Select Your Banks Carefully: Fed Will Desperately Reinflate System in 2024 Warns Rick Rule
“The idea that three trillion dollars in junk bond ETFs face a disintermediation phase, and the managers can’t sell the underlying instruments, keeps me awake,” says Rick Rule in an interview with Daniela Cambone. He delves into various topics related to the future and the economy, cautioning investors to prepare for potential liquidity events and credit crises. On the role of the U.S. dollar, Rick remains optimistic. “I think that US hegemony would be eroded as opposed to eliminated. I suspect that the so-called BRICS currency will evolve, if it does, into a settlement mechanism rather than a currency.” Additionally, he expresses confidence that the march of technology will continue to bring positive changes and opportunities. Watch the video for more insights.
Rick Rule’s Bootcamp: https://hopin.com/events/rick-rule-s-winter-investors-bootcamp?utm_source=aff&utm_campaign=8
CHAPTERS:
0:00 The right mindset for investors
4:00 The future is better
8:37 Fed’s pivot
12:55 How should investors prepare?
15:34 Purchasing power
19:45 US dollar
22:54 CBDC
26:52 Banking crisis
30:41 Banking in Canada
32:44 Liquidity crisis
37:59 Closing remarks
TRANSCRIPT FROM VIDEO:
Hi everyone Daniela Cambone here for ITM Trading I just want to say a very special thank you for all the emails you’re writing and telling me how much you’re enjoying this Outlook 2024 series with our experts we’ll have more great content heading your way and I just want to say I feel for you I you know I know a lot of you feel uncertain about the the future and what we’re heading into in 2024 so if you have any questions about the topics or if you need help build a strategy as we head into the new year you can always reach out uh to one of my colleagues over at ITM Trading the calendly link is in the description below in the in the video box so feel free to reach out and set up a time to speak with someone and we’re going to get to our Outlook Series right now.
Hi this is Daniela Cambone and welcome to the new Daniela Cambone Show here on ITM Trading I want to say it’s the same but different because we’re on itm trading now but I am joined by a very familiar face to those of you who have followed me for for quite some time Rick rule of rule investment media um with a beautiful and I’m very jealous of the tan right there Rick uh recently returned from Thailand and Malaysia with my wife Bonnie for a well- needed and uh frankly well-deserved vacation so I’m delighted despite the fact that I in the cold wet Northwest uh to be a little more yes well I was going to say I hope you’re finally enjoying some of your retirement I say retirement like this because I don’t think I’ve seen anyo ne work as much during retirement hence your bottle Bank logo today Daniela I love working uh the truth is this is my idea of a retirement it’s just great I I hope at some point in time Daniela if you haven’t achieved that that you you do get to achieve it it’s a wonderful place to well I I’m I’m uh I I love I absolutely love what I do I want I I always say I I I consider myself uh very lucky and and blessed to be doing something I love so much and I know that for you it’s so important to educate folks um that’s really at the root of of everything you really do Rick and I’ve been getting so much feedback regarding this Outlook people love the Outlook series you know I bring on some of you know our greatest guests obviously and the amount of emails I get Rick of people saying I’m lost I’m confused I’m scared heading into 2024 so what I want want to do with you a little bit today is obviously talk a little bit about you know things that are concerning you on the horizon what people shouldn’t seem to you out there uh other Generations have faced troubles too say World War II or the Great Depression do not be afraid do not become inactive look at the circumstance in front of you be concerned where you need to and take action but do not use world events as an excuse to fail or an excuse to quit that’s where you start the world will be much much much better 15 years from now and 20 years from now we have to get from here to there and I think that’s going to be a challenge and I think and I made the point that because of technology and because of communications our individual initiative generated enough utility to fund our Collective stupidity what’s changed Daniela is that because of things like the internet because Stanford University or offers free courses online as an example that garage doesn’t have to be in Sunnyville California anymore that garage could be in Lagos Nigeria that garage could be in Jakarta so I absolutely believe that the democratization of opportunity of bike and not being glued to this right and and and and determining your worth based on what you know whether Instagram thinks you’re you know popular or not or whatever or this is what you should be looking at I mean all that social media pressure I mean couldn’t you have the counterargument Rick that life was just simpler and better and yes we didn’t have these technological advancements of course but in a way way life was just easier Daniela I would be willing to argue with you in fact I’d be hic it’s truly