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The Hidden Debt Bubble Ready to Burst - Patrick Mueller #6433 · Financial Survival Network

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  Speaker 1: You're listening to Cary Lutz's Financial Survival Network, where you
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  Speaker 1: free newsletter and gift. Financial Survival Network, now more than ever.
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  Speaker 2: And welcome. This is Financial Survival Network. I'm your host,
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  Speaker 2: Cary Lutz. It's been a while since you heard from
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  Speaker 2: me last. I was on a trip overseas, but it's
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  Speaker 2: great to be back. And of course, the news never stopped.
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  Speaker 2: I never stopped writing my Substack column to keep you informed,
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  Speaker 2: give you my latest take on things. And well, we
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  Speaker 2: got some interesting employment data job openings and such. Patrick
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  Speaker 2: Muller is with us now, Bella Advisors. Patrick, it's great
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  Speaker 2: to have you back on the show. So what are
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  Speaker 2: these numbers telling us? Well, first tell us what the
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  Speaker 2: numbers are and then tell us your interpretation. Yeah, well,
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  Speaker 2: it's good.
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  Speaker 3: Jobs were, Wall Street was way off and 400,000 jobs,
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  Speaker 3: they missed it by. So the job market has been
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  Speaker 3: heating up and You don't have a whole lot of
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  Speaker 3: new jobs coming out, but you've got a lot of
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  Speaker 3: repositioning that's happening right now in the job market, especially
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  Speaker 3: with restaurants and hotels. You've got a lot of people quitting.
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  Speaker 3: You've got a lot of people looking for new jobs,
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  Speaker 3: trying to find a better position. And so you've got
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  Speaker 3: a lot of things moving around, but not a lot
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  Speaker 3: of huge growth that's going on right now. And there's
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  Speaker 3: a lot of companies. I think everybody's just on the
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  Speaker 3: sidelines and being very cautious right now, Kerry. as to
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  Speaker 3: where things are heading, we've got the election today that
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  Speaker 3: that's going on. That's going to be, you know, a
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  Speaker 3: big thing moving forward as far as the job markets
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  Speaker 3: and what's going to transpire over the next couple of
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  Speaker 3: years to the end of this administration.
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  Speaker 2: Yeah. So what's your take on things here? I mean,
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  Speaker 2: let's stay away from the predictions. I'm kind of sick
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  Speaker 2: of them, honestly, but where do you see it all going?
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  Speaker 3: Well, I think the, Things that are happening right now,
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  Speaker 3: the GDP has been good. You've got earnings that are
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  Speaker 3: super strong in the S & P right now. So
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  Speaker 3: you got earnings around 30%. So companies are making money
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  Speaker 3: and things are moving in a good direction. So I
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  Speaker 3: think once there's a clear sign of where the markets
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  Speaker 3: are going to be headed longer term, where things are
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  Speaker 3: going to be headed, I think you're going to start
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  Speaker 3: seeing the pocketbooks starting to open up again as far
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  Speaker 3: as hiring goes. But you have also had AIs that
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  Speaker 3: has been taking away a lot of jobs. I don't
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  Speaker 3: think it's as severe yet as it will be in
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  Speaker 3: the future, but there's definitely certain industries that are going
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  Speaker 3: to be taking an impact over the next few years job-wise.
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  Speaker 3: It's pretty crazy the things that you're able to do
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  Speaker 3: on your own now with AI. So I think long-term,
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  Speaker 3: I think the way that the country's heading right now,
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  Speaker 3: I think is really good. I think once the Iran
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  Speaker 3: conflict comes to fruition, whatever's going to happen there, we're
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  Speaker 3: starting to see oil prices starting to come back down,
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  Speaker 3: which is good. So I think longer term when people
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  Speaker 3: have more clarity as to where are we really headed
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  Speaker 3: and should I be cautious, should I be guarding my pocketbook,
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  Speaker 3: or can I freely spend right now? And I think
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  Speaker 3: people are just so uncertain that they're doing nothing.
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  Speaker 2: Yeah, when in doubt, when you're fearful, people tend to
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  Speaker 2: freeze up, right? Absolutely. Absolutely.
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  Speaker 3: 100%. People always are not very fearful, and you're hearing
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  Speaker 3: a lot of that now in the headlines of the
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  Speaker 3: news and people clutching onto their pocketbooks. It might not
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  Speaker 3: be so great as we're going into Christmas season here
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  Speaker 3: as far as spending, but who knows? The debt is
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  Speaker 3: going up like crazy on consumer debt, so that hasn't
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  Speaker 3: been stopping people.
