Latest / Financial Survival Network / Inflation -- No Place to Go But Up -- David Stryzewski #5898

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Inflation -- No Place to Go But Up -- David Stryzewski #5898 · Financial Survival Network

• 0:00
  Yeah, okay, Well, we just need to understand it's a basic thesis.
• 0:03
  Inflation is going up. Printing Milton freedmen define this printing is literally the
• 0:07
  cause of inflation. And so there's not inflation in any society we're printing doesn't
• 0:12
  occur. And so if we understand that that's true, and there are things
• 0:15
  that relative to us dollars are going to be going up and inflating, I
• 0:20
  think it's important that we understand. Commodities are the place that we generally speaking
• 0:25
  see inflation the most. And so think of oil and gas, think of
• 0:28
  metal miners, think of metals. In general, commodities are an important component
• 0:34
  to this. Food actually would also be going up. You're listening to Carrie
• 0:38
  Lets's Financial Survival Network, where you get valuable information you just can't find anywhere
• 0:43
  else to thrive in today's trying times. You need the Financial Survival Network now
• 0:50
  more than ever. Go to Financial Survival and Network dot com and get your
• 0:54
  free newsletter and gift. Financial Survival Network now more than ever. And welcome
• 1:04
  you are listening to watching the Financial Survival Network. I'm your host. Carry
• 1:08
  Let's hey, we're we're already passed. We're almost done with the half of
• 1:15
  September inflation numbers. Well, let's talk with David Strazuski, financial expert.
• 1:22
  Question is David, is inflation coming back and is it here to stay it?
• 1:27
  Well, greed to be with you is always carry you know, a
• 1:30
  couple of things to note. I was just in New York and the pc
• 1:34
  numbers come out. So for those that don't track it, that's the Federal
• 1:37
  Reserve's favorite way of identifying is inflation here, is it trending backward? Et
• 1:42
  cetera. So obviously since July last year, we've been seeing, you know,
• 1:46
  numbers trend back down, but we just saw an uptick or an increase
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  of point two percent. So tomorrow and the following day we've got CPI PPI
• 1:56
  coming out here, So those are going to be some pretty telling numbers right
• 1:59
  now. In my opinion, there's no question that CPI is going to be
• 2:02
  going up. There's no question that inflation is back right now. And the
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  big driver of that ultimately is gasoline and oil prices. You know, what's
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  happened since uh, you know, Biden has gotten into the White House is
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  that we have really restricted oil production, oiel manufacturing exploration, permits to those
• 2:22
  places, Keystone pipeline, you get the picture. But what happened here this
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  last year is that we've had oil come down about fifty percent. And the
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  reason for that was, well, it was a midterm election year and things
• 2:34
  weren't looking so great for the incumbent in his party, and so he ended
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  up draining the strategic petroleum reserve. And so here we are with half of
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  the strategic petroleum reserve, bringing us all the way back to nineteen eighty five
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  levels right now. But how they brought inflation down was by saturating the market
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  with oil that wasn't being produced. It was already refined, it was already
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  finished, and so you know, you add more supply, you can bring
• 2:59
  down the price. And so you know, those that are buying got cheaper
• 3:04
  oil. Well that's done. And so now we're seeing oil prices rise,
• 3:07
  which I think are just going to continue. I don't think the Fed's going
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  to come even close to getting to two percent. I think that we're going
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  to now see a leg up. This is this is inflationary, not deflationary.
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  I don't care who is out there and saying all this stuff is deflationary
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  right now and you know, the soft landing scenario is going to be showing
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  up that the facts don't add up to to bear that case out when you
• 3:30
  look at the macro ideas, when you see how all the plate tectonics are
• 3:36
  shifting right now in our society, so inflation is certainly going to be coming
• 3:42
  up. That is bad news for the average consumer today, who as of
• 3:45
  July, we've just hit one trillion dollars of credit card debt, and of
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  course most of those credit cards are actually at thirty percent APR rates. I
• 3:54
  think the Macy's card is thirty four percent, just as a simple example.
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  But people are out buying, but they're putting it on the card. That's
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  not an economy that's showing a whole lot of strength right now. So I'm
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  bearish on where things are going. I mean, I think that we're going
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  to get a slight drop here and then you know, maybe that did gets
• 4:15
  picked up because of the sentiment currently, but it's going to be short lived
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  as we head into October. And then one last point here, and that
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  is very few people today are expecting the government shutdown that's about to occur here
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  in less than three weeks because our fiscal New Year as America is October the
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  first, and if Congress doesn't pass the bills to fund everything, well,
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  then the government shuts down. This wouldn't be the first time that that happened.
