Well, well, this week on Cocomelon.

Oh, you.

No, you're past that now, right?

No, I'm past it, but I was reading, apparently the same, like, former studio executive who, like, was at Disney or something, purchased, like, Coco Melon.

What's the guy?

Blippi.

Oh, like another one.

He purchased all three of them and now he's, like, building out, like, some empire of, like, kids shows, and it's just.

Yeah, it's.

It's enviable.

Yeah.

Yeah.

Welcome back to the number one financial literacy podcast in the world.

Sitting in front of me is my partner in crime, Christopher Nahibi.

And sitting across from me in death, defyingly damn accurate 4k, my partner in time, the one and only Saitoma.

And sitting behind the desk, we have none other than the Fijian himself, Rajeel.

Hey, guys.

Such a nice teddy bear.

Yeah.

Is there, like, a national language that Fijians speak?

You're gonna trip out.

It's.

That's like, if you're English, they're very logical.

And you speak English.

Yeah, hello.

I speak English.

Like this.

So today is Wednesday, the 18th.

And little.

Little meeting happened today.

Hmm.

We had a Fed meeting.

We did have a Fed meeting started yesterday, concluded today.

The consensus going into it was, of course, that the Fed was likely to hold rates.

There wasn't enough, really, data prints coming between the last couple weeks in and this meeting to really give anybody any reason to feel that a rate cut was likely necessary.

And that was.

That was the outcome.

That was the outcome.

I mean, several months ago, it was largely believed that this meeting was going to be the meeting that they decided to begin cutting rates.

Yeah.

Back then was.

Was that this was.

This was the first cut.

This was the first cut.

So what was so special about this meeting was it was the one where they released their summary of economic projections, where they lay out what they expect to see in the upcoming future.

So still in that.

In.

In those projections, they expect one to two cuts by the end of the year.

Which that was interesting because they're.

Yeah, here it is.

Wall Street Journal.

Fed holds rates steady in key.

Keeps a door open to cuts.

It's interesting that they said they.

So the DOT plot came out today, and in the dot plot, a lot of the Fed members, you know, kind of indicated that they were talking about two cuts in the fourth quarter.

So the same amount of cuts they were always talking about just now, way, way in the back end of the year.

Yeah, I don't expect that to be the case.

I don't.

Maybe.

Maybe we get lucky with one.

But I thought what was equally as interesting, if not more interesting was in that dot plot, they showed only one ray cut next year.

Yeah.

So I've got mixed emotions about this whole thing.

And for those of you who listening to the show.

Oh, wow, look at you, Rejeel, pulling up the dot plot.

The dot plot.

Can you zoom in on that bad boy?

This guy Raise.

Look, that was, that was impressive.

And you can't zoom in, can you?

I gotcha.

Technically, stump the Fijian.

Chris plus one side.

Omar zero.

Control plus.

I think it's command plus command and scroll up.

Scroll up.

Don't try any of that because you're just gonna screw.

But yeah, that's a dot plot.

And effectively the little dots show effectively where they think things are gonna happen.

We've covered on a previous show.

You can, you can find that.

But suffice it to say this to me, is problematic.

A lot of companies have stopped giving forward guidance on where they think things are gonna go because it's.

You're telegraphing to the markets that you think X, Y and Z are going to happen.

So if you're Apple and you come out and you say, hey, we think we're going to grow by 10% next year if you don't hit that marker, you've now fallen, fallen short of your guidance.

But then what's the downside of just not saying that?

Exactly.

So if anything, that benefits them a little bit to.

Look, things are getting a little crazy right now.

We don't really know.

There's a lot of uncertainty.

There's a lot of geopolitical conflicts that remain to be seen, how it all shakes out.

Which for those of you who are following the geopolitical conflict and wars and the potential for war, we're going to talk surprisingly a lot about that later on the back half of the show.

Yeah.

And because of that, companies can no longer, like you said, you know, provide any forward guidance, which I think ultimately does help them and rightfully so.

I think.

I think it would be unfair.

Company should.

To be honest, I don't think a publicly traded company should be.

Wow, he figured it out.

See, this is why you can't bring him anywhere sneaky or bring him everywhere.

You'll figure out how to zoom on the screen.

Yeah.

So that's the dot flop.

And you can.

And every single one of these corresponds to a voting member of the FOMC's opinion on where they think rates are going to be at a certain time of the year based on quarters so.

In the Fed, in the post game press conference, if you will, Jerome Powell hinted at inflation and where it's at.

And the most recent CPR reporter, which I don't know if we actually got a chance to go over because Christopher has been interviewing some guests.

I did, yeah.

I've been doing a little bit.

You've been here.

Don't act like you're not here when this happens.

I know, but I promise the listeners.

Okay.

At some point in time, and I promise more than one listener.

Yeah.

We're gonna get this thing set up.

So this is our first.

I think they want to see us share a microphone.

Like just back and forth.

Yeah, yeah, like.

Okie dokie, your turn.

Yeah.

This is our first 4K episode that we're gonna put out.

We actually recorded the first one with a guest.

But look, I like our guests.

I do, but I wanted the extra sexy to be set up for you.

No, but his was sexy.

The guest was made sexy.

Yours was.

Yeah, it was a little hot.

Yeah.

Speaking of original, am I hot on the light?

Am I good?

Yeah, lighting's good.

All right.

If you appreciate the lighting of the show, do us a favor like the video or leave a comment saying so Chris has put a lot of time and effort into this.

I'm hyper desperate right now and it.

Will go a long way.

Love me.

Yeah.

So, yeah, at some point in time, we're going to have a setup where I can get you in here.

So I actually have.

For that side of the table, I have an extra camera arm and.

I'm sorry, an extra mic arm and an extra mic.

Yeah, we'll get there.

So we'll be able to do that.

And you're mic coming from the other side.

I'll be able to interview a guest just like this.

So we'll get there.

But so what I was going to say is we haven't had a chance to go over that last CPI report.

And I think the key part that we just need to focus on is what caused the.

What caused inflation to remain somewhat low was energy prices had gone down.

Right.

And the high, the thing that was causing inflation to remain high in that report was shelter was still very high, even though it was the lowest it had been in several years.

You know, I think increased 3.9% and.

Shelter was actually dragging up overall inflation.

And this is kind of reoccurring theme that we've had on many past shows that the shelter cost, the cost of owning a home or renting a home, and that's kind of Murky how the, how the Fed represents this.

But basically they use something called owner's rent equivalent in order to determine what is shelter costs.

Right.

And owners are equivalent is taking the current average market rents in certain sub markets, but also combining what a mortgage payment would be and breaking it down to rent.

But all of these are lagging indicators.

They generally lag about six months behind the economy.

And right now you have, despite the housing market seeming to have a very visible slowdown in the data, what you have is you have lagging data which shows that inflation in the home markets is still closer to 4%, a little higher than 4% on average across the country.

And that's dragging up overall inflation above the 2% mark, the target they're trying to hit.

Which is the problem with, with a lot of this data, even if it's lagging data or if it's not lagging data, it's always backward looking data.

Right.

So and yet here we are with an FOMC with forward looking statements.

Yeah, it makes no sense.

Right.

Their opinion on the economy is based off data from six months ago.

But they're having a conference today telling us what they think is going to happen in six months from now.

Right.

Which they're allowed to modify and say, oops, sorry, we were wrong, or go.

Let'S just change the language.

Let's just.

Right, let's just change, let's just see if anybody knows.

We'll just sneak in some different vernacular and somebody notices.

So they're the growing fear the FOMC is okay if what kept inflation low at that last print was energy.

Right.

And with what geopolitical conflicts that's going on back, you know, in the Middle east right now you got to think, okay, could there be a slowdown in oil production?

Right.

I mean I know that Iran for instance, Right.

They only produce a small percentage of overall oil production.

Yeah, right, right.

It's like 3% or something of total oppression.

But it's the neighboring countries, right.

And it's the fear, the escalation of what could happen ultimately that could again disrupt the supply chain.

Yeah, well, there's also like Kuwait, Iraq, there's a lot of neighboring countries, uae, Saudis, but they all come to the same strait.

Exactly.

Right.

I think straight up from O.

Is that what it is?

Yes.

Yeah.

So and then that's the fear.

Right.

And I mean rightfully so.

So I can see a position that they take where, well, if energy prices kept this thing low, and I know they don't like to look at Overall headline.

But, I mean, they have to factor it in.

Yeah, I think they will.

And so getting back to kind of the bigger, broader starting point for this conversation, it makes no sense to me that at least when you're a public reporting company, you have data through your quarter.

I'm reporting a forecast based on data I've collected for what I've done the last three months.

