The Fed Just CRUSHED The Stock Market - Here’s Why

The

stock

market

was rallying with hopes of a V-shaped recovery, but then the Federal Reserve Bank came out and

crushed

those dreams and the

stock

market

with a dismal economic report and now you might be wondering: are we point of seeing another stock market? Crash, what's wrong everyone? Just saying, and welcome to the minority mindset, the Federal Reserve Bank came out and gave an update on economic stimulus plans and interest rates and their report

crushed

the stock market first, they said they're going to keep rates at interest at 0% for as long as possible the Federal Reserve said they are not even thinking about raising interest rates, in fact they said they are not even thinking about thinking about raising interest rates, so rates can probably be expected 0% interest for In a second, they said they were worried about the resurgence of this virus because cases are starting to rise again.

States across the United States are seeing cases rise and if this virus comes back we won't be able to have gatherings, which means millions of Americans. they will not be able to return to their jobs third the Federal Reserve says the US economy will contract six and a half percent this year and they expect unemployment to be ten percent by the end of 2020 Jerome Powell, who is the chairman of the Federal says we must be realistic because sometimes the stock market lives in la-la territory and does not reflect reality, he said that although the stock market experienced some of the best growth in its history in May and although the stock market has practically reached pre-pandemic levels, it will take years for our economy to fully recover and we still have tens of millions of Americans out of work and fourth, the Federal Reserve said they will keep their money printer running and keep driving the markets as long as it is It is necessary to do what is necessary because, quote, the patient is still on life support, the patient they are referring to is the United States and the life support they are referring to is this printing of money by injecting cash into the economy in the markets , the feds' job is to monitor the armed system and they want a strong stock market, which is why they have already pumped trillions of dollars into our markets, but this dose of reality hit investors w

here

it hurts in their portfolios.

No, not my actions since the beginning of this crisis, experts have said that our economy will not improve until this virus goes away or until we have a vaccine. Well, when the lockdowns went away in May, a few things happened in America, the stock market started to live. In the land of la-la, with the hope of an economic recovery, people began to go out and live their lives again and thirdly, the virus began to appear again. Texas was one of the first states to open everything back up in their economy and right now at the time I recorded this video, your state is actually experiencing a record number of hospitalizations from this virus.

Fortunately, we're a little more prepared now than we were in March because companies have been making more PPE and hospitals have access to more ventilators, but Si Texas is any indication of what could happen as more states and their lockdowns could be devastating. for the economy, the stock market and people's health, a lot of people started thinking this and worrying about this, then Treasury Secretary Steve Minuchin came out. and he wanted to make investors feel safe again and said, "We can't shut down the economy again," what he was trying to do was tell the markets, "don't worry, we're not going to lock down the economy again, so that everything will be fine." but what really ended up happening was that people started to realize that things might be getting worse again, so get ready, hug your wallets for whatever may come.

I have my toilet paper ready. I know this is a serious health issue, so be sure to take your precautions. The good news is that Johnson & Johnson is on track to begin human trials of a vaccine in July, about two months earlier than expected. The bad news and reality is that even if we don't see another round of lockdowns and even if this virus doesn't investigate, it will take years for our economy to recover, as we

just

saw another million and a half Americans lose their jobs last week. Remember that the stock market and the economy are different.

Just because the stock market is up doesn't mean the economy is

just

because you're enjoying this video doesn't mean you can't hit the thumbs up button below. America is facing a shrinking economy at the same time we have tens of millions of Americans who are out of work and need a job and we have a national deficit for our country that is exploding, the government is making less money from taxes because no one You don't work or pay taxes and the government has more expenses than ever because it has to pay unemployment checks and stimulus checks, so t

here

is less money.

With more money coming in and going out is not a good mix for a government that was already losing money to begin with, the feds said they will do whatever it takes to support our economy, except they didn't really specify what that entails. reduce interest rates to zero percent, that makes it easier for you to go out and borrow money to buy a house or a car or maybe a Gucci, but if interest rates are already at 0%, that means that interest rates Interest rates cannot go lower and the Federal Reserve cannot stimulate the economy by cutting interest rates unless they reach negative interest rates and Federal Reserve Chairman Jerome Powell has said on multiple occasions that he is not interested in the negative interest rates, at least not yet, that means the only way the Fed can stimulate the economy now is by turning on its money printer and pumping a lot of free money into the economy and markets, for So the Fed can be expected to continue stimulating the economy and markets for a while, but it will be complicated.

