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Investors don't see Australia as a great place to invest because we're

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running it poorly and because of that, the value of our dollar has

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fallen drastically. If Apple spent no money on research and development, what

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do you think would happen to the iPhone? Imagine what happened if the iPhone 3 didn't

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innovate. You'd have got rid of the flipping thing. Well, that's what's happening to Australia. We're

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not innovating. We're literally anti-innovating. The

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cost of goods up, the cost of fuel up, housing up,

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all these are like human needs up, up, up, up, up, up. Check this

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out, $577 billion pumped into the economy, which

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is 30% of the gross domestic product of the country in

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that timeframe of COVID. I'm Lloyd James Ross, seven figure

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investor and entrepreneur, and I've helped thousands of business owners and

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professionals turn financial stress into success. If

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you're stuck in old money habits, overwhelmed by investing or unsure where

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to start, This is for you. I'll give you the mindset and

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strategies to take control, grow your wealth, and achieve financial

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freedom. It's time to make your money work for you. Ever

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wonder why the Aussie dollar feels like it's worth less every time you

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travel, shop, or fill up the tank at the gas station? You're

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not imagining it. The Australian dollar is collapsing, and

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it's not just bad luck or global chaos. There are real reasons behind

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why it's happening. And today, I'm going to break them all down for you. In

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this video, we're going to dive deep into why the Australian dollar is

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losing value, what a fiat currency really is, the insane

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money printing that happened during COVID, and how it all ties into

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inflation, debt, and trust. And we'll look at the day

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the Aussie dollar was floated. how inflation is baked into the system, and

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why some are calling it the Australian peso in

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jest. So if you care about your money, your future, or how to protect your

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purchasing power, then this episode you do not want to

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miss, all right? But before you watch this, go back and watch the

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episode Why is the Australian property market collapsing? It's

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our previous episode on YouTube. And there's a lot of incredibly

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fun, entertaining comments in the comments there. So go check it out and find

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out why it is collapsing. But we're going to find out why the currency is collapsing in

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this episode. So before we jump into this completely, I

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share some real data with you as to why this is happening in real time. I

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want to talk to you about fiat currency. Currency is

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just the exchange of value that we do in the world instead of barter.

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People often talk about, oh, what happens if the world ends? I'm like, well, we

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had a bit of a glimpse of that during COVID and guess what the currency of the

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day was back then? It wasn't gold. It wasn't crypto. It

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was toilet paper. Bartering,

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trading goods and services with each other is actually the

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original form of economics. Fiat

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currency replaced bartering because it was just simpler

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and easier. It's so much easier and frictionless to actually just use

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paper asset, paper money to transact rather than say, hey, I'll

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give you my iPhone if you give me that tire of your car, whatever it

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might be. It just makes trading

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goods easy and simple. A currency is

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a store of value, it facilitates exchange of value, and

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it's a measure or unit of currency. It does all these things.

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If it doesn't do those things, it's not really a currency. It's more of an asset or something

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else completely. What is fiat currency specifically? It's

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a currency that has value because the government says it does. So

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it's by decree. It's not backed by any hard assets. So it's

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not backed by gold. It's not backed by silver. It's not backed

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by any hard physical assets, all right? And

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some examples of a fiat currency are, of course, the Australian dollar,

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the US dollar called the greenback, the euro, the yen,

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the British pound. These are all fiat currencies,

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okay? And of course, it's how we're transacting now. And

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incidentally, the US currency still stands as the strongest currency in

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the world. And it accounts for about 50% to 60% of

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global trade. So very difficult to knock that off its

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perch. I can't see that losing its reserve currency

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in the world at the moment, although the RMB in China

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The digital renminbi probably has the chance next to

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becoming the global world reserve currency if the USD falls

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off its perch. But I can't see that happening in our lifetime. But let's talk about

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why the Australian dollar is collapsing. So the Australian dollar became

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a global floated currency. fiat

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currency in the early 1980s. Before then, it was actually linked

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to the US dollar. So, the day it was floated

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was back in the 12th of December, I think

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it was 12th, yeah, 1983. The same year I was born, a great

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year. So at the time, the treasurer Paul Keating, who became the Australian

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Prime Minister, under the Hawke government, on the 12th of December 1983, they

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floated the currency. So before then, it was

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pegged to a basket of other currencies. And normally, currencies

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are pegged to the USD. But

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eventually they thought we need to float this, okay? And floating

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means it's now, it's got its own value and the

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value of it is assessed against other currencies, all right? So the

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RBA or the Reserve Bank stopped sending the price back then, but it still controls the

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supply of the fiat currency to the market through interest rates, okay? Why

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did they float it? Five reasons. One, they wanted to modernize

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the financial world of Australia because if

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you have your own currency, it's almost like a maturity in your

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economics situation in your country. They wanted to grow and

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mature into a country that has its own currency. They wanted to modernize the

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economics of the country. The other thing they wanted to do, number two, is they wanted to remove inefficiencies. They

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wanted to They wanted to end the need to interfere

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with the currency market locally. All right. And number

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three, they want to encourage foreign investment. So they want to open up capital flow

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into the country. And so this increases the investment, the

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trust that investors have when they're bringing money into your currency, if you have your

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own local currency, they wanted to handle trade

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deficits better. So this allowed the currency to self adjust. to

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better handle trade deficit. It's like automatically rebalancing

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trade. So they want to do that. And the fifth one is they wanted to stop speculation and

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around what happens, the speculation pressure

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by removing the artificial pressure from defending the pegs that it was against. So

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they had all these reasons to do it. And so they

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thought, you know, we need to do this. We want to mature as a country. We have to have

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our own currency, right? So that's why they floated it

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back in the 80s. Now, what's interesting about that is that it's

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not been backed by anything. And so the US dollar used

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to be backed by gold. And then they removed this under the Nixon presidency. They

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removed this from the gold standard, which means that you could just print it infinitely.

