WEBVTT - TV: The System & Supply Chains 0:00:02.000 --> 0:00:05.440 Inflation numbers are out and stock good, and talk to 0:00:05.480 --> 0:00:07.760 Carol Roth about that. I'm going to talk to Ross 0:00:07.840 --> 0:00:12.080 Kennedy about supply chains. We have the system taking care 0:00:12.080 --> 0:00:13.920 of its own. All that more coming up tonight. And 0:00:13.960 --> 0:00:28.080 I'm right, inflation sucks. It sucks to be going into 0:00:28.080 --> 0:00:32.040 this economic downturn. That's such a nice way to put 0:00:32.040 --> 0:00:34.920 what we're going into here. And I did, look, I 0:00:35.000 --> 0:00:36.360 know it's gonna be a bit of a down. We 0:00:36.360 --> 0:00:38.839 gotta talk about some crappy numbers. What else can we 0:00:38.880 --> 0:00:43.760 do but laugh. We are, however, in the early stages. 0:00:44.440 --> 0:00:47.640 Please understand that and prepare accordingly. I don't tell you 0:00:47.640 --> 0:00:49.720 that to scare you. I tell you that so you 0:00:49.760 --> 0:00:53.120 can make preparations, whatever preparations you can make. We are 0:00:53.159 --> 0:00:56.640 not whole, just about to come out of this economic downturn. 0:00:57.200 --> 0:01:01.319 This is the beginning. This is the beginning. At eight 0:01:01.320 --> 0:01:03.480 point three percent inflation, that's the news of the day. 0:01:04.319 --> 0:01:08.200 They were expecting it to be lower. Before you get 0:01:08.240 --> 0:01:10.560 ahead of yourself there. Why were they expecting it to 0:01:10.600 --> 0:01:14.760 be lower because gas was down? Well that's great, right, 0:01:14.800 --> 0:01:17.080 we've saw that. No, no, no, no, you don't understand. 0:01:18.240 --> 0:01:23.640 Gas was down for two reasons One, we are draining 0:01:23.680 --> 0:01:26.680 our strategic oil reserve at a level we haven't seen 0:01:26.920 --> 0:01:30.360 in decades. They're doing that to artificially keep the prices low. 0:01:30.959 --> 0:01:34.600 By the way, that's a national security issue. We need 0:01:34.640 --> 0:01:38.440 a large strategic oil reserve in order to conduct any 0:01:38.520 --> 0:01:41.400 kind of a large scale war. If we don't have 0:01:41.520 --> 0:01:45.039 that oil, we're simply going to lose. You realize that, right. 0:01:45.280 --> 0:01:50.040 Those jets don't fly on solar panels. Neither do those boats. Anyway, Anyway, 0:01:50.120 --> 0:01:54.160 setting out aside, let's talk about why it didn't go 0:01:54.200 --> 0:01:57.400 down because gas was down. Well, the cost of food 0:01:57.840 --> 0:02:01.840 went up so much that it canceled out any gains 0:02:01.880 --> 0:02:05.160 we would have made from gas. How bad is it who? Well, 0:02:06.160 --> 0:02:11.440 fuel oil is up nearly seventy percent, gas twenty six, 0:02:11.720 --> 0:02:15.680 air fares thirty three, eggs forty, milk seventeen, groceries thirteen 0:02:15.680 --> 0:02:19.480 point five, electricity sixteen. Oh and by the way, you're earnings, 0:02:19.560 --> 0:02:23.600 real hourly earnings, earnings, they're down close to three percent. 0:02:24.200 --> 0:02:29.160 That is catastrophic for people, especially people on the lower 0:02:29.240 --> 0:02:32.000 end of the economic spectrum. If you're lower middle class 0:02:32.120 --> 0:02:35.240 or poor, this does more than hurt You're watching your 0:02:35.280 --> 0:02:37.880 standard of living evaporate. I hear these stories from people 0:02:37.880 --> 0:02:40.320 all the time. Now, even middle class people say, Hey, 0:02:41.240 --> 0:02:43.720 my power bill is so bad. I don't I don't 0:02:43.720 --> 0:02:46.160 know what to do. Hey, we're having to cancel theys. 0:02:46.200 --> 0:02:49.440 Hey we cut cable. Hey, we're already seeing standard of 0:02:49.520 --> 0:02:52.959 living going down. And one of the things we talked 0:02:52.960 --> 0:02:54.480 about before on the show, and I really do I 0:02:54.520 --> 0:02:58.760 find it fascinating, is how bad Joe Biden lies, how 0:02:58.880 --> 0:03:03.000 much he lies. Again, I'm not a child. All politicians 0:03:03.040 --> 0:03:06.520 lie in All presidents lie, Republicans and Democrats, they all lie, 0:03:06.880 --> 0:03:09.800 fudge the truth a little here, lie about that there. 