I mean, food is up 50% eggs and beef and insurance home prices are up over 50% in the last four years. So I mean, what, what, what are you talking about? We need price care. Like I said, we need prices in this country to gradually fall. Deflation is good and healthy. You're listening to Carrie Lutz's financial survival network, where you get valuable information. You just can't find anywhere else to thrive in today's trying times. You need the financial survival network now more than ever. Go to financialsurvivalnetwork.com and get your free newsletter and gift financial survival network now more than ever. And welcome. You are listening to and watching the financial survival network of your host, Carrie Lutz is election day, what I call pentos on. And you're really lucky. You people who are tuned in right now because you're listening to the only two people left in America who care about little things like deficits. And Michael, like elections, you know, it said when you elect the new government, you just change the face of government. You don't really change anything. Is this time going to be different? I think it's going to be different because the bond market is not going to tolerate this anymore. If you look at what happened in the UK and it's happened here in the past two in the 70s and early 80s, even though we are the world reserve currency and supposedly that means that investors internationally have insatiable desires for our mom. They just buy it no matter what. But I seem to remember that I think that 10-year note hits 15% okay, 15% in the early 80s. Didn't we have a very liquid bond market back then? Didn't we have the world reserve currency back then? So I mean, look, look, you know, bond yields are concerned about three things that are happening, which is sort of new now. We have we have an inflation problem in this country that Jerome Powell just doesn't want to deal with because he doesn't want to pay a trillion dollars in interest payments on the debt. That's why he cut interest rates by 50 basis points. I don't know if I had an opportunity to tell you that on your room. But you know, you think about, well, why need to cut 50. Jerome, if inflation is way above your target and it's been above your target for 43 stinking freaking months, you don't want to get below your target before you start cutting rates. Shouldn't you be raising rates? He cut by 50 basis points, not because we have an very high unemployment, an unemployment rate at 4.1% is still way below the long-term average of 5.7 isn't because the stock market's like, you know, really cheap. I mean, crashed, you know, it's a little expensive stock market. You know, the stock market, by the way, carries trading at three-time sales. That's like never happened before. You know, it's like incredibly expensive to 100% of GDP. So, Jerome's cutting interest rates because he doesn't care about inflation. He doesn't care about the middle class. He cares about the solvency or the, the, the ostensibly of the solvency of the United States treasury. So that's why he cut rates. So we have inflation that he can't deal with. We've got illiquidity, right? We have illiquidity down the bond market, the reverse repo facility, which is where all this money that was created by the Fed and went into the excess reserves and it was parked at the Fed earning a nice stat interest rate. It's $2.5 trillion two years ago. Now it's $150 billion. So your liquidity in the reverse repo facility is gone. So now what you have is the treasury general account, and that's like it'll last long. That'll be exhausted in early 2025. And then you have illiquidity in the bond market show illiquidity, inflation, and insolvency. Those three things are very bad. And that's going to put a check on no matter who and no matter who wins the White House, and no matter who controls Congress. If they are going to put forth their massive spending programs for either party, Trump is more gross, but still a lot of deficits. Nobody wants to touch entitlements, Kerry. No one's talking about so much to that. So if they get passed and if Kamala Harris wants to buy everybody a house, and I don't know the result of the election in the year to you, but I'm hoping that we have some bastion of sanity in DC where they just say, hey, listen, the bond market is going to revolt interest rates are going to spike like they did in 87. And we're going to have an absolute meltdown no matter what's going on in the economy. If interest rates become unglued. Yeah, well, we know things are not all peachy. I mean, it's amazing. I was talking to a friend who I used to think was fairly intelligent. He is intelligent to be fair. But he says, you know, what's wrong with the country? My portfolio is doubled. And that said, that is what's wrong with the country. Portfolio is doubled, right? And when did it double and what time frame over what? Over the past 18 months, I'd imagine, right? 