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Money Monday with BrianJames · Brian Thomas

• 0:01
  Speaker 1: It's eight oh six here at fifty five Caros De
• 0:03
  Speaker 1: Talk Station. Happy Monday, try to make it happy anyway,
• 0:06
  Speaker 1: you don't think about the situation between the United States
• 0:09
  Speaker 1: and Iran anyway, if you don't think about the price
• 0:10
  Speaker 1: of a barrel of oil, welcome back to the fifty
• 0:13
  Speaker 1: five Caosey Morning Show to discuss that, among other topics.
• 0:15
  Speaker 1: It's time for Money Monday with Brian James from all
• 0:18
  Speaker 1: Worth Financial. Every Monday at eight oh five we talked
• 0:20
  Speaker 1: about a few topics. Welcome back, Brian James. Hope you
• 0:22
  Speaker 1: had a wonderful weekend.
• 0:24
  Speaker 2: Good morning, mister Thomas, and let's all enjoy a hot,
• 0:27
  Speaker 2: sweatyday and the rest.
• 0:28
  Speaker 3: Of the week. I guess no doubt.
• 0:31
  Speaker 1: And thank god we're in America where ninety percent of
• 0:33
  Speaker 1: Americans have an air conditioning, unlike the Brits and the
• 0:37
  Speaker 1: French and the Germans who only I think twenty percent
• 0:42
  Speaker 1: maybe twenty. The French have twenty five percent air conditioning,
• 0:44
  Speaker 1: but if you go to the United Kingdom it's only
• 0:46
  Speaker 1: like fourteen or fifteen percent, which really has to suck.
• 0:50
  Speaker 2: Yeah, I'm gonna I'm gonna bump your number down to
• 0:52
  Speaker 2: eighty nine point nine nine nine percent. The cars ours
• 0:55
  Speaker 2: literally quit last night. That we have fans all over
• 0:57
  Speaker 2: the house my own fault. I was asking for it.
• 1:00
  Speaker 3: We haven't done the best job maintaining.
• 1:02
  Speaker 2: But it does make you realize exactly how spoiled we
• 1:05
  Speaker 2: are and how quickly it.
• 1:06
  Speaker 3: It disrupts life.
• 1:07
  Speaker 1: Not they have that, true, but I'd be remiss if
• 1:09
  Speaker 1: I didn't throw in a free spot for Zimmer Zimmer
• 1:11
  Speaker 1: Heating and air Conditioning to the rescue. Phil They sponsored
• 1:14
  Speaker 1: this show, so I got to put in a free
• 1:15
  Speaker 1: plug for them. Anybody with problems along those lines, I.
• 1:18
  Speaker 3: Will put them on the list.
• 1:19
  Speaker 1: There you go shortly, all right, that's gonna cost you
• 1:22
  Speaker 1: a little bit more money to drive around. Although I
• 1:24
  Speaker 1: don't know that they see the price of gasoline was
• 1:26
  Speaker 1: going down. I know a lot of people were angry
• 1:27
  Speaker 1: that it wasn't going down as fast as the barrels
• 1:30
  Speaker 1: of oil. But the minute they announced that the straight
• 1:31
  Speaker 1: of horror moves was going to be flowing freely again,
• 1:34
  Speaker 1: they being the US and Iran. Based on the memorand
• 1:36
  Speaker 1: of understanding, of course, the price of oil dropped really quickly.
• 1:39
  Speaker 1: That's great, But the gasoling price didn't go down very much.
• 1:43
  Speaker 1: But now we have the renewed strikes. We have Iran
• 1:46
  Speaker 1: blowing up boats because they didn't go through the Iranian
• 1:49
  Speaker 1: side of the Strait of Horror Mooves, which I know
• 1:50
  Speaker 1: that wasn't in the memorandum of understanding, but I guess
• 1:53
  Speaker 1: they saw it there and since the boats were going
• 1:55
  Speaker 1: along the Olmani side, they decided to blow one up.
• 1:58
  Speaker 1: Of course, we result that result to US bombing targets
• 2:02
  Speaker 1: in Iran and wash rents and repeat over the weekend.
• 2:05
  Speaker 1: But apparently they have settled back down again and they've
• 2:07
  Speaker 1: agreed to cease fire again. TikTok, TikTok. I suppose maybe
• 2:12
  Speaker 1: this one will last. Brian, I'm a little jaded and
• 2:15
  Speaker 1: cynical about whether that's going to happen. But we have
• 2:18
  Speaker 1: oil futures going up at least.
• 2:20
  Speaker 2: Some Yeah, you know, I'm a little bit jaded and
• 2:25
  Speaker 2: not quite trusting what I hear and see. Yet, you know,
• 2:28
  Speaker 2: I think for a good long time now we're going
• 2:31
  Speaker 2: to have questions. We've kind of been trained to believe
• 2:33
  Speaker 2: that what we hear is not exactly yet reality, and
• 2:36
  Speaker 2: it's not maybe as final as we've been led to
• 2:38
  Speaker 2: believe that it is. So let's talk a little bit
• 2:40
  Speaker 2: about why why is it still an expense more expensive
• 2:42
  Speaker 2: at the pump when oil prices dropped a good chunk. Well,
• 2:46
  Speaker 2: there's a lot more components than just oil going into gas.
