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Welcome you are listening to and watching the Financial Survival Network. I'm your
host, Carrie Letts. Well, good news yesterday, good news today.
US wholesale prices sank half a percent in March. Is it time to break
out the champagne? Inflation has been whipped? That reminds me of those buttons
that President Gerald Ford wore and I'm still trying to obtain them wind buttons,
which stood for whip inflation. Now, so the Fed has almost got inflation
whipped? And will they keep raising? Can you believe the numbers? CPI
dropped more than expected to five percent? But I seem to remember that inflation
was supposed to be transitory. And hey, can you ever believe the Fed?
They've missed every major event, or most of them, certainly for the
past decade. They missed the real estate collapse, and look if you're skeptical
about their ability to control events and the economy ahead, you have certainly have
every reason to be. But Matthew Johnson is with us. Now, Matthew,
you have a certain take here. You think the FED is succeeding.
Well, thanks for having me on, Carrie. It's good to be on
again. You know the numbers. I don't think lie now. I think
that there is definitely various different ways that we can read the CPI. We
know the CPI is actually broken into three different parts. They look at CPI,
they look at core CPI, and then they look at what they call
supercore. And the reality is is that things are indeed coming down. I
think the thing that gives most of us as investors in just as healand beings
in general, a lot of heartburn is the fact that not all these things
are coming down. In Unison, right, we still see that there's a
lot of inflation in our everyday life. But you're right, there is some
good news. We see that the CPI is dropped from six to five,
a little bit better than expected. We're seeing that the PPI today comes out
and it's down by half a percent. That's good news. We see the
morning straits have dropped just a little bit. So we look at all the
various different factors, we look at all the various different pieces of data that
we have access to as Americans, and we see that things are progressing.
But I think you bring up a good point. You know, in January
of the stock market, really it pulled the trigger too early. They were
thinking, oh, this is going to be a rate cut, right,
and all of a sudden they didn't get what they want. And the appreciation
that we saw in the market in January, we've given up quite a bit
of that. In February, we've given up some of that in March,
and unhus what we're going to see in the future months, but I believe
the Fed is going to have to raise interest rates. The thing that we
leaned, or that we've gleaned from the notes from the minutes of the Federal
Reserve that just came out yesterday was that there was quite a few of them
that actually were vying for a fifty basis point increase last month, and because
the banking scare and the banking crisis that was going on at the time,
they decided to relent and do twenty five basis points. Well, if they're
going to stay really stalwart, Carrie, I think getting this inflation number down
to two percent, which I think is very audacious in and of itself,
they're going to have to stick to their guns. They're going to have to
do another rate increase in May. I do believe that it's going to be
likely that they do a kind of a pause and see. But it was
also very evident for reading the Minute notes that they also are leaving the door
open for another rate increase in two and twenty three, even after the month
of May. So we have to be very careful to understand that these things
are going to be kind of a work in progress, and we don't exactly
know, as Dirrection it's going to go. Well, if we look at
the canary in the coal mine or the canary in the gold mine, we
see today as we're speaking on April thirteenth, Thursday, the gold is up
another twenty five dollars the ounce to two forty, a hair's breadth from its
prior high, which don't hold me to it, I believe was two thousand
and sixty nine. And even silver, which has been a perennial precious metal
under reformer, not just a precious metal, is approaching twenty six bucks.
So the ultimate haven people are, obviously, and I think this is a
global phenomena, have rediscovered the attraction of gold. You look at a bitcoin,
it's back over thirty thousand dollars, another an area in the gold mine.
You think that the BED is really capable of controlling this because look,
we've got deficits, trillion multi trillion dollar deficits as far as the eye can
see. That means by its very nature, they're going to be printing up
money like it's going out of style, more and more treasury debt issued.
Do you think they really have the ability to control inflation without blowing up the
whole system? We already saw regional banks are a disaster area. Money is
bank runs blowing out of there into the money center bank in search of safety.
You really think the FED has all this power and the ability even if
they do have the power to achieve these goals, Well, I think you're
asking a really good question, but I think it kind of boils down to
this. The FEDS are going to realize that they don't have the control to
be able to control everything. They don't have the ability of controlling human emotion,
human reaction, and there's way more of us than there is of them.
So if there's a run on the bank, if there's a run on
the market, you know, they only are limited in what they can do.
