How Banks Create Money Without Printing a Single Bill

2, 1. What's going on, everybody? Welcome back to the live stream that we are doing every day, 3 to 4 PM Eastern Standard Time of Uncovering the entirety of crypto, which starts at the foundations of money. Why the modern system is kind of a scam, or at least it was built against you. Pretty much every single subject we're going into extreme detail to fully uncover crypto in its entirety. When I mean the entirety, I mean everything: the basis of the internet itself, money itself, fractional reserve banking, the Federal Reserve. I mean, pretty much like the information they don't teach you in school. We're going to be diving in extreme detail. If you're new here. We do it every day, 3 to 4 PM Eastern Standard Time. So show up 3 to 4 PM Eastern Standard Time. And before we get started, I want to give you guys a quick announcement. CoinPix is giving away a free autonomous trader. So as you can see at the top right here, there's a free auto trader. In that, you're going to see a form. 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And I'm not going to click off of that because we want to go into a course. But today again, we're going to go through the entire financial system. Like last time, I mean, I don't know, we went through went through the properties of money. We went through the banking system, how loans work. We went through the inception of money itself, like how it was created, the reasons why it's important, all the little details that people tend to miss, and their foundation is cracked. So when they go to actually learning crypto, they don't understand why cryptos are significant, or they don't understand why a specific crypto is significant, right? It's all built off of understanding economics, how society works, which I think is important because like I said in other videos, you spend 1/3 of your life Literally working for a paycheck, which is a dollar, right? And that dollar is being depreciated by inflation and other variables that you cannot comprehend. So it is important for everyone. You don't have to be a finance major, but it is one-third of your life. And when I say one-third of your life, you sleep for eight hours, you're doing random stuff for eight hours, and you're at a job for eight hours a day roughly, right? So that's one-third of your entire existence on this planet. You should probably understand why money. Is money and why it works. And obviously, for the purpose of crypto, you can't— if you don't understand what money is, how could you possibly comprehend what a good crypto is? So that's what we're doing today at 3 to 4 PM Eastern Standard Time. And every single day, I've essentially dedicated my life to getting people to understand money, like for the— as long as it takes. We have 7 sections that we're going to be going through, and you can see that on the website on the Learn tab. So if you sign up, this is free as well. You click that Learn tab. I'm not clicking it because actually I could probably open another tab later. 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You could use it if you want, but this is obviously gonna be deeper information. And yeah, I'm just gonna eliminate all those lazy excuses. All you have to do is show up to the live Q&A once a day, 3 to 4 PM Eastern Standard Time. It's gonna be a great time. And this recording will be there for anybody else that missed it. So if you missed any of the last live Q&As, you can go on the learning tab. Again, no matter, I don't know what social media you're watching me at, Last announcement, it's coinpicks.app. coinpicks.app. There should be a link somewhere. I'm sure you can find it. If you can't find it, it's coinpicks.app. That's it. .app. Type that into your browser, create an account real quick, click the Learn tab, and follow along with us to get through the test questions. Before we get started, Does anybody have any questions in the chat or in person? We have an in-person audience here as well. It's learning crypto, so it's a cool, unique experience. And I'm sure you guys are going to have a great time. And he has a link there. Go to coinpix.app to follow along. Yes, yes, yes. Go to coinpix.app. All right. Yesterday we left off specifically looking at modern metal, or I'm sorry, not modern metal. We're looking at metals and we're looking at the banking system. So I actually kind of want to start here to kind of piggyback a little bit. And to kind of refresh where we're at. But what changes— now we're talking about a bank loan, so this is very important. It's one of the most important functions of society is loans, right? Loans are very important. So to make it super simple, I actually want to break this down really simple. I feel like loans are a little bit hard concept for certain people. I'm going to make it dumb, like really simple. So a loan is a promise to get paid back, right? So for example, if I have Tom and Tom's my best friend, And Tom says that he will loan me $500, but I have to pay it back by a certain day, that's a loan. So I'd be like, okay, I'm gonna pay it back in 3 weeks, right? That's normal, right? That's like a normal thing that you would do with your friend or family member. Now, what happens is they charge interest. So I'm gonna ask the audience a question. If I had 2 scenarios, one scenario is Tom is gonna pay back the loan in A month. And then we have another scenario where he's going to pay it back in 2 years. Which scenario gets a higher yield?

2 years?

Yes. Why?

Because that's a longer amount of time that the person has to pay interest on the loan.

Correct. But why specifically in the context of the person giving the loan?

Because there's a higher risk of that person not paying it back within 2 years.

