Set Up To Fail

Added: 2026-05-06

[00:00:00]So, we're delivering more talking about the monetary policy and what it is that we can expect from this monetary policy because many people are looking at what it is that's taking place with the forward guidance, the actual delivery of some information coming from the Federal Reserve talking about the interest rate adjustments. And it's pretty well locked in that people are convinced that there is going to be some sort of interest rate adjustment going into the future.

[00:00:25]And yet here it is, some members of the Federal Reserve saying, "Hey, we shouldn't have delivered this forward guidance into the economy." I find this to be so hilarious when I think about how it is that the Federal Reserve has communicated in the past that they were going to disagree with each other to make for a better monetary policy. And when you think about them disagreeing, you think about the failure that's taken place. And ultimately, the Federal Reserve is a complete failure in every sense of the term. is go and read every single article you have ever looked at when it comes to monetary policy. When it comes to how it is that people interpret the monetary policy and what it is that they think they feel about it, the Federal Reserve is a complete failure in every sense of the term.

[00:01:08]However, you go and look and they talk about being in a good place. So, how is it that the Federal Reserve failed if they are in a good place?

[00:01:19]See, it failed for everybody out there because of their understanding of the Federal Reserve. How many economists out there were screaming recession since essentially since co recession recession recession that's all you heard out there but yet the recession didn't occur right it's set up to fail it doesn't fail because the setup to fail that actual failure is the benefit to the Federal Reserve and to the monetary policy. This is the craziest thing for most people to finally internalize and look at. But once you see it, it makes so much more sense that the failure on purpose is actually to the benefit of monetary policy. Once you see it, it becomes very clear that failing on purpose is the way that they are going. They are going to do it. And we look at the failure because it's so painful for us. So when we think pain, we think failure. But when we think pain and failure, they're successful. And this is literally how they are doing it. Because raising that inflation and inflation expectation lowers the real interest rates. I've said it a million times on this channel.

[00:02:25]I've tried to push it out there as much as I can in every different platform existing as far as the uneducated economist has out there to push the information. It is very very very difficult. Most people will not receive it. They do not see it. They will not believe it. And so as I think about what it is that they are doing right now for monetary policy, they are literally guiding expectations.

[00:02:52]They push the people's belief systems into a particular direction. It's not for your benefit. People wonder how is this that it benefits us. It doesn't.

[00:03:01]It's not for our benefit. And this is really where people have to try and figure out how it is that they can position themselves because once you realize that it's no benefit to you and that it's a benefit to a particular class of people and why it is that it's a a benefit to that particular class of people, it became it starts to become a lot more understandable to why it is that they conduct themselves in this way. They fail on purpose.

[00:03:28]If you fail on purpose, they are successful.

[00:03:32]Think about the inflation. Here's something that I think a lot of people have really missed from the Federal Reserve and their communication from the past is to think about them swimming upstream fighting a current of too low inflation and inflation expectations.

[00:03:51]This is their own words fighting a current of too low of inflation and inflation expectations that interfere with the monetary policy.

[00:04:02]So now they have a monetary policy that has elevated inflation and inflation expectations and they say it straight up we are in a good place.

[00:04:13]How many people feel that they are in a good place? Nobody.

[00:04:18]Their failure that the people feel is their success.

[00:04:23]I don't know how many people see it.

[00:04:24]They're caught in this trap. They're literally caught in a trap of believing that the Federal Reserve is needing to do something to fix the situation and the Federal Reserve is sitting over there going, "Yeah, um, we're we're going to fix it. We promise, but they're in a good place. What is it that they need to fix? They have low unemployment and they have a consumer.

[00:04:47]They're doing their job. Now, many people won't feel that they're doing their job. They won't like what they're doing as far as their job. They won't appreciate what it is that's happening out there, but ultimately they're successful at what it is that they said that they were going to do.

[00:05:04]If they can ease the economy with elevated inflation and inflation expectation because it lowers the real interest rates, what do you think is going to be happening here very quickly?

[00:05:15]I don't know. I'm looking at it. And I'm thinking if the Federal Reserve sits still and we continue to have the issues that we are having with the energy crisis that's going on, then most likely we are going to see the real interest rates go negative. Are you prepared for that?

[00:05:32]Are you prepared to deal with a negative real interest rate environment? Do you know what that means?

[00:05:39]Cuz it's about ready to happen.

[00:05:42]And I don't know how many people are understanding of that situation and what it really means for monetary policy and finances and investment, but is going to be profoundly impactful to their life.

