Latest / Financial Survival Network / Can the Government's CPI Numbers be Trusted? - David Stryzewski #5972

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Can the Government's CPI Numbers be Trusted? - David Stryzewski #5972 · Financial Survival Network

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  The part that surprised actually was core inflation. And you not hear a lot
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  of people talking about this. This is the feeder reserve's most important indicator as
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  far as they're concerned, to what they continue to share with us. And
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  so this excludes food and energy prices and then their allocation of percentages of at
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  each cost and that actually went up here this month. You are listening to
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  Carrie Lutz's Financial Survival Network, where you get valuable information. You just can't
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  Network now more than ever. Go to Financial Survivalnetwork dot com and get your
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  free newsletter and gift. Financial Survival Network now more than ever. And welcome
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  you are listening to the Financial Survival Network. Om Here, hos Kerrie Letz.
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  It's twelve twelve twenty three. David Struzzuski is with us, and we're
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  talking about the CPI numbers. Can you trust them? Can you trust any
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  government numbers? Well maybe they're not quite as bad as China's. But when
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  that's the best you can say about them, you got to think, David,
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  and welcome back. So CPI, what's the deal? Hey, great
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  to be with you here, Carrie. Yeah, you know. So first,
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  the consumer Price Index represents a basket of services that the government has ultimately
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  determined to be a gauge of expenses or costs that you know, people are
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  spending money on. And and so we'll talk about the fallacy of that in
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  just a minute. But we just saw reading that you know, saw that
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  you know, CPI came down from three point two to three point one this
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  month. Okay, so that's some movement, not huge movement, of course,
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  we're expecting you know, fluctuations. But the big reason for that lower
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  reading was that energy costs went down about six percent. So you know,
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  I think that we're all recognizing that here at the gas pump that whatever reason,
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  gas prices are you know, below seventy of barrel right now. The
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  part that surprised actually was core inflation. And you not hear a lot of
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  people talking about this. This is the set of Reserve's most important indicator as
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  far as they're concerned to what they continue to share with us. And so
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  this excludes food and energy prices, and then their allocation of percentages of at
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  each cost and that actually went up here this month. So that's now at
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  four percent year every year, which is a long way from two. But
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  you know, big expenses within that were as a result of transportation being up
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  over ten percent over the year and housing being up six and a half percent
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  year over year, you know, which, of course, housing right now
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  is basically at its most unaffordable time in US history. And so let me
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  just talk about CBI for two seconds, and just for your listeners, you
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  know, there's a couple of problems with how they measure CPI. So number
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  one, this is not a measurement into any specific consumer spending, let alone
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  what the average American spends. And you know that's that's kind of an interesting
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  thing because you know, the market's been rallying on this new news that you
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  know, hey, we got this lower number coming out, even though it's
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  not applicable to any individual. But the what CPI fails to recognize today in
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  a big way is the cumulative inflation that we've seen since January of twenty twenty.
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  And so if we actually look at the cumula inflation, we'll recognize twenty
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  three point two percent as of this morning on trueflation dot com, which I
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  personally ascribed to as a good indicator and a way to be tracking and watching
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  things. But twenty three percent. I mean, this is the reason why
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  we saw overs three hundred strikes this year from all these companies and unions.
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  It's because the wages that people are receiving today are not keeping up with the
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  prices of everything else. And now that we're negotiating these new deals with auto
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  workers, with eachures, with you know, the Hollywood et cetera, or
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  our price is going to go down or up if we have to play pay
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  higher wages, higher benefits. No, they're of course going to equate to
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  higher prices, which ultimately leads to higher inflation. So I think that the
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  inflation story right now is about as cool as it's going to get. And
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  from here it's going to continue to rise. And you know, even how
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  we measure this thing, it as I've just been noting most economists that that
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  actually study this stuff and are you know, maybe a little bit more critical
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  of the data. They refer to this as the cp lie and and you
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  know, it doesn't include taxes, it doesn't include any basket of things that
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  anyone's specifically buying here, So you know, don't don't put too much weight
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  into these numbers, but I would just recognize that they have not gone down,
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  and a big part of that is what they would refer to as the
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  lag effect. You know, it takes time for these rates to rise and
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  stuff to hit. I think things are about to hit right now, and
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  it doesn't really spell a grade twenty twenty four here as we're heading into that
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  new year. Okay, so so it's it's looking the pretty bleak. Huh.
