2021 EP0731 - PLANNING MATTERS RADIO with OCTAVIO MARENZI !!!!

Although you plan for success planning matters radio and welcoming program. I am Peter Rochon, founder CEO advisor at Rochon planning you provide us online@richonplanning.com Marvel our clients is to identify opportunities and protect what's while formulating and instructing a comprehensive plan that will work to achieve your financial goals now and into the future.

If you got questions or concerns about your money about your investments about your financial and retirement outlook phone give us a call. We always love hearing from radio show and podcast listeners and do offer the opportunity for a complementary planning review and strategy session, we will put together the optimized retirement plan for you is a proprietary plan structure. It looks at your investments, your income, your taxes, your healthcare and your legacy planning and make sure everything is complete we see a lot of people with some great tools but there are a few holes in the plan that don't make them complete. Maybe they looked at the growth on on the rate of return on their investments, but haven't looked at the tax implications. Maybe they looked at building the assets and the retirement accounts but hadn't looked about how to protect that by using Social Security efficiently and effectively in the timing to make sure that we are making the best use of that tool to help us preserve and protect the personal net worth. There are a lot of different aspects in your financial and your retirement plan. They all have to work together. They all have to be cohesive and coordinated naturally try to bring together. We help people, our clients complete their plans through that optimized retirement planning process and if you would like to get your optimized retirement plan, pick up the phone and give us a call 919-300-5886 919-300-5886 in just a few minutes here on the program were going to have a special guest Octavio Renzi. He is the CEO of optimists and he will be talking with us about inflation Americans inflation fears reach another high as consumer prices surge Americans inflation fears have really reached a fever pitch.

Since about June rising to the highest level since June 2013 as prices of consumer goods continued to search, according to the Federal Reserve Bank of New York. The survey was published last Monday. The median expectation is that the inflation rate will be about 4.8% one year from now a new high for the gauge and up 3.6% three years from now, the highest level since 2013. According again to the Federal Reserve's survey on consumer expectations. So Americans are expecting to feel that the hurt from this home prices keep rising goods keep rising commodities keep rising.

What we purchase day-to-day end, and even the major purchases that we make our are up in prices in facts since last June or about 6.2%.

The Fed says that they don't expect that this stick but still a substantially higher one year.

3.7%.

Is the expectation for inflation. Now, on one hand, the Fed has talked about in the government has talked about that they will raise the cost of living adjustment on Social Security, the cola, but how will they do this, how will they accomplish this. When the Social Security ministration has already said that funds are tight and that the system is not well-funded to pay a sustainable benefit in the future. They've recently updated the statements. However, the old version of the statement said that by 2033.

They'd only be able to pay about $0.75 on the dollar of promised benefits. So how are they going to offset that fact with these now higher prices and adjust the cost of living for Social Security recipients and then continue to have solvency for the system moving forward only that, but how do savers and investors combat inflation.

One of the ways. What are the steps.

What are some of the tools and options that we have available to offset inflation. Sure, we could go into treasury inflation protected securities or government bonds or treasuries, but timing of that is inherently difficult and so we need to understand the tools that we do have available and the effects that it could have on other components of our financial outlook.

How will higher inflation rates affect the market.

How will higher inflation potentially affect our investments if we look back historically into the 1970s and early 80s there were high inflation rates historically high inflation rates in the market did not fare well at the same time to help savers and investors offset that now we are in a different time. And the supply of money has been dramatically increased and will not so oil and petrodollar dependent that time. In the 1970s, we were generally at capacity for our oil consumption. Today we run much, much lower than than than capacity and we are not petro dollar driven and dependent so if we are in a different time now where we are running lower than capacity will have the same effect. What we need to understand the options that we have for structuring income, making our money work for us to build to the possibility of a higher income and one thing that I see absent again talking about completing plans for the optimized retirement planning process. One thing that I have seen abundantly clear in my years of experience as an advisor is that most plans do not include or account for or address inflation.

Lots of plans that I see for retirement basically assume that our need for income throughout retirement remains flat simultaneously. A lot of plans I see make the assumption that the rate of return that were going to make on our investments stays constantly steady positive at seven or eight or nine or 10%.

Neither one of those is realistic and that's where the rubber meets the road. That's where we really try to help our clients examine their current tools and current projections and see if they do have a complete plan. During this process. We also sort of play Murphy's Law and and see if if worst-case scenarios do occur.

If your plan can survive if the bad things happen in the planning process on paper. If we can project out a worst-case scenario and were still in good shape and we can go out and live with confidence and hope for the best but be prepared for the worse and I think that's in the essence of what everybody wants from their money from their finances from their financial plan and that's with the optimized retirement plan is really all about.

If you like that, pick up the phone. Give a call 919, 300-5886@1930058869193005886.

