0:00 If you've got a 401k, a retirement account, money in bonds, or a pension that holds bonds, and almost every pension does, by the way, then what I'm about to show you is going to cost you more than any recession you will ever live through or have ever lived through. And now, it's not a depression or a really bad recession or something obvious like that. Because here's the thing about recessions or depressions. They end. The market falls and a few years later it goes back up. Hopefully, you had some cash to buy the dip in the meantime. But what I'm going to show you today does not end. There is no recovery on the other side of it and it isn't a forecast because it's already been happening for over two decades. But now it's being retargeted at your retirement and it's also accelerating. By the end of this video, you'll understand the government's exact plan in their own words. I'll show you the clips. You'll know what it does to your portfolio and retirement
0:46 plan. But more importantly, you'll know how to protect yourself. And it doesn't matter what country you live in. This affects everyone, not just the US. In case you don't know me, my name's Nick. I've been a professional investor and unprofessional trader for 25 years. Let's crack into it. Okay, so we're going to start with a very important number called the real rate. It's the number that tells you if you're getting richer or poorer, and usually you're getting poorer. It works like this. Take the interest rate you're being paid, take inflation, and subtract one from the other. Whatever's left is the real rate. So, let's say the bank pays you 4%, prices go up 3%, your real rate is plus 1%. You got richer slowly, but you did get richer. But if the bank pays you 3% and prices go up 4%, your real rate is minus 1%. You get poorer. When done intentionally,
1:31 this has a name. And I need you to remember this name because it's what the government is doing to you right now. And it's been doing it for a while. It's called financial repression. It isn't prices going up. That's inflation. Because prices going up is normal and it's been happening forever. It's prices going up faster than the interest you're paid on purpose. Okay, let me explain financial repression. This is my dog. His name is Chopper or Chop for short. But lately, we've started calling him Pork Chop because the vet said he's 3 kg overweight. That's like 6 lb in freedom weights. So, I need to put Pork Chop on a diet. But if I put less food in his bowl, he sits there staring at me like this for the whole day whining. It's so bloody annoying. So, I don't feed him less. I fill the bowl to exactly the same line and then I bulk it out a little bit. See, normally I feed him a mix of 85% meat, 15% fruit and veg. So, we're upping the vegetable percentage
2:20 to a little bit more, like 20%. Same amount of food in his bowl, fewer calories in the food. He's losing weight, and he has no idea. That's calorie repression. This is such a crazy example, but I think you get what I'm saying. Financial repression is the version where your government owes you money and it can't give you a smaller bowl because you're going to have a riot, right? So, it gives you the same bowl with less in it. The only difference with Chopper is that it's good for him because he needs to lose weight. But for your portfolio, the damage it does is staggering. We'll talk about that in a minute, though. But just remember the term financial repression. It's a hidden tax that we pay because our governments are incompetent, corrupt, and reckless with their spending. Kind of like I was reckless with giving him too many treats, which is probably why he's a bit chubby. Now, I know this is the point where you start wondering
3:05 what this means for your money specifically, but the answer is different for everybody. So, I'm going to be doing a live Q&A on the 17th of September at 6 p.m. GMT, and I'll answer as many of those questions as I can. Come ask me. There's a link to it below. Sign up. It's completely free. Now, back to financial repression. Why would your country do this to you on purpose? Well, in America's case, because it owes $40 trillion in bloody debt. And I say that all the time, but you have to remember that because they just crossed that crazy threshold. When you owe money like that, there are only three ways out of it. One, you pay it back, which means cutting spending or raising taxes or both of them together. No politician in history has ever survived trying that. It just doesn't really work. Two, you default on your debt. You tell the biggest lenders on the planet that they're not getting their money back. That's the end of the dollar as the world's money, a depression, and likely another world war. Nobody in Washington's going
3:55 to do that. At least not yet. Three. Actually, why should I explain number three? Treasury Secretary Scott Bessent said it just a few days ago. The world uh is a washing debt uh post GFC, postco, and the only way for us to uh get out of this is to grow our way out of this. grow your way out of this. It sounds really nice, but what does he actually mean? He means financial repression. It works like magic because they don't touch the debt at all. They leave that number exactly where it is or, you know, they grow it by taking on more debt. And they make the money it's measured in worth less year after year until the debt looks small next to everything else. But see, financial repression doesn't sound good. It doesn't sound very nice at all. Growth sounds great. That's why they keep saying it lately. We're going to have to grow our way out of this. Growth is again the
4:44 northstar of our policies. The new period is one of secular growth. We have tremendous growth. And the way you take care of debt is with growth. And we have tremendous growth. We've never had growth like we have right now. Growth. Growth. Growth. Tremendous growth. And before anyone starts, this isn't a political video. I honestly don't care if you love Trump or you can't stand him. Every president before him did this and every president after him is going to do this because this is just how countries are run. What I care about is what it does to our money. So, let's give all of these guys the benefit of the doubt, though, because there are two kinds of growth. Maybe they're talking about the good growth. Of course, they're not. But seriously, let's just give them the benefit of the doubt. Serious face, right? See, real growth is when a country actually makes more stuff than it made last year. More cars, more houses, more haircuts. In the haircuts is a
