1 00:00:00,520 --> 00:00:04,520 Speaker 1: What's up, everybody? Welcome to another episode of financial heresy, 2 00:00:04,640 --> 00:00:07,320 Speaker 1: where we talk about how money works so that you 3 00:00:07,360 --> 00:00:10,680 Speaker 1: can make more, keep more, and give more. It is 4 00:00:10,920 --> 00:00:15,880 Speaker 1: vital to understand the mechanics of how the economy works, 5 00:00:16,320 --> 00:00:20,840 Speaker 1: otherwise you might be making financial decisions based off of 6 00:00:21,160 --> 00:00:26,640 Speaker 1: false assumptions about what will happen next. For instance, today 7 00:00:26,760 --> 00:00:31,560 Speaker 1: we are talking about how to know when inflation will stop, because, 8 00:00:31,600 --> 00:00:35,720 Speaker 1: contrary to popular belief, inflation is not just something that 9 00:00:36,080 --> 00:00:40,599 Speaker 1: spontaneously happens out of nowhere for no reason. There are 10 00:00:40,680 --> 00:00:44,760 Speaker 1: actual mechanics behind it. And if there are mechanics behind 11 00:00:45,159 --> 00:00:47,519 Speaker 1: what causes it to start, then there are all some 12 00:00:47,640 --> 00:00:51,960 Speaker 1: mechanics behind what will allow it to stop. And knowing 13 00:00:52,280 --> 00:00:57,960 Speaker 1: whether inflation will continue, decelerate, stop, UH turn over into 14 00:00:58,040 --> 00:01:03,200 Speaker 1: deflation can be very full tools in making financial decisions 15 00:01:03,280 --> 00:01:07,520 Speaker 1: about spending money, about using debt, about saving money, about 16 00:01:07,520 --> 00:01:11,080 Speaker 1: purchasing investments, all of that. And so we are discussing 17 00:01:11,120 --> 00:01:15,560 Speaker 1: today how to know how and when inflation will end, 18 00:01:16,000 --> 00:01:18,720 Speaker 1: whether inflation will keep on going. You're not based on 19 00:01:18,760 --> 00:01:22,000 Speaker 1: the mechanics. UH. The proper terminology for what we are 20 00:01:22,000 --> 00:01:26,399 Speaker 1: discussing today is called the Cantyon effect This is named 21 00:01:26,400 --> 00:01:31,240 Speaker 1: after a man named Richard Cantyon and he was um uh. 22 00:01:31,400 --> 00:01:34,920 Speaker 1: He was alive during the seventeen hundreds, during the Mississippi Bubble, 23 00:01:35,360 --> 00:01:39,520 Speaker 1: So what was the Mississippi bubble? Three years ago? In France, 24 00:01:39,560 --> 00:01:43,600 Speaker 1: there was a man named John Law and he convinced 25 00:01:43,800 --> 00:01:47,520 Speaker 1: France to give him a central bank. So he started 26 00:01:47,560 --> 00:01:49,840 Speaker 1: a bank, and he got the charter, he got the 27 00:01:49,920 --> 00:01:53,120 Speaker 1: license to be the central bank for the nation. And 28 00:01:53,160 --> 00:01:55,160 Speaker 1: he said he was going to stimulate a lot of 29 00:01:55,200 --> 00:01:58,800 Speaker 1: economic growth in this position, and he was going to 30 00:01:58,920 --> 00:02:00,880 Speaker 1: spend a lot of money, but he was going to 31 00:02:01,000 --> 00:02:03,240 Speaker 1: spend more money than the government actually had to spend. 32 00:02:03,320 --> 00:02:05,880 Speaker 1: And so he came up with a plan. The first 33 00:02:05,920 --> 00:02:08,280 Speaker 1: thing that he did was he had everybody turn in 34 00:02:08,280 --> 00:02:11,480 Speaker 1: their golden silver. But don't worry, you're not losing any 35 00:02:11,520 --> 00:02:13,799 Speaker 1: money here, right like you never do. Like every time 36 00:02:14,000 --> 00:02:16,720 Speaker 1: this happened throughout history, it always works out great for everybody. 37 00:02:17,040 --> 00:02:20,000 Speaker 1: So give us your gold and silver, and I'm going 38 00:02:20,040 --> 00:02:22,600 Speaker 1: to give you a paper a piece of paper money 39 00:02:22,680 --> 00:02:24,960 Speaker 1: in its place, and don't worry, it has the same 40 00:02:25,000 --> 00:02:28,160 Speaker 1: exact value. So uh, no worries at all. You got 41 00:02:28,160 --> 00:02:29,520 Speaker 1: you got the same thing. You just have to give 42 00:02:29,600 --> 00:02:32,120 Speaker 1: us your gold and silver, will give you the paper. Now, 43 00:02:32,160 --> 00:02:36,160 Speaker 1: this paper money was backed up, it was the value 44 00:02:36,160 --> 00:02:38,640 Speaker 1: behind it was backed up by that gold and that 45 00:02:38,760 --> 00:02:41,360 Speaker 1: silver that they confiscated from the nation, but it was 46 00:02:41,400 --> 00:02:44,520 Speaker 1: also backed up by shares of the Mississippi Company. At 47 00:02:44,560 --> 00:02:46,960 Speaker 1: this time, Mississippi and the land around it in the 48 00:02:47,000 --> 00:02:51,280 Speaker 1: United States was owned by the Mississippi Company, which John 49 00:02:51,360 --> 00:02:55,760 Speaker 1: Law owned and controlled from France. And so the uh, 50 00:02:55,840 --> 00:02:59,320 Speaker 1: the value of the new currency in France was backed 51 00:02:59,360 --> 00:03:03,040 Speaker 1: up by both old and silver and land, because the 52 00:03:03,120 --> 00:03:07,200 Speaker 1: shares of the Mississippi Company had value because of the land. Um. 53 00:03:07,240 --> 00:03:10,400 Speaker 1: So then he started spending this paper money on different 54 00:03:10,400 --> 00:03:14,080 Speaker 1: economic initiatives to try and drive economic growth in France, 55 00:03:14,120 --> 00:03:16,320 Speaker 1: and it kind of worked for a little while, and 56 00:03:16,360 --> 00:03:21,160 Speaker 1: then there were, obviously, as there always are, unintended consequences 57 00:03:21,160 --> 00:03:23,480 Speaker 1: where certain things started to get worse, and so he 58 00:03:23,520 --> 00:03:26,760 Speaker 1: had to spend more and more paper money. But once 59 00:03:26,800 --> 00:03:29,720 Speaker 1: you start to print more money to solve these economic problems, 60 00:03:29,760 --> 00:03:32,200 Speaker 1: what happens to the value of that paper money, Well, 61 00:03:32,200 --> 00:03:35,040 Speaker 1: it starts to go down because the price of something 62 00:03:35,120 --> 00:03:38,240 Speaker 1: just communicates the value of something, but the price is 63 00:03:38,280 --> 00:03:42,080 Speaker 1: just information about the relative scarcity of one thing versus 64 00:03:42,080 --> 00:03:45,600 Speaker 1: everything else. So if you look at the price of air, 65 00:03:46,080 --> 00:03:49,880 Speaker 1: the price of air is zero because the relative scarcity 66 00:03:49,880 --> 00:03:54,040 Speaker 1: of air versus everything else, it's absolutely abundant. UM, there 67 00:03:54,160 --> 00:03:57,760 Speaker 1: is zero scarcity relative to everything else. You can walk 68 00:03:57,800 --> 00:04:01,960 Speaker 1: outside and you can breathe breathable air pretty much anywhere 69 00:04:02,000 --> 00:04:05,000 Speaker 1: on Earth. Now, what happens when you go somewhere where 70 00:04:05,000 --> 00:04:09,040 Speaker 1: breathable air is not abundant, where it is scarce, Well, 71 00:04:09,080 --> 00:04:11,120 Speaker 1: then you have to pay for it. There's a price. 72 00:04:11,280 --> 00:04:13,720 Speaker 1: Right when you go underwater, you go scuba diving. This 73 00:04:13,760 --> 00:04:17,000 Speaker 1: is an example from Jeff Booth that I always use UM. 74 00:04:17,040 --> 00:04:20,080 Speaker 1: When you go underwater, there is no breathable air. Therefore 75 00:04:20,160 --> 00:04:23,360 Speaker 1: it is absolutely scarce because there's zero of it. So 76 00:04:23,400 --> 00:04:25,320 Speaker 1: you have to bring some with you. So scuba gear 77 00:04:25,440 --> 00:04:28,599 Speaker 1: costs you money. And so this is UH. This is 78 00:04:28,640 --> 00:04:32,200 Speaker 1: an example of how the price of something communicates how 79 00:04:32,240 --> 00:04:37,320 Speaker 1: abundant or scarce something is relative to everything else. UM. 80 00:04:37,400 --> 00:04:41,880 Speaker 1: So beach side, ocean front, real estate in a country 81 00:04:41,880 --> 00:04:45,720 Speaker 1: with good rule of law, UM in UH, in the 82 00:04:47,040 --> 00:04:52,440 Speaker 1: proper latitude and altitude for really good weather, only that 83 00:04:52,560 --> 00:04:56,520 Speaker 1: the only place that is is in southern California. That 84 00:04:56,520 --> 00:04:59,840 Speaker 1: that that type of weather uh and environment exists in 85 00:04:59,880 --> 00:05:02,080 Speaker 1: a couple other places on Earth, and most of them 86 00:05:02,120 --> 00:05:05,800 Speaker 1: are not uh you know, economically and legally speaking, as 87 00:05:05,880 --> 00:05:09,320 Speaker 1: attractive as California being in the United States. And so 88 00:05:09,360 --> 00:05:13,960 Speaker 1: the beach front property there is extremely scarce. There is 89 00:05:14,000 --> 00:05:16,360 Speaker 1: no more of it being made. You can't make more 90 00:05:16,400 --> 00:05:20,520 Speaker 1: beach front real estate UM. And so the value of 91 00:05:20,560 --> 00:05:22,800 Speaker 1: it is high. The price of it is high because 92 00:05:22,800 --> 00:05:26,200 Speaker 1: it's extremely scarce relative to everything else UM. And so 93 00:05:26,240 --> 00:05:29,279 Speaker 1: these are two extreme examples air versus beach front property 94 00:05:29,320 --> 00:05:33,479 Speaker 1: in California. UM. One thing is extremely abundant, one is 95 00:05:33,520 --> 00:05:36,800 Speaker 1: extremely scarce. And so that's what the price communicates about it. 96 00:05:37,520 --> 00:05:40,880 Speaker 1: When you start to increase the quantity of money, what 97 00:05:41,080 --> 00:05:44,760 Speaker 1: happens to its scarcity. It goes down, it becomes more abundant. 