Latest / Financial Survival Network / Why the Debt Ceiling Mess is Important to You -- Carl Gould #5811

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Why the Debt Ceiling Mess is Important to You -- Carl Gould #5811 · Financial Survival Network

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  It's more posturing because there is absolutely no way on in any scenario, that
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  new United States allows itself to default on its obligations. Because the dollar is
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  the worldwide currency, it's the currency that's used to trade oil, it is
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  the standard throughout the world. The United States will never put that positioning at
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  risk. You're listening to Carrie Letz's Financial Survival Network, where you get valuable
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  information you just can't find anywhere else to thrive in today's trying times. You
• 0:32
  need the Financial Survival Network now more than ever. Go to Financial Survival Network
• 0:39
  dot com and get your free newsletter and gift. Financial Survival Network now more
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  than ever. Welcome you are listening to watching the Financial Survival Network. I'm
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  your host, Carrie Letz. Well, we've got the I guess it's annual
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  or almost annual debts kabuki dance taking place in DC now. If you're not
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  aware to date, they've they've raised. Congress since nineteen sixty has raised the
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  debt ceiling seventy eight separate times to permanently raise or temporarily extend or revise the
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  definition of debt limit. That's forty nine times under Republican presidents and twenty nine
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  times under democratic presidents. So that should tell you that this thing really kind
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  of should transcend politics. They're both both parties are fiscally irresponsible and have showed
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  absolutely no desire to reign in spending and to reprioritize government and preferably to stop
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  the government the country in the world from going bankrupt. But maybe this time
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  is different. Carl Gould is with us now by him at Karl Gould dot
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  com. Carl, great to have you back on. So why is this
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  time different than all the others? Hey carry great to be here. It's
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  not different than all the others. It's the same as all the others.
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  And what the death ceiling becomes as a negotiating point that every politician knows is
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  coming at some point, because what happens is, you know, the country
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  expands, they make more money. We have a greater GDP gross domestic product,
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  which is like our salaries, right, So the percentage of what you
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  are able to borrow or what is responsible to borrow also can increase, and
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  so by definition, the debt ceiling will increase as the company grows. Each
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  party knows that they all know that it's coming, but they use it as
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  a bit of a bargaining chip so they can get other items resolved as part
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  of the debt ceiling. All right, So so this is like death taxes
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  and the debt ceiling, right, pretty much, it's inevitable. There's now
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  and now the debt ceiling changing and rising doesn't have to be a bad thing.
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  It does mean we are irresponsibly raising the debt ceiling. It just means
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  that at some point, if you look at a percentage of revenue, the
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  debt ceiling will follow. We have to, of course, keep it under
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  a certain percentage, just like every every person out there is not going to
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  apply for a or get accepted for a mortgage if it's over a certain percentage
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  out there salary. But as your salary goes up, your ability to borrow
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  goes up as well. This is the same thing. But Carl, doesn't
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  it reach a point where it's unsustainable? And maybe we're at that point already
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  where we can't grow ourselves out of it. It used to be the debt
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  the deficit would be a couple of billion, Then it went to tens of
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  billions, then it went to hundreds of billions. Now we're in the trillion
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  dollar ms. What don't you think that's important? Doesn't it make a difference
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  at some point? There there is no question, and all of the entitled
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  programs during COVID increased the debt to historic eyes, and so it does need
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  to be reined back in. There is no question about it. And that's
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  exactly what's happening now. The Republican side wants certain spending measures reduced, the
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  Democratic side wants certain entitling programs to stay, and that all of the negotiation
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  that we're hearing about now has everything to do with everything but the debt ceiling.
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  They're not going to approve the death ceiling unless they get their their programs
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  push forward, right, So it's a political bargaining chip effectively, is what
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  you're telling exactly. And whoever has um you know, whoever has the majority
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  in Congress currently the Republicans can exert more influence. And so they're playing a
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  bit of game of chicken right now. But in the end they're all gonna
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  come to the table or they are they really playing a game of chicken?
