Transcription
I want you to think about your own bills for a moment. Your grocery bill, your insurance, how much you spend on utilities. You already know that they've gone up. You don't need a government report to tell you that.
But very soon there will be a day where you turn on the news and they're going to tell you that not only is inflation under control, but that it's actually come down so much that they've hit their target. And when that day happens, I want you to remember this video because right now they are preparing to change the way inflation is measured. And this is something I called before Kevin Walsh took over the Federal Reserve.
So a few months back, I came on this channel and I told you that Kevin Walsh, despite all this posturing and all of the noise around him fighting inflation, wasn't going to fight inflation. Instead, he was going to redefine it, which is exactly what's happening right now. So today in this video, I want to make sure we understand what exactly is happening and how it impacts you because this is not just another report or an abstract policy decision, but this is something that will impact every American household.
Now, in case you missed it this week, the Bureau of Economic Analysis is reworking how it calculates price rises, which is a funny sentence when you think about it because recalculating price rises, well, if a price rises, doesn't it just rise? Apparently not. In a move that is expected to lower recent readings of PCE inflation.
Now, as a reminder, when we measure inflation, there are two main measurements that we typically hear about on the news. One is the headline PCE, which hit a three-year high of 4.1% in May, while the core measure rose to 3.4%. Both well above the Fed's 2% target.
Now, what I want to be clear about is that this does not actually lower prices for you or I. The prices are going to stay the same or keep rising. All it does is change the way that inflation is measured and therefore how the Federal Reserve can respond to it.
So here, Allen, an economist at UBS and former Fed inflation researcher, says, quote, "The fact that it moves inflation closer to the Fed's goal should make it easier for them to not hike rates." This quote should make everyone pause because this is some scary stuff, okay? Moves inflation closer to the Fed's goal. Inflation did not get moved closer to the Fed's goal. They changed the measuring stick. That's what they're planning to do. It's like if you step on a scale, you don't like the number you see, so you step off, tweak it 10 pounds, and get back on. I mean, at the end of the day, the weight didn't change, right? The reading might have changed, so it looks like you achieved your goal, but you ultimately didn't. It's the same thing here with inflation. They're just being more brazen about the fact that they're going to be outright lying to us.
I mean, imagine you live in a world where they're telling you that inflation is coming down, yet you're standing in line at the grocery store and prices are rising on new digital tags. Tick, tick, tick, tick, tick, up, up, up, up, up. I mean, the first thing that popped into my mind was George Orwell's 1984, right? The Ministry of Truth going back and changing the records, right? Doesn't actually change what happened. And it doesn't change the truth, but it's changing the official numbers and telling everyone these are the numbers, therefore it's true.
But right or wrong, let's talk about the why. Why would they go through all of this trouble to change the way inflation's measured? They want to cut rates that badly. Well, it comes down to the fact that the United States is almost $40 trillion in debt. But it's not just the size of the debt that's the issue. It's the interest on the debt. More than half of what we're borrowing right now is just going straight to servicing the debt. Just the interest on the debt. More than defense, more than Medicare. We're talking big numbers. Over a trillion dollars a year with no signs of slowing. That accelerates the debt doom loop that the United States is stuck in.
So when rates remain high, two things happen. Now, number one, right, it slows down borrowing in the economy. There's obviously a lot of pressure to lower rates so that companies and mortgages and everything else can go back to normal, right? This era of low or near zero rates. But the second thing is that when rates remain high and inflation continues to remain high, what happens to the bondholders, the ones actually holding the US debt? Well, they get more nervous about holding said debt because the dollar is clearly depreciating in value. And if they're going to get paid back, they want to make sure they get paid back properly. So, they demand higher rates of return, right? Those are the bond yields that continue to hover around 5% for the 30-year Treasury.
Now, the last time consistently we saw that 5% was back in 2007. But at that time, the US debt was closer to 8.5 trillion. So if US debt has 6xed since then, what does that mean for the amount of interest we're paying? This is where the United States is in a sticky situation. They have to regain confidence by telling everyone that inflation is coming down. What's the easiest way to do that? Well, they can't really fight it, so they're just going to change the numbers.
None of the things that the Federal Reserve is doing is looking out for you. And maybe you already knew that, but maybe you needed to hear that because there's been a lot of optimism from people. I continue to see optimism that somehow this time is different. And what I think we need to do is remember that the Federal Reserve was not created with your or my intentions at heart. This is for the central bankers, the elite, those at the very top. And they have been transferring wealth from the many to the few since the creation in 1913 by devaluing the dollar. Every time your dollar loses its purchasing power, that wealth doesn't disappear. It merely changes hands from the many to the few, in a process that has been going on for over a hundred years, but that is rapidly accelerating.
What they are trying to do right now is just to keep that debt machine running longer. And listen, I get it because if that breaks, right, if bond yields actually absolutely surge and we can't keep up with the financing and the United States defaults on its debt right now, we have a crisis even bigger than the inflation that we're staring down the barrel of. But it's really a lose-lose because at the end of the day, they're always going to choose to save the system. But by doing so, we are going to see inflation continue to increase and not just pit along, right? We're going to see prices seriously rise in a way that's going to be far worse than what we've experienced so far.
That's my honest take. I want to hear from you. Do you agree with my opinion on this? Tell me your thoughts in the comments below. Do you think inflation is going to get worse? Do you think it's going to get better? I want to hear from you. Do you trust the Fed? And Kevin Walsh is the new chair that somehow things are going to be different this time. Tell me your thoughts in the comments below.
Because for me, what this tells me is that they are giving up on inflation. They understand that they can't put the genie back in the bottle. Instead, they're just going to do what they can to save the system and try and calm everything down in the meantime to squeeze more juice out of the lemon for as long as they can. But ultimately, that is going to hurt you and I. That's going to hurt everyday Americans.
And my best advice to anyone out there watching is that if you understand this is what's happening right now and you know what that means for what's coming next, or inflation and the future of the US dollar and any dollar denominated assets, right? We're talking about annuities, stock market, anything you have that touches the dollar is going to be at risk. Those who are going to come out the other side of this in a better position, right? Protected and able to scoop up assets at a fraction of the price with their wealth not only intact but prosperous. Those are going to be the ones who hold real physical assets such as physical gold and silver, right? Your gold and silver ETF will not protect you in this scenario the same way that the real deal will. But if you hold dollar dollar denominated assets and you understand what's coming next, you're going to be in a really tight spot because it's going to be harder and harder to outrun this, especially as time continues to go on.
Now, if you don't already own gold and silver or you do, but you want a second opinion to make sure you're positioned properly, that's what we do here at ITM Trading. You can always call us at the number below. Give us a call, talk to one of our expert analysts. They are happy to help answer any questions you might have. They study this currency resets, currency life cycles throughout history and that is what we are here to do is help you. So call us at the number below if you have any questions at all or you want to understand how we can help you.
And in the meantime, it's going to be a scary situation. Not that any of us can really trust the headlines as is, but just know that you are not alone. Just know that when your bills are going up, when you see these price tags rising, you're not crazy, you're sane. Keep fighting the good fight. Hang in there. We're all in this together. And in the meantime, thank you so much for being here. I'm Taylor Kenny with ITM Trading, your trusted source for all things gold, silver, and lifelong wealth protection. Until next time.