that I want to invest in.
14:58 And I’m not alone. For example, uh
15:00 Warren Buffett has a record 300 and more
15:04 than 350 billion dollars of cash that
15:07 he’s sitting on right now. he has
15:09 consistently been selling off assets in
15:11 his portfolio and just stockpiling cash.
15:15 Uh and he probably has a big chunk of
15:17 that sitting in money market funds or
15:18 something that’s earning 4% interest or
15:20 something like that. Uh but the reason
15:22 he’s done done that, you know, he is
15:24 arguably the best investor in the world
15:27 for traditional assets certainly not
15:29 things like not alternative assets like
15:32 Bitcoin or gold or things like that, but
15:34 for stocks and bonds and real estate and
15:36 that sort of thing. Uh Warren Buffett
15:38 has a better track record than anyone
15:41 else right now. Um give me one second.
15:44 Good
15:46 evening. So even with his incredible
15:49 track record of success for many decades
15:52 now, he has decided there’s nothing
15:54 worth investing in for him right now.
15:56 Not nothing but the vast majority of
15:58 things in that he could invest in he has
16:00 decided are overvalued and he does not
16:02 want to invest in them. So he’s sitting
16:04 on a record amounts of cash right now
16:07 just waiting waiting for everything to
16:08 crash so he can buy back in when
16:10 everything’s cheaper. And so the smart
16:13 people in my opinion are doing what
16:15 Warren Buffett’s doing which is they’re
16:17 pulling cash out of stocks and bonds and
16:19 real estate and putting it in things
16:23 that will perform well when the
16:24 government prints a ton of money. And in
16:26 my opinion that is Bitcoin by a long
16:28 shot. Now gold is also performing very
16:31 well but I think long-term Bitcoin out
16:34 competes gold and demonetizes gold
16:37 meaning I think Bitcoin sucks the value
16:40 out of gold and ultimately bitcoins
16:42 becomes the neutral reserve asset
16:45 monetary so because that’s my prediction
16:47 as far as what happens with gold versus
16:49 bitcoin I certainly think bitcoin is a
16:52 far better investment which is why I
16:54 have 100% of my liquid assets that I own
16:58 or control are in Bitcoin as opposed to
17:01 any other asset. So 7.4 trillion money
17:04 market 7.4 trillion dollar. So 7.4
17:08 trillion is sitting in money market
17:10 funds. I think a huge amount of that’s
17:11 going to flood back into the market when
17:12 interest rates come down. A bunch of
17:14 that is going to be looking for a home
17:16 and we’ll find a home in Bitcoin. And I
17:18 think long-term Bitcoin will outperform
17:20 every other asset over the next 10
17:23 years. And that’s all you can ask of any
17:25 asset is that it outperforms everything
17:27 else. So, I continue to think Bitcoin is
17:29 a fantastic investment for all of those
17:31 reasons and all the others I’ve covered
17:33 in the past. Have a great evening,
17:34 everyone. Thanks.
