The economy today is a complex landscape with numerous challenges and concerns that affect everyday Americans. While some claim that economic growth is strong and inflation is under control, the reality for most people tells a different story. Essential costs like food, electricity, gasoline, housing, and wages have seen significant changes under the current administration, raising questions about the true state of economic well-being.

As a Ben Shapiro follower, like me you may well have seen his discussion with Phillip Patrick of the Birch Gold group about the state of the US economy. In this article I have tried to summarise what they discussed.

As interest rates soar, and the influence of central bankers becomes more apparent, many are left wondering about the broader economic implications. The real estate market shows signs of strain, the stock market fluctuates with uncertainty, and the role of precious metals as a hedge against economic instability comes into focus. Navigating this tricky economic environment requires a deeper look at various factors influencing your financial choices.

Key Takeaways

• The current economic landscape is marked by high costs and stagnant wage growth.
• Central banks play a significant role in shaping the economic outlook.
• Precious metals are seen as a stable investment in uncertain times.

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Economic Analysis During Biden’s Tenure

Real-World Impact on Citizens

During Biden’s administration, the economic claims of growth contrast starkly with day-to-day experiences. You’ve likely noticed that basic necessities have become significantly more expensive.

• Food prices: Up 20%
• Electricity costs: Up 21%
• Gasoline prices: Increased by 72%
• Housing: Rent payments have risen by 25%, median mortgage payments surged by 85%

Wages have consistently lagged behind inflation, meaning real purchasing power has diminished.

Record Levels of Consumer Debt

Consumer debt has soared to unprecedented levels, surpassing one trillion dollars. This indicates many are borrowing more to maintain their standards of living. The combination of rising prices and interest rates, along with entrenched inflation, poses significant challenges. Economic measures meant to control inflation have only slowed its growth, meaning that costs continue to climb, albeit at a less rapid pace.

Inflation and Federal Reserve Responses

Federal Interest Rate Increases

Over the past few years, the Federal Reserve has raised interest rates significantly. Mortgage rates now hover around 7-8%, which is a stark increase from previous years. Historically, these rates aren’t considered extremely high, but they do mark a shift. The main reason for these hikes is to manage inflation and stabilize the economy.

Discussion on Inflation Control Claims

Claims about inflation being under control are prevalent. While lower inflation can be seen as a positive sign, it’s important to note that it’s cumulative. If inflation was 10% one year and 5% the next, prices didn’t decrease—they just rose more slowly. The Federal Reserve’s core measure of inflation, personal consumption expenditures, has consistently exceeded their 2% target, influenced heavily by fluctuating energy prices.

Long-Term Inflation Trends

Inflation isn’t just a short-term concern; it can embed itself into the economy. Historical data shows that inflation has been persisting above the Federal Reserve’s 2% target for years. The situation is becoming increasingly entrenched, making it challenging to predict when or if the 2% goal might be met again. This persistent inflation impacts various sectors, including housing and consumer goods, making long-term financial planning more complex.

Central Bank’s Influence on the Economy

Central banks wield considerable influence over the economy, particularly through their control over monetary policy and interest rates. By adjusting these rates, they impact borrowing costs and overall economic activity. For example, recent hikes in interest rates have led to higher mortgage rates, which have significantly increased the cost of homeownership.

• Interest Rates & Inflation
  • The Federal Reserve has set interest rates between 7-8%.
  • Typical inflation targets around 2%, yet current rates hover above 3%.
  • Key Insight: Inflation adjustments are cumulative. A drop from 10% to 5% still results in a cumulative price increase.

Federal Reserve’s Power

The Federal Reserve, despite being an unelected body, holds immense power. It affects the economy by controlling how much dollars are worth, particularly those already taxed and saved. Their policy tools include raising and lowering interest rates, each with significant repercussions. For example:

• Raising Rates: Aims to curb inflation but can stress financial institutions.
• Lowering Rates: Intended to stimulate spending but may be less effective in a sluggish economy.

Current Economic Conditions

In the present climate, the housing market faces challenges due to elevated mortgage rates. Many homeowners are reluctant to sell because new mortgages come with much higher interest rates compared to just a few years ago. Additionally, commercial real estate is seeing declining occupancy rates, affecting underlying asset values. The stock market also shows volatility with IPOs underperforming compared to recent years.

Financial Planning in Uncertain Times

Given the uncertain economy, people are questioning where to safely invest their money. Traditional and commercial real estate investments seem risky due to high mortgage rates and declining property values. Precious metals, such as gold and silver, present a potential hedge against economic instability. These commodities typically perform well amid inflation and economic recessions.

