Hey everybody welcome to the tui talk show today we're going to talk about inflation and the fed raising rates. Let's get right on into it, transition all right everybody, so i actually don't have a guest. Today, it's going to be just me, um kind of like every other week. It seems like we're just going to just me and we'll see, we'll see what you guys like more.

If you guys like hearing my beautiful sexy voice - and you know this voluptuous hair uh. No but deal we'll start off with who, oh my goodness guys i was, i was actually trying to get a guest on today. I was gon na say that's really, ironic timing, right as i started it um, but today, i'm filming on wednesday. I have to go back to new york tomorrow morning, so i won't be here on friday to film, so we're doing it early and that's convenient guys is tomorrow, st paddy's day yeah.

So it's kind of like perfect timing, which is why we didn't even allow you guys to vote for the drink. I didn't care because i wanted to do something irish, that, like it's like the drink of my people, um, i am like 100 irish. If you didn't know, that's what that's why i am really pale and can't tan, but that's also why i love me some wait. What i i need to pour the baileys in right.

The true irishmen would know that. No, we just know how to make really good potatoes um we're going to do what in the show yeah in the shot glass yeah in the shock. I saw you don't worry, i'm not. This isn't my first rodeo.

In fact, i went to my first rodeo this week and it was um well now i can officially say this: isn't my first rodeo, but it it was pretty crazy. I highly recommend it if you're ever in texas to go to a rodeo. I now feel like i've tried like truly crossed, that line into a real text and all right how much how much should i pour anything like the whole thing, all right, so we pour this into here, got some jameson in here already all right guys. Here you go, no, no all right, we got, we also have we can't you guys know.

My crew is always joining in on uh on the drink choices with me. So here we go. We drop this into the into the cup three two one. That's just good! That's like three different types of liquor and one drink: isn't it's beer yet beer, guinness, jameson and bailey's? If you guys don't know how to make an irish carbohydrate, i just taught you so what you do is you pour the guinness into the cup and you get a shot glass and you pour like half james and a half baileys, but apparently do not mix the Jameson and the baileys ahead of time behind the scenes here, he got going on uh a little a little too much to drank too fast and got stuck in the throat there.

So, but no it's a really good. It's a fun! It's called the irish car bomb. Perfect for st patty's day, for those of you guys who are going to be celebrating highly recommend trying it out, you can look it up online, but again, half the shot will jamison have to shop with baileys and you drop that shot glass into a glass of Guinness and then you drink it very fast because it will curdle if you let it sit too long. There's your lesson of the day.

Now, as i mentioned, this uh in the in this intro today, we're gon na be talking about, essentially inflation and the the recent uh hike rate hike that the fed just announced. Today there was the fomc meeting and we've been anticipating rates to be hyped right, like this isn't new news um in fact, we've been waiting for it for a while. Now that inflation is pushing eight percent at the end of february 2022, which is the i mean, that's it's a drastic increase, a very short period of time, in fact so much so let me uh get my notes up here. What are you talking a lot about? Uh we're gon na be talking about a lot of numbers today, so i decided to take some um meaningful notes here, just because i don't remember all these numbers off the top of my head, if i'm being completely honest, but they are really important to not only.

I mean very important, especially the overall market, but i mean your daily lives right. This is stuff that truly and as we've seen with the oil and gas prices, as we've seen with i mean i don't know about you guys, but i go to the grocery store. Now i'm spending more, i'm still spending noticeably more money than i used to now. I also eat a lot of food, so it's a very drastic price increase right when i'm paying for meat and whatnot um.

But this is all and there's plenty of reasons. Aside from just inflation, a lot of this global conflict, we're going through is going to lead to likely more supply chain issues, um anyways. This is among the highest level of inflation in quite some time, uh, the the the last real massive spike we had over. In fact, the last time we were over five percent was in 1990 and uh.

If we're gon na we'll we'll how we're gon na have some graphs show up on the screen here, um as i'm looking at them so but no, the the 80s were essentially among some of the highest inflation. We've seen this century um only topped by the late 1940s, where we got up to 15 inflation. However, in the 90s or 80s in the early 80s, we got up to just about 15, which led to some very, very massive rate hikes. Uh height, am i saying rate heights yeah.

That sounds weird. I'm saying i feel like i'm saying it backwards, but i'm not rate hikes, and i essentially again we can never predict the future here. We cannot predict. They can tell us how much they're going to keep hiking up the rates, but they also expected that inflation was going to be at two percent this year and we're now at nearly eight.

