Speaker 1: I mean food is up fifty percent of eggs and beef,
and insurance home prices are up over fifty percent in
the last four years, So I mean, what are you
talking about. We need price carry, Like I said, we
need prices in this country to gradually fall. Deflation is
good and healthy.
Speaker 2: You are listening to Carrie Lutz's Financial Survival Network, where
you get valuable information you just can't find anywhere else
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Speaker 3: And welcome.
Speaker 4: You are listening to and watching the Financial Survival Network.
I'm your host Carrie Lutz's Election Day I call pentas
on And you're really lucky, you people who are tuned
in right now because you're listening to the only two
people left in America who care about little things like
deficits and Michael like elections. You know it's said when
you elect the new government, you just change the face
of government. Do you don't really change anything? Is this
time going to be different?
Speaker 1: I think it's going to be different because the market
the bond market is not going to tolerate this anymore.
If you look like what happened in the UK has
happened here in the past two in the seventies and
early eighties, even though we are the world reserve currency,
and supposedly that means that investors internationally had insatiable desires
for our mom They just buy.
Speaker 3: It no matter what.
Speaker 1: But I seem to remember that, I think that's ten
year note hit fifteen percent, okay, fifteen percent in the
early eighties. Didn't we have a very liquid bond market
back then. Didn't we have the world reserve currency back then?
So I mean, look, look, you know, bond yields are
concerned about three things that are happening. It's just sort
of new. Now we have we have an inflation problem
in this country that Jerome Powell just doesn't want to
deal with because he doesn't want to pay a trillion
dollars in interest payments on the debt.
Speaker 3: That's why he cut interest rates by fifty basis points.
Speaker 1: I don't know if I had an opportunity to tell
you that on your drome, but you think about, well,
why did you cut fifty Jerome if inflation is way
above your target, and it's been above your target for
forty three stinking freaking months.
Speaker 3: You don't want to get below your.
Speaker 1: Target before you start cutting rates. Shouldn't you be raising rates?
He cut by fifty basis points. Not because we have
a very high unemployment, and unemployment rate at four point
one percent is still way below the long term average
of five point seven. Isn't because the stock market's like,
you know, really cheap, I mean crashed. You know, it's
a this expensive stock market. The other stock market, by
the way, Kerries trading at three times sales. That's like
never happened before, you know, it's like in creditably expensive,
two one hundred percent of GDB. So Jerome's cutting interest
rates because he doesn't care about inflation, doesn't care about
the middle class. He cares about the solvency or the
ostensibility of the solvency of the United States Treasury.
Speaker 3: So that's why he cut. Right, So we have inflation
that he can't deal with.
Speaker 1: We've got illiquidity, right, we have illiquidity down the bond market,
the reverse reboil facility, which is where all this money
that was created by the Fed and went into excess
reserves and that was parked at the Fed earning a
nice stat interest rate. It's two and a half trillion
dollars two years ago. Now it's one hundred and fifty
billion dollars. So your liquidity in the reversary bol facility
is gone. So now what you have is the Treasury
General account and that's not going to last long. That'll
be exhausted in early twenty twenty five. And then you
have ill liquidity in the bond market, show illiquidity, inflation,
and insolvency.
Speaker 3: Those three things are very bad.
Speaker 1: And that's going to put a check on no matter
who who, no matter who wins the White House, and
no matter who controls Congress, if they are going to
put forth their massive spending programs for either party. Trump
is more growth, but still a lot of deficits. Nobody
wants to touch in titlements, Kerry, no, what's talking about?
Speaker 3: So then s can't do that.
Speaker 1: So if they get past that, if Kamala Harris wants
to buy everybody a house, and I don't know the
result of the election in near to you, but I'm
hoping that we have some you know, bastion of sanity
in DC where they just say Hey, listen, the bond
market is going to revolve. Interest rates are going to
spike like they did in eighty seven, and we're going
to have an absolute meltdown no matter what's going on
in the economy if interest rates become unglued. Yeah, well,
we know things are not all peachy. I mean, it's amazing.
