It Is Never As It Seems To Be

[00:00:00]Good morning, everybody. Uneducated Economist here. Thought I'd give you a few minutes of economic rundown. Was thinking about the Federal Reserve and the interest rate adjustment on the way into work today and the idea that the inflationary pressures are going to force the Federal Reserve to have to raise the interest rates. And when I think about what it is that the Federal Reserve does with their interest rates and how that monetary policy impacts the economy, it comes with a lag period to it. So, even if the Federal Reserve was to adjust interest rates today, it would take 6 months to a year before we would actually feel the impact from that monetary adjustment. Now, to understand that the psychological impact would be right away, but for the reality of the situation is that it would take somewhere around 6 months to a year. So, really when we think about what it is that's taken place within the economy right now, we have to look to where the nominal interest rates were 6 months ago and even more so, we have to look to see where the real interest rates were 6 months ago. All this information becomes overwhelming and overbearing for most people to internalize, so they fall victim to what it is that's being said over the mainstream media, which is, excuse me, essentially a manipulated idea of what it is that the Federal Reserve is going to do in order to create the inflationary expectations that would then be in line with what it is that the Federal Reserve is needing for their monetary policy. And all that becomes so confusing that nobody could really ever internalize it to understand how it is that the economy is either accommodating or restrictive based on what it is that they hear from this mainstream media. So, when you think about what it is that the Federal Reserve is going to do going into the future, you really have to think, no matter what they do, it's going to take a year before you'll feel it.

[00:01:45]A year from now.

[00:01:47]So, if inflation rises from here and you have a Federal Reserve who adjusts interest rates, the adjustment of interest rates will not impact the economy for a year, so it is as if nothing has happened.

[00:02:02]But you can look back 6 months ago to see where the Fed had been positioned to get an idea of how it is that it's impacting the economy today.

[00:02:13]So now understanding that 6 months ago where the Federal Reserve was positioned in relation to the inflationary pressure that we are experiencing today, we will learn that the real interest rates will be falling in this environment.

[00:02:30]See, as everybody is thinking, okay, the the rates are going to rise. The Fed is going to have to be forced to raise rates. All your mortgages, all the credit cards, all that other stuff, you're going to see that stuff start to rise.

[00:02:41]And this will be very true. People will feel the pain from that. They will see the inflationary pressures. Their expectations will be a self-fulfilling prophecy, so what it will it will occur.

[00:02:52]But then when we know that the Federal Reserve has a lag to their monetary policy, and that the inflation, when it rises, it lowers the real interest rates, we can look back 6 months ago to see where the Fed was, where inflation is headed today, and then come to the understanding that the economy is not restricted like a lot of people would then anticipate.

[00:03:20]It will become very unrestricted.

[00:03:23]It could very well become accommodating.

[00:03:28]See, this is something that not a lot of people are going to share or even understand is because the mainstream media is not going to describe it.

[00:03:34]They can't describe it. It would be too difficult for people to even understand for just a minute what the real interest rates are, the lag period within the Fed, and so they just fall victim to the unfortunate circumstance of just believing that when the Fed raises rates, it restricts the economy, and when they lower rates, it accommodates the economy.

[00:03:56]This is not accurate. It's not true.

[00:03:58]It's not anywhere in history can you find evidence of this.

[00:04:03]But when yet you talk to all the economists out there, when you talk to all the people's perception, this is exactly the line of thinking that they go down.

[00:04:12]And then they wonder why they're so confused about the Fed.

[00:04:16]Uneducated economist, you guys let me know.