Can I Sign Nevada Banking PDF

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this is matthew crowder from trader university and today i want to talk about bitcoin gold and bonds especially interest rates and what's happening i've been getting more questions about this so last week we watched the us treasury yields the 10-year note which is one way that the us government finances its profligate spending we watched it spike back up to levels that were right before the covid pandemic and lockdown and panic hit and it turns out that these levels which we're close to about one call it 1.45 1.5 percent they're still very low but they're they're too high for the current leveraged economy to stand and this is one reason we've seen a big pullback in more speculative names in the stock market virgin galactic spce tesla pulled back a-r-k a-r-k-k etc a lot of these these more speculative growth stocks and the reason for this is that higher interest rates on treasuries which are sort of the risk-free rates or the base rates translate into high a higher discount rate on future earnings and future cash flows and when you discount future cash flows and most of these companies like tesla and virgin galactic their big cash flows are well in the future they're more insert uncertain etc and they're further out and so they have to be applied a higher discount rate and when you do this with using a higher interest rate you end up with lower stock prices but the fed simply cannot allow stock prices to go down too much because it will destroy tax receipts and this is a huge percentage of what the government brings in especially state governments for example like california really balances its budget on the taxes of a few individuals we can see the structural problem here is that the u.s is currently bringing in about 3.4 3.5 trillion in tax revenue and it's spending closer to 8 trillion so like any household that has to make up the difference by borrowing money that the budget deficit right now even before the new stimulus package is about 4.5 4.6 trillion so this is the backdrop the backdrop is we've hit debt to gdp levels that are so high that there's no coming back from them no country has ever come back from a debt to gdp level that's higher than 130 percent and this makes sense because if your debt level at the federal government level gets high enough it becomes too difficult to service as a percentage of the gdp gdp might be seen as all the revenue that's generated in the economy products and services and you can only tax so much of that you can only confiscate so much of it and so as you end up with very high debt levels just like any household knows if your if your debt levels get to a certain point it's very very difficult to recover from them and this is the this is the backdrop what kova did is it really just accelerated this problem with entitlement spending so the really big budget items here are uh medicare medicaid social security that's about uh 2.3 trillion just there defense budget which is very difficult to cut and then obviously interest on the debt so what this means is that the federal government's going to need to continue to issue huge amounts of of treasuries and what this is going to mean is that you need someone to buy these treasuries what we've seen over the last couple weeks and one reason that interest rates have spiked on the treasuries is we've seen one government buy one bad government bond auction after another so the worst one was a seven year auction this is when the u.s treasury auctions off these bonds you have banks bidding for them you have uh you have foreign central banks bidding for them etc this had very bad numbers especially when you look at uh the foreign demand for it and it makes sense because who wants to buy something that's yielding i call it less than one percent on the seven year this comes in the wake of a number of bad treasury auctions there was a bad thirty year uh about a two weeks ago and then there was a bad uh 20-year auction on february 17th and what this means is that you're gonna have to have central banks actually stepping in to buy if if these auctions go badly enough the buyer of last resort is the central bank of the country this is what's been happening we're actually seeing real yield curve control which is a government a central bank buying the government's bonds in an effort to keep interest rates down you might see this abbreviated ycc yield curve control and what happens is you just buy the bonds and as the price goes up that keeps that forces yields down and so it looks like the the the us treasury market was trying to sniff out these levels at which the fed would need to step in and start uh increasing its uh buying of the debt and one way to look at this is just to see how the stock market reacts to higher rates i think we may have seen the peak in rates here we have this long on february 25th we have this long candlestick chart where we really spiked up to 1.6 right i believe it was right before powell's testimony and then he came in and assured everyone that they would keep uh keep buying bonds but we're already seeing outright yield your outright yield curve control by the the rba uh the australian central bank in an effort to defend the front end of the curve they're keeping interest rates down on i believe the three year note the problem with it with the us is that foreign and international investors have really stopped buying treasuries they're not increasing them at the same rate we can see from really 2005 to call it 2013 or so this was especially japan and china especially china taking all the money we sent them for the products we buy and recycling it back into treasuries it's been fairly flat since then this only this chart only goes up to the third quarter of 2020 but what this means is that if japan and china are not buying our are government bonds someone needs to now no one wants to hold something that's yielding call it 1.4 1.5 percent on the 10-year note no one wants to hold something yielding this low when you know that inflation expectations are much higher we can see that the break-even inflation rate on the 10-year note has ticked up to above 2 percent historically it's not been allowed really to run much above two percent but though the fed has been saying they're going to let inflation run a little bit hotter now the actual inflation