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And the problem with that is you can do the same thing with the Australian dollar. So over

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time, it's in the nature of fiat currencies to actually fall.

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And the nature of them to fall is caused by two reasons. One is price

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inflation. So this is where the cost of goods and services actually goes up. And

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also the supply of the money to the marketplace. So both those

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things acting at the same time will create some sort of inflationary pressure,

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which means your money is worth less year by year by year by the exact amount

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of or roughly the amount of inflation. Inflation

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is really important to understand. So part of this episode

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is to explain to you why or importantly

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how the Australian dollar is falling

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in value fairly quickly. All right, so the

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very first reason why

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fiat currencies fall is because I said, as I said before, there's excessive

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printing. So they can supply the marketplace with more

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money. And of course, if you supply with more money, there's more of it around, it

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causes inflation because people have more money to actually spend. So it bids up the price

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of goods and services. So an example would be, I mean, COVID, it

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was just brutal stimulus, like it was what's called

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stimulus led inflation. So obviously

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there was fear that by shutting the country down,

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the world down, that there would be a credit squeeze, meaning

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there would be an unavailability of credit to continue with business

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in the economy. And if you have a credit freeze, you can have some

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serious things happen in your country like a run on banks. You don't want

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credit to be frozen. So to prevent that, they

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opened up the floodgates. They opened up the supply of money to prevent a

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credit squeeze. And of course, there wasn't really a credit squeeze. All

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that happened was they just flooded the country with money.

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They were paying people 750 bucks a week or whatever it was to

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just function without a job. And of course, it went to so many

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people. They took the money. They didn't save it. They obviously went and spent it on

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shoes, clothes, blah, blah, blah, blah. and they just spent it, which is

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great for the economy, but it pumped the price of goods and

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services way up for a couple of years. And we've basically seen,

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just from that one thing they did during COVID with supply of

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money, we've seen the, I feel, the Australian dollar lose half

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its value, I think, in the last five years. It's been absolutely insane. Before

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COVID, 100 grand was 100 grand. But after COVID, I really

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genuinely feel like, and you probably do too, it's more like 50 grand. Because

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if you think of inflation at, say, 10% to 12%, the rule of

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72 suggests that in the seven-year period, it loses half its value. So

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it's not been quite seven years, but let's say five years, and the currency's

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lost, I would say, half its value. So if it

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feels like you're poor, it's because you actually are from what's called inflation-led,

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sorry, money printing or excessive money printing-led inflation.

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Okay, the other reason why it happens to is that there's, there's

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a sell off in the currency. So if you have If

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the reserve bank of any country drops interest rates, there's

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less likelihood that people will want to buy bonds in the country. So

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if there's less enticement of investment dollars into the country, then

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you will find that the currency itself loses value. So here's what happens economically.

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When you reduce interest rates to stoke the

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economy, you actually reduce the

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returns that people get when they send money into your country to invest. So

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as rates fall, the value of the currency falls too.

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But as rates increase, the value of that local currency also increases. So

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if you think about it... Before coven as covert hit

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they were drastically reducing interest rates down to 1% so that massive

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fall interest rates meant it sent the currency just

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falling in value as a massive sell-off in the currency because People

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didn't want to bring money into Australia then to invest because it was very low yields very

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low bond yields here And so it made no sense to

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put money in here. So a lot of that Caused you

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know a sell-off in the currency. So interest rates do have a big impact And

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then the other reason to why why inflation happens or why currencies

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fall over time is There's actually a loss of confidence and trust a

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lot of fiat currency is based around trust And

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so if you start to lose trust in the in the in the currency, you

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can have a collapse in the real value of it So some really serious examples

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of this happening. You may have heard of these happening, but eventually what

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happened in Zimbabwe is is they printed so much

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money that it lost complete trust with the local people

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that live there. And they absolutely exploded the

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inflation there, which I'll come to in a second. And the same thing happened in

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Venezuela, Argentina, The same thing happened in

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Germany in the 30s. We've seen in the past multiple examples

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of what's called hyperinflation from an absolute loss

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of trust in local currency. So I'll come back to the data in a second on that.

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The other reasons why currencies lose value over time is

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because there's no hard backing. There's not backed by gold or any hard assets. And

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it's just easy to print. So they can abuse that ability to print the fiat

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currency. So there you go. When

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you do it too much, so let's say for example, your interest rates are super low,

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but you also print way too much money, you can get huge

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imbalances that happen or you can get huge oversupply of a

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currency in a place and the currency can effectively become

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worthless. And so if I look at the examples of when this happened,

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When when the currencies actually became worthless, right just possibility

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in why me in Germany, which is pretty precedes World War two

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This is kind of what they reckon cause the rise of Hitler is that in

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why me in Germany? They needed a in 1923 they inflated

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the currency so much you needed a wheelbarrow to buy a loaf of bread a

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wheelbarrow of it was the marks at the time to buy a Bread,

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which is crazy. Zimbabwe was 2008. It had

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89.76 trillion percent inflation. The

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inflation rate was just out

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of control. They set the currency on fire. In

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Venezuela in 2016, 2021, it became worthless.

