Much Higher Interest Rates for Much, Much Longer || Peter Zeihan 

Will Zeihan ever actually get to where he’s goin? I’ll keep watching

The looming recession and the Fed's rhetoric of raising interest rates have investors extremely concerned. I'm not sure what to do with my $600,000 portfolio yet. because we may not enter a recession, and even if the Fed is hawkish, interest rates may not be raised further.

Does the stock market appear to be improving, or is this merely the typical temporary manipulation of the market to draw in new investors? Right now, I have $500k left over from the sale of my house, and I'm wondering whether there are any better investments than stocks.

I see the rising interest rate as a very big problem, as more investors will definitely pull out more money from the Stock market. This might have worked when I was still invest-ing with a couple thousand dollars, but it is more difficult now to decide whether to pull out more than $365k from my port-folio. I know some inves-tors still make that despite the strong bear market. In wish I could pull that feat

The rising interest rate can surely control inflation, but won't prevent erosion of the eroding purchasing power of the US dollar. I have learnt my lesson this time. The banks can't be making money off my money, while inflation eats into it. I have set aside 650k to invest in the stock market now, since that keeps up with inflation, but I don't know how to get started.

I want to invest around $80K in the stock market, but I'm unsure of what the feds are doing with the interest rate. I don't want to lose my money to Inflation. what's the best strategy to secure my investments?

I believe investors should focus on under-the-radar stocks, especially given the present rollercoaster nature of the stock market. 35% of my $270,000 portfolio consists of collapsing stocks that were previously respected, and I don't know where to go from here.

These “high” interest rates are pretty much normal. We got used to stupidly low rates that are actually bad for the economy because they encourage people to invest stupidly.

If Peter guided a hiking group, I would definitely sign up. Walking while listening to global insights is my kind of experience.

My first house bought in 1987 was financed at around 11% for 30 years ($525/month). The total loan was for only $55k. Higher interest rates today are killer because everything is so much higher. That house today would be $300k and the mortgage at today’s rate of 7% would be $1995/month. Inflation is killing America and the World!

I'm convinced you started doing these videos partially because you think to yourself when you're walking. I do an hour-day walk and that's all I can do. Thank you I love the information.

I was 15 in 1980. Over my adult life, interest rates have done nothing but decline until recently. It's nice to see a savings account actually earning something again. Too bad inflation is eating it all.

When your under 30 and watching a Zeihan video: "Ah, i'll have to become even more jaded."

Occasionally it would be nice for Peter to end his videos with a quick glance around at some of that gorgeous nature most of us rarely get to see.

Peter, you should do a part 2 to this video and talk about what this will mean for the economy and why it’s a major problem.

I bet the top line of Professor Zeihan's syllabus for his Geopolitics course says "Bring hiking boots and trail mix."

Thinking picked the wrong morning to stop drinking…

Thank you.

In 1983 my parents slept in line outside of a bank in a tent to make sure they secured the sale interest rate of only 10%

When this inflation spike started a couple of years ago I astonished a friend by saying it could last 20 years - it just gets embedded (late 60s, 70s, 80s).

Imagine talking for nearly 9 minutes on US interest rates without mentioning the national debt and interest payments on it

Loved your analysis thank you!!

Great video! Also, one of my favorite trails to hike!

Higher interest rates for an economy that got used to low interest? Sure, that political nightmare is not something somebody wants to deal with.

Thanks!

Danke!

Thank you.🌸

Peter: Please take more long walks! This was GREAT!

"Your kids are moving out"??? Whose kids can afford to pay rent ANYWHERE these days?

Totally agree.

Very interesting perspective! Subscribed!

Finally some economics. Very informative piece. Thank you.

Great analysis

Good video👍🏼

We were spoiled for a while, but if you were an adult in the 1980's and 1990's it is going to look like that again. Housing prices should deflate, which will be good for young people today.

Thank you!

What a profound video. I need to rewatch this a couple of times to get this 100%

Thanks for the reverse indicator

Yup. Already happening.

Awesome!

The simple fact that we had zero rates for so damn long is why its messing everything too. We got used to it being cheap to borrow. It should not have been so for so long. Especially now when we need to expand and grow our own supply chains.