[00:05:56]This is coming, guys. Think about all the neighbors that you have, all the people that you talk to, all the politicians out there screaming it.

[00:06:03]Everybody has this belief system that the Federal Reserve has failed and that inflation is going to be running rampant into the future. Do you know what this does to the real interest rates?

[00:06:16]This is the trap.

[00:06:19]This is the mindset trap literally delivered to the people. They don't care if you do anything or not. If you decide to participate or not is really inconsequential to them. Go to work or don't.

[00:06:32]But if you have that in elevated inflation expectations, what you are going to do is deliver them a lower real interest rate and they are going to use it.

[00:06:46]This is probably one of the most scariest times for most people. And when you think about what it is that's really happening with the Fed and how it is that they're conducting monetary policy using this inflation expectation in order to deliver a lower real interest rate. and you think about who that's really benefiting and why it benefits that particular group and why they choose that particular group to benefit, it begins to make a lot more sense because it comes down to something called aggregate demand. How do you aggregate demand within this economy?

[00:07:19]You know how many people would go out there and increase their consumption to a level that can match that of the 10 to 20% of household incomes at the top? It would be almost impossible.

[00:07:31]They don't even come close to the amount of consumption that the 10 20% at the top do.

[00:07:37]They could double it. It still wouldn't be there.

[00:07:41]And so there is no opportunity for the Federal Reserve to spark aggregate demand within the workingclass individuals. The bottom 80% are irrelevant to the monetary policy.

[00:07:53]And this final understanding of it is probably one of the most gut-wrenching things to think about for the future.

[00:08:03]But once you understand and see how it is that this economy has evolved from a production saving economy into a consumer debtor-based economy, the people who are consuming are those at the top. Who are they going to focus in on as a consumer economy? Are they going to focus in on the people who are not consuming?

[00:08:23]Are they going to focus in on the people who can't consume? Even if you were to double their double their capabilities, they still wouldn't match the capabilities of that of the top 10 20%.

[00:08:33]Who is it they could possibly focus in on in order to create any kind of economic and activity unless it's this the top 10 20%. There's nobody else available for them. How do you spark their invest? How do you spark their consumption? How do you get them to go out there and start spending more money?

[00:08:56]You start lowering the real interest rates. You lower the real interest rates and you will benefit the asset holders.

[00:09:03]You don't believe me? Just look at the S&P. Look at the Dow about ready to hit records. S&P is sitting at records. All these things are sitting at record highs. And don't tell me that ain't benefiting the top h top 10 20%.

[00:09:17]As we go into the future and we think about what it is that the Federal Reserve is going to be doing with monetary policies and they delivered this forward guidance that there is definitely going to be an in adjustment.

[00:09:27]Think about what that's going to do to the inflation expectations.

[00:09:31]If you begin to lose, this is what's funny about this. You begin to lose the inflation expectations, you'll start making the economy a lot more restricted.

[00:09:43]People are hoping and wishing and praying for inflation to go away. And if that was to take place, it will begin to restrict the economy. Every time inflation rises, it makes the economy less restricted. This is probably one of the most esoteric understandings of the economy and how it is that monetary policy is being conducted that literally less than 1% of the people probably blind this stuff.

[00:10:10]I'm not going to let it go. I don't care that I'm the only one who's going to discuss it on this level constantly over and over again so that I can beat it into the heads of the people out there to understand that we are facing a situation in which that is this is like the biggest mind manipulation game ever.

[00:10:29]If the people lost that inflation expectation, they would lose their monetary policy. The whole system would crash. We could end the Fed. Literally, nobody's going to do it.

[00:10:42]And so as you think about how it is that this elevated inflation expectation, lowering the real interest rates, what that could do to the economy and how it is that you can position yourself accordingly for it. Think about how it is that that devastates the investor and benefits the debtor in a debt-based consumer-based economy.

[00:11:06]Who is it that's going to benefit from a low interest rate environment? low real interest rate environment.

[00:11:14]These things, these questions that I ask are so hard for the average person to try and internalize, but if you don't ask these questions and you don't seek out the answers, you're never going to find it. It's never going to show up.

[00:11:26]Nobody's ever going to present it to you. Everybody else is delivering stuff that's easy to digest.

[00:11:33]If you can easily digest it and it is a simple answer for you, think about that.

[00:11:41]Right. Somebody's out there trying to share some deep understanding far into it like the deep diving stuff into the depths of how far you could possibly go on this monetary policy to deliver the message over and over again.