0:03:10.440 --> 0:03:15.079 This administration. I don't know whether it's arrogance, whether he's 0:03:15.120 --> 0:03:18.080 just a full blown sociopath. That's probably it, because he 0:03:18.120 --> 0:03:20.640 has made a whole career out of this. They tell 0:03:20.760 --> 0:03:25.079 lies that are blake. We got horrible inflation numbers out 0:03:25.080 --> 0:03:28.679 there today. Oh Joe says, we're for surgeon, building an 0:03:28.680 --> 0:03:32.600 economy that finally works from working families. We started with 0:03:32.639 --> 0:03:36.520 the American rescue plans. That's taken us from economic crisis 0:03:36.600 --> 0:03:43.640 to economic resurgence. Man, that's great news. Here. I was worried. 0:03:44.000 --> 0:03:48.080 Joining me now, my friend Carol Roth recovering investment banker, 0:03:48.200 --> 0:03:50.640 author of the book The War on Small Business. I 0:03:50.640 --> 0:03:53.600 gotta be honest, Carol. I woke up today, rolled over, 0:03:54.080 --> 0:03:56.840 wiped a sleep out of my eyes, saw these inflation numbers, 0:03:56.840 --> 0:03:59.400 and I was worried. But then I heard Joe Biden. 0:03:59.480 --> 0:04:03.280 Now I'm not stressing a thing. Yeah, he got the 0:04:03.920 --> 0:04:09.440 word surging and resurgence mixed up. The inflation is surging, 0:04:09.640 --> 0:04:12.760 but that is not a resurgence of the economy, or 0:04:12.800 --> 0:04:15.520 perhaps it is in his world in a good way. 0:04:16.440 --> 0:04:20.040 But I mean, my goodness, today's inflation report, which we 0:04:20.040 --> 0:04:23.039 were hoping would give us, you know, some know, not 0:04:23.279 --> 0:04:26.240 great news, but at least a path to say things 0:04:26.279 --> 0:04:29.960 are getting better, was just a hot mess on every 0:04:30.000 --> 0:04:34.800 single facet, on the headline number, on the core number, 0:04:34.800 --> 0:04:39.120 which takes out food and energy month over month, Like 0:04:39.200 --> 0:04:41.920 there was no way to slice and dice it where 0:04:41.960 --> 0:04:44.680 we could go, Well, you know, here's something good that 0:04:44.720 --> 0:04:46.960 we could hang our hat on. I guess perhaps that 0:04:47.040 --> 0:04:50.040 it didn't go up year over a year, but you know, 0:04:50.080 --> 0:04:52.120 we kind of knew that wasn't going to happen anyway. 0:04:52.800 --> 0:04:55.559 But yeah, I mean, right to live in Joe Biden's world, 0:04:55.640 --> 0:04:57.120 where you know, all you have to worry about is 0:04:57.160 --> 0:04:59.160 what flavor pudding snack you're going to have that night. 0:04:59.279 --> 0:05:03.640 So good for him, Carol. Okay, now I want you 0:05:03.680 --> 0:05:07.839 to unpack this for people, actually for me. Headline number 0:05:07.960 --> 0:05:12.240 versus core number? What are those things? So the headline 0:05:12.400 --> 0:05:16.400 print is the CPI on a sort of year over 0:05:16.560 --> 0:05:19.440 year basis that everybody looks at. It looks at all 0:05:19.640 --> 0:05:23.800 different facets that they calculate in terms of inflation. This 0:05:23.920 --> 0:05:27.520 is just one measure of inflation. As we've talked about before, 0:05:28.000 --> 0:05:32.159 it's somewhat of a misnomer. They have manipulated the calculation 0:05:32.360 --> 0:05:35.120 so many times, you know, since the nineteen eighties that 0:05:35.160 --> 0:05:40.040 it doesn't really truly reflect the pain that you are feeling. 0:05:40.240 --> 0:05:42.400 But you know, it is a data point that we use, 0:05:42.440 --> 0:05:44.400 and we all kind of take it with a grain 0:05:44.480 --> 0:05:48.839 of salt. The core number is when they back out 0:05:49.040 --> 0:05:52.440 food and energy, their thoughts are, well, you know, no 0:05:52.480 --> 0:05:56.599 matter what happens, people aren't going to change their lives. 0:05:56.600 --> 0:05:58.960 It's not going to change demand much because obviously you 0:05:59.000 --> 0:06:01.120 need to heat to eat, you need to put gas 0:06:01.160 --> 0:06:04.360 in your car. So it's a secondary measure of inflation. 0:06:04.839 --> 0:06:08.760 And you know, we knew that that energy prices, you know, 0:06:08.800 --> 0:06:11.120 hadn't been going up and then coming back down again. 