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Making Sense of the Market · Mortgage Marketing Radio

0:00
In today's highly competitive mortgage industry, building profitable relationships with
0:04
the real estate agents is essential for success.
0:06
However, finding effective ways to secure agent relationships can be a challenge.
0:11
With so many mortgage loan originators vying for the attention of real estate agents, it
0:15
can be difficult to stand out and establish meaningful connections.
0:20
Our new case study featuring loan officer Chris Cogill is a must-read.
0:25
Chris has closed a remarkable 36 million in funded loans from agent referrals.
0:31
And in this case study, he shares his proven strategies for building strong relationships
0:34
with real estate agents and leveraging those relationships to drive more business.
0:39
To get your hands on this resource, head over to LOKestudy.com and download your free copy
0:45
of the case study today.
0:47
You'll find actionable insights and practical tips that Chris used to close 36 million
0:52
in funded loans from agent referrals and how you can, too.
0:56
Don't miss out.
0:57
Go check it out right now, visit LOKestudy.com and download your free copy today.
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Hey listeners, Jeff Zimper, welcome to the latest episode of the mortgage market radio
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podcast.
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I'm so grateful you tuned in.
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If you're liking the content you hear, would you do me a quick favor?
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This is how we grow and reach other people.
1:20
Just leave us a quick review wherever you're listening to this right now.
1:22
If it's on Apple podcasts, Spotify, you grab your mobile phone, tap through this, go find
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the place to where you can leave a review.
1:29
If you would mind taking about one minute to do that, I'd be grateful and appreciate it.
1:35
And if you do, hey, jump into our private Facebook group, Jeff for podcast listeners, where
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there's more cool stuff going on there, more resources training and free stuff.
1:44
And that's facebook.com, forward slash mortgage marketing radio.
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Check us out there.
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And if you did leave us a review, grab a screenshot of it if you don't mind.
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And I will share with you a very special gift just for doing that.
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Okay, before I bring on this episode's special guest, guys, one of the conversations we've
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been helping mortgage professionals have is with real estate brokers, real estate brokers.
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Why?
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Well, first of all, they're influential people, number one, number two, right?
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They have access to real estate agents, right?
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And number three is what do they need in today's market?
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They need solutions to help them with recruiting and retention, recruiting and retention.
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They want to continue to grow their brokerage.
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They're suffering attrition, right?
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Because of it's all about agent productivity.
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Their profit margins have come down.
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And so they're looking for ways to optimize their business model to increase recruiting,
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maintain retention, right?
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And minimize or mitigate attrition.
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Does that make sense?
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Right, you think about building a business?
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I mean, you always want to be adding new to the top of the funnel.
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You want to be keeping the ones in the funnel that you have, right?
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But there's always going to be a little bit of funnel leakage going on no matter what.
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And there is a side joke on that, but that's not for this time or place.
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That's for another time and place altogether.
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However, one of the cool things that we're helping our members do in the mortgage marketing
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broker community is hacks is have meaningful conversations with these real estate brokers.
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And what we're presenting is a platform to help the brokers have more value to offer to
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their existing agents, maintaining the existing agents, going deeper with the agents,
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providing more value to the existing agents, but also recruiting new agents.
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And so Nick and Chris and Glenda and others are leveraging the educational platform we
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have to have conversations with real estate brokers to say, hey, let me help you.
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If I could help you overcome the challenge of recruiting in retention, would you be
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open to talking more about that and learning more about how I do that?
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You know, seven, eight out of 10 times easily or more, you're going to get a yes, tell me
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more.
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I'm curious.
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And what we do is help them walk the real estate broker through the process of leading
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with an educational platform, equipping the agents with the modern day tools, skills,
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and strategies to build an audience, to create deal flow, to attract business to them.
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And all the things that are involved in that.
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And that is how you have meaningful conversations, impactful conversations, and you become more
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valuable.
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Does that make sense?
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So if you want to learn more about the mortgage marketing program, it'll simple.
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Go to mortgagemarketing.pro, tap the link here in the show notes or wherever you're listening
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to this and go watch the brief video, see the success stories, read the success stories.
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And if you're curious, you want to take the next step book, a call with me.
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Okay.
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So today's special guest is back for another session.
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And I always just kind of geek out when I get a chance to talk to Mr. Todd Ballinger.
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Todd has been in this industry for a long time and has a wealth of knowledge about markets,
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economies, about, you know, interest rates.
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And it's got this, this program over at Barrel Smart University dot com.
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There's links in this show notes to everything I've talked about here on the podcast.
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I also do his private Facebook group, which is a place for you to go to, I think get educated
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on being able to better articulate you becoming a debt manager, right?
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Not just a loan officer, but actually leveling up your skill set for being able to have
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a conversation and dialogue about the nuances of investing in real estate interest rates,
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inflation, markets, right?
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The inverted yield curve.
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I'm just looking at his blog here, AI tools for real estate lending, 30 year versus
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inflation, what's the next step on and on and on lots of great content.
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So I encourage you to go check out Barrel Smart University dot com and make sure you check
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the link in the show notes to join his free Facebook group.
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There's all kinds of free training that goes on in there.
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And so Todd and I just kind of geek out.
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We just kind of rip and riff and no specific agenda, but we talk a lot about what's happening
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in the current market and how to show up what to say in the current market.
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And then we talk at the end, stay tuned for a little bit of the impact of chat GBT and
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other tools, AI tools on our industry and generally on the future for directionally looking
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on the future of the job market and the economy overall.
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So I think hopefully you enjoy this conversation and check out his resources with thanks to
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the show notes.
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Without further ado, let's get into this week's show.
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Todd Ballad here, welcome back to the show.
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Hey, thanks for having me, Joe.
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Thank you for being here again.
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I wanted to have a conversation with you again because I think in times like these,
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we need context, right?
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And we need somebody who has, I think, a broad vision or both the ability to have a wide
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scope to take in all the information, provide some context, but then to kind of narrow that
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scope down to you, okay, what do we do today now over the next 90 days?
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So I think you have a skill set to do that.
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So that's all I wanted to have you today.
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Oh, thanks, man.
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Glad to be here.
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Okay, we just had a conversation on the day.
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It's a tale of two focuses.
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How do you maintain an aperture that's macroeconomic that says, here's what's happening, big picture
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and function on a day-to-day basis, which is a really small aperture of, I got to pick
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my kid up at school.
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I got to call this loan officer, this realtor back, because you can't live and either,
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you have to maintain both.
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You've got to be able to say, I'm calling this person for this reason, but also understand
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the broader macroeconomic dynamic of the markets and the fact that people have locked
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in interest rates that were below, you know, were 200-300% below historical norms, which
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we can kind of talk about that more, but you can't live in one of the other.
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If you live in the macro, you freak out because you don't get anything done.
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If you live in the getting done all day long and you're not aware of the macro, you're
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talking to people about nonsense.
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You know, hey, let's refinance your 2% mortgage to 7, that doesn't make sense.
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So you have to maintain these two focuses, which is a little bit of a different skill set,
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because I think some people are just used to head down in the weeds, grinding and not
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being aware of the broader, the headwinds and the trends and stuff that's happening.
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What do you think, whether what your consumer had on, loan officer, what do you think is,
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I'm trying to, so the mindset of a mortgage professional today, like, where should,
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what should they be paying attention to to help them not get freaked out, right?
