Speaker 1: Welcome to another episode of the Chicks on the Right podcast. Today,
I have with me one of our favorites, our BFF
and sponsor, Zach Abraham of Bulwart Capital Management. Zach, interesting
topic that we have for you today, and that is
apparently two representatives that you would not expect to be
working together, Anna, Paulina Luna and AOC have decided to
work together to introduce a bill that would cap credit
card interest rates at ten percent, which of course is
vastly lower than most of them are right now. And
they're saying they want to do this because they think
that this will end predatory practices. But on the other side,
there are critics who are saying this is going to
slow down economic growth, this is going to limit access
to credit for low income folks. Where do you stand
on this?
Speaker 2: You know, this is a tricky one because I am
not in favorite all of the current setup. Meaning if
you if you look at usery laws. Wait, I want
to say, I want to say credit card interest rates
are currently caped to like thirty percent.
Speaker 1: I mean, and they're right up there.
Speaker 2: Yeah, seems like yeah, Well, I mean wherever you put
the cap right, that's where they're going to both bias
right time. So so the thing you have to think about,
and these are always the things that get messed up
in economics, is we have an issue and we start
treating a symptom as opposed to looking at the pause
right now. Sometimes that's all you can do. And in
this situation, I think that there is a there is
a cause, there is there is reason and justification to
treat the symptom per se. Meaning I do not think
if folks fall on tough times or whatever and miss
a credit card payment that their balance should immediately go
from six nine nine to twenty nine nine nine right
like that. That seems onerous. The flip side of that
is that I think that culturally speaking and financially speaking,
one of the biggest problems we have in this country
is the non existence, if you will, or the extinction
of the whole concept of caveat import right, buyer beware.
And you deal with this in financial regulations so much
where so many of these regulations you can look at
them and you can see the intended purpose, right, and
the intended purpose was good, okay. The problem is is
that these things are thought of by people that are
typically non practitioners and they don't think about the knock
on effects. So yeah, and I can point to several
financial regulations that were passed that on the face of it,
you go, oh, yeah, that makes sense, and then I go, okay,
but here's what you didn't think about. And so actually
this regulation is accomplishing the exact opposite of what you're
trying to accomplish, right, And so I think we got
to be careful with that in credit cards because here's
a fact. If you cap rates at ten percent, less
credit will be available period. Now.
Speaker 1: Is that to explain that? Because is it just because
the credit card companies are making less and they don't
want to assume as much risk by giving it by
extending credit to higher risk people?
Speaker 2: Is that why? Yeah? Yeah, Basically you know these guys
aren't stupid, right, and so they're sitting there doing these
They're very similar to actuary actuary tables, right, looking at
default rates and you know, comparing that to income levels,
and there's all these ways that you can predict risk
and you can actually risk it. You can actually predict
it way tighter and way more accurately than most people
would think. Well, if I lower the upper bound, right,
there are several people where if I run them through
my scenario, my computer will kick back and be like, look,
if you're not charging this guy fifteen percent, there's no
way you're going to make any money on this, right,
So what am I going to do? I'm not going
to lend to anybody that if their credit comes back
saying that we need to charge them sixteen or seventeen percent,
I'm just not going to lend to them, right, And
you can't make that That's what I don't think people
like this understand. Certainly AOC doesn't where Okay, great, you
can artificially determine interest rate levels, but you can't make
anybody lend at that level, right, Yeah.
Speaker 1: Because it seems this seems like the same thing is
just telling, you know, telling companies how much profit they're
allowed to make.
Speaker 2: ROCH doesn't seem right, And so I think that you
should have some usury laws put in place. Like I said,
I don't think the way the current says. There's also
there's also a lot of historic precedent for usery laws,
and the fact that we don't have tighter ones on
the books is a problem. Okay, But the way that
they're going about doing This is very concerning to me
because these are how things get broken. Meaning ten percent
seems like a good level. You have no idea, you
don't know what level is. Let's sit down with some
actuaries and figure out, Okay, if we cap it at fifteen,
how much of Because like I said, these things are
not unknown. Okay, we can put five knowledgeable people together
in a room with a laptop, and I can tell
you probably within half a percentage point of where if
we if we put that cap at fifteen percent, this
is how much consumer credit will disappear. If we put
the cap at twelve, it's how much consumer credit will disappear.