0:06:11.839 --> 0:06:15.599 They actually the gasoline from month to month was a 0:06:15.680 --> 0:06:19.760 much better number, but increases in food prices, increases in 0:06:19.839 --> 0:06:25.320 shelter prices, and increases in medical care services more than 0:06:25.520 --> 0:06:29.440 wiped out any of the gains quote unquote gains we 0:06:28.960 --> 0:06:31.520 were made on a month to month basis from having 0:06:31.560 --> 0:06:34.920 those lower gasoline prices slightly lower, and again these are 0:06:35.000 --> 0:06:38.040 lower from the top. These are not lower from like 0:06:38.240 --> 0:06:42.719 a year ago or a couple of year signal, Carol, 0:06:42.839 --> 0:06:46.159 I have a question. I'm seeing something that concerns me. 0:06:46.200 --> 0:06:48.320 I'm seeing many things that concern me, but there's something 0:06:48.320 --> 0:06:52.120 out there that's really concerning me right now. What Janet 0:06:52.200 --> 0:06:55.960 Yellen had to say here was Janet Yellen, it's the 0:06:56.000 --> 0:06:59.200 fit is going to need great skill and also some 0:06:59.320 --> 0:07:03.600 good look to achieve what we sometimes call a soft landing, 0:07:04.000 --> 0:07:08.560 which is bringing inflation down while maintaining the strength of 0:07:08.600 --> 0:07:12.640 the labor market. And my hope, I believe there is 0:07:12.680 --> 0:07:17.520 a path to accomplishing that, Okay, Carol. That concerns me 0:07:17.520 --> 0:07:20.840 for a couple different reasons. One, there's not great skill. 0:07:21.000 --> 0:07:23.640 We don't have experts. We certainly don't have experts running 0:07:23.640 --> 0:07:26.320 the finances in this country. That's just not even arguable 0:07:26.320 --> 0:07:28.720 at this point. So, okay, there's no great skill. Even 0:07:28.760 --> 0:07:31.200 if we had great skill, we need luck. That's one 0:07:31.200 --> 0:07:33.600 thing that concerns me. The second thing is this that 0:07:33.720 --> 0:07:38.040 sounds pessimistic. When I hear pessimistic things from people who 0:07:38.120 --> 0:07:41.280 routinely lie to me and tell me how great things are, 0:07:41.680 --> 0:07:45.280 that concerns me greatly that we are just at the 0:07:45.480 --> 0:07:48.960 entry point of something really really ugly. Yeah. I mean, 0:07:49.080 --> 0:07:51.960 Janet Yellen is the same one who's been telling us 0:07:52.040 --> 0:07:55.440 things like inflation is going to be transitory or there 0:07:55.480 --> 0:07:59.000 will be no inflation, and we have to look at 0:07:59.040 --> 0:08:03.080 you six hundred account purchases online to make sure that 0:08:03.120 --> 0:08:06.440 we're making the billionaires pay their fair share. So when 0:08:06.480 --> 0:08:11.320 Janet Yellen is expressing some concern, that is the optimistic 0:08:11.400 --> 0:08:14.720 spin and the challenges that you have the Federal Reserve, 0:08:14.800 --> 0:08:18.560 which as you said, are not experts. They've created this 0:08:18.640 --> 0:08:21.920 situation and now they have, you know, just a very 0:08:22.000 --> 0:08:24.200 limited number of things that they could do to try 0:08:24.200 --> 0:08:27.800 and fix it. The quote unquote tools they have are 0:08:27.840 --> 0:08:32.040 on demand. Side. That means slowing down consumer purchases, slowing 0:08:32.040 --> 0:08:35.640 down business investment. The issue that we have in the 0:08:35.679 --> 0:08:38.760 economy is not on the demand side per se. It's 0:08:38.760 --> 0:08:43.560 the mismatch between supplying demand, and really it's a supply issue. 0:08:43.600 --> 0:08:46.480 We don't have enough food, we don't have enough labor, 0:08:46.600 --> 0:08:49.679 we don't have the right amount of energy to create 0:08:49.800 --> 0:08:54.280 that match. And unfortunately, the Federal Reserve cannot print workers, 0:08:54.320 --> 0:08:58.760 they cannot print oil, they cannot print food. So you know, 0:08:58.880 --> 0:09:01.559 they're stuck with the old only thing that they can do, 0:09:01.960 --> 0:09:05.720 and that is trying to slow things down via interest rates. 