[00:11:57]And people would rather say, "Man, it's just too much. Can't you just give it a simple answer?"

[00:12:06]And I think about it, the simple answer is generally the one that's most entertaining.

[00:12:12]And I look out there and I think about what it is that people communicate with each other. Back in my day, a house cost $20,000 and now it's $600,000.

[00:12:21]And you know, all this other stuff you hear, or the kids talking about their grandfather buying it for cheap and now they can't get it. And they just like, you know, they just hash out all these things over and over and over again. And I'm looking at it and I'm like, does anybody want to get down to the root of the problem or you just want to keep talking about the symptoms? You just want to keep blaming capitalism. You want to keep blaming baby boomers. You want to keep blaming the politicians?

[00:12:42]You want to keep blaming bankers? But you don't want to get down to the root of it. You don't want to get down to the understanding from an economic force so that you can recognize how it is that an inflation expectation that is elevated is going to raise the neutral interest rate and make the economy less restricted.

[00:13:01]I'm going to keep saying [clears throat] it over and over again. And if it's only a thousand people who decide that they're going to retain this and use it for their advantage, then perfect.

[00:13:13]Everybody else, they can, you know, be lost in the idea of what it is that's going on with the Fed.

[00:13:19]You know, you think about it. I mean, every single thing that we have ever hashed out here from the credible threat theory is coming to fruition.

[00:13:28]Yeah. I mean, this is pretty good. Um, you know, you even think about I love Jefferson's speech communicating about monetary policy. This speech right here, May 13th of 2024, communicating about monetary policy, delivered by Philip Jefferson, voting member of the FOMC, literally says this, right?

[00:13:52]The potential for misinterpretation is especially acute when many policy me makers speak at the same time. What do you hear going on right now? Even Wars is jumping into the game and he's not even a policy maker yet.

[00:14:07]All right. Many policy makers speak at the same time and disagree with each other. This is coming directly from one of the policy makers themselves.

[00:14:20]The potential for misinterpretation is especially acute when policymakers speak at the same time and disagree with each other. How many dissenting votes?

[00:14:30]More dissenting votes since the early 90s.

[00:14:34]Disagreeing with each other. Many of them. The diversity of viewpoints among policy makers lends itself to stimulating debate. How many people are out there debating it, trying to figure out what's going on? The forward guidance, right?

[00:14:51]stimulating debate and ultimately a better policy.

[00:14:56]They get more power out of it. This entire speech that he was delivering was talking about how it is that they use forward guidance. Right here, this is the this is what Worse wants to get rid of. All right, this is this is exactly the forward guidance they set it up starting in the mid 2000s.

[00:15:17]They started delivering and setting up the mechanisms for forward guidance.

[00:15:20]This is what it is that Worsh wants to get rid of. I'm going to share it with you right here, right now. Nobody else is going to talk about this. I'm the only one. Okay? This is what Worsh is wanting to get rid of when he steps in as the Fed chairman, right? He can't change the other votes. He can't do that. But he can change the mechanism in which it is that they deliver message.

[00:15:41]This is what he's going to get rid of.

[00:15:42]During the tenure of chairman Bernani, there was another burst of innovation in the way that monetary policy was communicated. In 2007, the SE the the first SE statement on economic projections was published to convey the systematically or to to convey systematically the economic outlook of the FOMC participants. In 2011, Chairman Bernani started holding press conferences after every other FOMC meeting. In 2012, the Fed adopted an explicit inflation target of 2% and start publishing the individual FOMC participants view of on the appropriate future path of the Fed funds rate now famously known as the dot plot. Again, this is what Worse wants to get rid of is all this stuff that they were setting up. This is the tools of the forward guidance that he wants to disassemble.

[00:16:34]During these years, Loretta in her capacity as the research director at the Federal Reserve Bank of Florida or Florida of Philadelphia, Florida, I don't I've been talking about Florida a lot lately. Sorry guys. The [laughter] the Federal Reserve Bank of Philadelphia contributed to ongoing works on communication in collaboration with policymakers and the Federal Reserve Board staff. Of course, this extraordinary time for monetary policy as interest rates in most advanced economies were close to zero following the global financial crisis. That's why they set up forward guidance. Monetary policy was ineffective because it was at the lower bound of zero. They didn't have any way of delivering any kind of real monetary policy except for that of their words, right? So they developed all these tools here, all these speech, the press conferences, the dot plot, all this stuff to deliver this message out there. And again, this is what wars wants to disassemble, right? He wants to disassemble these things. It says here, of course, this was an extraordinary time. F. Okay. The FOMC employed forward guidance, explicit communications about the future path of policy rates. This is when they launched it. that homeboy Mark Carney talking about how he de he produced and developed forward guidance. No, it all you central bankers together sat around in a big room and says you know what we could do is we could deliver this message to the people and convince them of what it is that we plan on doing for the future and then they will act accordingly. Right? Employed forward guidance, explicit communication about the future path of policy rate as a key tool to deal with the unprecedented situation. This is their key tool. This is what Worsh wants to disassemble. I keep saying it over and over again because he's straight up said it. I'm gonna end forward guidance and this whole dot plot nonsense and the idea of the RSTAR like I love it. I love the whole idea. It's going to change the way that the Federal Reserve completely communicates about monetary policy, but we already understand what it is that's going on.