18 months after he lost after he lost half of his money in COVID. Yeah, you know, it depends on what, but yeah, but the problem with the country is twofold, massive amount of debt and asset bubbles. And then you can lay most of that at the fee of the Federal Reserve. But in something I find even more interesting is, and by the way, we're not short here, rental portfolio strategies, we're long and strong in this market right now. But we have a hair trigger finger on when we could change that allocation. Because like I said before, the bond market is going to be key here. And I warned about it in 2013. I said, I mean, don't worry about it now. I said, but in the next few years, next couple of decades, we are going to have a massive disruption in the bond market because the Fed is going to have to choke off. The Fed is going to create inflation, and then they're going to have to choke it off. And if they don't have the willingness to fight it by raising interest rates, which is in de facto a blow up of the bond market, the Fed took interest rates from zero to five and a half. And if they don't have the temerity to, I don't know if that's the right word. If they don't have the courage, yeah, the four to two, four to two. Thank you. To actually raise rates, keep them there long enough to kill inflation. And I don't mean make inflation go up more slowly. I don't want I don't want phrases to rise less quickly than they were before. No, you need prices down. The price level of things has to fall. And if you doubt that, just look at your assurance bill, your car payment, and your home price and your equity prices, they have to fall. Otherwise, they're unsustainable, dangerous, and will are in danger of absolutely collapsing, which we don't want to happen. We'd rather have a gradual air let out of this bubble. But do you see that? Do you see any willingness to actually deal with our actual problems? No, I haven't heard it mentioned once during this entire election, other than putting Elon Musk in charge of the government efficiency commission, which government and efficiency are repellent to one another. It's an oxymoron. Yeah, it's an oxymoron. You know, Kerry, I've been in this business for 30, almost 34 years now. And I never thought I would say this, but our data now looks more like China. We're just making stuff up now. Look at the non-farm payroll reports that are coming out. I believe everything, Michael, I believe everything, you don't think your government would lie to you, do you? We learned in the last few years, I've known it all along, but you've known it. Sure, but the media had this very thin veil of objectivity. That's been ripped off. I mean, if you doubt that, just look at the late night comedians. You know, ABC has a signature program called Jimmy Kimmel. I mean, this is not funny. This is my objectivity. You know, it's just they're just stumping for Kamala Harris. And over CBS is not any different. So, and this is, you know, don't you think that people that the executives at ABC, CBS, NBC understand that when they put Kamala Harris on a giggling fest on Saturday Night Live, you know, today's before the election, that they're trying to corrupt and to he vote at the opposite had the opposite of the intended effect. You know, it's all just the Hollywood script that we're living here. And Hollywood only pays for happy endings. They don't pay for depressing bad tragic endings. It's rare to ever see a movie that ends unhappily. And that's what the governments do. And they're just paying for happy endings. Well, the government's also, unfortunately, like I said, looking more like China. So let's just take the non-farm pale report. And I'm not even talking about the 881,000 jobs after revisions. And they said, Oh, by the way, there's a, you know, we overcount it. Oh, they always over this, right? Are you sure? Where did they go? I don't know. We just we just added the birth death model was a little skewed. But then they look after report, right? There's less report, of course, which. Oh, it was just hurricane, this hurricane storm. So I don't even don't even look at it, Kerry. But the second look at the revisions, the August revision was 81,000 jobs, less than what they originally originally reported. Well, 81,000 is more than 50%. They were they're off by more than 50% on their initial guess. And so we have a federal reserve that controls the price of money based on information that comes in arrears that's completely faulty. Doesn't that bother anybody? I mean, we're a big, the middle class of this country has been eviscerated, hanging by a thread. We're now we have top 20%, the top quintile of the inhabitants of this nation are running everything. And they're keeping the economy afloat because their house prices are bubbleicious territory and along with their 401(k) plans. And when that goes, we're going to have we're not going to have just a collapse. We have chaos in the streets. I'm afraid I pray that doesn't happen. But you know, you have you can't have a healthy country without a healthy and vibrant vibrant