"What's Coming Is WORSE Than A Recession" — Robert Kiyosaki's Last WARNING

the date of today is important date and the reason that's important is just yesterday at davl Switzerland the IMF stood up and said the world economy is hitting into the worst economic headwinds since World War II the worst and that's why it could be bad news but depending how you look at it it could be very good news this is about as macro environment as I've ever seen and I think most people's read on it is probably wrong right now I'm going to go take you through a history lesson and then we'll get to today

tell you why I'm concerned so why World War II World War II was a fascinating period because like covid the entire world had basically been stuck at home or been on battlefields everyone came back there was no supply of Commodities and goods Global Supply chains were broken and everybody came back and started consuming again and guess what inflation went up to 133% or something maybe even higher and that period was fascinating because interest rates went up and the first thing that happened was the economy went straight back into recession and inflation went negative because it

was a massive tightening of monetary conditions you raised the cost of goods on people and didn't raise their salaries enough people couldn't get the goods that they wanted exactly like now and everything collapsed so we went back into recession and then eventually some better times and I'll come back into the 19 40s and 50s cuz I think it's a really important parallel that most people misunderstand the next time we saw anything remotely like this was 1974 a lot of people tell you it's the' 70s again inflation inflation well the inflation episode we had in the

late '70s was driven by demographics that was the Baby Boomers entering the workforce all at the same time it was the largest demand Shock the World had ever seen and we had a supply shock of this oil crisis of the Arab Oil Embargo that's not repeating now what is actually more similar as 1974 1974 was the Arab Oil Embargo the price of oil tripled and interest rates went up inflation shot up and the immediate effect was the economy went down the toilet Almost Do not pass go the stock market fell 50% and the ism survey

which is a good Guide to the business cycle anytime it crosses below 50 suggests the econom is getting weak a recession comes at about 47 it hit 30 which was the lowest in all history and it happened in the space of 4 months based on exactly the same kind of setup we've got now so are you saying that the 70s are now are pretty close yes and inflation fell in 1974 afterwards people are still thinking inflation goes on forever it did not and it did not in the 1940s either then the next one up is

1984 we saw an issue where global trade there was a huge amount of trade disputes the dollar was pretty strong like it is now interest rates were going up and inflation was high and everybody was fearing looking back and saying oh we don't want the early ' 80s late '70s again the inflation inflation so vulka was tightening rates too much and the economy collapsed it didn't go to recession because the FED quickly started cutting rates but the dollar went up a lot more and created a lot more problems when we ended up with a plaza

record in 1985 when everybody had to stop the dollar going up from destroying the global economy so then the next time we see something similar was 2008 if you remember the oil price was at $147 inflation was 6% the FED had been cutting into that because the economy was imploding 2018 exactly the same oil prices High inflation High the FED were hiking rates trying to tighten the balance sheet what happened is the economy rolled over really quickly again okay so what's going on here why does this phenomena keep happening everyone extrapolates inflation out forever what

actually happens is that consumption Falls because we've tightened monetary conditions so tightening monetary conditions to Ordinary People means the cost of your mortgage has gone up at the fastest Pace in history over a oneyear period mortgage rates have never risen this fast so any money you've borrowed has suddenly got much more expensive your wages haven't kept up with the cost of just basic services like food so you're actually feeling poorer so you can't consume as much and you start not consuming other things people overextended on housing because they rushed into housing and rates have gone

up for them also just the rise in things like the cost of oil has meant that you know gas prices all of this stuff and then the rise in the dollar which is a monetary tightening all of these things get together would suggest that the ism is going back to 30 which is as it was in 1974 which is a terrifying form and it's suggesting that if we're not careful we could have a very sharp nasty recession meaning kind of a negative 5% GDP recession it might be short depend what the FED does and we'll

come on to that in a bit so we've got the setup that we've seen many times in the past we've got the forward-looking indicators this monetary tightening suggesting we've got some real pain to come then the anecdotal evidence we're seeing all the tech companies who were bullet proof laying off stuff and giving earnings warnings because everybody can't raise prices enough so their margins are falling and people have overextended Amazon said we've hired too many people they're one of the biggest employees in the United States okay this is not good but the answer to higher prices

is higher prices and that's what's happened and everybody's looking around saying well what's going to break when stuff like this happens the market goes down something's going to break you know we're looking what bank is it what hedge fund is it the actual answer is it's the economy the economy has just broken and the FED are going to have to Pivot the monetary conditions that we have imposed on corporates and people is the biggest tightening in all history we've also got China slowing down very fast because a lockdowns but also they've been in recession and

