Markets could Fall 50% More | New BOMBSHELL.

is it possible that the Federal Reserve

could continue to keep interest rates

High while inflation plummets and the

answer is yes but in this video you're

going to learn why and it's

unfortunately something that is not a

good news video and it's not potentially

bullish

but it's true so we need to talk about

it a quick note

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started so

is it possible that the Federal Reserve

actually continues to hike interest

rates of what war or at least keeps them

at elevated levels potentially they hike

uh through to about a 5.25 interest rate

and then potentially keeps those rates

High while inflation actually plummets

and doesn't actually cut anytime soon is

that possible well initially when we

look we think to ourselves why would

they do that they're going to put us

into a deep recession but remember back

to January of 2022 I mentioned in many

videos and I've referenced this many a

time that the worst thing that could

happen for the Federal Reserve is

something known as a wage price spiral

this is generally defined by wages being

significantly above inflation and then

eventually those wages dragging

inflation back up now for our current

terms here in December of 2022 that

could actually spell what's known as a

second wave of inflation where inflation

starts plummeting like crazy next year

especially as owners equivalent rent

comes down and the the housing sector

slows down to a halt substantially but

then so so we see headline and core

inflation I'll plummet next year and we

actually do see inflation Trend towards

maybe a two percent average over the

long term maybe you know the high three

percent by by the end of next year and

then in the two percent range thereafter

right but what if the Federal Reserve is

concerned oh no we might actually see

inflation jump back up because wages are

high consider this wage growth right now

is in excess of five percent let's go

back to the last time we had high wage

growth it was actually in the 2008

recession or leading up to it was sort

of the crazy Market the crazy Bull Run

Market of 2006 and seven and what you

had here was you had wage growth sitting

somewhere around four uh to five percent

and the 2008 recession saw wage growth

fall rapidly but it took a deep

recession to actually achieve it

consider this in December well I should

I should start here in March of 2008.