0:09:06.080 --> 0:09:08.400 And so that means that they are trying to slow 0:09:08.480 --> 0:09:12.199 the economy. They're trying to slow the economy. And so 0:09:13.120 --> 0:09:15.560 given that sort of scenario and the fact that they're 0:09:15.600 --> 0:09:19.360 not going to be able to supply, that's the concern. 0:09:19.440 --> 0:09:23.080 And the concern is that seeing these high inflation numbers, 0:09:23.120 --> 0:09:25.839 it's going to get them to be even more aggressive, 0:09:26.320 --> 0:09:28.880 even though it's not the right tool to fix the 0:09:28.920 --> 0:09:33.160 problem that we have at hand. Okay, so let me 0:09:33.160 --> 0:09:36.000 see if I understand this correctly. We're already in a recession. 0:09:36.040 --> 0:09:37.800 I don't care how many times they try to change 0:09:37.800 --> 0:09:41.599 the definition. We are officially in a recession, and they're 0:09:41.960 --> 0:09:46.160 trying to slow the economy down more. Carol. This all 0:09:46.200 --> 0:09:50.760 sounds terrible, it does, and the government is trying to 0:09:50.800 --> 0:09:55.280 thwart their efforts by spending more on a government basis 0:09:55.320 --> 0:09:58.000 as well. And that's just what's going on here, Jesse. 0:09:58.160 --> 0:10:01.640 That you have what's going on in internationally. Obviously we 0:10:01.760 --> 0:10:05.320 know Europe is in a world of furreds, completely self 0:10:05.360 --> 0:10:09.520 inflicted because of the energy costs, and China is having 0:10:09.640 --> 0:10:13.040 massive problems because their energy or excusing the real estate 0:10:13.040 --> 0:10:15.760 bubble is popping. So we have all of these factors 0:10:15.760 --> 0:10:19.080 that could contribute to a massive global recession at the 0:10:19.120 --> 0:10:21.800 same time. And that's you know, not even taking into 0:10:21.800 --> 0:10:24.000 account all the things we just talked about. And so 0:10:24.040 --> 0:10:27.160 the FED into all of this is like, yes, we're 0:10:27.200 --> 0:10:29.520 going to have to go higher. And this number, you know, 0:10:29.520 --> 0:10:32.440 we were expecting that they were going to probably have 0:10:33.040 --> 0:10:35.480 seventy five basis points, which is three quarters of a 0:10:35.600 --> 0:10:39.480 percent raise in a couple of weeks. Here there was 0:10:39.520 --> 0:10:42.040 a possibility if we got a number that looked like 0:10:42.160 --> 0:10:46.120 inflation demand destruction was was bringing down inflation, that maybe 0:10:46.120 --> 0:10:48.160 it would be a little bit less than that. But 0:10:48.280 --> 0:10:50.760 now the market is pricing in well could actually even 0:10:50.840 --> 0:10:53.800 be worse. And again that the FED was wrong on 0:10:53.840 --> 0:10:55.800 the way down. They were wrong on the way up. 0:10:56.040 --> 0:10:58.560 And if you go back to March of twenty twenty, 0:10:59.080 --> 0:11:02.480 the FED, the government, they all said we had to 0:11:02.520 --> 0:11:05.760 do these emergency measures so they could save the economy. 0:11:05.960 --> 0:11:09.960 And what did they do. They destroyed the economy. So 0:11:10.000 --> 0:11:12.439 we need to take this power away from them because 0:11:12.480 --> 0:11:18.040 we're the ones paying the price quite literally for this, Carol, 0:11:17.880 --> 0:11:19.920 could I could spend an hour with you unpacking the 0:11:20.000 --> 0:11:22.880 Chinese markets and things like that. But let's talk about 0:11:22.920 --> 0:11:26.880 this really briefly. The debt, the national debt, because when 0:11:26.920 --> 0:11:30.440 I see things like the FED predicting massive raid hikes 0:11:30.440 --> 0:11:32.559 which they're going to use to try to prevent mass 0:11:32.559 --> 0:11:36.400 inflate or a hyperinflation, I say to myself, Okay, well, 0:11:37.120 --> 0:11:39.960 interest rates are a funny beast, especially when you have 0:11:40.080 --> 0:11:44.559 a thirty one trillion dollar national debt. Can you merge 0:11:44.600 --> 0:11:48.040 those two worlds? Raising interest rates and a thirty one 0:11:48.120 --> 0:11:52.839 trillion dollar national debt? That sounds like a freight train. Yeah. 0:11:52.880 --> 0:11:55.280 So the FED has already come out and said that 0:11:55.360 --> 0:12:00.280 the current path of government spending is