IFB147: How Does the Fed Affect Joe Schmoe

Announcer (00:00):

You’re tuned in to the Investing for Beginners podcast. Finally, step by step premium investment guidance for beginners led by Andrew Sather and Dave Ahern. To decode industry jargon, silence crippling confusion and help you overcome emotions by looking at the numbers. Your path to financial freedom starts now.

Andrew (00:36):

Welcome to the Investing for Beginners podcast. This is episode 47 I’m in the driver’s seat right now, but don’t worry, Dave is right here. We’ve got a lot to talk about and I’m going to be asking him a ton of questions because he’s been watching this particular topic, especially closely and knows a ton more than I do about it. And so it will be a good episode for me to ask questions because I’ll be coming at it from the mindset of a beginner. And I’m hoping that a lot of people are feeling that way too. And you’ll be able to answer a lot of our questions. So what’s up with the fed? First off, tell us what the fed has been doing lately and then maybe we can explain what they are and what they’ve done lately in respects to like the 2008, 2009 great recession and some of the events since then, but whether they’ve been doing and how is that affecting the economy and the current virus and everything like that?

Dave (01:44):

Boy, that’s a good question. So the, the fed has, for those of you who are not familiar with what we’re talking about, the, the, what we’re referring to is the federal reserve bank. So this is the central bank for the United States. And in essence what they do is they are there to help stimulate the economy or slow down inflation. So their basic two rules are they want to create more jobs and they want to, they want to control inflation as best as they can. So the way that they do that is they use funds with the banks to try to create more money or reduce money in the economy. And now does that mean that they physically print more money? Not necessarily. They do. Do some of that. But the majority of what they do is they create money by creating money with the other banks in allowing them to buy bonds from the federal government.

Dave (02:41):

So treasuries, and then that money is is taken away. It’s not taken away. It’s used as deposits to lend out to us to buy stuff, cars, you know, buildings, restaurants, whatever it may be, houses, all those kinds of, and so that’s how they put more money back into the system. So what they’ve been doing recently with the coronavirus hitting us, the pan Ana that has gone through the world, they have taken their balance sheet and basically exploded it. They’ve just kind of opened everything up and said, whatever it is, we’re going to buy it. So the first thing that they did was they lowered all the interest rates. So the interest rates are what really kind of drive lending and borrowing. So the, the idea, and the theory is, is the lower the interest rates are, the more people are going to be willing to go out and borrow money to buy things because money is so cheap.

Dave (03:42):

So if we’re going to buy a car, we want to buy a house of, if businesses want to borrow to try to grow and expand our businesses, they want to buy more equipment or they want to buy businesses land, whatever it may be, the money that they’re borrowing is that much more cheaper and it costs them less to borrow the money. So they’re going to be more enthusiastic and more willing to do it. So that’s the whole theory behind when they’re trying to create more leverage in, in the economy, I guess is the best way of putting it. So the first bullet that they tried to shoot when everything started to go sideways was they lowered the interest rates from around one and a quarter to one and a half percent down to a zero 2.25% and what that did was it was in, it was really intended to try to lower the interest rates so much that people would start borrowing money to try to get the economy going again.

Dave (04:39):

But then we kind of got hit with a double whammy of everybody had to shut down. We all had to start working either from home or a lot of people lost their jobs. I think to the tune of like 18 million people over the last two weeks for almost 10% of the economy is now not working, which is a staggering number. And so what’s happened is, is that with that combination, then all of a sudden there was no people that could borrow money because people weren’t working. And so now what they’re doing is they’re flooding the market with treasuries to try to proper everything up. So Andrew was asking me a little bit about that. So what’s been happening is they offered, they pledge that they would buy up to $50 billion a day of treasuries. And in and of itself, that may not sound like a lot, but when you think about that 50 billion a day, that’s 250 million, 250 billion a week.

