Banks are running out of money. Oh my gosh. Yeah, you heard me, right? Yes. I'm going to get into
this video because it is super scary. I read like all of these articles, I've studied this
and I have so much to share with you about this that I just really got to get into it. Let's go.
I'm going to share with you a simple step by step explanation on what is happening in this
market and why banks are running out of money. I'm going to share with you my biggest insider secret
on how you can benefit from the banks running out of money, and I'm going to share with you
the biggest, best trap that you need to avoid. So you probably already know how banks make money,
but let me quickly explain how most banks work. Obviously we open up checkings or
savings accounts as normal consumers and we put our money into the bank,
they give us an account and each time we get paid and we put money in the bank,
the bank then takes that money and they loan it out to other consumers. They may even loan some of
it back to you when it's all pulled together for things like auto loans, mortgages, credit cards,
personal loans, and other type of investment lending. These are what most banks invest in and
this is how they make money. They pay you interest on the money that you receive or they pay you no
interest on the money you receive in some cases, and then they lend that money out to others,
charging interest and making a profit. This is how most banks work. But do you know that banks
also make money not only with the interest that they charge lending money, they also invest money
as well. Most banks have their own portfolios of money that they've invested and they offer
ways for consumers to take advantage of those investments. For example, Chase Bank, for example,
may own actual real estate. They may actually even own portfolios of stocks or bonds and things like
that. Securities, they actually invest their money into other businesses and other investments. This
is one of the streams of incomes for banks. So they have the two major ways. They obviously
have the lending that they do with the money that you deposit, but then they also have their
own profits that they reinvest and monies that you've deposited that they do investments with.
So this is how banks make money and I'm going to share with you why they're running out of money
because something has definitely changed. So now let's talk about what's going on in this market
because it is crazy. So in another video I'm going to share with you and I explain the whole thing,
but 99% of all mortgages in the US right now are less than 6% interest rate. Let me say that
again. 99% of all of the mortgages currently in America, the sellers, the borrowers, the person
that owns the home, their mortgage interest rate is less than 6%, 99%. That is completely unheard
of and that is a new thing that has never happened before in our economy, adjusted for inflation,
of course. So what we are seeing now is that we have all of these people that own mortgages and
their rates are less than 6% and current interest rates on mortgages are nearly 7%. So that is a
really big gap. We're starting to see that many people are not wanting to take out as many new
mortgages because the mortgage interest rates were so low and we almost got really used to that
environment. Additionally, because interest rates are higher, people can't buy as much home as they
could two years ago, so they can't even afford as much house as they used to. So for example,
maybe in 2020 they could have gotten a $300,000 home with a $2,000 payment, but now that only
gets them a $200,000 home and there really just isn't too many of those properties available or
the competition for those lower price homes is immense and is really hard to find a property that
you can afford. So when you start to combine these two things, we have a real issues that banks are
facing that I'm going to explain to you in just a second. This creates a situation where banks are
actually losing money. Let me kind of explain to you, not in that they're losing money every day,
but kind of on paper they look like they are. Let me explain. Like I said earlier, banks
invest money. They have their own investments and in many cases their investments are portfolios of
loans. So let's just use the example, a portfolio of mortgage loans. So say they take a thousand
mortgage loans and that's just one portfolio and they've invested in that and that portfolio is
yielding a certain amount of return each year. Maybe I'm just going to use a round number. It's
a silly low round number. Let's just say it's $1 million, okay? But now with mortgage interest
rates being much higher portfolios have mortgages with much higher interest rates, which makes them
much more valuable. So you may have a portfolio with interest, like I said, those a thousand
loans, but those interest rates on those loans are 7%. So that portfolio is actually worth more than
the portfolio of the mortgages that at 3% interest rate. Do you get that? I'm going to put a little
illustration on the screen so you can see that. So if you have 3% earning here and 7%, this 7% pile
is worth more, it is more valuable. Investors will pay more because the yields, the returns
are going to be much higher because the interest rates are higher. You get that? So now we have a
situation where banks have lots of portfolios of loans with really low interest rates and those are
going to get value down like a markdown in value. I won't get into nerd out on you too much. I want
to keep this as simple as possible so everyone understands. So if those now were a million
dollar package, and then they say, well man, because of the market, these are now only worth
$750,000 and these 7% mortgages instead of being worth a million, they're really worth 2 million
because there's so much more valuable than these. So when you actually do the paper, a balance sheet
for a bank, they would have a situation where if they ever had this portfolio of loans that they
had to sell or they have to sell a portion of them or those people started to default,
they would be in a really bad situation and that's what a lot of banks are facing right now.
When they're looking at their actual, the value of their investments, they're having to write down
the value because interest rates have changed and the market has changed so much that those assets,
those portfolios are not actually worth as much as they thought they were and they're in a situation
where they actually would be at a loss. The cash that they have on hand, the capital minus those
investments being marked down as a loss would create a situation where banks are insolvent.
Literally it would be a situation on paper or if they ever had to do this in real life,
they would not have enough money to cover their losses, and that's the situation that we are in
right now. Whoa, this information is amazing and I want to keep making you these videos and sharing
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so I can keep making more content that you love and enjoy when you send me a super thanks. I know
that this is the content that you want and I just keep making more of it. Send me a super thanks and
let me know. Okay, back to this episode. So now let's get to the fun part because like I said,
the banks are running out of money or they could be running out of money. It hasn't actually
happened yet, but I'm going to keep a really close eye on this and I may make another video
of anything changes, but I need you to understand everything that I just explained because this is
always how it is. Whether rates are up or down, you need to understand what I just taught you,
and it is really simple to understand because the part that you really want to know is that
those properties are being marked down in value is called a discount, and discounts are really good
for investors. You like distress when you are an investor and you are looking to buy things
and spend and invest. If something is sold at a discount, then that is a good thing for you. You
want that. You want to buy a million dollar property for $500,000. You want to get loans
that are performing that are making money at a discount, and so there's opportunity because
distress assets are our biggest opportunity. Okay, let me say that again. Distressed assets
are an investor's biggest opportunity. That is how I got rich. People losing their homes,
people in foreclosure, bankruptcy, convalescent, home if they got relocated, people in distress is
how I got wealthy. So watch this situation really closely because this is be the situation where you
may be able to get stocks at a discount, mutual funds, different investments that banks may be
selling off, and so if banks come into a situation where they need that cash flow or they're forced
to sell off some of those assets, that will be the perfect opportunity for you to get rich. Wow,
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