June 24, 2022 - Epoch Times
12:29
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| Time | Text |
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| Good evening. | |
| Very few people know this, but as the inflation rate is spiraling out of control right now in this country, there's actually a U.S. Treasury bond that, again, very few people know about that you can buy to make use of the inflation rate to quite literally make thousands of dollars in profit. | |
| However, let me set the stage for you properly so I can explain what's going on. | |
| This right here is what's known as a can. | |
| It's typically the thing that politicians are seen kicking down the road. | |
| However, you can only kick the can down the road for so long until the real trouble starts bubbling up. | |
| Case in point, we right now not only have the highest inflation rate that we've seen in the past 40 years, but also besides that, you have many mainstream economists as well as the CEOs of many major corporations openly worrying about a looming recession. | |
| As just an example, a recent Bloomberg monthly survey of economists found that the probability of a recession over the next 12 months is roughly 30%, the highest that they've polled in two years. | |
| Then another poll from the National Association of Manufacturers found that close to 60% of the American manufacturers polled believe that a recession is likely coming to the U.S. in the near future. | |
| And then on top of that, just a few weeks ago, you even had the president of the Federal Reserve Bank of Minneapolis come out and say that it's unclear whether the central bank will need to actually trigger a recession in order to bring down inflation. | |
| Here's specifically what he said during a town hall meeting. | |
| Quote... | |
| My colleagues and I are going to do what we need to do to bring the economy back into balance. | |
| What a lot of economists are scratching their heads and wondering about is if we really have to bring demand down to get inflation in check, is that going to put the economy into recession? | |
| And we don't know. | |
| However, despite all these different signals quite literally flashing red, when Joe Biden was asked about it while on vacation in Delaware about four days ago, he said that all these concerns are just Republican talking points. | |
| Although, maybe he was joking. | |
| Take a listen. | |
| Regardless, today I'd like to focus our discussion on one very specific aspect of the economy, one which most people have exposure to, the real estate market, otherwise known as the most popular asset class among middle-class Americans. | |
| And unfortunately, it looks like the housing market is in the process of imploding on itself. | |
| To start with, due to the recent rate hike by the Federal Reserve, you can see this graph up on screen for yourself, showing that correspondingly, the average rate on a 30-year fixed-rate mortgage has been soaring at the fastest pace on record. | |
| It's now currently sitting above 6%. | |
| Or in other words, it's double what it was at the beginning of the year, and it's now at the same level that it was just before the housing bubble burst back in the year 2008. | |
| Now, fortunately, unlike in 2008, many people nowadays do not have a variable rate mortgage. | |
| They instead have a fixed rate mortgage, meaning that this doubling in rate won't affect the people who already own a home, at least in terms of their mortgage payments. | |
| However, it will essentially have the effect of putting the brakes on anyone looking to buy a new home. | |
| Because by going from a 3% mortgage rate to an over 6% rate, that corresponds to the average person's monthly mortgage payment going up by about $800. | |
| As you can see up on screen for yourself via this chart, the typical buyer today with a 30-year fixed-rate mortgage is now looking at a monthly payment of about $2,500. | |
| Whereas about a year ago, that same buyer would have been paying only $1,700 a month. | |
| Think about that. | |
| Buying a house today versus buying a house just 12 months ago will cost you about $800 more per month. | |
| And for many people, that is just a cost that they quite literally cannot swallow, which then naturally turns around and makes housing the most unaffordable that has been in history. | |
| Indicated by this graph that you see up on your screen. | |
| And because it's so unaffordable, new home sales are plunging at the fastest pace since the peak of COVID, which is a trend that will likely continue well into the future, given the fact that the home buyer sentiment is likewise just crashing through the floor. | |
| Which makes sense, given the fact that for one, many people are quite literally priced out of the market, and then secondly, if they can even afford it, they no longer see real estate as a good opportunity, leading to the number of mortgage applications falling by a whopping 52% compared to last year. | |
| And because of all these compounding factors, the real estate market is beginning to squeeze and the value of people's homes, meaning very likely the value of your home, is starting to fall. | |
