 Good day fellow investors. In a recent video discussing whether the housing market is in a bubble or not, I mentioned that markets are rigged. And there were a lot of comments saying okay now a PhD says that markets are rigged. Well in this video I want to explain that markets are rigged and they are rigged in a legal way. Everybody said central banks said they will rig the markets. So I want to explain what has been going on, why are the markets rigged and why on the markets there are no natural economic market forces that operate but influence distorted forces. So as it was a surprise to me that a lot of you saw my saying that the markets are rigged as a surprise let me just explain what's obvious in a video about market rigging. The points are the low interest rates have created a unique situation. Economies are fake because you don't know what is real value or smoke. And the most important thing about everything is what to do and that might surprise you as to play along is not such a bad idea. So take advantage of the rigged markets. The trigger for market rigging is not the 2009 Great Recession it's simply debt and lots of it. Total public debt at the percentage of the GDP increased from levels around 30% of GDP in the 1970s. Since then the GDP even exploded even more but the debt to GDP is now at 103%. So huge increase in debt. The situation in Europe isn't much different as the debt to GDP ratio is at 86%. Also an increase in debt over the last 40 years there. Now the large increases in debt are normal through human history. We have the long term 75 around 75 years debt cycle and we have short term debt cycles that impact the small time recessions we always discuss about. However few look at the long term debt cycle and the long term debt cycle is now coming or it's now reaching a creating a burden for future growth and that's why you see slow growth in the US, slow growth in Europe plus demographics plus everything. The last time the long term debt cycle went bust was in 1921 and we had the Great Depression. In 2009 we had the Great Recession and in order to prevent another depression politicians and monetary politicians said we're going to pump so much money into the system which will make it better at least for a while. That's my comment. But they really managed to create what we have now low interest rates, high unemployment and everything looks good. Yes until we don't see inflation, higher interest rates where we will see who is swimming naked and what parts of the economy are just fake and live alive thanks to the money injections and we'll see which parts of the economy are really really doing good. These are the balance sheets of the central bank. The blue one is the fed, the red one is the ECB and the Bank of Japan is the green one and you can see how on average their assets increased five times over the last 10 years. So this means that those banks purchased financial assets usually bonds but Bank of Japan also buys stocks for 50-20 trillion of US dollars and that's a huge impact on liquidity that lowers interest rates. And as you can see here the 10 year German treasury yield went from above 8% in the 70s 80s 90s to 4.2% in 2008 and then it went into negative territory as the ECB was buying everything it could buy 60 billion per month now down to 30 billion but they are still buying so they are still distorting financial markets and we can still say that financial markets are rigged. So when a bond goes from 4.9% or for 8% to 4.9% to 0% then money becomes free and whatever is going on with money is not normal is not natural and we can say it's rigged. So the key is to see okay when those interest rates as it has been starting in the US start rising we will see who is alive just thanks to the free money available and who will be in deep, deep trouble. Countries unfortunately will get into deep trouble especially those who are in a lot of debt and those that will not be bailed out. But now interest rates are increasing in the SAP 500 but still things are going good. As you can see with the SAP 500 it has quadrupled over the last 10 years since the crisis so buy stocks in a crisis as much as you can now buy a little bit less. However you can see that there are some turmoil but the SAP continues to go up. Unemployment is very low people are putting their money into index funds as they are recommended by most financial advisors and stocks continue to go up. However interest rates are rising inflation is rising so at some point we'll see an inflection point. But this result that you see is the pure result of the huge amounts of liquidity that central banks have put in the markets. That's all nice but what to do about what's going on? So when the next recession comes what will central banks and politicians do? I think that the biggest likelihood what they will do is to do the same thing that they did in the last 10 years. Print more money increase the liquidity lower interest rates. So when that happens if people lose faith in the financial system in their currencies then it's good to be short currencies which means if you are in debt like all the governments are in debt then you will do well if you have of course a fixed interest rate for a long period of time. So that's one way to take advantage of what's going on in the financial markets. The easiest thing to do when somebody has a lot of debt is to have inflation and to print money because then everything gets easier and the debts are repaid easily. So if you go along you might take advantage of what is the main problem coming for countries for corporations for everybody the high debt. So take advantage of it because governments will do anything they can to help those who have high debts as they did in the last 10 years. The second thing to do is to really look at hard assets what has spiked in the last 10 years real estate prices have exploded in the last five years stocks have exploded in the last 10 years but stocks are a little bit more volatile and now are expensive but still as I said that real estate long-term view I'm having a long-term view short-term everything can be very very volatile hard assets have a hedge have a gold hedge commodities might some might do good some might do well but you can see okay if one well diversified land of course land producing land great real estate if I'm well diversified across different asset classes you have nothing to worry especially if you look at the value of the asset class and not so much at the let's say pumped up price from the markets rigging as for stocks I think that the price to book value especially when you eliminate the intangible goodwill are extremely ridiculously high however if you look well across stocks you can find stocks with good price to book values price to tangible good book values so if you have a stock with a high price to book value and the stock with a lower price to book value that are the same which can be found in this market I think that the portfolio with a better price to book value as it has been the case in 94% of the 10 year returns over the last 140 years I think that such a portfolio will do well whatever happens and might even protect you from whatever will happen so stocks yes real assets global diversification diversification across many investments and if you want to really play the government's game take on a big mortgage with a fixed interest rate and then be happy if all hell breaks loose and there is hope holy helicopter money thrown at us thank you for watching looking forward to your comments what do you think about my idea of what to do there is a video about seven hedges that you might want to look if you're even interested if you're interested in stock analysis what are the best stocks that I find around please look at my research platform down in the link see you in the next video