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  Or is this just all fostering and just playing to the public. It's more
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  posturing because there is absolutely no way on in any scenario that the United States
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  allows itself to default on its obligations. Because the dollar is the worldwide currency,
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  if it's the currency that's used to trade oil, it is the standard
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  throughout the world. The United States will never put that positioning at risk.
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  All right, But there we come into the end of the dollar being the
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  sole reserve currency, now, aren't we really? I don't know that we're
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  coming to the end. Remember every time you borrow money and you signed a
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  thirty year mortgage, you have locked in that dollar for the next thirty years.
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  Anytime somebody places a foreign investment in our country and that invest if it's
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  a bond and it's a ten year bond, well that dollars locked in for
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  ten more years. That mortgage is locked in for twenty more years or thirty
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  more years. So the where that disruption is going to come from is digital
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  currencies, cryptoc and sees and other digital currencies. That is what is going
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  to disrupt the monetary system overall. But the dollar will remain as the world's
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  currency for the immediate time. Be okay, Well, hopefully you're correct on
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  that score. I don't know. At some point the world is subsidizing US
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  now subsidizing the dollar. Don't you think that you're going to get tired of
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  this at some point? Well as other opportunities and other options materialize, that
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  is what is going to put the dollar at risk. And so I think
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  the big change you're going to see is not necessarily around paper currency. It's
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  going to be around digital currency because right now, cash is the only way
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  that you can exchange value with another person without an intermediary. In other words,
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  Kerry, I can give you a dollar, you can give me something
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  back that's worth a dollar. We didn't need anyone else's permission for that.
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  I gave you a dollar, you gave me back value in a dollar.
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  That's the only Please, there's that one to one exchange. But right now
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  it's not the physical currency. Well, cryptocurrency and other digital currencies are trying
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  to become is a one to one, peer to peer exchange of value that
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  does not have an intermediary. That's where the change is going to come in
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  because now governments can't regulate the currency or the transaction. Okay, so yeah,
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  so this cryptocurrency is another step towards enslavement, then, isn't it.
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  Then now there will be. They're just trying to figure out how to regulate
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  it and how to enforce it. Because right now, if you have a
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  currency, it's because you have an army and you have a government, right
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  And if you have a strong enough government and a strong enough army, then
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  your currency will be stable and will be welcome in the marketplace. The United
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  States has both a great army, a great military, and a very stable
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  government, and so that's that's one of the reasons why the US currency is
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  the world's currency, and so h with it. When it comes to a
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  digital currency, it is likely going to be backed by a military and backed
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  by a government, all right. So when we're looking at the stability though,
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  how stable really is the United States at this point? Well, relatively,
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  the United States is one of the most if not the most stable currency
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  in one of the most stable economies. The overall monetary system is what has
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  some instability in it. Certainly, China is making some advances, but their
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  population, def their population is going to start to contract over the next couple
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  decades. So that's actually going to put them in a really difficult position because
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  they will not be able to sustain their growth. So they are going their
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  policies of only one child or family is going to come back to haunt them
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  as they look to grow, because it is rejected that in the next two
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  decades they will drop below one billion people and so they will have twenty to
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  thirty percent less population that they have now. And so for a growing company,
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  sorry for a growing country that wants to be a player in the world
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  market, that's going to be borderline devastating for them. Yeah. Well,
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  in the meantime, though, we got this banking disaster that's still unfolding that
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  they haven't been able to get a handle on yet and making a lot of
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  people nervous about the long term stability and viability of the country. Are you
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  concerned about it? Well, I'm always concerned about the long term viability of
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  our country, and I'm not ready to ring the doomsday bell just yet.
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  I think there. I think we have a many more tools at our disposal
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  that we once had. But it will be a volatile and very rocky road
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  over the next three to six years, there is no question about it.