Europe with a war and having to deal with this energy transition so we've got no leg of global growth here now the question is how bad does this get let's talk some scenario when people use the word recession that means two backto back quarters of negative growth that's the technical definition of a recession to you and me I think it means a loss of jobs and a loss in your net worth because it's the falling of asset prices that comes with a recession what's the possibility of sliding to a depression so depression I would suggest

is a much longer more extended period I don't think that can happen right now now I don't say that with certainty I never do talking probabilities the reason being is there's one piece of Magic the FED balance sheet the FED balance sheet disguises all bad things because what it does is when they print money it lowers the purchasing power of the dollar and most of the central banks at the same time do it and people always think it's going to be inflation is what it leads to it leads to something much more pernicious and evil

which is the debasement of currency and what that does how it manifests itself is all of these scarce assets equities real estate gold crypto go up a lot but all they're doing is reflecting the devaluation of the F currency itself so that optically can change everything because suddenly all of these things go up everybody feels okay and it changes the outcome people are still worse off generally but it's a trick and so I think that trick gets played again pretty soon this time I think the trick gets played in a different way which was the

other Genie that came out of the bottle in 2020 which the Europeans are doing now some states in the US are doing Japan is doing India is doing which is direct transfer payments to individuals when I heard you talking about the that rail I thought you went to the dark site man mmt Ubi and all that stuff which is too many Marxist but you're also looking at from the humanitarian side regardless of what our political economic views are this is what is going to happen so we have to judge it with that lens not how

we would like it to be but what it will be what the probabilities are look at the emptying office spaces cuz people are not going back to work I mean this is not an ordinary recession you know Apple says they're not going to go back to work you look all the Office Buildings empty and you know residential real estate depends upon jobs you know what I mean if you're saying recession means means a loss of jobs which Amazon's laying off what happens to real estate wherever they have an Amazon office this is the ripple effect

which is why I'm saying that was one of the biggest announcements I ever heard that the IMF is saying the world faces one of the biggest economic challenges since World War I but one thing that he mentioned talked about debasement of currency so here's a penny it's copper and in 1964 I was looking at the quarters and dimes same color do you know what I mean it's the same color so basically 1964 dimes quarters and half dollars became copper and that's what you were talking about debasement and I think we're paying the price for it

because I'm really glad you started with history because macroeconomics is history you have to look back in time and every time people did this first was a Chinese they printed paper money and the Chinese Empire collapsed and then when the Romans did the same thing debased the currency the Roman Empire collapsed you're looking at the end of the American Empire I think it's going to happen at a shocking speed so 1974 we went from everything looks okay to the worst recession since World War II in 4 months I'm thinking it's going to look similar because

of the speed of the monetary tightening the speed of the rise of prices so I think we are going to have a very ugly few months both economically and for markets the question is what comes next and that's the key point if my base case comes into play which is the Fed pivot and after that they will say well we're just going to see and we'll see the economy start going down the toilet and they will start thinking well we're not going to do QT now either so they're not going to start shrinking the FED

balance sheet and before you know it we're going to be talking about rate Cuts but we don't have many rates to cut you know rates are nowhere so the only outcome is they're going to have to print money the credit markets are already starting to dry up that's usually an indicator the housing Market's rolling over printing money is this stuff here you have a silver coin you have a copper coin made silver right basically it's called de basing the currency which the Romans and Chinese already did yeah because don't forget the basement of currency Works

in a simple way if you're really thirsty and I have a bottle of water you'll pay anything for it if you're really thirsty and I've got five bottles of water you're kind of thinking yeah I probably need some of that water I'll buy them all but at a lower price if I say here's a million bottles of water you don't want any of it because there's too much water now it has no scarcity so if you make too much of something it becomes less valuable so if D Vinci created 50 million pieces of art guess

what they're worthless and so it's that concept and what it does is if something gets devalued versus something else so we're not making more shares in the S&P actually what we're doing is buying them back making less of them therefore the S&P goes up real estate yes there's periods where we try and create new real estate but generally real estate prices go up versus the fair balance sheet because it's a relatively scarce asset same with gold same with crypto so that's the phenomena depends how fast they deploy the balance sheet cuz this balance sheet magic

