Latest / Financial Survival Network / Daddy What's Inflation? David Stryzewski #5922

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Daddy What's Inflation? David Stryzewski #5922 · Financial Survival Network

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  So a lot of the market right now is expecting the interest rates to draw.
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  Why, because this is what the Fed has done, at least over
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  the last forty years. We get into financial trouble, they dropped the interest
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  rate. The challenge is is that Powell recognizes the vulgar mistake that was made.
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  The vulgars thought that the inflation was going down. He went down with
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  it, and then ultimately inflation took off and went through the roof and we
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  had to you know, Jack the tenure treasury up to almost sixteen percent back
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  in September nineteen eighty one. And so there's a big mistake that he's certainly
• 0:32
  trying to ignore. You are listening to Carrie Letz's Financial Survival Network, where
• 0:37
  you get valuable information you just can't find anywhere else to thrive in today's trying
• 0:43
  times. You need the Financial Survival Network now more than ever. Go to
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  Financial Survivalnetwork dot com and get your free newsletter and gift. Financial Survival Network
• 0:56
  now more than ever, And welcome you are watching and listening to the Financial
• 1:03
  Survival Network. I'm your host, Carrie Lutz is eleven twelve, twenty three
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  and hey, lot's happening will this be a crash month? Will October be
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  the nail in the coffin of the US and global stock markets? I'm beginning
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  to think not every day that goes by is another day the crash hasn't occurred.
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  But one thing that's happening is inflation. And it just reminds me of
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  a commercial from McDonald's where this little kid goes, daddy, what's inflation and
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  he says, well, son, inflation is when the price of everything goes
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  up and your daddy's salary stays the same and actually could be going down.
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  So, hey, inflation. We get a CPI print today, and well,
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  David Strzuski is with us now, David, so what do we make
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  of the latest CPI number? Well, as far as the CPI goes,
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  I think there's a few things that we should really be paying attention to right
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  now. Number one is that the CPI is not necessarily reflective of what the
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  average individual is experiencing with their purchasing power. So the example you just gave
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  was great, Hey, daddy, why is everything getting so expensive? Because
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  I'm making the same amount and we've got some challenges here, and so you
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  know what we have right now? Is a challenge with printing and spending that
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  the government's doing. I believe the FED has their thesis completely backwards. They
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  believe that there's so much money chasing too few of items out there. That
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  was certainly true under COVID when we had all that gridlock there in the supply
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  chain. But today, the average family is putting more on the credit card
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  right now just to afford day to day life because we've not necessarily had you
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  know, responsible fiscal policy modeled for us by the government or even the large
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  financial institutions. We just spent put more on the card and on we go.
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  And so as we're looking at our CPI numbers right now, numbers came
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  in hotter than expected, and so I was expecting that that would occur.
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  I thought it would actually be a little bit higher. And the reason why
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  it didn't actually go up as high as I thought it would be was actually
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  because the US dollar is stronger this month than it was last month. And
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  actually, if we have a stronger dollar, that means that our dollars go
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  further, at least on the producer side and with more international type of exposure.
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  But we have you know, a higher read Another thing to note about
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  CPI is that we're not going back to pre twenty twenty prices. This means
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  increases from this moment forward. That spells big problems right now for the average
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  family who's making fifty to seventy five thousand dollars a year. You're trying to
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  figure out, you know, how to make ends meet a long time ago.
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  And now we're experiencing higher oil prices and you know, really as well,
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  over three hundred union shutdowns this year alone, which is ultimately going to
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  you know, be resulting in higher prices. Why because the pricing power of
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  these companies has to raise the price to the consumer if they have to pay
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  more per hour, bigger benefits, less work hours, whatever the situation might
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  be. But there are workers striking all over the place because they do not
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  have enough pricing power. So I think that the CPI is going to continue
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  to go up. We've seen it actually since June. It started ticking back
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  up. July it was up, August was up, Septembers now up.
