Debts just keep stacking and both governments and companies are obtaining like there is no future cost to handling financial obligation. And yes, if there are no immediate consequences, you actually look stupid if you don't take financial obligation. In this market, the risk takers make the most cash.
Government deficits of 7% per year are now a normality and nobody seems to care. That will change one day, due to easy laws of finance, and after that the only service will be inflation.
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0:00 Inflation Ahead.
0:34 The Circumstance.
2:52 US Borrowing.
4:12 Minsky Moment.
5:31 How To Invest.
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Hi Mr.Carlin. Could you make a video about how to invest like Druckenmiller to actually profit from this situation? Thank you very much for your insightful information in this video.
I’ve been hearing these warnings my entire life. In 1966, the 10 year yield was 4.7% and debt to GDP was 40%. We’ve tripled debt to GDP and the 10 year is now lower. Nobody ever discusses the demand side for treasuries. As long as the dollar (the Eurodollar) is the global reserve currency there will always be demand. Government spending is out of control, but there’s no evidence this will cause any problems in the market.
Sven, what do you think?
As you say, it hinges on the dollar continuing to be the global reserve currency.
Ray Dalio says in his book that all empires will eventually fall when the economy weakens for one reason or another, and they experience massive inflation. Then, their currency stops being the reserve currency.
Who knows when this will happen. No one can time it, but I agree with Dalio that it will eventually happen. Because it literally always ends up happening historically speaking. The US has been remarkably resilient, but the cracks are showing.
It seems stablecoins have given USD a second lease on life.
Greece had 40% debt to GDP in late 90s and than populists took it well above 100%. Than one black swan event took them down in 2009. You maybe have been hearing all these warnings all your life but util 2008 debt was low and offset by 30 years of decreasing rates. Government debt grows twice as fast than GDP since 1971 when gold standard was temporarily abandoned. Anyone who knows how exponencial growth and componding woks know that its just a matter of time and not if.
@@PavolKosik-b3u I didn’t know Greece had global reserve currency lmfao
Today the DEX in By-bit is lagging!!
I just done video to show that
When you are exchanging it’s giving you like 9x;
I believe too much focus is on government debt or central bank owned debt but too little on total debt growth, including corporate, personal and municipalities. Would be interesting to see more statistics about that.
I am increasing my position in gold to hedge against inflation.
Don’t worry guys, the very trustworthy bureau of economics will make some amendments to the inflation calculation methodology to make sure it doesn’t get too high
Great video, could you do another S&P 500 high level review of each stock, I recall you doing this a couple of years ago but can’t find it? maybe you can add to a separate play list, thanks for considering
With the demographic collapse, in 20 years we are gonna pray to have inflation.
Ever looked into Japans or South Koreas situation?
Where do you live? In the United States, there is no demographic collapse. We’ve imported so many people that population is supposed to keep growing this entire century (which is a good thing and a bad thing at the same time…) And personally, I do not think the fertility rate is irreparable (in the United States at least). Places like Japan or South Koreas fertility are cooked, they simply have too little land and resources to grow population any more, and will not import a billion immigrants like the US has. The US on the other hand is massive – and the ruling class could easily drum up baby making if they wanted to.
Give a look to the real wages@@jsedge2473and the effect that all this “imported” people have had on them
Luckily Elon Musk is going to fix government spending and reduce the debt pile. 🤔
Maybe he will eliminate a fraction for the waste and corruption. I doubt it can be fixed in one presidential term. For me the question is, do you believe the government is wasteful, inefficient, and corrupt? Both Reagan and Clinton said so. Our debt was decreasing, but since then it has only grown. I believe admitting there is a problem is the first step. We can instead mock and insult this attempt to address the problems.