• 2:49
  Speaker 2: And remember it takes gasoline to make gasoline. We have
• 2:53
  Speaker 2: to drag stuff all over the country. There are the
• 2:55
  Speaker 2: costs of refining, distribution, transportation, marketing, federal, state taxes, all
• 2:59
  Speaker 2: that other stuff. So there's definitely a difference. That's not
• 3:02
  Speaker 2: a direct relationship between the price of oil and the
• 3:05
  Speaker 2: price of gas. Not to mention, I believe the market
• 3:07
  Speaker 2: is out there, and I'm speaking in terms of futures
• 3:09
  Speaker 2: things like that, the market is out there being slightly suspicious,
• 3:12
  Speaker 2: just like you and I were.
• 3:13
  Speaker 3: Hinting at that maybe this isn't going to stick this time.
• 3:15
  Speaker 2: Anyway, and we're not going to drop prices just all
• 3:20
  Speaker 2: that quickly yet.
• 3:21
  Speaker 1: Well, honestly, and I had one of my listeners, you know,
• 3:25
  Speaker 1: very very conservative woman applaud the idea that Donald Trump
• 3:29
  Speaker 1: is going to lease the Department of Justice on the
• 3:30
  Speaker 1: oil companies for price gouging. I thought that really sounded
• 3:33
  Speaker 1: more Biden esque. It didn't sound like an appropriate response.
• 3:37
  Speaker 1: And I know he needs to suggest to the American
• 3:39
  Speaker 1: people he wants to do something about the price of gasoline.
• 3:42
  Speaker 1: But going back to your point, there's a whole lot
• 3:45
  Speaker 1: more involved in it than just the price of a
• 3:47
  Speaker 1: barrel of oil, of course.
• 3:49
  Speaker 2: And there's a lot of mechanics to it. And at
• 3:52
  Speaker 2: the same time, we got to remember, I am really
• 3:55
  Speaker 2: jaded when it comes to this kind of stuff. We've
• 3:56
  Speaker 2: got to remember that, you know, I think this administration
• 3:59
  Speaker 2: is a and in the country in general. We were
• 4:01
  Speaker 2: founded on the notion that we can create our own destiny,
• 4:05
  Speaker 2: and that means we can create our own profit margin. Uh,
• 4:07
  Speaker 2: and so make what you can make within the bounds
• 4:10
  Speaker 2: of the law. But at the same time, you're going
• 4:12
  Speaker 2: to get a pretty uh, pretty pretty loose reins in
• 4:15
  Speaker 2: terms of being able to do whatever you want to do.
• 4:17
  Speaker 2: And that is something that happens just about every industry. Uh.
• 4:21
  Speaker 2: You know, want one person or a couple of people
• 4:23
  Speaker 2: saying we should investigate so and so for for price
• 4:26
  Speaker 2: gouging that happens every time prices move around. People canna
• 4:29
  Speaker 2: disregard the notion that that that that that can happen
• 4:32
  Speaker 2: any other way than pure evil. Uh. But you know,
• 4:34
  Speaker 2: I don't. I haven't really heard of groundswell for this,
• 4:36
  Speaker 2: and I'm I'm not anticipating that the president is going
• 4:39
  Speaker 2: to anger his largest some of his largest contributors to
• 4:43
  Speaker 2: the UH, to.
• 4:44
  Speaker 1: The old coffers well, and they'd also have to prove
• 4:47
  Speaker 1: some sort of culpability. I mean, it's a point of
• 4:49
  Speaker 1: a you know, price gouging investigation that they find that
• 4:53
  Speaker 1: there is artificial price inflation. And I mean, but there
• 4:58
  Speaker 1: there isn't necessarily artificial price inflation because of everything that's
• 5:01
  Speaker 1: going on. Also, the oil companies don't necessarily own the
• 5:03
  Speaker 1: filling stations, you know. I always joke about the gas
• 5:07
  Speaker 1: station on Camargo that the price of gasoline there, regardless
• 5:10
  Speaker 1: of when under what the price of oil is doesn't matter.
• 5:13
  Speaker 1: It's always like a buck more a gallon expensive than
• 5:16
  Speaker 1: everythace else. If you drive like half a mile away,
• 5:19
  Speaker 1: you can save yourself a bucket gallon. They're the ones
• 5:21
  Speaker 1: that decided to make the price of gasoline expensive at
• 5:23
  Speaker 1: that one And if you, of course search around town,
• 5:26
  Speaker 1: the price of gasoline can vary like seventy five cents
• 5:29
  Speaker 1: depending on where you're buying it.
• 5:30
  Speaker 3: Now.
• 5:31
  Speaker 1: I don't know the reason for that, but that's not
• 5:33
  Speaker 1: the oil company's doing it now.