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But just to stay in the right place of, there's a lot of movement or maybe lack thereof,
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but like, where should their mindset be, you think, right now?
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Hmm.
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So good question.
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I think you first have to address, we'll say, the macro, the rolling force, right?
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Like, you have to sell a boat, you have to ask yourself, which way is the wind blowing?
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That's a good thing to ask before you get in the boat and just say, I want to sail, right?
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So we, you know, we've just had a period of time where we pulled forward years of demand.
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That was experienced through some of the most prolific income statements at loan officers
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and numbers that they've ever put up in mortgage companies.
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And what happened to those companies, they grew and grew and grew.
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And they grew because it's so much excess cash flow and the problem was always resource
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constraints, so they could have done more, right?
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So now we're seeing all these mortgage companies collapse and go bankrupt and get sold
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for a dollar and all this kind of stuff's happening.
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Why is that happening?
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Well, because once all that demand got pulled forward, then there's no more demand.
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And then you have to suddenly think differently.
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And so for a loan officer, one that I know that, you know, made $2 million the year before
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last, you know, struggling this year and I'm like, I'm like, dude, you pulled forward.
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You didn't just, you didn't get 10 times better in one year, okay?
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So the macro allows you to pull forward five years of mortgage production in a year.
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And then you have to now understand that that demand is gone for now, right?
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People are going to let go of that 2% 30 year mortgage.
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You have to cry out of their cold dead hands if unless there's a life event.
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So now if I were to quickly go across the boat to the practical, tactical that we just
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took the aperture down, right?
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What are the life events?
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Almost 70 to 80% of all refinances last month and production was cash out refinances, right?
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And those conversations are happening again.
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And that's an old dead fry loan, but it's happening because, you know, I love you, Jeff,
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but we're going to break up.
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I can only only on the other side of the house for so long before 7% doesn't matter anymore.
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And then the 2% goes away.
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We've got to sell the house.
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We've got to split up the assets, you know, whatever we have to do, or I've got to refinance
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and pay my wife off or my spouse off or either partner off those life events.
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I've got a kid and they're screaming each other in the same bedroom.
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I want a new bedroom.
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So you have to start moving to how is demand going to get re energized and it's not going
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to happen with people on a rate in term refus and it may not happen on the purchase side
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because you've got inventory constraints that are keeping prices up right now, right?
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Because there's limited inventory and that's going to take time to work off, but go after
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people in the place that they're having those life events, build relationships with
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estate planning attorneys, divorce attorneys, you know, my state going out and see financial
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advisors because their whole planning world is around life events.
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You've got to have a kid and you're insurance, you're going to buy a house, you've got to
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save up, you've got to retire, you know, it's all life event driven, lenders are rate driven
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oftentimes and they kind of miss out on this macro life event dynamic that's happening.
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And you need to be having conversations with your client base about, you know, home equity
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lines of credit.
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We have a calculator's on our website and we use Google AdWords to direct consumers there
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and I always track, you know, what's our calculator right now that's getting the most traction.
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If it's the first time home buyer calculator or new home buyer calculator, that tells
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me something, right?
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Right now it's the heel calculator and that makes total sense because if I've got a 3%
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mortgage and I have a life event, which might just be, I have more month and money, right?
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I've got right now my month is too long.
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I'm running out of the money from my available cash flow.
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Where do I get that from?
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I could take it from the stock market, but my portfolio is down 20 to 30%, I don't want
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to do that.
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I could take it from my house.
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Boom.
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My house is up 20 to 30%.
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That's a better place to potentially access well and I can do that with a heel lock.
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So again, there's a lot of opportunity people like I don't make money on a heel lock.
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So I'm like it's not about the heel lock, talk every client you've got, ask them if they
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have a heel lock.
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If they don't help them get one, so they have an ability to be their own bank, right?
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And access that liquidity and if they do lose their job, I mean, Amazon's laying out
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9,000 more and that is laying out now 22,000 people.
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This is happening.
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So if that became you, the day that happens, you can't access the equity in your home anymore.
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You don't have the conditional ability to qualify.
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But if you've gotten an equity line and closed on a day before, all that money is available
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to you, right?
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So do that right now.
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Get out there and have conversations that could lead to, you know, we've been thinking
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about buying that beach house because my cousins, you know, sell purse because they lost
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your job, but we could buy it rates of seven, but I don't care.
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I've been waiting about this house for 20 years.
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That's when rates aren't important anymore.
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The life event is driving the transaction.
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Yeah.
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I mean, there's a lot in there.
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First of all, that beach house example, we've got to remember, people are also sitting
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on tons of equity.
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And so they might be looking at a position of, you know, a situation of repositioning
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that asset to buy that second home, the dream home, the beach home, whatever cash out
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the scenarios.
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What you're saying is what, you know, what we talk about, I hear our mutual friend Dave
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Savage refer to as building your wealth team.
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And so the wealth team includes real estate agents, estate planning attorneys, et cetera,
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et cetera.
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And I think, you know, this, the market, the market will always, you know, force innovation,
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no matter what, as it always does.
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And so the innovations, it's laying upon us in the market industry real estate as well
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as that.
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Yeah.
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You know, it was, hold the bucket out and it filled it up with money, right?
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And now that's gone and we're like, well, shoot, what do we do, right?
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We have to now create, and I was saying this actually yesterday, I did a video about
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this, which is deal generation, deal generation is a skill.
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You've got to develop the skill of deal generation in those various ways to do that.
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You've mentioned a few.
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And you also highlighted something I want to share is that I was on a call a couple
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of weeks ago.
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And the loan officer had mentioned that in his company, I'm looking at the figure here.
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In his company that there was 300 cash out refides done at rates of 4% or less in the
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month.
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So to your point, it's being done.
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And those are the, those are the deals that have to get done because their life events
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are whatnot.
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And so full circle back to, for the listeners right now, man, I feel like I've been
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preaching this forever is conversations like, are you, you know, we've heard it all
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here before, whether it's the annual review, the six month review, the whatever, I don't
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know.
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But the bottom line is you better be having those conversations because, you know, dip
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in the technology pool, trigger leads, et cetera.
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If, you know, when somebody's right checking their credit or applying for credit, or there's
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all those things.
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And if you're not top of mine, obviously there's a hundred other companies that want that
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business.
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Absolutely, Jeff, you know, people say, you know, what's, you know, your network is one
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of the biggest leading indicators of your future income, you know, the old saying is your
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network becomes your net worth.
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So if you had a million people in your network right now, my guess is you would only need
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a very small percentage of them to transact and make your monthly production goals.
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If you've got a hundred people in your network, you need a much higher percentage engaging.
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So if you go back to, again, that lens discussion of two lenses macro, this is
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what's happening rates or it closes 7% right now and that the majority of people have
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4% or low rates, then you have to build a bigger network.
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So if you have free time, and this is something one people, most people have in common right
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now, as they have time on their, on their hands, then my, my recommendation is you do whatever
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you have to do to grow your network.
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You don't look for opportunities that just look for growing the network, you know, it's
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like, I'm going to have a wedding here with I invite, who do I know at church, literally
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some of that old school stuff of just thinking about people I know that I can call and say,
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I want to reach out touch base, talk about some things that we're doing.
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And this is where I like to have one thing that I can talk about.
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And to me, if I only have one thing right now would be, I just want to make sure you've
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got a heal I can place because there's a lot of volatility in the market right now.
