WEBVTT - Why This Recession Is Deeper and Deadlier Than 2008! | Ed Dowd 0:00:00.120 --> 0:00:04.880 Coincidentally, COVID hit and gave central banks and governments unprecedented 0:00:05.000 --> 0:00:08.360 excuses to create more debt and print more money, and 0:00:08.400 --> 0:00:10.000 that reinflated the system. 0:00:10.240 --> 0:00:14.800 Trump's new policies could potentially stay that off, or does 0:00:14.840 --> 0:00:16.200 that only exaggerate things? 0:00:16.560 --> 0:00:20.360 His plan is this right. He wants to deregulate, reinstitute 0:00:20.360 --> 0:00:23.920 the tax cuts. He wants to bring investment to the US. 0:00:24.040 --> 0:00:26.520 Just the second derivative change on that is going to 0:00:26.560 --> 0:00:29.360 create a debt. The real economy, the middle class economy, was, 0:00:29.400 --> 0:00:31.880 you could argue, was in a recession in twenty three 0:00:31.880 --> 0:00:34.959 and twenty four. So if you have a global debt problem, 0:00:35.040 --> 0:00:37.800 there's two ways to handle its way out of it. 0:00:38.000 --> 0:00:42.400 Or you ed you said that, You've been saying that 0:00:42.400 --> 0:00:45.159 there's a clock that started on a global debt crisis, 0:00:46.440 --> 0:00:48.639 Like what are you looking at that broke and why 0:00:48.680 --> 0:00:51.520 should anyone listening to right now be preparing for that? 0:00:52.840 --> 0:00:56.720 Well, look, the global debt crisis kind of manifested itself 0:00:56.720 --> 0:01:02.600 in twenty nineteen. There was a lot of synchronized global 0:01:02.800 --> 0:01:07.039 growth slowing and the repo market started blowing up in 0:01:07.080 --> 0:01:14.720 September of twenty nineteen. The plumbing was becoming unwound. Coincidentally, 0:01:14.760 --> 0:01:20.320 COVID hit and gave central banks and governments unprecedented excuses 0:01:20.400 --> 0:01:23.880 to create more debt and print more money, and that 0:01:24.000 --> 0:01:28.520 reinflated the system. So if you have a global debt problem, 0:01:28.800 --> 0:01:31.440 there's two ways to handle it. You inflate your way 0:01:31.440 --> 0:01:36.040 out of it, or you default. And COVID, again, I 0:01:36.080 --> 0:01:38.480 wasn't in the room. We can debate whether it was 0:01:38.520 --> 0:01:41.319 a plan or an accident. Who cares. It saved the 0:01:41.360 --> 0:01:44.959 system temporarily kicked the can down the road, and the 0:01:45.000 --> 0:01:49.600 FED printed and the US government spent. Printing without spending 0:01:49.600 --> 0:01:53.760 doesn't mean anything. So we saw unprecedented growth in the 0:01:53.760 --> 0:01:57.960 money supply. And my partner Carlos Aellegaria, you know in 0:01:58.040 --> 0:02:01.800 his book that he had a revised edition in twenty 0:02:01.800 --> 0:02:05.120 twenty one, predicted that massive inflation was coming, and it came. 0:02:05.760 --> 0:02:07.480 And you know, there's a little bit of a debate 0:02:07.520 --> 0:02:11.440 as to who caused the inflation. I would say what 0:02:11.520 --> 0:02:14.720 they did under the Trump administration with the COVID spending 0:02:14.760 --> 0:02:18.560 and the printing didn't really have an impact until you know, 0:02:18.760 --> 0:02:21.520 twelve to eighteen months later, and that was in the 0:02:21.560 --> 0:02:25.600 Biden administration. So you know, inflation which quote unquote was transitory. 0:02:26.919 --> 0:02:29.520 You know, that's what we were hearing from, you know, 0:02:30.000 --> 0:02:36.840 yelling and Powell was nonsense, because monetary, when you increase 0:02:36.880 --> 0:02:41.960 the money supply without you know, without a commensurate like growth, 0:02:42.760 --> 0:02:46.080 it just gonna inflay prices. And it did. And so 0:02:46.680 --> 0:02:50.200 the FED then responded by going on an unprecedented interest 0:02:50.240 --> 0:02:54.639 rate rapid interest rate increased from basically zero to five 0:02:54.680 --> 0:02:59.280 and a half percent, and m two year over year 0:02:59.360 --> 0:03:05.639 growth unged in the aftermath, and we saw for the 0:03:05.680 --> 0:03:08.240 first time since not you know, the thirties, and two 0:03:08.320 --> 0:03:12.720 year year growth went negative in November twenty two, and 0:03:12.760 --> 0:03:15.880 then unsurprisingly, we had a bunch of bank failures in 0:03:15.919 --> 0:03:21.600 the spring of twenty twenty three. People forget that, and 0:03:22.080 --> 0:03:27.880 the FED plugged the hole. They gave bank term funding program. 