• 5:36
  Speaker 2: That's just apply and demand. What can we get and
• 5:39
  Speaker 2: how much can we get for it. That's just the
• 5:42
  Speaker 2: American way. It always feels like this. But whenever we
• 5:45
  Speaker 2: have wild swings in oil prices and therefore gasoline prices,
• 5:49
  Speaker 2: there's always a ground swell of Hey, somebody is screwing me,
• 5:52
  Speaker 2: and I want somebody investigated, and I want somebody strung
• 5:54
  Speaker 2: up for this. Well, the largest investigation the FTC ever
• 5:59
  Speaker 2: did was right after Herhurricane Katrina. That obviously was a
• 6:01
  Speaker 2: huge disruption to the oil and gas industry here, and
• 6:06
  Speaker 2: so there was a lot of a hue and cry
• 6:08
  Speaker 2: over that. But at the same time, there was a
• 6:10
  Speaker 2: catalyst for it, and at that time, there was no
• 6:12
  Speaker 2: evidence of widespread collusion, nationwide price gouging anything like that.
• 6:16
  Speaker 2: The price increases that did occur were explained by supply disruptions,
• 6:20
  Speaker 2: refinery out just the stuff you would expect after the
• 6:22
  Speaker 2: largest hurricane in the country's history, you know, And I
• 6:26
  Speaker 2: would say that the same would be found here.
• 6:28
  Speaker 3: We have a major catalyst in terms.
• 6:30
  Speaker 2: Of a of a war that we started in Iran
• 6:34
  Speaker 2: that has disrupted a lot of the flow of oil
• 6:37
  Speaker 2: through the shrad.
• 6:37
  Speaker 3: Of horn moves.
• 6:38
  Speaker 2: Now the thing to remember, and I think this is
• 6:40
  Speaker 2: what confuses people a little bit, because we are not
• 6:43
  Speaker 2: nearly as dependent on the Middle East as we used
• 6:46
  Speaker 2: to be. Right so in the seventies we were heavily dependent.
• 6:50
  Speaker 2: US oil production had peaked, domestic consumption kept growing. Remember
• 6:54
  Speaker 2: these are the stagflation days. We had the Arab oil
• 6:56
  Speaker 2: embargo in nineteen seventy three and that resulted in oil
• 7:00
  Speaker 2: prices quadrupling, gas stations ran out of fuel and all
• 7:03
  Speaker 2: that kind of stuff that permanently changed US energy policy.
• 7:07
  Speaker 2: By the US by the early two thousands was importing
• 7:10
  Speaker 2: about sixty percent of the patroleum that it consumed. Imports
• 7:13
  Speaker 2: from Opec were a major, major strategic concern. But all
• 7:17
  Speaker 2: that changed around two thousand and five, six, seven, eight,
• 7:20
  Speaker 2: something like that. And it was a technology that did it.
• 7:23
  Speaker 2: So we learned how to drill horizontally, meaning if we
• 7:26
  Speaker 2: find a you know, an oil strand might be fifty
• 7:30
  Speaker 2: feet deep. If we drill through it too far, we'll
• 7:32
  Speaker 2: tough stuff. But it could be tens of hundred, if
• 7:35
  Speaker 2: not one hundreds of miles wide. So if we drill
• 7:37
  Speaker 2: horizontally through it, we can stay in it. And then
• 7:39
  Speaker 2: also we had what we now know is fracking come
• 7:42
  Speaker 2: online that has now unlocked enormous reserves in New Mexico, Texas,
• 7:46
  Speaker 2: North Dakota. So and then give you some some things
• 7:49
  Speaker 2: to compare here. By two thousand and eight, we were
• 7:52
  Speaker 2: producing about five million barrels a day twenty four to
• 7:54
  Speaker 2: twenty six. Now we produce about thirteen to fourteen million
• 7:57
  Speaker 2: barrels a day, so we are not nearly as dependent
• 7:59
  Speaker 2: as as we.
• 8:00
  Speaker 3: Used to be.
• 8:01
  Speaker 2: However, the price of oil is still set by global
• 8:04
  Speaker 2: conflict and all that other stuff.
• 8:06
  Speaker 3: It's still a market well.
• 8:07
  Speaker 1: And the other component of this is it's everything else
• 8:10
  Speaker 1: that flows through the strait of horror moves. And I
• 8:11
  Speaker 1: wanted to ask you about work around hold on at
• 8:15
  Speaker 1: a cough. We don't have enough refineries here, so we
• 8:19
  Speaker 1: always have to worry about production of gasoline. We don't
• 8:22
  Speaker 1: have fertilizer manufacturing here apparently either in very limited supply,
• 8:26
  Speaker 1: so you've got to rely on fertilizer made from petroleum
• 8:29
  Speaker 1: products coming through the straight of horror moves. That is
• 8:30
  Speaker 1: a global concept or problem is there down the road?
• 8:34
  Speaker 1: Do you see this much like we changed our energy
• 8:37
  Speaker 1: policies as as a direct consequence of the embargo from Opak,
• 8:41
  Speaker 1: we need to do our own mining. It's like going
• 8:43
  Speaker 1: through COVID. We need to start manufacturing our own pharmaceuticals.
• 8:46
  Speaker 1: Is there in the future, you believe a workaround around
• 8:50
  Speaker 1: the strait of horror moves so that it doesn't result
• 8:52
  Speaker 1: any closure by Iran down the road, doesn't result in
• 8:54
  Speaker 1: twenty percent of the world's you know, petroleum coming to
• 8:57
  Speaker 1: a screeching halt.