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You've got the average American has $256,000 in equity in their house.
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That's if you take all houses the average.
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So that's a all time record by far, used to be in the low 100s consistently.
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So if that's true, most people have 50, 100, 150,000 they have access to, right?
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If they set that line of credit up.
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So if you feel confident you've got something, a conversation worth having, I just want
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to check in, you know, I'm in the midst, I don't do, I don't make money on the heal
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lots.
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I can't even do them.
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Most people I thought they were like, we don't even have a heal.
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That's fine.
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But I want you to go to your bank and want you to get a heal lock for me.
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Would you do that?
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Because I think you won't care if you don't need it and if you do, you're going to think
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this is one of the best things that I ever did, you know, having that access to some liquidity
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in the market.
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So you know, if you got in the back pocket, that gives you enough confidence to have
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the call.
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If you have the call, magic can happen, you know, in someone, I mean, I got a call
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from a friend of the other day.
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He said, look, I'm splitting up, you know, and I just wanted to, I know you know this stuff
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and he gets like, what should I do, you know, about the house and so we started talking
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about it, right?
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But personally, I know you well enough to call you to have that conversation, right?
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But if you call them and you're asking to help them, you know, magic.
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I think this also has to do with identity and how do you identify yourself as a loan
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officer?
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You know, you're, you're, you're, how do you see yourself, did you see yourself as
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a law officer?
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You see your, you know, the old classic live and die by the refi.
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Um, I mean, now like this term debt management, right?
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I'm a debt management.
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I'm a debt.
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I'm an asset manager, right?
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Like I, my buddy, Ryan Grant, who talks about, you know, we help you get in.
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We got you into the largest debt of your life.
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It's on us to help you manage that largest debt of your life for the rest of your life,
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you know?
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That's where you need to change the mindset, the concept and the service level that you
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bring, uh, and, and architecting those touch points and conversations and engagement.
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So, you know, it, it's not weird to call Todd and go and try and fish for a deal, right?
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It's like, Hey, Todd, wanted to call you.
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I know it's been a while since we talked.
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Um, I just wanted to introduce you something myself and my team are doing now.
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We're actually, um, considering ourselves debt managers, right?
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And even use that line, I just gave you.
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Yeah.
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What does that, what that management mean is means is we're offering this, this, this,
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this, this, these various services or consultations for our clients and, you know, wanted to see
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if you wanted to talk further about that or maybe you know, so, yes, this is going to
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open up conversations, but this is back to that muscle building that skill set.
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Absolutely.
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And, and you gotta, you know, it's always mindset and skill set and sometimes we're
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tipped one way, sometimes the other, but just like the aperture, you got to have
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both balance.
20:05
You got to have the mindset that there are things you can do right now that are meaningful
20:09
and creative.
20:10
And if you're building your net work and you can understand the compounding dynamic of
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that, that will build your net worth in time.
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It could be immediate, it could be a week, it could be three weeks, but just keep building
20:22
your network.
20:23
Have a good story to go out there and, and sell and absolutely expand the aperture from
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being a loan officer to being a liability or a debt manager because now you're looking
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at the entire, you know, left side of the balance sheet, you know, as we like to say,
20:35
there's a three side of balance sheet, real estate assets and liabilities.
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And the realtor is out there, they play a role in this too, and it's really important,
20:44
but they tend to sell real estate, not manage it.
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Financial advisors manage assets, lenders sell money, they can have it and become managers
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of liabilities, much like the financial advisor.
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And it creates a literally an enormous opportunity for them when they start making that
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shift.
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Let's, let's get got a little bit on some data, if you don't mind, because I'm looking
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at the Facebook group and we'll put links to it all in the show notes.
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So people, I would assume you would be open to some more folks joining your Facebook group.
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We got room for three more, man.
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That's it.
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Okay.
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So I'm, where are you at?
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Well, look, everybody's talking about, oh, rates are going to come down in May, right?
21:32
Ish, ish.
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And the Fed's already done enough.
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We've seen the issues that's going on with some bank failures and stuff and everybody's
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pointing to, to aggressive inflation.
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Give me, so I'm a guy off the street, Todd, what, what the hell's happening with inflation?
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How do I make sense of this all?
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And considering that, I may want to be buying in the next six months.
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Let's see, we've got a couple of things there.
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What is inflation?
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We could start with it.
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What's happening with it?
22:02
Yeah.
22:03
Well, so M1 money supply, you know, the simplest, the way I think about it is Jeff, you live
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on an island, there's 10 people there, right?
22:17
And you guys, you know, you trade in seashells, that's your money.
22:22
Okay.
22:23
And there's 100 seashells on the island.
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So your entire economy and all the people there, they have a finite bounded system called
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100 seashells.
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And the richest guy has got the heart, the most seashells as a percentage of the population.
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But that creates constraints on what am I willing to trade my seashell for?
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Like I may have to work and fix someone's hut and they give me three seashells and I
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think that's fair.
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I traded my life energy for those seashells and now I got three seashells.
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I can just spend them on a ramen coat or I can go spend them on, you know, a nice facial
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massage.
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That's up to me to decide.
23:01
But one day, you walk on the beach and there's a bag lying there and you open it up and
23:08
it's fallen, it's washed up from a ship and has 100 seashells in it.
23:14
What happens to that economy, right?
23:17
The person that finds it becomes the richest person there, but they're going to transfer
23:22
those shells in some way to get things that they want because shells actually are worthless.
23:28
Money is worthless unless you can exchange it for something.
23:32
So that 100 is going to make it into that system.
23:35
Maybe this person keeps some of it so they can stay wealthier than others.
23:38
But at the end of the day, let's say they keep 40 and the other 60 get dispersed into
23:42
your economy.
23:43
The people that are in the economy have more seashells.
23:48
So what do they do?
23:49
They can bid up the cost of the services and the goods and the things that they want.
23:55
We have a society that has had an M1 money growth supply for all time.
24:02
And this is the first year, the first month that there's a little hook at the top where
24:07
money supply just shrank for the first time ever, right?
24:12
So what that means is someone now is taking those seashells and throwing them in the ocean.
24:18
And you can't find them.
24:20
And suddenly what starts to happen, right?
24:23
Things get more constrained and there's less liquidity.
24:26
But there's still money.
24:27
There's still that money in the system.
24:29
But eventually, and what the Fed is doing is they are starving the system of liquidity
24:35
and dollars to get inflation down.
24:37
Because inflation, unfortunately, is unsustainable in a society where people can't buy food anymore.
24:43
It gets you want inflation, but that's why if you look at the Fed, the engineer inflation
24:49
at 2% and 3% a year.
24:50
Why?
24:51
Because if there's inflation, you're always incentivized to spend your money because it's
24:55
always going to cost more later.
24:59
So inflation is a monetary phenomenon that is engineered by the government and by the
25:04
Federal Reserve, why wouldn't they say our goal is inflation target of negative 2%.
25:09
That's called deflation and everything you want to buy is cheaper down the road.
25:13
And so you're incentivized to save and not spend.
25:15
That kills the economy.
25:17
So inflation is something you want.
25:20
You always want to have some inflation as an incentive to spend money and grow your economy.
25:26
But if it gets to be six or seven or eight percent, something starts to happen.
25:31
It starts to have a negative effect.
25:33
You can't afford stuff anymore.
