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Every economist says that the safest investment you can make is lending money to the United States government, meaning buying United States bonds because the United States always pays back their bills. Well, Jamie Diamond, the CEO of JP Morgan Chase Bank, the largest bank in the world, just said that might be changing. Take a listen. There will be some kind of bond crisis and then we'll have to deal with it. The reason why, according to Jamie Diamond, is because of deficit spending, which means the United States government keeps spending trillions of dollars it doesn't have. He goes on to say that the worst case scenario is stagflation. This
is when you have high unemployment and rising prices and that's what destroyed the middle class in the 1970s. And then he goes on to say that the defining factor of what's going to happen in our economy is going to depend on geopolitics. What's going to happen with Iran and the Middle East? What's going to happen between Russia and Ukraine? And what's going to happen with China? So in this video, I want to break down what Jamie Diamond is talking about and what this means for you, your money, and how it can also create potential investment opportunities as well. So, make sure you stick with me until the end of this video. If you've been subscribed to my channel, you already know this. But the problem that Jaime
Diamond is talking about is the national debt here in the United States. And he says that people are not realizing how big of a deal it actually is. To put it in perspective, in 1980, the national debt here in the United States was $0.9 trillion. $900 billion, but I'm going to put it in 0.9 trillion. That way, it's all the same metric. By the year 2000, our national debt shot up to around $5.7 trillion. By the year 2020, during the pandemic, our national debt then shot up again to $26.9 trillion. And now people were talking about how big of a deal $25 trillion of national debt was. And now fast forward a few years to 2026, and we are approaching $40 trillion of national debt. And this might have you scratching
your head. Who does the United States government actually owe money to? Well, let me show you. By the way, do you know who gets rich every time the United States national debt keeps getting bigger? Investors. Why? Because it's more money ends up into the hands of the owners of the businesses, which are the investors. Which is why I make these videos. That way you can learn how to be a smarter investor. And if you want to learn how to start being an investor or find better investment opportunities, I have a free investing master class where I'll walk you through how you get started as investor and find opportunities before they hit the headlines. I'll show you the exact framework that my firm and I use to
research investment opportunities. And when you sign up for this master class, you're also going to get access to market briefs, which is my daily newsletter for investors to keep you up to date on what's happening in the markets into a quick five-minute read. So, if you want to get the investing master class and market briefs all for free, all you have to do is sign up. And I have the link for you down in the description below. Here's an in-depth look at how our national debt works. And I'm going to go deeper than what I normally do in my videos. The way that it works is the United States government has one source of revenue. And the source of revenue is tax dollars from taxpayers. And the United States
government then goes out and spends this money. But let's take it one step further. Where does the United States government actually generate these taxes from? As a licensed attorney who is not your attorney, here's a small list of different taxes that you pay. And I'll break it up into 10 different pieces. Number one is your payroll taxes. You go to work and you get paid. The United States government is going to take a piece of your income in the form of income taxes. Then you have to pay your FICA taxes. That's your social security and Medicare taxes on top of your income taxes. Then you have your property taxes. If you go out and buy a house, you have to pay property taxes when you
buy that house. Then you have to think about capital gains. If you buy a stock and you sell it for a profit 5 years later, you have to pay an investment tax called a capital gains tax. Then you have to pay sales tax. If you go to the store and you buy something, that's your sales tax. Then you have to pay tariff taxes. This has been a very hot topic for the last year and some change after President Trump imposed a lot of tariffs when you buy things from foreign countries. Then we have corporate taxes. Every corporation that makes money has to pay taxes on their profits before any of the money goes into the hands of the owners of that corporation. Then when the owners get that money, they have to
pay income taxes as well. So it's called a double taxation because the corporation has to pay money and then the people have to pay money. Then you have estate taxes. This is for the ultra wealthy. If you die with a lot of money and you pass this money on to your heirs or whoever, you have to pay an estate tax, otherwise known as a death tax on that. Then you have your local taxes. Certain cities and states like California, New York have very high local taxes that you have to think about. And then there are all the other taxes which I just lumped together into number 10, the other taxes. These are things like your cigarette taxes, your
alcohol taxes, your toll taxes, and everything else. So the United States government collects money in the form of taxes. How much money? Well, right now it's roughly around $5 trillion a year. And then they go out and spend that money. And you might be wondering, well, where is the United States government actually spending their money? In 2026, the top five places where the United States government is spending money in this order are number one, spending money on social security. That's old people to retire. Number two is interest expenses. What is that? Well, the United States government has a lot of debt. And then they have to pay interest on that debt. Which is why 20 cents of every