• 8:58
  Speaker 2: Brian James, Well, I think we're a little bit stuck
• 9:02
  Speaker 2: there because really at this point there isn't much of
• 9:04
  Speaker 2: an alternative.
• 9:05
  Speaker 3: And again it's not our oil.
• 9:06
  Speaker 2: We are not the ones can we're not the consumer
• 9:09
  Speaker 2: see to the other end of the oil that's moving
• 9:11
  Speaker 2: through there. However, our customers are so a lot of
• 9:15
  Speaker 2: the other countries in the world have no other choice
• 9:17
  Speaker 2: right there. There aren't many countries in Europe. I believe
• 9:19
  Speaker 2: it's only Norway that is technically oil independent. Everybody else
• 9:22
  Speaker 2: in Europe has to get their oil from somebody else,
• 9:25
  Speaker 2: and a lot of that, of course comes from Iran.
• 9:26
  Speaker 2: Those countries have a lot of consumers who like to
• 9:29
  Speaker 2: consume products that are that are created and based in
• 9:32
  Speaker 2: the United States. Unfortunately, if oil prices are affecting their
• 9:36
  Speaker 2: ability to pay for our.
• 9:37
  Speaker 3: Products, then that trickles through to us.
• 9:40
  Speaker 2: If I would say, if there was another another path
• 9:43
  Speaker 2: through that, then we would already have identified it. Because
• 9:46
  Speaker 2: this is especially now because we have now shined a
• 9:49
  Speaker 2: bright light.
• 9:49
  Speaker 3: I don't think even i Ran.
• 9:50
  Speaker 2: It seems like even Iran seems to have been aware
• 9:53
  Speaker 2: of exactly how much control they could have over the
• 9:55
  Speaker 2: rest of the world.
• 9:56
  Speaker 3: It's true, we started this war. It's true.
• 10:00
  Speaker 2: Yeah, they really caught them off guard as much as
• 10:02
  Speaker 2: it did the American public. I think that's kind of
• 10:04
  Speaker 2: an important area of the world.
• 10:05
  Speaker 1: Yeah, that's an excellent observation. They the Iranis didn't even
• 10:08
  Speaker 1: know how much power they had in their hands. That's crazy. Anyhow,
• 10:12
  Speaker 1: it is crazy, period, end of story. I just maybe
• 10:14
  Speaker 1: the rest of the world, like the European Union, will
• 10:16
  Speaker 1: quit slashing its throat in the name of ending carbon
• 10:18
  Speaker 1: dioxide in mouth, tapping into its own resources or at
• 10:22
  Speaker 1: least seeking out alternatives. They love to use the oil,
• 10:25
  Speaker 1: they just don't want to have any credit for pulling
• 10:27
  Speaker 1: it out of the ground because well, climate change or
• 10:31
  Speaker 1: whatever don't go away. Because Brian James is going to
• 10:33
  Speaker 1: talk about stock futures. Is this conflict impacting the stock market?
• 10:37
  Speaker 1: And the stock market seems to ignore the conflict from
• 10:39
  Speaker 1: everything I can tell Brian James on that coming up next,
• 10:41
  Speaker 1: Don't Go Away.
• 10:42
  Speaker 2: Fifty five KRC dot com our iHeartRadio.
• 10:46
  Speaker 3: Music Festival, the KRC the talk station.
• 10:50
  Speaker 1: Hey, twenty fifty one KRCD talk station. It is Money
• 10:53
  Speaker 1: Monday Time. A few segments with Brian James, all with Financie,
• 10:56
  Speaker 1: who's kind of enough to loan him out for a
• 10:58
  Speaker 1: few segments on a Monday. Let's talk about the stock futures.
• 11:01
  Speaker 1: They are trending a little bit higher this morning. I
• 11:03
  Speaker 1: was looking at the futures in Wall Street Journal. Dow
• 11:06
  Speaker 1: up half a point a little more than eighty percent,
• 11:09
  Speaker 1: or point eight on the S and P Nasdaq one
• 11:12
  Speaker 1: point two to three, So ticking up a little bit.
• 11:16
  Speaker 1: But that seems to be the case lately with the markets. Brian, I,
• 11:19
  Speaker 1: for whatever reason, I kind of have in the back
• 11:21
  Speaker 1: of my mind, you know, the bubble's going to burst,
• 11:23
  Speaker 1: the plug's gonna get pulled. Oh my god, the market's
• 11:25
  Speaker 1: over valued. Everybody wakes up one day, the whole thing
• 11:27
  Speaker 1: comes crashing down like we've seen so many times, you know,
• 11:30
  Speaker 1: with real estate collapse and the tech bubble bursting. So
• 11:35
  Speaker 1: where are we with this crazy doing really really well?
• 11:38
  Speaker 1: And thank god I'm invested in the market. Brian James.
• 11:41
  Speaker 2: You know, I think you just described it right there.
• 11:44
  Speaker 2: It's crazy and it's it can be. I don't want
• 11:46
  Speaker 2: to say unreliable, unpredictable. Maybe I think is the it's
• 11:49
  Speaker 2: let's let me let me put it this way, it's
• 11:51
  Speaker 2: reliably unpredictable.
