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The Fed Just Broke — Transcript

by Minority Mindset · 5,367 words · 820 segments · language en · Watch on YouTube

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0:00For the last 100 years, the Federal
0:01Reserve Bank was a machine that made
0:03America rich, but that machine just
0:06broke and most people have no idea
0:09what's happening. And no, I'm not
0:10talking about our national debt. I'm not
0:12talking about the bond market, and I'm
0:14not talking about the stock market. I'll
0:16show you. The Federal Reserve Bank is
0:18the central bank in the United States,
0:20and for 109 years, it made a profit in
0:23every single year. It would take that
0:25profit and then give it to the United
0:27States government, and then the United
0:29States government would take that money
0:30and spend it in our economy. They'd
0:33spend it on things like healthcare, or
0:35our military, or infrastructure. On
0:37September 2nd, 2026, the Federal Reserve
0:40Bank released their financial
0:41statements, and they said not only did
0:43they not have a profit to give to the
0:44United States government, but they lost
0:46hundreds of billions of dollars for the
0:48first time ever. And the reason why you
0:51want to pay attention isn't because this
0:52just blew a hole in the United States
0:54national debt, which just passed $40
0:57trillion,
0:57but this has a direct impact on the
0:59value of your dollar, your savings, and
1:02your paycheck. So, in this video, I want
1:03to break down what happened, what's
1:05going on, and what this means for you
1:07and your money, that way you can be a
1:08smarter investor. Again, this is why on
1:10September 29th, I'm hosting my live,
1:12free, and virtual investor workshop,
1:14because the dollar is losing value, and
1:16I'm going to show you how you can profit
1:18from the dollar losing value. It's a
1:20free workshop. I'm doing it twice on
1:22September 29th, once in the morning at
1:2410:30 a.m. Eastern Time, and then again
1:26in the evening at 8:00 p.m. Eastern
1:28Time. Yes, it is live, so there are a
1:30limited number of people that can
1:31actually join me live. So, if you'd like
1:32to register, I have that link for you
1:34down in the description below. And when
1:36you sign up, you're also going to get
1:37added to Market Briefs, which is my
1:39newsletter for investors, completely for
1:41free as a bonus. The Federal Reserve
1:43Bank lost a record amount of money in
1:452026 after 109 years of always turning a
1:48profit and giving that profit to the
1:50United States government. And to
1:52understand what's happening, you have to
1:53understand that the Federal Reserve Bank
1:55is the central bank in the United
1:57States, but it is not federal. It says
2:00so on its website that is not
2:01technically a part of the United States
2:03government. It's also not a reserve,
2:05meaning it's not sitting on any cash
2:07reserves, and it's also not a bank
2:10because you and I can't go there to
2:11deposit money. But what it does do, it
2:14has the ability to create money out of
2:16thin air. And this is where things
2:18really start to get interesting because
2:19if this entity can create money out of
2:21thin air, how in the world can it lose
2:23money? Let me show you. The United
2:25States government collects tax dollars
2:28from taxpayers, and then they go out and
2:30they spend money on things like social
2:32security and Medicare and our military.
2:35But the problem is is we've been
2:36spending more money than we generate
2:39from taxes. In fact, in 2025, the
2:41government spent around $7 trillion, but
2:43collected only about $5 trillion in
2:46taxes, which means the government then
2:47has to go out and borrow the rest of
2:50this money through debt. And this is
2:52where the Federal Reserve Bank comes
2:54into play because one of the strongest
2:56lenders for the United States government
2:58is the Federal Reserve Bank.
3:00Now, why would anybody lend money to the
3:02United States government or really
3:04anybody else for that matter?
3:05Because when you lend somebody else
3:07money, you get paid back interest. It's
3:10the same for the Federal Reserve Bank.
3:12And so what the Federal Reserve Bank has
3:14been able to do is they create this
3:16money out of thin air, and then they
3:18lend it to the United States government
3:21in the form of debt. Now, I'm going to
3:24grab a blue marker and show you how the
3:25Federal Reserve Bank gets paid. Now, all
3:27of a sudden, the Federal Reserve Bank
3:28has all these assets that it owns, which
3:31is the United States debt, and it gets
3:33paid back interest on that debt, and
3:35it's a pretty nice deal because now the
3:37Federal Reserve Bank is generating all
3:39this interest on money that was just
3:41created out of thin air. And if you
3:42don't believe me, just listen to what
3:44the previous chairman of the Federal
3:45Reserve Bank said on how it creates
3:47money.
