The Fed Found a New Way to Lower Inflation

本站添加: 2026-06-04

[00:00:00]Today's video is going to be somewhat ridiculous. Just going to shake my head in disappointment.

[00:00:05]Okay, so the Federal Reserve has been trying to get inflation down to a rate of 2.0%.

[00:00:11]But they can't do it. They've been trying for years and they keep failing.

[00:00:14]Maybe it's cuz all the money printing.

[00:00:17]Okay, so let me ask you, do you know the easiest way to get inflation down to a rate of 2.0%. What's the easiest way?

[00:00:25]How do you do it? I'll tell you the easiest way to do it is to change the way that they calculate inflation and that's what they're going to do. So, I wish I were lying. I wish I were exaggerating, but unfortunately that's not the case. Let me know what you think. Now, let me ask you another question. What's the real way to calculate the rate of inflation?

[00:00:46]Well, it depends on who you ask, apparently. Like, if you ask me, here's how you do it. You look at the M2 money supply. You ask the question a year ago, how much money was out there and how much money is out there right now? You calculate the difference like you calculate the change and then you get your rate of inflation. Pretty straightforward. That's how a normal person would do it. So if you look at the M2 money supply provided, this is provided by the Federal Reserve. You're going to see that for a year to date for 2026, the rate of inflation has been at 6.05%.

[00:01:19]Got it? So remember that number. Just call it 6%. But the CPI inflation report says that inflation is running at a rate of 3.8%.

[00:01:29]Okay. So why the difference 6% compared to 3.8%. And that's a big that's a big difference.

[00:01:35]It's because the CPI inflation report does not measure the change in prices from one period compared to another period. No. You know what the CPI inflation report does? It measures the change of the cost of living, whatever that means.

[00:01:51]So they calculate things like like this is how they do it. The let's just say that the price of oranges is going up so fast.

[00:02:00]Well, the the way that they're they're thinking is is just okay, sub out oranges because the price is going up so fast. Sub it out for grapefruits, which hasn't been going up as fast. You know, it's going to make our numbers look better. Or let's just say the price of ground coffee is going up too fast and it's making their numbers look bad. So you know what they do? You know what they can do? They could just eliminate it from the calculation altogether. So that's why a lot of people they refer to the CPI reports as the CPA lie reports.

[00:02:34]Okay. So why do they do this? Why do they why does the government understates the rate of inflation, the true rate of inflation? It's because imagine if the government had to pay social security recipients a 6% cost of living adjustments each year compared to a 3.8% adjustments. So if that were if that were to be the case then that would be expensive for the governments and it's all about the money. So that's what it boils down to like if you haven't realized it by now and the government is broke. They're in debt $39 trillion.

[00:03:05]However, the Federal Reserve says that their preferred measuring stick to assess inflation is core PC inflation.

[00:03:12]So that's what they go off of and that just recently came in at 3.3%.

[00:03:18]So inflation is running at 6%. The CPI inflation report says that it's running at 3.8%.

[00:03:25]But the Federal Reserve, you know, this whole time they've been saying that they prefer to use core PC inflation, which removes energy and food prices, which is at 3.3%.

[00:03:37]Okay? But you have to remember that the target is to get it down to 2.0%. And even 3.3% is a long ways off. Okay? So the Federal Reserve is trying to get inflation down to 2.0%. And if they're using core PC inflation, which is at 3.3% as their measuring stick, then you might think, okay, 2% compared to 3.3%.

[00:03:57]You know, that's not a big difference.

[00:03:58]Like, what's the big deal? I'll tell you, it is a big deal. That's a huge difference. So, listen, if inflation is running at a rate of 2.0%, which is again the Federal Reserve's target, that means that prices double every 35 years.

[00:04:12]Now, if you're going to be using core PC inflation and that's got an inflation rate currently of 3.3%, then that means that prices double every 21 years at 3.8% like if you're going to be using CPI inflation, prices double in 19 years. If you go by the M2 money supply at an inflation rate of 6.0%, prices double every 12 years. Now, I want to tell you about the situation.

[00:04:40]What's going on? Jay Powell was the chair of the Federal Reserve, but now his term expired. So, President Trump nominated Kevin Worsh to replace Jay Powell as a new Fed chair and the Senate confirmed Worsh. So, Worsh is now at the helm of the Federal Reserve as of May 22nd.

[00:04:56]And as you probably know, Trump was so, you know, he was I mean, he was frustrated and very upset at Powell for not cutting interest rates as much as Trump wanted him to. So Trump called Powell an imbecile, an idiot, a major loser, a real dummy, a stupid person, a jerk, numbum skull, etc. I mean, he's told this to he said these things to reporters in public. It's all documented. And then Trump had the Department of Justice launch a criminal investigation against Powell, which was clearly an intimidation measure.

[00:05:30]All of this, you know, all all of this because Powell just refused to cut interest rates. So, President Trump is expecting Kevin Worsh to cut interest rates. I mean, that's why President Trump gave him the job. However, I mean, I want you to think about this. Like, how is Worsh supposed to cut interest rates when the rate of inflation is spiking up right now due to the rising energy costs? So, I want to show you this chart of the rate of inflation.