0:03:28.040 --> 0:03:31.760 They lent moneies to banks that were underwater to prevent 0:03:31.880 --> 0:03:36.080 a deposit run and that worked because most of the 0:03:37.800 --> 0:03:40.560 most most of the credit that was underwater were you know, 0:03:41.040 --> 0:03:44.720 risk free assets like treasuries because of you know, the 0:03:44.840 --> 0:03:48.240 duration risks that happened when they raised interest rates. So 0:03:48.640 --> 0:03:50.920 what the Fed's not going to do and they've already 0:03:50.960 --> 0:03:53.120 ended the bank term funding program what the Fed's not 0:03:53.160 --> 0:03:57.000 going to do is lend money to bad credit, and 0:03:57.160 --> 0:04:00.000 that's we're getting into the credit cycle of this commercial 0:04:00.080 --> 0:04:03.360 real estate, as we know, is already a problem. That's 0:04:03.440 --> 0:04:06.360 about three to five trillion on banks balance sheets in 0:04:06.400 --> 0:04:11.720 the US. The bigger problem we see is the economy 0:04:12.160 --> 0:04:15.240 having been floated in twenty three and twenty four by 0:04:15.600 --> 0:04:18.480 illegal immigration. A large part of our growth came from 0:04:18.520 --> 0:04:27.480 that whole movement into basically an organized illegal operation that 0:04:28.120 --> 0:04:29.880 you know, we think of a large majority of the 0:04:29.920 --> 0:04:32.920 deficit spending we saw funded that through NGOs and other 0:04:32.960 --> 0:04:36.760 agencies and then direct payments to illegals. So that really 0:04:36.800 --> 0:04:39.599 floated the economy. And that's all coming away. So we 0:04:39.680 --> 0:04:44.520 see a housing crisis coming next. And when we say crisis, 0:04:44.839 --> 0:04:46.920 you know, I don't want people to freak out. I 0:04:46.960 --> 0:04:49.159 mean it's it's needed. I mean, home prices need to 0:04:49.160 --> 0:04:52.960 come down. People can't afford homes and new home supplies. 0:04:53.520 --> 0:04:55.800 You know, at all time record of the world near 0:04:55.839 --> 0:04:59.960 all time record levels, there's no there's no transaction active. 0:05:00.920 --> 0:05:05.359 And the housing market was really buoyed by the marginal renter, 0:05:05.560 --> 0:05:08.360 which was the illegal alien. That that momentum is all 0:05:08.400 --> 0:05:12.400 going the wrong way and p M I, you know, 0:05:12.640 --> 0:05:15.960 has been a problem for two years. It's been showing 0:05:15.960 --> 0:05:19.800 recessionary signals globally and the only economy that was really 0:05:19.880 --> 0:05:24.040 outstanding was the US economy. And that's all that's all 0:05:24.080 --> 0:05:27.760 going the wrong way. The second derivative government spending, even 0:05:27.800 --> 0:05:32.440 though the Trump administration is really not cutting spending, the 0:05:32.520 --> 0:05:38.080 second derivative is changing. The growth is flattening, and that's 0:05:38.120 --> 0:05:41.279 all you need to cause a softening in the economy. 0:05:41.360 --> 0:05:44.040 And that's what We've put out a report that we're 0:05:44.360 --> 0:05:49.200 selling on January ninth detailing what we were seeing, and 0:05:49.480 --> 0:05:51.560 you can buy it if you want at our website 0:05:51.640 --> 0:05:55.800 Finance Technologies dot com with the pH. So that's kind 0:05:55.839 --> 0:06:00.360 of the brad swathe we're already starting to see indicates 0:06:00.480 --> 0:06:04.880 that the economy is slowly starting to roll over, and 0:06:05.839 --> 0:06:07.640 we'll see if our calls right. We think we're going 0:06:07.720 --> 0:06:09.520 to be right in a very big way. 0:06:11.200 --> 0:06:13.159 Well, thanks for setting the stage on that. Let's let's 0:06:13.200 --> 0:06:17.800 dig into a couple of things on that you said. 0:06:17.880 --> 0:06:19.680 I think I think what you said is after you 0:06:19.720 --> 0:06:21.680 talked about the FED bailing out the banks in twenty 0:06:21.720 --> 0:06:26.200 twenty three through the BTFP, that the FED is not 0:06:26.320 --> 0:06:29.799 going to give money to bad businesses or bad investments anymore. 