The Fed is DESTROYING Us: -50% Coming | Great Recession 2.0

after yesterday after the last few weeks

I'm sure Danny shares that for you Danny

Blanchard joins us now the Dartmouth

professor and former member of the bank

of England monetary policy committee

Danny the bank of England inflation year

over year double digits people looking

for a rate hike do you think that's the

wrong move today

well I do as you might imagine

um I guess some news yesterday which was

uh inflation Rose more than folks think

but that's gone that's passed we're

supposed to be focusing on what's coming

there's a major credit Crunch and the

bank and the reality is that the bank of

England in its forecasts is forecasting

no growth whatsoever for three years

inflation below the Target and we've

just had a huge fiscal tightening so

basically guys assume they're going to

raise everyone thinks they will and what

we're going to sit and watch here is

disaster coming

um feels like 2008 all over again who's

holding what bad stuff presumably in the

UK with the mortgage markets now in

disarray we're going to start to see

Banks holding bad um Bad Mortgages if

you like that people can't afford to pay

so I think this is the peak this is a

huge mistake I would have been voted for

big rate cuts and what you'll see in the

United States and the UK is disastrous

data will show and central banks will

then move into panic mode as the markets

are pricing in already

Danny 25 is the wrong move so let's talk

about the Federal Reserve was that the

wrong move yesterday

well I think so too I mean we're seeing

inflation now clearly has peaked I mean

the question is to what extent is this

credit crunch a big deal I mean our pal

toast and Slot thinks that it's the

equivalent of about 150 basis points of

tightening that's probably true so this

is a new set of tightening over where we

were the FED has actually been entirely

guessing there is no economics to base

their claims that this would be a soft

Landing so you keep going and you keep

going but outcomes come about 18 months

later so the question is what what is

there out there that we don't know and

the new reported so well on Credit

Suisse and the 9 billion that UBS had to

receive to kind of make up for what's

hidden under the hood that we didn't

know so at these times you should be

cautious as to what's coming on the

downside it's hot I think the only

question is how bad is it going to be so

this looks like a wing and a prayer

we're going to carry on raising rates

well let's wait for some some data to

come and my assumption is that it will

start to come I mean the markets thinks

it's going to come I mean Howard says

you know maybe we'll raise rates but

look at look at the FED watch until

series fed watch talk says markets are

pricing in three cuts by the end of the

year so why would you raise when the

markets think you're going to cut so

we're in confusion we're absolutely in

confusion and it really feels like 2008

you know in the UK we've rescued

Northern Rock thought that that would

solve everything what happened was

Bradford and being the alliance unless

they failed RBS fell all about the six

to nine months later so watch this space

this was an error shouldn't have done it

there is no economic basis for anything

that they're doing and the real economy

is what's going to matter and wage

growth is a big deal that's not picked

up in the way that they thought but

really the real economy I have to cut it

so wrong because a lot of people are

listening to what you're saying and

saying really like 2008 Banks aren't as

leveraged at all what you're dealing

with is a liquidity crunch not a credit

Crunch at least not yet and you're

talking about assets that are backed by

sound loans not necessarily Mortgage

Debt that was taken out by somebody with

no income and who put nothing down so

this is a very different kind of

scenario than it was in 2008 how do you

push back against that

every credit crisis and every housing

booth for example the standard thing

that everybody says is this times

different for a variety of reasons this

time is different it simply can't happen

again I mean it's about it's not just

about that Lisa I think it's about

confidence remember it's about

confidence that the banks are whole it's

about confidence that my deposits are

safe and Janet Kellen I think made a

huge error yesterday I mean her error is

actually answering the question so now

we think are you you have a million

dollars in some Regional Bank what

should you do well obviously you should

pull that money up it's not guaranteed

then you should pull it out and take it

to Bank of America so that looks like

that right but it's about confidence

Lisa and each time in the history of the

history of crises everyone says this

time is different and I think the other

thing is that I mean you guys have

reported on it what what would you what

did UBS see under that hood that we

don't know about so I think that's a

great deal of it I mean remember as I

say in 2008 who would have thought in

August 2008 yeah that RBS would fail two

months later I think you know I think

it's these kinds of surprises let's put

the uh wrong of course I think you have

to be mindful credit crunch but let's

put the banking crisis aside for one

second the no no no no unknowns unknowns

whatever you want to call them and just

take a look at what the data was showing

before this particular meeting this sort

of perhaps backward looking but hotter

than expected inflation data that was

persisting in the U.S as well as in the

UK and other European nations from your

perspective have you been surprised by

how sticky inflation has been how long

it has taken to show signs of coming

down does that get you concerned at all

about where we're heading in terms of

fed policy being used as a tool for

financial the way she said just like get

you concerned at all sounded like she

was asking him does that get you excited

at all obviously because there are shops

in the UK context there's shocks imposed

by brexit but again go to August 2008

what you've said was essentially what

people said then in August inflation was

five and a half percent within nine

months it had gone to deflation and what

we're seeing in the United States is

those base effects are dropping out

certainly if you look at the uh the

unseasonably adjusted inflation numbers

they're really very very low I mean a

lot of actually what you're seeing is

about this weird technical thing about

the seasonal adjusting so really what

we're talking about is inflation's high

because of the way they've seasonally

adjusted using new methods so I think

the answer is that look at the way look

at the wages wages are not picked up in

