Reacting To Graham Stephan's China Economy Is Collapsing

After all, people don't trust banks. The less money is borrowed if people don't buy real estate. Developers walk away from projects. This then repeats the cycle to an.

Even larger degree if people don't trust banks. Well, if you're watching this video, probability is you might be one of those people. I know I am. What the heck is happening with China's economy? Is there a major real estate crash impending that's about to take the whole country under? Who knows? But we're going to react to a cool video that's talking about it.

Tens of thousands of them have begun withholding payments for unfinished projects. A massive protest over frozen bank deposits.

The international community and the financial markets will also feel the pain.

Okay, so already there's a lot going on here. So they're talking about the real estate market and the deposits and everything. Unless there. But also the part about frozen bank accounts. So there is many news articles about this. You can absolutely Google a lot of these things, although from what I understand, it has been harder to hear about them.

I think it's reasonable to assume that there is a bit of, let's say, data coming out of a communist nation that seem to want to maybe hold off on some of that information exiting the country. So I believe that it's. There's. Although there is absolutely there's articles you can find. We know maybe we're not able to find out the full story. So. And I'm sure even with the video that we're about to dig into here.

You know, I haven't validated any of this data.

I haven't watched this video before. So, you know, do your own research. But I think, I do believe from what I understand in the description and what I heard about this video is that there is a lot of telltale signs here of, of the UN impending bubble and there's a lot of historic aspects of that that, that follow a similar track of how bubbles like this are created. So I think that's kind of the key takeaway. So let's see what the economic collapse of China is all about.

What's up, you guys? It's Graham here. So I recently came across an extremely unsettling video from Cascanes Academy who posted about how China's entire economy will collapse in 34 days. And yeah, I have to say I had no idea what I was about to get myself into. Even though we've covered some of the fallout back in September with the collapse of the largest property developer, Evergrande, I was completely.

So talk about Evergreen in A second. But you know, he's saying 34 days from now. So I mean, that seems like a pretty bold statement. And this video I believe was recorded or. Or not recorded, recording, but I believe it was released in early August of 2022. So I'm watching this probably a couple weeks later, like maybe about 10 days.

Or two weeks after it was released. It's August 20th today. So he's saying 34 days. We're already like two weeks out of those three. 34 days. And we don't know when it was recorded versus when it was released. So just making some observation about that. But he mentions Evergrande. So yeah, real estate developer Evergrande. I mean they might be one of the largest real estate developers ever, period known, you know, so over a very long timeframe. And absolutely there's a, there's a collapse. And that one thing right there, I suspect we're gonna learn more about it, is probably a big component of what's driving this because they were such a large real estate developer. And there's all kinds of buildings that are basically empty that they've been constructed, but there's nobody living. I mean, they've been talking about ghost towns or ghost cities in, in China for a number of years. And I think some of that even has to do with going back to the Olympics that were held a few years back where there was a huge amount of build up and construction, build.

Construction, but they literally were building cities. And people are like investing to live in places or to buy places to get advantage in this real estate market. But you know, there's just, they're just ghost towns. It's like tumbleweeds running through and concrete and buildings, but there's nobody living them. There's like malls. Like I've seen videos already years ago now of people walking through these communities where there's just nobody there. You know, there's like a mall and there's like no, there's no stores open. It's a brand new mall, but it's already like starting to deteriorate because it isn't being utilized. So there is absolutely evidence of this type of thing happening already prior to this video ever coming out.

Completely unaware of the sheer magnitude of just how much the situation has devolved and how this could quite literally lead China to the edge of the next Great Depression in a very short amount of time. Why does this matter? Well, China is one of the largest economies in the world. They're fighting to overtake the US dollar as the world's reserve currency. They're responsible for manufacturing 20% of the items that we use day to day and they are, without exaggeration, at risk of a complet financial collapse, which of course would affect the rest of the world. So, as inspired by Cast Games Academy, who I'll link to down below in the description, I did my own research to determine just how bad the situation really was.

And I love that graphic is a guy on YouTube.

That's really, that's really good. Whoever did the video. Anyways, this is fantastic. So coincidentally I'm just a guy on YouTube. So my research was I've watched some random videos in the past and now I'm watching this also random video which showed up for me, which I've never seen before. So again, take everything with a grain of salt here. I'm just some dude making commentary on YouTube. But I do think it's. So far it's an interesting video and I'm excited to see what he has done for research and where it goes from here.

