Latest / Financial Survival Network / Fed Rate Cut: Short-Term Gain, Long-Term Pain? - Ed Siddell #6148

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Fed Rate Cut: Short-Term Gain, Long-Term Pain? - Ed Siddell #6148 · Financial Survival Network

• 0:00
  Speaker 1: Once you start going down this road of printing money
• 0:02
  Speaker 1: and deflating the currency and you know, creating this inflationary process.
• 0:06
  Speaker 1: I mean, it's really really hard to back out of.
• 0:09
  Speaker 1: And until we stop spending, you know, we can lower
• 0:12
  Speaker 1: rates as much as possible. And I really think that
• 0:15
  Speaker 1: this is going to be a it's a band aid,
• 0:17
  Speaker 1: it's a short term cure for a long term problem.
• 0:21
  Speaker 1: And you know, it's what is it, short term pain,
• 0:24
  Speaker 1: you know, versus long term gain. And instead we've chosen,
• 0:27
  Speaker 1: you know, short term gain, and we're going to create
• 0:30
  Speaker 1: long term pain.
• 0:31
  Speaker 2: You are listening to Carrie Let's's Financial Survival Network, where
• 0:35
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• 0:39
  Speaker 2: to thrive in today's trying times. You need the Financial
• 0:42
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• 0:47
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• 0:51
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• 0:58
  Speaker 3: And welcome. You are listening to and watching the Financial
• 1:02
  Speaker 3: Survival Network. I'm your host, Kerry Lutz. Hey, who would
• 1:05
  Speaker 3: think mid September, surprise, surprise, the Fed cut rates Finally, finally,
• 1:11
  Speaker 3: they've only been promising for a year now fifty basis
• 1:14
  Speaker 3: points probably another one on the way well sidell is
• 1:20
  Speaker 3: with us now ed So shock, what do you think?
• 1:24
  Speaker 1: No, no, I you know, originally I was saying, you know,
• 1:29
  Speaker 1: fifty basis points, and I kind of bought into well,
• 1:32
  Speaker 1: you know, they're not gonna telegraph it. They're not going
• 1:34
  Speaker 1: to be that overt and they'll probably only do twenty
• 1:37
  Speaker 1: five basis points. But once again, how they continue to
• 1:40
  Speaker 1: prove me wrong. You know, they telegraphed what six six
• 1:44
  Speaker 1: rate cuts in November and confirmed it in December last year,
• 1:49
  Speaker 1: and so this is the first one, and you know,
• 1:51
  Speaker 1: oh what a way to make a big splash. You know,
• 1:53
  Speaker 1: fifty basis points. I think now the federal funds rate
• 1:57
  Speaker 1: is four and three quarters to five percent. You know,
• 2:01
  Speaker 1: I think they're going to lower it another fifty to
• 2:03
  Speaker 1: seventy five basis points before your end.
• 2:05
  Speaker 3: I think it's a mistake, that's what they're.
• 2:07
  Speaker 1: Going to do.
• 2:08
  Speaker 3: This is the last one before the election though, right, yep,
• 2:11
  Speaker 3: when's the next FED meeting. It's in November, so it's
• 2:15
  Speaker 3: after the election.
• 2:17
  Speaker 1: This was a big one because you know, you know,
• 2:19
  Speaker 1: as a Pennsylvania I think Pennsylvania starts mailing ballots next week.
• 2:26
  Speaker 3: So yeah, this was a big deal. Yeah, well, I
• 2:29
  Speaker 3: don't think Pennsylvanians are really they're going to yawn at
• 2:32
  Speaker 3: this one, right, not going to matter. If you didn't
• 2:36
  Speaker 3: manage to secure one of those eight hundred and eighteen
• 2:40
  Speaker 3: thousand imaginary jobs with imaginary pay and benefits and imaginary vacations,
• 2:47
  Speaker 3: all that good stuff, then you're kind of left out
• 2:50
  Speaker 3: in the cold, aren't you.
