The Causey Consulting Podcast

⚠️ "Already past the point of no return" ⚠️

March 24, 2023
The Causey Consulting Podcast
⚠️ "Already past the point of no return" ⚠️
Show Notes Transcript

"'The Fed is facing a difficult task on Wednesday, but it is likely already past the point of no return,' JPMorgan strategists led by Marko Kolanovic, the bank’s chief global markets strategist, wrote in a note to clients Monday. 'A soft landing now looks unlikely, with the airplane in a tailspin (lack of market confidence) and engines about to turn off (bank lending).'" -

But remember how many times you were told:

  • Inflation is transitory
  • The job market is blazing hot
  • Labor shortage 🦜
  • We can't be in a recession because look at the job market
  • Soft landing
  • Slowcession
  • Rolling recession
  • Bad news is good news

If you haven't already prepared a job loss survival plan, it's probably too late. I hate to say that, but IMO, if you wait to be "officially" told that the economy is in a hot mess, you're waiting way too late.


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Siren courtesy of Pixabay


Hello, Hello, and thanks for tuning in. I'm going to try to make this episode as available as I possibly can. I'm going to see if I can convert it into a YouTube video and convert it into a blog post. People like to consume content in different ways on different platforms. And I understand that I typically just let a podcast episode be exactly that I'm busy, I have a lot of other things going on inside the business and outside the business. I'm going to try to keep this brief. But I wanted to hop on the airwaves and record another sort of emergency broadcast to say, if you are waiting to be officially told if you are waiting for some talking head or some politician to come out in the mainstream media and say, oops, a daisy, we're in a banking crisis. Oops, a daisy, we're in a financial freefall. Oh, the recession has officially started. As I always say, in my opinion, you are waiting too late. I think we're just going to be breadcrumbed into this thing. And what I mean by that is you'll get little hints, and little glimpses of the truth. But you won't be allowed to know exactly how bad it really is. And you may not be allowed to know that until years after all of this blows over if it blows over. I mean, I feel like to some degree, we're only just now being allowed to know how crippling things were in 2008 and 2009, they're going to try to get you to do whatever they want you to do, which is not panic, to not have bank runs and not freak out. And for the record, I'm not telling you to do any of those things, either. I think it's better to be prepared than panicked. And I would never tell somebody, go take all of your money and hide it in a jar in the backyard or put it under the mattress. I would never tell anybody to do anything like that. Anyway, I don't give you advice. I don't tell you what to do or what not to do. I just sit here and I opine for your entertainment only I try to read the tea leaves as best as I can. The reality is if you have to pay taxes, if you're a business owner, if you make trade and commerce with other companies, you're going to have to have money in the bank. This is the reality of the times in which we live, maybe back in Great Grandma great, great grandma's time, they could just hoard money under the mattress, or they could bury it in a coffee can out in the backyard somewhere where granddad wouldn't find it. I don't think personally that we live in that age anymore. But again, you have to do what you feel is best for yourself and your family. And I think you also have to keep some amount of money in the bank, at least to be able to pay your bills and to be able to pay your taxes and all of that. The headline that caught my attention. It comes on Yahoo live by way of fortune. already past the point of no return. JP Morgan says the US is probably headed for a recession, as economic engines are about to turn off. Reading this, especially in light of watching that FRONTLINE documentary, I recorded the podcast episode about that wonderful, very well made documentary yesterday. If you haven't checked out that podcast episode, if you haven't checked out that documentary yet, take some time over the weekend, please, to do that. I'm not joking. I'm not being hyperbolic. When I say The life you save could be your own, the finances you save could be your own hiding in the dark, staying ignorant. Probably not the best strategy right now. But if you look at this headline, they're still using equivocal language probably headed for a recession. But let's look at the statement all together already past the point of no return. But we're probably headed for a recession. The economic engines are about to turn off. But we're probably headed for recession. Let's be real. In my opinion. I think we're already in a recession. whatever comes next. I don't know. Does it look like the 1982 recession? Does it look like the 2008 global financial crisis? Does it look like 1930s era Great Depression? I don't know. That's not a question that I have the answer to and I would never get on here and try to play Nostradamus and say, Oh, I have this crystal ball and I'm having these visions and I can tell you exactly what's going to happen. It's like the clickbait that I see on YouTube. You've got four more days, you've got 24 hours, you've got three more weeks. If I'm subscribed to someone's channel and I see that crap, I unsubscribe. I'm not interested in fear porn. I'm not interested in clickbait and I'm also not interested in being manipulated to help somebody's YouTube channel grow based on bullshit speculum Asians, because these people don't know, unless maybe they're on the web or they're some hedge fund manager bazillionaire person that has access to information that you and I don't, they don't know. So