Name: Why All Millionaires Are Preparing For High Inflation
Uploaded: 2025-08-27T18:03:56.000Z
Duration: 14 min 34 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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The federal reserve just made it very clear that we are entering into a new age of high inflation.

Future simple

From now onwards, you can forget about inflation of 1.5 percent to 2 percent, but rather it is going to be an inflation of 3 percent or maybe even higher than that.

To-infinitive

The first priority of the fed is not going to be to keep inflation at 2 percent target, which means that prices from now onwards are going to increase significantly faster than they have been in the last 20 years.

So whether you like it or not, it is certainly going to impact you.

So here in this video, let's talk about why exactly that's happening, why the fed suddenly changed its policies and how it will impact you and how you can profit out of it, which is the most important part.

Either you will profit out of it or it's going to crush your earnings and you will get poorer at the end of the day.

That's why pay a very close attention and give this video a thumbs up and let's get right into it.

Federal reserve literally said we returned to a framework of flexible inflation targeting, which means that we are no longer going to stick to a 2 percent inflation rate.

And that did a lot of people to wonder what exactly has changed that we are abandoning the strategy of the last 20 years and we are moving into this more flexible inflation.

Well, the answer is very straight forward.

If you look at the US economy, you will see that finally the United States is having a very serious competitor, which is China.

The Chinese economy over the last couple of years have grown tremendously.

Back in 1980s and 90s, China was absolutely nobody.

But that gap has been shrinking over time.

One of them is going to win and one of them is going to lose.

If you look at their economies from purchasing power parity, which is a more accurate representation of the GDP, then China is already the largest economy in the world.

Now, there is a difference between the nominal GDP and the purchasing power parity because in each country, prices are very different.

For example, in China, real estate prices are much cheaper than the United States for the exact same income or for the exact same price, you can buy a far better house in China than the United States.

And that's why if we want a more accurate representation of the GDP, then we have to consider local prices.

From that perspective, China is already the world's largest economy.

However, because the world runs on the US dollar, another major benchmark is the GDP in US dollar, and that's when the United States is still far ahead of China.

But if you look at the GDP growth, then China is growing faster than the United States.

So if you literally do the math, you know that at a certain time in the future, China will overtake the United States even when it comes from the perspective of the US dollar and the nominal GDP.

And that's when the US dollar could lose its status as the global reserve currency.

Because currently, the US economy grows at a GDP of about 2.5-3% in the best-case scenario.

And over the last 10-20 years, it has been growing at about 2%.

The Chinese economy, yes, it has slowed down because the Chinese economy has made a tremendous progress over the last 30 years.

So if the United States is growing at 2.5% or 2% and China is growing at 5%, 15 years from now, China is now the largest economy in the world even when it comes to nominal GDP.

At the same time, you have to understand the real growth of the GDP and inflation rate.

Because if your GDP is growing because you are simply printing more money, it doesn't mean that the real GDP is growing.

So always you have to take into account inflation.

So the GDP growth, the productivity growth minus the inflation rate.

In the US, inflation has gotten out of control.

While in China, inflation is literally below 0.5% at 0.2%.

Which means that every percentage growth of GDP in China is far greater in productivity than in the United States.

Which again sends a very clear signal to the rest of the world that China is the real boss now and China is about to take over the United States.

And that has been the case for over the last couple of decades.

So the United States is finding itself in a very weird position.

The United States did not have any kind of a real rival since 1990s.

Just go back to 1990s, I mean to 1980s and 70s.

First of all, the United States had a real challenger, which was the Soviet Union.

So the United States had to work really really hard in order to beat the Soviet Union.

And then there was a competitor such as Japan.

Japan's economy was growing so fast that it almost overtook the United States.

But then the Japanese economy turned into a bubble and it burst.

Now unlike Japan, China is very different.

First of all, geographically, China is far bigger than Japan.

Demographically, China has far more people than Japan.

Literally, China has 10 times the population of Japan.

So China initially has much stronger foundation to overtake the United States than Japan ever had.

So the trend is very clear that if things continue like that, the United States is going to lose this battle.

And if you are no longer the largest economy in the world, then you can forget about being the global reserve currency.

Because you have the world's largest economy, you have the world's largest liquid market, and investors feel much more confident investing in your economy since you are the dominant economy in the world.

And you cannot compete with China if you have very high interest rates.

You have to bring down interest rates, make access to the capital much more accessible so that the US companies can have access to a lot more cash, they will start borrowing money investing, building plants, building infrastructure, building manufacturing plants across the United States so that the US economy grows at a much faster pace than it has been growing over the last 20 years and it matches with China.

So from now onwards, if the US will start growing at a much higher GDP growth and it will be very close to China's GDP growth, then the United States will be at the top of the game for far longer.

If the rate right now is for example 2.5% for the US and 5% for China, then there is a certain period where China will overtake.

Now, if we grow the US GDP to let's say to a growth rate of 3.4% to 4%, now the period at which the United States will be far ahead of China will be simply much longer.

There was a very long period where the United States was going through a very lazy period, that's how I actually call it.

Because if you look at the GDP growth, you will see that up until 1990s, the United States GDP was growing at about 4% rate.

Since then, it has been growing at about 2%.

The real question is that what exactly has happened.

In the late 1990s, the United States found itself in a very weird position that it has nobody to compete against.

Back in 1970s and 80s, it was the Soviet Union, then it was Japan, but since then, the United States was at the top of the game and I think that was the primary reason why the 2008 financial crisis happened.

Because in early 2000s, the United States thought that everything will continue to grow because this is the United States and this is the rest of the world.

So there was so much overconfidence in the United States that nobody believed that this could turn into a bubble and it will burst.

And then that is exactly what has happened.

The 2008 housing market turned into a bubble and it crushed the entire US economy.

And how do you think the United States saved itself?

Literally this is something that I still cannot possibly believe that it actually has happened.

The federal reserve comes in and literally bails out absolutely everybody.

Print money, create money, buy everything in the market, so that the economy starts growing again.

If any other economy has done anything like that, it would have turned into a disaster.

But the only reason that it didn't happen with the United States, because here was the United States and here was the rest of the world.

And that's why the growth in the US has been at around 2 percent since then.

Up until 2020, when the world realized that, wait a second, United States is losing the battle, and now there is a real competitor that somebody can realistically overtake the United States, not in a hundred years from now, but literally in the next 10 to 15 years.

So we have to do something about it, and we have to go back to the real growth of 1970s and 80s where the US GDP grows at about 4 percent, maybe even 4.5 percent.

If China's growth slowed down to 4 percent, and the US growth grows to 4 percent, suddenly, even mathematically, it's impossible to overtake the United States.

So here is the plan, either China is going to turn into a bubble just like Japan did, and the Chinese bubble is going to burst, and again, the United States will emerge out of this competition victorious.

Yes, some of the sectors in China are in bubble.

However, unlike Japan, China has a very strong foundation with its economies.

And China is nowhere close to a bubble like Japan has ever been.

So chances that China's bubble is going to burst just like Japan are very unlikely.

But the second option is that China will collapse just like the Soviet Union did back in 1991.

Because unlike the Soviet Union, China is a capitalistic economy, while the Soviet Union until its end was not a capitalistic economy, it was a state-driven economy.

The most important question is that how is that going to impact you.

What you need to understand first of all, the difference between wealth and income.

And this is the most important thing that a lot of people don't understand.