0:06:30.320 --> 0:06:33.560 I think, well, they're not. They're not. They're not going 0:06:33.600 --> 0:06:39.000 to loan money to Uh. It was easy to provide 0:06:39.080 --> 0:06:43.280 liquidity versus treasury assets. They're underwater. They're not going to 0:06:43.279 --> 0:06:47.480 provide liquidity to bad loan decisions, bad credit decisions. And 0:06:47.839 --> 0:06:50.520 what's going on with the commercial real estate problem? 0:06:51.080 --> 0:06:51.400 Uh? 0:06:51.440 --> 0:06:54.000 And by the way, this all eventually affects lending bank. 0:06:54.240 --> 0:06:57.320 The bank's main function is to choose the economy by lending. 0:06:57.800 --> 0:07:00.600 When you start to accumulate bad debts on your books, 0:07:00.680 --> 0:07:03.240 you you you, you know, you stop lending as much. 0:07:03.839 --> 0:07:06.040 And what's going on with the commercial real estate is 0:07:06.080 --> 0:07:07.560 they've been extending and pretending. 0:07:08.400 --> 0:07:08.880 Uh. 0:07:08.920 --> 0:07:11.760 And the FED put out a report in November of 0:07:12.040 --> 0:07:13.800 twenty twenty four detailing that. 0:07:14.520 --> 0:07:14.640 Uh. 0:07:14.840 --> 0:07:17.120 And I think they're going to start cracking down on banks, 0:07:18.480 --> 0:07:22.080 you know, coincidentally during the Trump administration. That may be 0:07:22.120 --> 0:07:24.080 a political move, who knows, but I mean, this has 0:07:24.080 --> 0:07:26.080 been a problem for well over a year and a half. 0:07:26.880 --> 0:07:27.000 Uh. 0:07:27.560 --> 0:07:33.080 There there's also starting to be uh, you know, indications 0:07:33.080 --> 0:07:37.000 and problems in auto loans, and there's delinquencies and homes arising. 0:07:37.080 --> 0:07:40.400 So we have a credit we have a classic credit 0:07:40.760 --> 0:07:44.360 cycle coming and it's just inevitable and it will cause 0:07:45.680 --> 0:07:49.080 the word deflation to be mentioned temporarily because we know 0:07:49.640 --> 0:07:54.480 that deflation is not allowed under the rules of the bankers. 0:07:54.960 --> 0:07:59.720 So we're predicting inflation CPI headlined to some sometime in 0:07:59.720 --> 0:08:02.600 the next six to twelve months print sub two percent number. 0:08:03.120 --> 0:08:07.760 The biggest component of inflation is shelter. It's about forty 0:08:07.760 --> 0:08:10.160 five percent of the CPI number. That's sticky, it takes 0:08:10.200 --> 0:08:16.320 time to adjust. And so we're expecting a recession. We're 0:08:16.320 --> 0:08:20.440 expecting the Fed to do what it does, lower interest rates, 0:08:20.440 --> 0:08:23.680 and then maybe if if the crisis is you know, 0:08:24.040 --> 0:08:26.160 if it goes if it looks like it's going to 0:08:26.200 --> 0:08:28.440 go systemic, they're going to print a ton of money 0:08:29.080 --> 0:08:32.040 and the government will have to do deficit spending and 0:08:32.080 --> 0:08:35.800 then you know, we're back in you know, the reinflation 0:08:35.880 --> 0:08:37.400 of the bubble if they can do it again. 0:08:38.360 --> 0:08:42.080 So yeah, so you said that if deflation is not 0:08:42.160 --> 0:08:44.720 allowed in bankers terms, it's really not allowed in a 0:08:44.760 --> 0:08:46.040 debt based monetary system. 0:08:46.120 --> 0:08:50.120 Just overall, it's if allowed to go on checked it 0:08:50.320 --> 0:08:52.040 the daisy chain effects are collapse. 