Watch and listen to Patrick Brunson talk about why you should be paying closer attention to inflation with U.S. Money Reserve Market Insights
Should We Be Paying Closer Attention to Inflation? – Video Transcription
Patrick Brunson: 00:00
Good morning, thank you for tuning in to daily market insights. Over the last week or two, we've been seeing a lot of things coming out on the news in regards to geopolitical risks. Last Friday we saw a lot of missile strikes in Syria creating a lot of uneasy tensions there, especially between Russia and the United States. In addition to that, we've also seen a lot of things that are really impacting the stock market. But I'm starting to notice more and more that analysts are coming out talking about how those things like inflation, or excuse me, interest rates or things like geopolitical risks are the things that could end this eight, nine year long bull market. But what I'm starting to notice is that's not the number one impact that- the number one piece that could really impact the stock market at this point. The number one thing that people are looking at right now is inflation.
Patrick Brunson: 00:57
That's a big deal because we have not seen really hardly any inflation since the 2008 financial crisis. But you'll notice that during the Obama administration they printed more money in those eight years, the Federal Reserve printed more money in those eight years than all of the 43 presidents before Obama combined. But we haven't seen one lick of inflation yet, not one single bit. So the question is why? Well, the short answer would be that none of that newly printed money has actually hit the economy yet. And so if it hasn't hit the economy yet, the next question would be where's that money sitting at? Well, if you look at the one area that's gone gangbusters over the course of the last eight or nine years, has been the stock market. That's where everybody's starting to put their money and that's where everybody has been putting their money over the course of the last eight or nine years
Patrick Brunson: 01:55
and it's gotten to the point where it's way, way over inflated. And so the biggest fear here is which will happen first: inflation to cause a stock market correction, or will the stock market correction start to cause inflation? Because once the market really starts to come down, I mean, all of that newly printed money will start coming out of the stock market and hitting the economy at once which can cause a massive inflationary period unlike anything we've seen since the Jimmy Carter era. If that happens, there's nothing that the Federal Reserve is going to be able to do to slow that down other than bring interest rates back down and maybe print more money to prop the market back up. So we're kind of in a position where it's a catch 22 and it's a double edge sword. I don't know that there's any real solution to this problem and ultimately it's really just a matter of time.
Patrick Brunson: 02:54
It's not really a matter of if. We all know that there's going to be a recession and a correction in the market at some point, we just don't know when it's going to be. We usually see a recession every seven to eight years and typically the economic cycles last anywhere from eight to ten years. Well that means we're two years overdue for a recession and the longer we go without seeing one, the worst that could be. So ultimately what this means for the average consumer, whether you're in the stock market or not, is the value of the dollar. Inflation is very simple. It's the purchasing power of your dollars dropping causing the prices of your goods and services and your cost of living to rise. The number one form of protection from inflationary periods in a devaluating dollar is physical gold itself, along with other precious metals.
Patrick Brunson: 03:46
Traditionally it's always been gold and that's one of the areas that I think more and more consumers are starting to look at as they start to get nervous about this market. There have been several polls that have been taken by the average consumer from TV sources like CNBC and MSNBC, Fox Business News, CNN, and right now the sentiment on the street for the average consumer is more than 68 percent of investors actually think that the market is going to correct very soon and that we're going to go into a recession. So that says a lot. With that being said, we don't have a crystal ball, we don't know what can happen in the future or when it will happen. We can only look at the fundamentals and that's where gold can really come into play for consumers who have portfolios to make sure you have insurance on your portfolio in the event that we go into this next correction, in the event that we go into an inflationary period, in the event that we go into a major recession. So you can still pick up your copy of the The Fiscal States of America to see what's going on in your state.
Patrick Brunson: 04:55
There are a lot of things happening right now that are not making mainstream media, and so, this report will help you see what's happening in your state and what is affecting you directly, especially if you're a retired employee for the actual state. So if you call the number or click on the link, you can pick up your copy. We also have our annual report coming out. You can also get signed up to receive that as well. If you have any questions about today's topics or previous topics and videos, you can comment in the section below or give us a call at U.S. Money Reserve and we'll answer any of your questions. That's all for today. Thank you for tuning in to daily market insights.