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  But this is the people's House, and the House has the purse strings,
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  and they're very concerned about the fact that we have thirty three trillion of
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  debt. Here in the next couple of days it'll hit that number. But
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  Janet Gellen just announced that we need two trillion dollars more to finish the new
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  year the second half of the year. I ran the calculation on the one
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  point nine trillion that she says that we need. If you divide that by
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  one hundred and eighty two point five days, which is half a year,
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  that says that we need an additional ten point four billion dollars every single day
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  for the end of the year just to keep Uncle Sam's doors open. I
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  don't think this is a strong moment. Printing is inflationary. They're going to
• 5:28
  have to turn on the printing press. Well, what choice do they have.
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  There's no place else to get the money. I mean, I guess
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  they can sell more tvills to somebody to the banks. Banks aren't real happy
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  taking on more of it. We got a surplus of death and probably not
• 5:46
  enough dollars to chase it. So where do you get it? Then it's
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  a great question. They don't have a real option, you know, I
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  think the big question is are they going to raise rates one more time?
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  I don't think it really matters. What they're really going to start focusing now
• 6:01
  is quantitative tightening, and so they're going to just start running off the balance
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  sheet. They're down a trillion right now from that. But of course,
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  you know, they build out the banks here after the Silicon Valley uh situation,
• 6:13
  and they said that they would trade these you know, these bonds that
• 6:15
  are worth about you know, twenty percent less, they'd trade them, you
• 6:18
  know, dollar for dollars long they were purchased for. Yeah, so you
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  know, every time that they run off a trillion dollars in debt, it's
• 6:26
  the equivalent of increasing the Fed funds rate by one percent rough math, but
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  it's but it's pretty accurate. H So you know, right now we're still
• 6:33
  four and a half trillion dollars above where we were pre COVID nineteen pandemic here.
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  So you know, if they really do what they say, and they're
• 6:43
  going to be reducing uh, you know, all this liquidity that's in the
• 6:46
  market that tightens things up even more so. So I think this spells big
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  trouble for the banks. I think this spells big trouble for corporate America.
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  This spells big trouble for the consumer right now. Who you know, Hey,
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  if we start getting unemployment to rise to you know, the four percent
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  that Pale thinks, I think it's going to five or even as high six
• 7:05
  percent. That doesn't just slow down because it goes up just a little bit.
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  If things start slipping, that's momentum that begins to move in that direction.
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  And you know, we've just really got a lot of crosswinds right now
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  that are just causing you know, a lot of this to feel a little
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  bit weird. I guess you're in Florida. So the analogy of a hurricane
• 7:26
  is probably a good one. A tropical swirms off on the distance, it
• 7:30
  gets stronger and stronger, and then ultimately shows up someday. Who knows when,
• 7:32
  how far it goes down, how long it'll be down for. No
• 7:35
  one knows those three answers. But we do know that these things are coming.
• 7:39
  This is the time to prepare. Well, you know what, they
• 7:42
  say, a trillion here, a trillion there. Pretty soon you're talking about
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  real money exactly. All right, So what does that mean for the investing
• 7:53
  public? What are you supposed to do? Yeah? Okay, Well,
• 7:56
  we just need to understand it's a basic thesis. Inflation is going up.
• 8:00
  Printing Milton freedmen define this. Printing is literally the cause of inflation. And
• 8:05
  so there's not inflation in any society we're printing doesn't occur. And so if
• 8:09
  we understand that that's true, and there are things that relative to us,
• 8:11
  dollars are going to be going up and inflating, I think it's important that
• 8:16
  we understand. Commodities are the place that we generally speaking see inflation the most,
• 8:22
  and so think of oil and gas, think of metal miners, think
• 8:24
  of metals. In general, commodities are an important component to this. Food
• 8:30
  actually would also be going up because of the cost of gas, and that
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  diesel is so much more expensive. It takes way more to farm, it
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  takes way more to make and produce the copper that all these evs need,
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  et cetera. And oh, by the way, China has better than ninety
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  five percent of the world's harvested copper right now. And you know, so
• 8:50
  we allowed them to essentially have a monopoly because they're the ones producing everything.
• 8:56
  So where do we go. That's a very difficult question to to answer.
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  I do think that that's based upon someone's risk tolerance. It's based upon uh,
• 9:05
  you know, their thesis, the time that they need in order to
• 9:07
  be able to recover. But you know, the goal here is to buy
• 9:11
  low, sell high. This is not a time, in my personal opinion,
• 9:16
  to be taking significant amounts of risk. This is a time to be
• 9:20
  paring back, to be preserving, to be waiting for the right opportunities.
• 9:24
  But if you want to buy on the DIT, I think that that can
• 9:26
  work out, just feather in over time dollar cost averaging. You know,
• 9:31
  there definitely are stocks and things that should ultimately work out in longer terms.
