Latest / Financial Survival Network / Fed Rate Cuts Amid Economic and Social Chaos with Ed Siddell #5995

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Fed Rate Cuts Amid Economic and Social Chaos with Ed Siddell #5995 · Financial Survival Network

• 0:00
  There's going to be a change. I don't know what that is. I
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  don't know. I mean, we've all heard the rumors right that they're going
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  to have that cut benefits by twenty to thirty five percent. They're going to
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  continue to increase that full retirement age up into the seventies. You know,
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  I don't know what's going to happen, but you know, at the current
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  rate, you know, it's just it's it's broken, and you know,
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  I don't know how long it's going to last. You are listening to Carrie
• 0:25
  Letz's Financial Survival Network, where you get valuable information. You just can't find
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  anywhere else to thrive in today's trying times. You need the Financial Survival Network
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  now more than ever. Go to Financial Survivalnetwork dot com and get your free
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  newsletter and gift. Financial Survival Network now more than ever. And welcome you
• 0:52
  are listening too. I'm watching the Financial Survival Network. I'm your host,
• 0:57
  Terry Lutz. Well, we got some major issues to discuss the year.
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  Obviously, the economy is slow and everyone can see that lay off up,
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  but has offended stood up and take notice. Well, arguably you could say
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  that their call for lower interest rates although we haven't seen them yet, is
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  the first salvo in their mission of pupping up the economy and keeping the stock
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  market going, especially in an election year at sidel is with us now,
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  So GDP one percent, all right, So it doesn't qualify or classify as
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  a recession yet, but if we had an honest inflation measure, maybe it
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  would. Yeah. And you know, I was just talking to to a
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  client and you know, we're talking about the old saying when it comes to
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  uh statistics, right, numbers, it's they're they're you know, there's there's
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  lives, there's damn lives and their statistics right, And depending on what numbers
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  you're going to use it really you know, you can you can hedge you
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  one way or the other. But you know, honestly, the way that
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  I'm looking at this is the FEDS are saying, oh, hey, PC,
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  that core it's at two percent. That's kind of our tarian number.
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  You know, I think that they may be looking at that along with you
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  know that you know one percent GDP. Where now all of a sudden,
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  yeah, they they have the ability, that's the past that they need to
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  start lowering rates because we see it. I mean, you and I and
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  and everyone that we know, I mean, we're we're we're seeing, we're
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  feeling the slow down already. But uh, I don't know. I think,
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  well, I do not think we'll be shocked next week during the Fed's
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  meeting. All right, So they said they're going to cut rates, but
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  they haven't done it. Yeah, there's three of them for the coming year.
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  Experts are saying six. And the mean rates have come down on their
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  own, which is indicative of a possible recession. Mortgage rates, you know,
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  long term rates, the two year has come down, which give some
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  breathing room because the Fed funds rates still at five and a quarter, so
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  they don't really have to do anything perhaps until later in the year. Those
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  lower rates are no doubt going to be helping the imperiled banking sector too as
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  well. Right, yeah, and you're absolutely right. You know, I
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  think the Feds have been looking at it, especially Jerome Powell. They're going
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  to let the capital markets, you know, do his job, you know,
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  and that's actually what the market should be doing, is you know,
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  doing what needs to be done, which is lower rates. And if you
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  look at what happened in October, you know that thirty year mortgage. It
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  was you know, eight point six percent at the high, and now depending
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  on the lender, you know, it's hovering around six And I just saw
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  the one this morning a little bit below six. So they're coming down on
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  their own. I don't think personally that the Feds are even going to think
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  about lowering rates until the mid to the end of the second quarter, which
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  is May. I also disagree with the experts that they're going to lower it
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  as much as six times. I don't know how they can do that without
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  kicking inflation back in because there's a lot of inflationary things going on right now.
