1
00:00:00,240 --> 00:00:03,439
The part that surprised actually was core
inflation. And you not hear a lot

2
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of people talking about this. This
is the feeder reserve's most important indicator as

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far as they're concerned, to what
they continue to share with us. And

4
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so this excludes food and energy prices
and then their allocation of percentages of at

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each cost and that actually went up
here this month. You are listening to

6
00:00:22,879 --> 00:00:28,039
Carrie Lutz's Financial Survival Network, where
you get valuable information. You just can't

7
00:00:28,079 --> 00:00:34,039
find anywhere else to thrive in today's
trying times. You need the Financial Survival

8
00:00:34,079 --> 00:00:39,759
Network now more than ever. Go
to Financial Survivalnetwork dot com and get your

9
00:00:39,840 --> 00:00:50,039
free newsletter and gift. Financial Survival
Network now more than ever. And welcome

10
00:00:50,079 --> 00:00:53,719
you are listening to the Financial Survival
Network. Om Here, hos Kerrie Letz.

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It's twelve twelve twenty three. David
Struzzuski is with us, and we're

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talking about the CPI numbers. Can
you trust them? Can you trust any

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government numbers? Well maybe they're not
quite as bad as China's. But when

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that's the best you can say about
them, you got to think, David,

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and welcome back. So CPI,
what's the deal? Hey, great

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to be with you here, Carrie. Yeah, you know. So first,

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the consumer Price Index represents a basket
of services that the government has ultimately

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determined to be a gauge of expenses
or costs that you know, people are

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spending money on. And and so
we'll talk about the fallacy of that in

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just a minute. But we just
saw reading that you know, saw that

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you know, CPI came down from
three point two to three point one this

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month. Okay, so that's some
movement, not huge movement, of course,

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we're expecting you know, fluctuations.
But the big reason for that lower

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reading was that energy costs went down
about six percent. So you know,

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I think that we're all recognizing that
here at the gas pump that whatever reason,

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gas prices are you know, below
seventy of barrel right now. The

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part that surprised actually was core inflation. And you not hear a lot of

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people talking about this. This is
the set of Reserve's most important indicator as

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far as they're concerned to what they
continue to share with us. And so

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this excludes food and energy prices,
and then their allocation of percentages of at

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each cost and that actually went up
here this month. So that's now at

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four percent year every year, which
is a long way from two. But

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you know, big expenses within that
were as a result of transportation being up

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over ten percent over the year and
housing being up six and a half percent

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year over year, you know,
which, of course, housing right now

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is basically at its most unaffordable time
in US history. And so let me

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just talk about CBI for two seconds, and just for your listeners, you

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know, there's a couple of problems
with how they measure CPI. So number

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one, this is not a measurement
into any specific consumer spending, let alone

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what the average American spends. And
you know that's that's kind of an interesting

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thing because you know, the market's
been rallying on this new news that you

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know, hey, we got this
lower number coming out, even though it's

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not applicable to any individual. But
the what CPI fails to recognize today in

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a big way is the cumulative inflation
that we've seen since January of twenty twenty.

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And so if we actually look at
the cumula inflation, we'll recognize twenty

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three point two percent as of this
morning on trueflation dot com, which I

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personally ascribed to as a good indicator
and a way to be tracking and watching

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things. But twenty three percent.
I mean, this is the reason why

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we saw overs three hundred strikes this
year from all these companies and unions.

