Name: The Next Market Crash - 5 Signs
Uploaded: 2021-03-02T19:20:09.000Z
Duration: 9 min 36 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

A few years ago, if you would say, let's print money to make everyone rich, no one would

Adverbs of manner

Yes, We can print money, but we should do that responsibly.

We cant randomly print money and just give everyone some cash.

That's not how the economy works, leave alone capitalism.

Remember when Andrew Yang proposed the UBI Universal basic income, and people bombarded

him with billions of arguments why that's never going to work, but then 2020 is like

- let me prove all of these people wrong.

The fed literally pumped over 3 trillion dollars into the economy.

The government distributed cash to ordinary people.

Everyone got their stimulus checks, which they ended up spending on amazon buying useless

Well, not everyone, at the end of the day, most people had to put food on the table one

That suppose to cause huge inflation, right?

The fed has been around for over 100 years, and it has created a lot of money since then.

However, 1 in every 5 dollars was created last year.

Throwing that much money into the economy suppose to create not just inflation but hyperinflation.

Have you seen pictures of people carrying bags of money just to buy bread or kids using

So why was inflation just a little over 2 percent last year?

Why does the fed keep printing even though it knows it can cause high inflation?

How the fed created the biggest financial bubble in history?

And how is that going to impact the stock market?

We will answer all of these questions and many more, but before we do that, give this

video a thumbs and let the algorithm know that you enjoy our videos, and make sure to

We have already explored how the economy works in previous videos, but let's just have a

The economy follows a cycle where it expands for a few years, then it peaks and slowly

starts falling into a recession, and the job of the federal reserve is to make sure that

inflation doesn't rise too fast when the economy is booming by cutting the supply of money

through high-interest rates for example, and when it falls into a recession, it makes sure

that the recession isn't too painful by flooding the market with cheap money to stimulate growth.

When interest rates are low, everyone jumps in to borrow money like in 2020.

Mortgage rates were so low that everyone who saved enough for the downpayment did take

a montage to the point where economists are warning us of another housing bubble.

So, in the middle of a pandemic, when many people lost their jobs, struggled to pay bills,

Because when too much money chases too little goods, prices increase, or the value of existing

The number of houses in the market didn't change much, but since so many more people

decided to take a mortgage, the demand increased, which is why prices increased as well.

Every time we had a crisis, the fed stepped in and saved the economy by pumping trillions

of dollars into the economy or lowering interest rates to the bare minimum.

It pumped trillions more back in 2008 to prevent the economy from collapsing and the crises

So some experts believe that we are living in a bubble that will sooner or later burst

Since we have abandoned the gold standard in 1971, inflation has been rising through

It's rising as if there is no tomorrow, and with more stimulus bills, that chart will

rise faster, especially when the fed pumped into the economy over 3 trillion dollars this

A single US dollar today worth just 4 percent of a dollar in 1914.

$100 in 1914 is equivalent in purchasing power to about $2,615.82 today, an increase of $2,515.82

This means that today's prices are 26.16 times higher than average prices since 1914.

Will that bubble burst this year, next year, ten years from now!

The fed successfully kept the inflation at around 2 to 3 percent.

It might be able to do that for another 100 years, and what happens 100 years from now

isn't something we should be too worried about now.

But let's find out if the stock market is overvalued today because if it, it's going

to crash, or at least we will witness a correction?

When the stock market crashed last year, why it suddenly jumped back and started rising?

Because the federal reserve lowered interest to 0 and started buying bonds.

A bond is basically a piece of paper that a government or a company issues that says

if you buy this paper, I will owe this much money plus interest.

I guess everyone would want to get that kind of a loan.

The fed usually buys government bonds to help the government raise money, but in march 2020,

the fed indirectly started buying corporate bonds.

This means companies could suddenly borrow billions of dollars at almost 0 percent, so

no matter how bad the crisis is, these companies could borrow money for free to survive.

The problem with that was that the fed even bought junk bonds, which means that it started

loaning money to companies that suppose to go bankrupt but survived because the fed gave

Think about what happens when the fed stops giving them money.

They will go bankrupt or at least be less profitable, which will drive investors away,

which will push their stock price to fall.

In other words, the stock market is filled with overvalued stocks right now.

The fed even purchased bonds of the largest companies in the market, such as Apple, Microsoft,

That's one of the main reasons why the stock market rose dramatically.

You don't have to be a genius to understand what happens when the fed stopps buying corporate

Of course, that's causing inflation, but the fed is comfortable with inflation even higher