We are now privileged to be joined by our guest is Octavio Renzi is the CEO, optimists, and he is the cofounder of optimists. He directs the firm's research in the areas of equities trading asset management and regulation.

He is here to talk about inflation, surging prices, consumer concerns about how much were paying for everything that it takes for us to survive these days. Octavio thank you for joining me on planning matters radio what we are seeing prices increase. On one hand, it's probably pretty concerning for the average consumer. On the other hand, we haven't seen inflation for quite some time, and the Fed has said they were targeting higher inflation. So where is this a a good thing or wears something to be concerned about how we find the balance will I think is a new southern regions of the above usual holding cashers runs on a fixed income time or musings that sort of placement can be directly out of this thing funds of losing is a really good place to be if you order lots of money against the fixed asset on fixed interest rates you see basic inflation Eagle getaway the reader what it means is a big social transfer from people who are indebted to be able to save Osorio around the people of same cashed people who are desert and this would eventually doesn't promote now the Fed has impeached to say that this is a transitory phenomenon and don't worry this is just going to disappear after all this is just the economy getting backflow loans can be a bit of inflation that addresses this is unfolds. I think the goal of enrollment and only enough of our limit is his friends that have not shared any of their locals with no symptoms of how they come to the conclusion that show the trust at the end of a new notion which are larger so I'll have you come to conclusions under the desk.

Also trying to do is really talk on people's expectations of inflation basis and don't worry it's gonna be okay as well because they know very well the people's expectations, inflation, lease, inflation, surveillance sinks, the valuables gonna go down by little will go down just like everyone thinks about it to the stock is vinegar down next week he will go down today and is the same effect so they're trying to manage his expectations of secular words of your case under control is tempered does look a simple servicing prices up right across the board also sort of commodity prices as consumer prices, housing prices, stock prices, you won't bug prices so but people are still paying these higher prices for housing for goods for commodities.

So what is the motivation then for those prices to come back down of people are still buying at the higher inflated prices will have the choice that the prices are going up basically because as an increase in the modern is an increase in the amount because people have no cash available cash because of that is principal so that is the way it has to work to the question simply debunks a prime using the amount being pumped up by this injection of these demonic in dollar terms "people are releasing more broken than before the rise of the same amount of vocational focus and so that in her spend more, we mentioned that this is essentially advantageous for those who have borrowed capital against the fixed asset.

Wealthier people can and do end up borrowing more so is this continuing with the transfer of wealth from the middle class to maybe the, the upper class or those with larger capabilities to borrow higher amounts things this deafening and traditionalist amount of income inequality is kind of get hidden because to be able to discern that you have for the trailer.

This is entertainment just far enough.

Most people don't realize this was going on in people's or complain about income inequality complain about miniature closing was never think it is a major driver of income inequality, which is called occasionally, follow the path anymore that there's as well as buying bonds will go to market to adjust people's inflation expectations is not smoke, we sort of hypertechnical exclamations will I think in essence that is a direct result of it so the youth among opposing leads to much higher stock prices on positive asset prices close out famous people who own stocks and bonds doesn't favor this people are less the first place that the mother because he has a positive impact in terms of prices.

I say positive increases prices it will seem to be massive in the housing market and continue to do so.

So the Fed is buying $40 billion a month of mortgage-backed securities that caused money goes directly into the housing market and rise of housing prices is greater go to house asyou don't have a house would like to buy one.

So this whole generation of first-time buyers who are locked out of the market come to expensive drives income inequality that are directly with the question then is how long can this continue and we seem to be living in a world where modern monetary theory states that the Fed and and the governments can just continue creating more and more wealth and and and more and more of dollars in circulation and it does not have any negative repercussions, but you and I know as a householder is an individual that racking up debt or or just putting money out there does have negative consequences. Where does the rubber meet the road here or are we going to see the continuation of what is essentially this modern monetary theory where debt and printing more money doesn't matter what I was writing to his parents of MMT try and follow what they're saying I was Vanessa thinking they cannot possibly read a believable essay.

The argument basically that they would promote is to say that it doesn't matter because the government can simply print more money. So that's okay you can extend that argument, but further, you might be tempted so well. Why do we pay taxes on all the government could just crinkle money to cover all I sure right is a garden once and for the celebration will work. The government could just print articles of money and have the money out and no desolate anymore and that that is just a logical sequence. In the afternoon.

If you follow the theories about Moshe theory is notionally working the central bank should be printing money and handing out little by Lamborghinis is just such nonsense because you need the goods and services that people have to work to create doesn't doesn't work as long as we as individuals and and then globally. As long as other nations continue to accept our currencies.