I was talking to a friend who I used to
think was fairly intelligent. He is intelligent, to be fair,
but he says, you know, what's wrong with the country.
My portfolio is doubled.
Speaker 4: And I said, that is what's wrong with the country?
Speaker 3: Doubled? Right? When did and when did it double? And
what timeframe over what left over the past eighteen months?
I'd imagine, right, eighteen months.
Speaker 1: Two years, well after he lost after he lost half
of his money in COVID And yeah, you know.
Speaker 3: It depends on what.
Speaker 1: Yeah, but the problem with the problem with the country
is is twofold, massive amount of debt and asset bubbles,
and then you can late most of that at the
feat of the Federal Reserve. But in something I find
even more interesting is and by the way, we're not
short here at pental portfolio Strategies. We're long long and
strong this market right now, but we have a hair
trigger finger on whence we could change that allocation, because,
like I said before, the bond market is is going
to be key here, and I've warned about it in
twenty thirteen. I said, No, I mean, don't have to
worry about it now. I said, but in the in
the next few years, next couple of decades, we are
going to have a massive disruption in the bond market
because the FED is going to have to choke off
the that is going to create inflation, and then they're
gonna have to choke it off. And if they don't
have the willingness to fight it by raising interest rates,
which is in the facto, will blow up of the
bond market. The FED took interest rates from zero to
five and a half, and if they don't have the
temerity to I don't know if that's the right word,
would if they don't have the courage, yeah, the fortitude
for to two thank you to actually raise rates keep
them there long enough to kill inflation. And I don't
mean make inflation go up more slowly, and I don't
want I don't want prices to rise less quickly than
they were before. No, you need prices down. The price
level of things has to fall. And if you if
you doubt that, just look at your assurance bill, your
car payment, and your home price and your equity prices.
They have to fall otherwise that they're unsustainable, dangerous, and
we are in danger of absolutely collapsing, which we don't
want to have that weight, rather have a gradual air
let out of this bubble.
Speaker 3: But do you see that?
Speaker 1: Do you see any willingness to actually deal with our
actual problems?
Speaker 3: No? I haven't heard it mentioned once during this entire election,
other than putting Elon Musk in charge of the Government
Efficiency Commission, which government and efficiency are repellent to one another.
Speaker 1: It's an oxymoron. Yeah, it's an oxman, you know, Carrie.
You know I've been in this business for thirty almost
thirty four years now and I never thought I would
say this, But we our data now looks more like China.
We're just making stuff up now, look a look at
the look at the non PHM payer reports that are
coming out.
Speaker 4: I believe everything, Michael, I believe everything. You don't think
your government would lie to you, do you?
Speaker 3: If you?
Speaker 1: We we learned in the last few years I've known
it all along, but you've known it of course, sure,
But the media had this very thin veil of objectivity
that's been ripped off. I mean, if you doubt that,
just look at the late night comedians. You know, ABC
has a signature program called the Jimmy Kimmel. I mean,
this is just not they not not funny, this objectivity.
Speaker 3: They don't.
Speaker 1: It's just it's just they're just stumping for Kamala Harris.
And over at CBS is not any different. So and
and this is you know, don't you think that people
that the executives at ABC, CBS, NBC understand that when
they put Kamala Harris on a giggling fest on Saturday
Night Live, you know, two days before the election, that
that they're trying to corrupt and.
Speaker 4: Vote the opposite had the opposite if he had tended
to effect. You know, it's all just a Hollywood script
that we're living here.
Speaker 3: And Hollywood only pays for happy endings.
Speaker 4: They don't pay for depressing, bad, tragic endings. It's rare
to ever see a movie that ends unhappily, and that's
what the governments do. And they're just paying for happy endings.
