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  • Elon Musk recently crossed a net worth of 300 billion dollars.

  • That's more wealth than the entire GDP of countries such as Greece, Portugal, or Finland. 

  • If he spends 1 million dollars a month, he would need 25K years to spend all of that

  • money.

  • Even if he would spend 1 million dollars a day, he will need more than 821 years to spend

  • 300 billion dollars.

  • Imagine how your life would look like if you could spend a million dollars a day. 

  • Elon Musk is 50 years old.

  • Let's assume he will live for another 50 years.

  • He will have to spend 6 billion dollars every single year, or 16.5 million dollars every

  • single day for the rest of his life to be able to spend all of that money within his

  • lifetime.

  • Can he do it?

  • You can ask him on Twitter!

  • 
 The only problem with this wealth is that. 

  • It's not real!

  • This wealth only exists on paper! 

  • If he tried to turn it into real money, he might end up losing all of his fortunes.

  • When the CEO sells off his shares when the company is barely profitable.

  • That can scare off investors, and an oversupply of Tesla shares can easily drag the stock

  • price down.

  • On top of that, He will have to pay a 20 percent capital gain tax, further diminishing his

  • net worth. 

  • So at the end of the day, he is not as rich as he might appear on the Forbes List.

  • But that's not a big deal.

  • When the world's richest man wants cash, he can simply borrow money by putting up some

  • of his Tesla shares as collateral.

  • Elon Musk can walk into a bank and say, how about you loan me a 100 million dollars.

  • In case if I won't be able to pay back, I will give you the authority to sell my Tesla

  • shares.

  • Since Tesla is booming, the bank isn't taking any risk, so they will loan him as much money

  • as he wants at 1 or 2 percent.

  • Elon Musk, or any billionaire, can access their wealth that exists only on paper without

  • paying taxes since you don't pay taxes on debt.

  • In 2012, he bought his first mansion in Bel Air for 17 million dollars.

  • Back then, Tesla's stock price was 6 dollars.

  • Ideally, he should have sold 17 million dollars worth of Tesla shares to buy that mansion.

  • But instead, he put his shares as collateral and took a mortgage.

  • Since then, Tesla's stock price has grown by 17K percent while he only had to pay a

  • 2 percent mortgage.

  • If he had sold his shares, he would have paid a 20 percent capital gain tax and would have

  • missed the opportunity to grow his shares by 17K percent.

  • Do you realize now why billionaires love debt so much?!

  • Here is another strategy.

  • Buy a piece of art for 10 million.

  • Pay some journalists to create a buzz around it.

  • Pay some experts to write about what a great piece of art it is and why it worth a 100

  • million dollars.

  • Go to a bank, give them your piece of art as collateral, and boom, you can borrow up

  • to 100 million dollars in cash at a 1 or 2 percent interest rate.

  • Now you can buy a mansion, a yacht, or throw a huge party.

  • Just make sure to make the minimum payment when your business generates some cash at

  • the end of the year without selling any shares and paying millions in taxes.

  • If you think it ends there, then you have no idea to what extend billionaires love debt.

  • 
 Soros

  • 
 It's the 1990s.

  • The British economy is suffering.

  • Inflation is high, unemployment is rising, and the government is in chaos.

  • Britain had to devalue it's currency to survive, but it was part of the ERM or the

  • European Exchange Rate Mechanism, which fixed all European currencies against each other

  • to prevent currency fluctuations to make it easier for businesses to trade across Europe.

  • The demand for the British pound kept declining as Britain fell into a recession.

  • Hence, the bank of England had to buy billions of dollars worth of pounds to keep the pound

  • at the same rate as other European currencies.

  • While it was bad news for Brits, it was a billion-dollar opportunity for George Soros.

  • By looking at the numbers, he realized that sooner or later, the bank of England would

  • have to devalue the pound even if that meant leaving the ERM.

  • Soros was one step away from a gold mine.

  • He went to various hedge funds, borrowed billions of pounds at a very low rate, and then sold

  • them in the forex market in exchange for german marks.

  • The idea was simple.

  • When the British pound will collapse.

  • Soros will buy those pounds cheaper and return them, pocketing the difference.

  • On September the 16th, the president of the Bundesbank hinted in an interview that it's

  • possible for some currencies to come under pressure.

  • That night when Europe was asleep, Soros began calling all the major banks or, in fact, any

  • bank to borrow as many pounds as possible.

  • By morning, Soros borrowed and sold over 10 billion dollars worth of pounds.

  • The bank of England was in absolute disarray.

  • The British pound was collapsing.

  • The bank of England purchased 27 billion dollars worth of pounds, raised interest rates to

  • 15 percent.