[00:18:40]So, we're not going to we're not going to fall for their little communication trick. [snorts] All right. Um, the research community have found that such forward guidance could be very effective in the context of the new Keynesian paradigm.

[00:18:57]When Loretta became president of the Federal Reserve Bank of Cleveland in 2014, she support she supported the continued use of forward guidance during these extraordinary times. in particular to communicate a lower for longer policy that could provide accommodations in the presence of the effective lower bound constraint. She is she also insisted that forward guidance could be used effectively in normal times as a means of clarifying the FOMC's reaction function. They are delivering the message guys. They are not reacting to the economy. They are pushing your expectations. And just look out there, how many people are feeling the inflationary pressures. What is this doing? It's lowering the real interest rates. This is making the economy far less restricted than anybody had ever given a consideration for except for the uneducated economist crew. Right here on the uneducated economist crew, this is all we talk about over and over again.

[00:19:55]And we see it plain as day.

[00:19:59]So amazing to see Loretta as a member of the FOMC subcommittee on communications developed and advocated for several proposals to improve communications. One proposal was to publish and measure of uncertainty surrounding the SE forecast the statement on economic elections that dot plot forecast numbers. She was concerned that uncertainty could be underestimated by the public if it wasn't communicated.

[00:20:29]Everything is about communication.

[00:20:31]Everything. How it is that they push that information out there to the people in order for them to receive it. Right?

[00:20:38]And again, this was the plan starting from back in early 2000s. I mean, this was developed in the early in the mid 2000s. We're go here. We'll take it back even further to prove it. Right. Ben Bernani in his speech talking about the same problem, right? When the nominal interest rates have hit the lower bound of zero. There's something that they can use.

[00:21:06]Let me see if I can get into it here.

[00:21:09]Oops.

[00:21:12]So, this is what Beni had to say.

[00:21:14]Because central banks conveniently conduct monetary policy by manipulating the short-term nominal interest rate, some observers have concluded that when the key rate stands at zero, the central bank has run out of ammunition that is no longer has the power to expand aggregate demand and hence economic activity. The problem expand aggregate demand. Once they hit the lower bound of zero, there was no more monetary adjustment because they could not get far enough below the neutral interest rate in order to stimulate the economy.

[00:21:45]Even at zero, they were essentially neutral, right?

[00:21:54]How to prevent inflation?

[00:22:00]The conclusion that deflation is always reversible under a fiat money system follows from some basic economic reasoning. Think about this speech. This was delivered in early 2000 2002.

[00:22:14]A little parable may prove useful.

[00:22:16]Today, an ounce of gold sells for $300, more or less. Crazy to think, right? Now suppose that a modern alchemist solves his subject's oldest problem by finding a way to produce unlimited amounts of new gold at essentially no cost.

[00:22:32]Moreover, his invention is widely publicized and scientifically verified.

[00:22:39]This is the point. Widely publicized and scientifically verified. Talking about this dude who invents this gold machine, hypothetical gold machine. Suppose that he has it. It's widely publicized and scientifically verified. Everybody knows for a fact this is how it works.

[00:22:58]And he announces his intention to begin massive production of gold within days.

[00:23:05]What would happen to the price of gold?

[00:23:07]Presumably, the potentially unlimited supply of cheap gold would cause the market price of gold to plummet. Indeed, if the market for gold is to any degree efficient, the price of gold would would collapse immediately after the announcement of the invention before the alchemist had produced and marketed a single ounce of the yellow metal. The credible threat alone would be enough to move the market. This is Ben Bernankey's tool to use when interest rate adjustments was no longer active.

[00:23:40]a gold machine, a hypothetical gold machine where they announce scientifically verified, widely publicized. Think about what it is that's going on out there when it comes to the inflation.