optically changes markets and if markets go up then household net worth stabilizes and spending comes back companies stop laying people off so it's actually a bit of a magic trick it comes down you know that wall saying the bull goes up the stairs the bear goes out the window the bear is about to go out the window the question is when does a bull start climbing again right and we either go through a scenario like 2000 which was a typical old school recession where Equity markets Unwound excesses the B Market was 18 months or so

and then the FED keep cutting rates and eventually it stabilizes but if we look at 2008 which was the next recession as soon as the FED used the FED balance sheet we pretty much stopped in its tracks really quite quick after they did that they cut rates first didn't really help cuz the banks had seized up then they used the balance sheet then they did it again in 2010 12 16 and then 18 was the FED pivot the PO pivot where they went from hiking to oh my God we need to cut TR older the

guy he says you cut this out you're killing my economy that's right so inflation had gone up pal like well I need to do this but the economy cannot take higher rates cuz everybody's so in debt and everybody's so old that is the problem so here we are we have employers not going back to work so all these reats raits real estate investment trusts they own all these Office Buildings and then there never has the FED I think it was a 30 trillion dollar debt now with 200 trillion off balance sheet and they keep cutting

rates and this but the question is can they keep doing the same thing given the conditions this is going to take us back to the 1940s in a sec but you're going to get destroyed because of the supply chain issues because of Co and all of this and your wages won't keep up so we're going to destroy household net worth and everything's levered so all the borrowings against houses and all the borrowings against equities and all of the borrowings on top of borrowings and you're going to let the collateral go down and blow the entire

thing up but isn't that what they're doing when they say they're going to pay off the student loan debt that's forgiveness that's mmt right which is coming whether we like it or not what they're trying to do is reduce the debt via Financial repression which is you basically have inflation running slightly higher so you have then interest rates so what you want is to reduce the real value of the debt so if you think back to your parents how much they paid for a house and the mortgage they had the mortgage seems laughable it's because

over time inflation rais the value of the house and the debt doesn't get raised so in the end the debt is nothing so the way that is this stuff here make the money less valuable correct it makes the debt less valuable right so it's okay if you're in debt but if you're lending money it becomes complicated but the point being is you either have a fiscal stimulus which is let's say the Republican view we'll have a fiscal culus cut taxes and we'll put some spending and what happens is is that doesn't go to the people

who are the worst off it's creating this issue of 1% versus 99 which nobody can see and nobody knows how to solve the issue is actually the balance sheet cuz all of the expensive assets keep going up cuz they keep printing money get richer but doing this blanket fiscal stimulus is hard because the rich get richer again so I think people have thought well maybe we should just try and give it directly to the people who are most affected okay those are the two choices or you do nothing which is too late because there's too

much debt so you can't let the system clear anymore the old way would have been you let the system clear it's all okay you just have a recession everyone stops borrowing as much money blah blah blah blah blah the world is 400% of GDP in debt the world has never been this in debt in all economic history let's go back to the 1940s now and figure out how bad it was then this was the very similar setup the worst supply chain issues massive inflation everybody coming back in but what happened was the economy collapsed then

interest rates came down and they stabilized and they stabilized cuz the FED stabilized them and inflation was running slightly hot 3% and bond yields are about 2% so real rates meaning you in the property Market are going to make a lot of money so negative real rates become very good for assets and what happened in the 1940s and 50s was a massive economic boom what we actually got was the value of the war debt eroding because of this financial repression we had the value of assets like housing the equity Market went up 900% over that

period of time there was a lot of fiscal stimulus because you had to rebuild after the war and companies were building factories so if you think of now companies are going to be rebuilding factories in the United States or in Europe and not in China so that's going to Gad some stimulus yes the jobs are not there it's robots in the factories but it's still stimulus for the economy the government will do some stimulus as we've talked about interest rates will remain relatively low inflation will remain controllable but a little bit higher than it has

been and what that sets off is a period of stability and boom because there's so much technology you know there's a lot of big things happening in the world that could be so that would be my rosy outcome would be that and I think that is still my highest probability that we kind of muddled through this in a way that we don't expect cuz it feels like the end of the world imagine what it must have felt like in 1948 all you can see is the end of the world and then you get this massive

inflation you just think this is the worst thing that could possibly happen what actually came out of it was something very different it was the rise of Technology it was the rise of the us as a big superpower it was a rise of the rebuilding of Europe the of Japan it was an incredible period the Britain Woods agreement where the dollar became the reserve currency of the world and all these really good things happened for America it's the same moment all of those things got built then every one of them from the Geneva Convention to