Correct. Oh, yeah. So basically the point here is that it's higher risk, longer period of time. So it's, they want to make more money up front, so they're going to charge you a higher interest rate. This is just how loans work. So it just so happens to be, it might be simple, but the entire economy operates off of like this loan. Like when you see, like for example, America says like, what is it, $7 trillion of government debt right now or something like that? $40 trillion. $40 trillion of government debt, that is loans. And it just so happens to be the last time I did the calculation, 93% of all money in existence is from debt. So even circulating supply and the way it's made through interest rate policy, it's loaned money. So it's one of the most significant portions of your life. So you need to understand that mechanic. And what I mean by that is there's something called interest rate policy. We'll get a little bit— we'll get more into this as we progress through the course. But the Federal Reserve has this lever, and that lever is called interest rate, right? I just told— I just said interest, right? So the interest rate can increase or decrease. If it interests increases, that means it's more expensive to borrow money, and people are less likely to borrow money because it's more expensive. When it decreases, that means that people are more likely to borrow, the entire circulating supply expands. So what that means for— in the case of crypto, so you guys can actually make some money— is when they drop interest rate, that means that everyone's more likely to take loans. If they're more likely to take loans, that means that there's more capital. If there's more capital, there's more chance to go into risk-on assets like crypto and stocks. Typically, when they drop interest rates, the market goes up. Does that make sense? So this loaning mechanic is one of the most important variables of your life, essentially, for finances at least, right? So we're talking about a vault, and in this case, what we're talking about is modern bank. This is a modern banking system. A modern bank loan creates a different kind of promise. Follow the baker again, and this time at her bank. The baker borrows 60 units. The bank adds 60 to their account. So this is talking about how loans are stored. It's in an account, so she can now spend them. At the same time, she owes the bank $60. We will leave out interest and fees for this example. Her account balance is called a deposit. Now, this is super important. You think it's just a basic word, but it's not. There's specific, like, for example, in the form of certain types of cryptos, there's actually like a deposit stablecoin, which is specifically a deposit stablecoin that runs by different rules than other stablecoins. So this word, remember, this deposit's important. It's like you have to understand that it's a deposit in the bank, right? It is money the bank owes her. The loan is money she owes to the bank. Those 2 records are created together, okay? Now look from the bank side. It owes the baker's promise to repay $60. That loan is an asset for the bank. Why is it an asset for the bank? Because it's money the bank owes her. Who could answer? So if the bank has— right here, let's read it again. Now look from the bank side. It owns the baker's promise to repay the 60 units. That loan is an asset. Why is it an asset? Come on, Jesse. I want to give it to somebody else. Gabby, you ready? Catch. Because it's a promise.

Because now they can loan out like more money based on the 60 that they got from the banker. I'm

gonna say it again. So now look from the bank's side. It owns the banker's promise. So the banker's promise— the bank owns the debt.

Because now with that promise, they can set it aside for other investments outside.

Nope.

Or use the money that they owe.

Go to Jenny.

Ready? Three, two, one.

Got hands.

I was gonna say because let's say they don't like let's they don't repay or something. Can't they just like use like the baker's like take their company pretty much or like something like that?

Sometimes, but that's not the point. No.

Okay, so I think that's what I was gonna say like collateral. Yeah, it would be collateral.

Yeah, so sometimes loans could have collateral, but the reason why— Jesse? Now he's like, I don't know. Come on, see, I can't even get into crypto yet. I don't even know loans. Come on. Why is it an asset? It's an asset. What is an asset? Explain to me what an asset is.

The loan is an asset. I mean, yeah, it's an asset because they didn't have to do anything to acquire it. It's just benefit for them. Because they're loaning out other people's money to the baker.

Yes, and it accrues— basically, yes. But the simple answer is it accrues interest, Fer. It makes money. Come on. I knew you were going to say that. It accrues interest. It's okay. So now look from the bank side. It owns the baker's promise. A promise is debt. The promise is debt. Remember that. When you promise, it's debt. And that loan is an asset for the bank. It's an asset. Banks want debt. Yes, banks want debt because they get yield on that. Ooh. They want us, bro, the bankers, like, business model is get as much debt as we possibly can, basically. The deposit is the other side of the deal, and the bank owes the baker the 60 shown in her account, right? The bank does not have to remove 60 from another customer's account. To create this deposit, making the loan can create new deposits and money. No, or making the loan can create new deposit money. Let me just move this. But it does not make the baker 60 units richer without a cost. She has a new debt as well as a new balance. Mm-hmm. Nor does the loan create an oven or a bag of flour. Someone still has to produce those things. Creating a payment balance And producing real goods for different jobs. So like when someone takes a— what it's basically saying is someone takes a loan, like they basically assess if that loan is going to go to something that will actually produce more so they can get their interest payments back, right? Banks usually keep less cash and central bank money than the total of their customer deposits. This is like right here, everything. Like, listen to what I'm saying, okay? Central bank money here includes balances banks hold At the central bank, holding only part of the total in these form is called fractional reserve banking. Let me break this down simple. This is not simple. I'll make it a little more simple. So it goes like this. So you have Bank A. Okay, so Bank A here has I don't know let's say. $100,000 in deposits. What is deposits? People putting money in? Yes, so people are like, hey, I trust Bank A, I'm gonna give you guys $100,000, right? Now, what they do is Bank A will take that 100 grand and they'll loan it out, I don't know, to Bank B. They can loan it out to banks, they can loan it out to anyone they want. So now Bank B is paying, let's say, 3% a year, 3% interest. They're paying 3% interest, that means that they're making how much? What is it? $100,000, 3%, that's what? $3,000? So $3,000 is paid to Bank A, but Bank A has now how much in their bank? Who can answer? How much— if they loaned it out to Bank B, how much do they have in their bank? $3,000. Go ahead, Jenny, it's quick. $0. Yes, they have $0. That money is now not in Bank A, it's actually in Bank B. Now, that percent— like, let's say hypothetically they loaned out $50K, how much would they have in the bank? $50,000, right? So that percentage is like— we call it like, uh, we do a ratio. So that ratio is like— would be like 1/2. So half of the actual deposits are in the bank. Now, what happens if all $100,000 is attempted to withdraw? What is that? Bank run. It's a bank run. A bank run is like where they're literally like trying to get all the bank money that the bank doesn't actually have, right? Now, that's simple. Now, let me ask you guys a question. Jesse, don't answer because you know the answer. Don't answer. Let me ask you guys a question. What do you think the legitimate ratio from the government they set? This is called fractional reserve banking. So fractional reserve banking was created to where now you're allowed to loan it. Before you wouldn't, like back in the day, you just can't loan it. Like you can't do that. Fractional reserve, look, fraction. What fraction do you think they legally allow right now in the banking system? What do you think is like a normal, like, hey, you know, because that's crazy. Like, if you like it, that's crazy. If half the money's not there and they try to withdraw it, you won't get your money back. What do you, what do you think the answer is?

