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And so we understand from at least
an economic stampoid, or we should.

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What this means for us is that
either we're going to see significant increases in

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taxation in this country. And I'm
already anticipating that. You know, I

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work with literally thousands of investors and
retirees over the course of a year,

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and I can't tell you the last
time that I'm at a person that didn't

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agree that taxes are going to be
going up. So we know that that's

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going to happen. You're listening to
Carrie Let's Financial Survival Network, where you

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00:00:32,000 --> 00:00:37,840
get valuable information you just can't find
anywhere else to thrive in today's trying times.

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00:00:38,119 --> 00:00:43,600
You need the Financial Survival Network now
more than ever. Go to Financial

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00:00:43,640 --> 00:00:49,799
Survival Network dot com and get your
free newsletter and gift. Financial Survival Network

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00:00:50,320 --> 00:00:59,079
now more than ever, and welcome
you are listening to watching the Financial Survival

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Network. I'm yours carry Lutz.
Today we get the long awaited GDP numbers,

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two percent annualized to increase. Not
so bad, maybe though maybe it

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isn't as good as it seems.
Maybe inflations higher than is acknowledged, and

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maybe real economic growth is actually negative. Well, a good friend Matthew Johnson

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is here to opine on the subject, and you find Matthew at Johnson with

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an h wim dot com. And
if you got a question for myself or

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Matthew, shoot us an email kl
at carry Lutz dot com. Matthew,

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great to have you back. So, so we should all be popping the

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champagne because annualized growth two percent,
that's wonderful, right, we should be

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celebrating, shouldn't we? Just not
just yet, it's gonna be doing on

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again. Thanks so much, Carrie. Sure, yeah, you know it's

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optimistic. It's optimistic news. From
the outside looking in, it sounds like,

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gosh, it certainly beat the expectation
of one point three percent. I

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mean, how could you go wrong
with a two percent GDP? But as

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you said, I think that there's
maybe a little bit of window addressing to

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that, because when you really start
to look at the numbers, you start

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to realize that there's a lot of
factors here that could be showing us kind

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of a false positive. So we
have to be somewhat I think, careful

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of the numbers and what we're being
told and what we think is actually happening.

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You know, it's one of these
things where we always have to address

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what we're hearing with what the facts
really are, and we have to unfortunately

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do a lot of our own fact
checking as individuals in today's society. You

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know, I just think of the
GDP number, it really isn't accurate because

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it doesn't measure wealth. It incorporates
debt into that number. So the more

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debt you have, the faster the
GDP goes up. You know, at

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one time Bernie Madoff was a net
positive to the GDP and we see how

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that wound up. So the fact
is that there's a lot more to the

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number than meets the eye. I
mean, look, when gasoline prices were

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up, that lifted retail sales PG
number. So, like you say,

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you really got to look underneath the
hood to really help you figure out what

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exactly is going on. And mentioned
earlier debt to GDP ratio. What's the

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significance there, Well, I think
it's very significant. In fact, I'm

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very concerned with it, as most
Americans should be, because if we look

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at the debt to GDP ratio right
now, carry we're in a position where

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we are just under the debt to
GDP ratios of World War Two. That

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should be absolutely scary to us.
And what does that mean to us?

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Well, at number one, if
we look at what spending has done,

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you back in two thousand and twenty
two, the debt of this country rose

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by thirty five percent thirty five percent, and they're expecting that there could be

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potentially another thirty to thirty five percent
increase on top of that, just in

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two and twenty three alone. Recently, I was reading an article from the

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Peterson Foundation and they were suggesting that
in the next ten years, if we

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continue to stay on this trajectory that
we're on right now as a nation,

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we're going to be in a position
where just to service the US debt alone,

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just that debt service is going to
be larger than all of Medicare and

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all of national defense. I mean, think about it. Right now,

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in two thousand and twenty three,
we have service to this debt of over

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four hundred and seventy five billion dollars. That's with a B. That is

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a big number. And so we
understand from at least an economic stampoid,

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or we should what this means for
us is that either we're going to see

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significant increases in taxation in this country, and I'm already anticipating that. You

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know, I work with literally thousands
of investors and retirees over the course of

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a year, and I can't tell
you the last time that I met a

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person that didn't agree that taxes are
going to be going up. So we

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know that that's going to happen.
But we can't just see taxes go up

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in order to fix this problem.
We're also going to see or have to

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see our government spend less and unfortunately
carry I'm not optimistic. I don't know

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about you, but I'm not optimistic
that there's anyone in Washington that wants to

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reduce spending. Well maybe a rampoll. Okay, well, I'm book they're

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minority. But you know what they
say, Thomas Jefferson said it to one

