Exposing the Fed's Secret Blueprint | "The Great Reset."

what would you say if I told you we have

played this movie before we have seen

the fear of a budget deficit resurging

inflation and recession all at the same

time before and what do you think the

Federal Reserve did in the face of those

fears what would you think if I told you

they laughed them off or what would you

think if I told you they embraced them

and took us into recession but one of

those is exactly what happened and

today's video is inspired by trying to

figure out what the heck is going on

with our economy because frankly there

is a lot of fear that inflation may be

trending back up that's what keeps a lot

of economists up at night now In

fairness economists aren't exactly the

best at making predictions as we saw

from Paul Krugman here from The New York

Times which some people love other

people hate but he makes a very accurate

Point by suggesting that in September of

2022 when markets had a real heart

attack after Jackson Hole and markets

ended up hitting their lows we ended up

having economists predict that we have

some of the scariest times ahead that in

order to get inflation down to 2% quote

we may need to tolerate employment of

6.5% for 2 years mind you we're

essentially at half of that unemployment

rate and so as is usual economists and

forecasters aren't really good at

figuring out exactly what is going to

happen and this comes as Dr Powell just

this morning says intellectual rigor has

to be combined with flexibility and

Agility even with state-of-the-art

models and even in relatively calm times

the economy frequently surprises us but

our economy is flexible and dynamic

damic and subject to unpredictable

shocks and so as forecasters we have to

think outside the models says drum

Powell at times forecasters have to

think outside the models now this is

really interesting because what we've

just set up is there's fear of inflation

economists were very dreary last year

about what it would take inflation to go

away just like economists many of them

are very dreary today about what it

would take inflation to go down you've

got expectations that inflation may be

turning back up in fact here's your

multivariant core trend for inflation as

you could see in the rate of inflation

has sort of bottomed out around this

summer but it's started to Trend back up

again this is for core now we could even

jump in here and grab Services X housing

removing some of that housing

disinflation that hopefully is coming in

the way of uh or stabilizing rents but

anyway uh as you can see here also a

slight inflection up and so this really

got me thinking man okay well is there a

historical precedent for these levels of

inflation and what I did is I decided

Well let's zoom out and look at history

and what we find is when we look at

Services inflation or the more

normalized line the multivariant core

inflation it's lumpy inflation goes up

and down it doesn't go straight down in

a straight line when it goes down it

could go down it could come up again it

could go down it's a little fussy the

long-term Trend since the late since the

early 80s late 70s has of course been

what the FED has since termed

opportunistic disinflation now that's

really important because it gives us an

idea of where we are today and then

we're going to compare back to when this

movie played the last time and the

reason I bring up opportunistic

disinflation this idea that hey we can

slowly be patient in letting inflation

get to 2% which was what was done after

Paul vuler in the early 80s raised rates

to those Peaks well what do we have just

yesterday in the in an interview with

the Wall Street Journal Neil kashari

tells us under tightening will not get

us back to 2% in reasonable time now

this is really interesting because it's

one of the first times we've actually

heard the Federal Reserve talk about

time how long is it going to take to get

to 2% and what are we okay with well

according to history we are okay with

waiting 20 certainly 10 years to get

inflation down over time and so what I

thought is okay let's go back to since

we just raised rates

55% let's go back to what the Federal

Reserve was saying after rates

skyrocketed in the Paul vulker era Paul

vulker was the chairperson of the

Federal Reserve erve until about

1987 so you'll actually have a lot more

that Paul vulker did and a lot more

commentary that came from Paul vulker

after his impressive action of finally

putting the fed's pants on raising rates

to break the back of people's inflation

expectations but it wasn't that easy see

even though Paul vulker raised rates to

nearly 20% to crush inflation there was

doubt there were people calling for

recession

and unmanageable budget deficits and

uncertainty of an inflation rebound that

could drive us into a deep dirty

recession which is eerily similar to

exactly what we're hearing today today