• 2:51
  Speaker 1: Well yeah, but you know, so everyone's kind of focusing
• 2:54
  Speaker 1: on that eight hundred and eighteen thousand, but everyone's forgetting
• 2:57
  Speaker 1: about all the revisions downwards on top of it, you know,
• 3:01
  Speaker 1: every other month, So every two months, you know, when
• 3:03
  Speaker 1: they came out with the jobs glowing jobs reports, you know,
• 3:06
  Speaker 1: look how great everything, and then they would everything is,
• 3:09
  Speaker 1: and then they would revise it downward two months later,
• 3:11
  Speaker 1: and then the other eighteen hundred and eighteen thousand on
• 3:14
  Speaker 1: top of it. So, you know, I think last time
• 3:17
  Speaker 1: we talked, I used the phrase the tail of two cities,
• 3:21
  Speaker 1: you know, Wall Street versus Main Street, and then I, honestly, Carrie,
• 3:24
  Speaker 1: I really started thinking about it. You know, I've been saying,
• 3:27
  Speaker 1: you know, we're kind of in a rolling recession. But
• 3:30
  Speaker 1: I missed the boat. I completely missed it until a
• 3:33
  Speaker 1: couple of weeks ago and then realized the recession is
• 3:36
  Speaker 1: in the private sector. Okay, the public sector, government jobs,
• 3:39
  Speaker 1: there is no recession. I mean, that's where we just
• 3:42
  Speaker 1: added forty seven thousand new jobs at government jobs and
• 3:46
  Speaker 1: so you know that's those jobs that weren't created and
• 3:50
  Speaker 1: continue to be lost, you know, those are in the
• 3:52
  Speaker 1: private sector, and that's where all the pain those are
• 3:54
  Speaker 1: the pain points right now.
• 3:55
  Speaker 3: Yeah. Well, hey, as far as the government is concerned,
• 4:00
  Speaker 3: the it's all the same, right, it's all one big
• 4:02
  Speaker 3: bucket and jobs are actually ops and uh we should
• 4:06
  Speaker 3: all be grateful.
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  Speaker 1: Yeah, yeah, just just happy and go along, you know,
• 4:11
  Speaker 1: go along to get along, you know. But I think
• 4:14
  Speaker 1: I think people are finally starting to wake up a
• 4:16
  Speaker 1: little bit, at least I at least I hope.
• 4:17
  Speaker 3: So ezak, you think they're waking up? Really, I do too,
• 4:22
  Speaker 3: you know, I think with we not as fats as
• 4:24
  Speaker 3: you own one. Yeah. So, uh so where does this
• 4:29
  Speaker 3: leave us all here? You know?
• 4:31
  Speaker 1: I I think, uh, we're going to continue to see
• 4:35
  Speaker 1: you know, another round of of q E quantitative easing,
• 4:38
  Speaker 1: and I think it's going to be honestly, you know,
• 4:41
  Speaker 1: quantitative easing Q e infinity. It's just it's just never
• 4:44
  Speaker 1: going to stop because you know, once you start going
• 4:45
  Speaker 1: down this road of printing money and deflating the currency
• 4:48
  Speaker 1: and you know, creating this inflationary process, I mean, it's
• 4:52
  Speaker 1: really really hard to back out of. And until we
• 4:55
  Speaker 1: stop spending, you know, we can lower rates as much
• 4:58
  Speaker 1: as possible. And I really think that this is going
• 5:01
  Speaker 1: to be a it's a band aid, it's a short
• 5:03
  Speaker 1: term cure for a long term problem. And you know,
• 5:07
  Speaker 1: it's what is it, short term pain, you know, versus
• 5:10
  Speaker 1: long term gain? And instead we've chosen you know, short
• 5:13
  Speaker 1: term gain, and we're going to create long term pain.
• 5:16
  Speaker 1: And I think we're going to see what we saw
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  Speaker 1: on the seventies. You know, inflation is going to come
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  Speaker 1: roaring back and then rates are going to go back up.
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  Speaker 1: And you know, until we get leaders in d C,
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  Speaker 1: actual leaders that that are really focused on their constituencies
• 5:33
  Speaker 1: and you know, American people, this is just going to
• 5:36
  Speaker 1: continue to happen and it's going to get worse before
• 5:38
  Speaker 1: it gets better.
• 5:39
  Speaker 3: All right, So what's the for the individual investor? Should
• 5:42
  Speaker 3: you be buying bonds because they're going up? Right? Yeah?
• 5:47
  Speaker 1: So not only the yields right are are still really
• 5:50
  Speaker 1: good right now. But you know, it's the the bonds
• 5:53
  Speaker 1: that has an inverse reaction to interest rates, either up
• 5:55
  Speaker 1: or down. So as rates go down, you know, the
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  Speaker 1: appreciation of bonds is going to go up.
• 6:00
  Speaker 3: And you know, if.