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man with courage as a majority,
right, could be let's hope, huh,

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let's hope. Well, yeah,
this situation the bleak. But I

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think we've got the best best looking
house in Baltimore. You know, the

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rest of the world is so bad
that the US looks good. Well,

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and to say it a different way, we are the cleanest shirt in the

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hamper. I get that, but
we also want to be very cognizant of

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today we are we are We're on
the edge of the largest majority of human

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beings in the United States today that
are going to be retiring. I don't

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know that it's absolutely precise, but
they say, as of February of twenty

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and twenty four, Carrier, we're
going to have the peak of retirement from

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the baby boover in generation. And
we need to be thinking about that because

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let's just put ourselves in their shoes. These are people that have spent the

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last thirty plus years of their life
and they've been on the accumulation stage.

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Right. They've been saving, they've
been working to save, they've been contributing

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and compounding their money, and now
they come to retirement, and they come

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to retirement at an economic stage which
is very uncertain. Right. We still

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have inflation, we have the Federal
Reserve that seems to be absolutely exacerbating the

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defaults within banks. The FDIC just
came out with a report that said where

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they had only four problem banks on
their watch list, now they have over

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forty three banks on their watch list. They're coming to retirement during a stage

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of life in which the majority of
them do not have interests, they do

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not have dividends. They are still
stuck in this growth based investment mode because

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that's what they've always been in.
And you're asking a person that for the

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last thirty years has done nothing but
save to now start taking to start taking

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withdrawals. That's a very scary time
for them. This is something that's a

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big transition for so many people.
And the reason that we have to be

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so sensitive to what's going on around
us and how our money is invested,

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where we're putting our money, and
what our money is doing for us is

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if we're the average retiree, we're
still focused on, say, sitting in

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growth based stocks that are paying us
dividends, and all of a sudden,

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the rope is being squeezed around the
economic neck as the Feds are doing what

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they're going to do and the government's
continuing to spend more, and then that's

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justifying a higher tax implication down the
road. Think about what that's going to

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do to potentially demonstate, just absolutely
devastate the portfolios of this country. That's

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a big concern for myself, that's
a big concern for many Americans today.

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Well, I have the solution.
We got to get the old people to

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spend more, you know, charge
more on their credit cards. So it's

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not what the country needs is a
more flamboyant elderly class like myself. And

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then we'll solve all the problems.
We'll keep the be going, buy houses,

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buy cars, you know, just
go out there and spend. Don't

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worry about leaving anything to your kids. Just leave them the leave them the

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loan statements. Right there, you
go, Lucian, Yeah, you know,

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I found that older generations, and
especially the generation you know, our

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grandparents, they went through the Great
Depression, right you you had a team

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on, if you had a team
of mules, you could not get them

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to take and put their money back
into the stock market because they learned how

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in how important that principle was to
them. Right. Well, the next

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generation that came behind, they were
definitely more in the spenders. But I

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think we're going to see between required
minimum distributions, where we have these mandatory

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withdrawals out of the stock market,
we see that there is most definitely a

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bubble that is being created within AI. And I'm not saying that that's bad,

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but we want to think back in
time, right, we want to

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think back to the tech bubble burst
where they said, you know, this

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is going to go to the moon, and it didn't. Eventually, these

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things are going to wind down,
and we have to be exactly, very

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exacting with what our long term plan
is. Is it really growth or is

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it more or less income? Because
if you do have income, like you

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said, now, you can spend, right, you can spend more freely.

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With more freedom, So true,
I couldn't agree with you more.

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You know, one of the things
in the notes I have here, you

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say, be patient, focus on
dividends, collect them or spend them,

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but be ready to buy as there's
likely to be more Kmart blue light specials

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coming. I think that's been it
now because Kmart's light all but gone,

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haven't they? Just? Okay,
all right, well let's turn back the

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clock to that Kmar blue light special
when you walked into a Kmart, Jerry,

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come on, when you saw that
blue light flashing on the end of

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the aisle, you knew where to
go, right, you were trained,

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man, you were gats right,
that's right. The Bluvie in response,

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you know that's right. You see
a blue light and you immediately get your

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credit card out. That's right.
Well, the reason I say what I

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say is because obviously, you know, when June the Federal Reserve gets together

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and there was a very split consensus
as to whether we were going to actually

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get into the rate hike or if
we were going to get a pause.

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Now, what we saw a transpire
was actually we didn't get a pause.