98 00:05:45,480 --> 00:05:48,160 Speaker 1: And so when we talk about prices, we normally are 99 00:05:48,240 --> 00:05:51,320 Speaker 1: denominating our prices in our money. But the way that 100 00:05:51,400 --> 00:05:54,200 Speaker 1: we talk about the value of money, we can't denominate 101 00:05:54,240 --> 00:05:56,640 Speaker 1: that in the prices because then it's self referential. And 102 00:05:56,680 --> 00:05:59,720 Speaker 1: so when we talk about the value of money, what 103 00:05:59,760 --> 00:06:03,640 Speaker 1: we're really saying is that the price of everything else 104 00:06:03,720 --> 00:06:07,600 Speaker 1: goes up when the value of money goes down. So 105 00:06:07,720 --> 00:06:12,000 Speaker 1: if money becomes extremely abundant, that means it takes more 106 00:06:12,120 --> 00:06:15,400 Speaker 1: money to get the same stuff. That means the value 107 00:06:15,400 --> 00:06:19,240 Speaker 1: of that money went down because the amount of stuff 108 00:06:19,279 --> 00:06:23,440 Speaker 1: that you can get for it goes down. You need 109 00:06:23,520 --> 00:06:25,880 Speaker 1: more money to get the same amount of stuff, so 110 00:06:25,960 --> 00:06:28,719 Speaker 1: the value of that money goes down. So in France, 111 00:06:28,720 --> 00:06:31,840 Speaker 1: back to France, UH, John Laws started printing a bunch 112 00:06:31,839 --> 00:06:36,280 Speaker 1: of paper currency and using that to UH to finance 113 00:06:36,560 --> 00:06:42,920 Speaker 1: his economic goals and plans. Well, obviously, what happens is 114 00:06:43,120 --> 00:06:46,080 Speaker 1: that currency loses value because there's more and more and 115 00:06:46,120 --> 00:06:49,560 Speaker 1: more paper money going around, So it loses its value 116 00:06:49,600 --> 00:06:51,200 Speaker 1: and people need more and more and more of it 117 00:06:51,279 --> 00:06:54,279 Speaker 1: to be able to afford stuff. So in order to 118 00:06:54,400 --> 00:06:58,600 Speaker 1: stop the value of of the currency from going down, 119 00:06:58,640 --> 00:07:00,679 Speaker 1: one thing you could do is stop printing. But clearly 120 00:07:00,960 --> 00:07:03,440 Speaker 1: this wasn't gonna happen with John Law. He needed to 121 00:07:03,440 --> 00:07:06,040 Speaker 1: print more of it to keep on spending money. So 122 00:07:06,120 --> 00:07:10,000 Speaker 1: he thought of another scheme. He thought of another scheme 123 00:07:10,120 --> 00:07:11,840 Speaker 1: to try and keep the value of this currency up. 124 00:07:12,360 --> 00:07:14,960 Speaker 1: This currency was backed by gold and silver, right, and 125 00:07:15,000 --> 00:07:17,480 Speaker 1: so he could get more gold and silver because then 126 00:07:17,960 --> 00:07:21,320 Speaker 1: it's you know, it's still backed by the exact same amount. 127 00:07:21,360 --> 00:07:24,400 Speaker 1: You're not backing the new currency with, uh, you know, 128 00:07:24,440 --> 00:07:27,080 Speaker 1: the same amount of gold. You back that new currency 129 00:07:27,160 --> 00:07:29,960 Speaker 1: with more gold and silver. But he already got all 130 00:07:29,960 --> 00:07:31,680 Speaker 1: the gold and silver, so that was out. But there 131 00:07:31,720 --> 00:07:34,120 Speaker 1: was a third thing that was backing up this currency, 132 00:07:34,520 --> 00:07:38,600 Speaker 1: the Mississippi Company. And so he realized it wasn't the 133 00:07:38,640 --> 00:07:41,880 Speaker 1: actual land, it was the shares of the company that 134 00:07:42,000 --> 00:07:46,920 Speaker 1: was backing up the currency. So he printed extra money 135 00:07:47,000 --> 00:07:50,120 Speaker 1: and he would use that to buy the shares of 136 00:07:50,160 --> 00:07:53,920 Speaker 1: the Mississippi Company on the open market to drive the 137 00:07:54,040 --> 00:07:58,520 Speaker 1: price higher. Well, as the price of those shares went up, well, 138 00:07:58,600 --> 00:08:01,720 Speaker 1: that means that the value you they're backing up the 139 00:08:01,760 --> 00:08:06,840 Speaker 1: currency also went up, and so there was less inflation 140 00:08:06,920 --> 00:08:10,680 Speaker 1: that happened because the value of the currency was worth more. Right, Well, 141 00:08:11,000 --> 00:08:14,600 Speaker 1: not so fast, because this would look like a free 142 00:08:14,640 --> 00:08:16,960 Speaker 1: lunch here. This would look like you could print value 143 00:08:16,960 --> 00:08:20,400 Speaker 1: into existence, and you can't. You can print money, but 144 00:08:20,480 --> 00:08:24,440 Speaker 1: you can't print wealth. And so what happened was people 145 00:08:24,480 --> 00:08:28,040 Speaker 1: started to realize that somebody was printing money to buy 146 00:08:28,240 --> 00:08:32,800 Speaker 1: shares of the Mississippi Company. So people started to sell 147 00:08:32,840 --> 00:08:36,880 Speaker 1: these shares. So instead of people buying something as they 148 00:08:36,960 --> 00:08:39,120 Speaker 1: watched the price go up and thinking it's a great deal. 149 00:08:39,600 --> 00:08:42,839 Speaker 1: The fact that the price was going up artificially meant 150 00:08:42,840 --> 00:08:47,040 Speaker 1: people decided to sell it because they knew they could 151 00:08:47,080 --> 00:08:48,920 Speaker 1: sell it right now at a higher price than it 152 00:08:49,000 --> 00:08:52,280 Speaker 1: was actually worth. Because if all that newly printed money 153 00:08:52,400 --> 00:08:54,200 Speaker 1: wasn't coming in to bid up the price, the price 154 00:08:54,240 --> 00:08:56,640 Speaker 1: would be a lot lower than it really than it 155 00:08:56,760 --> 00:08:59,959 Speaker 1: than it was right now. So that ironically gave people 156 00:09:00,080 --> 00:09:04,400 Speaker 1: the incentive and the ability to sell, because there was 157 00:09:04,440 --> 00:09:07,280 Speaker 1: a money printer coming in and buying up the shares 158 00:09:07,320 --> 00:09:10,040 Speaker 1: to try and drive the price higher. Um. One of 159 00:09:10,040 --> 00:09:14,720 Speaker 1: these people was Richard canty On. He recognized the flow 160 00:09:14,920 --> 00:09:17,959 Speaker 1: of money how things work, and so he sold shares 161 00:09:18,600 --> 00:09:22,520 Speaker 1: and uh and then he used his money to buy 162 00:09:22,640 --> 00:09:26,120 Speaker 1: what gold and silver. He recognized the currency was going 163 00:09:26,200 --> 00:09:28,959 Speaker 1: to collapse. This little Ponzi scheme of printing money to 164 00:09:29,040 --> 00:09:31,400 Speaker 1: drive up the shares couldn't last forever, and both were 165 00:09:31,400 --> 00:09:34,640 Speaker 1: gonna come crashing down and nobody would want either one anymore. 166 00:09:34,960 --> 00:09:37,160 Speaker 1: So he got rid of them both and exchanged him 167 00:09:37,200 --> 00:09:40,040 Speaker 1: for gold and silver, and he got wildly wealthy when 168 00:09:40,080 --> 00:09:44,920 Speaker 1: everything collapsed. So the path that new money takes this 169 00:09:45,000 --> 00:09:48,760 Speaker 1: is called the canty on effect. Uh. Basically, in basic terms, 170 00:09:49,040 --> 00:09:53,360 Speaker 1: new money hits the prices of assets first, then it 171 00:09:53,440 --> 00:09:56,880 Speaker 1: hits the prices of goods and services, then it hits wages. 