Speaker 1: Welcome to another episode of the Chicks on the Right
podcast where we talk to our friend and sponsor of
the show, Zach Abraham from Bulwark Capital Management. And it's
kind of a big news week, as it always is
right now with Trumre, and so over the past weekend
he decided to tweet that he is calling for a
cap on credit card interest rates of ten percent for
a year, and so we talked about this on our
show kind of just you know, saying, this doesn't feel
like a particularly conservative policy, you know, to put price
controls on a company, you know, in this fashion, and
it doesn't seem like he can do it without Congress.
Speaker 2: What is your take?
Speaker 3: So I'm with you when you talk about it not
feeling like a very conservative thing. But one of the
things that I've learned about political policy as it relates
to finances and economics is there's so often where we
get into these twenty and thirty year cycles and we
think that this is the way it's always been done.
Right when you look back at usury laws here in
the United States, and usury is just an exorbitant amount
of interest, right, trapping people in ie in for sloans.
Usury laws in the past have been much more restrictive
than they are now. So I don't see it as
it kind of reminds me of a scenario where at
the beginning of the twentieth century, so in the nineteen hundreds,
when Teddy Roosevelt took over. Remember, at the time, you
kind of had a similar scenario where Teddy is very
much a conservative, a free market guy, but he recognized
the issue at the time, and the issue at the
time was similar to the issue as now, which is
too much financial power consolidated too few hands. At that time,
they were using the trust is kind of the vehicle
to do that. And what did Teddy do. He came
in and bust up the trust. He had all of
the As a matter of fact, that's what cost him
the Republican nomination for president. That's why he ran.
Speaker 2: As a bull moose.
Speaker 3: They had the bull Moose Party because he ticked off
all the conservatives. Right now, you look back on it today,
if we saw somebody doing that, we'd be like, that's
not conservative. What about free markets? Well, Teddy, in my opinion,
understood something which is capitalism is something. It's not a
free for all capitalism, a system that has to be
defended like any others, and capitalism only works when there's competition.
And I think that same type of ideology can be
extrapolated over over to credit cards because people being in
financial peril and getting bled to consumer credit card companies.
It doesn't do anything beneficial for the economy, right, It's interest,
it's money lending. So it's not a It is a
value add because they provide capital, but I think very little.
I think very little of that capital would go away
if you capt it at ten percent.
Speaker 2: Where it would go away would be.
Speaker 3: At the higher risk end of the credit score, where
you know what, Quite honestly, those people shouldn't be.
Speaker 2: Getting credit anywhere.
Speaker 3: Right. Yeah, So now I hate saying that. I'm a
big believer and people need to be their own adult
and make up their decisions.
Speaker 2: At the flip side, you look what's going on.
Speaker 3: I mean, you know, look what's going on politically, and
regardless of where you stand, I don't want to if
you look at the situation in Minneapolis right now, I
think it's a horrifically unfortunate situation and I don't want
to take I don't want to go off the rails.
But I look at that situation, and what I think
is it's a scenario where a citizen did not do
the right thing, broke the laws, put themselves in peril,
and in my opinion, I think an officer shot when
he probably shouldn't have, even though I think he was
legally justified in shooting, if that makes sense, right, Meaning
I think that when you're dealing with real problems like this,
I think very very rarely do really strict ideological answers work. Right.
So the people that are going to push back against
this and go, no, it's not free markets, not capitalism, Well,
look at what do you do to the people that
get buried in credit card debt? Maybe for good reasons,
at the age of twenty two, twenty three, lose a job,
and by thirty having their first kid, they're still drowning
in a pile of credit card debt, despite the fact
they've made better decisions. Right, So, usory laws were made
for a good reason, and I think they should be reinstituted.
Where is that magic number? I'm not sure. If it
was me, I'd be consulting with a lot of credit
card companies. I'd be talking to these guys. I'd be
looking at their measurements of like, hey, big right, Because
wherever you put that limit, it's currently I believe at
twenty nine to nine. Wherever you put that limit, you
will have less credit available. But there's probably a really
good break even place where maybe it's fifteen, maybe it's ten,
maybe it's twelve. Well maybe you lose let's say ten
to fifteen, maybe twenty percent of available credit. But that
ten to twenty percent of available credit you lose is
really nasty stuff.