• 11:52
  Speaker 3: How about that? There you go just in.
• 11:54
  Speaker 2: Terms of, you know, what do we expect? And honestly,
• 11:57
  Speaker 2: I think this is just a step way way back
• 12:00
  Speaker 2: and just look at the whole, you know, long term
• 12:02
  Speaker 2: history of it here there there, the stock market has
• 12:05
  Speaker 2: just become the thing that we that that we that
• 12:09
  Speaker 2: drives everything.
• 12:10
  Speaker 3: I don't think it used to be that way fifty
• 12:11
  Speaker 3: sixty years ago.
• 12:12
  Speaker 2: But nowadays, every you know, the focus of basically everybody
• 12:16
  Speaker 2: trying to put themselves in a stronger, a stronger financial
• 12:19
  Speaker 2: situation has been how do I build my wealth? How
• 12:21
  Speaker 2: do I build my balance sheet? It used to be
• 12:23
  Speaker 2: how do I build a stream of income? I want
• 12:25
  Speaker 2: to I'm gonna work for this the factory for you know,
• 12:27
  Speaker 2: thirty forty years, and I'll get a pension, uh, and
• 12:30
  Speaker 2: maybe I'll put some of that in rental real estate
• 12:32
  Speaker 2: and I'll have all these streams of income. That's not
• 12:33
  Speaker 2: the way we think anymore. When you look at those
• 12:35
  Speaker 2: types of investments, they pale in comparison in terms of
• 12:39
  Speaker 2: over what the overall market has given us over the
• 12:42
  Speaker 2: past several decades. And it seems like we are just
• 12:44
  Speaker 2: We've just moved to this phase where what now what
• 12:47
  Speaker 2: I'm after is a bigger pile of money, not so
• 12:50
  Speaker 2: much a stream of income. I still need a stream
• 12:51
  Speaker 2: of income out of it, but my accumulation years are
• 12:54
  Speaker 2: much more about building a pile uh than they are
• 12:56
  Speaker 2: building a stream. And that's how the market and that's
• 12:59
  Speaker 2: basically what is in the market over the past several decades.
• 13:01
  Speaker 1: Well, it's that pile of money that you know creates
• 13:03
  Speaker 1: the revenue every year it tends to grow, so you know,
• 13:07
  Speaker 1: you pulled five, six, seven, eight percent off the pile
• 13:09
  Speaker 1: of money. Some people end up with a pile enough
• 13:11
  Speaker 1: money that's big enough that just what is earned on
• 13:14
  Speaker 1: the investment can feed and clothe them and house them
• 13:17
  Speaker 1: in their retirement so the principle never really kind of dissipates.
• 13:21
  Speaker 2: Yeah, And actually, ironically, we talk every now and about
• 13:24
  Speaker 2: that four percent rule, and I know you've you've heard
• 13:26
  Speaker 2: that out there. The basic study that you know four
• 13:29
  Speaker 2: percent is a reliable number to pull out over a
• 13:32
  Speaker 2: thirty year period, which is kind of an average retirement
• 13:36
  Speaker 2: timeframe there.
• 13:37
  Speaker 3: That study has been around for a long time.
• 13:39
  Speaker 2: What it did was it looked through years from say
• 13:41
  Speaker 2: nineteen thirty one to nineteen sixty one, thirty two to
• 13:43
  Speaker 2: sixty two and on down the line and figured out
• 13:46
  Speaker 2: of all those periods, what percentage could you have pulled
• 13:48
  Speaker 2: out of your principle and not run out of money?
• 13:50
  Speaker 2: And the conclusion was four percent. That's been around for
• 13:53
  Speaker 2: a long time. The gentleman who put that study together
• 13:56
  Speaker 2: just recently came out with an update and he now
• 13:58
  Speaker 2: believes that that calculation is four point seven percent. Now,
• 14:01
  Speaker 2: I'll tell you in thirty years whether that came to
• 14:03
  Speaker 2: pass or not. But to me, that's another indicator that again,
• 14:07
  Speaker 2: we are much more focused on piles of money than
• 14:09
  Speaker 2: streams of income. And that's coming through and all these
• 14:11
  Speaker 2: studies that talk about how to make your ass sets
• 14:15
  Speaker 2: last for the rest of your life.
• 14:16
  Speaker 1: Well, one that maybe we can tie into the next segment,
• 14:19
  Speaker 1: which is going to be, well should you claim social security?
• 14:22
  Speaker 1: Earlier I saw Senator Bill Cassany is looking for some
• 14:25
  Speaker 1: sort of reform in the Social Security system because we
• 14:27
  Speaker 1: do know it is running out of money and they're
• 14:29
  Speaker 1: going to start cutting our social Security checks in a
• 14:32
  Speaker 1: fairly short order unless something is done. Talking about a
• 14:35
  Speaker 1: one point trillion dollar a social Security rescue fund, in
• 14:38
  Speaker 1: other words, actually putting the money that they take out
• 14:42
  Speaker 1: of our paychecks in the market. So the account, the
• 14:46
  Speaker 1: Social Security like a trust fund account that actually exists,
• 14:49
  Speaker 1: Brian is actually invested in the market. Part of me
• 14:51
  Speaker 1: wants to say, well, that's better than just sort of
• 14:53
  Speaker 1: letting the government take care of it, because they don't.
