Hey everyone me kevin here, so there are two things that jerome powell just said that, in my opinion, are at least slightly cause for concern and they don't have to do with this really cool. Looking blue bar, like that's what i want in my house, look at that reflection of the blue on the ceiling there yeah that metallic ceiling kind of cool anyway, so a couple things that are not elon, that jerome powell just said not good. Okay, so first thing who remembers paul, volcker right, paul volcker was the guy that when inflation was so unanchored and so out of control in the late 70s and early 80s that paul volcker came and said. That's it we're just going to jack interest rates to be higher than the rate of inflation.

So, for example, if inflation was 14, they moved interest rates to 15. That would be like moving interest rates at the fed now from you know, 0.5 or 0.75 percent. So under 1, up to like 9, that would be really bad. We would go into like a depression right, that'd be pretty devastating, but it would also stop inflation like instantly.

That's the fed rug poll that i was worried about in january. That was going to come. Well, over the last three to four months, jerome powell has told us no that's not coming well now he's saying the following: quote: we're firmly committed to bringing inflation down mind you. This was in an interview with marketplace, npr's marketplace, kai rizdal.

Then we know that what paul volcker did was right in his situation worth remembering his situation was one of unanchored inflation expectations right now. The bond market, uh five-year break-even rate has fallen 19 from its peak in march, implying that we're not worried about runaway inflation that inflation expectations are actually coming down, not going up and of course they vacillate. Then you have the consumer expectations of inflation, which are at you know flat basically year over year and uh in a three to five year horizon. So you know these.

The expectations don't align today with what happened under paul volgar's uh administration, but they could change to that right. So anyway, here's what we hear quote. We know that what paul volcker did was right in his situation and it's something that might turn out to be right here. Oh yeah, that is like a big f like when i heard that i'm like what like last time, jerome powell talked.

He talked about how he admired paul, volcker, now he's saying oh yeah, paul volkering, the economy might turn out to be right here, like if you thought we were gon na get paul volcker. You should sell everything like you just literally short everything like the only survival that you will have is in cash. That's it everything else, just crashes, it's so bad uh, but and then he goes on to say, but i don't think we know that i think we have a lot to learn about what the path looks like ahead. All right.

So that's just exactly what markets hate right, more uncertainty, but listen to this one. Okay! This is the second piece that was like damn it damn it, powell you're ruining us all right. So the second piece was the following: jerome powell used to say our goal is to get inflation down to two percent without causing a recession or significant unemployment. Now he's revised that what does he say now he's the following quote? Our goal, of course, is to get inflation back down to two percent without having the economy go into recession or or, to put it this way, the labor market remaining fairly strong.

Okay, we never used to have that ore, that's opening the door to well, i mean if we have a recession as long as the labor market's good, we're, okay, that this is the first time that i've seen j-pal say that obviously right now they're on a path Of 50 bp hikes, but this is literally the first time i've heard him say: oh yeah, okay, as, as you know, things can be quite challenging right now, including orchestrating a soft landing. They say that. Well, you know, the unemployment rate is quite high. The labor market's extremely tight inflation is very high, so it'll be challenging.

It won't be easy. No one here thinks that it'll be easy. Nevertheless, there are pathways, but as long as we can do it without ruining the unemployment rate worst case, if we cause a recession, oh well right, like i'm imputing. Obviously this last couple sentences here, but when you, when you used to say without causing a recession or high employment or that is and high employment right and now we're going to or that is let's not cause either you start getting a little bit concerned that wait.

A minute jerome powell is now starting to talk about his admiration, for paul, volcker and saying paul. Volcker in the economy might be what we have to do here and now he's clearly or more clearly. I should say distinguishing that. Well, i mean basically, if we end up having a recession, then, as long as we don't, you know, create 10 unemployment and we get inflation down then maybe so be it, which i mean honestly makes sense right.

This is why i think we're in a recession. Right now, which i've been saying for for many months now, it's that it doesn't take much to slow the economy down to the point where we spend just a little bit less than we did last year. Wholesale inventories uh the trade deficit, personal consumption. All these things, if just together in net they go down point one percent, a tenth of one percent, two quarters in a row boom you're in our session.

I think we're gon na be in a recession all year long and then tucker carlson's gon na freak out and everybody else is gon na freak out as well. It's just my theory. I don't know i could be wrong, but something i pay attention to, and these are two subtle u-turns here from j-pal that i don't like. But what i do like is that amazing coupon code linked down below on everything that is on sale right now, coaching calls property management real estate, investing you name it.

Of course, prices will be going up tonight well late tonight, like first thing tomorrow morning anyway, thanks so much for watching we'll see in the next one bye.