Well, Steve in our live chat says we're going to have a second wave of inflation after the recession. That's definitely coming because after all, if the Federal Reserves SCP report is projecting point four percent, GDP at the end of the year and now you've got some Fed officials expecting a slight recession. Oh damn, anything they say you know is going to be worse. And the actual reality is.

So far, Steve's been right. Everything the FED has projected has been worse in reality. So assuming that anything the FED says is actually going to be better than expected may end up being a Fool's Aaron Instead of the fact that they were hiking back in March of 2022 when inflation was already at six and a half percent. That's when they started hiking.

But what were they doing? At the same time they were still printing 80 billion dollars of money, they were still doing QE quantitative easing right? Why? It's mind-blowing. Well, it's because they thought inflation was going to be transitory. Oh, it was Covid. Then it was Delta Omicron and War.

Okay, those are four shocks, but that'll be temporary. Well, temporary. Ended up lasting a whole hell of a lot longer now. Maybe it'll end up proving to be transitory, but that'll be over.

Probably twice the time frame that the Federal Reserve expected. So everything's taking a lot longer, things are lasting a lot longer, and usually that's a good thing, but in the case of bad news, it's not a good thing. So is it possible that when we go into this shallow recession we're going to end up with a second wave of inflation? and there are a lot of fears that the answer to that is Hell yeah? I Mean look at what the Bond market is. already.

pricing in the Bond market for some reason expects some massive fear coming very very soon. I Mean look at it right here. The Bond market is screaming at you, telling you, uh, oh, the Bond market thinks something's going to snap very soon. Which is kind of weird because like, things, don't seem that terribly bad right now.

But the way you would read this is, you would look right here. Look at this if the peak Fed rate, which is just where this orange bar Peaks right here is in tune. Why is the market pricing in all of these? Cuts Well, it assumes something is going to break. In fact, you could look at this Barclays piece which tells it to you in a different phrase: rate Cut Expectations right now are being priced out.

However, the implied rate path remains far below the Fed's consensus. This looks rather strange given the market is pricing A further rate hike in May implying the Bond market must be expecting a material deterioration in the economy in the next few months. Looking back at history and I'll translate this in a moment in case I lost it. But looking back at history, we found only three instances of a similar outcome: 1974, 1980, 1981.

All saw a sharp weakening across macroeconomic indicators like the Institute for Supply Side Management information, the non-farm payroll jobless claims, and inflation. While admittedly ISM Manufacturing is already down at recessionary levels, the jobs Market inflation are both in much better starting positions than in these other periods. In other words, this time is different, right? Therefore, we find it hard to believe that we are bearing down on the much anticipated pivot from the FED to cut unless there is a serious economic weakening. And so this is really interesting because let's translate this.

Basically, what these Wall Street suits are saying is yo man, dude with the dragon chain armor. Listen up man. The Bond market thinks rates are going to tank by the end of the year. The bomb Market knows all because it has a crystal ball, it doesn't and because the Bond market says big rate cuts are coming, something's about to hit the fan.

And then when something hits the fan, the Fed's gonna have to turn the money printer on again. And then this is where you get to Steve's argument Steve Who says quote I hope I am wrong Steve's argument is that as soon as you turn the money printer on again, you're effed because you're going to go right back to the inflation that you had during the pandemic. and I think this is where it's worth considering previous times, the Federal Reserve cut and did we end up getting inflation? Let's consider the Fed's pause in 2018. did we get inflation when the Federal Reserve paused its rate hike regime? No, we got a bull market and Below Trend inflation.

What about in 2009 when the Federal Reserve provided basically uh, so to speak, unlimited bailout? It wasn't unlimited at that point. There was a number set on it, but a big bailout. Big backstop of markets. The FED basically created the bottom of the market by a law large bailout in February of 2009.

and this is about six months after the Lehman Brothers disaster and everything. Even though Congress was trying to bail, you know everything out in like September and October. It wasn't until a Fed really stepped in with a money printer. And what did we get for the next decade? No inflation.

So it makes you wonder is structural disinflation? That's a fancy way of saying because we have technology that makes things generally more either productive or cheaper. Therefore, in the long run, like how much are you paying for a 40 inch TV 20 years ago, that's an LCD, uh, two grand. How much are you paying today? 200 right? That structural deflation? Is it possible that we'll go right back to seeing that? And I think where this comes to in in expectations is you have to just personally ask yourself, Well, what do I believe And let me set the stage for you because I think it's a lot easier to think about it when we not only consider history, but also when we consider what's likely to happen. So let's think about this.