the way that people thought wage growth

has been relatively benign I mean it's

hard to read the data Lisa I mean it's

as if people think we have a nice

Playbook we have never seen anything

like this other than the Great Recession

every piece of data since 1945 yeah

today is utterly irrelevant we have to

look at other prices and what you'll see

is then suddenly different inflation

plummet so I think that's what's called

Danny I've got to squeeze this in just

60 seconds left if they came out and

offered blanket Deposit Insurance would

your view change

probably would actually I mean I think

in a sense the answer then uh John is

that what wouldn't the bank of England

and the Bank of Canada and the ECP have

to do the same but I do think that the

blanket Deposit Insurance would really

be a help certainly think that Danny

thank you sir for catching up with us

Danny okay that was awesome let's break

that down because there is a lot of

information in that this guy like this

is a top G right here and I don't mean

like a top G like somebody who's stuck

in jail I mean like a finance type G

okay so basically an old white guy okay

so what what do we have well look at

this so first of all this is the

inflation that Jerome Powell was talking

about yesterday unfortunately during the

intra meeting period coming in a little

hotter than expected and really this

idea is that if you look at averages

over the last year yes inflation is

trending down that's fantastic if you

look at average pages of over the last

say six months okay yeah inflation also

oops let's go ahead and make the line

actually go the way there we go it's

also trending down that's fantastic in

fact the way you would probably draw

this average is something more like this

since these low points right here would

drag the line down right so that's

probably more of the moving average that

you're looking at right now the problem

is this this little pickup that we got

right here why if we now look at just

the last four months are we trending up

on uh basically core CPI on a month over

month basis right and this is what's

creating some concern for John Powell no

I think this individual makes a very

good argument is that Jerome Powell is

so concerned about what the CPI and pce

numbers are showing pce is the fed's

preferred method of CPI it's basically

the same thing a little different with

weightings but they rely so heavily on

these uh seasonal adjustments and their

weightings are based on some weird

things the weightings used to be based

on an average of two years of data now

they're based on one year of data then

at the end of every year we change the

weightings everything's a complete

disaster everything completely changes

right so uh what's remarkable about that

is you have this individual suggesting

Jerome Powell's convincing fight against

inflation is what's probably going to

destroy our economy now that means

recession In fairness Jerome Powell kind

of alluded to us walking into a

recession yesterday in fact I would go

as far as saying Jerome Powell basically

yesterday told us the recessions

confirmed folks buckle up there are a

few reasons for that number one Jerome

power when asked about out the soft

Landing basically said yeah there's a

path we're trying to find it but

basically it's not happening we're going

into a recession so Jerome Powell

realizes we're going into recession

beyond that look at this chart right

here this chart

shows Jerome Powell's front end of the

yield curve it is called Jerome Powell's

favored recession indicator and based on

this it has always been correct in the

past

we are going into recession when this

sucker inverts a recession follows

within 18 months and Jerome Powell

realizes that now obviously markets

change their opinion of what's going to

happen with either rate Cuts or rate

hikes Based on data for example there's

somebody in the chat here saying Kevin

you initially thought 2023 rate Cuts

would happen then you said they wouldn't

as market price no Cuts okay you have to

remember when I'm reporting whether rate

cuts are coming in 23 or not it's based

on what the bond market is telling you

in fact I provide you uh the data of

what the bond market is showing you and

showing you the charts saying hey this

is what the Market's pricing in right

now the market is pricing in 100 basis

points of rate cuts for 2023. this is

the same thing that was true in November

of 2022 the problem was in January and

February all of those rate Cuts went

away because inflation started running

up then we had a bank thinking crisis

and then the freight Cuts got priced in

again so like you have to be careful how

you how you analyze this data I I either

I want to make it clear to the people

watching that

whether we're having price Cuts uh or

rate Cuts this year is kind of like

watching a stock move one day it's right

one day it's green this stuff is

changing every single day and what we're

trying to do is pay attention to what's

going on because there is a really weird

Gap right now between expectations of

what the Federal Reserve is going to do

uh and uh expectations based on what the

bond market thinks look at this

particular chart right here okay on the

right side you have these little dots

I'm going to highlight them in green

this right here

in green at the top over five percent

five point one percent is where the FED

thinks we're going to end up having fed

policy uh policy rates for the end of

the year right that's where they think

we're going to be at the end of the year

well look at where they think we're

going to be next year I'll highlight it

in pink right here right there at about

4.6 fantastic well what is the market

pricing in for a terminal rate that is

the highest rate we're going to get to

well the market is pricing in that we're

going to be somewhere around

uh uh by the end of the year

3.94 by the end of the year well that's

very different that's actually

substantially lower than both of the

dots provided by the fed well why is

that well it's because the bond market

is trying to price in this idea that

crap we're probably going to go into a

recession now at the same time as we're

probably going to go into a recession

and even Jerome Powell's indicator

suggests we're going into recession the

reality is Jerome Powell basically has

to be dishonest to us this is what this

guy was saying the guy was saying Janet

Yellen crashed the market yesterday

because she was honest look at this uh

and and I remember this yesterday

because I was pitching the coupon code

for the programs of building your wealth

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changing the pricing for uh likely after