unsustainable. Shot looking 0:12:00.360 --> 0:12:03.520 to all of you that are listening, I know. The 0:12:03.640 --> 0:12:09.440 challenge is as the Fed keeps raising their target interest rates, 0:12:09.520 --> 0:12:12.800 it flows through the rest of the cost of financing, 0:12:13.000 --> 0:12:14.840 not on a one to one basis. It's not like 0:12:14.880 --> 0:12:17.160 it's a one percent increase and that means then the 0:12:17.200 --> 0:12:19.560 government has to pay one percent more in treasury, but 0:12:19.720 --> 0:12:22.719 it keeps putting upward pressure on it. And as the 0:12:22.760 --> 0:12:26.400 government needs to pay more for the debt that they have, 0:12:26.600 --> 0:12:29.880 the thirty one trillion dollars of debt that has varying maturities. 0:12:30.040 --> 0:12:31.600 The last time I looked at it, I think it 0:12:31.679 --> 0:12:35.040 was like somewhere between five and six years, every one 0:12:35.160 --> 0:12:40.040 percentage point increase in the cost of their debt is 0:12:40.080 --> 0:12:43.760 another three hundred billion dollars that we need to spend 0:12:44.080 --> 0:12:47.840 an interest to service that debt. So that is money 0:12:47.840 --> 0:12:50.440 that is going to come out of other spending. And 0:12:50.520 --> 0:12:52.679 you know what that means that either they're going to 0:12:52.720 --> 0:12:55.079 have to raise taxes or doing all of those things. 0:12:55.679 --> 0:12:58.920 Just to put this all in perspective, if we went 0:12:59.080 --> 0:13:04.040 back to twenty nineteen spending, so right before the pandemic, 0:13:04.320 --> 0:13:07.080 with the amount of receipts that they expect to collect 0:13:07.080 --> 0:13:09.440 for this year, we would actually be at a break 0:13:09.520 --> 0:13:12.600 even point if we went back to twenty eighteen, if 0:13:12.640 --> 0:13:15.320 they just dialed it back just to twenty eighteen, not 0:13:15.440 --> 0:13:17.880 that long ago. That's spending. With the amount of receipts 0:13:17.880 --> 0:13:21.160 that they're expecting to collect via taxes, we would have 0:13:21.200 --> 0:13:24.720 a three hundred billion dollars surplus. And what are these 0:13:24.760 --> 0:13:28.880 idiots doing. They're spending more and more money they expect 0:13:28.960 --> 0:13:31.120 for this fiscal year, which ends at the end of 0:13:31.160 --> 0:13:35.320 the month at one point for trillion dollar deficits. And 0:13:35.800 --> 0:13:37.560 you know, we've seen all of the spending that they've 0:13:37.559 --> 0:13:39.560 put in place, and that's not even included in that. 0:13:39.600 --> 0:13:43.079 So that's just going to continue to increase. And as 0:13:43.080 --> 0:13:45.840 I said again, it's just it destroys our purchasing power, 0:13:45.920 --> 0:13:49.000 It destroys everything that we're working for, and it threatens 0:13:49.000 --> 0:13:54.800 the economic security of our country. Rough, bright and sunny today. 0:13:54.800 --> 0:13:59.160 Thanks by hard assets, Jesse, buy your medals, by goal, 0:13:59.320 --> 0:14:02.600 by land and buy water. Right, Seriously, this is the 0:14:02.720 --> 0:14:05.360 long term strategy here. We have to get people to help. Right, 0:14:05.400 --> 0:14:08.079 what do you do long term? You want to own 0:14:08.559 --> 0:14:13.280 hard assets? You heard it here, carow off everybody fall 0:14:13.360 --> 0:14:16.760 over advice. Thank you all. That may have made you uncomfortable. 0:14:16.800 --> 0:14:19.800 Probably did we gotta know, right, but I'm right. Now, 0:14:21.000 --> 0:14:24.760 Let's dig into this a little bit more. Food prices, 0:14:24.960 --> 0:14:28.200 supply chains. Remember about a month or two ago, supply chains, 0:14:28.200 --> 0:14:30.080 we're all the rage, it's all anyone could talk about 0:14:30.120 --> 0:14:32.960 it now. It's it's like that that problem went away, 0:14:33.600 --> 0:14:36.600 or did it go away. We're gonna talk about that 0:14:36.680 --> 0:14:38.720 with Ross Kennedy, and we're gonna talk about it next. 0:14:38.720 --> 0:14:41.160 Before we talk about that, let's talk about that time 0:14:41.160 --> 0:14:44.120 share you one out of and they're not letting you out. 0:14:45.120 --> 0:14:48.000 I know how it works. I've heard all the stories. 