Dave (05:36):

And then that $1 trillion a month. So the balance sheet for the tread for the for the tread for the fed generally runs around three and a half to 4 billion or trillion, I’m sorry, at at one time. And so the, their, their budget has gone crazy. They’ve bought so much money, they’ve expanded their, they’re a balance sheet. I think it was almost $2 trillion in the last couple months which is unheard of. And they’ve done all this to try to prop up the economy because they have felt like that they’ve had to step in and just flood the market with money to keep everything going until we can get back to work and find out what’s really going to happen with everything. So that was kind of a long answer, but does that help kind of answer that question?

Andrew (06:25):

Oh yeah. 100%. So let’s, let’s circle around real quick. So when, when people say the fed, I think when you’re not well versed in economics and understand how that beast kind of all works you did mention at the beginning it’s, it’s a group of banks, but I’m remembering that. And then remembering that their function is, like you said, to reduce inflation and also spur the economy and spur economic activity. Some of the numbers you threw out can be pretty frightening. I think when we hear that because a, we start to think, we associate it with like the government itself, when we need to understand a separate entity and B, there can be positives and a good side to what they’re doing. So maybe let’s talk about that first and then, you know, after that, let’s follow through with how it could be bad for investors in the economy, which is I think what most people focus on. But let’s focus on the good parts of that first. So, you know, how does the fed essentially fueling all of this liquidity into the economy? Outside of like helping people or I guess, you know, you mentioned how it, it makes people more incentivized to take out loans, but how does that work in the economic machine, if you will? And how does that

Dave (07:54):

All, like how has that, how would that benefit Joe Schmo on the street or somebody who’s looking for a job? Because I, it’s all interconnected. Yeah, at the end of it. Yeah, it really is. So really what it comes down to is when they’re putting more money into the system, it just means that there’s more money to use to buy things. So for example, if they’re for Joe Schmoe, excuse me, he, he may not directly benefit from having a lower interest rate, but maybe his employer does because he’s able to go out and buy more equipment that allows Joe Schmo to get more jobs and to get more money for the business, which allows his employer to give him more money. So if Joe Schmoe is making $10 an hour and his boss could go out and buy more equipment, that allows him to get more business for the business that Joe Schmo works for.

Dave (08:48):

Now the employer can pay Joe Schmoe more than $10 an hour. Maybe you can pay him 10 to 12. Maybe you can pay him 12 or 14 bucks an hour. So that’s more money in Joe Schmoe’s pocket. Now the cool part about that is, is that now he can take his new found winnings, quote unquote, and he can go out and buy more things so he can afford to maybe buy a new car or maybe he can buy a new house or he can buy some of those electronics that he’s been dying to have. But he hasn’t been able to afford them because he wasn’t able to make it on what he was making on his paycheck. So, and now that he’s spending more money, he’s putting more money into the economy, which had turned, helps the businesses that are selling those TVs or those cars or those homes.

Dave (09:32):

And that in turn goes into the banks, which are used for deposits, which the banks can use to turn around and use those deposits to lend more money. So it’s just kind of an it’s, it flows in a, in a circle of life, if you will. And that’s how encouraging people to borrow more money at whatever level it may be, all helps put more money into the system because people are spending the money when it’s in a contractionary period where people are holding onto the money. Like that’s what they’re afraid of right now with everybody losing their jobs and people are, you know, concerned, you know, yes. The government is trying to help by expanding unemployment benefits and you know, the IRS is trying to work to try to get us the, the money that they pass for the stimulus packages recently. All those help put money back into our pockets, which we will use to spend to buy things like groceries and things that we need, which puts money back into the system. But that’s really kind of how the whole, that’s, that’s where the benefit can be to just the average everyday person when they’re trying to lower the interest rate.

Andrew (10:38):

Great. Yeah. So, so from how I understand it, basically you have that, but that’s not all flowers and roses because you could have too much money to flood the system. And so the economy almost needs to balance. I just recently watched a show where they talk about the oxygen levels on the earthly to balance at all, you know, too much would be bad, too little would be bad. And so when you talk about liquidity and capital and money flowing in, if you have, you know, you can’t just have this cycle that goes on forever where Joe Schmo gets a raise, Joe Schmo puts more money at some point. The way that I guess human beings are wired and the way that people with their own self interests working all in the system tend to do is you start to get people that had towards the extremes where some of them kind of abused the system.