172 00:09:57,360 --> 00:10:00,760 Speaker 1: This is the path that monetary policy hit. It's when 173 00:10:00,800 --> 00:10:03,600 Speaker 1: it goes through an economy. This is true of both 174 00:10:03,640 --> 00:10:08,440 Speaker 1: inflation and deflation. And so when new money is printed 175 00:10:08,440 --> 00:10:10,400 Speaker 1: and works its way throughout the economy, the first thing 176 00:10:10,440 --> 00:10:13,760 Speaker 1: that happens is asset prices respond. The second thing that 177 00:10:13,840 --> 00:10:16,440 Speaker 1: happens is good the prices of goods and services respond, 178 00:10:16,720 --> 00:10:18,760 Speaker 1: and then the third thing that lacks the most is 179 00:10:18,800 --> 00:10:23,600 Speaker 1: the prices of wages respond. Ironically, this is the exact 180 00:10:23,640 --> 00:10:26,520 Speaker 1: same path that deflation takes. So if you have a 181 00:10:26,559 --> 00:10:30,040 Speaker 1: bunch of money leave the system, the first thing that 182 00:10:30,080 --> 00:10:33,560 Speaker 1: will fall in price is the price of assets. The 183 00:10:33,600 --> 00:10:35,800 Speaker 1: second thing that will fall in price at the prices 184 00:10:35,800 --> 00:10:38,920 Speaker 1: of goods and services, and the third thing that will 185 00:10:38,960 --> 00:10:42,600 Speaker 1: fall in price is the price of wages. So if 186 00:10:42,640 --> 00:10:44,880 Speaker 1: we look at a period of time where there was 187 00:10:45,280 --> 00:10:48,920 Speaker 1: natural deflation, which is all of human history, actually, as 188 00:10:48,960 --> 00:10:51,640 Speaker 1: technology and wealth increases and the money supplies to these, 189 00:10:51,679 --> 00:10:56,080 Speaker 1: the same prices of everything go down. Um the canton 190 00:10:56,240 --> 00:11:00,240 Speaker 1: effects still exists asset prices first, then wages and and 191 00:11:00,400 --> 00:11:02,760 Speaker 1: services or I'm sorry, then goods and services, and then 192 00:11:02,800 --> 00:11:05,480 Speaker 1: finally wages. So when we look at a period time 193 00:11:05,480 --> 00:11:08,440 Speaker 1: where we have really good data from historically speaking, while 194 00:11:08,480 --> 00:11:11,840 Speaker 1: we also had natural deflation, a great period of time 195 00:11:12,360 --> 00:11:15,920 Speaker 1: to get this combination is about eighteen seventy because it's 196 00:11:15,960 --> 00:11:18,840 Speaker 1: after the Civil War through about nineteen ten because that's 197 00:11:18,840 --> 00:11:21,320 Speaker 1: before the creation of the Federal Reserve. So during this 198 00:11:21,320 --> 00:11:23,800 Speaker 1: period of time we had deflation. Pretty much every single year, 199 00:11:24,280 --> 00:11:30,199 Speaker 1: prices went down, but guess what the real wealth when 200 00:11:30,240 --> 00:11:35,880 Speaker 1: you adjust for hum for the deflation, real wealth and 201 00:11:35,960 --> 00:11:39,920 Speaker 1: real wages both went up. So this is how things worked. 202 00:11:40,320 --> 00:11:43,280 Speaker 1: You get paid, you know, a hundred dollars, that'd be 203 00:11:43,360 --> 00:11:45,400 Speaker 1: enough for you to survive. Let's say this month you 204 00:11:45,400 --> 00:11:47,079 Speaker 1: get paid a hundred bucks a month. That's enough for 205 00:11:47,120 --> 00:11:49,960 Speaker 1: you to survive this month. Next month you get paid 206 00:11:50,000 --> 00:11:54,760 Speaker 1: a hundred bucks again. But guess what, your your goods 207 00:11:54,760 --> 00:11:57,160 Speaker 1: and services got just a tad bit cheaper. You only 208 00:11:57,160 --> 00:12:00,560 Speaker 1: needs this month to be able to able to live, 209 00:12:01,200 --> 00:12:03,640 Speaker 1: so you spend yours. You've got a dollar left over. 210 00:12:04,600 --> 00:12:08,560 Speaker 1: Next month, you spend only eight dollars. You've got three 211 00:12:08,640 --> 00:12:11,240 Speaker 1: dollars now because the extra dollar from last month and 212 00:12:11,240 --> 00:12:14,400 Speaker 1: the extra two dollars from this month, And so as 213 00:12:14,440 --> 00:12:17,520 Speaker 1: time goes on, not only do you have extra money 214 00:12:17,600 --> 00:12:21,360 Speaker 1: left over from your income, but also the prior savings 215 00:12:21,800 --> 00:12:24,599 Speaker 1: go up in value, because eventually you're gonna save a 216 00:12:24,679 --> 00:12:27,680 Speaker 1: hundred bucks and you're gonna get up two hundred bucks 217 00:12:27,720 --> 00:12:30,600 Speaker 1: from your savings, and then you're gonna realize, hey, it 218 00:12:30,679 --> 00:12:32,520 Speaker 1: doesn't actually take me a hundred dollars to live for 219 00:12:32,559 --> 00:12:35,600 Speaker 1: a full month. It only takes me nine dollars to 220 00:12:35,600 --> 00:12:38,520 Speaker 1: live for a full month. So your savings grow and 221 00:12:38,559 --> 00:12:42,680 Speaker 1: purchasing power over time. Um, this is natural deflation. And 222 00:12:42,679 --> 00:12:45,640 Speaker 1: this is what happened throughout that entire you know, sixty 223 00:12:45,720 --> 00:12:50,559 Speaker 1: year period or so, is that prices went down. Wages 224 00:12:50,679 --> 00:12:54,440 Speaker 1: did go down, but not as fast as prices going down, 225 00:12:54,480 --> 00:12:57,960 Speaker 1: because the wages respond last. And so yes, maybe you 226 00:12:57,960 --> 00:12:59,800 Speaker 1: get a pay cup from a hundred dollars to ninety 227 00:12:59,840 --> 00:13:02,160 Speaker 1: nine dollars and the ninety eight dollars and the ninety s, 228 00:13:03,200 --> 00:13:06,200 Speaker 1: but before those pay cuts ever come around, your cost 229 00:13:06,240 --> 00:13:08,680 Speaker 1: of living has already gone down, and so you've already 230 00:13:08,679 --> 00:13:12,959 Speaker 1: been able to save while the prices were low. Before 231 00:13:13,000 --> 00:13:16,120 Speaker 1: you got your pay cut. So this is natural, natural 232 00:13:16,120 --> 00:13:20,880 Speaker 1: deflation that takes place across time, and this is the 233 00:13:20,960 --> 00:13:24,400 Speaker 1: Cantyon effect. This is that that's how it's described, is 234 00:13:24,440 --> 00:13:30,240 Speaker 1: that when the money supply changes relative to goods and services, 235 00:13:30,800 --> 00:13:35,760 Speaker 1: the effect of it works its way unevenly and uh 236 00:13:35,960 --> 00:13:39,640 Speaker 1: systematically through the economy and hits different areas first. And 237 00:13:39,679 --> 00:13:41,679 Speaker 1: you can see how this would be a massive benefit 238 00:13:41,720 --> 00:13:45,800 Speaker 1: for society. How the people who earn the least have 239 00:13:45,960 --> 00:13:49,480 Speaker 1: the ability to continue to get ahead every year, and 240 00:13:49,840 --> 00:13:52,800 Speaker 1: how how it works its way through and people who 241 00:13:53,160 --> 00:13:56,160 Speaker 1: earn wages earn more and more in real terms year 242 00:13:56,200 --> 00:13:58,760 Speaker 1: after year, and savings people are able to save a 243 00:13:58,840 --> 00:14:01,760 Speaker 1: little bit can grow the purchasing power of those savings. 244 00:14:02,440 --> 00:14:05,679 Speaker 1: Um how this would be a huge benefit for society. 245 00:14:05,720 --> 00:14:08,679 Speaker 1: And it doesn't matter if prices go down because wages 246 00:14:08,720 --> 00:14:11,079 Speaker 1: respond last, and so you want prices to go down. 247 00:14:11,160 --> 00:14:13,920 Speaker 1: This makes living easier for the people who are relying 248 00:14:14,080 --> 00:14:16,640 Speaker 1: on wages to be able to live, who are relying 249 00:14:16,640 --> 00:14:18,200 Speaker 1: on a little bit of savings to be able to 250 00:14:18,520 --> 00:14:21,280 Speaker 1: UH to be able to live. And so the canty 251 00:14:21,360 --> 00:14:24,080 Speaker 1: On effect works this way throughout inflation, throughout deflation. But 252 00:14:24,160 --> 00:14:27,240 Speaker 1: it also works this way through inflation. And so if 253 00:14:27,240 --> 00:14:30,240 Speaker 1: the money supply goes up relative to everything else, the 254 00:14:30,280 --> 00:14:32,520 Speaker 1: first thing it does is asset prices, then goes and 255 00:14:32,600 --> 00:14:36,760 Speaker 1: services then wages. And so what we're gonna do now 256 00:14:36,840 --> 00:14:39,640 Speaker 1: is look at how this how this unfolded over the 257 00:14:39,720 --> 00:14:42,760 Speaker 1: last couple of years. Went into this briefly on my 258 00:14:42,880 --> 00:14:45,560 Speaker 1: YouTube channel recently, and so we're going to kind of 259 00:14:45,600 --> 00:14:47,760 Speaker 1: take a deep dive here and look at the look 260 00:14:47,760 --> 00:14:52,240 Speaker 1: at the details. So in February and March of that's 261 00:14:52,240 --> 00:14:56,480 Speaker 1: when the federal reserves started printing money extremely quickly. Uh 262 00:14:56,480 --> 00:15:00,000 Speaker 1: they printed a few trillion dollars just in those uh 263 00:15:00,000 --> 00:15:07,880 Speaker 1: couple of months. Remember this is March when everything everything 264 00:15:07,920 --> 00:15:11,200 Speaker 1: blew up. Now, if we take a look at, for instance, 265 00:15:11,240 --> 00:15:14,960 Speaker 1: the stock market UM in February, it was about February 266 00:15:15,560 --> 00:15:17,720 Speaker 1: I believe, was the top of the stock market in 267 00:15:18,880 --> 00:15:22,680 Speaker 1: and it started to crash extremely rapidly and bottomed out 268 00:15:22,760 --> 00:15:26,640 Speaker 1: on the twenty three of March. So in one month 269 00:15:27,120 --> 00:15:30,040 Speaker 1: UM there was a massive collapse. The SMP five hundred 270 00:15:30,480 --> 00:15:34,800 Speaker 1: fell down from peak to bottom about thirty five in 271 00:15:34,960 --> 00:15:40,800 Speaker 1: one month. The money printer turned on in March of 272 00:15:41,960 --> 00:15:45,480 Speaker 1: few trillion dollars printed just in those couple of months. 