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The only way they could possibly survive
or make their economies look solvent is to

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print money in massive quantities to buy
sovereign debt. That's what Japan's doing,

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That's what the United States is doing, and I think that's going to increase

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in size and think quantity. So
central bankers around the world are buying goal

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with reckless abandon not only because they
know what they're doing to their carecies,

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but because they don't trust the United
States Reserve system, So they don't trust

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our dollar and they don't trust our
bond market any longer. You're listening to

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Carrie Letz's Financial Survival Network, where
you get valuable information you just can't find

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00:00:38,840 --> 00:00:44,920
anywhere else to thrive in today's trying
times. You need the Financial Survival Network

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00:00:45,240 --> 00:00:50,479
now more than ever. Go to
Financial Survivalnetwork dot com and get your free

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00:00:50,520 --> 00:01:00,920
newsletter and gift. Financial Survival Network
now more than ever. Welcome you are

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listening to and watching the Financial Survival
Network. I'm your host, Carrie Lutz.

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Well, hey, we're just barely
passed the first day, the first

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week of aprils of April twenty twenty
four, it's already hitting the fan goal

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trading at all time eyes well.
Inflation, according to Janet Yellen is going

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back under two percent this year,
and she's betting her job on it.

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I guess not as much good.
Michael Pentapentaport dot com is here with us

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questions comments kl at Carrie Lutz dot
com. Write your comments below. So,

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Michael, state of the disunion here. Inflation it's going below two percent?

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Yeah, based on what so for
the past nine months, it's been

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stuck in the low breeze. So
I don't know what gives Jenny Yellow the

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confidence is going to two percent.
I think the only way is going to

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two percent and below is if we
have a recession slash pressure, and that's

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a real possibility. I don't think
she's gonna like that outcome. But if

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not, if you look at the
soaring price of commodities, if you look

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at the real measurement or yardstick for
the dollar, which is against real money

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or gold or even hard assets like
commodities, it's tanking. It gets an

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F grade. Maybe not against the
Maybe it's not tanking against the Euro or

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the end or the pound, but
it certainly isn't tanking against real and honest

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money, which is gold. So
inflation isn't going anywhere near two percent for

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quite some time, unless we have
the economy fall off a cliff, which

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I think is a very real spot
possibility. They seem hell bent on making

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that happen, don't they. It
would appear so jerry, so so gold.

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Even if these a highly welled some
might refer to them as inflated prices.

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I'm sure you can see the headlines. Experts surprised by gold and silver's

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recent strength, right, these x
berts to get everything wrong. Yeah,

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well, you know, no one
knows better what's happening with fiat currencies than

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central bankers around the world, and
they know what they're doing. The only

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way they could possibly survive or make
their economies look solvent is to print money

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in massive quantities to buy sovereign debt. That's what Japan's doing, That's what

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the United States is doing, and
I think that's going to increase in size

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and in quantity. So central bankers
around the world are buying gold with reckless

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abandon not only because they know what
they're doing to their currencies, but because

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they don't trust the United States reserve
system, So they don't trust our dollar,

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and they don't trust our bund market
any longer. I mean, especially

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that's the case when the United States
could just say, you know, you

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know, laterally your reserves are cut
off. You no longer have access to

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your currency reserves, which are dollars
in sovereign debt. So it makes a

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lot more sense for them just to
buy gold. They hold the gold,

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and you know, they sell access
of goods to the United States. Right,

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they have excess dollars, they usually
would park them in treasuries, but

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instead of doing that, they go, let me just sell my dollars and

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buy some gold, and then they
obviate the problem of being, you know,

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a victim of US dollar hegemony.
Then he adds to that the fact

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that real interest rates nominal rates are
rising, if you've noticed, but religious

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rates are falling because mister Powell's hell
bent on cutting interest rates this year.

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Now one carry, Why would he
do that? Why would he do that

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when you could I assume he looks
at it short of the CRB index and

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it's just going up into the right
like a rocket ship. Why would he

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do that? Why would he be
cutting rates when inflation has been staying higher

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than fifty percent north of his target
for nine months. How would he do

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that? And I think he's panicked
because he knows that that America cannot issue

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debt north of five percent and remain
solvent. He just can't do it.

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And Corporate America with forty forty five
percent of the Rustle two thousand being held

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in companies that have no profits,
no have no earnings, they have to

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issue debt constantly. And they used
to issue it at very low interest rates

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close to zero, and now it's
you know, eight percent for high yield

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debt depending on the credit quality of
the borrow. So Powell knows before he

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has a recession or depression, which
is what it really would be, he

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needs to keep asset bubbles growing and
he needs to keep the economy the rate

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of GDP to increase. He needs
had to happen because you know, when

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you think about it having a recession, when acid prices are a little bit

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above where they should be historically,
it's not such a big deal. And

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when debt levels aren't so extreme,
this is a big deal. But when

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you have a recession when asset prices, stock and real estate prices are fifty

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percent above where they normally are historically, the ratio of total market cap to

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GDP is fifty percent above where it
should be historically speaking, the ratio of

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home prices to medium family incomes is
fifty percent above where it usually is historically.

