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and unfortunately you've heard about how it's the next generation's gonna have to pay the next generation is gonna have to pay no longer this is the generation now we're here it's happening this is part two of a special four-part video series about the economic horseman of the economy in the first video we talked about debts and what that means to you and to your investments in this one we're going to be talking about defaults and what's the problem with defaults it's the counterparty risk if you owe money to your credit card and you don't pay it there's a hit that the credit card company takes you don't just say okay now that debt's gone you don't have to pay it you get a ding on your credit rating but you still had money that was owed a liability to a credit card company that they have on the books that expect you to pay and now you don't pay it every time someone doesn't pay what they owe there's a default or a counterparty which takes a hit and yeah we saw a huge wave of defaults like i told you as was approaching and then it slowed down a bit but what's happened is we've shaken out all the low hanging fruit after the last few years of chaos we've had a pretty significant shake out but when the mud really hits the fan all of a sudden what's going to happen is a lot of the defaults that we have then that will increase there will be less money to be made more people will have to default so therefore a lot of counterparties are going to take a hit from that they're going to have numbers on their books which then they don't get that money coming in and take it as a write down everything mentioned in this video should be considered opinion only and not personalized investment advice i had a buddy who runs his own business he has a customer who went bankrupt and so he takes a sixty thousand dollar hit just instantly and there's nothing you can do about it so then that for example could put that business expecting the money into a ton of trouble when they suddenly have money coming in that isn't going to be coming in that's what you're going to see it's going to become a domino effect when the default start all the counterparty risk is going to start playing out and all the counterparties are going to take a hit and can they survive that it depends how bad it gets but i think it's going to get bad enough that they won't be able to survive that and i know this is all depressing talk but i'm just telling you what i see and also you need to understand this stuff so you can prepare yourself and benefit from it and land on your feet help the people you care about that's what this is all about that's why we're here talking about this stuff are you just here to watch the video to hear about how bad of a shape we're in the reality is that we are in that bad shape and so now what's going to happen and what are you going to do about it and the very fact that you're here watching this video this video series shows that you're an intelligent person who wants to keep on top of this stuff so that you don't wind up coming out on the other side like everyone else is not paying attention to it is going to come out of it and we want to get into some comments from some political leaders who are going to explain to you i really want to call these up because they're saying exactly what i've been telling you for ages about the debt ceiling this arbitrary made up meaningless number it doesn't really do anything it just feels like it does people act like it does but it doesn't really do anything and it isn't really it really isn't anything at all the debt ceiling is a matter of should we raise it so that therefore we will pay what we've already spent what we owe on things that we've already paid for that's what the point of the debt ceiling is should we pay or not pay but if we don't pay there's always bad things that happen so we better pay can the nation default they already have defaulted their own money to vietnam from the war still that they agreed that they were going to pay they're defaulting right now through inflation there's been some defaults and a couple of clawbacks that we've seen with pensions but nothing significant yet it's all going to come down together i've been telling you guys this from day one it's all going to come down together so if that doesn't get you excited to enjoy your day i don't know what will treasury secretary janet yellen warns of absolutely catastrophic hit to economic recovery this summer if the u.s can't pay its bills on time thank you janet yellen for catching up with where we've been for a long time people watching these videos already know that and now she's just finally saying it out loud [Applause] but it was janet yellen who said and i don't remember exactly her wording but she said either that there won't be another financial crisis in her lifetime or in our lifetimes either way it doesn't matter either way she's not correct that's an irresponsible statement because she cannot know that you cannot know that and somebody does know what's happening with the economy i'm telling you you are going to have a significant economic crisis in our lifetimes and there's a ton of things that i put this is like a 87 page script here there's a ton of things i pulled up political stuff that political stuff is such a waste of time don't even pay attention to it but this is from political this is one of the things i did pull out and save when i was in the cutting room floor political joe biden's infrastructure negotiations could get more complicated thanks to government's need to keep paying its bills on time think about that statement thanks a lot government having to pay your bills on time they're just irresponsible with the way they're handling money and debt and income and taxes everything they don't know what they're doing they know how to get elected they know what to say to get elected they have their party's leadership telling them what to do to get elected oh wait and what does this all work to let's see the federal government is expected to reach the limits of its borrowing authority within months or even weeks yeah don't worry about authority the fact is we spend money and now we either pay or we don't either way the outcome is going to be horrible the choices are either suspend the debt limit or they raise the debt limit if they suspend the debt limit that means they're sweeping dirt under the rug if they raise the debt limit that means that they're just making a bigger pile of dirt in the next few weeks they're going to be talking about raising the debt limit because it's already reached the limit of 28 trillion dollars and that's what we call in the industry slow clap time well done guys i'm glad i voted for you you've really kept us in the best possible situation it's so important that you ignore politics but this guy tester says a destination should be dealt with yet he says though here's the part i want to read you and essentially an essentially imaginary number that should be raised automatically wow and here's elizabeth warren i know some people like her some people don't either way listen to what she said raising the debt limit should just happen this is a fake problem designed to do nothing but slow down the government and add aggravation the united states government is not going to default on its loan obligations it absolutely is right now and it absolutely will continue to do so it's defaulting through inflation even they've even said we want to engender a certain level of inflation why ask yourself why you don't have to have inflation it's not a thing that we need and they're saying oh if we can get two percent two percent they want to inflate by two percent that's like saying we want to pay less money on our debts you know what ideally they get inflation to 100 and the dead load disappears and elizabeth warren goes on to say if we have to raise the debt ceiling then it will happen but we should spend no time on that they talk to us like we're children do you guys remember i told you that when this thing we're all dealing with for the last couple of