the US has benefited from the dollar serving
as the world’s Reserve currency for decades but that’s not guaranteed to last forever if
the US doesn’t get its debt under control if deficits keep ballooning America risks losing
that position to digital assets like Bitcoin and this is a recent quote from Larry think the
CEO of Black Rock the world’s largest asset manager when you consider that black rock has
been one of the largest buyers of Bitcoin via its ETFs it begs the question of what this huge
and powerful company is planning today we look at the answer my name is Nick and you’re watching
the coin Bureau the quote in the introduction comes from Larry’s annual letter to investors
which is titled quote the democratization of investing in other words making it easier for
retail investors to access the capital markets which Larry describes as one of the most powerful
and important systems on the planet Larry starts by explaining the first stock exchange opened
in Amsterdam Way Back In 1602 and that prior to this period investing was only available in a
private form and accessible only by the wealthy of course Larry does acknowledge that 90% of
investors in the stock exchange were wealthy too even so the introduction of the first public
markets 400 years ago brought investing one step closer to being available to the average person
case in point the remaining 10% of investors in the Amsterdam stock exchange were regular folks
uh which meant that there wasn’t much retail for the institutions to dump on Jokes Aside Larry
points out that the fundamental purpose of a public market is to create a quote Prosperity
flywheel wherein people invest in markets the companies in those markets make more profits and
share those profits with the people who invested in them in the form of dividends and such Larry
highlights the fact that today 60% of Americans are invested in stocks a figure that’s roughly
doubled since the 1980s meanwhile though Global GDP has grown more in the last 40 years than
it did over the previous 2000 but Larry does underscore the fact that this growth hasn’t
been equal on the contrary those with wealth I.E those with assets have gotten wealthier and
those without assets have gotten poorer except for a few segments of the working class in a few
countries that have benefited from globalizing ation logically Larry believes that this
capitalist system needs to be fixed and from Larry’s perspective the solution is simple make it
easier for the average person to invest in assets and they’ll be able to build wealth too to that
end Larry believes that two things need to happen markets need to be made more accessible and more
people need to become investors in Larry’s own words quote more investment more investors that’s
the answer but but obviously Larry seems to omit the fact that this so-called democratization of
investing won’t address the underlying problem all it will do is make existing asset holders even
richer but uh let’s not jump the gun just yet by a peculiar claim and that’s that the money
to finance things will not come as much from Banks governments or corporations instead Capital
markets will be the main vehicle for financing and Larry reveals that black rock has believed
this since he founded it in 1989 and what’s interesting is that Larry believes we are still
in the early stages of this process but that this process is going to accelerate and that’s just
because governments cannot afford to spend that much on infrastructure because they’re already
massively in debt they’ll have to rely on the markets at the same time companies cannot afford
to borrow much more from Banks because lending standards have become so much more constrained
they too will have to rely on the markets and in case it wasn’t clear enough Larry is basically
saying that governments and companies will need to rely on Black Rock the caveat is that it’s not
black rock that provides the money and this is one of the biggest misunderstandings when it comes to
asset managers they are merely the custodians of other people’s capital and the reason why black
rock and Co have so much influence is because of how they’ve been investing this Capital
anyways Larry notes that there’s over $25 trillion sitting in Banks and money market funds
and claims that this quote abundant capital is quote being deployed to narrowly if this sounds
familiar that’s because officials in the EU have been saying something similar about European
Savings in case you missed the memo EU commission president Ursula felan and European Central Bank
president Christine lagard have both talked about how they’re going to use the savings of European
citizens to fund the eu’s agenda naturally this has led to quite a few questions and of course
concerns it looks like black rock wants to do the same thing but the difference is that they
want to use carrots while the EU wants to use sticks in Larry’s view the only reason why these
savings aren’t being invested is because there aren’t any investment that these Savers find
appealing as such all that’s needed is better offerings what better offerings does Black
Rock have in mind well infrastructure via private markets Larry reveals that a staggering
$68 trillion of infrastructure spending will be required between now and 2040 in case you forgot
governments don’t have enough money for this and neither do the corporations apparently so who
is going to pay for it uh the retail investor apparently Larry seems to claim that investors
will benefit financially from this infrastructure and this foreshadows the privatization of said
infrastructure one to use a road well you’ll need to have a highway stamp one to cross a bridge
pay a toll and so on and so on case in point Larry says quote the beauty of investing in private
markets isn’t about owning a particular bridge tunnel or midsized company he then claims that the
real benefit is diversification and argues that the Next Generation portfolio should be 50% stocks