So as much as we want to predict and keep those numbers low. We have to kind of be prepared for everything, and i want to talk to you guys about what this really means in terms of our daily lives and in terms of the market. What happens to the markets during these times of massive um massive periods of inflation? When interest rates are raised, so right now we're sitting at roughly again, we increased as of today uh a quarter of percent 0.25, which is, you know, quote unquote modest um, considering right that, let's see i'll we're going to pull up this chart here too um in The 80s in the early 80s, when we were going to that massive period of inflation, uh rates were raised to nearly 20 and for reference right now we were at zero percent for two years: right: 0.09 percent, minuscule um, and so what again we'll get into all This and what it really means, but i mean for those of you guys who are you know, maybe either uh trying to get loans mortgages whatever back in the 80s you'll. Remember that this would.

This was an almost unaffordable. I say you'll remember like i was part of it. I wasn't even born, then i wasn't even probably thought of then. If i'm being completely honest, was i let's see i was born in 98 18 years? No, i don't even know if my parents, my parents, weren't married then they might not have even known each other man.

I wasn't even not only was i not a thought, my parents weren't even married, then that's crazy um. But i remember, like my my grandparents telling me about how the the essentially affordability of a mortgage has drastically drastically changed over the course of their lives, because they went through that period right where um interest rates were just so high. Now that was good signs for, like a savings account right where it was actually actually made sense to have money in a savings account then, because you're generally getting decent interest rates. Uh.

You were year over year when inflate or when interest rates are raised. You are seeing that effect in your bank account now a quarter of a percentage increase. You're not gon na see much like congrats you're gon na make an extra point two five percent of your money year over year when the market itself generally returns you about at the overall market year over year. For for the course of the markets, history, around eight percent a year now in 2020 to 2022, we saw a market increase from low to high of roughly a hundred percent, which is why you know everyone is kind of waiting for these pullbacks, because what goes up Must come down now? That's not saying we're going through a wild market crash.

We might just go into an actual true bear market and that's uh, something i think it's important to note too right is that a lot of people are worried about the next crash. During the covid crash, we that was one of the largest crashes that i've, that is, the largest market crash. I've ever seen, um now, of course, during like 2008, there was a pretty drastic decrease right. I think the market fell.

I want to say 50 or 60 percent during that 08 recession, but i wouldn't call that a crash right. The coveted crash really only lasted about a month or two before beginning to rebound, whereas that 08 into 09 recession took years to build out of, and that crash even still was roughly a crash was roughly a year, long um, and so, when i think of a Crash this is something i think is really important, and i saw this is a point i saw on twitter a long time ago. A crash implies true panic max panic. Think of it, like a panic dip, buy on an otc stock right where, when you get that massive, very fast, very drastic price, inbound supply and demand imbalance again, it's an imbalance.

It will balance itself back out just as quickly as it came down now. Maybe not all the way back to highs, but if you get a 50 or 60 crash in a matter of minutes on a stock that will at some point that panic um deteriorates and we get those people who are starting to buy just because of the price And difference very similar or imbalanced very similar to what happened during the covet crash and that actually ended up likely being some sort of a short trap right, where normally those bounces lead to a lower high. Such such a sharp drop generally is a bearish sign nonetheless, and there is opportunity on the long side trying to bounce it. However, again think of it even like a small cap stock right when you get a massive massive drop, it will bounce, but it likely isn't going to break out again like the overall market did and when that happens, you're going to have big money funds that are Loaded inputs that are loaded short into the bounce that are eventually getting squeezed out and which led to that 100 run from lows to highs um, and i don't even completely know where i was going with that talking about savings accounts.

I don't couldn't tell you how i got into that topic, but uh more or less i'm trying to get at here is that if we do have an actual pullback in this market, i don't expect it to be in the form of a true panic crash. I expected to be in more of a gradual, gradual downfall and we're kind of seeing that pattern right now already right from highs a couple months ago on the spy, it wasn't some massive three four or five day. This has been what, if we, how far we have highs now, how many months, i think it's probably early february, i want to say we hit highs it's a month. Now we have, we are down.

You know 15 20, but it was very much more gradual where we are getting these bounces right. We're going we're essentially getting that dip, lower high dip, lower high dip, lower high um or yeah lower high um, and so that's kind of more or less. What i expect to be, even when major support levels are broken, i don't think we're going to be seeing like massive seven or eight percent drops in a day. Unless again, there is so much.

