1
00:00:00,080 --> 00:00:02,960
And I think that there's a lot
of cash they're sitting on the sidelines right

2
00:00:03,000 --> 00:00:05,559
now. I think that there's a
lot of projects that are being held off.

3
00:00:06,200 --> 00:00:09,720
And I think what they're afraid of
is as soon as they show signals

4
00:00:10,160 --> 00:00:12,519
of cutting interest rates, all of
a sudden, there's going to be an

5
00:00:12,519 --> 00:00:15,839
outpouring of money and it's going to
hit the economy. And that's what they're

6
00:00:15,880 --> 00:00:19,280
afraid of. That's the reason that
you're trying so delicate. But whether or

7
00:00:19,280 --> 00:00:24,280
not they're going to actually drive us
into a recession first, that's the thing

8
00:00:24,320 --> 00:00:28,800
that I think is scarier because every
time they raise the rates, remember that

9
00:00:28,879 --> 00:00:34,079
the FEDS might be the catalyst,
they might trigger the recession, but it's

10
00:00:34,200 --> 00:00:38,840
EU and I, it's human beings, it's corporations that actually proceed on with

11
00:00:39,119 --> 00:00:44,280
that recession. You're listening to Carrie
Let's Financial Survival Network, where you get

12
00:00:44,359 --> 00:00:49,960
valuable information. You just can't find
anywhere else to thrive in today's trying times.

13
00:00:50,200 --> 00:00:55,719
You need the Financial Survival Network now
more than ever. Go to Financial

14
00:00:55,759 --> 00:01:00,320
Survival and Network dot com and get
your free newsletter in gift. Financial Survival

15
00:01:00,439 --> 00:01:10,159
Network now more than ever, and
welcome. You aren't listening to watching the

16
00:01:10,400 --> 00:01:14,719
Financial Survival Network. I'm your host, Carry Lutz. Well, rate hikes.

17
00:01:15,200 --> 00:01:19,439
Are they here to stay? Or
will a FED pivot? There are

18
00:01:19,599 --> 00:01:25,760
two schools of thought on the topic. Maybe there's three, there's one in

19
00:01:25,760 --> 00:01:30,120
the middle. Things they'll do both. Those are the people that don't want

20
00:01:30,120 --> 00:01:33,280
to take a position on anything.
But hey, you got an opinion on

21
00:01:33,319 --> 00:01:36,239
it. I want to hear from
you. They're going to raise to infinity

22
00:01:36,599 --> 00:01:38,680
or are they going to cut to
zero again? I want to know what

23
00:01:38,760 --> 00:01:44,439
you think. Send me an email
k l at Kerry Lutz dot com.

24
00:01:44,439 --> 00:01:49,920
And Matthew Johnson is with us here
to discuss this very topic. Matthew,

25
00:01:49,959 --> 00:01:55,239
welcome back. So do we keep
seeing rate increases in spite of the world

26
00:01:55,319 --> 00:01:59,200
economy imploding? Well, boy,
I tell you what, it's a giant

27
00:01:59,280 --> 00:02:02,319
game of cat and mouse, isn't
it? Carry Its what we're having me

28
00:02:02,359 --> 00:02:07,719
back. It's it's so very confusing
to the average person because right now we

29
00:02:07,759 --> 00:02:16,159
are just involved in this proverbial,
gray, vague type of verbiage that they're

30
00:02:16,280 --> 00:02:21,719
using where they're they're trying to,
you know, not give any signal to

31
00:02:21,759 --> 00:02:27,520
the market. They would justify them
running saying oh, they're using a very

32
00:02:27,599 --> 00:02:30,680
devish tone, so they're they're wanting
to kind of give us this very gray

33
00:02:30,759 --> 00:02:36,159
speed to allow us to think,
well, they're they're probably going to pause.