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What we got was, oh,
just joking, we're going to do a

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skip. And so you know,
just a minute ago you talked about we

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need to be bigger spenders. Well, interestingly enough, when you actually dissect

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the core PC and you're looking at
where spending is actually taking place, we're

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starting to see that there's slowed down
in certain parts of the sector, but

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there's also continued strength within home building
and that sort of thing. Yeah,

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what's with that? Well, that
one to me, Matthew, Well,

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we still very much have a shortage
when we think about single family homes.

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So when we think about the number
of individuals that we have in this country

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versus actual legitimate housing, we still
very much have a shortage. And when

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you think about what's happening, people
have to be able to live someplace,

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and people are getting more value from
the resale of their home but we have

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a lot of retirees that are still
maintaining their big home that they had when

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they were raising their kids, and
now what are they wanting to do.

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They're wanting to get into rand style
homes or trying to downsize a little bit.

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And so as a result, many
of them have the capital, and

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many of them are saying, you
know what, this is not high inflation.

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If you want high inflation, let's
take you back to the nineteen eighties

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and nineteen nineties. That was high
inflation. So they're still looking at today's

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interest rates saying this isn't bad,
this is doable. We've got the capital

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to do this. We want to
build, and they're building to spec so

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that they can enjoy their retirement and
something that they want to spend the rest

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of their years living in. All
right, So I am looking at the

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PHLX Housing index and I follow housing
a lot because it's also it used to

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be an analog for interest rates.
All right, it's right now, it's

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at a near all time high.
I have it right. If you look

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at Lenar Pulty Homes, KB homes
and look at whatever it was, But

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all of them are trading at five
year highs. Those stocks probably Old Eyes.

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00:13:54,399 --> 00:13:58,480
The only one that isn't is Toll
Brothers, which focuses more on the

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luxury end. So what does this
tell us here, Matthew, Well,

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00:14:03,679 --> 00:14:05,240
again, we have to look at
what the trends are doing, and I'm

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seeing an awful lot of MIC clients
that are building in there. They're really

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building into what they want to be
able to have. I just had a

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client that decided that he was going
to live the great state of Lead,

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the great state of Minnesota, and
he was going to be going down to

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Hilton Head and he said, you
know, we looked around. We just

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00:14:26,159 --> 00:14:30,960
didn't find anything, but really,
you know, tickled our fancy. It

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was nothing that really fit the bill
for us. So we just decided,

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you know what, We've got the
capital, we have accessibility to credit,

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We've got a lot of credit and
equity builds up in our home. We're

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00:14:39,159 --> 00:14:41,919
going to go ahead and we're going
to build. Now. When it comes

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00:14:41,960 --> 00:14:46,919
to luxury homes, I think that
we have a few more of the luxury

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00:14:46,960 --> 00:14:50,600
homes that are available for people to
actually purchase, But many of the homes

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that are being purchased today, or
rather built today, I think are the

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homes that are just below that luxury
class, and that's the reason that we're

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00:15:01,519 --> 00:15:07,120
seeing the drive in that demand.
And that's in the face of increasing interest

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00:15:07,240 --> 00:15:13,799
rates. And now you're starting to
see builders actually get back into the credit

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business. Remember after the big bust, oh eight No. Nine, Before

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that, the builders, the homebuilders
are making more money on their kickbacks from

195
00:15:22,960 --> 00:15:28,840
financing to banks, etc. Some
of them were even packaging their own mortgage

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00:15:28,879 --> 00:15:33,159
backed securities and that all fell by
the wayside. They were like, no

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00:15:33,240 --> 00:15:39,919
incentives. But now they're looking to
soften the blow. I think there's also

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00:15:39,080 --> 00:15:45,159
been some home builders, like in
that middle tier, mid mid to upper

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middle tier, they cut back on
features as well, maybe made the houses

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a little bit smaller to keep the
affordability there. I just wonder how long

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the show goes on. You know, go back to the eighties with double

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digit interest rates. The first mortgage
I ever got was on a co op,

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paid a whopping one hundred and seventeen
thousand dollars for it in Fort Lee,

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New Jersey, had an eight and
a half percent interest rate plus the

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common charges. And this was like
a struggle for a young newly married couple.

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But now you know, housing prices
are quadruple what they were in the

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eighties. Rates aren't what they were
in the eighties, but hey they're over

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five percent. That's a nos bleed
territory. Absolutely, And I think that

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there's one other factor, though I
know that this is not all encompassing,

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but we see that there's several states
now that are trying to become more attractive

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to retirees, and they're starting to
take and make adjustments to their income tax,

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right, and so what this is
doing is this is attracting those retirees

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because they're saying, hey, if
we don't have to pay income tax,

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now we have more capital, we
have more casual and now we can justify.