5:34 weird example. I'm sorry, but whatever. In the US, that's running at 1.5% right now. Not that much. very small actually nominal growth is another kind of growth and that's the same country with a bigger price tag on everything by bigger price tags I of course mean inflation and debt only shrinks against the nominal number I'll give you a simple example of this think about someone who took out a mortgage in the year 2000 the payment back then was $1,200 a month today 25 years later or 26 years later is still $1,200 a month if they are lucky enough to be on a fixed rate mortgage That number never moved. But that 1,200 in the year 2000 was serious money. Today, it's like a car payment and a food shop, right? Nobody paid that debt down any faster. Inflation
6:20 just made it smaller. That's exactly what the government is doing with the $40 trillion they owe. Except they are the ones who decide how fast this happens because they control inflation to an extent anyway. So when they tell you that they are going to grow their way out of it out of $40 trillion of debt and the real growth is only 1.5%. The rest is inflation. The word growth just sounds way better than inflation or financial repression allegedly. But why is this worse than a recession? I mean because it really is. Later I'm going to show you exactly how insidious it is and what it does to a portfolio to a retirement pot and how to protect yourself. But first you need to see how it actually works. So, a recession is something that just happens to an economy because, you know, the government screws things up and then it happens. Financial repression is something your government
7:05 does to you intentionally and it does it in three steps. Step one, they hold the interest rate below inflation. That's the real rate we discussed earlier. And it's the engine of the whole thing, the whole financial repression thing. Every year it runs, a slice of what you save moves across to whoever owes you money. And they've been doing it for a while now. It's accelerating because they are absolutely desperate with $40 trillion of debt. Take every month since the year 2000. Take the interest rate, take inflation, do that subtraction, it comes out at 59%. So the real rate was negative 59% of the time. That's 15 out of the last 25 years. Where simply holding cash lost you money. And that's measured against the Fed's official rate, which is a lot more interest than you realistically ever get paid. Measure it against interest that you'd realistically get.
7:52 And it's 21 out of the last 25 years, 84% of the time. And the 16% of years where you gain money, it was barely anything. So step one is ongoing right now. It's run for 25 years. And it took a slice of every single one of those years. It used to be somebody else paying it, but now it's you. We'll talk about that in a minute, too. Step two, they make sure somebody has to keep holding it. And they aren't even shy about telling you who this is. Uh the the 40 trillion is a big number. uh it is smaller when we look at the publicly traded amount because our social security funds and other government entities hold a substantial amount. Listen to what he's actually saying. Don't worry about the $40 trillion because a big chunk of it is owed to social security and other parts of the government. That isn't reassurance. That's them telling you don't worry about
8:38 the debt because it's held by you. Which kind of makes me worried really. But your pension fund, your insurance company, your bank, they are not buying government bonds or government debt because they think it's a brilliant investment. They are buying them because the rules say that they have to hold safe assets. And government debt is what rules count as safe. You didn't pick that. Nobody asked you. It's just how it is. And this scam is just getting worse. Allegedly, whenever there's risky trash they don't want to hold, they push it into your pension. Allegedly, because I don't know why I'm laughing. It's a sad situation because most people don't realize the danger. See, your retirement account is what you work for your whole life to put together and it's meant to fund your retirement. They dip into it with government bonds, also with private credit. That's another one. We're not going to talk about that today, but they are shoving that into your retirement, too,
9:25 with everything they can really. They just shove it in there. So, I beg you to look at your retirement portfolio and audit everything in there. You need to understand who you are lending money to. I'll talk more about that in a minute, too. There's a lot that we have to talk about in a minute. I'm sorry. But on to step three of their repression plan. They never stop this. A recession ends because it's a cycle. This doesn't because the debt doesn't stop growing. Every year they borrow more. So every year this has to keep getting worse for you. That's why waiting it out doesn't work. There's nothing to wait for. And none of this is new, by the way. America did this after the Second World War. So did Britain after the Second World War. And it led to the 70s, which was a disaster for both countries. Anyone who lived through there will tell you that. And Japan has been doing this for the last 30 years and it hasn't really stopped. Every single time the
10:13 government came out of the other side of this vine and you are the one that ate the loss. And I said at the start that this is accelerating. So let me show you why. For most of those 25 years that we've been talking about, debt was cheap because rates were on the floor. It isn't cheap anymore. America now pays over 1.25 trillion a year just in interest on its debt. US debt went from 18 trillion to 40 trillion in the last 11 years. And the foreign central banks that were lending them money have stopped. They've stopped lending us money. Why? Because they realized for 25 years they were on the losing side of this trade. So the US had to find a new forced buyer and that is you. That is why it's your problem now. It's our problem really because I'm involved in this too. I don't know why I keep saying you. So let me show you what that actually looks like in your account.