dollar that you pay in taxes is going directly in the form of interest. Then it is for health care and health coverage. Then it is for Medicare expenses. than it's for defense and military expenses. Now, take a look at this. The United States government is generating around $5 trillion a year. And you'd think that if they're running a balanced budget, they're going to spend less than $5 trillion a year, maybe $4 trillion a year. But that's not what they do. They don't spend $4 trillion a year. They don't spend $5 trillion a year. They spend more than that. They're spending around $7 trillion a year. Now, this deficit, this $2 trillion deficit is called our national deficit. So, every year the United States government is spending
more money than what they generate from taxes. And this deficit every year gets rolled over into a number called our national debt. And I'll put this right here. Our national debt today is right around $39 trillion. Which is why the second largest expense for the United States government and the fastest growing expense for the United States government is not a military, it's not health costs, it is paying the interest on this debt. Because not only is the amount of debt that we have going up, the interest rate on the debt is high. So more and more of your tax dollars are being used to pay off this debt, which might have you now questioning, well, where is this extra money coming from? Because there's still
a $2 trillion gap. And this is where the United States government has to go into debt to finance the rest of their operations. Well, who is lending money to the United States government? And there are three primary lenders to the United States government. Lender number one is people like you and me who lend money to the United States government by buying these Treasury bonds. When you go and lend money to the United States government, the government pays you back interest. And for many decades, everybody has always said that the safest place to invest your money is by lending money to the United States government because the United States government will always pay their bills.
You're always going to get your interest. Why? Because the United States government can collect these tax dollars. The second person that's lending money to the United States government are foreign countries. That's countries like Japan, the United Kingdom, and China, which have lent trillions of dollars to the United States government. And then third, last but not least, is the Federal Reserve Bank. That's the central bank here in the United States. Now, the interesting thing about the Federal Reserve Bank is that they're actually not a bank because you and I cannot go there to deposit money. They're not a reserve because they're not sitting on any cash reserves and they're not federal. It says so on
their website, which might now have you questioning again, well, if they don't have any cash reserves, how is the Federal Reserve Bank lending money to the United States government so we can continue spending money on all of these things? The way that the Federal Reserve Bank can do that is by printing money. This is where the next layer of complications come into play. Because as we continue spending money that we don't have, the United States government is relying less on foreign countries. They're relying less on you because we just keep spending more and more money and you and foreign countries don't have enough money to keep lending to the United States government. So, we're
relying more on the Federal Reserve Bank. But the Federal Reserve Bank is not sitting on any cash. So, they don't have the ability to just lend money to the government. They have to print that money. So, once money gets printed out of thin air, our money supply increases. Our wealth doesn't increase, but the amount of dollars increase. And when you keep increasing the amount of dollars out there, the value of each dollar goes down, causing the prices of things to go up. That's what inflation is. And so, this is where now Jaime Diamond and many others are saying that we could see a bond crisis at some point. The idea being we keep spending money. Not just that, we keep spending money we don't
have. And in order to keep financing this spending, we could either raise taxes, but that's not what we're seeing happen because well, the United States government just passed the biggest tax cut bill in the history of time in 2025 called the One Big Beautiful Bill Act. At the same time, we're not cutting spending. We're ramping up spending. So, we have an increase in spending. We have a decrease in taxes, which means this deficit must come from here, this debt, through more money printing, which means more inflation. And this is where we're starting to see more people and entities start to part ways and distance themselves from the United States dollar. China for years has been
reducing their holdings of United States debt. Russia has been reducing their holdings of United States debt. Saudi Arabia has been reducing their holdings of United States debt. and Japan went from a buyer of United States debt to now a net seller of United States debt. This is a concept called ddollarization where countries around the world are starting to distance themselves from the United States dollar because they have some concerns about the future ability of the United States government to continue paying back this same debt. And if you go back to Jamie Diamond, according to him, he says that the world should be experiencing a whole lot more inflation because it's not just the
