Okay, I just realized something about the Federal Reserve and it's quite important. Almost nobody's talking about this. Even billionaire Bill Ackman is not realizing something that I think is up Jerome Powell's sleeve and I think I see it I want to share with you and and see if you see what I'm seeing. Okay, but but first Billionaire Bill Ackman Okay, who thinks Sam Bankman Freed is telling the truth.

Oh God Oh Oh I I didn't mean to say that I'm sorry I'm sorry. Look I respect the Lackman but there's some things that I I don't like. Okay I don't like it when you say you trust What? Sam Bankman Freed says I replied to you when you said that and I said I thought you were crazy I Also did not like that at the bottom of the market in 2020, you went out on CNBC and told everyone the entire country needed to lock down for 30 days leading to massive capitulation and panic. Selling while you're uh, out of the money puts printed money 10x or more anyway? Uh, with that out of the way, let's go on to what billionaire Bill Ackman says here: the Federal Reserves some two percent inflation Target is no longer credible, no longer credible.

He says, okay, deglobalization. That would be disinflationary. The trends. Well, actually, Globalization is disinflationary.

Let's get that right. Globalization is is when we start using foreign workers. Globalization is deflationary. disinflationary prices.

Uh, either rising at a slower Pace or coming down. Deglobalization is more home-based manufacturing, which we're actually. We are seeing that that actually raises prices, right? And we're seeing that with the chip sack to battery manufacturing. Okay, the transition to Alternative Energy Yeah, that's actually also true.

that is inflationary. The need to pay workers more. Okay, uh, that's a little political. lower risk, shorter.

Supply Chains are all inflationary. Yeah, that's true. The FED cannot change its Target now, but will likely do so in the future. So Bill Ackman is making this argument that two percent will change in the future, but they've got to relax now with two percent.

Okay when asked Powell recommitted to the two percent Target but admitted that examining a higher rate was possible a possible longer term project. Businesses need price stability, but can thrive in a world with three percent stable inflation. I Don't think the Federal Reserve can get inflation back to two percent without a deep draw job destroying recession. and if it gets back to two percent, it won't remain stable there for the long term.

Accepting three percent plus or minus inflation is a better strategy for a strong economy and job growth over the long term. Okay, so it's actually not a poorly constructed argument, right? not poorly said. So if this is the case, that, look, our economy can support three percent inflation. and we do have things that create inflationary pressures.

Short term obviously we have: War Supply Chain shortages China's lockdown which leads to manufacturing issues and shortages worker shortages as we have re-transition of workers more people retired after Covid. A lot of things are temporarily inflationary. Obviously, you also have massive money printing that happened, but this argument then of alternative energy and deglobalization are potentially also slightly longer term inflationary. So Bill Ackman says we should raise the inflation Target from two percent to three percent, which the FED has been hounding on two percent for a very long time.

And if they change their two percent Target and in other words, relax to a three percent Target they would substantially substantially hurt their credibility. This is very different from what we had in the late 70s and 80s where the Federal Reserve was able to raise rates substantially and then lower rates. but they took an advantage. They took advantage of something called opportunistic disinflation.

That's a fancy way of saying they kind of just let inflation go down over sharply one year, but then it took like 15 years to get down to two percent. They just sort of like, ah, we're on the right path. no rush, right? Well, what Bill Ackman here is suggesting implies that the FED won't stop until they get to two percent, which is actually not true. see the Federal Reserve told us they won't stop until they are on the trajectory towards two percent and we need to go back to something that was announced by the Federal Reserve in 2019 and that was called Fate.

Fate is spelled F-a-i-t but it's pronounced Fate and it stands for Flexible Average Inflation Targeting. How convenient that something called Fate would be released right before some of the greatest inflation ever. Uh, since the 80s. But aside the point, Fate basically says, hey, look, we want inflation to average two percent over the long term.

we don't have to be at two percent right now. We just wanted to average two percent and as long as it averages two percent, we actually don't really need to be at two percent depending on how long we were under two percent beforehand. And so this is quite interesting because what was inflation before the pandemic? But not only that, are we talking about CPI or are we talking about Pce? Ah, well, don't worry, I already have the answer and no, it is not You Checking out with that coupon code expiring tonight. Uh, coupon code PP for the amazing programs on perspective: building your wealth with real estate investing Stock Investing Being a hustler, making more money at your current job, making money on a side hustle, you name it.

there's some incredible programs with lifetime access to live streams on building your wealth every day the market is open. Link down below the Federal Reserve talcially P Inflation. See here: The Fomc's Target in terms of inflation is the headline Pce inflation rate and the target Fomc has set. Or what the target is that they've set is two percent, a level that policy makers judge to be consistent with achieving price stability and maximum employment.

On average, Inflation was slightly below this target before the Pandemic's economic shock. How convenient that the Federal Reserve is actually talking about exactly what I just said on the St Louis Fed website. Headline Inflation on average was about 1.8 percent in 2020. The Fomc adopted this new policy framework they started talking about in 2019, called Fate and that is to ensure that the policy uh would average or inflation would average two percent on average.

