Summary
Transcript
What happens when the government’s debt can’t be repaid? Well, it’s different than when it’s your personal credit card versus of course the government’s debt But it’s also sort of the same thing meaning if the debt can’t be repaid then there has to be some sort of an agreement Like so for example on personal debt You might negotiate with the lender for smaller payments spread over a long time frame Maybe some sort of like a debt restructuring or sometimes it’s just like sorry. I just can’t pay Or sometimes it’s something in between but what happens Look at the ability to pay it back and you realize there’s just no way and you realize it can’t ever be paid back and with about 34 trillion dollars of debt for the US government about 300 trillion dollars of debt for governments around the world.
That’s the realization that many are starting to have so in this video I’m gonna go over how the US got into this debt mess the speed at which it’s growing What the government projects it to get to and the only four ways out of this mess now for those of you that don’t know me My name is Mark Moss. I’ve been an entrepreneur for over 25 years I’ve invested and made millions in tech real estate Bitcoin and a whole range of other sectors over the years I speak at some of the largest financial conferences in the world But through this channel I’ve been able to reach more people than I ever could in any of those rooms and I’m thrilled that on this channel We just hit five hundred thousand subscribers So if you’re new here, click that subscribe button and let’s just get into the video All right, so talking about the debt that can never be paid back The first thing is we have to understand first of all What is the debt and how does it get paid back then? We’ll get into like what does that mean for our portfolios and all that but first thing Let’s just talk about the debt and how do we pay it back? So the first thing is if we want to understand the debt Let’s first understand the ability to pay it back and we want to look at the money supply now This is the United States.
We’ll look at the global money supply as well But if I borrow money if I have debt, I have to pay it back with money, right? So the first thing is let’s take a look at the money So what we see here is this the the Fed the central bank of the United States the Federal Reserve and the money supply And what you can see I put some trend lines here It had been going at this trend right here at this even pace Then it started it sort of picked up to the next trend line and then it started getting steeper and then it started getting steeper And now the money supply is growing at this insane alarming rate, right almost going parabolic You can see that right here.
However, as parabolic as that is that’s about 20 trillion dollars Which sounds like a lot but not in comparison to the debt So that’s what we’re looking at now if I take out debt in US dollars What do I have to pay the debt back with US dollars? So we have about 20 trillion of US dollars Okay. Now, this is the debt clock and this kind of keeps track of how the debts been going up You might have seen this before there’s a whole lot of data on here I’m not gonna go through all that but the main thing I want to look at right here is this you can see this in Real time like ticking higher higher higher or over 34 almost 35 trillion dollars in debt So right off the bat, you’re like hmm.
We owe 35 trillion dollars, but we only have 20 trillion dollars to pay it back That sounds like a problem and you would be right It certainly is now if we look at the government debt We look at the money supply is growing we can also look very similar and the debt the debt had been on this trend line Barely even moving forever And then the debt started going higher and then the debt started going higher Look at these trend lines changing and now the debt is almost going straight up as a matter of fact We’re adding about the United States adding about one trillion dollars every quarter every 90 days to put this into perspective US government added about a trillion dollars from the inception of the country all the way to like the 80s and now we’re doing that Every single quarter now, this is government debt again.
This is government debt 35 trillion dollars But then we also have all the people me and you all individuals that owe Debt as well and we can see this what we call household debt not public debt But household debt and we’re at about almost 18 trillion dollars there Hmm 35 trillion plus 18 trillion And we only have 20 trillion dollars of all the money to pay it back It sounds like a problem and it is but it even gets worse because that’s just the United States But of course, there’s a whole world out there So if we look at the whole world, what we see is that the entire global debt is 300 trillion as a matter of fact, it’s even higher than that.
So over 300 trillion dollars in debt But do we have enough money to pay it back? Now, if we look globally there’s a problem part of the problem is that How much money is there even in the world and that’s a question that we really can’t even answer but we can get a couple of measurements and take a look at it and we can see that it’s Difficult to give a specific answer. So you’ll see different numbers. If you look at it, we’ll take the high number We can see that the value of notes and coins in circulation.