273 00:15:46,280 --> 00:15:51,680 Speaker 1: The market bottomed in March of so the market bottomed 274 00:15:51,720 --> 00:15:56,880 Speaker 1: when the money printer turned on. Subsequent to that, the 275 00:15:56,960 --> 00:16:05,120 Speaker 1: stock market rallied from March of through December. So the 276 00:16:05,240 --> 00:16:08,360 Speaker 1: stock market went up for over a year and a half, 277 00:16:09,120 --> 00:16:11,200 Speaker 1: and there was a very quick rally in the stock 278 00:16:11,280 --> 00:16:17,120 Speaker 1: market from that March of bottom through about August. Through 279 00:16:17,160 --> 00:16:21,080 Speaker 1: a couple of months, it recovered everything that it lost 280 00:16:21,400 --> 00:16:26,040 Speaker 1: from that one month drop. Now if we look at 281 00:16:26,080 --> 00:16:30,480 Speaker 1: what the money supply did, the money supply increased by 282 00:16:30,600 --> 00:16:33,320 Speaker 1: the few trillion dollars in those first couple of months, 283 00:16:33,760 --> 00:16:41,120 Speaker 1: and then it continued to increase until December. So from 284 00:16:41,200 --> 00:16:46,360 Speaker 1: March of December one, the money supply continued to increase. 285 00:16:48,000 --> 00:16:54,800 Speaker 1: From March of through December of the stock market also 286 00:16:54,920 --> 00:17:00,480 Speaker 1: continued to increase. The exact same time frame from bottom 287 00:17:00,560 --> 00:17:04,040 Speaker 1: to top of stock market was the exact same time 288 00:17:04,040 --> 00:17:06,440 Speaker 1: frame from when the money printer fired up to when 289 00:17:06,440 --> 00:17:13,879 Speaker 1: the money printer stopped again. The dates marchmb That is 290 00:17:13,880 --> 00:17:17,320 Speaker 1: a time frame in which the money supply was expanding rapidly. 291 00:17:17,720 --> 00:17:22,919 Speaker 1: It started in March and it ended in December. Go 292 00:17:23,000 --> 00:17:25,159 Speaker 1: look at the money supply. It's called M two. You 293 00:17:25,160 --> 00:17:28,360 Speaker 1: can find it on the Federal Reserves website Fred dot St. 294 00:17:28,440 --> 00:17:32,640 Speaker 1: Louis Fed dot org. Fred dot St. Louis fed dot org. 295 00:17:33,440 --> 00:17:36,280 Speaker 1: You can search for M two money supply. You can 296 00:17:36,320 --> 00:17:40,320 Speaker 1: see the money supply started increasing in March and it 297 00:17:40,600 --> 00:17:44,480 Speaker 1: stopped increasing, and it has moved sideways since then, since December. 298 00:17:46,200 --> 00:17:49,040 Speaker 1: That is the exact same time frame in which the 299 00:17:49,119 --> 00:17:53,040 Speaker 1: stock market rallied. That's when it started its rally at 300 00:17:53,040 --> 00:17:55,240 Speaker 1: the bottom of the crash, and that's when it ended 301 00:17:55,280 --> 00:17:59,080 Speaker 1: its rally at the top of the rally. So asset 302 00:17:59,119 --> 00:18:04,320 Speaker 1: prices respond and immediately to the money supply. That's the 303 00:18:04,359 --> 00:18:07,000 Speaker 1: first thing that happens. Now you might be asking, Okay, 304 00:18:07,000 --> 00:18:15,120 Speaker 1: what happened from December of until now? Money supply stopped increasing, 305 00:18:15,480 --> 00:18:20,280 Speaker 1: It moved sideways, It did not increase at all. What 306 00:18:20,400 --> 00:18:24,240 Speaker 1: happened to stocks, Well, they fell. As of the date 307 00:18:24,280 --> 00:18:30,399 Speaker 1: of this recording, November twenty nine, the S ANDP is 308 00:18:30,480 --> 00:18:34,920 Speaker 1: down seventeen from the top in December of last year. 309 00:18:35,359 --> 00:18:38,240 Speaker 1: Over the last year too. Right now it is down 310 00:18:38,280 --> 00:18:43,080 Speaker 1: about sevent So you might think that that's odd that 311 00:18:43,160 --> 00:18:46,879 Speaker 1: when the money supply increases, the stock market increases. But 312 00:18:46,960 --> 00:18:51,199 Speaker 1: with the money supply just stays the same, because in 313 00:18:51,240 --> 00:18:55,920 Speaker 1: December the money supply was twenty one three trillion dollars 314 00:18:56,760 --> 00:18:59,960 Speaker 1: as a recording, Today the money supply is twenty one 315 00:19:00,200 --> 00:19:04,200 Speaker 1: point three trillion dollars exactly the same. However, the stock 316 00:19:04,240 --> 00:19:07,280 Speaker 1: market has declined. I can explain that it's very simple. 317 00:19:07,880 --> 00:19:11,800 Speaker 1: Most people speculate on investments. Most people are not buying 318 00:19:11,880 --> 00:19:15,640 Speaker 1: and only buying and holding for life. And so when 319 00:19:15,720 --> 00:19:21,360 Speaker 1: you have people money buying something as an investment as 320 00:19:21,400 --> 00:19:26,280 Speaker 1: a speculation, they expect that it will go up in price, 321 00:19:26,680 --> 00:19:29,080 Speaker 1: It will go up in value. That is why people 322 00:19:29,119 --> 00:19:33,119 Speaker 1: buy it. What do you think will happen when it 323 00:19:33,280 --> 00:19:38,520 Speaker 1: stops going up? While people will sell it? So if 324 00:19:38,560 --> 00:19:41,159 Speaker 1: everything is if the stock market is going up because 325 00:19:41,200 --> 00:19:44,560 Speaker 1: there's more money entering the system, there the money supplies 326 00:19:44,600 --> 00:19:48,160 Speaker 1: going up, there's more money entering the system, more money 327 00:19:48,240 --> 00:19:51,800 Speaker 1: to buy stocks, keeping prices going up. Well, then what 328 00:19:51,880 --> 00:19:56,320 Speaker 1: would happen when when the money stops growing Well, now 329 00:19:56,640 --> 00:20:00,840 Speaker 1: there's no more new money available to continue to push 330 00:20:00,880 --> 00:20:04,440 Speaker 1: prices even higher. So the prices then at that point 331 00:20:04,480 --> 00:20:09,320 Speaker 1: would just stop going up and start moving sideways. But 332 00:20:09,400 --> 00:20:12,600 Speaker 1: because most investors are speculators and their only reason they're 333 00:20:12,640 --> 00:20:16,359 Speaker 1: buying stocks is because stocks would go up. Then who's 334 00:20:16,359 --> 00:20:18,719 Speaker 1: going to hold onto stocks when they just stopped going 335 00:20:18,800 --> 00:20:22,320 Speaker 1: up and move sideways? Not as many people. That would 336 00:20:22,359 --> 00:20:25,120 Speaker 1: mean that those people have no reason to own it anymore. 337 00:20:25,200 --> 00:20:28,119 Speaker 1: So they will sell it because if it's not making 338 00:20:28,160 --> 00:20:29,720 Speaker 1: them money anymore, I'm going to sell it and go 339 00:20:29,760 --> 00:20:32,600 Speaker 1: try and find a different way to make money. So 340 00:20:32,680 --> 00:20:35,560 Speaker 1: they sell it. What happens when all those previous buyers 341 00:20:35,560 --> 00:20:38,679 Speaker 1: turn into sellers now, well, now the price drops, and 342 00:20:38,720 --> 00:20:42,239 Speaker 1: the dropping price prompts even more sellers, and so on 343 00:20:42,280 --> 00:20:45,080 Speaker 1: and so forth. And so when you have the money 344 00:20:45,200 --> 00:20:49,560 Speaker 1: supply increase stop and now the money supply stays the same, 345 00:20:50,200 --> 00:20:54,760 Speaker 1: asset prices will actually drop. They won't just move sideways 346 00:20:54,800 --> 00:20:57,000 Speaker 1: because the very fact that the asset prices are not 347 00:20:57,040 --> 00:20:59,760 Speaker 1: going up anymore causes them to go down because nobody 348 00:20:59,760 --> 00:21:02,840 Speaker 1: wants to hold them anymore. So we see that asset 349 00:21:02,880 --> 00:21:07,320 Speaker 1: prices respond immediately to what the money supply does. Money 350 00:21:07,320 --> 00:21:11,600 Speaker 1: supply goes up, asset prices go up, money supply stops 351 00:21:11,640 --> 00:21:17,200 Speaker 1: going up, Asset prices go down immediately. March of December, 352 00:21:18,400 --> 00:21:22,720 Speaker 1: you can see this clear as day. Now, what happens 353 00:21:22,760 --> 00:21:26,200 Speaker 1: to the prices of goods and services, while they don't 354 00:21:26,280 --> 00:21:29,359 Speaker 1: respond immediately. Remember, like I said, the money supply, this 355 00:21:29,400 --> 00:21:32,600 Speaker 1: is the Cantyon effect. It hits asset prices first and 356 00:21:32,760 --> 00:21:37,280 Speaker 1: then goods and services respond after that. Well, how long 357 00:21:37,320 --> 00:21:40,119 Speaker 1: of a lag. Let's go back and take a look. 358 00:21:40,640 --> 00:21:43,199 Speaker 1: You can go and look at these exact same charts 359 00:21:43,280 --> 00:21:46,719 Speaker 1: as me. We're going to the BLS to look at 360 00:21:46,760 --> 00:21:51,080 Speaker 1: the inflation numbers, and what you'll see is a chart. 