U.S. hedge funds have borrowed trillions in near-zero interest Japanese yen to invest in U.S. assets. If the yen strengthens, a rapid unwinding of these leveraged positions could trigger a stock market crash, forcing the U.S. to intervene to protect its own markets.
Official inflation measures are manipulated and don't reflect the true loss of purchasing power. The rise in the stock market is a more accurate indicator of inflation, as it shows where newly printed money flows, enriching asset owners while devaluing cash and salaries.
Raising taxes or cutting spending are politically impossible for tackling the massive U.S. debt. The only acceptable route for politicians is to print more money, a "soft default" that devalues the currency and effectively acts as a hidden tax on savers and wage earners.
Continuous money printing erodes the value of currency, meaning fixed salaries and cash savings lose significant purchasing power. As an example, a $100k salary today could have the future purchasing power of just $7k, making asset ownership essential for wealth preservation.
To control rising long-term interest rates caused by a loss of market confidence, the U.S. is buying its own 10-30 year bonds. This is funded by issuing short-term IOUs that the Fed purchases—an act of money printing disguised withodyne names like "liquidity easing."
The "Genius Act" forces stablecoin issuers like Tether to back their assets with U.S. government debt. This cleverly creates trillions in compulsory, domestic demand for Treasury bonds, helping finance the deficit. Tether is already a top-20 holder of U.S. debt.
The stock market's performance isn't primarily from productivity gains. It is mostly a consequence of massive money printing that devalues the dollar and forces capital into assets to avoid inflation. Investors are mainly keeping pace with inflation, not getting richer in real terms.
Facing stagnation since the 1990s, Japan's central bank and domestic institutions bought nearly all its debt. The U.S. is now on a similar path, aiming to inflate its debt away relative to GDP, with Japan providing a historical playbook for this soft default.
The government no longer allows healthy recessions that clear out inefficient businesses. By bailing out failing companies, it creates a massive moral hazard, encouraging corporations to take extreme risks with the expectation that "Uncle Sam" will provide a safety net if they fail.
In an inflationary world, a salary alone will not make you wealthy as its value constantly erodes. The key to building wealth is to treat your income as capital for acquiring assets. Your real business becomes managing and compounding that invested money, not just earning a salary.
The fluctuations of open markets trigger emotional responses like FOMO or panic, leading to poor decisions. By analyzing your portfolio and planning trades on a Saturday or Sunday when markets are closed and prices are static, you can operate with a clear, rational mindset.
Passive investing is no longer diversified. The S&P 500 is now over 50% weighted towards AI and big tech, with the top five companies alone comprising 30% of the index. Many investors unknowingly double down on this risk by holding an index fund while also buying the same stocks individually.