Name: Why the US Economy hasn’t Crashed Yet?
Uploaded: 2025-07-23T18:49:47.000Z
Duration: 11 min 43 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...

Since the United States have announced the liberation day, the US economy has been on a roller coaster.

The United States have cancelled agreements that took the country 50 or 80 years to sign them.

The US has imposed some of the highest tariffs in the world.

And everybody expected that the US economy is instantly going to get into a recession.

A recession that is going to be very similar to the Great Depression of 1930s.

However, the absolute opposite has happened.

The US economy is growing, it didn't damage the economy, and the stock market just hit all-time high and another record.

If any other country would have done what the United States have done, that country would be in huge trouble.

When the UK left the European Union, the economy stagnated, and even up until today, the British economy is suffering.

And yet, the US economy is growing tremendously.

Some people might say, well, the stock market does not represent the economy.

Look at the job statistics and you will find the exact same thing.

When people have jobs, they have constant streams of income, and when they have pockets in their money, it means they are spending and the economy is not getting into a recession.

A recession happens when people do not have jobs, when unemployment is rising and spending goes down.

However, looking at the unemployment rate of the United States, we don't see a single sign of unemployment rising dramatically.

Compare that to another major economy, such as the UK.

Unemployment has been rising dramatically over the last 12 months, and now it's at 4.7%.

If it rises above 5%, then the likelihood of a recession starts to rise.

And the UK is not facing the same troubles as the US.

The UK did not cancel all of its trade agreements with the rest of the world and did not impose super high tariffs on the rest of the world.

Let's take another economy, such as China.

Unemployment is about 5%, which is actually not that bad, but it's much higher than the US.

In Germany, the situation is much worse than that.

European economies are suffering tremendously because of everything that is happening in Europe.

But by just looking at the most important indicator, which is the jobs report, we can confidently say that the US economy is doing far better than any other economy in the world.

If you look at the inflation rate, again, the United States is far ahead of everyone else.

Inflation slightly rose in June to 2.7% and that might indicate that inflation might get out of control because of these tariffs.

And maybe within the next 6 to 12 months, as the effects of tariffs will get into the economy, we might see slightly higher inflation.

When you're imposing 150% tariffs, when you're imposing 40% to 50% tariffs on the rest of the world and 250% on your most important trading partner, China, and you don't have a trade agreement with your most important neighbors such as Mexico and Canada, you expect an inflation that is going to be significantly higher than 2.7%.

So even if it rises by another couple of points, let's say to 2.8% or 2.9%, that is still far better than many other economies.

The inflation in the UK, that did not print as much money as the United States, is at 3.6%.

So if the US hits an inflation of 3%, it will still do far better than the UK.

This is probably the only country that is doing pretty good with the inflation rate.

Germany is one of the few countries that have a very good inflation rate.

And it makes sense because unemployment is very high, which means that spending is very low.

And when there is very little spending, obviously, you are going to have very little inflation.

Looking at the two most important indicators, unemployment rate and inflation rate, we can say that the United States is doing perfectly fine, and there are all the reasons for the US economy to continue to grow.

So while the United States put all of its trading relationships in such a huge danger and is giving a path for BRICS countries to challenge the US dollar, why the United States is not going through a financial crisis or at least a recession?

And that's because the United States bond market still dominates the world and there isn't any other alternative.

The US bond market represents literally 40% of the global bond market.

And while there are some competitors, they don't even come close to the United States.

Throughout the entire world, there are different financial institutions and there is so much wealth in the world.

That wealth isn't simply kept in bank accounts.

That wealth must be invested somewhere and it must create some return.

And because the US bond market is the world's largest bond market, especially with interest rates at around 4.5%, which means that treasurer bills have an annual return of around 4%, some of them slightly lower than 4%, others slightly higher than 4%, but that makes a pretty attractive investment.

Pretty much every country today has a pension fund.

And when people pay taxes for these pension funds, a portion of that money must be invested.

And the US bond market does not have a replacement.

There isn't an alternative to the US bond market.

So a huge amount of their money is being invested back into the bond market.

Especially when you look at the sovereign funds of countries with so much resources, such as Norway or Middle Eastern countries such as Qatar or Saudi Arabia, they've accumulated so much wealth.

And that wealth must be invested somewhere and provide a constant rate of return and provide a constant return on their investment to fill their budgets.

And again, where would they invest that money if not in the United States?

You have central banks across the globe who are keeping a huge portion of the bond market of the US.

You have investment banks, you have banks, the commercial banks, you have insurance companies, and all of them investing all of their money back into the bond market of the United States, simply because there isn't any alternative.

The second best option is obviously China.

And China represents about 6.5% of the entire global market.

But the problem with the Chinese bond market is that there isn't much of international foreign investment.

The only reason that the Chinese bond market is so huge is because the Chinese economy is so huge.

And because you have a large economy, you have lots of Chinese banks, and all of them must invest a portion of their assets into the bond market of China, which makes it the world's second largest bond market.

Of course, that's the case with the United States as well.

But what makes the United States so different than China is because you have so many international investors.

And that means that the bond market in the United States is much more liquid than any other bond market, including the Chinese market.

And if you are an insurance company, or a mutual fund, or a wealth fund, you want that money to be invested in the most liquid bond market possible so that you can exit your position instantly and it won't impact the price.

Imagine you are selling like, I don't know, like $20 billion worth of government bonds.

If the market is not liquid enough, you are instantly going to lose a huge portion of your portfolio.

Another option is Japan that represents 13% of the global bond market.

But Japan is very tricky because around half of Japan's bond market is being owned by the Bank of Japan, which is the central bank of Japan, which makes the entire market extremely illiquid.

So if you own like $20 billion or $100 billion of Japanese government bonds, it's very difficult to exit your position.

You probably need to strategize your entire position and sell $100 billion worth of Japanese bonds.

And if you hold that many bonds in the United States, you can literally exit your position without impacting the market or whatsoever.

Which is why a lot of money is still being flown back into the United States.

A lot of money is still being invested in the United States.

Even if the US imposes those huge tariffs on other countries, even if it cancels trade agreements with the rest of the world, money is still coming to the United States, which means that there is a lot of investments in the US, which means that there is a lot of spending in the United States, which means that the economy keeps growing and the markets keep growing.

Now, another reason is obviously the equity market.

The equity market of the US represents 60% of the entire global equity market and it's valued at over $60 trillion.

Now you have the exact same dynamics over here as well.

You have hedge funds that are consistently investing in equity funds because hedge funds are trying to get a slightly higher return than what the bond market could possibly produce.

Because when you're investing in bonds, you're investing in debt and debt always has a fixed rate of return.

But when you're investing in equity, you're investing in businesses and businesses can have very different returns, sometimes a thousand percent, and sometimes it can be even negative when you made a bad investment.

Mutual funds, not just in the US, but across the globe, they always invest a huge chunk of their money back into the equity market.

Again, there is no comparison between the United States and the rest of the world.

If you take the entire Chinese equity market, only 5% of the market is being held by the foreign investors.

If you compare that to the US, around 20% of the entire equity market of the US is being held by foreign investors, which again, makes it much more liquid, which attracts more foreign investments, which means that more mutual funds, more commercial banks, more central banks and sovereign funds will be investing in the US market.

Just imagine for a moment that the equity market in the US is much larger than the entire markets of the rest of the world.

How do you even compete with the United States?

And that's why you see the stock market in the US always grows much faster than any other market.