The Great Reorganization – Part 3

We’re talking about America’s Great Reorganization this week.

For those just joining us – the thesis is rather simple. Virtually every aspect of our economy has been “financialized” over the past 50 years. This caused some major distortions that threaten to sink the entire dollar-based financial system.

Most of the mainstream financial analysis I’ve seen largely ignores this dynamic. It takes the position that nothing has broken yet… therefore nothing big is likely to break going forward.

At the same time, much of the alternative financial commentary out there seems to employ single-variable analysis. It looks at the increase of fiscal debt and deficits and presumes that they will continue apace until the system collapses under its own weight.

But what if that variable isn’t fixed? What if it changes?

As we discussed yesterday, the US Congress has shown no desire to cut spending and get its fiscal house in order. But a major sea-change at the heart of the dollar-based financial system could force the issue.

That sea-change stems from the Secured Overnight Financing Rate (SOFR) replacing the London Interbank Offered Rate (LIBOR) as the interest rate benchmark for dollar-denominated loans and derivatives.

SOFR allowed the Federal Reserve (the Fed) to break ranks with the global central bank cartel. It’s what enabled Fed Chair Jerome Powell to raise interest rates at the most aggressive pace in history.

The financial media covered that story daily. They said it was all about combatting inflation. But that was just part of the story – a small part.

Powell’s not the kind of Fed Chair we’re used to.

If we think back to previous Fed Chairs – Janet Yellen (2014-2018), Ben Bernanke (2006-2014), and Alan Greenspan (1987-2006) – they were all academics. They had no real-world experience in the financial sector.

And they each were prone to what became known as “Fed speak”. They would get up on stage and talk a lot—using a lot of big words. But those words wouldn’t convey much meaning. Those listening were left to wonder what their true intentions were.

That’s not Powell. He’s not an academic. He’s a Wall Street guy. They call him private equity Powell on the Street.

Powell’s been a straight-shooter thus far. He’s said exactly what he planned to do…and then he did it. And even after cutting the fed funds rate last month, Powell said that he still aims for “normalization”. He made it clear that his goals have not changed.

If we take Powell at his word, that means the Fed didn’t really “pivot”. While Powell may announce a few more small rate cuts, he’s not trying to drive rates back down to historically low levels.

Instead, he wants the federal funds rate to be “neutral”. That way we can get back to allowing the market to set interest rates – not central planners.

If we take Powell at his word… and if he can pull it off – everything changes.

Congress will be forced to cut spending. Businesses will be forced to operate efficiently. Individuals will be forced to save before they spend. And then suddenly our value system will go back to what it once was…

The reality we’ve experienced is that “cheap money” cheapens everything. When we push interest rates to zero and print trillions of dollars from nothing, it encourages financialization, speculation, and waste.

That’s how we get cheap McMansions in the suburbs and fancy cars that nobody knows how to fix when something goes wrong.

It’s how we get strip malls and big box stores… and empty Main Streets. It’s how we get legions of sociology and diversity studies majors… and few people who know how anything actually works.

In short, cheap money cheapens our society’s values.

Keep at it long enough and you get to the point where your society has real discussions about who’s a boy, who’s a girl, who’s an it, and who can have babies. That’s when you know you took a wrong turn somewhere along the line.

Normalization is the solution. It will force the Great Reorganization.

Tomorrow we’ll talk about what it all looks like…

-Joe Withrow

P.S. I know some of this macro talk may seem “out there”… but there is a practical application. When we can connect the dots around what’s happening on the economic stage, we can position our finances accordingly.

In fact, I’m confident we can bulletproof our money if we get the big picture right. If you know what’s happening, you’ll know what to do… as the old saying goes.

That’s why I’m hosting a webinar next week. We’re calling it: The 4.5 Things You Need for Financial Freedom: How to Create True Financial Security in Today’s Economic Climate

We’ll go live on October 25^th at 3:00 pm Eastern. The core presentation will run for about an hour or so. Then we’ll open it up to unlimited Q&A. And I’m an open book – no question will go unanswered.

And I promise – we’re going to talk about actionable investment strategies that you can implement immediately. We’ll even walk through an approach capable of creating an extra $3,450 a month in extra income in three years or less. Once you see how straight-forward it is, you’ll wonder why more people don’t do it this way.

Oh, and we’ll even send everybody three guides to help you implement the solutions we’ll discuss.

So I’m very excited for the event next week. I think we’ll be able to share some strategies that you won’t find anywhere else. You can register now at https://phoenician-league.lpages.co/webinar-oct24-int/.