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So if you have a recession,
it could quickly become a depression.

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Carry you imagine what the banking system
would look like if home prices and stock

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prices went down fifty percent. I
mean this is I'm not making up number,

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I'm not being hyperbolic. I mean, if you have the home price

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to income ratio now is five point
five, it was two point eight in

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the year two thousand, total market
cap of equities to GDP is one hundred

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and eighty eight percent. It should
be one hundred percent or even slightly less

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than that. If you go back
to where it was in the eighties and

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nineties before we had this ZERP.
You know this desert regime asert I'll see

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it. So after prices were to
crash by fifty percent, what condition would

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the banking sector be in, what
condition would the consumer be in? It

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wouldn't be a recession, will be
depressions. And that is why Cole is

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hell bent and paddicking to get interest
rates down, even though he's going to

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be cutting rates when he's nowhere near
his inflation. To him, that's scary,

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a scary proposition. And so what
about the dollar? Hell, how

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much longer can the dollar exist in
this situation? Well, Kerry, like

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I said before, if you're measuring
measuring the dollar against the euro, I

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mean quite a long time. Look
it looks it looks fine, It looks

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fine. Yeah, it might only
might only get hurt on the margins.

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I mean, how much is the
dollar going to collapse against the end.

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They can't be that that retirement island
can't even hardly get off zero. I

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mean they just go to off negative
interest rates for five and a quarter with

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great so against the end and the
euro maybe maybe not so bad. But

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measure the dollar again. Measure the
dollar against oil, carry, measure the

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dollar against gold, it even silver, measure Measure that and tell me how

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you think it's doing. Measure it
against Melas, against a latte from our

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least favorite right left wing coffee purveyor
you know, stark about Live. Yeah,

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my latte has doubled in price in
the past like three or four years,

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and they cut back on their customer
disloyalty program. Uh, and I

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think sometimes you order a latte,
you know, like you know, I

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order the medium and it's half filled
with cream, yeah, you know,

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and then a quarters cool. That's
my new site, the Inflation Inflation Dot

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Cafe. Well, you know what, you know what the sad part is,

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Carrie, that's seventy percent poll that
came out to I'm going to go

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by Forbes in twenty twenty three,
seventy eight percent. That's a lot of

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Americans are living paycheck to paycheck.
That's friedmre because of the inflation that had

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been wrought against them by the very
people who proclaim that they're for the middle

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class. We're doing this for full
employment. We need full employment. We

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need to have stable prices, which
sometimes means zero percent inflation. And then

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it became two percent inflation, and
then it became nine percent inflation, and

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now it's three percent inflation. But
hey, you know what, three percent

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inflation isn't so bad. We can't
really get to two. Let's just talk

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about cutting interest rates now when inflation
is still fifty percent above the target.

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And here's the thing that I think
these gen there's four hundred PhD economists that

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work in the federal Reserve at all. I think this four hundred people.

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I was looking to hire one and
I couldn't find any. Now I know

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you're all at the FED to disrupting
things, Well, well you know you

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better go. You better off going
to kindergarten and getting you know, a

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kindergartener to run your economic models.
Because here's the thing that I think they're

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going to be most surprised about.
What if the Federal Reserve starts cutting interest

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rates? The Fed Funds rate,
that's the rate they control. They don't

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control long term rates and long term
rates sure, because inflation becomes intractable.

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That's a salient and viable risk.
And if that's the case, they will

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not provide any salve for anything.
If that's if that happens, m you

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think that's a viable option here?
I mean, is that is that really

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going to happen where they cut the
rates and then rates go up? Well,

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I mean we let's just let's just
normally speaking, historically speaking, the

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ten year treasurino ads commensurately with inflation
plus real GDP growth. So if inflation

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is at three percent and let's just
say real GDP growth around two three percent,

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Atlanta Fed has it at two and
a half, that's five and a

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half percent. A ten year note
is nowhere near five and a half percent

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right now, What if, in
an environment of a soft landing, supposedly

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purportedly so, the FED start to
slash interest rates? What do you think

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is going to happen with commodity prices? Which what do you think is gonna

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happen with the dollar? They're going
to crash, right right? A dollar

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would crash, mind prices didn't sort. Is that going to be good for

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inflation or bad for inflation? I
think it's going to be pretty bad for

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inflation. Well if three inflation goes
up. So if you have real GDP