30% bonds and 20% private credit but there’s just one problem and that’s that most retail investors
can’t currently invest in private credit after recounting how Black Rock democratized access
to public markets with ETFs Larry proclaims that black rock will do the same thing for private
markets foreshadowing its dominance in this investing Niche and it begins with an investment
fund called Global infrastructure Partners or Gip which Black Rock acquired last October quote
Gip owns some of the world’s most important infrastructure assets on behalf of our clients
London’s Gatwick Airport Key Energy pipelines and over 40 global data centers if that wasn’t
spooky enough Black Rock has purchased quote a network of 43 ports across 23 countries and quote
one in every 20 shipping containers moving around the world passes through these ports each year
and if this trend continues Black Rock could one day own most of the world’s infrastructure
but again it’s not black Rock’s money that’s been used to purchase this infrastructure per se
it’s the money of its clients the catch is that black rock is likely to use its influence
in private markets the same way it has in public markets with ESG and the like and this
is the aspect of black rock that is uh a tad bit scary we regret to announce that the Bro crypto
podcast is sponsored by the coin Bureau deals page to retirement and asset tokenization which he
sees as another technology that could further democratize investing regarding retirement Larry
commences with a sobering statistic more than half of retirees fear running out of money more than
they do death not only that but 33% of Americans have no savings and a third of Americans also said
they would have a hard time scraping together $500 to pay an unexpected Bill and this makes you
wonder exactly how democratizing finance will help given that a substantial percentage of
people are struggling to pay bills if that wasn’t concerning enough Larry also touched on
the fact that Social Security will run out of by 2035 and that even Pension funds are only 80%
funded put differently the boomers are cooked but Larry believes that black rock well they can
help but just give us some money and we’ll buy some roads and bridges no money no problem Larry
has a three-point plan to help you the first is working with nonprofits to set aside money for
the poorest plebs the second is to try and auto enroll all workers into 401k land and the third
is to help young people start investing earlier seems that that’s the best that they can do for
us on that note Larry points out that the average American estimates that they need over $2 million
to retire comfortably they’re going to be awfully disappointed when the inflation makes that figure
10 times bigger funnily enough though Larry thinks that 2 million is a lot even more than he was
expecting what’s even funnier is that given this lofty goal Larry says quote we’re going to need
better ways to boost portfolios as you might have guessed the answer is to invest in infrastructure
via private markets and what’s Wild is that Larry admits that any money invested in private markets
will be locked for a while quote when you invest in private assets like a bridge for example the
value of those assets aren’t updated daily and you can’t withdraw your money whenever you
want it’s a bridge after all not a stock fortunately or unfortunately Larry says that
Bridges will become liquid Investments eventually he also drops another thought-provoking statistic
30% of all money flowing into US markets is coming from retirement investing what happens when all
the Boomers retire and start selling more than they are buying Larry doesn’t say but he does
recommend a black rock product that schedules these outflows never mind that some of the
infrastructure Larry on retirees to spend their money on will only be complete by the time they’re
dead speaking of which he also reveals that it takes a who in 13 years to get approval to build
high voltage power lines in the US and the EU and that’s not construction that’s just approval
that’s an issue because we’re going to need lots of energy to power the humanoid robots that are
going to replace us this is actually not a joke Larry says that the energy demand from AI data
centers alone could push existing power grids to the Limit with the states of Utah Ohio and Texas
warning about exactly that the irony is that a lot of this has to do with the restrictions placed
on energy by uh ESG investing not surprisingly Larry doesn’t acknowledge black Rock’s role in
holding back the development of reliable and constant energy sources he just acknowledges that
wind and solar alone aren’t going to cut it which is literally the opposite of what ESG investors
like Black Rock was saying a few years ago in fact Larry even goes as far as praising nuclear
power something that was likewise Unthinkable just a few years ago under the ESG ideology
Larry applauds China for rapidly building out nuclear plants but uh he doesn’t have anything
to say about Germany shutting its nuclear plants during an energy crisis though to add insult
to injury Larry shares a graph that shows cases how a person’s quality of life is directly
related to how much energy they get to use believe it or not but many ESG investors were completely
unaware of this and it looks like there are still a few countries that deny the reality of physics
on a completely unrelated note Larry Praises Europe’s slow walk towards reducing trade barriers
within the block which will likely allow for more corporate monopolies to form boosting GDP as
always place he also applauds the possibility that AI could be used to address Europe’s demographic
implosion H some would say a better solution would be to make life more affordable for Europeans to
actually have more children but let’s not gets into that debate now seemingly out of the blue
Larry then changes the topic to bitcoin and says what I noted in the introduction the US dollar is
the world’s Reserve currency but it may not be for long if the United States continues going deeper