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It's because the wages that people are
receiving today are not keeping up with the

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prices of everything else. And now
that we're negotiating these new deals with auto

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workers, with eachures, with you
know, the Hollywood et cetera, or

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our price is going to go down
or up if we have to play pay

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higher wages, higher benefits. No, they're of course going to equate to

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higher prices, which ultimately leads to
higher inflation. So I think that the

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inflation story right now is about as
cool as it's going to get. And

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from here it's going to continue to
rise. And you know, even how

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we measure this thing, it as
I've just been noting most economists that that

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actually study this stuff and are you
know, maybe a little bit more critical

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of the data. They refer to
this as the cp lie and and you

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know, it doesn't include taxes,
it doesn't include any basket of things that

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anyone's specifically buying here, So you
know, don't don't put too much weight

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into these numbers, but I would
just recognize that they have not gone down,

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and a big part of that is
what they would refer to as the

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lag effect. You know, it
takes time for these rates to rise and

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stuff to hit. I think things
are about to hit right now, and

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it doesn't really spell a grade twenty
twenty four here as we're heading into that

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new year. Okay, so so
it's it's looking the pretty bleak. Huh.

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Well, yeah, so if we
look at, you know, some

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of the indicators that would give us
understanding for where we're headed next, we

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need we should understand that our gross
domestic product, what's the US produce?

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What do we do? Seventy percent
of all GDP in the United States has

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been the consumer, as I know
I'm talking about. But in twenty twenty

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four, it's going to be much
this consumer is going to be much weaker.

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Why well, we've got over one
point two trillion in credit card debt

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at act record high aprs. I
mean, let's just be honest here,

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who's doing that and putting you know, payments under credit card at a twenty

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three, twenty four, twenty five
percent rate. No one would ever do

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that and think this is a really
good idea. They're worced to do it

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because they don't not a budget.
We've got student loan payment that just began

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here in October, which is a
big deal for those that you know hadn't

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had those payments, and then you
know, they took on more debt,

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got a new car, got a
different house, whatever, and then ultimately,

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you know, housing, as I
mentioned earlier, never been more unaffordable

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as it is right now. So
I personally think that housing is going to

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go down. But if you look
at the price to rent versus a mortgage,

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and you don't even account for the
down payment that it takes to buy

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that mortgage, you've got a better
deal right now renting than purchasing that mortgage.

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It's nobody's market right now here in
real estate in my opinion, other

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than you know, places like Florida, like where you're at. You know,

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there's still some opportunities that you know
showing up. But if you look

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at the consumer today, more and
more people, if you look at these

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jobs numbers, they're losing full time
jobs and taking on second and third part

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time jobs. And so this is
not a good sign for the American consumer,

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for the middle class. And then
ultimately, you know, my opinion

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of twenty twenty three is that,
you know, this is the most anticipated

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recession in our history, and we
were expecting it here in twenty twenty three.

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But you know, we were also
expecting that, you know, they

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were going to be cutting rates by
July. That didn't happen. Now it's

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supposed to be you know, sometime
mid next year. But but the reason

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that that things actually really didn't crash
yet was because that they put one plenty

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two trillion dollars in the consumer's hands. Who has the biggest prependent proponent uh

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prependency to spend uh That would be
business owners, so PPP and employee retention

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and credit loans came in. We
bought real estate, We bought lots of

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stuff hopefully invested back into your companies. But this has delayed that lag effect.

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And so you know, if we
if we look at the employee retention

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credit, which is the last you
know, kind of giveaway here, that

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all ended September of this year,
So July was the biggest month of payments

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and then it ended in September,
and so we had this amazing you know

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GDP number for Q three. Well, you know, I was taking a

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walk here the other day. You
know, it's a little bit cold here

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in the Green Seattle area in comparison
to what it was like in Q three

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July. I think that we're in
a different climate right now, and in

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my opinion, Q four is likely
going to be this time frame that we

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recognize some of the bad data,
some of the data that that that would

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that would show that negative things are
occurring. We're getting weaker, you know,

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we're always looking in the rear room
mirror. I think Q four is

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when it's really going to be come
out here. They're probably going to name

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that the beginning of the recession,
you think, so, I know,

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it's a strong statement. Yeah,
acession is going to be you know,

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that's the million dollar question. You
know. Recessions come and go. They're

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they're normal, they're good for the
market actually, to have you know,

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things flush out than healthy things grow
back in, just like pruning is a

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good thing, you know. So
so a global recession though, that is

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more of a rare event, and
we're seeing globally a shutdown right now.