Right.

So, for example, most public.

Public companies are going to report at some point in July on their Q2 earnings calls.

Right.

January, February, March, Q1.

April, May, June Q2.

June Q2.

You talk about on your July earnings call.

Right, right.

In July.

That stuff you just did the previous quarter.

And you're going to report in that previous quarter, and then you're going to.

If you're.

If you provide forward guidance, you're going to tell the market what you think you're going to do in the following quarter, which you're already technically one month into.

In July, by the time you have this con.

Yeah.

Which they have.

Like you said to your point earlier, they have to be careful with how aggressive they want to be, because if you don't hit those numbers, then analysts.

Are going to forecast based off of what you say.

Yeah.

And the kids say, that's a bad look.

That's a bad look.

Yeah.

When you dip, I dip.

We did.

Yeah, exactly.

These young kids are like, what is that?

What are you saying?

Why is he saying that?

They don't get that.

Yeah.

That reference is way over their head.

Yeah.

Did you get that reference?

Yeah, of course.

Okay.

That's also a TikTok trend now, at least.

See, that's why he gets.

It's not.

The age demographic here is wide brother.

Yeah.

He's a student of the game, though.

Yeah.

He's also your age.

So I'm making fun of both of you at the same time.

No, he's not.

He's way younger than I am.

No, he's not.

Look at that.

How old you.

I don't see a single gray hair, bro.

He's Fijian.

Oh, I got so many gray hairs.

That's nice.

You're 30, 37.

Right.

I think.

I think your definition of so many is in.

Mine is 34.

Yeah.

Damn it.

Yeah, bro.

Come on, now.

I'm 39.

39, bro.

Bro.

I was 11 when he was born.

That's a problem.

When I was driving a car.

Oh, no.

He was my son's age.

That's a problem.

That is somewhat of a problem.

Yeah.

We got to check IDs on ex employees.

All right, so I want to read.

Well, I guess.

And I'll finish off this one.

Talk one thing.

So to me, it makes no sense that a public company gives forward guidance the same way the FOMC does.

And the FOMC is relying on data that's six months old.

Right.

Imagine Apple saying, hey, let me tell you what we're gonna do next quarter based on what we did a year ago.

And mind you, this all went down with him.

And by him, I mean Jerome Powell and the FOMC members getting pressure from the president, you know, to cut rates.

Cut rates.

We need you to cut rates.

You ever heard about this whole shadow FOMC thing that he's talking about now, which is interesting.

No.

So at first I was like, what does that even mean?

Like, he's been talking about putting in a shadow, like Fed secretary.

So apparently what they're what Trump is considering doing, and this is rumor at this point, so bear grain of salt, is naming the successor FOMC head.

Like, let's just say it's beset at this point in time saying that he's going to be the next FOMC secretary or chair and replacing Jerome Powell, kind of making Jerome Powell, like, know that that's coming in next so his opinion will weigh on the economy because he's the guy coming up, right?

Ah, right.

Imagine if you knew who your next president was long before.

That's the thing, that, that here's the thing, man.

That's what makes Trump so special.

Right.

That he knows the game of how to control the narrative.

Well, we'll have more on that later.

Yeah, see what I'm doing?

You don't even appreciate.

I don't do what you're doing.

You're ruining our possibility to advertise this episode.

All right, so directly from the Wall Street Journal article, to resume rate cuts that they started last year, Fed officials are likely to need to see either labor market softening or stronger evidence that price increases due to tariffs will be relatively muted.

And again, relying on historical lagging data, they haven't seen what tariffs are doing to the economy in full yet because it's just old data.

And the tariffs are relatively new.

Right.

And they're new.

And he's picking and choosing which ones he wants to pause, hold on to for longer, keeping this level of optimism, like maybe they won't ever even go into effect.

Yeah.

So projections released Wednesday suggest officials were open minded about whether they would have that evidence by the fall.

So you don't know.

We're open Minded about it.

We're hopeful.

There was a lot of like, hopeful talk today which was also a bit strange.

I don't know that we should be giving Rosie optimism at this particular time with all the geopolitical unrest that we're seeing.

But we've been talking about this.

A lot of people are beginning to feel the stresses that the economy has been putting on them.

So maybe they themselves know the some of the real data points and they feel like we need to start pushing more optimism because we're going to be holding these rates higher for longer.

Yeah.

But, so here's my thought on that.

Okay.

Okay.

If I'm the FOMC and I'm being genuine, I come out and I say, yo, it's rough in these streets, kids.

I know.

I don't know what my next job is going to be.

Apparently Beset's going to take my job.

That's what I heard.

You know, like rumor has it.

I.

I don't know what, I don't know.

But instead they come out with this rosy optimism.

It seems a little disingenuous, you know what I mean?

Like, it just seems a little.

Yeah, a little fluffy choking on that one or are you coughing on that one?

I couldn't tell about it.

The new interest rate projections highlighted a divergence among the 19 Fed officials who participated in the meeting.

Ten of them expect the central bank to cut rates at least twice this year, a narrower majority than in March.

Neel Kashkari voted in March.

So grain of salt there.

And two penciled in one cut.

Cut.

Meanwhile, seven penciled in.

No changes this year, up from just four in March.

So a lot of changing opinions as it relates to what they're going to do.

Economic projections show officials expect inflation and unemployment to rise this year by more than they projected in March.

So it sounds like they think things are going to get worse this year than they originally thought.

If I'm paraphrasing, that is potentially messy combination for the central bank because it could forced officials to choose between focusing on shoring up the labor markets by lowering interest rates or defending against higher inflation by keeping rates where they are.

Officials indicated that they expected a closely watched measure of inflation to rise to 3.1% this year.

It was 2.5% in April.

So it is going the wrong way is kind of what they're suggesting.

They projected the unemployment rate at 4.2% in May would creep up to 4.5% by the end of the year.

So the numbers are going in very confusing directions.

It is now, the question remains, this part of the, the dual mandate of the fomc, we know is stabilized prices.

Right.

And unemployment.

Right.

Providing maximum employment for everybody out there.

Now, they do have to factor in what goes on with GDP.

That's right.

Q1, we had negative GDP growth.

Correct.

Yeah.

And that.

And let's, let's just take a little side Here.

If Q2 is sabotaged.

Right.

By tariff talk, by.

I mean, we're kind of already in the tail end of Q2, but if it is sabotaged by geopolitical conflict.

Right.

And you have a second successive quarter of negative GDP growth.

That's the technical definition of a recession.

Two successive quarters of negative GDP growth, you're in a recession.

Right.

I don't care what the White House says about that.

I care what the Bureau of Labor Statistics says about that.

But they've been awfully silent for years, a long time.

Yeah.

I would not be surprised if Trump laid them all off.

You can't declare recession if you're not employed.

Yeah.

The National Bureau of Economic Research in Burya.

You said bls, though.

Oh, did I really?

Yeah, But I don't want to correct.

You, but I mean, I haven't heard from.

Yeah, yeah, exactly.

I want to hear from the bls.

But then the question then becomes, I did say, if we do, if we do go into, decide to jump in and help out in this war, what happens to the economy then?

Is it good for the economy?

What does history say?

Well, we're going to go over.

So I started kind of thinking back to my childhood.

Obviously, you guys weren't even alive.

And I thought the two nearest examples of this that dealt with similarly situated Middle Eastern countries were the Gulf War, dealing with Kuwait and the Iraq War, which was probably the closest one in time.

Both of them had very different and distinct impacts to the economy.

Both of them had very bad impacts to the economy, but the speed with which it impacted and the ultimate outcome were very different in a lot of ways.

So we, we'll break that down in the latter half.

But let's finish with the FOMC talk for a little bit.

Okay.

I want to go over some things that I think are important and meaningful here, not the least of which is I provided an FOMC comparison.

I've done this now every single time.

I think it's very valuable.

Oh, the red line.

Yeah, the red line.

So what this provides here for you is, takes a look, if you will, at the statement that the Federal Reserve provides.

And as we covered on previous shows, they don't make a lot of meaningful changes to their statements.

So in this particular version of it, they said, and I'm going to try to zoom in here because I'm blind.

As hell has it there.

Right?

Yeah.

There you go.

Make that bigger.

Full screen, baby.

Full screen.

There you go.

Yeah.

All right.

So the unemployment.

That's perfect.

Now scroll up.

There you go.

The unemployment rate has stabilized at a low level in recent months.

Has changed to.

The unemployment rate remains low.

Powerful.

Change the next paragraph down.

They changed.

The economic outlook has increased further to.

The economic outlook has diminished but remains elevated.

Last line, last sentence of the second paragraph.