| For instance, during the four week period ending on June the 12th, we saw the largest percentage of sellers ever recorded reducing the list price on the homes that they're trying to sell. | |
| Furthermore, the property values in some parts of the country are falling by as much as 20%. | |
| As you can see up on screen for yourself, this is a chart from Zillow showing places like Toledo, Rochester, Detroit, and Pittsburgh seeing losses between 13% to 19% in terms of people's home values. | |
| Now, of course, you can make the argument that this harsh decline is a necessary market correction, given the fact that the Fed has been essentially propping up a real estate bubble for the past 10 years now by flooding the market with cheap cash. | |
| However, regardless of how we got here, all these different data points make quite a lot of people agree with the sentiment that was expressed by the CEO of Airbnb when he said this, And of course, even though we highlighted the real estate market, well, a similar situation is playing out across the entire economy. | |
| For instance, stocks have plummeted for the past several weeks, resulting in almost $3 trillion being erased from people's retirement accounts. | |
| About $2 trillion of market cap has been wiped out among all cryptocurrencies. | |
| And of course, you are seeing rampant inflation in this country, with the cost of seemingly everything going up by double digits. | |
| However, while doing this research, I wanted to find the silver lining. | |
| Because typically, where there is a challenge, there is also an opportunity. | |
| And during my search, I came across a relatively unknown inflation bond, which is currently offering close to a 10% annual return. | |
| And now, before I explain to you what an iBond actually is, I should mention that for one, I'm not giving you any financial advice, I'm just explaining to you how these bonds work. | |
| And secondly, I just wanted to mention that I don't earn any commission, Nor do I earn any money whatsoever by telling you about these bonds. | |
| I just want to tell you what they are so that you know about them as a possible hedge to all this rampant government-caused inflation. | |
| And all I ask in return is that you take a quick moment to smash, smash, smash that like button so this video can be shared out to ever more people. | |
| And perhaps, if you haven't already, also subscribe to this channel. | |
| That way you can get this type of honest news content delivered directly into your YouTube feed every single weekday. | |
| So, an I-bond, which stands for an inflation bond, is issued by the U.S. Treasury, and the amount of interest that you earn on the bond is tied directly to the annual inflation rate. | |
| Now, these bonds have been around since about 1998. | |
| However, normally, these bonds are not very interesting. | |
| When the inflation rate is, let's say, 2% or 3% like it is typically, well, that's not a very big return. | |
| However, these I-bonds really begin to shine during times like these, because at this moment, the current annualized rate of inflation is sitting at a whopping 9.62%, and therefore, this is what these bonds yield. | |
| However, there are three things worth mentioning about these bonds, which we'll get to in a moment after a quick word from today's sponsor. | |
| Alright, the sponsor of today's episode is a phenomenal company called AMAC. That's A-M-A-C, and it stands for the Association of Mature American Citizens. | |
| They are quite literally one of the fastest growing conservative organizations in all of America, and you should consider joining for three main reasons. | |
| The first is the money-saving benefit, because as a member of AMAC, you get access to a ton of discounts at many different verticals. | |
| Things like vitamin stores, restaurants, retail shops, and so on and so forth. | |
| If you want to check out the full list, it's pretty exhaustive, you can do so over on AMAC's website. | |
| The second benefit is that you get exclusive access to the AMAC magazine. | |
| It'll be delivered directly to your doorstep and it contains phenomenal coverage as well as deep analysis. | |
| And then the third benefit, the one that people say is their favorite, is that AMAC fights for your values over on Capitol Hill. | |
| In fact, you can check out the online version of this on their website. | |
| It's the AMAC Action Advocacy Annual Report, and it shows exactly what they're doing on Capitol Hill in terms of fighting what they call the socialist storm that's brewing in this country. | |
| So head on over to amac.us forward slash facts matter and sign up today. | |
| I'll also throw a link down in the description box below. | |
| Now, there are three main things worth mentioning about these I-bonds. | |
| The first is that every individual person is limited to buying a maximum of $10,000 per year of these I-bonds. | |
| That's because they're primarily intended for small savers and investors, not for big institutional players. | |
| However, there's a caveat here. | |
| There's a way to work around that. | |
| Because while every individual person is limited to buying only $10,000 of I-bonds, a couple can each get $10,000 individually. | |
