Hey this is tom, and i want to talk to you about an impending disaster, and i just had this really alarming thought that i feel can't wait. Um i tend to do these car videos when i feel something is really bothering me and i'm really bothered by something. That's inevitably is about to hit really hard. It's not even a question of if, but rather than the question of when now i want you to look at a few pieces of information which i'm about to give you, because you know in my videos i, like you guys to actually do the research for yourself And you know verify what i'm saying: don't just blindly trust anybody.

Definitely not me. So here's a few pieces of information, and once i get through these, it's very very clear to you. What exactly am i talking about so? First of all, i want you guys to look at the reverse repos chart over the course of its entire existence. Basically, in case you don't know what that is.

Reverse repos is repurchase agreements between the banks and the federal reserve. It's a way for the banks to stay balanced overnight and it's a little bit of a artificial device. I'll explain a second. Why? Basically, the banks hold cash on behalf of the clients and that's why banks don't really treat cash as assets? Usually, cash would be asset for an individual or a company, but for banks this is actually a liability, that's something that's not theirs, and banks get stuck with too much money.

Basically, what ends up happening is that it seems based on their balance sheet, that they're insolvent too much liabilities too little assets, and we can't have that. That's why they came up with this system where, overnight, every night, the federal reserve would buy these cash and it will provide certain securities which will become assets for the banks and then there's literally no interest in this well very little interest. It's called the overnight rate. Doesn't really matter also, it doesn't really matter if you like that arrangement or not, i'm not here, to make a qualitative judgment, whether that's good or bad, just the way it is, and what i do want you to look at is what's been going on with the Reverse repos: it used to be a thing that was on the fringe.

It was never a huge deal because if you know banks, you probably know that bank's job is to find use for money right. So the only time banks would use these reverse repos is where they you know they got stuck with a little bit of money. They couldn't figure out what to do with, which almost never happens. I mean by definition, banks are supposed to do something good with the money; otherwise it would, you know, would not be a bank and that, over the course of the existence of these arrangements, this was something just you know marginal and if you take a look at The reverse report chart and go ahead and do it while i speak or after this video doesn't really matter see what happens for the entire existence of this device.

It used to be close to zero. Sometimes it would spike a little bit, but in general it would never go anywhere beyond the fringe and even to the point where in december 2020, which is literally uh 11 months ago, we had zero dollars in you know repos, because you know the banks definitely can Find use for money and if you take a look at what happens since december 20, until today we spike from zero to 1.5 trillion dollars trillion dollars. Imagine the banks are saying we can't find a good deal to invest our 1.5 trillion dollars, because essentially the stock market is too expensive. Real estate is expensive.

We'd rather get no interest and put our money in the federal reserve than to invest it, because we can't find any decent investments. That's a sign of an insane inflation. Now the problem is with reverse repos, there's different arguments where you can punch holes in this theory, but here's the thing check it out. Why don't you go and also check another completely independent parameter, which is the buffett indicator and again i'm not sure how warren buffett feels about the fact that they called it.

The buffett indicator, but it's called the buffer indicator for a reason because he's the guy who coined it, but essentially it's very simple: it's the market cap of all u.s, publicly traded companies versus the entire gross domestic product of the united states, essentially how much the publicly Traded companies are worth on the stock market versus uh how much gdp the u.s produces pretty much in a year and the medium the average the mean whatever you want to call. It used to be 100 and 140 used to be really expensive, like you would say: wow 140 percent, more evaluations than gdp. That means the market is frothy, get out get out and if you check it right now we're over 220. I believe, like close to 230 percent, so we're about 100 from the highest point that used to be called the high point of of of the market cap to gdp, and i think you can look at other parameters as well.

Look at what's going on with the stock market in general, we have cryptocurrencies that launch and in the they sell out in a second you know the squid game cryptocurrency came out sold out in a second spiked 2400. In the single day, you saw what happened with the shibuynu ushibainu, whatever it's called and again it's not that. I think that these guys don't deserve the money go right ahead if somebody put in a thousand dollar made 500 000 good for you, i'm really happy for you, but i look at it as an economist and i look at it and i'm really alarmed by the Way the stock market is behaving and people are saying well tom. This is the new stock market market caps.

Don't matter fundamentals, don't matter you're, just thinking about the market in all ways that are not relevant anymore, you have to adapt. You have to change and i think that this is a really alarming status, because if you see so much money in the stock market that it's literally driving prices, hundreds of percent in a day on the consistent basis year of the year months of the month and We've been having this upward strand for about three years since 2017 2018, it has started, we had a little pandemic pullback, but we've been on the bull market for a long ass time. So the question is, i mean: what's going to happen next now, if you listen to the government, even if you look at their data, which is insanely skewed, we're in an all-time inflation high, so the market definitely has a better way of judging inflation, but the government Will show you this thing called the core inflation, so the core inflation is basically where they exclude anything inflationary and they measure inflation. For example, it doesn't include the stock market, which is insanely inflationary.

It doesn't include the housing market, it's just kind of living expenses and even that isn't a 30-year high. I believe it's like four and a half percent, so even that is even the government is saying that we're in a 30-year high, so we're headed to an explosion. So right now the government is faced with this really bad decision and when i say the government, i don't differentiate between the government and the federal reserve. I know they're completely independent, but in my mind i i think they operate in tandem.

At least they logically operate. They have similar interests and basically we're about to get and there's really two options here: option number one we're gon na get when the federal reserve starts tapering, because when they pump the brakes to stop inflation, we're gon na feel the pain the stock market is gon. Na pull back, everything is gon na slow down. It's gon na be painful.

However, my fear is that they won't do it. My fear is that jerome powell, janet ellen and all these guys will start believing their own, that this is completely transitory and they're, not gon na taper and not gon na raise interest rates just because they want to piss the people off and just kick the can Down the road see what happens, and i feel they might do it for their own political survival. Knowing that, what's to come later, is going to be much much worse and what's to come later, is actually hyperinflation. So this is both really horrible options, and yet we have to prepare so i'll, make a few videos explaining how i'm bracing for this for both alternatives, and it's not that complicated, there's really four or five things.

I'm going to do and i'm going to share with you. You know i always democratize information, i'm not going to put it on patreon, it's going to be right here for free for everybody to learn and implement, and i i think that we can make a lot of adjustments to praise for that think about it. This way, if you're, basically riding a bicycle - and you know you're - about to fall, you're going to brace for impact. But if you're riding a bicycle like like you hit a trash can and you keep flying in the air - and you know you're going to take a fall and you keep singing in the ring you can get up.

So, let's be the first example rather than second, in this case and i'll see you guys in my next video explaining exactly how.