34
00:02:36,240 --> 00:02:38,759
But then again, we really don't
know they might do it in the

35
00:02:38,759 --> 00:02:42,719
future, and right now the only
real sort of day that we have is

36
00:02:42,960 --> 00:02:45,639
well, we just don't know until
they have the meeting and then they come

37
00:02:45,639 --> 00:02:47,520
on and they tell us what their
decision is. But at some point,

38
00:02:47,639 --> 00:02:52,919
don't they have to absolutely have to
cut rates. Well, I most definitely

39
00:02:52,919 --> 00:02:57,840
agree. When you consider the national
debt, you consider what has happened to

40
00:02:57,879 --> 00:03:02,680
the economy and the shrinkage of the
economy. There is also the dynamic where

41
00:03:02,879 --> 00:03:06,599
Carrie, I think you would agree, and many of your listeners would agree.

42
00:03:06,680 --> 00:03:12,560
Our country. Corporations in our country
just normal everyday citizens of this country

43
00:03:12,879 --> 00:03:16,599
have grown very much accustomed to low
interest rates and low interest rates. Let's

44
00:03:16,599 --> 00:03:22,360
face it, that stimulates growth,
right People buy cars, people build their

45
00:03:22,400 --> 00:03:27,960
homes, people do all sorts of
things when interest rates are well. Corporations

46
00:03:28,039 --> 00:03:30,919
do the exact same thing. And
right now we're seeing many corporations that are

47
00:03:30,919 --> 00:03:35,039
sitting on the sidelines. They're not
borrowing. Buddy, they're not doing new

48
00:03:35,159 --> 00:03:39,280
issues because let's face it, interest
rates you too high, and if we

49
00:03:39,319 --> 00:03:44,520
sit on the sidelines long enough,
number one, that is going to definitely

50
00:03:45,039 --> 00:03:49,879
further the inflation coming down. But
we know that in the future the Feds

51
00:03:49,879 --> 00:03:52,120
are going to have to relet,
They're going to have to start bringing interest

52
00:03:52,159 --> 00:03:57,000
rates back down to get this economy
moving again. All right, So it's

53
00:03:57,080 --> 00:04:00,840
kind of a game at shooken here, But at some point they've got to

54
00:04:00,840 --> 00:04:08,479
do it. And the damage from
these higher rates bring down inflation, but

55
00:04:08,599 --> 00:04:13,439
at the cost of what our rates
really going to bring inflation down? Or

56
00:04:13,520 --> 00:04:16,120
is it the induced recession that's going
to cause that? Yeah, in many

57
00:04:16,199 --> 00:04:19,319
respects, I think that there's a
lot of theories out there that their goal

58
00:04:19,600 --> 00:04:24,600
is indeed to create a mild recession
at the very least, you know.

59
00:04:25,000 --> 00:04:30,240
I just think of the malarkey that
we heard eighteen nineteen months ago from the

60
00:04:30,240 --> 00:04:32,920
Federal Reserve saying that they were,
you know, very optimistic that they were

61
00:04:32,920 --> 00:04:35,079
going to be able to do a
soft landing, that they were going to

62
00:04:35,160 --> 00:04:40,240
quote unquote thread the needle, all
of these various things, and yet we

63
00:04:40,319 --> 00:04:46,600
see that they just seemed absolutely adamant
to continue pounding the nails into the coffin.

64
00:04:46,279 --> 00:04:50,920
And I think that in all honesty, where I believe that they should

65
00:04:51,040 --> 00:04:57,600
have not raised interest rates back in
July like they did, they did it

66
00:04:57,639 --> 00:05:00,839
anyway, and now I think that
they're feeling some back clash. But I

67
00:05:00,879 --> 00:05:05,120
think it goes further than that.
You know, when inflation really became obviously

68
00:05:05,240 --> 00:05:09,720
out of control, and we put
that in air quotes because you and I

69
00:05:09,759 --> 00:05:14,720
both know inflation, what real inflation
was back in the eighties and nineties.