We've talked about the past three episodes. The russia, ukraine top conflict topic has come up if that continues to get worse perhaps, but even during you know, i think we talked to last last episode. Maybe we didn't. This is something i did want to talk about, though, is that during the different world wars that we've had? Actually, the market surprisingly didn't have that massive drop during the war, because the market had already dropped before that right.

World war ii came after the great depression right. Am i right on that? When did world war ii happen? Maybe i'm completely talking bogus um? I should know this. This is pretty sad. Let's see we're gon na do some quick research here when did world war september, 1st 1939 right? Okay, so that panic was at the end of the 1920s right that great depression into the 1930s and by the time world war ii had started.

And again we didn't immediately go into into world war ii here right. It took us some time to get into it, and i say us as the united states, literally us um u.s um. No, it took some time and by the time we had entered the world war which what i guess early 40s um. We had already gone through that massive depression, and so the us entering the war, the worst starting in a sense, was already priced into the market, and now we are at highs.

We are in a global conflict, but we're not directly involved in this rush. Ukraine uh conflict. If we went into a third world war, maybe different story right where the u.s goes to war with russia or china could be a different story. But as of now that isn't the case um, and so when these global conflicts.

Yes, they do affect the market. But statistically over time, actually, during the war itself, the market hasn't had these massive fluctuations. Generally, it's almost been priced into before that, even even smaller wars like the korean war, um uh. Oh, what was the other one? Vietnam, the vietnam war, is that that was one of them right wow, as you can tell, i dropped out of school, did not pass.

History didn't pass. Math didn't pass science, okay, i passed history, but i didn't pass science or math. Actually i just didn't take science. That's why i dropped out it's because i didn't want to go through chemistry and bio.

Come on come on, you got to give me what uh they're they're. Looking at me back here, like i'm completely stupid, which listen, i'm kidding off topic, but no during these wars. Right, we do have a drop in the market, it's just simply not an actual crash um. What has led to crashes statistically has been things like covet things.

Like an actual, you know, the housing market bubble bursts, the dot-com bubble burst right. It wasn't wars because generally spending actually increases during wars during times of conflict and when spending increases the economy gets stronger. Now, that's an argument in itself where so, i think, there's a lot of people that argue a lot of times. Wars are started for financial reasons.

Uh, which is kind of sad right to think about, however, it's just kind of the fact of the matter is that wars do help economies and debatably. Why we stayed in afghanista, afghanistan, so long is that it - and i think, actually, i think bowen might have talked about this last week - right where why did we stay in the war so long? Well, unfortunately, it led to a lot of government contractors, defense contractors getting a lot of government money and again that that provides a lot of jobs that provides a lot of opportunity. It forces us to spend money as a government. Now again, we're just got a little sidetrack there, but it is good to understand how this stuff affects the market, and now that we are raising rates, even though it is during a time of conflict.

I think that the conflict itself is not going to be or lead to a massive crash. However, during times of uh, raising rates right things get with things like well just about everything in your life is going to get more expensive and i earlier was talking about how mortgages were nearly unaffordable. In fact, when i was doing some research for this show, there was actually an article talking about just how unaffordable mortgages were. I think that might have been like the headline how it was.

It was more flashy than what i'm about to say, but the unaffordable mortgages of the 1980s um - and this is a great time where again, it makes more sense to save money than it does invest because of the rates and that's kind of right. The the two different sides of this, where, when rates are raised, investing growth is a lot more limited, but saving money is a lot more uh lucrative, and that is you know the age-old advice your parents probably gave you save your money. Save your money, save your money and then people are always saying: no, invest your money, invest your money, invest your money and it's like okay, well, which one do i do. Investing might not be practical for someone who did not have a lot of money beforehand, because again, you know you're, probably better off saving up to invest if you don't have enough money to really capitalize on those growth periods.

However, when growth periods, slow and saving periods take over, essentially, money is priced at approval time, more or less uh is is priced at a premium where the value of money of the dollar in your pocket today is worth more than a dollar in your pocket tomorrow And that is very, very true during periods of high interest rates um and that inversely that is not necessarily the case during periods of very low interest rates, high growth, no wonder we saw so many overvaluated companies. Interest rates were at all time lows. Everyone was inves all-time lows. I say that like, let's see where are we where's this chart? I was just looking at um, okay, oh, i actually just headed up during from about 2009.

