I am a millenial living in California and I honestly stopped worrying about it. I adjusted (lowered) my expectations to life, try to eat healthy, work out and let it go.
I never wanted to leave CA, but leaving CA was one of the better decisions I've ever made. Find a job in WA, leave and don't look back, you'll thank me later.
It is not that they are anomaly it is the fact that crazy policies were put in place with low interest rates. It is like having a sale were gold is 50% the market rate and there is only so long that can continue until the seller realizes that they cannot source any more gold or they run out of funds.
if you bought a house before 2 years ago with a ridiculously low interest rate, you're sitting pretty now. well, at least as long as you still have a job. in hindsight I should have bought a massive home on an acreage, then sold my modest little home at the peak of the boom. oh well, I'm happy where I'm at so there's that 😂 in comparison my Dad bought his first house at 18% 😱 yeah, things are reverting to the mean after years of manipulation to paper over the 2008 crash
@@RealJohnnyDingo As long as you stay, you’re in good shape. But there are a lot of people who now won’t move to take the better job because they will not be able to afford the house they have at a higher rate or they’ll be forced to take a lifestyle haircut. It will change things a lot. Remote work will mitigate it somewhat. On a nationwide scale, it changes things. 2008 was fine for us, we were employed, but we did feel stuck in our house for several years. The irony is, we stayed put, which has been good for us in the long run financially. Moving, buying, selling can suck tens of thousands of dollars away really fast.
I don't know about the real estate market in your country, but I bet your house has doubled in value. So today a buyer has to pay double the mortgage you did, even at the same interest rate.
This triggers memories of Austrian School Economics, i.e. That recessions are caused by mal-investment which is caused by artificially low-interest rates. Artificially low rates make bad ideas look like good ideas and then at some point reality hits and the industries that overdid it get hit HARD. The term I keep hearing is Zombie Companies, the walking dead dependent on low-interest rates. The Federal Reserve does not SEE itself as a Zombie Hunting organization, but they are. Or that is the theory anyway. I really don't look forward to finding out the reality, given that 30% of listed companies are described as Zombie Companies by some accounts...
Well, they are looking to change those unemployment numbers so coming after zombie companies would probably fix that problem for them. The great resignation won’t be so great, very soon.
Austrian economics does make good arguments but it also has made people over sensitive to the fact that dirt happens. Recessions are going to happen no matter who manages the system. The idea that there is some Austrian economic model of free market that will completely eliminate inflation or recession is a very simplistic outlook.
@@bighands69 I don’t think I’ve ever heard someone say that if we follow that model we would not have boom and bust cycles anymore, all they seem to say is that they’ve become more painful because we’re creating bubbles, and higher highs.
Transitory inflation is driven by quantitative easing and massive cash infusions. Persistent inflation (most of what we’re seeing now) is driven by energy costs - period - and these interest rate changes will make it worse, not better, as investment in energy production decreases (but we HAVE to do this), long-term inflation (what we’re also seeing) is driven by MMT (zero percent interest rates) and ALL these zombie companys have to be eliminated before we see what actual supply/demand curves look like when companies have to be profitable to succeed (hasn’t been true for 20 years). We have a decade, at least, of abnormal inflation AND a massive decrease in supply of consumables. Going to be a fun decade.
@@captainalex157 they have a special problem with people paying on new apartments that are not built yet. Xi tried to do a western style massive build to house people. He did not understand how to do this and Evergrand is failing . Xi doesnt want to bail them out. Hence his retreat back to the old ways . But all his rich citizens want out. We are but pawns to our countries leaders🇨🇦
I'm an older millennial and want to point out these interest rate increases are also painful from a student loan standpoint. I have an adjustable rate private loan. As Peter said I have been lucky with low rates since graduation but it has gone from 3% to 6% and now looks like it will almost be 7%. I am going to pay it off soon but folks with a higher balance are going to feel pain from their interest payment more than doubling.
I don’t have the stomach for adjustable rate anything. Especially mortgages. It just ensures that the payments sharply increase exactly when the economy sharply decreases.
Peter Zeihan said, “When money is free all sorts of weird shit happens.” It can be painful to correct all that “weird shit.” We bought our first house in 1980, when mortgage rates were 18%. We were THRILLED to be able to assume a VA mortgage at 8.75% but our down payment was over 25%. That was a painful time.