United States that's doing this deficit spending. The whole world is doing this deficit spending. Take a listen. I don't know how the world running deficits like this isn't inflationary. And this is where things really get interesting because according to Jamie Diamond, the real concern here that could cause this bond crisis to happen is not this problem right here. It's actually something completely separate. It is the private credit crisis. Let me wipe this off from a whiteboard and I'll diagram it for you. Let's say you're a business and you want to go out and borrow money, but you can't qualify for a loan from one of the traditional banks
like JP Morgan, Chase Bank. Well, what do you do? you're not big enough to go out and raise money by going public on the stock market. So, the other option is to go out and raise money, meaning borrow money from this thing called private credit. I'm going to abbreviate it to PC right here. Private credit is kind of like a bank, but it's not a bank. And the reason why that's very important is because this private credit is going to lend you money. You're going to pay private credit back with interest. But because it's not actually a bank, this is not regulated the way the banks are. The reason why this matters is because after the 2008 crash happened, banks had a whole new layer of
regulation put on them, which stopped them from making loans to certain people in certain industries. Well, this private credit industry, because it's not a bank, doesn't have those same regulations that banks have after the 2008 crash. So, these private credit companies are lending money to these businesses, and these businesses are paying interest to private credit. Nothing wrong here. This is where things get even more interesting because these private credit companies said, "Oh, this is a very lucrative opportunity because these businesses are not paying three, four or 5% a year in interest. They're
paying 8 to about 20% a year in interest because they have no options anywhere else." And this is where these private credit companies have said, "Hey investors, people like you, me, and big banks and pension funds and institutions, how about you come and invest money with us because we have these great businesses that want to borrow money." So investors like regular people and pension funds and family offices and other investment companies have been saying, "Oh, this looks like a good investment. We will lend money to these private credit companies. They're going to pay us back some interest. These private credit companies are then lending money to these businesses and these businesses are then paying interest to the private credit.
Everything was great until things started to break in 2025. And what happened in 2025 is number one, it became clear that these businesses were not all very good that these private credit companies were lending money to because they were not all being vetted very well. That was problem number one. Problem number two is interest rates went up significantly because unlike a 30-year fixed rate mortgage, these loans were adjustable rate mortgages because that's how business loans work. And many of these loans were originated during the time where interest rates were extremely low during the pandemic. So 2020, 2021, 2022.
Well, now 2025, those interest rates started to readjust at much higher interest rates, which means now these businesses had to pay significantly higher interest rates, which was a big burden and pain for those businesses. That was problem number two. Problem number three is AI. Many of these businesses were software companies, and many of these software companies are now being beaten by AI because some businesses are saying, "We don't need your software. We'll just build our own because of AI." So more and more of these businesses are hurting. Well, why does that matter? Because now as these businesses hurt, they're not able to pay back these private credit companies. As these private credit companies don't get their money back, they can't pay back
investors. And to be clear, the pitch to the investors was, hey, if you lend money to these private credit companies, you can pull your money out essentially whenever you want. It's kind of like a bank, but it's not a bank, which means it's not FDIC insured. And so what we saw happen is as people started to get more concerned about these private credit funds, private credit started to run out of money. And because it started to run out of money, people wanted to pull their money out. And Don Private Credit said, "Stop. If you pull your money out, we're going to collapse." So we started to see one after the other private credit companies started freezing investors money. They started
seizing assets. We saw Blue Owl do it. We saw Aries Capital Management do it. We saw Morgan Stanley do it. We saw Blackstone do it. We even saw Black Rockck, the largest asset manager in the world, freeze assets because of this. So, this is now a growing problem that's happening behind the scenes. Now, the question is, how does this have anything to do with this? Well, let's go back to what I was saying just a minute ago. Who are these lenders into private credit? There's insurance companies, there's investment institutions, there's pension funds, there's a lot of these big investment institutions. And so now if they're losing money from these private credit funds, they could be forced to,
depending on what happens here, if this continues to go bad, they could be forced to sell out of some of their other assets in order to make their investments whole. Well, what are some of their other assets? Remember what I said in the beginning of this video? The safest investment for many, many decades has been lending money to the United States government. So, one of the big lenders to the United States government here is you. And by you I mean regular investors but also pension funds, insurance companies, investment institutions, family offices, all of those people now are many of them are also involved here. And so people start to get burned here, they might be forced to sell out of here. And if people are
