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Michael Burry’s SHOCKING Theory Re-Examined | MEGA Bubble Prep Right as we speak we are living through history's most important economic case study. As you may have heard governments around the world have printed trillions of dollars, injected mountains of money as stimulus, and plan on adding to national debt significantly.
This in turn has created market conditions that many are calling frothy, dangerous, and even apocalyptic. Dr. Michael Burry, the man most famous for his 2008 housing bet, stands at the top as the most outspoken and bearish of so-called experts. His analysis points to a future that challenges the very existence of the United States of America.
His tweets signaling hyperinflation, akin to what was saw in the Weimar Republic during the 1920s. In today’s video, we look at all the developing facts, from both sides, and answer the great question. Is the Everything Bubble finally going pop? And what I’am doing to prepare for what’s to come? [Music Ends] The first thing we are going to look at is the ultimate worst-case scenario.
To layout the foundation for this we begin with some deleted tweets by Dr. Michael Burry. If you are not familiar with him, he was the man behind the Big Short, an investor who famously shorted the housing market in 2008, earning him and his clients billions, and embedding himself in one of Hollywood's greatest movies.
Recently burry has been on and off Twitter shooting off some pretty disturbing tweets suggesting the unthinkable. On Feb 20th he specifically told followers that The US was inviting severe inflation with its insane monetary policy. His theory points to a WordPress article which makes a very good and convincing point comparing the US and the Weimar republic.
At the time Germany was experiencing steady prices, while the market was booming. The exchange rate against the dollar actually rose. Many got rich and many more remained on the outside of easy money, looking but unable to get in. Speculation becomes one of Germany’s largest activities, and everyone from the elevator operator to the CEO was playing the markets.
Quietly a ticking time bomb was building. Germany’s inflation cycle ran for not one but 9 years. Representing 8 years of gestation and only 1 year of complete collapse. This story according to Michael Burry is beginning to look eerily familiar. His claim. America is headed down this path. If you look around at the markets today you see prices rising everywhere.
Whether that be real estate, stocks, commodities, or cars. Everything is seemingly jumping up, but most experts are quick to blame to supply side. Claiming that all of these price jumps are temporary, and prices will subside once inventories catch up to demand. On the other side of this argument are experts like Peter Shiff, who point out that all of these price increases come down to one thing.
Take a listen to this interview clip. Ok so let’s go over a couple of facts and make sure we understand this correctly. What Peter just said is pretty simple on the surface. Inflation is creeping into our lives via higher prices on real estate, and countless other items that slowly bleed the purchasing power of the US dollar.
And while the first portion of that statement is undoubtedly correct, there are many who give a valid counter-argument to this claim. They include the federal reserve, who is convicted that all of these price hikes are transitory. Once the supply catches up to the demand, they seem to think that prices will calm.
Specifically Jay Powell is predicting that once this year passes inflation will slowly come back down to 2%, the official target number. If this is the case, well Peter will be wrong, and Michael Burry will be very very wrong. So far the evidence in my opinion seems to be pointing to the federal reserve story.
I know that’s going to cause a lot of haters to come out in the comments but it’s just the truth, and if you give me a second to explain, I can show you why. If the permeant inflation tale is correct, we would see something else happen to our currency. Here is the clear example. Argentina is a country that is actually battling severe inflation.
In the past few years, you can easily spot this by look at the Argentina Peso. Its currency has been devalued significantly in the past 2 years. I mean just look at that chart. Those poor Argentinians who had their life savings in cash would have been wiped out these past 3 years. I’m sure if you check the comments you will find at least one Argentinian confirming this.
Now, look at the US dollar. Despite the worse CPI numbers in over a decade, the US dollar index doesn’t look too bad. In fact, were are at pretty steady levels, up much higher than where we were back in 2008. Over the past few months, we’ve actually strengthened the dollar, and it seems to be in a continued uptrend.
If inflation was true as severe of a problem as claimed, I believe we’d see at the very least a weekend dollar. But to be fair there is a significant amount of bizarre behavior occurring in the markets to suggest that something weird is going on. For one, the stock market is 100% experiencing some sort of inflation push as this almost exponential growth is definitely not based on real profits.
Then you have countless billionaires, and financial experts all saying that the market is significantly overvalued. Just look at Berkshire for an example. They have over 138 billion in cash, just sitting there waiting for investment. Over the past year if that cash was deployed at the bottom of the pandemic panic, Warren could have easily doubled his money, and based on where this market is headed, there really isn’t a good reason not to deploy it unless he truly believe that a severe market downturn is coming.
One bigger than that massive drop in March of 2020. Either Warren Buffet is making the worst mistake in his career or they are on to something much bigger. If Warren refused to deploy the cash in the 2020 crash, can you imagine what he’s waiting for? He has stated countless times that this 0% interest environment and this unlimited money printing glitch is just too good to be true.
Yet since 2010, he’s been dead wrong. We have found nirvana, printing billions keep rates at 0, and generating multiple trillion-dollar companies. As a result, Berkshire has lagged the SP but Warren swimmingly doesn’t care instead focusing on a future crash that has never come up. He and his partner Charlie have stated numerous times, indirectly that this market is rather bizarre, and while they have never come out and said that a crash is incoming they have in my opinion hinted at the fact that this is just too good to be true.
And America may be past it’s golden age. But before I show you one of Charlie Munger's most controversial clips, please make sure you hit that subscribe button if you are enjoying the content. Now back to Charlie.. But despite Charlie take it’s Warren who is actually in my opinion more likely to be correct.
I think the United States till has a lot of potentials, and its worldwide economic and political dominance is likely going to continue despite some rather large headwinds. Just like all of those people who predicted that hyper-inflation would come after the 2008 monetary policy, they have turned out to be dead wrong.
That's just the facts. The United States Dollar is the worldwide reserve currency and as long as that is the case, I think the US has a large advantage over any other economy in the world. Sure that doesn’t make us immune from an economic depression but it sure makes it extremely hard for a scenario like Michael Burry is predicting to unfold.
The US is special. The US cannot default on it’s bonds unlike Argentina, Venezuela, or Lebanon. This is because the United States prints bonds in its own currency, This is basically saying that the US issues its debit in its very own currency. And guess what they have access to its printing press. Which means they can just print the debit away.
Sure that would devalue the dollar, but it means it as long as the debit is dollar-based it could never ever default on it. Take a listen to Warren explain exactly this. So to wrap it all up. I’ll give you my humble opinion. I think Michael Burry will be very wrong. We will not end up like Weimar Germany anytime soon.
However given the extreme condition the market is currently in, it’s very possible we see the dollar get devalued, and inflation to jump up to those 1970’s levels. This does mean significant turmoil in the markets, but not the end of America as we know it. I think a large market downturn, one bigger than what we saw in March of 2020 is very possible and likely.
I already made a video showing Burry’s positions preparing for a scenario similar to this, one filled with Inverse Treasury calls, and Big Tech calls. My portfolio looks very similar. It’s essentially a bet that the markets will turn over soon, with upside protection via big tech calls. This type of bet gives you the ability to profit on both ends.
If the fed is right and inflation stays low, while the market continues its parabolic move up, you’ll profit via those tech calls, while if inflation does get out of hand, and the fed is forced to raise interest rates, you’ll get some serious profits on those TBT calls. Thank you guys for watching and please make sure you hit that subscribe button if you enjoyed it.
Also if you are interested in buying up some crypto and earning some interest on it, please condor using my BlockFi affiliate link in the description below.
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