What you're about to hear is most likely going to be worse than expected. See, much of this begins with two words, real estate. Throughout the last few years, China experienced what many would consider to be a real estate bubble as citizens preferred to invest their money in real estate as a safety net, causing the real estate market to increase double digits year over year. On top of that, the urbanization throughout most of rural China, combined with the societal pressure to own a home, caused a massive relocation to cities that offered greater opportunities and higher earnings potential, thereby further driving up demand. In fact, the country was building five times as many homes as America and Europe combined, and supply was still so limited.

Now, I, I can't validate that, but obviously we're putting some headlines, but I mean, there's obviously just logic to what's happening here. There's no, I think everyone knows that there's been a huge urbanization happening in China. You know, it's, it's the, the, the rise of the middle class and that sort of thing. People moving from the outer rural communities into the major cities and those cities, you know, blowing up and, and the need and demand for housing as that happens, manufacturing jobs increasing, all these things are, this, this isn't like an overnight thing. This has been happening for, you know, decades. But you know, there's been an increase in that activity happening. And so these, you know, if we just stopped at that alone and we didn't even think about any other economics about interest rates and all the other kind of manipulation of the money supply, that's been happening globally. And we just looked at the fundamentals of like the urbanization of a large nation which has a massive population base of people moving from this farming kind of world to this, like smashing everybody into cities. We can start to see the possibility already building up towards a housing bubble over a long period of time. And now we start throwing in some economic factors which I'm sure he's about to get to here. And you know, you can, you can clearly identify like, oh, well, this seems pretty sensible that this could happen, seeing as how even just with what we've looked at so far, this same similarities and trends have caused housing bubbles in many other locations over historic amount of time. So, I mean, it's not like we have to stretch very far to think that we could be getting into some.

Kind of a problem.

Admitted that some cities would use a lottery system to decide who gets to buy a home. With some odds as low as 1 in 60. That led to 70% of the country's wealth being tied to the property market, which is more than twice as high as we have here in the United States. But there was.

Now, again, we're looking at headlines, so. And they're coming by quickly, so we don't really have a way to validate them. But I mean, if it's a headline, it's probably from a reasonable article. It's just a matter of what the source is. But I mean, I, again, I don't think that there's any reason to doubt the reasonability of what he's saying here because when there's a housing demand in an area and it's hard to get anything because they can't keep up with the demand, the supply is insufficient. It's simply a supply and demand situation. And everyone's wanting to get into the market in these given areas, but there's nothing available for them, obviously that's going to push up prices. That's what happens. It's. It happened, you know, in Edmonton, Alberta in 2004, 5, 6 and 7 before it, you know, kind of hit a peak and then it crashed. And so I lived through that experience and I've also, you know, done enough reading of history books and economic books that you can, you can easily circle back to many other experiences throughout time where this same situation has taken place.

There's also another problem. People believed the housing market was such a good investment that they would literally buy anything that they could get, because even if they didn't live there and they kept it empty, they could always sell it in the future for a profit. At that point, property values were rising so quickly that developers would pre sell units where the buyer would begin.

