---
title: 'Breaking: The Bond Market Is Collapsing - Massive Bailout Has Begun!'
source: 'https://youtube.com/watch?v=mV1iw0aN9uo'
video_id: 'mV1iw0aN9uo'
date: 2026-08-25
duration_sec: 941
channel: 'Graham Stephan'
---

# Breaking: The Bond Market Is Collapsing - Massive Bailout Has Begun!

> Source: [Breaking: The Bond Market Is Collapsing - Massive Bailout Has Begun!](https://youtube.com/watch?v=mV1iw0aN9uo)

## Summary

The video discusses the recent intervention in the bond market by the U.S. government, which the creator interprets as a sign of an impending economic crisis. It explores the possibility of a stock market bubble by comparing current valuations to historical peaks, and presents both bearish and bullish arguments. The creator concludes by advocating for a diversified investment strategy and warns against trying to predict market movements.

### Key Points

- **Bond Market Intervention** [00:03] — The U.S. government intervened in the bond market, which the creator describes as a panic move, potentially leading to a trillion-dollar bailout.
- **Market Valuations at Dot-Com Peak** [00:30] — Stocks are as expensive as they were at the peak of the dot-com bubble in 2001, with interest rates rising out of control.
- **Interest Rates as Market Driver** [01:38] — The creator argues that interest rates, not profits, drive markets. Rising rates are due to investors demanding higher returns to compensate for inflation risk.
- **Treasury Yields at 20-Year High** [02:22] — Treasury yields reached their highest level in almost 20 years, a level seen right before the Great Financial Crisis.
- **Historical Yield Control** [02:35] — The U.S. has implemented yield control before, including in the 1940s to finance WWII, and through quantitative easing from 2008-2014 and in 2020.
- **Five Concerns About a Bubble** [03:43] — The creator lists five concerns: extreme market valuations (CAPE ratio at dot-com levels, Buffett indicator above 230%), weak AI monetization (95% of pilots show no profit impact), circular financing among tech firms, similarity to past tech bubbles, and extreme concentration of VC funding in AI (87%).
- **Comparison to 1920s Great Depression** [08:07] — Some analysts compare the current market to the 1920s, with charts showing eerie similarities, suggesting a potential melt-up before a crash.
- **Five Reasons for Continued Growth** [08:35] — Counter-arguments include: companies are highly profitable, rapid growth in cloud AI (triple-digit percentages), valuations not as extreme as 2000, low IPO activity, and the need for an unforeseen catalyst to end a rally.
- **Fidelity's Red Flags** [10:34] — Fidelity identifies red flags: companies burning cash, interconnected ownership, rising debt, AI energy limits, and higher borrowing costs.
- **Future Returns and Historical Context** [11:16] — Ben Carlson suggests that the last 30 years are more relevant than the last 150, and that earnings are strong, with the market being efficient. Even investing at the 1928 peak with dividends reinvested would have yielded 100% profits over two decades.
- **Japan Comparison** [12:53] — A Japan-like scenario would require earnings to stall and the S&P 500 to trade at a devaluation of 14,000, which is unlikely. The market is expensive but can keep going higher.
- **Personal Investment Strategy** [13:35] — The creator advocates for diversification, holding U.S. and international stocks, 20-25% in treasuries, some real estate, and a Bitcoin ETF, and maintaining income to buy dips.

### Conclusion

The video concludes that while the market is expensive, it doesn't necessarily mean a crash is imminent. The creator advises against trying to predict the market and instead recommends a diversified, patient approach to investing.

