Welcome to another edition of the Chicks on the Right podcast. We are with
our good friend and sponsor of the show, Zach Abraham from Bulwark Capital Management.
And Zach, now that we know inflation out of control once again,
and the border crisis not showing signs of slowing down, and now the Biden
administration is trying to be all like, look at us go this job's report
is amazing, three hundred and three thousand new jobs. But then it turns
out in the fine print one hundred thousand of those or more are in it
are by immigrants. So we want to know why. We want to know
your take on why businesses, American businesses are relying so much on cheap labor
in this economy. Well, I mean because they want to maximize their profits.
They don't care, right, So you know it goes back to no,
it's no, there's no there's get in trouble for it, right,
there's no no. And and unfortunately this is a in my mind, this
is a perfect example of regulatory capture, what we call regulatory capture, meaning
when we talk about and I think that you hear it, and it's not
even so much intentional on if we're looking at the Federal Reserve as an example.
I don't even really think it's intentional. Like if you listen to them
talk about they said something stunning the other day and I can't remember who it
was. Maybe it was Powell, I know, you know what. I
think it was Jannie Yellen and Laoe Brainerd from the Treasury Economic Advisor. Yeah,
and they were talking about like, hey, you know making references.
Hey, we need this, you know, we got to get wages down.
And I'm sitting there going okay, like right, but this is you
got to understand the way these people think. At some point, what became
good. Now there's always been this relationship, but naturally it needs to have
boundaries. So at some point, what became good for the economy really means
what is good for megacap companies? Right? What is good for the companies
that we want to hire us when we're done? At the Federal Reserve?
Right? And I don't think it's intentional. I just I honestly think it's
morphed into that. So you're battling with inflation and they're focused on getting wages
down. Okay, Now, if you get wages down into an inflationary environment,
right, So because the whole idea economists believe that that that higher employ
the only reason. They think the only reason you get inflation is because of
overemployment or full employment. They don't believe that the government can spend too much
money and create inflation. These people are like, no, no, it's
if you guys really knew the full extent of it. You had to read
through the FED minutes and realize what these people think, you'd want to pull
your hair out, right. So their idea to deal with inflation is to
bring more people into the country, so competition for goods heats up and also
lowers wages at the same time. Yeah, I mean like that's but they
can hire these people for less, right, and so what so what what
does that do to the labor market? Was that due to us? Well
it certainly. And that's that's the issue, is that they're sitting there going,
oh, that's deflationary, right, or that that's going to bring down
inflation. Well you're like, yeah, but it's going to increase demand for
goods and housing, right, So so that's your strategy. It's not to
bring down costs, but to bring down wages. In an inflationary environment.
But it shows you how flawed their model of economics is. Yeah, and
that's why they're wrong at every turn. That's why I was sitting there and
we put out a tweet the other day where I was like, look,
we're not spiking the football and we're not saying that we're brilliant and the Fed
stupid. But you guys, remember at the end of the year, I
was telling you we expect inflation to ramp back up on the first two quarters.
Why because employment hadn't pulled back, stock market and housing price says we're
up. It was that simple. You got to financialize. They're sitting there
just flummcks by it. And and the point I was putting out there was
if if if some guys like us sitting in our office over here in Tocoma,
Washington, you know, they didn't go to Ivy League schools and don't
have NBA or excuse me, don't have PhDs and economics and all that kind
of stuff, if we can figure it out. But supposedly as far as
people right, they can, what does it mean. It means they're worthless.
It just means they're completely worthless. Yeah, if all you did was
do the opposite of what the FED said, you'd have a really good track
record. So then so then what happens if Trump gets to office? Then
does everything turn around? What do you think? No? No, no,
because you're at a point now and and and look, you know,
for the Trump fans out there, I'm not bashing Trump, Okay, I'm
just talking reality. Okay. Trump ain't exactly a buttoned down, fiscally disciplined
guy himself, right, so when he comes in and that and that's the
other problem you're at here. People are like, we need to get this
spending under control. Yeah, if you want a really nasty recession, that's
correct. But we're at a point now in our opinion, and I think
it's really hard to argue that if you want growth in the economy, the
government needs to spend ridiculous amounts of money. If you want the government to
have fiscal restraint and discipline, then we're going to go through a really nasty
recession. It's that simple. Those horrible, horrible choices, Yeah they are.
But did you get what I'm saying though, Like, yeah, like
everybody, you know, everybody, just look at the math of it.
It's totally their fault. They've done this well and just look at the math
of it. Okay. So and these are like terms and it's pretty obvious.
It's why I laugh so hard every time somebody's like, the economy is
so strong, economy is growing at three three and a half percent, and
you're running seven percent deficits. Yeah, that's it. I mean, that
doesn't matter. Yeah. Literally, you're literally like the boat is sinking and
you're like, you know what I mean, you're taking water in, you're
like scooping water out. It's like it's it's just like we're breaking even we're
still drowning. We're drowning is what we're doing. Yeah, which is why
slowly, which is why I use the bathtub analogy. Right, Yeah,
Like these people walk into a bathroom, they see a hole in the bathtub,
water all over the floor, and I'm like, hey, we got
to patch that hole, and they're like no, no, we just need
to get a higher flow faucet. Yeah, oh my exact so true,
that's exactly what's happening. Yeah, And so like right, so if you
think if you just sit there and look at it and go, hey,
what would happen? Not if we balance the budget, what would happen if
we got back to historically normal rate deficit rates of two and a half to
three percent. We'll do the math. Right, you're at seven percent,
you're getting three to three and a half percent growth, pup deficits back to
three percent, you're in recession. Yeah, it's gonna take massive mathive cuts.
It's going to take like Argentina type cuts. Oh my god. And
see, this is why we're always telling people that they need to get with
you to do a risk review, because now more than ever, when the
world is this borked, we need to be paying attention to the that we
face in just the regular markets and with everything in our financial portfolios. So
how do people find you and learn more about how they can get help from
you and the folks at bullwork. Yeah, I think pretty easy. So
you can just google Know your Risk Radio, Know your Risk Radio podcast,
Bullwarkcapitalmanagement dot com. We're all over the place. But yeah, it's low
pressure. The biggest thing we're trying to get out to people is listen.
By definition, you have a portfolio that is not suited for this environment.
It's just not You have the record low exposure to things like gold, to
things like silver to things like oil and net gas materials. You know,
we're having a really good start to the year right now and it's being driven
by all those things. And you look at every all these portfolios that come
in, Nobody has any exposure to that stuff. It's a portfolio built on
low interest rates, low inflation. It's the opposite of where we're at.
And if you think that playbook's going to work going forward, best of luck
to you, because I wont okay. That's a pretty good warning. Well,
thank you, and we hope people reach out to you at know your
risk com always great to have you. Thank you, Thank you, ladies,
have a good one you too. Investment advisory service is offered through Trek
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