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  And so that's called a trend. And so when we see one happen,
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  it's not necessarily a trend. Four consecutive that would be a trend that's developed
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  in now. They will also say that, you know, when you you
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  know, get out at energy and food prices, you know that that came
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  down point one percent this last year or sorry, this last month, if
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  the end, and so exactly. And I again, they manipulate these figures
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  and they don't necessarily reflect the average person's personal CPI. What are they actually
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  spending on. No one's buying a house every month as an example. But
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  housing prices are the reason why you know the CPI is rising because you know,
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  it's never been more expensive to own a house. So anyway, this
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  is just new inflation that's that's being added because of the print and spend economics
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  that President Biden has has ultimately been authorizing and Congress has been allowing. And
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  you know, we find ourselves at a really weird place here today, Carrie,
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  which might we might go into, you know, talking about, you
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  know, what the Fed might do next, but also the fact that you
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  know, the House is in disarray, and we've got to November fifteenth to
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  you know, to not be on this you know, punted time frame for
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  the government shut down. We got to pass twelve budgets. We've got to
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  get a new Speaker of the House. And oh, by the way,
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  there's impeachment proceedings against President Biden that are going on that look quite nefigurious.
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  So you know, there's a lot that's that's taking place right now, and
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  I think that we're going to see a lot change here in the next forty
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  five days. Isn't that his son's name nefarious? I think that might be
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  his middle name, Hunter Nefarius Biden to have that, right, Yeah,
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  I think that might be right. All right, So most protected man in
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  the world, really, I mean, this guy's gotten away with so much.
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  I'll go back to Winston Churchill. He said God looks after children drunks
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  in the United States of America. Hey, well, and said, your
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  lips to God's ears. As long as he's still looking after us right now,
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  I need him, so I needed With what's going on, I think
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  he might have even given up on us. But hey, let's not get
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  religious here. There's enough economic things to make your head spin. Numbers coming
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  up, and what you're expecting here, David, Okay, Well, so
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  what I'm expecting next is that you know, the feed is going to be
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  meeting here again. So we've had eleven rate hikes. You know, are
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  they going to go up a quarter point more? I don't think so.
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  You know, the five point five you know, increases that they've done haven't
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  necessarily, you know, brought inflation down yet. And I believe that it's
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  actually the case could be made that we've actually lost the inflation battle. And
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  by the way, we didn't even get PCEE, you know, the Fed's
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  favorite indicator, didn't even get below four yet. You know, we're running
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  out of time for this lag effect to kick in. And it's a big
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  problem because Powell was eighteen months late essentially in acting on this inflation. Hey,
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  it's transitory, et cetera, et cetera. So I think that he's
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  had it wrong the whole time. And his biggest mistake is that he hasn't
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  even talked to Congress about their deficit spending and you know, and said to
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  them, you guys, you can't keep doing this. It's it's counterintuitive to
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  what I'm trying to do. So a lot of the market right now is
• 7:48
  expecting the interest rates to draw why, because this is what the Fed has
• 7:54
  done at least over the last forty years. We get into financial trouble,
• 7:57
  they dropped the interest rate. The challenge is is that Powell recognizes the Vulcar
• 8:01
  mistake that was made. You know, they Vulcars thought that, you know,
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  the inflation was going down. He went down with it, and then
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  ultimately inflation took off and went through the roof and we had to you know,
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  jack the tenure treasury up to almost sixteen percent back in September nineteen eighty
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  one. And so there's a big mistake that he's certainly trying to ignore.
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  And I don't think that he's going to move on further rate increases until,
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  you know, until we really see a trend developed. But you know,
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  we were supposed to be an easing already, Carrie, it was supposed to
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  happen back in July. So I listen, bring the higher for longer revelation.
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  Yeah, where's the Powell pivot when you need it? Yeah, there's
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  no more Powell pivot right now. That Powell pivot would be only as a
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  result of significant job losses, which if you can just give me two seconds
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  on that. I have some stats that I don't think many people are aware
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  of. One of those things is that if you just look at the raw
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  data and I don't have it in front of me right here, but you
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  can look this up if we don't use the seasonally adjust jobs numbers that just
• 9:01
  came out, but we just look at the raw numbers. Do you know
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  that we lost over eight hundred thousand jobs just this last month. That was
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  the highest amount of losses that we had since April twenty twenty. April twenty
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  twenty was the middle of COVID, That's what all these job losses were occurring.
