... This tells me one thing, you have never heard a really good pair of speakers or headphones, they can take even a Lossy MP3 and bring them to another level.
I don't really share this sentiment ... my Fostex studio monitors @ 192khz makes lossy MP3 sound like
<Mod Edit>, because the fidelity is so high, you can hear all the "loss". It literally sounds grainy and gritty in the high end compared to an uncompressed source. And this is the idea behind a high end dead flat response studio monitor - so that when you are making music, you make it without flaws that a low quality speaker would tend to hide. the higher the quality of a speaker, the flatter the response will be.
His sentiment isn't entirely incorrect. You shouldn't be pairing high end gear with a crappy compressed source, like YouTube for example or even MP3 in most cases, as the source is still crappy - it can't really be fixed - at least not in any natural way.
If you listen to a lossless music format like FLAC from the original recordings, or maybe straight from vinyl with a beautiful pre-amp, only then is the source quality going to be high enough to make higher end gear actually worth the extra money.
I'll give a bit more detail as to partly why without a lossless source, your not properly using your high end gear ... A high end speaker system will output flat to at least 21,000 to 30,000hz (+/- 6db) - sometimes even more. While you can't really hear anything above 16,000-18,000hz, those higher frequencies
do get recorded and will interact / resonate with the other audible frequencies and augment
them, just as one would experieince in a live "real life" scenario, to create a much more natural "live" sound.
This is part of the reason you would spend extra for a high end speaker - to reap the benefits of this ability from a lossless source; and this is why some very high end speakers reach into these frequencies, when our ears can't even hear them at all.
Now let's look at the source ... if the music is MP3 or compressed in any manner, guess which frequencies get affected and stripped? The high frequencies because they take waaay more "data" to translate into sound. So the frequencies above about 17,000hz are completely stripped, even with light compression and everything else in the high frequency space gets compression applied. Low frequencies take very little data, so they tend to stay fairly accurate with compression and don't really suffer much "loss".
Only if your source has retained these very high frequencies that are contained in th eoriginal recording (like FLAC for example), can you reap this benefit that a high end system can provide.
I'm not saying some expensive high end monitors don't sound better than $20 speakers with an MP3 source, but I think you missed what he was actually trying to say.