So when we're on this page right here, what we can do is, we can say all right. So what cause, What do we know that caused massive inflation? Okay, what caused massive inflation and what caused no inflation? Okay, so if we compare these segments here, we should be able to have a little bit of an idea. So what caused no inflation? Well, no inflation was. Let's see.

Let's go with a little bit of a smaller print here. There we go. So no inflation was what we saw in 2018, what we saw in 2009. Some could even argue what we saw in the orally 2003 era because we really didn't have a massive inflation problem.

You could also say the late 80s, right? the 87 89 recession. We didn't have inflation here. That's because this was all part of the Great moderation. And so no inflation could be because of structural disinflation.

That's what I talked about with the LCD screens, right? In other words, we can print without inflation. That's interesting. So what definitely causes inflation like? what do we know with certainty causes inflation? Well, let's try. Uh, three rounds of massive stemi checks.

right? Stimmy? Hey, don't get me wrong, I Love the stimmy check days. They were great. but it's no surprise we had massive inflation right? How about uh, a massive uh, massive, unemployment payments for not working? Remember the somewhere around 600 a week for doing nothing right? All of the obviously the Eidls the Ppps All of this right? We know that causes inflation. We know price caps and subsequent removal cause inflation.

That's what we had in 1969. Uh, and then we know uh, and then somewhere around 75 as well. We also know that inflation is caused by unanchored inflation expectations. This is what when the economy gets fed up and says the FED doesn't know what the F they're doing, So screw them.

when did that happen? Well, you could argue that happened in Uh 79 to 81 where we also had then two waves. Uh, one wave was over here in 75 and the other wave was in the late 80s. You basically had, uh, an oil disaster, right? Oil prices? way up right. We think oil prices are so high today, but they're really a fraction of what the explosion was that we saw in the late Uh, 70, mid to late 70s.

So really compare the the things that cause inflation to what we expect here. So what do we expect going forward and this is a guess, right? Uh, we would expect in a rate cut regime. What do we expect? Do we think we'll go back to stimulus checks personally? I Believe the answer to that is unlikely I Think what we would see would probably be expanded support for a poor and maybe exp and more expanded additional on top of what we already have support for uh, us manufacturing because that would create more jobs, right? Creating basically providing stimulus checks to manufacturers is what China does. and if you look at China they don't They're not experiencing heavy inflation.

In fact Chinese rates are kept at I think it's 2.75 They're not facing an inflation problem and the stimulus checks that China gave did not go to the people. They actually went to the creators of Labor which is manufacturing. You know AOC was on Twitter ranting yesterday that the Labor Department is supposed to be for people and not bosses. but the reality is, bosses create jobs.

People don't create jobs. People do jobs. Bosses create jobs anyway. I Don't know why it went off on an AOC tangent here, but but then again, she likes to say things that are popular on Twitter that are often detached from reality or economics anyway.

but she does a great job running campaigns. You can't You can't. You can't fall for that. Uh, even if you hate her guts, you can't fault her.

She knows how to run a campaign. So anyway, um, what do you have? How is today different and I hate using that phrase because every time I use the word different, we always think oh, oh, this time is different, You know and that obviously that means that, uh, you know that's wrong but uh, I Think we have to go a step further here and actually look and go. Well, Do we really think we're going to get any of the things on the left again? That would cause a second massive wave of inflation after this, say, shallow or deep recession that we get when the Federal Reserve starts printing again? Well, do we think we're going to get rounds of stimulus checks and massive unemployment payments for not working, creating massive supply chain disruptions and lockdowns? No, of course not. I Mean nobody in their right mind is going to go back to that.

No way. Hell No. Uh. or do we have price caps? No, we've learned that price caps don't work.

Do we have unanchored inflation expectation? Technically, No. Have we seen a recent crack? Yes. So we want to pay attention to this one, But technically right now, no. Do we have an oil disaster With oil prices skyrocketing.

