Speaker 1: So they've ratcheted up these rates. And you know, obviously
we saw you know, our inflation go from like nine
point one to three point zero in June of twenty three,
so that was about a year ago that we saw
these rates come way way way down. So the Fed
basically thought that they were going to be you know,
able to just you know set back. They went from
nine to three, so going to two is not going
to be difficult, and ultimately we've stayed rage bound.
Speaker 2: Here.
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Speaker 2: And welcome. You are listening to and watching the Financial
Survival Network. I'm your host, Carrie Lutz. Hey, guess what
the Fed didn't cut rates? What is wrong with the
world here? How can this be? Is this a tragedy
of biblical proportions? Is this as bad? Is the flooding
currently going on in China? Well, David Strazuski's with us now, David,
I'm cressfallen, and yet the market goes up.
Speaker 1: What is going on here, Well, the you know, the
Fed has sort of got this idea in mind that
they reached what they call a terminal rate, so they've
they've ratcheted up these rates. And you know, obviously we
saw you know, our inflation go from like nine point
one to three point zero in June of twenty three,
so that was about a year ago that we saw
these rates come way way way down. So the Fed
basically thought that they were going to be you know,
able to just you know, set back. They went from
nine to three, so going to two is not going
to be difficult. And ultimately we've stayed rage bound here,
you know, somewhere between three to three point point nine
about an average about three point three in these numbers.
And so what's going on in the market right now, Well, hey,
you know what the market wants to rally. We've seen pullbacks,
We've seen you know, the bulls and the bears kind
of do their back and forth right now. And you
know it's easy to to to see that, you know,
whether it's political or financial commentators, we can we can
all say both positive and negative things about where we
are currently right now, and so I personally believe that
a lot of this data is deteriorating quickly. But you know,
July is the best month historically for the market. Uh,
and it looks like today is no exception to that.
Speaker 2: It's pretty pretty amazing. I mean, just like, well, it
looks like this bump that the market god is quickly fading.
But inflation, you know, it ain't going away.
Speaker 1: No, no, it's not going away.
Speaker 4: You're right.
Speaker 1: So, you know, we've we've had inflation that that's been
above you know, three and not below for thirteen months.
In fact, I think it's thirty eight months that we've
had inflation higher than three percent in general. So so
I don't see inflation going away. In fact, if you
think back to Milton Friedman, which I know that you're
a student of as well, you know, he would tell
you that, you know, printing is literally the cause of inflation.
Inflation is caught by central banks printing. And so this
is the tax of least resistance. And so it is
a tax. It's a tax on the world, it's a
tax on the American consumer. We're inflating our dollar right now.
And so you know, basically we haven't seen inflation moving
over a year. We have had all these false narratives
as far as you know, hey, the thread's going to
be cutting any day now. I mean last July it
was supposed to be cutting. Well, now we got the pause.
So it's been a year since everything's been paused, and
you know, and now we're looking for this rate cut.
But one thing to understand as well is that historically
when rate cuts occur, that's actually when the rec sessions happen.
Is just following that. So if we even get rate cuts,
it's not like a really great sign, because that means
that things have deteriorated in a way that are not
you know, exactly peachy and wonderful and great for the economy,
at least as far as the middle class is concerned.
Speaker 2: Yeah. Yeah, well, you know, when rates start coming down,
that's when everything hits the fan. Hey, Actually, the rates now,
even though they don't look good because we've had nearly
twenty years of declining, interest rates are kind of normalized.
You know, five percent T bills, right, I mean, that's
what you want, that's the historic interest rate and the
fact is that over the past ten years we've had
these you know, since the Great Recession of eight nine,
we've had these sub normal rates, and they were heading
into the Great Recession. So what would happen if they
cut rates before there was a recession? David, Well, what.
Speaker 1: You're going to see is inflate, get even deeper rooted
into our economy, and it's going to cause things to
just really you know, inflate. The stock market's going to
go up. And by the way, the stock market is
actually not a true barometer of what's going on in
the economy. It just happens to be a barometer of
economic health. You know, I personally believe that our economies
should be judged by how well the middle class is
doing or not doing. And in that case, we're a
big and challenging spot. You know, if you've cut interest
rates right now a quarter percent, does that lower the
mortgage interest rates in a meaningful way that people are
going to get back out and start buying things. Not
a chance. In fact, we're seeing inventories build right now.
And with interest rate level that we got to your point,
we had these low interest rates for about fifteen years
and then now they got ratcheted up at the fastest
pace that we've ever experienced here, at least in the
United States, and so that's significant. Change has flipped the
entire market, and the world runs on credit US dollar credit,
and so this effects and impacts everything. I mean, we
were talking a little bit before this. You know, the
impacts on China right now are massive, Japan massive. There's
a lot of change that's taking place all over the
earth right now as a.
Speaker 2: Result of this.
Speaker 1: But you know, I don't think that the FED is
going to be able to get these down in a
meaningful way, you know, just because we saw things trend
a little bit better right now. They're going to need
at least two months worth of data or two different
times that they sit down trending in the positive direction
or lower than wherever they are right now, and if
they're going to see anything. So I don't expect anything
even in September, even though I know that that's like
a guarantee right now according to Wall Street, you're not
going to see it happen unless there's a major crisis.
And then I think that they're going to turn on
the printing press, and that's basically their only option.