years worldwide when that is no longer a fear or a focus and it's not quite there yet but as it becomes less of a focus that's when you look under the hood of the automobile and realize that you've got no i don't know anything about cars you got no pins piston i don't know but here's the thing to pay attention to in terms of the timeline for this stuff the debt ceiling limited government's borrowing authority is suspended through july 31st what is it now like july something midway through the month so we're talking a matter of weeks after that the treasury department can deploy a variety of tactics to avoid missing payments or defaulting on the federal debt but those measures may run out sooner than expected what they're saying is that they're going to move goal posts do a shell game to make things technically feel like they did their job right technically feel like we've taken care of the problem but we never took care of the problem we never took care of the problem and if we just dealt with it one time we'd be set forever we won't have to pay as much we're just blowing away money for carrying costs let alone building up more and more debt half of the money that we spend is not from taxation revenues as should be healthy in an economy it's from freshly created money why don't we just create 10 times that much money just pay down everything do you think that'll work out well why is no country doing this some countries have tried and they devolved into chaos but when we hit the debt ceiling they're saying it's going to set up a possible collision this summer or fall between a debt fight and the nation's infrastructure spending that they're planning janet yellen urged congress to raise or suspend the debt ceiling within the next month floating the possibility of a crisis level situation as early as august when lawmakers are out of town that's what they've done they've set you up they've set it up this way we ran out of money we're taking a vacation good luck everybody but here check out this i really want any of these comments are the ones i really wanted to pull out of pages and pages of gobbledygook meanwhile okay the debt limit didn't come up during a meeting between schumer and the senate budget democrats last week everything you know is in that sentence the debt limit didn't come up is it important or not but the thing is they've derailed the train and they're sitting on the train as it's being derailed and they just don't talk about it i decided of mine good thing we put them all in power and let me say i'm so glad that you guys are here watching this and learning about this stuff it is so important it is more important than a lot of things so you have to keep an eye on this because there's so many ways you can land on your feet through this if you pay attention to it you learn about it and i really appreciate you guys being here and learning all this stuff i don't necessarily like i kind of do but i don't necessarily like talking about this stuff i want to be more optimistic but it's just what i see it's what's happening and so you can either stick your head in the sand or not you choose but here is one i really want to pull out again congress has acted more than two dozen times over the last three decades two dozen times in 30 years to avert default on the nation's financial obligations do you see though how that proves it's meaningless it doesn't go away the problem doesn't go away they just put it down the road a bit they kick it down the road they kick it down the road if they didn't meet their financial obligations such a scenario would whack the government's credit rating increase costs for u.s borrowers and create stock market chaos oh thanks for letting us know we know now everybody else can know too but that goes on it says unwelcome turmoil at any time but especially with an economy inching toward a full recovery after the pandemic it's too hot out here right now i'm sweating like crazy i can't get into this it makes me so mad we're not inching toward a full recovery in some ways we're inching toward a full rebound to a point that was problematic we're trying to get back to what was a problematic level because it got much worse and now they're saying this is a recovery and marie says it has to be done i don't know the path yet everybody is aware that it needs to be done we have to pay our bills i'm gonna argue that not everyone realizes that we have to pay our bills i'd say the majority of people don't realize that and plenty of politicians don't really get it they're just going through the motions to try and get paid and be in a certain standing among their peer group it's got nothing to do with what's in your best interest and that's what makes me mad people think that i'm so negative or that i'm whatever i don't know they think doesn't matter to me and a lot of the safety nets that they've set up for you that make you feel better like the debt ceiling has one example and all this jaw boning talking about how great the economy is doing is set up to make you feel better but that's another way of saying it's set up to distract you or make you avoid the real problems the real problems look it's not complicated go find a 12 year old kid and ask him about it and i'll explain it to you you have to pay what you owe if you want to spend money you need to make money to pay it and if you just borrow and create money that's not a sustainable path it's not a sustainable path that's the problem eventually it's going to catch up with us and unfortunately you've heard about how it's the next generation's gonna have to pay the next generation is gonna have to pay no longer this is the generation now we're here it's happening suspending the limit to a later date has been a more popular option in recent years rather than increasing the limit to a higher amount put that in perspective it's not that different from you and your credit cards it's not it really isn't it's popular to pay the carrying cost on the card only and it's like and he's saying that it's a popular choice rather than increasing the limit on your credit card just to not deal with it just don't deal with it suspend it till later i'll worry about this credit card next year well that's what they did and i told you that time it's going to backfire and now we're here it came to this point we're now okay suspended till when till the end of this month couple weeks from now and we're here you guys got a better idea what we should be doing here let me know but these videos are about trying to make you land on your feet through this stuff that's why you have to subscribe to the channel and click on the alert bell so that as we are telling you this stuff you're going to be aware of it and you're going to learn from it and then land on your feet nobody else is going to land on their feet the vast majority of people are going to get completely steamrolled from what's about to come and they'll be so surprised you have no excuse not to set yourself up properly and if you don't know exactly what to do then watch these videos there's a lot of strategies about what kind of investments you should own what kind of investments you should hold what's going to be coming out on the other side that you want to be hanging on to and still have some kind of value net worth that you had before everything's about to happen it's just like saying i'm not going to deal with it right now problem solved very very dangerous for you as you see in the next couple weeks and don't worry they're going to raise the debt ceiling limit or they're going to suspend it and then you're going to feel better say oh wow that was close we were a couple weeks away and then they fixed it they didn't fix it they're going to make it worse i'm telling you they're making it worse and this is senator pat toomey we need a fiscal reorientation now more than ever correct that's something i'll agree with so i'd like to see us do that i'm not optimistic that we will but that's what we should do yes that is what you should do everything mentioned in this video should be considered opinion only and not personalized investment advice