I love his use of air quotations, uh, being an air, being an air quote guy myself. So I mean this speculative investing method is, it happens all the time. It's, it's happening in Canada. I mean it's probably going to taper right now because we're seeing interest rates begin to rise. And so now there's articles coming out saying oh my God, the Canadian real estate market's going to collapse. I'm like, okay, well what about all the, the 10 years of articles leading up to how there was certain bits of unsustainability and what we were creating because of the low interest rate environment. So you know, in areas like Vancouver and Toronto and the GTA area, we've seen monstrous house spikes no different than what they're talking about here. I mean maybe the numbers are different but, and geographically there's always going to be certain pockets at this town or this community or this general sector. When you look at a greater nation and you, you isolate certain areas where, where there's outlier events that are happening. You know the Toronto marketplace has been one of those over the last, you know, maybe not quite decade, but pretty close to a decade. And there are some things that were driving that up but a lot of that driver has been funny money. So the manipulation of the interest rates and that sort of thing by the bank of Canada and, and that causing a spur and a frenzy. And so all these, there's other factors but these are ancillary factors that go towards driving people to buy property and having the price rise because the affordability on the payment, it gets easier and easier to afford a higher value property based on a lower interest rate. And so we've seen this huge increase and then exactly what you're talking about here, like pre construction, you know, condos and properties where people are buying and they're getting it on the ground floor, get on the deal before the deal's gone and they hear about their neighbor, you know, Bob and Sally. They made, ah, they made 100 grand on a pre sale condo. Like that's obviously the way to, you know, get yourself to wealth. Well that works out for a bunch of people until it just doesn't. Sooner or later you're late to the party. Someone's always late to the party. You go and set the deal for the pre construction condo. You put in your, you know, your, your deposit of 25 or 50 grand and then five years goes by and you're supposed to take possession of this thing and it's supposed to be worth this huge lift. Your intention wasn't even to own it. It was literally to flip it or to sell the contract or to sell the unit as soon as you take possession. And so you close on the property and now you're trying to sell it and there's no more buyers, the market has shifted. And that, that rise of value that everyone else was getting, you didn't get it. Maybe you own a property that's worth less than what you signed the contract for, or, or it's worth, maybe it's worth the same value, but you can't sell it because now you got to pay, you know, real estate fees, you got to pay the mortgage, you know, payout penalty and ancillary costs. And you're in a position now that you, you can't exit the deal and get your capital back out. Now, depending on where you live or how old you are when you're watching this, maybe you haven't experienced that yet, but I can tell you personally of people that I know who've experienced, and I myself has experienced, you know, ups and downs of real estate markets in a variety of different markets. And I have colleagues all over North America that can tell you all kinds of stories about this. So it's no different than, you know, getting a hot stock tip from your buddy. And then, of course, by the time, you know, you get the stock tip and you go and acquire the stock, you're buying it at a higher price and eventually the price falls and now you're, you're left holding the bag. It's, you know, P.J. o' Rourke wrote a book called, I.

Believe it was him. He wrote a book called the Greater Fool Theory. And you know, it's, hey, you're just trying to find a greater fool to buy it from you at a higher price. And then he's trying to find a.

Greater fool to buy from him at.

A higher price and so on and so on until we find the greatest fool of all who pays the highest price. And then it comes plummeting down. We can see that happen sometimes quicker and faster in stock market situation because of the, the nature of speed of buying and selling. It happens usually over longer time horizons in the real estate market because, you know, it's, it's not as quick and easy to just buy a piece of real estate. There's a bunch of paperwork that's got to happen and, and you know, you might have to Go walk through a couple houses and stuff. So it does take longer to see that cycle appear. And you know, we're obviously at the tail end of a pretty good cycle. And so far what I'm seeing, again, not validating any of these because I couldn't possibly do that. But we're just looking at headlines. Normally I don't. Usually the good stuff of an article is at the bottom of the article, not at the top of the article. You know, I learned that from one of my mentors, Don Campbell, who used to do a great session called what's behind the Curtain as part of the Real Estate Investment Network. And you know, I learned a ton from him about how to look, look at these articles with a little bit more of a, of a keen eye. And unfortunately we're not able to do that here. But yeah, just using a little bit of logic, there's nothing that I see here that doesn't give me indication to think that, you know, that this gentleman is saying is completely off base.

Making payments on a property that didn't even exist yet with the expectation that it would be cheaper to buy today than it would be in the future. Since property values just keep on rising higher, it didn't matter how much it costs either. Home buyers would spend as much as 20, 23 times their annual income to buy a home with the mortgage sometimes taking up more than half of their gross take home pay while they financed and borrowed money from.

We've never seen that happen before. That wasn't part of the same kind of situation that happened during the subprime crisis that led to an ultimate collapse of the real estate market. And then mortgage backed securities being bundled, bundled up over a bunch of years and sold as investment grade products all across the globe, which brought down most of the financial system in 2008. No, no, no. We've never seen anything like this before. Of course not. There's no possible way that can happen. No one would be stupid enough to do that. Oh wait a second, it's already happened before in the past. Keep forgetting about that thing called history. Cheese. Only some way to learn from that experience.

Family and friends just to say that they're able to own a home that led to a 22% vacancy rate throughout China is hard. Homebuyers bought second properties for an investment just outside the city limits without restrictions, right as the government.