middle class just can't have it. Yeah, can't not in the modern economy. That's for sure where everything hinges on demand. Like, like these guys, like Trump is running on, he's going to bring the prices stuff down. But he's also running on, I'm going to lower interest rates. And my question is, like, how do you do this? You cut the government, like, I don't know if the last time you were on, I told you I did this exercise with chat GPT. I said, I want to balance the budget. How do I do it? And the first thing it says is increase taxes by 50%. And then I had to tell that stupid thing, look, I'd want to do it without raising taxes. Give me a list of 100 agencies we can get rid of that no one will notice. And Michael, there were agencies in there that I don't know where they came from. I don't know what they do. The only valid agency in the bunch was the Department of Redundancy Department. You know, and then chat GPT just didn't want to get rid of that one. Well, even if you got rid of those 100 agencies, they probably have no money in there. If you can't solve Social Security, Medicare, Medicaid, and the interest on the debt, and you don't want to touch defense, I don't care if you cut every other program. You haven't solved any problem. That's where all the money is being spent right now. And it's going to get a lot worse. You know, we're going to have a 60 trillion dollar deficit by 2050 trillion dollars. That I mean, and that's if we don't have a recession, and if interest rates don't go up, and inflation is not a problem, I'll bet you anything in the world will have a recession by 2050. I bet you anything any amount of money you want to. Well, one thing, if they ban sugar, and nicotine, and carbohydrates, so should just be a law against carbohydrates, that would get rid of our Medicare problem and all of our health problems. But then the problem would be that people would be living too damn long, and everyone would be living to 100 or 90, and they'd be collecting Social Security. So that doesn't really solve the problem, does it? Not, you know, I could say as anecdotally, we have one of the most dangerous food supplies on the planet. I came back from Italy not too long ago, and we ate out breakfast, lunch, and dinner every day for like 10 days, and came back at the same week. And I have one dinner here, and I gained three pounds. We have pasta, the breakfast, Jerry, who is the largest contributor to the Food and Drug Administration? Oh, it's a big pharma, right? I mean, they're, they paid billions of dollars in bonuses to the employees to approve these bad drugs. Isn't that like, yeah, so I make my money when people get sick, and I'm going to contribute, the biggest, like 75% or something to the budget of the FDA from, from the pharmaceutical industry. You know, that brought, is that bother, anybody? Is that, is that, is that counterintuitive? Their purpose isn't to fight a cure. It's to fight a long-term treatment that makes you dependent, like, you know, somebody likened it the other day, they were telling me, like, you know, dating sites don't really want you to find people, and they're designed so you don't find people dating sites are designed. So you keep paying your subscription fees. The drug industry, it's a model for American industry, the food industry. They don't want you healthy. They want you eating more and more of this stuff. And that's why it's all decided food kitchens. So it hacks your brain, it bio hacks your brain, and the economy is no different. They just want you spending, spending, spending without any regard to financial solvency or anything else. It's all rigged. Yeah. And now the zeitgeist of today is, you know, how you grow an economy is by how much your government wants to stimulate. But if the government had plenary control of the economy, and they could just, like, if they want to be nice, they'll just stimulate borrow a bunch of money and give it to you. And how much the economy grows is just predicated on how much they want to borrow. And I mean, when did that when did that become a formula for success in a capitalist economy, you know, China is completely communist. I get that. But, you know, people are saying, well, even if you hear our American media, if only the communist, the PBOC and the, and the, and Beijing will just, just agree to stimulate a little more. That's what I need to just stimulate. That worked real good last time. It reminds me of a Saturday Night Live skit back when Saturday Night Live was actually really funny. And we used to race home to see it because we didn't have DVRs. Jimmy Carter was talking about inflation. And his plan was, I'm going to use inflation to make everybody in the country a millionaire. That's how I'm going to solve the problem. And sure enough, Jerome Powell and the current leaders in Trump as well, that's their plan. They're going to make everyone a millionaire Michael and basically home prices were already halfway there for a lot of the country. And being a millionaire