25:34
And people start going into debt because now they're having to make up the shortfall for
25:38
things like food and shelter and rent and things like that with debt.
25:42
And that unfortunately is pulling forward their future to man to today so they can live.
25:46
But now they're paying compounding interest and so this whole thing starts to get all
25:50
mocked up.
25:51
So you eventually get to a point where inflation is no longer tenable and you've got to
25:56
get it down.
25:57
Why is it not tenable because people get angry?
25:59
They start overthrowing governments.
26:02
Every single, if you look at Ray Dahlia's stuff, every major government that's ever fallen
26:07
fell because the gap between the haves and the have-knots got too far apart.
26:12
The Roman Empire collapsed because the wealthy and the non-wealthy gets too far apart.
26:18
You have to have this sort of homeostasis and we are in a weird dynamic where everything
26:23
in the middle is sort of disappearing.
26:25
You have extremes of either wealth or you have poverty or you have massive two million
26:30
dollar homes.
26:31
You have starter homes.
26:32
But it's just weird.
26:33
Everything sort of in the middle has been getting kind of gutted.
26:38
For whatever random reason, the inverted yield curve popped into my head and I thought
26:43
I would tee that one up see if you want to briefly explain that because that's relevant
26:48
of course to what's happening for you.
26:50
On a simple level, when you're borrowing money, the longer you borrow money, the more
26:57
risk there is.
27:01
You're pricing in risk and right now you can earn more on a two month treasury coupon
27:08
and you can on a ten year, more than on a thirty year.
27:13
What the market is saying is the risk is being mispriced.
27:17
The curve is being inverted.
27:19
I would expect to earn one percent on something for a month and if I locked up for two years,
27:24
two percent and locked up for thirty years, I'd get five or six percent for that because
27:29
I'm holding that money and it's a long time and time is risk.
27:33
You don't know if someone's going to drop a new curve, what's going to happen?
27:37
But when everything gets inverted like that, the economy is saying, hey, something is really
27:41
weird.
27:42
This is what is leading and has led to the banking problems.
27:47
No one expected the yield curve to invert this fast because when you buy future cash
27:55
flow and you say invest in a bond is paying three percent, if interest rates go up, your
28:03
bond is worth less.
28:05
It goes down in value, because I could sell this right now three percent and buy four percent.
28:13
What's happened is these banks that had all this money sitting on their balance sheets
28:17
from deposits, they went out and said, I'm going to keep paying you, Jeff, one percent
28:23
or one point or point two five percent for your checking account, but I'm going to go
28:26
buy treasuries right now earning three percent.
28:30
That's fine unless you want your money back because I can hold to maturity those bonds
28:36
and I'll get a hundred percent of my money back.
28:39
The bond will give me that money in time, but you take your money out of the checking
28:43
account right now because you know what you want to do?
28:45
You want to go put it in a money market and get your own three percent.
28:49
I've got to give you that money back, but I put that money in a two year treasury at
28:53
three percent, but the fed raised rates and that bond, if I sell it right now, is worth
28:59
half of what it was worth before, but I have no choice.
29:02
I've got to sell it at half the value, give you your money so you can go buy the same bond
29:07
yourself, but I don't have the liquidity to do that.
29:11
SVP, they had to take a two billion dollar write off, which was manageable, but that's
29:19
the haircut because if you have a four percent bond, you can buy today and I've got a three
29:23
percent, how do I make you right?
29:25
I have to give you a four percent yield.
29:27
You're going to make it.
29:28
You get a four percent yield.
29:29
I got a discount at 25 percent and take a 25 percent haircut and then you'll buy it
29:34
because if you buy a three percent bond at a 25 percent discount, that's a lot getting
29:39
a four percent bond in terms of your real yield, but I just took a 25 percent loss just
29:44
to give you your money back so you could go buy your own bond and I'm going to get on my
29:50
soapbox.
29:51
We just want to minute here if I can, I'm kind of on it, but I'm going to step on the
29:55
next thing, buy the house, date the rate, SVP was dating the rate.
30:05
Some of these language that people are using right now is really dangerous because you're
30:11
implying to someone who's going to make a 20 or 30 year commitment and buying a house
30:15
and securing a bond, that's what mortgages are.
30:19
They're buying a 30 year bond that they can get out and get into something lower.
30:24
SVP thought they were doing the safest thing they could buy in US categories and rates
30:29
continue to go up.
30:31
They were dating the rate.
30:33
So you've got to be really careful when you hear a cute term like that and you get into
30:39
it too much, at least put disclosures and disclaimers on it and say, this is just a concept.
30:46
Your rates may not go down.
30:48
Your house value could also go down because I'm watching videos and TikToks and social
30:53
media stuff and it's all like, hey, don't worry, buy your house now.
30:56
You can refinance it for 4% in 10 years.
30:58
You can't say that without a disclaimer.
31:01
That's an implied guarantee without a disclaimer and I'm very worried that a lot of loans
31:07
are right now and even realtors are trying to induce business opportunities that may come
31:13
back to hurt them down the road.
31:15
So that's a side more, but SVP was dating the rate.
31:19
So I saw a quote, I won't remember the whole thing, but about that date, the rate thing
31:24
was, yeah, marry the house date, the rate, but whoops, the rate got pregnant and it's
31:29
going to be around for a while.
31:30
Yes.
31:31
And you've got child support for 30 years, so no form of your current note rate.
31:36
Exactly.
31:37
I love it.
31:38
I love it.
31:39
It was a good one.
31:40
Anyway, I don't know if I got your stuff in there, but inflation is a dynamic.
31:42
It's always a monetary dynamic.
31:44
With too much money in the system, we still do.
31:47
It's going to take a long time to work it out.
31:49
The Fed is, think about it, interest rates are a tax on everyone, right?
31:55
So I can tax all the way down because, you know, a small percentage of the population actually
32:00
pays taxes.
32:01
So you can raise taxes.
32:02
You don't really raise revenues for the government.
32:05
You don't necessarily put stress on people like you think, but interest rates do because
32:09
credit cards, people that are in the lower echelons have credit cards, you know, ironically
32:14
wealthy people right now can take all their money out of the stock market and earn 5, 5,
32:19
and a half percent risk free and treasuries, whereas before they were earning 7 or 8 percent
32:23
in the market, but it was incredibly volatile, right?
32:27
So you're having, you have all these weird effects.
32:29
You think raising rates is going to hurt the economy that it does.
32:31
It hurts sectors of the economy like building, construction, real estate, but actually helps
32:36
other areas.
32:37
You would think it would help banks, but it actually hurts banks, you know, in some
32:41
ways.
32:42
There are a lot of unintended consequences when you start poking the bear, but when
32:46
you jump in his cave and get on him at night and poke him fast, you don't know what's
32:49
going to happen.
32:50
And we're starting to see that now.
32:51
We got cocaine bear going on in the markets and, you know, if people like, I didn't expect
32:57
that to happen.
32:58
I'm like, well, I don't know that anyone's ever given a bear a kilo of cocaine and, you
33:03
know, the core, but that's really kind of what's going on, right?
33:06
So how much of this, this, you said we still have excess money supply, right?
33:11
How much of that is because of the COVID stimulation and all that?
33:15
50% of every dollar that exists on the planet has been printed in like the last eight years.
33:25
Really?
33:26
And yes, you're talking, think about that conceptually.
