Speaker 1: I was asked this question yesterday by a client.
Speaker 2: You know our raid is going to start going down
in January because you hear all the punt saying, oh, yeah,
they're going down right away, and I don't think they are.
Eventually they will, but in the near term I don't
think that they will because the market is saying inflation
is still here. How we saw with the CPI report.
I think it's actually higher than that. But eventually it
will go down. But we do actually have to affect
change in order for rates to go down and make
it more advantageous for businesses to do things.
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Speaker 4: Than ever, and welcome you are listening to and watching
the Financial Survival Network. I'm your host, Kerrie lutt Well.
We got the TPI number out today, two point seven percent.
We can all celebrate between that and DOGE and tariff
and all these good things happening. Happy days are here
again or maybe they're not. And lower interest rate not
the boot it ideal is with us now. Ed, great
to have you back on the show. So we should
be celebrating in the streets now. Trump won and he's
actually going to address little minor problems like the deficit,
like government spending, like all these good things. So why worry?
Speaker 1: Yeah, exactly, Well, thanks for having me back.
Speaker 2: You know, to two point seven percent CPI a little bit.
I hate the term. Oh, it's you know, it's hotter.
The inflation is a little bit hotter than what we're expecting.
Inflation is not two point seven percent. We all know
it's it's it's higher than that. Jannet Yellen's interview. I
mean she she regrets, uh, as she said it last night.
You know, she regrets the fact that she said inflation
is transitory and and uh, you know, it's it's.
Speaker 1: Higher than expected.
Speaker 2: We all know that it's here, and I think it's
it's gonna actually get a little bit higher going into
into next year. I don't think it's going away anytime soon.
But you know, these policies going forward, I do believe
long term, you know, we will be able to get
it under control if we actually follow through on the
on the policies of the new administration. But it's uh,
we'll have to wait and see and it's not going
to be out without some pain.
Speaker 4: Yeah, well, no pain, no gain. But you know, when
you look at it, if we got rid of the
corporate welfare, that's like the lap time I heard about it,
we're both quing one. It was three hundred and fifty
billion a year, all right, So we get rid of that,
we get rid of the improper payment. Elon Musk, the
head of DOGE in the vech Ramaswami, said that they
want to reduce the number of government agencies from something
like ploth the five hundred and ninety nine agencies. And
you know there are agencies you don't even know about,
Like I just did a search on chat gipp a
while ago and I said, give me one hundred agencies
I can get rid of. Then nobody will ever know
the difference. And some of them are minor, relatively minor.
But it's a culture of waste, corruption and inefficiency. One
thing that's been advertising is the president Impoundent Authority, which
was dramatically scaled back during the Nickton era congrect path
the law saying if we call you have to spend money,
you have to spend it. You can unimpounded unless we
agree if you can impound it, and this had kept
back on a presidential power that went back to George
Washingship or at least Jeffers maybe Washington. I think that
Trump is going to make liberal use of it and
tell Congress sue me, and Congress the controlled by the Republicans,
I don't think they're going to sue. So that means
the minority party is going to sue the president. It's
not going to happen. I think there's limits impoundment where
effectively will gut a program. But it's going to be
really interesting because I've read a number of articles. I
talked to Bill Walton, who is on Trump's transition team,
and he says, they're going to use it. This is
going to be Bloody Hill in Washington. Can you picture
if it starts happening?
Speaker 1: Yeah, and you know.
Speaker 2: It's it's so so let's look at it from the
market side, the economic side, and then the.
Speaker 1: Public perception side.
Speaker 2: So the market hates uncertainty, So I I think is
the we have this infighting, We're going to see a
lot of volatility, you know, as they try to you know,
implement some of these new policy changes and eliminate some
of these agencies and jobs.
Speaker 1: Uh And as a result.
Speaker 2: Of that, you know, the the government, what's been propping
up the economy is government spending.
Speaker 1: Uh and and so you know that that's going to
stifle the economy for a short period.
Speaker 2: I really believe, you know, if you just look at
the math, you know, we're the market's gonna go down.
We could see correction territory. We may even see bear
territory for a little while. But like you said earlier,
you know, no pain, no gain, right, We're in order
for this to take hold, we have to realize some
short term pain in order to justify and and enjoy
the long term gain down the road.
Speaker 1: So right, so not only are are.
Speaker 2: We going to see uh an impact on the markets,
but you know also the the economy. Now, the public
perception is they really want this, but are they willing
to accept that short term pain? You know, let's face it,
we are a nation of consumption. We consume, We don't
really produce a whole lot of anything. We just consume.
So really we're trying to change these habits, you know,
and probably one of the biggest habits is government waste.
You know, I heard on the report. I can't remember
what channel was, but it was saying one percent, one
percent of government workers of all employees work nine to
five Monday through Friday.