Ironically, at the end of that recession, interest rates are dropped to encourage economic growth. Pardon me and then from end of mid mid to end of 2015 up until 2019 rates were slowly raised up to about two percent, and that was roughly a four year period. We are projected oh. This is what i wanted to talk about too um.

So, with that 0.25 increase in the uh in that rate hike plan during the next next six fomc meetings, they plan on raising rates at a standard at a set quarter percentage every meeting, which should lead to an effective interest rate by the end of 2022 to 1.9 percent, which will essentially get us back to levels from 2019. It almost seems like that's what they're trying to do right is get us back to that level. Up from 2019 pre covered crash they're almost trying to correct it themselves. Now.

That being said, the difference is we weren't going through massive periods of inflation during 2015 to 2019. In fact, we were at a very healthy, i would argue, a very healthy economy. Um. They were just against stable growth.

We didn't have any massive inflation didn't have any massive economic worries um, and so it was a little bit more of a healthy interest rate. Uh increase, gradual right. This is going to be a lot less gradual, a lot more sudden and it's a way to fight that inflation, which is what was done in the 80s when interest rates made their way up to you know, inflation was no yeah interest rates made their way up To 18.75 percent uh inflation was at 15 again we're still at half of that level and fortunately uh the interest rates have not raised to half of our uh. I guess we did the math at what they should be.

You know from the 80s to now um, when inflation was at 15 rates were 18.75, so interest was actually over. Had the interest rates had overtaken inflation. If we were to go there in this short of a period of time, which could happen in the next two or three years, if inflation remains high, we could see interest rates up over five percent um up over maybe 10, depending on how this works. Now, what's really interesting as well about um inflation and interest rates raising.

Is that it's not necessarily right, like the inflation, isn't uniform right, it's not every it's, not that every single sector will see inflation rates at that level. However, i so just as we've seen now right, oil and gas prices are up. Oh, what is it it's some very broad range here between 50 and 100 year-over-year, i want to say it's actually like right around 50 right now year-over-year, but i can just tell you from when i moved to texas um last year. Almost what day is today the oh, my god, hey happy anniversary, i moved to texas.

A year ago today, yeah yeah yeah um, when i moved to texas gas, was about 2.25 2.30 cents, a gallon, we are now. I can't go anywhere. What do you? What do you see about four dollars? A gallon right now, 3.99 seems to be the standard level at every gas station, so yeah right around 40, pushing 50 percent between 40 and 50 right here in texas - from what i see, but i know that isn't necessarily the case everywhere in the country. So you know yeah we're at a 7.9 inflation rate.

That doesn't mean everything is affected accordingly and again, there's that's because there are other factors like this russia, ukraine, war, which is creating more of a psychological dependency on oil and gas, even though supply hasn't necessarily massively decreased at you know a 40 or whatever that math Would be again didn't pass my statistics to class um - it's not uniform, for example. Here are a couple notes that i took right now, some of the more fitting ones to that inflation number clothing prices are up 6.6 percent, auto body repairs. Motor repairs are up. Six point: three percent airline fees are up.

Thirty well, twelve point: seven percent call it thirteen percent that i mean and then rent well. So this is this is the statistic i would. I guess i also do live in austin, which is you know, a booming city. Um and my my rent's increasing more than this number but rent slash, shelter is up 4.8 year-over-year now my rent.

Apparently they want to charge me an extra 15 to 20 percent this year, this time around uh for the longest lease. I know a lot of uh uh apartments here in austin, especially downtown that were raising their rent prices 30 year like from last year. That's crazy now, what's interesting, though, is that housing prices i think everywhere um now, i'm i'm from upstate new york. So i actually, i still like to kind of keep in touch with those those rent prices.

Again, it's pretty easy. I've got family there. Uh housing prices. Didn't like drastically drastically increase, they definitely.

You know they definitely rose. You know 20 25, which is a drastic uh increase in such a short period of time, but here in austin, oh man i mean i, i don't know the exact data, but i i know one point now. This was during that peak craziness. There were houses that were up over a hundred percent year over year in terms of value and again that's because not only were we going through all of that um housing bubble right, we want to call it bubble, but austin is also.

Everyone is moving here. Lower tax well really, no taxes, i guess in taxes, no state taxes for income um, and you basically had a lot of people from places that were already overvalued. Finding an area that was undervalued and being able to pay cash for these houses and they didn't care. If they paid over there a lot of really beautiful houses here, it's a great area and so different areas are going to be affected differently.

