Well, we've got some different asset classes if you had to pick one
investment to hold for 10 years plus what would it be?
Would it be gold and silver Bitcoin, bonds or stocks?
And the the overwhelming majority said gold and silver.
How long will it take the FED to lower the CPI to two percent three
questions with troubling answers.
So tell us a little bit about this article because it's got some
really great insights.
You know, Mike I I'm an investor to and I listen to the FED to just
like everybody else and when Jerome Powell insisted that he was going
to get inflation down to 2%, you know, I'm an analyst.
So
So, I had some questions about that and how realistic that is, you
know?
So, basically this article asked three questions and go through and
answer them with data with history, you know, with a current
circumstance and all that sort of thing.
So the first question there, Mike has hiking rates actually lowered
inflation.
And you'll see I have a chart there, that shows just how aggressive
they've been at raising rates.
They've raised rates point seven, five percent four times the roads.
The most aggressive
Eight, hike in history.
Now in modern history, at least and you can see here likes during the
Great Depression and the FED broke the economy back then.
They made some horrible horrendous mistakes during the Great
Depression, where they would slam up the rate, like a full point at a
time from practically zero.
And but yes, this is as far as how far you can go back.
And create charts on the federal reserve's website, that only goes
back the charts for rate hikes.
Only go back to about World War Two but that's long enough to write.
Well, you can send you a car.
Yeah.
2% is a long way off, you know?
So it was as aggressive as they have been and rates are coming down a
little bit.
I don't know if that's really the fed or just the slowing economy that
you pointed out many times now.
But 2% is a long way off.
That's the whole point of that.
So, and then the set, my second question was, can inflations root
cause be solved with higher rates?
Are they using the right prescription to solve High inflation?
And basically, as I point out here, as you've talked about, Mike, it's
really more of a supply chain issue.
Inflation's usually demand driven, this is more supply chain issues,
and until the supply chain is solved, the bottom line is, it's going
to be very difficult for the FED to get inflation.
All the way down to 2%.
You have any comment on that?
Well, supply chain issues.
Yeah well inflation.
Over the long run is quantity of currency and then over the short run.
There's the whole bunch of things that have affected and it's supply
and demand is, I mean it's the reason that if you go to Columbia a cab
ride from the airport to your hotel is going to cost you millions of
pesos instead of 100 you know about a hundred bucks or whatever that
is but its measured in millions of pesos simply because
they've printed so many pesos, you know, things go up and down over
the short term due to supply demand velocity shortages.
Surpluses so inflation becomes very complex over the short term and
supply chain disruption has kicked it off.
You know I'm my book should have been out last a month ago and there's
problems with the printers.
There's
One's getting boxes to put the cardboard.
You not only have supply chain issues with the paper, but then you've
got the cardboard box that you've got to put an end to be able to ship
to Amazon.
Then there's the trucker's.
They are.
One of the things that you have identified is that supply chain issues
when you make it harder to do business.
And Powell is going to put quite a number of businesses out of
business with these higher.
Rates.
There's something called Zombie companies, where they can only afford.
They can't quite afford to make the interest payments on their debt,
out of current cash flow.
They don't have enough profits.
Well, if they've got short-term debt that has to roll over and it
rolls over to these higher interest rates that puts them even even
further - and so, some of these companies are destined for bankruptcy
with these higher, the higher rate regime that we've got
And when they go out of business that affects the supply chain even
more.
And if you've got a shortage of goods, you have to bid a higher price
to get that good.
And so yes, this is a, a bad spiral.
So right?
Tell me about your analysis hear of it this because I find it
fascinating.
Well, the basic the upshot of all this on that issue is that you know,
higher rates, make it more difficult and more expensive to do.
Business not easier.
So higher rates.
Don't solve a supply chain issue.
They actually make it more difficult.
So, yes, the supply chain, will eventually get resolved.