Speaker 2: So I think that they should do it.
Speaker 3: I think that you should be done carefully to make
sure you don't nuke too much of this available credit.
But like I said, kind of like back in the
Teddy Roosevelt times, I think that there is a way
we need to defend capitalism and letting people, letting corporations
trap people inside of financing that they have no viable
way to pay back. That isn't capitalism, that's U three.
Speaker 4: But do you think that they would have a viable
way to actually pay it back if they when they say, okay,
we're going to do this for a year, We're going
to cap it at ten percent, do you think that actually, like,
because a lot of these people they're in debt because
they're morons, right, not all of them, not all of them.
But I mean, let's face it, like some when I
was younger, you know, you get credit cards, You'd be.
Speaker 2: Like, what credit card?
Speaker 4: And that's the thing. Yeah, that's what I wanted.
Speaker 2: Do you really do you really think that it will help?
Or maybe it will because.
Speaker 4: You're listen, you're in finance, Like, you see people and
you know how how people operate, and you understand the psychology.
I think more of how people do this kind of stuff.
I don't. So do you think that this will actually
help people pay off their debt? That's what I'm wondering.
Speaker 2: Well, for sure it will right to some degree.
Speaker 3: The degree to which it helps, I'm not really sure,
but you need to make there's I hate saying this
because I I there's so many of these credit situations
that you look at right now that are trash right
from the go, and that the only reason that these
people are signing up for it is because they don't
fully understand.
Speaker 1: It, right.
Speaker 3: Yeah, that part of it needs to go away. I
am a big believer. Getting back to the current political
situation in Minneapolis. The other side of it is how
much of these problems have been caused by politicians advocating
for quote unquote resistance, advocating for people to break the law. Right,
So meaning there's we've got to get rid of perverse incentives,
right we are we You know that the situation in
Minneapolis just from insane, stupid, irresponsible politicians. In my opinion,
the credit situation is a little bit different. But again,
I like, like I said, I hate to go I
hate to keep going back to Teddy, but I think
Teddy gives us a roadmap that showed, like it's undeniable
that what he did in the beginning of the twentieth
century was good for America.
Speaker 2: Right, it's undeniable. That's the case.
Speaker 3: Okay, if if you go back and look at it, it
flies in the face at that moment of what we'd
say are traditionally conservative ideas. Right, But like anything else,
when we push it too far to one side, right,
like when you had four men effectively controlling sixty or
seventy percent of the US economy at the beginning of
the twentieth century, that's not capitalism. That's not good, right,
that's any that's a good idea taken too far right, well,
we're just at the other end of the spectrum now,
and so we actually need to push it back further
to the right.
Speaker 1: In my lina, what's the history on the usury laws
getting undone or whatever?
Speaker 3: You know what I'd have that I'd have to go
back and look at it. But usury laws are very old,
for instance, in the Muslim in Islam. Right in Islam,
as it is, it is against Islam law to charge
interest right at all?
Speaker 2: Yeah, at all?
Speaker 3: So, and I think there are smaller forms of interest
that they've able to finagle under the financial rules or
anything like that. But these are these are not new ideas.
You know, hundreds of years ago people were worried about this.
That's why that rule in Islam exists. So when we
go there are going to be people lamenting. And my
question is anybody that's screaming too loud about this? I'm
kind of looking at going who are you getting paid by?
Speaker 2: Right?
Speaker 3: Because it the indebted problem in this country is an issue,
there also needs to be another part of it though,
that does encourage personal responsibility and personal education about this
because again looking at the situation of Minneapolis, how many
of these situations would not exist if these people were
not being told that they're currently being led by a dictator,
this is too you know what I mean. You listen
to them talk and you're sitting there going, good, God,
you sound like an idiot first grader.
Speaker 1: Well, I mean, and just even like the terms of
accepting a credit card, you know, it's this tiny little
print that's written in like legally kind of language, and
people are going to people are going to sign off,
just like they do the freakin' Apple whenever you accept
the terms of your iPhone.
Speaker 2: Nobody actually reads that. It's kind of predatory.
Speaker 1: Yeah, but at the same time, it's like, you know,
ticking the boxes of due diligence for these companies. Listen,
we're providing the information. We can't force people to absorb it.
But what are they supposed to do to encourage people
to really understand what they're buying into?