Andrew (11:37):

And so as you get things to expand and to boom and then certain people take advantage of that system and then certain other people maybe get too aggressive and get over leveraged and then, you know, eventually they need to see the consequences kind of show up with that. And so you have this cycle that permeated upon itself to create a boom and then they can also collapse upon itself. And then now it can cycle downward and the opposite fashion. So talk about maybe the downward spiral and then what the fed tries to do to counteract what can happen there.

Dave (12:16):

Well the, the downward spiral it can be when there’s too much liquidity in the system and borrowing becomes a crutch to prop up businesses. And I think that’s one of the arguments about kind of what’s going on today with the stock market. And one of the concerns I guess the when I have free time, so I spent time on Twitter sometimes and there’s two main topics basically that of the people that I follow. One is the pandemic stuff obviously. And then the other one is going to be the actions of the fed and everything that’s been going on. There’s a lot of people out there that feel like the fed is propping up unnecessarily. Companies that really shouldn’t be being propped up. A particular favorite of everybody on Twitter right now is bowling. The people are feeling like that bowling is getting a handout even though they’ve spent so much money buying back shares and they borrowed a lot of money to do some of those things. And so that’s where people feel like it’s not really fair that that they’re getting that. But what is happening is, is that when there’s too much liquidity and as you were saying, people start getting aggressive and doing things that are maybe not ethical and trying to line their own pockets, then what happens is, is that the the dollar starts to in essence de-value and so things start to become not as valuable and people have a hard time selling things because

Speaker 1 (13:52):

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Andrew (14:03):

Well, I guess at a certain point I don’t know if this particularly goes to like devaluation, but on one token I can see if certain spending was fueled by debt and then that borrowing dries up. Then the spending that you sit depend on debt can’t be spent anymore. And so that can kind of spiral downwards. And so I think the fear, especially when you talk about the fed having fired all of its bullets is, is the, the fear that they’ve lowered interest rates so low. So as interest rates come up, the opposite effects are so happen, right, where it becomes harder to get a loan because, yeah, because the interest rates are more expensive. And so if this business now that you suspend a bunch of money on equipment, can’t afford

Dave (14:52):

To borrow any more money because they’re not solvent and then so they’re spending less than this other person, the business that they were buying their equipment from now has a lower income and so it kind of spirals down negatively. And if that happens too fast and too aggressively, it can really do serious damage to the economy. Does that kind of, yeah, that’s, that’s the many ways. I mean, and then all, obviously there’s, you know, the corruption and everything else that goes along with, with that too. But that can be one major factor that at least the fed looks at when they, when you talk about the supply of money itself. Yeah, that’s a, that’s exactly it and they, they spend a lot of time analyzing the data of inflation and deflation and how much money is in the system and how it’s being used so that they can assess what they want to do as far as interest rates to try to control inflation as well as try to control the money that’s in the system.

Dave (15:53):

Because like you were saying, too much money in the system can eventually become a bad thing because they’ll get to a point where they don’t need to keep bugling the system. They won’t need, you know, they, they said today, right? Yeah, yeah, exactly. It’s like a the hugest waste of of money ever because all it does is they say it goes to the shareholder, but at the end of the day, once the stock price goes down, then it didn’t really go to, you know, I know it didn’t and it really only goes to us if we sell it when it’s at a higher price. If we still, when it’s a lower price, it doesn’t come to us. It only, it only benefits the people that are in the C suite that have stock options tied to their compensation and if they’re selling when the price is high, then obviously they’re the ones that are able to benefit from that, from that circumstance.

Dave (16:46):

For sure. And one of the things that you mentioned just a minute ago I think is something that we should touch on. One of the things that the fed spends a lot of time, as I was saying, analyzing the numbers and and determining what their path is going to be. The economy never just flows in one straight up or down line. It, it, it kind of ebbs and flows and there’s lots of talk about economic cycles. And I’ll admit I am not super versed in that yet, but one of the things that I have learned about some of these things is that as the economy goes through ebbs and flows, there’s going to be expansionary and contractionary periods of fed the fed using their money to try to create those circumstances. And they will, as you said, they will stop lending money at a point when they don’t feel like it’s necessary to continue the economy going in a direction that it’s going and the bat can over time.