These are not unknown things, right, So the way you
want to approach this is through a much more analytical
and rigorous practice rather than just throwing out a ten
percent because, like you said, you said it earlier on right,
the question is available credit is helpful? We want to
make sure that we are doing it in such a
way that it is a benefit to the overall system, right,
Meaning we know it's going to make less credit available,
but if done correctly, it'll make less of the false
as well. Right, Yeah, and so whatever we're whatever we're
quote unquote hurting consumers with the lack of credit availability.
They will be gaining back hopefully through you know, more
economic production, smarter allocation of assets, you know, things like that.
And that's really the that's really the only way you
can go about doing it. But if you just start
throwing off which it sounds to me like that's what
they're doing. We think ten percent sounds fair well great,
but if that if that eliminates forty percent of available
consumer credit, that's a problem. Right, that makes sense? Well,
especially the other thing that you have to consider too,
is the amount of consumers that are currently levered up
in this environment, right, meaning there's a lot of consumers
that don't have the option of just saying, okay, well
we'll quit using credit, right like, meaning they've created a
nasty situation where for look, whether they like it or not,
they're reliant on credit. Right If you all of a
sudden lower that rate and they can't access credit, you've
just created a pretty big problem for them. So it's thought.
But here's the other thing too, and this goes right
into what we're dealing with doge in this country. Getting
back to that idea of caveat m tour. Also getting
back to that idea of everything in adult life. And
I've been hammering this over my kid's head lately, just
because this is something that I think is just so
basic it has just gotten lost in our culture. Everything
in adult life is a cost benefit analysis, meaning everything
has a cost, everything has a benefit. The question is,
let's quit looking for cost free benefits. They do not exist.
Perfection is the enemy of progress. What we need to
start thinking like, is okay, how much pain are we
willing to take to get this desired outcome? Because that's
really the question. Right. It's like everybody freaking out about
Doge and you're sitting there going, guys, how do you
think we're ever going to balance a budget if we
don't do auditing? Right, Like, nobody wants any type of
pain or discomfort, and you're just we can't lay those
people off, and you go, how did you think we
are going to cut cost that money? What?
Speaker 1: And it's like that I saw, you know, I saw
just this week that there were people, you know, showing
these stats that in Trump's you know, first however many
days it's been now we're already seeing record deficits compared
to last year and I'm like, so you're gonna blame
that on him when it's literally because we we're not at.
Speaker 2: In string bill. I'm not even his spending bill. It's
not even his budget that's operating right now, right And yet.
Speaker 1: They're gonna say it's because of his policies somehow that
we're facing this like never before seen deficit. Therefore, Elon,
Everything that Elon is doing is useless. This is this
is like how their minds work. And I'm just like, Oh,
this stuff to not happen instantaneously.
Speaker 2: Or stop the Elon coup. He has much power, I go, guys,
he has no power. All he's doing is giving recommendations
to to to the people that do He has no power.
He can't eliminate somebody's paycheck. He can't. He can't just
sit there and start slashing budgets. All he can do
is present the information. Hey. It was like a woman
I was listening to the other day going off about
the dissolution of the Department of Education, and she goes,
if we get rid of the Department of Education, every
school is going to turn into a Christian school. And
and I and I and I responded, and I went pardon,
and they oh, yeah, because there's gonna be no rule.
And I go, guys, guys, separation of church and state
is part constitution, whether deal Department of Education is involved
or not. And they go, well, they're already putting Ten
Commandments in the school. And I go, well, seeing is
that is the basis for our entire legal system. There's
at least something we should teach them. And they go, oh, well,
they're putting Bibles in school, and I go, once again,
the most published red manuscript in the history of humankind,
And you don't think kids should have access to it
in the school? What are we talking about? Right? Like,
it's just I mean, and and here's the problem. Everybody
makes up their own facts, right, Like getting rid of
the Department of Education means that these are going to
altern into Christian schools. You go, it also means that
we're gonna get free McDonald's on Monday, Wednesday and Friday,
and the Hamburglar is going to be the principal, right, Like,
let's just make stuff up, you know, Yeah, well.