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  But just understand the fact that the market has run really high this year,
• 9:39
  specifically in the nadsdack all that all those tech stocks which are doing the amazing
• 9:43
  you know, things like AI which we love so much and can ultimately change
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  the world and really actually bring inflation down because input costs would would would go
• 9:52
  down if you know, you can do more with less. But but those
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  those tech stocks are are quite overvalued. If we look at things like Schiller's
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  cape ratio, which has always been a good indicator of where we are being
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  overvalued undervalued, you know, we're looking at overvalued right now by about fifty
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  five percent. I mean, that's that's a big deal. You look at
• 10:15
  Buffett which is you know, total market to GDP, and we're overvalued by
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  about the same about fifty something percent, you know. And of course if
• 10:22
  GDP slips because we actually go into recession, then that's going to look even
• 10:26
  worse. So again, this is a time I think that we can deploy
• 10:30
  cash. We can do some safe assets, but but real big caution here,
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  super big caution bonds are potentially the worst investment that you could make as
• 10:39
  we look forward here over the next two years or so. And the reason
• 10:43
  why I make such a strong point to say that is this, if less
• 10:46
  people are buying US treasuries and we're less credit worthy here today because we just
• 10:52
  got downgraded, we're going to be shutting down here in the next few weeks.
• 10:54
  That means that it's going to be more expensive for us to borrow.
• 10:58
  There are a lot fewer buyers of US treasuries right now, yet we have
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  to issue over ten billion a day in order to be able to to keep
• 11:05
  our doors open. This is all very inflationary. And so as as we
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  look at the collective world, you know, hey, India, it looks
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  to be pretty solid. They're making the new iPhone right now. They I
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  think that they've got a tremendous history in front of them here that might be
• 11:22
  a multidecade trend. But you know, the dollars are going out of China,
• 11:26
  dollars are going out of the US, and there's just a lot of
• 11:28
  cross currents here today that are making things confusing. So I would say,
• 11:33
  don't don't give into fomo the fear of missing out. This is the time
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  to have patience. This is the time to have, you know, a
• 11:39
  real sound idea of where to be going right now, because these bonds lose
• 11:46
  money in five different ways, and I've got more information on that if people
• 11:50
  are interested in it. But ultimately I see interest rates popping up. That's
• 11:54
  going to be really bad for those who are near near entering retirement, looking
• 11:58
  for safe and looking for anchors. And so there are alternatives. They just
• 12:03
  got to know where to find them, all right. So based on what
• 12:05
  you're saying, then precious metals should be getting ready, huh. I believe
• 12:09
  so. In fact, I think that the silver to gold to silver ratio
• 12:13
  is eighty three to one as of this morning, and you know, eighty
• 12:18
  three ounces of silver for every one ounce of gold. I will personally do
• 12:20
  that deal all day, every day. There's no way that that those levels
• 12:26
  can can remain just based on simple supply and demand factors. They can actually
• 12:30
  produce nine ounces of silver for every one ounce of gold. Well, it's
• 12:33
  eighty three to one, So I'd say that there's a pretty nice rise that
• 12:37
  that's that silver could find here. But you know, copper is something also
• 12:41
  that's that's very much needed, especially for going more green, and we've got
• 12:46
  solar and all the evs that are that are getting uh, you know,
• 12:50
  so much demand right now, especially with this quote unquote Inflation Reduction Act and
• 12:54
  all the buying that's taking place. So you know, I look at copper
• 12:58
  here too. So metal myners are are a good option. You can use
• 13:01
  indexes, which leverages experts perspectives. Although you know there are you know,
• 13:09
  individual names that are going to probably you know, do pretty darn well,
• 13:13
  just given how their position and some of the specialties that they have. But
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  you know, some of this is uh uh, you know, when is
• 13:20
  that exactly going to happen? Because I thought it was going to happen earlier
• 13:22
  than this. But yeah, the point is it'll come. Yeah, sooner
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  or later, it's bound to. So what else profits in an inflationary environment?
• 13:33
  Real estate or residential real estate? What do you think? Okay,
• 13:37
  so what's interesting with real estate right now is you know, when you go
• 13:41
  from a record low real estate mortgage environment to raising rates faster than rates have
• 13:48
  ever been raised before, you kill both the supply and the demand all at
• 13:52
  once. And so now people are have the golden handcuffs. They're tied to
• 13:56
  three percent mortgages, and no one really wants to sell. I mean,
• 14:01
  I don't want to sell because I'd have to sell on a seven percent market,
• 14:03
  which is going to get a lower amount I'm going to have to buy
• 14:05
  in a seven percent market. And so you know, but there are people
• 14:09
  still getting divorced, they're still kids that are growing up and needing to move
• 14:13
  out. There's still you know the demand for homes that are out there.