0:14:48.880 --> 0:14:53.080 Go to a timeshare seminar, you make the buye, maybe 0:14:53.080 --> 0:14:55.880 you spend a bunch of time there with yourself, friends, family, 0:14:55.960 --> 0:14:59.120 enjoying yourself. But eventually you stopped going. Or maybe you'd 0:14:59.120 --> 0:15:01.640 never really win at all. Don't tell anybody that. And 0:15:01.760 --> 0:15:04.760 now you want out, and the timeshare company says, no, no, no, no, no, 0:15:04.760 --> 0:15:08.520 no no. You forgot to read the fine print. You're 0:15:08.560 --> 0:15:12.040 in this forever. Every year you will pay your annual fees, 0:15:12.080 --> 0:15:14.680 and we'll keep increasing those annual fees. You'll pay your 0:15:14.680 --> 0:15:19.920 special assessments. There's no getting out. Yes, there is. Lone 0:15:19.960 --> 0:15:23.280 Star Transfer will get you out. They guarantee it. They 0:15:23.320 --> 0:15:27.280 guarantee it in writing. They even give you a date. Hey, 0:15:27.560 --> 0:15:29.760 we will get you out, and we will get you 0:15:29.840 --> 0:15:33.400 out by this time. That's amazing. That's confidence. That's the 0:15:33.440 --> 0:15:37.560 confidence of helping over sixteen thousand people will get out permanently. 0:15:38.240 --> 0:15:41.560 Your one phone call away from getting out eight four 0:15:41.680 --> 0:15:45.800 four three one zero two six four six eight four 0:15:45.960 --> 0:15:50.880 four three one zero two six four six or go 0:15:50.920 --> 0:15:59.480 to loan star transfer dot com. We'll be back. Each morning, 0:15:59.600 --> 0:16:02.640 the print of the United States receives a highly classified 0:16:02.640 --> 0:16:05.680 briefing on the most important issues facing the country. It's 0:16:05.680 --> 0:16:09.200 called the President's Daily Brief, or PDB. It's delivered by 0:16:09.200 --> 0:16:12.400 America's spies and analysts. Well, now you can hear your 0:16:12.520 --> 0:16:15.720 very own PDB in the form of a podcast hosted 0:16:15.720 --> 0:16:19.360 by me Brian Dean Wright, a former CIA operations officer. 0:16:19.720 --> 0:16:22.440 Each morning at six am Eastern, I'll bring you fifteen 0:16:22.480 --> 0:16:25.280 to twenty minutes of the most important issues facing the country, 0:16:25.480 --> 0:16:28.760 giving you the critical intelligence and analysis you need to 0:16:28.880 --> 0:16:41.800 start your morning. Remember those long lines, you guys would 0:16:41.800 --> 0:16:46.080 all film of cars, decent looking car not jelopis nice 0:16:46.160 --> 0:16:49.280 cars just waiting for a box of food to be 0:16:49.320 --> 0:16:53.120 put in the trunk in the United States of America, 0:16:53.680 --> 0:16:56.760 waiting for over an hour to get food in a trunk. 0:16:57.360 --> 0:17:03.160 Two weeks later, Yeah, is a line of desperation drivers 0:17:03.160 --> 0:17:07.040 parked along a busy Dallas rode They're waiting for food. 0:17:07.600 --> 0:17:10.520 This looks like what we saw a couple of years ago. Unfortunately, 0:17:10.560 --> 0:17:14.760 it's worse than a couple of years ago. Don't you 0:17:14.840 --> 0:17:17.159 loving an old jerk? Joe Biden still is. Did you 0:17:17.200 --> 0:17:19.679 catch that part at the beginning? He just can't help himself. 0:17:19.960 --> 0:17:22.960 Those lines, you guys all filmed as if they were 0:17:23.000 --> 0:17:26.080 just obligated to censor those things to protect old Joe. 0:17:26.320 --> 0:17:28.919 Joining me now, Ross Kennedy, he is the founder of 0:17:28.920 --> 0:17:33.560 Fortis Analysis. Ross, Okay, that was a big food number today, 0:17:33.640 --> 0:17:37.600 eleven point four percent increase in the food index. Well, 0:17:37.600 --> 0:17:39.280 I don't know what the food index is, but that 0:17:39.359 --> 0:17:44.960 sounds bad, Ross. Ye. Yes, So it's it's a baseline 0:17:44.960 --> 0:17:50.080 measure of what certain staple ingredients and items cost within 0:17:50.119 --> 0:17:53.760 the United States. So you would have not only account for, 0:17:54.560 --> 0:17:57.160 you know, things like cereal, but you'd also haven't think 0:17:57.200 --> 0:18:01.680 so that would be you know, milk, dairy egged