• 6:01
  Speaker 1: If you go out to uh, you know, close to
• 6:03
  Speaker 1: ten years and you do a decent fixed income ladder portfolio,
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  Speaker 1: you know, getting you know, six six and a half,
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  Speaker 1: you know, uh, growth rates including yield on an annual basis,
• 6:16
  Speaker 1: I think is unbelievably doable, you know, especially as we
• 6:19
  Speaker 1: can continue to see money market rates go down.
• 6:21
  Speaker 3: Yeah, so maybe last week the market's getting gyrating getting
• 6:26
  Speaker 3: slammed was the market's way of telling the Fed you
• 6:30
  Speaker 3: promised you better deliver. Yeah, oh absolutely that.
• 6:34
  Speaker 1: I think that was the wake up call and said, hey,
• 6:36
  Speaker 1: you know what, we already have fifty bases points built
• 6:39
  Speaker 1: in and you know, I honestly I think the FEDS
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  Speaker 1: should get out of the interest rate game and trying
• 6:47
  Speaker 1: to you know, control the economy using interest rates. You know,
• 6:51
  Speaker 1: I think what they need to do is just have
• 6:53
  Speaker 1: a sound you know, monetary policy. But you were that's
• 6:59
  Speaker 1: just never going to happen, at least not with this leadership,
• 7:01
  Speaker 1: not with Powell. You know, he's more concerned about his legacy,
• 7:05
  Speaker 1: you know, over the next couple of years. So yeah,
• 7:08
  Speaker 1: and that's really what it comes down to. They're just
• 7:11
  Speaker 1: looking at, you know, what's it going to look like
• 7:13
  Speaker 1: by the time I get out of here. And once
• 7:15
  Speaker 1: I get out of here, you know, then it's up
• 7:17
  Speaker 1: to the next person. And I you know, I'm not
• 7:19
  Speaker 1: so worried about.
• 7:19
  Speaker 3: It, all right, So bonds Obviously, gold has been going up,
• 7:25
  Speaker 3: you know, you do realize, like, of course you realize
• 7:28
  Speaker 3: I'm talking to a financial professional, but the dollar has
• 7:32
  Speaker 3: been steadily sinking, right, and it was obvious that this
• 7:37
  Speaker 3: was going to happen. They put it off till the
• 7:40
  Speaker 3: last possible moment. Right now, we've got gold, as you
• 7:43
  Speaker 3: and I speak, all time high of twenty five eighty
• 7:48
  Speaker 3: five the ounce, So it's going to three thousand. It
• 7:51
  Speaker 3: looks pretty obvious for sure, there's got to be sold
• 7:54
  Speaker 3: that we have pulled back at some point. And then
• 7:59
  Speaker 3: the silver back up to thirty one bucks just about so.
• 8:04
  Speaker 3: And then when we look at the dollar, it's it's
• 8:06
  Speaker 3: right at one hundred, which historically it's not such a
• 8:10
  Speaker 3: low level. But compared to what it was trading at.
• 8:12
  Speaker 3: It's down you know, fifteen percent recently. Yeah, you know,
• 8:17
  Speaker 3: I mean it was this I think it was a
• 8:19
  Speaker 3: year ago. A year ago October it was you know,
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  Speaker 3: one fifteen and and so yeah, you know, I've been
• 8:27
  Speaker 3: saying it's going to dip below one hundred, but you
• 8:30
  Speaker 3: know that it's it's going to be the continued devaluation
• 8:33
  Speaker 3: of the dollar, and I agree with you. I mean,
• 8:35
  Speaker 3: gold is going to hit three thousand sooner than expect.
• 8:38
  Speaker 3: I think earlier this week or maybe it was last
• 8:41
  Speaker 3: Friday gold was or or over the weekend, I can't remember,
• 8:45
  Speaker 3: when everything's kind of running together where gold was actually
• 8:48
  Speaker 3: over twenty six twenty six hundred. So you know, we're
• 8:52
  Speaker 3: just going to and that's.
• 8:53
  Speaker 1: That's a telltale sign of you know, hard assets, people
• 8:57
  Speaker 1: investing in that as well as silver, and and you know,
• 9:00
  Speaker 1: protecting what they have. I think short term the market
• 9:04
  Speaker 1: is is going to do well, uh this year, going
• 9:07
  Speaker 1: in the next year. But you know, you really got
• 9:09
  Speaker 1: to keep an open eye as to what's going on
• 9:11
  Speaker 1: in the world around you because you know, when when
• 9:14
  Speaker 1: things really start going wrong, I think it's going to
• 9:17
  Speaker 1: go wrong, not at the drop of the hat, but
• 9:19
  Speaker 1: it could be like overnight or over week, you know,
• 9:22
  Speaker 1: very very quickly, and you know, you want to make
• 9:25
  Speaker 1: sure you know you're you're protected. You know you do
• 9:28
  Speaker 1: have those hard assets on hand, cash on hand and
• 9:31
  Speaker 1: other things because you know, work the the the debt
• 9:35
  Speaker 1: rate for consumers is up one hundred and twenty three percent.