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It was just like paper. You can see it can

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absolutely lose value in a period of months. It can just

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dissipate. The value can dissipate. It's

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designed to erode your money. So usually inflation

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erodes your money by about 2-3% a year and it's a

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quiet tax on your money. We really shouldn't be living in

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a world where inflation exists. In fact, we should have deflation. I

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would prefer deflation to inflation but somehow the

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government has conned us all into thinking

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wrongly that 2-3% inflation is what

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we really want. I don't know how they've conned us into that, but deflation

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is what we want. We want to actually have more wages increase and the value of things

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like homes fall in value. Why do we want

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prices of goods to go up? Come on, why do we want our

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Big Mac to go up in price? We want it to come down in

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price and we want our wages to go up. We want to get wealthy, not poorer, but

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what has happened is that the fiat currency controlled by

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governments, when it's not backed by hard assets has given them the

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ability to print and the ability to keep inflation at

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3% a year. Now, I think it's more than that. But what that's done is it's created a

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quiet tax on the people and it's made everyone a lot poorer. And I

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think it's just, we just don't want that. But I mean, they've conned us into thinking that's

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normal. So, okay, back to a 2%, 3% a year. Don't

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worry, I'll come to, in the next episode, I'll talk about how to overcome this stuff. So

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it's designed to erode your money. What's inflation like in Australia? So these are

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the stats from Australia. Currently, CPI stands for Consumer

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Price Index. And it's where a basket of goods from groceries to

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rent and fuel and so forth is put into a basket of average good prices. And

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over the course of a year, CPI, Consumer Price Index, assesses

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the increase in price from the basket of

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goods in one year to the next year. So if CPI is 3.6%, right, then

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that means the basket of goods for the next year has gone up by

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3.6%. So the current inflation in Australia, they say, is

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3.6%. However, it was up to 8% because of

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COVID, because of all the massive money supply they put into the economy for

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particularly no reason. They should have not done what they did, but it is done

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now. So it's come down, right? But

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that's the current inflation rate. The Reserve Bank of Australia targets

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about 2% to 3%. But again, that's a quiet tax on people. And

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of course, they're anticipating if oil

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goes up, if there's more war, If

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there's more inflation that's caused by that, then they may increase

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rates and that can have a huge effect on the economy. But

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for now, it seems like inflation is under control, but I don't believe

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it. Again, in the episode I did on why the Australian

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property market is collapsing, I talk about this thing called the the

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Maxibon index that's a real personal life

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experience. And I bought one the other day too, six bucks. And by

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all accounts, the inflation rate is not 3%. And you probably agree with

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me. And if you don't agree with me, put it in the comments below. If you agree with me, pop in the comments below.

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I'd love to see what you think about that. What's driving

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the, so here we go. What's driving inflation in Australia right now? There's probably five

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core things driving inflation. One, COVID

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00:16:03,799 --> 00:16:07,581
shortages, so there's higher price on goods. So there was actually, we couldn't import

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00:16:07,661 --> 00:16:11,544
as many goods as what we used to. So like, remember when like boats were going up in value and

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cars were going up in value? It's like, well, it's complete opposite to what you realize. So

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there was higher price on goods that caused inflation. Rising energy and

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fuel costs, that's still causing inflation. It's crazy to think how

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much. fuel costs for us now in diesel, it kind of doubled. I

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00:16:25,173 --> 00:16:29,676
remember I used to be able to fill my car up for like a hundred bucks. Now it's like 160. So

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00:16:29,917 --> 00:16:33,259
I'd say there's 60% inflation on fuel, which is gnarly in five years.

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So that's over 10% a year. We've got number three, wage

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pressures. So We do have a, because of the aging

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boomer population, we have a shortage in certain labor

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markets in Australia, and that caused wage inflation. So you look at all

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these inflationary pressures happening at the same time, housing and rental costs, because we

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00:16:50,485 --> 00:16:54,928
like to keep interest rates ridiculously low for too long because we're idiots. We

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00:16:54,988 --> 00:16:58,331
had... housing and rental costs go massively up.

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So we had rental inflation and price of

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housing inflation. So these are all important things. You're going to look at it. This

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00:17:05,960 --> 00:17:09,183
is like the cost of goods up, the cost of

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fuel up, the cost of wages up, the cost of

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00:17:12,587 --> 00:17:15,910
like that's for businesses, hiring staff, going to pay more, housing up.

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All these are like human needs up, up, up, up, up, up. And

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00:17:19,714 --> 00:17:23,116
of course, you add in the government stimulus that I spoke about, they pumped

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in, check this out, $577 billion pumped

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00:17:26,978 --> 00:17:30,300
into the economy, which is 30% of the gross domestic product

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of the country in that timeframe of COVID. They

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just chucked the Australian dollar on the fire and shred it, just burnt it.

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00:17:40,507 --> 00:17:43,791
That's just wild. They kept the JobKeeper on

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00:17:44,712 --> 00:17:47,896
for 3.8 million workers for way too long. I remember they were

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00:17:47,916 --> 00:17:51,000
paying everyone $750. I didn't get mine. Did you get your $750? I

293
00:17:51,020 --> 00:17:56,426
never got $750. Where's my $750? Just

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00:17:56,466 --> 00:17:59,849
quickly, if you're ready to take control of your finances but feel stuck on

295
00:17:59,869 --> 00:18:03,552
where to start, I have a solution. My book Money Buys Happiness

296
00:18:04,013 --> 00:18:07,196
simplifies investing and wealth building with practical steps to help

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00:18:07,236 --> 00:18:10,338
you achieve financial peace. Get your copy via the

298
00:18:10,378 --> 00:18:13,641
link in the show notes and let's get your money working for you. Now back

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00:18:13,661 --> 00:18:17,124
to the episode. A friend of mine, I had him on the show, Simon

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00:18:17,185 --> 00:18:20,628
Beard, he owned Culture Kings, founder

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00:18:20,648 --> 00:18:24,031
of Culture Kings. I've had him on the show. Go back and check out the episode of me interviewing

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00:18:24,071 --> 00:18:27,514
Simon. He said

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00:18:27,554 --> 00:18:30,717
he set up to sell his business before COVID, but it just