They're completely removed.

And judges the risk of higher employment and higher inflation have risen.

So they just remove that.

And then at the end, all they did is they swapped out Neel Kashkari because he was not a voting alternate at this meeting.

Other than that, the statement they released is identical.

Right.

So not a lot of meaningful changes in this report.

Yeah, I mean, like we said, they try to control the narrative.

They try to make sure that all their options always remain on the table.

So they want to provide as little change as possible.

Right.

They're not trying to.

And they do understand, to their.

To their credit, they do understand that, especially in today's media coverage of anything, not just the FOMC statement, that it can sway the market on any given day.

Right.

What they change, what they produce, how, how other people in office decide to understand it.

Right.

And what they say, that whatever rhetoric they begin to put out can sway the market in a way that they don't want to happen.

So the reason why I included this statement before, what I'm going to play next.

And Rejeel, if you want to tee up the YouTube video here in a moment.

Not a YouTube, the Instagram video.

Sorry.

The statement that they make.

And this is why Saeed and I always talk about the press conference afterward, the statement that they make is very vanilla.

It's the one I just read you.

And there's not a lot of meaningful changes in it.

But it's this rhetoric that we're going to hear in a moment that he says at the post game press conferences say he likes to say where he clarifies certain details on the Q and A section.

The Q and A section.

Yeah, where he gets, you know, peppered with questions from the media.

And instead of saying, hey, I don't like you, the media, the devil, he responds and says things like what Rajill's about to play.

Had three months of favorable inflation readings since the high readings of January and February, and that's of course highly welcome news.

Part of that just is that services, core services, both housing services and non housing services, have really been grinding down toward levels that are, that are consistent with 2% inflation.

So that's the good news.

We've had goods inflation just moving up a bit.

And of course we expect, as you, as you point out, we do expect to see more of that over the course of the summer.

It takes some time for tariffs to work their way through the chain of distribution to the end consumer.

A good example of that would be goods being sold at retailers today may have been important, reported several months ago before tariffs were imposed.

So we're beginning to see some effects and we do expect to see more of them over coming months.

We do also see price increases in some of the relevant categories like personal computers and audio visual equipment and things like that that are attributable to tariff increases.

In addition, we look at surveys of businesses and there are many of those and you do see a range of things.

But many, many companies do expect to put all or some or all of the effective tariffs through to the next person in the chain and ultimately to the consumer today.

You know, the amount of these, the amount of the tariff effects, the size of the tariff effects, their duration and the time it will take are all highly uncertain.

So that is why we think the appropriate thing to do is to hold where we are as we learn more and we think our policy stance is in a good place where we're well positioned to react to incoming developments.

All right.

I mean, as much as I hate to agree with him on this.

Yeah.

He's not wrong.

He's being very pragmatic.

Well, that's not just him, it's the entire committee.

But yeah, he's not, I mean, yeah.

That thought process, that line of thinking.

Yeah.

It remains to be seen what is going to happen with the tariffs.

Right.

And, and frankly, he's alluding to the fact that it's going to be passed on to you and me.

I mean, that's.

Yeah, we know that.

Right.

It's essentially a tax which.

How is how you get inflation.

Right.

I thought about doing an episode coming up about the national debt more in like a granular detail of how, you know, breaking it down.

Very simply of how we, you know, we take in 5 trillion, but we spend 6 trillion.

Where the extra trillion comes from.

Yes.

Can be explained and I can actually map it out.

Yeah.

And I actually got a really cool idea which I haven't really Shared with you guys yet, but I found a way to use an iPad to draw notes that we can display on the screen in real time.

Really?

Yeah.

So I like that we can get detailed, although I don't trust you with a pen in your hand on the show because you're immature.

Okay, what's the first thing that I would draw?

I don't know, but it wouldn't be appropriate.

Okay, Okay.

I don't know.

That's fair.

That's fair.

So we have a little segment coming up called History Lessons and how war really hits the economy.

And I'm going to explain what it is, but I have to give a disclaimer.

Okay.

Okay.

Can you put your mature hat on for a second here?

Yes.

That's good.

It's mature face.

Yeah, that's good.

All right.

As tensions mount in the Middle east, especially between the U.S.

iran and Israel, we're heading into a period where geopolitical conflict and geopolitics might start doing the Fed's job for it.

Okay.

So all that we just heard from the Fed, frankly, relies on the possibility that this does not escalate significantly.

Because if it does, everything we just.

Talked about, changes go sideways, right?

Yeah.

And while today's central bankers chose to hold rates steady, history shows that war has a way of shifting the entire playbook.

Now here is the disclaimer.

This is not about our political opinion.

There will be inevitably somebody who listens to the show saying that we are picking a side in a political fight.

That is not the case.

No.

Okay.

This is rather an objective look at what similar situations have meant historically for the US Economy for you, for me, for Jill, and for all the listeners out there in the worst case event scenario that we actually do escalate to war.

And I think there is a high probability of that, given the rhetoric and context of what we've seen thus far in the media from the White House.

I am not endorsing anybody or their actions, but I do think we owe it to ourselves to be thoughtful and pragmatic about what that could mean financially for our economy and for all of us.

Yeah, 100%.

We got to take a look back in history to see how these things affected us as a whole so that we can make better, more informed decisions on our own personal finances moving forward.

Forward, yeah.

So let's start off with the two examples that we talked about.

The Gulf War and the Iraq War.

The Gulf war in particular.

1990 to 1991, Brazil.

When were you born?

91.

Yeah, he said it back there.

With Mike off because he's afraid of it.

He's afraid to say it.

Were you born chief.

90S baby.

I wanted that caption on the mic.

So this is the year you were born.

It actually started before you were born.

In August of 1990, Iraqi President Saddam Hussein.

A reoccurring theme here, by the way, and also the reason why brown men can't have mustaches today launched a surprise invasion of Kuwait, claiming territorial rights and accusing Kuwait of overproducing oil, which suppressed prices and hurt Iraq's war torn economy.

Following the Iran Iraq war, Kuwait held about 10% of the world's known oil reserves at that time.

And in Saddam, you want to control.

Yeah.

So the international response was swift.

Fearing further aggression in the oil rich region, the United nations imposed sanctions.

And the United States under President George H.W.

bush, led a global coalition of 35 countries in a massive military buildup known as Operation Desert Shield.

Very different paradigm where you've got UN meeting 35 nations, get behind it and then they go to war.

Right now, nowhere near that.

There hasn't been anywhere near the buildup.

I mean, I was sitting in front of a TV and I'm like, wait, I'm sorry, Israel is doing what now?

And what's going on?

And like it was completely caught off guard.

Right.

And we're supporting.

Are we not supporting?

This was telegraphed, on the other hand.

So by January 1981, diplomacy had failed.

The coalition launched Operation Desert Storm, a blistering air and ground offense that expelled Iraqi forces from Kuwait in just six weeks.

The war ended quickly, but the shock waves in the oil market in the US economy lasted much, much longer.

So economic consequences.

Kids, you ready?

Yeah, hit me with it.

The economic consequences, right?

Yeah.

Just economic consequences.

Yeah.

So number one, the obvious thing, 10% of your oil is coming from that country.

You had oil shock, right?

So crude oil prices doubled in the months following the invasion, jumping from $17 a barrel approximately to over $36 by October 1990.

Energy inflation seeped into everything from transportation into food.

When it costs more to pay for energy, which is used to process and manufacture products that we have in the economy.

You know, because you listen to this show, they're not going to take that on the, on the chin.

The manufacturers, the producers, they're going to pass that on to you, to me, to everyone.

The same way tariffs, it cost them more to ship.

It cost, they're going to cost.

They're going to sell you a higher price product.

That's how inflation works.

So you said up to 35 a barrel.

36.

17 to 36.

Where are we at now?

Are we at 25 a barrel or.

Jill, you want to.

Can you look that up?

Probably in the hundreds.

25 or 35.

You know, just assume me.

Nobody else is listening.

I know your stomach's upset tonight, brother.

If you got to run to the restroom, like, just.

We got you.

Rajeel's pushing through.

I will make fun of you on the show.

Yeah, but.

All good.

Yeah.

Okay.

All right.

You good?

You sure?

Yeah, yeah.

All right.

All right.

I just.

I don't want him popping back there.

Poor guy.

You put himself on blast.

You don't want anybody to know.

I know, but he's that.

Look, I.

I want him to legitimately leave if he has to.

You know, I'm trying to be like.

You know what he's doing.

We've all been in a situation where we had to go to the bathroom, but you had to stay seated.

It's the worst.

Yeah.

That is.

That is arguably one of the worst feelings in the world.

75 a barrel.