• 14:56
  Speaker 1: But what kind of impact might that have if I
• 14:58
  Speaker 1: can catch you off guard a little bit on the
• 15:01
  Speaker 1: markets themselves, if the government starts investing in it directly.
• 15:05
  Speaker 2: Sure well, Well, first off, think about the impact that
• 15:08
  Speaker 2: happened to the stock market when the four to oh
• 15:10
  Speaker 2: one k became a thing starting in the late seventies.
• 15:13
  Speaker 2: Shortly after that, we of course had a recession and
• 15:15
  Speaker 2: we had really high interest rates to beat that back.
• 15:17
  Speaker 2: But then all of a sudden, as we were making
• 15:19
  Speaker 2: the pivot from pensions where companies themselves had to support
• 15:23
  Speaker 2: their own retirees and a lot of dollars had to
• 15:25
  Speaker 2: flow into very safe investments like US treasuries and so forth.
• 15:28
  Speaker 2: Back in the eighties, those happened at very high interest rates.
• 15:30
  Speaker 2: But then we purposely pushed interest rates down to nothing
• 15:33
  Speaker 2: and kept them there for forty years. Well, look what
• 15:35
  Speaker 2: happened to the stock market in the eighties when all
• 15:37
  Speaker 2: that extra money was flowing in every week, every two weeks,
• 15:39
  Speaker 2: every month, however often we got paid. From then on,
• 15:42
  Speaker 2: money kept flowing into the stock market. Well, to me,
• 15:45
  Speaker 2: it'll have a similar impact in terms of every single time.
• 15:48
  Speaker 2: However they want to work out the structure, probably going
• 15:51
  Speaker 2: to be payroll based if this gets off the ground.
• 15:53
  Speaker 2: Right this is nothing more than a bill right now,
• 15:55
  Speaker 2: but there's going to be money flowing regularly into indexed
• 15:58
  Speaker 2: type investments, and I think it's going to be a
• 16:00
  Speaker 2: similar impact to what we saw back in the eighties,
• 16:02
  Speaker 2: with all that money driving things in an upward motion.
• 16:04
  Speaker 2: More volatility for sure, because we're simply hanging more dollars
• 16:08
  Speaker 2: on the back of the stock market to support us,
• 16:11
  Speaker 2: but at the same time money flowing in, think supply
• 16:13
  Speaker 2: and demand. More money flowing in pushes prices up.
• 16:16
  Speaker 1: Indeed, appreciate your thoughtful analysis on that. In last minute there,
• 16:19
  Speaker 1: let's pause, we'll find out about whether or not it's
• 16:21
  Speaker 1: a good idea to claim social security. Earth Talk Station,
• 16:25
  Speaker 1: Hey twenty nine, I think about KARCD Talk Station Brian
• 16:27
  Speaker 1: Thomas with money Monday's Brian James continuing a late topic
• 16:31
  Speaker 1: theme there social Security, which we've been told by the
• 16:34
  Speaker 1: Social Security Administration, and it's twenty twenty six. Trustees report
• 16:37
  Speaker 1: that the federal reserve retirement safety net is less than
• 16:40
  Speaker 1: seven years away from reserve depletion. So I guess this
• 16:44
  Speaker 1: is leading some folks to make the conclusion that, well,
• 16:47
  Speaker 1: I'd be better off saying I'm going to take a
• 16:49
  Speaker 1: Social Security starting at age sixty two rather than wait
• 16:53
  Speaker 1: to collect what I would get, which is a larger
• 16:55
  Speaker 1: payment if I hold off retirement to sixty seven or
• 16:58
  Speaker 1: even longer than that. Think the reserves are going to
• 17:00
  Speaker 1: run out, So cash it in while you're going to
• 17:02
  Speaker 1: get one hundred percent of what you expect, or wait
• 17:05
  Speaker 1: till later where you might get even twenty percent benefit cut.
• 17:08
  Speaker 1: How does the math actually work out on this, Brian James.
• 17:12
  Speaker 2: Yeah, let's talk about first all, how how does the
• 17:14
  Speaker 2: headline work out. Let's start there, because the headline is
• 17:17
  Speaker 2: you use the phrase reserve depletion. Yeah, and a lot
• 17:19
  Speaker 2: of people just heard you say, is that it's going
• 17:21
  Speaker 2: to go to zero, because that's just what our monkey
• 17:23
  Speaker 2: brains tell us.
• 17:24
  Speaker 1: No, no, no, no, this is like the retirement savings. You know,
• 17:26
  Speaker 1: if you live off just the interest, you're not depleting
• 17:29
  Speaker 1: the reserve.
• 17:30
  Speaker 3: So yeah, right, exactly.
• 17:32
  Speaker 2: Yeah, So realistically, what happens is is the dollars flow
• 17:37
  Speaker 2: out of your and mine and everybody else's driving to
• 17:39
  Speaker 2: work listening to us right now, everybody is we have
• 17:43
  Speaker 2: a top half of our past dub with something called
• 17:45
  Speaker 2: FICA on it. FIKA is the tax is used to
• 17:47
  Speaker 2: pay Social Security, and for the most part, those go
• 17:50
  Speaker 2: from our paychecks to Social Security current recipients. People are
• 17:54
  Speaker 2: actually living off of it.