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  And so you know, so here we are with eight hundred thousand it's
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  like eight sixty maybe thousand losses, and then we had you know, one
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  point one million gains, but most of those were part time work. This
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  is people taking second or maybe even third jobs. That's not healthy a healthy
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  economy. It's also a lot easier to take a job than it is to
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  create a job. So if you're letting go of all these employees, I'm
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  telling you right now, we are not in a position as a nation just
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  say, man, this is a healthy place. We're going to see this
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  bull really come back here with strength. People are taking those second and third
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  jobs that they really don't want. I mean, no one wants to work
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  a second or third, but they're going to because they need to have for
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  their life. They don't want to foreclose their house, et cetera. So
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  the system's getting repriced right now with this, this this big credit change,
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  with interest rates raising and yet to David, you know, the real estate
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  market continuing, prices going up in most markets across the country, inventory being
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  at an all time low. Obviously, many of you in there are locked
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  into your three percent mortgages. Like imagine that a mortgage becomes an asset and
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  a millstone around your neck. So interesting. You know, we sit at
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  opposite sides of the table for a bank, you know, our liability,
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  the mortgage is their asset. That's it. Yeah, And so in twenty
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  twenty, twenty twenty one, fifty percent of homeowners in America refinanced at three
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  percent rates. Well, those three percent rates are far below what inflation is
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  running at right now and what you should be getting for longer term thirty year
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  investments of capital. I mean, we just saw the thirty year you know,
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  hit five percent, sixteen year high this last week, and so you
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  know, this is not good for the banks. Additionally, there's not a
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  lot of new money going into the banks right now. So not only do
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  I personally anticipate a recession that's going to begin, you know, probably first
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  maybe second quarter next year, but I'm also expecting that we're going to see
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  this simultaneously happen with a financial crisis in banking. Now, recessions come and
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  go, financial crisises, these are bigger shifts, and it really comes down
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  to the money supply and how this all works. But the banks can't compete
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  with the ten year treasury or with the Treasury in general. Why because the
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  Treasury is paying higher than point zero one to nothing. They ensure more than
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  two hundred and fifty thousand that a bank insurres. They ensure an indefinite amount
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  of money. The banks are just money's getting sucked out, and they've been
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  leveraging up ten to one. And so this is where I'm concerned. You
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  know, you're down in Florida and everything's still going up in the real estate
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  market. I'm in Washington State, where the real estate market was so hot.
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  I mean we literally led the nation, I believe through twenty and nineteen
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  as far as where I specifically live lived. But right right now we're seeing
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  a stalled out, you know, real estate market. I'm looking at houses
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  that are sitting there there in that one hundred days now, and the only
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  people that can really borrow are those who don't need to borrow. You know,
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  you got plenty of cash to maybe even buy it in cash, and
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  the banks are being just real picky eaters right now. I also talked to
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  by Bank of America loan guy here the other day and he said an average
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  rate that he was getting for his clients was better than eight percent, a
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  little bit higher than eight percent. And I said, how many out of
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  ten that you believe could qualify or should qualify are actually getting their mortgages?
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  He said, seven are probably not getting their mortgages. Only three or thirty
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  percent of applicants that he was specifically working with or getting mortgages today. So
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  even if you wanted about, it's really challenging to do. So this is
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  not a great moment in that. But real estate's a lagging indicator. It's
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  a slower mover because you know, it takes time to get a house to
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  market, it takes time people to find, it takes time to the finance,
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  et cetera. So it's a it takes a minute for that one to
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  show up. Yeah, the only point I'd make is the fact is the
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  migration which is fed the demand in the South. And we're not just talking
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  Florida, We're talking Texas, We're talking our Mississippian Georgia, the Carolina Tennessee,
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  all these Tennessee continue. Yeah, nobody really moves to Kentucky unless they
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  like bourbon a lot. But seriously, those people who are selling in the
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  in the failing states and cities don't care about the rate. They're willing to
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  pay eight percent mortgage rates to get out of Dodge. That's what's different than
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  any other market we've ever seen. So assuming they can call they got good
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  credit, you know, they sold their home. They're getting out of Dodge.
