This Is What "ALWAYS" Happens Before A Financial Crisis

What triggers the most devastating

recessions those that go beyond just a

mere bubble bursting and lead to a

full-blown financial crisis examples

like the 2008 crisis where mortgage

delinquency surged by an astonishing

657 resulting in the implosions of banks

like Layman brothers who had total

losses of $691 billion or consider the

Great Depression which left 25% of the

workforce unemployed and forced those

who retain their jobs to endure pay day

Cuts averaging 42 1.5% imagine waking up

to a stock market crash watching your

Investments drop and seeing your savings

at risk it sounds terrifying right and

it is but this has happened before and

there are clear warning signs that

predict a financial crisis from asset

price bubbles to bank defaults history

offers clues in this video I'll share

the Key signs that the financial

meltdown is on the horizon and what you

can do to safeguard yourself this is

what always happens before a financial

crisis but before we get into the video

my name is noas and if you want the

truth about finances the real truth then

this is the place for you so if at the

end of this video you found it useful

you found it insightful and it gave you

some actionable tips in order to help

Safeguard yourself against the next

financial crisis then do me a favor hit

the like button and subscribe oh and

tell me what you think are we headed for

another major financial crisis or is

this just another recession that's on

the horizon okay so in this video we're

unpacking what always happens before a

financial crisis and to be clear here

I'm not talking about your everyday

recession your run-of-the-mill recession

or an asset bubble bursting I'm talking

about real Financial crises that can

lead to Devastation all over the globe

there is a very clear distinction

between a recession and a financial

crisis and there are some things that

always lead to an actual financial

crisis but before we can understand that

we need to understand the difference

between a bubble bursting a recession

and an actual full-blown financial

crisis now even though a recession can

trigger a financial crisis for an

individual a recession is not a

full-blown financial crisis when you

look at it from a Global Perspective so

it's important to understand the

difference things like the Tulip craze

which I'll talk about in a little bit

and things like the dotcom bubble burst

aren't necessarily financial crisis they

can definitely lead to recessions and

they often do but they aren't the real

big problem you see when a bubble burst

it's simply an overvalued investor

that's collapsing take all of those

whatever.com companies that were raising

tons of money on the stock market but

had little to no profits and no real

future prospects of profits well that

was the epitome of a bubble bursting it

was a craze where everyone started

investing in tech stocks because that's

where all the money was being made and

that inevitably led to a pretty big

disaster but not the kind of disaster

that we're talking about when we talk

about a financial crisis now a recession

on the other hand and yes the stock

market burst was definitely something

that led to a recession although not as

severe as the 2008 financial crisis a

recession is when the economy just gets

bad it doesn't mean that everyone loses

their homes and everyone loses their

savings it just means things get a

little bit harder for a while and

typically it is defined by two quarters

in a row with negative GDP and this can

often be fixed easily by just having the

Central Bank reduce interest rates which

Spurs on the economy and everything gets

back to normal but then there's a

financial crisis and this is when

everything collapses and this is what

we're talking about today and much like

an investment bubble there are some

clear signs that lead to a financial

crisis in fact one could argue that a

financial crisis is very much a bubble

that's gone Way Beyond what a normal

bubble looks like and turns into an

economic meltdown so let's talk about

the anatomy of a financial crisis yes

there's always bubble like asset

inflation 2008 think about what was

going on with real estate the Great

Depression

1929 think about what was going on with

stocks when everybody was buying them

thinking that all the money was

available to be made and that there was

no prospects of prices coming down and

that is the beginning of a potential

financial crisis but here's the real

differentiating factor it's when there's

a debt fueled buying craze it goes

beyond just people sticking their money

into stocks or sticking them into tech

stocks or buying homes with cash it is

when debt is fueling the buying frenzy

and then inevitably there is a sudden

decisive shift in confidence which leads

to a scarcity of buyers and obviously we

all know what happens when everyone owns

things that nobody else actually wants

the values of those things go down and

plunge through the floor but the

difference between a bubble and a

financial crisis is when people start

