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USA, Israel, Iran, Middle East, World Politics
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00:00Today I want to look at how the global economy will collapse, specifically how the U.S. economy
00:06will collapse because of this war. Now the argument I want to make to you today is that
00:12financial collapse do not happen accidentally or naturally. It has to be engineered and this is a
00:19very hard concept for us to understand, okay? So in economics there's something called the
00:24boom-bust cycle which basically states that in capitalism you have the economy booming then
00:31suddenly for whatever reason it collapses, okay? It's called a boom-bust cycle and the idea is that
00:37if you study economics they teach you that this is just a natural part of capitalism because in good
00:44times people spend too much money. They become overconfident and so then they waste a lot of
00:50money and then it collapses. The economy turns bad and so you have to focus on being more lean
00:56and efficient and resilient. So think of, you know, gaining weight, okay? You gain too much weight
01:03and then you feel bad so then you lose weight and that's the idea of the boom-bust cycle. The
01:08problem
01:09though is that no one can explain properly how and why suddenly the bubble pops, okay? What's the
01:18mechanism or trigger for the collapse? Let's just say you're a bank, all right? You're a bank and your
01:25job is to take those money, save it and then use it properly in order to promote the economy. So
01:32let's
01:32just say we put a million dollars into a bank and what does the bank do with it? The bank
01:37then lets it
01:37out to entrepreneurs, right? So maybe I want to start a restaurant and that's why I borrow a million
01:42dollars from the bank. Okay, question. How much money is a bank now? It's zero, right? Okay, that's
01:48that's math, guys. Look, if I take in a million dollars and I lend it out a million dollars, I
01:53should have zero
01:54because that's just basic math. But that's not the answer. The actual answer is two million dollars. What you
01:59need to understand is that each bank has the ability to print its own money and the bank is a
02:06mechanism
02:06for liquidity in the economy, okay? And this is a great illusion. This is the delusion, okay,
02:15behind the economy where money is just an idea. It's a concept. It's a collective hallucination.
02:22But the problem is there are thousands, tens of thousands of banks everywhere. So how do they know
02:28how to coordinate together, okay? And this is something else you need to understand about the
02:33system. There's actually something called a signaling mechanism. So all these banks are
02:37separate, but they are linked together into something called a central bank, okay? Central
02:41bank. And what does a central bank do? The central bank signals whether or not to lend money or not
02:47to lend money. And this mechanism is called the interest rate. Now, again, if you study economics,
02:52what they will teach you is that depending on the interest rate, if it's low, maybe 1%, or 5%,
02:58or high, 5%, then that will determine how consumers behave. If the interest rate is 1%, what this means
03:05is I can go to the bank, get money, and buy a house. If it's too high, 5%, then I
03:10don't want to go to the
03:11bank to buy a house. And this is what you're taught in economics class. But there's actually another
03:15explanation, which is the interest rate is not to signal consumers or homeowners to buy, but rather for
03:21banks to lend or not, okay? Does that make sense? Because the banks, what they can do is, depending on
03:28the
03:28interest rate, they know that, okay, my job is to release more liquidity into the system,
03:33release more money into the system, and therefore, I will make it easier to take out a loan,
03:38okay? So for the longest time, the Chinese currency was trading above 8% to the US dollar.
03:45Because remember, the US dollar is the main mechanism, is the main mechanism of global trade.
03:50And then, hey, starting around this time, 2008, guys, it started to increase in value, okay?
03:56And so now, the world knows, oh, I should trade with China. And China is like, well, okay,
04:02my exchange rate is higher than before, therefore, I should buy more things from the world,
04:07okay? But not only that, but now that I have access to commodities from the world,
04:12then I should know I need to promote my economy to use these resources. So I should spend more money
04:20on infrastructure. I should build more high-speed railways. I should build airports, okay? And that's
04:25what China did. You see how 2008, just as the American and European economies were suffering,
04:31the global economy was suffering, the Chinese economy, China started to have a higher exchange
04:34rate, okay? And it kept on going higher, higher and higher. And then, what did China do with it?
04:40China started to buy stuff from around the world with it, okay? Again, this is a signaling mechanism
04:46where the bank of international sentiments are saying to the world, you can now sell to China.
04:49We will guarantee China, all right? And that's because the bank of international sentiments need
04:54to try to buy more things from the world. And this happened in starting around 2008, right?
04:58This massive surge in imports. And because all the commodities were coming to China,
05:03trying to spend these commodities, so it started to build infrastructure, right? And how did it finance
05:08the building of this infrastructure? Bank loans, guys. Bank loans, all right? So this is China.