Is it 1/10?

Close. So 1/10, this is what he's claiming. What he's saying is, he's saying that if I run a bank and $100,000 in deposits, I only got to keep What? $10,000. $10K? Close. What do you guys think it is? Less or higher? I'm not telling you.

I feel like that's a trick question. I feel like they're allowed to loan all of it out.

Yes, correct. So it used to be 1/10 until when? Who can guess the date? Justin, do you know it? Cogito. Give it to him. Give it to him. So basically it was 1/10, which is OD, by the way. That means if you have $10 million— if you have like $100 million, You only got to keep $1 million in the bank account and you can loan out $99 million and get yield. That was all the way that— that's first off like a scam, right? Up until COVID. And then explain what happened.

Yeah, in COVID they needed more money to get pumped into the economy because everything was crashing. So they lowered the fractional reserve rate to zero.

So it's basically no reserve banking. So we live in an economy right now Where the bank legally does not need to hold any of the dollars that you give it in bank deposits. It is called no-reserve banking. Fractional reserve banking is an old term since 2020. When I'm talking about zero, it is legally allowed to keep zero in the bank. They can loan out 100% of your proceeds. Now, let's say hypothetically they loan out 100% and there's like 14 banks and they're all loaned out. What happens next? They're all bankrupt. Who can explain it? Except for Jesse. What you got? So let's say hypothetically there's a run on banks. There's 15 banks, total accumulation of $10 million. Everybody wants their money back. They don't have money in the bank. What happens?

The Fed bails them out.

Correct. So the Federal Reserve, they call it the lender of last resort. You're going to hear that word so many different times. It's the lender of last resort. See, the weird— the thing that pisses me off is they call it the lender of last resort, But there's so many last resorts. They just continually use it's like it's like you got this button like it's for only emergencies like devastation Armageddon and they're just like like every three years like literally bro so the lender of last resort will bail the bank out now why would they bail the bank out what's the reason they don't want to test it good tell me I want to see if you guys learn something. Come

on. Because they don't want like a Great Depression to happen and they don't want to crash the economy?

Correct. They don't want to destroy it and like instill fear. Because what happens if they do? I'm gonna blow your mind.

They're not gonna trust them?

But who are they not gonna trust?

The government?

No, the government.

The feds.

Okay, so what's the problem with not trusting the Fed? What's the— wait, wait, wait, let's slow this down. So you're gonna answer. So if there is a run on banks and the Federal Reserve bails them out, right? Why that that's that's like a bad thing, right? But if you do that too much, what happens? They're not going to trust who? Not the government because the government doesn't bail us out. Okay. They're going to not trust who? The Federal Reserve. Now if you don't trust the Federal Reserve, what happens?

You start using the Chinese yen.

Correct perception. So it's perception because what happens is the Federal Reserve knows they got this freaking button. They can do whatever they want. But the problem is their only power comes from what? People adopting USDC. Their only power— if everyone just decided to not have USDC at all and they just forget USDC— or I'm sorry, I said USDC— USD. If everyone just decides simultaneously that the United States, the Federal Reserve is corrupt, we're all going to the yen, right? They will lose their— their button wouldn't matter. So it's a perception. So this is why I always say, remember this.

So realistically, just to understand that question, the government has less power than the Fed by itself because they're running the money system, correct?

Correct. Like from the dimension of money, yes. You can make an argument on other things, but yeah, pretty much.

Okay. But the government, I would say it ties very strongly to benefit the Fed whenever they can, 100%.

Yes.

Okay.

100%. Actually, the US government is in debt to the Federal Reserve.

And then at what point do they start printing— so let's say bailing them out is too great of a cost. Do they print money?

They print money to bail— when they bail out—

They will print money to bail them out?