33:29
I mean, if you look at the M1 supply, and you look at, there's a chart in my Facebook
33:33
page on this.
33:34
There's quite a few on the M1 and money-sponsed up.
33:37
But one of them talks about money supply over time.
33:40
So this is the other thing.
33:42
Inflation is a tax on everyone that people don't understand, right?
33:46
If, if I'm sitting here with 100 seashells, and that other 100 seashell shows up on the
33:51
shore, my money's worth 50% of what it was a moment earlier, because there's a larger
33:58
supply of the seashells.
33:59
Because there's 200 now and I have about 50% of supply.
34:02
So when the Fed keeps printing like they have been, they are stimulating the economy.
34:08
But again, it's in the form of borrow.
34:10
They're borrowing from themselves, creating new money and putting it into the system.
34:15
That is also pulling demand forward in the way that we talked about earlier.
34:19
That is meaning we are robbing our children.
34:22
Someone's going to repay this debt, either in real dollars or in political capital, like
34:28
losing supremacy to China and other places because you can't keep creating money.
34:33
Eventually, people get pissed.
34:35
The Saudi Arabia government says, look, you guys keep printing money.
34:38
We have all of our oil and dollars.
34:39
We're not going to stand for that anymore.
34:41
We're going to party with China and Russia.
34:42
I mean, you got to pay at some point, right?
34:45
I know we're way out there in the weeds on the macro, but there's no free lunch anywhere.
34:50
And if you keep creating inflation at 6% a year, you are losing 6% of your wealth per
34:57
year because it's not, it's spending power that you care about.
35:00
And if you go to the store, and I get a chipotle right now, one more time, and spend $48
35:05
on my wife and I to get a burrito and dinner, it's like, that used to be a really nice night
35:10
out at the club or something.
35:14
So all right, let's, I love that.
35:16
Let's just play that snare for a moment here at the chipotle, 48 bucks.
35:20
So when inflation pulls back and rates come down, does your chipotle become less, or does
35:26
it stay?
35:27
That is a great question.
35:29
That's when you hear the words sticky.
35:32
So the average fast food worker in America, as of last month, makes $18 an hour.
35:39
Wow.
35:40
A year ago, it was $12, and before that, it was in the 8 to 10 range, right, just two years
35:47
ago.
35:48
So think about that.
35:49
Yes.
35:50
Are you going to take that chipotle worker, this is the cashier, and say, sorry, we're taking
35:54
you back to $10 an hour.
35:57
No, you can't.
35:58
And that's, that's what I think happens is that we get used to paying the higher fees
36:02
for these retail, right, food, et cetera, the consumable goods, but it's not like these
36:07
companies go, oh, hey, inflation's back down.
36:09
Let's reduce the, our cost here, or rather our price.
36:13
And that's why I do that.
36:15
So the highest in history, corporate profits of the highest in history, because they front
36:20
ran the inflation and the supply and other stuff.
36:23
And then consumers didn't back, back down their spending.
36:26
This is where the Fed is going nuts right now, because they keep raising rates, and people
36:32
keep spending, and jobs, they're looking for some job destruction right now.
36:36
They're not getting that either because people are still hiring for the most part, although
36:40
we're starting to see that, you know, major shifts there in tech and other places, the
36:44
construction industry still growing because we've got an inventory problem.
36:48
So the builders are finally going, look, we can build it.
36:50
People are going to buy it because the people that, what they're realizing is all these
36:55
people that have existing real estate, if they sell right now, their 3% goes away.
37:02
So anything that they do, they're swapping costs is 4%.
37:06
I got to go pay seven.
37:08
So if I go from a 400,000 dollar house to a 500 dollar house, it's like buying an 800,000
37:14
dollar house.
37:15
Because I'm going from three on my current net, which I've gotten used to, to seven on
37:18
the new though.
37:19
So I'm staying here.
37:20
I mean, we're not moving.
37:21
We're going to remodel.
37:22
That kind of stuff.
37:23
So the builders are figuring this out.
37:25
They're going, holy cow, the only way to get to solve this is to build more houses.
37:28
If we build more houses, you know, we can sell them because of this inventory issue.
37:33
So the government was hoping there'd be some construction, you know, destruction and things
37:39
like that.
37:40
And that's not happening.
37:41
And why is that not happening?
37:42
Is that still a supply?
37:43
I mean, that's not been happening since the host number of numbers finally gone down and
37:47
building costs and supplies have gone down.
37:49
So the builders can start building again, very, very efficiently.
37:53
And they can happen.
37:54
Is it going to happen?
37:56
I mean, yeah, just the last start I saw a lumber prices is where we're down below normal,
38:02
like after hitting this crazy level, we're all the way back.
38:05
Right?
38:06
We're back down to normal for what?
38:07
I'm reading where you have like a million, you know, houses short.
38:12
Oh, you know, that's what I mean.
38:14
The lumber prices are really down, the construction materials are really down, so the builders
38:18
are trying to ramp up their sort of building and saying, look, if we build it, people will
38:23
buy it because they don't have existing inventory out there to buy it, that's, you're not
38:28
going to solve the inventory problem with existing homes because there's a rate problem.
38:33
People don't want to give up that cheaper, right?
38:35
But you think that regarding the inventory issue, right?
38:39
Do you think that will ever be solved or at least kind of more in line?
38:44
I think it will, well, all problems get solved if they're painful enough, and, you know,
38:49
it may mean that we have to solve them in new ways, you know, you know, printed homes
38:54
and in demand, you know, construction and going on in those tiny homes, those 3D printer
38:59
homes.
39:00
3D printer homes, 80 years, California is trying to solve it by paying you $40,000 to
39:05
build an additional dwelling unit on your property.
39:08
Yeah, you get $42,000 in California.
39:11
If you'll build an additional unit on your property for rent, or you can move into it
39:15
and rent your main house, I mean, you start to see structural kinds of things that are
39:19
trying to be done.
39:20
We're going to build more high rises.
39:22
Absolutely.
39:23
But we also have a population problem, our population is dropping as well.
39:28
So you've got other weird things going on there, you know, too, that, you know, take a
39:32
little bit of the pressure off, you know, if you're starting to slow.
39:37
You have a, you have an image in your Facebook group, and we will put a link up, but if
39:41
you're reading it, right, listening right now, just tap the link in the show notes, right,
39:44
to its Facebook.com forward slash N-I-F-E-C-L-A, this, this image, you know, the map I'm
39:52
referring to, it's like 98% blue, and there's like the orange that shows the severe under
39:58
supply is all west coast.
40:00
Yeah, yeah, yeah.
40:02
But every other area of the country, it looks like according to this map, it looks like
40:06
there is adequate supply, but severe under supply.
40:10
What are these?
40:11
The growth states?
40:12
Yeah.
40:13
Well, people want to live on the west coast because it's beautiful, but then they're also
40:15
fleeing because the prices have continued to go up so dramatically.
40:19
So you're seeing sort of a migrations in the middle of the country.
40:23
In many ways, I've certainly had friends, I've talked a lot off, so they have days leaving
40:28
Portland and they're moving to Florida.
40:31
But a lot of the loan officers, I know that we work within our group, they're expanding
40:35
their reach to do loans for their clients, we're moving to Idaho and Michigan and places
40:39
like that in the Midwest where they can sell a million-dollar house in California and buy
40:44
a nicer house for 300,000 with lower taxes and everything else, and so that's, that
40:49
could help with inventory, but it's going to create other issues, right?