Dave (17:53):

Cause what you’re talking about where there’s the kind of the flip side of this where instead of it being easy, now all of a sudden it’s harder to borrow money. And those companies, like you were saying that were relying on that instead of Orion on their revenues and their cashflow, now they’re going to be in a harder place to be in. And the, a lot of the commentary on Twitter about this is that there is been a lot of conversation recently. People have been afraid that we’re falling into the next great depression and there’s a guy that I follow on Twitter. His name is Colin Roky and he, I’m probably butchering his last name, so forgive me if if I am, but he writes a blog called pragmatic capitalism and smart, very smart guy. He’s brilliant. He really knows this stuff and one of the things that he’s been talking about the last week or so as he felt he has felt like that the fed has really stepped in and done a fantastic job and he wrote a blog post on seeking alpha a few days ago and one of the things that he said in there was that this is not going to be the next great depression for several reasons.

Dave (19:01):

The first reason, excuse me, is that this is not the same circumstances that are causing a economic downturn. This is self-induced in that we are forcing the economy to stop. The economy was not doing poorly and then crashed. We stopped it because of everything that was going on with the health situation in the country. And I’m not going to argue for or against the right or wrong of that. That’s not the blue. This is not the place to have that conversation, but the, the point that he was making was valid in that the depression back in the, in the twenties 1929 when I first started, that was caused by the economy just basically collapsing, that it was being propped up to a point that it didn’t need to be and it fell on its own. It had nothing to do with an outside force. There wasn’t a world war, there wasn’t anything else going on that caused it to fall.

Dave (19:59):

It fell on its own. And his viewpoint was that the fed had stepped in at that time. They did nothing. They basically just said, if a company’s going to die, it’s going to die and so be it. And they just kind of let everything crash around them and they didn’t try to step in and stimulate the economy until it was too late and they did too little and it did basically nothing. Whereas in 2008 in 2009 under somewhat similar circumstances, the fed did step in and started quantitative easing, which at that time was a newer style of stimulus that the, that the federal banks could do. Japan was the first one of the first company countries that I’m aware of that started doing this type of stimulus. So the United States when our federal reserve doing that, it was far more aggressive than anything that ever been done in the United States.

Dave (20:51):

And so it caught everybody off guard. But at the time it was felt like it was needed and necessary just to proper everything up. The concern that a lot of people on Twitter had was that through the years it kind of has gone off and on, off and on with QE up until present day. Now present day Colin felt like that they have really stepped on the gas and have really fueled what we’ve been able to stabilize or he feels like a stabilized the economy until everything kind of washes out with a pandemic. And then we can assess what we need to do at that point. But he felt like that this is not a great depression. It’s not even in the same ballpark because it’s not apples to apples. Again, we stopped the economy. It did not stop because of economic forces that were causing things to go badly. Things were not going badly and you could argue things were going great. Again, I’m not going to argue that. But what I will say is that things were not going badly and then we stopped it, which caused everything to happen. And now the fed is stepping in to try to prop everything up.

Andrew (22:00):

Okay. So we talked about how you know, with interest rates and how the fed can use those as a lever and how that affects the, the S the supply or flow of money through the economy. One last, I guess negative thing we should mention too is, which I think obviously on the minds of a lot of people, the effects of inflation and how that particularly in the U S how that affects the dollar when you have too much money printing. And so like you mentioned, there might not be a literal printing of money, but when they do QE, when there’s I think just several months ago they called it something to repo and then now lately with, with the junk bonds, which is completely unprecedented as well. From my understanding that has a similar effect to as if you had printed money. So how, how can all of those moves kinda combine? How can that affect the dollar and why is everybody freak out about it?

Dave (23:08):

Well, I think they’re, they’re afraid at some point it’s going to start to devalue the dollar bill where it won’t be able to buy as much, not necessarily here in the United States, but overseas, it won’t have the same power. It won’t have the same power that it does today. Right now it’s basically the currency of the world and the people on the flip side of the argument of the fed are, are concerned that with the continual printing of money, it will eventually devalue the dollar because it will get to the point where it just won’t be worth much. What if you look back at the history of money and how it works. One of the theories out there about the fall of the Roman empire is the devaluation of the money. At the height of Rome’s power. Their coins were basically all made of a high value metal silver or gold.