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  All these government jobs are inflationary. We're overspending, which is inflationary,
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  and so if they lower them too much, it's going to put us right
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  back to where we were. Yeah, so there's a kind of a new
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  way out for them. The only thing they get to do now, which
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  they're probably better off doing nothing than something. But what happens when the market
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  wakes up one day and says, you'll lie, we wanted to lower a
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  rates, said you didn't give them to us, and then we have an
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  inverted yield curve and all of that good stunts. Yeah, you know that
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  could definitely happen. I think as long as the Beefeds adhere to what they
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  were talking about before Lauren rates two or three times because they changed it from
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  four to to three times in August the last year. I you know,
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  I think the markets are going to be fine. It's just not going to
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  be you know, a trajectory straight up like it was last year. But
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  it's an election year. Historically it's always a positive year. You know,
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  the average is close to eight and a half percent, no matter who's in
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  the White House and whatever the running is. But I think we have an
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  narrow window between now and the election to you know, make a little bit
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  of hay while the sun shines. You know, as long as everything is
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  status quo, which means there's there's no additional geopolitical issue. We we we
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  don't have an event like Gaza, you know, or anything major happening or
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  you know everyone who use of the term black swan. Yeah, all right,
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  So what about asking this question here? So inflation kicks up, prescious
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  metals start moving up, but then we have this thing called the January facts,
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  right, and it's almost never brow. It's one of the most solid
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  indicators so it goes January, so goes year. Yep. So then we'll
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  have a dip probably after January or the first second week of February. It'll
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  did it through till the perhaps the summer, and then the federal start making
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  some noises because as the late Great allen ablesonset, the Fed is doing what
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  it does best, which is an elected president right absolutely every time every time,
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  you know, you know, and if you go back and you look
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  at the stats during a presidential election year, you know, the turnover from
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  you know, a Democratic administration to a Republican or Democrat staying you know,
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  Democrat to Democrat, Republican and Republican. There's really not a whole lot of
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  variants in that through the end of the year. It's the following year where
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  there's a little bit of change. But you know, I look every time,
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  you know, I come on your podcast, I say the same thing.
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  You know, it's there's there's a debt issue, there's a debt bubble.
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  But I'm positive this year, especially AI tech, I don't think that
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  run is done. And you know, industrials and materials because that's been beat
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  up so hard. Even though the economy is slowing down, you know.
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  I I think that that's you know, a really good specter going forward,
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  especially you know, as there there's hedges against the inflation. I think,
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  you know, the industrials, materials that they're going to benefit from it.
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  Okay, so so and then the of course, uh we would remiss,
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  we didn't talk about so inflation is already cooked into the system. Everything you
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  buy has gotten more expensive, especially things you need like food and energy.
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  While that's down a little bit, but we'll see how long that led us
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  for. Hey, inflation, is it behind us? Is the worst behind?
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  Or are we going to have another resurgence because it's a twenty year cycle?
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  Yeah? Yeah, I mean we're it's uh, we're just just barely
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  ahead of the curve right now, and it is it's going to come surging
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  back. I mean you can't, even though the FEDS have that core target
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  of two percent I mean, which is literally arbitrary. I mean it really
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  is. But when you add as many government jobs as we did and we
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  continue to overspend, I mean, a republican democratic doesn't matter all overspending,
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  right, and then we add in all the unfunded liabilities that we have,
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  from social security to medicare, defense spending, and just you know, covering
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  the interest on the national debt. You know, that's all inflationary. And
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  we combine the national debt thirty four plus trillion and the unfunded liabilities which are
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  estimated to be somewhere between one hundred and eighty and one hundred and ninety trillion
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  on top of it, there's Yeah, that's inflationary. I mean, there's
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  at some point in time, whether it's this year or next year, I
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  mean, it's it's going to come home to roost. And that's what makes
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  me nervous. This is why I say all the time I'm cautiously optimistic.
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  And you know, we've got a very narrow window between now and in the
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  end of the year through the election. Yeah, do you think they're going
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  to take my social security away from me? Here? At you know what,
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  I don't know if it's going to be there. When when you look
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  at the aging population, the amount of the workforce that is not actually engaged
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  in working, you know, there there's not enough people funding the boomers that
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  are retiring, So there's there's going to be a change. I don't know
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  what that is. I don't know. I mean We've all heard the rumors
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  right that they're going to have that cut benefits by twenty to thirty five percent.
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  They're going to continue to increase that full retirement age up into the seventies.
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  You know, I don't know what's going to happen, but you know,
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  at the current rate, you know, it's just it's it's broken,
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  and you know, I don't know how long it's going to last, all
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  right, so I should enjoy it. Well, I got it. Huh,
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  Yeah, that's right. Here's a question for you. Like or narrow?