obscene but I would absolutely positively be willing to bet that your children as a consequence of your efforts are going to be Superstars there’s all kinds of stuff for them to get online what they’re interested in is what you teach them let’s um and I I I appreciate those insights I want to Pivot and talk about the fed’s pivot now how’s that for a pivot I want to get your thoughts on what you make um of the latest from the Federal Reserve now cuts are coming are they going to get o the arithmetic and get away from the narrative I would suggest to you uh Daniela that the market believes that inflation has been tamed Ray Dalio doesn’t Jim Grant doesn’t but you know the smart people people like Joe Biden Donald, Trump uh they would tell you that inflation’s been tamed because they look at something called the CPI the Consumer Price Index and I think any discussion of this pivot involves a discussion of the CPI uh inflation and real interest rates the CPI is purported to be a ng power of my savings US dollar denomination was declining at 7% compounded so when we talk about a nominal interest rate on the US 10year Treasury at 4. 1 we’re talking about a nominal return not a real return the real return would be subtracting seven the rate of deterioration of the purchasing power real rate of deterioration of the purchasing power in US dollar denominated savings from 4.1 the nominal interest rate which means from my point of view the US 10-year treasury rather than yield core inflation is much higher than people believe and I think that people will begin to change their savings habits as an example there are a lot of people now who hold deposits in banks that pay them no interest either because they’re convenient or they believe those banks are too big to fail or they don’t know other options or they or they don’t know other options but that’s their job the idea that they rely on the big thinkers to tell them what the other options are when the big thinkers are fairly low a lower nominal interest rate which is to say If the Fed succeeds in reducing the interest rate two or three times uh ironically that’ll be very good for the bond market I I think you’re setting up a bull trap you know I I I think that you’re going to get capital gains in something that will later on uh self-destruct but I think in the very near term One impact of lower interest rates would be a fairly strong W long bond market uh which I say is is a perverse incentive because I t what the citizens want is to steal from their neighbors and give to themselves uh Malay uh has no money the Argentine government doesn’t have the ability to benefit sadly to redistribute to anybody in addition he doesn’t yet at least control Parliament so much of what he talks about about is at present narrative I am delighted that the Argentine Society came together in a protest vote and that uh importantly the protest vote in his favor I included the poor who understood that the alleged theft that that is right the idea that there’s $140 trillion dollar in inheritable wealth in the United States passing from the Baby Boomers to other Generations uh is held up uh as an excuse for the social transfer it’s interesting that if you look at federal government debt which is to say on balance sheet liabilities at 30 3 trillion and off-balance sheet liabilities according to the Congressional budget office entitlements the net present value of entitlements that numbers $140 trillion too so who of course lives in Argentina Doug Casey describes the US dollar as the worst currency in the world with the sole exception of all the others and I continue to believe that I’m 70 years of age I think the US dollar will be the world’s Reserve currency for the balance of my lifetime I think that us age my would be eroded as opposed to eliminated uh I I suspect that the so-called bricks currency will evolve if it does into a settlement mechanism as opposed to a currency and I think ironical at the end of the year uh Mr Xi goes up to Moscow with a billion bricks uh and said I’d uh this is gold backed I’d like my gold Mr Putin says no I think you should keep your bricks uh how is Mr Xi going to enforce convertibility unless the gold has already been surrendered from a sovereign holder to a central repository which none of the BRICS nations with the exception of China are willing to do and China is willing to do it if the repository is in China let me ask you this I want to get back to and sees the assets of his political opponents extra judiciously look at the fondness that go that governments are expressing for a currency that they can cancel not merely seize if they don’t look like the way you act look at the overprint or the potential for the overprint of social credit scores on social media a technology that’s in place in China now with the ability of uh countries to cancel their citizenry’s wealth and savings if they disagree with the citizenry’s political beliefs I don h you could use those letters uh to come to a different description uh of the organization which I’ll leave viewers imaginations uh with regards to your uh description of the mainstream media I I think it’s worthy to note that the mainstream media has been losing market share for a very long time yes uh and