Hey everyone meet kevin here, it's official, the black friday coupon code is alive. You can now use black friday for any of the programs on building your wealth link down below the price will be going up when black friday is over. So take advantage of that before the price goes up on the programs, i'm building your wealth and buy sell alerts when i send alerts in the stocks and psychology money group. Folks, let's get into the topic in this video, we're going to talk about the potential implosion at the federal reserve as politics pressure the fed and what might happen over the next six to 12 months and beyond.

I'm also going to talk about history and what history might teach us about, how long inflation might last hint. If you don't know what happened after world war ii and how that compares to what happened in the 70s buckle up you're about to learn a lot towards the end of this video, i'm going to point out some investments that i'm making and that, i think, will Do well no matter this scenario, so, first what the heck is happening. Well, folks, we have 10.4 million job openings. According to the jolts measure.

That's 44! More than usual, we had 4.4 million people quit their jobs in october, likely, at least in part due to vaccine mandates and 25 of workers are considering a job change or retirement within the next 12 to 18 months, which is definitely putting prices on wages going up At the same time, consumers are expecting inflation of 4.9 percent. The highest consumers have ever anticipated for inflation since 2008.. Consumers also expect prices to rise 2.9 percent over the next 5 to 10 years. That means constantly beating what the federal reserve's expectations are for the next five to ten years.

Consumers also expect rent to skyrocket the most we've ever seen in decades, and these expectations began going up in about the spring of 2021, and a lot of this makes sense. Look around ikea, for example, is complaining that profits will fall for two years as they keep products affordable, but are slowly being forced to raise prices due to supply chain constraints. Commodity prices have skyrocketed, despite being in a 200 year. Downtrend and wheat prices are going up.

So much that france is having to raise the price of baguettes and french, don't like more expensive baguettes bottlenecks in shipping are also leading to overflowing disorganization theft loss and, ultimately, what this turns into is bottlenecks, creating more bottlenecks in supply chains and shipping. Half of americans who heat their homes with gas are expected to spend nearly 30 percent more on gas. This winter and our latest cpi read, came in at the highest in 30 years with a 6.1 read. At the same time, asset prices are skyrocketing.

Hedges to inflation are skyrocketing, like crypto to some degree and average hourly earnings are up 5.1 percent year over year. It's obvious. We are in an inflationary time, while these indicators - and there are some indicators that are showing - maybe maybe prices were cool - like, for example, we saw lumber prices, slow down and they're finally continuing to slow down we're, seeing some indications that maybe container prices for shipping are Starting to fall on a weekly basis, we've been seeing this since about july, but all indications or most indications that we're seeing in the market pretty painful. So why is this happening, and where do we go from here? Well, a lot of this has to do with the natural delay of the federal reserve's money printer see.

When the federal reserve prints money, you can go to two places. It can essentially go to congress, and this can get out into the market pretty quickly when the federal reserve spends money through stimulus programs like ppp, eidl grants or stimulus checks, we get money very quickly and that money gets spent very quickly. This is what led to that v-shaped recovery. We saw in 2020 coming out of the coveted recession, but monetary stimulus when the federal reserve buys bonds can sometimes take 12 to 18 months to actually get out into the economy.

That's because bonds being bought by the fed from corporations or foreign investors or banks might not necessarily need the cash immediately. So they park the cash into money. Market accounts, which ultimately show up on the federal reserve's chart of reverse repos, which we've seen a skyrocketing of cash available, and now we have this cash sitting around not being used, and it potentially takes 12 to 18 months to actually get into the economy so that Bond buying that we started back in march of 2020 about 20 months ago might actually just now be starting to hit the market, which is coinciding with supply chain constraints and now higher inflation. Even though we have begun to taper, we don't actually expect our taper to start affecting the market for another, probably 12 to 20 months and sure we're not printing as much anymore but we're still printing we're printing.

