[Music]

welcome to the Deerwood Realty YouTube channel I'm John Schink founder managing broker of dearwood realy in St Louis Missouri if you've noticed if you've watched any my other videos and you've noticed that my voice is totally different I have a cold or something and I sound terrible and I'm sorry but we're going to get through this together tonight I saw something I saw an article that it kind of speaks to me in the way I think and I wanted to share it with you because it relates to the housing market in a certain way and that's look the FED is very important when it comes to housing and it comes to the economy you know their decisions can uh throw housing out of whack which they've done um or they can they can help it just I mean depending on what the situation is um you know that's that's where the FED comes in and and either helps or destroys things you'll remember maybe a few maybe a month back at least now the National Association of home builders National Association of mortgage brokers or the Mortgage Bankers Association I'm sorry and the uh National Association of Realtors all put forth a letter to the FED saying hey could you give us some clarity on rates because you know we could we could kind of use that we have no idea what's going on and I don't think that the letter was ever returned and so you know that's not great but whatever right whatever so anyway let's get to the article in question by the way I'm going to start early tonight if you if you do like my content would you hit the Subscribe button I've had a wonderful run lately and I'd like to keep it going I'd like to actually get up to uh I mean I'm at I think 250 tonight it'd be great to be at 300 you know just small steps with that let's get into it it says the FED has no plan and is just hoping for the best and man I mean if you could have a better headline than that I don't know it's uh it was uh on Zero Hedge but it came from The mises Institute um and so let's just kind of go through it together I it's it's a great read but you kind of have to get all the you know all the words it's not easy to skip this one so let's start off with this it says the Federal Reserves Open Market Committee last week left the target policy interest rate the FED funds rate unchanged at 5.5% this pause in the Target rate suggest the fomc believes it has raised the target rate high enough to reign in price inflation which has run well above the fed's arbitrary 2% inflation Target since mid 2021 I say believe but perhaps the more appropriate word here is Hope and I'm a I'm I I think the same thing I don't think the FED has any idea what they're doing I know what they they want to do but I I just don't think that I don't think it's a winnable job and I and I hope you understand that when I attack the fed I'm not attacking the people um as much as they they've got a mandate that they can't possibly do and it and it's frustrating to me because rather than just accept it we we continue on with this you know dog and pony show like these people are all knowing and that they're somehow you know capable of uh of you know navigating uh the world economy it's just it's just not it's not great so it says that is the Fed hopes it has raised the target interest rate high enough moreover the FED hopes this will both re in price inflation and also avoid raising unemployment too high see below for what is meant by enough and too high now that's what I like is because we're getting to this point where we're talking about like well what are the you know what is going on here up in the other paragraph It's like the FED has an arbitrary 2% inflation Target well they they have a terrible time hitting that Target ever ever so it's like you know if you have this Target and you miss all the time I don't understand um we'll go through like it says it's in the Articles a little bit later so let's get to the next line it says after all the FED has no idea what the correct fed's fund rate is to achieve the goals that the FED has set for itself nor does the FED know what the neutral interest rate is at any given time as even chairman J Jerome Paul admitted at his month's press conference you can't identify the neutral rate with any Precision in real time and we know that wouldn't that be great if you could if you had a neutral rate I suspect you wouldn't have to worry about inflation because you could always just Target the neutral rate let's continue it says nonetheless we can see here that the largest the target federal funds rate has been held steady by the fomc since July of this year the length of the pause is significant because once the target rate has been flat for more than 2 months in in a tightening period the fed's next step is nearly always to begin lowering the target rate like everyone kind of knows what they're going to do next in theory because they've held the rate the same for two months it says whether or not the FED does that this time is not a sure thing and it has become increasingly obvious the voting members of the fomc have no idea or are unwilling to reveal what they'll do next either and that's that's something that I've noticed in my time on Earth is you'll have different fed Governors speaking and they'll always say something different like they contradict each other so you know what are we to make of it I'm going to cough so I'm sorry that's my cold whether it says gone in the days when the FED repeatedly suggested that had long-term plan or any sort of clear strategy for manipulating economic conditions over the past several months Paul has made it increasingly clear in his post fomc press conferences that the FED is if we believe what they say playing it all by ear on a meeting by meeting basis its strategy consists of tinkering with its monetary policy and then Crossing its fingers and waiting and that's definitely the sense that I've always gotten like it doesn't matter who's in charge they just Tinker with they don't have any idea what's going to happen I mean none it's really like it's like playing darts blind it's just just not good I don't think says this is just a fancy way of saying we have no idea what will happen next this may seem like an admission of the obvious reality of many to people like so me I believe this like it's obvious to me they have no idea what they're doing but this all contradicts the Decades of propaganda we've been told about the fed and it's technocrats and this is key once you figure these things out once you see them in real life you you you your mind will be blown we're supposed to believe that the FED has the nation's best economists and the best economic models and pursues policies based on apolitical economic science yet it all turns out that the FED has nothing in its toolbox other than tinkering each month with a few knobs and levers and hoping price inflation goes down that's absolutely right we're told that the FED is all knowing omnipotent and the FED is just like they literally get up and go to work just like you and I they they are no different than you or I they may have fancy degrees they may come from Wall Street you know they may have political ties but they are just people and they make awful mistakes under the guise of professionals quote unquote professionals it says there are reasons for this utter lack of precision in planning some are economic and others are political and this is what I've been trying to tell you for months the FED is an econom it's a it's a political job there it's not got anything it's 100% politics and it's a h let's go 90% politics and 10% economics I mean it's that bad it says the reason is that the FED is terrible at forecasting fomc members and chairman are consistently behind the curve when it comes to understanding Trends in price inflation economic growth and this is this is