This is, I think, where the ghost cities start coming into place. When you get a vacancy rate like that, it's pretty crazy if you actually experience a vacancy rate like that. You know, and you're. You're holding on to property that you can't really afford. That's a recipe for disaster. But if you can't even rent it, there's no rental market, there's nobody living there to pay any. Any fees form of the costs. It could be very debilitating in a quick period of time. And like, thinking about vacancy rates, you know, I've seen vacancy rates this high in the town of Fort McMurray in Alberta because, you know, they've kind of been through the wringer in the last decade or so with the oil price being, you know, very cyclical. Some other economic factors in the province of Alberta as well as, you know, they had a major fire event that they had to evacuate the entire city. You know, that happened for a long period of time, had a devastating impact on the city. Also coincidentally caused a huge spike in a cockroach problem in the city because it was a peak heat of the summer and everybody, like, power was out, fridges, food left on the counter. That sort of thing is not good for infestation. But, you know, additionally, they also had a major flood event, you know, again, shortly after that a couple of years later. So, I mean, they've been, like, beaten up severely, both by the economy and then other ancillary factors. So vacancy rates have been very high. They're still very high in that community today. And I mean, easily they were at 25% for a number of years, and they're probably starting to decline now, but not, not substantially. And depending on where you are, if you're in the downtown core, still pretty high vacancy rate there today.

As of 2022, government stepped in to buy the surplus inventory to keep the market stable. In addition to that, the increased building demand meant that there was less oversight in terms of quality of construction, leading, of course, to substantial building problems as developers cut corners to save costs.

There's a lot of good stuff in this video. So again, I'm just like providing a reference point. So I was a licensed realtor in Edmonton, Alberta, for not quite a decade, but like about nine years. And I have a construction background, major electrician, actually, by trade. You know, my former life, I guess it's never really former. It's still part of your life. And so I have a degree of understanding of construction, residential and commercial and industrial construction. And there was so many problems with condominium property like this. Exactly what's being described here. And, you know, quote unquote, shoddy workmanship or maybe a little bit of a lack on Meeting the proper regulations. And of course, you know, I would imagine in certain marketplaces there's times where the wheels of the machine get greased a little bit. You know, there's a little bit of money that changes hands for inspectors and people to look the other way whether, you know, we can't validate that happening here. But like it's reasonable to jump to the conclusion like oh yeah, you know, they were making so much money. Let's just grease the wheels of the machine a little bit so we can get our, get our building inspected and get a stamp so we can have occupancy.

The problem is that these pre sale units were not being finished. In fact, it's alleged that some of the largest property developers were taking pre sale money, funneling them as down payments into new projects for the purpose of garnering even more presale deposits and running a property Ponzi scheme by using.

Yeah, I was about to say that's called a Ponzi scheme, but he's already done here and I'll try to let this video play through. But similar to this, there was some stuff that happened even recently in Saskatchewan, I believe in Saskatoon with a major real estate company that's gone belly up and a huge amount of investors taken under. So again in Canada recently, I believe it was their epic Real estate was the name of the company. So there's several articles about that. This is all coming to fruition in the last several months. And it wasn't new construction, it was all pre existing homes and like a landlord flipping kind of arrangement. But they were, that's what was happening. Part of is they were using money and they were using it to pay out rent to people that they guarantee these rents. But then they're also trying to acquire more properties. So it's like a pass the buck forward situation. It just all imploded. And so that's, that's what happens in these situations. I mean, yeah, this, there's nothing here that has never happened before. It's just happening into a, to what it sounds like a much larger scale. In the country of China.

This is only the tip of the iceberg as more and more projects have fallen behind the construction or flat out abandoned their construction entirely due to a lack of funding. Buyers have staged a mortgage boy where all homeowners with outstanding mortgage loans will stop paying unless construction resumes before October 20th. Even though this all started with the property giant Evergrande whose $300 billion in debt within four weeks, more than 320 projects in about 100 cities were facing similar protests, roiling markets and forcing authorities to corral banks and develop.

I think this is interesting because they're saying 320 projects and 100 cities. I mean that's a lot of cities, of course, but 320 projects. What we don't know is how many units per project. Like if we're talking, you know, say 300 unit condo buildings or apartment towers, then this is a, that's a massive amount of individual units. And on top of a whole bunch of already basically completed units that are vacant because of the buying spree prior to this. I mean, we're looking at a monstrous amount of property right here that's not going to go well.

Developers to defuse the unrest, although the damage might be too late to fix. Home sales and property investments have seen a steep decline since February of 2021, while at the same time the credit market ballooned at a staggering.