rate as we all know if you want to get an education if you want to pay tuition if you want to buy a house in a decent neighborhood if you want to get medical care everything you need is going up uh closer to eight to fifteen percent this is the true in inflation rate and the cpi is just a highly suspect and manipulated number so you have this problem who wants to own something that's making one and a half percent when you're actually losing in terms of purchasing power you're losing something more like 10 or 15 percent on it this is a very bad risk reward and you're basically guaranteed to lose 12 13 14 every year in terms of your actual purchasing power so this is a way of destroying your savings the only institutions that really want to hold this are institutions that are required by regulators to hold this u.s government bond garbage on their balance sheets obviously banks hold a lot of it as we'll see insurance companies pensions etc and this is one way that the us government offloads its debt it gets these these private companies to hold uh to hold the debt and they're forced to hold it by regulations now we can see that the amount of treasuries this is treasuries and agencies but it's mostly treasuries held by commercial banks has really skyrocketed over the last real really over the last 10 years but especially over the last year this is this is banks like call it wells fargo and and bank of america and jp morgan etc buying more and more government debt and holding it on their books and they're trying to keep up the slack take up the slack that's left by the lack of international uh international investors and what is happening actually is this government spending that is being financed by issuing government bonds or treasuries is being is crowding out the private sector so if we look at treasury holdings i'm sorry commercial bank holdings of treasuries the latest number that i could find here was his uh the february 26 2021 release and it shows that the holdings of treasuries have gone up this is a percentage number have gone up 33 from november 2019 to november 2020. so the us commercial banks u.s commercial banks are increasing their holdings of government debt at the same time if we scroll down they're shrinking their real estate loans they're shrinking their commercial and industrial loans this makes sense sort of given the lockdown they're shrinking commercial commercial real estate loans are only growing here at three percent etc and if you go down and look at the total assets total assets growing much slower uh growing about seven and a half percent uh loans to other commercial banks down 71 percent but the they're growing their actual total assets at a much slower rate than they're growing their holdings of u.s treasuries which they're growing at a rate of of what do we say 33 so this is a perfect example of what happens when a government spends too much it creates too much debt and has to shove this into the banking system now the yield curve is fairly steep and so the banking system can make money from from this by borrowing at the short end and lending at the longer end to the us government but the problem is this uh this is not how the banking system's supposed to work it's not supposed to um it's not supposed to exist just to fund u.s government uh spending i'd ask you right now if you have a chance and you're enjoying this video to hit that subscribe and hit that like button just wanted to play this video again this is how the us how the federal reserve which is the u.s central bank generates money to buy this government these government bonds they just print the money and they can print infinite amount of money this is the m2 money stock we can see that's really went vertical in 2020 which is one reason that bitcoin has done so well the holdings by the u.s treasury by the i'm sorry by the us central bank by the federal reserve of treasury securities of government bonds has also uh has also skyrocketed it really went vertical in early 2020 the rate of change has uh slowed down a little bit and this may be one reason we've been seeing a stock market pull back but the basic playbook is we have to find a place to to to drop all this junk all this government bonds so we'll stuff it into the balance sheets of insurance companies and banks and then when there's no one else left to take the remainder we'll just print money and stick it in the u.s central bank now what has gold been doing throughout all of this gold has been massively underperforming really since last summer call it since august or so we just got a moving average crossover which is quite bearish for gold the 50-day moving average just just crossed below the 200-day moving average and gold is really behaving very poorly even in the face of giant government stimulus and massive central bank printing and what i would suggest is that this is happening because gold is actually being demonetized by bitcoin gold obviously has uses industrial usages it has electronic uses you have gold in your iphone for example but gold is in the process of becoming losing its status as a monetary good as a precious metal and over the next 10 to 20 years is going to become just any other like any other industrial metal like copper or aluminum or something like this the industrial usages of gold constitute about 10 of its current price this implies 90 downside to gold from current prices now this seems a little bit extreme uh and it will obviously happen slowly and over time but this is one reason that i sold off all my gold royalty stocks and moved the money into bitcoin instead bitcoin is just a superior money technology as we've talked about it's gold 2.0 it's digital gold it's easier to store it's easier to send to receive to hide to verify or a say and it doesn't take giant airplanes and armed guards and millions of dollars to move it around the world you can shoot a billion dollars around the globe using bitcoin in 10 to 60 minutes to move a billion dollars worth of gold would take literally months and possibly years and so as anything else gold is the analog version of money bitcoin is the digital version and the digital version here is destroying the analog version we're actually seeing this in uh in real time the eaton vance stock fund which invests in various companies said that they sold their franco nevada corp which is a gold a gold mining company or