Speaker 1: Report after report is showing that the United States is about to face a recession. The rumors of a recession started way back in 2022 when the Fed just hiked the rates, but then the government changed the definition of a recession, even though that the United States actually experienced two consecutive negative GDP growth, which is what a recession is. That's a brilliant way to say that the United States is not in a recession, we are doing fine. However, we have to give credit to the Fed for accurately hiking the rate in such a way that they did not destroy the economy. Yes, of course, there was a market crash, a lot of companies went bankrupt, a lot of people lost their jobs, but overall the economy is doing fine. And a lot of economists since then started predicting a soft landing, even the chairman of the Fed himself, Jay Paul. A soft landing is when the economy doesn't instantly slide into a recession or a depression or any kind of financial crisis, but gradually falls into a crisis. That would be perfect for the economy because no one is going to experience a shock when everything is falling down, when the stock market is collapsing. But a lot of other economists are saying that there will not be a soft landing, yes, everyone wants a soft landing, but the data is indicating to the fact that there could be a hard landing where the economy will instantly fall into a crisis, it will instantly fall into a recession. The economy isn't always a reflection of the stock market, sometimes, the stock market might be doing perfect, it might keep growing, but the economy is suffering, people losing their jobs. However, in the long run, the stock market will always follow the economy, I mean, when the economy is in a crisis, unemployment starts rising, and when unemployment rises, people will have less money to spend, they will have to dig deep into their pockets in order to put food on the table, and that will reflect in the revenue of these companies. These multi-trillion dollar companies are traded in the stock market, so when they start showing less revenue in the next quarter, investors will be scared to invest more, and that will reduce the demand for their stocks and will lead these stocks to collapse and fall down, and when that happens on a massive level, we will have a stock market crash. So unhealthy economy will always lead to a stock market crash anyways. If you have been watching the news, you probably realized that two major economies just this week have fallen into a recession, the United Kingdom, one of the world's largest economies out there, and Japan, which is the world's third largest economy. Them falling into a recession will definitely have a negative impact on the global economy, including the United States. I mean, these two countries have been stagnating for the last decade or so, but officially, they have just fallen into a recession. But a lot of people don't understand that a recession isn't always something bad. Yes, of course, there is a long list of negative consequences of a recession, where people start losing their jobs, they will have less money, they will have to spend their savings. However, if you look at it from a whole different perspective, you will realize that a recession is actually an opportunity, an opportunity to make a lot of money. I mean, there is nothing that gives you more opportunity than a recession. Nothing creates more rich people than a financial crisis, especially when it's a recession. If you take a look at the list of billionaires, you will realize that every single time when there is a crisis, the list of billionaires suddenly starts expanding, it starts growing. In fact, you will also realize that some billionaires will be replaced. It doesn't just happen with billionaires, it happens with regular rich people. Remember, for every billionaire that's out there, there are thousands of millionaires. So whenever there is a crisis, even if we have one billionaire joining the Forbes list, we have thousands of people who took advantage out of this crisis and made millions of dollars. When there is a crisis, remember, the wealth that is there in the economy doesn't disappear, it's still there part of the economy. What happens to that wealth is that the perception of people about the future of the economy starts being negative, so they start spending less. That will drop the value of that wealth in the economy, but it's still there in the economy because people are afraid to spend, people are afraid to buy stocks. In fact, they start selling stocks. So the value of that wealth during that period will fall down. And the people who understand how crises work, people who understand, who are not afraid, who are risk takers, they understand that sooner or later the economy will recover, they start jumping in and buying those assets. And that's what taking risks means. When the future is uncertain, when the future looks blurry, that's when you jump in and start investing and start buying and start opening a business. If you have an analytical mind and you understand the nature of crises and you understand the nature of the market, instead of giving up to the emotions, you start thinking with your mind, you start taking decisions based on fact and logic and the circumstances on the ground. Yes, everything is falling down right now, but that's not a forever thing, it will recover because you have done your math and you know what's happening. The media will of course start exaggerating the crisis, but because you understand how everything works, you are not going to give up to the emotions of fear. But the question that a lot of people have in mind is that, how on earth do