buying based on debt and when the value

of those assets goes down substantially

they don't have the money to pay back

the loans or they don't have the money

to make the payments on them and to me

there's one clear sign for this when

everyone starts telling me that you need

to invest in something like gold or

Bitcoin OR tech stocks or buy real

estate cuz it will only ever go up in

value and you can buy it and have

somebody else pay it off and everything

will be just fine that's usually a sign

that a bubble is about to burst and when

people start saying hey don't worry

about boring money to buy it because it

can only go up in value well that's when

things get crazy and that's what leads

to a financial crisis in fact to put it

really succinctly it's when the stupid

of the stupidest start buying into an

investment idea and plowing all of their

money into it that's usually a pretty

good sign that it's time to get out now

recognizing asset bubbles is actually

not as hard as you might think from

tulips to tech stocks speculation is

what drives these crazes I mean just

think of 1999 when everyone was buying

companies like whatever.com but none of

these companies actually had any profits

but people sitting in coffee shops and

bars were talking about their next big

investment or their secret tip and

everyone was plowing money into these

Investments it was pretty obvious that

the value the fundamentals for investing

in them weren't there which should have

been assigned to most people that maybe

it wasn't a good idea to buy and these

economic signals are often hidden in

plain sight you all remember the movie

The Big Short right well do you remember

the stripper scene when the stripper

while dancing was talking about all the

properties that she owned and that she

clearly could not afford what do you

mean all your loans we're talking about

two loans on one house right I have five

houses it's that kind of craziness

that's a pretty good sign that a bubble

is brewing and then when you add in the

debt components of it of borrowing the

money to buy those Investments when

everybody else is doing it well that's

the fuel on the fire that will lead

potentially to a financial crisis and

there's also leading indicators to this

things like the Lei the leading economic

index now the Lei is put out by the

conference board and it has 10

components which are typically an

indicator of a recession and you can

simply go on their website and look at

the monthly forcast and see whether or

not we are in a place that could

potentially lead to things turning the

other way and I'm not going to read you

the 10 components of the Lei but these

are all very much leading indicators

that could indicate that trouble is

brewing ahead and when you take a look

at the Lei chart it's very clear that

there are often warning signals and

recession signals that are in plain

sight and the red lines indicate that

yes indeed there is a recession signal

there which typically means that we're

already in a recession

now not always but typically so when you

know what to look for the signs are

almost always clearly there now when it

comes to a financial crisis yes that is

almost always a recession but there's

some clear differences and some things

you can look for in order to see a

financial crisis coming where it may not

be so obvious that a recession is on the

way so let's start with one of the clear

warning signs and that is speculation

and one of the best examples of this is

the Tulip bubble of the 1600s now in the

1600s tulips were often a symbol of

wealth in fact in many cases having one

tulip meant you were rich and having

multiple tulips meant you were extremely

wealthy and of course tulips really only

bloom in the spring which meant it

wasn't something that you necessarily

had year round but some really Savvy

investors decided that they were going

to sell Futures on tulips which led to

speculation over the price of tulips in

the future and that ultimately led to a

disaster and it's a disaster that we can

use in order to understand the

psychology that will lead us to be able

to identify future crises because when

everyone goes crazy and starts buying

tulip Futures something that you can

literally grow on your own but you're

buying the ability to own when a tulip

at the end of the day really doesn't

have any other value than maybe perhaps

a little bit of status if you were back

in the 1600s well that's a pretty

obvious sign that we've got a bubble

Brewing it's exactly that it's when

things have more value than what they

should and everybody is buying them and

propping up the price that's when we

have a bubble on the way now the good

news is in the 1600s this didn't lead to

any sort of disaster it didn't lead to

any sort of financial crisis but the

speculation piece is a case study that

we can use to identify future major

issues and the lessons from this are

really simple markets and economies that

are built on speculation are vulnerable

think about Bitcoin right now it is

built on speculation yes there are some