Speaker 1: One percent, you know, So that's yeah, that actually what?
Speaker 4: Right?
Speaker 1: So what is that going to look like? What is
the lowest hanging fruit?
Speaker 2: How are they going to resolve some of these spending issues?
And like you were talking about this this use it
or lose it mentality? You know, well, it's it's November,
it's October, we're in the third quarter. You know, we
have all we have hundreds of millions, millions of dollars
left in our budget.
Speaker 1: Let's just spend it.
Speaker 2: We've got to spend it otherwise we're not going to
get that same amount next year. So, you know, how
can we change that culture going forward? And I think
that's going to be the hardest hurdle to overcome, and
I don't know how they're going to do it, and
I'm excited to see that they're even going to try it.
Speaker 4: You know, they could you know, that number one percent.
The buildings are empty all over DC. You know, the
one of the biggest benefit of the Obama administration was
the expansion of the federal government, which led to this
huge expansion in norder Virginia. And you know, if you
drive through DC and then Virginia to the top of
it used to be you know, the traffic left at
like thirty minutes, you know, fifteen twenty miles. Now it's
seventy miles down there. It's all suburb at BP of
all the government workers, and now they don't even go
to the office anymore. I only said that the way
to cut back on government was to tell tell the
worker next time of the note storm, only essential government
workers go to work, and everybody who doesn't show up,
you fire them because you only want essential people. You
don't want any non essential workers. Right, but maybe they'll
borrow a borrow a chapter from my book on how
to cut government weight carey.
Speaker 2: Based on that, I think you should be part of
DOSE because I think that's brilliant.
Speaker 1: Well no, I mean, you.
Speaker 2: Already tapped yourself as being non essential, so you know,
why why should we continue that salary and benefits and
everything so goes along with it, and you think about
the number of jobs just just you know, during this administration,
just in the last year, half of the jobs created
were government jobs.
Speaker 1: And to do what I mean, that's you know, it's.
Speaker 2: A form of nepotism, is really all it is. Right,
It's like, oh wait, I can get you in here,
come on in, come on in. And that's really all
it is. So, you know, are they going to be
able to eliminate agencies and their totality? You know, how
are they going to start? What's that going to look like?
And you know, like it is going to have a
negative impact short term, but I think long term, you know,
it's going to be good. But it has to be permanent.
It can't all be executive order because then the next
administration is going to come in and wash it all away.
We already saw that, you know, from the this this
current administration, from the previous administration, Trump's first administration. So
it's executive orders are great for that time period, but
then they.
Speaker 1: All go away.
Speaker 4: Yeah, and so therefore got to be done by consensus.
Maybe that will happen that ADLOP three branches are in control.
And beauty is that they ever read by Milton Friedman.
He said, the first hundred days of an administration are
the most important. That's the only time you can get
something done because all the forces that are marginaling against
you are in dis array. And that's when you get
a career. And Reagan did that at some expense. Trump
did it, but not enough. Now you see that the
day he walked into the Oval office, there's going to
be a stack of executive orders that he signed without
second thought, and all of his nominees they're going to
go through quickly. Are he going to do a not
a reset appointment, but a vacancy appointment? It is different
than a resets appointment. It's the resetch point that I
think it's good for a year with salary and then
another year without salary. A vacancy one is good for
two hundred and ten days. So you could be the
acting director. And you know they're going to use every
trick in the book here that's been used against the
American public. But let's go back to uh. You know,
you get rid of half the government workers, a million
of them, you just dump them, and then another half
a million uh or a million contractors, way more contractors
than there are employeed. Uh, they can't just fire these
people at Kurtie Days, not that that's not out of
the government work. They're going to give them a severance package,
so the actual benefit probably isn't going to kick in
for two years, you know.
Speaker 1: H Yeah, And I do like that idea.
Speaker 2: And I can't remember if it was Musk or maybe
it was our laugher. I can't remember who had the
idea of saying, you know, we we've got to incentivize
you know, their their their ability and desire.
Speaker 1: To get a new job. So you know, if if in.
Speaker 2: That two year period, if you get a new job,
you still continue to get that severance on top of
the new job, instead of waiting until the end and
then all of a sudden, well, you know what, I
don't have a job now, I'm going to still be
on the government doll. It's just going to be unemployment,
you know. So we there has to be a way
to get incentivize people to say, you know what, let's
find another career, because we still have people from COVID
that that are you know, underemployed because they choose to be,
or unemployed because they choose to be. They just don't
want to go back to work. So you know that
again that that goes back to the culture issue. You know,
how can we get people to say, you know what
I actually do want to do the American dream. I
want to work and you know better my life, in
my family's life.
Speaker 4: So if they actually make all these cuts, that should
have a beneficial effect on interesties.
Speaker 2: Right, yes, absolutely, And you know I so I asked.
I was asked this question yesterday by a client. You know,
are our raid is going to start going down in January?
