Name: This Could Be The Worse Recession We Will Ever Have - 5 Signs
Uploaded: 2025-11-02T18:22:15.000Z
Duration: 18 min 11 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...

This could be the worst recession the United States will ever face.

Adverbs of manner

Companies across multiple industries are massively laying off their employees.

Adverbs of degree

Amazon just announced that they will lay off 30,000 people.

And intel, which was recently partially acquired by the government and is backed by the most powerful government in the world, is about to lay off 15% of its stuff.

And this is happening across multiple different industries.

If this is happening to the largest companies across the country, what do you think is happening to small little private businesses?

Revenues are falling down, costs are rising.

Even though that we are in the middle of the greatest revolution in history, the AI revolution.

And this is just the beginning because the big tech is preparing itself for a really worse recession.

J.P. morgan, Goldman Sachs, everybody is anticipating a recession.

But this recession is going to be very different.

What makes this recession so different from all previous recessions is that we did not have a recession since 2008 financial crisis.

Prior to that, recessions were absolutely normal.

In 2001 the economy crashed and then we got out of that recession.

The only recession since 2008 happened was in 2022.

But technically that wasn't actually a rece.

That's because the global economy collapsed.

Since we got a global pandemic, countries shut down their borders and the economic machine began to slow down.

But when central banks enter the economy with so much cheap money, we avoided that recession.

And we have avoided many recessions because the Federal Reserve has been fueling the country with cheap money.

One of the biggest indicators of a recession is the yield curve.

When you borrow money or you provide loans to somebody, the longer the loan, the higher should be the interest rate.

The shorter the loan, the smaller or the lower should be the yield on that.

If you are buying a US treasury for one month, you are not worried.

You will get your money one month from now.

But if you have locked your money for the next 30 years, imagine how many opportunities you are going to miss.

The opportunity cost is dramatically higher.

But your money right now is being locked at the hands of the government and you can't use it in order to invest in the AI stocks.

So you miss that opportunity, which is why you will demand a much higher yield.

If you're investing long term, if you're locking your money for the next 10, 20 or 30 years.

And that's why this is how the yield curve usually looks like.

Short term government bonds provides you with a much lower yield.

Longer government bonds provide you with a much higher yields.

The moment the dynamic of this curve changes, that's when we have a problem.

The the moment investors start expecting a much lower yield on long term government bonds than short term government bonds, it changes the dynamic of the market.

And that's when you have to ask yourself why investors are comfortable to accept much lower yields on long term government bonds than short term government bonds.

This is how it looks like usually when the yield curve is inverted.

Short term government bonds, such as three months, six months, one year have a much higher interest rate than longer term government bonds such as 30 year government bonds.

What usually determines the yields on treasury bills is supply and demand.

If more people want to buy short term yields, then their rates will be much lower.

If the demand for short term treasury bills is so low, then the government will offer a much higher interest rate to attract investors.

And the same logic applies to long term government bonds.

If the demand for 30 year government bonds suddenly skyrockets, the then the government is going to provide a much slower or a much lower yield and vice versa.

If there is very little demand for 30 year government bonds because everybody is excited about AI and everybody wants to invest in the stock market, they don't want to lock their money in the hands of the government for the next 30 years, then the government will suddenly start offering a much higher yield on 30 year government bonds in order to attract these investors.

But in this scenario, investors are willing to lock their money for the next 30 years.

And that's because investors believe that the Fed will cut interest rates due to slower economic growth.

When the economy begins to slow down, when it enters into a recession, when a financial crisis is about to hit, the Federal Reserve is going to lower interest rates, but

the new government bonds, because the Fed has lowered interest rates, especially on short term government bonds, they will start offering a much lower yields if we are entering into a recession and the Fed will keep interest rates very low.

It's much better for me to buy long term government bonds at a higher rate to lock my money so that I will continue earning 4% or 5% in interest every single year.

Because a month from now my one month treasury bills is going to expire.

And if I buy a new treasury bills, it will offer me a much lower yield.

Which is why as an investor, I will lock my money for 30 year government bonds so that I continue receiving a much higher yield on my investment.

And that's why the moment the economy slows down and the Fed starts to lower interest rates, investors lock their money for 30 year government bonds.

The demand for 30 year government bonds is going to rise.

The yields in them is going to fall down, which is why we are going to have an inverted yield curve every single time.

That three month treasury bills had much higher interest rates or much higher yields compared to 10 year government bonds.

Three month treasury bills had almost 3% higher yields than 10 year government bonds.

So the economy collapsed and we had a recession in early 2008.

The exact same thing happened over here and we had the Great Recession of 2008.

And since 2008, three month treasury bills usually had a much higher yield than 10 year government bonds.

The US economy supposed to be in a recession since 2008 up until 2015 and 2016, but

it did not happen because the Federal Reserve intervened in the economy and kept bumping the economy with so much cheap money that it prevented the economy to be in a recession.

The Fed artificially helped the economy avoid a recession with cheap money and not because the economy was actually growing.

If it wasn't for the Federal Reserve, then the US Economy would have been in a recession far longer than one or two years that it was back in 2008 and 2009.

Starting in 2020, that rate has also been growing.

Short term treasury yields have been rising much higher than longer term government bonds.

And that's why the probability of a recession by April 2024 has risen by 70%.

But since then it has fallen dramatically because the Fed lowered interest rates in 2024 by about 1.5%.

And now that number is rising again because the probability of a recession is rising.

The difference between 10 year government bonds and 3 month treasury bills is almost zero.

The moment it becomes inverted, then the probability of a recession shoots to 70 or 80%.

And that's why so many big companies, so many investors are expecting a recession in the foreseeable future.

It's very normal for the economy to go through a recession every four to eight years.

The economy starts growing, inflation starts growing.

The moment we hit the point where inflation starts rising faster than the economy, that's when we should have a recession.

Because at the end of the day, if inflation is rising and the GDP is growing, but

the real economy is not growing, that's not what we want, because productivity isn't growing, the economy isn't growing.

Yes, prices has grown, but prices has grown because of inflation and not economic activity.

And that economic cycle was very normal until 2008.

Something happens in 2008 that the economy stops getting into a recession.

Because every time we're hitting a recession, the Fed intervenes and it gives the economy an artificial boost.

We hit a point where prices are rising much faster than the economy.

The economy is supposed to slow down, but

then the Fed intervenes and gives the economy another boost, so the economy starts growing again.

And that's why we avoided so many recessions over this period of time.

In fact, if you look at what's happening right now, we're literally having every single sign that we're supposed to have a recession.

If you look at the unemployment rate, it has been rising at least since September of 2023.

At the same time, inflation isn't solved at all.

We actually hit a very good point in April at 2.3% inflation rate.

Subtitles ListPlay Video

This Could Be The Worse Recession We Will Ever Have - 5 Signs

literally

stuff

assume

opportunity