forced to sell out of here, well that now could mean that we have more sellers of United States government debt. Why does that matter? Because the United States government debt runs on supply and demand. When there are more lenders to the United States government, everybody wants to throw money at the United States government, they don't need to offer high interest rates to incentivize you to lend money to them because people are throwing the money at the government. So, they can offer lower interest rates. But if there are more sellers of this debt and there aren't as many buyers, because we've already seen how many countries are lending less money to the United States government
because of dilization. But if we start to see these people start to become more of sellers of the debt because of more pain in the economy, well, now the United States government is still spending money that they don't have. And now they need to incentivize more people to lend money to the United States government. And if I'm offering these investments and I need to incentivize more people, how do I incentivize you? By saying, I'm going to give you a higher rate of return. I'm going to pay you a higher interest rate. Why does that matter? Because if the government is paying a higher interest rate, well, now all of a sudden the interest expense for the United States government gets a lot more expensive
because now the government has to pay higher interest on all of this debt they have accumulated because this $39 trillion is also not a 30-year fixed rate mortgage. A lot of it is a one-year loan, two-year loan, fiveyear loan, which means if interest rates go up, the debt becomes more expensive. And remember, where does the government get their money? Tax dollars from taxpayers, which means more of your tax dollars could be used now to pay back that interest. This is that whole life cycle of the debt and bond problem that Jamie Diamond is alluding to that we have these issues in the United States government. There's one source of revenue, taxes. People are already paying a lot of taxes. The government is
spending a whole lot of money. We don't want to cut the spending because if the government cuts spending, well, that means somebody gets hurt. If they cut somebody's social security, we know how that could be painful. If they cut the interest, well, that would mean a bankruptcy or default by the government, that would create a global economic crisis. If they cut health care, we know how that could be a problem. If they cut Medicare, we know how that could be a problem. If they cut the defense, well, you know how that could be a problem. I don't want to get into the whole war side of business, but the government loves spending money on defense. Not just the United States, but countries
around the world love spending money on defense. And this is where now it runs into problems and opportunities. So, how could it be problems? Well, if we continue to see government spending the way that it is, and as of today, it looks like we're going to continue seeing an excess of spending versus revenue, understand that hurts the value of your savings. That hurts the value of your paycheck because government spending is inflationary, especially if the government is spending money they don't have through money printing. And we know that the growing lender to the government is the Federal Reserve Bank who has to keep printing money. The other part of that is when the government prints money, inflation
happens. The person that gets rich is the investor. Period. Now, I got to give you that disclosure, okay? Because I'm not a financial adviser. I'm just a random guy on YouTube. And investing has risks. You are never guaranteed to make money when you invest. In fact, you will lose money at some point. So, make sure you always do your own due diligence and never blindly trust a random guy on YouTube. The idea is if you're concerned about the bond market, you don't want to be holding long-term bonds that are 20 or 30 years maturing in the future. Because if you're concerned about what's going to happen over the next 10 or 15 years, you don't want to be holding something that you are required to hold
for 30 years. Now, I understand that one of the largest investment classes in the world, if not the largest, is treasuries, meaning lending money to the United States government. So, if that is something that you're interested in, a short-term treasury, meaning a short-term loan to the United States government, will be safer than a long-term loan. And there are a couple ways to do that directly through the stock market instead of actually lending money through something like Treasury Direct. For example, the ETF SG OV, you can buy and sell this on the stock market. This is give you exposure to ultra short treasuries, meaning loans to the United States government that are generally 3 months or less. And the idea
behind this is you're not trying to see growth in the value of your investment. you're just trying to get regular interest payments. It's a pretty steady interest payment and you don't have to worry about the long-term United States bond. It's backed by United States Treasuries. And the nice part is when you are investing in bonds, you generally don't have to worry about state or local taxes, but you still have to pay your federal taxes. Traditional example number two would be something like gold. Because when people are concerned about the dollar, they're concerned about the value of inflation. That's when generally people turn to gold. Now, the reason I want to talk about gold a little bit longer here is