you had wage growth sitting close to

four percent

by December of 2008 you had wage growth

at 3.6 and now you are already knee-deep

in the recession

that ended up falling by December of

2009 to 1.9 percent which is good wage

growth fell substantially if wage growth

is sitting somewhere around two or three

percent and inflation is somewhere

around 1.8 percent that's probably where

the FED says we're okay with that

consider what happened after the

recession after the recession it took

nine and a half years to get wage growth

back over three percent that means that

wage growth was sitting at as low as 1.9

percent in December of 2009 and it took

nine and a half years to 2019 to

actually get back over three percent

wage growth but at the time inflation

was sitting at somewhere around again

1.8 1.7 1.9 percent so the Fed was

really okay with this spread of maybe a

third to one percent where wages are

growing a third of a percent to one

percent above what the inflation rate is

right well where do we sit now well

right now inflation is over seven

percent and wage growth is five and a

half percent okay cool no wage price

spiral because inflation is higher right

well what happens at the end of 2023

when all of a sudden inflation is 3.9

and wage growth is potentially still 5.5

the spread is too large and if in 2024

we see that wage growth continue to

stabilize around five percent and

inflation sitting at say two and a half

percent and we have a two and a half

percent spread or a three percent spread

between where inflation is and where

wage growth is guess what the FED has to

do well they have to bring wages down

otherwise they risk a second wave of

inflation wages are so high that now

people go back to spending they keep

spending like crazy and then guess what

happens inflation comes back and it

never goes down and if it doesn't go

down then it becomes entrenched and then

you're back to the 1970s where you had

sort of a decade long of inflation and

then you never average that two percent

Target but consider this the FED has

three solutions for bringing inflation

in the wage sector down there are three

ways you bring wages down and remember

the FED wants some wage growth right

this isn't to say we don't want to see

people have their earnings go up but

there are only three solutions number

one you increase the supply of labor

which is immigration right you have you

loosen immigration policies you bring

millions of people into America

hopefully through legal means and all of

a sudden now we have more workers and

wage growth can stop everybody can have

a job wages can still go up two to three

percent but they're not going up by five

and a half percent every year which is

unsustainable that would lead to a

second wave of inflation right of course

Congress ain't going to do that because

Congress is never going to loosen the

immigration rules because they just

don't uh it's very very difficult to

have immigration into the United States

so

the second option would be you train

workers to take jobs that are needed

unfortunately that requires better

schools and I ran a governor campaign in

California all about better schools and

financial education and schools and

trade schools and let's just say

everybody says it's a good idea but then

everybody wants to tell you how hard it

is to change the school system and how

are you going to work with the

politicians on the school board how are

you going to convince them that they

should actually do something okay that's

no offense to school boards but let me

just say that's what other people were

telling me when I was in that world and

it's just like oh God okay everybody

just wants to tell you it can't be done

I I'm not a big fan of it can't be done

I'm a big fan of how can we get it done

the only option remaining to actually

get wages back in check is the painful

one it's crushing demand that's the only

other option this is why Tech is laying

off because advertising demand is down

uh SAS Service uh demand is down and

when demand goes down companies go uh we

have too many people we need to preserve

margins let's lay off

so this is why the FED is looking and

saying okay well we need to get job

openings down because right now we're in

a situation where we still have oh

that's so loud we still have three

million more job openings than we

actually have uh you know people willing

to take those jobs and when you have

that many job openings it suggests that

there's still more demand for labor than

there is labor Supply and what happens

in a situation like that

wage prices keep going up so this is

actually a really crappy situation where

I realized you know I like to go back to

why did the FED go more hawkish the fed

you know Jerome Powell all of a sudden

was like really chill in November he

seemed happy he's like okay great like

we've got a good inflation report let's

get a second good inflation report and

inflation starts trending down and then

all of a sudden he comes out like a

total jerk in the last fomc meeting and

I'm like why dude why why all of a

sudden you're turning into a jerk again

and I now you know I'm studying more my

goodness it is so loud today hopefully

you can't hear that this is so loud I'm

sure you're here a little bit but but

anyway I'm like why is it so uh why did

you turn so hawkish and then I I study

every single day that's just all I do

and now I'm realizing oh my gosh we

cannot have wage growth at five and a

half percent while inflation is even

three percent because now we for sure

have a wage price spiral we're gonna

have a second wave of massive inflation

now I'm not trying to be all doom and

gloomy here uh like there there is a way

this can still happen basically what we

need is yes companies to stop raising

prices that's step one let's actually

get inflation under control I think

everybody is kind of convinced at this

point that inflation is going to come

down substantially in 2023. my concern

is

what happens when we get to May

or you know March right because I talk

about March on the summary of economic

projections so by March we're going to

have another three CPI reports so let's

say inflation is is super low in March

right and the summary of economic

projections is like all right great

we're doing good inflation is under

control but what's the FED going to look

at they're going to look and go how are

job openings uh-oh still out of balance

okay well now we have to revise that Dot

Plot to say potentially we have to keep

rates higher for longer so that's not

going to be taken well by the stock

market because I don't think most people

in the stock market right now are

looking saying okay yeah inflation is

going to fall and there's actually a

chance that inflation could Skyrocket

again I think we're thinking inflation

is going to fall the fed's going to

U-turn and game over we're back to the

party that we had before the pandemic

you know this is all caused by all the

crazy money printing we had and it's all

going to go away but the problem is it

may not

because wage inflation could keep going

so I actually think that in the next few

months the real Catalyst that we need to

look at and and the CPI report's still

going to be very important because we

need step one to happen right we do need

that inflation to follow so we need the

confirmation that inflation is trending

down just like Jerome said yeah

inflation's falling just like we're

expecting it to that's what he said last

time like super Cavalier and I'm like

why is he saying that

and if he's expecting it to go down and

it's behaving the way it is why is he

still being so hawkish and then I'm like

oh no

it's that like that wage growth

seriously their concern is it's going to

lead to a second wave of inflation so

what do we have to look at we have to

look at the jolts data we have to look

at the labor reports and we actually

have to see companies slow their hiring

but until that happens

buckle up

raise cash have more cash you know I

don't think there's a massive Rush here

to get in the market and if I get asked

one more time uh should you start taking

on margin to buy the dip the answer is a

resounding no

anyway check out the programs I'm

building your wealth link down below uh

this is going to be something I'm going

to study some more and we'll have some

more videos on this but uh

damn it

damn it honestly damn it all right we'll

see in the next one bye