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I mean, Germany is in recession. Depends on the verge of recession Canada

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is on the verge of a housing
recession. China is in massive trouble right

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now. Of course, they hardly
report their their their information correctly, and

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so you know, how bad is
this recession going to be? You know,

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I think that when we look at
this thing objectively, we have to

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recognize that in March this year,
just nine months ago, we had a

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banking crisis began. That banking crisis
resulted in the most significant bank bailout in

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the United States history. And so
this is just nine months ago, and

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and and you know, we if
we understand, you know, kind of

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what that looks like where that leads
I personally am seeing that, you know,

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March this next year is likely going
to have a lot more of the

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bank challenges, especially given the fact
that these banks just don't have capital to

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lend any longer. Because people move
to treasury markets. You know, they

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can get FDA c to one percent
of their money, not just two hundred

140
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and fifty thousand of it. But
you know, here's the thing that that

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most most people have not factored in
them as well, and that is that

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most CFOs their job is to cure
low cost lines of credit. And so

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00:10:01,840 --> 00:10:05,519
if they could refin their debt in
twenty eighteen, nineteen twenty twenty one,

144
00:10:05,840 --> 00:10:11,240
then they could get in at you
know, three four percent on loans.

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That was a really awesome thing and
it caused our economy to really grow.

146
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But what happens is that that debt
has to be remetabolized every five years.

147
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So it's a thirty year amateurization schedule, but it usually resets every five Well,

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what that means right now is that, you know, coming somewhere around

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I don't know, twenty twenty four, twenty twenty five, twenty twenty six,

150
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we have record levels of debt,
trillions of dollars that are coming due,

151
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and these these these dollars coming due
are going to be having to either

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be paid off in full or you
know, recast at higher rates, and

153
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ultimately that's going to triple these companies
because their their margin, what they had

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to operate on previously, was based
upon a low cost debt, is plentiful,

155
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high liquidity, you know, timeframes, and so I personally see a

156
00:11:01,360 --> 00:11:05,679
financial crisis occurring at the same time
as a recession. Now, if those

157
00:11:05,679 --> 00:11:09,720
things coincide, and if this takes
place over the time frame that we're expecting

158
00:11:09,720 --> 00:11:13,519
here, you know, another lost
decade is definitely not outside of the purview,

159
00:11:13,840 --> 00:11:18,519
especially when we're about to hit thirty
four trillion in debt here, you

160
00:11:18,559 --> 00:11:22,759
know, by December twenty second this
year, according to the numbers I was

161
00:11:22,799 --> 00:11:26,519
looking at. So you know,
that combined that with you know, China,

162
00:11:28,600 --> 00:11:31,960
you know, and it's saddle rattling
that's going on right now. You

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00:11:31,039 --> 00:11:35,879
got the United States dollar and the
bricks paid, which is this new system

164
00:11:35,879 --> 00:11:41,519
that comes out January one. I
mean this is they haven't announced that bricks

165
00:11:41,559 --> 00:11:43,320
pay's going out January. We're twenty
one, but I can say this much.

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00:11:43,399 --> 00:11:50,600
The Saudis joined the bricks January of
twenty one or twenty four. And

167
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when the Saudis join, I personally
believe that that is the end of the

168
00:11:54,559 --> 00:11:58,240
petro dollar. Why if you Google
or Wikipedia with bricks pay, it literally

169
00:11:58,279 --> 00:12:03,080
talks about it aiment system that Brazil, Russia, India, China, South

170
00:12:03,120 --> 00:12:07,080
Africa and the you know, the
plus nations that are joining right now are

171
00:12:07,120 --> 00:12:09,759
looking at creating a settling currency.
This isn't for them to go buy milk

172
00:12:09,759 --> 00:12:15,240
and eggs. This is to settle
trade amongst nations. They're buying thousands of