As a millennial, I joined the workforce when the job market was absolute trash. The job market finally improved during the pandemic. No realistic way to buy a home or have kids. Thanks!
Have kids anyway. You don't actually need money to raise them, it's just harder. You'll be happier with a family you build over your lifetime. Done right, It's worth it.
Pricing of petroleum is set in the international market. If global supply is cut, prices go up. If demand is high, prices go up. The U.S. has plenty of petroleum and refining capacity, but unless you 1) create a separate controlled domestic market, OR 2) increase global supply by exporting enough to compensate for undersupply, your(our) gas and diesel prices are going to reflect the global market and remain high. The problem with 2) is it will take investment to export more petroleum, and it’s very difficult to determine when prices will reach a new equilibrium. That makes the investments in increased export capacity very risky. The problem with 1) is obvious, I hope.
@@annking1576 Because they rely on doom and gloom for views. They have been saying the same things since the dawn of TH-cam. It takes a LOT of people to let things crumble like they predict. Diesel is being processed as I type this. The hysteria those videos create bothers me.
@@jeremyhanson8411 I agree! I've had to stop watching them - just their titles want to strike fear in the viewers. The problem is when they all jump on the same bandwagon, then you question the subject being discussed & need verification. Thank God for Peter's videos!
There are going to be 2 kinds of Millienials going forward. - Those that bought a home before interest rates hikes and - Those that can't buy a home due to interest rate hikes
@@bighands69 The 'Bank of Mom and Dad' often doesn't have to charge market interest rates. Millennials whose parents are able and willing to loan might have family money available at affordable rates, even if their real world credit rating is less than 650.
@@bighands69 Gap gets bigger. If you're buying a house with cash and you're competing with people who struggle to get a mortgage. The rich need to invest their wealth. Asset prices could stay high or go down less.
this time it's going to be like the 80s but 10x worse because wages have completely decoupled from productivity thanks to automation and globalization. Even if globalization decreases, automation is exponentially increasing. We're heading for a crisis unlike anything in human history and I don't think anybody, even Peter, can fully appreciate just how devastating this is about to be for the average middle class and lower class person / family. It's fucking brutal.
I actually remember the exact opposite. Maybe it just depended on where you lived. The people I know made bank in the 80's and it crashed in the early 90's.
@@jchase8223 where did you live at the time? In Holland the 80's were horrible but after the fall of the wall and one eastern country joining the EU after the other in the early 90's export was booming. Happy Hardcore originated in the Netherlands in the 90's ascent for a reason.
Thank you very much for your updates point of view. Just finished your book Disunited Nations and it was lots of learning for me. Very much appreciate your work!
Excellent commentary, and completely correct, too. I ask again, how could American business interests _not_ have seen nearly all this coming at least a decade ago. I guess ignorance and greed always go together.
If you go back and review his specific calls from earlier this year you'll see he's often wrong (wheat, energy, Russian military...). Marco economics and technology are not his strong points, saying fed wants a minimum of 6% is nuts
@@ajc3e he's giving, and possibly believing, the rationals being used by those seeking to do it. The UK looks on that path too. Imo in reality it's more of a pretext to do exactly what they're saying on the business channels and continue to suppress wages purely for the rich to stay pain free at everyone else's expense both literally and figuratively. Because this is not a recession, most of this inflation not stemming from the war in Ukraine or Trump's trade war is all price gouging and simply redressing half the inequality that's piled up over the last 40 years would nearly make up for all the rest of this that they'd rather drop on the poor and vanishing middle class. I'm not so sure Zeihan is in favor of all that but his personal position and lifestyle does seem to hinge more on him auguring trends for upper middle to just below hedge fund managing classes. Probably why he seems almost disdainful of the very different circumstances faced by later GenX and Millennials compared to his key audience. The only alternative to pushing rates sky high is taxing the rich, breaking the monopolies and redistributing all that capital in Scrooge McDuck vaults.
Also saying Germany will implement capital controls. The EU is there for free flow of labour and capital. No EU country can stop capital or close their borders.
Insightful as always! To be even more precise, a mortgage rate of 6.5% already results in a monthly payment of 50% more than a 3% mortgage. A mortgage rate of 9% vs. 3% is actually 91% higher.