• 17:56
  Speaker 3: Right now.
• 17:56
  Speaker 2: There's more coming off the top half of the pay
• 17:58
  Speaker 2: stub than is going out to those beneficiaries. That's the gap, though,
• 18:02
  Speaker 2: that is closing, and as of right now, supposed to
• 18:05
  Speaker 2: be the gap should go away by twenty thirty one,
• 18:07
  Speaker 2: twenty thirty two, meaning at that time, the only money
• 18:12
  Speaker 2: we'll be able to send to Social Security recipients will
• 18:14
  Speaker 2: be the total dollar amount that's coming off of those
• 18:17
  Speaker 2: fight at taxes. There isn't at that point, there won't
• 18:19
  Speaker 2: be more coming in than is going out currently. That
• 18:22
  Speaker 2: is the case now. People unfortunately hear that headline and
• 18:25
  Speaker 2: what they hear, and honestly, I think a little bit
• 18:27
  Speaker 2: as wishful thinking. People want to be told it's okay
• 18:29
  Speaker 2: to go ahead and turn on your Social Security sooner
• 18:32
  Speaker 2: rather than later, so they super want to go ahead
• 18:34
  Speaker 2: and do that, so they say, forget it, it's going
• 18:36
  Speaker 2: to zero.
• 18:37
  Speaker 3: I'm just going to take it now.
• 18:38
  Speaker 2: But really, Brian, the map hasn't changed, right, There is
• 18:41
  Speaker 2: still a benefit to waiting at age sixty two. No
• 18:45
  Speaker 2: matter what. That's still always going to be the lowest
• 18:48
  Speaker 2: check you'll ever see. If you take it as soon
• 18:50
  Speaker 2: as possible, you have every right to do that, but
• 18:51
  Speaker 2: it's going to be lowest check you'll ever see. Age
• 18:54
  Speaker 2: seventy is the biggest check you'll ever see. Now, that
• 18:57
  Speaker 2: doesn't mean we should all wait till seventy. That's not
• 18:59
  Speaker 2: a black and white rule. You have to understand how
• 19:01
  Speaker 2: the math works and how it applies to your specific situation.
• 19:04
  Speaker 2: But there is still the same to decision to be made.
• 19:07
  Speaker 3: If we do.
• 19:07
  Speaker 2: Absolutely nothing to change the math, then all that means
• 19:11
  Speaker 2: is that the benefits you're seeing on your report are
• 19:13
  Speaker 2: going to drop by about twenty maybe twenty five percent.
• 19:15
  Speaker 2: That's a chunk, but it's not zero, And that same
• 19:18
  Speaker 2: eight percent increase still applies every year that you wait
• 19:22
  Speaker 2: between sixty two and sixty seven, So you still have
• 19:25
  Speaker 2: the same decision to make. You gotta understand how it
• 19:26
  Speaker 2: applies to your plan.
• 19:28
  Speaker 1: Excellent analysis on that. Isn't this sort of revealing that
• 19:31
  Speaker 1: we are living the lie? This Social Security really is
• 19:34
  Speaker 1: just a giant Ponzi scheme. You have to have enough
• 19:36
  Speaker 1: workers to perpetuate the money going out the door. You
• 19:40
  Speaker 1: got too many retirees, not enough workers. It's like Amway,
• 19:43
  Speaker 1: isn't it. I mean, I don't want a diss Amway,
• 19:45
  Speaker 1: but that seems to me to be the way that
• 19:47
  Speaker 1: works too. You get people to work for you, they
• 19:49
  Speaker 1: pay you money, and you pay money to the person
• 19:51
  Speaker 1: who got you hooked up. And if there are any
• 19:53
  Speaker 1: people down the lower rungs actually going out and selling
• 19:55
  Speaker 1: the products. Then the whole system falls in on itself.
• 19:59
  Speaker 3: Yeah, I mean it does rely on more and more workers.
• 20:02
  Speaker 2: That's basically what we're seeing here there, just the way
• 20:04
  Speaker 2: the generations are constructed. The Baby Boom generation obviously is
• 20:07
  Speaker 2: in the thick of social security right now. That's the
• 20:09
  Speaker 2: largest generation that we've had, and then it's followed by
• 20:12
  Speaker 2: my generation, Gen X, which is one of the smaller ones.
• 20:15
  Speaker 2: After that, though, become those younger generations where the math
• 20:19
  Speaker 2: actually starts to make a little more sense. So social
• 20:21
  Speaker 2: Security is absolutely not going away, and it is not
• 20:24
  Speaker 2: unless we've.
• 20:24
  Speaker 3: Voted out of existence.
• 20:25
  Speaker 2: Right We are still going to be paying fight A
• 20:27
  Speaker 2: taxes unless we proactively vote that out of existence. So
• 20:31
  Speaker 2: there will always be money flowing to social Security recipients.