There's different mechanics, but yeah, usually they'll just print money and bail them out. They will not let that go down. Because if they do, everybody would hate them, and then everybody would stop using the banking system. This is why you need to write it down in all caps on your notes. The Federal Reserve is a PR company. Wow. So public relations— it is a marketing company. Their job is to control public perception to keep the dollar adopted so their button works. Does that make sense? That's all they are. So if you if you look at it from that lens, now every Fed meeting they have meetings, FOMC meetings, different things where they go over this monetary policy. Now you'll understand why they move the way they move. If you look at them as like oh they're super smart guys that know economics better than everybody else and they're doing this for the good of blah blah blah, then you'll see it different. But if you understand what I'm saying, I'm telling you right. It is just literally they made a massive formula for modern economics and then they just Make sure that everybody continues to use that formula, and if someone doesn't use it, they lose their power. They are a PR company. This is a whole different ball game. I'm telling you, bro. Nobody knows this. This took years of understanding to really capture it. Okay, we just got lost and sidetracked. This is the cooler teaching. I like that teaching better, but we'll get back to it. Does that? That does not mean that every stored coin automatically turns into a fixed number of loans before lending. A bank must judge. Whether the borrower can repay, right? So that they have a process of judging. We know this, but if you understand, this is technically true, but the issue is that if you have the unlimited loan capacity and you know the Federal Reserve is going to bail you out, like, how much would you really care? You'll just loan out like Timbuktu. You're just going to loan it out, and who cares anyways? Because if you go bankrupt, then we'll get bailed out anyway. So they don't care. So essentially, it's called the law of incentives. So the banks are incentivized to essentially wreck the— like, to take as many loans as possible. Does that make sense? Mm-hmm. It needs money ready to make payments and borrow whatever. The cost of getting funds matters too. So do banking rules and central banking policy. These limits help explain why a bank cannot simply keep lending any amount it chooses. Yeah, there's like small limits, but the general gist of what we said is true. The baker now specifically sends her 60 units. The seller receives the money in a bank account. If the seller uses a different bank, the banks must also settle the payment between themselves. So yes, there's a communication within the banks. I forgot the exact protocol, but there is like a modern protocol. Do you know— do you remember the name of the protocol? There is a protocol. XRP is trying to change that. There's like a specific banking protocol. They communicate within each other. They're like a centralized thing, right? Changing the 2 customer balances is only a part of the payment. Later, the baker repays some of the amount she borrowed using the money in her account. Her loan balance follows. The deposit money used for that repayment falls too. This applies to your original amount borrowed, which is the principal. So the principal is the original amount agreed upon on the borrowing, and the interest is after that. Interest is handled separately. We will follow the payment and repayment steps more closely as we navigate the financial system. Okay, and I wanna kinda explain that. All right, the promise on a note can change. Return to the paper receipt. Its holder expects to receive gold. So we're talking about the concept of the last training, where people put gold in a vault and then there's a receipt that gives you access to the gold. What happens if the rules no longer require the issuer to hand over that gold? A note can continue to be used as money even after that promise changes, right? And this is where it gets really real because you'll see that we were on a gold standard at one point in America where there was real gold backing up dollars, like validating that a dollar is really valuable, and then they took away the gold standard and basically made all dollars invaluable, but then people still used it. You'll see what I'm saying. Britain did not keep the same gold payment rules without a break. It stopped exchanging notes for gold during some periods, including 1797 and 1821. Governments could change the rules around the bank's promise. So basically what they do, and it's like, the credit card system did the same thing as well. It's like a bait and switch. I want to delete this. It's like a bait and switch. What they do is like, hey, adopt my currency, it's backed by gold, don't worry. If you hold my dollars at any time, you can come to me and give me the dollars back and I'll give you the gold. And they keep it like that, they build a whole bunch of trust, there's a whole bunch of gold in the vault, everybody has a whole bunch of gold, a whole bunch of trust, a whole bunch of dollars out there. And then out of nowhere they're like, hey, look, ah man, We just realized that we don't need to keep all the gold, but you're good. The money's still the money. Use the money. It's a bait and switch. And then now the value of the dollar has intrinsically dropped significantly, but the perception stayed the same. People still perceive it as money, but the intrinsic value drops— the mechanics, the utility of it drops substantially. And then what do they do? They use that gold for whatever they want. They finesse. It's a perception game. Right? Britain did not keep the same gold payment. Okay, but governments also took a larger role in deciding who could issue notes. In England and Wales— sorry— the Bank Charter Act of 1844 limited other banknote issues. It also stopped new banks from starting to issue notes. This made the Bank of England's role stronger. See, this is a fight, but it did not end every private banknote overnight. So what they'll do is they try to seize power. So they try to seize power by stopping other banks to have the same power. Basically, bro, to put it— and you'll see as we go through this more and more— there's a couple really smart guys that understand a financial rule. Like I said this before, just remember, a whole bunch of smart guys, they understand finances on a high level, they instill their own type of mechanic that has never existed before, and then they basically make it legal, and then they try to control and monopolize it, like, so that nobody else has access to it, and then they just get rich as heck. Because they control money, basically. Does that make sense? In September 1931, Britain left the gold standard. So the gold standard— America had a gold standard as well. They left the gold standard. A Bank of England note no longer gave its holder the right to demand gold. People could still use the note to pay, but the gold promise has ended. What do you think happens when the gold promise ends but it's still a form of money? Who can answer? So the gold promise, they backed it up. So like, if you had $100 million in gold and you issued $100 million in receipts and then they took away half the gold, what do you think is going to happen to the dollars?

So they take away half the gold, the value of the dollars go up? Or you're saying—

Nope, opposite. It goes down. Why does it go down? Yeah, right.

There's now less gold.

There's now less gold. So the value of the gold was the thing holding up the value. The dollar's value was determined by the gold. Now let's get crazy with it. Not necessarily. It doesn't cut in half. Why? You can't even answer this. It doesn't cut— it doesn't— it doesn't cut in half. Why? What doesn't cut in half? So you got $100 mil in gold. And then you have $100 mil in banknotes. This is a deep one. I love that. This is great, right? $100 mil in gold and then banknotes, right? This gets slashed in half to $50 mil. Wouldn't you reasonably expect— wouldn't you— isn't it reasonable to say that the value of the banknotes might get slashed in half? Why is that not true? Go for it.

Because they're very good at managing the perception.

Okay, now let's get into the economics of perception. So what is the rate of how much it would drop if you were to make a formula? Oh my gosh, I love this, this is too fun.

A direct constant compared to fear, how much fear it caused.

Fear's a good one. I would say fear's a good one. Who else got something? Nothing? Okay, so what I would say is the percentage that this would drop in value is in proportion to how many people can learn that this was valued by this in the first place.

Yeah. The perception that the gold was being— so that the banknotes were being valued by the gold?

Yeah, this is like Alex Economics 101. This is fun, but I believe it is definitively true and I can back it up with theory. Go ahead.

So would the banknotes actually decrease more because it's on track, the decline is happening?

