RATES EXPLODE | Economy is SCREWED | STAGFLATION

Breaking news once again welcome back to Real estate mindset the 10-year treasury Right now has absolutely skyrocketed and That's in the face of an economy that's Absolutely for the lack of better words Screwed and guys I have Jack here today To try to help us understand like what The heck is going on here's the tenure Right here sitting at 4.7 as the Recording of This 30-year fixed rate Mortgages updated to 7.52% here's my buddy nobody special Finance I pulled him in guys to help us Try to figure out what's going on Because you're boys with a low reading Group all right I'm good in math and Subdivision analysis but I bring in the Big guns Jack I was peacefully minding My own business this morning I'm in my You know Discord chat talking to Discord Members about how you know four-week Rolling average median sales price hit a New record uh that was set last June uh 2022 and you know mind in my business Showing them median how to calculate Median and things like that and the next Thing I know we get a report that GDP Has half of expectations and then after That pce comes out Double expectations the tenure shoots up Jack can you tell us can you tell the Viewers what's going on and also I love You thank you for being here well thanks Brother right back at you appreciate the

Introduction and thank you for having me On uh so yeah this GDP report this Morning it was really the worst possible Scenario I mean it could have been worse We could have entered a recession we Could have had a big NE negative number Right but everybody was expecting big Growth the market was expecting Somewhere between 2.6 and 2.9% economic Growth we only got 1.6 now that is still growing the Economy is still expanding but that is The slowest growth in in a couple of Years and way way below what the market Was expecting and on top of that besides The disappointing economic growth Numbers was What's called the personal Consumption expenditure Or the basically the price index Measured quarter over quarter and that Saw an explosion higher of 3.7% now That's the the core pce which takes out Food and energy that's the one the FED Watches really closely and that jumped From 2% last quarter to 3.7% so this morning we got a onew punch Of economic growth being cut in half at The same time inflation almost doubled And if you're one of those guys who's Sitting there watching the stock market Saying any day now the FED is going to Go Zer and bur and lower interest rates And those cuts they right around the Corner this report today Dash those

Hopes once again we're looking at an Economy that is still inflating that the Prices are still Rising inflation is Trending in the wrong direction and even Worse economic growth is slowing and at Risk of going negative and you know the Keynesian economists the people who run Our economy they always say that's Impossible we can't have a situation Where the economy is shrinking or Unemployment is rising and have high Inflation at the same time it's supposed To be impossible even though it happened In the 1970s and it looks like that's Where we're heading now and that's Called stagflation so this was really a Wakeup call and the market did not like It as you saw higher interest rates Stocks took a nose dive a really bad Report You Know Jack Shameless plug I Got to tell people because I'm really Proud of myself because I'm about to get This right you guys if you want to keep Hands to the pulse of the economy Obviously there's a lot going on there's A lot of division there's a lot of Cracks there's a lot of things that are Doing good K kshap recovery right so It's you know very confusing if you guys Really want to know what's going on Watch Jack he does lives every single Morning from Monday through Friday and It's not 900 PM Eastern Jack that's not What time that's not what time your Live

Start Jack your Live start at 9900 a.m. Eastern time Monday through Friday and I Would strongly suggest the 14th video we Did together something like that you Finally got it right brother I think Learn congratulations and and just don't Tell the viewers that you know when we Were practicing I got it somehow wrong Once again what did I say 8:30 yeah yeah You got it wrong again while we were Practicing that's all right happens to a Lot of guys right but more importantly Though man and I and I want to get you Know kind of take a look at at what's The difference between the 1970s and now But could you explain to the viewers Jack and I know you have a presentation We will get to it but what for the Layman You know explain this to like a Kindergarten what's Stagflation stagflation is the Simultaneous rise in unemployment while Prices are also going up right it's it's High unemployment and high inflation at The same time now the the the prevailing Wisdom in economic theory is the the Keynesian School of economics and the Keynesians have this thing called the Phillips curve that's basically as Unemployment Rises inflation Falls and As unemployment Falls inflation Rises so You typically according to the Keynesians according to the Phillips

Curve you can't have both at the same Time it's economically impossible There's a little bit of reason you know Wisdom that right if everybody's working And everybody's getting paid then Everybody is spending money chasing Goods and services so low unemployment Would typically Drive prices higher as Everybody makes more money they spend it And vice versa higher prices shouldn't Be possible when everybody is out of Work because people aren't making any Money so they have no money to spend and So that should bring inflation down if You put people out of work now this is The prevailing economic theory it's Taught in schools all the guys in the Financial press CNBC and Bloomberg they All subscribe to this Theory and it's One of the reasons why the FED is Raising interest rates to fight Inflation because they don't say this But when they raise interest rates they Put people out of work and if people are Out of work they can't spend money and So it should solve inflation they're Literally hurting people to try to fight Inflation now that's what they did in The 1970s but in the 1970s we had the oil embargo the Arab Oil Embargo that happened and that drove Fuel prices higher where it didn't Matter if people were or weren't working There was no gas there was no fuel fuel

