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