Actionable Insights

1. Evaluate Your Investments: Given the volatile stock market and real estate conditions, review your asset allocations.
2. Consider Safe Havens: Precious metals may provide safety and stability in uncertain times.
3. Stay Informed: Keep an eye on Federal Reserve policies as they directly impact borrowing costs and economic health.

Understanding the role of central banks and current market conditions can help guide better financial decisions.

Obstacles in the Real Estate Market

Effects of Mortgage Rates

Rising mortgage rates have a significant impact on the housing market. With current rates at 7-8%, buying a home has become less affordable for many individuals. This increase leads to higher monthly payments, making it difficult for new buyers to enter the market.

Homeowners are also less inclined to sell their properties, as they would need to replace their current low-rate mortgages with new ones at much higher rates. Consequently, this has resulted in a reduction of housing inventory available for sale.

Issues in Commercial Properties

The commercial real estate sector faces its own set of difficulties. One major concern is the declining occupancy rates, which have been falling rapidly. This decline affects the underlying value of commercial properties, as there are fewer tenants to provide rental income.

As occupancy rates drop, the value of these properties tends to decrease, causing further instability in the market. Investing in commercial real estate has become risky, with many businesses reconsidering their long-term leases. This uncertainty contributes to the broader economic challenges faced by property stakeholders.

Stock Market and Investment Outlook

Performance of Recent Market Entrants

In the current financial climate, investors have observed noticeable changes in the performance of new public offerings. The general sentiment in the market has been cautious, leading to less enthusiasm compared to previous years. Newly listed companies are experiencing significantly lower trading volumes and valuations.

Key data indicates:

• New IPOs are performing at a fraction of their past levels
• Investor confidence remains subdued

Secure Investment Opportunities

Given the uncertainty, many are looking for safer places to park their money. Interest rates on traditional investments have risen, making certain options more attractive. Money market accounts are offering competitive returns, which appeal to risk-averse investors.

Advantages:

• Competitive interest rates
• Lower risk

Additionally, precious metals like gold and silver have become attractive due to their historical resilience during economic instability. Two main factors driving this trend include:

• Inflation concerns
• Potential recession risks

Investing in these assets may provide a hedge against the unpredictable economic conditions currently faced.

The Role of Precious Metals

Gold and Silver as Safe Havens

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Gold and silver are often viewed as reliable assets during uncertain economic times. When inflation rates rise and the value of paper currencies falls, these metals historically maintain their worth. As the Federal Reserve struggles to manage inflation and interest rates, gold and silver become attractive options for preserving your wealth.

Many people turn to these metals due to their ability to act as hedges against economic instability. Unlike currencies that can be influenced by central bank policies, the intrinsic value of gold and silver remains relatively stable. This stability makes them preferred choices for those looking to safeguard their investments during times of economic volatility.

In times of high inflation or potential recessions, placing a portion of your assets in these precious metals can offer a level of security. With concerns over the long-term strength of the currency, gold and silver provide a dependable alternative. The market may see fluctuations, but the long-term trend often leans towards preserving value, especially when other investment options present higher risks.

Summary and Birch Gold Group Affiliation

One of the things Ben Shapiro often states his appreciation of on his show is Birch Gold. As one of his show’s biggest sponsors, they provide insights into the economic landscape. In the interview summarised here, Ben was joined by Philip Patrick, a precious metal specialist from Birch Gold, to discuss the current economic conditions.

While official reports claim strong economic growth under outgoing President Joe Biden, a closer look reveals a different story. Food prices have increased by 20%, electricity by 21%, gasoline by 72%, and housing costs have risen sharply. Rent payments are up by 25%, and median mortgage payments have soared by 85%. Unfortunately, wage growth has not kept pace with inflation, leading to a significant decline in purchasing power for many Americans.

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Inflation, despite being said to be under control, remains above the Federal Reserve’s 2% target. The cumulative effect of inflation means that even if the rate decreases, the cost of goods remains high. This ongoing issue demonstrates how entrenched inflation has become in the economy.

The power wielded by central bankers, particularly the Federal Reserve, has greatly influenced the economy. Unlike elected officials, these bankers are not accountable to the public, yet they have a significant impact on the value of the dollar and the overall economic stability.

In such an uncertain economic climate, many are unsure where to invest their money. Real estate markets are facing difficulties due to high mortgage rates, and there’s unease in the stock market. Precious metals, such as gold and silver, offer a viable hedge against these uncertainties. They perform well in times of inflation, recession, and currency devaluation.

For those interested in exploring precious metals further, Birch Gold can provide essential information. You can even get a free information kit on gold. Birch Gold boasts an A+ rating with the Better Business Bureau and has thousands of satisfied customers. Trusting Birch Gold as a solid option for diversifying into precious metals is what Ben Shapiro regularly recommends.

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