3:48>> Where does it come from? Do you just
3:49print it?
3:51>> We print it digitally. So, we, you know
3:53we as a central bank we have the ability
3:55to create money
3:57uh digitally and we do that by buying
3:59treasury bills or or bonds
4:03or other government guaranteed
4:04securities and that that actually
4:05increases the money supply. We also
4:07print actual currency and we distribute
4:10that through the Federal Reserve Banks.
4:11>> But creating money and lending it to the
4:12United States government and collecting
4:14interest on that is just half of what
4:16the Federal Reserve Bank does. The
4:18second thing that the Federal Reserve
4:19Bank does is it sets interest rates.
4:22Now, I'm not talking about your mortgage
4:23rate, your car loan rate, your credit
4:25card rate, your business loan rate. I'm
4:27talking about something called the
4:29federal funds rate. The federal funds
4:31rate is the interest rate that banks
4:33have to pay one another when they lend
4:35each other money. So, [snorts] when you
4:36go to the bank and you deposit that
4:38$100, you're going to get paid back
4:39interest. Well, what these banks do is
4:42they're also saving their money
4:44somewhere and the place where they save
4:46their money is the Federal Reserve Bank.
4:49Now, [clears throat] this is where the
4:50Federal Reserve Bank has to pay these
4:52banks back interest and let me draw this
4:54in red. When all these banks around the
4:56country now save their money with the
4:57Federal Reserve Bank, the Federal
4:59Reserve Bank now has to pay them back
5:01this interest which is set as the
5:05federal funds rate. So, this interest
5:07rate that the Federal Reserve Bank pays
5:09back is the federal funds rate and then
5:11the interest that the Federal Reserve
5:13Bank is collecting from the United
5:14States government is called the treasury
5:17rate. And for more than 100 years, the
5:19Federal Reserve Bank has been making a
5:21profit because they would create money
5:23out of thin air, they would lend it to
5:25the United States government, they would
5:27then collect interest on that money, and
5:29then the Federal Reserve Bank would then
5:30be paying interest out to these banks,
5:32and then the Federal Reserve Bank would
5:33be making hundreds of billions of
5:35dollars worth of profit. They would then
5:37take that profit and then just give it
5:39to the United States government. And
5:41then when the Federal Reserve Bank gives
5:42it to the United States government, all
5:43of a sudden now they have more money to
5:45spend in the economy. Now, the
5:46government can stimulate the economy,
5:48they can boost the economy, they can
5:50create more jobs, they can invest in
5:52more infrastructure because the
5:53government is essentially getting free
5:55money from the Federal Reserve Bank
5:57that's not coming from your tax dollars
5:59directly. But, this system started to
6:01break in 2023 because for the first time
6:03in the Federal Reserve Bank's history,
6:06the Federal Reserve Bank lost money in
6:082023. And now in 2026, it is the biggest
6:12loss in the history of time for the
6:14Federal Reserve Bank as they lost
6:16hundreds of billions of dollars even
6:19though they're able to create that money
6:20out of thin air. And there's a price
6:22that you want to understand that
6:23somebody has to pay for. But first, how
6:25is it possible that the Federal Reserve
6:27Bank is losing money if they can just
6:29buy these assets, this United States
6:31debt with created money out of thin air?
6:34And the reason why is because during the
6:36pandemic time, 2020, 2021, and into
6:392022, the Federal Reserve Bank bought a
6:42lot of this United States debt. What
6:45does that mean? A lot of money was
6:46created during the pandemic. We remember
6:49the unemployment checks, the PPP checks,
6:52the stimulus checks, the grants, the
6:54trillions of dollars that the United
6:56States government was spending to keep
6:57our economy running and alive even
7:00though nobody was working.
7:02Well, that meant that the Federal
7:03Reserve Bank was printing a whole lot of
7:05money
7:06and then giving the United States that
7:07money in the form of debt. Now, yes, the
7:10Federal Reserve Bank was generating
7:12interest on that. But also remember that
7:15during the pandemic era, interest rates
7:17were at their lowest levels in the
7:19history of time.
7:21So, the Federal Reserve Bank created a
7:23whole lot of money, more money than ever
7:25before, and they bought a huge chunk of
7:27the United States debt, but they're only
7:29generating about 2% in interest on that
7:33debt.