But again the the number is apparently 4.8 percent. I would argue that in some bigger cities, it's a lot higher um, but again the whole point of that is that, as you see, these are slightly different numbers. Now, apparently, airline fees are up um out of out of those that i listed the most, which doesn't surprise me either i told you i'm flying back home to new york tomorrow and oh my gosh. The ticket prices are absurd.

I remember i used to be able to go home. Oh now again, i this is gon na sound, so bad, but i so i i'm too tall to fit in the the seats. So i have to fly first class or buy two seat tickets, because my legs are still it's on all legs right. You see me sitting down and you're like okay you're, not that tall.

But it's i. I wear a medium-sized length, torso extra extra alarms, extra extra large sleeves and then my pants are just outrageously they're bad for those of you, men watching and know men's pant sizes. I wear like a 34-38, it's brutal yeah, yeah, yeah yeah. It sucks it sucks and i fortunately, i actually used to be a 32-38 that was even harder to find um.

It depends on the i guess it depends on the brand too. You guys all know right different different, like clothing brands. Sometimes like a 30, i can fit into some 36s and other ones. Most of them are 38s, but it is.

I can't find those in stores. I can promise you that i cannot find long long-sleeve shirts in stores either, because again let me re-reiterate that a medium-length torso with extra extra long sleeves and i unfortunately right the hardest part we're going into a little tangent here. But i know some of you guys have clothing is tough right like for, for me, everyone's always shopping at a big and tall store, but i don't i'm just i'm like tall and way too thin. It's so hard, i'm trying to put on weight so bad, but it's just not working.

Unfortunately, i need to find a way to slow down my metabolism a little bit because it's just like i need to be able to fit into some clothes like. I can't go. Get anything so i would argue that probably clothing is not more than 6.6. For me, uh inflation is really going to be making me feel this one.

We got a little sidetracked there, though, so i kind of want to give my thoughts as to whether or not this could get worse right, um and going back to that point as a way to counter inflation. During the 80s right, interest rates did raise to nearly 20 percent, but how fast was that? And how long did it last for well if we go on these charts, we'll put them back up on the screen here, uh we'll start off here with the federal funds. Effective rate from about i'm going to take a guess here, because i can't see the exact dates, but from 1981 to 1982 within a year they rose from nine percent, so they were already high because again, inflation was rising. So it's not an overnight change.

These changes are not overnight a year or two is a likely um implement implementation period. So from like 1981 to 1982-ish, we got that spike from about nine percent up to about 19 percent and then gradually fell. It double topped quote: unquote: uh at around 18.75 percent. Uh in what looks to be mid-1982 and then by 1985 interest rates were down at 12 percent and then by 1990 interest rates were down at 10 and it wasn't until the mid 90s, where interest rates were down under 4.

So, as you see, that was like a 15-year period from highs to quote-unquote lows now it did have some more lows, like let's say: 1986 1987. As you can see on this chart, we hit a low there of roughly six percent from 19 um. Now, let's look at inflation next right, you know: how did that change? Now? Inflation during the 1980s made its way up, as i said up to about 15 percent by the mid-80s inflation and fallen back down to three percent, so that drastic increase in interest rate did lead to a fast uh or quick. You know whatever you want to call it decline in the inflation, but they have.

They can't just immediately uh reverse those changes, or else there is risk that inflation rises back up just as fast, so they have to gradually cut down on those interest rates. And again, it's very likely right: we've been at an all-time low interest rate again all-time low as in zero, more or less. I think it actually might have literally hit zero. Now they say 0.09 percent, but call it zero from 2020.

For two years, there's been no interest, and that is just simply not likely not sustainable, and it wouldn't surprise me to see interest in the next few years up four five: six percent, where it is almost smarter right to put your money into a savings account than It is the overall market. This is where we're going to see growth periods slow down, and you need to do that in order to fight inflation when we grow too fast - and this is just simple economics which i did pass boom simple economics - is that when you grow too fast, everything else Around you is going to grow too fast, aka inflation. Now we can blame this on politics. You can blame on wherever you want.

It really just boils down to like very simple math is that when everyone is making more money and that's why you're seeing a lot a lot, a lot of very uh, unsustainably high wages right now in a market? Where not only do people not want to work, but we're also growing the well the economy, you know financially is growing. It's such a fast rate. Companies are paying a lot. I know one of my buddies not even buddies.