I had to live through that period, running a group of businesses in the UK. Volcker's rapid rise in rates helped kill inflation but caused carnage around the globe. Some called it the Latin American debt crisis but it was much wider than that. Many non oil producing countries in the Middle East, Africa and elsewhere had borrowed in petrodollars. The rise in interest rates meant they ran out of cash; no less than 15 countries we exported to stopped buying products, even spare parts as they were forced to focus on buying food and energy. In the UK a subsequent investigation by a parliamentary select committee reckoned that about one third of UK manufacturing businesses folded under the pressures. Economic structures have changed since then but the pressures remain and rising interest rates will cause more grief and pain.
@@davidandrews1715 It was a period of hard choices that had to be made. the 1980s economics of the US was a response to the sloppy 1970s policies that encouraged expansion. If the UK had of followed the US lead in cutting taxes at the same time and deregulating they would have expanded their market base but instead the UK media and the unions along with members of parliament decided cutting taxes was not a good thing so only limited amounts of tax cuts happened.
What happens when: - US debt to GDP is at 120% - you spike fed funds rate from 0% to 5% - most of US debt is short term 1 to 2 years and needs to be rolled over - 20% of the S&P 500 are zombie companies (they can’t survive without issuing cheap debt) - tax receipts collapse because companies fail. This video reminds me of a Bitcoin style argument only looking at one side of the issue and ignoring the other side. Yes the your mortgage would be 50% higher, but servicing the government debt would be 50% higher too. While the US is in a strong demographic position and military position we are in a weak position in regards to our debt.
Thanks Peter Ziehan. Your videos are so educational, and often I have seen that your predictions and forecasts are on point, even though I have just recently found out about you. The things you say makes me take HUGE financial precautions. Right now after this video, having to seriously look at 3 things: My soon coming electric car, my career in tech, our small ski town apartment.
@@larsfaye292 The Tesla might become a value loser if interest rates hits 9%, then it will become too expensive to finance for a larger proportion of the demographic, as Peter would say. Also our ski appt has a 25% rent hike, interest rates on loans going up. But as long I have a job it all works out.
Get rid of all three (10 year time horizon)....electric cars make no sense anywhere in or near big cities and considering ALL the tech companies are instituting HUGE layoffs that means NO MORE work at home! In point of fact, working from office (or service job in the city and environs is more likely). I'm pretty certain small ski town apartments are gonna be pretty tough investments to get rid of; also w/10 year horizon. Good luck friend.
Bought my house during the housing market crash at $109k with a 3.1% interest rate. 3 bedroom, a pool, next to a mountain, 15 min from downtown, great view of the city, and nice sized back yard. My brother just bought a house a little larger, on the edge of the city (not by choice), almost no back yard, a block from a highway, for $485k at 7%. It's ridiculous right now.
4:20 I was born in 1980. I feel like i was born in that sweet spot knowing what came before me with clarity. I also know that the rates we have seen in my life are not normal. Many of us have deemed it so due to our short memories. I find it difficult to accept many of you tend to do this. Its a human trate. In any event I'm "used to" mortgage rates being in the 5-10% I grew up in the mortgage industry doing processing, sales, origination, uw, lately building. Ive done it all. I never said to myself this 0% thing is here to stay. Ive always had in the back of my mind rates coming back up. And here they are. Good for me. lol
I'm so glad, as a gen x'er, I was already expecting to not do as good as my folks. I spent my time doing things that cant be taken away by economic crashes. Knowledge, relationships, finding contentment with less. In 2008 I didnt even notice the crash. It will be that way this time too because I have never been invested. As far as buying a home.... no thanks. I like being mobile. I have two jobs that I can do in any city and get the job in days. That gives me amazing flexibility that having a home that ties me to a location doesn't afford. When you never thought the "American dream" was that appealing anyways, it's easy to find a path that works for you.
As a millennial and being in tech (Financial tech no less) this is all especially poignant. Bad time to move across the country but will just have to change how I allocate money. Many aren’t so lucky sadly.
Oh nooo! I'm going to go from not being able to afford a 3% mortgage to not being able afford a 9% mortgage. If you hadn't said something, I literally wouldn't have noticed...The only thing that matters to most people is their salary...Either you make good money or you are barely scraping by...Young people are exceptionally average.