• 20:35
  Speaker 2: So if you're somebody who's looking at it saying, well,
• 20:37
  Speaker 2: I'm planning around, it's not going to be there, it
• 20:39
  Speaker 2: absolutely will be there because otherwise we literally would have
• 20:41
  Speaker 2: to decide not to charge those taxes. We could very
• 20:45
  Speaker 2: well do that, who knows, but I don't hear any
• 20:47
  Speaker 2: grounds well for that to be happening anytime soon. We're
• 20:49
  Speaker 2: just assuming that you know that quick headline math is
• 20:52
  Speaker 2: that that's going to zero sooner rather than later.
• 20:55
  Speaker 1: Well, and there have been proposals in the past about
• 20:57
  Speaker 1: allowing people to have the Social Security withholdings put into
• 21:01
  Speaker 1: their own private, personally owned like a four toh one
• 21:04
  Speaker 1: K type type account. And I saw an article recently.
• 21:07
  Speaker 1: Had we been able to do that when it was
• 21:09
  Speaker 1: originally proposed, the amount of money each and every American
• 21:11
  Speaker 1: would have compared to what they're going to get from
• 21:13
  Speaker 1: Social Security administration actually pretty impressive. So we missed out
• 21:17
  Speaker 1: on an opportunity to prepare and provide for our own
• 21:20
  Speaker 1: retirement without having to rely on the government to manage it.
• 21:23
  Speaker 2: Yeah, that's true, But remember when Social Security came on
• 21:26
  Speaker 2: the heels of things like the Great Depression, where when
• 21:29
  Speaker 2: we've seen nothing but pretty much uptimes in the stock
• 21:31
  Speaker 2: market barring two thousand and eight twenty twenty two.
• 21:33
  Speaker 3: All that stuff kind of happens. But Social Security was.
• 21:37
  Speaker 2: Created with the shadow of the Great Depression looming in
• 21:40
  Speaker 2: the rear view mirror a little bit, so people thought
• 21:43
  Speaker 2: a bit differently. We want a guaranteed stream of income.
• 21:45
  Speaker 2: We can't afford to rely on things that can bounce
• 21:47
  Speaker 2: up and down this much. Nowadays, though, Brian Thomas. We
• 21:50
  Speaker 2: lean into the things that can bounce up and dere
• 21:52
  Speaker 2: We love speculation, cryptocurrency and the stock market itself and
• 21:56
  Speaker 2: all these other fun things. That's what we're addicted to.
• 21:59
  Speaker 2: We don't like our guarantees so much. So I think
• 22:02
  Speaker 2: we're just in a different situation with a different mindset
• 22:05
  Speaker 2: in terms of the risks that we are willing to take.
• 22:07
  Speaker 2: And there's a lot of people out there who obviously
• 22:08
  Speaker 2: want to do the math of saying, here's what we
• 22:11
  Speaker 2: could have had had we been allowed to invest social
• 22:13
  Speaker 2: security in the markets in the past, and I'm not
• 22:14
  Speaker 2: here to say that's wrong, But we also do not
• 22:17
  Speaker 2: have a situation where anybody's Social Security check ever drops
• 22:21
  Speaker 2: from month to month, quarter to quarter. Somehow that would
• 22:24
  Speaker 2: have to be factored for when we do have those
• 22:26
  Speaker 2: scary markets like eight and twenty two. And I'm not
• 22:28
  Speaker 2: sure as a society we're ready yet to be told
• 22:31
  Speaker 2: that it might not be as guaranteed as we feel.
• 22:32
  Speaker 3: Like it is.
• 22:33
  Speaker 1: Well, or you don't do anything and you're already told
• 22:36
  Speaker 1: that we may get a twenty percent benefit cut, So
• 22:38
  Speaker 1: people weren't counting on that either. Wait a second, I've
• 22:40
  Speaker 1: been told for years I was going to get X amount.
• 22:43
  Speaker 1: That's because they didn't read the entire letter they got
• 22:45
  Speaker 1: from the Social Security Administration saying this is not guarantee.
• 22:48
  Speaker 1: This is an estimate based upon your prior earnings. You know,
• 22:52
  Speaker 1: wait around for it. We'll see what's left or how
• 22:54
  Speaker 1: the program's working when you start drawing a check. So anyhow, well,
• 22:58
  Speaker 1: at least since they're talking about the idea of reform,
• 23:00
  Speaker 1: Brian James actually maybe grabbing a hold of the third
• 23:03
  Speaker 1: rail because of what's what we're facing now in terms
• 23:05
  Speaker 1: of the uh, the potential reduction and benefits. Maybe they
• 23:09
  Speaker 1: might embrace something along those lines, but look about what
• 23:12
  Speaker 1: could have been as a mechanism to talk about what
• 23:14
  Speaker 1: might be in the future. Brian James, for sure, appreciate
• 23:18
  Speaker 1: what you're doing for us every Monday with great advice
• 23:20
  Speaker 1: and you know, get a financial planner. They'll save you
• 23:22
  Speaker 1: from yourself in many cases, that's what Brian James does.
• 23:25
  Speaker 1: Brian will talk again next Monday. I hope you have
• 23:27
  Speaker 1: a wonderful week.
• 23:29
  Speaker 3: You have a nice hot week.