It will be like a battle between the economy and the stock market and the feds' money printer because the stimulus checks and unemployment checks go away, the economy will naturally slow down because people will have less free money and that's when the Fed Federal might have to start. inject more money into the markets to compensate for this or they may not want to do it. I don't know. I'm not going to delve too deeply into how our economy and credit system works. I'll talk about that in a video very soon, so if you haven't subscribed to our YouTube channel yet, make sure you do, but our economy is based on spending, the more money you spend, the more money someone else makes, the more money you make. , the more creditworthy you are, the more you are creditworthy the more money you can borrow the more money you can borrow the more money you can spend and the more money you can spend the more money someone else will earn so it's like a positive economic cycle borrow more spend more and people Making more money I'm not saying it's right or wrong, that's how the system works, but when the economy is slow, like we're seeing now, people spend less money if you spend less money, that means people make less money if you spend less money. people earn less money that means you are less creditworthy if you are less creditworthy that means you can borrow less money and if you can borrow less money that means you can't spend as much money which means now people will earn less money and now we are In a negative deflationary cycle where people earn less money, can borrow less money and can't afford the same lifestyle as before, when the economy was good, this deflationary cycle is very bad for the economy because it means the economy goes down. contracts and it's very bad for people because that means you'll make less money from your work and it's very bad for assets and investors because that means asset prices will crash, so this is what the Fed is trying to do. avoid by injecting money into the economy to combat this deflationary cycle.

This is where things get really complicated because normally the Fed can stimulate the economy and add more money to the economy by lowering interest rates because when interest rates are cheaper it's easier for you. Go out and borrow money, and when you borrow money, that means the banks are essentially creating money out of thin air because now they can print more money and lend you more money, so when interest rates are lower, people borrow. Borrowed more money, which means more money. is created, but now the Fed is faced with a dilemma where they can't cut interest rates further unless they are negative, but they don't want to, at least not now, so the Fed is trying to get creative printing a lot of money and injecting it into the economy and the markets as a way to give people more money or purchasing power because people can't go to the bank and borrow money, that's why the Federal Reserve used some of its powers specials during this 2020 crisis to Let them use your money printer to print money, go out into the stock market and start buying corporate bond funds and other bonds in the stock market to help inflate the price of these assets.

The idea is that if your asset prices are higher, you. You will feel richer and when you feel richer you are more likely to go out and spend more money, but the downside to this is that the only way you will benefit is if you own assets and many Americans don't. If you don't own assets like you haven't benefited from the stock market rally, unless you actually own stocks right now, you might think something like well, maybe I should invest my entire bank account in stocks so the Fed can make me rich before you do that.

There are a couple of things you need to know: the stock market is emotional, we saw the stock market crash faster than ever in March and we saw the stock market grow faster than ever in May, this port market crash has not finished, we are going to see a lot of volatility in the stock market at least through 2020, so there is a chance that we could see the stock market drop quite significantly, so if you are going to buy stocks and invest in stocks, don't invest on emotions, do some research, know where what you are doing, don't just invest in something because you will see that everyone is getting rich.

If you are new to stock market investing, you need to use a stock brokerage to invest in stocks and our team prepared a stock market investing article that will show you that. It will show you how to find a good stock brokerage, how to invest in stocks, and how you can get some free stocks just by using the right stock brokerage. If you would like to read this blog post on our website, you can do so by clicking the link here. or by clicking the link in the description below - you need to know what you are investing in, that means you need to understand the flow of money, like hospitals are busy with cases of this pandemic and if cases increase, beds of hospitals could be even busier because treating someone for this pandemic is not very profitable.

I mean, hospitals make most of their money on elective procedures like hip replacements and knee replacements, but no one wants to replace their hip when there are hospital beds. are full of people with cases of this virus, it will be some time before large gatherings are normal again, so concerts, sports businesses, and the travel industry will be affected and will take time to recover. Some of these stocks may even recover. when it doesn't make any sense, but I'm going to defer to Warren Buffett on this thing that says don't invest in anything you don't understand, like in early June when the stock market started breaking highs, companies that went bankrupt like Hertz and JC Penney They started to recover even though their stocks and companies were bankrupt and meaningless and eventually their businesses that require their physical presence will take a long time to fully recover, so these are their restaurants, their shopping malls, their retail stores .

It will take longer for businesses to recover so make sure you keep this in mind when trying to invest your money and this is what financial literacy is all about: using your money as a tool to get rich rather than making everyone around you richer. Wealthy and knowing how to use your money the right way If you're looking for an easy way to improve your financial literacy, we have a free ebook on money management and investing that you can read for free when you sign up for a financial program. educational emails that are also free, you can get a free ebook and start reading yourfinancial education emails by clicking the link above or by clicking the link in the description below, thanks for watching, if you enjoyed this video, please share it with a friend. please help spread the word if you want to learn more about how to find a solid company to invest in in the stock market I already made a video about it and you can watch it on youtube by clicking this button here thanks for watching and as always keep up incredible