I met him at my apartment, complex and i'll. Do a little quick side story here, so he was driving this there's. A blue lamborghini huracan parked up at the top of my parking garage on the weekends and my brother flew into town last summer, and i was like hey. We should go check and see if that lambo is here and we drove up and it was there and the guy that the owner of that lamborghini.

He was actually sitting there and he's like hey. Do you want to like you want to sit in it, and i was like? Oh my god, that'd be kind of cool i didn't fit in, unfortunately, probably for the best, because i would have blown like all my money on one. They looked so cool um, but so i got talking to. I was like hey out of curiosity man like how what what do you do like i'm just curious, you know um and he was telling me he is a uh, artificial intelligence developer for, like a small startup, bringing a small startup like what and he's like.

You know i make about 450 000 a year and i was like wow for a small startup, that's pretty good, but then i talked to a lot of other people here who work for facebook who work for? Well, maybe not facebook anymore, now they're down 50 from highs, but you know google apple and they a lot of these developers. These software roles are getting paid, multiple, hundreds of thousands of dollars a year and it's just because it is a high skilled job. In a booming city and again it's a fact that they grew a lot as well. I mean these are legitimate companies.

Right i mean we see small caps every day that run 50 100 200 in a day, but they they all fall down. They don't actually make money. These companies are pump and dumps. At the end of the day, these were real companies multi, i say multi billions, but hundreds of billions, if not trillion dollar companies that grew 100 by stock price over the course of two years, if not more they're going to have more money to pay high skilled People and again in a job market, where not a lot of people want to work because of all this coveted stimulus that we got when the supply again supply is low.

The supply of workers is low. Companies are going to pay people high high, highly skilled employees. More money - and so it's ju, and when people are paid more money and now we're almost going back to the housing thing, people are able to they don't care, they don't care about money. They've never had this.

They've never had all of this money at once and they're like oh yeah, whatever like it's, i can afford that and now to be fair, the guy with the lamborghini he had actually a really kind of sad story, told me his you know he had some really Really bad personal personal uh - i won't get into it, but he had a really sad personal story and he's like you know: life is just too short not to um. Life is too short not to get what you want he's like i've always like, since i was young every every time. I just thought of myself driving a lamborghini and i always wanted it and now that's you know that i think that's an exception, because a lot of people who buy these like really fancy cars are like it's an impulse buy it's like. They got a lot of money like oh that'd, be cool and then within, like two months like okay, it's just a car.

This guy's, he said he's had the car for a little over a year. Now he's like every day yeah, i i love it and it's just like it reminds me of it. You know, helps me get through that time. So different story, i respected his story a lot, but the story was really as a way to show that why inflation or why inflation happens during periods of growth and then when we grow too much you know, unfortunately, for the most part i gave you some anomaly.

Examples but the majority of working class wages are not rising with inflation. I am sure um. I i talk, i mean even you know my parents. I talked to people back home.

I talked to a lot of people here and you know if they get a a salary, a promotion that they get a promotion. It normally is not reflective of inflation rates right like we're at seven point: nine percent right now, um, which is up six percent. I know a lot of people are still getting paid, probably the same price as they were during 2020 or slightly higher, but as inflation continues to get higher again, we went back in the 80s 15 percent just about in even you know, you know during the 90s Inflation's at 5, and during those times it's simply most working-class people are not going to be getting uh. Their wages are not going to be reflective of inflation, especially when you have a lot of very uh.

I don't know, i guess, needs right. Oil and gas you're. Probably going to need to drive food, i would imagine you have to eat, although you know i know a lot of people who do like not a lot. I know some people who do like a 30-day water fast congrats to you, because i can't go 30 minutes without eating um, but you know like these are things that you need rent right rent i can tell you here, has increased, probably 20 30 and in these Areas, wages generally speaking for the average, are not increasing that rate, so you have to counter it by raising interest rates, and you know incentivizing saving over investing and that's what's going to lead to a lot slower growth and more stability, and hopefully we can fight that.

It's always an uh situation where you need to balance things out in the economy, because you cannot, you know, i'm sure, you've all seen the graph. I don't have it pulled up, but it's essentially the cycles right you get when you get to highs. You know growth was in an all-time high and then you have to bring it back down. You have to slow down the growth and almost reverse growth, uh and that's obviously not truly reverse, because if we look at the s p 500, we see that it's.

