How Big Government Is Costing YOU Big $$

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Welcome everybody. I know I’d go over a lot of, oftentimes complex topics here when it comes to money. And I try really, really hard. Sometimes when you’re trying to present something, you might not recognize that, you know, somebody might not have a bit of information, whatever it may be when it comes, whether it be Federal Reserve, inflation, and I constantly hear you listen to this podcast on a regular basis.

You can kind of play connect the dots from one story to another, one issue to another, and you can see how they’re all connected. It’s kind of like when you’re a kid, you play this, well, I don’t do that anymore, but kids even play connect the dots anymore, you know, one, two, and it comes out with this picture at the end. I want to talk a little bit about inflation, money, buy nanomics, basically with several stories.

that came out today, headlines today, that unfortunately nobody ends up putting them together. You get bits and pieces here and there. And it was interesting this, you had the Jamie Dimon, a lot of attention. He always gets a lot of attention. Obviously he is the, he’s the big banker out there, JP Morgan Chase. And he comes out and he echoes.

what we’ve been saying here on the program and he’s been saying it too. He’s been saying it too and he kind of nods and grins when he says it, but at least he’s honest when it comes to this, when it comes to the realities of what’s happening here in this country and that excessive government spending is going to continue to fuel inflation and interest rates. Period. The end.

it’s not going to change. He gave his assessment of the economy. And again, he’s a CEO of JP Morgan Chase and he’s got to as powerful as he is and as powerful as JP Morgan Chase is, he has to hedge things to some degree. But he did come out and admit that the economy is being fueled by deficit spending and stimulus that has already been spent.

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And he also talks about all of the big plans, the big plans that government has, greener economy, restructuring global supply chains, again, handing money out to Taiwan semiconductor to build a chips plant, whatever it may be, more, more military expenditures and battling higher health care costs, social security.

And he says that, guess what? Inflation is sticky and rates are going to stay higher for longer.

Again, I don’t know if they’re going to stay higher for longer. I think at some point in time later on this year, I think the Fed will focus on a number or two and start to lower rates, giving them honestly a bit of a reprieve in regards to monetizing their debt. This is something that many people don’t understand. The Federal Reserve should essentially

be making money for we the people, we the taxpayers. And all the money that the Federal Reserve makes, the remittances are supposed to go back to the US Treasury. And if you can actually take a look at budget projections that are put out by whether it be Biden, Trump doesn’t make any difference. They account for, oh yeah, the Fed’s gonna be sending us money. Not so much, not so much. When interest rates were down to nothing.

The Fed was going out there and monetizing our debt. Not just monetizing debt. What did they do last year when they bought up all those mortgage backed securities that were going to hell in a hand basket from banks that were failing? Already going all the way back quite frankly to 2008, 2009. Last year, the Federal Reserve, again, these are the smartest guys in the room, right? How many economists have got working at the Fed?

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They lost $114 billion. $114 billion. They’re already this year, they’ve lost first quarter, they lost $28 billion. They have on their books over $6 trillion. $6 trillion in Treasury bonds, long-term Treasury bonds.

and mortgage securities that are yielding, I don’t know, 2%.

2%. Again, you can’t even, that portfolio, that $6.23 trillion, if they actually marked it to market, it would be obviously much, much different than that. Much, much different than that, be worth a hell of a lot less, based upon where interest rates are right now. Now, they’re losing money is because banks all over the world,

can park money at the Fed. They park money at the Fed. So let’s give JP Morgan for an example there. Again, they’re going to go out and rather, this is how they go about slowing the economy. Rather than lend money out to businesses, to people wanting to go out and buy a home, whatever it may be, they can say, hey,

I can deposit this money at the Federal Reserve and get 5% risk free right now. Right now I say 5%, risk free right now. So they do that, banks do that. Not bad, right? Risk free return. So the Fed is losing money on the bond portfolio that it has.

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while paying out more money to not just US banks, but banks from all over the globe. You ever wonder why? Because we address this. We addressed this when it was a zero interest rate policy, for the most part, zero interest rates, sometimes negative interest rates from all around the globe. You ever ask yourself the question again, the wizards of smart don’t pose this on TV. They don’t dare to do that.