the IMF to the World Bank to the United Nations they all came in that period 47 right same time is this what they're kind of alluding to with the great reset it's all going to change again yeah it's the fourth turning and that's where we are and this may be the final event of the fourth turning it maybe just another phase of pushing this towards it 2008 2020 and maybe now it just keeps moving the world to the direction that we all know it has to go is we need to stop what we're doing and

change what we're doing I always say the bond market is the truth the bond market the job of bond market participants is two things only what is the future rate of inflation and what's economic growth now in the stock market it's like earnings and this and emotion and all that the bond market is simply two things so they usually get it right and this is a structural shift in the glob glal economy if we're right here and you got cash and we're going to see this big who and it probably means that the economy and

asset prices there's certain things it's going to set up for what we're looking for if you want to generate wealth this is the time to step up yeah this is the best time macroeconomics is through history you know the fall of Empires and all this I think we're falling right now you know that's a huge problem all Cycles go through up it's approximately the age of a human being 20 years 20 years 20 years you know said that also and it's matures and the whole thing changes fourth training is always marked by weak leadership and

then we have that today but the people that get hammered are the people operating on yesterday's ideas we talked about how bull markets make stupid people look smart you know so you could be really stupid and you put your money on Apple and you got really rich or Bitcoin and oh my God I'm rich I'm smart and then the bare Market makes shows you how stupid you are and that's why what r is saying is going to come quick all the stupid people who think they're smart are going to find out how stupid they are

and it's going to be a very interesting time when the crash comes it comes so fast on you you don't know what's going to hit I think the most important message from today's lesson is this the bull has been going up the stairs for a while now it's about to go out the window so that's what in davil Switzerland when the IMF says we're going to face the biggest economic headwinds and voila I can't believe that what a gift I'm predicting the biggest bust in world history is coming so it's going to be the biggest

opportunity of all times because you know Kim and I made our fortunes 2008 remember quantitative easing when it first came out Ben beri never said that it was qe1 he just said it was Q because we weren't supposed to have a two three and now Infinity but what happens is the economy gets addicted to it so now the economy is addicted to stimulus government spending and there for addicted to this money printing mmt whatever you want to call it so that's what the average investor needs to be cognizant of because they have to adjust their

portfolio accordingly if they don't then they're really going to have some financial difficulties in the future what that means is simply there's more currency units in the economy that are chasing goods and services so there's more dollars fake money there fake news fake money the dollar is fake money because it's just an IOU and to make it more extreme all your checking account is is the bank saying we owe you IUS it's like a double IOU but they're creating more dollars so it's just simple math if there's more dollars out there chasing the same amount

or fewer goods and services most likely the price of those goods and services are going to increase and if prices are going to increase over the next call it 10 15 years significantly you need to have your portfolio set up in a much different way than if prices were to go down or stay the same over the next 10 to 15 years the reason I call it fake money is the more the FED prints money the rich get rich you know we have asset inflation right now we have asset inflation in the stock market bond

market real estate market it's really it's feeding the rich so you bi mmt quantity us making the rich rich unfortunately the middle class will pay higher taxes because the rich don't pay taxes but what it does when you have Universal basic income in mmt the poor get poor you know so if you're a poor person you can't afford a house now because of real estate prices are so high you know and if you have Universal basic income I don't think a bank will touch you you know if you want to buy real estate yeah it's

like the what was it in the Roman days the bread and circus it seems like it's the same thing today with these stimulus checks and the Ubi is that people are getting a couple bucks in the mail and they're thinking that's fantastic well at the same time they're not realizing that they're being priced out of every single asset denominated in dollars and if they do try to buy a house or if they do try to invest in stocks or bonds and if they don't know what they're doing they're going to get steamrolled because everything is

in a bubble thanks to the fed the money printing the artificially low interest rates and Ubi will accelerate them that's right it'll make the bubble so big it turns into a Mania you know what's interesting too you use the word Mania and we hear a lot in the media right now with this cancel culture where everyone is hysterical about everything else but there's also a lot of Hysteria in the stock market in all these asset classes so it's like we live in this world where everyone is hysterical about something it's just kind of pick your

poison there's capital gains and there's cash flow and you got to know what you're going for so in real estate or in stocks or in bonds people most of the time are going for capital gains so when a person flips a house they're going to buy it for 100 goes to 200 they're going to net but the trouble with capital gains is you pay tax on it but the other part there's always a boom and a bust and I predicting the biggest bust in world history is coming so it's going to be the biggest opportunity

of all times because you know Kim and I made our fortunes 2008 because you know we had apartment houses and our tenants were leaving to buy their houses they couldn't afford I me there was a thing called a ninja loan no income no job okay so there booms bus capital GES cash flow and there's a thing called you know in there's always the opposite I was at the gym just now before everybody came out I said I felt for this guy he says I've been a bus driver for 40 years I'm going to retire and