You know consistently grown decade over decade, but you have to slow it down in order to make sure we don't go into some period of hyperinflation, where it's that that's when you and i would argue, we already have a pretty wild uh wealth gap. But you have to try to slow that down and that's generally the way you do, it is kind of by slowing it back down, and you there's probably a lot of arguments that that still i mean we've we've been seeing a diminishing middle class for the past 30 years right i mean it's not this isn't brand new, but the extent of which that gap has increased during covid and during this period of massive growth truly is astonishing, and the only way to really bring that back down is to try to almost like recreate A middle class by distributing the wealth a little bit better um and unfortunately there is no perfect utopia, utopian style answer, but we can do our best by raising interest rates so anyways. This is like been a pretty lengthy, lengthy talk here about inflation. How long has it been too long? Are we good? Do you think i'm going to start wrapping it up here? Yeah, okay, i'm gon na start wrapping it up here, but i want to make sure i didn't miss anything on my uh on my notepad here.

Let's see - and i guess the only the way the way i'll end on this here - is that re kind of reiterating that, while you know everyone, i think i think the market is kind of already priced in the raising interest rates that we're seeing now right, essentially Getting up to two percent by the end of this year, but at the end of the day, two percent isn't that high historically. And i think it's very likely that in the next few years, especially with so much global uncertainty, not only in the geopolitical space. But in the economical space, i don't think it's unrealistic that this is the highest we're going to go. I am, i would not be shocked to see interest interest rates continue to rise throughout the next few years as a way to really make sure we're fighting inflation.

We printed a lot of money and i don't i mean trillions of dollars in order to reverse that, and that's essentially raising interest rates is almost the government's way of taking back the money that they printed or at least um, making well yeah more or less taking It back, that's that's: what printing is all about right. Is that you're giving more money at some point they need to take it back like okay, we gave a lot of money. We need this money back um and you know that's that's. Why that's why? This is being done because we gave out so much money but again think of how much money we printed, i want to say it was around six trillion dollars could be wrong.

That could be way off um. How much money did the us print over? Let's see, oh, that wasn't that far off 5.2 trillion as of march 2021 um, and so they need a way to kind of get that money back and in my opinion, they will not be able to do that at only a two percent interest rate and everyone. Everyone understands that, but after being at nearly zero percent for so long, two percent within a year seems pretty high and yeah. It's a pretty drastic increase.

I'd argue uh 0.09 percent to nearly two percent within a year by in terms of percentages. That's that's pretty high right, i mean 100 increase in interest rates would be 0.18 percent. Uh and clearly looks like it should be. A thousand percent increase yeah that sounds about right, um.

We it's it's probably going to keep going higher and again i'm not. I'm no expert, i'm no, i'm not accredited economist um, although that is actually my one of my life goals is actually becoming accredited philosopher come on. Let me know down in the comments below. If you think i'd be a great philosopher, i actually have a uh ethereum.

Oh god, i'm going to just say it. I guess at this point marty this far and that's my biggest problem. My friends know it all too well. Is that sometimes i just talk and talk and talk and all of a sudden i say things that you know debatably or a little embarrassing, but i'm working on the puzzle.

Theory right and it's i won't. I won't get too far into it. Some write an entire thesis about it. It's essentially how different different puzzle pieces in your life fit together for some reason, but you'll think that you know, as you see in a puzzle a lot of times, it's very hard to find the last few puzzle pieces a lot, not maybe not the last few.

It's a little easier then, but you have a lot of the puzzle complete right, but maybe you still have a lot of people. I'd say start with the edge and as you get in the middle you'll have a lot of images that are very close together. The pieces look like they should fit, but they don't and a lot of times you have to like move that puzzle piece around quite a bit to find exactly where it goes and i'd argue a lot of us as a whole have our life together for the Most part, but there are some little parts missing and that's the puzzle. Theory is working on finding those missing parts: okay, anyways again, not an economist, but it would not surprise me to see this getting worse.

It's just a matter of how much worse and again it's understanding and that's why i wanted to talk about this today: the difference between low interest rate growth periods versus high interest rate saving periods, and hopefully you can prepare in a way right this. I don't think we're at a time yet where it's definitely where it's uh beneficial to have money in a savings account, but we could get there and i would argue that, probably when it gets closer to five six, seven percent, if if it gets closer to that, That's when it's going to make the most sense and hopefully we're not doing it too drastic of an increase, but as as you saw in those drafts earlier, i mean during the 80s when inflation was at not all-time highs, but pretty close to it. From i shouldn't say, all-time highs, because i think it was when was the other time in the 40s, i'm actually going to throw up another chart here, real quick. Just to give you an understanding almost like recap, everything but yeah end of the late 1940s.