into debt he notes that by 2030 mandatory spending and debt servicing will use up all federal
revenue Larry then claims that if the US can’t get its debt situation under control then the US
dollar could lose its reserved currency status and be overtaken by a digital asset like Bitcoin
Larry explains that this could happen if investors start to see BTC as being a safer bet than the US
dollar but this is highly debatable some would say that investors see gold as the safe haven asset in
the current environment evidenced by the fact that gold has recently been hitting all-time highs and
continues to Rally higher and higher historically speaking gold was the safe store of value and
backed fiat currency so it’s a more logical Choice then again it’s possible that investors
could eventually see Bitcoin as a digital gold for the time being though it’s clear that they see it
as a risk asset even with Larry claiming that it’s quote digitizing gold let’s not forget that asset
managers are also fans of stable coins and Central Bank digital currencies in any case this ties
into the buzz phrase of the moment which is asset tokenization Larry explains that tokenization
involves quote turning real world assets stocks bonds real estate into digital tokens tradable
online each token certifies your ownership of a specific asset much like a digital deed unlike
traditional paper certificates these tokens live securely on a blockchain enabling instant buying
selling and transferring without cumbersome paperwork or waiting periods a perfect definition
no doubt Larry explains that every asset can be tokenized and if they are it will provide an
enormous boost to Capital markets which you’ll recall will become the lifeblood of the entire
planet per black rocks thesis token assets will democratize access shareholder voting and yield
which is certainly good news the bad news is that there’s one thing Larry and black rock want and
that’s quote a new digital identity verification system because apparently existing forms of ID
Aren’t Enough what’s the matter don’t you want to build wealth by investing in bridges and roads
just tokenize your identity it’ll be fine right and this brings me to the big question question
and that’s what black rock is Planning by this point the answer should be clear the asset manager
is trying to suck in as much money as it can primarily from retail by allowing them to invest
in private markets primarily for infrastructure which someone needs to pay for when you zoom out
it really looks like the powers that be are trying to trick the plebs into keeping the unsustainable
Financial system going for just a little while longer remember that the US government is
projected to essentially run out of money by 2030 and that’s an issue for the Global Financial
system you see US Government debt or rather us bonds are the primary form of collateral in the
financial system like all assets the price of US bonds is determined by supply and demand the more
debt that the US government must issue the larger the supply and the lower that bond prices fall all
El equal since the US government is already low on money this means that any further infrastructure
spending would require even more borrowing which would cause us bond prices to fall in turn this
would cause anyone who uses us bonds as collateral to borrow money to default which is quite a
few people this default would result in the forced selling of us bonds causing prices to fall
further as prices fall us bond yields would rise which would force interest rates higher in the US
making it even harder for the US government to pay back its debt creating a Deb spiral that collapses
the US dollar per Larry’s Point if that wasn’t bad enough most countries are in a similar position
financially speaking they’ve borrowed as much as they realistically can and if they borrow any more
it will either cause a spike in interest rates that destroys the economy or a spike in inflation
that eventually also destroys the economy the worst part is that the main reason why the economy
and the markets have done so well is because of the money that governments have been spending
especially the US government if they were to reduce their spending in any meaningful way then
the economy and the markets would suffer too if you listen closely it really sounds like a game of
musical chairs and the chairs well they’re running out and this has institutions like the EU and
black rock looking for other chairs to add to the game so that it keeps on going they can all see
the tens of trillions of savings that people are sitting on and they want that money notably this
is even true in places like China where the CCP is trying to boost domestic consumption and this begs
the question of how exactly the powers that be will convince the people with trillions of dollars
of savings to invest that money as I hinted at earlier there are only two answers sticks and
carrots a stick would be launching a cbdc and manually forcing this money into the markets
against the will of the Savers a carrot would be creating a speculative Mania in the markets
that incentivizes Savers to allocate their Capital uh to play a song that’s so catchy that they
voluntarily add their chair to the musical game as the most accessible and most volatile asset class
in the world crypto is perfectly positioned to be that song and the craziest part is that the stable
coins used to buy these cryptocurrencies are backed by us government debt meaning that every
time someone buys a stable coin to buy a crypto they’re buying US Government debt and it looks
like tokenized assets will trade primarily against stable coins too and you can learn all about that
using the link right over here in the top right and I’ll see you over there and if you are not
subscribed to the channel yet you can do that right over here this is Nick signing off thank you
very much for watching and I’ll see you again soon
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