The Pump and Dump Economy

so the stock market has lost more than $5 trillion since its all-time Peak which was achieved roughly a month ago to the day that this video was uploaded asset markets are a forward-looking indication of investors predictions of what the future will look like and right now those predictions are Bleak we have been talking about the everything bubble for a long time now everything from stocks to real estate to precious metals and even really dumb [ __ ] like meme coins have experienced massive price increases fueled primarily by wealthy speculators that are running out of things

to invest in if you were looking for something that could potentially come along and pop this bubble then take your pick trade Wars actual Wars household debt national debt massive layoffs government programs being cut and the biggest problem of all which is that nobody knows what the is going on anymore $4 trillion of market value since it's all-time high less than a month ago I'm talking on February the 19th an additional 25% tariff to 50% on steel and aluminum coming into the us up to $400,000 each and every single day federal judge is allowing president

Trump's Mass layoffs to press forward while leading legal proceedings continue after tariffs hit imports from Canada and Mexico president Trump now reversing his decision president Trump walks back tariffs on most products from Mexico and Canada again money loves certainty Business Leaders and investors need to make decisions based on reasonable assumptions about what the future is going to look like every decision a business makes from hiring or firing staff building a warehouse launching a new product to paying a dividend inevitably involves someone making an educated guess about the next quarter the next year and for some

optimistic CEOs the next decade now sometimes those guesses are wrong sometimes they are right and good business managers should have a backup plan if nobody has any idea what the next week let alone the next decade is going to look like the only responsible decision is to play it as safe as possible for businesses playing it safe means reducing expenses halting new untested products and stockpiling as much cash as possible to keep the business solvent for any eventuality for active investors playing at safe means liquidating their positions and moving into safe assets until they can

properly analyze the market again right now in America even hedge funds which typically do better during periods of increased Market volatility are sitting out the craziness a report by the financial times found that across the industry these investors are pulling back on Leverage and reducing their exposure to the markets even when theoretically these are the times when they are most likely to outperform and make huge bonuses the reason for all these Trends is the same nobody knows what to expect next so yeah we got to talk about these tariffs a uh brief recount of these

measures so far is this before taking office president Trump kicked things off by announcing 100% tariffs on any country that undermine the USD as a global medium of exchange 6 days after inauguration the first wave of new tariffs were placed on Colombia for not accepting deportation flights 3 Days Later 25% tariffs were proposed on Canada and Mexico with an additional 10% tariff to be placed on Chinese Goods on top of the tariffs already paid for those Imports those were supposed to go in effect on the fourth but then on the 3D they were delayed by

30 days but only for Canada and Mexico China's tariffs were put into effect and they hit back with a selection of their own tariffs a week later tariffs are announced on steal on aluminum by removing exemptions from tariffs set back in 2018 3 Days Later reciprocal tariffs are announced for countries Beyond China Canada and Mexico and warnings are issued that no country will be spared two weeks after that the Commerce department is directed to start looking into the viability of copper tariffs 3 days after that the 25% tariffs on Canada and Mexico went into effect

with some carve outs for things like energy which were taxed at 10% the additional tariff on Chinese Imports was also raised from 10% to 20% all three countries retaliate with tariffs of their own on select American Goods one day later those tariffs are pulled back but only for us automakers then a day after the tariffs are delayed for everyone once again for another 25 days but they will go into effect on the 2nd of April for real this time to start this week tariffs were also placed on Australia the UK and Europe with a threatened

200% tariff on wine and champagne after the European Union threatened a 50% tariff on American whiskey in response to America putting 25% tariffs on steel and aluminum by the time you actually watch this video it's highly likely that these tariffs will either be delayed escalated renegotiated or forgotten about but that's the story so far now hot take alert but tariffs if used correctly can be useful instruments to encourage local business development protect American jobs and maintain strategic Industries but if we are going to get these benefits and minimize the side effects there needs to be

a clear plan implemented over a long enough time to give businesses time to adapt now if you are watching this you might be starting to think that maybe this is all just reactionary and that there isn't actually a plan behind all these on off again tariffs more trade policy changes have been announced in the last 2 months than in the decade that came before now when businesses and investors don't know what to expect next the only good option they have left is to play it as safe as possible which is why we have seen such

a large selloff in the last month now I know what you might be thinking who cares you have probably heard the anecdote a 100 times the stock market is not the economy and these losses will overwhelmingly be felt by people who already have Financial Security because well they own almost all the stocks if anything this crash might be a good opportunity to even the financial playing field between existing asset owners ERS and people who work for their money right wrong unfortunately the stock market is not the economy until it's the stock market that's doing badly

so it's time to learn how many Works to find out what happens to a pump and DP economy when it's all out of pump to give this week's video is sponsored by story blocks we use a lot of footage in our videos and if you've ever bought stock Clips individually you know how expensive that can get that's where story blocks comes in it gives us unlimited downloads of of highquality stock video music sound effects and templates all for one predictable subscription cost whether we need cinematic b-roll Motion Graphics or the perfect background track story blocks

has everything in one place making our workflow faster and more affordable plus everything is royaltyfree with clearcut licensing so we never have to worry about copyright claims if you ever want to start making videos like ours and build your own business a story block subscription is the perfect place to start to get started with unlim lied stock media downloads at one set price head over to story blocks.com many works or click the link in the description I want to make it clear that included in the group of people that don't know what is going on