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  Well, yeah, so if we look at, you know, some
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  of the indicators that would give us understanding for where we're headed next, we
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  need we should understand that our gross domestic product, what's the US produce?
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  What do we do? Seventy percent of all GDP in the United States has
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  been the consumer, as I know I'm talking about. But in twenty twenty
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  four, it's going to be much this consumer is going to be much weaker.
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  Why well, we've got over one point two trillion in credit card debt
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  at act record high aprs. I mean, let's just be honest here,
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  who's doing that and putting you know, payments under credit card at a twenty
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  three, twenty four, twenty five percent rate. No one would ever do
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  that and think this is a really good idea. They're worced to do it
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  because they don't not a budget. We've got student loan payment that just began
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  here in October, which is a big deal for those that you know hadn't
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  had those payments, and then you know, they took on more debt,
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  got a new car, got a different house, whatever, and then ultimately,
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  you know, housing, as I mentioned earlier, never been more unaffordable
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  as it is right now. So I personally think that housing is going to
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  go down. But if you look at the price to rent versus a mortgage,
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  and you don't even account for the down payment that it takes to buy
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  that mortgage, you've got a better deal right now renting than purchasing that mortgage.
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  It's nobody's market right now here in real estate in my opinion, other
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  than you know, places like Florida, like where you're at. You know,
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  there's still some opportunities that you know showing up. But if you look
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  at the consumer today, more and more people, if you look at these
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  jobs numbers, they're losing full time jobs and taking on second and third part
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  time jobs. And so this is not a good sign for the American consumer,
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  for the middle class. And then ultimately, you know, my opinion
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  of twenty twenty three is that, you know, this is the most anticipated
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  recession in our history, and we were expecting it here in twenty twenty three.
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  But you know, we were also expecting that, you know, they
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  were going to be cutting rates by July. That didn't happen. Now it's
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  supposed to be you know, sometime mid next year. But but the reason
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  that that things actually really didn't crash yet was because that they put one plenty
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  two trillion dollars in the consumer's hands. Who has the biggest prependent proponent uh
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  prependency to spend uh That would be business owners, so PPP and employee retention
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  and credit loans came in. We bought real estate, We bought lots of
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  stuff hopefully invested back into your companies. But this has delayed that lag effect.
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  And so you know, if we if we look at the employee retention
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  credit, which is the last you know, kind of giveaway here, that
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  all ended September of this year, So July was the biggest month of payments
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  and then it ended in September, and so we had this amazing you know
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  GDP number for Q three. Well, you know, I was taking a
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  walk here the other day. You know, it's a little bit cold here
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  in the Green Seattle area in comparison to what it was like in Q three
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  July. I think that we're in a different climate right now, and in
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  my opinion, Q four is likely going to be this time frame that we
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  recognize some of the bad data, some of the data that that that would
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  that would show that negative things are occurring. We're getting weaker, you know,
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  we're always looking in the rear room mirror. I think Q four is
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  when it's really going to be come out here. They're probably going to name
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  that the beginning of the recession, you think, so, I know,
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  it's a strong statement. Yeah, acession is going to be you know,
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  that's the million dollar question. You know. Recessions come and go. They're
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  they're normal, they're good for the market actually, to have you know,
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  things flush out than healthy things grow back in, just like pruning is a
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  good thing, you know. So so a global recession though, that is
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  more of a rare event, and we're seeing globally a shutdown right now.
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  I mean, Germany is in recession. Depends on the verge of recession Canada
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  is on the verge of a housing recession. China is in massive trouble right
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  now. Of course, they hardly report their their their information correctly, and
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  so you know, how bad is this recession going to be? You know,
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  I think that when we look at this thing objectively, we have to
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  recognize that in March this year, just nine months ago, we had a
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  banking crisis began. That banking crisis resulted in the most significant bank bailout in
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  the United States history. And so this is just nine months ago, and
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  and and you know, we if we understand, you know, kind of
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  what that looks like where that leads I personally am seeing that, you know,
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  March this next year is likely going to have a lot more of the
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  bank challenges, especially given the fact that these banks just don't have capital to
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  lend any longer. Because people move to treasury markets. You know, they
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  can get FDA c to one percent of their money, not just two hundred
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  and fifty thousand of it. But you know, here's the thing that that
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  most most people have not factored in them as well, and that is that
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  most CFOs their job is to cure low cost lines of credit. And so
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  if they could refin their debt in twenty eighteen, nineteen twenty twenty one,
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  then they could get in at you know, three four percent on loans.