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00:18:30,757 --> 00:18:34,160
so happened that the government stimulated the economy with

305
00:18:34,260 --> 00:18:37,343
COVID money. He said that really went straight into the hands of

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00:18:37,383 --> 00:18:40,966
his ideal customer, which is young kids, and they went and bought hats and shoes and stuff from Culture

307
00:18:40,986 --> 00:18:44,167
Kings and he said his business has blitzed and he said he

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00:18:44,227 --> 00:18:47,488
exited perfectly and he sold for 600 million. So

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00:18:47,588 --> 00:18:51,569
that's an example of how sometimes this type of thing can also benefit business

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00:18:51,609 --> 00:18:55,131
owners. But he also said that it was just wildly well-timed and go

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00:18:55,171 --> 00:18:58,912
check out the episode too. But this is what happened during COVID. Why

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00:18:58,992 --> 00:19:02,213
is the Australian dollar falling? What's causing the collapse of the Australian dollar? I'm

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00:19:02,233 --> 00:19:05,554
going to give you 10 real core reasons. So get ready and buckle up

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00:19:05,574 --> 00:19:08,815
for this. The first reason is this, the Reserve Bank

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00:19:08,855 --> 00:19:12,136
of Australia versus the Federal Reserve of America. So right now,

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00:19:12,176 --> 00:19:16,578
the Reserve Bank of Australia has a cash rate at 4.1% and

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00:19:16,598 --> 00:19:20,399
the federal fund rate is higher than that. So the USD federal

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00:19:20,439 --> 00:19:23,580
fund rate is over 4.5% and they're increasing and they look like they're going

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00:19:23,600 --> 00:19:26,741
to hold rates where they are, but we just dropped rates. So the fact that

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00:19:26,781 --> 00:19:29,967
the Reserve Bank of Australia is dropping rates, is

321
00:19:30,067 --> 00:19:33,349
causing our currency to fall in value, and the fact that the federal funds

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00:19:33,389 --> 00:19:37,071
rate in America is keeping them steady, or maybe even increasing them, it's

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00:19:37,111 --> 00:19:40,392
gonna create more demand for the US dollar. And because we

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00:19:40,452 --> 00:19:43,754
measure the value of our Australian dollar against the US dollar, we're seeing it

325
00:19:43,974 --> 00:19:47,295
fall against the greenback, okay? So there is this battle against the

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00:19:47,355 --> 00:19:50,857
two reserve banks at the same time. We're reducing rates, creating Australian dollar

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00:19:50,877 --> 00:19:54,119
weakness, and they're keeping rates the same, or increasing them. It looks like they're

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00:19:54,139 --> 00:19:57,761
not increasing them yet, but they might, and it's creating Value in

329
00:19:57,801 --> 00:20:01,184
the US dollar so you can see that's the first thing that's creating this weakness.

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00:20:01,204 --> 00:20:04,326
That's why when you go to America I've been to America. I'll be going to America for

331
00:20:04,346 --> 00:20:07,529
the third time this year You feel like a poor person as soon as you walk

332
00:20:07,549 --> 00:20:10,631
off the plane you get off the plane. You've lost half your purchasing power I

333
00:20:10,892 --> 00:20:14,455
was at the airport and recently coming back from the States and we're in a long line and

334
00:20:14,475 --> 00:20:17,717
we're coming through the gates to go through Immigration as American guy big

335
00:20:17,817 --> 00:20:20,980
loud American guy from Hawaii was then he was you know, you could tell

336
00:20:21,020 --> 00:20:24,122
he's from America and And I said, oh, I

337
00:20:24,142 --> 00:20:27,365
said, how does it feel to be a millionaire? He's like, what are you talking about? I said, you just got the plan in

338
00:20:27,385 --> 00:20:30,607
Australia. You got US dollars, you're a flipping overnight millionaire. So it's

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00:20:30,647 --> 00:20:33,729
a really challenging time to go to America right now because we have huge weakness of the

340
00:20:33,769 --> 00:20:37,952
Australian dollar versus the USD, OK? The second reason why the Australian

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00:20:37,972 --> 00:20:41,535
dollar is collapsing is this. China's economic slowdown. Our

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00:20:42,035 --> 00:20:45,962
currency is very driven by resources

343
00:20:46,002 --> 00:20:49,264
here. So like our currency is heavily dependent on the

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00:20:49,304 --> 00:20:53,086
price of iron ore, the price of coal, the price of all

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00:20:53,106 --> 00:20:56,327
the different metals that we send overseas. And so we're

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00:20:56,347 --> 00:21:00,049
very resource driven currency. And

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00:21:00,089 --> 00:21:03,207
so When China pumps and the economy is

348
00:21:03,267 --> 00:21:07,131
killing it over there, and they're importing a ton of our resources, the

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00:21:07,171 --> 00:21:10,614
value of our dollar is a lot higher. So the fact that recently,

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00:21:10,674 --> 00:21:14,558
too, because of the tariff war that is happening with the US and China, massive

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00:21:14,979 --> 00:21:18,422
exports dropped out of China like 34% year on year. So it's

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00:21:18,462 --> 00:21:21,665
a huge shift in how much they're consuming there. And of course,

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00:21:21,685 --> 00:21:25,008
their property market completely collapsed. They were building

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ghost cities, and those ghost cities actually turned

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00:21:28,551 --> 00:21:33,094
into just wasted steel and all this incredibly wasteful

356
00:21:33,154 --> 00:21:36,576
resource. And we were pumping China with so much iron ore

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00:21:36,856 --> 00:21:40,158
to build all these buildings. And that's started to come off the ball now. A lot

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00:21:40,179 --> 00:21:43,721
of the property sectors come off and decreased. So