So the money that we have is about 8.2 trillion So that’s just the dollar bills the coins etc 8.2 trillion across 20 major countries plus the euro area, so not just the United States, but Globally, that’s about the money supply. Now we can go a little bit higher Like I said, let’s go on the high ends. We can get the benefit of the doubt here We can see the global in one supply not just US dollars But the global in one supply which includes all the money in circulation plus Travelers checks plus deposits like checking and savings accounts was about 48 trillion.
So let’s call it 50 trillion dollars Against remember 300 trillion debt But if we want to go even higher we could say that the m2 supply is about 82 trillion Let’s take that number. So we have about 82 trillion dollars some estimates are maybe even as high as a hundred trillion Whatever we have a hundred trillion dollars in money to pay back 300 trillion dollars in debt and you start to understand the magnitude of the problem that we have Here’s a graphical form format just so you can understand a little bit better this giant section of the pie chart right here That’s the global debt and this little this little sliver area right here That’s the amount of money that we have so we don’t have near enough money to pay off near the debt So that’s the problem.
So how does that get paid back? And what does all this mean first we have to kind of project well How much more will the debt even grow and of course we can just look right at the government for these answers The first thing you have to understand is that we are in a debt-based monetary system So, you know, we talk about the Federal Reserve and the printer go burr those types of things, which is a funny meme It’s not actually how it works, right money is created through debt expansion when you get a loan for a house a car boat, etc That money is created out of thin air Corporations get money from debt governments get money from debt and so in this debt-based monetary system It has to always be growing or the whole thing whole thing falls apart So it has to expand it has to and all money comes from debt.
And so understanding that key fact Let’s take a look at some of these projections So here’s for the United States which of course is the US dollar and it doesn’t matter where you live in the world US dollar is the reserve currency the world’s with this matters. Now what we can see is this is US public debt and And as it’s projected to increase so we can see here in the year 2000 now here We are about 2023 and here we are 2050 and what we can see is the payments on the debt going up from 1% to 5% We can see the deficit going higher and higher higher no deficit in 2000 We actually had a surplus surprise surprise to 5% of deficit in 2050 and we can see the percentage of debt This is the alarming one going from 38% debt to GDP up to a hundred and seventy five percent Projected and so basically what we’re looking at is the debt will continue to go higher at an ever ever faster rate The CBO again put out this chart that shows this in another format.
So here we are right here with a record amounts of debts as A matter of fact more than or about where we were in World War one World War two And this is what it’s projected to do that’s from the government’s own admission This is not me making this up now if we want to look at this globally again That’s the United States if we look at this globally what we can see is something similar and we are right about here right now And that is where it’s expected to go we already don’t have near enough dollars to pay back the debt that we owe in the first place and The debt is expected to go a whole lot higher.
So where do we go from here? Well, there’s four ways out radio broke this down very well in his book talking about this sovereign debt crisis Which is basically what we’re in and they said there’s four ways that we can get out of this number one We can have austerity and that basically means the government goes on a budget That means let’s cut spending by you know, whatever 50% let’s increase the taxes So we cut spending we bring in more revenue and we’ll save our way out of it Of course that doesn’t work The people that are on the dole the people that get benefits from the government.
They certainly don’t want that to happen The other thing is that you know, sometimes you might hear well, we owe the debt to ourselves, right? We could just not pay it back. Well, not really. So we obviously owe a lot of other government’s money China etc probably won’t like that if we decide not to pay them back But we owe it not to ourselves we owe it to the people of the United States So if you have a retirement account 401k mutual fund a lot of your money is probably in the government’s hand and they owe That money to you.
And so if they decide not to pay that back, that’s your retirement money. That’s gone even more It’s not that they can always just print the money, right because they owe people medical services, right? And so this is a big problem number two. They could do a debt restructuring. Hey, look, we’re way over our skis on this There’s no way that we can pay this back We’ll pay you back 50 cents on the dollar 10 cents on the dollar something like that Maybe extend it out the third way and this is of course The most likely scenario is we’ll just print the money and of course, this is what governments around the world are doing They’re continuing to expand the money supply the debt because they’re continuing to print money Now the reality is that it’s not one of these it’s really probably all three So for example, they’re gonna increase the taxes.