Increases to money supply made by the federal government also play a major role. The global M1 supply, which includes all the money in circulation plus travelers checks and demand deposits like checking and savings accounts, was $48.9 trillion as of Nov. 28, 2022, according to Visual Capitalist. That publication estimated the total value of the M2 supply to be $82.6 trillion. M1 includes money in circulation plus checkable deposits in banks. M2 includes M1 plus savings deposits (less than $100,000) and money market mutual funds. M1 reflects the actual purchasing power in the economy, and M2 reflects the potential purchasing power. There was also a huge increase in the money supply over the last 4 years. In 2020, there was a revision in how to calculate money supply. With no revision made to the M2 money supply calculation, it provides a clearer interpretation. Taking the March 2022 peak money supply of $21.70 trillion and going back to February 2020 (which coincides with the beginning of the official recession) we have an initial starting point of $15.45 trillion. This two-year period represents an extraordinary increase in the money supply of around 40%.

Thankfully, after twenty years, the adults are finally back in charge at the Federal Reserve. 7% is historically a low interest rate. The dollar is the strongest currency in the world, the U.S. is onshoring or nearshoring manufacturing, and real value-added jobs are being emphasized (i.e. not the FIRE industries). Eventually, the housing market will correct and young people will be able to afford a house once again. The doomsters that are always screaming about the impending fall of the U.S. are going to be very disappointed this century. While the U.S. economy isn't great, the rest of the world is absolutely screwed going forward.

Awesome, this is really really good news!

Excellent analysis. Finally someone understands and articulates reality. Thank you.

This guy just tried to predict the next 10 years lol

Thanks Peter for interesting topics. I know you made an episode about BRICS currency but I wonder what are your views on the link between the federal reserve interest rate and BRICS countries swapping USD for gold and the impact of flooding the market with large amounts of USD as a result?

Greeeat. Thanks for that.

I guess I’ll just stay in my cardboard box under the bridge for another 10 years. Thanks Peter.

Milton Friedman said spending is taxation because there is no such thing as a free lunch. Spending is out of control

These are just normal interest rates

Gratitude

This is not "Financial Advice" I'm merely walking through the desert making money on RU-vid while you go to work 😂

Excellent analysis as always Peter, I agree with you 💯.

Wow, Peter that place is beautiful! I can’t wait to go back to Colorado. My fiancé’s family live there.😎👍

Sharp insights from a thoughtful man

can you talk about Sec 174 and how it'll impact the Technology sector jobs?

Everyone take a drink, Peter acknowledged Gen X in a video, instead of glossing over us entirely.

for 20 years ive been watching the velocity of money crater and i have just been scratching my head.

The longer you spend on RU-vid the more you realize non of these guys actually know what’s going on and they’re just telling us their internal monologue

America needs higher interest rates.

Always insightful and very believeable.

The FED ALWAYS forgets or leaves out its roles in these financial issues as well. They are NOT innocent in these major downturns.

i am always more impressed by his hiking than his words

at 0:05 we see peter remember he isnt supposed to teleport mid-video

US gov can't handle higher for longer, 1 Trillion in gov debt interest payments. How does this factor in?

This video is very good.

My first mortgage had an 8% interest rate and I was thrilled to get it. People younger than me don't understand super low interest rates are not normal

Hi Peter. Love your contents and videos and your views on various topics. Can i ask to talk a bit about green-flaction, please? Thanks

Rates are not even "high" they are just "higher" than the stupid low rates that were in place for way too long and greatly contributed to inflation.

love Zeihan, he is the example of how generalized knowledge is superior to all else. If you read this Zeihan, could you do a crash course on how you understand currencies to work, with all the different factors like, developing vs developed countries, balance of trade, reserve currency, how much the currency is used etc etc

Peter sigh. You have a lot of solid insight to backward looking/current state events - great stuff really. The forward looking proclamations…there’s just so much to unpack. I get the apocalyptic tone has its impact but it’s really running roughshod over the confluence of other factors that will likely play their roles. I suppose the best response is “let’s see.” Good luck

Interesting. I just subscribed. How high do you think the 10 year Treasury will go?

Imagine talking for nearly 9 minutes on US interest rates without mentioning the national debt and interest payments on it,

I think the conclusions Peter spoke about are right in this video. The background reasons are perhaps glossed over. Demographics, wall street, federal reserve all have their part to play. However, Covid was bad for inflation because money is supposed to represent payment for goods and services. However, that stopped being true - for the whole world - while Covid was in play. No work means no value given, means the money isn't worth what it was. When governments just print more money, the money loses its value. In fact, the only reason America hasn't turned into Venezuala is because Europe/Japan/China/etc. have all been so irresponsible that there hasn't been better options for the world and we're kind of still holding our place. Austerity will have to have its day, and economic health in America is a decade plus away, if we start being responsible. Its not merely a demographic thing, or a wall street thing, or a federal reserve thing. Most certainly the next President won't fix it, though they could wreck it further. To portray it as such is to declare the magic box will correct and we needn't worry. Government spending must go down. People must work hard and reduce their dependence.