| And then furthermore, you can also buy additional I-bonds as a gift. | |
| For instance, you can buy a gift for each one of your children. | |
| Meaning that while an individual person is limited to buying only $10,000 of I-bonds per year, a family unit can buy a lot more. | |
| Then the second point is that you will have to hold the I-Bond for at least one year. | |
| Meaning that if you buy an I-Bond today, you cannot cash it out for a full 12 months. | |
| That money is tied for a full year. | |
| Then after the year, you can take it out any time. | |
| However, it's worth mentioning that if you sell the bond before holding it for five years, you will have to give up three months worth of interest. | |
| Meaning that, let's say, if you buy the bond today, and then you hold it for 24 months, and then you sell it at that point, you will only get 21 months' worth of interest, because you have to give up three months. | |
| However, if you hold the bond for over five years, that penalty no longer applies. | |
| Then, the third point is that the way that the interest rate on these I-bonds is calculated, as I mentioned earlier, is tied directly to the annualized rate of inflation. | |
| And that rate is adjusted twice a year by the U.S. Treasury, on May 1st, and then again on November 1st. | |
| However, whatever the rate is when you purchase the I-bond is the rate that you will be guaranteed for the next six months. | |
| So if that sounds a little complex to you, let me show you on a graphical timeline. | |
| Let's say you buy the I-bond today, which is in June. | |
| The current rate of inflation is 9.62%, which is the interest rate that you are guaranteed to have on your bond for the next six months. | |
| Then after six months, the interest on your bond compounds, and the I-bond rate is reset to whatever the new inflation rate is as of November the 1st. | |
| And so let's say the new inflation rate will be 10%. | |
| And so for the next six months, your I-bond rate will be 10%. | |
| Then after another six months, the process repeats itself, your interest is once again compounded, and the rate is reset once again according to whatever the new inflation rate was set to by the Treasury on May the 1st. | |
| And so on and so on and so forth. | |
| That is how an I-bond works. | |
| And it appears that they are getting more and more popular, given the fact that according to the U.S. Treasury, they have sold about 10 times more I-bonds this year than in previous years. | |
| Which obviously makes sense, given the fact that you now have an investment like this, yielding an almost 10% return, backed up by the full faith and credit of the U.S. government, whatever that means. | |
| And so, if you'd like to buy these iBonds for yourself, you can only purchase them directly from the Treasury itself. | |
| You can do so by going over to www.treasurydirect.gov and setting up an account there. | |
| I'll throw a link to the Treasury website. | |
| It'll be down there right in the description box below. | |
| And then furthermore, I'd love to know whether you guys enjoy content like this and whether you'd like to see more of it. | |
| I was actually thinking about doing a whole series about these types of concrete ways that you can prepare yourself and your family for a possible recession. | |
| Let me know in the comments section below whether you'd like to see more content like this as well as a series on how to recession-proof your life. | |
| Leave the comments below. | |
| I'll be reading them later today. | |
| And also, as you're making your way down there to the comments section, please take a small detour and smash that like button as well as that subscribe button. | |
| And lastly, as I mentioned before on several previous episodes, but I'll mention it again, over on EpicTV, we recently published a great interview between myself and Dr. | |
| Michael Yeadon, who is a former vice president at Pfizer, as well as Pfizer's former chief scientific officer for their allergy and respiratory research department. | |
| And we discussed a broad range of topics, including how, in his professional opinion, there is no safe way to combat an ongoing pandemic, Since the necessary safety trials for a vaccine are necessarily longer than the length of the actual pandemic, and then furthermore, if we continue down the path that we've been going down, it will lead to total global control by a small group of elites. | |
| Now again, even though that interview was fantastic, at least in my opinion, and even though everything was properly sourced, due to the censorship regime here on YouTube, I cannot even show you the trailer for that episode. | |
| However, you can find it right there at the very top of the description box by clicking on that link. | |
| It'll take you directly to Epic TV, where you can watch that interview in its entirety. | |
| And I hope you do check it out, because Dr. | |
| Yudin has a phenomenal kind of insider's view into what's been happening over the past two and a half years. | |
| So again, that interview will be right there at the very top of the description box. | |
| And until next time, I'm your host, Roman from the Epic Times. |
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