 Good day, fellow investors. The financial environment has gone completely crazy and that's something completely normal. Bubbles are a natural part of the humankind, are a natural part of how we are wired because we always tend to overreach. We always tend to let's make more money, let's invest more, let's grow bigger, bigger, bigger and bigger and that usually always goes up but then falls down and then goes up and as long as we see higher highs and higher lows everything is okay but some bubbles can be innocuous like blue apron bubble and home delivery meals of something like that but where if the company pops a little bit of investor lose money but it's not significant a little bit more important because a lot of people will get burned and will never invest like cryptocurrencies when that bubble pops a lot of people will lose their money and take it out especially from Nigeria or some other countries like that which are the highest investors in cryptocurrencies and there are extremely dangerous bubbles. Bubbles that are created over 75 year long debt cycles and that can have extremely negative consequences, depression consequences on a economy on the global environment and so on. Let's dig into a little bit of bubbles to see their impact their possible impact on the economy and how dangerous those bubbles are because the things are that are going on in the financial environment are completely crazy and somebody has to start telling the world that things are crazy it might well be me let's start first let's look at the Fed's financial stress index it has never been so low since it measured this means that it is very easy to get to money you know what happens when you have easy money when you have free money people usually get addicted to that money and start doing very very crazy things which is completely normal and happens over and over again in time now this money people have more money unemployment is very low everybody has something extra to invest and then there is a cool story like cryptocurrencies not the bitcoin but in this case i want to talk about ripple or however do i pronounce it if you look at the chart we have seen here ripple in bitcoin prices the orange line and ripple in us dollars the green line in the last month weeks i don't know what happened but in the last year ripple went from not even 1 cent per coin to 3.46 dollars per coin at that moment in time the market capitalization of ripple was 133 billion which made the founder of ripple the seventh richest person in the world worth more than larry page sergui brian of jack ma if you look at this table here and you put the founder of ripple at position five or six you can see that you have probably used products from each one of the companies these gentlemen's here own however you probably have never used ripple to buy anything else and this is example number one of how crazy this environment is however this ripple thing its marginal prices go up and down a little bit of people will lose their money as it always happened the founder will probably make a lot of money because he will be selling it to the ones buying it but that's a different story but it's not dangerous for the financial system now we're going to talk about things that are crazy and extremely dangerous for the global financial system and nobody's talking about nobody's talking about risks it's something very important that everybody should think know about and see how to behave in relation to that first the notion of risk is gone this is the yield that the german government is paying on a five year bond for the past three years it has been mostly negative how can a yield on a bond be negative perfectly distorted financial markets crazy financial markets that's one what's even crazier than those investing in the german five-year bond is the european high yield index high yield means junk and you can see here that the index the yield on the index on the average junk bonds in europe is 2.55 percent companies that have a junk rating means that whenever something happens in the environment some change happens those companies are going to have extreme difficulties to refinance or pay back their debt and that's something again crazy that you invest in something that offers just 2.55 percent which in the next recession goes bankrupt as you can see on the chart the yield in the last recession went up to 25 percent which means that you will be able to sell those bonds at 25 percent of their current value if not even less so extremely crazy environment now this abundance of money is making people all around the world take debt and people that have the money printed by the ecb the fed and bank of japan bank of china they lend it all around the world chasing yields because you cannot get the positive yield from the german bonds so you look around the world where you can get it if we look at the spread between the us treasury and emerging markets us dollar denominated bonds so from countries that are emerging risky everything can happen the spread is just 1.67 percent so you can invest in a us 10 year treasury and get a yield of 2.44 percent or you can invest in a country like indonesia or something like that and get a 4 percent yield in the case of trouble as you can see again on this chart the emerging market yield goes quickly to 10 percent because people will rush to the dollar for safety perhaps you never know but it's extremely risky and that spread is crazy what has happened that all that money all that abundance of money has entered every corner in the whole world so which means that when there will be a problem with liquidity in those corners it will affect the whole system and then there might be very very big trouble but this emerging markets again it can be dealt with corporations okay we can save them something can happen there is a lot of growth okay but there is something even more dangerous and there is something so dangerous that that it will affect people in the next 50 years let's see the ultimate chart of risk and how crazy this environment is this is the us federal government fiscal and debt forecasts from the bmi research institute you can see that the us federal deficits are piling are bigger bigger and bigger and that the us federal government debt to GDP ratio will approach 100% in the next 10 years and that's something again normal interest rates have been going down for the last 45 percent and governments have been high on borrowing everybody wants the best everybody wants to do the best and the easiest thing to do more and more and more is by taking more debt debt debt and debt however that long-term cycle of piling up debt without seeing further than the next four years without seeing higher interest rates with how without seeing who will repay that debt it's the craziest thing that is going now in financial markets so we have to a say okay it's crazy and be prepared for it we can see huge inflation because governments will need to print money to pay back those debt if things go wrong we can see a recession a huge recession even worse than it was in 2009 because when people lose faith in money then we have a problem and in higher interest rates will force those governments that are just piling money to pay more money and that will again destabilize countries continents and who knows what so the financial environment is crazy the best way to be protected is i think to be hedged so from a personal perspective what will happen in the environment you never know however estimating the risk and rewards always works well even if nobody's looking at the risks now which is the craziest things of all thank you for watching looking forward to your comments