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the fact that China's slowed down means there's less demand for

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00:21:46,963 --> 00:21:50,125
our commodities here, which means there's less demand for the

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00:21:50,165 --> 00:21:53,688
Australian dollar. Does that make sense? So that's the second reason. The third reason

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00:21:53,948 --> 00:21:58,871
why the Australian dollar is collapsing is because commodity

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00:21:58,892 --> 00:22:02,614
prices here are falling across the board. We've had a massive fall in lithium. We've

364
00:22:02,634 --> 00:22:06,237
had falls in iron ore prices, spot iron ore prices falling. We've

365
00:22:06,277 --> 00:22:09,660
had, thankfully, gold's increased in value, but we've

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00:22:09,680 --> 00:22:13,042
had a lot of Again, commodities in Australia fall away because

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00:22:13,082 --> 00:22:16,324
the demand for those commodities, not just in China, but other areas around

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00:22:16,344 --> 00:22:19,826
the world has actually slowed down because of a slowdown in

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00:22:20,046 --> 00:22:23,207
global economic growth. There's been very sluggish growth in the

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00:22:23,388 --> 00:22:26,769
world's economy, which means if Australia's got, in fact, Australia does

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00:22:26,809 --> 00:22:30,312
have the richest resources in the world. Recently, they just discovered like,

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00:22:30,672 --> 00:22:34,235
I think it was $6 trillion worth of iron

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00:22:34,275 --> 00:22:37,438
ore deposits here, some crazy number. I think it was 6 trillion. I mean, look

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00:22:37,458 --> 00:22:40,841
at how powerfully rich we are as a very rich resource nation.

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It's just that the growth in the world has meant that, hey, we don't

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00:22:44,104 --> 00:22:47,627
need as many resources from you, Australia. So of course, our currency falls. The

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00:22:47,687 --> 00:22:51,280
fourth reason why it's collapsing is this. There's sluggish wage

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00:22:51,300 --> 00:22:55,243
growth here in the country. In fact, we've been in a silent recession for the last

379
00:22:55,583 --> 00:22:59,266
three years, I think. I mean, it's been like

380
00:22:59,287 --> 00:23:02,729
a quiet recession, because a recession is when you've had two successive quarters

381
00:23:02,749 --> 00:23:06,192
of negative GDP growth. But we've been so close to negative.

382
00:23:07,113 --> 00:23:10,496
We've just been sitting, we're teetering on negative. We're like zero point something. It's

383
00:23:10,516 --> 00:23:13,720
just been teetering on no growth. We've been in

384
00:23:13,740 --> 00:23:17,243
a bit of stagflation where nothing's actually happening. So

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00:23:17,263 --> 00:23:20,707
we've had sluggish wage growth, we've had more consumer

386
00:23:20,727 --> 00:23:24,210
spending, and we've really not had any productivity gains. And

387
00:23:24,250 --> 00:23:27,453
so if you're not a productive country, why would your

388
00:23:27,493 --> 00:23:30,738
currency be valuable? it wouldn't be, right?

389
00:23:30,838 --> 00:23:34,165
So you're seeing this, you know, the fact that we've got pumping out

390
00:23:34,305 --> 00:23:37,672
social security so much, we're pumping at NDIS, we're pumping

391
00:23:37,772 --> 00:23:41,792
out We're providing poor

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00:23:41,872 --> 00:23:45,454
energy policy. All these things that I spoke about in the other video

393
00:23:45,494 --> 00:23:48,836
on why the Australian property market's collapsing is the same reason

394
00:23:48,916 --> 00:23:52,018
why a lot of our currency is collapsing at the same time, right? So there you

395
00:23:52,038 --> 00:23:55,239
go. Cautious consumers means there's a weaker domestic economy. So

396
00:23:55,259 --> 00:23:58,381
we're not spending on parts of the economy we need to spend on

397
00:23:58,421 --> 00:24:02,743
for a productive outcome. pumping

398
00:24:02,783 --> 00:24:06,666
up housing where we're really not spending when we need to spend. Number

399
00:24:06,746 --> 00:24:10,008
five reason why the Australian dollar is collapsing, debt to

400
00:24:10,048 --> 00:24:13,530
GDP. 111.5% in quarter three

401
00:24:13,550 --> 00:24:17,312
of 2024. It's one of the highest globally. That

402
00:24:17,392 --> 00:24:21,114
means that we've got the most debt to GDP. In

403
00:24:21,154 --> 00:24:25,922
fact, we've got the highest household debt to

404
00:24:26,022 --> 00:24:30,525
income or to GDP in the world. We do. We have the highest household

405
00:24:30,565 --> 00:24:33,747
debt. I think it's something like 200%. It's a

406
00:24:33,887 --> 00:24:37,650
whole 100% higher than other countries. It's like we're just soaking

407
00:24:38,210 --> 00:24:41,332
in debt, which tells me a lot of the The

408
00:24:41,372 --> 00:24:45,014
monetary supply that's coming to the economy is just pumped into land. It's

409
00:24:45,074 --> 00:24:48,435
a weird thing. We have this saying in Australia, we dig holes and buy houses.

410
00:24:49,075 --> 00:24:52,877
That's our whole economy. We dig holes, buy houses. Unfortunately,

411
00:24:53,037 --> 00:24:56,098
the world doesn't want what we're digging out of the holes as much, so the currency is falling. Of

412
00:24:56,138 --> 00:24:59,400
course, if we're pumping up property and increasing the inflation in that area, we're

413
00:24:59,420 --> 00:25:02,801
also hurting the currency. Number

414
00:25:02,841 --> 00:25:06,542
six reason why the Australian currency is collapsing is because we

415
00:25:06,642 --> 00:25:09,943
also have an account deficit. We have a trade deficit. We're 14 points.