The living standards in America are far higher than anywhere else. When Americans think they have it tough they are still living the high life compared to everywhere else. The great depression in America was still a far better economic condition than many European countries had at their economic peak.
@@bighands69 I'm not discussing living standards (whatever that means lmao) in the US or abroad...or various eras...It's not relevant to the conversation...It seems you're just too stupid to have a discussion with. Sorry.
I've only found out recently that US home loan rates are fixed for the life of the loan (assume this is true?). Here in Australia most loans are variable, if fixed it's only for 2,3 or maybe 5 yrs. This means each time our reserve increases rates our mortgages go up pretty much straight away (unless we are in a fixed period). I beleive this is the same in parts of Europe too.
In the 80’s a lot of people had what they call an arm loan and some loans by time closing a lot of interest rates would double.. I knew to never buy a house on a ARM loan… Our home loan is at 3% …
Yeah Aussie housing market could do with a reset anyway, average house price in nsw is something like $1m and average wage is like 60k IIRC insane levels of over valued
Yes most loans in the US are fixed when buying a home but you can also buy homes with variable interest rates as well usually the people that buy variable interest rate home loans don't have to credit to get fixed rates
My understanding is that a majority of the mortgages that caused the financial crises in 2008 were fixed for the first 5 to 7 years and then had adjustable rates after that. So, I think most tried to move away from those after the dust settled from the financial crises. It still is an available option but more used by those expecting to move within the first few years or those with just bad enough credit they cant get the fixed but still good enough to get a mortgage. But I very much could be incorrect.
In the US it is already a mortgage crisis: lots of people are backing out of the loan application by 90% because they can't afford the monthy payment that takes more than 50% of their monthly salary. Logically this means that the housing market will crash by next year. What people might do is to cash out their loan equity based on the actual market value and either use that money during hard times and default on their loan in the next few months. Due to the interest rates rising , it's possible we see again those ARMs (Adjustable rate mortage) to get a lower interest rate, it would give about 1 to 2 years of stability on the market before the big mortgage crash. Greetings from France.
@@ultraderek honestly curious, as we came to the same conclusion on interest…but can’t see how monetary deflation wouldn’t bring those values right up, if not surpass them.
Pete, San Jose is not in Silicon Valley. Count the high tech there, then count in Santa Clara, Sunnyvale, Mountain View, and Palo Alto and compare the numbers. San Jose is the bedroom of Silicon Valley service workers.
Except Mr. Zeihan was writing the exact same thing in his first book, in 2014, way before Mr. Johnson started claiming "his" theory. And then there's the Triffin Dilemma, aka, "The OG dollar milkshake theory" first created back in the 1960s by a Belgian economist. So...nothing new under the sun, hey?
0:55 Millennials don't have a lot of peers around the world. So sad. Even if True. So sad. We were sold too many population growth, when in fact low birth rates will be the biggest problem of the next 100 years.
When money is free all sorts of weird shit happens.” Like corporations/companies buying up any and all real estate and driving up the price of rentals and for sale properties?
Low interest rates were very bad too... if everybody can afford it on credit that means the prices are always going up... good for the few bad for the many
Great video. German has many headwinds to deal with but their exporters have the mother of all tail winds: of a really weak Euro. They also have high productivity, which is key when input costs are rising. When the global economy rebounds, they will come back hard and fast.
Out of interest I had a look at the population pyramids for various countries. As Peter says Germany has a problem as do many other central and southern European countries as well as countries like Japan. However if you look at France, UK and the Scandinavian countries they are very similar to the US.
As usual he completely ignores that Germany has and is receiving large influx of immigrants from all over the EU and abroad. I don't know why he is so fixated on Germany anyway. The ECB isn't going to raise interest as high as the Fed does, and inflation isn't as bad in most of eurozone as in the US.
edbop you disregard the immigrants in the story. As Peter outlines in his latest book, these are not the ambitious immigrants easily absorbed and on to the American Dream but immigrants with an average IQ of 85 who go to Europe for free housing, money, food and abuse women.