0:08:52.920 --> 0:08:55.480 Would you say you mentioned, you know how this actually 0:08:55.520 --> 0:08:58.160 started in twenty nineteen and then the COVID sort of 0:08:58.520 --> 0:09:01.959 excuse came along. Would you say that it actually started 0:09:02.000 --> 0:09:04.760 back in two thousand and eight when we really sort 0:09:04.760 --> 0:09:09.480 of had the first QE. Maybe the FED tried to 0:09:09.600 --> 0:09:12.080 allow the bubble to deflate like they had done in 0:09:12.240 --> 0:09:16.160 previous cycles two thousand, et cetera. But then it became 0:09:16.200 --> 0:09:18.720 too systemic, right, they had to bel out the banks, 0:09:18.720 --> 0:09:23.480 they had to do the quantitative easing. It levered up 0:09:23.520 --> 0:09:26.480 the system to a point now in twenty nineteen, twenty 0:09:26.480 --> 0:09:29.040 twenty showed that they're and even twenty twenty three showed 0:09:29.080 --> 0:09:32.640 there's zero appetite to allow it to sort of deflate 0:09:32.679 --> 0:09:34.760 on its own and they have to keep reinflating. 0:09:35.800 --> 0:09:38.240 Yeah, I would. It's interesting you talked about the Great 0:09:38.280 --> 0:09:40.520 Financial Crisis. That's when a lot of things change. That's 0:09:40.520 --> 0:09:46.360 when we saw unprecedented monetary policy, which now everybody expects 0:09:46.360 --> 0:09:49.880 and it's not as unprecedented. It's a tool in the toolbox. 0:09:50.600 --> 0:09:53.920 And what that did is the real economy, if you 0:09:54.000 --> 0:09:57.800 go back, really kind of died globally and what floated 0:09:57.840 --> 0:10:02.640 the economy for the next fourteen years was precedented monetary 0:10:02.679 --> 0:10:06.400 policy coupled with government spending, and the government as a 0:10:06.440 --> 0:10:10.120 percent of GDP, not only in the US, but in Europe, China, 0:10:10.440 --> 0:10:14.400 you name, it grew its share the pie in GDP, 0:10:15.160 --> 0:10:18.760 and that's changed a lot of you know, what's been 0:10:18.800 --> 0:10:22.720 going on economically. So the closer you are to government 0:10:22.960 --> 0:10:26.520 and government favors and the printing press, the better. After 0:10:26.840 --> 0:10:31.560 you've done so, the economy showed growth, but the problem was, 0:10:31.800 --> 0:10:35.080 over time there was a wealth disparity effect. And that's why, 0:10:35.320 --> 0:10:37.520 you know, if you want to ask yourself why populism 0:10:37.840 --> 0:10:40.679 is on the rise, it's basically because the rich got 0:10:40.760 --> 0:10:44.120 richer and everybody else got poor. And it's been an 0:10:44.160 --> 0:10:47.800 economy of the rich, not of the middle class. And 0:10:47.880 --> 0:10:51.840 Trump was elected primarily because there was minus two percent 0:10:51.960 --> 0:10:55.960 real wage growth going into the election. The last time 0:10:56.000 --> 0:10:59.079 that happened in nineteen eighty, Ronald Reagan swept in and 0:10:59.160 --> 0:11:02.960 it's Bill Clinton ninety two. So you know, well, Trump 0:11:03.040 --> 0:11:04.679 was was going to win no matter what because of 0:11:04.679 --> 0:11:06.800 the economy didn't matter. Got it. 0:11:07.000 --> 0:11:12.680 So if the system structurally fundamentally changed in two thousand 0:11:12.720 --> 0:11:16.440 and eight, got so levered up, you could see twenty nineteen, 0:11:16.520 --> 0:11:19.240 twenty twenty, the response was way faster. Right, two thousand 0:11:19.240 --> 0:11:22.240 and eight, they allowed bear Stearns to go down and 0:11:22.320 --> 0:11:24.200 took seven months to get a bail out. In twenty 0:11:24.240 --> 0:11:26.600 twenty three, it took six days to bail out the banks. 0:11:29.320 --> 0:11:32.280 But you think that now maybe FED, the FED would 0:11:32.320 --> 0:11:33.959 sort of change their tune and say, well, let's just 0:11:34.040 --> 0:11:36.160 let these bad loans go bad and let's see what 0:11:36.160 --> 0:11:36.920 happens with the defaise. 0:11:37.000 --> 0:11:43.240 Well, it depends they can't be seen as bailing out politically, 0:11:43.240 --> 0:11:44.760 it's going to be a lot harder to try to 0:11:44.800 --> 0:11:46.520 bail out the banks. And during twenty. 0:11:46.320 --> 0:11:48.840 Short of like just take the loans on their books 0:11:48.840 --> 0:11:50.520 like they did with the NBS and eight, like, you 0:11:50.559 --> 0:11:52.280 don't think that's politically sustainable. 