416
00:25:10,143 --> 00:25:13,764
Check this out. 14.7 billion in

417
00:25:13,844 --> 00:25:17,325
deficit Q1 2025, right? That's a

418
00:25:17,385 --> 00:25:20,806
current account deficit. That's a trade deficit on the current account of 14 billion.

419
00:25:20,846 --> 00:25:24,027
So we've got a net capital outflow from Australia. And the reason for that too

420
00:25:24,067 --> 00:25:27,268
is because our interest rates are too low. So that

421
00:25:27,408 --> 00:25:31,030
is burning not well for the value of the Australian dollar. Number

422
00:25:31,110 --> 00:25:34,932
seven, the global risk off sentiment. So global risk off means

423
00:25:35,772 --> 00:25:39,614
people are not open to investing in what's called risk assets. So things

424
00:25:39,654 --> 00:25:42,936
like tech stocks and so forth that generally are high

425
00:25:42,976 --> 00:25:46,478
growth, they call that risk on. And risk-off sentiment means

426
00:25:46,498 --> 00:25:49,700
we're not prepared to swing at those risky assets. So what we want

427
00:25:49,740 --> 00:25:53,483
to do is we want to go back into non-risk assets. So there's a

428
00:25:53,543 --> 00:25:57,306
global shift in risk-off sentiment

429
00:25:57,326 --> 00:26:01,028
versus risk-on, and the Australian dollar is a risk-on currency. And

430
00:26:01,048 --> 00:26:05,012
so if there's no risk on, then the value of the Australian dollar is falling. And

431
00:26:05,092 --> 00:26:08,595
so basically in uncertain times, so when there's risk off sentiment,

432
00:26:08,995 --> 00:26:12,318
people run to the US dollar. They run

433
00:26:12,338 --> 00:26:15,600
to the Japanese yen. They run to other currencies that are more strong than

434
00:26:15,681 --> 00:26:19,203
ours. They run away from the Australian dollar. That's what happens. So

435
00:26:19,244 --> 00:26:22,666
what we want is to have risk on. But that's not happening because there's wars. There's

436
00:26:24,008 --> 00:26:28,311
fear of inflation. There's all these fears happening in the world right now. And

437
00:26:28,351 --> 00:26:31,472
it's running people to the U.S. dollar. That's why the

438
00:26:31,532 --> 00:26:34,673
U.S. dollar has gained so much strength and the Australian dollar has lost so

439
00:26:34,713 --> 00:26:37,975
much value. Number 8 reason why the Australian dollar is falling in

440
00:26:38,035 --> 00:26:42,805
value because the Forex market, so there was large traders holding about 8,500. net

441
00:26:42,845 --> 00:26:46,206
long Australian dollar contracts in early 2000, earlier this

442
00:26:46,226 --> 00:26:49,346
year. And so that shows you there's a lot of volatility risk. And so if there's a

443
00:26:49,366 --> 00:26:52,707
lot of volatility risk in the currency, generally speaking, it's not well sought after,

444
00:26:53,047 --> 00:26:56,387
it's too risky for people to hold, so they don't want to hold it. So the demand for Australian dollar falls,

445
00:26:56,447 --> 00:26:59,708
okay? Number nine reason why the Australian

446
00:26:59,728 --> 00:27:03,068
dollar is collapsing is geopolitical tensions, right? What's happening right

447
00:27:03,108 --> 00:27:06,149
now is Iran and Israel are at

448
00:27:06,209 --> 00:27:09,510
war, effectively overnight, we just announced they're at war. And so that's

449
00:27:09,730 --> 00:27:13,811
huge, I would say, destabilization

450
00:27:13,831 --> 00:27:17,112
of that region, not to mention the fact that Russia and Ukraine are

451
00:27:17,212 --> 00:27:20,994
still at war. So we've got two wars happening. We've got uncertainty

452
00:27:21,054 --> 00:27:24,455
in China in terms of the economy. We've got huge uncertainty and

453
00:27:24,735 --> 00:27:28,897
civil unrest in the United States. There's a lot of protests happening around the ICE

454
00:27:28,957 --> 00:27:32,519
removal of illegal immigrants there. So massive

455
00:27:32,599 --> 00:27:36,040
uncertainty, particularly in the Asia-Pacific area where our currency lives.

456
00:27:36,480 --> 00:27:39,622
And so there's a huge amount of investor caution. So they're not really wanting to put their hands on

457
00:27:39,642 --> 00:27:43,135
the Australian dollar, like, nah, Take me to the USD, take me to gold, take

458
00:27:43,175 --> 00:27:46,577
me to all these not, you know, risk-off type currencies and assets.

459
00:27:46,617 --> 00:27:49,940
And so that's causing this fall in the value of the Australian dollar.

460
00:27:50,340 --> 00:27:54,343
And finally, number 10, weak business investment. In

461
00:27:54,383 --> 00:27:57,546
Australia, we don't have a lot of people wanting to invest in our country because we

462
00:27:57,606 --> 00:28:01,449
don't invest well in new businesses. We don't invest well in innovation. I

463
00:28:01,489 --> 00:28:04,771
saw this article pop up the other day. Annoyed me, it was like two days ago.

464
00:28:05,352 --> 00:28:08,554
And Anthony Albanese, the prime minister, said that Australia is

465
00:28:08,614 --> 00:28:11,796
a leading tech country. I just want to punch it.