10:59 Every single dollar of that 40 trillion of debt that the US has is owed to someone. Pension funds, insurance companies, etc., even your bank deposits because your bank takes the money that you put in and buys government debt with it. At least some of it anyway, but it also lends it out as mortgages and other stuff. Your pension is almost certainly holding government bonds right now, government debt. That's why you need to audit what's in your pension because the government will pay that back. And that sounds great. They'll pay back every cent on time. It just makes sure that those cents buy way less than the ones you lent it, which is exactly what you don't want when you're retiring. So, there's no version of this where the government wins and you don't lose. And like I said, this is not a theory. The data is public information. So, let's put some real numbers on
11:45 it. I'm going to use a retirement account as an example, but this applies to your normal portfolio, too. See, most people's retirement plan is just a number. I need this much and then I can stop working. The problem is that that number isn't fixed. It moves and financial repression is the thing that is moving it constantly. So, let's run this forward from today, right? You're 11 years out from retiring. You've got about $200,000 put away. You do exactly what you're meant to do, what the textbooks say you should do. You derisk. You take it out of anything scary and you move it into the safe stuff. And I'm not going to sit here and guess at what the future is. So, let's just say that the next 11 years go exactly like the last 11 years did. Same inflation, same interest rates, same everything. It will probably be far worse in my opinion because it is accelerating. But let's just be conservative and say the next 11 years are like the previous
12:33 ones. So over the last 11 years, the cost of retirement went up 42% thanks to inflation. So to stand exactly where you're standing today, that 200,000 needs to become 284,000 because the price of everything went up. So your money needs to be somewhere where it earns more than 84,000 just to break even. Let's look at the options. Option one is a bank savings account. 11 years of interest on that and the average account pays so little that it only comes out to about $4,000. So your statement says $204,000 at the end. So you're 80,000 short once you factor in inflation because you need $284,000 just to break even. Option two is three month treasury bills. The safe option that retirement accounts are often built around and they are the best option on this list, but they're still not great. They pay you roughly 2% a year. So you actually collect about $53,000
13:21 in interest over 11 years. $253,000, you're still $31,000 short, and that is the best result on this entire list. Option three is a standard 10-year bond fund. You collect more interest here than you do on the bills, but bond prices fell as rates went up, and that ate almost all of it. Almost all of it. $215,000. That's what you would end up with. You're $69,000 short. Option four, the long 30-year bond fund. This pays the biggest interest of the lot and the price fall wipes out every cent of it and you actually end up behind. $174,000 you're $110,000 short by the time you retire. Four safe options, but they all ended up losing money to inflation. And in a standard retirement account, you wouldn't be all in on any of these one options. You'd be diversified between them. But it doesn't matter because they all lost money after inflation. The best you could
14:08 do over 11 years was come up $31,000 short on a $200,000 pot. And those numbers aren't a forecast. That's the last 11 years run again. So if the next 11 years stay the same, you're behind. And if it gets worse, you're way behind on the off chance that things somehow miraculously get better, which you know, do you really think they will? Then maybe you're ahead of it, which like it's it's just probably not going to happen. And even if you are ahead, it's going to be marginal because the debt is bigger now. The interest bill is bigger now. In my opinion, things are only getting worse. And just don't take my word for it. Speak to a financial adviser. Speak to an expert. show them this. Now, the obvious answer to this is that stocks, gold or silver are the option, but it's not really that simple because those can drop too. January hasn't been a stellar year for
14:55 gold and silver if you went all in at the top, which you probably shouldn't have, and I hope you didn't. And if that year happens around when you retire, then you might be in trouble. So, look, I'm not telling you to chunk your retirement into AI stocks and just hope for the best. I'm just showing you the math of what holding a heavy bonds portfolio leads to. But what are the alternatives? Well, first let's look at what the smart money is doing. In 2015, foreign central banks held $4.17 trillion of US government debt. So those are the bonds that you hold. It's the same thing. At the time, the government had $18 trillion of debt. That's the US government. So foreign governments held 23% of the entire debt pile. Today, foreign governments hold around 3.85 trillion of US debt. But remember, US government debt went from 18 trillion to 40 trillion. So there's $22 trillion