Prices were exploding higher whether People could afford it or not and that's Kind of always been my biggest gripe With keyy and economics is it totally Ignores the entire supply side of the Supply demand equation and it it it just Doesn't work and you know the the Keynesians are yet to fully explain what Happened in the 1970s how could we Possibly have stag flation it's not Supposed to be possible yet that's Exactly what we had in the 70s and you Know this current inflationary scenario Where we're in where inflation spiked in 2022 at about 9% and it came back down And now it's rising again it almost Identically mirrors the path inflation Took in the 1970s when we ended when we Ended up in stagflation so once again We're making the same stupid mistakes Doing the same stupid thing and Expecting a different result this time It's probably not going to work out that Way and the data we got today shows that Yeah and Jack I would wonder you know What they teach in school about deficit Spending impacting the laws of supply And demand and impacting the sentiment Because uh unlike right now you know the 1970s if I'm not mistaken didn't have This type of deficit spending the 1970s And 1980s they still had like real wage Growth during the 1970s and 1980s Consumers were still saving at Double

Digit so to me it seems like if we're Going to compare it to 1970s and 80s You're going to have to replace the Strong consumer with a toxic government Because it seems like if people are Losing their jobs and suffering like we Can all see when we go outside of our Door yet prices are still up people are Spending money then to me it would kind Of be probable that maybe the deficit Spending really is messing us up Especially right now when they're com Trying to combat inflation so right now Americans have to pay the bill the Federal Reserve says we're going to do QT we're going to raise rates it's time For America to pay the bill over Lockdowns fine so be it we'll heal Together but instead of everyone healing Together the government's like you know What we're just going to keep spending As if we are in lockdown yeah so I was Going to say that the debt to GDP ratio In the 1970s was something closer to Like 30 to 40% federal debt to GDP now It's somewhere closer to 130% so okay You know it's it's not really comparable The the solution we used in the 1970s When uh Paul vulker was the chairman of The Federal Reserve and he very famously Raised interest rates obscenely High you Know we're we're at right now like uh Five and a quarter percent is the Fed Funds rate I think vulker took us to

Something like 13 or 14% in the FED Funds rate that would instantly bankrupt The government if we were to pull a Paul Vuler right now I mean we're running Trillion dollar deficits at five and a Quarter percent if if we I mean if we Ran to all the way up to what Paul vuler Did almost every dollar the government Takes in would be spent on interest on The national debt alone so there really Is no there there's no way out of this To to fight inflation like we did in the 70s if it ever gets as bad as the 70s Got then we're in big trouble just a Real quick reminder this is the the math For GDP right GDP equals c which means Consumption I is investment G is Government spending and then the E minus M that's exports minus Imports or or net Exports right so this is the math for GDP every single dollar that gets spent Fits one categories I don't I'm sorry to Interrupt you I don't care who knows People go don't interrupt him don't say You love him jack I love you and I love How how I mean these are and I'm going To explain why these are very Complicated issues we're talking about a Lot of Americans don't even care what's Going on a lot of them are frustrated Trying to figure what's going on and so When you simplify things like this I Really feel like it makes a huge impact And so thank God that like you're not

Too smart for for us all all our own Good that you're still a humble man and That's what I really respect about you And I apologize for interrupting you sir I I can't believe you interrupted me Again that's so rude Travis Really comments that he shouldn't Interrupt Me MH I'm GNA I just no really thank you for Having me on again it's a pleasure to be Here and don't worry jump in if I if I Say something and you don't understand It or you want me to elaborate just jump In you won't hurt my feelings uh but This is the actual report that just came Out from the Bureau of economic analysis This is the GDP report and you can see Right on the first first page here real Gross domestic products so this is Adjusted for inflation when they say Real they mean subtracting the rate of Inflation it grew at 1.6% in the first Quarter of 2024 and that is compared to Real GDP growth of 3.4% in the last quarter of last year so Economic growth more than cut in half Right so big reduction in growth still Growing it's important it's an important Distinction it's still growing but much Much slower all right now they get into What was actually driving it I'm going To skip over a lot of this stuff and We're going to go down to some of these

Tables here where they elaborate on the Categories of GDP and where the actual Spending was uh what we're looking at Here is uh here's the total gross Domestic product here's the first Quarter of 2024 there's your 1.6% number We just got the 3.4% from last quarter So you see as we go back through prior Quarters this was the slowest economic Growth since the second quarter of 2022 When it was actually negative remember 2022 the recession that wasn't when they Defined their way out of a recession Even though we had two consecutive Quarters of negative GDP uh this is the Slowest growth since then so things are Slowing down and they're slowing rapidly We went from 4.9 in the third quarter to 3.4 now we're down to 1.6 you can see Where this is going here uh now the Biggest category by far the most Important category in the United States GDP is personal consumption all right The C in the equation right like 70% of GDP comes from that c category there and That's consumption and consumption is Broken down into goods and services and You'll see here in consumption of goods Was actually negative here we bought Less stuff in the first quarter than we Did in the prior quarter good swung Pretty pretty far negative and I can Tell you right there that is inflation And that is people having less money to

Spend on discretionary items things like Electronics TVs new phones we're seeing Declines in spending on those things That are quality of life things right They're not vital to your survival but They are things that make life a little Bit better you know obviously material Things don't give you happiness but it Helps U now really alarming in here was The growth in Services you can see here We got a 4% under the services category And that's accelerating it was 3.4 in The prior quarter and it was 2.2 in the Quarter after that or before that now That's important because Services Inflation is really what the FED wants To see come down Jerome pal told us Several times that before he cuts rates He needs to see services come down now He says things like super core services Or or core non-housing services this is Things like insurance which is getting Really really expensive insurance was a Big contributor to growth in GDP and That's all inflationary there's not more People buying Insurance the people that The insurance people are buying is just Going up in costs like auto insurance Has gone way up medical insurance is Going up everything is going up and Insurance-wise so we saw a lot of growth In the consumption of services in this One Now going back to the formula here under

