America Just Found a Way to Print $1T

追加: 2026-06-03

[00:00:00]Okay guys, I just want to talk to you today about  a way that the Federal Reserve is able to print $1 trillion without calling it QE. And they're  doing this through the private sector. And I just want to talk to you about some of the regulations  that they're actually easing from private banks to actually create this much money. Uh it's not  really talked about at all. Haven't seen it at all in the FT or any sort of financial newspaper. What  actually is the ESLR? So this is the policy that is going to be changed and it's going to release  all the capital. So first we need to understand what the SLR is. The SLR is a post208 rule where  banks basically have to hold capital very safe capital against their entire balance sheet. Um and  this can even be against very safe assets such as treasuries. Um we also have an enhanced SLR which  is the enhanced supplementary leverage ratio.

[00:00:54]This is an extra requirement on top of the normal  SLR onto the eight big US globally systematic important banks things like JP Morgan, Bank of  America, City and this basically to prevent them from uh going bust in the future and make sure  they have extra capital to fund losses to prevent things like a government bailout of these in the  future. So the reform here is basically cutting this requirement of the ESLR and frees up $210  billion in equity. And this basically allows these banks to purchase whatever they want with this  um as they don't need to now be restricted with that on their on their balance sheet or be holding  very safe assets with it. They can be holding more risky assets which is why we want to be investing  in more risky assets as a result of this policy.

[00:01:49]So this effectively means that banks go  from needing $6 of save capital to back $100 of treasuries down to $4. So this is quite  a substantial reduction about a 33.3% reduction.

[00:02:08]And of course through things like repo leverage  which is the deposits at Federal Reserve, they will be able to use this new money as  collateral to the Federal Reserve to then keep borrowing from them and lending back which  potentially could result in a leverage chain and introduce about one to$1.2 trillion into money  markets or basically new money. So what is the reason why they're actually doing this? This is  obviously going to let let banks absorb a lot more treasuries. Um and this is obviously going  to fund the US government deficit. Obviously we know that the US has a lot of debt and um when  they have a lot of debt, the bond market is obviously a lot more volatile. Um especially  at the moment when you have external factors like rising commodity prices. The timing of this  is actually uh interesting because there's a big refinancing wall happening this year as well as  in 2027 where a lot of the debt from the COVID era is actually becoming due. So in order to prevent  yields from spiking a lot of these domestic banks, a lot of these big banks will need to have more  capital available in order to actually buy these and help the government reissue these back onto  the markets. So the reason why they're doing this for the big domestic banks is that foreign buyers  are actually retreating from buying US treasuries and this is just due to more of a trend of the  world to be less reliant on America uh due to some policies by the current administration but  also just due to it due to the empire of the United States and the dollar monetary system just  becoming less attractive especially with other powers rising. So another reason why these foreign  buyers are retreating from buying US treasuries is that they need capital to fund tariff fees. This  means that uh domestic buyers must replace them.

[00:04:12]So why is this stealth QE and actual like  printing of money? So this is obviously the same as QE as it's monetizing deficits. These  banks will primarily be using this capital to um invest in government bonds and US debt. So it's  not the Fed's balance sheet, it is private banks balance sheets. And the Walsh angle here of Kevin  Walsh's come into Fed chair. Um he does oppose a big Fed balance sheet, but he never said he  opposes big private bank balance sheets. So obviously with such a massive US debt um he's a  bit of a Trojan horse here and that he's actually going to be using deregulation from private banks  in order to achieve you know QE from the Federal Reserve in the form of private banks without the  political baggage of QE um and the Federal Reserve being involved in public market. So the market  effect of this is that yields are effectively capped. This means a lot less volatility in bond  markets and means a lot to the banks can issue a lot more capital um take on a lot more leverage  and just stimulate the economy in general. In terms of what actually outperforms here, the  stuff that you should be investing in in order to actually take advantage of this new policy. Um,  obviously because there's a lot more money being created here, debasement sensitive assets are just  a real no-brainer. So, obviously you've got to have gold. That's just a great hedge against  this this massive influx of capital which is going to be coming. Um, Bitcoin obviously Bitcoin  is going to be able to outperform gold due to its fixed supply and its alignment with you know AI um  and the rise of technology and autonomous agents um and then also AI and highly innovative tech  companies because there going to be a lot more um dollars in the system in the future meaning  that earnings are going to be increasing these companies. I would generally expect if you're  going to be buying any of these assets, I would generally expect this time frame to take about two  to five years to play out. Um, as obviously a lot of these banks will have risk controls um in place  and they really need to find out a um a way that they can use this capital to benefit them without  taking on too much risk. So in terms of the long game that the US government is playing here, they  are really trying to repatriate dollars back into the US system in order to debase their debt. One  of the policies which is very clear that they're doing this is tariffs because it achieves a lot of  things. This basically forces you uh trade surplus countries to recycle their dollars reserves back  into the US. um because they were importing their goods and receiving dollars for those goods, but  now they're going they're having to use these dollars to pay for tariffs in order to still  sell goods to the US as well as potentially using these dollars to invest into the US to build  manufacturing facilities to actually avoid these tariffs altogether. And obviously these dollars  coming back into the US is going to land back into the US financial system in the form of US private  banks or just in a US government through tariff um tariff fees. And obviously this means that  the Federal Reserve is going to have more control over the dollars when they're in within  the US. So this obviously is going to give the government and the Federal Reserve more policy  control over the deregulation of these banks.

[00:07:59]um and also a lot more accessibility of the Fed  to purchase bonds off these banks in the future in order to um debase the debt which is very very  high at the moment. What this means for the US is that growing the GDP is basically the only option.  You know, we've seen that spending cuts are not politically possible. Um we've had uh policies  like the department of government efficiency and El Musk not being able to uh cut any of these  deficits at all. So obviously the only lever is growing the GDP and there are two paths which  the US government can take which is deregulating banks which is what they're doing now with the  ESLR being cut which means a lot more credit creation in the economy as banks increase their  leverage increase their lending and purchasing of government debt. The second is a lot more risky  and a lot more speculative actually. So it is not a viable policy for the Federal Reserve. This  is waiting for AI robotics productivity boom to happen. Uh and basically exponentially increase  GDP relative to uh to the debt. Um and you know this is a thing that the current Federal Reserve  chair Kevin Walsh is a big advocate for. He thinks the productivity boom is happening within AI but  there needs to be a material increase in GDP to actually prove this is happening. Either way,  stimulus is basically coming because obviously we're going to get a lot more credit creation  through the deregulation of private banks and also for this productivity boom because what happens  in the productivity boom especially with AI a lot of white collar workers uh are going to be laid  off and we're going to see a lot of unemployment and obviously the Fed's dual mandate one of the  Fed's dual mandates is to keep unemployment very low. So they'll have to stimulate the economy in  order to replace this. Um otherwise there'll be risk or a recession or some sort of consumption  bust. Thank you very much guys for watching the entire video. Um if you have any comments at all,  feel free to comment your questions in the comment section. I'll get back to you as soon as possible.  Um and I'll see you in the next in the next video.