valid arguments to own it but at the end

of the day most of the speculation has

to do with the collapse of the US dollar

and being independent of governments

that could do really bad things but for

somebody to take all of their life

savings and put it into Bitcoin when it

is very much an asset that is in fact

based on speculation well that's

absolutely crazy but when the majority

of people start doing that that's

typically how you know that a bubble is

brewing and whether it's tulips or

technology stocks the speculation is

what fuels the crashes but the debt the

debt is what turns them from crashes

into allout meltdowns and there's almost

always speculation happening all around

us and it is that speculation that

creates Financial Bubbles and the

lessons from the past can really guide

us from today take for example there are

danger signs brewing in the gold market

and they are clear as day if you know

what to look for the price of gold

almost always follows the exact same

speculative patterns and the pattern is

this when consumer confidence Falls

significantly the price of gold almost

immediately negatively correlates to

consumer confidence so in other words

when consumer confidence Falls

significantly the value of gold almost

always goes up now humans as a general

rule have a hard time forgetting the bad

times they have a hard time dismissing

their fears about things like the

economy so then inevitably the pattern

continues for a period of several months

or maybe a couple of years depending on

how bad the economy got the fear tends

to stick around and eventually consumer

confidence starts to increase but that

little voice in the back of people's

head doesn't go away the fear of another

big 2008 or another pandemic which leads

for a period of like I said maybe a

couple months or a couple of years gold

prices continuing to go up in value but

eventually consumer confidence gets back

to the point where people start to feel

comfortable with the economy again and

don't feel as much of a need to actually

hold gold as an asset or at least not to

buy more of it if they've already bought

it and this inevitably almost all the

time leads to gold prices returning back

to closer to where they were prior to

the major loss in consumer confidence

and this pattern repeats itself over and

over and over again you see a massive

loss in consumer confidence due to a

major major collapse perhaps a financial

crisis and then you see gold continue to

run up maybe for a couple of years until

consumer confidence gets to an all-time

high again and then that's when you see

the price of gold come down so while

everyone in a period of time after a

major financial crisis might be sitting

there going buy gold because you need it

it protects you against inflation the

reality is is gold is less correlated to

inflation than it is to fear in the

market and if you're smart about this

you can start to see the patterns emerge

and prevent yourself from buying things

like gold and an alltime High when

there's a frenzy which like I said is

usually just after a major financial

crisis when people are still fear F even

though the economy is getting better and

that's why at least in my opinion I

believe it's so important to fix the

percentage of gold in your portfolio and

when it starts to get above that

percentage that you fixed it at let's

say 5% you start selling because that's

usually an indication that it's hitting

those highs and then eventually if the

prices go down you start buying more to

bring the percentage back up to 5% and

you're just constantly buying when it's

cheap and selling when it's expensive

but if you were to take all of your

assets because you believe that

everything's going to hell in a hand

basket and put it in Gold well guess

what gold is not a safe investment it's

just like every other investment and you

will be susceptible to Major declines in

the values and gold much like other

assets when it goes down significantly

in value it takes a long time for it to

recover so let's talk about what sets up

a financial crisis and let's start with

the Roaring 20s the economy was booming

everyone was doing well everyone also

started to believe that stocks could

only go up in value and it led to a

credit fueled economic boom there was

massive consumer demand for homes and

cars people were buying everything that

they possibly could and often buying it

on credit because they believed that the

economy could only get better but

beneath the surface there was a storm

brewing and the margin trading that

existed at the time which was

essentially boring money to buy stocks

was what created the massive amount of

risk that led to the Great Depression

and this was largely because the values

of stocks got complet Ely detached from

reality it was all bye byebye without

understanding the value of the

Investments and this led to a massive

bubble that was ready to burst in 1929

and the difference between this being

just a run-of-the-mill recession and a

complete Financial meltdown was the fact

that the bubble was ready to burst but