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  You're better off taking it till you waiting until it hits need the tape,
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  right, because then you get your maximum benefit. But dearly is this
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  something that we want to perhaps speed up? Yeah? You know, when
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  when we're building plans for people, you know, we're looking at it two
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  ways. You know, the math, you know wins what what does it
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  tell us the best time to take it? You know, is it you
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  know, sixty seven, sixty eight, seventy, I mean, is it
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  is at early at age sixty two? Right? Everyone's situation is a little
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  bit different now. Having said that, I am my personal belief, I
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  don't think that if they hate cuts that they're going to cut the benefits.
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  I hate saying the word benefit because it's our money, but cut the most
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  benefits of the recipients that are computing. What's that I said, they'll cut
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  the outlays, right, Well, that's exactly it. So like to your
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  point at right that just you back, that's all it is. And so
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  it may make sense to actually take that money a little bit early so that
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  that way, yes, you may have a reduction, but at least you're
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  going to get it and you're locked in and it could wind up being more
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  than than what the outcome is. Yeah, mine is I've got like survivor
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  benefits, so that pays me about half of my eventual payment will be after
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  seventy. So do I get ready now to take it all now? But
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  should give me probably I don't know, fifteen hundred a month more or or
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  maybe a thousand a month more it took it all now, or do I
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  wait till the three years from now and I'm seventy and then get it.
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  You know, it's a question I've been having difficult since with well, you
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  know what, and that's a great question in the fact that you're being thinking
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  about it is really important because most people don't think about it that way,
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  and it really you know, is it going to be there? Yeah,
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  we've heard estimates from twenty thirty nine to twenty thirty five to you know,
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  twenty twenty six. Who really knows, because it's really there's nothing there.
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  It's you know, it's a flow through, you know, the Social Security
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  that's taken out of our taxes every pay period. That's what's going to fund
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  the retirees. So if we don't have enough people working to fund that,
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  you know that there lies the problem. And and where is that that break
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  even point or the breaking point if you will, for that to happen.
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  So breaking point I'm more concerned about than the break even point. Yeah,
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  well yeah, absolutely so, you know, because it's a question also if
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  they'd all do anything about it, then inflation is going to need it away
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  anyway. Right, Well, yeah, you're exactly right. You know this
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  fallacy we I've been hearing it all day on the news, the experts saying,
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  well, you know, inflation, you know, inflation is going down.
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  Inflation is going down. It's not going down, it's the rate of
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  growth of inflation that's decreasing. I mean prices are still going up, and
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  so you know, it's that like you said, you know, even though
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  they're adding that that cost of living adjustment and everything else. I mean,
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  you know, inflation. It's it's it's that silent tax, the island killer,
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  if you will, against your wealth. It just keeps eroding it a
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  little by little, not by month. Yeah, and sometimes not so little,
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  right, yeah, sometimes not so little, because it does. I
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  mean, you know, you've got different inflationary factors, just the standard of
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  living, like you said, you know, those luxuries like food, shelter,
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  clothing, Okay, and then you add into it healthcare or you know,
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  if your kids are in college. You know, the the inflation rates,
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  the growth rate and cost on healthcare and prescriptions and and education is astronomical.
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  You know, the the economic inflation rate pales comparison to you know,
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  those industries. So it does it it is, it's a wealth killer.
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  You know, that's amazing looking at my social security state that I'm in,
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  leading in me and my employer and basically that was my employer. I put
• 14:56
  it in write sixty thousand dollars and you know, it's going to take a
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  long time for me just to break these on the deal and my parents on
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  the other hand, you know, people ten to fifteen years older than me.
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  Man, they really cleaned up on this thing. I'll be happy just
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  to break eat it. You know, you're exactly right. I mean when
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  it was originally designed, you know, life expectancy was I mean, so
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  sixty five was the original you know, full retirement age and life expectancy was
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  below seventy you know, sixty seven, sixty eight, sixty nine. And
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  now people are living well into their mid to late nineties. And I and
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  I think I would not surprise me, wouldn't shock me at all if you
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  start seeing them, you know, continue to increase the eligibility age and the
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  full retirement age, you know, to get close to that that same point
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  again because now I think life expectancy carry for you and me. They just
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  saw it again and it's below eighty again. I think it's like seventy nine
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  or something like that for exactly that's see, so we have to be you
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  know this, I'm just gonna just clarify what you're saying. Yep, if
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  you make it to sixty, then you're probably gonna make it to eighty three.