used to mean something. It doesn't mean anything anymore because everybody isn't. Well, I say everybody. It's a bifurcated country. So yeah, you know, there was a one of the founding fathers of Bloomberg was talking about how wonderful inflation is because inflation is now back prices are now back down to where they were. And before COVID, and that wages have kept pace with inflation. What wages would it average wages have kept up with CPI average wages. That's assuming everybody gets to say that gets that average. But if you're on a fixed income, tell me how your wages have kept up with the inflation. Right. If you don't have a job, tell me how your wages have kept up with inflation. And that again, those wages are all skewed to the top 20%. And those wages have kept up with CPI is CPI active accurate measurement of the no really has occurred with prices. No, I mean, food is up 50%. You know, eggs and beef and insurance home prices are up over 50% in the last four years. So I mean, what what what are you talking about? We need price care. Like I said, we need prices in this country to gradually fall deflation is good and healthy. Because you're going to get if you can't get that to happen. If you're going to if your own power is going to say, I am telling you that inflation above 2%, which it still is, and it's been that way for 43 months, if inflation is above 2%, I need to start cutting rates aggressively to try to keep inflation from falling any further. That's telling investors in our fixed income spectrum that since our central bank no longer cares about inflation, we need to start caring about inflation a whole lot more. And they are, you know, here's here's a fact. Mortgage rates have gone up significantly significantly. They just but like from 6.1% to 7.5% since Powell cut interest rates to bring interest rates down. Now, that about a pinch the benchmark 10 year treasury, you know, that's what that's mostly paid to what mortgage rates are going to do. And what you're on the now, if your auto is more expensive and your house is more expensive, tell me, tell me how Powell is making things better by adding interest or no. When you've done, as you said, you said to investors, you no longer care about inflation. So we have to start too. It's badness. It's madness of, you know, one thing that I, yeah, I thought we were at this point that we're at now in the 90s. Then the internet came along and there was a productivity boom, globally, that brought down prices around the world to think that government will stop spending and that somehow that's going to save us here that you know, as well as I know, and that that just ain't going to happen until they have to, right? Yeah, they'll stop. They'll stop spending. They'll reset the currency. They will default explicitly on debt after we suffer a long and protracted battle with hyperinflation. We're not we're no longer near that. We're not near that at all right now. What about we will I think we will eventually have that battle and then and then when people when the people wake up and they stop watching, you know, the network television, you get their news. They have pretty well doing that. You know that then. It's network news is like, nobody trust it. Trust it, right? The least trusted name in news, CNN, the cemetery news network, right? That's why people are flocking to outlets like yours to get real honest information and real honest interpretation of that medicine of that information. Yeah, Gerald. So born that people say, wait a second. Why is my why is the purchasing power of my currency cratering? What is causing that? What does it mean when a Fed's balance, he goes from a few hundred billion dollars to nine trillion? What does it mean when when Janet Yellen, the Treasury Secretary, whoever at the time sends another round of helicopter money, just checks in the mail? What does that really mean? Where does the money come from? What is backing my currency? Those are the questions that we stopped asking. I mean, I used to ask them all the time when I was on CNBC and I've been throwing on the channel. What is wrong? I should debate Steve Lee's about the solace and what is wrong? We got to do a discussion about the increase in the money supply. I was like, well, you need a Fed. How would you target the money supply? I said, why do you peg it towards something like gold? The mine supply increasing gold is commensurate with 20% a year. It's about to about two percent a year. I think that's what you said. I think it's gone down a bit, but one and a half historically, yeah. So one and a half percent, let's just say one and a half two percent per year, which commensurate with population growth plus productivity growth, long term averages. You can't have these bubbles. Why don't we just what? Oh, we don't. We need the elasticity in our currency. Well, you need. Eric, you need elasticity to the point where you're printing trillions upon trillions of dollars in a matter of months. Is that what kind of