  • But it was already too late since the entire market began to sell their pounds after Soros's

  • move.

  • Before the day ended, England left the ERM and devalued the pound, and Soros profited

  • over a billion dollars.

  • Without spending a single penny out of his pocket, he borrowed billions of pounds, broke

  • the bank of England, and pocketed a billion dollars. 

  • Can you really say debt is bad after that?!

  • 
 Michael burry

  • 
 It's 2005.

  • Michael burry is going through mortgage-backed securities, and he is suspicious.

  • Something unusual comes up.

  • He can't believe his eyes.

  • So he starts digging further and further, but the more he digs, the more he is shocked.

  • Every mortgage-backed security is filled with multiple junk loans.

  • In fact, these loans are given on the basis that the borrower doesn't have a deadline

  • to pay the principal.

  • They can even skip the interest on the interest.

  • Which meant that even a high school dropout with no job or savings could buy a house.

  • Ideally, the rating agencies would give these loans a C rating, but investment banks piled

  • them with good loans, and boom, now they are rated as AAA loans.

  • If a small minority of these borrowers will default on their loans, it will drag down

  • the entire market.

  • In 2007 alone, 500 billion dollars worth of these loans were sold.

  • That's when Michael Burry shorted mortgaged-backed securities exactly like Soros shorted the

  • pound.

  • He borrowed as many mortgage-backed securities as possible and immediately sold them in the

  • open market, hoping that when the market crashes, he would be able to buy these securities at

  • a much lower price and return them back.

  • Everyone thought he was crazy betting against the housing market.

  • But this is what happened on September the 16th (video of housing crash).

  • Micheal Burry walked away with a personal profit of 100 million dollars.

  • All of that was done with DEBT!

  • But not everything is sunshine and rainbows.

  • Its April 2020, Melvin Capital, Citadel, and a few other hedge funds decided to make a

  • few billion dollars by bankrupting another barely surviving company called Gamestop.

  • By that time, the hedge funds had already shorted 140 percent of the total stocks.

  • More shares were shorted than actual shares in circulation.

  • It was a matter of time before the stock collapses, and hedge funds would close the deal with

  • a few billion dollars for their investors.

  • But something went wrong.

  • A Reddit user realized that the only way these hedge funds can get out of this deal is by

  • purchasing back all the existing shares.

  • If he purchases Gamestop shares and holds them long enough.

  • These hedge funds will pay whatever price you want to buy back these shares because

  • if they don't, they will keep paying interest since these shares have been borrowed.

  • The Reddit post went viral and everyone began buying game stop shares to the point where

  • the stock price soared.

  • Hedge funds purchased the stocks at 5 to 10 dollars but now had to buy them back at 300

  • to 400 dollars to give them back.

  • The news broke the internet.

  • Wall Street was in absolute chaos.

  • For the first time, retail investors beat wall street at their own game.

  • At this point, the hedge funds knew that if they won't stop this rebellion, they might

  • go bankrupt.

  • First, they pushed Robinhood to stop selling GameStop shares on their platform.

  • Soon other brokers followed.

  • Even though they stopped the rebellion, Hedge funds ended up losing almost 13 billion dollars

  • in the process.

  • Debt is a powerful tool, but it's not for everyone.

  • It can be your best friend or your worst enemy.

  • Even if you have hundreds of millions of dollars stashed in your bank account.

  • Not a single, smart businessman will use that money to grow the business.

  • Instead, let the banks know that you or your company actually have the money and borrow

  • an equivalent amount of money to finance your operations.

  • At the end of the year, when it's time to pay taxes, you can claim that you didn't make

  • any profit on paper since you owe the bank so much money.

  • Suddenly instead of paying a 21% percent corporate tax, you pay nothing.

  • And in case you need money to finance your lavish lifestyle, use the company's funds

  • to pay for your private jet, expensive restaurants, and luxurious hotels and write them off as

  • a business expense at the end of the year.

  • That's what almost every company does in the US or in fact, anywhere else in the world.

  • Before taking advantage out of debt, any rational investor would tell you that you have to run

  • your numbers first.

  • But learning how to read statistics and find probabilities is not easy, that's why you

  • have to take this course by brilliant that will teach you in a simple, interactive way

  • the fundamentals of probability.

  • What I like about brilliant is that it's not just a series of lectures but you learn by

  • solving problems and applying knowledge through interactive visuals.

  • If brilliant existed back when I was in school, I would have excelled in math because with

  • their puzzles, games, and riddles, learning math isn't just easy but fun.

  • You will be amazed by how much you will learn with brilliant.

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