this live stream here but anyway take a

look at this

this chart when Janet Yellen was talking

uh is basically what crash the market

because like this guy says she was

honest so look at where we are here here

we had that classic W shape of Jerome

Powell this is what happens the market

goes up when the press conference comes

out the statement comes out rather so

the the data comes out the statement

comes out the market uh actually Rises

so it goes up after it goes up it comes

down a little bit uh then it comes up

going into the presser then it goes down

and then it tends to close up we tend to

have a w shape

unfortunately Janet Yellen came out and

said the truth that no we're not

backstopping Banks and markets cratered

after that I mean the last 15 minutes of

the day yesterday were a complete

disaster while Jenny healing was

testifying uh and so the individual we

just saw in the interview he's like look

Janet Yellen

said the truth what's the truth well the

truth is simple and the truth hurts but

it's very simple

no backstop of all deposits that's what

Janet Yellen said and this is the first

time we've really had this split screen

event where you have Janet Yellen

talking at the same time as Powell and

they didn't have a phone call first to

discuss being on the same page because

Powell comes out and says your deposits

are safe and then he's asked about it

are you sure and he says all I'm going

to say is your deposits are safe we have

the tools

Jenny Ellen's like nah we're not going

to extend FDIC and so what did this

former guy from the bank of England say

dude in that case

go to Bank of America like basically get

out of the small Banks and go to the big

Banks it totally makes sense especially

if you have more than the FDIC limit

right of course but that's what we've

been talking about for quite a while now

that's just the way the game is played

oh and so that created some stress in

markets yesterday but I actually agree

with the individual

that we are likely to see inflation

plummet every leading indicator I look

at leading indicator not this lagging

crap of these reports but I'm talking

company earnings companies forecast for

hiring what sentiment is on the ground

what business owners are doing in

regards to hiring the availability of

Labor not the stupid joltz data survey

that says oh there are all these job

openings bullcrap man talk to people how

many remote job opportunities are there

they're dwindling how many opportunities

are there for getting jobs at tech

companies very few uh how much

competition is there for tech jobs

massive how many applications did

cloudflare get last year for 1300 job

openings four hundred thousand there is

a glut of Labor Supply that's why you're

seeing so much extra driver availability

at Lyft and Uber the likes of which we

haven't seen before and it's leading to

a reduction in in uh earnings for

companies like uber because you have no

more Peak pricing because there's no p

like so it's kind of remarkable the the

availability of Labor Supply that you're

seeing that's deflationary uh as is

obviously autonomy and Automation and

and other leading uh factors we're

seeing by the way and this is just sort

of a side rant what the hell Airbnb you

want to rent an Airbnb for like 250 a

night because it's like oh the hotel's

250 a night the Airbnb is 250 and I then

when you get to checkout it's like the

250 turns into like 600. it's insane oh

my God the amount of extra fees that are

added on now are just absolutely

ludicrous I feel like rather than paying

for like a room tidy up I'm literally

paying for house cleaners to do a deep

cleaning of the entire house it's insane

but anyway uh back to this uh what this

individual says he's totally right to

say look we're probably walking right

into a recession and uh and and the fact

of the matter is

I think the easiest thing you could do

is look at drone Powell's response to a

question like this one I think this this

was a good question watch this response

right here from j-pal uh and uh any

totally Dodges the guy when the guy's

like are you just basically giving us

another false sense of hopium uh listen

in here

um you know that's just something that

we'll have to come through through

softening demand and perhaps some

softening in labor market conditions we

don't see that yet and that's that's of

course 56 percent of the index so the

story is pretty much the same I will say

that the inflation data that we got to

your point really pointed to Stronger

inflation if I could follow up on that I

was curious why you don't see more

coming from the credit crunch because it

seems to me that's something that you'd

actually uh welcome to a degree and uh

expect

um and are you not seeing more coming

from that because you don't know or

because you just don't want to have

another round of wishful thinking so

it's it's kind of interesting here

another round of Wishful Thinking uh so

so in other words

uh as sort of making this argument of