that you want? I need. I need a elasticity in my waistband, but if it's too elastic, those pants are going to fall down on me. Oh, no, we don't. And we don't want that that, right? No, you don't want that. It's so insane. When the American public has a Tiffany and they say, okay, I understand why our founding fathers said article one, section 10 of our constitution that only gold or silver should be considered money. You just can't print it willy-nilly, not a state and not the federal government, certainly not the federal. When money becomes real, we'll stop all this madness. We'll stop the endless wars. We'll stop the acid bubbles. We'll heal the middle class. We'll stop the bifurcation of the country between the haves and have-nots. Stable prices, stable interest rates, declining price, people currency, declining prices, declining prices. And that's, you know, that's a natural by-product of productivity. If I can produce more forward bars off the assembly line for less money, I could charge you less, but I make up for it in volume. My margins might stay the same or shrink a little, but the volume will be explosive. Everybody wins. You hire a lot of people. That's how you grow a economy through, here's a word for you, grow productivity. And savor. Real patterns. Honest innovation. You do not grow an economy by praying and obsequiously supplicating to a government to stimulate. They have nothing. Government has nothing but a printing press. They take. They take from you. They take from the private sector and they create inflation. Their government is a productivity killing machine and inflation producing machine. That is all they can do. Please remember that when you asked for, well, why don't they just stimulate? We need some deficit spending. That's right here. Well, we thought we had. I think we tried that. We have that. And now we have, we are the precipice, precipice of a bond market collapse. And that's going to wake a lot of people up. Yes, for sure. Well, you know, you know, it wakes people up. Things like peanut, the squirrel, you know, stormtroopers, charging it to a guy's house and then killing his pet squirrel and his pet raccoon, because everything else you're talking about, most of the people weren't alive, Michael, for the last round of inflation in the 70s and 80s and late 60s, like you and I were. But when the government comes in and you're minding your own business and they, you know, they, you know, 10 people armed to go get a squirrel that's a real threat to humanity, people start to, the veil is coming off, you know, I think it might even be an election. That's because, you know, I was, listen, you, why didn't they just let Rocky to squirrel go? Yeah. I mean, I mean, I live in Florida. And if you look the wrong way out of, out of fish, I mean, you could go to jail here. I mean, you, I think they shot the, did they shoot the squirrel? Yeah, they'd know they didn't shoot it, but they euthanized it. In other words, they killed it and the raccoon, both of them. The raccoon was just bystander. How'd they kill it? They give it a, a, a, just a needle that, yeah, you know, put it down. But why couldn't they just let the thing go? Because it supposedly bit somebody in the squirrel. The raccoon was a witness. I don't know. They had to erase all old witnesses. The witnesses had to be, you know, like some mob to let a witness arrive. I don't know why it's illegal to have a, I mean, is it a rodent? I mean, a rabbits or rodents. I don't know. I don't want, you know, I'm sure our audience doesn't want to hear it. But, but, but the thing is that why we have to feather the control of government. And then the number one thing we need to do is the government has, they have, they have usurped the authority of markets. They've taken it away and they control everything. And that's why we are obsessive, compulsive about every fed meeting and parse their words like our readings, because they control everything. The fed can destroy this economy or they can do, or they can create some kind of, you know, stagflationary. Sure. So true. My sense. It's up to them. And we should never have relegated that power to just, you know, 12 voting members and their unelected people. But educate yourself, people. That's it. All right. Well, Michael, always insightful, always a pleasure learning from you. Pentoport.com is the site to go to where you'll find Michael's extensive work, podcasts, interviews, everything else. And if you got a question for Michael myself, shoot me an email kl@carilets.com. And you'll find a link to Michael's site on the show notes to this interview on financial survival network.com. Sign up for your free newsletter. Michael will talk to you again in a month or two and see how things are transgressing. Lessing to you, Carrie. Thank you. Thanks for listening to Carrie Lutz's Financial Survival Network, your solution to today's trying times. For the latest, go to financialsurvivalnetwork.com. Financial survival network. Now, more than ever.
