Is Private Credit About To Crash The Global Economy?

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Get an exclusive 15% discount on Saily data plans! Use code howmoneyworks at checkout. Download the Saily app or go to https://saily.com/howmoneyworks ----- How Private Equity Works Video: https://youtu.be/qbSL8VD4wNA Sign up for our FREE newsletter! - https://www.compoundeddaily.com/ Books we recommend - https://www.howmoneyworkslibrary.com/ Listen on Spotify - https://open.spotify.com/show/5gi1JobDJC3QqaF4aKfenR?si=f3IsgWIlSKObF8BT1Fitig ----- My Other Channel: @HowHistoryWorks @HowMoneyWorksUncut Edited By: Svibe Multimedia Studio Music Courtesy of: Epidemic Sound Select Footage Courtesy of: Getty Images 📩 Business Inquiries ➡️ [email protected] Sign up for our newsletter https://compoundeddaily.com 👈 All materials in these videos are for educational purposes only and fall within the guidelines of fair use. No copyright infringement intended. This video does not provide investment or financial advice of any kind. #privatecredit #money #finance ----- Amidst all of the chaos of last week, the world's largest asset manager (blackrock) quietly announced something that should be making a lot of people extremely worried. They would be limiting withdrawals on one of their flagship private credit funds that currently has (or at least had) 26 billion dollars worth of assets under management. Now I know that there is a lot going on in the world right now and compared to some of the headlines we have seen in the past week this might sound pretty minor, but a hiccup like this in these markets could genuinely be the sign, symptom and cause of something much scarier. On one hand, people pulling money out of these kinds of funds is a sign that things are not going well amongst even the most high end investors. On the other hand, the fact that they can’t get their money out is a symptom of people predicting things are about to get much worse… And on the third hand, a shocking amount of everyday businesses have been propped up by the easy lending done by firms like this… If their money stops flowing, it could easily cause much larger knock on effects throughout the real economy in extremely direct ways. But before we get too hyperbolic, it’s important to understand exactly what these funds were supposed to do and more importantly what they have actually been doing, because depending on your interpretation of this business model, this headline is either little more than dumb investors not understanding what they invested in… or it’s the modern equivalent of a bank run. The total debt outstanding in this highly risky class of finance is now over 2 trillion dollars (and that’s only what we actually know of), either way that’s almost twice as much as the 1.3 trillion dollars in subprime mortgage lending done in 2008, and with an alarming number of parallels it’s clear to see why some people are getting nervous… Now that alone is… not great… but it gets worse… If one Blackrock fund really was the only fund having problems it could probably just be written off as (a concerning but ultimately) isolated incident, unfortunately though, this week's announcement was just the latest (and so far) largest example of major issues in these multi trillion dollar private markets…