We were printing 120 billion a month, now we're printing 105 billion a month and we're expecting to taper that down 90 billion 75 billion and so on and so forth. But the question is: where do we go from here? If we're still printing money today to try to prop up the market in 12 to 20 months, why is the fed doing that and what, if the fed u-turns on their entire policies? Well, there are two paths we can go and politics are certainly getting heated around. This larry summers, the former u.s treasury, warns that failing to address inflation will quote re-elect donald trump, who will deal with it. A candidate for congress, shannon bray a navy vet from north carolina says that shiba inu should be part of our national discussions in part.

Thanks to inflation and republicans argue, they will not support any of biden's spending plans due to inflation, and even moderate democrats like joe manchin, are arguing this as well. All of this adds inflationary fears and compounds these fears and angst amongst democrats who don't want to lose power in 2022, which right now, if they don't control inflation, they're expected to lose power in 2022, because right now they have the presidency, the house and senate, and Unless inflation goes away magically by november of 2022, it's not looking good for democrats, and this is motivating a lot of democrats to encourage replacing the chairperson of the federal reserve, jerome powell, potentially with somebody who can actually handle inflation and what we're going to do now Is we're going to talk about that potential replacement and then we're going to talk about paths that the fed might be going down? So let's talk about the current potential replacement candidate, which predicted puts at about a 33 percent chance of getting or of being the replacement to jerome powell, the other 70. You know 67 being jerome powell, maintaining a seat. Well, let's go to lyle brainard.

She would be the replacement remember. Elizabeth warren has called jerome powell, a dangerous man, saying that republicans, like him, sow the seeds for the next recession. Instead, we need democratically elected people like brainerd, who would be a democratically elected a nominee. History shows that democratic nominees can sometimes be a little more hawkish against inflation and that's particularly because we think of paul volcker, who is a legendary hawk, who whipped inflation in the 80s to get it down.

But so far when we actually look at brainerd's policies. Who could be the replacement for jerome album? She tends to pretty much always agree with jerome powell, with the exception of removing regulations on things like dodd-frank, which jerome powell was a fan of, she was not. She has never dissented against a decision that jerome powell has made to either keep the money printer going to keep the money printed or to speed up the money printing or to keep rates low. In fact, she's a big fan of fate, which stands for flexible average inflation targeting, which means we're going to keep inflation high for longer and we're doing that on purpose, so that we have an average of two and a half percent inflation.

She is in favor that she was also the author of the language maximum employment rather than full employment. This means this is basically the fed no longer trying to determine what full is instead moving away from that simplistic number of full employment and going for something more vague. Like broad inclusive policy, see brain art is a person who doesn't believe that we're ready to determine that we've lost jobs permanently, because if that were true, then we would raise rates sooner. Instead.

She believes that employment still has time to go, that we need to still be accommodative of employment that we still need to be accommodative of the market, so, in other words, brainard. If anything seems like a mirror image - or i shouldn't say, mirror image like a spitting image like a replica of jerome powell and in some cases she's, potentially even more dovish. That is, let's keep interest rates low, longer, let's print money more longer, which seems like it would be. The opposite of what people in congress would want, if they're politically trying to show they're doing something to take control of inflation, keep in mind brainard, and this is really interesting.

She was part of the treasury department during obama's term for international affairs, and she offered insight into how damaging inflation was, especially on households who can't maintain their purchasing power in in foreign countries. In developing countries see she sees inflation as a significant risk. Her background says: inflation is really bad, but she's also calling for patience she's calling for doing what jerome powell does for keeping rates longer and keeping the money printer going. She strongly fears that the u.s economy could actually slump back into a period of low inflation once bottleneck issues are resolved, so this is really interesting.

So if we get brainerd or we're stuck with powell, in both cases, it seems like the fed is convinced. We've got to keep the money printer going, even though we're seeing high inflation right now. This sounds pretty crazy right. It's very kooky, but there might be a reason for this.

Let's go down the two paths. The first path is what, if the fed is stupid and wrong. The second path is what, if the fed is playing 4d chess - and they know what happened in the late 1940s and how it's different from what happened in the 1970s and the fed could actually have a master plan that actually might work. Well, we'll talk about that.