Like, increasingly? Yes, I believe that because this was slashed in half, there will be a decrease. A perfect decrease would assumably say that this would be worth $50 million. The value of the dollar should drop in half. That's a perfect decrease. But the reason why I'm not saying it's perfect, because out of 100% of people, I would just make up a number and say that maybe 80% of them are ignorant to even believing that gold is the reason why it has value in the first place. So I would say that it's probably going to But only 20% of the people are actually educated enough to understand the mechanic. And so if only 20% of the people are educated enough, then maybe— and it's supposed to drop by half, then we only have a 10% decrease. Hmm. Does that make sense? Because you have to literally educate. There's a resistance. And the resistance is the education process of understanding the value backing your money. So if I'm the person that just sold the gold and got half the gold and cashing it out to the bank, what is my incentive now? This is high-level stuff. Listen, what is my incentive now? What am I incentivized to do if I am the guy that controls the gold to $50 million? What am I incentivized to do?

Go. Get it as low as possible without making people freak out.

Get what as low as possible?

The actual backing, the gold or whatever the real—

Yes, of course. You want to get it low without people freaking out. How do I— I'm incentivized now to get people to not freak out. How do I get people to not freak out? How do I get people? I am now incentivized because if I drop the gold, I have like a bar, and then the fear increases and all that. What do I do to stop people from understanding this?

Go. Pretty much get them to understand that the value of their banknotes was not affected by the amount of gold.

Correct. How do I do that though? What's the strategy? If you're a mastermind, what would you do?

Control the news.

I would.

Yes, we're getting somewhere. Keep going.

I would keep the banknotes at the same value regardless of the amount of gold.

You can't do that because the market buy and sell determines the value of the banknotes. So they could— a whole bunch of people sell it, the value would drop. You can't control that.

So where do you see the value of the dollar, for example?

It'll be like an exchange rank at a bank. They'll have like an exchange rate. But basically, he kind of hit it on the head. Yeah, you want to make people ignorant. So now I am incentivized to make people as ignorant as possible about money as possible because I have this mechanism to where I could drop the value without them ever noticing. If we can keep the perception the same and if I can get 50 million out, then all I got to do is attack the education system and make sure I take that $50 million and then just inhibit their ignorance. I could just be like, you can't— just don't learn money. We goo up. Just stay here.

So is that similar to people believing that inflation causes prices to go up when in fact the dollar is going down?

Correct. It's a little bit of both. But nobody knows because they don't even know the CPI calculation. That's crazy. Yeah. And they make it really hard. I'll give you a test. You go on a website, government website. Look at the user experience of the website. Try to use a government website. It is so hard to understand and it's annoying as heck, bro. Go use it, trust me, you think I'm playing.

Do you think they do that on purpose?

I believe that there is a purposeful lack of maintenance, 'cause you could go the opposite direction would be like, hey, let's make it super easy so everybody can learn. They don't do that, I know that for a fact. So I don't know if it's purposeful or they're just ignorant, but I do know that Somebody's incentivized to keep someone ignorant. That's crazy. Yeah, for sure. Whoever controls the mechanism— so what was the Federal Reserve again? Is it what, a PR company? I don't know, public relations company. What is a public relation? What does it do? It controls the perspective. It controls the perspective. So if I, if I'm a public relation, I want people to keep people ignorant, I'll blow your mind. Okay, I don't want to keep going like this, but If you go on Google in 2020, there's something called Google Trends. Google Trends shows how many people search a search term. So it shows like, oh, all these people search this search term, and you can see a spike in historical context, like the past 20 years, right? In 2020, guess which search term popped off like crazy? Guess. 2020 crypto? Nope. Yeah, kind of, but like the main one. Jesse, do you know? Inflation. Inflation. So if you have a certain— if everybody's typing in inflation, what's happening to the perception? They're being fear-based. They're understanding that what inflation is. Their education is increasing on inflation. So if your education is increasing on inflation, what happens? The general people are going to look at the Federal Reserve and like, yo, inflation, I know inflation now. So what do you think the Federal Reserve does? Come on. What is it? What do they do? They're getting onto them. No, if they hit the button, it would be bad for them. If they hit the button, inflation goes up. Therefore, they lose trust. Therefore, they could potentially lose the dollar. What do they do? They make it more confusing and they move the mechanism to which they print. There's many. There's like hundreds of mechanisms on how they print. I'm not joking with you. They move the goalposts, bro. They have changed the way CPI is calculated. CPI is Consumer Price Index. That's the way we measure it. They've changed it 3 times. Yeah, I remember that. They've changed it 3 times, bro. Not only that, but the way that they inject money into the market, bro, they have hundreds of mechanisms, more than that. And then the way that they injected in 2020, we researched on how, how they're doing it now. We're like, hey, where's the money at? They switched it. They're doing it in a different way. Same byproduct, inject money into an economy through inflation. Same byproduct, But just a different mechanism, so we don't understand. Make more money. You understand? That's crazy, bro. Yes. We're gonna keep going. This is not even the topic here, but it's fine. It's kind of cool. I told Victor, I was like, "Bro, I want to get into this." We're getting. We're gonna get into the meat, boy. All right. Okay. So other countries follow different paths to understand the U.S. dollar's later gold link. We need to follow a separate set of events, and you're gonna see how one of the biggest perspectives of this whole entire thing is war. So war is a massive pillar of understanding finance, and we'll explain what I mean by that, but just know that these guys get rich off war for a reason, okay? They get real rich right off war. So 1944, countries agree on a plan. This is nasty, it's so dirty. Leaders from 44 countries meet at Bretton Woods. This is in America. Is it America? I don't know if it's America. I just know it's the Bretton Woods. It was led by America, but they call it the Bretton Woods Agreement. They wanted rules for exchanging their currencies after the war. We're talking about what, World War II? Yeah, World War II. They had World War II. New Hampshire. New Hampshire, there you go. World War II and everybody's freaking out like, man, the world's in chaos. We just had war, blah, blah, blah, right? A whole bunch of war. We need to come up with a plan. Let's bring all the countries together. leaders from 44 countries. An exchange rate says how much of one currency you can get for another. The plan linked other currencies to the dollar set rates. Those rates could be exchanged under the system. They were not fixed forever. So essentially, the dollar, USD, in turn had an official gold price of $35 an ounce. So $1, what was it? Yeah, it's $35 per ounce. So that was the set rate. So 1 ounce, right, equals $35. They all came into that agreement. Now, what is the purpose of putting that? Who can explain? Why did they do that? They set a rate. They were like, hey, everyone on Earth, 1 ounce of gold is equivalent to $35. We're setting that price right now. Why did they do that?