This can or it least has seemed to continue what I said. I think there's this two things really worth bearing in mind is supposed couple decades. If you look at what prices. I think we should've seen a lot of deflation at prices going down the volume value money going out in this two major reasons for that one is that we have anxiety incident far better informational disposal with which we should become much much more productive and usually a more productive and means prices go down i.e. deflection is will be producing another major things happen in the course about 10 or 20 years is the opening up of China with very cheap, mass-produced goods coming into our markets flooding the measurements of deflation pressures as well. So we should've seen prices drop quality quite significant. 20, 30 years and we haven't we have seen a drop in prices because the Fed and other central banks of printed money just to the right rates to negate the action of an obstacle that if that is at the inflation engine disappears in the dream big trouble and I think we seem to spring on drives. I think some of the games – information on the gains made in terms of trying or not appropriate at their end and consents for the benefit and so now was obscene inflation take hold. The Fed had stated that they intended to target a higher inflation rate. In fact from their previous target. The rate that they stated at the end of 2020 or beginning of 2021. I think they stated that they were looking to essentially double their target rate for inflation.

My question is, once the two toothpaste is starting to leave the tube. It's hard to get that cap back on. How are they going to control it and and keep it at that target rate at a maximum amount or do we see this getting out of control as I think it does have a very serious risk control. Things don't always work the way that they expected to spend most of that was proven to be the most reliable freedom from zoster down Lebron and so what they do when inflation sounds good. I can't waiting until political pressure builds up and there's been recent high inflation set is gluten, sums of argument lies in the favor some station political pressure will become quite intense and is available very, very unhappy people unable to park on houses to get pensions evaporate in terms of value labels on things can be a great deal of appeal that and they will have to address it and then they will have to increase interest rates and was increase interest rates they gonna crash the markets to become so important that on the treatment. I think that's what was he unfolding of the course next. Exactly when it will happen a long can they keep goading how little people still expect the temper invasion story for the monthly accents. I like to take a year to yesteryear's emotional and psychological health of an adult happen is we saw a lot of institutional investors got a run for the door was crushed market inflation liberal or under control. So that's the what what you see is some of the potential early warning signs that that is beginning to occur while I was as good this to this two ways that compose out. One is the fish can accept a very high inflation rate is congrats control and the signs that would be religious.

Karen saying everything's okay was concurrent printing money, binders of bonds may millennium an expandable… I would see that as a sign of lunacy and inflation recycle the other side of things is that they can crazy the markets by cutting back on money supply will see there is a fan base, with decision, saying would increase interest rates now very prevalent. In time, so that would be two snares moving to the warning signs of either one of last week on the program.

We talked about the fact that Wells Fargo recently announced that they were cutting or ending extending personal lines of credit to individual account holders throughout their banks nationwide.

Do you see that may be where banks are beginning to exit the area where there extending credit to consumers that that may be a a a warning sign of of the beginning of this. I think Wells Fargo is an exceptional case the and Wells Fargo Center in the West to the class for some time. In terms of banking in terms of ripping off its customers and fake accounts. Mrs. time to recover from that. We have seen a certain amount of softness in some lending and some lines of business of the large banks are usually sunk like credit cards. For example, lending there came back down about 15% during the pandemic and has become so is still lower than it was pre-pandemic is done quite well. The housing loans are often of the subdisciplines are out.

I think we Wells Fargo.

I think it's pretty easy to to interpret false emotions with a basic transfer those people. Health of fixed rates into variable rates and that was really what sort was present when your personal line of credit anymore, but you can cover credit card and said so basically there's that's turns around as I was little level of lending didn't really get impacted by that subdirectory is found on particular type of loan hadn't been as possible is considered a colluded outline of loans and replaced on the other hand, and potentially not offsetting the inflation that we are seeing but we are hearing that Social Security is preparing for a historic cost of living adjustment for income recipients for retirees for Social Security recipients that can help us offset some of this inflation. If we see a higher cost of living increase then we have historically seen. That'll put a little bit more income into retirees pockets each month I will be exactly inflation or a man that was funded and I think our betting man I would bet dollars to donuts that enough on this by issuing bonds and irresponsible report by the Federal Reserve so I always hear the term vicious cycle and I say let's maybe not so vicious it's just the cycle but in this case it may be in fact a pretty vicious cycle. There is a big arrangement, 5.4% increase in Social Security checks that will be funded by money printing either directly or indirectly around the circle by selling the bone says the primary dealers in the Fed buys these things from the primary dealers. The ineffective is is just monetizing the debt. Printing money to pay people so you see MMT put through to the test mode mantra. There will really put to the test and see how it works. It didn't work so well in all the other times been Trident Zimbabwe is not doing that well. But, on the theory that the richest country in the world is starting to patient with their other political and financial theories that have been tried before, and we seem to be cycling back to and trying again with with a new attitude that can work this time there was just some something wrong with the way they did it before history repeating itself yeah advancing regularly at this time is different. I think people promotions. There is a release of stubbornly ahistorical. They don't look back at what's been tried and tested the awesome old regional series and understand what they did it into and serve at this will be face rising to repeat now in the cycle as well.