here hey like J J Powell uh you know why

why don't you think this credit crunch

is going to hurt us more do you really

think you can make an excuse that's

going to say oh our Market's not going

to crash because you think inflation is

slightly still trending up and now we're

going to have this wishful thinking that

we could continue to hike and damage

this economy and push us into a deep

procession uh because you had an

inflation report that showed 0.04 or 0.4

percent month over month inflation come

on Jay pal like you're losing the plot

the credit tightening that we're going

to see could be as painful as a one and

a half percent uh a rate hike at least

according to TS Lombard they think that

could be anywhere between 0.75 to 1.5

percent that means we're knocking on the

door of of six percent interest rates

here that's insane of course Jay

Powell's response it's really just a

question of not knowing at this point

there's exactly

great deal of literature on the

connection between tighter credit

conditions economic activity hiring and

inflation very large body of literature

the question is how significant will

this credit tightening be and how how

sustainable it be that's that's the

issue and we don't really see it yet

it's so so people are making estimates

you know people are publishing estimates

and it's but it's very kind of rule of

thumb uh guesswork almost at this point

but we think it's it's potentially quite

real and that argues for you know being

alert as we go forward as we think about

for the right hikes for us we'll be

paying attention to the actual and all

right we'll be paying attention Okay so

you kind of get it it's basically like

yeah we don't know we don't know okay

but we already know that so um now

here's here's another thing uh that a

couple couple things that are

interesting so I want to address this

one comment here about uh lower wage

workers seeing wage hikes uh and there's

this comment here about cleaners uh but

first I want to respond to this person

so this person's name whose looks like

gag uh it's either two boobs and a four

in between or or it's gag or her name I

don't know who this is but anyway this

person says friends don't make you pay

for information a friend shares

information that could change your life

Kevin is not your friend he could share

this info on YouTube freely his videos

for an advertisement

wow

so let's break this down

first of all how many YouTube videos are

on my channel and how many hours of

content are freely shared on my channel

the answer is thousands and tens of

thousands there's thousands of videos

and tens of thousands of hours of

content are available on the channel

so that's a a lot of information is

shared freely on YouTube

the next issue that you didn't address

is the fact that people are willing to

pay for information that isn't available

on YouTube or readily available on

YouTube let me make that clear

the reason I have courses is twofold

number one it organizes information in a

row for you so that way you can actually

understand it and build your information

together like if you watch a a real

estate 101 video and then you go to a

real estate 110 video well now you've

lost context right and that's kind of

what YouTube is it serves you up really

basic and then really complicated you

don't even know what you don't know when

it comes to investing in real estate and

so the beautiful thing in my opinion

about courses is this organized

structure for actually learning a

download of how somebody views the world

and gets perspective in order

and in a way that actually teaches

rather than in a way that gives you

information that potentially is more

scattered right I mean many of you know

I'm a big fan of wedge deals in real

estate many of you know a lot of my

principles uh but that doesn't mean

they've been taught in a way that's

organized that uh that that you can

adapt as easily as you could in a course

now sure can we make videos on that yeah

and but that's what the course is the

course is 40 a lot of the courses are

like 40 hours in a row of that kind of

content I can't make a 40 hour long

YouTube video I can make 41 hour videos

but again the way the algo serves it to

you isn't that good that's a uh and then

B wow how how dare a YouTube content

creator try to make money you know I I

really think this idea that uh oh people

it's it's evil for people to make money

is really stupid I don't know what's

gotten into people's heads in America

lately but there's been this

vilification of capitalism uh it's

really disappointing and and saddening

because capitalism is disinflationary

the fact that you could learn how to be

a millionaire in real estate for for 400

bucks through a course rather than going

to college for four years or you know

and spending 40 Grand uh is is insane

and they don't even teach you that stuff

in college so uh the the capitalism is

so wonderful and we should really be uh

uh you know a proponents of capitalism