For this, what is it, divisibility purposes?

Nope. That's a good metric, kind of, but that's not the main point.

That way we can involve everybody else's currency and have value all over the world.

Correct. We have like a consistent standard of value. So now the $35 is backed by 1 ounce. Now, what for them to do that, what do they need to do?

Divide the gold?

They need to hoard gold. They need to hoard as much gold as they can so that if somebody gives $35, they can redeem it with 1 ounce of gold. So it's back— the gold is backing the dollar. So when you hold the dollar, you're not just holding a dollar, you're holding 35 or whatever, an ounce of gold or whatever. Does that make sense? So they started hoarding gold like crazy. This is

Was that the Gold Rush where they called everybody to— not the Gold Rush, but what is it called when they told— when they made it illegal to have gold?

Yes, it's nasty. They got mad. They were like, bro, you guys can't own gold. Give us all your gold. Forfeit it to the— yeah, it gets nasty. I'm not like— it's not a class on that, but yeah, basically— watch this. He's like, it's all making sense now.

It was like the history I was presented was in parts.

They left out the good part.

They left out all this.

Let me see the chat box real quick. What does the chat say? They're probably like, what is happening right now?

I'm freaking out.

He said a random platform, one thing. Finally utilizing

it. That's what they miss out on. I wonder why they missed it out. It's because they're incentivized. Somebody paid the school system a whole bunch of money to keep them ignorant. Are you catching it?

Let's go down this

road. We we can't get. You can't buy me out. I'm exposing it all. You can't buy me out. You ain't paying me nothing. It's the holy. It's the Holy Spirit. Does that make sense? So the dollar in turn had an official gold price of thirty-five per ounce. The dollar's gold link connected other currencies to the gold. So now what they did is they denominated, right? This is dollars. Every other currency. So I'm just gonna put other currencies. All other currencies of the world now were in relation to this. They denominated it in dollars. So if you've ever seen an exchange— so basically it's an exchange rate. So like now, like, you could take yen and exchange it for a certain amount here because the dollar is officially backed by gold. So it's the only country that had— they probably had other ones, but it's the only major one that the 44 countries decided the dollar was going to be the world reserve currency as long as that dollar is backed by gold. Right? And then everybody else is good now. We could just exchange it for the dollar. Like we have an exchange rate. We have a we have a constant. It's called a constant. It's like a foundation to where everybody can now value their dollar in proportion to the U.S. dollar. Does that make sense? Boom! This arrangement is what we call the Bretton Woods system. In 1971, the U.S. stops a Official gold exchanges. On August 15th, President Nixon stopped foreign official holders such as central banks from exchanging dollars for gold at a set rate. They just—they—as soon as they get the world to essentially adopt, they just—they move the goalposts and switch it. That detail matters. Ordinary Americans had already lost the general right to exchange dollar for gold decades earlier. The 1971 decision ended the promise. To foreign official holders. It did not take the right away from American households for the first time. So what they did is they were like, hey, you guys can't exchange it, everybody else in the world, but Americans can do it. And what that did is it put America in strategic power because they could actually— their freedom to exchange the gold, it just gives them an— it's like an— it's economic warfare, essentially. In 1973, major exchange rates started to float. Countries tried to repair the system after 1971. It isn't explicitly say it, but basically what they did is they took off the— they call it the killing of the gold standard. Can you look up the official date? They took American dollar off the gold standard. So they're just basically like, hey, we're not gonna keep the gold anymore. We could do that if we want, basically. And the whole world has to kind of comply. When did they do that? I know the Bretton Woods Agreement. Well, when did they take it off the gold standard? 1971. August 15th, 1971. So yeah, August 15th, 1971, they officially, uh, took off the gold standard for America. And so doing that, now we, we talked about the PR stuff, right? We talked about all that. Basically, they can control the monetary supply at will. And if they control the monetary supply, that means they can control everybody else that is attached to the monetary supply. 1973, major exchange rates started to float. Countries tried to repair the system after 1971. March 1973, major currencies had to move to floating rates. Their prices against other currencies can move in currency markets. The Bretton Woods system had broken down. So yeah, pretty straightforward. Not going to go into too much detail. There's so much more after this. Now, why people still accept dollars. Think of a baker accepting a dollar today. She does not expect to take it to the government and collect a set amount of gold. She accepts it because she expects the miller, the power company, and the other sellers to accept dollars from her, right? There's a perception. This is called fiat money, which is— what is fiat money, guys? Who can explain the definition of fiat money? Another really important term. They switched the goalposts from gold standard to what? Fiat money. It's what-backed money?

So is fiat money just like the commonly used money that everybody uses as exchange?