40:52
Migration issues always, you can lose those property, not property taxes, but income.
40:57
That's what I did five years ago, man, left California in Nevada, so.
41:00
Oh, I've had two friends move to Austin in the last couple years.
41:04
I mean, they're just finding interesting places to move and relocate where the quality
41:08
of life is there and you can become a king, right?
41:11
You move the other side of the island and find the seashell, your king.
41:14
There's always, that's a good example.
41:17
There's always trade-offs, of course, and everything.
41:19
Absolutely.
41:20
All right, I'm looking at some of this more of this information here.
41:22
You have a, I'm trying to see if I understand this graph correctly.
41:26
Let me, it is a downward trend showing, and I can share it to you and I are on the same
41:32
page here.
41:33
I'm going to scroll back up.
41:34
All right.
41:35
So here, let me share it.
41:36
So you're on the same page.
41:38
All right.
41:39
This is it right here.
41:41
This will be good for the YouTube peeps.
41:42
Yeah.
41:43
All right.
41:44
So this one right here, market expectations for Fed funds rate, and is this is forecasting
41:48
out to January 2025?
41:49
Yep.
41:50
Yeah.
41:51
So this is taking the way the yield curve is positioned stop and looking at futures and
41:57
saying, hey, you know, we had seen, you know, you could go down some of the early charts
42:02
and what you'll suddenly see is there was say, expecting no rate cuts until 2024 originally,
42:08
they thought it was going to start in February of this year and they got moved way out.
42:12
Now that stuff is starting to break, how do you take pressure off of companies, zombie
42:19
companies that can't make their debt service payments and can't refinance right now?
42:22
I think, but your company, any finance that's debt on a two year commercial note at 3%,
42:28
and your company now is flatlined or it's seeing some decreasing stress.
42:34
And you've got, what, refinance that note and the bank says it's going to be 5%.
42:38
And you're like, that's, you know, one and a half times what we're paying right now or
42:42
two and a half times what we're paying right now.
42:44
That puts stress.
42:45
So this is all of this stuff that they're doing, the slow becomes putting stress on the economy
42:50
and things are starting to break.
42:52
So people are saying, hey, the Fed can't lower rates because politically that will continue
43:01
to fuel inflation.
43:04
But right, if I, if I, if I stop raising rates and lower rates, I'm actually doing what?
43:08
I'm creating more money.
43:10
I'm people that my credit card payments go down, my auto payments go down.
43:13
I have more, you know, cash for debt, you know, I can refinance and get cheap stuff.
43:19
So they have pressure to keep rates high until the pressure is, say, the economy, which
43:24
is what happened with SVP is what's happening with credit Swiss right now.
43:27
It's what's happening with this, you know, FRC and these other banks, they're starting
43:31
to break down because they're collapsing on the weight of these higher interest rate
43:35
things.
43:36
So then suddenly, the yield curve reprices and says, I believe we're going to have to
43:41
lower sooner.
43:42
So now you're starting to see expectations that, and tomorrow is the big day.
43:47
This is probably the biggest financial day we've had in so much time because there's
43:52
just a occasion for them to stop lowering rates and just stay where they are.
43:58
There's just a occasion for them to start lowering rates to take pressure off the banks
44:02
and the, and the ecosystem.
44:03
There's, there's really a great justification to go bigger and raise rates more because
44:08
inflation and job stuff's not happening.
44:10
So you could go any direction and the direction we get tomorrow in this sort of Fed funds
44:16
announcement, it's going to probably tell us a lot about where we're going to go over
44:19
the rest of this year.
44:21
All right.
44:22
Todd, it's prediction time.
44:23
What?
44:24
What are you predicting for tomorrow's Fed meeting in regards to rates?
44:30
I think the Fed will do 25 because there's sort of a moral hazard.
44:43
Increase.
44:44
Increase.
44:45
Increase.
44:46
All right.
44:47
I think you're spending so much time and energy shoring up the banks because they want to
44:52
continue to show their commitment to getting inflation down.
44:56
If they don't get inflation down now, they'll be fighting it as we go into the election season
45:02
and that's not a good thing.
45:03
But they also don't want to tank the markets because they were in a recession, which
45:07
will probably already end.
45:08
That's the balance.
45:09
If I told you, I'm going to stop raising rates, your question should be, wait a minute,
45:13
why?
45:14
Is there something else coming that I haven't seen you start an election, an election,
45:20
but also that you may see stuff.
45:22
I don't see that's happening that's much worse.
45:25
And maybe you're doing that because you have to and maybe I should be really scared.
45:29
Maybe I should pull my money out of the market.
45:31
So you started to create these self-fulfilling kind of profits.
45:34
Well, don't you think that the current administration, there's going to be a
45:39
election in 2024, right?
45:42
Next year, don't you, I mean, you want to go to that election with the economy doing
45:46
well, right?
45:47
So.
45:48
You do.
45:49
And yeah, and if people can't afford to put gas in their car and buy groceries and stuff,
45:56
that's their economy, right?
45:58
Like, you know, a 60-year-old wealthy executive, the economy to them is a stock market.
46:04
The economy to your average American is, do I have more month than money?
46:09
Right.
46:10
Because if I do, I'm in pain and the mildly choice right now is to go get another job
46:14
and work extra hours or use a credit card.
46:17
So the economy and the base that you're playing to is going to be very different.
46:21
But the bigger economy is those smaller Americans, the majority, 15% of all Americans have
46:29
access to financial advisor.
46:31
So it's not, that's the base, right?
46:33
Most people don't have access to financial advice.
46:35
Most people have negative real savings, most people that are going to put someone in
46:39
office.
46:40
And that's why inflation is really more important than the stock market and what we think
46:45
of oftentimes is the broader economy.
46:48
So you have another graphic from yesterday in your Facebook group about housing, right
46:54
on track with overall inflation, 80% more expensive in the last 22 years.
46:59
That means your house values have gone up and your cost of service that debt has gone
47:02
down.
47:03
Yes.
47:04
So this is the thing that, it's one of my favorite things about inflation that the loan
47:11
officer to especially should understand this in real terms too.
47:15
So if you borrow money, $100,000, and let's say you bought it in your example 22 years
47:23
ago, right?
47:26
If you were to wait and today write a check to pay off that $100,000 note, you're paying
47:33
$0.18 on the dollar because the property has gone up 80% in value, but it costs you because
47:45
of inflation, inflation inflates assets, but it deflates loans.
47:52
And this is why people kind of get confused.
47:54
If you are the bank, you are the bank, Jeff, you loan me the $100,000 for the house.
48:00
I pay you back in 22 years.
48:03
Here's your $100,000, Jeff.
48:05
You can only buy $18,000 worth of stuff, right?
48:10
Because that money has lost 82% of its purchasing power.
48:16
So when you have debt, inflation is your friend.
48:20
It's allowing you to pay off the same dollar you borrowed 20 years ago with today's dollars,
48:26
which are going up in value because most people make money over time index to inflation.
48:31
You at least get a 2% or 3% annual raise.
48:34
That's to keep your buying power the same.
48:37
So your buying power is saying the same, but your real cost to paying that debt off is
48:40
going down.