all of this hot air and bloviating about you got 24 more hours, you've only got three more weeks, I put that in the same category as my episode of Grifters are going to grift. It's no different in my mind and telling somebody Well, right now is a great time to go buy a house, you should just run right down there to the mortgage company and do it right now today. Sure, you should, of course. Now, do you have a vested interest? Are you heavily invested in real estate? Do you are you being paid by the mortgage company to tell everybody that because I think that should sort of be trotted out upfront. We should know who's sponsoring you before we would make any decision like that. But I put the clickbait errors and the fear porn people in the same category. You got three more days? You got two more weeks. Okay. Sure. Because, you know, no, you don't know. And in the videos, if you watch them, they'll tell you that now. I mean, I don't know. I mean, my best guess is it's probably got 48 hours and some of them will just admit I do this for clickbait. My message is so important that I have to use chicanery to get it out there. I don't want to stoop to that level. I don't know how much time that you have left. My concern if I'm being candid is that if you have not already roughed out an RTO survival plan, if you have not already roughed out a job loss survival plan, if you freelancer you own and operate your own business, and you haven't come up with a plan B, C, D, E, F, of how you're going to make money during this downturn, you might have waited too late, it might be too late. If you are only just now starting. You're getting out your pen and paper or your marker board and your brainstorming ideas only just now. It might be too late. Better late than never. I mean, if it were me, I would still want to go ahead and try. I'm just thinking about how far behind the eight ball by the time that people are panicked. By the time that people are freaking the eff out. I think you've waited too late. You don't want to be in a horde of people losing their minds. I just don't feel like that's a safe place to be. So we go in this Yahoo article we read. It adds up to an impossible choice the Federal Reserve has to make when officials meet on Wednesday, slow down the pace of interest rate hikes or plow ahead to bring down resurgent inflation as risk amplifying damage to the economy. But as far as the Fed is concerned hopes of engineering a soft landing for the economy and avoiding a recession may already be in the rearview mirror. I will button and say yeah, I think we're way past the point of slow session, rolling recession, soft landing, inflation is transitory all this other bunk that they told you to keep you quiet and pacified? Yeah, it's in the rearview mirror Powell. The Fed is facing a difficult task on Wednesday, but it is likely already past the point of no return. JP Morgan strategist led by Marco Kalon avec the bank's chief Global Market Strategist wrote in a note to clients on Monday, okay, this is a note going out to clients. It's important to pay attention to what these bankers and FatCat say privately. What did they say to the investors, the shareholders, the stakeholders, the Board of Directors, the people that they believe are important, not the unwashed masses like you and me, but to the people that they think matter. So they're telling people they're telling their clients, we're already likely past the point of no return. A soft landing now looks unlikely with the airplane in a tailspin, lack of market confidence, and engines about to turn off bank lending in quote. If you watch age of easy money, if you listen to the podcast episode that I recorded about that documentary, that's one of the things that has talked about this idea of bank lending, what happened in oh eight and oh nine, what happened in March of 2020, when the pandemic hit. This is something that's talked about. The banks quit lending, everything just came to a standstill, and it wrecked the economy. So if JP Morgan strategists are privately telling clients a soft landing now looks unlikely the airplane is in a tailspin, which means a lack of market confidence, and the engines are about to turn off which means the banks are not going to start lending. Hmm, let's let's stroke our long imaginary devil beard thoughtfully here. What do you think that means? If historically, every time that there's been a lack of market confidence and the engines have turned off, ie the banks quit lending and everything grinds to a halt, if every time historically that's happened, we've had one hell of a recession. or an economic depression? What does that tell you? It tells me again, I don't tell you what to think. But it tells me we're in for a shitstorm. And I really, really hope that you're prepared. Also something worth noting before I sign off. Over on the hill we read the Fed circumvented the debt ceiling to borrow billions for failed banks, and this was published on March 20. As a consequence of its COVID crisis asset purchase program, the subsequent increases in interest rates needed to fight inflation. The Fed is now losing billions of dollars a week. The feds most recent H for one statement shows that the Fed has borrowed $41 billion to pay its cash losses. But these borrowings do not count as US Treasury debt and are not counted against the congressional Treasury debt ceiling limit. Hmm. Interesting. In the past week, the Feds financial statement shows it borrowed an additional $143 billion to fund the FDIC is bailout of Silicon Valley Bank and Signature Bank even though the FDIC is supposed to be supposed to fund bank bailouts using the Deposit Insurance Fund and if need be by borrowing from the US Treasury. Instead, the Fed borrowed these funds and lent them to the FDIC to keep these bank failures from reducing the Treasury's cash balances. You may recall