0:11:52.520 --> 0:11:56.080 They could do it, but they will only do it 0:11:56.120 --> 0:12:01.840 if it's enough pain, So that's why they'll do it. 0:12:01.880 --> 0:12:04.959 But they'll do it after a big correction and people 0:12:05.000 --> 0:12:07.480 are freaking out and begged them to do it. They 0:12:07.520 --> 0:12:09.720 don't want to do it ahead of time. Twenty twenty 0:12:09.720 --> 0:12:12.800 gave them great cover. I mean, they bailed out Citadel Capital. 0:12:13.240 --> 0:12:16.600 You know, they gave them emergency repos during twenty twenty 0:12:17.040 --> 0:12:20.200 and and and there was also and they also basically 0:12:20.240 --> 0:12:24.400 privatized the corporate credit market. They started buying I don't 0:12:24.400 --> 0:12:27.200 know if people remember this, but they started buying under 0:12:27.240 --> 0:12:32.240 their balance sheet apple bonds, So they they basically privatized 0:12:32.280 --> 0:12:34.440 the corporate credit market. The problem with that is it's 0:12:34.520 --> 0:12:39.280 kept corporate spread credit spreads tight, and that's driven a 0:12:39.280 --> 0:12:42.680 massive amount of misallocation of capital, as you would imagine. 0:12:42.920 --> 0:12:47.720 So and the other problem is this, so you know, 0:12:47.800 --> 0:12:52.360 in the dot com boom, we had a corporate fraud cycle, 0:12:53.080 --> 0:12:56.200 and then you know, we had a the FED do 0:12:56.320 --> 0:12:59.360 their easy money after that bus that led to a 0:12:59.400 --> 0:13:04.360 banking fraud cycle. And now we have, fourteen years later, 0:13:05.240 --> 0:13:10.080 a i would say, a central bank government fraud cycle. 0:13:10.440 --> 0:13:12.960 And we're discovering all sorts of frauds, you know, through 0:13:13.120 --> 0:13:16.520 what doge is exposed and whatnot. And it's not so 0:13:16.679 --> 0:13:21.360 much that the FED will become trapped when another central 0:13:21.360 --> 0:13:23.440 bank has a problem. And the Bank of Japan is 0:13:23.520 --> 0:13:25.679 kind of the in the problem right now. They can 0:13:25.720 --> 0:13:30.360 either you know, continue to print money to float the 0:13:30.440 --> 0:13:34.480 yen carry trade or there people will continue to get 0:13:34.480 --> 0:13:37.120 poor and there's a currency crisis. So the release valve 0:13:37.200 --> 0:13:40.200 on the sovereign debt crisis is always was always going 0:13:40.240 --> 0:13:44.400 to be the currency markets, because eventually the currency markets 0:13:44.400 --> 0:13:47.439 will revolt if one country, you know, it's someone to 0:13:47.960 --> 0:13:51.080 if the market's determined no moss, then it's over and 0:13:51.120 --> 0:13:53.720 then the whole thing has a problem. So the FED, 0:13:54.320 --> 0:13:56.720 you know, is the FED going to bail out Japan? 0:13:57.120 --> 0:13:59.319 I mean that right? So this is where we are. 0:13:59.400 --> 0:14:02.200 It's it's very precarious. We don't have a crystal ball. 0:14:02.280 --> 0:14:05.600 But what we do know is there's an economic sloan 0:14:05.640 --> 0:14:09.599 on coming. There's going to be, you know, problem in 0:14:09.600 --> 0:14:14.000 the stock markets, and we're expecting yields to go much lower. 0:14:14.640 --> 0:14:17.240 And obviously, if you believe our call, you want to 0:14:17.280 --> 0:14:20.320 be up to your eyeballs in risk creer assets like 0:14:20.360 --> 0:14:24.040 the US T bills, notes and buys. And I don't 0:14:24.040 --> 0:14:26.320 have anything with the risk any risk asset. 0:14:26.880 --> 0:14:30.280 Let's come back to that. How you see this playing out? 0:14:30.320 --> 0:14:33.000 And uh and I know we'll talk about the report 0:14:33.040 --> 0:14:35.000 that you said you have and how people can get 0:14:35.000 --> 0:14:40.480 a hold of that. Would you say that Trump's new 0:14:40.560 --> 0:14:44.720 policies potentially this mar a Lago accord restructuring the global 0:14:44.720 --> 0:14:51.960 monetary system uh, making America investible again, could potentially stay 0:14:52.040 --> 0:14:54.360 that off or does that only exaggerate things? 