right now is you me anybody you are going to watch online corporate Executives and probably even most of the people making the actual decisions this is a real problem for businesses because here's the important thing even planning for a bad future is better than not being able to plan at all if tariffs were implemented broadly on amongst all of our large trading partners at a high rate of like 25% that would be bad it would slow down business disrupt Supply chains and lead to retaliatory tariffs that make our exports less attractive to Global customers sure

some of these costs could be passed along to Consumers but I don't know if you have notice but most consumers really can't bear any more cost right now so yeah this would be bad but businesses could slowly adapt it by moving Supply chains on Shore working out deals with domestic suppliers and focusing more on selling to the American Market however businesses don't want to make these massive Investments if the rules are just going to change all over again because then they will have effectively just wasted their money car companies are the perfect example of this

they produce very complex end products made of hundreds of components and factories that take years to get online so un surprisingly they aren't really changing anything until they really know what the trade landscape is going to be long term there are however some companies that have ignored this trend although not exactly for the best reasons big retailers like wal have significantly increased the amount of inventory they are keeping on hand so that they can keep their shelf stocked more consistently while these trade Wars figure themselves out this might help them Outlast their competition by a

few weeks but holding this much inventory is generally bad for business and there is a limit to how much they can actually keep even at their current elevated levels and even if consumer Behavior was totally predictable their supplies would run out in a little over 4 weeks the other businesses are mostly tech companies announcing major investments into Data Centers and energy infrastructure to develop artificial intelligence here in America and there have been some truly ludicrous numbers being thrown around now spending hundreds of billions of dollars to further accelerate the production of AI slop might not

sound like your idea of a great investment but even if the end product is not ideal these Investments can do a lot of good all of this infrastructure needs to be constructed by skilled technicians and even though it feels at least a little bit dystopian that tech companies are onling their own nuclear power plants to feed their insatiable appetite for energy that's still going to give jobs to a lot of people in an area that really needs more funding but here is the thing about big public investment announcements they're free the companies making these announcements

don't actually have to follow through on them and in most cases they don't Apple recently announced a plan to invest $500 billion here in America an investment that would also create 20,000 new jobs this was widely celebrated and supported by politicians who wanted to talk about their business friendly credentials but if you've been paying attention it does sound awfully familiar back in 2018 Apple announced a $350 billion investment into the American economy which would also create 20,000 jobs 3 years later after the inauguration of Joe Biden and the news about more regulations on Tech monopolies

Apple made another announcement about investing $430 billion in a plan that would you guessed it create 20,000 American jobs now apple is not alone most companies do this apple is just particularly bad at not even pretending to change their homework AB bet Elon Musk has also built an Infamous reputation for over promising and underd delivering in his business but love him or hate him he is basically doing the same thing that every other tech company in America is doing he is just getting up and announcing it personally but why do they do this well there

are three reasons the first is that it's a great way to get politicians on your side lawmakers on both sides of the aisle love a good headline they can post about their booming economy and big Investments That create lots of jobs are exciting to most people it also lets them push back against any of the those nasty regulations if you are the CEO of a company about to catch the attention of the FTC you can just call up the politician you have on a retainer and say that if a law goes through or your company

gets investigated for anti-competitive practices you may not be able to commit to the big Investments you had planned and wouldn't that just be terrible these announcements can also be used to secure co-investments from the government or relax regulations to let these businesses make their supposed Investments without getting bogged down by pesky red tape the second reason is that people just forget about it how many people are that interested in the budget planning of large companies over the next 5 years apart from sophisticated investors who won't really care if the company doesn't blow half a trillion

dollar on some PR project and just a stock BuyBacks with that money instead the third reason is that it pumps up stock values regular investors will see a company making a big investment into a hot new industry that signals that a the company has half a trillion dollars to invest and B the company is optimistic enough about its future to use that money if companies can give the impression of making big Investments without needing to put those Investments and their financial statements that's a big win the expectation of unlimited future growth is why these companies

have become so unbelievably valuable over just the last decade picking on Apple again its profits have only increased by 80% over the past decade but its valuation has increased by over 330% we spoke about stretch valuations last week but something I forgot to mention is that this only works that people expect even the biggest companies in the world to keep growing extremely quickly which is getting harder and harder so maybe this market crash is at worst correcting investor expectations or at best a buying opportunity that will let new investors get access at more reasonable prices

but there are some problems with this idea the first is that buying the dip is just timing the market which for most investors is a really bad idea and you don't want to make the plain bagel angry with bad personal financial decisions do you The Wider problem though is buying the dip with what household savings are approaching record lows and unfortunately as companies have to answer to their shareholders they are likely to continue with layoff to minimize their expenses during the period of uncertainty and that's to say nothing of the employees that have been laid

off from historically stable government jobs it might be cathartic to watch the net worth of some of the richest people in the world tank with the down Market but even though they are technically more exposed to the market they will almost certainly be able to survive economic turbulence better than most households some like Warren Buffett's Brookshire hathway have slowly been accumulating hundreds of billions of dollars in cash so yeah old man Buffett is going to have a great time buying the dip everybody else probably not so much now all right even if the stock market

gets more Consolidated maybe a market crash will be an opportunity for average people to get into something that's becoming an even bigger asset Market if real estate becomes a declining investment maybe that will be good for people who just want to buy a home right well even if prices do fall go and watch this video to find out why unfortunately a real estate crash probably won't help you and make sure to like And subscribe to keep keep on learning how money works