I’m often asked “what will the fed do with interest rates?” They raised them have for the last few quarters. We all know it is likely to happen again. But here’s the thing, relying on the Fed to save our economy through the artificial manipulation of interest rates is like taking marriage advice from a Kardashian. It’s a gamble at best and you already know you’re going to leave the deal with more problems than you had when you went in. Similarly, the Fed is destructive by nature.
Quantitative Easing: a monetary phenomena that began in November of 2008. It marked the beginning of a new era. An era where the Federal Reserve would print more money faster than we can count. Literally. They printed money at a rate of roughly $32,000 per second! That got us out of the economic turmoil that was caused by banks, Wall Street, and our lovely government. But it did not solve the problem. We basically put a massive number of Band-Aids on a fatal gunshot wound. Over the last 9 years, the band aids have been getting sweaty, lose their stickiness, and slowly bleeding through as we bleed out economically.
Logically speaking, the Fed printed a lot of money and artificially suppressed interest rates to incentive spending and lending. Great! So again, logically speaking, it would make sense to raise rates to start soaking up and eliminating some of the fake money supply that was created. Here is the problem. That would be like trying to fill up the Grand Canyon by throwing a brick into it. Personally, I’m calling the Fed’s bluff. Yes, they’re raising rates and the only reason (I stress the word ONLY) is because if they don’t raise rates, during this next recession if they try to lower rates again our country will have negative interest rates. Yes, I said negative. And so, in order to prevent that from happening, we must raise them enough so that when we must lower rates again, we don’t go negative. We can’t get the bullet out without killing the patient so we are going to slowing start adding morphine so that at least it doesn’t hurt. The Fed’s interest rate manipulation is simply a last-minute attempt at bedside manner for our weak economy. Can I prove any of this? Not. But the data is there for us all to look at. Numbers don’t lie. People do.
The end result of this will be deflation. Deflation is when the money supply decreases, the cost to of borrowing and buying naturally skyrocket, because money supply is so low buyers are scarce, prices go down, interest rates go up, jobs are lost, businesses fail, and the cycle compounds upon itself. Best case, this results in a recession. Worst case, this results in a depression. The only reason we don’t believe this is 3 reasons:
Recensy Bias: because things have been good for a while, things will continue to be good.
Denial: accepting this basically means accepting that our lifestyles must do a complete 180. Sell the house, find the better job, stop buying and borrowing for things that don’t produce income, actually learn how to invest rather than being hand-fed by our 401k’s and other artificial financial products and “investments. It’s much easier to just pretend nothing is wrong and not have to deal with any of that stuff.
Me: you don’t believe/like/trust me (or others like me). What I’m saying so heavily disagrees with virtually everyone’s reality. So naturally your affinity towards my message may not be very high and therefore your affinity towards me may not be very high. Like me or don’t like me, I care about you and I care about my country enough to keep providing data and facts to help you make a better decision.
If this is true, then what do we need to do? What’s the solution? First, we all need to secure our income and go create more of it. Then, we need to get massive cash positions in everything. Home equity isn’t cash, the stocks, bonds & mutual funds you can liquidate is not cash, and gold & silver (I don’t like fiat currency either) are not cash. Get cash fast. Sell. Get out of those illiquid investments and products that you own. Save your income. By having enough cash, the greatest economic tragedy in the world can become the greatest opportunity in the world. My clients will buy during this next recession or depression. Because we have cash, we will buy the real estate when it’s cheap, the businesses, the stocks, you name it. But only if we are nimble and have cash.
If you’re reading this and you feel overwhelmed, it’s okay. You should be. This is very different news than you’re used to. Don’t trust me until you decide to trust me. Don’t make any decisions until you’re sure. If you’d like to schedule a free consultation with a Wealth Coach to get more information and have your questions answered the CLICK HERE.
Fight for yourself, your family, your friends, your church and your country. Be the person who can pay the price when no one else can because you paid the price when no one else did.
Jerry Fetta
Jerry Fetta is a husband, son of Yahweh, Entrepreneur and owner of 5 privately held businesses. Jerry lives in Alaska with his wife and 2 dogs. His no-nonsense approach to business, finances, and life speaks truth and provides clarity to his clients and followers. His personal mission in life is to empower millions of leaders to own their God-given, ultimate potential
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