7:35Now, here we are today, and what's
7:36happening with interest rates?
7:38Well, they're a whole lot higher.
7:40And they're a lot higher because the
7:42Federal Reserve Bank had to raise
7:43interest rates aggressively in order to
7:46fight the inflation that happened
7:47because of all this money printing.
7:50And now because the Federal Reserve Bank
7:51had had to raise interest rates, now the
7:54Federal Reserve Bank is paying out
7:56something like 4%.
7:59So, they created this money and are
8:01generating 2% in interest, but they're
8:03paying out 4% and this is why now the
8:06Federal Reserve Bank is losing hundreds
8:08of billions of dollars. Now, the other
8:10interesting thing about this loss is
8:13that the Federal Reserve Bank doesn't
8:14actually call it a loss. They call it a
8:16quote deferred asset and the reason why
8:19the Federal Reserve Bank calls it a
8:21deferred asset instead of a loss is
8:23because the Federal Reserve Bank can't
8:24actually go bankrupt because they can
8:26just print that money. When the Federal
8:28Reserve Bank loses hundreds of billions
8:30of dollars, well, they can just create
8:32more of that money, which is why they
8:34call it a deferred asset that maybe
8:36hopefully one day in the future we'll
8:38just make that money back. Just take a
8:40look at what the Federal Reserve Bank
8:41published. What happens when the Fed's
8:43income does not exceed its operating
8:45costs. This does not affect the Fed's
8:48ability to conduct monetary policy or
8:51meet its financial obligations. That
8:52doesn't mean that there's no
8:53consequences to the Federal Reserve Bank
8:55losing money. Somebody has to pay the
8:57price, but I'll talk more about that in
8:59a minute. The Federal Reserve Bank was
9:00created in 1913 to prevent banking
9:03crises from happening and between 1913
9:06to 2022 the Federal Reserve Bank was
9:08able to create money out of thin air,
9:11lend it to the United States government
9:13and now start to generate free interest
9:15on this money because they could buy
9:17these assets, the United States
9:18Treasuries, with money that was created
9:20out of thin air.
9:21Now, the Federal Reserve Bank would then
9:22collect that interest and then pay out
9:25something called the federal funds rate
9:27to banks that lend money to the Federal
9:29Reserve Bank. And between 1913 to 2022,
9:32those 109 years, the Federal Reserve
9:34Bank made huge profits, hundreds of
9:37billions of dollars oftentimes a year,
9:40just by creating this money out of thin
9:42air, and this arbitrage of lending money
9:44to the government, and then paying out
9:46money to banks.
9:47That broke in 2023 because in 2023 for
9:50the first time in 109 years, the Federal
9:52Reserve Bank lost money during this
9:54system. And now here we are in 2026, the
9:57Federal Reserve Bank just published that
9:59they lost the most money ever, hundreds
10:02of billions of dollars through this
10:03system. But they don't call it a loss,
10:05they call it a quote deferred asset
10:07because the Federal Reserve Bank can't
10:08go bankrupt. Why can't they go bankrupt?
10:10Because instead of just declaring
10:12default, they just create more money,
10:14those hundreds of billions of dollars,
10:15and then they pay out that money to
10:17these banks.
10:18But there are consequences to this
10:20starting with the United States
10:21government because remember what I said
10:23earlier?
10:24The United States government collects
10:25money from tax dollars from taxpayers.
10:27In 2025, the government collected around
10:29$5 trillion,
10:31and then they spend around $7 trillion,
10:32which means we have a deficit of about
10:36$2 trillion.
10:38And that deficit has to be funded
10:40through debt. Now, if you've been living
10:42anywhere around my YouTube channel,
10:44you've heard that the United States
10:45government now has more than $40
10:47trillion worth of national debt. Because
10:50we have spent $40 trillion that we don't
10:52have because the government wants to
10:54continue spending money in our economy
10:56because that keeps our economy strong,
10:58at least on one side of the equation.