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at two percent three percent plus inflation
at four or five, six seven percent,

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what the hell or why in God's
good name would anybody buy a ten

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00:11:54,679 --> 00:11:56,879
year note yielding four and a hared
percent? It doesn't make any sense to

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me, especially when the Fed has, you know, at least tacitly admitted

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to you that they can never control
inflation without destroying the economy. So so

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they're stuck. In other words,
right, yeah, I think they're I

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think they're stuck. I think they're
in a I think they're in a dilemma

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of epic proportions because if they do
nothing and keep their interest rates where they

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are already. You know, we
just had the n FIB Small Bism Optimism

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Index come out that has strung for
twenty seven months in a row. Twenty

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seven months in a row. Household
net interest income has plunged by two hundred

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billion dollars in this current Fed tightening
signal. That's because you know, back

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in back in the two thousand and
six Fed raised rates, but it was

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an inaggregate, households gained income because
they have you know, their interest income

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went up. But now we have
a lot more percentage of debt, household

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debt that's in a variable rate environment, personal loans, credit card debt,

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you know, revolve day. So
net interest income has plunged. We have

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a near perfect recession indicator. It's
called the yield curve. It's been inverted

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for a record amount of time.
Positive real interest rates that have existed for

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about almost a year now. When
that is the case, when you have

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real a real Fed fund rate,
so the Fed fund rates five and a

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quarter to five and a half,
the effective Fed fundrate is five point three

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subtracted by inflations around two percent.
Whenever you get that for about a year,

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the economy has tended to melt down
in the past. Howell knows all

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this. We've had the most corporate
defaults in Q one in twenty twenty four

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CITs to global financial crisis. Wow, at a loan and credit card.

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The faults are soaring. The consumer, oh, you know, not only

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the consumer in the corporation. They
can't handle these interest rates. But you

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know what, the government can't handle
these interest rates either. Imagine paying two

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trillion dollars a year on interest.
That's crazy. So they have to unilize

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the debt, right, they're going
to be monetizing, which is basically q

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E. Right. Uh, it's
not it's exactly what it is. It's

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exactly what it is. How much
how much debt can they buy before the

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game blows up? I guess they
can buy the debt and uh, basically

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quarantine it, right, basically sterilize
the money, make the banks keep it

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on deposit with the Fed. Right, so then the money doesn't get unleashed.

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Yeah, but you know what happened. You know that that's a that's

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a possibility. But what's going to
happen with the currency if they do that.

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I mean, I can't see the
Fed's balance sheet going back to nine

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trullion and higher without destroying the purchasing
power of the middle class, which is

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already on life support. I just
can't see it happening. Mhm. They

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could. They could try to do
that. That that's for sure. But

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but you know, if they credal
is inflation and you know, they give

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all these back the banks have these
reserves, I mean, we couldn't be

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We couldn't be Japan. We could
turn into Japan. But is that is

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that really our model that we want
to pursue? That is that the model

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we want to follow? And is
the is the IF going to buy?

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Is that they're going to buy corporate
debt too? Are they going to buy

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mortgage backed securities too? I mean, are they going to buy everything on

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the planet and then pay an enormous
amount of interest on excess reserves? Is

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that what they're going to do?
I guess as possible, I can.

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I guess they can do that,
but I think they can just they would

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destroy the dollars purchasing power against hard
assets. I think that would be a

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very big outcome, negative outcome.
So so it's not like back in two

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thousand and nine when they just monetize
the debt and said everything's fine, right,

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We're not there now. You notice
that two thousand and nine didn't solve

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anything. I mean we haven't.
We have still have. We still have

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record asset bubbles, record ascid bubbles. I mean what right now that I

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mentioned it, seventy eight percent of
Americans living page check to paycheck. Who

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can afford a home anymore? You
know, the market for first time old

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buyers is gone, I get afford
it. So you know, the FA

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has to make some very serious choices
coming up. What do they want to

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do? They do they want to
usurp the market price of assets forever and

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see if that See how that works. I mean, we could be that,

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we could be we could become Japan. That's a nation that's been mired

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in growth that's low floating, you
know, around zero for decades. That's

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what we want to do. That's
fun. Yeah, yeah, well we

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see how well that works? Right? Yeah? You see, you know

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the whole thing is about you burst
and arrogance. At some point we have

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to decide to let markets function freely
or just have the state take care,

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take care of everything, control everything. That is where Japan is right now.

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They buy they buy almost every single
bond issued by the Japanese Central Bank.

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I mean every JGB is bought by
the government, and the government owns

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I think about half of all of
ETF's outstanding. So if that's what we

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want to do, that's fine,
all right. So inflation's going up.