Yes, but remember we were gold-backed, we switched to fiat. So fiat is basically what they call government-backed money. So it's the promise of the government. Now before it was the promise of redeeming gold, now it's the promise— the government's basically like, you're good. Perception. The government got you, which is crazy because who controls the printing of the money? Not the government. So you get the government's credibility with a private company's control.

So fiat money is just money that's now, instead of being backed by gold, is backed by the

government. Yeah, fiat money's literal definition, I believe, is government-backed money. Government-backed Correct. It's fun. This is fun, right? Just, it's like a whole bunch of finesse. They do not promise a fixed amount of gold, silver, or another physical good in return. People use them within a system of laws, banks, and payments and expect others to accept them. The material in a dollar bill does not explain what it can buy. So the actual value of the dollar, it's not that, it's the promise of the government. This leaves a question about the rules. Who should be able to change them? John Maynard Keynes helped design the Bretton Woods. This dude, like, bro, there's different styles of economics. I'm not gonna go into too much detail, but he was like the proponent guy to make this possible, essentially. He would like go in and go hard, and he helped design the Bretton Woods Agreement. And I would definitely question his ethics. That's my personal perspective. He wanted public institutions to have room to respond when the economy was in trouble. So the reason why he was able to instill this is because, again, the economy was in trouble. What are we playing off here? When you say economy was in trouble, it starts with an F. Fear. Fear. So with fear, he was able to instill a corrupt system. Does that make sense?

Because he didn't want people to turn their— to go against the government?

No, he was basically like, he wanted public— he was like, hey, public institutions, if there's a major catastrophe, we need something to respond to. We got to bail it out. We got to do something about it. So I'm proposing a solution. It's called the Bretton Woods. And the Bretton Woods would just somehow magically with formulas make the economy super fluid and cool. They have a whole bunch of formulas backing it. And he just sat there for like 10 years trying to convince people, and then he convinced them, and he got it. And he basically just got this monetary system to where they're— this is such a watered-down explanation, but basically what he said is we need the money to be more fluid so if there is a major catastrophe, we can solve that. This is the modern way to live because in modern times, we want modern times to be able to solve different problems. It doesn't need to be backed by gold. Let's take it off the gold standard. Does that make sense? Mm-hmm. Yeah, it was Bret— it was, it was, it was, it was, uh, John Maynard Keynes. There's a long story, there's a little different history. There's not just him, there's a couple other people involved and things like that. I'm not here to go into the specifics of it, but I would say that that was, uh, the, the fruit of the scenario was crazy, right? People still debate how much power these institutions should have. They also debate how to prevent misuse, who bears the cost of their decisions. Removing a gold link does not remove the need for rules or good judgment. In the US, the central bank is the Federal Reserve, also called the Fed. Its goals include maximum employment. This is, this is actually very important. So maximum employment is one of their PR campaigns. So they want to make sure everyone's employed. And stable prices basically mean they want to keep inflation at 2%. That is their two number one priorities is employment and two percent inflation. In everyday terms, it seeks a strong broad job market and low and steady price increases. And what do they mean by low and steady price increases? Because inflation is calculated by the increase of price, so they want to keep it at two percent. But we know like that's just a PR campaign. You keep prices. The reason why they're doing that is because it's dynamic between how much you're getting people are getting paid at their job versus how much the cost. So for example, if we have a job making $50K and it stays $50K for 40 years, it never changes, but the price increases 10% a year, that $50K is losing— the $50K doesn't mean anything. It's losing value. The $50K is losing value. So what he's trying to say is you want to keep people employed. If they wanted to do this right, instead of saying keep people employed, they should have said 3 things: keep people employed, make sure people are earning more per year on a consistent basis and keep inflation at 2%. But instead, their agenda is to keep people just having a job, not making more money, just having a job, and then the price increase needs to be 2%. That would be an honest economy in my opinion, is not only just keeping people employed, but also measuring how much more people make. And then what you would want in a rich country is you would want the amount of people that make to be higher than the inflation. What the heck? Right? Isn't that what you want? Isn't that how to make a prosperous country? Make sure everybody's earning more than inflation rate so you actually have savings and you're not at a default negative? Because inflation's at a default negative. You're default losing 2% guaranteed. That's a default negative, right? Wouldn't you want a default surplus? Wouldn't that be the cool way to run an economy, right? Really, what I think about employment rate is it's really just a PR campaign. You want to make sure your people's employed. They wave that, hey, everybody's employed, we're good, right? The Federal Reserve can influence rates. It can affect the cost of borrowing and the amount of people spend. It also uses other tools, but it does not choose every worker's pay or set every shop's prices. It does not, but it has the most important lever, and everything is directed. is affected by it. Here it is, 2% inflation over a longer run, personal consumption expenditures price index, PCE. To track the goal, the index follows prices across a broad range of consumer spending. And it's so crazy, but inflation is not really inflation. If you know what inflation is, if you have a set of 100 supply and it goes to 101, the inflation should be 1%, but they calculate it completely different. They calculated by the cost, the rate of the cost of goods going up. So if, like, for example, bread, eggs, and whatever started going up, that's the inflation rate. They did that because they had to, because they were just like, their initial calculations were just like so bad that they had to kind of like make it up. The Fed adopted this clear 2% goal in January 2012. It was not a part of the 1944 Bretton Woods Plan. And it is a goal for a broad measure over time, not a promise that families' bills will rise 2% each year. All right, so watch this. Let's go over some details that I think are gonna happen. I'm gonna give you some scenarios. You guys ready? All right, try to answer this. How much time we have? About 5 minutes. 5 minutes? All right, last final question's gonna be cool. So I'm gonna give you some hypotheticals, and I want you to tell me what will likely happen. I want you to try to predict the Federal Reserve move. So let's say hypothetically inflation drives— let's say hypothetically employment rate is at— the unemployment rate is 10%. The unemployment rate is 10%, right? Inflation is at 1%. What do you think the Federal Reserve will do? Either increase interest rates or decrease interest rates? Interest rates is the cost of borrowing money. Increase interest rates or decrease interest rates? If you think it's gonna be increase interest rates, raise your hand. Okay, what is the effect of increasing interest rates?