[00:05:55]This is according to the CP lie. So, take a look at this. Look at how inflation has been spiking up until April. Like, I can't wait to see how this chart looks in May. like it's going to be higher. April was at 3.8%. May is expected to be around 4.2%. But it might it might come in much higher. So if Worsh cuts interest rates, then the consequence is that it's going to add fuel to the inflationary fire. Okay, another question. Why is it so important to President Trump for the Federal Reserve to lower interest rates? It's because lower interest rates spur economic growth and increase hiring.

[00:06:33]like it helps labor markets. So, it's also going to help the housing market and well, the real estate market in general, which is President Trump's bread and butter, of course. And lower interest rates would make it easier for the government to service their debt.

[00:06:46]The interest expense would decrease if we have lower interest rates. So, those are the benefits. However, the drawback is higher inflation.

[00:06:55]And although although these benefits sound appealing, like I'm sorry, but inflation is picking up again and it's picking up at a alarming rate. All right, so with that being said, how can Kevin Worsh give President Trump what he wants, which is of course lower interest rates, but also justify it. So one way to do it, which is what Kevin Worsh has been saying publicly, is for the Federal Reserve to change how they calculate inflation. And Kevin Worsh is advocating for the Federal Reserve to use a newer methodology called the trim mean calculation.

[00:07:29]And using that new improved calculation, the rate of inflation is 2.3%. Like tada. Like you see how easy it is to bring down inflation. You just change the calculation method. So it looks better with this method. You know, problem solved. So close to the target 2.0%.

[00:07:47]And if if they're very close to their target of 2.0%, 0%. I guess that's one way to justify interest rate cuts. So, listen. I already warned you at the start of this video that it's going to get a bit ridiculous, but you can let me know your opinion. Now, I want to show you what the market thinks and the market is not buying it, but but then again, you never know what's going to happen. Anything's possible, right? So, this is coming from the CME Fed Watch tool. The next Federal Reserve meeting is on June 17th, and this is going to be Kevin Worsh's first meeting as chair of the Federal Reserve. So there is a 98.6% chance that the Federal Reserve will keep interest rates the same at this meeting. So there's a 1.4% chance that they cut interest rates by 0.25%.

[00:08:30]So it would go from well if they cut which you know most likely they're not but if they did it would go from the current 3.75% to 3.5%.

[00:08:42]Okay. And then the next meeting is going to be on July 29th. The highest probability at 92.4% 4% is that the Federal Reserve will keep interest rates the same. So there's a 1.3% chance that they'll cut interest rates by a quarter point by then and there's a 6.3% chance that they're going to raise interest rates by then. So to me the July meeting like I'll tell you it's quite interesting in terms of what the market is expecting. The vast majority believes that there's going to be no change.

[00:09:11]However, some people are expecting a cut by or at the July meeting. And some people are expecting an interest rate increase. Now, I just want to jump ahead. Let's go to the end of the year.

[00:09:22]So, we're going to go to the the last meeting of this year, 2026, which is on December 9th. So, this one's pretty wild, like as you can see. So, I've highlighted what the interest rate is currently set at, which is 3.75%.

[00:09:35]And the market believes that there's a 45% chance that we remain at 3.75% by the end of the year, which is assigned as the most likely outcome. And there's a 0.6% chance expectation that interest rates will be lower by the end of the year. So it's very small, less than 1%.

[00:09:53]There's a 54.3% chance that interest rates will be raised by the end of the year. And it's ranging from, you know, higher interest rate of by 0.25% 25% higher to all the way to a full percentage point higher.

[00:10:08]So I just want to say like if that does happen, which is, you know, a very high probability, can you imagine how angry President Trump's going to be at Wars if he raises interest rates? Like he's he's demanding interest rate cuts. But being neutral, I'm sure that would be very upsetting to Trump, but raising rates, that would be pretty wild. So listen, I just want to say that it's a tricky situation because if the Federal Reserve cuts interest rates to help the economy and to lower borrowing costs, then it's going to give inflation a boost and it's going up already. And if the Federal Reserve raises interest rates to suppress inflation, then that's going to damage the economy. It's also going to increase borrowing costs, not just for consumers, but for the United States government as well.

[00:10:54]And if the Federal Reserve keeps interest rates the same, then just take a look at the current situation. The economy is going to continue to degrade.

[00:11:03]The labor market's going to continue to weaken. And as I've said before, the United States government cannot afford a recession, which, you know, we've already walked through the numbers in a previous video.

[00:11:14]Anyways, to Kevin Worsh, you know, good luck. Like, you're going to need it, but in the end, I'm telling you, the math is not going to work out. And listen, I just want to tell you this. If you enjoy this content, then I extend my invitation to you to join our investing community. So you can see what I'm investing in, you can get my trade alerts, you could join our private chat room. We have thousands of investors in there. So I'm going to leave a link for you down below. Thank you so much and wish you a very nice day. Take care.