Name: Most People Have No Idea What’s About To Happen To Housing Market
Uploaded: 2025-07-28T18:14:09.000Z
Duration: 25 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...

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This is probably your last chance to buy a house because house prices are about to explode and nobody will be able to afford the house.

The white house is trying to force the federal reserve to lower down interest rates so that you will be able to afford the house.

But what if I told you that is only going to make the situation so bad that the vast of people won't be able to afford the house.

You might think that it should be the other way around.

But what if I told you that it's not the fed that determines your mortgage rate and even if the fed lowers down the interest rates to 0 percent, that is not going to bring down the mortgage rates.

If you think that I am exaggerating and house prices are about to explode, then watch the video till the end because I will explain everything step by step and by the end of the video, you will be amazed that house prices are about to explode.

If you are ready, give this video a thumbs up and let's dive right into it.

A lot of people imagine that if the federal reserve lowers down interest rates, then mortgage rates should go down as well.

That's not just what an average person believes, that's what the president of the United States thinks.

And that's why they are trying to push the federal reserve to lower down interest rates because they want to serve the average American.

They want to serve the people, the average people who are working hard so that they will finally be able to afford the house.

A lot of people imagine that we have a bank, and the bank borrows money from the federal reserve and then loans that money to you in form of credit card debts and also a mortgage.

So if the federal reserve will lower down interest rates to 1 percent in this case, then the bank will be able to loan that money at 2 percent interest rate and that's how we bring down the mortgage rate.

This sounds great, this is how it's supposed to be, but unfortunately, it doesn't work like that.

Because if it works like this, then why don't you go and open a bank.

Opening a bank would be the best business in the world because you can simply open a bank, borrow money from the federal reserve and loan it to everybody else at a lower interest rate.

If it's so easy and so simple, why don't you go and do it.

I promise you that I will be your first client and I will go and borrow trillions of dollars out of your bank if you can provide that money at 2 percent interest rate.

I will become a trillionaire, you will become a trillionaire, and we will together invite Elon Musk and tell him, listen, you had to build spaceships, you had to build Tesla cars, but we became trillionaires just by opening a bank.

Unfortunately, it doesn't work like that, which is why this system is not going to work.

The banks are basically the middlemen and they are in the business of borrowing money from people who have money and loaning that money to people who don't have money at a higher interest rate.

This is me, this is you, this is anybody who has money.

It can be a big financial institution or it can simply be an average person.

This could be you who saved a hundred thousand or barely ten thousand dollars.

Would you be willing to give that money for free to anybody?

Of course not, but you are more than willing to invest that money so that it works on behalf of you and makes you more money.

On the other side, we have people who want to borrow money.

So these are the people who don't have money but they want to buy a house so they would get a 30-year loan, which we call a mortgage, and buy that house.

It also could be a person who wants to buy a car and he doesn't have the money so he wants to go and borrow an auto loan and buy that fancy BMW.

So all the bank does is that it takes the money from the people who have money and gives the money to people who don't have the money and then they will pocket the difference.

Now, for this transaction to work, this deal must be profitable.

So the bank would go to the investors and ask them, are you willing to loan your money?

The investors will say, oh, kind of a business is that?

Well, so he will think about the risks and the return that the business will do.

If it's a business type of a business and the investors doesn't know if this business will be successful or not, he will ask a much higher interest rate.

But if it's a debt, which means that the money will be returned bank guaranteed, then he will ask for a lower interest rate.

The second thing he will ask is, of course, rate of return that we just talked about.

But the most important thing when it comes to debt that investors care about is inflation rate.

Inflation is how much the value of the dollar devalues annually.

So if the dollar devalues by 2% annually and I make 2% as an investor, then I made no money or whatsoever because I made 2% and I lost 2% because this money was devalued.

So if I want to make a real return, my real returns are anything that I make above the rate of inflation.

If inflation is 2%, then investors are willing to accept 3% or 4%.

If inflation is 10%, then nobody will accept 2% because investors are losing money on that deal.

But banks have to make a profit on the investments that they make.

And banks do not have a lot of cash in their hands.

Because this is a bank and the bank borrowed money from investors and quickly gave it away to people who want that money, which means that the bank doesn't have a lot of cash.

That is why we created something called fractional reserve banking.

It allows the bank to show that you have your money in the bank and it also gave that money away to someone else in the form of a mortgage.

There is a lot of conspiracies about fractional reserve banking and that it shouldn't exist in the first place.

But what do you think the bank is supposed to do?

The bank is in the business of borrowing the money and loaning that money to someone else.

If the bank will simply take your money and keep it in the bank, then the real question is that, why would the bank do that?

Do you think people have nothing else to do that they will simply build an entire financial system only to keep your money safe?

I mean, if you want to do charity, if you want to do that kind of a business for free to everybody, go ahead and do that.

We live in a free market, capitalistic society.

So the bank will take the money and give it to other people, which means that the bank doesn't have a lot of cash.

Well, you might say, well, the bank should keep some cash.

Let's imagine that the bank will take that money and will keep that cash in the bank account.

So the value of the cash that the bank keeps becomes less and less valuable.

So the bank is losing money by keeping that cash in the bank, which is why for these two reasons, banks never keep money in their bank accounts.

I mean, they keep a portion of the cash, of course, but most of the money is being loaned to people so that this money is working on behalf of investors and making the investors rich and the bank rich.

But how do we solve this problem if somebody, if suddenly some people will come to the bank and will ask for money back?

So imagine we have loaned, we have like a hundred investors and we have a hundred people to whom we give the money.

Now, tomorrow, 20 people will come to the doors of Bank of America and will say, we want our money back.

The Bank of America will say, well, your money is not there in the bank.

So the Bank of America will start calling the people to whom lend the money.

For example, you who took a mortgage and will tell you, listen, Michael, we actually gave you a 30-year mortgage, but unfortunately, this investor wants his money back.

Can you please give us back the $500,000 we gave you?

You will reply and say, listen, I don't have the $500,000 and we agree that it's a 30-year mortgage.

So please respect your terms of the agreement and let's just do it the way it was agreed in the first place.

But on the other side, this investor wants his money back.

So how do we solve this complicated situation?

The banks, in order to function, they have to have a lot of treasurer bills.

This is the debt that the government of the United States has created.

So on one side, we keep this treasurer bills and we're not losing money to inflation because we are getting interest on these treasurer bills.

If inflation is 2%, the treasurer bills provide us with 3 to 4% interest rate, which means that yes, we're keeping this treasurer bills and we're making money on this treasurer bills.

So even though that inflation is eating away money, we are making more than inflation on this treasurer bills.

On the other side, because we have this treasurer bills, we have the Fed as well.

Now, the job of the Fed here is that if we have such a situation where a lot of people get into the bank to ask for their money back, the bank can use the treasurer bills as a collateral to borrow money from the Federal Reserve in the short run and give it to the investors.

The bank will call the Fed and will say, listen, Fed, I have this 20 investors who want their money back and I don't have cash, but I have these treasurer bills, which are super safe investments.

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Most People Have No Idea What’s About To Happen To Housing Market

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