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  That was a really awesome thing and it caused our economy to really grow.
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  But what happens is that that debt has to be remetabolized every five years.
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  So it's a thirty year amateurization schedule, but it usually resets every five Well,
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  what that means right now is that, you know, coming somewhere around
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  I don't know, twenty twenty four, twenty twenty five, twenty twenty six,
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  we have record levels of debt, trillions of dollars that are coming due,
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  and these these these dollars coming due are going to be having to either
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  be paid off in full or you know, recast at higher rates, and
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  ultimately that's going to triple these companies because their their margin, what they had
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  to operate on previously, was based upon a low cost debt, is plentiful,
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  high liquidity, you know, timeframes, and so I personally see a
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  financial crisis occurring at the same time as a recession. Now, if those
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  things coincide, and if this takes place over the time frame that we're expecting
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  here, you know, another lost decade is definitely not outside of the purview,
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  especially when we're about to hit thirty four trillion in debt here, you
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  know, by December twenty second this year, according to the numbers I was
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  looking at. So you know, that combined that with you know, China,
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  you know, and it's saddle rattling that's going on right now. You
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  got the United States dollar and the bricks paid, which is this new system
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  that comes out January one. I mean this is they haven't announced that bricks
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  pay's going out January. We're twenty one, but I can say this much.
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  The Saudis joined the bricks January of twenty one or twenty four. And
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  when the Saudis join, I personally believe that that is the end of the
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  petro dollar. Why if you Google or Wikipedia with bricks pay, it literally
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  talks about it aiment system that Brazil, Russia, India, China, South
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  Africa and the you know, the plus nations that are joining right now are
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  looking at creating a settling currency. This isn't for them to go buy milk
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  and eggs. This is to settle trade amongst nations. They're buying thousands of
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  tons of gold right now, trying to back up their currency and their financial
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  standings. They're not buying US dollars anymore. I believe that the US has
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  a real rival at a time when we have massive debt our bankings in crisis,
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  and ultimately our adversaries are becoming weaker and weaker, which tend to put
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  people and places where they could act erratically like WWS three type of activity,
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  which I pray and we all need to pray that this stuff doesn't really and
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  actually unfold, especially given the fact that we have an open border and millions
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  and millions of undocumented people now in our nation that never got fully vetted.
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  So I could lay out a really really nasty and bad scenario here, which
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  unfortunately seems more probable than not on every level. That's going to result in
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  bankruptcies and you know, a lot of pain and carnage here for stocks as
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  well as the bond market. Bond market's going to get hit really, really
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  really hard by this. Actually all right, well, you're a breath of
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  fresh air today. What are you supposed to do about all this? Since
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  most yeah, I was out of our control here, right, Well,
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  so that is the question my belief is that traditional buy and hold, park
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  and prey hope everything will be okay strategies. While they work when times are
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  normal and good, they do not work very well when times of disruption are
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  occurring. And so we need to allocate in a more specific way, and
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  we need to be looking at a higher amount of commodities today. You know,
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  gold and silver are going to for sure be the winners throughout this.