So hard for Millennials, Really, My parents went thru the Great Depression, and WW2. My father did not own a pair of shoes until he went into the Military at age 17. Mother worked in a ammo plant for 10 cents an hour 7 days a week 16 hours a day. Vast majority of millianials I know are have never seen a hard day of work . They are the softest people I know.
@@kellychuba in that regard its too late for nations like Germany, S Korea and China. I predict that in about 10-15 years that there will be a massive immigration from Europe to the America's and Australia as a result of wars and economic collapse.
Yes, once rates are high enough they will start the labor market destruction leading to mass real estate liquidation, since no one can buy with high rates and no jobs, prices will plummet and they can scoop up all the property cheap. Enjoy the pod.
Our first mortgage in '86 was 13.5% and we were lucky to get it. Not that many years earlier, we had friends who were paying 20%.. And then our interest rates began to slowly fall until our mortgage was paid. Guess what, kids? You'll survive.
@@bighands69 Understandable, but not American. It is also not particularly helpful unless you can afford a mortgage specifically in the area that you work in.
Been there done that. I entered the work force in 1972. A huge surge in the work forces from boomers reduced wages that forced mom to go to work just to barely survive. Interest rates for houses got closed to 20%. Had large unemployment with high inflation. The myth that boomers had it so good is nonsense. Maybe richer upper class ones did but the majority of us were working class. I had a better relationship with my grandparents because you had to go back to the Great Depression to find as bad a economic situation . Which they enter during their early working years. I was smart cut my cost to the bone and was creative to find housing and other goods I needed. Delay gratification could of been my slogan. The young right now have one thing going for them I did not. Labor is scarce and getting scarcer. They will be able to demand wages to compensate , something I did not have.
@@bighands69 Nope! I entered the work force in late 80s. It was much worse back then, than today. Manufacturing was leaving the US for China. Today more manufacturing is coming back. Easy credit was unheard of. All major credit cards charged annual fees on top of high interests. Get into the trades and you'll never have to worry. But don't forget to thank a Democrat for the high inflation and the mess that's coming.
You forgot to mention that low interest rates during the past decade facilitated the fracking boom, which has now flatlined and may be going into decline, which has implications for worldwide energy.
Many, many wells are simply capped. Infrastructure is mostly in place - it only needs to make economic sense to turn the fields back on. The reason this hasn't happened already not corporate greed, it's market uncertainty.
Hello Peter. I've been listening to you for a while now. I appreciate your perspective, I find it really helpful to understand the world, counterbalance others opinions and try to form opinions of my own. Being french, I'd be very insterested in a breakdown of France weaknesses and strengths for the forseeable future. What are our unexploited ressources ? What shifts should be made in our strategies ? etc, etc. I'm just adding my small weight towards you making such content. I appreciate and value you and your work. TYVM.
As a non french citizen (I am Swedish). If you're pro EU, you should allow gas pipes to be built between Spain and Germany through France. It would help the Germans and the union a lot :)
@@nils123007 US citizen here and I agree about the pipelines. Spain is an energy island, more or less cut off from the rest of the EU due to the lack of pipelines. If France was willing to allow them to be built across their territory, Germany's position would at least downgrade in severity from 'catastrophic' to 'extremely bad'. As for how France could benefit; demand the pipelines be built with french labor, then tax the gas as it travels through your country.
France expects to see slightly lower baguette exports in 2023, however due to global instability, the need for humour will increase and the unemployment rate for mimes will drop. There may be opportunities awaiting you as a professional street performing mime. Have you considered that?
Circa 2017 - 18, Peter Ziehan saw France as the nation in Europe most likely to be 21st century power. I too would love an update and analysis of the current French positioning towards Germany per Russian aggression and defense of Ukraine!??
@@jameswelsh7789 yeah, I heard him say something along this line. He put Sweden there aswell (with its nuclear/water dam energy) if I remeber correctly. But with the last five years, we could use an in-depth update
If people can't afford current home prices at 9% interest, then sellers will have to either lower their asking price or not sell. Of course there's more to it than higher rates force down prices, those who already own might not be able to afford to sell at a lower price, or might simply not be willing. But I think the effects of the interest rate hike might not be all bad.
Great video! Can you please give your opinion on the whole BRICS thing with their supposed anti-dollar currency? It sounds ridiculous to me (The BRICS concept itself AND their currency idea), but I'd love to hear your points.