361 00:21:51,200 --> 00:21:54,520 Speaker 1: So the website that we're at, we're just googling cp 362 00:21:54,560 --> 00:21:56,480 Speaker 1: I chart and you're looking for the one from the BLS. 363 00:21:56,680 --> 00:21:59,879 Speaker 1: So the u r L is gonna be b b 364 00:22:00,280 --> 00:22:03,000 Speaker 1: l S Bureau of Labor Statistics b LS dot Gov 365 00:22:03,119 --> 00:22:07,680 Speaker 1: slash charts, uh slash Consumer Price Index something like that, 366 00:22:07,760 --> 00:22:09,439 Speaker 1: So that's the one that you're looking for when you 367 00:22:09,480 --> 00:22:12,280 Speaker 1: google this. What you'll see is we're going to look 368 00:22:12,320 --> 00:22:14,720 Speaker 1: at a baseline for inflation. So I know these aren't 369 00:22:14,800 --> 00:22:18,840 Speaker 1: actually accurate, but they're consistent in terms of the way 370 00:22:18,880 --> 00:22:21,880 Speaker 1: that they're measured recently in the past, you know, decade 371 00:22:21,960 --> 00:22:25,280 Speaker 1: or so um. And so when we look at seventeen 372 00:22:25,720 --> 00:22:29,239 Speaker 1: and eighteen and twenty nineteen, we're going to see an 373 00:22:29,280 --> 00:22:33,120 Speaker 1: average inflation rate of two two and a half percent, 374 00:22:33,680 --> 00:22:35,720 Speaker 1: sometimes a little lower than two percent, sometimes a little 375 00:22:35,760 --> 00:22:38,360 Speaker 1: higher than two percents. Let's just say two percent from 376 00:22:38,720 --> 00:22:42,640 Speaker 1: seventeen through nineteen, and even if we go back further 377 00:22:42,720 --> 00:22:48,760 Speaker 1: than that, in the years of mostly it's around two percent. 378 00:22:48,840 --> 00:22:51,720 Speaker 1: In twenty eleven, it was a little higher, in fifteen 379 00:22:51,800 --> 00:22:54,679 Speaker 1: it was a little bit lower. And so really for 380 00:22:54,760 --> 00:22:58,240 Speaker 1: the last over the last the decade preceding COVID, it 381 00:22:58,400 --> 00:23:03,000 Speaker 1: was it was right around two percent. Uh the inflation rate. Officially. 382 00:23:03,040 --> 00:23:05,119 Speaker 1: I'm not saying that that's the real rate of inflation. 383 00:23:05,160 --> 00:23:07,800 Speaker 1: I know it's a lot higher than that for most people. Um. 384 00:23:07,840 --> 00:23:09,960 Speaker 1: And so this is just the official numbers, and they've 385 00:23:09,960 --> 00:23:12,600 Speaker 1: been measured consistently at least during that time frame. So 386 00:23:12,840 --> 00:23:14,639 Speaker 1: it doesn't matter if they're accurate. What matters is that 387 00:23:14,640 --> 00:23:22,320 Speaker 1: they're consistent. So what happened then, in well marchs they 388 00:23:22,320 --> 00:23:27,280 Speaker 1: start printing a ton of money. Would you expect asset 389 00:23:27,440 --> 00:23:30,120 Speaker 1: or prices of goods and services the actual inflation rate 390 00:23:30,119 --> 00:23:33,120 Speaker 1: the c p I Would you expect that to react immediately? 391 00:23:33,960 --> 00:23:36,119 Speaker 1: Most people would, But now we know due to the 392 00:23:36,160 --> 00:23:40,159 Speaker 1: Canton effect, it doesn't happen immediately. Asset prices get hit 393 00:23:40,200 --> 00:23:43,640 Speaker 1: immediately and there's a lack So how much of a lag? Well, 394 00:23:43,680 --> 00:23:48,320 Speaker 1: if we look at March of inflation was one April 395 00:23:48,560 --> 00:23:53,480 Speaker 1: point three percent, May point one percent, June point six percent, 396 00:23:54,000 --> 00:23:59,360 Speaker 1: July one percent, uh, August one point three percent. Uh, 397 00:23:59,640 --> 00:24:04,399 Speaker 1: just October one percent, November one, December one point four percent. 398 00:24:04,640 --> 00:24:07,200 Speaker 1: And I'm skipping some months here because the mouse that's 399 00:24:07,240 --> 00:24:09,800 Speaker 1: having I'm having a hard time hovering over the exact 400 00:24:09,880 --> 00:24:12,040 Speaker 1: number here. So where do we have to go to 401 00:24:12,080 --> 00:24:15,119 Speaker 1: even get back to baseline? We have to get all 402 00:24:15,119 --> 00:24:19,200 Speaker 1: the way to March of one to get to two 403 00:24:19,200 --> 00:24:22,560 Speaker 1: point six percent. February was one point seven percent, so 404 00:24:22,720 --> 00:24:26,399 Speaker 1: March two point six percent, So we had a drop 405 00:24:26,440 --> 00:24:28,879 Speaker 1: in the inflation rate, and just to get back to 406 00:24:29,000 --> 00:24:32,720 Speaker 1: even two point six percent, it took us a full year. 407 00:24:33,160 --> 00:24:37,239 Speaker 1: We're already at March of and the inflation rate is 408 00:24:37,320 --> 00:24:40,320 Speaker 1: still only at two two point six percent, just back 409 00:24:40,320 --> 00:24:44,119 Speaker 1: to what it was originally for the prior ten years. 410 00:24:45,920 --> 00:24:48,399 Speaker 1: So we've are we a year ago at this point 411 00:24:48,480 --> 00:24:52,800 Speaker 1: we had printed trillions of dollars. Asset prices have already 412 00:24:52,800 --> 00:24:55,480 Speaker 1: been on a year long bull run at this point, 413 00:24:55,760 --> 00:24:59,280 Speaker 1: a year long bull run trillions of dollars, and still 414 00:24:59,320 --> 00:25:02,120 Speaker 1: a year later the c p I was still reading 415 00:25:02,359 --> 00:25:07,400 Speaker 1: two point six percent. Now at this point it takes 416 00:25:07,400 --> 00:25:11,560 Speaker 1: off like a rocket. We go to April four point 417 00:25:11,640 --> 00:25:14,560 Speaker 1: two percent. We'll remember we're in one now. So this 418 00:25:14,760 --> 00:25:17,240 Speaker 1: over a year after COVID started, after the layoffs, and 419 00:25:17,440 --> 00:25:20,919 Speaker 1: i'm sorry, the lockdowns and the stimulus checks and the 420 00:25:20,920 --> 00:25:23,360 Speaker 1: printing of the money and all the corruption and all that. 421 00:25:23,640 --> 00:25:28,680 Speaker 1: So we were in April one now four percent, May five, 422 00:25:29,960 --> 00:25:34,320 Speaker 1: June five percent, July five point four, August five point three, 423 00:25:34,400 --> 00:25:37,760 Speaker 1: September five point four, and then October six point two, 424 00:25:38,080 --> 00:25:45,520 Speaker 1: November six eight, December seven percent. So if it was 425 00:25:45,560 --> 00:25:47,760 Speaker 1: going to be exactly in line with the stock market, 426 00:25:48,200 --> 00:25:51,360 Speaker 1: which is not, we know that. But December one would 427 00:25:51,359 --> 00:25:53,960 Speaker 1: have been the end of inflation, right, But no, keeps 428 00:25:54,000 --> 00:25:57,240 Speaker 1: on keeps on going. So January seven and a half percent, 429 00:25:57,359 --> 00:25:59,320 Speaker 1: March of this year eight and a half percent. It 430 00:25:59,440 --> 00:26:03,200 Speaker 1: peaked so far in June of this year at nine 431 00:26:03,400 --> 00:26:07,120 Speaker 1: point one percent. By June of this year, when the 432 00:26:07,240 --> 00:26:11,320 Speaker 1: CPI the cost of goods and services going up, was 433 00:26:11,400 --> 00:26:15,399 Speaker 1: peaking at nine the stock market had already been in 434 00:26:15,400 --> 00:26:20,080 Speaker 1: a six month bear market at this point so stocks 435 00:26:20,080 --> 00:26:22,240 Speaker 1: have been going down for six months at this point 436 00:26:22,560 --> 00:26:26,560 Speaker 1: when inflation is still peaking. Now fast forward to the 437 00:26:26,600 --> 00:26:29,440 Speaker 1: October numbers because the November numbers aren't in yet. As 438 00:26:29,440 --> 00:26:33,320 Speaker 1: of the time of this recording. October two, last month 439 00:26:33,520 --> 00:26:38,000 Speaker 1: inflation was seven point seven percent. At this point, the 440 00:26:38,080 --> 00:26:43,240 Speaker 1: stock market in October of two UM was down a 441 00:26:43,240 --> 00:26:46,679 Speaker 1: lot more than it is right now at UM at 442 00:26:46,720 --> 00:26:51,879 Speaker 1: the bottom. It was down from its top, and so 443 00:26:52,400 --> 00:26:56,359 Speaker 1: asset prices continued to fall as a result of being 444 00:26:56,560 --> 00:26:59,639 Speaker 1: a year out almost from the money supply ceasing to 445 00:26:59,720 --> 00:27:03,400 Speaker 1: increase east But that money is still working its way 446 00:27:03,440 --> 00:27:08,600 Speaker 1: throughout the real economy, hitting goods and services. So what 447 00:27:08,680 --> 00:27:12,280 Speaker 1: we see here is about a one year lag. Remember 448 00:27:12,280 --> 00:27:17,600 Speaker 1: the money printing started in March of the prices didn't 449 00:27:17,680 --> 00:27:22,960 Speaker 1: even get back to normal until March of then they 450 00:27:23,040 --> 00:27:27,280 Speaker 1: started to skyrocket from there. And so when we see 451 00:27:27,320 --> 00:27:31,480 Speaker 1: that the inflation rate of goods and services has about 452 00:27:31,480 --> 00:27:36,080 Speaker 1: a one year lag, where does that put us today? Well, 453 00:27:36,240 --> 00:27:39,439 Speaker 1: let's go back to the money supply. When did the 454 00:27:39,480 --> 00:27:47,200 Speaker 1: money supply stop increasing. It was December of The money 455 00:27:47,200 --> 00:27:50,639 Speaker 1: supply in December of one was twenty two and a 456 00:27:50,720 --> 00:27:55,280 Speaker 1: half trillion dollars today, the money supply is twenty one 457 00:27:55,320 --> 00:27:59,320 Speaker 1: and a half trillion dollars, so the money supply has 458 00:27:59,359 --> 00:28:05,240 Speaker 1: moved sideways since then. Now does that mean that we're 459 00:28:05,960 --> 00:28:08,679 Speaker 1: one month away? Because it's almost December, So does that 460 00:28:08,720 --> 00:28:13,240 Speaker 1: mean we're one month away from inflation stopping. Probably not, 461 00:28:14,280 --> 00:28:17,360 Speaker 1: but it does mean that within the next couple