05:14This is China, right? Look at this. Look at this. This is China. 2008. 2008, basically,
05:20China, US, Japan, Europe, their economies were about the same. The bank systems were about the
05:25same. But starting by 2008, wow. Look at this. This is all being orchestrated by the bank of
05:31international settlements, by a few people working behind the scenes. Look at this. Look at how crazy
05:35this is, all right? So what does this mean? It means that today, China has the largest banks in the
05:42world. This is JP Morgan, the largest bank in America. This is Chinese. This is Chinese. This
05:48is Chinese. This is Chinese. This is Japanese, okay? The top four banks in the world are Chinese.
05:55Why? Because in the bank system, debts are liabilities. Sorry, debt liabilities are also
06:01assets. Do you understand? All the Chinese banks have are just liabilities, okay? So this is how the
06:07system works. It's all just an illusion. The thing about the Chinese system that prevents it from
06:14imploding is the fact that all debt in China is localized instead of nationalized, all right? So
06:21even though these Chinese banks are heavily in debt, they're in debt in local areas, not national
06:26areas, okay? And all this means is that the bank of China does not have that much debt relative to,
06:34say, the bank of Japan. So debt in Japan is nationalized. Debt in China is localized. So
06:40another major consequence of China, the growth of the Chinese bank system is that China started to
06:47export its goods around the world more, okay? So as you can see, in the year 2000, America really
06:54dominated the world in manufacturer export, okay? But by the year 2024, look, it's basically the entire
06:59world is buying Chinese exports, all right? And so this is a deliberate strategy of transnational
07:07capital to move the center of economic gravity from the United States to China. And the problem
07:12with China, the reason why China has not become the hegemon is that China's not interested in being the
07:19hegemon. In other words, military power. Also, as China is expanding its manufacturing capacity to the
07:26world, who's upset now? The United States, right? And so what the United States does is it imposes
07:30tariffs. Does that make sense? All right. So in other words, okay, even though in theory, the theory
07:36is that the goal of the bankers is to maintain the game, okay? That's all they care about. So they
07:42want to switch from America to China, but it didn't really work because China doesn't really want to
07:47take responsibility of being a global reserve currency as well as having military bases overseas,
07:52right? So China doesn't want to do this and America won't let China do this. So your only option now
07:58is Israel. And that's why I believe that this war in Iran, what it will do is shift the extent
08:04of
08:04gravity from America to Israel because Israel wants to be the center of the world, not China,
08:09okay? That doesn't make sense, guys, all right? The other thing you have to understand is that for
08:13this to happen though, transnational capital needs to first collapse the American economy. And
08:20they can collapse the private credit bubble, they can collapse the AI bubble, they can collapse both
08:25at the same time. And why would they want to do that? Because as a banker, as transnational
08:28capital, you make your money through activity, right? When people go and do stuff, whether it's
08:35entrepreneurship or starting wars, they have to go do stuff. And right now, America has a lot of
08:40problems, okay? So let's look at America's problems. First is aging, where the elite are now older and
08:46older. Therefore, they are less active, they are less energetic, they're less entrepreneurial,
08:50okay? Then you have something called quantum easing, which is like too much money in the system.
08:55If you have too much money in the system, then people do stupid things like gamble, okay? All right?
09:00And the last problem of America is you can't win wars. Like this Iran situation is showing that
09:05America, the American military is not as strong as you think it is. So if you're transnational capital,
09:09you see these few things, okay? The population is getting too old, too much money around, so people do
09:13stupid things like gambling, and the American military is not that great, then you're going
09:17to shift your capital from America overseas, okay? But before you do that, what you want to do is
09:23engineer a financial crisis so that you can make as much money as possible. See, that's like the 2008
09:28financial crisis, okay? So we don't know when it will happen, but we're going to be sure that it will
09:31happen. It'll be suddenly, okay? Okay, does that make sense, guys? Now, you're like, wait a minute here.
09:37Why would Trump and the Americans allow this to happen? They must know this is coming.
09:42And the answer is because it is in the long-term best interest of America for the economy to
09:49collapse and for transnational capital to go elsewhere. And this is something we'll discuss
09:53next class, okay? What the long-term American strategy is. Transnational capital is leaving
09:58America, so and the Americans are like, oh my God, Bank of England, City of London,
10:03these Parisites are leaving? Thank you! Get out of here, man! Okay? And what will happen is once they
10:07leave, America will probably have a much brighter future. This is something we'll discuss next
10:12class. But if the interest rate is high, then I know, okay, I must not release too much liquidity
10:16in the system. Therefore, I will make the loan application hard, okay? So, in other words,
10:22the interest rate is not, it is not set in order to guide consumer behavior. It is set in order
10:29to
10:29coordinate liquidity in the marketplace. The big question is, why did the financial market collapse?
