Federal Reserve reset: how debt, inflation and a new chair shift wealth

0:00If you hold a 401k, a savings account, bonds, stocks, or even cryptocurrency, what the Federal Reserve just did and who they're about to put in charge could either protect your wealth or leave you financially devastated. A bit like Winston looks fairly devastated back there, doesn't he? He doesn't like bad news. But according to the Fed's own announcement, they just stopped shredding money.

0:30And betting markets are now giving Kevin Hassett, a former investment banker, bit like myself, with a 7-figure Coinbase stake, that's not me, a 75% probability of becoming the next Fed chair. I don't want to be Fed chair. Sounds like a lot of work, doesn't it? Better to snooze near a Christmas tree.

0:50But this combination could trigger the biggest money printing event since the COVID pandemic and it could transfer trillions of dollars from savers to asset owners, i.e. investors. My name is Felix Prehn. I am also a former investment banker. I apologise for that. That's Winston back there. And I've been studying for years how Wall Street actually operates. I'm also the founder of the GOAT Academy where we've taught over 20,000 students and the co-founder of TradeMission.io where we provide you with Wall Street quality news alerts and data that's better than what most retail investors get.

1:29And for that by the way there is still a Black Friday deal out there. I think go to freed.org/tradevision. There'll be a link down below. There's a free trial. Zero risk, risk free. But what I've dedicated my retirement to now is to teach and help protect ordinary people like you and me and help them protect their wealth from the schemes and the financial engineering out there that's meant to take it and transfer it to the lovies on Wall Street.

1:59So for this video, I've been analysing Federal Reserve minute meetings and tracking the betting markets on who becomes the next Fed chair. I reviewed Kevin Hassett's policy statements and studied what happened the last three times the Fed pivoted from tightening to easy with help from Winston back there. We have put this all together for you and to get you as informed as possible in a very very short period of time.

2:25So here's what you're going to learn today. Three critical things. First, what the Fed just did and why it matters to your money. Second, who Kevin Hassett is and what his appointment as Fed chair means, not just generally, but for your dollars, dollars in your wallet. And third, how exactly to position yourself to profit from this wealth transfer instead of being a victim of it. Most people will be a victim of it. So you're going to understand all of that by the end of this video.

2:55Now, we got to take one step back. America's got $30-something trillion worth of debt. More than $100,000 for every single American man, woman, and child, and possibly even golden retriever. So it's basically like owing about 6 times your annual salary, massive, massive unsustainable debt crisis, $3 billion paid in interest every day, rising unemployment.

3:19So think about it this way. If you earned $100,000 a year and you owe $130,000 on credit cards a year and you pay just $30k already in interest only, that is literally where the United States is right now. Now, this isn't the first time major powers faced a debt crisis like this. Let me give you three historical examples to show you what happens next.

3:41First, we had the Nixon shock in 1971. The US had too much debt. Foreign countries were demanding gold for their dollars and the US couldn't pay. So President Nixon ended the gold standard. He literally just cut the tie of the dollar to gold. What happened? Massive, massive inflation. The 1970s had inflation over 10%. But if you owned gold or stocks or real estate, you weren't just fine, you were great. If you held cash or bonds, you got destroyed.

4:14Second, we have 1989, the Brady Plan. Latin America had a massive debt crisis. Mexico, Brazil couldn't pay their debts. So what did they do? They restructured their debt into new bonds. Brady bonds backed by US treasuries. So they basically swapped old debt for new debt with better terms. It's kind of exactly the sort of financial engineering we might see with stablecoins here today.

4:44And then third and most recent, the pandemic money print. 2020 to 2021. The Fed bought trillions of dollars in bonds with money they just vanished out of thin air. A magician's act. So the government sent out stimulus checks to you. Interest rates went to zero. What happened? Well, the stock market went absolutely bananas, right? Real estate went up 30 to 40%. Crypto just went parabolic and then guess what? Inflation came in in 2022. Inflation hits 9%.

5:19And the Fed has to go, "Oh, let's put on the brakes, shall we?" But every single time a government faces a debt crisis, they will choose inflation over default. They will print money. They restructure debt. They devalue the currency, which is your money. And every time asset owners win, cash holders lose. Salarymen, they lose.