Gas is more expensive Now that's true. But is it anything like the 4X that we saw uh, back in, uh, in the 80s or even what we saw in the 2008 era? No, of course not. Yes, oils and gas is a little more expensive, but it's nowhere near the levels that it even was in the last in this cycle, right? So no, we don't have an OPEC or oil disaster I Mean we do have new fears Like we have this: D dollar fear, right? So there's the D dollar fear. But I've already broken down on the channel a thousand times, so this is complete nonsense.

I Just posted a video on it yesterday. just type into YouTube Meet Kevin China breaks the dollar or whatever. Uh, then you can have this argument about uh China invading Taiwan Yes, that's a potential problem, but it's probably like a less than five percent probability. And of course, if you have a different probability then maybe you think differently.

Uh, and yeah, we've got the Russia Ukraine disaster. But so far, the world is moving forward. you know, without any massive inflation Continuing right. We were facing disinflation right now.

Yes, there are still some levels of sticky inflation, but the point is, if we go through a recession, the current cycle of inflation is expected to be gone, so not terribly worried about that. So what do we think going forward? Well, yeah, maybe expanded support for the poor and additional support for manufacturing. But do I really think we're going to get after the FED goes back to cutting some kind of massive surge of inflation again? No. Because that nothing aligns with the left side here and everything aligns with the right side of this document here, which is the 18, 2009 2003 Late 80s Great moderation style money Printing And guess what? No inflation.

So thanks Steve you just helped me make a 10 minute video I Appreciate you, You know I Feel like you all you're owed like a royalty here. Like a share of this video's Revenue You know? So anyway, with that said, Do I Really Fear massive inflation? No. but instead what I'm gonna do is I'm gonna listen to the opening bell foreign all right now just to finish that thought up. Uh, Gary Roberts says Milton Friedman would disagree.

Government printing is what causes inflation. Uh, that's not actually what Milton Friedman says Milton Friedman says it's the expansion of the money supply. We're always printing money, but if we're rolling that money off, then we can actually see money printing happening at the same time as the money supply is Contracting right? So we can look at the money supply. This is an Austrian School of Economics thesis and so we could look at the money supply and to some extent Milton Friedman is correct.

However, it's actually the first derivative of the money supply that you have to pay attention to. It's not the money supply itself that you have to pay attention to. Now that sounds extremely complicated. It makes it sound like I just came out of a math class.

trust me. I Hate math. So let's make this very simple. and let's answer what act actually Milton Friedman suggests when a hymn or Austrian Econo Economist suggests that money, the money supply expanding will cause inflation.

What it actually means is the rate of change accelerating up quickly in the expansion of the money supply that causes inflation. Look at this graphically. This is the M2 Money Supply And what I want you to notice is see this entire era from here 1981 all the way to 2020. That entire segment.

What happened Mr Gary Roberts What happened from the left side all the way to 2020. What happened is very simple. The money supply expanded. How much inflation did we get? Zero? Okay, like 1.5 super nominal.

Basically zero. We may as well round it to zero. But what happened when that rate which was progressing steadily even through those recession? What happened when the rate of Money Supply expansion exploded. In other words, right here over here during the covet pandemic.

Oh damn that caused inflation. So we have to parse what Milton Friedman says. And actually you help me make my point because if we go over here to 2009, you can see the rate of Money Supply growth didn't unanchor, ridiculously and stupidly. And we didn't get inflation.

So money supply can expand without causing inflation. It's the derivative of inflation or of the money supply that causes inflation. If I were to make a first derivative chart of this, uh, it would probably look something like let's draw it together. So if we were going to drop a first derivative chart of this boy, it's been so long since I've done this.

So the rate of change for 20 years is flat, right? This is our our chart flat and therefore no inflation, right? But then all of a sudden the acceleration how quickly the money supply expanded exploded right and then we kind of got back to flat and then we actually turned negative, right? Money supply growth expanding at sort of a negative level. Um, this right here is what caused the inflation, not the 20 years before it. So it's really interesting thing about. look: I Love economics.

And if you want to learn all of my perspectives on building your wealth, check out the programs linked down below. We're changing all the pricing at 7 pm. Uh, tonight? Uh, that's when we're flipping over. so you've got another, you know what, 10 hours or whatever from when you're watching this video.

Uh, it might be even less than that depending on when you watch it. But anyway, 7 p.m tonight we're making the changes. Uh, the lowest price options will be going away to get into the lifetime access on the programs. I'm building your wealth if you like my perspective.

I'd love to have you over there.