of months, 462 00:28:17,400 --> 00:28:22,520 Speaker 1: I anticipate the inflation rate to come wildly crashing down, 463 00:28:23,040 --> 00:28:26,520 Speaker 1: maybe not zero, but a lot lower than seven and 464 00:28:26,560 --> 00:28:32,080 Speaker 1: eight percent. Why is that there's not enough new money 465 00:28:32,440 --> 00:28:37,000 Speaker 1: circulating around to continue to support higher and higher and 466 00:28:37,119 --> 00:28:40,600 Speaker 1: higher prices. We are starting to see job layoffs, we 467 00:28:40,640 --> 00:28:42,840 Speaker 1: are starting to see pay cuts, we are starting to 468 00:28:42,880 --> 00:28:45,400 Speaker 1: see furloughs, we are starting to see discounts, We're starting 469 00:28:45,400 --> 00:28:49,640 Speaker 1: to see inventory skyrockets. So all of the measures being 470 00:28:49,760 --> 00:28:53,560 Speaker 1: used to measure prices are start are going to start 471 00:28:53,600 --> 00:28:58,040 Speaker 1: to see year over year inflation come down because there's 472 00:28:58,320 --> 00:29:01,480 Speaker 1: there hasn't been for almost a year now. There has 473 00:29:01,560 --> 00:29:05,360 Speaker 1: not been new money continually pouring in to support higher 474 00:29:05,360 --> 00:29:08,640 Speaker 1: and higher prices. The money supply has stayed the same, 475 00:29:09,600 --> 00:29:11,800 Speaker 1: and so when we measure prices right now versus a 476 00:29:11,880 --> 00:29:14,520 Speaker 1: year ago, because that's how inflation is measured is year 477 00:29:14,560 --> 00:29:16,800 Speaker 1: over year, we're going to start to see that prices 478 00:29:16,840 --> 00:29:18,840 Speaker 1: are going to flatline. Now, there are some things that 479 00:29:18,880 --> 00:29:22,040 Speaker 1: prices have gone up in, certainly still and we'll continue 480 00:29:22,080 --> 00:29:24,200 Speaker 1: to go up in. There are also some things that 481 00:29:24,240 --> 00:29:27,840 Speaker 1: prices have started to go down in. So on average, 482 00:29:28,080 --> 00:29:31,960 Speaker 1: the basket that's being measured for the c p I 483 00:29:32,040 --> 00:29:34,560 Speaker 1: will very likely within the next month, two months, maybe 484 00:29:34,560 --> 00:29:38,600 Speaker 1: three months, start to show prices flatlining. Now you might 485 00:29:38,600 --> 00:29:41,360 Speaker 1: look at the stock market and say, okay, well, if 486 00:29:41,400 --> 00:29:44,080 Speaker 1: we've got a year lag behind the stock market, what 487 00:29:44,120 --> 00:29:48,600 Speaker 1: the stock market does, would we expect deflation? Then soon? 488 00:29:49,160 --> 00:29:51,480 Speaker 1: Would we expect the prices of goods and services to 489 00:29:51,520 --> 00:29:54,640 Speaker 1: start to crash here soon, just like the stock market crashed. 490 00:29:54,920 --> 00:29:58,200 Speaker 1: And to that I would say most likely, No. Why 491 00:29:58,320 --> 00:30:02,920 Speaker 1: is that? Well, stock fall when they stopped going up, 492 00:30:02,960 --> 00:30:06,520 Speaker 1: precisely because they stopped going up. So you don't really 493 00:30:06,560 --> 00:30:09,960 Speaker 1: have anybody who's buying stocks just to watch them stay 494 00:30:09,960 --> 00:30:13,280 Speaker 1: the same. You have people buying stocks in anticipation that 495 00:30:13,360 --> 00:30:16,040 Speaker 1: they go up in price, and so when the stocks 496 00:30:16,040 --> 00:30:18,360 Speaker 1: stopped going up in price, people start to sell them. 497 00:30:18,800 --> 00:30:21,480 Speaker 1: But that doesn't really happen for goods and services. You 498 00:30:21,480 --> 00:30:24,640 Speaker 1: don't want to have people going to the grocery store 499 00:30:24,640 --> 00:30:28,240 Speaker 1: looking at eggs and thinking, well, man, eggs are not 500 00:30:28,320 --> 00:30:31,280 Speaker 1: going up in price anymore. I guess I should go 501 00:30:31,440 --> 00:30:35,320 Speaker 1: start a chicken farm and start selling eggs. Like that, 502 00:30:35,400 --> 00:30:39,280 Speaker 1: You don't have a mechanism by which goods and services 503 00:30:39,480 --> 00:30:43,240 Speaker 1: will drop in price just simply from the phenomenon of 504 00:30:43,280 --> 00:30:47,760 Speaker 1: them stopping going up in price, whereas that does happen 505 00:30:48,120 --> 00:30:51,760 Speaker 1: with stocks, and so for goods and services, the stuff 506 00:30:51,800 --> 00:30:54,160 Speaker 1: that's being measured by the c P, I we have 507 00:30:54,360 --> 00:30:58,920 Speaker 1: a very high likelihood that the inflation rate, the official 508 00:30:59,200 --> 00:31:02,360 Speaker 1: measured inflation rate, will come crashing down within the next 509 00:31:02,360 --> 00:31:07,000 Speaker 1: couple of months. Definitely, in my opinion, this is, you know, 510 00:31:07,080 --> 00:31:09,080 Speaker 1: going out on a little bit of a limb. I 511 00:31:09,120 --> 00:31:12,280 Speaker 1: would say by March, I would not be surprised at 512 00:31:12,320 --> 00:31:17,520 Speaker 1: all to see a zero percent inflation reading. I would 513 00:31:17,560 --> 00:31:19,720 Speaker 1: not be surprised at all to see that. Now, we 514 00:31:19,800 --> 00:31:22,360 Speaker 1: probably won't hit that low simply because there are some 515 00:31:22,440 --> 00:31:27,920 Speaker 1: other things with supply chain issues, geopolitical issues, deglobalization going on. 516 00:31:28,040 --> 00:31:31,000 Speaker 1: There are some other inflationary forces that are keeping some 517 00:31:31,040 --> 00:31:36,480 Speaker 1: things that are measured going up. However, I anticipate that 518 00:31:36,520 --> 00:31:40,400 Speaker 1: the inflation rate will start to move down very rapidly 519 00:31:40,640 --> 00:31:44,360 Speaker 1: over the next couple of months. Now, what does this 520 00:31:44,520 --> 00:31:49,360 Speaker 1: mean for UH four wages. Well, wages are still in 521 00:31:49,440 --> 00:31:51,960 Speaker 1: many areas kind of catching up. There's still a little 522 00:31:51,960 --> 00:31:54,239 Speaker 1: bit of a job turn thing going on. But in 523 00:31:54,280 --> 00:31:59,880 Speaker 1: the places that are most quickly responding to UM et 524 00:32:00,000 --> 00:32:04,360 Speaker 1: ponomic changes happening, things like technology, especially some of the 525 00:32:04,400 --> 00:32:08,000 Speaker 1: more bubbly areas, we're starting to see the reversal of 526 00:32:08,080 --> 00:32:12,520 Speaker 1: that happened. We're seeing layoffs all over tech, obviously crypto 527 00:32:12,680 --> 00:32:14,680 Speaker 1: right now. UM we're seeing a lot of things like 528 00:32:14,720 --> 00:32:17,440 Speaker 1: that take place, where like and then with places like 529 00:32:17,680 --> 00:32:21,440 Speaker 1: Amazon and FedEx, we're seeing UH furloughs take place, We're 530 00:32:21,440 --> 00:32:25,040 Speaker 1: seeing layoffs take place, We're seeing UM people being asked 531 00:32:25,080 --> 00:32:29,040 Speaker 1: to take pay cuts in certain areas in tech, and 532 00:32:29,080 --> 00:32:31,680 Speaker 1: so we're seeing some areas that are kind of leading 533 00:32:31,880 --> 00:32:37,280 Speaker 1: in the economy indicate that this wage price spiral of 534 00:32:37,320 --> 00:32:41,760 Speaker 1: everything going up might be starting to reverse itself. Now, luckily, 535 00:32:41,960 --> 00:32:45,640 Speaker 1: this takes a lot longer for that to happen than 536 00:32:46,160 --> 00:32:50,120 Speaker 1: UH than either assets or goods and services, and so 537 00:32:50,600 --> 00:32:53,720 Speaker 1: people on on average will be able to continue to 538 00:32:53,760 --> 00:32:57,680 Speaker 1: maintain their incomes enough to hopefully take advantage of some 539 00:32:57,720 --> 00:33:00,600 Speaker 1: of the lower prices of things as price has come down. 540 00:33:01,520 --> 00:33:04,080 Speaker 1: But here is the thing that I'm most concerned about, 541 00:33:04,200 --> 00:33:05,800 Speaker 1: and the last thing that we're going to talk about 542 00:33:05,840 --> 00:33:09,840 Speaker 1: today is the Fed's response to to to inflation coming down, 543 00:33:10,560 --> 00:33:14,440 Speaker 1: because we know there's some economic pain all around. Households 544 00:33:14,440 --> 00:33:18,520 Speaker 1: are hurting, leverage is going up, debtloads are going up. 545 00:33:19,440 --> 00:33:22,280 Speaker 1: We're gonna probably start to see more and more layoffs happen, 546 00:33:22,560 --> 00:33:25,320 Speaker 1: unemployment go up, So we know that there's going to 547 00:33:25,400 --> 00:33:27,720 Speaker 1: be some economic pain. This is a result of the 548 00:33:27,720 --> 00:33:30,280 Speaker 1: boom bus cycle, which is a result of the money printing. 