Jesus.

Yeah.

He wasn't wrong about being close to 100.

Yeah.

I mean, keep in mind inflation.

This is the 1990s.

It's been, like, literally 30, almost 40 years.

So.

Yeah, we're at $75.29 per barrel.

Yeah.

In California, we got.

We pay, like, a special tax because of any, like, environmental concerns that we have.

Yeah, the state sucks.

Yeah.

Let's just leave it there.

Yeah.

Isn't it going up 66 cents?

No, that's a mileage tax.

Right.

Isn't that.

Or.

No.

Is it a gas tax?

I think it's a gas.

Gas tax.

Yes.

Down like, two or three refineries in California.

Yeah.

It's just a way to create revenue.

I mean, it's so twisted, brother.

At the same time, during this whole Gulf war epidemic from 1990, 1981, just six weeks of actual war, consumer confidence fell sharply as Americans feared a prolonged war.

You don't know when it's going to end.

You know, it starts, and you think of all the bad things that can happen because it's scary stuff.

Yeah.

And let's be honest here about what really happens here.

Good people on both sides of a war are impacted by the political decisions of people who have maybe, I don't know, righteous motives, maybe nefarious motives.

But it's generally not the populace that are making this decision.

Yeah.

Right.

So consumer confidence in the US who's in part of this war, their consumer confidence falls, too, because they don't know what's going to happen to them any more than anybody else does.

Absolutely.

Yeah.

Right.

And then of course, what does this all lead to?

A recession.

And as we talked about earlier, two successive quarters of negative GDP growth.

Well, that happens quickly.

That's six months.

So during the talks leading up to the war.

And during the war you had negative GDP growth because the fear leading up to it.

The telegraphed fear.

Yeah.

Led to people pulling back on spending.

Yeah.

Right.

Consumer confidence drops.

That's what happens.

So the recession officially began in July of 1990, before the war, and lasted through March of 1991.

War related uncertainty in the oil shock worsened an already sluggish economy.

So they were already entering into a recession.

Then this war happens.

And then because the war happens, it even shocks oil and fuel prices even more.

Yeah.

The good news is, is the US now attacking Iran doesn't get anywhere near the oil supply.

They get they got from Kuwait and from Iraq back then.

But it still has impacts because war in the region will destabilize the region.

Absolutely.

In theory.

Yep.

Well, at the same time, you're now in a recession, there are other implications.

We often talk about the Fed's dual mandate, employment being one of them.

Unemployment rose steadily hitting 7.3% by mid-1992, even after the war ended.

And here is a common theme for the listeners to know.

Unemployment typically peaks after the end of a declared recession.

Right.

So at.

If we're going into a recession and you feel like things are bad, you're like, oh my God, Chris.

But unemployment still healthy.

Yeah, that's actually normal.

You generally get higher unemployment towards the end and through the end of recession.

For reference, I think we, I think we hit 10% unemployment after the great financial crisis in 2010, after the recession was already declared to be over.

That talks a lot about the company's cycle of traditional public company cycle of business.

Right.

Like you people don't spend as much, they spend more.

You wait, you kind of process, then you get into it.

Yeah, there you go.

Wow.

The U.S.

unemployment rate in 2010 was 9.6%.

It was a significant increase from the pre recession rate of 4.8% in the fourth quarter of 2007.

So.

Wow, 2007, what we think about as a start of the great financial crisis, it was approximately half.

Half.

Right.

And higher than what we're at now.

Yeah.

Rajeel, I gotta point out, brother, you were good back there.

Like I don't you good at this?

Yeah, you're, you're quick.

Yeah.

That.

That does have anything to do with the Internet speed?

I think so.

Dude, it's so fast now.

Are we gonna talk about that.

At some point later in the show?

We could talk about it.

We got.

Stay tuned to the end of the show.

We'll explain to you how.

I can tell you're so excited.

Dude.

Dude.

It was such a problem.

I was so excited when I found out it was a possibility.

I was literally.

It was late at night.

For those who don't know, we've often talked about Alan Greenspan on the show.

I'm a big fan of him as a Fed chair.

He was a Fed chair during this time in the 1990s.

In my humble opinion, I think much better Fed chair than Jerome Powell.

So I thought we had a better shepherd to shepherd the financial position of the economy back then with Jerome Powell and the tension that you're seeing from the White House.

I don't know what's going to happen.

Yeah.

It's also what he's having to navigate through, I think is a little unfair.

None of his predecessors had to deal with what he's dealing with.

Jerome Powell, Yes.

I think that's a fair statement, you.

Know, so it's like, it's not.

There's.

There's not really a roadmap for him to be able to follow.

Right.

That's true.

But he speaks too much, him and the fomc.

It's just too much.

I understand what he's trying to do.

He's trying to be transparent and give full disclosure, but at the same time, we're his kids.

Okay.

You gotta tailor the narrative to your kids.

Yeah, Right.

You can't come out and say things that'll scare your kids.

You gotta ease them into the realities of adulthood because they've got a young, naive perspective on the world.

Right.

And the problem.

And the problem is, I mean, I don't know how many other Fed chairs prior to him handled the Q A portion the way he does.

Right.

And you gotta think, because he's done it once, he's done it twice, and he's.

He's answering these questions so thoroughly.

Right.

He really is.

It's.

You can't now revert back and be like, no questions this time.

That's gonna cause hysteria.

Right.

People.

People are gonna start to freak out.

Like, wait a minute, why is he not being so, you know, communicative anymore?

So now he's forced to have to continue to be that type, type of parent, if you will.

You think he goes home and goes, oh, God, why Did I take this job?

No, he likes it.

I think he likes it.

I mean, you get security, you know, there's.

That's cool, you get security.

And then if I ever get security, I'm telling you guys right now, you want to be able to speak directly.

I mean, you can't.

Not directly to me.

Talk to him.

Hey, man, go ahead and tell him what you want.

He'll tell me.

Yeah, I could see.

The funny part is I could see you being like that.

I would, I'm telling you right now.

So the Fed's responsible.

Alan Greenspan in charge during the Gulf crisis.

While Greenspan and the Fed responded with a series of rapid rate cuts, pushing the federal funds rate from 8% in the mid-1990 period to about 3% by the mid-1992 period.

So they were actually cutting into what was the end of the recession.

So they were cutting, cutting, cutting.

Hey, recession.

Oh my God.

Keep cutting.

Recession's over.

Keep cutting some more.

Then we see where things stabilize again.

Lagging indicators.

So that's probably why that, honestly, that is the thought process with what the FOMC is doing now.

Nothing has officially broken yet.

And they want to have enough of enough wiggle room to be able to cut rates at a certain cadence if they need to.

They begin cutting too early now, you lose that tool.

You can't use that tool to help stimulate the economy again.

Right.

So if they've had to deal with a lot of volatility, so if, if.

If they did believe that something was on the brink of happening, why isn't that.

Can you look up the VIX VI X, the fear gauge?

I want to see what the index is at today.

Got you.

Oh, you track it on your Apple phone?

On your Apple stock?

Yeah.

It's down 20.14, 2414.

That's actually not bad from a fear gauge standpoint.

You know, anything below 25 in my mind is still what I would call reasonable uncertainty in the markets.

Yeah.

Go back to six month view there.

Click on the six month view the perfect.

There you go.

See that spike right there?

That spike went up to as high as what, 50, 49 something.

Yeah.

So that to me signals a lot of fear.

That was Liberation Day, by the way.

That was a tariff talking, all that stuff.

So right now.

So, yeah, the general consensus of fear in the economy is about half of what it was during liberation.

People are more afraid of tariffs in the economy than they are of the prospect of war at this particular time.

And to give you an idea, we're not Far off the lows.

Right.

That we've seen in the last six months.

So it's kind of wild when you think about it.

But I think there is an irrational perspective in the economy so far.

There's a disconnect in the markets to the geopolitical conflict.

Yeah, that's weird to me.

Very weird.

It is weird.

And you take all this too, with everything that's also going on in the bond market in general.

Right.

There's so many different things that people are worried about that they're trying to juggle everything at once.

And you wonder, one of these things eventually is going to break and then it could cause a rippling effect.

So I will say that over the course of the last 15 years, there has been a connection between the bond market and the US dollar where you've seen the US dollar fall and the stock market fall relatively about the same time or inverted from.

There's a.

There's a pattern of behavior there.

What we're seeing right now is a departure from anything we've seen over the last 15 years where you have US currency being devalued, but the stock market rising.

Right.

It makes mixed signals.

It's very mixed signals.

And that's not really something that's happened in the last 15 to 20 years.

And I'll be honest, I do know listeners have reached out to me and said, can you please help me understand this?