However, with that being said, I do believe that they're going to
exert doing what they feel that they can do to be able to bring us
to somewhat of a or rational economy with inflation. That's going to be within
reason. But I think that there's another thing that we may be wanting to
think about. You know, back in the two thousand and eight crisis,
they you mentioned earlier. You remember the name Ben Burnanky, right, Ben
Burninky did something that was kind of interesting from a strategic standpoint. There was
huge infusions of money that were going into the banks, and there was around
six trillion dollars that they ended up giving to the banks. But then they
convinced the banks to keep that money with them. Now here's the thing,
they quote unquote sterilize those six trillion dollars. But those six trillion dollars are
now costing our federal government around two hundred and seventy five million, excuse me
billion dollars per year. That's more than all of the veteran benefits in the
United States today in a year. So the question becomes can they keep a
lid on this? Because here's the deal. If they stop paying interest on
those dollars, then those dollars fled back into the economy and that creates a
multiple domino effect. You want to talk about inflation, you haven't even seen
inflation yet compared to what it could be if something like that happened. So
are they in control? No? Are they trying to give the personification that
they are in control. Absolutely? Do they want to try to keep the
average American fairly calm and reasonable? Yes. Are they doing what they're doing
because of good intention to try to bring the inflation down? I think that
they are. The problem is is that we have so many things that you
and I consume every single day that doesn't seem to correlate with what we're hearing
on the news. You know, when we go to buy dog food and
we're paying twenty one percent more today for dog food than we were a year
ago, it still kind of sticks in our crawl. Right when we're buying
our medicine, we're buying our eggs. Just Kim mccross, the client who's
got a great friend that lives in Alaska, and that friend was telling his
friend, he said, do you realize that I have to pay over twenty
dollars for a dozen eggs in Alaska? We're talking. There's not a lot
of correlation between what we're seeing from the numbers that the government's giving us the
news is reporting to us, compared to a howl of feeling. But I
think that there's another facet here. I know that diversification is such an important
thing. You talk about precious metals. It could be a safe haven,
and I believe that it is. But have we looked and really paid attention
to what stage of life we are in When I discuss precious metal investing with
my clients, carry it is certainly something that we can use as a diversification.
I think we should. Is it perfect? It isn't perfect. There
is no perfect tool, doesn't have limitations. Is it practical? All of
these various things, And I think people tend to, especially investors, they
begin to look at the book ends of the investment world and we fail to
see some of the other opportunities that we and use as tools on our toolbox,
along with the precious medals, along with the CDs, along with the
other various different things that people invest in. Then that's fixed income. And
when you think about fixed income investing, I don't know about you, but
there's many more corporations that I would choose to trust over the United States government.
When you think about the bank and you think about how very little if
there was a toll banking crisis, just a complete meltdown, how very little
the FDIC would matter. You know, how very limited and resource they are,
that they would be able to come in and take care of everyone who
has their name on an account and give them a quarter million dollars of protection.
I think that this is where diversification comes into play. And if we
can make certain that our working capital is as safe as we possibly can make
it, and we can make certain that our working capital is actually producing something
for us in the way of interest, in the way of dividends, and
we can have various buckets of money doing various different things. This is what's
going to give us the greatest chance of success, regardless of whether things get
worse or whether things get better. Now I'm wholping for better. But what
I hope for and what becomes reality, as we all know, can be
two totally different things. What was that old saying that your mother used to
say, if wishes were I can't remember it now, but I get you
so multifaceted approach. If I interpret what you're saying correctly, maybe you should
have some gold and silver, maybe you should have some currency, and maybe
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This is the financial survival network. The information you need to throw now
more than member not at all. So I want to get back to this
just to be clear. When we think about the world of investing. Obviously
we've got equities, Okay, if you're in a position, whether you're on
the accumulation stage of your life Carrie as an investor who's got many more years
before they retire, versus the person who is maybe a year away from retirement
or maybe they're in retirement. If you're going to be looking at equities,
you can't forget to pay attention to free cash flowing companies that are going to
pay you a dividend. That dividend is your reward for being the shareholder,
right. But we have to not just look at the equity side. We
have to look at things like individual bonds. For many investors, they have
grown so accustomed because of the laziness of the financial services industry that the only
bonds are fixed income that they know is simply bond funds. Okay, they
may have their place, but bond funds are next to worthless compared to an
individual bond. When you own a bond to individually, you own a contract.
You are sitting in a position where you can rest easier, you can
sleep better at night because you know that that bond is going to be paying
you a contractual stream of interest income every year. You realize that if you
hold that bond to maturity, when that bond matures, you're going to get
your part value back. Even preferred stocks, which rank higher than common stock,
can bring consistency and steadiness to a person's portfolio. And when we have
dividends, we don't have to be as concerned. It's not that we're not
concerned, but we don't have to be as concerned with the underlying value of
our asset because we know that we have that income that we can spend if
we need it, and if we have got more income than we need,
we simply reinvest it back in more income, produce and things. Okay,
so what all right, So a diversified approach here, But you gotta believe
that this situation here is really, really kind of dire here. The regional
banks, they make most of the real estate loans that we know of here,
other than the big ones that the money center banks make. We've got
commercial real estate really lowing up all over the place, and at some point
the ability of the government to bail everybody out and the FED it's going to
be challenged, isn't it. Well one hundred percent, I agree one hundred
percent with that assessment, and I think it's going to become even more public.