11:01Why? Because when the government spends
11:02money, somebody makes money. When the
11:04government signs a contract to build
11:06military equipment, companies make
11:08money, people get jobs, and things are
11:11being built. When the government signs a
11:13contract to build a new bridge or a new
11:15road, people are getting jobs,
11:16businesses are making profits. So when
11:18the government spends money, somebody
11:20else is making money, and that is a way
11:22of stimulating the economy, which is
11:23normally okay, but the problem is the
11:25government has been spending so much
11:27money that we don't have that we now
11:28have this record $40 trillion dollars of
11:30national debt. And so this is where a
11:32lot of people say, "How do we fix our
11:34debt crisis?" And really there's two
11:37things that we can do. We can cut our
11:38spending or we can raise our taxes. But
11:40cutting spending is painful because if
11:43the government were to cut back on
11:44spending, well that means maybe they'd
11:46cut back on social security. People
11:48wouldn't like that. Maybe they have to
11:50cut back on Medicare or Medicaid. People
11:52wouldn't like that. Maybe the government
11:53has to cut back on military spending.
11:56Some people would like that, but you can
11:58imagine that well, the government might
12:00not like that. Maybe the government
12:01would cut back on other welfare, other
12:03aid. You can start to see how cutting
12:05back government spending has a
12:07consequence because that means somebody
12:08is not making money or somebody loses a
12:10job. When Doge came in in early 2025 and
12:13they started eliminating government
12:15departments, people were losing jobs and
12:17that's what made people upset because in
12:19an effort to cut government spending,
12:21somebody had to feel some pain. So
12:24cutting government spending is difficult
12:26when you've become addicted to
12:28government spending. Well, now you could
12:29say, "Why don't we just raise taxes?
12:32That way we can collect more tax dollars
12:34relative to our spending."
12:36But most people don't like higher taxes.
12:39Not to mention the fact that in 2025,
12:41President Trump signed the One Big
12:43Beautiful Bill Act, which is the biggest
12:45and historic tax cut bill that we have
12:47seen in about a hundred plus years. So
12:50we're not going to be seeing higher
12:51taxes under the Trump administration.
12:54Cutting spending is not that easy, which
12:56means now the government has just been
12:58relying more and more on debt.
13:01But there's two problems here. Problem
13:03number one that I've been talking about
13:04this entire video is for a hundred and
13:07nine years, the Federal Reserve Bank has
13:10been a source of free money for the
13:13government because the Federal Reserve
13:14Bank would make a profit through the
13:16system where they would lend money to
13:17the government and then pay out this
13:19federal funds rate and then take that
13:21profit and give it to the United States
13:23government. Like for the decade between
13:252011 to 2022, the United States
13:29government was paid almost a trillion
13:31dollars, a little bit under a trillion
13:33dollars, but almost a trillion dollars
13:36of this {quote} "free money"
13:39from the Federal Reserve Bank, which was
13:41extra money that the government could
13:42use to spend.
13:44But now that does not exist because when
13:46the Federal Reserve Bank lent trillions
13:48of dollars to the United States
13:49government during the pandemic and is
13:51generating 2% interest on that, that is
13:54a loss compared to how much money the
13:55Federal Reserve Bank has to pay out,
13:57which is currently around 4% in the
13:59federal funds rate to all of these
14:01banks.
14:02And so now the United States government
14:04has lost this source of revenue,
14:07but the spending hasn't decreased and
14:09the taxes haven't increased, which means
14:12the debt has to keep going up.
14:15That's one of the reasons why we now
14:18have this national debt exploding at
14:21over 40 trillion dollars.
14:24Now the reason why this matters is
14:27because in order to continue funding
14:28this economy,
14:30we keep going deeper and deeper into
14:32debt.
14:33Now, why does that matter? That's going
14:35to seem like a little bit of a
14:36rhetorical question, but the reason why
14:38that matters is because the Federal
14:39Reserve Bank is not a reserve, meaning
14:42it's not sitting on any cash reserves.
14:44Meaning when the Federal Reserve Bank
14:45now lends money to the United States
14:47government, that money has to be poof
14:49created out of thin air. And when the
14:51money is created out of thin air, what
14:53happens to the value of the dollar?
14:56Well, to understand that, you have to
14:57remember that our dollars are not backed
15:00by physical gold. Back in 1971, then
15:03President Richard Nixon took the United
15:05States dollar temporarily off of the
15:08gold standard.
15:08>> I have directed Secretary Connally to
15:10suspend temporarily the convertibility
15:12of the dollar into gold or other reserve
15:15assets.
15:16>> The reason why was the United States
15:18government was on the verge of default.
15:20We had a lot of expenses we had to pay
15:22as a government, but we did not have
15:24enough tax dollars coming in.