0:14:55.240 --> 0:14:59.920 No, Look, his plan is this right. He wants to deregulate, 0:15:00.080 --> 0:15:04.080 reinstitute the tax cuts. He wants to bring investment to 0:15:04.120 --> 0:15:08.400 the US. The bringing investments to the US is going 0:15:08.480 --> 0:15:10.880 to take time. You know, as well as I do. 0:15:11.040 --> 0:15:14.760 Breaking ground, getting getting things going doesn't happen overnight. So 0:15:14.800 --> 0:15:17.960 that's that that that is out in the future. It's 0:15:18.040 --> 0:15:20.520 much like what happened around Ronald Rugg and Renald Reagan 0:15:20.560 --> 0:15:23.280 had a recession and you know eighty I think eighty 0:15:23.320 --> 0:15:26.680 and eight eighty one, he had a double dip recession. 0:15:28.000 --> 0:15:30.840 Trump is facing the same problem. His policies are going 0:15:30.920 --> 0:15:33.680 to take time to to an app The FED is 0:15:33.720 --> 0:15:38.920 too tight at the moment, and his policies are actually 0:15:38.960 --> 0:15:42.600 reversing out the juice to the economy the last two years, 0:15:42.600 --> 0:15:47.200 which was unprecedented deficit spending, a legal immigration, and government 0:15:48.120 --> 0:15:52.760 job hiring. So just the second derivative change on that 0:15:52.960 --> 0:15:55.560 is going to create a dip because the economy, the 0:15:55.560 --> 0:15:58.240 real economy, the middle class economy was you could argue, 0:15:58.280 --> 0:16:00.720 was in a recession in twenty three twenty four. 0:16:01.320 --> 0:16:05.200 So we have eight trillion dollars of commitments to be 0:16:05.280 --> 0:16:07.120 invested in the United States. But to your point, that's 0:16:07.120 --> 0:16:09.080 going to take a while to see that come to fruition. 0:16:09.360 --> 0:16:14.280 Yeah, commitment, commitment, commitments don't translate into money changing hands. 0:16:14.320 --> 0:16:15.320 Yet it does. 0:16:15.480 --> 0:16:18.280 Yeah. Now, he has done quite a few executive orders 0:16:18.360 --> 0:16:21.520 laying the groundwork for like fast tracking these two things, 0:16:21.560 --> 0:16:23.680 coordinating through all the states to get these things through. 0:16:23.720 --> 0:16:26.160 I think it was any investments over a billion dollars 0:16:26.200 --> 0:16:28.880 get sort of rubber stamped through. But even then you're 0:16:28.920 --> 0:16:32.400 still talking years probably before that stuff happening happened, at 0:16:32.480 --> 0:16:33.560 least at least. 0:16:33.280 --> 0:16:36.720 You know, twelve to twenty four months depends, you know, 0:16:37.240 --> 0:16:42.920 And so that's why you know this. We wrote the report. 0:16:43.440 --> 0:16:48.160 His reversal his policies actually will cause a temporary recession 0:16:48.920 --> 0:16:52.440 and then his other policies will bring us out of it. 0:16:52.480 --> 0:16:54.960 But again, there's a timing issue. So there's there's a 0:16:55.080 --> 0:16:58.920 valley before the glory right now, right, it all depends 0:16:58.920 --> 0:17:03.160 on the execution, the timing. If he if the economy 0:17:03.200 --> 0:17:09.760 isn't turning around by twenty twenty six mid terms, we've 0:17:09.760 --> 0:17:13.760 got a problem. So the idea here is you have 0:17:14.080 --> 0:17:18.399 a recession that we think manifests itself pretty soon and 0:17:18.840 --> 0:17:21.359 the stock market's bottom sometime in the first quarter of 0:17:21.359 --> 0:17:25.919 twenty twenty six, and then you have, you know, a recovery. 0:17:26.000 --> 0:17:28.960 That's the ideal situation. And that's why in our report 0:17:29.000 --> 0:17:31.000 we're not we're not. In our report, we don't we're 0:17:31.000 --> 0:17:33.840 not claiming anything it's going to go systemic. We're not 0:17:33.920 --> 0:17:36.399 doom and gloom. It's just, you know, we think it's 0:17:36.400 --> 0:17:40.480 an old fashioned deep recession and hopefully it's quick and 0:17:40.680 --> 0:17:44.840 typically speaking in recessions, like in the dot com recession 0:17:44.880 --> 0:17:49.200 and the Great Financial Crisis, stocks went down fifty percent 0:17:49.520 --> 0:17:54.240 before they recovered. So we're nowhere near down fifty percent