And I think that there's a lot of cash they're sitting on the sidelines right
now. I think that there's a lot of projects that are being held off.
And I think what they're afraid of is as soon as they show signals
of cutting interest rates, all of a sudden, there's going to be an
outpouring of money and it's going to hit the economy. And that's what they're
afraid of. That's the reason that you're trying so delicate. But whether or
not they're going to actually drive us into a recession first, that's the thing
that I think is scarier because every time they raise the rates, remember that
the FEDS might be the catalyst, they might trigger the recession, but it's
EU and I, it's human beings, it's corporations that actually proceed on with
that recession. You're listening to Carrie Let's Financial Survival Network, where you get
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Survival and Network dot com and get your free newsletter in gift. Financial Survival
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Financial Survival Network. I'm your host, Carry Lutz. Well, rate hikes.
Are they here to stay? Or will a FED pivot? There are
two schools of thought on the topic. Maybe there's three, there's one in
the middle. Things they'll do both. Those are the people that don't want
to take a position on anything. But hey, you got an opinion on
it. I want to hear from you. They're going to raise to infinity
or are they going to cut to zero again? I want to know what
you think. Send me an email k l at Kerry Lutz dot com.
And Matthew Johnson is with us here to discuss this very topic. Matthew,
welcome back. So do we keep seeing rate increases in spite of the world
economy imploding? Well, boy, I tell you what, it's a giant
game of cat and mouse, isn't it? Carry Its what we're having me
back. It's it's so very confusing to the average person because right now we
are just involved in this proverbial, gray, vague type of verbiage that they're
using where they're they're trying to, you know, not give any signal to
the market. They would justify them running saying oh, they're using a very
devish tone, so they're they're wanting to kind of give us this very gray
speed to allow us to think, well, they're they're probably going to pause.
But then again, we really don't know they might do it in the
future, and right now the only real sort of day that we have is
well, we just don't know until they have the meeting and then they come
on and they tell us what their decision is. But at some point,
don't they have to absolutely have to cut rates. Well, I most definitely
agree. When you consider the national debt, you consider what has happened to
the economy and the shrinkage of the economy. There is also the dynamic where
Carrie, I think you would agree, and many of your listeners would agree.
Our country. Corporations in our country just normal everyday citizens of this country
have grown very much accustomed to low interest rates and low interest rates. Let's
face it, that stimulates growth, right People buy cars, people build their
homes, people do all sorts of things when interest rates are well. Corporations
do the exact same thing. And right now we're seeing many corporations that are
sitting on the sidelines. They're not borrowing. Buddy, they're not doing new
issues because let's face it, interest rates you too high, and if we
sit on the sidelines long enough, number one, that is going to definitely
further the inflation coming down. But we know that in the future the Feds
are going to have to relet, They're going to have to start bringing interest
rates back down to get this economy moving again. All right, So it's
kind of a game at shooken here, But at some point they've got to
do it. And the damage from these higher rates bring down inflation, but
at the cost of what our rates really going to bring inflation down? Or
is it the induced recession that's going to cause that? Yeah, in many
respects, I think that there's a lot of theories out there that their goal
is indeed to create a mild recession at the very least, you know.
I just think of the malarkey that we heard eighteen nineteen months ago from the
Federal Reserve saying that they were, you know, very optimistic that they were
going to be able to do a soft landing, that they were going to
quote unquote thread the needle, all of these various things, and yet we
see that they just seemed absolutely adamant to continue pounding the nails into the coffin.
And I think that in all honesty, where I believe that they should
have not raised interest rates back in July like they did, they did it
anyway, and now I think that they're feeling some back clash. But I
think it goes further than that. You know, when inflation really became obviously
out of control, and we put that in air quotes because you and I
both know inflation, what real inflation was back in the eighties and nineties.
But when inflation really became the number one headline, that's when all of a
sudden, the Federal Reserve became the whipping boy for not acting stuff. And
now I think that they're taking this tenure where they want to keep policy extremely
tight because no matter what, they don't want to be blamed for having another
repeated in nineteen seventies. They don't want to stop too early and then all
of a sudden have inflation reserves that would be just a disaster for them.