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  Speaker 2: Yeah, so isn't that interesting that nobody's worried about the debt?
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  Speaker 2: And at any level, whether it's consumer, governmental, federal debt,
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  Speaker 2: nobody seems to care about it, right? At all.
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  Speaker 3: And, you know, consumer debt's going up like crazy. You've
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  Speaker 3: got the buy now, pay now, you know, buy now,
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  Speaker 3: pay later. That is going through the roof, you know,
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  Speaker 3: financial burrito and 14 payments. So we're seeing that going
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  Speaker 3: through the roof and it's going to be over $ 200
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  Speaker 3: billion this year, which is nuts. So now when we've
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  Speaker 3: got this debt going up, you've also got the private
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  Speaker 3: debt market, the private credit market that's been going up
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  Speaker 3: like crazy. So when 2008, when the banks started pulling
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  Speaker 3: back on lending, now you got all this private credit
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  Speaker 3: going out there, financing all of it, and you're starting
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  Speaker 3: to see the cracks there. I think that will be
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  Speaker 3: the next bubble to burst is going to be the
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  Speaker 3: private credit market. And that's not going to be nice.
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  Speaker 2: We've had some issues with the private credit market, you know,
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  Speaker 2: various funds being shut down, basically. What's your take on that?
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  Speaker 2: Is that the beginning of a thing? But I think
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  Speaker 2: it's a little different than the mortgage crisis, right?
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  Speaker 3: Much different, much different than the mortgage crisis. But you've
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  Speaker 3: got a lot of these insurance companies, especially from insurance companies.
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  Speaker 3: You've got these big insurers. You've got like the Apollo
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  Speaker 3: Group and different groups like that that are out there
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  Speaker 3: that own a conglomerate of different insurance companies. So you've
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  Speaker 3: got pension money that's going into the private credit. You've
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  Speaker 3: got insurance companies. So people that think that their annuities
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  Speaker 3: are safe and their annuity companies are safe. A lot
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  Speaker 3: of these companies are heavily leveraged and loaning money out
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  Speaker 3: in private credit. And so when you've got all these
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  Speaker 3: defaults start happening, you've got funds that are limiting the liquidity.
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  Speaker 3: When people want their money out, they're having issues getting
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  Speaker 3: the money out. So I think that's all signs of
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  Speaker 3: what is coming up. So if that happens, I mean,
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  Speaker 3: you could see a huge issue in the insurance market.
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  Speaker 2: You think so, huh? Really? Is that keeping you up
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  Speaker 2: at night? It does.
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  Speaker 3: It does keep me up at night. I mean, not
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  Speaker 3: really keeping me up at night, but it's definitely something
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  Speaker 3: to be concerned about and making sure that, you know,
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  Speaker 3: something that we look at, because I only work with
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  Speaker 3: people who are retired, Kerry, or within a handful of
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  Speaker 3: years from retiring. So I look at things a whole
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  Speaker 3: lot different. And So there's a lot of money that's
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  Speaker 3: in that particular sector that's in insurance. So I'd have
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  Speaker 3: to look at these insurance companies and how much are
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  Speaker 3: they allocating towards private credit and how much is really
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  Speaker 3: at risk when people don't think that that money is
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  Speaker 3: at risk. But that's what's happening right now is there's
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  Speaker 3: much more risk that's there under the surface than people realize.
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  Speaker 3: And it's way bigger, right, than the the housing bubble that,
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  Speaker 3: that happened back in 2008.
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  Speaker 2: Yeah. So, so you are concerned about it, huh?
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  Speaker 3: A hundred percent, a hundred percent. I, nobody's, nobody's talking
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  Speaker 3: about it really at this point, but I think if
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  Speaker 3: we see, if we do see a bubble burst here
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  Speaker 3: in the near future, we've got the consumer debt that
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  Speaker 3: that's going up.
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  Speaker 2: You got the private credit debt. That's an issue.
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  Speaker 3: And then also you got the governmental debt. That's just
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  Speaker 3: growing like crazy. You got 25% of the GDP right now.
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  Speaker 3: That's just going to pay interest on our debt.
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  Speaker 2: Right. And, uh, you know, the debt to GDP ratio.
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  Speaker 2: I have this little thing. You should take a look
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  Speaker 2: at it called the dollartimemachine.com. And what that does basically
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  Speaker 2: is show you what a dollar was worth at any
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  Speaker 2: given year in the past in various different commodities you
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  Speaker 2: could have. In fact, let me just pull it up here.
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  Speaker 2: Why not? As long as we got it. And I'll
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  Speaker 2: share it with the audience. You look at it here.