## Transcript

up. >> Trump panicked yesterday and they intervened in the bond market. >> What we saw yesterday was a sign of >> This is u the most expensive market in American history.
>> And the pricking of the bubble happens when better prepare for what just happened. Breaking news. Believe it or not, the United States is suddenly preparing for up to a trillion dollar bailout to save
all of this is happening during a time where stocks are just as expensive as they were at the peak of the dot bubble in 2001. Interest rates have been rising out of control. And now people are once again drawing comparisons to 1999, right
seriousness, we are about to witness one of the largest economic interventions since 2020. And that's why we have to talk about exactly what's happening, why we're about to get another bond market bailout, unlike anything that we have
no one's prepared for. Because once you surface, you'll begin to realize that the market's sending a completely think. Although, before we start, as usual, if you appreciate the breaking
world to me if you hit the like button and subscribed if you haven't done it already. I know it sounds dumb to ask. I'm not a fan of constantly asking for thank you for doing that, here's a picture of a mouse. So, thanks so much
and also big thank you to SoFi for sponsoring this video, but more on that to talk about something that almost all of us were completely unprepared for, and that would be yield control. See, what most people forget is that what
actually drives the markets isn't necessarily profits or expansion or attractive valuations. Instead, it's interest rates. And lately, those interest rates have been skyrocketing. Why? Well, to put it simply, investors
continuing to grow. And as a result of that, they're demanding a higher return extra risk. Like, think of it this way. If you believe long-term inflation is going to be 4%, why would you lend your money at 3% or 2%. Instead, you would
want 5 12% so you could make a little bit of profit. Well, obviously that puts a strain on the national debt, on mortgage rates, on the economy, and that's led to Treasury yields reaching their highest level in almost 20 years,
which coincidentally also occurred right before the Great Financial Crisis. So, what did we do? That's right. The United States stepped in to buy their own long-term treasuries, essentially bailing out the market with a barrage of
money printing to bring down interest rates. And believe it or not, this isn't the first time that they've done this to be able to bail out the market. In fact, the United States implemented yield control back in the 1940s to finance the
war with cheap money. Then afterwards, the stock market rallied 187%. Then again, we saw various forms of quantitative easing from 2008 to 2014. And then most recently, we all remember what happened in 2020 before the market
went crazy. Basically, in all of these cases, yield control was implemented to prevent a market meltdown or disastrous situation. Which means the fact that they implemented this today leads us to question, what do they know that the
rest of the market doesn't price in yet? And that of course is what leads us to stock prices. First of all, it's no surprise the stock market loves free money. Like over the last year, we're up about 20% and even year to date, we're
up almost 12%. But now people are beginning to worry. Are we getting into a stock market bubble to the point where pretty soon everything could come that, we need to talk about whether or not this rally is actually sustainable
because there are five concerns that a lot of people are beginning to realize. With the first being number one, the market's extremely expensive. Look, right off the bat, the cape ratio is pretty much sitting at the exact same
level as we saw during the peak of the 2000's.com bubble. The Buffett indicator hit an all-time high above 230%. Signaling that the market is twice as high as it really should be. And a small number of AI stocks are pretty much
those recent gains. In fact, the legendary investor Jeremy Grantham recently labeled this the biggest investment bubble in American history. weak monetization. The reality is hyperscalers are on track for $850
billion worth of spending in 2026. Great, right? Well, it would be if they were making their money back. And so far, MIT found that roughly 95% of AI pilots deliver no measurable impacts to profits. On top of that, other firms
call this the largest capex bubble in history, comparable to railroads or built far ahead of proven cash flows. That's also leading to three, circular financing. In really basic terms, we've
all probably seen this chart here where large tech firms are investing in, buying from, and guaranteeing capacity from each other, boosting each other's revenues. It's kind of like I'm giving $10 to Tom, who gives $10 to John, who
gives $10 back to me, and now we all show $10 of revenue, even though it's all just kind of shuffling around our own money. This is number four, similar to other technology bubbles. Like usually people get ahead of themselves