70
00:05:15,920 --> 00:05:19,480
But when inflation really became the number
one headline, that's when all of a

71
00:05:19,519 --> 00:05:25,759
sudden, the Federal Reserve became the
whipping boy for not acting stuff. And

72
00:05:25,839 --> 00:05:29,800
now I think that they're taking this
tenure where they want to keep policy extremely

73
00:05:29,839 --> 00:05:33,240
tight because no matter what, they
don't want to be blamed for having another

74
00:05:33,240 --> 00:05:38,199
repeated in nineteen seventies. They don't
want to stop too early and then all

75
00:05:38,240 --> 00:05:42,399
of a sudden have inflation reserves that
would be just a disaster for them.

76
00:05:42,879 --> 00:05:45,720
So I think that that's the reason
that they're taking the tenor that they are

77
00:05:46,360 --> 00:05:48,759
all right, So at what point
does this thing end? That? I

78
00:05:48,759 --> 00:05:53,759
mean, I know you said when
it basically when it's done, it's done.

79
00:05:54,279 --> 00:05:57,800
But how will you know, how
can you tell that they're actually going

80
00:05:57,879 --> 00:06:01,240
to pivot? Cool? You know
when they're going to start cutting interest rates?

81
00:06:01,920 --> 00:06:04,800
My best guess, And I'm not
a fortune teller, I'm not carmack

82
00:06:04,839 --> 00:06:10,120
off from Johnny Carson, but you
know, not at all. I just

83
00:06:10,240 --> 00:06:14,279
I don't have that at your turving. I think that's Turt in your office.

84
00:06:14,319 --> 00:06:17,160
There that in the index card,
right, yea, my whole my

85
00:06:17,560 --> 00:06:23,759
best My best guess is that early
on in the year, I was thinking,

86
00:06:23,800 --> 00:06:26,439
Okay, well, maybe there's a
possibility by the end of the first

87
00:06:26,519 --> 00:06:30,199
quarter twenty twenty four, we're going
to start to see the pivot. And

88
00:06:30,439 --> 00:06:33,079
now I believe that all they're doing
is kicking the can down the road.

89
00:06:33,120 --> 00:06:39,399
They're furthering that time in which they
can pivot and start cutting interest rates closer

90
00:06:39,439 --> 00:06:43,199
to the end of the second quarter
of twenty twenty four. And I think

91
00:06:43,199 --> 00:06:45,959
that there's a lot of cash that's
sitting on the sidelines right now. I

92
00:06:45,959 --> 00:06:48,160
think that there's a lot of projects
that are being held off. And I

93
00:06:48,199 --> 00:06:53,639
think what they're afraid of is as
soon as they show signals of cutting interest

94
00:06:53,680 --> 00:06:56,560
rates, all of a sudden,
there's going to be an outpouring of money

95
00:06:56,639 --> 00:06:58,959
and it's going to hit the economy, and that's what they're afraid of.

96
00:06:59,040 --> 00:07:01,600
That's the reason that you're train is
delicate. But whether or not they're going

97
00:07:01,680 --> 00:07:06,560
to actually drive us into a recession
first, that's the thing that I think

98
00:07:06,680 --> 00:07:12,319
is scarier because every time they raise
the rates, remember that the Feds might

99
00:07:12,399 --> 00:07:16,439
be the catalyst, they might trigger
the recession, but it's you and I,

100
00:07:16,519 --> 00:07:21,600
it's human beings, it's corporations that
actually proceed on with that recession.

101
00:07:21,759 --> 00:07:25,920
We start to tighten up, just
clam up, and all of a sudden,

102
00:07:26,360 --> 00:07:29,439
that's what creates that knee jerk reaction
that we're all so afraid of.

103
00:07:30,000 --> 00:07:33,360
All right, well, I guess
we'll know it's happening when it happens.