In a moment, first we're going to talk about what, if the fed's wrong, because that's a whole lot more interesting and keep in mind. If any of this overwhelms you and you kind of want a daily pep talk on what's going on in the market, my strategies check out any of my programs linked below in building your wealth. They all come with daily live streams. Where i talk about my thoughts on the market they're, the first place that i start mentioning concerns about certain stocks that i'm holding things i'm thinking about selling.

For example, i told everyone in my course that i was selling out of insure tech stocks before i actually did so i got front run and then sure text spell more and i still haven't gotten rid of all my insure tech, even though i want to, and There are reasons for that, but anyway the point is. I share my theses oftentimes in terms of where i'm looking to invest or not before, and this can be very interesting. So if you're interested in sort of that or uh lectures on building your wealth with real estate or sucks check out, the programs down below the black friday sale is active. This is the price that we will be having on black friday, and this is the coupon code that we will have on black friday, and the price will be going up thereafter, like the price, always does all right, let's get back into this.

So what? If the fed is wrong, okay, so if the fed ends up being wrong and we end up having inflation last, then what could happen is the federal reserve might have to panic and react very quickly. They might have to suddenly end our tapering completely and just stop buying bonds entirely. Then they might have to suddenly announce in an emergency manner that they are raising interest rates because they've lost control of inflation. This could lead to a very negative market reaction.

If not a recession, it could lead to a spike in volatility it cause. It could cause an immediate decline in the stock market and, depending on how the bond market reacts, which we would expect rates would jump substantially and instantly bond yields will likely overreact to the upside meaning. Mortgage rates will go up, we could see real estate prices tumbled. So if the federal reserve says we were wrong on inflation, panic reacts and raises rates, which is what a lot of people, especially gold buffs, are calling for.

Then we could see pain in stocks, bonds and real estate. Real estate, for example, could move substantially. A one percent increase to the upside in mortgage rates could lead housing prices to fall. 10 percent.

Remember the rule of 10x for every 1 increase in mortgage rates. Housing prices tend to fall about 10. Now we'd like to think that real estate prices fall slowly, but this is not true. Look at 2018.

In the summer of 2018, you will see that when interest rates started getting moved up rapidly by the fed, which ended up leading mortgage rates to also increase real estate, prices fell very quickly, 12 in a matter of six weeks. If this event occurs, markets will also likely lose substantial confidence in the federal reserve, because that means that everything, the federal reserve told us was complete in other bs and they were wrong and they failed now many of you watching this video might already be thinking. Well, i already know they're wrong: they suck and that's fine, but that would be the nail in the coffin that would remove any chance that they were possibly right. They would be wrong, they would admit defeat and they'd.

Panic react probably leading to a temporary recession, which we've actually seen before the federal reserve tightened so substantially and quickly in 1948 and 1949, in response to increasing inflation that ended up, proving to be temporary, that we fell into a recession, see that's because, after world war Ii, when we rejiggered our manufacturing from wartime efforts to peacetime efforts, which meant spending money on goods and educational products and entertainment products or whatever, we all of a sudden, had a surge in demand for stuff that our manufacturing facilities couldn't keep up with, which led to Inflation, the federal reserve responded very quickly and aggressively leading to a recession, and you won't believe this deflation, the federal reserve, tightened so quickly. They panicked and created deflation, which in theory, would be the response of, or at least somewhat of a goal to try to reduce inflation. They just overreacted back in the 40s, but don't worry. We've got more to learn from the 40s which we'll talk about in a moment, because it gets very, very interesting, but that's in the other scenario.

So right now, obviously the federal reserve reacting very quickly history shows could mean the federal reserve loses confidence crashes. The market creates a recession just like it did in 1949 and yeah. It gets inflation down, but at a very painful cost because they will create a market crash. The fed will also have all of their trust implode and they will be an utter failure.