He's done a fair amount of discussion on BRICS in some of his older (pre-covid) presentations. The long and short of it is that the dollar isn't going anywhere since the US is the only country with a large enough stable economy that has proven it won't interfere with monetary supply to rig the game in it's favor.
I guess my take on this is that whenever undemocratic entities (of which some of BRICS are to a lesser or greater degree) try to achieve anything like that which requires some degree of honesty or cooperation, it is generally doomed, because there is so much rot and dishonesty throughout such systems thanks to awful tyrannical characters at their peak who, as Peter often points out, don't tolerate any bad news, so they end up getting little to no accurate information from their subordinates who are often in fear for their lives if they don't tell despots what they want to hear.
He’s going to give a pro-U.S view and dismiss it as irrelevant. Actually this new reserve currency backed by gold will allow countries to trade without the U.S. dollar.
They're all screwed except, _maybe,_ India which has it's own problems. India has a large sex imbalance like China, most women get a raw deal, Hindutva is baloney, climate change will wreak the same problems on India that it does on China and Bangladesh. India may wind up facing the middle income trap like China is right now. I'm rooting for India right now, because it's a democratic country, if _that_ changes . . .
What makes you think Germany or any Euro denominated country will implement capital controls? Hasnt happened in decades. Highly doubtful this would start.
They will do it as there will be a capital flight out of Europe. The UK market has the tools to enable it to dampen the outward flow of capital without doing anything to drastic. Since you have pointed out that it has not happened in decades that answer your question any small amount of control will look like the sky is falling.
Peter is as much of a generalist as any or us. I too can accurately talk about my field of expertise, and then be wrong about nearly everything else outside of my area of competence. In the last month he has said 'putin has one week left' (wrong), Wagner group will collapse when the current troops are killed (wrong - they will just recruit from anywhere in the world that being paid to potentially die is still worth it). He's now saying that established economies are 'done' because of mild rising interest rates. Go look at a graph of historical interest rates for Germany, the US, japan, ect - there have been DECADES of giant interest rated and guess what - these countries are still around - their governments change policies that stink, but are just that: policy. Peter acts like when bad things happen everyone sits on their hands and does nothing. He uses the economic standard of 'all factors otherwise remain the same' and then extrapolates to the worst case scenerio. In real life governments and people are dynamic and they solve problems. This is why none of his predictions turn out to be true - just go look at his headlines over the years. There is no current world wide famine, nuclear bombs are not being used, russia continues to gain ground in ukraine, russian oil did not freeze, europe did not freeze. I still watch bc its hilarious, but it took a long time to figure out why he is always wrong and i like spreading the word now.
He is talking on a base level what the bank does in the market to charge the customer is a different matter and could be much higher unless there are measures in place to stop the bank from doing it.
Another US Millenial here. Honestly, I (and likely no few number of my peers) gave up on buying a home years ago. As it is, I've been saving up for an RV, and that's where me and the cat will stay; on the open road.
Thank you Peter, can you help us explaining how this capital flight into the US will affect the dollar and hence our standard of living ? Much appreciated 😊
" Past periods of low rates gave us Subprime". Subprime Mortgage Crisis was 14 years ago, before " low rates decade". Mortgage in 2007 was around 7-8%...
@@hansgullickson4080 Due to extremely low interest rates most third world countries have had USD denominated debt. Now that USD interest rates are going up while also the USD rising in valuation compared to their own currencies it becomes harder and harder to pay this debt back. It's going to result in sovereign debt defaults and a crash of third world governments globally. You know the massive progress the third world made since the 1990s mass starvation? Well yeah... That was built upon cheap capital from baby boomers. Now that baby boomers are starting to retire and there is a capital crunch as capital is moving back to the US their entire systems built since then are going to collapse. With a lot of famine, warfare and general instability as a result.
@@joey199412 Most of those developing nations that rely on that cheap capital from the US are very corrupt and are not market economies. No matter what happens they were always going to fail. Many of them used that capital to fund their military forces so as to stay in power.