I can't wait you know he's turned 65 I said what do you got he said I got a 401k I said what's it filled with he says oh I just sold all my stocks at the top of the market and I went into bonds George what did he just do the most stupid thing you could possibly have done first of all you should never put all your eggs in one basket but especially not the bond market right now with the all the money printing that you referred to earlier you know Robert before you said you

think the market is going to crash so whether that's the stock market real estate market um the question is does it crash in nominal terms or adjusted for inflation see the stock market can stay the same as it is right now but if we get 10% inflation because the money printing you'll actually lose purchasing power you see so the market can crash up just as easy as it can crash down if your definition of a crash is losing purchasing power so if you're someone that believes like I do that once the FED starts printing all

this money the government prints all this money with stimulus and whatnot they cannot stop it's like a heroin addict the only thing they can do is print more and more and more and they can't reverse course then you need to start thinking through your portfolio in terms of hard assets correct something tangible well I'm an entrepreneur but if the crash wipes out your business you have no cash flow and what happened when um a covid hit for Kim and myself cash flow went up you know because the market was demanding more financial education it's always

going up and down in and out and that's what investing is you're the capital cash flow boom bust liquidity all this stuff and that's what Financial education is it's not this poor guy he says I have a 401k and I was told to sell all my stocks and get into the bond market now George would you explain why you said that is the most stupid thing you could do because you're getting a future stream of dollars that's all a bond is you're buying a bond for $1,000 and they're saying okay in 10 years we're going

to give you $1,000 back and along the way we'll pay you a little bit of Interest I mean it's negligible at best so what happens if we have a high rate of inflation because of the money printing you're going to get paid that $1,000 back but it's going to buy you a loaf of bread so you don't get back your purchasing power you only get back your dollars see when I look at the stuff I'm look at the relationship between equities or stocks and bonds and so the reason the stock market went up is it

kept dropping the interest rates on the bonds so you know when I started off interest rates were about 16% so if I had a bond I was getting 16% interest that was a very valuable Bond if they dropped the interest rate to 14% my 16% Bond was more valuable that makes sense it's like my cash flow from the bond or the dividend was good and so when the market kept crashing they dropped up to eight and today I think is about two and a half on the long Bond so as to keep the stock market

up they had to keep dropping the bond prices down and now we're at zero they call it the zero bound yeah and that's for Japan is yeah for a long time they can't keep dropping that bond price the stock market comes down so that's the correlation between equities stocks and bonds this is my question George so let's say today bonds are 2% what happens if it goes to 5% because inflation comes in they have to raise the bond rate to 5% what happens to the 2-year Bond the value of the bonds purchased at 2% goes

down yeah and that's what that guy do that's right he's buying a bunch of stuff with a value you really can't get any capital gain on it that most likely you're going to be stuck holding and that's not going to be good in inflation one of the great things about being an entrepreneur going back to Rich Dad Poor Dad is you put yourself in the position of being a price maker where other people are price takers the majority of people are price takers so they have to take whatever price is offered by whatever it is

they want to buy but the real estate owner the apartment owner let's say or the business owner can raise their prices if the rate of inflation is going up so it Hedges you against inflation while at the same time paying you to own it with that positive cash flow and a bond holder does not have that opportunity to say the least bonds and stocks are liquid real estate's not so it's like that guy buying a bond at 2% nobody wants it if it's 5% so if you buy a piece of real estate let's say in

Dallas Texas and suddenly the prices drop it's hard to get out of that debt on that real estate because it's not liquid yeah so the good thing about the bond he can dump and take his loss now but real estate is El liquid yeah and that's why we highly suggest investing your financial education because it's not an answer to it it's a process and my concern is and I'm not saying don't buy like I was just in Texas it's a Mania because everybody's running out of California New York wherever they're running from and everybody wants

to get out of the Cities so they want a piece of the country so land prices spiked now is that good or bad