5:43And I'll tell you why. The solutions are these. The first solution is you print more money. Well, you get hyperinflation. You become Zimbabwe. Well, not quite. But you lose a lot of your money, loses a lot of value. We saw that in 2022. Right now, you could just cut spending, but that's political suicide. That's never going to happen. You could default on the dollar. That's just a ridiculous idea. No one's ever going to do that.

6:05Well, you could raise taxes, right? You going to vote for the guy says, I'm going to raise your taxes? No, you won't. Sounds like a nice idea, but no one's going to do that. Plus, taxes will not pay $36 trillion down. Well, you could grow the economy. That's the present plan. You'd need 7 to 8% growth for decades. It's never happened before. It's very unlikely to happen now. So there's actually no way out of this. And that's why the Fed is about to try something different.

6:35The only viable path forward, and my experience tells me this is coming, it is a monetary reset. They're going to use stablecoins. They're going to use inflation. So how does it work? The Fed keeps interest rates low. The new guy's going to deliver that. They start printing money. QE just means money printer, right? And then they're going to buy government debt and they're going to allow inflation to run at 3 to 4% officially.

7:06Government numbers obviously always fudged so in reality it'll be much higher but they'll tell you it's only 3 to 4%. So they don't want you to freak out and that slowly reduces the value of the debt. And then they're going to integrate stablecoins. It will give them more control over money. Kevin Hassett with his 7-figure Coinbase stake and his crypto-loving background is the perfect person to oversee this.

7:33But here's what Wall Street doesn't actually want you to know. The critical thing here isn't really what stock to be in. It's about having a rule book that'll guide you through the new phase that's coming and any phase that's coming because actually the Wall Street rule book is pretty much always the same. And once you understand those simple three rules, which I'll teach you if you join me on Saturday at felixfriends.org/training, and that'll be the last time we're going to run that training for ages because the actual mentoring programme behind that, we can't take on any more students after this set because we teach one-on-one.

8:08My mentors are Wall Street guys. 20, 30, 40, 50 years experience of working on Wall Street. And they can only look after so many people one-on-one, which is why we're actually going to run this for the last time. So if you want to join me, there is the link felix/trading. It's also in the description down below. It's completely free. I'm just going to teach you, right? I'm going to walk you through. If you wish to learn more from us, you can, but you don't have to.

8:34And look, I can imagine the comments coming up. And look, I know what I trigger when I talk about things like this. People don't want this to be true. I get people think it's a conspiracy theory. You're basically saying, Felix, you're saying the Fed's going to deliberately inflate away debt. You're saying they're going to coordinate with a crypto-friendly Fed chair to integrate digital dollars and control us. Yeah. Let me show you that this isn't a conspiracy. It is pattern recognition, which is really what I do.

9:02Remember that announcement I mentioned at the beginning of the video here? They officially stopped quantitative tightening which is money shredding. So for the last three years since 2022 they've been shredding money gently but slowly, that stops. The next thing that's going to happen is on December 9th and 10th there is a Fed meeting and the market expects a rate cut. Why? Because unemployment is rising, layoffs are increasing and the economy is slowing. The Fed doesn't want a recession.

9:37And then the third step is a new Fed chair. Jerome Powell's term ends. It's kind of funny that Jerome Powell was appointed by Trump and now Trump gets to appoint the successor. Kevin Hassett has a 75% likelihood of being that successor. And he's not some random guy. Hassett is the director of the National Economic Council. He's been publicly defending Trump's economic policies, including lower interest rates, and pro-growth. He's promising cheaper car loans, lower mortgage rates, easier access to credit. Sounds like a politician, not like a Fed chair.

10:12And the guy owns a 7-figure stake in Coinbase. He also got paid in the past by Coinbase's academic and regulatory advisory council. So he's pretty close to crypto. He understands crypto and digital assets. So let's connect the dots. The Fed stops pulling money out of the economy. They start cutting rates. They appoint a Fed chair who's crypto friendly. You get lower rates. The Fed is now aligned with Trump's pro-growth agenda. What's the logical next step? You restart money printing. What'll that do? It'll pump the economy and it'll pump the market. That's the play. But we've seen it, right? To me, this isn't

10:52An if, it is when. To me that is happening very, very, very soon. So how does this work? Well, you print money and you create 3 to 4% inflation. It'll probably be more but that'll be the official lie. Sorry, the official set of government statistics. Saved myself there, didn't I? You lose about 3 to 4% on your cash. Now it isn't just cash, it is also salaries.