Why is it that the stock market is performing all time highs again?

Right.

But there's all this uncertainty.

We had, you know, negative growth in Q1 and we're on the brink of a recession and there's, you know, unemployment's rising, but the stock market is doing all time highs.

The short answer is it's irrational.

Yeah, I mean, I don't want to downplay some of the economics that drive it.

And there's certainly a conversation to be had there.

And I think we do that in the same episode we do about the US Debt because I think you can talk about the irrational behavior of the consumer.

And then there's also kind of like how this overlays into the bond market.

And then the bond market explanation can be brought into how we handle the US debt because really the US debt is handled by issuing bonds.

So I'm the US government and I'm making a trillion dollars less than I need to spend on my bills and my debt.

What do I do?

Well, I issue bonds and other countries will buy my bonds because this is such a secure place to buy bonds.

You're giving me money you're loaning me money for 10 years and I'm giving you a guaranteed rate, at the end of which I give you your original loan back.

Right.

And it has been for a long time.

But now with everything that's going on and people being, or you know, us as, as the US getting downgraded by all three, all the three major credit bureaus.

Right.

With rates going up higher, bonds, bond values have gone lower.

Right?

That's right.

So, and people are now becoming more and more skeptical.

Wait a minute.

Will the US eventually now become to a point where they don't pay back some of their debts?

What does that have, what does that cause the government to do, raise treasuries even more?

Right.

Only require them to go deeper into.

Debt, issue more bonds to take on more debt.

So let me, let me explain this in a very, very basic way which we can unpack later on another episode.

But essentially the way this works is, let's say, Saeed, you're the US government and you need $6 trillion a year to pay your debt, but you only make 5 trillion.

So you need another trillion from somewhere.

Somewhere.

So you're going to issue bonds, you're going to go to China, who trades currency in the US Dollar and say, hey, look, if you give me a loan for $1 trillion and it's usually dispersed among several other countries, but in this case, yeah, if you give me a loan for 1 $1 trillion, I will give you 5% interest on your, on your debt.

And then at the end of 10 years, for this 10 year bond, I will give you back your $1 trillion.

Yeah, now, now I'll play China and be like, yeah, you know, but I've seen what's been, what's been going on.

I saw Moody's recently downgrade.

You guys, 5% is not good enough.

Yeah.

And effectively you might have to increase your bond returns so now 6%.

6% only causing us to pay back that 6% even more.

Right.

Which cost us even more.

Okay, I'll do, I'll do it at 6%.

And it's kind of a parasitic cycle because every single year you're not paying down debt, you're effectively issuing more debt and taking on more debt, which is why you're seeing this super.

See if you can find the national debt chart.

Rejill.

Oh, God.

Yeah.

It's like a hockey stick straight up.

I mean, it, it's, it's at the point now where it's in my mind in a position that's almost irreversible if not irreversible.

Now, I mean, you're.

You're at a point where this is going to start escalating because compound interest works this way.

Yeah.

And Ray Dalio has been sounding the alarms.

Has he really?

Yeah.

I love Ray Dalio.

Stud.

Yeah.

Underrated.

One of the first few peoples I followed on Instagram is.

Really.

Yeah.

So while he's doing that, in today's parallel to the Gulf War and today.

Well, I think it's important to draw the.

The.

The parallels.

There you go.

The US national debt stands at 31.5 trillion.

Is that, Is that the current one?

That ain't right.

No, that's old me.

Yeah, yeah.

See, Rajille, I take back everything I said about you being talented about this.

So if Iran disrupts oil shipping through the Strait of Hermos, a critical choke point for about 20% of the global oil supply.

Right.

The result could be another oil shock, just like we had in 1990.

So the last thing you want are all these aircraft carriers and all.

All these war operations to move into this.

This strait, which Iran borders.

Yes.

Right.

And to choke up the oil supply, making it harder to get oil in and out of the Middle east, which is a very big possibility here.

The Fed today is caught in a similar dilemma.

Cut rates and risk inflation or hold rates steady and risk a recession with, mind you, one quarter of negative GDP growth already in front of them.

Yeah, yeah.

Just as Greenspan was in the 1990s, this is the exact same economic setting that he was led into during the Gulf War.

Right.

So very similar global economic current position.

Let's see here.

U.

S.

National debt is currently over 36.2 trillion.

There you go.

This debt has grown significantly over time with major increases during wartime.

Look at that, Jill, I think you've redeemed yourself.

And if you look at this picture, it's the same picture that I pulled up.

So the AI used that also.

You know, I'm trying to look him.

Try to justify his behavior.

That wasn't me.

Look, look, look, I see you justifying.

Yeah.

AI lying to you, trying to slide that right in there.

This is why you can't trust Siri.

All right, so let's go on to the Iraq war, a much more recent example from 2003-20.

And you ready for the context?

Yeah.

In the wake of what we now know was 9, 11, in a very traumatic time globally and certainly here in the United States, the Bush administration shifted its foreign policy towards a preemptive doctrine.

We're going to attack People before they have the chance to attack us.

Because we seen what happens when you don't.

Yeah, right.

By 2002, attention turns squarely to Iraq, where US alleged that Saddam Hussein, again, the mustache man, was developing weapons of mass destructions.

Very similar to today's conversation.

I saw, and I saw so many compilation videos of the prime minister of Israel for the last, like, 20 years.

Saying, oh, I saw this, too.

Yeah, dude, they're days away.

He kept their weeks away.

Yeah, there are weeks away of having.

And you're like, man.

But you saw the hillside in Iran that they.

That.

I mean, so it literally built into the ground.

This facility looks.

You don't build a facility into the ground like that if you're not doing something kind of, you know.

True, true.

But also, just because we're playing devil's advocate, we're playing both sides here tonight.

Right.

They've also been very much willing for.

For to coordinate with people to come in and make sure to, you know, evaluate everything that they're doing.

Well, there's a long political backstory there.

Yeah, yeah.

But then again, I mean, I don't.

I don't know nuclear physics enough to know if, like, you can play hide the weasel with.

Look over here.

Look at this shiny thing.

I have no idea.

Yeah, it just.

Just seems.

Just seems like something above my pay grade.

Yeah.

Above my pay grade for sure.

Where's your uranium?

It's over there.

Can I see it?

No.

No.

I don't know.

So in maintaining ties to terrorist groups, this is weapons of mass destruction they were making, and then they had ties to terrorist groups, which, again, Israel is now is alleged against Iran as well.

So there's a whole lot there, and I think there's probably some supporting data to support that, frankly.

Despite global protests and limited support from major allies, the US launched an invasion of Iraq in March of 2008.

Three under the banner of Operation Iraqi Freedom.

Not as strong as Desert Storm, by the way.

Yeah.

I was going to say when you mentioned Desert Storm earlier, I'm like, what a gangster name.

I know.

It's solid, right?

Right.

Yeah.

I feel like Operation Iraqi Freedom is very.

Well, that's the beginning of controlling the narrative.

I guess the freedom part makes you feel like you're doing something good, like we're freeing people we're not storming.

Right.

One's more or less aggressive.

The Inflation Reduction Act.

We're going to reduce inflation.

And with Trump's, I guess, media prowess, you know, it's gonna be a good name.

Right.

It's Gonna be something amazing.

Liberation days.

I mean Liberation Dave.

Just for tariffs.

I know, right, right, exactly.

It's gonna be something crazy.

Yeah.

The initial military campaign toppled Saddam's regime in just weeks.

Again, very similar to Kuwait.

Six weeks.

But what followed was years long insurgency, regional destabilization and the emergence of new threats, including Al Qaeda in Iraq, the precursor to isis.

The war became a protracted and polarizing conflict both politically and economically.

There's no way we're gonna be able to advertise this episode.

No.

There's zero episode.

There's no possibility.

The only way this video is going to do numbers is if you guys share it with family and friends.

Yeah.

It's gonna have to be passed around to the homies.

Yeah, exactly.

So, you know.

But by the way, I've been listening to us on one and a half speed lately.

Why would you do that to us?

It sounds great.

I do not sound better on 1:1 speed.

There is no world where this pitch voice.

Yeah.

Am I as nasally to you guys?

I am to me?

No.

Oh, that's a yes.

You son of.

No.

I swear.

No.

Just look at the screen.

No, you're not easily.

That seemed very.

That's not true.

All right, so the economic consequences here are important.

Again, you're going to see some very similar things to what we're dealing with now.

The US had just emerged from the 2001.com bust and 911 driven downturn.

But by 2003, GDP was growing again, but consumer confidence remained fragile.

I would say we just came out of the COVID era recessionary economy.