The I the investment category now There's there's two categories of Investment there's fixed investment Which is like buildings structures Equipment and then there is uh inventory When when companies stock the shelves That's viewed as an investment all right So those are the two main categories in Gross Domestic private investment uh the Investment category actually went up Pretty big here 3.2 % right gross Private domestic investment it went from 0.7 to 3.2 now you'll notice as we go Back in time in this category this is a Pretty volatile one like that was 10% in The third quarter of last year 5.2 Before that so this one tends to swing a Little bit little little more wildly now Notable within the investment category The biggest contributor to the growth in Investment was residential construction Fixed residential spending it was I Wrote it down here 1.9% increase is the number right down There that's that's huge because I went Back Jack uh to 2021 2022 2023 it Appears other than Q it appears other Than Q3 of 2020 that is the biggest Jump in in residential is that Y is that Accurate showing 30% in Q4 of 20120 was The biggest jump in residential or the Last time we had a jump of this size but Yeah it's this is a a big acceleration

In residential in fixed investment Home Building basically is what we're looking At here right and we've seen that some Of the home builders are really cranking Up you know they're they're building a Ton of homes they're building bigger Homes nicer homes uh so that was a big Contributor to GDP here was residential Investment um also not included on this Page but inventory was another one there Was actually a negative inventory number And we seen this in a lot of the retail Stores like Target and Walmart they've All reported big year-over-year declines In same store sales but their earnings Are going up because they're not Replacing the stuff they sell and we're Seeing the same thing in a lot of these Manufacturing pmis or purchasing Purchasing managers index the new orders For factories aren't coming in shipments Aren't going out the stores are not Replenishing what they sell so a decline In Inventories is the store's way of Telling us that they don't think Personal consumption is going to keep Growing much longer and you know you can See we have been declining three Quarters in a row and we've been hearing About this right sizing of inventory Among retailers for the better part of a Year now and it's still going on we're Still not getting those new orders at

The factories so that's another Important barometer for the health of The consumer or for future consumption The fact that those inventories aren't Rising They're actually shrinking yeah amazing And also Jack you know what you Pinpointed and I want to tell the Viewers one more time and I say this Jack said 70% and correct me Jack if I'm Wrong Jack said 70% roughly of GDP is From consumer spending yep and when we Look at the data depending on the data Source depending on the time depending On the survey depending on all these Things we could safely say that about 70% of consumers the last report 78% of Consum consumers are living paycheck to Paycheck and so it's fair to say Jack That the Economy in most of the economy is being Ran off of the bad spending habits of Consumers is that fair to say I think That is more than fair to say Travis and You know there's a big variable in this Equation that the New York Post as soon As I get this ad out of my face I'll Show you this story here 15 million Americans including those making more Than $100,000 a year are buying Groceries using buy now pay later apps Right I saw this story a couple of weeks Ago the New York Post the pop-up ads are Seen on this website but you can kind of

Get the idea here now buy now pay later Is a relatively new phenomenon it's not Reported to the credit bureau so we have No way of tracking how much of this is Actually going on we only have what I Call anic data right stories that people Tell and this is saying 15 million People which if you assume average Household size of four you're talking 60 Million Americans which is about what A Fifth maybe a sixth of the US population Is eating off of buy now pay later Loans czy and that's just food that Doesn't mention discretionary items People living above their means so this Is a brand new kind of debt that has Been implemented on a huge scale we Don't know how big because it doesn't Get reported to the Credit Agencies this Is on top of credit card debt which Continues to rise at an astronomical Level so the American Consumer is on Life support there's they're going Deeper and deeper into debt they're Using shadier and shadier debt to Maintain their spending and even still It's growing just barely again Consumption only grew by 1.6 or what was It 2% I think was the let me bring that Number back up while you're bringing um No 2.5 sorry you were gonna say Well Jack if I'm not mistaken I I think it's It's maybe the third it could be the Second uh behind auto loans second or

Third highest Consumer Debt school Loans um that's still paused that's Still paed and I say even though they're Saying it's not paused because they're Building interest it's paused because They're not paying because it's not Hurting their credit and so like I get It oh yeah this is like the 70s and 80s But like the 70s and 80s we didn't have This government spending toxicity that Americans didn't care about and we Didn't have Frozen debt that's still There you got to pay it and so what's Happening Jack is is instead of them Paying it they're they're replacing the Expense with something else my Mother-in-law called me last night to Talk about her son who just bought a new House they didn't escrow the house Properly which means they didn't set Proper property taxes so at the end of The year they had a $6,000 bill that They don't have and their payment goes Up $600 a month on their mortgage and Guess what they just bought a new Vehicle Jack and so when they come to me After the fact and ask me for help it's Like man I you've already done what I've Been telling you not you know telling Everyone not to do and so like that's What I'm really like panicking about It's like it's not too late to get ahead Of this it's just don't be part of that Don't be part of that 70% of of you know