Inflation was at 15 after the war wars also, while they do lead to economic growth again, economic growth means inflation and that's why actually a lot of times post-war you go into periods of inflation, but let me throw up the consumer price index here and you'll see This was a cnbc uh data point from the board of governors federal reserve system, u.s federal funds, effective rate retrieved from federal reserve banks of saint louis bank of st louis, not banks. Consumer price index is at a multi-decade high, pushing uh the only period higher than that was shocking, the 1980s, but it's pretty surprising that the consumer price index is working its way towards again. Oh, i guess that more or less is really just inflation just shown in a different graph here, but we are it's almost like a breakout chart and without countering that we do. I i hope you feel the same way.

You don't want to go into a period of hyperinflation. I seriously do not want to go into a period of hyperinflation, so raising rates is the best way we will likely see during raise uh in periods of that was the last thing i wanted to talk about during periods. So how does this affect the market right? During 20 end of 2015 to 2019, while we were slowly raising interest rates, we were not dealing with massive inflation, so the market still grinded its way up. It was, we didn't see a bear market during the during the gradual raising of interest rates, because those interest rates were one being raised gradually and two not necessarily being raised to fight this massive inflation waning over us, but uh this time.

This time during um the the raised interest rates, we are battling inflation and the market knows that in which that is more likely, where it's going to lead to some kind of quote-unquote bear market, or at least not again, periods of growth. So keep that in the back of your mind, people, that's all i want to say uh. Hopefully, hopefully it's nothing too drastic. That's all we can do all we can hope for um with that being said, guys, i'm about to get heading out out of here uh before we do before we do head on out of here.

I do want to let you know, though, that despite you know, hopefully what or hopefully not, i should say, um a potential incoming. You know i call it a bear market. Don't let bear market scare that doesn't mean crash, but slower growth period. What's beautiful about the small cap space is that there are always opportunities, despite the market conditioning, and these are what we call pump and dumps now they are going to dump but things they can first get pumped during these periods.

There are still opportunities as a day trader. So don't let this scare you away from if you're, maybe just getting in the market. Don't let this scare you uh during during i mean i can i have data on this. There were still runners during the 2008 recession.

Um 2000 well. 2008-2009. There are still opportunities, and that is our goal as day traders sure there might be not as many opportunities as there were during 2020. We probably won't see those types of opportunities again for a decade, but that our goal, our job, is right to find these opportunities, and that is what my goal is to help teach you guys how to do me myself and i no myself matt, monaco and john Papa guys, we are all part of small cap rockets, i'm sure you probably know that by now, but we are looking for and there even now today there are less opportunities than there were just a few months ago, but we're still all all of us are still At our all-time highs for our p l's and i'd like to think we're doing a good job at helping people, helping traders stay safe and learn almost the emotional side of knowing when to attack the best trades in term or as opposed to just throwing money.

At anything, and that's a very, very important aspect right now, if you guys are interested in learning the way we trade, even during a slower market period and potentially incoming bear market knock on wood. Hopefully, it doesn't happen be sure to check us out in small cap rockets. We have a link right down below here, where you can get in what is it? Is it 7 or 14 days right now, it's either 7 or 14 days at least check us out for a week or two depending on the offer we have currently going on um, and i i just i i genuinely stand by. I think we do a very, very, very great job in making sure traders are learning the emotional side, the risk level side, the the risk management side, as well as learning how to spot the patterns that we trade every single day, despite the changing market conditions.

So again, that link will be down in the description below um and that's all i've got for today guys. So, first of all, let me know down in the comments what you think about all this i'd love to hear your guys's thoughts on inflation and the raising of interest rates. Do you think we could continue to keep raising after 2022 and again, a lot of this will probably be infected by affected by global conflicts, but still, let me know down below and uh yeah make sure you leave a like if you like, this video, be sure To subscribe, if you're not subscribed turn on those post notification bells, i heard it's really fun to click that button and turn it on. But you know what do i know anyways.

Thank you guys for tuning in um, and i will be sure to see you guys back here next week for next next week's. Is this episode four nice i'll, be sure to see you guys back here for episode five next week, where i've got a couple of potential guests lined up all of them, i think will be great guests for you guys to listen to so have a happy. This is coming up on friday. Isn't it have a happy friday? I hope you had a great st patrick's day yesterday talking in the future right now and uh i'll see you guys here next week.

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