Video Closed Captioning:
good morning good afternoon good evening
folks michael zuber one rental at a time
back with this thursday guest and friend
of the channel mr jonathan tuanley how
you doing sir i’m doing great michael
how are you today i’m doing well so uh
you shared an article with me this
morning i think we have to talk about
uh really it is it’s going to be a
thinker for a lot of folks because it’s
going to go against the the wisdom
right the wisdom out there is inflation
is bad we must beat it back
and um you know inflation i think the
last cpi was six point eight percent
calls for it to go above seven but you
really shared an article that says hey
guys
go look at japan
japan’s uh in something that uh you know
what maybe five percent inflation isn’t
all that bad so why don’t you share uh
what you took from that yeah so uh this
is an article that a friend so i
probably as you guys know used to work
in japan and one of uh someone who i
used to work with posted this article on
his facebook
uh last night and it is from
the asia times i mean it’s called
japan pays a high price as it goes down
market
and now this is really an interesting
article because it talks about the fact
and i have noticed this myself right so
i noticed when i go back to japan
30 years after i lived there right
everything either cost the same as it
did 30 years ago or the less oh wow
and so
like rents are
the same or less than what they were
when i lived there right
and you know japan has always had this
image
as a very expensive country sure to
visit
but the reality is right now that that’s
no longer true and the really really
sort of shocking thing about this
article was it pointed out
that japan which everybody sees as
this rich country
with every where everything is really
expensive has
the fourth
lowest starting salaries
not of
the oecd
not of developed countries
not anything like that the fourth lowest
starting salaries in the entire world
wow the entire world right
thailand someplace you think of as being
a developing country higher starting
salaries than wow
switzerland the starting salaries in
switzerland are four times what they are
in japan right the united states they’re
like double what they are in japan often
starting salaries and the reason for
this is
that
japan has had 30 years of either
outright deflation or barely any
inflation at all
and it has created a lot
of
problems for people yeah
like salaries not going up
uh you know like uh real estate prices
not going up right
and and so this is so when people hear
now i understand like inflation’s
getting you know gets up to seven
percent i mean it’s concerning right
it’s not like nothing right yeah
and and
inflation of seven percent for many
years running is also a real big problem
right
however
the real
real issue is
deflation because what happens in the
deflationary environment is people stop
spending money because they know that
tomorrow everything’s going to be
cheaper than it is today they don’t
invest because they know tomorrow
they’re going to get a better deal than
they are today
and it basically causes
the economy to just
grind
slowly
downward right because of living erodes
in a way differently than it erodes with
inflation right at least at least with
inflation there are things that you can
do to protect yourself right you can buy
assets that that are inflation
protected right
salaries also tend to go up like you
kind of you may not keep up completely
but you’re not
you’re not eroding you’re you know
you’re not going to erode it seven
percent a year maybe you’re gonna load
it some slower rating if you make the
right investments you know maybe your
house price appreciation is going to
offset a lot of it but it’s it’s not as
bad a situation as when you’ve got
persistent deflation right which is
basically where the
the your economy is just slowly grinding
down to like to like nothing so
i i just i i wanted to bring this up
just because i want people to have this
perspective
that
you know
when
i think a lot of people really didn’t
take seriously
say after the the great financial crisis
when you saw a lot of the same stuff
we’re hearing now like oh you know what
the government is doing is going to
cause inflation and we shouldn’t worry
about you know this it’s all horrible
and then it didn’t but it didn’t cause
any inflation and that was because
the deflationary forces were so much
greater
at the time than the inflationary forces
that
basically you know
the ma you think about how massive the
intervention in the economy around the
world was in 2008 2009
that
stopped that massive inflation that
massive inflationary stimulus
just barely got us on the inflation
right the fed was not even hitting their
two percent inflation target you know
at any time and the reason they they
have that two percent inflation target
is because we need inflation in the
economy it’s what keeps the economy
going they just the fed just decided
that well they
want it to be
uh didn’t want it to get out of control
right and now it is but now we’re seeing
well they’re going to dial it back
because it is gotten support right now
it’s concerning right so we’re going to
remove some of the stimulus from the
economy but we’re not in any kind of
like even though people keep on using