these newcomers actually take advantage out of this crisis while the world's largest companies sometimes do not? I mean, these companies have more money, they have more resources, they have more people, but somehow these newcomers are able to take advantage out of this opportunity and the wealth changes hands. I mean, isn't that something weird? Well what happens usually is that, all of these multi-billion or sometimes multi-trillion dollar companies get comfortable, they stop seeing the big picture. They start focusing on the short-term profits instead of actually conquering the market over the long run, and that's how they lose competition. Take a look at Boeing, it's one of the most successful companies out there, it's literally an American icon. When you think of the United States, you think of Boeing, and they have built Boeing 737, it went on to become the most successful plane in history, over 10K of them were produced, and even today, 50 years later, 5000 airlines across 200 countries are using Boeing 737. But guess what's happening today, Boeing is losing competition, why? Because they have focused on building the next plane with the mindset to make as much profit as possible. It's absolutely normal when companies are focused on making more money, but when making more money becomes the only priority and you stop focusing on making great products, that's when you start losing, and that's what happened to Boeing. They started cutting a lot of corners when building that plane, and that product has a lot of problems today. It's actually causing Boeing a lot of money every single day for not being able to produce a proper plane that could challenge Airbus today. Lehman Brothers is another example, I mean if you just go back to 2007 and ask anyone that, will Lehman Brothers go bankrupt, nobody will ever believe you, because this is an American icon. This company has been out there for over a hundred years, this was the biggest shark on wall street, and yet in 2008, it went bankrupt, why? Because the CEO, the management of that company, focused on filling their pockets instead of growing the company, and that's why it went bankrupt. So don't be discouraged by the fact that you are a small fish in this vast ocean filled with wall street sharks. Even if you don't have as much money as wall street, even if you don't have as much resources as they have, that doesn't mean that you cannot take advantage out of that crisis. You might not be building the next billion dollar company, but every single person during this period have the ability to actually take advantage and build some wealth. No matter how bad it gets, no matter how dark it gets, the economy will bounce back. Take a look at this chart. What you see here is that all of the crises that happened over the last 50 years. What you see constant here is that, after every single crisis, yes, the market has tanked into a crisis, but it literally recovered and kept growing. When the crisis just happened, it created a panic in the market, and the people who gave up to their emotions, who did not understand how the market works, they started selling their assets. But at some point, the market cannot just keep crushing, because the US economy has solid foundations and it starts growing, especially when the people who have been waiting for this opportunity, who have been saving their money, jumped in and started buying those assets. The market starts recovering and starts growing, and the same thing repeats over and over. The people who understand how everything works, the people who actually have been saving their money in order to buy those assets at a huge discount, made a lot of money. But the people who did not understand how everything works, the people who gave up to their emotions, lost their assets and sold them at a huge discount. As one of the legendary investors once said, Nathan Rothschild, buy when there is blood in the streets. And that's the definition of a risk. When you buy something and the future is a bit blurry, when you don't know what exactly is waiting for you, the higher the risk, the higher is the reward, the higher is the return that you can make on your investment. Of course, you can go out there and buy and invest in the safest assets, for example, such as government bonds. You know for a fact that you will get your money back, especially if you are buying a US government bond. You know that the United States is not going to go bankrupt. They have the fed that is ready to print any amount of money that the government wants. People might say that the fed is independent, it's privately owned, but guess what, who appoints the head of the fed, the president of the United States. In 99% of the cases, when the fed says that it's going to print money, they are printing money because the government told them to do so. So if the government runs out of money to pay you back, they will just ask the fed to print that money and they will give you back. And the worst case scenario is that, unlike your friend who might actually lose his job and might not be able to pay you back, the government can simply raise the taxes and pay you back. The government literally has the best source of passive income. People are constantly working, they have their jobs, and they are paying their taxes. And if the government needs money urgently, they will just raise the taxes and pay that money easily. And that's why you cannot expect high returns when it comes to safe investments such as government bonds. But when it comes to a recession, you can easily make like 100% on your money. Some people who are so good at predicting recessions and are preparing for it can actually make like 