104
00:07:33,800 --> 00:07:39,240
Then then we'll be playing that good
old song from the thirties, happy Days,

105
00:07:39,319 --> 00:07:44,160
or here again. Right, let's
all yeah, will. But you

106
00:07:44,199 --> 00:07:49,680
know, every recession starts sets the
stage for the next expansion, and every

107
00:07:49,720 --> 00:07:56,279
expansion sets the stage for the next
contraction or recession. It's kind of like

108
00:07:56,439 --> 00:08:01,600
peace leads to war, war leads
to peace, But there are always telltale

109
00:08:01,680 --> 00:08:05,879
signals that they give out to the
big boys, right, because that's why

110
00:08:05,879 --> 00:08:11,920
they exist, to guarantee the sanctity
of the banking system. Agreed. So

111
00:08:13,000 --> 00:08:16,519
the next question, is the banking
crisis over or every time they raise rates

112
00:08:16,560 --> 00:08:20,879
it goes up another notch. I
think that that's a really worthwhile question.

113
00:08:22,040 --> 00:08:26,519
Carry I'm not cumfortable with saying that
we're out of the woodchet. I think

114
00:08:26,519 --> 00:08:33,679
that there's quite a bit of distress
that still exists within the banking industry,

115
00:08:33,679 --> 00:08:37,320
and especially within some of the larger
banks. I know that just recently,

116
00:08:37,559 --> 00:08:41,720
you know, the Federal Reserve has
gotten together with the banking sector and they've

117
00:08:41,759 --> 00:08:46,919
tried to calm the fears. But
yet we know that every single time rates

118
00:08:46,960 --> 00:08:52,399
go up, it creates greater distress
and pressure on the banking system. And

119
00:08:52,440 --> 00:08:56,440
so is this something where we have
to be alarmed when we see a few

120
00:08:56,440 --> 00:09:01,519
banks fail. I don't believe so, because historically, when we go back

121
00:09:01,600 --> 00:09:05,840
from say two thousand and eight until
now, and we look at the average

122
00:09:05,919 --> 00:09:11,080
number of banks across the United States
that have failed, it's actually pretty alarming

123
00:09:11,679 --> 00:09:16,000
when you see the average number.
But we know that the number has gotten

124
00:09:16,080 --> 00:09:20,240
smaller and smaller. But now these
banks are dealing with manipulation, right,

125
00:09:20,279 --> 00:09:26,759
they're dealing with the government manipulating the
monetary system raising the interest rates. That

126
00:09:26,799 --> 00:09:30,960
means that they're losing money on the
bonds. We know that there is a

127
00:09:31,000 --> 00:09:37,840
tremendous number of institutional investors as well
as just average joes that are walking in.

128
00:09:37,879 --> 00:09:41,240
They're pulling their money out of one
institution and moving in across the street

129
00:09:41,240 --> 00:09:46,559
to another institution that's going to give
them ten basis points more for interest,

130
00:09:46,399 --> 00:09:50,840
and so this is creating quite a
bit of distress. So we want to

131
00:09:50,840 --> 00:09:56,080
be extremely careful to not only manage
how much money we have in the banks,

132
00:09:56,080 --> 00:10:01,120
but we want to make certain that
we're doing our due dilig in the

133
00:10:01,159 --> 00:10:05,519
bank that we actually have our money
in. Are they small and private or

134
00:10:05,559 --> 00:10:09,480
are they part of a conglomerate.
Is there, you know, any opportunity

135
00:10:09,519 --> 00:10:13,799
of research that we can look and
see how distressed they may be, or

136
00:10:13,799 --> 00:10:18,639
what percentage of their book the assets
is distressed. That these are important things

137
00:10:18,679 --> 00:10:22,879
that we have to take responsibility for
our belief. Yeah, but you know,

138
00:10:22,960 --> 00:10:28,360
the financial statements of these mega banks, giga banks, terror banks are

139
00:10:28,519 --> 00:10:35,919
so opaque that I challenge anyone even
if you have an advanced degree in auditing

140
00:10:37,519 --> 00:10:41,039
to be able to understand what's in
there because you don't know. And then

141
00:10:41,039 --> 00:10:46,440
you've got all these single purpose vehicles
SPVs that they created to avoid all the

142
00:10:46,519 --> 00:10:56,120
regulation. You know, banks are
masters at obfuscation and deception, so you

143
00:10:56,200 --> 00:11:00,279
really can't know whether your bank is
solving or not, can you. It

144
00:11:00,399 --> 00:11:05,279
is very, very challenging today to
be able to know exactly where things are.