They’re gonna restructure the debt for longer refinance it And they’re gonna print money at the same time and they continue to use all three of these But there’s a fourth way and it’s sort of like betting on a miracle and the miracle is We could have a productivity miracle Now a lot of times people talk about this like if we could just come up with like free unlimited energy For example nuclear fission if we can come up with that then we’d have this productivity miracle and we could grow out of it You have to understand that we have remember the ratio is debt To GDP it’s a nominator denominator So we could either bring the debt down or we could bring the GDP up So if we have a productivity miracle, we could grow our way out of it Hypothetically, but maybe we actually can’t are we on the verge of a productivity miracle that could potentially see us do this And the answer is maybe we are so what am I talking about specifically? Of course AI We have an AI driven boom that is completely changing the landscape of the entire world From everything that we know from how we get information to how we work to whether you have a job or not What type of job you’ll have which new businesses are growing and even potentially saving governments from reckless spending by having a productivity miracle So obviously I’m talking about like I said the growth of AI and we’ve seen how fast this is growing Some ways we can look at this just from a chart is look at Nvidia If you haven’t been paying attention to the Nvidia you’re not paying attention at all And what we can see is that Nvidia has basically shot up like what is this like a meme stock a crypto stock I mean, it’s basically gone straight up for no reason.
There’s no Fundamental reason if we try to analyze it like a typical stock why it’s gone up like this But it’s gone up like this because of the AI boom that’s going on so is Businesses become more productive meaning I can get more work done in my business without hiring additional people That means my profitability goes up, right doesn’t mean you have to have mass layoffs But let’s say that it now there’s a lot more higher level jobs from coders and things like that So now maybe people are making more money again that pushes the GDP up and maybe just maybe we could grow Faster to move the GDP up faster than the debts growing.
The question is is this actually realistic? well, I’ve studied the data I’ve studied the math and Maybe but there’s also a big danger as we transition into that I want to break all of that down for you, but real quick before I get into that data I just want to let you know I got a sponsor for this week’s show I want to let you about let let you know about them real quick. I’m talking about Iber America Here’s their stock ticker right here And the reason why this company is probably a good one sponsor for this video is because they’re at the forefront of the AI Boom, I’ve talked about before the different commodities whether that’s lithium or cobalt We talked about copper how copper is being used in the AI boom one thing that’s being used in the AI boom And you can see from this chart right here is tin Yes The old metal tin and you probably don’t realize how much tin goes into the data centers and more specifically the microchips like Nvidia uses When they put them onto a circuit board they have to solder them and that all requires tin And so you can see tin is also going up like Nvidia like a meme stock as well And that’s because of the demand now we have at this Iber America basically is going to be Europe’s Largest tin mine in the world now.
Why does this matter? Well, it matters because the majority of tin around the world right now Is coming from countries that we would say are non-friendly as a matter of fact, China Indonesia and Peru make up 75% of the supply of tin you already know we’re trying to decouple from China. We can’t depend on them anymore Indonesia we can’t we have such heavy sanctions on them because of their Environmental policies and Peru has massive Disruption in their mining sector you can see foreign investments need to understand that there’s massive political risk in Peru And so most of the supply of tin comes from non-friendly friendly countries and here we have one in Europe now The key to understand is also is that the only way to get access to tin is different than most commodities You can’t just buy it through an ETF The only way you can get exposure to tin is by buying one of the producers And you don’t want to buy a producer in Peru or China or or Indonesia And so maybe in a European company might be a better way now real quickly Just got to get back to the video, but real quickly the team is stellar David Young He’s been head of natural resources at Carlyle Group, which is the fifth largest private equity firm He managed over four billion dollars of resources at there.