You know, we're coming into earning season, and that means that there's
going to be a number of banks that are having to come out with their
numbers, and assuming that they're not fudging the numbers, I think that there's
going to be some pretty pretty big ugliness that's that's coming out, showing just
how desperate of a situation it is for many of them. With this,
we have to maintain understanding. This is the reason why you don't put all
your eggs in one basket. You know, who could fault the average American
today? If they're sitting in a bank that's maybe smaller, they're paying them
a smaller rate of interest, and they see the bank across the street and
is paying them, you know, two three tenths better interest. We know
that money is flowing out of banks. We know that even if you look
at a various asset class called the annuity, you know, fixed interests.
Annuities today are producing five five a quarter, even as much as five and
a half percent on a guaranteed basis. And people understand that if I invest
in a CD today and maybe I'm getting four and a half percent in one
year, assuming that the feverer Reserve follows through with their word and then begin
to taper interest rates in one year, that CD is not going to be
renewing at four and a half percent. It's going to be renewing maybe at
two and so people are looking for viable alternatives. And the good news is
that with this interest rate increase, it's giving people an opportunity, I think,
to better diversify. Think about it. The reason that we saw the
market blow up the way they did in two twenty one after twenty twenty was
because we had this abundance of liquidity, We had cheap interest rates. And
when people are looking at their fixed interest accounts and they're saying, gosh,
I'm not making anything there, I'm losing to inflation. Low interest rates drives
people further out onto the risk curve. It drives people into the market because
they get the sensation that that's the only place that you can make money.
But you and I both know that there is many other alternatives that are safer
havens, many other alternatives that we could put our money to help us be
better diversified, to be able to help us create real income that we can
spend just some number on the statement, And that's what we really need to
be focused on. There's many things in this world we cannot control. There's
many institutions that I would not trust. But my money is my responsibility.
And this is the reason why we have to listen to all various data coming
into us and then make logical decisions that are comfortable to us. Right,
gotcha? And all right, So we live in an uncertain world. We
know that, and you know things are happening, trends. You can't not
be aware of it. What do you think the role of AI is going
to be in the whole next emerging financial crisis, the next one that comes.
Is it going to cause it? Is it going to be the solution?
What are your thoughts? Well, It's funny that you ask that,
because I've had a number of different interviews and conversations with different individuals, and
you know, the latest worry for so many people has been that, only
goodness, the government's going to be going to digital currency, all right,
So I personally believe Kerry that we're going to eventually become a cash lest society.
I don't know exactly when that's going to happen, but I believe that
it's going to happen, right, Yeah, exactly. Getting there myself,
you have to pay for a lot of things in cash, and now the
only thing I pay in cash or basically is the maid. That's right,
she'll probably be on Zell shortly likely, so, but I think we would
be. I think that this is kind of the same argument that my dad
had twenty five years ago, and he said, oh, you know the
Internet, that thing is just a fad. Okay, Well no, it's
it's not a fad, dad, It's it's going to be a very real
thing. And we know that artificial intelligence is becoming more and more part of
our life. We know that so many companies, so many businesses, are
implementing it, and in many respects, I want to believe that in in
the majority the scheme of things, it's going to be benefiting our life.
It's going to allow greater efficiency, it's going to allow more accuracy. But
you know what, there's always that possibility carry that we could see some really
bad implications as a result of its misuse or the lack of following through and
making certain word thinking through all of the various different ways that it could be
a detriment to society. And we see an awful large emphasis in today's society
that I think is, you know, they're awoke society that believes that,
you know, the nation owes them a living, and there's you don't have
to work for a living, you don't have to learn tangible skills, and
that you can do everything that you want to do behind our computer screen,
behind a keyboard, and in many respects, I think that this is where
a lot of motivation is coming from. The world is becoming more technical,
but we can't forget the human element to this, and so I hope for
the best, but I don't know what it's going to become. All right,
we agree there, Well, Matthew, appreciate your coming on again and
sharing this with us. Where is the best place to find you these days?
Or can certainly go to my website. They can go to Johnson Wim
dot com, which is your website. They can also go to my YouTube
channel which is the Capitalized Life Channel, and they can watch our my weekly
videos there. If they go to the website, they can hear my Saturday
morning radio show that I produce each Saturday. And the website is just full
of all sorts of information to help educate the average investor and retiring on what
they can do to make more conservative, suitable decisions for their money and be
safer and enjoy the retirement that they deserve, a retirement that is full of
income instead of anxiety and stress. All right, well, we appreciate you
coming on. If you've got a question from Matthew, shoot us an email
kl at kryltz dot com. Make sure you go over to the site subscribe
to you free newsletter Financial Survival Network dot com. Matthew, We'll talk to
you again soon. Appreciate you stopping by. Thanks Carry, thanks for listening
to Carrie Letz's Financial Survival Network, your solution to today's trying times. For
the latest, go to Financial Survival Network dot Com Financial Survival Network now more than ever