Speaker 1: Well, the government's also, unfortunately, like I said, looking more
like China. So let's just take the Non farm Paler report,
and I'm not even talking about the eight hundred and
eighty one thousand jobs after revisions, and they said, oh,
by the way, there's a you know, we overcounted. Oh right,
be sure, where did they go? I don't know, we
just added the birth death model was a little skewed.
But then they last report, right, this last report of course,
which oh it was just hurricane this hurricane.
Speaker 3: Storm, so don't even don't even look at it.
Speaker 1: Carry But second, look at the revisions. The August revision
was eighty one thousand jobs less than what the originally
visually reported. Well, eighty one thousand is more than fifty percent.
They're off by more than fifty percent on their initial guests.
And so we have a federal reserve that controls the
price of money based on information that comes in arrears
that's completely faulty. Doesn't that bother anybody? I mean, we're
in a big met The middle class of this country
has been eviscerated, hanging by a thread, where now we
have top twenty percent, the top quintile of the inhabitants
of this nation are running everything and they're keeping the
economy afloat because their house prices are bubblicious territory and
along with their four one K plans.
Speaker 3: And when that goes, we're gonna have We're not gonna
have just a collapse. Who have chaos in the streets.
I'm afraid. I pray that doesn't happen, but you know
you have. You can't have.
Speaker 1: A healthy country without a healthy and virate, virant middle class.
Speaker 3: Just can't have it.
Speaker 4: Yeah, can't not in a modern economy, that's for sure,
where everything hinges on demand. Michael, Like these guys like
Trump is running on he's going to bring the price
of stuff down, but he's also running on I'm going
to lower interest rates.
Speaker 3: And my question is like, how do you do this?
You cut the government?
Speaker 4: Like, I don't know if the last time you were on,
I told you I did this exercise with chat GPT.
Speaker 3: I said, I want to balance the budget. How do
I do it?
Speaker 4: And the first thing it says is increase taxes by
fifty percent? And then I had to tell that stupid thing. Look,
I'd want to do it without raising taxes. Give me
a list of one hundred agencies we can get rid
of that no one will notice. And Michael, there were
agencies in there that I don't know where they came from.
Speaker 3: I don't know what they do.
Speaker 4: The only valid agency in the bunch was the Apartment
of Redundancy Department, you know, and the chat GPT just
didn't want to get rid of that one.
Speaker 1: Well, even if you got rid of those hundred agencies,
they probably have no money in there other than what
do you if you can't solve Social Security, Medicare, Medicaid,
and the interest on the debt, and you don't want
to touch defense. I don't care if you cut every
other program, you haven't solved any problem. That's where all
the money is being spent right now, and it's going
to get a lot worse. You know, we're going to
have a sixty We're going to have at a minimum
a sixty trillion, sixty trillion dollar deficit by two thousand
and fifty sixty trillion dollars that I mean, and that's
if we don't have a recession, and if interest rates
don't go up and an inflation is not a problem.
Speaker 3: I mean, I'll bet you anything in the.
Speaker 1: World will have a recession by twenty and fifty. Yeah,
I bet anything, any amount of money he wants it.
Speaker 4: Well, one thing, if they bam sugar and and nicotine
and carbohydrates, there should just be a law against carbohydrates.
Speaker 3: That would get rid.
Speaker 4: Of our medicare problem and all of our health problems.
But then the problem would be that people would be
living too damn long, and everyone would be living to
one hundred or ninety and they'd be collecting Social Security.
So that doesn't really solve the problem, does it.
Speaker 1: No?
Speaker 3: Not all.
Speaker 1: You know, I could say, as anecdotally, we have one
of the most dangerous food supplies on the planet. Yeah.
Speaker 3: I came back from Italy not too long.
Speaker 1: Ago, and we ate out breakfast, lunch, and dinner every
day for like ten days. And came back at the
same week and I have one dinner here, and you know,
I gained three pounds.
Speaker 3: We get pasta the breakfast. Kerry. I asked you, who
is the largest contributory to the Food and Drug Administration?