Speaker 2: Hey, And I'm just surprised that they must think the
election is is such a lost cause that they're not
even bothering to monkey with the rates. Right.
Speaker 1: Well, you know, it's an interesting thing. The you know,
the FED can do a lot of things. I believe
that they're very partisan. Actually, you know where they say, hey,
we don't comment on political things. Well, it's the politicians
can't lean on the FED and say lower rates so
I get elected, But the FED should say and I
believe it would be negligence to not say, hey, Congress,
this print and spend stuff that you're doing. This is
the cause of inflation, all the raises that we're doing.
You're doing the counterintuitive thing. You're making this worse for
the people that you quote unquote represent. And so one
of the things I'd like to be talking to people
about right now is I like to say, you know,
elections definitely matter, and it doesn't matter what side of
the aisle that you're on.
Speaker 4: Right now.
Speaker 1: You believe that this is one of the most important
elections in the United States history, and I believe that
that's true. The thing, though, that I want to point
out is that elections matter a lot less when we
have the right risk diversified approach to our investment strategy.
When we have the right strategy approach to this rate
changing environment as we're moving from more maybe more of
a growth situation with a values a type of an economy,
maybe individual stocks versus ets. Like, there's a lot of
different strategies that we can employ. And then the third
thing would be tax diversification strategies. And I really think
this is something that is not being discussed right now
very much. And you know, if we continue to print
like this, what's going to happen with taxes. We're going
to have to raise taxes in order to continue to
pay for everything, including you know deficits now that are
in excess of a trillion dollars every one hundred days.
So we're blowing our budget by a trillion dollars every
one hundred days today. And this is just in an
unsustainable way, trending backwards. So elections matter, they don't matter
as much when you get risk diversified strategy versus by
tax to versus.
Speaker 2: I couldn't agree with you more. In the meantime, President
Trump is out there. First, he promised the waiters and
waitresses and bartenders, no tax on their tips, right, that's
inflationary today. Just heard that he's promising all the people
getting uh you know, government checks, social Security, no tax
on them. I mean there's going to be left to
pay taxes here.
Speaker 1: Yeah, I mean perhaps that's a that's a that's an
appeal to sort of like that that mid and lower.
Speaker 4: Mid Hansah, maybe a little tangerrating doesn't doesn't sound to
me specifically like a bribe like the you know, the
the college education stuff that the Supreme Court has been
saying that they're not going to be doing it right now.
Speaker 1: So, uh, you know, I don't know. There's a lot
of going on, but these election years tend to have
a lot of promises. We'll see what ultimately gets to
live it. But ultimately, our economy does need to grow
and we we we have to be able to figure
out as as as a nation and who leads the world,
how are we going to lead forward? And so I
do think it's going to come down to supply side economics.
Speaker 2: Well, you know, the problem is when Trump makes these promises,
he's actually a politician who keeps his promises. That's true.
What is he going to do? He's got to eviscerate
the federal government literally. I mean, look, do we need
to FED buying up mortgages now? Do we need Fanny
Freddy and the whole apparatus artificially supporting real estate?
Speaker 3: You know?
Speaker 2: Yeah, if we got rid of them back in two
thousand and eight nine, really structurally reorganized the entire financial sector,
we wouldn't be in a situation now, would we.
Speaker 3: No?
Speaker 1: And honestly, we continue to get ourselves into deeper places
when we don't address the problems that got us there,
you know, like when the banks are needing bailouts and
they're the ones that actually led us to these broken places,
no one goes to jail. And oh, by the way,
personally believed and can see that we're going to see
another banking crisis and it's just going to continue to
unfold right now. I think we're in the second half
of this, just starting nowt FED just told FGSC told
us we got sixty three banks that are insolvent right now.
All hundreds or a thousands, yeah exactly, are just right
behind that. So, uh, you know, the I think the
system needs reform. Hopefully the national debate and conversation can
happen as opposed to just by executive order doing everything
like we've seen with the border here in the last
few years, et cetera. So you know, this is this
is this is where real conversations with real adults need
to be happening. And I just wish and pray and
hope that we as a nation can can get to
the place of trying to come up with some solutions
as opposed to just pointing out problems, throwing stones and uh,
you know, going to our political corner, you know, blue,
no matter who or red, tell them dead.
Speaker 2: Yeah. Well, you know, it's like it's got to stop.
And financial fiscal sanity has got reassert itself because we
can't go on this way unsustainable. David, just tell us
where do we find you? How do we connect with
you on the web?
Speaker 1: Yeah, so website is my SPG for Sound Planning Group
dot com. I got a number of things that are
coming out here, courses, got a book that's been a
long time coming. It's getting out here, hey pretty soon.
Carrie Riding Bulls and Taming Bears. Investing for Retirement in
the twenty first century Fair.
Speaker 2: It can't wait, Yes, Sarry, all right, Hey, it's got
a question for David myself kl at Carrie Leuts. That's
the email address. We'll get you an answer and to
get to David's site. The link is in the show
notes to this interview on Financial Survival Network dot com.
While you're there, sign up for your free newsletter. David
always a pleasure. Thanks for coming by.
Speaker 1: Hey, Pleasures Mine Gary, look forward to Dog with Jon.
Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network. Your
solution to today's trying times For the go to Financial
Survivalnetwork dot com. Financial Survival Network now more than ever