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Isn't it interesting, Carrie? How
as human beings were kind of our

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own best attorneys, right, we
justify in our light all we're able to

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make something work. And so I
see a lot of my clients that have

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moved from other states into the state
of Iowa. Why because we just got

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done eliminating state income tax from any
distribution from any retirement program. That's really

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really nice. You look at other
states like Florida, You look at states

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and the Carolina is where they're reducing
this these are the things that are going

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to be attracting people to these states, and they're going to be hopefully seeing

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a boom in building. That's pretty
brilliant to get rid of all the passive

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income taxes state income taxes, so
basically, you're sixty five and over and

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you can live state tax free.
You'll let all the young people pay for

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the costs of government. You're there, you said, well, I guess

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you are spending some money. You
got to live, right, They drive

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a car. So that's really a
kind of enlightened leadership in this day and

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age because it's very difficult for a
state, never heard of it, to

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just dump an income tax. They've
talked about it, but they've never there's

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never been a state that's done it. So this is kind of like engineering

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that tax to attract the people and
make it more attractive to those retirees.

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Who look at Florida, the states
that have been attracting retirees, their GDP

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is increasing way way faster than the
states they're shedding retirees absolutely undred percent.

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I think it's very clever and it's
very forward thinking because when you think about

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it, you know who's going to
have more money the thirty five year old

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or the sixty five year old that's
already you know, all mass over the

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course of time, and now they're
hitting the distribution stage of their life where

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they don't have a job to time
down. Now they can go out and

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they can consume, they can buy, they can be able to enjoy more

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luxury items. This is really forward
thinking and I'm very very pleased to be

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seeing it because i think oftentimes there's
too many things that get in the way

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of economic growth when it comes to
political agendas and so on and so forth.

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You see the state of Minnesota,
prime example. They've squandered so much

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of the state income tax, they've
squandered so much of the resources that they've

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brought in from their citizens, and
they're starting to drive people out. So

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if they would just spend some time
driving out the mosquitoes, they would probably

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attract more people. But that's not
going to happen because they got ten thousand

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lakes. There. Felled states,
So you know, these are failing states

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three or four categories of states.
They're states that are growing, mostly in

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the south southwest. There are states
that are more or less stable, and

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really that's kind of like Iowa's and
the Kansas is not really a lot of

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growth there. And then there's states
that are failing and would put in Minnesota

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as one of them. And then
there are failed states like California, New

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York, New Jersey, an Etiqutte
probably falls into that. So I find

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it interesting that the state like Iowa, stable, you know, farm built

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all that, really figured this out. They kind of unraveled the riddle.

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You know, it used to be
like states didn't tax their own state workers

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pensions, but a lot of them
do that now. Well, interesting,

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interesting times here when we have this
conversation in a year, what do you

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think we're going to be seeing here, Matthew, Oh boy, that's the

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sixty four thousand dollar question, isn't
it. I think that there is some

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potential that we can pull this off, But my biggest concern is that right

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now we are getting very close to
the edge of a potential recession. The

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Federal Reserve seems absolutely resolved to continue
to raise interest rates, to continue to

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contract the economy. Part of the
problem, a big part of the problem

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is the government spending and it's working
contrary to what they're trying to do,

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and so they keep hammering on this, and if the Federal Reserve would just

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back off and let things continue to
calm down, I think that they would

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work their way down. Now.
I still think that a two percent inflation

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factor is way unreasonable. I think
it's still way too unachievable in the short

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term. But in this case,
if they keep pushing these interest rates higher,

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it's going to be interesting. Are
we going to have a full blown

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recession? I'm not sure. I've
been suggesting to many clients We're not going

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to see any kind of a raycut
for inflation until at least the end of

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the first quarter of two and twenty
four. But we shall see. We

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shall see. There's going to be
a lot of time between now and then.

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All Right, well, I think
that sums it up well. In

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any event, I've got a question
from Matthew myself k l at kryltz dot

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00:22:27,000 --> 00:22:32,160
com with ktch an answer quick and
while you're at it, to just go

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00:22:32,279 --> 00:22:36,799
over to the show notes Financial Survival
Network dot com. You'll find a link

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00:22:37,039 --> 00:22:44,440
to Matthew's site, Johnson with an
hwim dot com and hey, well you're

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00:22:44,440 --> 00:22:47,880
there. Sign up for your free
newsletter. Matthew always a pleasure thanks for

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00:22:47,920 --> 00:22:51,920
coming on. Thanks so much,
Carrie, thanks for listening to Carrie Lets's

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00:22:51,920 --> 00:22:56,559
Financial Survival Network, your solution to
today's trying times. For the latest,

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00:22:56,640 --> 00:23:03,279
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