components 0:18:01.720 --> 0:18:04.760 like that. And unfortunately, when you're talking about you know, 0:18:04.880 --> 0:18:10.600 demand and supply disruptions driving really really quick price increases, 0:18:10.920 --> 0:18:14.520 it shows up there first. And the scary thing is 0:18:14.520 --> 0:18:16.480 is that it's a it's a tailing indicator or a 0:18:16.520 --> 0:18:19.439 lagging indicator. If we're hearing that it was reported to 0:18:19.480 --> 0:18:23.200 be x amount in the previous month, whatever was potentially 0:18:23.240 --> 0:18:28.479 driving those prices higher could still be ongoing or even worsening. Okay, 0:18:28.520 --> 0:18:30.359 I guess that's where That's what I want to ask 0:18:30.359 --> 0:18:33.119 you about today is where are we going? We know 0:18:33.160 --> 0:18:35.960 where we are? It sucks everyone who's bought groceries knows 0:18:36.000 --> 0:18:39.560 where we are. Where are we going? I have argued 0:18:39.600 --> 0:18:41.560 just from the things I see, the things x where 0:18:41.600 --> 0:18:43.720 it's like you tell me, I feel like we are 0:18:43.760 --> 0:18:47.080 in the very beginning of a very deep, potentially long 0:18:47.200 --> 0:18:51.080 lasting economic downturn. But hopefully I'm wrong. Gosh, I want 0:18:51.080 --> 0:18:53.680 to be wrong bad? Where are we? Where are we going? Ross? 0:18:54.480 --> 0:18:56.360 How scared do you want to be? A jesse Um? 0:18:57.320 --> 0:19:02.040 There's having to me, there's whole range of outcomes here. 0:19:02.080 --> 0:19:09.160 The go from fairly frightening to nearly apocalyptic. The one 0:19:09.200 --> 0:19:11.159 benefit I will say to frame all of this is 0:19:11.200 --> 0:19:13.560 that in the US we still have, on a per 0:19:13.600 --> 0:19:16.720 acre basis, on a per calories per capita basis, we 0:19:16.800 --> 0:19:20.359 are still the most wildly productive food system in the world. 0:19:20.440 --> 0:19:23.280 So it's going to get worse in other places long 0:19:23.280 --> 0:19:25.960 before it gets that bad here. But we do still 0:19:25.960 --> 0:19:30.280 face some extremely significant challenges, not necessarily starvation, but certainly 0:19:30.320 --> 0:19:34.520 food budgets, completely crippling the economy because people have to 0:19:34.560 --> 0:19:38.960 eat before they can spend money on new furniture, new electronics, clothing, 0:19:39.640 --> 0:19:42.640 whatever it may be. On the lower end here, we're 0:19:42.720 --> 0:19:45.960 looking at six to twelve month disruption that's driven by 0:19:46.920 --> 0:19:51.040 a range of factors, higher energy costs increasing not only 0:19:51.080 --> 0:19:55.280 food production but also food transportation. We're looking at some 0:19:55.720 --> 0:19:58.760 reduced yields, particularly on corn and wheat here in the 0:19:58.840 --> 0:20:00.720 US for twenty twenty two, with a lot of the 0:20:00.800 --> 0:20:03.920 drought issues that we've had. Rice is also down. Swathings 0:20:03.920 --> 0:20:07.159 look pretty good for now, but despite the best efforts 0:20:07.160 --> 0:20:08.919 of the world Economic form, we can only eat so 0:20:09.000 --> 0:20:11.920 much soy or export so much soy in our diet. 0:20:12.640 --> 0:20:16.160 So on the really bad end, the US is dependent 0:20:16.200 --> 0:20:18.840 on about sixty percent of the amino acids that go 0:20:18.880 --> 0:20:22.200 into animal food production. About ninety percent of the vitamins 0:20:22.280 --> 0:20:28.359 that go into both animal and human ingredients come from China, 0:20:28.440 --> 0:20:32.000 and so a significant disruption in the manufacturing base in 0:20:32.080 --> 0:20:36.160 China or the ability to export those significantly cripples US 0:20:36.200 --> 0:20:39.679 food production. If we have zero vitamins available to us 0:20:39.680 --> 0:20:42.520 in the US, we can't supplement out of Europe. Only 0:20:42.520 --> 0:20:45.320 a couple are made in Europe. Those factories are dependent 0:20:45.320 --> 0:20:49.119 on Russian natural gas, probably to no one's surprise. But 0:20:49.160 --> 0:20:51.000 if we can't give vitamins to our animals, and if 0:20:51.000 --> 0:20:53.480 we can't add it into human food