466
00:28:11,936 --> 00:28:15,197
What? What? What? Leading tech can't ... We

467
00:28:15,217 --> 00:28:18,818
can't even get our NBN sorted. We're

468
00:28:18,878 --> 00:28:22,999
terrible at adopting technology. We're slow. We're

469
00:28:23,079 --> 00:28:26,339
way out of date already in AI. We're

470
00:28:26,399 --> 00:28:30,320
not really ... We used to be tech innovators. Australia had

471
00:28:30,340 --> 00:28:34,641
some cool inventions. We invented the torpedo. We invented the Victor lawnmower. We

472
00:28:34,661 --> 00:28:38,283
went to the Hills Hoist, Clothesline, we're innovators. No, but we

473
00:28:38,343 --> 00:28:41,805
used to be more of a manufacturing-related innovation economy, but we

474
00:28:41,845 --> 00:28:45,207
have pretty well just destroyed all manufacturing in the country. We're

475
00:28:45,267 --> 00:28:48,669
not tech innovators. We don't invest in businesses. In fact, our

476
00:28:48,789 --> 00:28:52,310
banks do not lend well to businesses. They are more about

477
00:28:52,391 --> 00:28:56,233
lending to property owners. What's happened is because we've just

478
00:28:56,253 --> 00:29:00,355
become property sycophants, property like

479
00:29:01,195 --> 00:29:04,339
addicts. All we've done is bid up our own land price with

480
00:29:04,359 --> 00:29:07,663
our money. We're a bunch of idiots. What we need to be doing is spending money on

481
00:29:07,784 --> 00:29:11,088
business innovation. We've been hit hard with

482
00:29:11,148 --> 00:29:14,953
capital sliding into Australia for investment because we have soft growth. Of

483
00:29:14,993 --> 00:29:18,157
course, if you have a country that has not innovated, imagine a

484
00:29:18,217 --> 00:29:21,681
company For one second, just imagine there's a company, a

485
00:29:21,741 --> 00:29:25,206
business, and it spends no money on R&D. So

486
00:29:25,366 --> 00:29:28,951
no money on research and development. If Apple spent no money on

487
00:29:29,091 --> 00:29:32,636
research and development, what do you think would happen to the iPhone? It

488
00:29:32,656 --> 00:29:35,720
wouldn't have innovated since the iPhone 3. Imagine what happened if

489
00:29:35,760 --> 00:29:38,943
the iPhone 3 didn't innovate. What would you have done? You'd have got

490
00:29:38,983 --> 00:29:42,464
rid of the flipping thing. Well, that's what's happening to Australia. We're not

491
00:29:42,945 --> 00:29:46,226
innovating. We're literally anti-innovating. All

492
00:29:46,246 --> 00:29:49,548
we're doing is taking the money we got and chucking it to non-productive parts

493
00:29:49,568 --> 00:29:53,650
of the country. Country

494
00:29:53,690 --> 00:29:57,171
working, because we're not innovating. We're not spending any money on R&D. Zip.

495
00:29:57,972 --> 00:30:01,293
In fact, we're borderline going to lose our security agreements

496
00:30:01,313 --> 00:30:06,066
to the United States, because we're run by a bunch of Muppets. Frankly,

497
00:30:06,526 --> 00:30:09,708
and you don't really have to, it's gross incompetence is

498
00:30:09,728 --> 00:30:12,950
what it is. We're so attached to doing

499
00:30:12,970 --> 00:30:16,712
what's right with all these woke agendas that we cannot

500
00:30:17,332 --> 00:30:20,834
even start to look at how our country's gonna live for the next 50 years. If

501
00:30:20,894 --> 00:30:24,376
we don't innovate in Australia, we're not gonna have any capital

502
00:30:24,436 --> 00:30:27,538
investment in Australia. I mean, if you think about it, if Australia was a

503
00:30:27,598 --> 00:30:30,739
company in a business right now, truthfully, and you know that it's

504
00:30:30,759 --> 00:30:35,218
not innovating, and all of its poorest non-productive

505
00:30:35,279 --> 00:30:38,461
employees, imagine your business, you got all these employees, and all

506
00:30:38,481 --> 00:30:41,704
they do is just move paper around all day, they don't actually do anything productive, and

507
00:30:41,724 --> 00:30:44,986
a lot of them are sick and tired and fat and overweight, and you just give them all this money

508
00:30:45,027 --> 00:30:48,169
out of the profits, and none of them are producing any sales for your business, what do you

509
00:30:48,189 --> 00:30:52,213
think would happen to your business in the next 10 years? It'd be gone. It'll

510
00:30:52,233 --> 00:30:56,179
be gone. What do you think is happening to Australia? If

511
00:30:56,219 --> 00:31:01,286
we're not innovating and spending money on R&D, if we're not actually incentivizing

512
00:31:01,326 --> 00:31:05,352
and paying our highest, most productive talent, if

513
00:31:05,412 --> 00:31:08,715
we're actually incentivizing to actually do

514
00:31:08,775 --> 00:31:12,378
less work, so we're actually putting too much into social security. If

515
00:31:12,458 --> 00:31:15,499
we're not innovating our energy policy, and we're making it

516
00:31:15,599 --> 00:31:18,801
even more difficult to actually pay for energy. In fact, if you look

517
00:31:18,821 --> 00:31:22,063
at your energy bill of the last quarter, tell me, how is it

518
00:31:22,283 --> 00:31:25,745
that a country with the most land has the greatest housing shortage

519
00:31:25,765 --> 00:31:29,307
in the world? And you tell me how the country with the most resources and

520
00:31:29,487 --> 00:31:32,889
energy and hydrocarbons in the world is having the

521
00:31:32,929 --> 00:31:36,209
highest energy prices in the world. How? It's

522
00:31:36,269 --> 00:31:40,091
because the business that we run here is being run by

523
00:31:40,131 --> 00:31:43,613
an idiot. And it's good, Warren Buffett says,

524
00:31:43,833 --> 00:31:47,135
invest in a business so good that even an idiot can run it because sooner

525
00:31:47,195 --> 00:31:50,657
or later one will. So if you look at Australia as more

526
00:31:50,677 --> 00:31:54,259
of a business, as an example, is that strong

527
00:31:54,279 --> 00:31:58,061
in resources, wonderful. Light in population, wonderful.