because a lot of people have hyped up the idea of gold because we've seen a huge runup. Understand that normally gold prices don't far exceed the stock market for long periods of time unless there is a period of crisis. But gold doesn't always go up, sometimes it goes down. During the 2008 crash, gold prices soared when people were worried about the dollar, when people worried about all the money printing that the government was doing. So gold prices skyrocketed between 2008 to 2012. Then in 2012 when people realized that the dollar was not going to collapse, gold prices also fell and they stayed down hard until 2020. 2020 the Monday printer turned back on and the gold prices
skyrocketed until today. So gold is a hedge for people that want to protect themselves against inflation. Just understand gold doesn't always go up. It goes up when people are concerned about the dollar. There are multiple ways to invest in gold. You can go and buy the physical gold or you can invest in ETFs like GLD which will give you paper exposure to gold. Now the last thing that I want to say about gold is I don't look at gold as an actual investment. I look at it as a way of saving money in an alternative form a way of saving hard money. Because when you buy gold it doesn't actually produce any value. It just sits there in a drawer looking back at you. When you buy a stock in
something like Amazon that's actually working to produce value because the Amazon company is working to produce a product. It's working to produce a profit and it's working to innovate. Gold just sits there. The third thing that you can think about and again I'm not here to tell you what to invest in. My goal is to show you how you can start thinking like an investor is to understand where the government is spending money. Because if the government continues to spend money on things like defense, well that could create an opportunity. There it is. Defense. We know that if there's more geopolitical conflicts, the government's probably going to spend more money on
the military. And that could be an investment opportunity for you as well. Again, I'm not here to be the judge of your moral compass and tell you what's right and what's wrong. I just want you to understand how investors think because my job here is to help spread that financial education. So, if that is something that you wanted to invest in, there are funds that can give you exposure to defense. For example, ITA is an ETF that gives you exposure to the defense industry. On the topic of government spending, another place where now the government is making a lot of investments and growing investments because of the growing technology because of the growing competition between the United States and other
countries like China is energy. Why? Because we need a lot more energy to power our data centers to power the AI to power other technology that we're doing. And we know that we're facing an economic competition between other countries like China to see who's going to be the world leader in AI. So that could be an opportunity for you as well to invest in the energy space. There are many ways to play the energy space. I'm just going to go over a couple ETF examples. Again, I'm not telling you what to invest in. I just want you to start thinking like an investor. If you wanted the broad exposure to energy, XLE is an ETF that will give you that broad exposure to energy because we need more
energy to fund all this AI and technology. Or if you wanted to focus in on nuclear because President Trump wants to invest a lot more in nuclear and UKZ. Nukes is an ETF that'll give you exposure to the nuclear space. We also know that a lot of the big tech companies are now starting to build their own nuclear facilities. That way they can power their own data centers and their own AI. Or if you want more broad market exposure, there's a few ways you can go about doing this. If you wanted to invest broadly into the United States stock market, something like SPY will give you exposure to the S&P 500. That's a group of the 500 largest
companies in the United States stock market. If you say, "Well, I'm concerned about the United States economy. I want some diversification into other countries as well." There's many ways you can do that as well. For example, VA is an ETF that will give you exposure to developed countries around the world. These are more the larger, more established countries and economies globally. Or if you want to focus in more on the smaller countries, more of those nimble, faster growing countries, more risk for more potential return, this could be something like the emerging market countries. And VWO is an ETF that will give you exposure to these emerging market countries. Now you could
get even more niche and invest in specific countries like Japan or China or India or Germany. There are ETFs that will give you exposure to that. But the idea here is every change creates opportunity. And the part that a lot of people don't understand is pain comes with opportunity. One of the things that I've learned in life is that often times the things you don't pay attention to end up mattering the most. And that's why I want to talk to you about life insurance with our sponsor, Policy Genius. Because if you don't have the assets to live off of yet and something tragically happened to you, the last thing you want is now your spouse and your family trying to struggle to survive financially. And that's where
term life insurance can come into play. Now, I'm talking about term life insurance here, not whole life insurance. The whole idea with term life insurance is it's life insurance for a period of time, 10 years, 20 years, 30 years. That way, you can work to build your assets. It is a lot cheaper than whole life insurance because the whole idea is you're not here trying to get rich off your life insurance. It's just there as a bridge until you can build your assets. This is one of those things where the earlier you start, the cheaper it is. Because if you're a healthy 30-year-old guy, you could potentially get a half a million dollar term life insurance policy for less than a dollar