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Interest rates are going to go up
because they're going to cut them and it's

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going to cause them to go up. So the only safe have ins We're

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looking at precious metals, right well, so when you enter sectors four and

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five and right now where I believe
we're in sector four of my inflation deflation

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spectrum, that's an increase in the
rate of inflation and a second derivative basis.

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So you look at energy, you
look at gold, and you look

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at shorting the bond market, and
that's what we're you know, we're headaches

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towards that sector Sector four and five
right now, kind of like I said,

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between three and four, which is
stasis, which is a stability in

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the second derivative of inflation. But
let's just see what Powell does that we

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have a problem coming up around June
and July, and that's when the excess

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reserves from the reverse repol facility run
dry. And that's provided all the liquidity

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for the bond market and all the
liquidity for the stock market. When that

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ends, we could have a serious
problem with both stocks and bonds. Bond

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yields could soar and stock prices could
plumme it because the liquidity affor those assets

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dries up. So we'll see what
his decision is. It's it's up to

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Powerfull and the FOMC. They are
a very powerful institution. I know some

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people come on financial media and say, oh, they're irrelevant. They just

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no, they're not irrelevant. They
provide the liquidity, they control the base

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money supply. They control liquidity for
the banking system. And if you think

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the banking system is irrelevant in the
United States, that I'll disagree with you.

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So let's see what he does.
I mean, I think my own

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belief is he'll flirt with reality,
and when reality blows up in his face,

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he'll acquies that. He'll cut interest
rates, he'll go back to QI,

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he'll buy all the government debt,
he'll take have the bonds like you

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said, taking off the bank's balance
sheets and sitting at the federal reserve.

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They'll pay the bank's excess interests on
those excess reserves. And you know,

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all this comes down to one thing. The rich will get richer and the

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poor will get poorer. Those that
spend thirty forty fifty percent of their income

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on clothing and shelter and food will
be moved further towards penurine. And people

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like us who own multiple houses and
have you know, multimillionaires, which just

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get richer and richer. I don't, I deny, and I don't like.

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Yeah, do I enjoy being wealthy? You enjoy being wealthy? I

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guess we do. But it's just
not fair and it's not a viable way

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to run a country because you just
can't have a country run without a middle

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00:20:10,920 --> 00:20:15,440
class, a functioning and viable middle
class. Yeah no, can't. We

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see what's happening in China now,
right? The country had a more fragile

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middle class than they thought, and
now they've done everything they could to destroy

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it, and now they're reaping the
fruits of their policies, as every country

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eventually does. Right. Yeah,
it's risky for the this country to go

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down the road of looking more and
more like a Banana republic in their monetary

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00:20:48,680 --> 00:20:53,039
policy, their fiscal policy, and
even in the way we transition power from

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one administration to the next. You
know, when you try to influence elections

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by putting people who are running for
office in jail, it's right, it's

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you in other words, And I'm
a libertarian, I'm not a Republican,

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So don't don't anyone same say so
when you try to surp the power of

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the people to decide who they want
to be president, that leads to big

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problems. So when you have political
chaos financial uh, when you have monetary

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00:21:29,240 --> 00:21:33,279
chaos and you have a fiscal chaos, it leads to economic chaos. That's

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where we are, and that's where
we're headed in a more salient fashion.

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All right, On that note,
we will let you go. Michael.

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I know you have a busy day
ahead of you. A questions comments for

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00:21:45,079 --> 00:21:49,559
Michael myself k L at kerrie Lets
dot com. Write your comments below in

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00:21:49,559 --> 00:21:55,039
the YouTube channel and make sure you
go over to pentoport dot com. It's

276
00:21:55,079 --> 00:21:59,680
in the show notes this interview on
Financial Survival Network dot com. And while

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00:21:59,720 --> 00:22:03,160
you're there, please sign up for
our free newsletter. Michael, always a

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00:22:03,160 --> 00:22:08,880
pleasure, even if the topic is
somewhat somber and I'm not depressing you know,

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00:22:10,200 --> 00:22:14,799
well, it's unfortunately. You know
what else? What other conclusion can

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00:22:14,799 --> 00:22:18,000
you arrive at? If you're an
independent thinker, look around and tell me

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00:22:18,359 --> 00:22:22,079
if you think this is a viable
situation And the answer is sadly no,

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00:22:22,640 --> 00:22:26,160
absolutely, all right, We appreciate
you, we'll talk to you, and

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00:22:26,279 --> 00:22:30,920
soon you'll be well. Thank you, carry you too, Thanks for listening

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00:22:30,960 --> 00:22:37,160
to Carrie Letz's Financial Survival Network,
your solution to today's trying times. For

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00:22:37,240 --> 00:22:42,920
the latest, go to Financial Survivalnetwork
dot com. Financial Survival Network now more

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00:22:42,960 --> 00:22:44,519
than ever,