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I know Jamie Diamond has says something similar that the United States is essentially heading towards a cliff we see that there's this Cliff ahead we like you're mentioning inflation looks like it's going to be getting worse Americans are already spending most if not all of their money they're digging it to savings they're digging it to the 401K they're digging it to the credit cards if that problem gets worse it's going to be even harder for somebody next year to build wealth which means from an economic level like what you were talking about back in the beginning this recession might be worse than what people might expect a lot of people don't even think we're going to have a recession they think we've avoided even a soft Landing but I I think that again we're probably already in a recession it's just that the numbers don't reveal that yet they may have to be revised at some later date maybe after the election we'll get a lot of these revisions uh but not before the economy is a lot weaker Than People expect and inflation is a lot stronger instead of this goldilock scenario that people Envision it's it's the worst case scenario because you've got weak growth and inflation at the same time and there are people that think that well those two situations are mutually exclusive and they're not I mean that's what they thought in the 60s and then came the 1970s that's when they started using the word stagflation because in the 60s they thought the 70s was impossible but then it happened because the people who thought it was impossible didn't actually understand economics a bunch of keynesians who think inflation is a byproduct of people working or economic growth it's not it's caused by government uh deficit spending and fed money printing which is what we had uh during the QE era we had massive inflation Unleashed by the government uh it was the treasury in you know tandem with the Federal Reserve working together to flood the economy with inflation and now we're experiencing the consequences of all that new money being created and spent into the economy prices are going higher they're going much higher we're still early in the process where prices are adjusting to a new much higher level given all the the new money but you know people's wages haven't kept pace and of course people savings uh you know don't you know aren't tied to uh the inflation so uh everybody is being made a lot poor I mean the people who are benefiting are the very rich who had a lot of debt and owned a lot of assets real assets like you know stocks or real estate uh inflation served them well but the general public uh you know was was harmed substantially again that's why Biden is so unpopular because the people who are scoring him so low are living in the reality of of this lousy economy they don't exist in in the fake world of Statistics I did a video recently we looked at the Social Security cost of living increases over the last 5 years which came up right around 22% the reported inflation over that same period CPI was around 25% versus the S&P has grown by around 75% so people who like whater mentioned the investors have become significantly wealthier over the last 5 years versus the average person has become poorer but the thing that's interesting about again remember that 12 that 25 % increase in the CPI probably equates to a 50% increase in the actual cost of living so those Social Security uh increases haven't come close to covering the added expenses that Social Security recipients are dealing with but of course all those increased payments directly add to the deficit because the government you know doesn't raise taxes to make higher payments to Social Security uh and so they end up having to print more money to pay for the colas which creates even more inflation which creates bigger colas and so it's like a a process that feeds on itself and I want to talk more about the retirement crisis that a lot of people are worried about in a minute but I think the financially Savvy who are paying attention to this are hearing okay well if there's a recession coming that generally means asset prices stock prices real estate prices would move lower that's what we've seen happen in previous recessions and in previous recessions look at 2020 uh 2008 2000 if I was sitting on a pile of cash I could come in buy stocks for pennies on the dollar I could buy real estate for pennies on the dollar and make a lot of money very quickly is that something that you see coming in the in the next couple of years not necessarily um because if there's a lot of inflation this time which is what I expect um the stock prices and real estate prices may actually not come down that much I mean there may be some individual stocks that do like a lot of overpriced tech stocks so those stocks could come down but the overall stock market may not come down that much real estate market may not come down that much uh because of inflation but if instead of sitting on a bunch of cash you're sitting on a stockpile of gold that might be the opportunity you may be able to sell your gold and buy a lot of cheap stocks and real estate in terms of your gold because maybe stock prices real estate prices go up 50% right but uh gold goes up 500% right that means that in terms of Gold stock and real estate prices crash and so I think that's where people are going to see the bargains or maybe even in some foreign currencies you may see uh more significant declines in the value of us uh Financial assets and and real estate so it may not not unplay out you know play out the way it's played out in Prior recessions and also you know in Prior recessions the government has been able to artificially Goose the economy with bigger deficit spending and 0% interest rates but High inflation May prevent that from happening so the FED may not be able to provide the type of stimulus that everybody has been accustomed to and also the bailouts you know when we had the financial crisis when we had covid there were lots of stimulus checks coming in the mail a lot of bailouts we may not be able to do that again uh because the reason we're in so much trouble now is because we borrowed so much money back then to pay for those bailouts and stimulus programs so this time we may not be able to do it again which means we're going to go through a recession where nobody gets any help from the government and nobody nobody who's failing gets a bailout so uh that could be a much more severe uh economic downturn than we're used to you know without that offsetting help from the government of course the government help came at a huge cost the cost was everything being so much worse in the future because we just kicked a can down the road and made the problems that we were dealing with at the time even bigger but we postponed the Day of Reckoning to some future date that sounds scary especially because in the previous recessions we never really had an inflation issue going into a recession like going into the 2008 financial crisis inflation wasn't really a concern I mean sure maybe when the money printing was happening some people were worried about inflation but it never really became a a real issue same with before the 2020 pandemic now what you're saying is because we already have an inflation issue if we go into a recession which you're saying we're already in getting us out of this mess is going to be a lot more painful is that what I'm hearing well exactly because this the the economic solution that the FED has always come up with for every problem was inflation in fact if you think about quantitative easing that's just a euphemism for inflation right quantitative easing is inflation it's printing money and buying government bonds that that's inflation that's right there you're inflating the money supply that's where the word comes from means inflation means to expand and it's the money supply that gets expanded in fact if you get an old enough Webster's Dictionary that's what it says that inflation is an expansion of the supply of money and credit prices simply rise as a consequence of inflation they are not inflation nor do they cause the inflation they result uh from inflation so if the FED has always created inflation to get us out of every recession if we finally have a recession that's actually caused by high inflation where High inflation is the major problem that is uh confronting the economy how does the FED then use its standard Playbook of more inflation to solve a problem that in and of itself was caused by inflation and we you so that's why they're they're in a a no- win situation right you you can't you can't fight inflation with more inflation and it's not like you know fight a hangover by taking another drink right just you know more of the dog to bit you that isn't going to work more inflation isn't going to solve a problem of too much inflation thank you for watching and I'll see you in the next one
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