[00:23:51]Everybody is got very high expectations and belief systems around what is happening with the energy crisis, the war, and all the other, right? It is widely publicized and scientifically verified. Don't tell me it doesn't work.

[00:24:06]All right? Totally works.

[00:24:10]Now, this is probably one of the best examples of the credible threat theory, right? This is probably like Ben Bernankei's gold machine. Widely publicized, scientifically verified, totally getting the market to react to that gold machine. I mean, you guys hear it, right? You guys heard the story.

[00:24:37]Listen to this, right? This is coming from Claretta Richard Claretta. This is a speech monetary the US economic outlook on monetary policy delivered May 21st, 2020. This is probably one of the most incredible like examples of the gold machine, right? Like here it is scientifically verified and widely publicized.

[00:25:02]It says this talking about this is happening during COVID. So, you got to remember the stimulus packages and what it is that the Federal Reserve was doing. They were stepping up to bat and they were establishing these lending facilities to backs stop the entire financial system. This is what it says.

[00:25:19]These programs are authorized under emergency lending powers granted to the Federal Reserve under section 133 of the Federal Reserve Act and are available only in unusual and exigent circumstances.

[00:25:36]and with the consent of the Secretary of Treasury. I think you will agree that today we face circumstances that are both exagent and unusual. These facilities are supported with money invested by the Department of Treasury drawing on appropriations of more than 450 billion authorized by Congress in the CARES Act. You see this? This is widely publicized and this is scientifically verified. Widely publicized, scientifically verified.

[00:26:04]Think about the gold machine, right? Uh for the specific purpose of investing in Fed programs to sustain the flow of credit to households and firms and communities during the Corona virus.

[00:26:18]This is what we plan on doing, setting up 133, the Federal Reserve 133 act.

[00:26:24]Right? This is unusual in existent circumstances. Here it is. We're going to set up these facilities, fund them with hundreds of billions of dollars, and then what happens with these facilities? We are providing a bridge by stepping in and supporting lending throughout the economy until the recovery takes hold. They were going to pick the winners and losers. Remember, widely publicized. I was one of them. I was screaming out there on YouTube.

[00:26:50]They're picking the winners and losers.

[00:26:52]They're going to be buying into the corporate debt. They're going to be supporting the corporations. They're literally buying straight.

[00:26:59]Anyway, I was one of them, right? I was I was one of the propagandists out there because this is what I heard that they were going to be doing this. These programs are designed to offer a backs stop source of funding to the private sector. end.

[00:27:13]Just the announcements that these backs stop facilities would soon be launched appears to have bolstered confidence in the capital market, allowing many many of these companies to finance themselves privately even before the facilities were up and running.

[00:27:32]Think about the gold machine. Widely publicized, scientifically proven, verified.

[00:27:40]How is it that people were feeling about these specialurpose vehicles, setting up hundreds of billions of dollars to buy corporate debt, putting out the announcement, we are buying corporate debt, going to be picking the winners and losers, and then everybody out there lost their mind. Mhm. Right.

[00:27:59]talking about how it is that they were going to be pushing corporate debt higher and higher and then everybody ran in and supported these corporations with their own money before those facilities were up and running. The credible threat alone was enough to do it. This is how they conduct themselves.

[00:28:20]Think about the tariffs. Just think about these illegal tariffs that were the Supreme Court was just like, "Well, we know they're illegal, but you know what? Go ahead.

[00:28:29]And it was just like, but the pain and suffering to the people, it was just like refund the money to the corporations.

[00:28:38]It's just like how is this not like Okay, I'm going to step back for just a minute and just say, okay, you had illegal tariffs that charged the corporations money, put that into an escrow account, essentially started charging interest on it, going to refund that back to the corporations.

[00:28:58]So, there's like a bonus to these corporations. I mean, I don't know how many people are under the impression that they aren't going to take that money and then reinvest it back into their business, but that's what they do, right? You know, they buy more equipment, hire people, you know, it's like a stimulus package, a sense, but after they have already increased the price, so they've already been reimbursed with elevated prices. The inflationary scenario is running rampant. Everybody sees it, right? And then at the same time, they're like, "Oh, by the way, these things are illegal. here, you can have the money back. So, stimulate the business, right?

[00:29:33]Get the corporations their money. This is again, how is it that you're supposed to conduct monetary policy when the consumer is not you, the working class, not to stimulate you. You go to work, doesn't matter, right? You're not really that important. Who is important? Aha.