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  I think treasury bills look all right, but you know you're buying fewture promises
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  for US dollars, so I wouldn't get too long on that. But you
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  know, we look at oil producers. I think oil producers are actually going
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  to do really well. They paid really good dividends. They definitely won't stop
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  those if they can, if they can help it. We got some international
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  plays today that can be really valuable. Indias and examples of probably a multi
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  decade story. You know, they were just our backed office before. Now
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  they're becoming more of a manufacturer and they've got you know, these very educated
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  people that are graduating from from college. I think that as people are looking
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  at allocation strategies, they need to be very very very wise as they look
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  at their bond allocations or fixed allocations. And the reason for that is,
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  if you know, bonds can lose money in five ways, five different ways,
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  and so we've talked about this before, but these five specific ways are
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  actually all five raising warning signs right now, which causes you know, considerable
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  concern for me. So we need alternatives to bonds very specifically, because you
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  know, the ultimate uh you know form of loss here is default and you
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  get nothing back. So so that's the part that we really need to be
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  cautious about. So I think if people are looking at you know, more
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  fixed assets, you know, treasuries can can can work out short term very
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  specifically, or I actually believe that there's never been a better time to own
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  what's called a growth oriented fixed index annuity gives you essentially the ability to make
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  reasonable rates of return on the upside, but more importantly none of the downside
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  when the market corrects. And so we've been allocating people to these types of
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  products, which are actually insurance contracts, as alternatives to bonds, and they've
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  been working out exceptionally well, you know, when when you can get you
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  know, let's just say sixty percent of whenever the market does. But none
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  of the downside. You know that that surpasses what most people believe their fixed
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  portfolio is going to do, especially because there could be actual losses like we're
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  about to see here for the third year in a row as the year closes
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  out on bonds. So yes, sir, I do all right. Well,
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  hey, we always appreciate your take on things. You know, it's
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  difficult times for sure, and you need to do what is necessary. Do
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  you think any of these insurance companies writing these annuities are going to fail?
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  You know, it's a great question. How the insurance companies have to work
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  though, is that they must ensure and have dollars in reserve one for one
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  with the investments that are being made. And so in our nation's history,
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  we have not seen even one of these contracts somebody not get paid back.
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  There's only one stalure that's ever occurred, and it was because they were really
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  running their books. Funny. You know, insurance companies certainly could have challenges
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  because hey, they bought into the same long data treasuries that the banks did
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  in the pension companies, et cetera. But you know, the good news
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  is that the reserve requirements make them the most conservative places to be put in
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  money. And you know, here in a great state of Washington, which
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  I personally live in, we even have a five hundred thousand per account per
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  policy holder guarantee. That's kind of like FDIC, but it's you know,
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  the state of Washington actually backing it up. And hey, god forbid,
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  these these companies actually went out of business. Most people are not aware that
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  as a taxpayer of that state, you actually would be responsible to make those
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  people hold up to the guarantee issue levels that the state has the insurance commissioner
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  has created, and so it might have some more safety than people specifically are
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  looking at. But I also love the idea that we can dollar cost average
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  out of these accounts, you know, typically about ten percent of a year
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  back into the stock market when everything goes on sale. And so our strategy
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  is we're going to actually make a lot of money as the world changes.
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  We just need to be able to make money and sideways markets. So we
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  do that through what we call writing ball and tame and bears. All right,
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  So they sometimes the best way to tame a bear is just to avoid
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  it all together, right, yes, sir, that's exactly right, All
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  right, all right, David, where do we find you in these days?
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  Yeah? So my website is my SPG for Sound Planning Group dot com.
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  And I've actually got a new book that'll be coming out here and the
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  first part of the year called Writing Balls and Taming Bears. Got a new
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  class that will be coming out called a Federal Reserve Bubble here in twenty twenty
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  four, and so that's what I'm naming this next crisis. And I'm going
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  to lay all of that out here in a book and in that class.
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  And so people can find more information on my SPG dot com or they can
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  put their name in and say hey, love to connect and answer some questions.
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  But your viewers are incredibly intelligent, and you know, I think that
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  they would be wise to be taking heed to some of the cautions that I've
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  shared here today, because I hope I'm wrong, but the reality is,
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  if I write, those are game changer moments that ultimately affect somebody's outcome and
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  their ability to retire and stay retired. All right, Hey, we appreciate
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  if you've got a question for David or myself, you can always email me
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  kl Atcarrie LUTs dot com. The link to David's site is on our site
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  in the show notes to this interview Financial Survival Network dot com. Make sure
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  you sign up for your free newsletter. David always a pleasure, appreciate your
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  stopping by and we'll talk to you next month. Happy healthy holidays for lack
• 19:34
  of a more politically correct term, and if you're ready, dear to you
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  and yours. He appreciate your cary, Blessings to you and your family,
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  and yeah, look forward to connecting with you. So take care. Thanks
• 19:45
  for listening to Carrie Letz's Financial Survival Network, your solution to today's trying times.
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  For the latest, go to Financial Survivalnetwork dot com. Financial Survival Network
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  now more than