so many of the stocks that were being

bought on the market were being bought

with margin which meant that when the

bubble did in fact burst the people who

had bought them would not have the money

or the assets available to make payment

on the money that they owed and that's

what led to a massive shock wave through

the economy that didn't just isolate

itself to the US but went completely

Global this in fact was a financial

meltdown then there was the 2008 housing

bubble which was essentially history

repeating itself now the memories of the

1929 crash LED people to be less

inclined to borrow a bunch of money to

buy stocks they'd already seen that

program they didn't want to go down that

road but hey housing was different

people need need a place to live it can

only go up in value but it was

essentially the exact same pattern that

happened in the 1920s with stocks and

this debt fueled buying frenzy of an

asset that could only go up in value led

to well one of the biggest Financial

collapses in history although it wasn't

quite as bad as the Great Depression the

primary reason why was because we had

seen that program before and the

government knew that if it didn't step

in it would absolutely get as bad as the

Great Depression so they stepped in and

did what they could to save the economy

and while the damage was bad it was a

lot less worse than it could have been

but once again this debt fueled buying

frenzy led to not just an American crash

but a global economic downturn and again

that's the difference between a

financial crisis and and Brun of the

mill recession it's the debt that leads

to the Meltdown and I hope you're

sensing a theme here because when we do

get the part where I explain how to

protect yourself from a financial crisis

it's going to be a part of it but it's

just a small part of

it now let's talk about how Financial

bubbles burst the signs were clear at

least in hindsight buying stocks on

margin set up the storm buying anything

on margin or with debt sets up the storm

and when the market opened on Black

Tuesday the sell orders came in but

there were no buyers present to actually

buy the things that everyone wanted to

sell then there was the housing market

crash of 2008 and again the signs of

trouble were clear at least in hindsight

risky lending things like ninja loans no

income no job no assets created a

financial storm and this ultimately put

a qu of a million Homes at risk

increased delinquencies by

667 and triggered the worst recession we

had seen since well the Great Depression

but even though the signs were so clear

nobody did anything to prevent it which

is a clear indication that it's up to

you and I to protect ourselves because

nobody else is going to protect us from

the inevitable when it happens but if we

get smart about this and we understand

that historical Cycles repeat we can

eventually educate ourselves on what to

look out for and how to make sure that

we're not in a position that when a

financial crisis happens we are taken to

the cleaners so if I haven't made it

clear enough at this point speculation

fuels the crash debt turns it into a

financial crisis and too much risk and

not enough oversight is what turns a

run-of-the mail recession into a

financial nightmare so then the question

becomes can we predict the next

financial crisis well probably not but

there will be warning signs things like

Bitcoin going to the Moon with there

actually being no value for Bitcoin

other than the fact that there might be

another guy down the road who's going to

buy it now I'm not going to say that you

shouldn't own Bitcoin I definitely think

that there's some validity in having a

very small portion of your portfolio in

any asset that is perhaps popular but

you need to make sure that you're only

keeping a small portion of your

portfolio in that not your entire life

savings and definitely don't be

borrowing money to buy Bitcoin if you

have even a little bit of debt you

shouldn't be buying a speculative asset

and the same thing goes for gold as well

now as of right now as of today as of

the time that I'm filming this video it

doesn't seem like we're setting

ourselves up for a financial crisis

because the level of borrowing that

happened in the 1920s and prior to 2008

hasn't really been happening yes there

are some speculative bubbles in

different types of Investments that seem

to be Brewing but a complete Financial

meltdown at least right now doesn't seem

to be in the cards but one thing to

watch out for is that in today's day and

age where information spreads almost

instantly we're starting to see Cycles

speed up so it may not be another 80 or

90 years until we see another major

financial crisis which means that today

now is the time to start preparing so

that you have the assets and you

eliminate the risk in your personal

financial situation just in case it does

happen happen a lot faster than

expected so even though there isn't as

much risky Behavior happening right now

there is still definitely risky behavior

and let's be clear here bubbles are

driven by risky behavior taking