yet, 0:17:54.640 --> 0:17:56.920 and we think that's kind of and you know, look, 0:17:56.960 --> 0:17:59.240 it's not the end of the world, right, I mean, 0:17:59.440 --> 0:18:02.199 home price is going down, are you know, well, not 0:18:02.359 --> 0:18:05.560 good for overlevered rich people that are over their skis. 0:18:05.600 --> 0:18:07.720 It's great for like someone who had a first time 0:18:07.760 --> 0:18:12.280 a home buyer. So you know, it's just not people 0:18:12.359 --> 0:18:14.280 just don't like recessions and they think it's the end 0:18:14.320 --> 0:18:17.200 of the world. But it's healthy and it resets things. 0:18:17.200 --> 0:18:20.280 The problem is, you know, the bankers don't like it, 0:18:20.320 --> 0:18:24.840 and they keep reinflating and creating malinvestments. So we're going 0:18:24.880 --> 0:18:27.280 to see what happens in the in the teeth of 0:18:27.320 --> 0:18:30.160 this one. The Fed is behind the eight ball. They 0:18:30.160 --> 0:18:32.639 didn't lower that. You know, I predicted they weren't going 0:18:32.720 --> 0:18:36.040 to lower this Wednesday. They didn't. And we might even 0:18:36.040 --> 0:18:39.960 get some headline inflation reports that look like inflation's accelerating. 0:18:40.960 --> 0:18:43.640 But you know, you get to remember the Great Financial Crisis, 0:18:43.680 --> 0:18:48.200 inflation was accelerating June, July, and August before everything imploded. 0:18:48.800 --> 0:18:53.160 It seems like, you know, when you have basically a 0:18:52.560 --> 0:18:55.960 heads or tails sort of thing where we either continue 0:18:55.960 --> 0:18:59.480 to inflate this bubble and have more inflation, or we 0:18:59.560 --> 0:19:01.480 let a def in To your point, you know, maybe 0:19:01.480 --> 0:19:03.920 that's a good thing to let asset prices, house prices 0:19:03.920 --> 0:19:06.480 come back down, sort of give that that next generation 0:19:06.560 --> 0:19:09.680 a chance. It just seems like if people were given 0:19:09.720 --> 0:19:12.640 a choice like which one's more bearable, most people would 0:19:12.640 --> 0:19:15.520 probably rather see their retirement accounts than their their house 0:19:15.560 --> 0:19:17.800 et cetera go up in value, even if the price 0:19:17.800 --> 0:19:20.840 of gas and food went up a little bit, versus 0:19:21.800 --> 0:19:24.000 you know, all their prices come crashing down, their stock 0:19:24.000 --> 0:19:27.600 retirement accounts, housecounts all come crashing down, their businesses suffer. 0:19:28.080 --> 0:19:30.879 So it seems like maybe if people had to choose, 0:19:30.920 --> 0:19:32.680 and you know, the government having to deal with sort 0:19:32.720 --> 0:19:35.760 of the public's view on this, seems like they would 0:19:35.760 --> 0:19:36.720 probably choose inflation. 0:19:37.359 --> 0:19:41.600 But well, I think it's a generational issue, right, So 0:19:41.720 --> 0:19:44.160 we have the baby boomer generation. It has a lot 0:19:44.200 --> 0:19:46.280 of the wealth in the country who wants to see 0:19:46.280 --> 0:19:49.840 policies that protect themselves. And then it's this is classic 0:19:50.040 --> 0:19:54.040 generational warfare. My partner Carlos Selegri who writes about it 0:19:54.080 --> 0:19:57.600 in his book Economic Cycles, Debt and Demographics. This has 0:19:57.640 --> 0:20:01.480 gone on, you know, many times before in history. So 0:20:01.520 --> 0:20:04.639 we have we have a we have a we have 0:20:05.320 --> 0:20:08.400 what money would call a fourth attorney. I mean, this 0:20:08.440 --> 0:20:11.440 is this is a generational war. You have the young 0:20:11.480 --> 0:20:14.960 people who are locked out of a lifestyle that their 0:20:15.000 --> 0:20:19.040 parents and grandparents experienced and are still holding on to 0:20:19.640 --> 0:20:23.119 and and they and you know, uh, that's why populism 0:20:23.160 --> 0:20:26.720 is rising at the moment. And you can see you know, 0:20:27.080 --> 0:20:29.720 I'm sure you're online a lot. You know, I'm not 0:20:29.760 --> 0:20:31.560 a boomer, I'm a gen exer, but I get called 0:20:31.560 --> 0:20:34.240 the boomer Okay, boomer, you. 0:20:34.200 --> 0:20:38.159 Know, yeah, yeah, yeah, how much of that would you 0:20:38.400 --> 0:20:42.359 say is attributed more to where we're at in technology? 