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  If you make it to sixty five, then you're probably going to make
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  it to your mid to high eighties. And if you make it to sixty
• 16:22
  seven, you'll probably make it to like eighty eight or eighty nine. Those
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  numbers aren't et sact but that comes from the actuarial tables. But the action
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  of your life back don't see American mail is under it's like seventy seven,
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  I think, right, Oh, is it that low? Okay, I
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  just knew the average overall was below eighty. I didn't realize it was seventy.
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  So I didn't realize it was that low. And we're in that right
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  with you know, healthcare, the modern medicine and everything else. You know,
• 16:52
  our clients are aging population, they are living longer and longer, and
• 16:56
  so you know, we're having to plan out these plans until they're mid and
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  upper nineties. Just based on the stats that you just talked about. So
• 17:06
  I just looked it up. American life expectancy that without regard to sex tender
• 17:12
  is seventy nine point eleven years, which actually increased from twenty twenty one when
• 17:21
  it was just under seventy nine. But you know, at one point it
• 17:26
  was definitely higher. But you know point is you have to be very concerned
• 17:37
  that the median life expectancy is eighty one point four and the women female was
• 17:42
  four point eight, which was down from well twenty twenty three went up a
• 17:48
  little bit. You have to look at you can google live better than me.
• 17:51
  And the point is there's different numbers, yes, but point is you
• 17:56
  could last a long time. And if you're holding out hoping your social security
• 18:02
  is going to get you through it, just figure if it makes your house
• 18:06
  and car payment and buys your groceries and your utilities, you'll be doing really
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  well. Yeah, you know, and I mean just food, shelter,
• 18:17
  clothing, basic necessities. And you know, at the continued growth rate of
• 18:22
  inflation, you know that's that's going to be tough, especially when you add
• 18:26
  in you know, increasing taxes. I mean we're seeing that here in Ohio.
• 18:30
  You know all the the additional you know, assessments on property values and
• 18:36
  you know, school district taxes and everything else. And in even if your
• 18:40
  home is free and clear, it's becoming very difficult to afford to live in
• 18:45
  the house that you raise your families in. You know, for a lot
• 18:48
  of retirees that are all fixed income, which is why I'm creating a new
• 18:52
  newsletter and if you're subscribe to my existing one, you'll automatically get it.
• 18:56
  It's called the in slate. That's called Inflation Cafe where dollars go to die.
• 19:07
  Oh I like that, Pat, Yeah, yeah, so pint is
• 19:18
  this is serious stuff here. I didn't no, house serious. It is.
• 19:22
  Still you wind up retiring and then you don't have enough and then you're
• 19:26
  a greeter at ol Mart. Except the greater job is probably going to be
• 19:30
  replaced by a robot soon, right, boy, you know what, I
• 19:33
  didn't even think about it like that. You're exactly right, Yeah, you
• 19:37
  know. I mean because it it the front end capital for that robot is
• 19:41
  going to be way more expensive than long term. You know, it's going
• 19:45
  to be cheaper. You know, they're never going to get sick. They
• 19:47
  don't need vacation, no benefits. They just need a service to contract.
• 19:52
  Right, That's that's it. That's it. Yep. Yeah, Well,
• 19:56
  interesting times ahead for sure. Just tell us where we find you. How
• 20:02
  do we connect with you on the web. Yeah, you can find us
• 20:06
  at e g SI Financial dot com. That is the best way to find
• 20:11
  us and get a hold of us anytime. You need us all right,
• 20:14
  and the link to that is in the show notes this interview on Financial Survival
• 20:19
  Network dot com. Make sure you go there, sign up for your free
• 20:23
  newsletter ED always a pleasure, and we will be talking to you again real
• 20:27
  soon. Absolutely my pleasure. Thanks for having me back, thanks for listening
• 20:33
  to carry Lets this Financial survival Network your solution to today's trying times. For
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  the latest, go to Financial Survivalnetwork dot com. Financial Survival Network now more
• 20:45
  than ever,