We've had a lot of destabilization ourselves.

And here we are with consumer confidence once again.

Fragile.

I mean, frankly, Liberation day drove the Vix up to above 50.

Right.

So we're in a similar fragile emotional state as a consumer.

You, me, Rajille back there, everybody.

Yeah.

Inflation stayed surprisingly tame during this time, which may actually be very similar to where we are today.

Again, CPI was 2.3% in 2003.

Wow.

2.7% in 2004.

And hovered around just under 4% even with rising military spending.

Oil prices rose gradually but didn't spike as they had in 1990.

So this is going to be interesting to see because we know that oil is going to be impacted if the US goes enters the war in Iran.

Right.

The question is, will it be a dramatic immediate impact like we saw in Kuwait, or will it be this slower prolongated response?

So unemployment this time persisted high early on around 6% despite GDP growth.

This period was called a jobless recovery, which was interesting because employers remain hesitant to hire and to rehire, even as profits returned.

Again, kind of speaking what I was talking about earlier where.

Yeah.

They don't move really quickly.

They're going to wait and see what happens because, you know, nobody wants to be in a situation where you did all these things in response to what you thought was a recovery and then it wasn't.

All right, makes sense.

So the Fed chair again, Alan Greenspan, My guy.

The homie.

The homie, exactly.

You know, he knows what to do.

Yeah.

What do you do?

He'd been here.

He been in, you know, he knows.

Yeah, he knows the game.

He knows the game.

Right.

He's not going to go on stage and slap anybody.

Right.

He's going to make a comment.

Not going to be.

Will Smith, 99 years old.

What?

A student.

He has 99 years, but.

Oh, go ahead.

Yeah.

He started tap dancing.

Yeah.

Can I make an inappropriate comment?

Yeah, make it.

Can I do this?

Do it.

We're about 49 minutes.

There's, like three listeners here.

It's always been weird to me that the parts on your face that continue to grow are your nose and your ears and all the cartilage.

Yeah.

It changes your face pretty dynamically.

Of course.

Yeah.

I mean, so what's the problem?

He looked like a G.

Yeah, but.

The older version of him looks more like a Disney character.

That's all I'm saying.

He's 99 and look good.

Good for you.

Longevity.

Born in 1926.

He looks like the guy that was painting on Woody.

Yeah, yeah, that's right.

I mean, look, the guy is a stud, though.

I mean, he was an economist.

Former chair of the Federal reserve.

I mean, 13th chairman of the Federal Reserve, 1987 to 2006.

That's a long table, I was going to say.

Yeah.

From Washington Heights, New York, man put in the work.

Dang.

Yeah.

So what did Alan Greenspan do?

Well, he kept interest rates at 1%, the lowest in decades.

Through 2004.

It held off and the FOMC held off on tightening for fear of stalling recovery and shaking investor confidence during wartime.

He knew there was concerns, and then.

People took advantage of that.

Look how they treated him.

I mean, after that, all the subprime mortgages.

Yeah, that happened.

They took advantage of them.

They didn't take advantage.

This is.

This is why we can't have nice things, people.

Yeah.

Come on.

Y' all want your stated income now?

Look what we got.

Yeah.

There were hidden consequences that Prolonged low rate environment combined with weak oversight helped inflate the housing bubble, as said alluded to, and laid the foundation for the 2008 financial crisis, which I should point out, that's what we got when we held rates at 1%.

Yeah, right.

We just came out of a period that was prolonged where we held rates.

At 0% for a very long time.

Matter of fact, we came out of a period I like to describe colorfully and colloquially as the single largest artificially interest rate deflated economy in modern American history.

It's true.

And if the 1% hold from, you know, a couple of years of economic stress led to the housing bubble in a financial crisis, I would be, you know, thinking pretty hard about the situation that we're in now where shelter is leading the way.

I'm not saying we're gonna enter that.

I'm not saying it's gonna happen again.

I mean, shelter is leading the way, but it has consistently been coming down.

Right.

And it's very, we know it's very, very slow.

I, I, quite frankly, I feel like it's a lot less than even what it's being reported to be because we know they only, they only go off of executed contracts.

Right.

And it's, it's lagging because they do them in, in regions over six month periods, so.

Which we have our own gripes about that.

Come on, man, it's 2025.

What are we doing?

This, this needs to be electronic at this point.

Y' all got better ways to collect data.

Yeah.

It doesn't need to be so lagging anymore.

If the US government needs a subscription to Microsoft bi, I will pay, pay for it.

Right.

I got you, dog.

That's what I'm saying.

I know you're borrowing trillions from China.

I'm sure you could ask Chat.

Chat will give you the answer.

Chat GPT.

You know they're not allowed to use Chat GPT.

You know, they do though.

Everybody, you know, they do though.

Yeah.

It's just trying to block every AI server out there right now.

Now people are like, oh, we'll give you Microsoft's AI co pilot.

Yeah.

And you can use that, but you can't use Chat GPT.

What's the difference, bro?

See, Sam Altman was, Sam Altman was making the rounds on a bunch of podcasts and he was saying that some of their top people were getting offered like $100 million bonuses from Meta.

Yeah.

Which made me instantly regret all my career choices.

Right, bro, I don't know what you do for a living, but if someone's going like, hey, dog, if you come.

Over here, what you know is worth.

$100 million, I'm going to give you $100 million bonus.

Imagine what, Jesus, how much money I got.

He's probably thinking, like, if I, if you're going to give me 100 million, how much is it really worth?

You.

I want two.

Yeah, I want.

Make it two, bro.

Yes.

The US government is exploring utilizing Chat GPT and similar AI tools, particularly through a specialized version called Chat GPT.

Go.

Stop.

Don't do that.

Stat.

GPT.

Gov, a special one.

I would love for it to give the government employees wait times.

Please hold.

Just start messing with them.

And how does that make you feel?

Right.

I'm a terrible human being.

I'm sorry to all the government employees.

There's lots of them to listen to the show.

Yeah.

I mean that with love.

Y' all suck.

But I mean, no, not all of us.

Don't do this.

No, actually AT and T's on my hit list today.

I, I called them yesterday to cancel the WI FI hotspot, which we'll talk about at the end of the show.

Yeah.

And they, they had, you know, you put your number and they'll call you back.

Yeah.

A day later to call me back.

They literally said they can call you back on Wednesday.

You know what they thought they like.

Oh, on Thursday it's not urgent.

Or click three for never.

Yeah, it wasn't urgent enough for you.

Then they call me.

It's the wrong department.

Not because I chose the wrong department, because I only have one number to call.

Come on, man.

Then I held on for 30 more minutes.

They transferred me to three other wrong departments, told me they couldn't help me out.

And the whole time I'm sitting like an idiot.

I canceled it with a chat bot using AI allegedly.

We'll see what the bill comes next month or not.

Right.

All right.

So the today's parallel to the Iraq war because.

So you can't stay on topic.

Too much caffeine.

If the US gets pulled into a long, ambitious, ambiguous, high cost engagement with Iran or regional militias.

I don't use that word very often.

The economic effect may mirror Iraq, not an immediate inflation, but in creeping instability and policy distortion, which I would say creeping inflation in response to this would be death by a thousand cuts.

Yeah, it would not be good.

It would drive us into a prolonged recessionary economy is my best guess.

Certainly it may correct home prices a little bit, but it could be painful for employment.

It could be painful for us because you're not going to get, like, massive wage increases during that time.

I mean, in general, you won't.

Even if times were good, employers aren't going to be rushing to pay their employees more.

They're going to expect them to hold steady.

Yeah, that's right.

So just like 2003, the Fed might hold rates low or cut them not because the data screams recession, but because geopolitical risk introduces fragile confidence and global volatility.

I have never heard Jerome Powell say that kind of thing.

So if he were to do that, in my mind, that would be a significant departure from the economic policies laid out.

Now, if I were arguing for him, I would say wartime concerns were not on the radar.

Right.

So there's a material difference in how I address these matters.

Yeah.

And of course, last but not least.

And like Alan Greenspan in 2003, Powell may risk over stimulating the economy to maintain calm, only to deal with unintended consequences years later.

And we do know.

Which is somewhat commendable.

It is commendable.

We do know, because that's.

He knows that's not going to be his problem.

He could be like, I'll make it better on my watch.

Y' all want to shout out secretary, right?

Hey, Brissette, look what I just did.

Yeah.

Good luck.

Yeah, bye.

It's your problem.

Yeah.

But we do know that Jerome Powell is a big fan of Alan Greenspan and is a big fan of a lot of things he's done.

So he's talking about.

He has to be.

I mean, who's he gonna.