Of that spending Hab don't be part of The 78% pay paycheck to paycheck I mean Jack I mean I'm not spending recklessly And my life is happy and I'm renting are You happy jack yeah I'm a happy guy and You know I don't I I I put everything on The credit card and pay the card off at The end of the month I I don't carry a Balance on my credit card ever the cards Pay me my points I don't pay any Interest in my opinion I win I don't let The points convince me to buy things I Wouldn't otherwise buy I'm cheap AF so You know I'm fine I don't I can't be Marketed too let's just put that way I Am immune to marketing but my point is Is is I wish the kids understood what Really matters in life you're a great Father you're happiness comes from there You're a great husband your happiness Comes from there it doesn't matter if We're renting doesn't matter if we own Certainly it it does feel awesome though You know to to have a good investment But my point is Jack is like it's fre It's freaking scary dude that how wrong Especially Millennials and younger are Getting it as far as what should we be Doing right now but I also think that Some of this data is Tainted and and I I Also believe Jack that there are a bunch Of people that are doing the right thing Right now I think a lot of those people May be in the shadows not speaking out

On all of this um because you can't hide It we all got to go to the grocery store We all got to go to the gas pumps we all Got to for the most part get insurance We all know what's going on and Meanwhile prices are going up how's that Possible I'm spending less money myself My bills are higher though and and Honestly and I've and I've been fighting To keep my purchasing power and in Attack myself as an expert uh in in you Know this industry and Jack my my Purchasing power is getting you know is Is is is taking a little bit of a hit Even though I'm doing the things that You said and also the T Bill and chills But brother you know I'm just glad I Know real people man I'm just glad we're Not you know we're not at these rich People at the top that are spending you Know trying to feel a void of emptiness In their hearts and and people may laugh At me for saying that but it's true you Know it's so rare Jack to to meet people That are successful and it's even in the Bible but there's it's rare to meet People that are successful that are Still humble and happy people and um Anyways sorry brother I'm just happy to Know you man I'm really happy that that We have someone in our community like You that's I'm just say you're way Smarter than me all right so I'm Flattered that you're that you're taking

Your expertise because you care you're Not making any money by doing this right Now I I hope people understand and Jack's a very busy person and so I'm Just saying Jack go to 900 a.m. lives Monday through Friday this is a good man You were saying got it right twice in a Row you are on a roll brother on a roll Thank you yes all right so where was I Let's let's go back to the math all Right let's get let's talk about the G Now the government spending right now Let me just preface this by saying Sometimes the G can hide in the c or Hide in the eye case in point the chips The inflation reduction uction Act and The stimy checks all right when stimulus Went out it was technically government Spending but it showed up in GDP under C Because it was money from the government That people went and spent on stuff so It technically showed up in GDP in the Form of consumption it was borrowed Government money but it showed up in the Sea and we do have a little bit of that Going on right now right we're building Chip factories in Texas and Arizona in New York they're buying steel they're Buying Lumber that's all showing up Under the sea or under the I structural Investments but really it's being funded By the G but it's not being counted Under the G so that's going on right now And the reason why I'm prefacing all of

That because believe it or not and don't Shoot the messenger here guys don't Don't shoot the messenger we actually Saw a decline in federal government Spending in this GDP report I know a lot Of people are going to roll their eyes Smack their foreheads jump down my Throat in the comments I get it I get it I was skeptical too but all just keep in Mind that a lot of that government Spending right now is hiding in the sea All right student loan forgiveness gives People extra money at the end of the Month to go spend on stupid stuff Instead of M making their student loan Payments that's government spending Inflating the consumption numbers while Not affecting the the G in the equation All right now total government Consumption actually went up 1.2% but Federal decline but negative 0.2% we actually had a decline in Federal government spending in this Quarter and that was mainly driven by National Defense I I don't know how That's possible because we're popping Off missiles in the Red Sea we're Intercepting $20,000 drones with $2 Million sm2 from the Navy we're given You know we just passed that big defense Bill for Ukraine and Israel and Taiwan Although that wasn't in the first Quarter so it's possible some of the Stalemate in Congress maybe contributed

To that that negative number there but You know I got to report the data as It's reported and this is showing a Decline in federal government spending For that quarter now that was more than Offset by a 2% increase in state and Local government spending shown right Here now the state and local government Spending that is 100% being driven by Wages teachers cops firefighters local Government employees were getting long Overdue cost of living increases in Their paychecks because they you know The cost of living went up so much in 2022 and 2023 they finally got that Raise this year and so state and local Government spending is on the rise so That's what drove most of that Government spending there um that Federal government spending that Negative number that's not going to be There much longer I I think that's That's a fluke but it the data says what It Says Jackie I mean it it seems that they Have the power to shuffle from consumer Spending to I mean come on guys I mean I Mean that's really what we're saying you Know when and and and I'm not saying yes Or no to any of this but when we do Packages for War uh Ukraine Israel I'm Not saying yes or no to these things It's going to cause more inflation that That money is going to come back to

Consumers one way or the other it's it's Gonna have more consumer spending here On Mainland and so I mean I I just I Don't see anywhere else to go other than That this is from deficit spending it's Just but it's it's shocking to me Jack That even with the deficit spending in The trillions uh over a trillion for the Year to Date they've done it in such a way where It's they can now say hey it's slowing Down by Point by a my know nothing by 0 Two but still there's a negative number There uh and it seems to me that they Would use that to celebrate some type of False Victory do do you know the famous Saying there's lies damn lies and Statistics right like talk talk about The chips act right there's been a Couple of stories over the last few Months Intel got a few billion dollars To build a factory in Texas when Intel Spends that money that's going to show Up under the ey that's going to be Non-residential fixed investment when They spend that money to build that Chips factory if the money came from the Government it should show up under G but It's going to show up under I so there's Ways government spending can hide in This math where they could technically Be telling the truth but it's kind of a Lie of omission and that they're not Mentioning how the government spending