production, we're talking 0:20:53.520 --> 0:20:55.919 an eight to ten percent or excuse me, eight to 0:20:55.960 --> 0:21:00.000 ten x increase in the price of food within six months, 0:21:00.440 --> 0:21:04.200 because it would it would decimate the animal population that 0:21:04.480 --> 0:21:09.600 we manage for human food consumption and eight to ten 0:21:09.960 --> 0:21:16.639 times increase in food. Yes, okay, that's before I before 0:21:16.640 --> 0:21:20.360 I pass out from fear. Here, let's unpack why what's 0:21:20.400 --> 0:21:25.159 wrong with China and they're manufacturing well, Chinese manufacturing is 0:21:25.840 --> 0:21:29.240 undergoing a few things as well. China is some really 0:21:29.280 --> 0:21:33.320 significant displacement of natural gas. For example, natural gas as 0:21:33.359 --> 0:21:36.240 a critical key input or a lot of these manufacturing 0:21:36.280 --> 0:21:39.880 processes for synthetic vitamins or for amino acids. Their corn 0:21:39.920 --> 0:21:43.359 production is down significantly. Despite whatever their media reports are 0:21:43.400 --> 0:21:46.480 lying about. They're struggling with corn production, and that's a 0:21:46.560 --> 0:21:50.399 major raw material for amino acid production and a couple 0:21:50.440 --> 0:21:55.480 potentially vitamins as well. So you've got significant raw you know, 0:21:55.600 --> 0:21:58.240 raw input issues there as well. You also have the 0:21:58.640 --> 0:22:01.439 October Party Congress coming up, and as we've seen with 0:22:01.520 --> 0:22:05.720 Shanghai with the lockdowns there, the factionalization of the CCP, 0:22:05.920 --> 0:22:08.719 the fighting over a hijinping is going to be emperor 0:22:08.720 --> 0:22:11.600 for a life. That is going to have a significant 0:22:11.920 --> 0:22:14.600 potential impact, if you will, on the ability of China 0:22:14.600 --> 0:22:19.240 to export these ingredients to the US and too elsewhere. Okay, 0:22:20.720 --> 0:22:22.399 let's let's rewind just a little bit when we were 0:22:22.440 --> 0:22:25.480 talking about potentially on the low end six months to 0:22:25.600 --> 0:22:29.040 a year. I understand there are external factors going on 0:22:29.160 --> 0:22:32.320 right now, drought and Russia, Ukraine and all these other 0:22:32.320 --> 0:22:35.240 things that nobody can control. Part of the reason I've 0:22:35.280 --> 0:22:37.119 been warning people that I think this is going to 0:22:37.160 --> 0:22:39.280 be very deep in the last a very long time 0:22:39.840 --> 0:22:43.040 is because Joe Biden's not going anywhere for a few years. 0:22:43.040 --> 0:22:46.080 Not to make it completely political, but they're waging and 0:22:46.160 --> 0:22:48.320 all out war on the energy sector right now, and 0:22:48.440 --> 0:22:51.440 open war. They're bragging about it. If you're waging in 0:22:51.560 --> 0:22:53.840 war on one of the critical pillars that holds up 0:22:53.880 --> 0:22:58.200 into economy, how could it be anything but a disaster. Yeah, 0:22:58.240 --> 0:23:00.760 I mean, that's that's absolutely correct. If we look, for example, 0:23:00.800 --> 0:23:04.119 at the fact that we are very we're built around 0:23:04.160 --> 0:23:05.600 corn as a mono crop. We have a lot of 0:23:05.600 --> 0:23:08.280 soybeans as well, but let's say corn is probably the 0:23:08.400 --> 0:23:11.960 number one most critical raw material for the overall food 0:23:11.960 --> 0:23:15.000 production in the US. From a biological side, we need 0:23:15.119 --> 0:23:19.120 huge amounts of nitrogen or natural gas to produce nitrogen ingredients. 0:23:19.160 --> 0:23:22.360 That is one of the probably key input for corn 0:23:22.400 --> 0:23:25.920 production is the end part of NPK. You need natural 0:23:25.920 --> 0:23:27.720 gas to make an awful lot of that, particularly for 0:23:27.720 --> 0:23:31.119 our domestic industry. Without that, we can't produce as much corn. 0:23:31.359 --> 0:23:33.480 We shift more to soy but a lot of things 0:23:33.480 --> 0:23:36.240 that rely on corn as the base ingredient. And it's 0:23:36.240 --> 0:23:40.359 not just hyproctose corn throw it's textures, texture, what they 0:23:40.359 --> 0:23:44.760