China's entire economy is about to collapse and instigate the largest global recession. Recent economic data coming out of china is exposing the country's serious weakness. The chinese communist party is trying to save the economy, but the truth has already come out. Kathy wood manages almost 20 billion dollars and has quickly recognized the pain that the world is about to face.

Economists now see the us gdp growth, outpacing china for the first time in almost five decades, so what's really going on in china, this video will unravel china's frightening situation and the shocking data pointing towards the country's collapse after china began to open its economy in 1978. The country experienced unprecedented levels of growth. China's gdp growth averaged a rate of roughly 10 percent per year. This brought substantial prosperity to chinese citizens.

Over 800 million people escaped poverty, healthcare advanced immensely education became prioritized and technological development accelerated. China's unrivaled growth has led the country to become a manufacturing powerhouse respected by all economists, but, as you all know, there's no free lunch. The reason behind china's unparalleled prosperity centered around its growing liabilities when the economy thrived those who took out loans, experienced a quick appreciation in their net worth this incentivized others to do the same, causing the economy to grow even faster. This caused even more chinese citizens to take out loans.

The cycle represented a positive feedback loop that caused china to experience exponential growth. This model has worked for many decades, but china's debt has grown to a point that isn't sustainable. China's government debt to gdp ratio has increased to over 66 percent, which has built over the many decades of growth. The total public chinese debt to gdp has also followed this trend to over 300 percent.

This is almost 60 percent higher than the global rate of debt to gdp and is almost double the u.s non-financial corporate debt to gdp. Such a large amount of liabilities is obviously not sustainable, and china's recent issues are revealing. This china has been attempting to implement. What's known as the zero covet policy, the zero coveted policy gives china's government a simple target of zero covert cases.

The only way to get remotely close to this goal is to implement harsh regulations which have severe economic implications. Banks and economists worldwide have continuously cut their gdp forecast for china due to strict coveted regulations. More importantly, china's crackdown on over leveraged companies could instigate the opposite of the positive feedback loop. We talked about earlier.

A negative feedback loop people defaulting on their loans causes the economy to slow down that leads more people to default, which slows down the economy. Even more presidency has a simple goal of common prosperity and has been implementing a vast array of regulations for this campaign. One of these sectors is real estate. Real estate prices are the epitome of uncommon prosperity.

Speculators have made a disproportionate amount of capital appreciation from rising property prices. T is attempting to crack down on this by implementing new property taxes. Another policy that c has been implementing the crackdown on within real estate is the three redlands policy. The three redlands put a ceiling on the amount of debt that property developers can have.

All of these policies are causing housing prices to drop at extremely fast rates. The volume of new home sales is also experiencing a similar downturn. New home sales in early may of 2022 are down by 33 in 23 major tiny cities. Real estate accounts for 25 of china's gdp, so a 33 drop in home sales would result in a 9 drop in china's gdp.

China's government recognizes the company's impending disaster and has been doing anything in its power to prevent a further collapse. While the u.s federal reserve has been raising interest rates, china's government has been cutting interest rates to save its economy. China's loan prime rate for households and corporate loans is currently at 3.7 percent. This number is only expected to drop even more as time goes on.

The country recently cut its five-year loan, prime rate, by the largest amount since 2019.. Most investors look at this crash as an isolated failure that won't affect other countries. Contrary to this, china's economic collapse could cause the entire world to enter a severe recession. The u.s federal reserve is raising interest rates and strengthening the purchasing power of the dollar.

This directly weakens the value of the chinese run in comparison to the us dollar. China's weakening currency will lead its purchasing power to drop substantially while the chinese economy is already crashing. The fed is really focused on the us, but i think europe is in a recession. China, some of the numbers coming out of china are shocking as well.

That has an impact on the rest of asia. So there what they're facing is a recession and their currencies are dropping. Their currencies are dropping relative to the dollar, which means their purchasing power is going down, but it also means that some of them are tightening more because their currencies are falling against the dollar. So it's a bit of a vicious cycle and as nancy says, i agree with you nancy.

We are not alone. Many people are thinking about the us in isolation. Uh we've already had one quarter of negative gdp, which most people brushed aside. Saying.

Oh that's uh! That's a fluke, and you know i don't think i think that was a real number and we should not dismiss it. So uh agree with you totally uh nancy. China accounted for over 18 percent of the global gdp in 2021, so a sudden crash in china's economy would cause global weakness top this off with the fact that europe is experiencing decelerating economic growth and we are clearly in a frightening situation. Kathy likened the fed raising interest rates to playing with fire because it could exacerbate international issues.