Speaker 2: You know?
Speaker 3: So, and my fear is this, this will come with
some ridiculous like we're going to make everybody go through
an online test for fifteen minutes before they get their
credit card or something like that.
Speaker 2: Right, Well, that's the right answer.
Speaker 3: It isn't because everybody will just look up the answers
and go right through it, and it'll just become another
door that they have to go through. What you have
to start doing is we need to reinstitute some form
of home EC, some type of financial.
Speaker 2: Class, a finance class.
Speaker 3: Yeah, I've seen some of these things, and again, I'm
really close to it, and I understand that, and I
studied finance in college and all that kind of stuff.
But I'll see people post stuff on social media about
horrified it what they're actually paying for their house or
their truck, and it always catches me off guard where
I'm like, you didn't know that, Like you didn't, You
didn't you didn't know what twenty percent interest does, And
it's shocking because you sit there and here. I put
out a tweet one time. I put out this tweet
one time where I said, hey, you know one of
the things and it was just one of those simple
things that i'd remembered, which is, anybody that has a
fixed stright mortgage should make one to one and a
half extra payments per year. If you do that with
a thirty year fixed, you take a thirty year fix
down to about I want to say twenty one years, right,
just making an extra one and a half payments here.
Speaker 1: That's like one of my favorite things is to look
at the amortization calculator and play with how much more
can I pay this month? That'll and what will that
save over time? And it's like drastic amounts of money
that you save.
Speaker 3: It's crazy because every dime you're paying back goes straight
to principle. And if you pay that back, Let's say,
let's say you put an extra five grand on the
second year you own your home. So here, two years
into a thirty year mortgage. That's five grand that doesn't
have any interest charged on it over the next twenty
eight years. Yeah, okay, so think about that at seven
percent interest rates, which is not far from what your
thirty year mortgage is at seven percent interest rates. Whatever
you're doing at seven percent doubles every ten years. Okay,
So over the course of thirty years, that five grand
is going to save you about fifteen to twenty Oh
my right god. And if you put that extra five
grand every year, you just keep knocking that down. Why
put out a tweet saying that again? Like common sense?
It was one of those things where I was like,
you know, what for why am I not doing this?
Speaker 2: Now?
Speaker 3: My situation is a little bit different, but still I've
got I've got fifty percent of my house on a
mortgage right now, Why am I not making extra payment?
Speaker 2: I should be put out a tweet like that.
Speaker 3: The tweet had like a two million impressions and got
retweeted like a thousand times.
Speaker 2: It went viral, and it just shocked.
Speaker 3: Me because I went, people don't know this right, and
so we need to have we need more information out there,
but more important, we need to explain to this stuff
in high school because one of the things that's changed
about kids. If you walk into a high school class
today and you're talking about investing and money and saving,
kids will listen today more than they ever have.
Speaker 1: Oh yeah, that's probably right because they're more I mean,
they've got all the little apps and stuff that they
can use to get into financial stuff. You're absolutely right
about it being we need the classes. We need more
of that in schools. But for those people that don't
have that, they have classes from you.
Speaker 2: Yeah, here she goes, their parents can come to you.
Speaker 3: Yes, yeah, well, and then truthfully, hey, truthfully, I can't
tell you how many times I've gotten on the phone
with a client's kids and have these conversations and so listen,
don't do that, don't do this, And that's one of
the you know, we always people like you. Don't charge
extra for that, not if you're a client, but anyway,
So yeah, if if you want to talk to us,
talk to me, talk to one of our advisors. You
can get a hold of us at Bordcapitalmanagement dot com.
Know your Risk podcast dot com, not hard to find, Google, Bullwark,
Zach Abraham, Know your Risk Podcast not not tough to find.
Speaker 2: Love it.
Speaker 4: Thank you, Thank you, Zach.
Speaker 2: All right, thank you, ladies. Have a great week, you too.
Investment advisory services offered through Trek Financial, LOLLC and SEC
Registered Investment Advisor.
Speaker 3: The opinions expressed in this programmer for general informational purposes only,
and are not intended to provide specific advice or recommendations
for any individual or on any specific security. Any references
to performance of security so are thought to be materially
accurate and actual performance may differ investments involved risk and
are not guaranteed.
Speaker 2: Past performance doesn't guarantee future results. Trek twenty four three
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