Speaker 4: Oh, it's a big pharma though, right, I mean they're
they paidillions of dollars in bonuses to the employees to
approve these bad drugs.
Speaker 3: Isn't that? Isn't that?
Speaker 1: Like, Yeah, so i make my money when people get sick,
and I'm going to contribute the biggest lark like seventy
five percent or something to the budget of the fight
from from pharmaceouil.
Speaker 3: Industry that brought does that bother any money? That is that?
Is that counterintuitive?
Speaker 4: Their purpose isn't to fight a cure, it's to find
a long term treatment that makes you dependent. Like you know,
somebody likned it the other day or telling me, like
you know, dating sites don't really want want you to
find people, and they're designed so you don't find people.
Dating sites are designed so you keep paying your subscription fees.
And the drug industry, it's a model for American industry.
The food industry. They don't want you healthy. They want
you eating more and more of this stuff. And that's
why it's all designed food kitchens, so it hacks your brain.
It biohacks your brain. And the economy is no different.
They just want just spending, spending, spending, without any regard
to uh financial solvency or anything else.
Speaker 3: It's all rigged.
Speaker 1: Yeah, and now the zeitgeist of today is you know
how you grow an economy is by how much your
government wants to stimulate. But it's as if the government
had plenary control of the economy and they could just like,
if they want to be nice, they'll just stimulate, borrow
a bunch of money and give it to you. And
how much the economy grows is just dedicated on how
much they want to borrow.
Speaker 3: And I mean when did that?
Speaker 1: When did that become a formula for success in a
capitalist economy? You know, yeah, China is completely communists.
Speaker 3: I get that.
Speaker 1: But you know people are saying, well, even you here
are are American media, if only the communists, the PBOC
and the and the and the and Beijing will just
just agree to stimulate a little more, that's only just
to stimulate.
Speaker 4: That worked real good last time. It reminds me of
a Saturday Night Live skit back when Saturday Night Live
was actually really funny and we used to race home
to see it because we didn't have DV yours. Jimmy
Carter was talking about inflation and his plan was, I'm
going to use inflation to make everybody in the country
a millionaire. That's how I'm going to solve the problem.
And sure enough, Jerome Powell and the current leaders and
Trump as well.
Speaker 3: That's their plan.
Speaker 4: They're going to make everyone a millionaire, Michael, and basically
home prices.
Speaker 3: We're already halfway there for a lot of the country. Yeah,
and being a millionaire used to mean something.
Speaker 1: It doesn't mean anything anymore because everybody isn't well, I
say everybody.
Speaker 3: It's a bifurcated country.
Speaker 1: So yeah, you know, there was a one of the
founding fathers of Bloomberg about how wonderful inflation is because
inflation is now back, prices are now back down to
where they were and before COVID, and that wages have
kept pace with inflation.
Speaker 3: What wages like?
Speaker 1: What average wages have kept up with CPI average wages?
That's assuming everybody gets to say that gets that average.
But if you're on a fixed income, tell me how
your wages have kept up with inflation? Right, if you
don't have a job, tell me how your wages have
kept up with inflation? And that again, those wages are
all skewed to the top twenty percent, and those wages
have kept up with CPI. Is CPI accurate measurement of
the really has occurred with prices? No?
Speaker 3: I mean food is up fifty percent if you look, you.
Speaker 1: Know, eggs and beef and insurance home prices are up
over fifty percent in the last four years.
Speaker 3: So I mean, what what what are you talking about?
Speaker 1: We need price carried, Like I said, we need prices
in this country to gradually fall. Deflation is good and
healthy because you're going to get if you can't get
that to happen, if you're gonna if your own power
is gonna say, I am telling you that inflation above
two percent, which it still is and it's been that
way for forty three months. If inflation is above two percent,
I need to start cutting rates aggressively to try to
keep inflation from falling any further. That's telling investors in
our fixed income spectrum that since our central bank no
longer cares about inflation, we need to start caring about
inflation a whole lot more. And they are. You know,
here's here's here's a fact. Mortgage rates have gone up significantly, significantly.