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  Speaker 2: When I was born in 1957, $ 1 is now the
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  Speaker 2: equivalent of $ 11. 82. Wow. All right. A dollar's worth of
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  Speaker 2: housing back then, what the dollar bought, $ 1 worth of housing. Obviously,
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  Speaker 2: you can't buy a house for that. It's $ 40 now. Gold, $ 110. Silver, $ 39.
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  Speaker 2: Dow Jones Industrial, $ 1 is $ 118. But if you compounded
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  Speaker 2: for dividends, reinvesting, $ 800. And then for the S & P,
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  Speaker 2: it's $ 1, 300, interestingly enough. The debt-to-GDP ratio back then, interestingly enough, 1957, 57.4%.
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  Speaker 2: Now it's 123%. You know, basically debt per dollar of
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  Speaker 2: output was 57 cents. Now it's $ 1. 23. And back then,
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  Speaker 2: they were crying about the interest expense. It was 5.4
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  Speaker 2: billion a year. Now it's 1.06 trillion. So you kind
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  Speaker 2: of get the idea of these structural issues that are
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  Speaker 2: going to have to be addressed, but nobody wants to
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  Speaker 2: address them. When was the last time you heard any
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  Speaker 2: credible politician, although politicians aren't very credible anyway. But the
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  Speaker 2: last time you heard any of them say anything about
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  Speaker 2: the debt, they don't really seem to care about it,
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  Speaker 2: do they?
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  Speaker 3: They don't. And they want to get reelected. And that's
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  Speaker 3: the only thing that they care about is just getting reelected.
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  Speaker 3: And everybody just wants to kick the can down the road.
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  Speaker 3: So we got a lot of big things that are coming.
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  Speaker 3: You've got Social Security that's that's has huge issues right now.
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  Speaker 3: You got Medicare that's got huge issues right now. And
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  Speaker 3: nobody wants to mess with the biggest voting population, which
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  Speaker 3: is the boomers. And so when you've got a largest
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  Speaker 3: voting population and people want to get reelected, nobody touches
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  Speaker 3: those things and they just want to pass it on
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  Speaker 3: to the next administration and then have them deal with it.
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  Speaker 3: And so everybody's just kicking the can down the road.
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  Speaker 3: But at some point, I mean, the math doesn't lie.
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  Speaker 3: And at some point, the debt's going to get so
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  Speaker 3: bad that, I mean, nobody's fixing it. But it's crazy.
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  Speaker 3: And I used to say this in speaking events, you know,
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  Speaker 3: raise your hands if you– pay more for your last
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  Speaker 3: car than you did your first home. So just active inflation.
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  Speaker 3: And you've got the last few years, the price of
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  Speaker 3: everything has doubled the last five to six years, which
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  Speaker 3: is that's the scariest thing, I think, for most people
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  Speaker 3: is the real rate of inflation and just how much it's.
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  Speaker 2: Really eating up people's pocketbooks. Yeah, isn't it amazing? Every
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  Speaker 2: now and then you see an item that drives it home. Today,
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  Speaker 2: I bought a pound of pistachio nuts at Publix. Now,
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  Speaker 2: like three weeks ago, four weeks ago, before I went away,
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  Speaker 2: I think they were $ 12. 39 a one-pound bag. It was,
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  Speaker 2: I think, $ 15. 99 for a bag of them. And, you know,
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  Speaker 2: obviously you can't draw inferences to the economy because there's
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  Speaker 2: probably some commodity issue with pistachio nuts. But prices going up,
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  Speaker 2: and you see it with your own eyes... That's why
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  Speaker 2: I created the dollar time machine here, Patrick, because so
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  Speaker 2: many of the younger kids, the millennials, they weren't alive
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  Speaker 2: for the last bout of inflation in the 60s, 70s
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  Speaker 2: and 80s. They don't really understand the cyclicality of it.
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  Speaker 2: And the fact that, you know, these politicians, they're all
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  Speaker 2: saying affordability, affordability. Well, let me give you a little hint.
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  Speaker 2: As long as we're electing you guys to office. There
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  Speaker 2: ain't going to be any affordability. And the fact is,
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  Speaker 2: the way things are going, things are more affordable today
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  Speaker 2: than they're ever going to be in the future. 100 percent.
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  Speaker 3: And there's no signs of that slowing down, especially with
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  Speaker 3: the rising gas prices that we've had, the oil prices.
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  Speaker 2: Has gone from.
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  Speaker 3: You know, $ 60 a barrel up to $ 100 a barrel.