I think that that’s one of the reasons why mercifully uh part of my rosy View of the world has to do with the emergence of many but not enough Daniela Cambone uh and I think it’s up to the increased while their return on Capital employed decreased to the point where if you take many banks in the country right now and you look at their loan portfolios and mark them to Market Market which by the way the FED doesn’t require them to do they’re in fact insolvent if you lower the interest rate it lowers their cost of capital at the same time as it increases the nominal value of their bond portfolios so one of the things that I think that the FED is attempting to do is to reflate the ban elieve that people probably uh for the next year need to worry too much but I wouldn’t want to have more than $250,000 on deposit at any one bank and I would select banks that are well capitalized I also think that depositors although they don’t want to they want Rick rule to tell them where to bank and Daniela Cambone to tell them where to bank I think that depositors need to get from their institution something called the statement of financial condition I don’t think that there’s a that there have it is healthier as opposed to healthy Canada has a banking oligopoly uh which means it’s a protected industry in Canada which means that the Canadian government is causing the Canadian taxpayer and the Canadian depositor and the Canadian borrower to subsidize their Banks and in that sense the Canadian banks are healthier than the American Banks the Canadian banks have in certain circumstances used that legislation to take even more risk there is no requirement that the Canadian Banks de we wrap our Outlook uh 2024 with you Rick I mean we obviously talked about various things here life economy whatnot uh but I you know you said you’re you’re never scared right you’re always prepared prepared uh but as we head into 2024 I always ask you this is there anything that really keeps you up at night I know Central Bank digital currencies you hope won’t come but I know it’s one of them um is there anything else that you’re really eyeing and concerned about the PO we should have our ETFs themselves are highly liquid they trade billions and billions of dollars a day in 10,000 and $20,000 instruments their owners I think are naive with regards to credit uh the underlying instruments that those ETFs own over the counter junk bonds are highly illiquid and a circumstance where there was a concern about credit like we saw in 2008 with mortgage back Securities that caused the retail holders of these credit instruments to sell them and caused the ETF to have to sell the underlying a they were broke they wouldn’t trade with other institutions because they would assume they were broke too uh and I think that you could easily have a replay of 2008 if you remember back to 2008 uh most conventionally priced Financial assets at least in terms of price fell by half we uh papered over the difficulty because we counterfeit and spent our way out of that conundrum which is to say the FED went to war against the lack of confidence the Fed was able to do that because there was enough co them talk about in a second but if if you want to register will be in the description below on our YouTube page so tell me about your boot camp a couple closing remarks the boot camp is some is part of something called Rule investment media uh I offer all of your listeners the ability to submit their natural resource stocks to rural investment media where I will rank them one to 10 uh in the interest of investor education among other things further to that education a related website Rule classroom complete construction on time on budget and obtain name plate capacity it is very common that they double in price uh investors avoid these companies because the press releases that they’re doing while they’re under construction are characteristically boring how many yards of concrete they’ve poured uh what stage their engineering is at and the consequence of the fact that they’re boring is that people avoid them because they’re more interested in stimulation than making money uh we hope t again we can’t use we can’t use technology as an excuse not to break bread that would be that would be tragic there you go all right well happy holidays to uh the rule family and thank you all for watching I hope you’re enjoying this Outlook 2024 because I sure am I’m learning along with you so keep tuning in we’ll have more incredible content coming your way and don’t forget to sign up at danielacambone.com that’s it for me thanks for watching.
SOURCES:
https://twitter.com/RealRickRule
https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm
https://www.imf.org/en/Topics/fintech/central-bank-digital-currency/virtual-handbook
https://www.youtube.com/watch?v=eY8-XmcBiJA
https://www.pgpf.org/national-debt-clock
https://www.cnbc.com/2014/07/28/these-hated-stocks-stand-to-do-very-well-jim-grant.html
https://www.flickr.com/photos/worldeconomicforum/8413401045
https://www.usatoday.com/story/money/2023/12/13/fed-interest-rate-hike-live-updates/71896343007/
https://www.bloomberg.com/quote/DXY:CUR
https://www.cnn.com/2023/10/23/business/javier-milei-argentina-dollerization-explainer/index.html