They just butt like from six point one percent to
seven and a half percent since Powell cut interest rates
to bring interest rates down. Now, what's that about the
benchmark ten year treasury You know, that's what that's mostly
paid to what mortgage rates are going to do and
what your order going Now, if your ordo is more
expensive and your house is more expensive, tell me, tell
me how Powell is making things better?
Speaker 2: Good?
Speaker 1: Right on an answered note, when you've done is you said,
you said to investors you no longer care about inflation,
so we have to start to It's madness.
Speaker 4: It's madness of You know, one thing that I thought
we were at this point that we're at now in
the nineties. Then the Internet came along and there was
a productivity boom globally that brought down prices around the
world to think that government will stop spending and that
somehow that's going to to save us here that you
know as well as ido, and that just ain't going
to happen until they have to. Right.
Speaker 1: Yeah, they'll stop, They'll stop spending, They'll they'll reset the currency,
they will default explicitly on debt. After we suffer a
long and protractive battle with hyperinflation.
Speaker 3: We're not We're no longer near that. We're not near
that at all. Right now, what about we will? I
think we will eventually have that battle. And then and
then and.
Speaker 1: Then when people when the people wake up and they
stop watching you know, uh, the network television to get
their news.
Speaker 3: They are pretty well doing that, you know that.
Speaker 4: Then it's a network news is like nobody trusted trust it, right,
the least trusted name in news, CNN, the cemetery news network.
Speaker 3: Right.
Speaker 1: That's why people are flocking to outlets like yours to
get real honest information and real honest interpretation of that
medicine of that information.
Speaker 3: Yeah, Joe Rude.
Speaker 1: So when the people say, wait a second, why why
is my Why is the purchasing power of my currency cratering?
What is causing that? What does it mean when a
fence balance he goes from a few hundred billion dollars
to nine trillion?
Speaker 3: What does what does it mean when.
Speaker 1: When Jaddie Yellen, the Treasury Secretary whoever at the time,
sends another round of helicopter money just checks in the mail?
What does that really mean? Where does the money come from?
What is backing my currency? Those are the questions that
we stopped asking. I mean I used to ask them
all the time when I was on CNBC and I've
been thrown off the channel. Hey, what what is wrong?
I used to debate Steve Lison about this all and
what is wrong. We got to a discussion about the
the increase in the money supply. It's like, well, you
need a how would you how would you, you know,
target the money supply? I said, why do you peg
it towards something like gold? The mind supply increasing gold
is commensurate with a year it's about to about two
percent a year. I think that's what you said.
Speaker 3: I think it's gotten down a bit, but one and
a half you are as Yeah, so one and a
half percent.
Speaker 1: Let's just say one and a half two percent per year,
which commensurate with population growth plus productivity growth, long term averages.
You can't have these bubbles. Why don't we just what? Oh,
we don't we need the elasticity in our currency?
Speaker 3: Well you need aria?
Speaker 1: Do you need elasticity to the point where you're printing
trillions upon trillions of dollars in a matter of months?
Speaker 5: Is that?
Speaker 3: What kind of the eleg what you want need?
Speaker 4: I need elasticity in my waistband. But if it's too elastic,
those pants are going to fall down on me.
Speaker 3: Oh no, we don't and we don't want that. That
all right? You don't about that. It's when the.
Speaker 1: American public has an epiphany and they say, okay, I
understand why our founding fathers said Article one, section ten
of our Constitution that only gold or silver should be
considered money.
Speaker 3: You just can't print it. WILLI nilly?
Speaker 1: Not a state, and not the federal government, certainly not
the federal When money becomes real, we'll stop all this madness,
will stop, the endless wars, will stop, the acid bubbles
will heal the middle class, will stop, the bifurcation of
the country between the haves and have nots.
Speaker 3: Stable prices, stable interest.
Speaker 4: Rates, declining price people currency, declining prices, declining prices.