549 00:33:31,240 --> 00:33:35,120 Speaker 1: So my fear is that we are going to have 550 00:33:35,680 --> 00:33:38,120 Speaker 1: inflation over the next couple of months crash back down 551 00:33:38,200 --> 00:33:45,440 Speaker 1: to zero. January February, CPI readings hit one. If that happens, 552 00:33:45,680 --> 00:33:48,760 Speaker 1: the Federal Reserve is going to start running victory laps. 553 00:33:49,600 --> 00:33:52,600 Speaker 1: They're gonna start saying we did our job, we achieved 554 00:33:52,640 --> 00:33:55,320 Speaker 1: a soft landing. They're even going to be able to 555 00:33:55,360 --> 00:33:58,920 Speaker 1: say we did it without causing a recession, right because 556 00:33:58,920 --> 00:34:04,360 Speaker 1: if you remember, they redefined what recession? How what what 557 00:34:04,640 --> 00:34:07,960 Speaker 1: the definition of a recession? Because everybody always used to 558 00:34:07,960 --> 00:34:12,240 Speaker 1: say that to consecutive quarters of a decline in GDP 559 00:34:12,440 --> 00:34:15,640 Speaker 1: counted as a recession. That means the basically a total 560 00:34:15,680 --> 00:34:17,719 Speaker 1: price of the economy, everything in the economy added up 561 00:34:17,760 --> 00:34:20,800 Speaker 1: all together. If that number goes down for two quarters 562 00:34:20,840 --> 00:34:23,560 Speaker 1: in a row, so six months, then we call it 563 00:34:23,560 --> 00:34:27,920 Speaker 1: a recession. Well then that happened, and suddenly everybody in 564 00:34:27,960 --> 00:34:29,920 Speaker 1: the media said, oh, well, that doesn't count as a 565 00:34:29,960 --> 00:34:32,760 Speaker 1: recession because there's a there's a tight labor market because 566 00:34:32,760 --> 00:34:35,600 Speaker 1: of the way that we're measuring the labor market. Let's 567 00:34:35,600 --> 00:34:39,200 Speaker 1: be honest, um, not because it's actually a tight labor market. 568 00:34:39,640 --> 00:34:43,759 Speaker 1: And so when when that happened, everybody said, okay, yeah, no, 569 00:34:43,880 --> 00:34:47,359 Speaker 1: no recession. Then well, well we'll still anticipate that there's 570 00:34:47,400 --> 00:34:52,160 Speaker 1: a recession coming soon, but yeah, no, no recession right now. 571 00:34:52,880 --> 00:34:56,239 Speaker 1: And so if in January, let's say I'm right, February 572 00:34:56,360 --> 00:35:00,359 Speaker 1: I'm right, and the inflation rate hits one percent, we're 573 00:35:00,400 --> 00:35:03,400 Speaker 1: gonna get Time Magazine people of the Year. We're gonna 574 00:35:03,440 --> 00:35:08,080 Speaker 1: get uh you know, uh purple hearts and badges of 575 00:35:08,160 --> 00:35:11,480 Speaker 1: honor and uh, you know, all sorts of awards, uh, 576 00:35:11,680 --> 00:35:17,440 Speaker 1: Nobel prizes and honorary degrees and you know, every every 577 00:35:17,480 --> 00:35:22,279 Speaker 1: imaginable honor and um esteem that you can think of, 578 00:35:22,640 --> 00:35:26,680 Speaker 1: just thrown at everybody at the Federal Reserve. You did it. 579 00:35:27,040 --> 00:35:30,080 Speaker 1: They did it. They centrally planned, They controlled an economy 580 00:35:30,080 --> 00:35:33,520 Speaker 1: from the top down. They printed trillions of dollars, saved 581 00:35:33,520 --> 00:35:35,920 Speaker 1: the economy from the crash and COVID, and then when 582 00:35:35,920 --> 00:35:38,480 Speaker 1: inflation started to get you know, rear its ugly head, 583 00:35:38,520 --> 00:35:41,480 Speaker 1: they quickly got it under control and fixed everything, and 584 00:35:41,480 --> 00:35:44,960 Speaker 1: we didn't even have anything, uh like a recession that 585 00:35:45,000 --> 00:35:47,240 Speaker 1: we had to deal with. They achieved the soft landing. 586 00:35:47,280 --> 00:35:50,520 Speaker 1: They did the impossible, what nobody thought they could, and 587 00:35:50,600 --> 00:35:55,759 Speaker 1: everybody is going to be praising them for their infinite wisdom. Well, 588 00:35:55,800 --> 00:35:57,680 Speaker 1: one of two things is going to happen at this 589 00:35:57,760 --> 00:36:03,239 Speaker 1: point then I Either they're gonna take their foot off 590 00:36:03,440 --> 00:36:07,319 Speaker 1: the brakes. They're gonna stop raising rates, they're gonna stop 591 00:36:07,360 --> 00:36:09,680 Speaker 1: selling assets off their balance sheet, and they're just gonna 592 00:36:09,680 --> 00:36:12,000 Speaker 1: say we're just gonna let things chill and just hold 593 00:36:12,040 --> 00:36:15,880 Speaker 1: off for a while here. At that point, the market 594 00:36:15,880 --> 00:36:20,360 Speaker 1: will go bananas. Asset prices will start to explode. Everybody 595 00:36:20,440 --> 00:36:23,480 Speaker 1: will think that we have, you know, achieved the impossible. 596 00:36:24,000 --> 00:36:27,959 Speaker 1: Everybody will start spending again. Asset prices will explode, debt 597 00:36:28,000 --> 00:36:31,000 Speaker 1: will start to explode, and we're gonna get ourselves right 598 00:36:31,000 --> 00:36:34,600 Speaker 1: back into a brand new unsustainable bubble because remember there's 599 00:36:34,600 --> 00:36:36,720 Speaker 1: no more money coming into the system at this point. 600 00:36:37,440 --> 00:36:40,839 Speaker 1: So prices explode, debt explodes, leverage explodes, and we set 601 00:36:40,840 --> 00:36:45,400 Speaker 1: ourselves up for another major crash. The other thing that happens, 602 00:36:45,600 --> 00:36:48,479 Speaker 1: potentially is that the FED does not take their foot 603 00:36:48,520 --> 00:36:51,800 Speaker 1: off the brakes and tightens a little bit more, maybe 604 00:36:51,800 --> 00:36:53,759 Speaker 1: for one more quarter. They raise rates a little bit 605 00:36:53,760 --> 00:36:55,640 Speaker 1: at a time, where they keep on selling assets off 606 00:36:55,640 --> 00:36:58,239 Speaker 1: their balance sheet a little bit at a time. And 607 00:36:58,280 --> 00:37:01,120 Speaker 1: if that happens, then first the market says, yeah, we 608 00:37:01,200 --> 00:37:04,120 Speaker 1: achieved a soft landing. Now the Fed can stop tightening. 609 00:37:04,200 --> 00:37:07,880 Speaker 1: And then they don't stop tightening. Boom crash right away, 610 00:37:08,000 --> 00:37:13,360 Speaker 1: everything starts to crumble. If this path is what happens, 611 00:37:14,000 --> 00:37:18,040 Speaker 1: then the FED will be forced to pivot extremely quickly 612 00:37:18,080 --> 00:37:23,000 Speaker 1: as things start to really crash, more money printing, and 613 00:37:23,040 --> 00:37:27,960 Speaker 1: then we risk hyper inflation. Now that's kind of another 614 00:37:28,120 --> 00:37:32,040 Speaker 1: topic for you know, we've talked about before how how 615 00:37:32,120 --> 00:37:36,680 Speaker 1: hyper inflation happens in the economy. UM two episodes ago 616 00:37:36,800 --> 00:37:41,280 Speaker 1: from November six, episode titled surviving and thriving and hyper inflation. 617 00:37:41,800 --> 00:37:45,040 Speaker 1: That is kind of the game plan for how hyper 618 00:37:45,040 --> 00:37:47,560 Speaker 1: inflation takes over in an economy and what people can 619 00:37:47,600 --> 00:37:51,759 Speaker 1: do to survive and thrive during it. But when you 620 00:37:51,800 --> 00:37:54,080 Speaker 1: get to the point where within a couple of years 621 00:37:54,120 --> 00:37:58,640 Speaker 1: after increasing the money supply, um, you have to do 622 00:37:58,640 --> 00:38:01,200 Speaker 1: it again. And then that's not enough, so you have 623 00:38:01,280 --> 00:38:03,479 Speaker 1: to do it even more than you did last time, 624 00:38:04,239 --> 00:38:08,720 Speaker 1: you really risk completely collapsing the value of the currency. 625 00:38:08,880 --> 00:38:11,520 Speaker 1: This has happened time and time and time and time 626 00:38:11,560 --> 00:38:14,640 Speaker 1: again throughout history, where governments get a little bit too 627 00:38:14,719 --> 00:38:17,799 Speaker 1: egotistical and print a little bit too much money and 628 00:38:17,880 --> 00:38:20,920 Speaker 1: it's just enough to tip over a hyper inflation and 629 00:38:20,960 --> 00:38:24,920 Speaker 1: then the currency collapses. Nobody wants it anymore, dumps it 630 00:38:24,960 --> 00:38:27,960 Speaker 1: at all costs, and all the power the government had 631 00:38:28,120 --> 00:38:30,320 Speaker 1: in the world and in their country as a result 632 00:38:30,640 --> 00:38:34,720 Speaker 1: of the monopoly on money evaporates overnight and disappears normally, 633 00:38:34,800 --> 00:38:37,359 Speaker 1: new governments are set up in their place, new at 634 00:38:37,400 --> 00:38:41,120 Speaker 1: least new parties come into power, and it is a 635 00:38:41,160 --> 00:38:45,680 Speaker 1: total game changer either way. My fear is how the 636 00:38:45,680 --> 00:38:50,480 Speaker 1: Federal Reserve responds to responds to inflation crashing down, which 637 00:38:50,520 --> 00:38:52,960 Speaker 1: I think it will within the next couple of months 638 00:38:53,640 --> 00:38:56,080 Speaker 1: that either respond to it by tipping us over into 639 00:38:56,120 --> 00:38:59,919 Speaker 1: deflation or they respond to it by tipping us over 640 00:39:00,000 --> 00:39:03,640 Speaker 1: into hyper inflation. Now, if they decide to do nothing, 641 00:39:03,719 --> 00:39:05,960 Speaker 1: let's just hype. Let's just take this one step further 642 00:39:06,040 --> 00:39:09,760 Speaker 1: and say what should they do? What should they do 643 00:39:10,000 --> 00:39:13,239 Speaker 1: is absolutely nothing. They should get out of the game 644 00:39:13,320 --> 00:39:19,000 Speaker 1: completely and stop messing with anything. Stop everything with their 645 00:39:19,040 --> 00:39:22,520 Speaker 1: balance sheet. No more printing money, no more buying assets. 