Is actually driving a lot of consumption And investment right now same thing with Electric vehicle factories subsidies for Electric vehicles tax credits that kind Of stuff it doesn't show up under the G Even though it's government Spending okay um the last category is The net exports the E minus M cover that One real quick uh where was it exports Rose a little bit we got a marginal Increase 0.9% rise in exports there it Is that's versus a 5.1% rise last Quarter so um growth exports is slowing Substantially and then Imports which is A big negative in GDP we actually saw a Big increase in our Imports 7.2% versus 2.2% last quarter so net Exports was actually a big negative the Trade deficit got bigger in this quarter Because we're importing a lot more stuff Than we're exporting so that was a big Detractor from GDP so that's where the Growth is and where the contraction is Now here's what I think was probably Scared people the most about this report And that is on page 11 here let me get To page 11 that is when they're showing us price Indexes for gross domestic product and Related measures percent change from the Preceding period all right now the total GDP total personal consumption Expenditures increased 3.4% that's including everything food

Energy housing all right but really the More important number is core pce that Takes out food and energy because food And energy are more determined by Commodity prices than the actual state Of the economy it's kind of independent Of the whole Supply demand Dynamics Jack Go ahead can can you explain and to the Viewers as well um first of all I Noticed in q1 it appears like you said From the beginning the services uh huge Explosion Services inflation can you Talk to the viewers about why the FED is Watching service inflation why it's so Sticky why is the service inflation Potentially the bigger problem versus Another Category so Services is a big problem Because we've already seen inflation in Goods has come back down more consistent With what it was pre pandemic right Prices are still going up on a lot of Things um and again keep in mind guys I Get this comment a lot inflation coming Down doesn't mean price is coming down Yeah inflation is a rate of change of Price so inflation can come down and Price can still go up that's what's Happening uh but Goods inflation right Now is largely back to where we were Before the pandemic but Services Inflation which services are driven more By labor costs than raw material inputs And factories Services inflation is

Still every bit as bad as it was in 2022 and in a lot of ways it's actually Worse than it was in 2022 and again the keynesians are are in Charge Of things right now and another big Thing of keynesians is wage spiral Inflation keynesians believe that if People make more money people spend more Money and therefore prices rise okay and So one of the worst things the Keynesians could ever see is Wages Rising quickly and what did we get last Year we had the big fight with the Automakers unions they got a big raise We got the near strike with UPS UPS Drivers got a big raise all the airline Pilots got big raise es Social Security Had the biggest cost of living Adjustment in its history last year Wages are rising it's taken a long time It's long overdue because the cost of Living Rose years ago but now the wages Are rising and that's driving a lot of Services inflation Here okay and well let's let's stay on This one because Services inflation 5.4% as measured by pce personal Consumption expenditures uh pce is the Fed's favorite inflation gauge more so Than CPI CPI gets all the ma all the Media head headlines and everything but The FED watches pce more closely and That is showing an A big- Time

Reacceleration In Services inflation it Went from 3.4% last quarter to 5.4% this Quarter like I mentioned the FED is Watching Services very closely that's More important than Goods inflation and That's heading in the wrong direction Jack I'm looking I'm I'm I'm looking at That chart brother and and I know Because the viewers may not be able to See this as much I'll try to zoom in on It but it looks you know you're breaking This down perfectly but for the viewers This is matching Services is Matching 2022 I mean the worst part of The inflation in 2022 arguably right yep And third quarter of 22 was the worst of The inflation and it's Matching it looks like there's is at 6.3 On Q4 2022 also yeah that was the peak In service inflation was in the fourth Quarter of 2022 so you could argue um That actually no work has been done to Services inflation is is that what I'm Seeing here Jack yeah I mean I mean you Could follow along by quarter right you Know starting with like second quarter Of 2022 right 5.8 5.6 6.3 that was Peak Inflation Panic now Goods inflation was A lot higher back then but Services it Started to come down yeah in 2023 we got 6% then 3.6 then 3.5 then 3.4 okay but now all of a sudden we're Back to 5.4 and by the way Services inflation

That's your auto insurance that's your Medical insurance that's a price you're Paying if you have somebody come to Clean your house what you're paying for That that's repairs on your car right Anything that that involves somebody Else's labor you know eating at a Restaurant the the server there no that Would TR open in Goods that's food away From home but a lot of the a lot of the A lot of the things that involve people Performing work for you instead of Buying stuff that's your services and That just made a very abrupt turn in the Wrong direction right up until today it Was going in the right direction it was Taking its sweet time getting there yeah Yeah right I mean 3.6 3.5 3.4 everybody Rolling their eyes yeah but now but at Least a little progress you know a Little progress right but h i mean it's It's skyrockets Jack I mean this is a Real problem here man that's that 5.4% Read in the q1 that is all of those Labor disputes that we saw last summer And last fall finally showing up in the Inflation math people finally got that Raise that they deserved I'm not saying They shouldn't have got it the cost of Living was so high they deserve that Raise yeah but now we're at that point Where it's showing up in services and Now the increase in Services inflation Is more than offsetting the decreas is