The us bond curve recently inverted for the first time since 2019, which signals that a recession could be coming. An inverted yield curve is when the 10-year treasury bond yield is less than a two year treasury bond yield when the interest rate for a short period of time is greater than a longer period of time. This implies that the near-term risk is greater than the long-term. In simpler terms, bond investors are expecting considerable pain.

An inverted yield curve typically precedes recessions. Most of the time europe and china are in difficult straight. The fed seems to be playing with fire. International economies are incredibly fragile right now and they crash and the u.s economy would spiral every other economy into unbearable turmoil, europe's probably in recession.

China is, if we're looking at the micro numbers, china's very weak, very, very weak, and so the you know everything's riding on the u.s. So the supply shocks, i think, are hurting purchasing power, as i said in the u.s, could cause a recession uh that will unwind the supply chain bottlenecks pretty quickly, and i think a lot of what we're seeing right now is a function of supply chain and supply Shocks very cyclical as well, and i think we'll see the other side of that. The last global recession was in 2008, when a vast array of countries experienced economic weakness, but the 2008 recession wasn't on the same scale as our impending crisis. China's gdp was still growing in double digits during the 2008 global recession.

The rest of asia, australia and africa also didn't experience a substantial decline in their respective gdps, unlike 2008. Our current situation includes the majority of asia, europe, south africa, australia and america suffering. I have shown many graphs about china's economy throughout this video, but those numbers could actually be fake. China is known for having false economic data that covers economic disasters and exaggerates growth.

Several chinese cities have openly admitted to faking economic data. One northern industrial city in china named baalto openly revised their economic report due to quote unquote fake additions, another city in 2016 that was called the chinese manhattan overstated its revenue by 33. This type of false reporting could mean that china is already in a recession, but we just don't know it yet kathy believes that if we saw the real numbers in china, there would be even more massive sales declines in the property sector. She believes that could ultimately lead to lower oil prices in the short term, i'm beginning to think that substitution, as well as a recession in europe, a significant slowdown in china.

I think if we, if we saw the real numbers there we'd probably be seeing more declines. Given how much they've hit their property sector and are bearing down on the on the economy generally from a regulatory point of view, so we think that demand is falling and and would not be surprised uh at the end of the day, to to learn that 130 Was the peak of course, anything's possible now giving the given the the kind of shocks we've been through? So given all this information, how can investors prepare their portfolios to survive this downturn? One simple way to stay afloat is to hold cash, but inflation will eat away at your capital. Investing internationally is also not an option with both asia and europe. Suffering one way to protect your portfolio in the coming months is to invest in the u.s market.

That might sound counterintuitive, but the u.s financial markets are still in the best position compared to the global markets. Even though the u.s dollar is experiencing significant inflation, it is still remaining relatively strong. The dollar index tracks the strength of the dollar relative to other currencies. This index has been in the uptrend over the past year, despite immense inflation, investing in gold could be a fantastic hedge, although a significant slowdown in inflation could lead gold prices to drop.

My point is that every asset has downsides in this environment. Diversification in the best assets would be the greatest option for lowering volatility while still keeping positive returns. One instance of diversification could be twenty five percent of cash, five percent in gold, five percent in bitcoin. Forty percent in etfs and twenty five percent in individual stocks, such a portfolio might not obtain the highest returns, but you can still have the capital to buy the dip while having long-term gains.

The dollar is moving up and i do believe, there's a terms of trade reason for it. China's become more hostile to capital, europe's in recession and uh on the border of a war, and the u.s just seems like a safer place to be right. Now, if you're looking to take on higher risk for higher rewards, investing in public gold stocks could be very lucrative. I recently attended an event in miami called the all in summit, which featured many billionaire venture capitalists and ceos.

I noticed at the event that many of the venture capitalists became incredibly bullish on public growth stocks. This is a picture that i took at the all in summit with venture capitalist, brad gerschner and bill gurley. Both of them managed billions of dollars and gave a presentation detailing why software's a service stocks were intriguing. We all know that public growth stocks have crashed immensely with arc, invest being the center of attention for that.

This has opened up a vast array of opportunities to make 10 or even 20x returns over the next few years. Public growth stocks are extremely volatile and you should only invest if you're prepared to see your portfolio trend downwards in the short term. That being said, i have witnessed several billionaires change your sentiment on growth stocks and start buying in. Let me know what you think about china's impending recession down below.

Do you think the u.s will be hit alongside china? If you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.