that the Treasury is already precluded from any additional borrowing under the current congressional debt limit. Well, hell, let's just ignore the debt limit. Let's ignore the debt ceiling let's borrow this money off the books I mean, what could possibly go wrong? This is the kind of thing where you watch it in real time and you know, a decade from now, you're gonna see some commentator talking about how foolish this all was. Some other documentarian will record a show about oh, we had the age of easy money and we we had the age of saying inflation was transitory and the age of trusting the Fed and oops, a daisy that didn't go so well. I mean, it's like you can see it coming from a mile away. The Fed is now losing billions of dollars each month. The losses are a consequence of the Feds huge investment portfolio that yields around 2% but costs about 4.6%. To finance, measured using generally accepted accounting principles. The Fed is now approximately bankrupt as operating losses mount in the months and years to come its cumulative operating losses and the Feds equity capital deficit will grow. The Fed pays for its cash operating losses in two ways. It can print paper Federal Reserve notes, which pay no interest or it can borrow reserve balances from banks and other financial institutions through its reverse repurchase program. When it borrows, it pays the lenders the interest rate on reserve balances 4.6 point 5% Or the rate on reverse repurchase agreements 4.55%. The feds ability to fund these losses by printing paper currency is limited by the public's demand for Federal Reserve notes. As a practical matter, the Fed borrows most of these funds. Just scroll down a little. The FDIC is supposed to fund the cash expenses generated by failed bank receiverships by using balances in the Deposit Insurance Fund. Drawing on the FDIC is line of credit with the US Treasury or utilizing the treasuries federal financing bank. Beginning a potential banking crisis with a fully depleted insurance fund would not have instilled confidence in the administration's claim that the banking system is sound in quote, well, no shit. Yeah. Again, by the time somebody trots out and they officially say, Oh, we're out of deposit money, we can't bail anybody out. Or well, it'll be okay. Because we'll just print more money. We'll just print up more fiat currency that's not backed by anything. And then we'll cause even more inflation. I mean, what a mess. What a mess. So you have the Fed borrowing a total of 184 billion to try to keep this economic jalopy pasted together and on the road. I also think it's interesting. Just a weird little coincidence, let's say on There's a headline Americans owe an estimated 184 billion to friends and family annually. analyzes survey data to understand the friends and family economy. So I think it's interesting that they did this study earlier this year. I think it was from February of this year about how Americans owe 184 billion to friends and family that they've borrowed. Hey, can you spot me some casual video pal Hey, mom and dad gonna get a little loan on the slide from you. And then we also have the Fed borrowing that exact total of money to try to circumvent The debt ceiling and help out these failed banks. It should, I suppose, worry you that the Fed is approximately bankrupt, as they say in this article on the hill. They're supposed to be this deposit insurance. But if we go into it with a fully depleted Insurance Fund, people are going to understand that the banking system is not in fact sound. I feel like you have this window of time and I don't know what that window of time looks like, I have no idea. That's why I don't get on here with the clickbait fear porn and you got one more week you got two more days, I don't do that mess. Because I don't know, I don't know what that window of time looks like, I have no idea. And it will be different, most likely for each person listening someone that has a million dollars in the bank right now. And they're trying to figure out what the hell to do for wealth protection is in a different set of circumstances than someone who's living paycheck to paycheck. And they're making decisions about do we buy the ramen noodles this week? Or do we buy mac and cheese? Completely different set of circumstances. So I don't know what your window of time is. What I want to do in this broadcast is to just simply warn you, if you haven't thought about these things yet, if you are still listening to hot air and hopium it may be too late. I go back yet again, before I sign off to this headline, already past the point of no return. The economic engines are about to turn off. There is a line of thinking, you know before a storm rolls in, get where you're going to be. Figure out your game plan before the storm hits and then get where you intend to be to ride it out. If you're going to stay there and put plywood up on the windows and hunker down. Or if you're going to stay there and be prepared to jump in the cellar or the safe room. If we're talking about a tornado you've got someplace you can go in the event of an earthquake we're not gonna be on the top floor of a building, let's say get where you're going to go. I don't tell you what to do. I don't tell you what to think or what not to think. In my opinion, this is the time to really wargame that out where do I want to be in an sh TF situation? Not that I'm talking about the Thunderdome. I'm not talking about total anarchy. I'm not talking about zombies eating your brains like we're in a Hollywood movie. I'm talking about what if there is a banking collapse? What if there is a financial collapse? What if we go into something that makes Oh 809 Look like a cakewalk? Have you thought about how you're going to handle that and where you want to be to ride it out? Stay safe, stay sane. And I will see you in the Saturday broadcast.