In good inflation which means even Though those people got that cost of Living increase it's not enough they're Not buying any more stuff it's all going To auto insurance it's all going to Healthare it's all going to Airlines and Jack meanwhile like I I didn't I wasn't One of the people that got a raise There's a whole bunch of other people That didn't get the raise thank God Social Security got the raise you know They're on a fixed income but this is I Mean I'm almost I mean I'm almost Speechless because it's almost like what We were saying back in 2022 higher rates We need higher rates you know but it Started to look good we started that Deflation those Bank runs but then the Be you know Banks or funding program Came and then the deficit deficit Deficit I mean it seems like this is the Twilight Zone I mean and why are we the Ones that are are the crazy people for Telling people to just be cautious why Do people get mad at us for saying don't Spend right Now you know Travis I I really wonder You you mentioned the bank runs if they Had not intervened on behalf of Silicon Valley last March would we be having This conversation right now I don't Think so they bailed out Silicon Valley Bank they bailed out all the wealthy Venture capitalists and the big Tech

Guys in Northern California right they All got bailed out when the FDIC stepped In and guaranteed uninsured deposits at Silicon Valley and signature bank and Now here we are a year later and Inflation is heading in the wrong Direction bank failures are highly Deflationary they chose to inflict this Pain on Main Street to save Silicon Valley last year but and that's truth of This isn't the ugly truth in addition to What you said as well is that the Federal Reserve is it's a private Company whatever the Federal Reserve the Government company the Federal Reserve You can argue with me in the comments All you want that's the government Aren't they really Protecting the banks and not Federal Reserve is the banks oh that's right if You factor in that the banks also own The government then yeah the Federal Reserve is the government it's owned by The same people right the Federal Reserve is a private entity to your Point it's owned by its member banks Which means the people who control the FED are the same people who buy the Politicians and they're the same people Who control the money supply and the Price of money so it's yeah it's the Same people pulling the strings just I Feel much better now different puppets Oh yeah yeah thank you that that that

Clears it right up yeah right let's go Spend some money you wantan to uh want To go to I don't know want to go to Vacation somewhere oh yeah they'd love You to do that they they don't like Savers they punish Savers they they want They want that c man this is this is What they want they want to keep you Consuming that that inflates their Wealth right there borrow from their Banks to drive that consumption that's How they Win U how do we win Jack I'll let you know as soon as I Figure that one out Travis I can tell You my f my favorite way is I I store a Large amount of my wealth outside of Their system that's that's one way to do The ownership of precious metals Bitcoin That's how I like to to protect myself From they because the more they play These games the more they mess with the Money supply the higher the value of Those things goes so I mean we know They're playing these games we looked at The the deficit the government spendings Going down but the deficit spendings Going up I mean this is uh you know What's the bigger problem Jack I mean I Mean let's be realistic what we're Looking at here on the screen that the Viewers are saying is is economic Turmoil we're suffering we fill the Inflation but we also before we put this

On the screen we talked about 70% Consumer spending 78% paycheck to Paycheck so is it kind of fair to say Perhaps in many Situations that the bigger issue is just American consumers don't give a crap and They don't care and they have horrible Spending habits isn't isn't that Potentially the bigger issue here I mean It's it's the same thing right it we're Talking about it's not one or the other They're symptoms of the same thing we Printed all this money during the during The vid right they gave everybody money And some people paid down credit card Debt right America's credit card bills Went down but most people just took that Money out and blew it on stupid stuff They could have bought assets with that Money assets that would have gone up in Value with the ensuing inflation like Some people did a lot of people did and Now they're doing great right like I Know a lot of guys bought gold and Silver with their stemmy monies and now Gold and silver are at all-time highs Well gold is silver's not but you know To to the point th those things have Gone up in value the people who took That stemy money and just dumped it into The C column just went and consumed Bought Gucci bags bought electronics That don't work four years later you Know all they did was drive themselves

Further in debt and now the inflation That resulted from that expansion of the Money Supply is costing them out to back end You know yeah we got $600 stimy checks But then our cost of living went up by $1,000 a year which means here we are Four years later we're way in the hole On those stemies so and remember that The next time some politician is Promising to print money and give it to You he not giving you anything he's Robbing you when he does That do you have an idea Jack of what You know and what do you expect and Maybe you haven't you haven't kind of Meditated on this yet but what do you Expect to happen in uh Q2 and I say that With this in mind there's a lot of People including myself and as Mickey Mouse as this sounds and I understand This is Elementary School Mickey Mouse It's an election year okay it's an Election year it's an election year um So I I what do you think well happen Jack in Q2 will gudp do you think it's Going to go up you think we'll have a Similar issue do and I are we G to make It to the presidential election prior to Us going into Recession do you think uh well right now Even if we were to suddenly swing to an Economic loss right if if GDP were to Start Contracting starting right now we

Still wouldn't know about it until after The third quarter is over and those Numbers get reported which would be like Right at the the election right so of Course you Know a lot of stars have to align for us To officially enter a recession prior to The election so I I'm gonna go out I'm Gonna say probably not we probably won't Officially enter a recession now that What if we there's a lot that can go Wrong without a recession okay right the Bank earnings have been abysmal the Banks are getting clobbered here even The big Banks like JP Morgan double Digigit declines in earnings per share For all the big Banks and the big Banks Did great last year when all the other Little Banks were failing commercial Real estate that is getting worse by the Day so you know we could have this big The big liquidity event The Big Black Swan where interest rates surge Overnight that could happen whether we Enter a recession or not I would say That's actually probably a likelihood Not just a Possibility uh it's the response to that Event that's the big if does the FED Turn on the printer right away do they Lower rates right away you know that's That's hard harder to gauge but let's Say that they do okay let's say that They turn that money printer back on