48:42
So and people know this intuitively, if I said you I'm going to borrow $100,000 and pay
48:47
you back in 30 years, you know that that's not a good deal for you.
48:52
And so you say, well, compensate for that.
48:54
I'm going to charge you something.
48:55
It's called interest.
48:58
So interest is a construct that was created to maintain buying power for people when they
49:04
loan other people money.
49:06
If you pay me interest, I'm not actually making money.
49:09
I'm maintaining my borrowing power over time.
49:12
As an interest is higher than inflation, I make money.
49:16
So if you loan me money at 7%, and I pay you back at 7%, I'm not paying you back $100,000,
49:23
I'm going to pay you back $225,000.
49:26
But if inflation was 3% over that 30 years, you make that 4% spread, right?
49:32
Because you're getting that difference.
49:34
But if you loan me $100,000 at 4%, and inflation 7%, you're welcome to.
49:42
And say inflation 6%, then I'm actually earning 2% to borrow from you.
49:47
Yeah.
49:48
Because you're earning 4, and I'm paying a negative 6, it's offsetting.
49:52
So that's why borrowing is the best thing ever if there's inflation.
49:58
And I wrote a whole paper on it, and there's on the blog post, if you search inflation,
50:02
I wrote a 3 or 4 page paper on this, and I have a calculator that I developed.
50:06
You put in your interest rate, your borrowing cost inflation, it actually shows you what
50:10
you're repaying and real dollars.
50:12
And it's a really important concept to help consumers understand that you don't get that
50:17
benefit if you pay cash for a house.
50:19
Yeah.
50:20
It's going to be bar.
50:22
Right.
50:23
Which is why real estate is such a great asset class for investing for all the reasons.
50:28
You just described, including depreciation, et cetera, leverage, right?
50:34
But yeah, that's, I think what you just kind of walk through right there, when we talked
50:41
about becoming a debt manager and being able to articulate that in today's world, like
50:47
if it's a loan officer listening could get better at articulating why borrowing during
50:51
inflation makes sense, right?
50:54
And all the things you mentioned, like you're going to really level up your perception about
50:59
being a mortgage professional.
51:02
Absolutely.
51:03
So when you can explain to someone that they're better off borrowing at 5% and an 8% inflationary
51:13
environment, then borrowing it 4% and a 0% inflationary environment, you know, that sounds
51:22
completely antithetical, but it's again, when you borrow money, you're pledging to pay
51:28
it back over 30 years.
51:29
That's the problem with renting.
51:31
Renting is indexed to inflation.
51:33
It's always going to continue to creep up.
51:35
But I can pay for a house today, use it for 30 years and pay it today's dollars.
51:40
That is cheating.
51:41
It's one of the few facts that I find that most people don't understand why it creates
51:48
wealth.
51:49
It's not just the house going up.
51:50
It's the fact that I literally indexed my cost of living to something 10, 20, 30 years
51:55
ago, and if inflation's only 3% a year, in 30 years, I'm going to be indexing my cost
52:02
of living, 90% behind where I was at 3% a year or 30 years, I'm paying in 30-year-old
52:10
dollars.
52:11
This is incredible, but you can't do that anywhere else that I'm aware of.
52:14
Yeah.
52:15
Of course, it does come down to for a lot of people they think in terms of payment and
52:19
you still have to have that conversation.
52:21
Again, listeners, I'm just saying add this skill set of being able to articulate that
52:27
management and everything that it means when it comes to people investing, buying real
52:31
estate.
52:32
The common denominator is money, Jeff.
52:35
This is a thing like realtors, lenders, and financial advisors, and their clients have
52:40
something very similar in common, and that is money.
52:43
All of their work, all of their energy is translated into money, and that's the common
52:49
denominator in common language.
52:51
Money literacy is literally where all, there's so much in common between the language of
52:58
money because you're working for money, I'm working for money, I save money, I'm paid,
53:03
my interest is in money, we have this sort of common language that we forget about that
53:07
if you learn to speak that language, you realize, we're all doing the same stuff.
53:11
Why do you want to lower rate because you want more cash flow?
53:14
Why do you want a good deal on a house because you want to spend less on it?
53:17
Why do you want to save for the future because you want your money to earn its own money
53:21
in the form of interest?
53:22
So what?
53:23
At some point that money can support you when you're not making money and you're doing
53:27
something else with your time.
53:29
It's all sort of a common language that we all need to learn to speak in our way.
53:34
Let me ask you this probably final question.
53:37
Just just my own curiosity is, we've heard for many, many years about devaluing the US
53:43
dollar and this goes back to what you said about us, the government borrowing all the
53:47
time.
53:48
And I've asked, I have a friend who's a chartered financial analyst this question a
53:52
few years ago and at that point, anyway, this is going back at least half a dozen years.
53:59
He was very bullish on the strength of the US dollar and the US economy and all that
54:04
noise and China and everything, you know, all that kind of was just like the US dollar
54:09
is just so strong, you know, that he has no concern about that.
54:12
I'm curious if you had any input on that.
54:15
The US dollar is strong because of our rule of law, because people understand that we
54:21
protect our capital, we protect our dollar, but there are lots of other currencies, oil
54:27
is a currency, but it's denominated in US dollars, right?
54:31
Most of the world, you know, sort of ecosystem is based in US dollars and that's, again,
54:37
go back to Ray Dalio's kind of stuff, which is really interesting on how powers change
54:40
over time.
54:41
And it's usually when you lose the reserve currency, you lose your world power.
54:47
Now dollars, when I say rule of law, I'm also talking about military, right?
54:52
Because we have a military, a strong military, you can enforce that rule of law against other
54:57
countries.
54:58
But if China comes in and partners and takes out our protection agreement with Saudi
55:03
Arabia from the 70s and said, we'll protect you.
55:07
But you have to denominate oil going forward in one, not dollars.
55:11
You're going to start to see cracking in the overall ecosystem of the dollars reserve currency
55:16
in which case it starts to get value.
55:19
That's really bad for us because we can keep printing dollars because we make dollars.
55:23
We have a dollar factory called the Federal Reserve.
55:26
We can make these dollars, but when we print dollars, we're devaluating everyone's dollar
55:31
on the entire planet and the planet knows that.
55:35
So if you have money in Switzerland or you have money in Russia that you have a US dollars
55:39
and we print dollars, your dollar value is down.
55:41
If you have Chinese one and they print one, your value is going down.
55:46
So there isn't awareness when you're spending power and you're still being devalued.
55:50
And so the US government cannot keep printing to solve our problems because if we do that,
55:57
we'll keep the valuing our dollar and we'll eventually lose that world reserve currency.
56:01
But when there's a problem like you saw happen with this economy recently when you spank
56:05
stuff, you immediately saw a flight to the US dollar because it's a safe haven and when
56:10
there's instability, eventually they may fly to something else.
56:17
If people thought it was going to be Bitcoin, people thought it was going to be this and
56:19
that.
56:20
Who knows?
56:21
There's a lot of trust and that trust is military strength.
56:25
It's rule of law with all those things that China hasn't had in the past, but they can
56:29
bully their way there if they get enough other countries, India, Russia, other countries
56:34
to say I'm going to play a new game with the one.
56:37
Yeah, but we've been printing money for years.
56:40
I've heard about this since, you know, I've been in the mortgage business in 2003 and
56:45
I'm sure grandpa used to bitch about like the government keeps printing money and borrowing
56:50
money and, you know, oh my God, if everybody we owe money to ever calls in that debt, right,
56:54
we're screwed.