Is he gonna talk smack on a previous chair?

He's not gonna.

He's not.

No, but there.

There are certain favor.

Yeah, but it's.

No but it's.

We know who his number one boy is.

Yeah, we do.

Come on.

Paul Volcker.

Yeah.

The double dip.

Double dip recession.

Paul Volcker.

Yeah.

And pull him up, will you?

Paul.

Paul Volcker.

Yeah.

And that's B O L K E R.

Yeah.

And we did a whole episode on him.

And if that was someone that he's been looking to for a long time.

Straight gangster.

Look at it with the cigar.

I see him with Snoop Dogg in a Lolo.

Have to.

Deceased December 8, 2019.

May he rest in peace.

All these guys are from New York.

American economist who served as the 12th chairman.

So he followed.

He was predecessor to Greenspan.

New Jersey, New York.

Died at 92 years old.

Damn, these Fed secretaries live a long time.

Yeah.

London School of Economics and Political Science.

I'm from London.

I like Kate.

They Put him on the juice.

On the Juice, Yeah.

Height six, seven.

Was he really?

Damn.

He was in a car with Snoop Dogg.

Right.

Imagine having that much control and walking into a room being six, seven.

Wow.

I'm caught off guard by the height there.

Yeah.

Six, seven and living in 92.

There's hope for me yet, dog.

Yeah.

That must have been painful for him later in life.

Right.

I hurt now.

I went to the gym earlier today.

That's why I'm dressed like a hobo.

Right, bro?

I was like, why am I doing this?

I can just get skinny now.

So.

I know, I know you brought it.

Sorry, I want to catch up.

You have more to that one?

No, not to the Iraq thing.

I got a whole wrap up segment, a whole rap.

So I know those are the two main examples because it relates a lot to currently what we're going through.

Right.

I just picked them at kind of my best guess of approximate the, the.

Big one too that a lot of people will cite is what happened with the Great Depression.

Right.

To me, I just feel like.

And I thought about that.

To me it just feels like it's because it was a, it was a wartime based recessionary economy and I get that.

To me, it's so far in proximate time.

Yes.

That it's really hard to.

I mean, Alan Greenspan was born in 1926.

The Great Depression was technically the black Monday was October 29, 1929, I believe.

Yeah, yeah, yeah.

So, yeah.

The Great Depression was a severe worldwide economic downturn that began in 1929 and lasted until the late 1930s and early or early 1940s.

Right.

And to.

To put things into perspective on how big of a deal that was.

Right.

And the worldwide decline in GDP at that time that was caused by the Great Depression was a decline of 15%.

The great financial crisis only caused 1% as wild.

Wild looks too good stat.

Yeah, it's pulled it out.

So it's, it's a completely different time than what we're currently going through.

But why I bring it up is because war times are usually viewed as an opportunity to provide a stimulus into the economy.

Right.

Yeah.

Right.

And if you look at who the largest employer in the US is, it's Walmart.

Right.

Over 2.1 million employees.

But more so than them are the armed forces with 2.8 million.

So this creates potentially room for more drop jobs, room for more procurement of getting machines and ships and, and all weapons and mil and anything that the military uses.

I wonder how that.

So I think a lot about AI in today's world, every time I turn a corner and I've talked a lot about it on the show, I'm very passionate about it.

Obviously.

I wonder how AI will impact because you still need humans for war.

Yes.

But there's a lot of war being.

Done with drones and we've, when we've talked about this.

So yeah, there's, there are drone strikes.

Right.

Which that's now shaping a new style of war.

Have you seen some of the small ones?

They have, but yeah, they have drones that, that are like, they can fit in the palm of your hand kind of style, but they have explosives tied to them.

I've seen.

And they're like fast as bullets.

I've seen someone literally with a crowd, it was like almost like a TED Talk.

And he takes this little drone and he like throws it over the crowd.

Yeah.

And it whips around and it, and it hits some like mannequin like right in the forehead.

I've never actually seen a TED Talk and I'm kind of ashamed that you have because I used to think they were kind of like cool, but then I realized like every out there is on a TED Talk.

No, no, the technology ones are really cool.

Are they really?

Yeah.

You haven't seen one?

One.

Oh, there was one, I remember that was like revolutionary back in the day, it was like six Sense Technology.

When that first came out, it was so dope.

Sixth Sense technology.

Yeah.

It was this guy that, that had created a wearable device to where it was way ahead of its time.

But like you could hold up your boarding pass and it would tell you just by looking, scanning your boarding pass really quickly, whether your flight's delayed or whether it was on time.

If somebody walked in the room, it would, it would literally label them and tell you what department they work for, what their name was.

And it was way, it was just way, way ahead of his time.

But.

And then I remember following him for like a year or two later and then it just disappeared.

Almost like somebody had bought the rights to, to all that.

And then sometimes cool stuff just doesn't catch on, man.

Sometimes doesn't catch on, but sometimes it's way ahead of his time too.

Yeah, right.

Because that seems super invasive.

I think one of the biggest gaps in technology adoption is like real world use cases are sometimes not as, not as valuable as the cool factor you want to instill.

Like those Apple, the Apple virtual reality.

Right.

Like that thing.

And I remember when first hearing about.

I'm like, I gotta get my hands on those.

Yeah.

Right.

Oh, there's.

There's a drone.

Autonomous killer drones.

Has facial recognition shaped explosive.

This is the one I was talking about.

Look at this, look at this.

Those are crowd people are freaking out.

Oh, my God.

Wow.

That was like a bullet.

Did you see that?

And watch how he explains this.

That little bang is enough to penetrate the skull and destroy the contents.

They used to say guns.

This is 2017, bro.

Imagine what they got now.

They get emotional.

Insane.

Disobey orders.

Scary.

Really scary to think about.

Yeah.

Let's watch.

And this is what we know.

Anyways.

Can you imagine just sitting outside on your patio smoking a cigar if somebody wanted to.

Yeah.

If Trump really wanted to.

That's what I'm saying.

They should do a South park episode for that.

Just.

Just so they can see it.

I'm not going outside anymore, man.

That's one of those shows that I always wish that I got into South Park.

Yeah.

Because they're always up to date with.

All the current events, so.

With all the current events.

So good.

Yeah.

So good.

So good.

But yeah.

So war times can generally be used if enough money gets dumped in as a stimulus to help stimulate the economy near term.

Not long term, near term.

But the question is, is that a good way to stimulate the economy?

No.

What is it creating?

Because usually what is.

What do we look at for, like, signs of a healthy economy?

We look at gdp, we look at inflation, we look at unemployment.

You know, we look at the stock market, all these growth metrics.

Right.

But.

Well, that's why you see unemployment typically peak after the end of recessions.

You see some of the stuff that trails recession economies and wars and recessions have a corollary.

You are again struggling to breathe tonight.

What?

The studio.

I'm controlling the cough.

No, I know, but this has been like a couple episodes in a row now.

The same cough.

Cough is lingering.

Yeah.

Okay, you're not going to tell me we need another filter in here because.

No, this.

Yeah, that bad boy is nice.

Okay.

I can tell.

Yeah.

But then made me lose my train of thought.

You're saying how sexy I am.

Yeah.

So that's what we look at when we're trying to view a healthy economy.

Right.

But if you get this artificial, like stimulus into the economy through, let's say, wartime efforts and dumping money into the military with.

Whether it's, you know, getting a bunch of new people to sign up for the armed forces and research and development and all the procurement and whatnot.

Right.

Then is that.

Is that really helping the consumer get what they Want.

Right.

A healthy economy is consumers going out and spending money.

Yeah.

So I like to think of war as lip filler.

Okay.

You pump.

You pump some.

Show me.

You pump some lip filler into your lips, and you plump your lips up.

Okay.

It might look good in the beginning.

Yeah, it's true.

And then you gotta get redone.

You gotta get redone.

And then you want more filler.

And then it starts to look a little, you know, weird.

It's.

Yeah, it's like the people that get, like, addicted to the plastic surgery.

Yeah.

And then at some point in time, you start looking like you're not human anymore.

You don't want to look like you're not human.

No.

You want to dissolve a lip filler, you go, you know what?

That's not the look.

Yeah, it's not the look.

A little bit of the aging is good.

Yeah.

You want to look age appropriate.

Right.

Like, I saw a video recently of Brad Pitt.

He's.

He's okay.

He's okay with the.

The crow's feet right on the eyes.

And he doesn't.

He doesn't fix all that.

I'm like, I respect this guy.

I got a controversial statement here.

Oh, Brad Pitt has aged better than Tom Cruise.

A hundred percent, bro.

What do you mean that's not controversial?

I.

I feel like it is a little controversial.