We have Gene McBurney He was the CEO of Canaccord Genuity, which is the second largest Canadian investment bank Co-founder of GMP Securities, which is an investment dealer massive massive talent here We also have Hatch Consulting which is uh on is uh on board to get the production back on track We’ll talk about that production in a second And lastly real quick before we get back to the AI boom We know that Iber America while at the forefront of this AI boom supplying the tin that we need They basically have done something by going and acquiring this mine in Spain in Europe And they bought it and the reason why they bought it is the company that had it before mismanaged it and part of the mismanagement Was also just the cycle of it.
The AI boom wasn’t there neither was tin and they were able to buy a Mine here that was worth 78 million dollars and they bought it for only six million So what happens in the sickality of commodities? So they bought a 78 million dollar asset for only six million dollars and the buyer Iber America is only an 18 million dollar market cap So an 18 million dollar market cap is buying an asset for 78 million dollars What do you think potentially happens with this company? As tin continues to take off now The good thing too is this is all happening right now at the time of this video As a matter of fact, they’re closing on this deal in the next two weeks and their goal is they have the time They have the money and they have the know-how to put this back into production right right now Right at the time that AI is completely blowing up and they have the tin Okay now enough with that sponsor check them out if you want But let’s get back to can this AI productivity miracle help us grow out of this? Okay, so let’s like look at this from a couple areas So the first thing that we can see is when we’ve looked at something like this in the past It gives us an idea.
I always use history history is our guide to the future So for example when we had the internet boom, what’d the internet do the internet increased our efficiency now instead of having to Drive somewhere for a meeting. I just go on zoom Right instead of having to drive to a store and pick up stuff and I can click a button have it shipped to me So internet was also something that really created this productivity boom and what we can see here in 2000 This is a chart here of corporate profits Meaning corporations making more money when corporations make more money that increases the gdb, right? So right here is when the tech boom happened.
This is the year 2000 the dot-com boom and look at this trend line So this is the corporate profits. We’re on this trend line right here Then it started ticking up a little bit because in the 80s We started getting you know computers and some of the businesses and things like that So productivity started picking up here, but right here where the 2000.com happened Look at the new trend line that started up see how much faster Corporate profits went up how much faster gdp started going up and now you can see since 2020 We are on a straight line So the precedence shows that technology does increase efficiency which boost corporate profits, which then yes brings up gdp Okay, another way we can take a look at this specifically that’s that’s historically, but we can also look at this from ai So this is some of the projections.
What we can see is that the ai market cap. We’re right here right now It’s been growing pretty slowly, but you have to remember this is all still pretty new. What are we? Less than two years we’re a year and a half into sort of since openai was introduced But it’s projected to grow at a three or 33 percent compounded annual growth rate. That’s amazing It’s enormous And if you’re not using it in your business You totally should in our business We use it all over the place already a 33 percent compounded annual growth rate And so that’s how fast the ai boom is going to continue to grow And it’s going to continue to cause all other things to happen And a lot of it is in the demand of the commodities and things like that Now there is some downsides to this I don’t want to go deep into this right now I can make another video if you want, but typically when we have this pulse of productivity Maybe some people lose their jobs now those people can go find higher paying jobs But there is some danger in the short term and again We have historical precedence for this if you want me to break that down in a video Let me know in the comments down below.
We can make a whole separate video on that But what we do know is this ai and the tech trend is very very strong now. We know that Technology happens in about 50 year cycles and it drives financial markets So what’s driven financial markets the last 50 years? Well, it was personal computers telecom and internet What drove it before that it was for gmge? What drove it before that? Well, it was steel railways What we drove for that oil, right? That’s what we know is the next 50 years going to be dominated by ai and crypto part of this 50 year technological boom And maybe just maybe it could grow our way out of this.
It’s a miracle Maybe now if you want to know more about these 50 year cycles, I did a whole video on it We’ll go ahead and link it up here if you want to watch that But let me know what you think about the video Can we grow our way out of this as a miracle or is it just smoke and dream? Let me know in the comments down below Of course subscribe if you’re not subscribed like the video if you liked it if you don’t you can give me a thumbs down That’s okay.
But at least tell me why in the comments down below And that’s what I got to your success I’m out You
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