Speaker 1: Because you hear all.
Speaker 2: The punt in saying, oh, yeah, they they're going down
right away, and I don't think they are. Eventually they will,
but in the near term I don't think that they
will because the market is saying inflation is still here
we saw with the CPI report. I think it's actually
higher than that. But eventually it will go down. But
we do actually have to affect change in order for
rates to go down and make it more advantageous for
businesses to do things. We have to be able to
loosen up the lending so that banks will lend and businesses,
small businesses especially can grow. But we're seeing a still
a uphour excent of positivity even passed the first ten
to fifteen days since the election. We're seeing it in
the Russell two thousand. We're still seeing in the markets.
You know, we saw the CPI the hotter quote unquote
hotter than expected. But the markets really don't care. I mean,
they're looking at it longer term, and I hope it
just continues going forward.
Speaker 4: That's really a good question, is how long can the
trumporia continue to run?
Speaker 2: Yeah, And you know, like you said, it's it's that
first hundred days that is so important.
Speaker 1: And I agree completely.
Speaker 2: You know, Larry Cudlow said this, and I think I
heard our laugh for talk about it too, and and
I agree, uh completely. Is that My fear is that
the talk the scuttle but if you will, is that
they're going to push that the the continuation of the
current tax code to the second half of the year.
And I think that that's a mistake, you know, to
your point exactly, we've got to get it done, you know,
in that first hundred days while we can and and
make it permanent. You know, especially if we're talking about
lower corporate tax rates and lower in the you know,
long term capital gains, you know, those are the things
that are So that's going to create the certainty that
we need for the markets to to continue being happy.
Speaker 1: And and uh uh you know.
Speaker 2: Continue the upward swing and and it's going to temper
you know, any any correction in the market, you know,
if if not completely for a shorter period of time.
Speaker 4: What about the con that the Trump threw out there,
actually eliminating the I R S doesn't sound like it
could probably happen, but it beings like the situation of the
country in everything is on the table.
Speaker 2: You know, for the first time ever, everything is on
the table. You know, if we go back to Reagan's comments,
you know, this is this is what the administrative state,
you know, the fourth branch to Vive's comment, the fourth
branch of the government, right, the administrative branch is the
I R S.
Speaker 1: What they would like is you know, a.
Speaker 2: Two line tax return. You know, how much do you
make and send it in? Is the second line. And
if we go back to everyone's so afraid of tariffs,
I big tariffs. That that was the only tax for Americans,
uh for the longest time. And so we needed to
raise more money, you know, after World War one and two,
and so we imposed the you know, the peral income tax.
Speaker 1: So you know, the now is.
Speaker 2: The time to make the changes. That's where we can
really affect change and make it permanent to benefit Americans
and have America become you know, a manufacturing powerhouse.
Speaker 1: We need to bring that.
Speaker 2: Manufacturing back and we have to make it more tax advantaged.
Speaker 4: Yeah. No, I couldn't agree with you more. And uh hey,
getting rid of the I R that paint. I could
believe that too.
Speaker 2: I don't think it's going to happen, but boy, I'll
tell you what I sure would like it. You know,
if if I didn't have to stroke a tech check
on a quarterly basis.
Speaker 1: That that would be that would be great.
Speaker 2: And imagine the positive impact that that would have on
the economy, I mean more disposable income. And people forget,
they get it's counterintuitive, right, Folks are so focused on well,
you know what if we eliminate taxes where we're not
going to have revenue, Well, if we're creating more of
a tax base through production and manufacturing and we're growing
the economy, you know, that's where that the tax is
going to come from. That's going to be more than
what we can spend. Once we get rid of the
government waste and hopefully actually start spending down the deficit.
Getting rid of the deficit.
Speaker 4: I can't wait, so I hope I only live to
see it. Eventually. It have to happen, because if just
makes subtle sense, it always prepeats coming on. When we
talk next December eleventh, twenty twenty five, where's the market
going to be at? Then?
Speaker 1: You know, you know, I think we're going to see
I'm going to be conservative here. I know people are
being way way way.
Speaker 2: Over U four work in the growth, but I think
we're going to see, you know, an eight to twelve
percent growth by the end of next year. I think
it's going to be unbelievably volatile in the second going
into the third quarter, but I think going to come
out on top by the end.
Speaker 1: Of the year.
Speaker 4: Well, we'll see if the January effect is alive and well.
In the meantime, make sure you go over to edsite
e g SI Financial dot com. The link is in
the show notes this interview on Financial Survival Network dot com.
And I would just ask you, when you did the bite,
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a pleasure. Thanks for stopping by.
Speaker 1: Carrie, I appreciate it.
Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network, your
solution to today's trying times. For the latest, go to
Financial Survival Network dot com. Financial Survival Network
Speaker 1: Now more than ever,