pricing massive growth and then everything comes crashing down when the expectations don't meet reality which is especially true with number five extreme concentration. Right now it's estimated that 87% of venture capital is flowing
that 87% of venture capital is flowing into AI and even Sam Alman questioned are we in a phase where investors as a whole are excited about AI. My opinion is yes. When bubbles happen, smart people get excited about a kernel of
truth, which is flagged as a potential sign of a bubble. However, others now could be one of the best opportunities in your lifetime to put time where the government is beginning to print and push a lot of money back
actually going on, if this is one of the last chances to buy before prices melt higher, and then what you can do once the market does eventually fall, here is what you came for. Because there's one last piece of data that's about to
determine whether or not this could be the best investing opportunity of a lifetime or a massive mistake. Although, before we go into that, I just want to be clear that building wealth isn't just about maximizing returns. It's also
about diversification and being prepared for wherever the financial system leads us next. Like cryptocurrencies becoming extremely difficult to ignore as tokenization grows and more assets move on to digital networks. Now, that
doesn't mean that it's right for everybody, but having a safe, convenient place to learn and explore can make a huge difference. And that, of course, is help. And what makes them stand out is
chartered bank where you could buy, sell, and hold cryptocurrency all from within one simple app. This means you get all the safeguards of a bank within a federally regulated platform, which is huge. On top of that, they also allow
you to buy and sell cryptocurrency from within the same SoFi app as the rest of your finances. This means you can manage your cryptocurrency right alongside with your SoFi checking, savings, and investments without having to jump
you don't know where to start, their in-app guidance can help you learn as you go, so you could better understand exactly what you're doing before you make any decisions. Of course, crypto is inherently risky, and you got to make
situation before investing. But if you're ready to explore crypto with SoFi, just visit sofi.com/gram or click the link down below in the description to get started. And from now until August 27th, you'll be able to
earn up to $1,000 in your choice of crypto. All the details are down below in the description or at sofi.com/gr. Thanks so much and now let's get back to what's currently happening, if the market could soon sell off according to
the data and whether or not it's a good time to keep buying in, we need to talk about the market bubble. Now, I know I might be going a bit extreme here, but I see a lot of people comparing what's happening today with what occurred back
in the 1920s Great Depression, except coincidentally, it's almost exactly a hundred years later. In fact, you know what's scary? Even when you match up the charts, it looks eerily similar, almost like a confirmation that we've begun the
final stages of a great meltup before everything comes crashing down into the abyss. However, critics of this say that those people have got this entirely wrong. And in actuality, the market's going to be continuing to go even higher
for much longer than expected for five main reasons. With the first being number one, companies are making a lot of money. Like, it's no surprise that Nvidia, Amazon, Alphabet, Microsoft, you name it. They're all really profitable
and their AI buildouts have actually been funded by internal cash rather than debt or equity issuance. Earnings have also beaten expectations, signaling that there's real sustainable growth driving these valuations. And smaller companies
have actually begun to catch up, which should in theory give a more balanced rally, especially when you compare it with number two. There is rapid growth. For example, just look at cloud AI run rates. They've been increasing at
tripledigit percentages. Enthropic reached a 30-fold increase by mid 2026. usage metrics are rising and all of this signals that we could see trillions of dollars worth of earnings and growth over the next few years. On top of that,
we also have number three, valuations are still not as extreme as 2000. Now, sure, the forward PE ratio is similar, but they're still significantly below the ADX multiples that were a lot more common from unprofitable companies 30
gains are from actual earnings rather than just speculation. Leading to number four, low IPO activity. Now, generally at the peak of the bubble, you see a wave of IPOs and acquisitions of
companies that aren't quite profitable. And even though SpaceX was the largest IPO ever in history, one IPO isn't necessarily the boogeyman of the entire economy, especially when a lot of companies are already using and making
money from AI. And finally, that brings us to number five. Rallies don't end reality is there needs to be an unforeseen catalyst that cascades into a wave of selling. And right now, despite rising oil, international conflict, and