15:41 of new borrowing and the foreign central banks funded none of it. In fact, they actually sold. They are down. Central banks are the institutions that print money for a living. They understand this mechanism better than anyone alive. And every single year, they've been reducing how much US debt they own. So what have they been buying instead? Gold. For the first time since 1996, foreign central banks hold more of their reserves in gold than they do in US treasuries. And that's because they understand the game. They understand that the borrower is the only one who wins and the lender always loses. America is the borrower. They spend the money now. They make their army bigger. Politicians invest in allegedly whatever they do with it. Then they pay you back with a currency that is constantly being devalued. Why would foreign governments keep playing this game? Well,
16:27 they aren't. They aren't. They stop playing the game. That's the whole bloody point. That's why the government has to find a new buyer, which is you. I know I've already said that, but I'm going to keep saying it because you need to understand this. So, what do we actually do about all this? What what did I do for my retirement? First, I stopped treating cash as somewhere to keep my money and started treating it as a tool. Now, I know if you watch my videos often, you'll know that I'm 40% in cash right now. But there's a difference. And I'll explain the difference because I treat cash as a tool right now. It's just where I keep my dry powder. So, I have to decide, hey, if I'm going to hold cash because I want to buy the dip, where is the most efficient place to hold it? The most efficient place to hold it is in short-term US debt right now. But, like I said, that's just dry powder. I've set it aside for buying the dip. I've parked it in government models because holding cash is going to cost me money, but short-term bonds are right now the lowest cost. Sometimes holding cash makes sense,
17:17 but when you're going to hold it, make sure you are you understand the cheapest place to hold it. Second is hard assets. I've held gold and silver since about 2013, and I'm happy I did because in 2013, an ounce of gold was worth $1,300. Today, an ounce of gold is worth 4,500 or 3,150 if we adjust for inflation. If I kept it as cash, it would be worth about $1,000 or less than $1,000 adjusted for inflation. That's why everyone says gold is a hedge against inflation, because it is. Third, I don't keep it all in one country. Most of the world's stock markets aren't American, obviously, because there's so many bloody countries, and I've got money in a few of them. Everyone's obsessed with the US stock market, but the Polish stock market has outperformed it by like 2.5x this year alone. The South Korean stock market by about 5x. That's five times. There's plenty of other
18:07 opportunity out there if you open yourself up to it. These days, you can invest in pretty much any market around the world thanks to ETFs. I'm not a huge fan of ETFs, but they do give us access to markets all over the world. So, they are useful in that respect. And like I mentioned earlier, there's a live Q&A on the 17th of September at 6 p.m. GMT. Bring your questions on any of this and I'll answer them in the live Q&A. So, here's where that leaves you. The government has $40 trillion of debt that it's never going to repay. The only tool it has left is keeping your money losing value slightly faster than it earns it. It's done that for 21 of the last 25 years. And the best stretch that we've had in a while ended in March. So, it's it's gone downhill again. This isn't something you get ready for once and then it's over. It's the condition you're going to be investing in for the rest of your working life. Most likely a recession would have been easier.
18:53 At least those bloody end. And the plan isn't complicated. Just talk to your financial adviser and say, "Hey, I'm worried that I'm losing money due to inflation with bonds because last 25 years have proven that's the case. What do we do about this?" They might suggest some metal exposure, some stock exposure. For me, it's been to go heavier into metals and focus on safe, boring stocks. I managed my own portfolio, though. I got into the Polish stock market earlier this year. People told me that it was a bad idea. They were like, "You're stupid. Why not just stay in in the American stock market? But the Polish stock market just made out new all-time highs today or yesterday, and it's up over 30% this year versus 12% for the S&P 500, which is the US stock market. So, definitely ask your financial adviser or whoever you talk to about this about diversifying outside of the US because it's often a good idea. I'll see you in the next one.