and people are making money there are

ways to have win-win products and

services right I think people have this

inherent aversion for some reason of oh

well I won't click that person's link

because they might make money why is

that bad when somebody makes money

they're motivated to continue providing

you a good or service and making it even

better so I I don't know what this this

weird aversion to capitalism is it's

like people who are like oh I don't like

your real estate startup because because

you're going to make housing

unaffordable and I'm like what are you

smoking what makes housing unaffordable

the lack of Rental Supply apply for

renters what is my startup going to do

take houses that are uninhabitable like

hoarding houses or fixer-uppers and

bring them to the market and then

potentially add Casitas so you're going

from zero homes on Market to one to two

to three homes on Market Per property

like the the this vilification of

capitalism and investors is so backwards

and contorted I don't know what's being

taught in schools if it's just a lack of

being taught in schools I think there's

a lack of logic that's being taught in

schools and it's sad it's really sad and

look I'm not saying that you know j-pal

has all the answers or he doesn't have

all the answers he just told you himself

he doesn't have all the answers I'm not

saying I have all the answers but the

critical thinking that's that's missing

in the world today is very sad but going

back to this this hotel comment because

I actually think this is a very

reasonable comment so Tom Baker here

says I'm in the hotel business and it's

next impossible to hire cleaners paying

18 per hour rates for rooms are going up

so this is actually is something that I

think is very important to talk about

when it comes to the topic of inflation

uh and I think it's useful to look at it

uh you know on on screen here

so what I would say is if you go in and

uh basically say that the

typical wage you would pay for uh a

manual laborer is 14 let's say uh and

maybe now you have to pay 18 that is

absolutely inflationary to you that

makes your costs of business go up now

that makes you desire to raise your room

rates but your room rates your 250

dollar per night hotel room is not

predicated on what your costs are that's

not how capitalism Works your room rates

are predicated on demand so if demand

for your rooms go down you have to lower

the price and that means you eat the

difference in costs that then creates a

lower margin business and it's it

basically pushes inefficient businesses

out of the market

now just because Walmart and McDonald's

are raising wages does not mean we have

a wage price spiral after all the

average range wage in America is 32

bucks well if the average wage in

America is 32 bucks even if you see

lower wages go up

and you have more of those you're

actually potentially dragging average

wages down especially if you're losing

higher paid wages right so that's

another aspect to consider when it comes

to inflation what's the best way to ask

for a wage uh I would say wait right now

I mean we have a lot of strategies for

that in the elite Hustlers group but

this is probably the worst time to ask

for a wage because it's such an

uncertain time I think one of the best

things to do right now is make sure you

are invaluable to your your boss now I

get this all the time people are like oh

but does my boss see the value I'm

providing I guarantee you I guarantee it

your immediate supervisor whoever that

is whether that's the owner of the

company your supervisor whatever

sees and knows which workers work the

hardest they know who's sitting on their

phone all day long and who is actually

grinding all day long and those people

who grind will always end up getting

rewarded I'm highly confident of that

our media and schools are corrupted

probably so I start my new career and

job on Monday congratulations uh but but

yeah anyway uh so these are these are

interesting things to keep in mind and I

think it's very interesting uh about uh

what this Bank of England individual

said regarding Jerome Powell I think

he's right you know I think he's

absolutely right that Jerome Powell is

leading us into this tightening cycle

that's going to push us into a an ugly

uh recession sadly uh and it's very

unfortunate uh hopefully that recession

is very shallow because if the recession

is not shallow uh all stocks are going

to get reamed if the recession is

shallow then I can play music for you uh

and uh and and basically uh hope that

pricing power stocks continue to do very

well and uh we move on you know that's

that's the goal so anyway check out

those links down below for life

insurance by going to metcaven.com life

met kevin.com free for 12 free stocks

from Weeble uh and uh uh yeah there you

have it now I've run out of things to

say while my music is playing I'm hoping

to get you know to the end of that music

because I think it's kind of cool