For the average saver or investor who has built up some capital and hoping that at some point in time they built up enough to where they don't have to trade their time for money and they can survive off of their savings and investments.

What is may be something to consider for them a a good play right now or something that could help offset and combat the effects of inflation because it didn't work out so well.

To be an investor in the market in the 1970s were we had historically high inflation and stagflation. Well, if you wish to go back so that's the 1970s, 1980s, the smartest thing to do back then when a secured Volga increase interest rates up to 20% would've been to barge as a whole bunch of US treasuries and sit on them in ways the interest rate to them for all and then your roommate actually so can you time.

That will mean theoretically now is if you're now an investor or smalltime signaling logs from inflation thing to do is indolent to any asset that is not denominated in dollars on currency so so anything that is not modeled on the anything asset and finalization, by definition, is an increase in value so be it. Saw anything like that will real estate will be shielded at least until the inflation and hard assets and what needs to do is switch really quickly into cash that turnabout without telling difficult to estimate and a local trade is a washing, not quite have to see when the point reached so I do know some symptoms and you don't want to be investor who benefits from a lost 10% in spite of the markets you want to be out well before that and I don't know whether we've reached a point know it's a lot to say but I think investor thinks they can time the market will you well that's what I would be doing or saying it in the stock market will you have them, and once you see that turning point reached at 5000 Duncans of bonds and cash us to imagine how to time that that well it's I think is was impossible to our our these factors leading to the rise in value in popularity in legitimacy of crypto currencies are these concerns that we are talk about with modern monetary theory with with inflation, with the fiat currencies are these some of the factors that are leading toward the popularity and and acceptance of crypto currencies will different of that is the underpinning philosophy of crypto currencies. In particular, bitcoin, which is basically created as a response embracing we don't want to have a currency that is just inflation willy-nilly by some central bank because they cite other should be twice as much money in circulation. So one substance limited. We want something that cannot just be expanded indefinitely and big one has a problem. Zero as we approach the generation you currency in transactions of estrangement makes perfect sense if you going to try and come up with unanswered.

The thing is I think about it: currencies like the central banks don't blanket for obvious reasons, as it is a direct compression and has been explicitly set out to compete with the dollar and the euro in the general terms like so I think at some stage as it takes off as a payment vehicle if he takes off central banks will step in and try have about the findings is unlimited, outright and say we have an abandoned bitcoin sideways making very difficult essay was used to fund terrorist sold tax evasion nor child pornography. Also some of the evil things you can think of in the five reasons to register as a download link diagram, counsel for the crypto exchanges. Anyone dealing so I think that's probably how with the schedule is or becomes very popular as a payment vehicle and regular psychiatric patients develop the federal respondent will respond how because they position as a central bank will be charged. Do we see that this trend of inflation could derail the recovery that we've seen from the coven pandemic and I think is going to make a lot of people feel worse off certain and said that Mike Mike is anyone was on fixed incomes and pensions are Nugent sounds is is going as a field of the door is not going as far as of when defaults are and definite suffer other people might do quite well outfit so it's not is not a mutual thing in the sense of everyone sees the same way and is an important some people benefit from it and some people suffer. How does this compare to the interest rates from the Fed. On one hand, are targeting higher inflation rates but they voted unanimously to keep interest rates at or near zero but I think it's the two sides of the same coin. Basically they they keep interest rates very very low by printing money and buying bonds. So that's how interest rates closer so it is direct relationships to The Money Supply Is More Important Factor Than Interest Rates Stay, They Are Intimately Related. If You Look at How the Fed Actually Does Manage Circulation to the Way They Increase the Money Supplies and Conducts the Money in the Buy Some Bonds and That's How My Spike Regulation When I First Have Never Received My Share of the Money Supply Did Not Send You a Check Saying Increase the Money Supply Usual $20,000 Number so I Haven't Fizzled out to Bond Purchases and Other Ancestors. Well If You Go to the Federal Reserve Economic Data Fred They Can Show You Charts Were 20% of All Money That Is in Circulation Right Now Has Been Printed in about the Last 18 Months, so I Know I Have Not Received My 20% Bonus on on My Savings We Been Talking with Octavio Renzi.

He Is the CEO of Optimists and He Has Been Talking with Us about Modern Monetary Theory about Low Interest Rates about Inflation Concerns and the Effects That Could Have on Sabers, Investors, and the Economy Debuted Really Appreciate the Time and and the Perspective and Insight That You Shared with Us Right Thank You so Much without a Great Interview with Octavio Moran Say Again, He Is the CEO of Optimists and Gave Us Perspective on Modern Monetary Theory, Something That I Talked about in a Regular Monthly Client Newsletters Waived like to Sign up for Those Be in Touch.

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