10:34So, this is the CDO issuance, okay? As you can see, it's generating a lot of money for these
10:40private banks. And then suddenly, in 2008, there's this massive default. It collapses. The question
10:45is, why did this happen? And again, you're taught in the English class, this is just a law of gravity,
10:50okay? If you go too high, you're going to fall. But what people don't tell you is this. There are
10:54actually people who made a lot of money because of the collapse. John Paulson. How much money did he
11:01make in this collapse? $20 billion, guys. That's a lot of money. $20 billion. How did he make his
11:08money? He made his money by betting that the house market would collapse. You understand what happened,
11:13okay? So, think about this. Okay, I lend a million dollars to Amber, okay? And everyone, you have to pay
11:22me back $10,000. But then suddenly, you can't pay me back, right? But if I tell you, Amber, you
11:27can't
11:27pay me back. You have to give me your home, okay? Then I lose my investment in you, right? So,
11:31I don't
11:31do that. I keep on letting you live in the house, pretend that you can pay me back even though
11:36you
11:36can't pay me back. But then, Vincent says to me, hey, Mr. Jack, I bet you that Amber will not
11:42default
11:43on her loan because she hasn't defaulted in the past 10 years. I say to Vincent, how much do you
11:48want to bet me?
11:48And he's like, half a million dollars, okay? He's so confident that you will not default, right?
11:52So, I say, sure, Vincent. I'll take this bet with you, right? Now that I do, now I make you
11:56default
11:57because now I can make a million dollars from Vincent. And that's how it worked, guys. You think
12:00it's a very complicated thing. It's not. It's all a giant scam because only a few people control the
12:05entire system. This is how you make $20 billion in this game, okay? There are stupid people buying
12:11from you, right? But there are more stupid people who bet that you will not default on these mortgages.
12:16And so you take your money from the stupidest people. And that's why this system collapsed.
12:19Because you're going to make more money from collapsing the system and just letting it go
12:23on, okay? This is John Paulson. This is Jimmy Dimon. And he also profited from the bank collapse.
12:30Why? Because when these banks collapse, you can start to consolidate the banking industry,
12:35okay? So, Jimmy Morgan started to buy these other banks that were losing money. And Jimmy Morgan
12:41now it's the largest bank in America, all right? Also, guys, look at this. Before 2008,
12:49most homes were actually owned by individuals, okay? This is 2008, okay? So the gray are just
12:57individuals. They might have one home. They might have 10 homes, okay? But they're basically
12:59individuals. The blue are those who own more than a thousand houses. And then the dark blue
13:06are those big banks that own like 100,000 of homes, okay? So before 2008, you can see like most
13:14people
13:14were in the gray, okay? These are just individuals. But then after collapse, you see the blue and the
13:23dark blue go way up. Why? Because these homeowners lost their homes. And so these banks and these
13:31companies come in and buy them on the cheap. Doesn't make sense. So it's not... So the great financial
13:36crisis of 2008 destroyed millions of lives, but it made it profitable for a few powerful
13:42individuals and institutions, okay? Right. A major consequence. So then you're like, okay, no, no,
13:48no, no, no, Mr. Jiang, you don't get it. It's gravity. Eventually, a bubble has to collapse. Well,
13:54okay, well, today we have two bubbles. We have something called the private equity bubble,
13:58private credit bubble, okay? Where private banks lend money to private companies. And people say it's
14:03$200 and it hasn't collapsed yet. Why? Because the private banks allow the private companies who
14:11are losing money to keep on going. You understand? The private banks don't come and say, hey, you
14:15guys are losing money. I... You should declare bankruptcy and I'll take whatever you have. Why?
14:19Because they would lose a lot of money that way. Okay? Do you understand this idea? These bubbles can
14:22keep on going forever. They don't have to collapse. Another big bubble today is something called the AI
14:27bubble, right? These companies, NVIDIA, OpenAI, when they... Their AI products don't actually make any money.
14:32Like, ChatGPT does not make any money. In fact, it loses money every time you use it, okay?
14:38Because it's more expensive to run ChatGPT than it generates in revenue. But... And it's a huge bubble.
14:43But why does it collapse? Because these are just a few companies lending money to each other, okay?
14:48That's all it is. It's a giant Ponzi scheme. It's an inside game. So, bubbles don't have to collapse.
14:53They collapse when it's profitable for a few individuals to make it collapse.
14:59All right?
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