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tons of gold right now, trying
to back up their currency and their financial

174
00:12:18,679 --> 00:12:22,879
standings. They're not buying US dollars
anymore. I believe that the US has

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00:12:22,919 --> 00:12:26,559
a real rival at a time when
we have massive debt our bankings in crisis,

176
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and ultimately our adversaries are becoming weaker
and weaker, which tend to put

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people and places where they could act
erratically like WWS three type of activity,

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00:12:39,559 --> 00:12:43,639
which I pray and we all need
to pray that this stuff doesn't really and

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actually unfold, especially given the fact
that we have an open border and millions

180
00:12:48,399 --> 00:12:52,799
and millions of undocumented people now in
our nation that never got fully vetted.

181
00:12:52,919 --> 00:12:58,919
So I could lay out a really
really nasty and bad scenario here, which

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00:12:58,159 --> 00:13:03,200
unfortunately seems more probable than not on
every level. That's going to result in

183
00:13:03,279 --> 00:13:09,399
bankruptcies and you know, a lot
of pain and carnage here for stocks as

184
00:13:09,399 --> 00:13:11,919
well as the bond market. Bond
market's going to get hit really, really

185
00:13:13,000 --> 00:13:16,639
really hard by this. Actually all
right, well, you're a breath of

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00:13:16,679 --> 00:13:22,159
fresh air today. What are you
supposed to do about all this? Since

187
00:13:22,240 --> 00:13:26,399
most yeah, I was out of
our control here, right, Well,

188
00:13:26,759 --> 00:13:31,120
so that is the question my belief
is that traditional buy and hold, park

189
00:13:31,159 --> 00:13:35,360
and prey hope everything will be okay
strategies. While they work when times are

190
00:13:35,399 --> 00:13:41,759
normal and good, they do not
work very well when times of disruption are

191
00:13:41,759 --> 00:13:46,519
occurring. And so we need to
allocate in a more specific way, and

192
00:13:46,559 --> 00:13:50,200
we need to be looking at a
higher amount of commodities today. You know,

193
00:13:50,240 --> 00:13:54,320
gold and silver are going to for
sure be the winners throughout this.

194
00:13:54,919 --> 00:14:01,279
I think treasury bills look all right, but you know you're buying fewture promises

195
00:14:01,320 --> 00:14:05,320
for US dollars, so I wouldn't
get too long on that. But you

196
00:14:05,320 --> 00:14:07,679
know, we look at oil producers. I think oil producers are actually going

197
00:14:07,720 --> 00:14:11,840
to do really well. They paid
really good dividends. They definitely won't stop

198
00:14:11,919 --> 00:14:15,360
those if they can, if they
can help it. We got some international

199
00:14:15,399 --> 00:14:18,799
plays today that can be really valuable. Indias and examples of probably a multi

200
00:14:18,840 --> 00:14:22,159
decade story. You know, they
were just our backed office before. Now

201
00:14:22,240 --> 00:14:26,039
they're becoming more of a manufacturer and
they've got you know, these very educated

202
00:14:26,080 --> 00:14:31,720
people that are graduating from from college. I think that as people are looking

203
00:14:31,720 --> 00:14:35,000
at allocation strategies, they need to
be very very very wise as they look

204
00:14:35,039 --> 00:14:39,720
at their bond allocations or fixed allocations. And the reason for that is,

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if you know, bonds can lose
money in five ways, five different ways,

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and so we've talked about this before, but these five specific ways are

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actually all five raising warning signs right
now, which causes you know, considerable

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concern for me. So we need
alternatives to bonds very specifically, because you

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know, the ultimate uh you know
form of loss here is default and you

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get nothing back. So so that's
the part that we really need to be

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cautious about. So I think if
people are looking at you know, more

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fixed assets, you know, treasuries
can can can work out short term very

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specifically, or I actually believe that
there's never been a better time to own

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what's called a growth oriented fixed index
annuity gives you essentially the ability to make