it is quite precisely what we are

hearing geopolitics fiscal deficits

uncontrolled inflation going into

recession now how interesting to see how

Paul vulker responded to somebody saying

exact ex actly this and then I'll tell

you right when and what happened next

ready for this buckle up it's a good one

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look at those okay here we

go one question we haven't talked about

is how much inflation we're likely to

get before the cycle is over oo talking

about the cycle coming to an end right

let's just read it the way it's written

though so Kevin keep the commentary to a

little keep going here if we're ever

going to get back to price stability we

have to keep ratcheting down the peaks

of inflation from cycle to cycle look at

this this Ang this fear of if if we're

ever going to get the markets to believe

again that we could actually get

long-term inflation to come down we must

continue to ratchet rates higher to push

inflation down and to break that

fear remember inflation is as much a

reality of prices going up as it is

individuals feeling that prices are

going to keep going up driving them to

by now causing more inflation see

inflation is vastly self-fulfilling it's

all based on our expectations and then

we self- fulfill them so you have to

break inflation

expectations so let's keep listening to

this person here as I look at this all

expansions come to an end because of

some excesses somewhere we've pointed

out a couple the budget deficit the

trade balance and there may be others

but it seems to me that the two excesses

that we have our telescopes on are the

kind that are likely to push up interest

rates fairly sharply once they go and we

have a recovery it seems that is

operating near a margin of interest

rates that could turn the whole recovery

soft fairly easily this is a way of

saying like Hey we're about to break

something and you know our recovery

could turn into recession really quickly

that's the mortgage Market automobiles

Market Consumer Electronic sector by the

end of 1985 this recovery will be only 3

years old and as we get into 1986 we'll

be 4 years old the question is will the

excesses trigger a recession before

inflation jumps above the previous Peak

now this is pretty bearish right this is

very inflation bearish and sounds eerily

similar to some of the pain that we're

hearing about today and I want you to

hear Paul vr's response and then I want

you to see what the FED did next so in

case it hasn't been obvious yet this is

actually from January of of

1984 1984 this is just 2 years after we

saw some of the highest interest rates

from the federal reserves in the last 40

years and what was Paul vul's response

chairman vulker because you have the

happy Prospect of another

recession in other words Paul vulker

laughed off this person's inflationary

concerns by suggesting the only reason

he might think we might not end up

getting higher inflation is because

we're about to go into a deep recession

which in case you haven't been caught up

with what the Bears think that is

exactly what a lot of bears in the

market today think and respectfully it's

a good argument then maybe the argument

isn't sustained long-term inflation it's

actually that something's going to break

and the economy is going to collapse so

the question is twofold one what what

did the stock market do and two what did

the Federal Reserve do both of those

very very interesting one way to look at

that with these balloons in my face is

to look at CPI and the FED funds rate

and then we can look at the Dow Jones

Industrial so over here 1984 January of

1984 the Federal Reserve was right here

they ended up raising rates a little bit

more as you could see here they were

still on sort of this slight upward

trend of uh increasing interest rates

and what we noticed is that inflation

slowly moderated this is a core CPI here

somewhere between that 4 to 3% level it

went up again a little bit to about 4

and a half and it really took about the

91 paino recession here to really Drive

inflation down for the next 10 to 20

years and that's really what we saw here

is this 40 40e path of inflation coming

down but this isn't too interesting this

isn't too interesting no Pon intended of

a chart to look at what's more

interesting is to look at how did the

stock market react because the bearish

arguments sounded very similar then as

they do today that there were fears

about inflation not going away and take

a look at what the stock market did

here's the Dow Jones Industrial Average

you're going to mind that the biggest

pain Point came right here during the

vulker era that these are the 70s which

was a quite painful decade and then here

we had sort of the double recessions of

the early 80s you can see this right

here is yourt bubble this is your

1991 recession and again here are the

early 80s now because it might not be