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  Speaker 3: So just that there, I mean, everything that we consume,
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  Speaker 3: whether it's pistachio nuts or anything else at the grocery
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  Speaker 3: store or anything else we consume has got to be transported.
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  Speaker 3: So it's, you know, you got shipping costs that have
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  Speaker 3: gone way up. And my wife is a distributor for Westernware.
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  Speaker 3: And so I hear it all the time, just how
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  Speaker 3: much all the shipping costs and everything are just skyrocketing.
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  Speaker 3: And so that's passing it on to the consumer. And
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  Speaker 3: So until that subsides and that starts coming back down,
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  Speaker 3: I don't think we're going to start seeing any easing
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  Speaker 3: on that. But you've got retailers that are never big
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  Speaker 3: on when, even when prices do come down on things,
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  Speaker 3: they're not typically reducing their prices that fast. So it's
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  Speaker 3: hitting people.
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  Speaker 2: Yeah, you're not going to repeat. The only reason they
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  Speaker 2: reduce their prices isn't because their costs come down. It's
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  Speaker 2: because a decision gets made that they want to increase
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  Speaker 2: market share or the competition is cutting their prices. And
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  Speaker 2: that's a process that takes place over time. It doesn't
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  Speaker 2: just happen. And certainly, you know, the government is scamming
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  Speaker 2: us when they're saying that, you know, that things are
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  Speaker 2: going to become more affordable. You know, like who does
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  Speaker 2: anyone believe it? A hundred percent.
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  Speaker 3: It's just like the tariffs, right? I mean, the tariffs,
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  Speaker 3: if you're having to pay more, right, for goods and
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  Speaker 3: services and you know, overseas or whether we're importing it
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  Speaker 3: into the country. I mean, it's going to increase the
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  Speaker 3: prices of everything. So that for certain is a tax,
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  Speaker 3: you know, the, at the gas pumps, the oil price
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  Speaker 3: is almost doubling, you know, that's a tax. And so
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  Speaker 3: that we're all going to pay. So it's, but like
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  Speaker 3: you said, it's just a, it is a big scam.
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  Speaker 2: It is a big scam.
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  Speaker 3: And so people, people just need to make sure that
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  Speaker 3: they're making the right moves and positioning your money in
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  Speaker 3: the right way. So when we do see, you know,
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  Speaker 3: future scenarios on the market, like especially when it comes
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  Speaker 3: to AI, everything has been so tech driven, you got
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  Speaker 3: trillions of dollars going, you know, going into that particular
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  Speaker 3: market sector. And when these companies are meeting expectations, like
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  Speaker 3: you've been seeing IBM, Google, OpenAI, you start seeing the forecasting.
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  Speaker 3: I mean, the run is going to get pulled out
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  Speaker 3: at some point when it comes to a lot of
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  Speaker 3: the companies that are big on that sector. So people
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  Speaker 3: just need to be cautious to not have so much
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  Speaker 3: money tied to those different things. But You know, we've
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  Speaker 3: kind of had to been riding that wave as much
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  Speaker 3: as we possibly can, because the top 10 companies in
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  Speaker 3: the stock market is driving 50 percent of the growth
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  Speaker 3: of the of the stock market, which is scary.
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  Speaker 2: Yeah. Yeah. Very scary. And that's why you got to
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  Speaker 2: own assets. All right. Well, hey, we really appreciate you
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  Speaker 2: coming on with us again, Patrick. Parting wisdom for the
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  Speaker 2: crowd out there and tell us where we find you,
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  Speaker 2: how we connect with you. Yeah, absolutely.
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  Speaker 3: Stay optimistic, everybody, for sure. Everything's headed in a good
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  Speaker 3: direction as far as our economy goes. So hopefully that
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  Speaker 3: stays the same. But you can reach us at BellaAdvisors.com
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  Speaker 3: if you need any help with retirement planning.
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  Speaker 2: All right. And the links in the show notes to
• 15:09
  Speaker 2: this interview on FinancialSurvivalNetwork.com. Just take a look. Questions, comments,
• 15:16
  Speaker 2: KL at CarrieLutz.com. Patrick, we'll look forward to having you
• 15:19
  Speaker 2: back on again in a couple months and seeing how
• 15:21
  Speaker 2: this show winds up here. All right. Sounds great. Great
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  Speaker 2: to be with you, Cary.
• 15:26
  Speaker 1: Thanks for listening to Cary Lutz's Financial Survival Network, your
• 15:30
  Speaker 1: solution to today's trying times. For the latest, go to FinancialSurvivalNetwork.com.
• 15:37
  Speaker 1: Financial Survival Network, now more than ever.