1000% in a single year. So how close is the US economy from a recession? Since 2008, the US economy got hooked on cheap money. Up until 2008, cheap money wasn't really playing such a big role like it is today. Up until 2008, the total printed money was less than a trillion dollars. All of the money that the fed has printed was less than a trillion dollars. But then in 2008, you will see a spike. Overnight, the federal reserve printed another trillion dollars. It went up to like 2.3 or 2.5 trillion dollars. That's when the fed realized that you don't have to work hard to grow the economy. All you can do is just press on that printing press, and the money will come out, and the GDP will start growing, the economy will start growing, companies will start showing more profits. And guess where that money was going to? Exactly, it went on to bail out some of the largest companies in the country, including Wall Street, including General Motors or Ford. The logic behind it was very simple. All of these multi-billion dollar companies are employing hundreds of thousands if not millions of people. So if they go bankrupt, all of these people will lose their jobs and that will just destroy the US economy. Wait a second, what does 2008 crisis has to do with 2024? Most of the economic crises that the United States experienced since then have their roots to 2008. Because the US economy today highly depends on debt to grow, which was not the case before the 2008. Since then, the fed is simply solving every single major crisis by just printing more money. Why no one thought of that before? Because that creates inflation. Every extra dollar that enters into the economy makes the existing dollars less valuable, and that's known as inflation. When there are so many dollars, the actual value, the real value of the dollars can literally go to zero. And that's why the fed stopped printing all of that money in 2016 and realized that it's time to pay back our debts. If we don't do that, sooner or later, the dollar will become worthless. But in 2020, something happened that the fed couldn't just do anything about it. Yes, a global pandemic hit the world and the United States, and the US government had to somehow lock people in their homes. You cannot force people to stay at home when they have to put food on the table, otherwise they will just starve to death. And that's why the printing press started working actively again. That's when the fed printed trillions of dollars and distributed that money not just to people, but rather to companies, to everyone else. The US economy was filled with dollars. It created the biggest inflation in decades. So if you wanna know when the fed is going to lower down interest rates again, just take a look at fed's balance sheet. Unless the fed is gonna be confident that lowering the rates will not create massive inflation, it's not gonna do that. But from the other side, the US economy is doing perfectly fine, it's doing way better than most of the world. It's not falling into a recession today like the UK or Japan. So what's the big deal here? While the US economy is not really showing a clear sign of another recession in the foreseeable future, you have to understand that the US economy is highly dependent on debt, and that could change everything overnight. It's really difficult to say anything exact about the US economy, to make any exact forecast, because the United States has never been in such a position that it's today. It has never been as dependent on debt as it is today. Just for the record, the United States printed around 240 billion dollars during world war 2. Now world war 2 was literally the biggest war, the biggest crisis in human history, and the United States printed just 240 billion dollars. Now if you adjust that to inflation, to 2024 dollars, it's around 3 trillion dollars. But during covid alone, the United States printed much more money than it did during world war 2. Can you imagine the amount of debt that the United States has today? Now the second problem that the United States is facing is that it's having its most controversial election in the last 30 or 40 or even 50 years. Now we have two candidates, the first candidate who is Biden or the democrats in general who wants the United States to keep paying the global police, but that requires a lot of money. That's one reason why the United States is borrowing so much money, why it's spending so much money on the military and literally just holding the global order that it created way back after world war 2. On the other side, we have Trump. While Trump is having his ideas about how to run the country, he does not want the United States to be the global police, he does not want the US taxpayers to keep paying for everyone's security across the globe. I don't want to take sides here, but you have to understand that the current global order is giving US companies a competitive advantage over everyone else. Because the United States controls the global financial system, the United States controls the global supply chain, and literally the United States has the strongest negotiation power than any other country on the face of the earth. And part of the reason the US has such a power is because it's spending so much money on its military and is playing the role of the global police. So while the United States might not face any immediate risk of falling into a recession in the foreseeable future, the global geopolitical changes that could happen over the next 12 months or 24 months could actually change everything for the United States. And that's when you should jump in and start investing and start buying and take advantage out of that opportunity.