WARNING: 5%+ CPI Inflation Does Not Concern The Fed. They Are Concerned about HUGE Asset Bubbles.

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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

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