where it gets fun and I remember this in 2008 it says for example chairman bernacki was still insisting there was no recession coming as late as the mid 2008 I added the months later the nation was in a full financial crisis in mid 2021 Min Minneapolis fed president Neil kashari claimed there was no price inflation in store and the FED would keep the target rate near zero until 2023 po of course famously insisted throughout 2021 that price inflation was transitory which it wasn't it wasn't and that there was no need to curb the fed's Relentless Easy Money policies to rent in price inflation in other words there is no correlation between the fed's economic forecast and what actually happens in the economy and I I believe that to be true I mean they do things okay but but the forecast forward they just they have they got nothing they have no idea what's going to happen they just sit around and you know should we raise should we lower let's let's come up with something that sounds smart it says other reasons for the fed's evasiveness are political which is what I've been saying contrary to the long-standing myth of the FED Independence and political neutrality the FED is a deeply political organization committed to kicking the can down the road to get the regime through just one more election without physical or monetary disaster the FED is also expected to ensure that the federal government has easy access to liquidity and deficit funding while also ensuring that price inflation and unemployment remain at levels politically palatable to the voters and that's been my concern this whole time they're screwing with employment they're screwing and and to me that's just evil I I hate to say it but like if you're given a choice if you can save American jobs okay or or hand a bunch of money to you know oligarchs and other countries you know the the FED has a has a real tough time with helping out the American worker they don't really care if you lose your job in fact they you know employment full we've had full employment for a long time now and just as a matter of of like Trends you would think that it would go down a bit and I'm sure the FED is hoping it does but they're talking about employment softness like by the time they get to that it's going to be scary in my opinion but it's so political um they can't they can't uh they can't hurt the economy so bad that that people start pointing the finger at them then they need cover from the executive government or the executive branch basically and the uh the the Congress who just spends and spends and spends it's just absolutely out of control it says the If the Fed allows price inflation to Surge this will undermine The regime's credibility and damage the administration which I mean look at what's happening now this is what the FED is worried about when it is concerned that it has raised the target rate enough enough is a political definition and that's so key enough is a political definition it's how you use the word on the other hand the FED does want unemployment to rise to politically problematic levels that would also be bad for both the fed and the administration so let's go through that again on the other hand the FED doesn't want unemployment to rise to politically problematic levels and that's right this is what the FED worries about in terms of raising the target rate too much what constitutes too much is a political question that's right so you've got basically the Mandate for the fed and they're both political questions they're political mandates basically it says meanwhile the regime wants the FED to help keep interest rates on government debt low so the cost of deficit spending don't get out of hand which they've gotten out of hand the me that means pushing down the federal funds rate and other interest rates through its open market operations but risking more price inflation debbit debt costs unemployment and price inflation are all political problems the FED must manage at once but the time Horizon is strictly shortterm and this was key and this was eye openening for me and hopefully if you manage to make get through the video this long you'll see uh how amazing this is it's there is no long-term thinking here about building a sound economy fostering investment or helping the Working Man save for retirement the fed's concern is keeping up appearances and this requires constant open-ended tinkering policy tinkering with policy rates and the FED portfolio and hoping for the best now I don't think my own opinion is I don't think that this was too harsh I don't think this was too harsh of an article on the FED I think that the FED is in a difficult spot because like they said if if the politics involved um don't go well then the FED is in trouble and they will preserve themselves before anybody else um so how does this relate to the housing market well we've seen a tremendous run up in prices on homes due to in my opinion tremendous government spending and that's combination of that and um keeping the in uh keeping the baring artificially low for too long these are the two two things that have just really destroyed now we've got inflation now and inflation once it starts is hard to get under control and so that's why you see kind of this battle going on where things in our in our everyday lives are screwed up if you go to the grocery store I was I was talking to my wife a 12-pack of Coke cans was like $6.50 at Walmart Halloween candy the 200 piece set was like $27 this year here I mean these are ridiculous numbers okay uh we have not seen what I thought we were going to see and that was an expansion in uh prices for energy I thought that the oil prices were going to go through the roof by now which was going to cause even more of an issue luckily we haven't had that but you know we talked about it last night you see it in Services as well uh companies like ups are going to raise their rates five and six% to you know to pay off the employees um and they might get away with it that's what makes inflation so sticky so um I mean as a real estate agent right now the market is broken I mean it's just broken is it because of the FED I think that the FED is is partly responsible like maybe actually majorly responsible because the rates didn't didn't match up with the real reality of the the economy as like and let me just try and put it the the best way I can how can you give people money okay how can you give people money during a um worldwide P pandemic and then expect that money that you just gave them you just flat out handed it to them how could you expect for that money to be worth the same as what someone else worked

for it's just it just seems obvious to me that that was a real problem and uh and so you know the Market's locked up for me as a real estate agent um we sit around and we know that buyers aren't going to buy and the ones that do feel very uncomfortable for uncomfortable with their decision and so I'm stuck with with a situation where I'd like my buyers to be happy and my buyers are miserable because they either have to pay these stupid rates when in stupid prices or or you know sit around and and and rent or something like that it's not a good situation um so I just wanted to put that out there I think the FED I think I think we should talk more about the FED like amongst ourselves like people should pay attention to the FED as much as they pay attention to a Sunday football game I mean it's that important with that I'm going to head on out if you've made this before like I said would you please consider subscribing um and I'm going to I'm I mean I'm going to get some rest basically I apologize for the cough in the middle of my episode but I'm just happy to be able to do one thank you for watching thank you for listening and I'll catch you on the next one