Speaker 1: This is this is all they have. This is all
that they can do is make stuff up, because they
certainly can't lean on their own policies which suck, and
you know, trying to turn education back over to the States.
Speaker 2: It's not like the Department of.
Speaker 1: Ed has always existed way back when actually kids were
educated and in a way that was meaningful. Yeah, they've
not been around that long, and so returning the control
to the States, I think is a welcome change goal.
Speaker 2: Yeah. Go look, all you have to do is go
look at test scores. Okay, let's go look at test
scores and aptitude scores from nineteen hundred to nineteen eighty,
the year the Department of Education was put into existence.
And let's see from now, for the first time in
developed history of this country, you have illiteracy rates among
people between eighteen to twenty five, going up, going soizy okay.
And then you look at a country as big and
diverse as ours is. You know, what is it the
second largest country in terms of land mass, second or third? Okay,
three hundred and sixty million people, and you think one
department of education located in one city, which of I
think it's important to point out, nobody in the Department
of Education has actually taught anybody anything. Right, people have
never stepped inside of a classroom, right, and you don't
think localizing education, getting more parental and and customizing that
education to the geographic specific needs of the people there.
What like that is the dumbest think about like the
people that live in the rich suburbs of DC educationally speaking,
and then compare that to people growing up in Biloxi, Mississippi.
And you're telling me that the exact same educational standard
should be. It's just stupid, right, And.
Speaker 1: I know that anytime Randy Weingarten is super mad about something,
then I should be on the other side of that thing.
Speaker 2: Yeah, we should be celebrating. Right, That's exactly right. And
I just want to look at him and go, can
somebody tell me a reason to not get rid of
the Department of It? Yes, give me a point me
to one thing.
Speaker 1: Yeah, what has what has that department done for us lately?
Speaker 2: Yeah? Yeah? Yeah, and justify it in some way. Point
to me something that they have improved or that they
have made better, and explain to me why you don't
think education should be more local. Crazy thing is I
feel like a granola munching liberal when I say stuff
like that. Right, we want to make education more local,
we want more more parental involvement, and then I turn
around and all the granola crunching liberals are all like,
that's because you're a fascist, and you're going right, wow, yeah,
I thought everything has gotten so flipped on its head.
Speaker 1: It's because now you know, conservatives are the are the rebels,
like we're the crazy anti war you know, granola people
just like you said.
Speaker 2: Yeah, it's it is, it's.
Speaker 1: We live in interesting times.
Speaker 2: Yeah, isn't That isn't Maybe you look at interesting times
at least? Thats right? That's right?
Speaker 1: Well, and these interesting times certainly give you a lot
of fodder when you have your webinars, which I know
you've got another one coming up. You do these on
the regular. How can people find out more about those
and find out more about you?
Speaker 2: Yeah, and a little bit of a plug here, guys.
We are at a sea change right now as far
as markets go, and if you're doing the same things
that you've been doing over the last ten to fifteen years,
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know what I mean? The webinar is all about showing
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else is doing. They're not dealing with these things. They're
just telling you to buy the dip right. Times are
changing and you've got very historical things happening right now.
So just walking people through what we do. You know,
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right doesn't mean we're taking crazy risks. It's kind of
the opposite. We're managing risk properly. So anyway, we're walking
through that, explain that to you, and it's of no cost.
We're doing that on March twentieth of this month, so
next week, I believe that is Yeah. Just go to
Borcapitalmanagement dot com. Sign up, it's for free and we'll
happy to see you there. Awesome, Thanks again, Zach, all right,
thank you so much. Reservices offered through Trek Financial loc
and SEC registered investment advisor. 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 different. Investments involve risk and are not guaranteed. Past
performance doesn't guarantee future results. Track twenty four to three,
Zeroly