The credit market ballooned. China's bank loans to the property sector ballooned over the years. Yeah, I mean it's a, it's a huge, it's a huge increase and we're looking at less than a 10 year period of time. So this is about an 8 year market cycle and again driven a lot by interest rates and all these kind of things. It's a, it's a big problem. Wouldn't matter where this graph is located, which country we're talking about, it's a problem.

Well, China came out with a statement that they tightened regulation by supervising customer funds and ensuring timely delivery of new units. But when 96% of the Chinese population is exposed to the real estate market market and 13 million units have already been halted in the last year alone, it's inevitably going to spill over across other industries and banks are one of them. On July 11, protests erupted outside of the People's bank of China where customer deposits have been frozen since April when banking regulators said that they were investigating out.

So just stop right there and think about that for a second. So you've got money deposit on a bank and it's frozen. You can't go get your money and it's happened in April. So April, May, June, July, you know, June and July. Now you're starting to protest because you need your money. You can't pay your bills, you can't pay your mortgage, you can't get the down payment. You need to go close on that reconstruction condo that you signed paperwork on five years ago that's not even going to be finished. You're going to take possession of an empty shell that won't even have, you know, be, it won't be up to par. And you can't even get the money out to do it because the bank is frozen. The funds, the money. The reason is because this, it's not your money, it's, it's an iou. If you got that money on deposit at the bank and they said the bank of China or whatever they said it was here, it's not, it's not yours as soon as you hand the money over to them or it's direct deposited to that account. You have an account, you have a ledger, but you've transferred ownership of the money away to the lending institution. They have an IOU that says on demand. You, you had this deposit back. But on demand, if we have the money. Well, if they don't have the money to give your deposit back, then that's called a run on the bank. So basically what we're looking at here based on this part of the video, is a run on the bank starting in April. People are looking for the deposits and the, and the bank doesn't have the deposits to give them. Yeah, again, not good, Not a good situation having more control over your capital, ideally in a private contract.

Where a dollar is not manipulated from the central banking system. Probably a better situation overall. You can learn more about that by the way, if you want to go to watchibc.com and you kind of learn how to make that happen for yourself.

Allegations of illegal financial activity. The authorities claim that the problem was caused by a takeover of the bank by criminal gangs, which they say dated back to 2011. Was met with a lot of skepticism.

I was gonna say, let me get. So that's the, that's the government.

They talk.

Who's the criminal gang they're talking about here? More of the banking system or is it the government? Or is it actually some other form of criminal institution? Anyway, just, I thought that was funny.

And according to an inside source, some developers have been taking the money needed to finish housing projects out of the country. For example, they might take out a loan for $80 million, spend $10 million buying a new property to come, collect even more pre sale deposits and then transfer the money overseas, leaving the bank and the people on the hook for the amount unpaid.

Boy, I can't imagine any of that money going overseas, landing in, oh, I.

Don'T know, causing a similar increase in housing prices that's now impacting an entirely different nation. I mean, can't imagine that happening at all. Interesting.

The Chinese government has agreed to repay their customers the equivalent of about $15,000. But that might not be enough to get their customers to fully trust the banking system again, leading to the word that everyone fears. A bank run. As Cast Games Academy pointed out, both the US and China employ a system called fractional reserve banking, where a bank is only required.

Well, there we go.

This video he's got here, one minute. Economics.com that's a great site that has a lot of really interesting animated videos as well, which I've watched a few before.

They're kind of neat wired to keep 10% of their customers assets on hand at all times. The rest could be freely lent out or loaned to other institutions for a profit. Just imagine it like this. You give me $1,000 to hold on to for safekeeping, but I'm allowed to turn around to give $900 of that to someone else who gives $810 to someone else who gives $709 to someone else, and so on. Or in other words, they're betting that no more than 10% of their customers customers are going to want all of their money back at the exact same time. But since 2019, China's been lowering these reserve requirements to allow for more money to be spent, which would temporarily prevent the economy from slowing down. But that comes at the increased risk of a bank run should more of their customers all demand their money back at the exact same time.

Which tends to happen in escalating numbers when news articles are going out and videos, especially on social media, that are showing people protesting, hey, I haven't been able to access my money since April. I'd really like to get my money so I can put food on my table and feed my family and stuff. You know, that word gets around pretty quickly. And then this, like, escalates fast.

It's like, oh, my God.