145
00:11:05,399 --> 00:11:09,799
We know that banks have very clever
ways and being able to hide distressed

146
00:11:09,879 --> 00:11:18,519
instruments and distressed assets. We know
most every corporation has very unique and very

147
00:11:18,519 --> 00:11:24,879
clever ways of being able to hide
distressed instruments and assets. Nevertheless, I

148
00:11:24,919 --> 00:11:28,919
still believe that it's our responsibility to
do our due diligence to make certain that

149
00:11:28,960 --> 00:11:33,879
we have our money diversified. You
know, one of the things that human

150
00:11:33,919 --> 00:11:37,320
beings I think are very susceptible to
carry, and I know you believe in

151
00:11:37,360 --> 00:11:43,559
diversification as a fiduciary, I do
is with us is we have to be

152
00:11:43,639 --> 00:11:50,200
diversified with our money. We cannot
find one single source of instrumentation for ourselves

153
00:11:50,240 --> 00:11:52,799
and say this is it, this
is the perfect one. You know,

154
00:11:52,840 --> 00:11:58,240
we can look and observe goal,
for instance, and gold is down slightly

155
00:11:58,279 --> 00:12:01,759
over the last six months, and
yet we could something like a commodity like

156
00:12:01,799 --> 00:12:05,360
crude oil and it's up thirty five
percent in the last six months. Well,

157
00:12:05,159 --> 00:12:09,320
someone could argue, well, oil
is the best investment that there is

158
00:12:09,360 --> 00:12:13,879
out there, and yet you can
go back and you can see where oil

159
00:12:13,000 --> 00:12:18,320
was decimated in twenty twenty. Right. So this is where we want to

160
00:12:18,360 --> 00:12:20,919
make certain we don't have too much
of our money in the bank, We

161
00:12:20,960 --> 00:12:24,200
don't have too much of our money
in any one particular area, but rather

162
00:12:24,279 --> 00:12:31,960
we are diversified not only by name, but we are diversified by asset class

163
00:12:31,000 --> 00:12:35,919
as well, newor diligence, because
no one's going to be here. The

164
00:12:35,960 --> 00:12:39,720
government's certainly not going to be here. We can't even believe half of the

165
00:12:39,840 --> 00:12:46,519
numbers that we receive, in my
opinion, only half, only half.

166
00:12:46,559 --> 00:12:50,840
And you're being an optimist here.
I don't want to be a devy doner,

167
00:12:50,080 --> 00:12:54,000
right, but we have to do
our own due diligence and make certain

168
00:12:54,039 --> 00:12:58,200
that we have that money diversified.
And we've looked at where we're putting our

169
00:12:58,200 --> 00:13:01,799
money, and we first feel don't
take a person's word for it and say,

170
00:13:01,919 --> 00:13:05,759
yeah, we're safe because we've been
down that road. We've either got

171
00:13:05,919 --> 00:13:11,480
personal experiences or we've got our friends
that have had that experience and we don't

172
00:13:11,480 --> 00:13:16,000
want to replicate that. Yeah,
just look what's happening in China. Now.

173
00:13:16,200 --> 00:13:18,759
You know, if Chinese read American
history, they would have been prepared

174
00:13:18,799 --> 00:13:24,399
for all this. We forget going
back that how many millions of people lost

175
00:13:24,559 --> 00:13:31,000
their life savings entrusted to the banking
sector. And I know, like my

176
00:13:31,120 --> 00:13:35,759
grandparents generation didn't trust banks for the
rest of their lives. And even my

177
00:13:35,879 --> 00:13:41,960
parents had issues, but they managed
to put them aside. The you know,

178
00:13:41,120 --> 00:13:48,000
winds of time kind of wear everything
down. But you know, I

179
00:13:48,039 --> 00:13:52,559
guess a government, some government guarantee
is better than no guarantee at all.