• 14:18
  But where do we go? Well, I think that we're going to see
• 14:22
  deflation in real estate prices relative to interest rates. And the big problem that
• 14:30
  the mortgage industry has right now is that the banks that have typically lended so
• 14:35
  much, they've been lending ten to one, so for every one hundred thousand
• 14:39
  that's on the books, they can lend out one million dollars. Well,
• 14:41
  today they have a difficult time competing with the Treasury of the United States,
• 14:46
  which is the safest place to put money, at least on the test that
• 14:48
  I have to take to be an advisor. That's the answer. And when
• 14:52
  someone says, hey, I'm going to take my one hundred grand from the
• 14:54
  bank and I'm going to put it in the treasury, which seems to be
• 14:56
  a safer idea. Plus, if I put it in you know, some
• 14:58
  sure term stuff here today, it's paying five percent. You know what happens
• 15:03
  is the bank has to then go and sell those assets which was in treasury.
• 15:09
  They get it on par from from the treasury that then goes to the
• 15:13
  consumer. The consumer then puts it right back at the treasury. The bank
• 15:16
  has less money to loan with, and so all these loans that are out
• 15:20
  there thirty years, which I think off of America refied between twenty twenty and
• 15:24
  twenty twenty one. That's a big number, So a lot of people are
• 15:28
  locked in for thirty I guess that's good for some of the consumers. But
• 15:31
  the challenge then becomes, hey, these commercial products, these commercial banks,
• 15:35
  they are there. They tend to have as much as seven years of loans.
• 15:41
  Well, we've got more than a trillion dollars every year for the next
• 15:46
  at least six or seven that are going to be coming due, specifically in
• 15:50
  corporate credit and corporate debt. That's going to cause margin compression. And that's
• 15:54
  important to note because it's going to be, you know, like twice as
• 15:58
  expensive to get a mortgage today because you want from three four percent to now
• 16:00
  you're like seven, eight, ten, twelve, fifteen percent depending on how
• 16:03
  credit worthy you are, and you've got to pay you ten percent to get
• 16:08
  a mortgage right now or a refly on your building. That's going to really
• 16:14
  eat into any profits that you had to begin with. So price of fuel
• 16:18
  going up, all these challenges. I do not see the commercial real estate
• 16:23
  side of things, or even residential trending positively. I think that those things
• 16:27
  are going to be trending down and there'll be great buyers, you know,
• 16:30
  times to buy for those who have cash and have a little bit of patience
• 16:33
  here. But the real estate markets slower, and so just know that it's
• 16:37
  a lagging effect, not a league being effect, of where the economy is
• 16:41
  going. All right, well, thanks for that big good jolt of good
• 16:45
  news. They are David, and come here for that. So hey,
• 16:52
  So I guess the moral of the story is get ready now because it's going
• 16:56
  to get you later. That's right, that's right. Yeah. A book's
• 17:00
  coming out right now. It's called Riding Bulls and Taming Bears, and in
• 17:03
  it we're trying to describe some of those ideas and give people the benefit of
• 17:08
  understanding, Okay, if these things change, where are some of the places
• 17:12
  in ways that they should be allocating capital day, Especially given my personal emphasis,
• 17:18
  which is helping people to retire and so we when we don't have time
• 17:22
  to you know, to make up from financial injuries, I think it's really
• 17:25
  important that we understand our risk management strategies and our protocols again rules to ride
• 17:30
  bulls, Tame bears, and and ultimately here survive just like you're trying to
• 17:37
  teach people how to do so. Okay, so how do you get that
• 17:40
  book? Okay? So my website is my SPG Sound Planning Group myspg dot
• 17:45
  com and it'll be out about thirty days. We're just in the last finalizings
• 17:51
  of everything, which is exciting. It's been a while now that I've been
• 17:55
  putting this thing together. So encouraged to be able to do that. So
• 17:57
  if people want to to, you know, pay even our website and say,
• 18:00
  you know, hey, when this comes out and for me love to
• 18:03
  be able to do so, I'll definitely come back on your show and talk
• 18:07
  some more about it though. All right, hey, we appreciate it.
• 18:10
  I've got a question for David. You can always shoot me an email k
• 18:14
  l at Kerry Lutz dot com. And hey, go to the show notes
• 18:18
  this interview on Financial Survival Network dot com. You'll have a link right to
• 18:22
  David's site, and while you're there, sign up for your free newsletter David.
• 18:26
  Always a pleasure, Thanks for stopping by, Hey, pleasures mind carry
• 18:30
  great to be with you. Thanks for listening to carry Lutz's Financial Survival Network.
• 18:34
  Your solution to today's trying times For the latest, go to Financial Survival
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