528
00:31:58,241 --> 00:32:01,403
We actually have almost no one lives here. Massive land mass, wonderful. You

529
00:32:01,423 --> 00:32:04,605
would think based on that, we would be the richest country in the world.

530
00:32:05,225 --> 00:32:08,347
And the value of our Australian dollar would be way above the

531
00:32:08,447 --> 00:32:11,650
US dollar. But the truth of the matter is, because we're running it

532
00:32:11,710 --> 00:32:15,032
poorly, investors don't see Australia as a great place to

533
00:32:15,072 --> 00:32:18,495
invest. And because of that, the value of our dollar has

534
00:32:18,575 --> 00:32:22,058
fallen drastically. And it's sitting around about 0.649 US

535
00:32:22,138 --> 00:32:25,220
cents to the one Australian dollar. And the history of the

536
00:32:25,240 --> 00:32:29,323
Australian dollar has been, on average, it'll sit at about $0.75. So we're oscillating

537
00:32:29,363 --> 00:32:32,565
around this weaker Australian dollar. It's collapsing further and

538
00:32:32,585 --> 00:32:35,808
further and further and further from inflation. then you can

539
00:32:35,848 --> 00:32:39,210
possibly even keep up with and that's why it would feel like right now

540
00:32:39,490 --> 00:32:42,852
despite wage increases, despite the fact that having

541
00:32:42,873 --> 00:32:46,327
some successful years in your business or your job, And you're like, why

542
00:32:46,347 --> 00:32:49,469
am I feeling poorer? And it's because of these things happening all at once that

543
00:32:49,509 --> 00:32:53,451
are collapsing the Australian dollar. So they're the 10 reasons why

544
00:32:53,892 --> 00:32:57,114
the Australian dollar is absolutely collapsing. They're

545
00:32:57,134 --> 00:33:00,276
all very succinct. They're all happening at the same time. So yeah, a

546
00:33:00,416 --> 00:33:04,299
couple of things happening. One, you're going to feel poorer because

547
00:33:04,319 --> 00:33:07,521
you effectively are from inflation. And two, if you assess it

548
00:33:07,561 --> 00:33:14,219
against other currencies, we're also falling. So we're falling in the the

549
00:33:14,339 --> 00:33:17,542
foreign exchange rate of other currencies, and we're also falling from

550
00:33:17,562 --> 00:33:21,385
the inflation rate of our own currency. So two things happening at once. So

551
00:33:21,405 --> 00:33:24,788
it's not a great time to be investing overseas, that's for sure, for the Australian dollar.

552
00:33:25,128 --> 00:33:28,951
But it can flip and it may flip, but what we do need is we need a complete flip of

553
00:33:29,192 --> 00:33:32,915
the Australian economy with better leadership, but that's out of our control. So

554
00:33:33,015 --> 00:33:36,438
what is in our control? What is in our control? How do you

555
00:33:36,798 --> 00:33:39,881
protect yourself from the inflationary hit to

556
00:33:39,901 --> 00:33:43,364
the Australian dollar? And how do you protect yourself against you losing

557
00:33:43,424 --> 00:33:46,807
wealth over time if you're earning Australian dollars? All right. And that's a great question.

558
00:33:46,867 --> 00:33:50,350
So it's not falling randomly. It's a result

559
00:33:50,370 --> 00:33:53,533
of all these unchecked spending, rising debt situations and

560
00:33:53,653 --> 00:33:58,117
a system designed to quietly erode your wealth, right? But what

561
00:33:58,137 --> 00:34:01,599
you have to understand is it's happening. And you can implement steps

562
00:34:01,639 --> 00:34:04,960
yourself to actually prevent it. Alright, so in the next

563
00:34:04,980 --> 00:34:08,341
video, I'm going to break down exactly how

564
00:34:08,401 --> 00:34:11,742
to protect your money during inflation, right

565
00:34:11,762 --> 00:34:15,042
from smart investments and ideas that are simple, you can follow follow

566
00:34:15,163 --> 00:34:18,283
model, and they're well documented and well known. And I'm

567
00:34:18,303 --> 00:34:21,464
going to go through exactly what has happened to countries that have

568
00:34:21,984 --> 00:34:25,425
gone through hyperinflation, what actually happened to them, and how hard assets

569
00:34:25,445 --> 00:34:28,826
can prevent you losing wealth if that happens to the Australian dollar. Alright,

570
00:34:28,866 --> 00:34:32,246
so if this video gave you value, hit the like button,

571
00:34:32,426 --> 00:34:35,927
hit the subscribe button, share with someone who needs to hear it. And don't

572
00:34:35,987 --> 00:34:39,288
miss the next episode because I dive deep into how to prevent your

573
00:34:39,428 --> 00:34:42,868
money from eroding away in the next one. So go check it out. Knowledge

574
00:34:42,908 --> 00:34:46,211
is power, but only if you use it. See you in the next episode. Thanks for

575
00:34:46,251 --> 00:34:49,795
listening to Money Grows on Trees. If you enjoyed the episode, leave a five-star

576
00:34:49,815 --> 00:34:53,198
review on Apple Podcasts and Spotify and subscribe to

577
00:34:53,258 --> 00:34:56,721
us on YouTube so you never miss an episode. And if you're serious about building

578
00:34:56,761 --> 00:35:00,164
wealth, make sure to check out the links in the show notes and follow me on

579
00:35:00,344 --> 00:35:03,947
all social media platforms, at LloydJamesRoss for