So I think that that's the reason that they're taking the tenor that they are
all right, So at what point does this thing end? That? I
mean, I know you said when it basically when it's done, it's done.
But how will you know, how can you tell that they're actually going
to pivot? Cool? You know when they're going to start cutting interest rates?
My best guess, And I'm not a fortune teller, I'm not carmack
off from Johnny Carson, but you know, not at all. I just
I don't have that at your turving. I think that's Turt in your office.
There that in the index card, right, yea, my whole my
best My best guess is that early on in the year, I was thinking,
Okay, well, maybe there's a possibility by the end of the first
quarter twenty twenty four, we're going to start to see the pivot. And
now I believe that all they're doing is kicking the can down the road.
They're furthering that time in which they can pivot and start cutting interest rates closer
to the end of the second quarter of twenty twenty four. And I think
that there's a lot of cash that's sitting on the sidelines right now. I
think that there's a lot of projects that are being held off. And I
think what they're afraid of is as soon as they show signals of cutting interest
rates, all of a sudden, there's going to be an outpouring of money
and it's going to hit the economy, and that's what they're afraid of.
That's the reason that you're train is delicate. But whether or not they're going
to actually drive us into a recession first, that's the thing that I think
is scarier because every time they raise the rates, remember that the Feds might
be the catalyst, they might trigger the recession, but it's you and I,
it's human beings, it's corporations that actually proceed on with that recession.
We start to tighten up, just clam up, and all of a sudden,
that's what creates that knee jerk reaction that we're all so afraid of.
All right, well, I guess we'll know it's happening when it happens.
Then then we'll be playing that good old song from the thirties, happy Days,
or here again. Right, let's all yeah, will. But you
know, every recession starts sets the stage for the next expansion, and every
expansion sets the stage for the next contraction or recession. It's kind of like
peace leads to war, war leads to peace, But there are always telltale
signals that they give out to the big boys, right, because that's why
they exist, to guarantee the sanctity of the banking system. Agreed. So
the next question, is the banking crisis over or every time they raise rates
it goes up another notch. I think that that's a really worthwhile question.
Carry I'm not cumfortable with saying that we're out of the woodchet. I think
that there's quite a bit of distress that still exists within the banking industry,
and especially within some of the larger banks. I know that just recently,
you know, the Federal Reserve has gotten together with the banking sector and they've
tried to calm the fears. But yet we know that every single time rates
go up, it creates greater distress and pressure on the banking system. And
so is this something where we have to be alarmed when we see a few
banks fail. I don't believe so, because historically, when we go back
from say two thousand and eight until now, and we look at the average
number of banks across the United States that have failed, it's actually pretty alarming
when you see the average number. But we know that the number has gotten
smaller and smaller. But now these banks are dealing with manipulation, right,
they're dealing with the government manipulating the monetary system raising the interest rates. That
means that they're losing money on the bonds. We know that there is a
tremendous number of institutional investors as well as just average joes that are walking in.
They're pulling their money out of one institution and moving in across the street
to another institution that's going to give them ten basis points more for interest,
and so this is creating quite a bit of distress. So we want to
be extremely careful to not only manage how much money we have in the banks,
but we want to make certain that we're doing our due dilig in the
bank that we actually have our money in. Are they small and private or
are they part of a conglomerate. Is there, you know, any opportunity
of research that we can look and see how distressed they may be, or
what percentage of their book the assets is distressed. That these are important things
that we have to take responsibility for our belief. Yeah, but you know,
the financial statements of these mega banks, giga banks, terror banks are
so opaque that I challenge anyone even if you have an advanced degree in auditing
to be able to understand what's in there because you don't know. And then
you've got all these single purpose vehicles SPVs that they created to avoid all the
regulation. You know, banks are masters at obfuscation and deception, so you
really can't know whether your bank is solving or not, can you. It
is very, very challenging today to be able to know exactly where things are.