15:26And so then the government had to make a
15:28decision. Do we default on our debts, or
15:31do we find an alternative solution?
15:32Because back then, the United States
15:34dollar was backed by physical gold, so
15:36the government and the Federal Reserve
15:38Bank couldn't just print an unlimited
15:40amount of money.
15:41So then President Richard Nixon said,
15:42"Let's take the dollar off of the gold
15:44standard." Which means now our money is
15:45just pieces of paper.
15:47And now the Federal Reserve Bank can
15:48print an unlimited amount of money. And
15:50they gave a blank check to the United
15:52States government. The government then
15:54paid off all their debts, and all of our
15:56financial problems were solved.
15:58Except then a new financial problem was
16:00created.
16:01Inflation. In the 1970s, we saw the
16:03highest inflation that we have seen in
16:05modern history in the United States,
16:07because we had printed and created all
16:09this money. So we created all this money
16:11out of thin air without creating more
16:13wealth, which was physical gold then.
16:15And now the value of the dollar goes
16:17down, causing the prices of things to go
16:19up. A lot of people assume that
16:20inflation is the prices of things going
16:21up. When in reality, the prices of
16:23things going up is a byproduct of
16:25inflation, because inflation comes from
16:27the word inflate. That's inflating the
16:29amount of money out there, creating more
16:31dollars. So as the Federal Reserve Bank
16:33creates more money,
16:35the value of each individual dollar goes
16:36down, causing the prices of things to go
16:39up. Again, this is why on September
16:4029th, I'm hosting my free live workshop
16:42on how you can profit from a falling
16:44dollar, because of all these things
16:45happening right now. If you haven't
16:47registered for it yet, I have that link
16:49for you down in the description. But
16:50that's just the beginning. We know that
16:52the United States government's going to
16:53continue spending money that they don't
16:54have. We know that these taxes are not
16:56going to, at the current rate, cover the
16:58expenses. So the government has to go
17:00deeper and deeper into debt, while the
17:02government lost this revenue source from
17:05the Federal Reserve Bank.
17:06But now there's a new problem. Problem
17:08number two. So we know that this $40
17:11trillion with the national debt is
17:13inflationary, because in order to fund
17:15all this national debt, a lot of money
17:17has to be printed. Now, if you look at
17:19this side of the board, the Federal
17:20Reserve Bank is losing a record amount
17:22of money. It has been increasing its
17:24losses year after year.
17:27And now we have a record 200 some
17:29billion dollars of loss by the Federal
17:31Reserve Bank. But the Federal Reserve
17:33Bank can't go bankrupt because it can
17:36just create that money out of thin air,
17:37right? It's a quote-unquote deferred
17:39asset. And so when the Federal Reserve
17:41Bank loses money, what does that mean?
17:43Well, they're just going to print that
17:44money
17:45and lend it out here.
17:47That's not shown up here on the
17:48government side. That's just here on
17:51this side.
17:52Well,
17:53if we could just print an unlimited
17:55amount of money, why do you have to pay
17:57taxes in the first place? And the
17:59problem is when you just start creating
18:01that money, that is inflationary. So,
18:05this now becomes inflationary.
18:07This national debt becomes inflationary.
18:10And you can start to see the problems
18:11here because on one hand, we have the
18:13situation where the government spending
18:14is out of control.
18:16Then on the other hand, we have a
18:17situation where the Federal Reserve Bank
18:19has been printing so much money. Now
18:21we're paying the consequences for it.
18:23And the question is what is going to
18:24come next? Are we going to be able to
18:26fix this situation, or are we going to
18:29see more inflation? And the way that we
18:31fix this situation, the ideal way, would
18:34be to get the government spending and
18:37income in check.
18:40Which essentially means
18:42the government will need its economy to
18:44grow faster than the national debt.
18:46Think of it this way. You go out and buy
18:47a half a million dollar house.
18:50If you have $400,000 of debt on the
18:52$500,000 house, you have 80%
18:55loan-to-value.
18:56You got a 80% mortgage.
18:59You're considered quote-unquote healthy.
19:01But now, same situation, you buy the
19:02half a million dollar house.
19:04But now, instead of getting a $400,000
19:05mortgage, you get a $600,000 mortgage.
19:09Now you're underwater.
19:10120% loan-to-value.
19:13That's more problematic.
19:15Today, the United States government is
19:16underwater.