Frankly, I'm RELIEVED the Fed has raised rates some. For my lifetime, dropping rates has been the single and only tool that has been effective against slow downs/recessions. And for too long now (20 years?) we have been operating at rock bottom rates. Meaning, had we faced a depression we would have been helpless. With rates now having gone up a bit, we've got some breathing room, and maybe we should get some more (raise rates higher) while we can. I'll admit I say that partially with knowledge that I've refinanced my home at a very low fixed rate.

Countervailing force will be robotics and automation reducing the cost of productivity, though I would guess at least 5 years before that puts on deflationary pressure.

Inflation has been due to mass spending, not fall in consumption from Covid.

Remember when he said Wheat prices were gonna be high for a long time, and then they stabilized very quickly? Gives you pause huh.

Nice head handle, Peter!!

If anyone wants to truly make America great again, in a real way, then we should embrace inflation for all of the growth we need to accomplish over the next decade. I ain't rich but do feel this is the right frame of mind and will approach future decisions from that perspective. In my opinion.

Yet people are expecting a rate cut sometime soon 🙄

When my wife and I bought our house in 1982 the interest rate was 15% and hard to get. The job market was tight and car loans were expensive. Most boomers we know are still in the stock market but are slowly moving to CDs because of the national debt and the future problems with social security. Many of this administration's policies are spending us into a hole we may not get out of. Inflation is here to stay and compound daily.

Excellent, I’m in T bills, keep those rates super high plz.

Hey Peter, Love your videos. As a Gen X guy, who believes/hopes I'll live to be 100 or more, I really don't think I'd be in a hurry to shift my retirement accounts to bonds or conservative investments by age 70 (have a while to get there). Though, I think that I'd still want to be in majority big cap index funds even well into my 80's if I'm healthy, and then maybe slowly rebalance. I don't want to miss out on making double-digit gains, as long as my horizon is 7+ years in mutual funds. What are other smart people you know saying about their plans? I think even a lot of boomers may have to -or want to- work or have a business much later, esp as people are living longer, so the whole generation may slowly leave the work and investing mode over a longer period of time, mainly so they won't run out of money later if they're still around in another 30 years.

You didn't mention trillions of do9llars of deficit spending, also going into the economy causing inflation.

Where were your videos 5 years ago??? 😭 would have been like having a crystal ball!

Live within your means

Highly recommend adding Chinese subtitles. I suggested this one other time to a wellness doctor and he did it. His following is now massive.

I bought my home in the mid 80's, Interest rates were 10.5%. My $100,000 home back then was costing me $10,000 a year just in interest alone. Most people think it's great to have super low interest rates until they want a descend rate on their savings account. Chase is paying basically less than half of 1% for savings account. Inflation is 10 times that. How is that good for someone over 73 years old trying to live these days. My young neighbors rent the two of them are making a little less than $200,000 a year combined. Those incomes were unheard of in the mid 80's. People need to be real and look into the future, you'll be 73 faster than you know it. Los Angeles

Remember this statement "inflation is just transitory" - Janet Yellen, 2021. Trump also over spent. But what you don't do is keep spending when inflation is soaring. That's pure stupid.

this i agree with and approve

Hey I'm an expat living in Europe, could you do something on the USDEUR pair? Or maybe an outlook on the strength of the USD?

I respect Peter’s views on geopolitics not so much on economics. The Fed will start to ease rates by Q4 this year. Our nation is in a period of out of control spending and has to borrow money to fund this spending spree. Higher for longer increases the cost of servicing our debt. Costs we no longer can afford.

"rate increases for the next 2-5 years!" 🙄

A Brilliant Analysis Based on Facts!!!

I see some people talking about price gouging. What percentage of inflation can be attributed to that if it’s a thing?

When the GDP growth cools down, so will inflation. That´s the simple but extremely powerful mechanism in play. Re-visit this video in a couple of years and you´ll realize why the economy is a very complex system where it´s almost impossible to make these kind of predictions Zeihan is doing here.

Funny, but I am more capital rich than when I retired but then I didn’t cash in, but kept on investing! Andrew Carnegie thought dividends are wonderful and so do I!

What about monopolies?