• 9:38
  Speaker 1: Savings is normally average is about almost nine percent. I
• 9:42
  Speaker 1: think it's like eight point eight or eight point nine percent,
• 9:45
  Speaker 1: and it's down low three percent, which is recessionary by itself.
• 9:48
  Speaker 1: So you know, we've been hearing soft landing, soft landing,
• 9:52
  Speaker 1: don't worry about it. Everything's great, you know, rainbows and
• 9:55
  Speaker 1: puppy dogs, and you know, I think we're there and
• 10:00
  Speaker 1: I think it could get a little bit uglier before
• 10:02
  Speaker 1: it gets better. But the market's going to tell a
• 10:04
  Speaker 1: different story because as rates go down, the market's going
• 10:08
  Speaker 1: to do better. And and my fear is as rates
• 10:12
  Speaker 1: go down, people are going to spend more, get more
• 10:16
  Speaker 1: into debt, and that you know, that's going to create
• 10:18
  Speaker 1: an issue all the way across the board.
• 10:20
  Speaker 3: Well, you know, they even if they don't go on
• 10:22
  Speaker 3: shopping sprees, they're going to be spending more because everything
• 10:25
  Speaker 3: is more expensive, right, and when you tell.
• 10:28
  Speaker 1: The cure inflation, yeah, the nerd inflation carriers, it's we're
• 10:32
  Speaker 1: all good. Remember inflation is only at you know, a
• 10:34
  Speaker 1: two point five percent to show.
• 10:38
  Speaker 3: Well, it sounds like whoever the next occupant of the
• 10:42
  Speaker 3: White House is going to be. Uh, there're going to
• 10:45
  Speaker 3: be some issues, aren't there?
• 10:47
  Speaker 1: Yeah, you know there are, right, and you know either
• 10:51
  Speaker 1: candidate right now, you know both. And you know I'm
• 10:55
  Speaker 1: saying Harris because she was part of the Biden Harris campaign.
• 10:58
  Speaker 1: Everyone who over spent it. So so you know, we
• 11:01
  Speaker 1: need to make sure from the Speaker of the House
• 11:04
  Speaker 1: to the White House that everyone's on the same page
• 11:06
  Speaker 1: as far as getting this debt under control. And if
• 11:10
  Speaker 1: we don't, if we don't read this debt bubble, it's
• 11:12
  Speaker 1: going to pop all the way across the board, and
• 11:14
  Speaker 1: that's when it's going to really get ugly.
• 11:16
  Speaker 3: All right, Well, thank you for your words of wisdom.
• 11:20
  Speaker 1: Ed.
• 11:20
  Speaker 3: Just tell us where we find you again, how we
• 11:22
  Speaker 3: connect with you on the web? Yeah?
• 11:24
  Speaker 1: Absolutely, it's e g SI Financial dot com.
• 11:29
  Speaker 3: E g SI Financial dot com And the link is
• 11:32
  Speaker 3: in the show notes of this interview on financial survival networks.
• 11:35
  Speaker 3: Dot com. When you're there, please sign up for free
• 11:38
  Speaker 3: newsletters like thirty over thirty thousand of you have done
• 11:43
  Speaker 3: already and a great info from a variety of sources.
• 11:48
  Speaker 3: And if you've got a question for Ed or myself,
• 11:50
  Speaker 3: you can always shoot me an email k l Atcarrie
• 11:53
  Speaker 3: Lutz dot com. Ed we'll talk to you next month,
• 11:56
  Speaker 3: and let's let's keep our fingers crossed. Man, maybe financial
• 12:01
  Speaker 3: alchemy isn't dead after all, and the FED will pull
• 12:04
  Speaker 3: a monetary rabbit out of the hat, although for some
• 12:08
  Speaker 3: reason maybe not. We can only hope.
• 12:11
  Speaker 2: Thanks for listening to carry Letz's Financial Survival Network your
• 12:15
  Speaker 2: solution to today's trying times. For the latest, go to
• 12:19
  Speaker 2: Financial Survivalnetwork dot com. Financial Survival Network now more than ever,