particular ly clear I want you to see

that on a chart here where when I move

my mouse you could verify this indeed is

1982 81 right around here where the

stock market bottom and this bearish

fear was actually made right about here

sort of in this midpoint volatility

which is quite interesting because we've

seen our Market plummet in

20122 recover in 2023 and have a little

bit of a hiccup here in the last few

months and the Bears are very fearful

about the reality of a recession we've

seen the Atlanta fed now real GDP

estimate drop below 1% last week

although it was revised up to above 2%

again here but folks what happened after

that era and what did it somewhat

symbolize in terms of uh a pattern well

if I could ask you to look at this chart

very closely do you see any shape that

pops up

huh that's quite interesting now why

would that occur over the next 20 to 30

years despite the fact that you had a

painful recession here a painful

recession here in 2001 this would be so

your 91 your 2001 your bubble I mean

remember folks in some cases here it

took 14 years for your stocks to come

back to the same value that they were at

the top of theom bubble right

so what made the stock market Trend in

this direction where it fell under

inflation fears and then slowly started

rising in the shape of this uh check

mark at first in ' 84 during these

periods of uncertainty the Federal

Reserve continued to raise rates a bit

but did start trending towards a

maintain bias wait and see which is also

exactly what the Federal Reserve sounds

like it it's doing now and you know what

came after

1984

1985 and you know what commentary

changed to from 1984's bare uncertainty

of oh no we might go into a recession

and we don't know how long inflation is

going to last and we don't know if

inflation is going to pop back up and we

don't know what's going to happen with

inflation we are fearful do you know

what happened do you know what

chairperson vul's words were directly

from his mouth via this piece of

paper they were there have been a lot of

comments about a speculative feeling

about whether people are taking on

excessive debt and whether levels of the

uh Dow Jones Industrial at 1,500 or

sustainable

levels and do you know what Paul vul's

explanation for this was by

85 it was the following quote I think

it's partially because people people

have changed their views on inflation

which is

constructive and I wouldn't want to

undermine that now that's really

interesting because obviously if there

is a constructive change in the

Viewpoint of inflation it means that

people's expectations of inflation are

lowering they're falling people think

inflation is no longer the problem that

it used to be when that sort of calmness

happens

financial markets Nike Swoosh recover

that is you get the most painful

drop before you get the long-term swoosh

up because of inflation fears being at

Peak and as those fears slowly and I'm

not talking over months I'm talking over

years as those inflation fears finally

go away over years despite the shouting

bear

and the eventuality that we will have

other recessions the stock market

continued to Prevail so what's the big

bottom line takeaway from this video

well the big bottom line is simple we

have actually seen this movie before we

went from unanchored inflation

expectations a fear that we were going

to have wheelbarrows of money becoming

the wymer Republic fears that because we

left the gold standard and there was

geopolitical turmoil and an oil crisis

and fiscal deficits and trade deficits

and drama because of those

fears combined with high inflation we

ended up getting a stock market that

fell for nearly

15 years think about that folks 15 years

of pain as we are fighting inflation we

have this bizarre privilege of being

able to look at at what happened after

inflation was conquered after the pull

vulker and put all of the subsequent

crashes into perspective and even if you

go as far as normalizing the chart to

get a more logarithmic chart for the Dow

Jones Industrial you could still see

that the low in essentially the last 100

years with the exception of briefly here

in the Great Depression

was the pul

valkering the rapid increase in interest

rates and as inflation expectations

faded everything ended up being just all

right so it turns out the great reset

was less of a great reset of

everyone so it turns out the prior fed

blueprint of a great reset wasn't so

much resetting everybody's wealth it was

resetting inflation

expectations and as those expectations

fell stocks and asset values Rose why

not advertise these things that you told

us here I feel like nobody else knows

about this we'll we'll try a little

advertising and see how it goes

congratulations man you have done so

much people love you people look up to

you Kevin PA there financial analyst and

YouTuber meet Kevin always great to get

your

take