Dave (24:10):

As their economy started to worsen and they started to run out of physical money, they started having to substitute for gold and silver in the money that they used in circulation because they didn’t have as much gold or silver to put in to go into money. And eventually the coins that they’re using became in essence worthless. And the soldiers that they were trying to pay out in the frontiers started deserting because they couldn’t get paid. And so that left the borders open, which allowed the barbarians to come in and kind of everything fell from there. But there’s a lot of people that feel like that. That was one of the things that led to the fall of the Roman empire. So coming back to the United States right now, the dollars probably the world currency, right? So if it’s, if it’s devalued at a, at a certain point, then that makes it worthless.

Dave (25:07):

Now, you and I were talking a little bit off air beforehand about how the, the government is kind of propping up some of these things like you’re talking about the junk bonds and, and repo and corporate bonds. The government has now buying corporate bonds as well as as junk bonds, which means that they’re putting money into things that are very, very risky. Whereas before it was they’re only buying items that were treasuries, which were considered safe and secure because they were backed by the full faith and backing of the United States. Now, the government is one of the concerns is that by doing all this, they keep propping everything up and it’s devaluing the money because it could we to a D pegging of the dollar against everything because it becomes so cheap because it’s not worth anything anymore. And that’s why you see a lot of people flying to gold or to Bitcoin. Again, I’m not an expert on either one of those subjects, but I know a lot of people are talking about both of those as hedges against the dollar in case the dollar becomes devalued to the point where it is not worth as much. And you mentioned something about I don’t know. I found that interesting that the, even while everything was crashing, even gold was crashing too. When we had the panic several weeks ago. And

Andrew (26:44):

We’re, you know, the, the U S isn’t the only government to be printing another printing the Euro a lot. And a lot of the other central banks have their printing presses on too, you know. Yeah. So it’s interesting because it’s all, all of this money has to go somewhere. Right. And so, you know, we can speculate and kind of put our, we can put tin tinfoil hats on and, and speculate about the fall of, of the U S empire as long as we want or, you know, we can kind of just focus right now on, on what’s in front of us. And so you mentioned the buying of corporate bonds, which I had never heard of the fed doing before. And I was trying to think, you know, it doesn’t sound, it doesn’t sound necessarily that, that much of a bad thing, you know if the primary goal of the fed is to provide liquidity, right, and to put capital into the economy, we’ll then, if they’re doing it through this Avenue, well sure, why not. But then as I started to think about it more as you were talking, it’s, you know, if some of these loans default, well now all of a sudden you go from the economy having a liquidity problem to could the fed have a problem if they’re not, you know, if a lot of their investments are not getting paid back, you know, they have to have a reserve of some point too. Right. And they need to keep a solvent balance sheet as well. What would happen if, if they had too many risky bets, not pan out.

Dave (28:21):

Yeah. That’s the, and that’s the scary part of, of what they’re doing and, and it’s, it’s unprecedented. It’s, it’s never been done before. And that is one of the, the huge concerns. If they’re buying a bond for Microsoft or Johnson and Johnson, which are both triple a rated bonds, that in and of itself is probably not as big of a concern, but it’s more of a concern if they’re buying bonds of say carnival that would be a concern. Because their, their bond rating I’m sure right now is probably not the greatest. And so that would be a concern because like you said, if that company that they’re buying the bonds, it is helping them survive, which is great. But in the long run, if it doesn’t pan out and just picking on carnival for a second, if they are the one that ends up having to default on their loans, then that would be not necessarily catastrophic for the fed. But if enough companies like that do that, then that would be, yes, a very big concern. And that’s one of the concerns about the propping up of the junk bond market because those are typically companies that are very risky, very insolvent, not a lot of cash on their, on their balance sheets and are struggling for funding.

