Name: Something is going deeply wrong inside US economy
Uploaded: 2025-07-17T09:32:49.000Z
Duration: 24 min 51 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...

United States is on the brink of 1929 style depression.

This is going to be by far the greatest crisis in the history of the United States.

Modal verbs - B1

And it might seem like I'm exaggerating, but if you dig deep into it, you will find out that I'm not exaggerating at all.

And after doing all of the research, I found out that it's a lot worse than I initially thought.

So instead of actually trying to scare you, let me simply explain what exactly is happening.

And you will judge by the end of the video, because this is some strange thing that is happening with the economy.

So if you're ready, give this video a thumbs up and let's get right into it.

To understand that, we have to understand how the economy works.

A hundred years ago, the GDP of the United States was $19 billion.

If we adjust that to today's numbers after inflation, that's a trillion dollars.

However, it wasn't a straight line growth.

There has been recessions, crises, and many more.

There has been even wars that drag the economy down and down.

However, every single time the economy got out of that crisis and continued to grow.

When people have more money in their savings and in their pockets, they start spending money.

That spending turns into an economic growth and the economy keeps growing and growing and growing.

In fact, at certain times, people feel like the economy will grow forever.

Back in 2020 and 2021, everybody thought that the stock market will never collapse and people threw every single penny they could into the market.

However, at certain points, the economy peaks when inflation starts rising faster than the economy.

When the Fed realizes that inflation is growing faster than the economy, the Federal Reserve increases the interest rates in order to cool down the economy and control inflation.

High interest rates leads to lower spending within the economy.

When you spend less money, then businesses have to adjust, which means that they have to lower down their cost.

And one of the ways they do that is by shrinking their workforce, which means that unemployment starts rising.

They start spending less money, which means that the economy starts to slow down.

At certain points, the economy even shrinks.

When the Fed realizes that the economy entered into a recession and inflation has cooled down because inflation happens when people spend too much money.

But now people are not spending money and the economy is in a recession.

The Federal Reserve steps in, lower down interest rates.

Businesses borrow money, hire more people.

Spending goes up and the same cycle repeats over and over and over.

There are two ways for the economy or the government to control the economic cycle.

One is to lower down interest rate, but it does not always work.

Other times when the government realizes that we have lowered down interest rates to almost 0% and it's not working, then the government starts to borrow money in order to stimulate the economy.

The government is this giant institution that has the ability to borrow a lot of money.

Investors are the people who are sitting with some extra money.

They lend money to the government of the United States.

The government takes that money and starts spending.

More employment leads to people having more money.

More money spending means the economy starts to grow and the economy gets out of the crisis.

However, one man's debt is another man's asset.

That is a very beautiful quote by Ray Dalio.

When I'm loaning money to you, for example, to buy a house, you take my money and you go and get yourself a house.

For the next 30 years, you have to pay me interest every single year because you borrowed that money from me.

It's a debt for you, but it's an asset for me because based on that money, I will be receiving money from you since you have taken that money from me and the interest.

So 2008 financial crisis happens and the government does what it always does.

It lowers down interest rates and it sees like it's not helping to grow the economy.

It's not helping to help the economy to get out of the recession, especially when the United States is looking at the rest of the world, countries like China that are growing tremendously.

So they feel this urge to act immediately and save the economy as fast as possible before it turns into another Great Depression of 1929.

The government starts borrowing money and spending money in order to help the economy and it doesn't help either.

On one side, you have the government of the United States and it wants to borrow money from investors.

People on the other side who have a lot of extra money, these are the rich people, they want to make a return on their money.

The government issues a piece of paper called the government bond and this piece of paper is literally the debt.

The investor buys it, the money goes into the pockets of the government.

If it's a two-year government bond with 5% interest rate, the government will pay the investor 5% on that $1,000 and two years from now, will return that money back to the investor, the exact same $1,000.

Now the question is that, who determines at what interest rate the government will borrow that money?

The more people would want to buy government bonds of the United States, the lower will be the interest rates.

The less people would want to loan their money to the government of the United States, the higher the interest rates will be risen by the government of the United States to attract those people to invest in the United States debts.

But because the US government is the safest investment that you can possibly make, investors always demand an interest rate that is slightly higher than inflation.

You know that lending your money to the government of the US is very safe, but you still want to make a certain rate of return.

If inflation is 2% and you are making 2% on your money, then you're not making any kind of money or whatsoever.

Because even though that you made an extra 2%, the just inflation has risen by 2%, you essentially made no money at all.

It's much better for you and buy some kind of asset that rises together with interest rates or with inflation, like gold, for example.

Which is why the government always has to provide you with an interest rate that is slightly above inflation, which is 1% or 2% higher than inflation.

So if inflation is 4%, you expect from the government 6%.

If inflation is 2%, you expect from the government 4%.

If inflation is 10%, then probably you expect much more than that.

So 2008 financial crisis happens and the United States government is trying to borrow money from investors in order to stimulate the economy for growth.

And all the money that the government over here tried to raise from investors did not help to fix the problem and get the economy out of the recession.

So what do you think the government does?

The government turns into the Federal Reserve in order to come up with a new terminology and a new method to save the economy.

Quantitative easing is the ability of the Fed to print money and directly buy government bonds in the open market.

So if these investors are not willing to buy these government bonds, then the chairman of the Fed or the Federal Reserve is printing money and buying these government bonds.

And the government of the United States will be left with all of those trillions of dollars in their pockets to invest it back into the economy to stimulate the economy to grow.

But let's get back to the question, who determines the rates on these government bonds?

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Something is going deeply wrong inside US economy

massive

depression

slightly

exaggerate