11:16So even if you get a 4% pay rise, you're exactly at square one. Didn't get anything. Asset owners on the other hand, and if you're an investor you're an asset owner, you get 10 to 20% growth. So it is a hidden tax on the have-nots because they typically hold cash and they typically live purely off salaries. So how does that work in the long run? Well, let's do this for 5 years. 100k in cash is now worth 82k. So you're down 18k, right? 100k in stocks, you're now 200k. So actually you're not down 18k because someone else is up 100k. So you're actually down 118k. You see what I'm saying? Because you got to really add that up together, which is 136,000.

12:02That is now the wealth difference between the salary, live paycheque to paycheque people and investors, right? I think it's 136 if you follow my maths. That is big. Let me break it down for you in a way that really shows you who the real beneficiary is. It's actually not investors. But it actually gets much worse, and I'll tell you why.

12:22Let me explain how this actually works. So up here you have the Fed. What do they do? They print money, new money, digital money. Where does that money then go? Well, one of the things that happens, of course, they buy government debt. So they make it easier for the government to finance this debt. But you also have banks like JP Morgan, Bank of America, and so on. And those guys hold a lot of bonds. So what do they do? They pass their bonds up to the Fed. The Fed gives them those new digital dollars and JP Morgan will then lend that money out to whom?

13:03Businesses, car loans, credit cards, that sort of thing. And for every dollar that they get up here, they can lend out about 90. Now, if you lend money to a business, and this is where it gets a bit interesting, that business, if you lend a business a dollar, they will usually put most of that money in the bank account because they're keeping it there to invest down the road. So the business actually puts back a lot of the money into JP Morgan. And what does JP Morgan then do with that money? Well, they can take that new money and they can lend it out once more. So you can create this sort of cycle whereby JP Morgan just wins again and again and again because they're lending the same money over and over and over. That's how banking works, right?

13:51So who really wins from this? Is it asset investors? Yes, we do. But it is also the banks very, very much, right? And if you look at the guys running this place, well there's a lot of bankers in there, right? But what do we want to be invested in? Well, stocks, index funds, real estate, REITs. Just be careful what you own there. I wouldn't be in the residential stuff. Gold, silver, crypto has all done very well. Doesn't mean you should run out and buy it just because I'm mentioning it, but you see what I mean. But you don't want to be in long-term bonds. They typically lose value. You don't want to have lots of cash. And you don't want to have high interest debt. That's typically the places that lose, right?

14:31So what am I expecting? This is my timeline. You might want to write this down. I think we're going to get massive rate cuts in the next 6 to 12 months. We're going to get some ups and downs on that, some choppiness. We're going to get in the next year, I think money printing will restart, initially in a secret way and then more bolder. And the wealth gap will widen, and I don't mean the rich and poor. I mean the middle class and the rich, that wealth gap will widen.

14:58Why? Because someone who is already rich gets almost his entire income from assets, whereas someone who is middle class, professional, that kind of thing, they get most of their money from a salary. Now the salary is basically cash, so it'll lose value, and they haven't got enough money in assets, which is what would make them rich. So my advice to you would be have more money in assets. It's going to make you rich most likely.

15:25So what do we do here? We look at what we own. We learn how we become better investors. You can start by joining me on Saturday at felix.org/webinar and I'll teach you for free. The link's down below in the description and I'll walk you through Wall Street's own rules for what we buy in this scenario and in any other scenario. And it'll be very simple. It'll take me about probably an hour and a half or so to teach you. And it'll be fun, it'll be free.

15:54And my whole plan and goal here is to get more and more people to financial nirvana where you are actually free and you can make the decisions you want to make, not because you have to make them. And you think your government has low taxes and is a low tax presidency, and it's not a political statement, but it's just not true because inflation is a tax and they're planning to tax you that way. So governments will always find ways to tax you, hidden or not. This is a hidden way of doing it. You now understand it.

16:22Next is what can you do about that? So join me on Saturday. I wish you all the best, take care. Nvidia destroyed a $2 billion cheque for one company, not a chip maker, a software company most people have never heard of. And the stock jumped 8% that.