646 00:39:23,360 --> 00:39:25,239 Speaker 1: Maybe they don't have to sell the assets off their 647 00:39:25,239 --> 00:39:28,880 Speaker 1: balance sheet. That's fine, um, but at least they can't 648 00:39:28,960 --> 00:39:32,040 Speaker 1: roll it over, so as it matures, it has to 649 00:39:32,160 --> 00:39:34,600 Speaker 1: roll off their balance sheet, and their balance sheet declines 650 00:39:34,680 --> 00:39:38,960 Speaker 1: as the debt matures. That's on there. Um. With the 651 00:39:39,040 --> 00:39:42,280 Speaker 1: with the interest rates, set it and forget it. Whatever 652 00:39:42,280 --> 00:39:44,360 Speaker 1: the interest rate is at, they're just never allowed to 653 00:39:44,440 --> 00:39:47,440 Speaker 1: change it again, or at the very least they have 654 00:39:47,560 --> 00:39:49,879 Speaker 1: to come up with a set of rules by which 655 00:39:49,920 --> 00:39:53,000 Speaker 1: the interest rate changes. Because this is the Fed funds rate, 656 00:39:53,080 --> 00:39:56,120 Speaker 1: so they don't directly control all the other interest rates. 657 00:39:56,160 --> 00:39:58,279 Speaker 1: All the other interest rates are just set based off 658 00:39:58,320 --> 00:40:03,080 Speaker 1: of the the risk rate versus the Federal Funds rate, 659 00:40:03,719 --> 00:40:05,440 Speaker 1: and so generally the federal funds rate is going to 660 00:40:05,480 --> 00:40:07,840 Speaker 1: be the lowest interest rate in the economy, and everything 661 00:40:07,960 --> 00:40:09,640 Speaker 1: else is going to be higher than that, depending on 662 00:40:09,680 --> 00:40:12,279 Speaker 1: the risk. And so that's generally going to be how 663 00:40:12,280 --> 00:40:15,640 Speaker 1: it works, and so UM. At the very even if 664 00:40:15,680 --> 00:40:17,600 Speaker 1: they say okay, you know, even if they don't say that, 665 00:40:17,600 --> 00:40:19,200 Speaker 1: they're never going to change it again. At least they 666 00:40:19,200 --> 00:40:20,560 Speaker 1: have to come up with a set of rules and 667 00:40:20,560 --> 00:40:23,919 Speaker 1: say okay, for the next twenty years. This is exactly 668 00:40:23,960 --> 00:40:27,000 Speaker 1: how interest rates will change. We cannot make up a 669 00:40:27,040 --> 00:40:32,080 Speaker 1: decision other than just following these preset rules. Because this 670 00:40:32,120 --> 00:40:37,600 Speaker 1: is something about systems. Complex systems. Complex systems thrive on 671 00:40:37,840 --> 00:40:42,440 Speaker 1: solid foundations. Um, and so the foundation of a system 672 00:40:42,480 --> 00:40:45,280 Speaker 1: would be the set of rules that govern the system. 673 00:40:45,320 --> 00:40:47,719 Speaker 1: So this is like the idea of the constitution. You 674 00:40:47,719 --> 00:40:50,480 Speaker 1: have a rule, a set of unchanging rules that cannot 675 00:40:50,480 --> 00:40:53,480 Speaker 1: be changed. Otherwise you have rule of man. Rule of 676 00:40:53,520 --> 00:40:55,600 Speaker 1: man means whoever is in power can make the laws. 677 00:40:56,400 --> 00:40:59,040 Speaker 1: Rule of law means that here's the set of rules 678 00:40:59,040 --> 00:41:01,920 Speaker 1: that cannot change regardless of who the ruler is. That 679 00:41:02,000 --> 00:41:07,160 Speaker 1: provides certainty, and that that that provides a static foundation 680 00:41:07,239 --> 00:41:11,239 Speaker 1: that cannot move and is unchanging and then that allows 681 00:41:11,280 --> 00:41:14,680 Speaker 1: a dynamic system to live upon it. You cannot stand 682 00:41:15,080 --> 00:41:19,160 Speaker 1: uh strongly on a foundation that is constantly shifting and 683 00:41:19,160 --> 00:41:21,360 Speaker 1: moving underneath your feet. And so if you want to 684 00:41:21,360 --> 00:41:24,800 Speaker 1: have a dynamic, thriving, a live system that works and grows, 685 00:41:25,239 --> 00:41:27,359 Speaker 1: it has to be able to move, and it has 686 00:41:27,400 --> 00:41:29,399 Speaker 1: to be able to know that what it's standing on 687 00:41:29,560 --> 00:41:32,279 Speaker 1: doesn't move so that it can move. It has to 688 00:41:32,320 --> 00:41:35,359 Speaker 1: be able to predict with certainty the areas that are 689 00:41:35,360 --> 00:41:38,719 Speaker 1: strong underneath it in order to build and predict for 690 00:41:38,760 --> 00:41:42,520 Speaker 1: the future. And so with money, this would mean the 691 00:41:42,600 --> 00:41:46,759 Speaker 1: rules of money absolutely do not change no matter what, 692 00:41:47,680 --> 00:41:50,080 Speaker 1: and even if the rules are bad. This is key 693 00:41:50,160 --> 00:41:53,440 Speaker 1: here to understand for the last couple of minutes, even 694 00:41:53,480 --> 00:41:59,400 Speaker 1: if the rule is bad, the unchanging nature of a 695 00:41:59,520 --> 00:42:03,480 Speaker 1: bad rule means a better system can live on it. 696 00:42:04,000 --> 00:42:08,160 Speaker 1: Then a set of rules that is objectively better but 697 00:42:08,360 --> 00:42:13,200 Speaker 1: constantly changing, because you can't win at the game of 698 00:42:13,280 --> 00:42:16,520 Speaker 1: chess if the rules are constantly changing. Even if every 699 00:42:16,520 --> 00:42:18,600 Speaker 1: time you change the rules, it's like, oh, it gets better. 700 00:42:18,680 --> 00:42:22,000 Speaker 1: Well by what standard? The rules are there to pre 701 00:42:22,400 --> 00:42:26,680 Speaker 1: provide a foundation that allows people to be good and 702 00:42:26,760 --> 00:42:28,919 Speaker 1: business is to be good in actions to be good 703 00:42:29,360 --> 00:42:33,200 Speaker 1: and so the rules that govern how money works should 704 00:42:33,280 --> 00:42:38,040 Speaker 1: not change. This would provide predictability and certainty with being 705 00:42:38,040 --> 00:42:42,120 Speaker 1: able to accurately judge how to make economic decisions going 706 00:42:42,200 --> 00:42:44,760 Speaker 1: forward into the future. You don't have to worry about 707 00:42:44,800 --> 00:42:46,960 Speaker 1: when the next time is the money printer will fire up. 708 00:42:47,120 --> 00:42:48,839 Speaker 1: You don't have to worry about when the next time 709 00:42:48,880 --> 00:42:51,080 Speaker 1: that interest rates drop is. You will be able to 710 00:42:51,080 --> 00:42:55,560 Speaker 1: make accurate financial decisions and planning about the financial future 711 00:42:55,600 --> 00:42:59,200 Speaker 1: regardless of any person's opinions because you know what the 712 00:42:59,320 --> 00:43:02,160 Speaker 1: rules are, and you know the rules aren't going to change. 713 00:43:02,280 --> 00:43:04,520 Speaker 1: You know when the money supply will increase or decrease, 714 00:43:04,600 --> 00:43:06,480 Speaker 1: or interest rates will go up or down based on 715 00:43:06,520 --> 00:43:09,919 Speaker 1: the preset rules that everybody can see. And so this 716 00:43:10,040 --> 00:43:15,799 Speaker 1: is a system that would provide a dynamic, thriving, growing economy. 717 00:43:16,040 --> 00:43:18,600 Speaker 1: On top of it is one that is predictable, one 718 00:43:18,640 --> 00:43:22,400 Speaker 1: that is unchanging, governed by rules, not by rulers. This 719 00:43:22,480 --> 00:43:26,520 Speaker 1: goes for political systems, this goes for economic systems, and 720 00:43:26,600 --> 00:43:30,360 Speaker 1: any system that is categorized as complex instead of simple 721 00:43:30,760 --> 00:43:33,720 Speaker 1: thrives when the rules governing it don't change, like, for instance, 722 00:43:33,880 --> 00:43:38,640 Speaker 1: the laws of physics. Imagine if life could could exist 723 00:43:39,920 --> 00:43:43,760 Speaker 1: if the laws of physics are constantly changing, they couldn't exist. 724 00:43:44,960 --> 00:43:49,760 Speaker 1: Life couldn't so uh. That is how money, monetary supply, 725 00:43:50,080 --> 00:43:53,480 Speaker 1: or I'm sorry, monetary policy. The money supply works its 726 00:43:53,480 --> 00:43:56,280 Speaker 1: way throughout the economy. First assets, then good and services, 727 00:43:56,320 --> 00:44:00,280 Speaker 1: then wages, and based on the lag where pro probably 728 00:44:00,320 --> 00:44:03,399 Speaker 1: about to see the inflation rate collapse over the next 729 00:44:03,400 --> 00:44:06,440 Speaker 1: couple of months, the Feds start running victory laps. And 730 00:44:06,520 --> 00:44:08,920 Speaker 1: that is when I will truly get scared when the 731 00:44:08,920 --> 00:44:11,520 Speaker 1: Fed starts running victory laps and thinks they're smarter than 732 00:44:11,520 --> 00:44:14,160 Speaker 1: they already think they are. As always, thank you so 733 00:44:14,239 --> 00:44:15,840 Speaker 1: much for listening, and we will see you on the 734 00:44:15,880 --> 00:44:21,440 Speaker 1: next episode next week. Okay, okay,