it's a gold royalty stock i can't remember which which one but obviously it's it's price is driven by gold uh actually it is a royalty stock uh basically franco nevada stock did well as a gold miner in the first half of 2020 and then since august 2020 it's declined as bitcoin has gained traction as an alternate inflation hedge so here we can see an actual money manager saying they sold out of their gold royalty stock simply because they could see bitcoin uh hurting it as a hedge so this is the process of gold losing its monetary status and this upsets a lot of people but this is the same way that if you owned a newspaper if you owned a physical bookstore and you thought amazon was not a threat you ended up massively losing losing your wealth losing your savings in the same way if you are a shareholder and blockbuster that was destroyed by netflix it's very easy to see these things coming bitcoin does everything the gold does and does it much better and this is the main reason i think that that gold is underperforming the commodity prices are set on the margins and if the marginal buyer that would be buying gold is instead buying bitcoin and selling their gold maybe they're taking their gold in their portfolio down from three percent to two percent they're moving the uh the difference into bitcoin this in itself is enough to account for massive outperformance by bitcoin over uh over gold we just had a report this morning from city uh citibank city group saying that uh they think that bitcoin may be at a tipping point where it's gotten so big and there's so many so much uh corporate demand for it and even demand uh for trade as an easy way of moving money around the globe that we may be at a tipping point this is a reminder that they had a leaked report at the end of 2020 they put a price target of 300 000 on bitcoin now my price target for bitcoin is still uh 200 000 uh that we could certainly overshoot that but at least 200 000 by the end of this year we just see one bitcoin bear after another coming around kevin o'leary of shark tank fame has now reversed he was a real bitcoin bear has now reversed his uh stance on bitcoin and has invested three percent of his portfolio in uh in a basket of uh ethereum and uh and bitcoin so this is this is what happens bitcoin ultimately wins it it converts the bears into bulls and uh continues to take over the world in this way now a lot of people were confused by uh by my my two videos one that uh these worries that the us government was comparing it preparing an attack on bitcoin uh based on harold uh malmgren's tweets combined with the fact that the us government may actually want much higher bitcoin prices so these are two separate videos one is super bullish on bitcoin one is more bearish uh the idea that the us government may want bitcoin prices to go up a lot as a way of fighting the chinese central bank digital currencies and really moving the advantage to uh to the us so i just wanted to clarify that i am still extremely bullish on bitcoin i've never sold any of my bitcoin i've been adding to it actually in the past couple days and i think bitcoin will continue to go up no matter what the us government tries to do to it i just try to uh i try to false falsify my hypothesis i try to think of very very dark scenarios as a way of just keeping the risk real for everyone if you're invested in bitcoin you have to know that it's volatile and that it's still an emerging project things could go wrong the us government could try to hurt it ultimately i don't think the u government can stop bitcoin they could cause some short-term price volatility if they imposed an unrealized capital gains tax which would be really unfair that could definitely lead to a lake down in bitcoin but the thing about bitcoin is it's this alien software program it's an open source software program that's running all over the world now and any country that tries to ban it or tax it excessively will you'll just have a massive flow of of wealth and a massive brain drain out of that country so i'm hoping that the us does not go this route i did these two videos to try to show that the us government is not a uh a homogeneous institution they're different factions one that may really like bitcoin one that really hates bitcoin like uh like janet yellen but ultimately i think that bitcoin wins i just want people to be psychologically prepared for what could happen if the us government says you have to declare all your holdings you have to possibly pay taxes on uh on unrealized profits so in other words pay taxes before you sell your bitcoin any of this could happen it's not it's hard to attach probabilities to this ultimately i think bitcoin does win and so just wanted to clarify that and the reason it wins is because the fed can never stop uh they can never stop printing they need to keep printing as the buyer of last resort to buy up these treasuries and as they do that bitcoin really is the central beneficiary gold shows displays no interest for people under the age of i call it whereas people under the age of 35 they're all buying bitcoin they're all buying other cryptocurrencies we're moving into a a an increasingly digital world and shiny yellow rocks like gold just don't have a place in this really the demographic the demographic flows really argue against gold and for bitcoin and i think we've seen this real we've seen this in the price action the fact that gold could behave so badly when there's massive stimulus shows you that there's something massively wrong with gold as a result not interested in holding gold or silver or any any other precious metal this is like buying a an analog bookstore a physical bookstore instead of buying amazon stock in the late 90s or or early 2000s you might get a leg up you might get lucky for a short period of time but all the flows argue against it and in uh in 20 years from now gold will just be an interesting beautiful metal that's used for uh for for electronics and for jewelry but it will have lost its monetary uh its monetary premium which implies just as we said huge downside risk if you found this video helpful be sure to hit that subscribe and like button hit the notification bell if you want to be notified when i publish my next video and let me know your questions and comments in the comment section below thanks a lot for watching and i'll see you in the next video