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  The you know, the economic downturns and the correction in the markets, when
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  you mix in COVID and the pandemic and all the dollars that were put back
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  into the system to stimulate it that all that XS cash excess equity, excess
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  value has to be flushed out and normalized. And so yeah, the next
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  three to six years are going to be rough, but they're going to be
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  rough for everybody. There's there's nobody that is going to be spared this next
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  correction that will come over the next few years. So it's going to be
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  tough. It's gonna be tough, there's no doubt about all. Right,
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  So we know it's gonna be tough. But what can you do about it?
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  How do you prepare for it as an individual? Are you totally helpless
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  or is there something you can do? No, there's a lot you could
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  do, and you want to just be a little bit more discretionary with your
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  spending. A formula that we advise our clients to use is to look at
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  anything that you're about to buy. You look at the asset and you want
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  to pay sixty percent of the asking price, or you're looking for bargains.
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  You're looking for deals because things are overchrist right now, So don't get caught
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  over buying an asset. And during the next three to six years. Don't
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  expect an asset to grow in its equity value. Manage it for cash flow.
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  So we say buy low and manage for cash flow during times like this.
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  And if you are if you are doing that and not expecting to get
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  some high you know, upside on the value or the equity value of the
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  asset, you should be in good seat, all right. So so buy
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  assets at a discount. Do we buy assets other than housing, assets that
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  are going to make you money cash flowing? Perhaps your guidelines there. So
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  if you need to buy a truck for your business, you need to buy
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  a printing press because you're a printer, you need to buy. If you're
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  a contractor, you need to buy you know, lawnmowers and trailers and trucks.
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  Look for them out on the secondary market. Somebody who has a change
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  in their life or change in their business or looking to sell. You could
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  likely get a good deal on that. So don't pay retail prices for the
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  next three to six years on assets because they will not appreciate. You want
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  to look for the good deal, and you want to you want to bargain
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  hunt right now, all right, So bargain hunting. You know, I'm
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  always bargain hunting, so that's nothing new to me. Sure, but make
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  sure that these are the kind of assets that perhaps aren't going to lose value.
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  Do we say it that way, or well, they are. If
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  you bought them at their peak, they might likely lose their value for a
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  period of time. But if you're buying below market value, when the value
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  comes down, you'll still be safe and you won't be underwater. You know,
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  if you look back at two thousand and five where people bought houses,
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  they bought them at the peak with low interest rates. Right, all of
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  a sudden the value the house comes down, and all of a sudden,
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  your interest rate goes up. Now you're underwater. Your mordig is high or
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  than the value of your own right, so you got underwater that way.
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  We're not doing it that way. Now. What we're doing is we say,
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  if you're asking for a hundred, I'm offering sixty. I'll buy us
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  somewhere in there. So when that asset drops down to eighty or seventy,
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  I'm still okay. All right. So but you know, like a house,
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  all right, For instance, you know that inflation is not going away
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  anytime soon. They don't have it under control. As much as they would
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  like you to believe that you got to live someplace anyway, you risk being
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  underwater to have your monthly housing payment to be below market value. You know
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  what I'm saying. Yeah, not necessarily. So for example, you can
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  have a house that's a perfectly good asset, but maybe the ownership or the
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  partnership that owns it is distressed. So you're not always just looking for distressed
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  assets. You're also looking for distressed people that are in distressed and need to
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  get out of it, and you could help them do that. So as
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  state sales and auctions and what people are selling their real estate portfolio or um,
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  you're you're buying a fixer upper, or you know somebody is looking to
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  down size or they're moving, So there are other avenues to explore. Sometimes
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  when you see a foresale by owner, that's somebody that's that you know might
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  be look have some have some distress or or their life circumstances have changed,
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  and you coming in and even buying it for less than they're asking actually helps
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  them out. So so there are a number of circumstances where you could buy
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  it a discount and it actually helps the seller Okay, got you there,