That's very bad, that is scenario number one that is the fed being wrong and the implosion of the federal reserve, but there's another scenario that actually also has the potential of being right, which there is also historical precedent for see back in the 1970s, we had high Inflation due to a lack of supply for oil and a removal of price caps from the 1960s see in the 1960s, there were limits on how much things could cost price caps. Anytime. You have a price ceiling, you create economic inefficiencies which, when those price caps are removed, you end up seeing prices skyrocket, sometimes to the upside too much and you end up creating inflation. At the same time, we also left the gold standard, which created massive reasons for to some degree hyperinflation in the 1970s in excess of 14 in certain months, that's insane, but back in 1946, 7, 8 and 9.

We had something really interesting happen. Remember what i described after world war ii about the rejiggering of manufacturing processes about how people were moving from wartime purchases to peacetime purchases, and this ended up leading to inflation. Inflation in 1946 was 8.33 in 1947. It was over 14 and in 1948 it was 8.

Then the federal reserve over tightened overreacted too quickly to what ended up being temporary inflation. This inflation in the 1940s, the late 1940s, was temporary because people were shifting demand very similarly to what we're kind of seeing now in the 2020 to 2021 cycle people are shifting their demand substantially. I mean think about how much demand has been shifted. We went from a normal economy to doing nothing out and about not having services to only buying goods, cars and junk.

Now we're still buying lots of goods, cars and junk thanks to all the stimulus that has pumped up people's wealth and the wealth effect of the stock market being higher and people retiring more than ever before. So then, spending more money than ever before and sure. Now we're introducing service spending again, while people have more wealth, we have a massive increase of the amount of spending and our supply chains just can't keep up with this. This has very eerie similarities to what happened after world war ii.

1946. 47. 48.. Listen to those numbers again: 46: inflation was 8.33 percent 48.

It was, i was right, 47, it was 14 and in 48 it was eight percent. That means we had high inflation peaked and went down. That was a three year period of a transitionary form of inflation. Transitionary potentially transitory took three years, and it only ended when the government, over when the fed separate, when the fed, overreacted and forced us into a recession in 1949.

The fed overreacted and our federal reserve today does not want to overreact again. Because guess what happened? After that recession of 49, when the fed overreacted, we ended up with really low inflation in the 1950s aside from the korean war, when we had a very brief period of inflation, wartime inflation aside from the korean war, the 1950s, through about the mid-1960s or about this 15, 16 year period of time had very low inflation. We constantly undershot inflation targets, we're constantly sitting around 1.2 to point five percent inflation for 16 years. So it's weird because anytime, you see inflation happening.

It's usually because of temporary issues. The issues in the 70s oil shocks, the removal of price caps and removing the gold standard. Well, no, those things are going to cause inflation, world war ii and sort of the reopening after world war ii. Well, duh: that's going to create inflation, but when you look outside of these time frames, you tend to have very very low inflation, and so this is what the fed realizes right now and the fed wants to prevent the mistake of 1949, and so this is where The federal reserve is saying we know, there's a 12 to 20 month delay and when we print money, so let's go down the rabbit hole.

First, supply chain issues start subsiding container prices which are already starting to come down. Come down more shipping container prices not only come down, but warehouses have enough employees and strong efficient systems in place to deal with overshipments. But now we get to normal shipments and they're really efficient. The holiday rush is over.

Companies are well stocked and now more efficient than ever, workers are potentially more productive than ever. The price of raw materials plummet because now, all of a sudden we're ordering less in bulk and at the same time as china's economy, slows, leading to less demand for raw materials. We end up seeing raw materials for things like aluminum, lithium, steel and lumber all come. Plummeting leading again commodity prices across the board to fall and companies while having raised wages, are now finding a new happy median, which means we don't have to continue to raise prices because we get to full employment.

Now inflation starts to inflect down sure prices went up, but they're not continuing to go up. They kind of hit a ceiling. Now, potentially certain prices of things start going down. We start seeing inflation not only no longer going up but starting to get closer to zero.

That is, if prices stay stable, we have zero inflation right. It could still mean that price. Look. The price of milk can go from two dollars to six dollars, just as an extreme example right and that would be 300 or three times inflation right like three times.

