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Correction or Crash? U.S. Money Reserve Market Insights

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Feb 14, 2018

Watch and listen to U.S. Money Reserve's Coy Wells and Patrick Brunson talk about bonds, interest rates, and pensions leading the way.

Correction or Crash?- Video Transcription

Coy Wells:               00:00

Good morning and thank you for watching daily market insights. Today we're joined with Patrick Brunson as you've seen both of us together with many videos. Patrick and I have been talking about pension plans and the interest rates in the bond market now for going on almost six months now. In regards to pitching plans, last week we saw something very interesting take place. The United States Court of Appeals for the first circuit for the state of Rhode Island had announced that they have now or they are now going to start taking over pension plans, uh, for the firefighters and police officers of the state of Rhode Island. I'm gonna say that again. The First Court of Appeals for Rhode Island has now agreed that they're going to be dipping in and taking money from the pension plans of the state of Rhode Island. We have been talking for over six months in regards to the pension plans.

Coy Wells:               00:43

We've also talked about the book that you have the availability to get, which is the fiscal states of America. This list every single state with inside the United States and where the pension plan is. Currently, we have about 46 states that are in the same position as Rhode Island. Now take taking mind, Rhode Island is a double A state. A AA is not bad. I mean we're talking AAA, then you get downgraded. But they're a AAA state and now they're having to dip into the pension plans of the employees of the state. This is huge folks because once that goes into process, that means other states that are in financial peril, will also be doing the same thing once the ball gets rolling and that's what's happened. We also talked about several things last week. Mr Brunson talked about interest rates and we talked how the stock market would be directly affected by that. On Thursday afternoon two weeks ago, they came out and stated with the new director Jerome Powell, taking place on Monday that interest rates were going to be raised.

Coy Wells:               01:36

This was also what Mr Brunson talked about in regards to us treasury bonds and the Federal Reserve trying to remove those from the balance sheet. Mr Brunson's going to talk to us today again about that and the cause and effect and what it will continue to do in the stock market and if you're watching today, the news has clearly stated that we are in a stock market correction. I'm gonna say that again. A stock market correction, that is official. It's happening. Just as we said it would. Go ahead Mr. Brunson. So I did talk a lot about the stock market and the potential for a major correction. The questions we've been getting is will the correction lead to an overall crash? We don't know the answer to that, but the bottom line here is now that we have interest rates going up, it starts to look a lot like corrections we've seen in the past.

Patrick Brunson:               02:20

One of the reasons the depression went into the great depression is because the Federal Reserve was forced to raise interest rates a lot quicker than they wanted to. That caused a lot of inflation and eventually led to the stock market crash that put us into the Great Depression. What we're seeing right now is very, very similar. We're seeing that the Fed is being forced to raise interest rates a lot quicker than they really want to, and that leads to inflationary fears, which is causing the stock market correction. We don't know how far this is going to go. All we know is that this is really, really bad and it's very, very similar to a lot of the things we've seen in the past. And if you use the past is prologue. It looks like this could be the beginning of a major, major correction. So moving forward, we're going to keep you updated on these things. But in the meantime, we do have this report that you can acquire, the fiscal states of America.

Patrick Brunson:               03:16

We also have our 2018 annual report coming out very soon. You're definitely going to want to grab that. That's going to give you a good projection as to what we're going to see over the course of this year based off a lot of the things we've seen in the financial system and the decisions that have been made for our economy. Yeah, thank you and Mr Brunson is 110% correct. The thing I want you to take away from this when you're watching this is when we talk about interest rates, the stock market two weeks ago, they just made the announcement that they're considering raising interest rates. The word consideration of raising interest rates one or two points caused the stock market to correct almost overnight. The question now becomes why would interest rates or even the talk or discussion of interest rates affect the stock market?

Coy Wells:               03:59

The reason it affects the stock market is because it is built on borrowed money. It's just like you as an individual. If you've got $100,000 cash in the bank and you go buy a new vehicle and they offer you 0% you're going to take the 0% interest rate over using your capital that's in the bank. This is exactly what companies and corporations here in the United States have done. As Mr Brunson talked about in the past, the average for the stock market is a thousand points, a thousand points in an annual time frame. And this is a historical average. We've seen the stock market grow from a difference of a thousand points a year to 8,000 points a year. 8,000 points a year. There's something wrong there. And if you look at interest rates, interest rates has been suppressed for eight years, which has allowed the stock market to be at the level that its at today. The economy from a numbers standpoint is minuscule. Has there been some growth? Yes, but in compared to what it has been for the last six to eight years, it is minuscule in regards to growth.

Coy Wells:               04:50

The correction you're seeing today, will most likely continue. They will have to raise interest rates, as Mr. Brunson just stated, much quicker than expected. If they raise the interest rates, as we've talked about, is going to continue to drive the stock market down. And that's where your money's at. The, uh, issues with Rhode Island and the other states that is also going to be an issue. If the stock market continues to be suppressed and consumers lose money in that market like states do as well, the banks have money in that area. Individuals will rely on those pension plans, over the course of time and if it starts impacting them financially, they have to go to the stock market to pull that money out to survive. So this is going to be a long term program or a long term problem. And uh, Mr Brunson and I are in agreement with what's going on here.

Coy Wells:               05:33

And again, thank you for watching. And as we've asked in the past, please respond in the comment section. If you have questions or concerns, feel free to put that in the comment section and we'll call you. Or if you wanna leave your phone number, we'll call you back and help you go over some of the information or we can just comment and respond back to you and tell you how it can affect you directly. But again, go to the phone number, go to the link below. Look for the fiscal states of America. This will help you tremendously if have a pension plan. It will also help you where your state stands with inside the United States and how it's ranked. Again today, thank you for being with us Mr Brunson. Thank you for being with us and we hope to see you next week. Thank you.

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