Everybody goes and starts to. It's kind of like when, when, when Covid first started, you know, ramping up and, and the lockdowns began beginning in different areas. Like in Canada, the biggest thing in the news was about toilet paper. Oh, my God, we can't get toilet paper. The toilet paper is off the shelves. Like, for some reason, everybody thought that of all the things that they could have needed, like canned goods and food for their family, like, toilet paper was the number one thing. And so, like, basically the supply chain, there was no toilet paper getting any stores, and it was just cleared out. It was like kind of like a stampede. The doors would open in a, in a grocery store and there was a stampede. Of people running to go try and go to the toilet paper aisle because there's no toilet paper available. So the same concept of that happening which did happen during COVID is now happening or, or will likely take place in this bank run situation. Everyone, as soon as you know you can't go and get the thing that you you need or you you should be able to go get, the panic buying begins. In this case, it's not panic buying, it's panic withdrawals to try to make sure that you're not the last one who can't get any of their money out of that institution. Again, this is not new. This has happened before.

So it's happening at the same time that their population has lost faith in the real estate market, has degraded consumer faith in the Chinese economy. And for the government the priority is to break the negative feedback loop that features the high leverage ratio and the liquidity crunch on the part of the developers. After all, people don't trust banks. The less money is borrowed if people don't buy real estate. Developers walk away from projects. Projects this thin repeats the cycle to an even larger degree.

If people don't trust banks. Well, if you're watching this video, probability is you might be one of those people. I know I am. And it's not that the people work at the bank are bad. It's that the fundamental methodology by which the commercial banking system is allowed to implement this fractional reserve mechanism is part of the problem. And the way to become a solution to that problem is to stop doing your business with banks. So you might want to consider how you can become your own bank. Pretty simple. Go to watchibc.com you can learn all about that. But the more and more people on a global scale that are able to implement that, that process in their life and it's nothing that happens overnight. But as you start to take your deposit business away from a commercial banking system, they can't manufacture new money off of your deposit anymore, they can't fractionalize it. And if you take your lending business, where you need to borrow capital from a fractional reserve institution, a commercial bank, that allows for that manipulation of the monetary supply away from them and you do that in an institution, oh, I don't know, let's say a mutual insurance company where you co own it and you're participating all their profits, including their lending business, and you basically co own the lender and you do that where you can. Now they're not allowed to fractionalize the money supply because they're not a Banking institution then now you're becoming part of the solution versus part of the problem. And that's what Nelson Nash, my mentor, recognized. And that this method of becoming your own banker and implementing infinite banking concept, as you kind of see it in my sign here, become your own banker is a method of combating the fractional reserve system without needing to seek government action or lobby or political means, which Nelson would have referred to as top down thinking. Instead it's a way to create a societal bottom up solution to a top down problem. And we don't need to ask permission. You just, you just get started. So anyway, watch IBC.com you learn all about it.

Will people pull money out of the system and protect whatever is left? However, the one thing that China's been really good at is delaying the inevitable through reimbursing some accounts, single overseas transactions, and potentially bailing out bankrupt developers by lending even more money. Yeah, seriously, you can't even make this up.

Not only can you not make it up, it's happened before, not that long ago. Remember 2008 crisis meltdown, bailouts like Citibank and you know, this is no different, this is the same stuff, it's legitimate. And all the people would say, boy, we learned our lesson, this will never happen again. Well, obviously not like it's happening right here. So I don't know, this is, this is just like the 2008 financial crisis effectively when we think about the subprime mortgage crisis, there was a whole bunch of empty houses, people were buying property, the real estate markets were going up, they were getting loans without qualifying, was easy to get, easy credit, easy to get money buying things. Everyone thought that the house price were.

Going to go up.

Appraisers were getting the, you know, the greasy, you know, getting their pockets greased. Mortgage people again, these are bad people but you know, they're getting like kickbacks and all this kind of stuff. So they're letting the loans go like it's just the whole thing was shenanigans taking place again over a number of years and just spreading and spreading.

Solution to solve over leveraged properties is to simply loan more money to make up for it. It's kind of like telling a lottery addict to go and buy more lottery tickets to recoup their losses. But it's estimated that this new fund could raise all the way up to 300 billion yuan, which might.

And so this is the quantitative easing basically QE stuff that's been happening in the States. The same, you know, they, they put a fancy label on it's the same stuff. It reminds me of some of the videos that used to be out there. They're probably still out there on YouTube of when they were talking about Ben Bernanke who at that time during subcongress was the chairman of the Federal Reserve and they were calling him Helicopter Ben because. And it was like these, you know, whatever amity videos of his head coming out of a helicopter and just like money raining down out of the helicopter because the Fed's printing money. It's all, it's all the same crap that's happening right here.