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  all right? So win win situation effectively or win not excuse me, m
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  but at this way, win win but not losing too much. Correct,
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  Sometimes you win by not losing, right, That's right. Sometimes you get
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  into a good deal if sometimes you avoid a bad one. Those are both
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  wins. All right. What about people as far as testing in yourself,
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  human capital, all that stuff, does that still apply or do you just
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  hoard cash and try to ride out the storm. No, you know some
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  people will hoard cash and just try to ride out the storm, and that
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  would be a mistake right now doing volatile times. Purchasers defer to what they
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  believe are experts, and they believe if they believe that company is the best
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  in its niche. So right now I would be directing my If I'm a
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  business owner, I'm directing my funds towards marketing and I'm brand building and I'm
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  show I'm sharing thought leadership to show that I have I'm a subject matter expert,
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  and I have a solid place in the market. Now, if you're
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  an employee, what I suggest is go to your boss and show them just
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  how indispensable you are, and tell them that you are willing to come back
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  into the office at least three days a week, because that's where that's what
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  businesses need. They need their employees back in the office. And I know
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  it was an employee's market for a while, but it's flipped back. It's
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  an employer's market now. And you don't want to be left on the outside
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  looking in. You know, business great businesses, most of them are grown
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  by having their employees collaborating and be around each other, have proximity. So
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  I would share with your with my boss just how indispensable I am, and
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  then I'm willing to come into the office. Yeah. But if you're a
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  millennial, the last thing you want to do or a gen zer, last
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  thing you want to do is go back to the office. Right, This
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  is true. This is true. You might not want to do it,
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  but it doesn't change the fact that that's what the company needs. And you're
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  putting yourself at a disadvantage if you're unwilling to do all. Right, So,
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  no matter how any masks you think you need to go back to the
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  office, go back to the office. Now. Remember most businesses have adopted
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  a hybrid policy. They're okay with you only coming in a few days a
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  week, right, So set your week up that way, right, and
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  it's and it doesn't have to be as bad as it seemed. To Remember
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  it wasn't all that long ago that you used to go into the office all
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  the time. So you know they if not, you are subjecting yourself to
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  you know, the marketplace and trying to find a job where that is going
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  to be the prevailing request is that you move back in to the office.
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  Come back to the office the bullet, huh, bite the bull, or
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  start your own business where you don't have to come in and come into the
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  office. But if you're working for somebody else, they're going to ask you
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  to come in right. Don't be insulted if the boss expects you to come
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  in right, that's right. Look before COVID, nobody was saying the way
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  to build a great company is to send everybody home. Nobody was saying that
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  that was out of necessity. We got a little there is, we got
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  a little sabbatical there. If you're able to engineer your life where you can
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  continue to do that, good for you. But understand that business owners know
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  and they've had the most success by having their teams working together at being in
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  an office together, and they're going to go back to that. Yeah,
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  and you know when Elon Musk is saying, you know, you got to
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  come back to the office or else, then it's time to get back to
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  the office. Exactly, exactly, all right, Well, interesting perspective on
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  things, Carl. Just tell us where we find you. How do we
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  connect with you on the web. Sure, you can connect with me by
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  going to my personal site Carl three six dot com. That's c A RBL
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  three six zero dot com and you can connect with all of my social media.
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  Interact with me anyway, Drop me a text, drop me a line,
• 18:37
  and we can we'll connect there, all right. That link is in
• 18:41
  the show notes to this interview on Financial Survival Network and the just click through
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  and it'll take you there. While you're at the site, just to sign
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  up for your free newsletter. We bring you a lot of interesting info like
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  things with Carl's discussing the economy, the dollar, all these things. And
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  if you got a question for me or Carl, I'll shoot us an email.
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  Heyl at carry Lutz dot com. Carrel always a pleasure. We'll talk
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  to you a gain real soon. Thanks Carry, Thanks for listening to carry
• 19:10
  Lutz's Financial Survival Network, your solution to today's trying times. For the latest,
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  go to Financial Survival Network dot com. Financial Survival Network now more than ever