[00:29:49]Right? These companies, these corporations, and the top 10, 20%, the asset holders. So, think about it. If they are trying to produce something that is going to stimulate aggregate demand, it's going to happen at the top.

[00:30:03]Illegal tariffs.

[00:30:06]No way that this was not a setup to then stimulate the corporations. It's like bailing out the corporations, but then you don't actually have to bail them out and piss the people off. The people are already pissed off. They were like, "Hey man, we have already been charged." I was like, "Yeah, I know, man. Got to get the money back. Here you go." You know, it was just like they like they're like, "Oh, bummer." You know, like what are they going to do about it? Nothing. But if you were like, "Hey, we got to stimulate these corporations and give them a bunch of money and it's going to be at your expense." They would lose their damn mind. But this way, everybody just kind of accepts it. Nobody, nobody question, nobody riot, nobody cares. I mean, they care. They talk about it. They tweet about it, but that's about it. That's as far as they go.

[00:30:52]All right, Deja, inflate your worth by the books.

[00:30:59]Let me cruise up here a little bit.

[00:31:00]Thank you, Deja, for being here. Thank you, Wayne. Thank you, Allnighter. You guys are awesome. Yo yo yo, but why do you need more gold? Just raise the price. Okay, gold doesn't speak rumors, but the Fed does. Yeah, please be sure to hit the like button, everybody. It's the best free way to support the channel. Yes, please do. I really appreciate I see I got some rubies up there. I'm not sure quite how those things work, but I really appreciate that. All right. Uneducated economist.

[00:31:27]Simon, did you get my reply to your email? Hadn't heard back from you, so was thinking we might have missed it.

[00:31:34]Oh, uh yeah, I will go and take a look.

[00:31:36]Brady, I think I did see the email up in there and I am sorry I didn't respond back to it. Um but I will go and look for that.

[00:31:44]All right, cruise up here a little ways.

[00:31:48]Wars was the take Greenland by force guy. Again, that was a credible threat, right? All of the like a lot of times I think people take the idea of a credible threat as not legitimate threat, you know, and that's, you know, people say, well, it's crying wolf. It's not crying wolf. It's like actually having wolves and saying you're going to let them go, but then you don't because people will going to react because you know they got the wolves, right? It's different. It's it's different from the idea that, you know, I don't know how to like put it. It's like people think that it's like a bluff and that's not it. It's not a bluff. It's something that they will legitimately do, but they don't have to because they're stating it in such a way that the people will react to it, you know, and and don't get me wrong, there are people who are going to suffer in pain and misery and die and it's going to be ugly and horrible. And I don't like to describe it in such fashions, but that is part of it as well, right?

[00:32:57]And as like many people like light up about that part like, well, how do we stop that from happening? And I'm like, you're not going to. It's going to be part of it. Just don't get caught up in it if you can. I mean, I don't how do I advise somebody to not get caught up in the dangers of their life? I mean, it's just like everybody's got to make their own choices, but this isn't a joke and they're not and they're not bluffing, right? They are using credible threats. Now the idea of a gold machine, right, that is bluffing in a sense, but if you could publish something that is widely proven and scientifically verified, that's not exactly like a makebelieve story. Right now, when we listen to Ben Bernani describe it, it's as if he may believe this gold machine and then faked the news out there to the people. And I don't think that's exactly how it is that he was trying to describe the gold machine. Although many people will interpret as that in my view of how it is that Ben Bernani was describing the gold machine, it's the hypo hypothetical belief that there is an actual gold machine that could exist, right? That's the idea behind it that the reality does exist. Like it doesn't we I mean I guess there is that you know they can produce gold but it's not like efficient or anything. So like the reality of it doesn't exist from Ben Bernanke's story and so we think about it as you know fictitious all the way around but I believe that he was trying to describe something as if it was a real possibility you know and being able to scientifically verify that that is how the credible threat theory is going to work. You've got to have the wolves right? You got to believe that the wolves exist.

[00:34:45]If you didn't believe the wolves exist, then it would be just crying wolf. And then one day you'd be like, "Man, I'm just going to bluff against it." I mean, think about the taco trade. Like, they came up with a whole acronym. Trump always chickens out.