They're going to lower let's say they Lower interest rates Jack at this stage Of the game of runaway stagflation Whatever what impact would that have oh That would send inflation to new highs That that would be that second wave of Inflation that everybody sees coming Right now that's starting with this Report today or really you could say it Started in January was when CPI first Started trending in the higher Direction U and that would follow the course of The 1970s right all the inflation of the 1970s didn't happen in a straight line There was it was like a wave and the Peaks got higher and higher in these Three distinct waves and it didn't even Really Peak until I think like 1981 or You know very late 70s early 80s is when It peaked Uh we're still in the you know right at The bottom following the first wave so If we stick with the course of the 1970s We've got two more waves with higher Peaks ahead of us here and I think That's what gold prices are sniffing out Right now gold is at an all-time high Just off an all-time high around $2,400 An ounce here and we've had a stronger Dollar this year and we've had interest Rates Rising now historically those are Two things that are terrible for gold Prices higher interest rates and a Strong dollar and yet gold is at an

All-time high here because the gold Investors especially people overseas you Know Asians are flocking the gold for Safety too but a lot of gold investors Read the writing on the wall and they Know sooner or later the fed's going to Do what they've always done they're Going to bring back the easy money and Gold does very well anticipating Inflation and right now we're watching Inflation just start to turn higher and Everybody's saying we know the fed's Going to cut eventually and so they're Piling in the gold knowing that when They eventually do cut gold is going to Explode higher so I I think the gold Market is telling us there's higher Inflation on the horizon here sharply Higher Inflation and Jack if if you can answer This question man and maybe I look up to You too much maybe I put too much faith On your shoulders I I really appreciate You man I really appreciate you going Back to the Great Depression okay again If you don't know that's fine I I I need To look more into this there's just not A lot of data that's 100 years old That's easily access you know accessible Without paying a subscription was there Inflation uh during prior to the Great Depression yes there there was inflation In the 20s um but a lot of things like Like the price of gold didn't really

React because the price of gold was Still fixed back then the dollar was Backed by gold and it was redeemable for Gold back then so you know like the Price movement of gold in the 1920s Isn't really a very good barometer but Yeah we had the Roaring 20s you know Times were good Um so I say that Jack because again I I I I haven't got I want to dig more into The 40s as well and the 20s um but I try To always think okay can the consumers Pay like because my point a lot of like A collapse is consumers cannot pay for This the consumer getting absolutely Murdered right now and when people throw The 7s and 80s I understand like the Rules the premises the runway inflation Vore but like I'm but like we have to Also understand the consumer was in a Much different situation what we had Happened was unnatural it's a lot we Were locked down and almost imprisoned And this is different and so like I Don't think that the consumers are 70s And 80s but I don't know enough about The 20s and 30s about the consumer to Compare do do you know because the Roaring 20s right like do do we have Data that where we can compare the the The consumer of the 20s and 30s to the Consumer that we have right now and Maybe kind of look at the differences in Those I I don't have the consumer data

Ahead but you know let's let's also keep In mind there there are some parallels Here right Spanish Flu Global pandemic 1918 immediately preceded the big boom Of the 1920s um so you know there's there's Some historical parallels there big Economic expansion following a global Calamity we were also just coming out of A World War um you know I tend to Subscribe to the Austrian School of Economics which is like the polar Opposite of the keynesians and the Austrians subscribe to the boom bus Cycle right you you you get an economic Boom Hard Times create strong men right Strong men create good times and during The economic boom you get credit Expansion there's a lot of borrowing and Investment goes on and so the money Supply increases you tend to get a Little bit of inflation as the money Supply increases through more loans you Tend to get Reckless investment and Reckless investment in inevitably fails And those loans start to go bad that Results in a bust which is deflationary And during the bust you get credit Contraction you get money supply Shrinking until the hard times come back And then eventually you go back swing Back into the boom this Behavior pretty Accurately mimics what we see in nature Right species Thrive there's some

Evolutionary change happens and a Species does really well that species Starts to grow it starts to reproduce But it over consumes its food supply Food gets scarce and then that species Starts to die off until some change Happens in their behavior or they move Or you know it seeks an equilibrium so The the Austrian School of Economics Says the bust is inevitable it's it's G To happen allow it to happen let the bad Business fail because a more healthy Ecosystem will emerge from that bust and Then you'll get more expansion and Growth out of that the keynesians come In and say ah we can make that bust Obsolete because the government can step Up monetary policy and inject money in The economy through deficit spending to Make sure that bust never happens well Like we see in California with wildfires If you never do the controlled Burns if You don't get rid of that dead crap that Piles up on the forest floor eventually That spark happens anyway and you get These raging infernos that you can't Control and so that's kind of the big Difference between the keynesians and The and the austrians there's plenty of Other ones but that's I I hope the viewers rewind that that Was a great explanation on difference of K Keynesian and Austrian School of Economics thank you man Jack if you can

Help if you could try to help me if you Could try to help the viewers right now And I know I put a lot of pressure on You okay I get it I'll shut up about It you don't have a crystal ball you're Forgiven if you're not doing this Perfectly you'll get no hate from me Ever what the hell happens next Hm um well you know honestly it it may Have already happened by the time you Air this right because we're it's like 3:30 here on on what is it Thursday We've got Microsoft and Google earnings Coming out later today um we just blood Bath and meta earnings Yesterday if something doesn't change Quick we may be in the early Innings of The bursting of the AI bubble um and the AI bubble is one of the biggest Speculative asset bubbles of all time And if meta earnings are any indicator Investors are starting to say I don't Care how much money you're aimlessly Dumping into buying chips if you're not Creating a product that adds value to Somebody's life I'm G to sell your stock That's what happened to meta this Morning if that happens to Microsoft and To Google this afternoon also then we're Going to be looking at a totally Different market economy mindset by the Time this video airs so that you know It's hard to see past a fork in the road Like that I am staying out of this fomo