Why?

Because of Mission Impossible?

I'm sure he's had some plastic surgery along the way.

Apparently, Mission Impossible has lost a crazy amount of money.

I don't know.

Yeah, I stopped watching after, like, Miss Impossible 2.

Oh, really?

I haven't seen.

Yeah, it's the same.

Same movie.

Yeah.

How many times you watch so many people Jobs, though?

Like, a thousand people.

No, I'm not saying it's not a good dude or, you know, whatever.

I don't know.

I'm just saying he probably feels indebted.

Like, if I don't keep doing this, what are these people gonna do?

Can I get a different storyline, please?

Why?

You know, I mean, like, can I.

Just, like, man, what do you got against Tom Cruise?

Mission not so impossible.

Can I get Mission Possible?

Mission possible.

Right.

Get something different.

Right.

It's the same story.

How many has there been?

10.

I.

I don't know.

I want to.

I want to watch Tom Cruise do, like, Mission Possible, like, in retirement.

Like, he's now, like, on Grandpa.

Dude, he's got a phone on Grandpa.

Yeah.

Stab him.

Yeah.

Punch him in the face.

Yeah.

Look at that.

How many is that?

10?

Yeah.

20, 25?

500?

6 million.

That's not good.

That's a lot.

That's eight.

Yeah, eight.

Yeah.

Okay, I'm out.

I liked Fast and Furious when it came out.

I stopped watching after, like, the third.

One after the Dwayne Johnson one.

After that one, then I was.

I never saw that one.

What?

That was amazing.

Dj, you miss back.

You missed out, really.

Stop.

That was good.

I'm telling you.

I didn't watch the Tokyo Drift one, though.

Oh, that one's the best one.

What?

The best one, you say coming from the guy that said, I stopped watching.

It, that was the best one.

You're like, it can't get any better than this.

I'm out selling, you know, Kit Kats.

American.

American sushi on the market, bro.

Like, he's getting it done.

Yeah.

All right, let's get back on point here with my recap.

Spent a lot of time in his recap.

All right, so what's making this trickier in 2025?

Well, a split.

Fed, as we know from reading the top of the show, you've got 10 members see two rate cuts this year, seven see none.

That's a very wide split.

That's a lack of consensus in the middle of a potential global crisis.

They all knew what was going on geopolitically, and they went in there with that different of a perspective.

You're about 50.

50.

Almost rightfully so, though.

I'm not.

I'm not.

I'm not against it.

I can.

You can see I'm just throwing out.

No, no, but you, brother.

No, but I can see why.

Right.

All right.

All right, well, allow me to continue then.

Okay.

All right.

Inflation expectations are already creeping back.

Can't deny that one.

That's fact.

Okay.

Fed's preferred inflation measure now projected at 3.1% by year end up from 2.5% in April, like we said at the start of the show.

So it's going the wrong way already.

Right.

And number three, labor market slack building.

Unemployment forecast to reach 4.5%.

That's almost a full point jump from today.

They're forecasting it's going to go up right now.

Right.

By one point.

That's a.

That's a pretty big hit.

Now, healthy unemployment, typically 5% or below, although they just revised it, I think.

4.5%.

Yeah, 4.7 or something.

Yeah, something.

So 4 something.

Yeah.

So they're technically revised.

They're basically saying it's going to be at a healthy point in the future, which is kind of a weird thing to say.

Yeah, I'm gonna be Rich next year.

So.

But what is.

I, I, I can't remember, but Jill, maybe you can look this up, please.

What it, what is the definition of someone who is unemployed?

Us?

Yeah.

No, like, is it, is it someone who's, who works a certain amount of hours?

No, unfortunately this is a very technical definition.

It's so simple to say it, this is not the technical.

No, Google the, Google the actual someone without a job.

Yeah, the, the definition of unemployment for the unemployment rate.

Yes.

Yeah, it's, it's actually by bls.

Yeah.

By the Bureau of Labor Statistics.

The official.

Yeah.

Unemployment rate.

There you go.

Perfect.

If they're not currently employed or actually seeing, working or available to start out.

So, yeah, I thought, and I thought this was true.

I think it, it literally means someone who's working less than one hour a week.

Right.

Yeah.

So it's, if you're, if you're working, you know, minimum wages at, you know.

Here'S a detailed breakdown.

If you're not employed, this means the individual does not have a job during the reference week.

Actively seeking work means they have made specific efforts to find employment within the past four weeks available for work.

They are able to start a job if one is offered.

Individuals who are employed, who are not employed but are not actively seeking work are defined as and classified as not in the labor force.

This can include discouraged workers who have stopped looking for work.

The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force employed plus unemployed.

That's why this figure should be always taken with a grain of salt.

Plus they've also manipulated the ones who are looking for work and the ones who are working by delineating a de minimis amount of hours worked and how much time they spend in a narrow window of time, which, let's be honest, no one's honest about that stuff.

No.

Yeah.

No.

Hey, site, I'm working four hours this week.

I work part time.

Yeah, right.

You know exactly what happens.

So again, so now you got a split Fed inflation expectations already creeping back.

You got a labor market that's building up, slacking.

Now you're adding to that a record national debt which we spent a little bit of time on, thank you, Rejill, earlier in the show, and a stock market that's pricing in perfection.

Right?

So to your point earlier in the show and the concern of everybody listening to the show, you've got a stock market which appears to be acting irrational.

If the stock market is acting irrational as the dollar is being devalued, and now you have national debt at an ultimate peak.

You have what I like to call a coming together of a perfect storm.

Right.

Of a lot of things that could go wrong.

Not saying they will, but the problem is there's too many things here that could go wrong.

That could be cataclysmic.

That could be cataclysm.

And the investors that are waiting on the sideline.

I think I saw an article earlier today, I don't have it in the show notes, but there's $7 trillion waiting on the sideline to get deployed into the market.

Right.

And you got to think that when something bad happens, whatever catalyst that is, they're going to, they're not going to jump in and save the day.

They're going to wait for it.

Well, their job is not to save the day.

Right.

Their, their job is to respond to data.

Now sure, the Fed can take it upon themselves to act very, very aggressively, but that would overlook something the Fed has been very clear about.

They have always been and remain to be and have said multiple times.

They are data dependent.

Yeah.

If they are going to depart from that rhetoric which has been the anchor and cornerstone to their entire monetary policy during this rate hiking and cutting cycle, that is not going to be without its criticism 100%.

That's literally leaving giving themselves enough wiggle room to act late.

Yeah.

Yeah.

I think we had a good show.

I think we had a great show.

So I promised a story.

Story time.

Yeah.

When we built the space I made two critical errors.

Critical error number one is I didn't realize there was not plugs on one wall.

So we've got a lopsided a lot.

I do remember us coming in though in the beginning thing.

Man, we got a lot of plugs.

We're good.

We're Gucci.

I remember saying that.

Yeah, we counted them.

Yeah, we did count them.

Counted wrong.

Yeah, we should have been counting plugs on walls because those can always be expanded out versus the one wall when you walk in that's no plugs.

Yeah, but the Internet service here we knew was going to be a bit of a problem.

I saw a Cox sign around, around the parking lot of another building adjacent to here thinking that they were to get fiber here because the Cox sign said and then come to find out we could only get a wireless hotspot here.

And up until recently that is the only thing we've had to connect us to the Internet and it has been God awful.

I'm happy to announce that we now have fiber and a fiber line running here.

It's currently at one gig.

Upload downloaded but we can upgrade it too if we wanted to.

It's got built in redundancy.

We actually have the ability to.

Rajille was dancing earlier.

Access the interwebs.

It's so fast.

Yeah, he was.

He was literally.

You happy back there?

He was.

He's testing speed.

Yeah, he was prancing.

Look at that.

932.5 megs download.

And over.

900.

917, 18, 19, 20.

Going up.

922.8 upload.

There you go.

That's how you operate a YouTube setup.

Efficient.

Yeah.

You can upload the hell out of them videos.

Right?

Well, I appreciate you, sir.

Appreciate you happy 4k first episode.

Yeah.

Oh, yeah.

Let us know how we did in the comment section.

If you're still sticking around, please make sure you leave us an honest five star review.

We will read it on the show.

Whether that's on Apple or Spotify or if you're watching us over on YouTube, please subscribe.

Hit that like button.

Ring that notification bell, do all the moist goody good stuff.

All right.

It's been a while since I did that and I nailed it.

You did nail it.

You.

You going to go high pitched or am I going to go high pitched?

Huh?

You going to go.

You're going to go high pitched?

One of us is going high pitched.

One of us.

Okay.

Okay, bye.

Ah, you snaked it.