0:20:43.119 --> 0:20:46.560 So for example, right like, the baby boomers had a 0:20:46.600 --> 0:20:49.919 massive middle class because we had the industrial age and 0:20:49.920 --> 0:20:52.600 we had assembly lines, and so smart people and dumb 0:20:52.640 --> 0:20:55.200 people were marginalized and they all did just put their 0:20:55.400 --> 0:20:56.920 their peace on the widget as it went down the 0:20:56.920 --> 0:20:59.080 assembly line. So we got this massive middle class. But 0:20:59.119 --> 0:21:02.040 as we moved to the information age especially and as 0:21:02.080 --> 0:21:04.879 we've accelerated into that now with AI, it's almost more 0:21:04.880 --> 0:21:06.919 of a meritocracy where if I'm smarter, I can just 0:21:06.960 --> 0:21:09.280 use my laptop, I can just get ahead, and that 0:21:09.359 --> 0:21:11.840 middle class sort of goes away and maybe there's no 0:21:11.960 --> 0:21:13.359 returning to that. 0:21:13.359 --> 0:21:16.720 That's what Trump is trying to address by bringing manufacturing 0:21:16.800 --> 0:21:20.080 jobs back. It's a bold move. We'll see if it works. 0:21:21.720 --> 0:21:24.280 The other thing to remember, though, is when you have 0:21:24.440 --> 0:21:27.960 let's say you bring a manufacturing plant to a town, 0:21:29.040 --> 0:21:34.080 I'm talking micro economics, and you hire that just say 0:21:34.080 --> 0:21:38.400 a thousand people, That creates jobs for those people. Those 0:21:38.400 --> 0:21:44.600 people then spend on ancillary services like housing, restaurants, services, 0:21:44.720 --> 0:21:48.600 so there's other jobs that are created by that steady 0:21:48.640 --> 0:21:51.640 base of manufacturing. And you know, that's what we saw 0:21:52.000 --> 0:21:56.280 hopp into a lot of Midwest towns during the outsourcing 0:21:56.480 --> 0:22:01.000 of manufacturing in the US and the nineties and two 0:22:01.040 --> 0:22:07.840 thousands under Clinton, Bush, Obama and and and and and 0:22:07.840 --> 0:22:10.800 and what have you, we saw towns. I mean I drove, 0:22:10.880 --> 0:22:14.280 I drove across the country Midwest towns just like the 0:22:14.320 --> 0:22:17.879 plant left, and they're just shadows of their former selves. 0:22:18.200 --> 0:22:22.000 So Trump, I think I did, idealistically, wants to bring 0:22:22.080 --> 0:22:24.160 back that kind of Whether it works or not, let's 0:22:24.160 --> 0:22:26.639 we'll see. And you're right there, there's been a change 0:22:26.800 --> 0:22:30.960 in the nature of the workforce and unfortunately, I Q 0:22:31.119 --> 0:22:32.120 has a lot to do with it. 0:22:32.440 --> 0:22:34.880 And our education system isn't helping at all. 0:22:35.000 --> 0:22:38.240 You know, our education system is a disaster. It's making 0:22:38.400 --> 0:22:41.399 I mean, look, I went to public school and I 0:22:41.520 --> 0:22:45.960 learned a lot. It was great. And I think that's 0:22:46.000 --> 0:22:48.840 been a lot of people's experience that are my age. 0:22:49.320 --> 0:22:51.560 I hear what's going on in the public school system now, 0:22:51.600 --> 0:22:52.800 and it's it's a disaster. 0:22:53.280 --> 0:22:55.560 My My daughter is a sophomore in high school and 0:22:55.600 --> 0:22:59.040 she she's homeschooling, and she just does she just wants 0:22:59.040 --> 0:23:00.960 to just take her to get out, and I'm like, 0:23:01.000 --> 0:23:03.399 just drop out, like I don't care. There's nothing that 0:23:03.440 --> 0:23:04.879 they're going to teach you at this point that you 0:23:04.920 --> 0:23:07.040 need to know. Like you're already working for me, You're 0:23:07.040 --> 0:23:09.680 already learning more cutting edge marketing stuff than they'll ever 0:23:09.720 --> 0:23:13.480 teach you in that industrial era school. So it's almost 0:23:13.480 --> 0:23:15.760 like people are being still trained in an industrial era 0:23:15.840 --> 0:23:19.840