19:18We have a debt to GDP ratio, a loan to
19:21value ratio of 125%,
19:24which is the highest we have seen
19:26outside of the pandemic since before
19:29World War and so the problem is is our
19:32national debt as an economy has been
19:34growing faster than our economy. And so
19:37if we want to fix this problem, we need
19:39our economy to grow faster than our
19:41debt.
19:43Which means either our economy has to
19:44grow faster
19:46or we have to grow our debt slower. And
19:48right now, our debts are not growing
19:49slower. They keep growing faster and we
19:52need to figure out how we can get our
19:53economy moving again. If the economy
19:56does not start growing faster than our
19:57debt, we're going to see more inflation
20:00problems.
20:01But if the economy can grow faster than
20:03the national debt, well, then a lot of
20:05these debt problems can then go away.
20:07This is where the Treasury Secretary,
20:10the president, President Trump, and the
20:11entire White House believe that our
20:13economy will be able to grow faster than
20:16our national debt. Why? Because of the
20:18things like tariffs to bring more jobs
20:20to the United States, because of the new
20:21executive orders by the White House to
20:23bring more jobs to the United States,
20:24because of the investment into AI and
20:26other industries by the White House,
20:28because of the tax cuts by the White
20:30House that that will all stimulate the
20:32economy in a way to get the economy
20:34moving, to get people working, to grow
20:37our productivity so our economy can grow
20:39faster than our national debt.
20:41Now, on the other side, people are
20:42concerned that while our national debt
20:45keeps ballooning,
20:46but we're not fixing that problem.
20:49And the answer is well, we'll see what
20:52happens, but this is what I want you to
20:54pay attention to as an investor because
20:56we're seeing these things happen.
20:58The Federal Reserve Bank was a way to
21:00make the United States government rich,
21:01kind of in secret because a lot of
21:03people had no idea of how it would work,
21:05how inflation happened, how it was
21:07funding and fueling spending for the
21:09United States government.
21:11But now we're starting to see more
21:12cracks with the Central Bank, the
21:14Federal Reserve Bank.
21:16And my goal in this video is to help you
21:18be more educated, that way you can be a
21:19smarter investor. Investing your money
21:21is hard, and on this channel I teach how
21:23you can start investing your money
21:24yourself. But for some of you, working
21:27with a financial advisor, somebody who
21:28is a professional, will be a better
21:30option because now it's more hands-off
21:32and you can work with a professional who
21:34will manage and invest your money for
21:36you. And that's why I partnered with my
21:38sponsor Money Pickle. The reason why I
21:40like Money Pickle is because first they
21:41get to know you and what your needs are,
21:44and then they match you with a vetted
21:46financial advisor who would be best
21:48suited for your needs, and then they
21:50give you a free consultation call with a
21:52financial advisor, that way you can get
21:54a feel of the financial advisor and see
21:56if they're right for you or not. That
21:58way you don't have to go through a
21:59high-pressure sales process with
22:02somebody who might not even be a good
22:03fit for you. If you're interested in
22:05learning more and you have over $100,000
22:07in assets, the process is pretty simple.
22:09All you have to do is complete a short
22:11form, I have that link for you down in
22:13the description. It takes a few minutes
22:14to complete, and once you do that, Money
22:16Pickle will review your answers and then
22:18pair you with a vetted financial advisor
22:21who they believe is best suited for you.
22:23It's a completely free process, that
22:25initial consultation again is free, and
22:27then if you decide to move forward, then
22:29you can negotiate and discuss what your
22:31rates and terms look like with that
22:33financial advisor directly. So, if you
22:36want help managing your money and you
22:37want to work with a vetted financial
22:39advisor, my sponsor Money Pickle can
22:41help get you paired up with a financial
22:42advisor at no additional cost. So, if
22:45you want to learn more, I have that link
22:46for you down in the description. So,
22:48what we talked about in this video is
22:49that the Federal Reserve Bank is the
22:50Central Bank of the United States, but
22:52they're not federal, it's not a reserve,
22:53and it's not a bank.
22:55However, the Federal Reserve Bank has
22:56the ability to do two things. Number
22:58one, it can create money out of thin
22:59air, and number two, it can set interest
23:01rates.
23:02And so, for 109 years, the Federal
23:05Reserve Bank was creating money out of
23:07thin air and buying assets and getting
23:10rich off of those assets. Which assets
23:12was it buying? Well, it was buying
23:13United States Treasuries, meaning it was
23:15lending money to the United States
23:17government and collecting interest on
23:18that money.