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  That's what's feeding the demand here. And honestly, David, I don't
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  see anything that's going to stop that trend unless these failed cities and states do
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  little things like prosecute to shoplifters and prosecute to criminals and have crackdowns. Right
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  I thought that's what our system was supposed to be doing. Anyway, right
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  now, we were this nation of rural law, and that's why we were
• 14:31
  the helping stem. We have it own wusiness with you got it all wrong.
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  The criminals are victims, okay, and we need to make sure that
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  their needs are met. You know, So the criminals need to be coddled
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  and they need to be encouraged to continue their criminal pursuits. And that's exactly
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  the policies. And then they can't figure out why people are leaving, why
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  downtown San Francisco is a ghost city. You know what was encouraging David There
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  was just a law past that, uh that the erstwhile moronic governor of the
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  of California I won't I won't mention his name signed which forces people, uh
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  who are homeless or on drugs to either get treatment or go to jail.
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  Okay. So yeah, I think that we're there's a huge mental health pandemic
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  that's taking place right now, whether we're talking to oh wow, you know,
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  people that are confused about other areas or other things. We've got setting
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  all touring over our border right now, very powerful stuff. And so go
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  to rehab or go to jail. I mean, that's that's a you know,
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  we need to probably make ultimatums like that on some level. But at
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  the same time, how does that actually benefit somebody. I think there might
• 15:48
  be some better approaches here in the twenty first century how to get I take
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  it to some of this. We need to treat these things for what they
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  are, mental health, crisis, addiction, whatever it is, whether it's
• 16:00
  alcohol, drugs or whatever is that's right, is a mental health issue,
• 16:07
  not a criminal issue. Okay, becomes criminal when you steal this support your
• 16:11
  habit. But were they to treat it that way, that would mean the
• 16:15
  price of illicit drugs would go way way down, and it would kill the
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  profit in the market. And I'm convinced the powers that beat don't want that
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  under any circumstances. David, Well, the other thing is that you know
• 16:29
  Newsstem's got some law where you can steal up to one thousand dollars per occurrence.
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  Go do it several times per day. We're not even going to charge
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  you. So we're encouraging people right now with how we write the law I
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  just signed last night, you know the little deal outside the grocery store.
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  Washington State's done some weird stuff as well. We no longer allow our police
• 16:51
  officers to pursue people that they've turned on the lights that pull over after a
• 16:56
  mile they got to let them go. We're literally encouraging people, Well,
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  hey, just don't pull over and you won't get a ticket. Or if
• 17:02
  you've got drugs in the car, you're doing whatever, just don't even don't
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  even do it. Ignore them. Yeah, have a card shop. How
• 17:07
  is that going to help out? Have a car chase? Exactly? That's
• 17:10
  called life imitating cops. Well, we got to let it go at that.
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  If you've got a question, Comma David or myself. The email address
• 17:18
  is Kitty l at Kerrie Lutz dot com. David, tell us your website
• 17:22
  where we find you. Link will be in the show notes of this interview
• 17:25
  on Financial Survival Network dot com. Yeah, my organizations called Sound Planning Group
• 17:30
  MYSPG dot com is is our website. We've got a lot of great resources
• 17:34
  up there. I've got classes and different things that I teach about out of
• 17:37
  the line of portfolio today given where we are right now, some of the
• 17:41
  things we just discussed. But Carrie, it's always a pleasure to be with
• 17:44
  you here and you know, looking forward to doing it again in the future.
• 17:48
  Oh yeah, we'll probably talk to you next month when more numbers come
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  out and more depression sets in Hey, if we can manage to get through
• 17:56
  October without a crash, yeah, I think we're doing pretty good. It
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  would be uh yeah, I mean, I think if we can get through
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  November fifteenth, which is when that you know, we've got to have a
• 18:07
  House speaker, we got to get stuff passed or the government shuts down.
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  I think that's the big one. And you know, Moody's is now looking
• 18:12
  at downgrading US as a nation. So those are my big you know,
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  kind of wave points here coming up in the next thirty days or so.
• 18:18
  All right, Matt, Hey, be well, thanks a lot, all
• 18:21
  right, you too, take care. Thanks for listening to carry Letz's Financial
• 18:25
  Survival Network, your solution to today's trying times. For the latest, go
• 18:30
  to Financial Survivalnetwork dot com. Financial Survival Network now more than ever