Why would anyone buy, why would anybody buy a 30 year treasury yielding 2% knowing, knowing that inflation is running much hotter than that, essentially you’re losing money. They do it, many institutions do it, insurance companies do it, because of how these bonds are rated.

and they must have a portfolio and certain amount in a portfolio and what is deemed risk free assets. This has hurt pension funds, insurance companies all over the globe, because again, they have to have a certain portion of their money and what is known as risk free cash equivalent type of investments like long term treasury bonds and they lost on that.

It has hurt them for a very long period of time. Now again, I kind of laugh at this stuff. I’m not a bond traders. People make money playing the interest rates and using leverage to do that. You think that I was loading up my clients’ portfolios in 30 years? No. No, you’re losing money. You’re losing money. So again, that’s what the Fed is doing.

at this point in time and they’re gonna have to continue to do that. They’re gonna have to continue to go out and monetize our debt and buy more of it if other nations from all over the globe are continuing to pull back, which they are, which they are. So again, inflation.

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What does this translate into? What does this all mean? Well, again, we can’t control it. The Fed can’t control it unless the government stops spending. And we just got the latest numbers, six month federal budget deficit, 1.1 trillion. Interest expense on the public debt rose 43%. We spent more money the first six months of this year. Spent more money the first six months of this year.

than on interest than we did on national defense.

national defense and again you’ll get every publication out there bought and sold by the military industrial complex demanding more and more military expenditures and you know I get it I get it they want more that’s how you know they’re going to keep demanding more you can’t go a day doesn’t go by when you’re not saying we’ve got to be sending more money to this country or that country whatever it may be you also take a look at the increased expenditures with

Medicare, Medicaid outlays, Social Security right on down the line. Things that the supposed, our leaders, the people are supposed to lead us won’t address pretending that they don’t exist. This again trickles down to the masses. Do you ever think about it for a second? Let me present it to you this way.

The Federal Reserve comes out and they want to have, this is their target. And again, I don’t believe the government inflation numbers. We’ve been talking about them for some time. They want to have a 2% target. Think about the loss of the value of a dollar at 2% inflation. Let’s just pretend, okay, that inflation is going to stay at 2% over the course of someone’s lifetime, 80 years.

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I mean, what have you lost? How much buying power have you lost with your money over that period of time? 2% is not good. But again, we’ve been running much, much hotter than that. So how does this hit? Again, it hits everyone, but it most certainly hits the upper middle class, the middle class and the lower classes much, much harder.

than it does everyone else based upon where they’re spending their money, the percentage of their income that has to go to things that make life sustainable here in the United States. What does it do to small businesses here in the United States? This came out today. Not a good sign, again, and we are always, you know, the advocate for small business owners because again, they make up the bulk.

of our clients around the country. Small Business Optimism Index is at its lowest level since 2012.

The lowest level since 2012. 25% of business owners identify inflation as the largest issue plaguing day-to-day operations.

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Again, that number continues to go up and they’re also talking about other economic headwinds, regulations, you name it. Again, this all stems from, to be honest here, our inability to deal with the most important issues that are out there, which is how much our government

continues to spend. You could flick on a television today. Yeah, sure, they talked a little about what Jamie Dimon had to say, and then onto the next story. And it’s some nonsense, it’s some committee hearing or investigation or whether or not Mike Johnson’s gonna get the right people on so he can get the money for Ukraine and sending it over here when this is it.

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This is it. This is, again, we’ve talked about the concept of priority and what a priority is. No such thing as priorities. It’s priority. This is all hands on deck with this because again, you want more and more people. You want to continue to be on the hamster wheel.

You want to continue to have the phoser monetize our debt. You honestly see where we’re at, at $34 trillion. It’s a serious number. And the idea that no way it could happen here and we couldn’t have a situation like Argentina or other countries that have wrecked themselves. I’ve talked about ancient Greece, I’ve talked about ancient Rome, what countries have done to themselves, empires, if you will, done to themselves.

in the past, do you honestly believe that somehow we are insulated from that? We’re not.

or not, and I don’t care what Paul Krugman or what’s her name there from Stony Brook University, that, you know, Kelton there, that, you know, modern monetary theory economists or Alan Blinder, these other people have to tell you. You can’t, it’s, the numbers don’t add up, and it’s high time we start making some better choices.

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