Less loans.

Less loans. If you do less loans, what happens?

Then there's not much circulation of the money.

And if there's not enough circulation of the money, what happens?

Uh, they're not making money.

Similar, the cost, the, the cost of goods doesn't go up because there's less buying. No one wants to buy. So if no one's buying, supply versus demand, there's less, there's less demand. Therefore, the price of goods would drop, increasing, increasing inflation. I'm sorry, increasing the interest rate will actually drop inflation, but the inflation's at 1%, so they ain't gonna do that. Why would they do that? They want to increase inflation to 2%. Why? To make more money back. To get the unemployment rate down. Correct. If they increase the, the, the, um, interest rate— I mean, sorry, if they decrease the interest rate, that means the cost of borrowing money is now cheaper. If it is cheaper, they take out more loans. If they take out more loans, that means that people buy more stuff. If they buy more stuff, what happens to the jobs? You get more jobs. You get more jobs, so that means it will drop this to like, I don't know, 5%. And then what will happen to inflation? It goes up back to the 2%, or which they wanted in the first place. These are hypothetical numbers, but you get the point. So I'm gonna give you another scenario. Now you kind of get the concept, right? Last scenario, get it right. Come on, it's like the most important mechanic lever of your entire financial being. Right here, all of it boils down to this basically. All right, we have a scenario where we have 5% interest. And then we have, I don't even know the answer to this one, I'm gonna make it up, 7% unemployment rate. What does the Federal Reserve do? Raise interest rates. Do they increase interest rates or do they decrease interest rates? I guess they're so hardcore. All right, raise your hand if you think it's increase. Now who could tell me why? Who could tell me why? You want to tell me why? Yeah.

The higher interest rates to pay them off, they'll have to work more jobs in order to pay them off. Is that incorrect?

Higher interest rates mean—

Would cost them—

Less borrowing.

And it would basically make people work more, even harder to pay off the interest rates. I'm not sure if that's correct or

not. No, come on, nice. More— less borrowing equals what?

So if they increase it, it's going to drop the inflation rate.

Correct.

You want to keep it at a 2%.

Why is it going to drop? Why is it going to drop the inflation rate? I don't know. It's very simple. Just remember this, right? Rate of— rate leads to increase or decrease of spending. Right. So if it's higher interest, that means less spending. So she said to increase interest rate. That's correct. If they increase interest rates, what's going to happen is people are going to spend less, which will drop the cost of goods Down. Correct. Simple economics. All right, cool. That's pretty much it for today. Last question. Yeah, so like, okay, last thing so I can show you how it makes money. Ready? Crypto, crypto stuff. It's kind of a surface-level answer, but ready? If interest rates drop— last one— interest rate drop, Is that good or bad for crypto? It's good as heck, right? Super good. Why? Interest rates drop. That means like, let's say it went from 10 to 2. Dang, loans are at 2%. I want to get a house. Cheap loans equal more spend. More spend equals the cost of things going up. What are you holding in crypto? You're holding what? Assets. You're holding assets that do what? They go up in value. They go up in value. You're holding an asset that goes up in value. You understand? Now, last thing is gonna put the cherry on top. We just talked about how they control the lever and it's forever expanding the economy. Like, we just talked about how the, the supply of money is forever expanding. Forever. We just said they tried to set it at 2%. Here's the eureka moment. If it's forever expanding and you're holding an asset that goes up, Are you putting it together? The only people that lose are people that don't hold assets. That's good. That's crazy. So let's go back to saving. Is it biblical? If you do not hold an asset, you by default are getting wrecked because it's forever expanding. The supply is forever getting bigger. If the supply is forever getting bigger, That means the cost of things are forever increasing. And if the cost of things are forever increasing, that means that you can hold the thing that's forever increasing.

That's getting us that 70% return on Bitcoin in a year.

And Bitcoin is different. We'll come back to that one. We're teaching you regular stuff here. Does that make sense? All right, that's it for this livestream, guys. Thank you guys for watching. 3 to 4 PM Eastern Standard Time every day. I'll pour my heart out, do the best I can. By the way, If you guys want to get access to the free AutoTrader, all you have to do is click this fat blue button right here. Go over to free AutoTrader. Give me 10 seconds, guys. You click this free AutoTrader button. It takes you over here. There's gonna be a little form to fill out. You can request a call where they'll help you. But right here, as you can see, you can watch the setup video, connect the API, and officially download the AutoTrader zip via Mac or Windows 100% free. You download it, you put it in Claude, and then you simply just connect it to the beacon right here. And then you can watch this video to set it up step by step by Jessito. Jessito made the video. So all of that is 100% free. Click the blue button right now as we speak. Click the blue button right now. Click the blue button. Let's go. Coinpicks.app if you're watching anywhere. It's coinpicks.app. Coinpicks.app. P-I-C-K-S dot A-P-P. Head on over to the website, click the big blue button, and get the free trader. Or not, it's okay, we'll still be friends. Thank you guys for watching this livestream. Be easy. If you don't get with it, you will get left behind. If you don't buy assets, you will go broke. Talk to you guys later. End the stream. Bye.