a yen carry trade, there's nothing that's gotten in the way so far of mean that we're definitely not in a bubble. But according to Fidelity, there are some red flags to be made aware of that if these start flashing, we should
be concerned. And those red flags are in order. Companies burning through cash Businesses each owning a piece of each other to the point where if one falls, they all fall. Debt levels are growing out of proportion to profits. AI is
hitting a limit in terms of how much energy it uses, literally capping growth and higher borrowing costs which lower profits. In fact, Fidelity thinks that markets will continue going higher because of AI. The way they see it,
industrial firms, healthcare, and utility companies will be able to use it to scale. But even with all of that said, in terms of what the data says is actually most likely going to happen next, here's what's pretty surprising,
and it all has to do with future returns. Personally, I am a huge fan of statistically, this is probably the most accurate. And when you look at the numbers, yes, we are historically high. But Ben Carlson points out that the last
30 years is a lot more relevant to us than the last 150 before the internet took over. And once you look at it like this, our average isn't anywhere near as crazy as some people make it out to be. For this reason, Ben Carlson followed up
his research by saying that earnings are still incredibly strong. And the stock market is surprisingly efficient. It doesn't care what's necessarily happening today. It only believes what could be happening in the future. And as
one researcher said, the stock market's job is to make you say, "This makes no sense." Separate from that, another analyst believes that if companies political tensions stabilize even slightly, there remains a credible path
for equities to move higher. Now, yes, had you been an investor from 1928 to 1949, there would have been almost two decades where the stock market went nowhere but down and sideways. But even then, had you literally invested at the
very peak and then done nothing with dividends reinvested over that time frame, you still would have earned about 100% in profits. Again, assuming that you didn't buy any of the dip, which realistically is not possible because
over time. So, in terms of whether or not we're in a bubble, here's the to see a repeat of what happened to Japan, where prices fell for decades, that means our earnings would have to stall out and the S&P 500 would need to
trade at devaluation of 14,000 just to be equivalent to what the Japanese saw in the 1970s and 80s. Or basically, if earnings start to decline and our market doubles in price, then yes, there is a lot to be concerned about and we could
very much compare ourselves with Japan. But from a bubble standpoint, yes, the stock market's expensive, but that doesn't mean it can't keep going higher. talking about a stock market bubble means that maybe some of it's priced in.
buying in at all-time highs barely moves the needle in terms of your overall returns since the market naturally hits all-time highs as inflation grows and companies expand. So, in terms of what I'm personally doing myself, my own
thoughts about what's going on, and what you could do today to come out ahead, here is what you came for. Overall, I am a huge fan of the phrase, "The market could remain irrational longer than you could remain solvent." This means that
as smart as you might think you are to predict the future, the market has consistently defied the odds. That picking one side or the other is usually a losing proposition. Like you could be completely correct that the market is
overpriced and due for a 30% correction, but then out of nowhere, Scott Bessant says he's printing money to bring down the yields. Boom. Your entire thesis all of a sudden is null and void and you are wrong. Or you could think that the
higher because they're printing a whole bunch of money and then boom, out of nowhere, Trump initiates a 50% tariff on Canada. All of a sudden, you're wrong again. Even though on paper you should have been correct. That's why I really
possible throughout my investments. I got United States, I got international markets, I got about 20 to 25% in treasuries that earn between 3 and a half to maybe 3.8% right now. I own a
little real estate. I have a little bit in a Bitcoin ETF and I maintain my income to the point where if the market drops, I could still keep buying in no such a firm believer that you can't predict what's going to happen next, but
you can have control over how patient you are, how often you buy in, whether or not you panic sell at the bottom, and if you just stay consistent, you should be just fine. Especially if you hit the like button and subscribe if you haven't
thank you so much for watching. And as always, if you want to see bonus videos, including early access to content like this and member exclusive content, feel you get an extra video from me every single week, early access, priority
responses to all the comments. Would love to have you a part of it. And in audits where you could send me your finances and if it's interesting, I'll go through it and I'll tear you to shreds. So, if that sounds interesting,
feel free to join. Thank you so much for watching and until next