everything you have and putting it into

one type of investment buying things

that really inherently don't have any

value or don't produce any income things

like Bitcoin and gold or even having a

massive amount of debt and just assuming

that your income is always going to

increase and that you'll be be able to

pay it off later and it's important to

watch out for when the value of assets

completely disconnects from reality for

example there's a real estate company

right now in North America that has a

valuation bigger than the biggest real

estate company in the world which is

Remax the value of that company is

completely disconnected from reality so

when all of my buddies keep saying hey

you got to buy this stock because it's

going to the Moon well it's pretty clear

to see that there's a buying frenzy and

that the value the price of that stock

doesn't really match what they have in

assets or even in potential earnings so

it becomes really clear that the fomo

and the herd mentality is the thing that

you have to watch out for and avoid at

all costs now if you can get into

something that's going to go up in value

early and get out quickly and you're

only risking a very small portion of

your portfolio fine if you want to do a

little bit of gambling with your money

as long as it's a very small portion of

your money do it but don't start

following the herd and putting all of

your assets into those risky investments

in other words just don't follow the

stupid people because bubbles are simply

this they're Illusions they're hard to

predict but they're highly visible and

once the Panic sets in the market

collapses it always does so in the case

of the stock I was just talking about or

things like GameStop where you could

have gotten in and gotten out real quick

and made a small amount of money maybe

10 or 15% on your investment fine but

make sure you're not holding the ball

when the Panic sets in because once it

sets in the damage is already done and

there's nothing you can do to undo it in

fact some of the best investors I know

in the world they will find the bubbles

they will buy in they will take a 10 to

15% increase on their money in a very

short period of time but their goal is

to just make a little bit of a lift and

get out as fast as possible and the

reason why is because the cycle of

bubbles is clear it always repeats they

follow a predictable pattern and in

order to minimize the damage especially

leading up to a financial crisis there's

two things that you can do and they're

the only two things that you really need

to do always make sure your Investments

are Diversified into a diversified

portfolio I highly recommend that you go

and take a look at Ray Delio's

all-weather portfolio and forget what

everyone's saying about it not

performing in the last 10 years it'll

perform over the long run and if you

make sure that you're in a portfolio

that's set up like that you run very

little risk of seeing a massive hit on

your Investments and then the next step

is to make sure that you're never buying

anything on credit with perhaps the

exception of a home with the goal to pay

that home off as fast as humanly

possible because like I said previously

it is the speculation that leads to a

bubble it is the debt that turns it into

a financial meltdown and if you don't

have the debt you reduce your risk to

almost zero but if you do have the debt

well guess what you're going to get

wiped out with everybody else so

recognizing fomo and having the ability

to avoid risky behaviors is Paramount

like I said Investments like Bitcoin and

gold are not immune and most people

always find themselves falling for the

sure thing that turns out to be not so

sure but here's your secret weapon your

secret weapon is exactly what you're

doing right now it is educating yourself

financial literacy is the best defense

and it's my belief that everybody should

be spending at least 10 to 15 minutes a

day trying to increase their financial

literacy and I don't mean watching

YouTube videos about how the sky is

falling and how everything's going to

hell in a hand basket I I mean reading

the classics the books like Think and

Grow Rich or pretty much anything

written on how Warren Buffett invests

and learn how real investors are able to

invest and avoid the very very very bad

things that happen during a financial

crisis and also understand that knowing

history gives you an edge yesterday's

tulips could be today's gold or

tomorrow's Bitcoin because at the end of

the day the next Crisis isn't a question

of if but when and history gives us

Clues but we must act and the way that

we Act is by preparing for the

inevitable long before it ever happens

and in order to do that it all comes

down to financial education that is what

protects you from becoming a victim and

this all sums up into this spot the

signs don't follow risky Trends act on

the lessons of the past and stay ahead

of the next financial crisis financial

literacy is your Shield history repeats

be prepared and act on this knowledge

that you gain in order to avoid disaster