So what is the Pce inflation rate? What's actually a lot lower than the CPI inflation rate? In fact, if you look at what CPI is right now CPI right now fell to 7.1 percent, which is phenomenal. We're happy that CPI fell to 7.1 percent. We could see that evidenced right here on the Bureau of Labor Statistics website. What we can now do is same place PC inflation rate.

Give that a quick little slap into Google and the PC inflation rate in October set at six percent which is almost a whole percentage Point lower than CPI right? But not only that, take a look at this. This is a chart showing you the average Pce inflation rate year over year. so it's throughout the year. What was the average in that year relative to last year And what you can see are these various different inflation rates here and you can see a lot of these are actually under two percent: 1.8 1.2 1.5 1.35 1.86 You get the idea.

So what I decided to do was export this data, put it all on a table, and then average these numbers up starting at a certain decade for Pce inflation, and the results are actually quite interesting. I'll delete this for a moment I read the bottom one. Look at this: The average inflation rate for Pce since 1990 has been about 2.12 since 2000, 2.17 since 2010 2.2 I'm obviously purposely leaving out the 70s and 80s because the average will skew slightly higher. though even if you took those periods into account not much, you could take this entire chart into account and you'll end up with something like three point something percent.

But we've had the great moderation since then and I don't think we really need the last 100 years to average two percent, probably more or less. It's going to be something like the 10 years before and after a certain point that the Federal Reserve will want to see inflation average ten or two percent. So in my opinion, the Fed's probably going to want to see something like a 2010 to 2030 average two percent inflation rate and what would it take to achieve that? Well, what I did is I went all the way down to where we sit now 2022 I threw in 6.1 for a year-end average here and then I took the summary of economic projections from the Federal Reserve 3.1 2.5 and 2.1 and threw those in. So yellow is roughly what the Federal Reserve is estimating for inflation or what we could expect inflation might be for the next few years.

The once again listed in yellow, the FED does actually think 2022 median inflation will end at 5.6 percent. I Think that's a little bit low. so I personally went with 6.1 but let's use their number just for the sake of this. and now let's assume that inflation actually goes under two percent.

We'll play with this. Let's assume it actually goes under two percent for the rest of the decade. If that's the case, what does inflation actually look like on average? Well, we'll paste up. Darn it.

I ruined my paste formula. So we'll go ahead and do it together. average. So that way you could see it is legit and we're just gonna go grab it from 2030.

I'm gonna go ahead and pull that all the way to 2010. That's 10 years. Basically in either. Direction Look at that 2.08 which is actually less than any of the other inflation scores now.

Obviously it would take up a little bit if we went over here and increase this to just two percent, right? If we made each of these two percent and we just happen to stay around two percent, what does it end up looking like? It looks like 2.18 which is actually not terribly off of the other decades Anyway, So in other words, the market. Right now, at least some individuals in the market think there's no way we're going to get back to two percent inflation. That's insane there. The Fed's going to crush us to Oblivion We're not going to invest in the market until the FED ruins their credibility and changes the two percent inflation.

Target And I'm looking at it going. Oh My Gosh. nobody's realizing this. The FED literally told us right before the pandemic.

Hey, hey, new policy framework. We do flexible average inflation targeting around here. called Fate Now. When Jerome Powell was specifically asked about potentially changing their inflation Target above two percent, he actually responded quite frustratingly, suggesting absolutely not.

Would there be a consideration of raising the inflation? Target That's because. remember folks, Jerome Powell needs to talk inflation down. But actual written policy at the Federal Reserve says while I talk inflation down. Don't worry, our policy averages it out anyway.

so we just have to be moving in that direction because then we'll get an average. We had a substantial period of lower inflation. Now we have higher inflation, and if we have lower inflation on the other side, it's okay. we don't have to rush to two percent.

That's actually, in my opinion, Very bullish now. I Don't want to be misunderstood for suggesting. that's it. This Oh My Gosh, Kevin made a revelation.

That's it. It's time to go. All in. no, it's actually to show you that even though markets could be pessimistic and sit on Sidelines waiting for the FED to say, that's it.

We're changing our inflation Target Which I don't think they will do because they'll shoot their credibility in the foot whatever's left of it. the FED May Soon one. Once inflation actually consistently shows, it's on a downtrend reiterate. Hey, y'all remember how we have a policy of fate.

Yeah, so we're actually going to drop interest rates now because we're We think we're substantially on the way to lower inflation. And you know, since we're going to average it out anyway, we we don't necessarily have to rush it, and we want to support the economy a little bit more. Historically, the best time to invest is when the Federal Reserve not pivots, which is reducing the rate of increases or pausing, but rather when the Federal Reserve actually starts cutting. We'll see it's an interesting Revelation Let me know what you think in the comments down below and check out: PP.