That's crazy right, but if the very next year we go from six dollars to six dollars with zero percent inflation, we go from six dollars to five dollars and forty cents. That's ten percent deflation on the price of bill, just as an example right, and so this creates the very real possibility that in some categories we are going to see categorical deflation used car prices, uh commodities whatever. Now. This is where things get really interesting, and this is where the fed might be playing 4d chess get this.

If the federal reserve knows that their money printing takes 12 to 18 to 20 months to hit the market, then it's entirely possible that the money printing, the fed, is still doing right now is going to really appear in the market at the end of 2022, which Is potentially when supply chain issues will go away when we might actually start seeing deflation and the money the fed is printing now will actually prevent us from falling into deflation at the end of 2022 to prevent consumer price indexes from going totally negative now this is Super 4d chess here, if the fed pulls this off correctly and prevents hyperinflation by uh, you know by you know essentially being correct that this is transitory inflation and prevents deflation by printing money today that they expect to really hit the market a year from now. That would be like a genie that would be like the fed has turned into god and in this case, which it's possible. I know it might be a long shot, but it's possible. I would expect that real estate prices would continue to zoom asset prices like stocks.

Would continue to take off crypto might actually lose some of its sex appeal as inflation clickbait subsides, but blockchain technology obviously is going to be here to stay, and the fed could end up perfectly navigating us both through preventing 1970s style, hyperinflation and 1949 style, deflation and Recession, that means we could literally be in a frugal decade, not have a recession in the 19 or in the 20s here throughout the 2020s, and it's a long shot. But it's entirely possible that our portfolios could continue to do extremely well throughout this entire decade, and so when people ask me about my portfolio, i you know my portfolio go through really quick. It's about a 52 million portfolio uh there's about nine million dollars, 10 million dollars of real estate debt about 22 million is real estate, so about 42 real estate in the portfolio about 4 is in crypto 28 is in tesla. I know that's a lot.

I've got about 15 percent, combined in a firm, etsy and phase and matterport. I love these companies. These are like really really great companies, but the point is, i'm 100 invested and i'm not super exposed. I have zero exposure to what commodities a zero exposure.

I actually think, and maybe i'm insane, which is entirely possible - then at least i'm upfront and transparent about it's entirely possible that the fed could end up being right, that the fed could navigate what history is telling us very well now history, people always say: oh this Time is different, but history is bound to repeat itself and historically we're not seeing what happened in the 70s. We're seeing more what happened after world war ii, and we could potentially be going into the 1950s, which is when we just had low inflation for another decade. Plus, bearing you know, absent a war, and so this is where we look and we go wait a minute, maybe a lil brand or brainerd nomination and confirmation. It's just going to keep us on exactly the same path that inflation is transitory, maybe not temporary, but transitory, and we're printing to prevent potentially deflation at the end of 22 when we get through supply chain issues.

And so, if this is the case, then i expect stocks of real estate to do very, very well and remember. If you want my buy and sell alerts anytime, i make a transition. I share my opinions buy, sell. I tend to do so in big batches, where all of a sudden, i'm selling a lot or i'm buying a lot, and sometimes there are quiet periods in between check out my programs on building your wealth link down below.

There are amazing programs. The alerts come with stocks and psychology and money. There are programs on building your wealth with real estate real estate, investing zero to millionaire real estate, property management and rental renovations for once you're in there's an agent course there's a course for making youtube videos. Folks, there's a lot of stuff down there check those links out down below and use that black friday coupon, but really what's the bottom line here well folks, the bottom line is no matter what happens? I'm staying invested if we end up getting into a potential recession scenario where the fed overreacts i'm not in margin, which is good so i'll, be able to have some money to go, buy the dip.

In the meantime, i'm fully invested and i'm not super concerned about the future of our market. I don't think the federal reserve is going to overreact and i don't think that leo brainard is actually going to be necessarily bad for the fed. I think it would just be a continuation of the powell regime, so these are my thoughts on the implosion of the fed and the potential for a market crash. If you found this helpful, consider sharing the video and check out the programs on building your wealth down below thanks so much.

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