23:19And then, at the same time, the Federal
23:21Reserve Bank would have expenses. Those
23:23expenses was paying interest out to
23:25banks when banks would then save their
23:27money at the Federal Reserve Bank. The
23:29interest rate that the Federal Reserve
23:31Bank paid out to these banks is called
23:32the federal funds rate.
23:34And the interest rate that the Fed
23:35collected from the United States
23:37government was called the Treasury rate.
23:39Well, things really started to flip
23:41during the pandemic time. Because during
23:42the pandemic time, the United States
23:44government had an explosion of spending.
23:47We started spending money on so many
23:48things, like PPP loans and unemployment
23:50checks and grants and bailouts and all
23:51that other stuff.
23:53Then now the government needed a huge
23:54sum of trillions of dollars.
23:57Which meant the Federal Reserve Bank
23:58then printed and created those trillions
23:59of dollars out of thin air and lent it
24:01to the United States government.
24:03But also during the pandemic,
24:05the Federal Reserve Bank lent it to the
24:07government when the government was only
24:08paying out about 2% in interest. So, the
24:11Federal Reserve Bank locked in these
24:12loans to the government at about a 2%
24:15interest rate. While at the same time,
24:17after the pandemic, we saw huge
24:19inflation.
24:20And that inflation problem had to be
24:22fought by the Federal Reserve Bank. So,
24:25how did the Federal Reserve Bank fight
24:26inflation? They started raising the
24:28federal funds rate. So, now we're in a
24:30situation today Federal Reserve Bank is
24:32collecting 2% in interest on those
24:33trillions of dollars, but now they're
24:35paying out something like 4% in interest
24:37to the banks on these federal funds
24:39rate, which means now the Federal
24:41Reserve Bank has begun losing money.
24:442023 was the first year in 109 years
24:48since the Federal Reserve Bank was
24:49created that the Federal Reserve Bank
24:51lost money.
24:52Today in 2026, the Federal Reserve Bank
24:54has lost more money than ever, hundreds
24:57of billions of dollars. The reason why
24:58that's a problem is number one, those
25:01billions of dollars or hundreds of
25:02billions of dollars the Federal Reserve
25:03Bank would make in profit would then be
25:05given to the Treasury, and then the
25:07United States government could then
25:08spend that money in our economy to help
25:10grow our economy. But now we're in a
25:12situation where not only can the Federal
25:14Reserve Bank not give that money to the
25:16United States government, which means
25:17the government now has to borrow more
25:19money, which is more inflationary, but
25:22the Federal Reserve Bank is also losing
25:24hundreds of billions of dollars as they
25:25pay out these expenses, and the Federal
25:28Reserve Bank can't default because it
25:30just creates money. So now to cover
25:32those hundreds of billions of dollars of
25:33losses, the Federal Reserve Bank now has
25:35to print those hundreds of billions of
25:37dollars, that way they can continue
25:38lending this money out, which is also
25:41inflationary.
25:43And this is where you can start to see
25:44it becomes a very negative spiral
25:45because now this is inflationary with
25:47the Federal Reserve Bank paying out to
25:49the banks. It's inflationary that the
25:50government has to borrow more money, but
25:52we're not seeing a slowdown in spending,
25:54and we're not seeing an increase in tax
25:56revenue,
25:57which is where we continue to see a lot
25:59of growth in our national debt. And the
26:01question is, are we going to see our
26:02economy outpace our national debt?
26:05And that's where hindsight is 20/20. And
26:08as an investor, you want to understand
26:10what's happening, that way you can find
26:12the best opportunities with your money.
26:14If you got value out of this video, the
26:16best thank you is a referral, so if you
26:17could please share this video with a
26:18friend, family member, colleague, or
26:20fellow investor, that way we continue to
26:21spread this type of financial education.
26:23Thank you. Elon Musk and Tim Cook say
26:25that America's facing a
26:27once-in-a-hundred-year investment
26:29opportunity that has nothing to do with
26:30the Federal Reserve Bank, has nothing to
26:32do with the dollar, and has nothing to
26:33do with oil prices that most people are
26:36overlooking. Take a look. Tim Cook in
26:38his last speech as the CEO of Apple just
26:40said that America is facing a 100-year

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