Andrew (29:42):

Excuse me. I don’t know. Not, not always. I feel that the whole junk bond thing is really great for making headlines at the same time. There are plenty of great businesses and they’re called junk bonds, quote unquote. Just because, you know, I, I, I F I feel like the way that the bonds are rated isn’t always necessarily a hundred percent correlated to how risky those bonds actually are. Like, I don’t want to get too deep into the weeds about, about how they rate bonds, but there’s plenty of AAA rated bonds that have eventually gone bankrupt and there’s plenty of, let’s say triple B rated, Which would technically be considered junk bond, right. Which are just below that top tronch that

Andrew (30:36):

Are just fine as far as longterm health. So I don’t know, like, I guess it really depends on what exactly they’re, they’re buying, right? Like do they, do they, do they disclose that? I know you had a fantastic blog post where you talked about it as opposed to call navigate the federal reserve balance sheet with the simple guide. And so talk a little bit about that. How much do they disclose, how much do they not and how can people like us who are interested in that get informed about

Dave (31:07):

Exactly what they’re doing? Well that’s a great question. And so the fed publishes their balance sheet just like every other public company. You can go to the federal reserve.gov and you can find a link there for their balance sheet and you go look at it every single day. They publish a new one every Thursday at four 30, I believe, breaks down into four different parts. I’m sorry, five different parts. And each part talks a little bit about the different sections of the balance sheet as well as the full balance sheet. So they kind of break down the securities that they’re buying, the length of term and some of the other aspects of the breakdown of the balance sheet. Specifically, they don’t tell you what exactly they’re buying. You can just see the amount that they’re buying and the duration of that particular security, whatever it may be. So I didn’t see anything on there that told me that, Hey, I’m, they’re buying bonds of a particular oil company for example. I didn’t, I didn’t see anything like that. So that part of it I would met. I don’t know for sure, but I can tell you that when you look at the specific dollar amounts and the duration of all the things that they’re buying, you can see all that on there as well as the repos and any sort of mortgage back securities. Those are kind of the big, the big functions on there.

Andrew (32:40):

I would just be curious, I mean, not only even though if that data is out now, but you know, it would not shock me if the actual percentage of funds that are going to this junk bond category, if they were so proportionally low that, you know, people are freaking out for like little reason. You know, like as an example you know, Warren buffet recently sold some Delta stock and some Southwest Southwest airlines stock. So I saw comments online about people being like, Oh my God, like, yeah, out of Southwest airlines are trash, blah, blah, blah, blah, blah. He sold 5% of his position at Southwest. He did sell a lot of his Delta stock, but it was a 5% position. So it’s like when you look at the numbers and realize when you’re looking at big numbers, you need context in it, you know. So I mean, I don’t know how that stands with, with what they’re doing now, but I guess there are some cold hard fact numbers that we do know, such as you talked about their balance sheet growing by a significant amount compared to what it’s done in the past.

Andrew (33:50):

So I don’t know, some things I guess to consider, maybe some things are overblown, maybe some of it that’s not, yeah, I would agree with that. I think I think over the next couple of weeks it will be interesting to maybe touch back on this subject in the fact that I could do a little research and see if there is any indication of exactly how much of that they are doing so that we can give kind of a you know, a, a comparison so that people can see that this is what they’re actually spending on those subjects so that it has context. I think that’s probably the, you know, the best, best way to do that. I don’t know, like teach a man to fish, right? I think the, the blog posts you did and you really have a great series that you did on the blog.

Andrew (34:39):

So people go to the einvesting for beginners.com we made a new little category on the right sidebar, which we called economics one-on-one. And so those are filled with posts from one of your favorite bloggers, mr Dave


. And he has a whole four part series on the fed. So if you want to talk about the history of the fed and the structure of it. So kind of like, you know, how we were talking about, it’s made up of a bunch of core banks in different cities. So he, he breaks down like what that really looks like and then a much better breakdown about how it affects the economy than I am my layman terms ever could do. And then obviously the one that we just talked about where you talk through and show a nice guide going through the balance sheet of the fed.