this term it’s completely wrong you’re
not in a hyper no come on people no
hyperinflation no we’ve never
experienced hyperinflation in the united
states even in the 70s that was not
hyper no that was just really bad
inflation yeah so i actually went out
and did some research right because
people use that term so hyperinflation
the technical definition is 50
um inflation in a month
yes
a month
that’s 600 percent annualized we don’t
have inflation not going to happen
that’s that’s when literally like prices
are changing on a daily basis yeah yeah
they change once in the morning once in
the afternoon yeah yeah so that is
different from what what we’ve got what
we’ve got is we’ve got inflation we’ve
got concerning
inflation but you know
now the fed is going to dial it back and
like wall street’s going to scream
because yeah
so that’s those are two topics i wanted
to hit before we wrap up episode number
three
one is
as we talked about in episode one the
fed’s not your friend the fed risk off
is coming it’s it’s gonna it’s gonna
ripple through
assets that are um
bubble-like
yeah my question to you is
historically speaking the fed wall
street can whip the fed into action
right so for example if the stock market
goes down 30 percent a week
there’s a pretty good chance that’s
going to get the fed’s attention and
they’re going to do something yeah i’m
sorry i’m about to lose my batteries
i saw it that’s fine no problem yeah i’m
listening so do you think there is
so do
okay so again let’s let’s say we have an
orderly unwind and again we don’t have a
pop of the bubble we have a slow
um
retreat of the bubble right it collapses
organize it organize
i don’t i don’t think the fed comes and
bails it out i once we went from a
dot-com to a housing to an everything
bubble i think they now realize we got
to get out of this it’s it’s out of
control
so i think they’re going to be okay with
a let’s call it i think the fed will be
okay with a 20 or 25 stock market
correction what do you think
well yeah i mean and look we had one
last year and didn’t really seem to
affect anybody i mean
well i don’t know they came in and
bailed it out right after that right
well it was i but they already had
reduced rates before that i believe
hadn’t they
well
it was so fast i think it was it well
anyway the reducing rates didn’t have
anything with the stock market
correction though right that wasn’t why
they did it they did it to to bail out
every single overly indebted company in
the united states well yeah i did that
yeah so yeah so i don’t think it was
because of the stock market but anyway
yeah no i think that’s i think i think
listen i mean they’ve been talking for
years about trying to normalize interest
rates they tried to do it in 2018 the
stock market went holistic exactly my
question yes so they got they got cold
feeding backed off really i in my view
there was absolutely no reason for them
to back off the economy was doing fine
right but they
they just they got they got scared
wall street cowed them and they and they
backed off and lowered interest rates
again i i agree i think that they you
know
kyle’s gonna have some backbone that’s
that’s the key he’s gonna be more volk
or like a backbone this time it’s not
gonna
bend like a a leaf i think because
because we because i think clearly
super low interest rates are not
healthy for the economy i agree yeah
and they and they should have i think
really the the fed and
you know and all the central banks in
2008 should have said they should have
come out and said we’re going to have
like zero percent interest rates for two
years
prepare for it
do what you want to do don’t be shocked
don’t be surprised yeah i know we’re
going to raise it and you’re going to
raise it no matter what and they should
they should have raised rates much
quicker than they did yeah in my view
but um yeah so so last question wrap
this one up so the 10-year note i think
of this morning i it popped a 1.75
uh just again your crystal ball is as
broken as mine do you think we see two
and a half by the end of the year on the
10-year treasury
i mean i
i’ll say yes
i would say if it happens i won’t be
shocked yeah i think it will happen yeah
i’m not by the way
it will but i
very cool well jonathan do me a favor
how can people find you
yeah there are a bunch of different ways
uh you can go to my website if you would
like to get on my investor list and uh
that is two bridges asset management llc
there’s an investor form you can fill
out you’ll get on my list as a result if
you do that
if you would like to learn how to be a
multi-family investor you’re the kind of
person who wants to do this all on your
own
you can go join my program which is
multifamilylaunchpad.org
join that explains the whole program
very affordable very comprehensive
and a lot of fun
and uh you can also get a free download
from me if you just want to join my list
and kind of wait and see and see what
goes on get more daily emails
that’s if you just go to
multifamilylaunchpad.org
and you’ll see the download right there
so very cool well jonathan thank you
very very much for another great weekly
conversation jonathan has a playlist go
check it out hundreds of hours of
material he’s always giving back every
week jonathan thank you very much thank
you you got it