Yes, but the feds actually in the way of resolving that with higher
rates, they're making it more difficult and more expensive.
So, I just don't see a CPI coming down to 2% anytime soon at least
until the supply chain is completely back to normal.
So,
And the third point, the third question, I asked their Mike was, what
does history show about?
Raising rates to bring down high inflation.
So, I just put up a chart of when Paul volcker was first hired back in
the 1979, when rates were really high, inflation was really high and
you can see their inflation, jumped 40, at least another year, kept
going up after he was hired, and it took a full five years for him and
the FED at that time to get in.
Relation this Epi down below three percent, five years.
And some will say well inflation was a lot higher than well.
It's all relative, right?
So this percentage drop in the CPI needed today is roughly the same
percentage drop that they needed then.
So, you know, history shows that it takes a long time to bring a CPI
down by raising rates and
Any comment on that Mike.
Well one of the things I'm noticing here is that the scales on this
one, we've got CPI going up to 16 percent and over on the right hand
scale fed funds rate, the range of the scale range goes up to 25%.
So actually it took a lot more pain than
This chart even conveys.
If they were both the.
Now, if you refer to the previous chart, you'll see that the CPI has a
higher scale going up to 10% on the right side and left side fed funds
rate, only goes to four percent.
So we're nowhere near getting the FED funds rate above the rate of
inflation.
And that's what a good point, Paul Paul folk or to get this under
control.
But if you adjusted this and made the CPI scale, instead of going up
to 16 if that was going up to 25 so they were equal, what you would
see is that the FED funds rate had to go significantly above the rate
of inflation for any of this to start coming down.
And, you know, it's interesting that, you know, went down to
3% or three and a half by 83 and then in 84 bounced back up over four
percent.
They don't have the control that they think that's thank you.
That's the whole point of this article.
They can't control as much as they think they can and it takes longer
than any think.
It'll take.
That's the whole point, a good, what central Bankers themselves are
doing and like, this was astonishing to me, but Central Bankers.
Now, are buying and record amounts and
Fact, year to date, they've bought more gold.
Central Bankers have bought more gold so far in 2022 than any year
since 1967 in 1967.
You'll remember goal was backed the dollar was backed by gold.
That's how long it's been that since they've bought this much gold.
So that's a clear message, I think from Central bankers,
Yes it is.
If they're buying gold, it's interesting.
They, they're taking action early compared to what the public is doing
right now.
The public isn't paying attention, but I really think that the this I
don't know how long this is going to last, whether it's just a couple
of months or six months or a year.
But this is the time to accumulate
Late before the results that, you know, this delay of an input
stepping on the accelerator and nothing happens until the the you know
the mixture in the engine, richens up the revs start to build the
transmission kicks down and then suddenly the car lunges forward.
Well we're still in that stage where the transmission is kicking down
and stuff from all of the currency creation that they did.
And then the supply chain disruptions
Top of them.
And so you've to get ahead of this, to me is important.
I would rather be a decade earlier than one day, too late, because
when it's too late, it's too late.
Well, we've got some different asset classes if you had to pick one
investment to hold for 10 years plus what would it be?
Would it be gold and silver Bitcoin bonds or stocks?
And
The the overwhelming majority said gold and silver Bitcoin came in at
one-third.
It's interesting.
Stocks came in at less than eight and a half percent and bonds and
down 1.3%, but the new poll that we've put out there is the same poll,
but it we've added that you have to also be able to sleep soundly at
night.
We
Just been through a huge disruption in the crypto sector that.
I mean you know I am so glad that throughout the years I've been
taking profits from crypto and buying real Metals, I just like this
physical thing that has is three-dimensional.
It has mass you know you can hold it, it's heavy and so I've been
taking a virtual asset cryptos and what I've got
Prophets, taking some of those profits and converting them into real
precious metals.
And
We the cryptos have just fallen off the cliff, the precious metals
protected, the wealth that I stored in them when I took those profit.