[00:35:00]I mean, that's like, if that isn't a symptom of the credible threat theory, I don't know what is. Like that is like a symptom of the credible threat theory of all symptoms is literally an acronym coming out talking about how it is that Trump always chickens out that to me was just like man I mean I couldn't have play like and surprisingly I get like almost no I mean the people here who recognized it gave me recognition for it but really like nobody out there on the mainstream or anybody out there in the world of subculture and the economist or anything else recognizes that I called out the recession less recession and I called out essentially the credible threat theory that they were going to be using their words more than their actions and then taco acronym comes out afterwards literally like nobody comes and says dude how are you able to do that you know it was just like because it is so difficult and so deep and so hard to understand it for the most most of the people out there if you didn't learn it over time it's really just kind of stuck on the surface level money printer go bur prices go up and And then after that it's very difficult. Yeah.

[00:36:10]All right.

[00:36:12]What does negative interest rates mean for the bottom 80%.

[00:36:19]Have you ever seen a negative interest rate environment? Like do you actually like here's something that I think is really interesting. If you were to go sell a house just you personally just think about it. you're going to sell a house and you could sell it for cash or you could take out a loan.

[00:36:36]Okay, so let's just assume let's let's make the number really small so that we can kind of look at it, right? Say say the house is going to sell for, you know, $100,000.

[00:36:47]Okay, so here it is. You have a house cash sale. Give me 100 grand, right? and you can have the house or you can buy it with a mortgage and pay a negative interest rate and over time you'll pay me back $98,000.

[00:37:05]So wait a minute I I have to wait to get paid for my asset and I get less money.

[00:37:14]Why would I do that?

[00:37:18]Well, maybe if we paid you more for the house so that it would make up for the negative interest rate so that at the end of it you still pay $100,000.

[00:37:30][gasps] So I think about it again. It was just like, well, no, that's still not going to work for me, right? Because I'm not going to wait over time to get $100,000. I want $100,000 now. And if you want me to wait, I want to get compensated for that waiting. So if you're going to pay me a negative interest rate, which means that I'm going to have to charge an even higher premium for this house. In order to get compensated for the negative interest rates to make sure that I'm at 100, I'm going to have to charge even more for this house in order to make sure that I have the profit at the end of this experience so that I don't come up, you know, down.

[00:38:10]you know, investors point, you know, point is don't lose money, right? So, you got to at least make some money off of this. And in order to make this negative interest rate work for the investor, you're going to have to charge such an extreme amount for this house.

[00:38:23]And if that's the common price that people are buying it for because they're using a negative interest rate mortgage to get it, what are the prices of homes going to be like?

[00:38:33]Be like a $100,000 house would be listed for, you know, hundreds of thousands of dollars.

[00:38:41]But then if you say, "Well, what if I buy it for cash right now?" And well, then you don't have the negative interest rate environment, but you don't get to take advantage of it either. So now, how does this work? I just don't get it. I mean, I'm looking at that and I'm thinking, I don't see how anybody would ever buy into a mortgage back security that pays them a negative interest rate over time, unless they were of the mindset that the negative interest rate was going to go deeper into the future and then they could sell that mortgage back security off for a profit.

[00:39:16]So a complete speculation that interest rates would go deeper into negative interest rate negative territory would be the only thing that I could imagine would support the mortgage back security market.

[00:39:33]This I don't see it like I don't see how a negative interest rate could work.

[00:39:38][cough] Mainly [clears throat] because the moment that you start getting a negative interest rate you're going to start pulling cash. Everybody's going to get into cash.

[00:39:47]Well, if cash sale for that house isn't possible because cash doesn't exist, how do you buy the house?

[00:39:58]All right, you're going to buy it with digital currencies.

[00:40:05]And by that time, I can imagine being in a tokenization of the house and how it is that those things are working at that point. It would be a whole new economy.

[00:40:14]To try and describe what that would look like is complete imagination, artistic fantasies, pure imagination. Nobody knows, right? I mean, people have good ideas. The Genius Act is setting up.

[00:40:27]There's people who are already tokenizing the economy in many ways. A lot of things are going on blockchain.

[00:40:33]So, it's already in motion. It's going to happen. But what that negative interest rate could do to like the housing market, the mortgage market, I find this very difficult to try and imagine that you are going to be getting paid or essentially paid back less on the house with a negative mortgage. Just doesn't seem right.

[00:40:56]Yeah. I mean is there there's actually been moments in time where it did happen too where in where mortgage rates did go negative like there was such a demand for bonds and positioning into bonds in such a speculative manner that it literally drove um adjustable rate mortgages temporarily negative for a short amount of time which is just incredible to imagine you know but it did for for for a brief moment there you know not here in the United States I think that was in Denmark.

[00:41:30]I can't remember.

[00:41:34]All right.