We know that banks have very clever ways and being able to hide distressed
instruments and distressed assets. We know most every corporation has very unique and very
clever ways of being able to hide distressed instruments and assets. Nevertheless, I
still believe that it's our responsibility to do our due diligence to make certain that
we have our money diversified. You know, one of the things that human
beings I think are very susceptible to carry, and I know you believe in
diversification as a fiduciary, I do is with us is we have to be
diversified with our money. We cannot find one single source of instrumentation for ourselves
and say this is it, this is the perfect one. You know,
we can look and observe goal, for instance, and gold is down slightly
over the last six months, and yet we could something like a commodity like
crude oil and it's up thirty five percent in the last six months. Well,
someone could argue, well, oil is the best investment that there is
out there, and yet you can go back and you can see where oil
was decimated in twenty twenty. Right. So this is where we want to
make certain we don't have too much of our money in the bank, We
don't have too much of our money in any one particular area, but rather
we are diversified not only by name, but we are diversified by asset class
as well, newor diligence, because no one's going to be here. The
government's certainly not going to be here. We can't even believe half of the
numbers that we receive, in my opinion, only half, only half.
And you're being an optimist here. I don't want to be a devy doner,
right, but we have to do our own due diligence and make certain
that we have that money diversified. And we've looked at where we're putting our
money, and we first feel don't take a person's word for it and say,
yeah, we're safe because we've been down that road. We've either got
personal experiences or we've got our friends that have had that experience and we don't
want to replicate that. Yeah, just look what's happening in China. Now.
You know, if Chinese read American history, they would have been prepared
for all this. We forget going back that how many millions of people lost
their life savings entrusted to the banking sector. And I know, like my
grandparents generation didn't trust banks for the rest of their lives. And even my
parents had issues, but they managed to put them aside. The you know,
winds of time kind of wear everything down. But you know, I
guess a government, some government guarantee is better than no guarantee at all.
And push comes to show they will print money to stop a banking sector collapse.
They're doing it right now out with the emergency facility at the discount window
to keep all these mid sized banks afloat right. M agree, we have
never had a problem in the last two decades of taking in financially manipulating what
we need to in the monetary system to keep things looking good. And that's
part of the reason that so many people today have distrust for the for the
government, they have distrust in the banking sector, they have distrust in the
in the in the stock market, and in many respects. I want to
just kind of speak of this. There's there's many places that we can deposit
money and we can feel relative safety in doing so. We want to remember
that the bank is simply one place. Granted it may be the most popular
and the most common, but there's many places that we can put money that
is relatively safe. Are these things going to be absolutely one percentage? And
the answer is, I don't care. If you look at insurance companies,
I don't look. I don't care if you look at new factories or intrude
municipals. All of those things are going to have good times, are going
to have bad times. But diversification is the call of the day for it
today. Okay, So we will leave it at that. Diversify it or
die potentially. I mean, you have to do it, because they've left
you no other choice anyway, Matthew, just tell us best place to find
you these days? Absolutely, you can go to our website. Johnson wim
dot com stands for Wealth Income Management They can also tune into my radio show.
They can go to my YouTube channel, The Capitalized Life, all sorts
of webinars every single month to educate people on things that are financially relevant to
them. I appreciate all of the feedbacks from your listeners. It's always so
very gratifying. Hey, well, thank you for that, and we appreciate
it as well. Hey, if you've got a question from Matthew myself kl
at carluts dot com, please send your emails let us know how you are
maximizing your cash flow. Are you putting safety or perceived safety above all other
factors in your decision where to put your money? Like to know kl at
caryluts dot com and you'll find a link to Matthew's site at Financial Survival Network
dot com in the show notes in this interview. While you're there, sign
up for a free newsletter. Matthew, thanks for coming by. Always a
pleasure. Thanks for having me carry here, Thanks for listening to carry Letts's
Financial Survival Network, your solution to today's trying times. For the latest,
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