Andrew (35:30):

And so that’s definitely worth checking out. The thing I liked about your, I mean, all of your blog posts have always been just really well researched and really thorough and I think a lot of people appreciate that and I certainly do. I liked how the fellow reserve can be a really touchy topic. I think it, and insights, a lot of emotions with a lot of people and I think there’s a lot of just misinformation and ignorance about the topic, myself included. Okay. Like, I’m not, I’m not turning to Sam other than anybody else, but what I like about the blog posts you did is I felt that you presented it in a very neutral, unbiased way. For whatever reason it just didn’t seem like you had a agenda for, toward, you know, supporting the fan or going against the fed. And so I know it can be a somewhat political issue.

Andrew (36:24):

It can be an emotional issue and it can just be really confusing and it’s just amazing how you see the stock market jump on Fed news and, and it never makes sense. You know, I, I look at an event about the fan, I think, Oh that’s, that’s really bad. And then the stock market jumps or it’s like, Oh, good job fed. And then the stock market drops. So, you know, a tough topic to cover for sure. I just appreciated how you presented everything very, fairly, very thoroughly. And it’s something that I think if people are interested, they should definitely go check that out.

Dave (36:56):

Well, thank you. It was, it was a lot of fun to write and, and frankly to learn about too. It, it, it was a subject that I’ve always kind of had an interest in honestly, and I didn’t know that much about it either. And so it was a lot of fun for me to really kind of dive in and learn as much as I could about the subject. And I agree with you, there was a lot of mythology around the fed and a lot of controversy and there’s a lot of good spirits. He’s around it too. So it was really kind of interesting. You and I both read that book. That was a, it kinda really helped spark some of my interest in this, not necessarily because of the theories that the gentleman was espousing in his book, but just the history that he was talking about was, was kind of fascinating to me. And, and it is, it has such a big impact on our economy and the stock market that I felt like it was something that should be explored and tried to help people learn more about,

Andrew (37:52):

Oh, it’s super timely. I mean, especially now that they’re dominating the headlines over the past month. And for better or for worse, you know, we’ll see how that plays out. I’m not a currency expert or a foreign policy expert in the slightest. I just, I just, I tend to have a very optimistic view about, you know, maybe that’s the Patriot in me, but yeah, I think we can’t not say that the fact that some, so much innovation and, and so much of the major parts of technology are still here. I think that’s a very bullish thing for, you know, for, for, for the economy and for the dollar itself. And so it makes me still feel comfortable in, in buying stocks and, and seen and, you know, just kind of, you know, kind of watching it all, but, but trusting that the economy will be fine over the very long term. I would agree with that. Definitely. And if people are interested in ordering more than beyond what I was able to, to write about a Ray Dalio is a fantastic person to investigate. He has a, a great book the debt, Christ, the big debt crisis, but that was fantastic. And then the, a 30 minute video, what was the name of that again? How the economic machine works. Yeah, that is fantastic. That literally one of my favorite.

Andrew (39:25):

Absolutely. Yeah. I find economic, even as somebody who loves the stock market, I find economics pretty hard to follow. That video is probably the simplest and I feel like it helps conceptualize so much more, like even more than this book, like the navigating debt crisis seeing, I really, really had to concentrate on trying to read that thing and I feel like a lot of it still went over my head, but that video you know, millions and millions of millions of people have viewed it and even people who do economic policy have said that that’s influenced their, their decision making. So yeah, I mean, Ray Daleo had of the best hedge fund ever up to this point. Right. Definitely somebody that was to, yeah, for sure. Absolutely. I totally agree with that.

Dave (40:11):

All right folks. Well that is going to wrap up our conversation for this evening. I hope you enjoyed Andrew and I’s conversation about the fed and I hope you guys weren’t a thing or two.

Dave (40:20):

If you guys have any questions about anything, please don’t hesitate to reach out. I’m here to help any way that we can. So it was Andrew so without any further doing and we do have a ton of questions I have piled up and we will get to those eventually. Keep sending them in. They’ve been fantastic. Yeah, absolutely. Yep, we will. So without any further ado, I’m going to go ahead and sign this off. You guys go out there and invest with a margin of safety emphasis on a safety. Have a great week and we’ll talk to you all next week.

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