[00:41:36]Uh, what time is it? All right. Two more minutes and I got to go.

[00:41:43]Uh, make deflation great again. No, it's not going to happen. I mean, I have posts if you eat on my Discord from the beginning. Right on.

[00:41:58]Falling in love. That never made sense to me. Every time I've fallen, it was chit or some slippery slime. I don't know.

[00:42:09]Yeah.

[00:42:10][laughter] I hear you. All right. I subbed to Brody and you should too.

[00:42:16]Yeah, absolutely.

[00:42:21]All right, man. And you going to show us around the clean old suburban?

[00:42:28]The clean old Suburban. What do I have back there? I got a fishing pole back there.

[00:42:32]See, there's nothing back there. Old fishing pole and a tarp and a spare. That's it.

[00:42:43]It's best truck ever. I love it.

[00:42:46]See, what's nice about having a Suburban with nothing in the back is that there is a hell of a lot of space back here.

[00:42:51]And it rains all the time in Oregon, so it's dry, right? Dry space is is a commodity.

[00:43:00]Uh, that ride is me, bro. Thank you, man. I I love it. Four-wheel drive just just I love it. It's got like I think it's still got like some of the old stuff from the old driver and from the old owner.

[00:43:18]All right. Uh, Trump funeral, get popcorn. Dice roll.

[00:43:25]Yep, you got it, Tabitha.

[00:43:28]All righty. So, I don't know what to do, guys, other than just keep sharing what it is that I see going on within the economy. I know we got a unique view of it. I know the credible threat theory is by far the most accurate way of looking at monetary policy. It has predicted so much stuff.

[00:43:45]it is like on it when it comes to the position in which that people are feeling as far as like wars coming in and what could happen to the Fed. I don't know how many other people are diving into it to the level that we are here breaking it down for the average workingass individual. I don't know if an investor is going to be able to use this information and I know they used my information when I was talking about lumber and things that were happening within the lumber industry. I had people contacting me all over the place saying, "Dude, you are helping out with a painful experience here and I really appreciate all the information that you're delivering." And I'm thinking, man, if I'm not delivering like the most helpful information out there to try and explain what it is that's causing this pain and how they are most benefited from it, not just you, but the powers that be, but how it is that you can position yourself to benefit from it as well. I just don't know anybody else who's doing it. I'm looking at videos of like really good understanding economists out there who are talking about like they were talking about recessions four years ago that never came up. They're talking about unemployment skyrocketing that never took place. They're talking about the Federal Reserve going back to zero. That was never an option. All these things that they talk about and I'm like, where is it that these people are looking for this information? Are they just making it up?

[00:45:10]because I'm going right to the Fed. I'm getting the information directly from their own words. I delivered how many speeches to you here in this video today? Three, four of them going back through using their own words against them. And yet here it is. People are like so lost to the idea. And I feel like I literally am the only one who is breaking this down to this level. But you know, if people don't see how how this is helping for their painful experience. Like this is what I am trying to share with people is that we are all experiencing a massive amount of pain from the working class position. If we are day jobs, if we are wage earners, if we are like stretched to the end of the month with our paychecks trying to figure out how it is that we are going to make it next month, this is the pain that we experience. And now what I am trying to share and what it is that I am going to continue to share is what it is that is causing this pain. And a lot of people can point at the symptoms but they very rarely look at what it is that is happening to the benefit of their own monetary policy from the pain that we are experiencing.

[00:46:25]Right?

[00:46:28]It can make it not so painful once you see it. Once you see the credible threat theory, it adds an eerie calmness to the understanding of what's happening. Like literally an eerie kind of feeling of calmness in which you see it in such a different light and you recognize how it is that it's taking place. Like every time the S&P rolls up, you're like, "Yep, figured, right?"

[00:46:56]Every time you hear them say, "Well, we might have to hold positions again because inflation is just again another another issue with inflation, one repeated issue, one series of inflationary expectations after the other." It's just like we're going to keep remembering how it is that the uneducated economist was saying it.

[00:47:14]They're going to be pushing for elevated inflation and inflation expectations to raise the neutral interest rate and make the economy less restricted. Now that we are witnessing it happening, we know exactly why. We know what we can do about it. We may not like it. We may not have a lot that we can do about it, but at least we understand some point in what it is that we can do with our position. Now, most people are going to look at it and say, "Who can we vote for? What gains can we make?" And I'm thinking, they're not going to change this. They're right where they want to be.

[00:47:45]All right. Uneducated economist, you guys. Let me know.