Elon only became rich because the Tesla stock bubble
Under Trump’s first presidency, he added $7.8 TRILLIONS to the national debt by cutting taxes, sending out covid stimulus checks, and increased military and discretionary spending. He already said that he will cut more taxes and increase military spending again, which will add trillions more to the national debt. How can anyone take him seriously when he talks about reducing the national debt? It’s like someone who goes to an all-you-can-eat buffet and say he’s trying to lose weight by ordering diet Coke. The largest mandatory federal programs are Medicare, Medicaid, Social Security and discretionary spending like Defense, paying interest on the national debt, and Education, Health, and infrastructure spending. Exactly where will be cut come from? Do you know why the national debt doesn’t get solved? Because politicians know that promising tax cuts will get them elected and promising to raise taxes and cutting Social Security, Medicare, and other programs will get them booted from their jobs. Do you know how to solve the spending program? Warren Buffett said: “I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.” Unfortunately, this law will never get passed.
Inflation means – s&p tech & emerging markets.
In my opinion the U.S. stock market can work pretty well even despite what´s happenning with the U.S. debt. It is the most liquid market in the world and any internatinal company going public goes or try to list in New York instead of London, Frankfurt or Paris. The most valuable companies listed in the U.S. actually generate their income globallx and the USA is only a part of their income. I believe that as long as the US keeps their financial markets important, the dollar will stay strong no matter what happens with the US debt.
They dont care about increasing debt if they already decided to never completely pay it. This is just a future generation problem.
The location of the Sven carlin Research plarform logo in the Carlin value investing quadrant is interesting… otherwise, with respect to the S&P 500 location, while the reward may be low, I think the (long-term) risk is likely lower than shown in the quadrant. It cannot be compared to a single-company stock that can go bankrupt after a few years or a decade. Thus, the risk of permanent capital loss is reasonably low.
Thanks Sven
Q: If Inflation is a certainty, why doesn’t Berkshire keep its cash balances in TIPS instead of T-bills?
I believe the TIPS can only be bought at a max of $10 million per auction and they can’t be redeemed for 12 months from what I’ve read.
Either way, when Berkshire has cash, people view it as “Berkshire has cash” but in reality it should be view as “Berkshire has an option contract on something going wrong” and the premium they pay on that option is inflation in excess of the interest they earn.
This is a special type of “option contract” in that it is one of the few ways left at Berkshire’s size to have an edge- having huge LIQUIDITY when other people don’t. If some event occurs 1 week from now, 9 months from now, or 9 years from now, where markets freeze up and banks don’t want to lend, Buffett wants the ability to become the only bank available. This gives him huge negotiating power. If he is the only person in the world with $300 billion in cash and can commit this cash in under 48 hours to organizations in need, he gets to set the terms of the deal.
Long story short: probably because TIPS are not liquid enough compared to treasuries
In my opinion<, according to what I heard in my college macroeconomics class, the reason why lower inflation would hurt the middle class is because, in order for the FED to lower inflation, they have to raise rates, lowering debt, which lowers demand. Any lower prices would be from a decline in demand. If they just get rid of all the money that they printed, reversing our inflation and bringing prices to how they were, our economy would likely collapse overnight. That's why historically, the FED dropping inflation by a percent has had a 2-3 percent decrease in GDP. But the recent surge in demand from inflation is only temporary, as people will eventually adjust and cut back on spending, which we are starting to see. The FED has backed itself into a corner. My advice to anyone feeling the heat in this inflation, just trade long term more than ever, I have made over 720k from day trading with Leasie Aiken in few weeks, this is one of the best medium to backup your assets incase it goes bearish..
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This is why it is advisable to connect with a true market strategist in order to avoid missing such opportunity and maintain steady gains. ° °
Is this good or bad for tlt
This is a very thorough explanation of the U.S. economic situation. It is sad that the uneducated ones who need to know this will not understand and will say, “what are you talking about??”
What do you think of Bayer – they are at a 20 year low. Yearly FCF per share of 5-7 € in the next few years and 15 of the last 22 law suits were won.
As we inflate the debt/gdp ratio down our politicians will just spend it right back up. It’s not going to solve the problem, just sustain it.