Speaker 1: And that's you know, that's a natural byproduct of productivity.
You know, if I can, if I can produce more
forward bars off the assembly line for you know, for
less money, I could charge you less, but I make
up for it in volume. My margin is why might
might stay the same or shrink a little, but the
volume will be explosive. Everybody wins and you hire a
lot of people. That's how you grow. You grow economy
through here's the word for you, productivity and savings, real
honest innovation.
Speaker 3: You do not grow an economy by.
Speaker 1: Praying and obsequiously supplicating to a government to stimulate. They
have nothing. The government has nothing but a printing press.
They take, they take, they take from you, they take
from the private sector, and they create inflation. They are
government is a productivity killing machine and an inflation producing machine.
That is all they can do. Please remember that when
you asked for well, why don't they just stimulate? We
need some we need some deficit spending.
Speaker 3: That's right here. Well we thought.
Speaker 1: I think we tried that we have and now we have.
We are on the precipice, precipice of a bond market collapse.
And that's going to wake a lot of.
Speaker 4: People up, Yes, for sure. Well you know, you know
it wakes people up. Things like peanut the squirrel, you know,
stormtroopers charging it to a guy's house and then killing
his pet squirrel in his pet raccoon. Because everything else
you're talking about, most of the people weren't alive Michael
for the last round of inflation in the seventies and
eighties and late sixties.
Speaker 3: Like you and I were.
Speaker 4: But when the government comes in and you're mighty your
own business, and they you know, they, you know, ten
people armed to go get a squirrel that's a real
threat to humanity. People start to the veil is coming off.
You know, I think it might even be an election
events because you know, I was listen. Why didn't they
just let Rocky the squirrel go?
Speaker 3: Yeah? I mean, good, good, good? I mean, what are you?
Speaker 1: I live in Florida, and if you look the wrong
way at a fish, I mean you could go to
jail here.
Speaker 3: I mean, I think they shot that. Did they shoot
the squirrel? Yeah?
Speaker 4: They know they didn't shoot it, but they euthanized it.
In other words, they killed it and the raccoon, both
of them. The raccoon was just a bystander. Had they
kill it?
Speaker 3: They give it a list. I guess they needled it. Yeah,
you know, put it down. But why couldn't they just
let the thing.
Speaker 4: Go because it supposedly bit somebody and the squirrel the
raccoon was a witness.
Speaker 3: I don't know.
Speaker 5: They had to erase all bald witnesses. The witnesses how
to be Yeah, you know, like some mob can't let
a witness arrive. I don't know why it's illegal to
have a round. I mean because a rodent, I mean
a rabbits or rodents I don't know. I don't want
you know, I'm sure I already doesn't want to hear it.
But but but the thing is that why we have
to feder the control of government.
Speaker 1: And then the number one thing we need to do
is the government has they have they have usurped the
authority of markets, they've taken it away, and they control everything.
And that's why we are obsessive, compulsive about every FED
meeting and parse their words like our reading scripture, because
they control everything. The FED can destroy this economy, or
they can do or they can create some kind of
you know, stagflationary sure, so true, license all it's up
to them, and we should never have relegated that power
to just you know, twelve voting members and they're unelected people.
Speaker 3: But educate yourself people, that's it, all right?
Speaker 4: Well, Michael, always insightful, always a pleasure learning from you.
Pentoport dot com is the site to go to where
you'll find Michael's extensive work, podcasts, interviews, everything else. And
if you've got a question from Michael myself, shoot me
an email kl at carrie lets dot com and you'll
find a link to Michael's site On the show notes
to this interview on Financial Survival Network dot com. Sign
up for your free newsletter. Michael, we'll talk to you
again in a month or two and see how things
are transgressing. Lessens to you, Carrie, Thank you, thanks.
Speaker 2: For listening to Carrie Let's's Financial Survival Network, your solution
to today's trying times. For the latest, go to Financial
Survivalnetwork dot com. Financial Survival Network now more than ever,