Bubble I have totally sat out this run In stocks I've missed out on a lot of Gains I don't care because my risk Adjusted returns are just fine I bought Gold silver Bitcoin and t- bills all of Those things have made me money and I Have taken very little risk I'm G to Stay in that until I think the Deleveraging has happened enough that I'm comfortable buying stocks again I'm Still Not Jack do you think that's that's Great a testimony thank you for sure um Do you think that a pop the AI an AI Pop In stock market certainly that would Slow down the rich luxurious spending Okay which is in my opinion driving the Housing market right now so okay that Will be good but would a pop also create Unemployment and if so in what Ways I don't think the AI bubble would NE necessarily create the unemployment I Think the unemployment's coming no Matter what um and and this slowdown We're seeing in consumption is already Starting to show that we're getting a Lot of anic data about layoffs um a lot Of companies are cutting back people Red Lobster went out of business uh dollar Stores going out of business right a lot Of retailers closing hundreds of stores Across the country these are a lot of Those part-time jobs that we've talked About in other videos how part-time jobs

Have masked the loss of full-time jobs Uh I think we're already starting to see That switch the full-time jobs are not Coming back and the part-time jobs are About to start going away so I think the Higher unemployment is coming regardless Of what the AI bubble does the AI bubble Has more to do with how much spending For luxury items luxury travel among the Super wealthy how much that continues And uh I say cut their cut their legs Out from underneath them Jack enough Like we're all like you know I'm not we Are blessed first of all like we're Making decisions to stay out there's There's I don't know how what 70 80 some Percentage of America that is forced Like imagine the difference of being Forced to the sideline you want to buy Something you want to buy a house you Want to grow but you're forced to the Unfairly you're forced to the sideline Through a lockdown type scenario that People are trying to normalize and People are trying to compare to 70s and 80s I'm not this is no not against you I'm just saying like we got straight up Locked down dude we got straight up Locked down that wasn't that wasn't Normal and uh you know I think that you Did a great job Jack at explaining what Happened today uh do you think and this Will be the last question unless you Want to add anything do you think that

That 10e will hit oh my God I just Looked at the 10 year do you think that That 10 year will hit 5 per this year Yes I do think so we we haven't seen it Yet because for the last few months Three four months or so or actually the Last two quarters the data the qras the Quarterly refunding announcements have Been lower than expected Yellen has not Been borrowing as much in the last two Quarters or should I say she hasn't been Issuing as many new treasuries we've Been spending money because of tax Receipts you know tax season just came And went uh that is going to change Heading into the second quarter and the Third quarter we're going to see bigger Treasury auctions more issuance of new Government bonds bonds and you know Simple simply put when you increase the Supply of something the demand stays the Same the price goes lower and with a Bond when the price goes lower the Interest rate goes higher so just the Expected increase in Government Bond Issuance over the next two quarters is Going to drive interest rates higher That's regardless of what happens in Commercial real estate regardless of What the Japanese do to defend their Currency the yen is collapsing versus The dollar right now the Japanese are Going to intervene any day now in their Currency Market that probably means

Selling US Government debt driving Interest rates higher so yeah I think 5% Happens definitely all right man you Know let me give you we're gonna get out Of here Jack uh let me give you the last Words before I do the outro I would just Say no fomo that that's that's the one Thing don't chase asset valuations at All-time highs they increased the money Supply that money went and chased goods And services it went and chased asset Prices I think virtually everything is Overpriced right now almost everything Probably precious metals are the one Thing that isn't overpriced and uh Precious metals are moving upward right Now they took a breather the last week Or so but you know gold hovering near All-time highs um take a hard look at That because there's obviously something On the horizon what it is how bad it is I don't know but something is coming and Regardless of what it is the the Response of that hammer will be the same Every time because it all looks like Nails they're going to lower and they're Going to print I don't know when but They will and when they do that you're Going to wish you own some precious Medals outside the financial system when That happens all right Peter shiff I'm Just kid I'm not gonna with that but I Thought about It I W do that all right you guys I'm

Gonna get us out of here but do not Forget go to Jack's Channel 9 a.m. Eastern I look at Jack as an Investigative journalist again this is a Great man I definitely trust him he's Got some great content I'm working with Him on the thumbnails I'm trying to Teach him the game I hate the game Jack You know I hate the game but This is a good dude you know Jack's you Know his honesty the Truthfulness it's important to him man You know a lot of people they just want The clout they want the story they're Not digging in they're not analyzing Like you are so again from the bottom of My heart you're true friend of me Personally and of this channel you're Welcome here anytime if we can do Anything in return like beat you at Trivia just let me know brother my Community is ready to smash down on your Community we are ready to play some Trivia if you you want to do trivia I'll Do some trivia with you as long as we I Said my Community is very trivial you go right Ahe you'll smoke me Jack you'll smoke me Unless it's about fishing you're gonna Get me or about mortgage you s you know But anyways man just again from the bot Of my heart really appreciate you taking The time I'm gonna go ahead and edit This look out for those earnings and

Other than that guys if you're out there Investing in real estate you guys Already know we wish you luck and we Hope you win