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reasonable rates of return on the upside, but more importantly none of the downside

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when the market corrects. And so
we've been allocating people to these types of

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products, which are actually insurance contracts, as alternatives to bonds, and they've

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been working out exceptionally well, you
know, when when you can get you

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know, let's just say sixty percent
of whenever the market does. But none

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of the downside. You know that
that surpasses what most people believe their fixed

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portfolio is going to do, especially
because there could be actual losses like we're

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about to see here for the third
year in a row as the year closes

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out on bonds. So yes,
sir, I do all right. Well,

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hey, we always appreciate your take
on things. You know, it's

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difficult times for sure, and you
need to do what is necessary. Do

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you think any of these insurance companies
writing these annuities are going to fail?

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You know, it's a great question. How the insurance companies have to work

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though, is that they must ensure
and have dollars in reserve one for one

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with the investments that are being made. And so in our nation's history,

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we have not seen even one of
these contracts somebody not get paid back.

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There's only one stalure that's ever occurred, and it was because they were really

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running their books. Funny. You
know, insurance companies certainly could have challenges

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because hey, they bought into the
same long data treasuries that the banks did

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in the pension companies, et cetera. But you know, the good news

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is that the reserve requirements make them
the most conservative places to be put in

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money. And you know, here
in a great state of Washington, which

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I personally live in, we even
have a five hundred thousand per account per

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policy holder guarantee. That's kind of
like FDIC, but it's you know,

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the state of Washington actually backing it
up. And hey, god forbid,

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these these companies actually went out of
business. Most people are not aware that

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as a taxpayer of that state,
you actually would be responsible to make those

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people hold up to the guarantee issue
levels that the state has the insurance commissioner

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has created, and so it might
have some more safety than people specifically are

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looking at. But I also love
the idea that we can dollar cost average

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out of these accounts, you know, typically about ten percent of a year

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back into the stock market when everything
goes on sale. And so our strategy

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is we're going to actually make a
lot of money as the world changes.

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We just need to be able to
make money and sideways markets. So we

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do that through what we call writing
ball and tame and bears. All right,

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So they sometimes the best way to
tame a bear is just to avoid

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it all together, right, yes, sir, that's exactly right, All

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right, all right, David,
where do we find you in these days?

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Yeah? So my website is my
SPG for Sound Planning Group dot com.

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And I've actually got a new book
that'll be coming out here and the

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first part of the year called Writing
Balls and Taming Bears. Got a new

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class that will be coming out called
a Federal Reserve Bubble here in twenty twenty

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four, and so that's what I'm
naming this next crisis. And I'm going

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to lay all of that out here
in a book and in that class.

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And so people can find more information
on my SPG dot com or they can

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put their name in and say hey, love to connect and answer some questions.

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But your viewers are incredibly intelligent,
and you know, I think that

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they would be wise to be taking
heed to some of the cautions that I've

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shared here today, because I hope
I'm wrong, but the reality is,

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if I write, those are game
changer moments that ultimately affect somebody's outcome and

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their ability to retire and stay retired. All right, Hey, we appreciate

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if you've got a question for David
or myself, you can always email me

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kl Atcarrie LUTs dot com. The
link to David's site is on our site

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in the show notes to this interview
Financial Survival Network dot com. Make sure

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you sign up for your free newsletter. David always a pleasure, appreciate your

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stopping by and we'll talk to you
next month. Happy healthy holidays for lack

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00:19:34,240 --> 00:19:38,880
of a more politically correct term,
and if you're ready, dear to you

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and yours. He appreciate your cary, Blessings to you and your family,

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and yeah, look forward to connecting
with you. So take care. Thanks

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for listening to Carrie Letz's Financial Survival
Network, your solution to today's trying times.

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00:19:52,759 --> 00:19:57,240
For the latest, go to Financial
Survivalnetwork dot com. Financial Survival Network

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00:19:57,599 --> 00:19:59,720
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