But regardless, Chinese companies also hold a lot of exposure to the United States market. And when they need money it would make sense that they would sell those assets to raise capital, which would result in a much more volatile stock market. The real impact though for everyone in the US is not so much a policy change or a drop in the stock market, but instead the investor perception that things could get a lot worse before they get better. Or in other words, it's just fear. In the United States, for example, fractional reserve banking has been around since 1791 and it's backed by the code of the FDIC and regulation to ensure that banks aren't just going to be running off with your money. Now sure you have examples of the 1920s Great Depression caused by over leverage on bad investments while entire cities wanted their money back. But throughout most of.

Another example which doesn't mention here is the First national bank of Midland, Texas. Now in Nelson Nash's book he talks about that the collapse of the First national bank in Midland, Texas is a great example. And again it's the, it's the stock, it's the shareholders of the bank who were taking loans and they were non performing loans. They were reinvesting into the oil business because they were greedy and they wanted to make money in the oil business. So there's lots of circumstances of this type of activity happening. And he's mentioning the FDIC which is a federal deposit insurance corporation in the States. So in Canada we have the CDIC Canada Deposit Insurance Corporation. Now according to the research I've done, the funding of the Canada Deposit Insurance Corporation is certainly much higher in proportionate scale like population base wise to the FDIC in the US So we're probably better off in Canada. We're, I think we're, for the most part we're more conservative how we do a lot of things here in Canada, but still likely insufficient. It only, it only guarantees or insures up to $100,000 Canadian per account, I think account type per institution.

But it's noted that China will fall short of meeting its annual economic growth target of 5 1/2 percent. And we're starting to realize very quickly that the days of China's meteoric economic rise are long past. In a perfect world, I would love to see this amicably resolved and tougher regulations in place to protect their citizens. But realistically, realistically expect that the Chinese economy is going to be something to closely follow. And if you want to be kept up to date, feel free to subscribe or check out Kaskayan's Academy down below in the description because he provided some great insights into the inner workings of their economy.

Just thinking about, make the assumption if everything that he's saying is true, if all these headlines are accurate, if the articles written are all, are all accurate, then yeah, absolutely. There's, there's a big fat problem that's been created. But just think in general, broad terms about the circumstances. So let's forget about China and forget about it being their economy and just think about the circumstances of this happening anywhere. What would naturally tend to happen. We had, you know, panic buying because we can't get into a house and everyone's, you know, like this greed factor. We're buying property and then it's easy credit, easy money. You got a bunch of properties being built and now it's not being built maybe to the proper codes because. And then developers are taking money and the money, rather than being available to make sure they finish their project, is actually going to start another project so they can sell more. Like these types of things happening could create a pretty epic problem. And I do believe there's a lot of ways you could validate many of these aspects. And I don't think it would take you very long to, to go and validate them. And I'm not here to do that. That's not my role. My role is just to talk through what we're watching and give you perspective is could this be a problem? How big could the problem be and what would it mean for you? Well, I think one of the things that would mean for you is that you probably want to recognize where you have your money stored and where is your money protected and how much exposure do you have to things like, let's say the, the, the national economy of China. Now if you have, you know, ABC mutual funds or whatever, with some bank or some whatever group benefit plan, let's just say take a look at what your holdings are and how much of that is exposed directly to marketplaces like this. I mean, you, you're the only one that can go take a look at, no one else is going to look at it for you. That's up to you to do. And you might look at rebalancing some stuff and I'd say, oh, geez, looks like there could be some, some, some murky waters up ahead. Maybe I want to move some of my capital into a, a place where it's preserved and I can, I can make sure it's going to be there regardless of these market conditions happening and start, you know, getting yourself some private contracts. Oh, free contract with the free people is the, is the basis of which mutual whole life insurance is designed. And it is a free contract that you enter into voluntarily. Nobody puts a gun to your head and forces you to do it. And you could be personally profitable with your own personal monetary system. So there's no reason not to do it. It's just a matter of understanding how does it work and is it something you want to do? Well, first step to that is going to watchIBC.com and take a few minutes to learn and see if it's the right fit for you. Maybe it isn't, but the only way you're going to know is if you start doing some research. So hope you enjoyed this reaction and stay tuned for some more. Coming up. Check out the next video on the list.