56:55
So what's the answer?
56:56
You say we have to stop printing money.
56:58
What does that mean?
56:59
How do we then the government has revenue sources?
57:01
Does that mean we just raise taxes more or what?
57:04
Well, there's a great chart in our flannel taxes.
57:07
Anytime we get close to 18%, if we tax our citizens at 18%, all hell breaks loose, the
57:13
economy goes into major recession and all the government gets thrown out a new, a new
57:17
era happens.
57:18
And so each time we keep trying to raise taxes, that's one way to do it, but again, you
57:22
only get so much blood from an orange, you've already got inflation tax in me.
57:26
Now you're going to try to tax me for my work and things are going up.
57:29
At some point, the citizen says enough and they say that in voting and then we see a new
57:35
power kind of come in.
57:36
We sort of saw that in the last election cycle, we're going to see it probably again here
57:40
happening.
57:41
We've been talking about inflation.
57:43
The most deflationary force in history just hit and it's called AI.
57:49
So technology has been the great, the flater because it allows people to do more with less.
57:56
And that creates productivity and more productivity means more money.
57:59
And the US is the most productive economy on the planet because we're incredibly creative.
58:05
Cat GPT and always due to AI tools are going to be much like the tractor.
58:09
One tractor could do 100 men's work in a day.
58:12
AI will allow people to do 100 times what they were already doing if they want to do that
58:19
or to have more free time to spend money and do other things.
58:22
That's the deflationary for the society as a whole because when you can do more with less,
58:28
right, it just sort of over time starts to deflate because I can have fewer workers.
58:36
That $18 an hour worker, I can't get rid of them until I can buy a robot.
58:40
They can do it better for $4,000 as a fixed installation.
58:45
And the AI is going to answer my questions and help me and push the buttons.
58:49
That's how I get that's deflationary.
58:51
It starts to completely change the way we think about work and other stuff.
58:55
And I saw a great quote the other day that AI will not replace your job, the person with AI will.
59:01
And I truly believe that.
59:02
It's augmented intelligence.
59:04
It's additional intelligence as I like to call it.
59:06
It's a second brain.
59:07
It's going to allow you to be incredibly effective.
59:10
But that's deflationary.
59:11
If I can now do the work I was doing in my system had to do before because I don't need
59:16
her to do marketing anymore, I can let her go.
59:19
That's deflationary in a good way for me.
59:22
It reduces my cost of running my business.
59:25
But now this person's now got to go find a new job and get retrained or whatever.
59:29
So you're going to see a huge shift I think in our society.
59:32
But we're at the epicenter of that, which could be a really good thing.
59:35
It's just going to take time to work its way through the system, new economy.
59:39
Yeah, thanks for bringing that up.
59:40
I know we meant to talk about that.
59:41
I saw the quote.
59:43
I'm sure you would agree.
59:44
I'm assuming you tell me we've got to put a put a bow on this one.
59:47
But a quote, of course, Microsoft's invested 10 billion, right?
59:51
So, but their comment or quote was that if this sounds obvious, I apologize.
59:57
But that AI will have as equal perhaps greater impact on us as did the personal computer in the
1:00:06
Internet.
1:00:06
That's absolutely.
1:00:09
This feels like ninth grade of me when somebody came into my office and said,
1:00:12
I want to talk about the Internet.
1:00:14
And I was like, what?
1:00:15
You know, just make absolutely.
1:00:16
I was like, what the hell are you talking about?
1:00:17
It didn't make sense.
1:00:19
I think this is the same kind of sea change.
1:00:21
But exponentially, if you kind of look at a Moore's law,
1:00:24
this is going to be exponential stuff.
1:00:26
When co-pilot is in all of your documents and I start to build a spreadsheet.
1:00:31
And I just say, hey, build me a rental comparison proposal for client on this and this.
1:00:36
And the spreadsheet's built.
1:00:38
And you can send it to him a custom sheet and the kind of stuff you can do right now
1:00:41
with writing and a lot of the tools that we play around with.
1:00:44
I've got a great little, got a post on this that I updated weekly.
1:00:47
But I have my favorite tools in there by category.
1:00:50
Writing, imagery, marketing.
1:00:52
And it's in the blog if you want to play around with that.
1:00:55
But I'm just, I'm really fascinated by the changes that I think are going to be brought about.
1:01:00
Medicine, I mean, just short, I never need to wrap.
1:01:03
But you know, they just, it's been passing every exam, every bar, every medical stuff.
1:01:08
They had a simulation that they've been running for years on medical advice.
1:01:12
And AI was 200% better than a doctor at taking the intake form and diagnosing
1:01:20
what's actually going on, right?
1:01:22
With this Chaggit beauty, when they did the same test, it was 750% better.
1:01:28
Now, you think about a doctor, you're thinking about the schooling and the education.
1:01:32
But you're also, you've got such bias, such, you know, this and that.
1:01:36
And it's probably this, it's going around all that, the, the, the intake form with just the
1:01:41
symptoms on it.
1:01:43
What will that do for the medical permission?
1:01:45
Right.
1:01:45
When you come in, right?
1:01:47
And someone can put that form together and it's got a five times better chance
1:01:51
to diagnose it much wrong.
1:01:52
And you start with the diagnosis and work backward versus having a conversation,
1:01:55
trying to figure it out.
1:01:56
You need less doctors, you need less, all kinds of things for that.
1:01:59
And that's going to be between the mortgage industry, between the real estate industry,
1:02:03
the job will go away.
1:02:04
There's going to shift and, and, and, and, and be very different.
1:02:07
Hmm, very interesting stuff.
1:02:10
And thank you for reminding me of the blog, borrowsmartuneiversity.com.
1:02:14
As we can find that, that'll be a link here as well in addition to the Facebook group.
1:02:19
Man, we could, we could keep talking for hours.
1:02:21
I know it's always great to have you on.
1:02:23
And I really, really appreciate you sharing some of your knowledge and expertise with our listeners.
1:02:28
Hey, I appreciate it, man.
1:02:30
Again, we also get kind of a common language here.
1:02:33
And it's just fun to talk about some of these different topics.
1:02:36
It, it really, it's a difficult but also an incredibly exciting time to, to, to be alive.
1:02:42
And encourage people right now, build your network.
1:02:44
You've got time.
1:02:45
Everyone was complaining.
1:02:46
They were too busy, you know, a year ago to do it, to learn things now, like,
1:02:50
learn, grow, develop yourself.
1:02:52
My slogan right now is, grow yourself and your business will keep ketchup.
1:02:55
You've got to keep growing yourself, grow yourself, your business will catch up.
1:02:58
If you're trying to grow your business right now, you're going to struggle with finding ways to do that.
1:03:02
You grow yourself.
1:03:03
All of these ways start to appear and they become very, very obvious.
1:03:08
And so you kind of have to flip the script a little bit and, and invert your thinking.
1:03:11
Yeah, that's definitely a good advice.
1:03:13
I like that tagline too.
1:03:14
All right, so once again, people, links are in the show notes.
1:03:16
Check it out.
1:03:17
Todd, as always, thank you and listen to your junior to do.
1:03:19
If you like this episode, you can leave us a review or share it with somebody.
1:03:23
We'll see you on the next one.
1:03:24
Bye for now.
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