180
00:13:52,240 --> 00:13:58,720
And push comes to show they will
print money to stop a banking sector collapse.

181
00:13:58,799 --> 00:14:03,399
They're doing it right now out with
the emergency facility at the discount window

182
00:14:03,799 --> 00:14:09,759
to keep all these mid sized banks
afloat right. M agree, we have

183
00:14:09,840 --> 00:14:15,919
never had a problem in the last
two decades of taking in financially manipulating what

184
00:14:15,960 --> 00:14:18,960
we need to in the monetary system
to keep things looking good. And that's

185
00:14:20,000 --> 00:14:24,639
part of the reason that so many
people today have distrust for the for the

186
00:14:24,679 --> 00:14:30,519
government, they have distrust in the
banking sector, they have distrust in the

187
00:14:30,279 --> 00:14:35,159
in the in the stock market,
and in many respects. I want to

188
00:14:35,320 --> 00:14:41,159
just kind of speak of this.
There's there's many places that we can deposit

189
00:14:41,200 --> 00:14:46,519
money and we can feel relative safety
in doing so. We want to remember

190
00:14:46,639 --> 00:14:50,039
that the bank is simply one place. Granted it may be the most popular

191
00:14:50,080 --> 00:14:54,759
and the most common, but there's
many places that we can put money that

192
00:14:54,879 --> 00:15:01,159
is relatively safe. Are these things
going to be absolutely one percentage? And

193
00:15:01,240 --> 00:15:03,639
the answer is, I don't care. If you look at insurance companies,

194
00:15:03,000 --> 00:15:07,159
I don't look. I don't care
if you look at new factories or intrude

195
00:15:07,240 --> 00:15:11,879
municipals. All of those things are
going to have good times, are going

196
00:15:11,879 --> 00:15:16,159
to have bad times. But diversification
is the call of the day for it

197
00:15:16,240 --> 00:15:20,799
today. Okay, So we will
leave it at that. Diversify it or

198
00:15:20,960 --> 00:15:26,320
die potentially. I mean, you
have to do it, because they've left

199
00:15:26,360 --> 00:15:31,360
you no other choice anyway, Matthew, just tell us best place to find

200
00:15:31,399 --> 00:15:37,200
you these days? Absolutely, you
can go to our website. Johnson wim

201
00:15:37,200 --> 00:15:41,600
dot com stands for Wealth Income Management
They can also tune into my radio show.

202
00:15:41,639 --> 00:15:48,519
They can go to my YouTube channel, The Capitalized Life, all sorts

203
00:15:48,559 --> 00:15:54,120
of webinars every single month to educate
people on things that are financially relevant to

204
00:15:54,159 --> 00:15:58,200
them. I appreciate all of the
feedbacks from your listeners. It's always so

205
00:15:58,279 --> 00:16:00,840
very gratifying. Hey, well,
thank you for that, and we appreciate

206
00:16:00,879 --> 00:16:04,559
it as well. Hey, if
you've got a question from Matthew myself kl

207
00:16:04,799 --> 00:16:10,039
at carluts dot com, please send
your emails let us know how you are

208
00:16:10,080 --> 00:16:15,720
maximizing your cash flow. Are you
putting safety or perceived safety above all other

209
00:16:15,399 --> 00:16:19,720
factors in your decision where to put
your money? Like to know kl at

210
00:16:19,799 --> 00:16:27,600
caryluts dot com and you'll find a
link to Matthew's site at Financial Survival Network

211
00:16:27,639 --> 00:16:30,679
dot com in the show notes in
this interview. While you're there, sign

212
00:16:30,720 --> 00:16:33,919
up for a free newsletter. Matthew, thanks for coming by. Always a

213
00:16:33,960 --> 00:16:37,919
pleasure. Thanks for having me carry
here, Thanks for listening to carry Letts's

214
00:16:38,039 --> 00:16:44,679
Financial Survival Network, your solution to
today's trying times. For the latest,

215
00:16:44,759 --> 00:16:51,399
go to Financial Survival Network dot com. Financial Survival Network now more than ever