a day. So, if you have any questions, you want to learn more about term life insurance or you want to see how much a term life insurance policy would actually cost you, I'll put a link to Policy Genius's form down in the description. It only takes a few minutes to complete and it'll give you an actual quote on how much term life insurance will actually cost you. And I have that link for you down in the description. What Jamie Diamond talked about is that there are concerns in the bond market and a lot of people hear that and they freak out and they panic. My goal is to help you understand what's happening through education. That way you can
understand what it means, but also understand how it creates opportunity. Because the situation that we're here in right now is the United States government spending a lot of money they don't have. They're generating around $5 trillion in taxes and spending around $7 trillion. Where are they getting the tax money? Well, they're getting it from your payroll taxes, your FICA taxes, property taxes, capital gains, sales taxes, tariff taxes, corporate taxes, state taxes, local taxes, and your other taxes. Well, they're spending money that they don't have. and their top five expenses are social security, interest expenses, health care, Medicare, defense, and so every year they're
spending trillions of dollars that they don't have from taxes, which rolls over into our national debt, which at the time of me recording this video is right around $39 trillion. Well, here's the problem. The fastest growing expense for the government is interest expenses because we keep growing our national debt. But where is the government continuing to borrow all this money from? They borrow this money from people like you and me and pension funds and investment institutions. They're borrowing this money from foreign countries and they're borrowing this money from the Federal Reserve Bank. Well, one of the concerns we talked about which is called dd dollararization is there's many countries around the world that are starting to not lend
money to the United States government. We're seeing a lot of countries say, you know what, we're going to go from being a buyer of government debt to a seller of government debt. The second concern that we talked about is this part is private people and institutions potentially turning into sellers of government debt because of the private credit crisis. There's this whole issue on Wall Street where businesses are borrowing money from these private credit institutions, but they can't pay it back. And the people that were lending money to these private credit institutions are retail investors, pension funds, investment institutions, and a whole lot of other investment groups. Well, if there's more pain in the private credit market, that could
bleed over to people selling these treasuries. And if people turn into a net seller of treasuries, that could force interest rates to go up. If interest rates go up, well, now our national debt becomes more expensive. More tax dollars have to be used in interest and that means the government now has to work to borrow more money, which means more money has to be printed, which creates more of an inflation problem. That being said, every pain also creates opportunity. Inflation hurts salaries. It hurts savings. This is why you need to understand how inflation works. So if inflation hurts those things, how can it benefit others? Because inflation also makes investors richer. We've seen this
happen not just post pandemic, but for many, many, many decades. And so what that means is it could create a whole suite of opportunities. Now, first I wanted to talk about bonds because one of, if not the largest investment group in the world is lending money to the United States government. And if there's concerns about bonds, then long-term bonds become less attractive because you don't want to have any concerns of the value of those bonds. So, if you wanted short-term bonds, there are ways to do that. Like SGOV is an ETF that gives you exposure to the interest rate on these short-term bonds backed by treasuries. And you don't have to worry about state or local taxes and you can buy and sell
it anytime you want, like a stock. then it is investing in something like gold. Now gold is a hedge against inflation but I don't really like to look at it as a real investment. The third thing would be where is the United States government spending money? We know that they're spending money on defense. If there's more concerns about geopolitical conflict that could create an investment opportunity there. So we talked about defense as an opportunity. Then we talked about energy as a growing opportunity because the government wants to compete against other countries in the world to be the leader in AI which means we're going to need more energy. So we talked about the traditional energy companies and then nuclear energy
companies and then finally we talked about broad investment opportunities to invest in the United States economy with something like SPY which gives the exposure to the S&P 500 to developed countries around the world and emerging market countries around the world. Again, if you are an investor and you want to learn more about how you can start it or find investment opportunities, I have a free investing master class plus market breaks that you can get by signing up. I have the link for you down in the description. And if you got value out of this video, the best thank you was a referral. So if you could, please share this video with a friend, family member, colleague, or fellow investor. That way we can continue to spread this type of
financial education. Thank you. The president of China just said that the international order is quote crumbling into disarray. Take a listen.