They are not raising interest rates to stave off a recession. They expect that recession to happen as a certainty. They are raising interest rates to stop inflation. And their primary reason for doing that is because once inflation starts it can be very difficult to stop and can play out of decades. In 1970 the US inflation rate was about 6% and by 1980 it was at 14%. With there being periods during that of peak inflation hitting 24%.
Well done, so why does the FED never publically talk about the democraphic effect our economy? We had very similar inflation when the world war 2 generation was retiring in the 1980s and the Boomers (or mid-centurians as I like to call myself) came of age and started buying homes. The first I became aware the link of demographics to economics was from Harry Dent and later on from you.
Stone-cold brilliant - I love your videos. Thank you for what you do - I majored in political science, worked for Google for many years. I consider myself a thoughtful person and you truly opened my eyes on so many things: Germany, Chine, US. I need to teach you how to pronounce those Ukrainian cities (eg Kherson) though.
As someone considering immigrating to the US to study, and hopefully work in the tech scene, this just confuses me more lol. Not complaining though, this is definitely food for thought!
It´s painful but the FED as well as ECB needs to pull the money out of the market. Interest rates are not high enough yet, they need to be as high as current inflation and reduced once the money blown into the bubble / baloon, during last 3-5 years is back out of the system.
ECB is not like the Fed and has nowhere near the powers that the Fed has. The ECB is a collection of different countries that have pooled their banking resources together and as such the ECB has a series of limitations placed on them. Anything that the ECB has to implement has to be ratified through the commission which in effect is the leadership of every european country. They can do minor interest rate changes but if they do anything that causes an individual country to start crying it could cause the whole house to come crashing down.
In the 1980s, interest rates on mortgages were as high as 15%, and this was a GOOD THING for most people because such high interest rates meant that the principal couldn't be very high to begin with or else nobody would be able to afford to pay off the interest, let alone the capital. High interest rates keep housing prices affordable.
Going to push back on Peter this time. The USA inflation is supply driven and raising rates extends the time it takes to re shore industry's to provide supply. The inflation would top out and come down without a massive recession as supply comes back up. But the fed will destroy demand and leave us with high interest restriction of capitol dragging the mess out.
The federal reserve does not care about supply side trading and economics because they cannot control that. All they can do is deal with the monetary side of money supply. They have to slow down the rate of money creation and the best way to do that is to increase interest rates slow so that there is a slow down on that side. At this point a recession is the least of the federal reserve's worries and what concerns them the most is runaway inflation that once it starts can be very difficult to stop.
What you are describing is ‘the dollar milkshake theory.’ Problem is, The Fed can’t tighten that high. The US debt is something like 130% of GDP. Soon, the Fed can’t raise and then the dollar goes kaput. Kaput means it loses value when the Fed reverses course and quits raising, lowers rates, and prints again. Although the stock market ‘goes up’ it does so with shrunken dollars. This, my friend, is the effect of the ‘hidden tax’ or how we pay for the overspending of the US. It’s in the plan by the Fed.
Lol spot on. I learned about interest rates when I was like 5 or 6. We grew up in an economically depressed part of Canada. Thankfully I'm a doomer and always always prepared for high interest rates. I have no debt and no plan to take any on.
Any recommendations for german millenials how to ride through this? Buying a house here has become unaffordable for the average family, so what can we do with the savings that are in our bank accounts besides buying stocks of low debt high value companies?
As crazy as it might sound to you, start to check South America specially Mexico and Colombia and bring your skills to those countries and prosper there with those young thriving populations during the next decades. People don't understand why I'm saying that now but everything will be more clear in a decade. th-cam.com/video/bEh0Q94Gjss/w-d-xo.html&ab_channel=CNBC
I would suggest you first read the book Intelligent Investor by Benjamin Graham that was written in 1949. It is based on his older book Security Analysis that was written during the great depression. It can become your investment bible that you use to develop your knowledge and act as a reference. If you are a young german with no family dependents look at emigrating to the US.
I stumbled across Peter on TH-cam, then bought his first book to see if he was as prophetic as he seemed. I thought it held up well - not "perfect", but better than most - so I bought the rest and have been paying attention to (not blindly following) him ever since.
Higher interest rates will lead to lower prices. Upside down in a house will be a problem for owners that did get in a house with artificially low rates.
Eh, I work for one of the big Silicon Valley tech manufacturers. Our problems are physical supply chain. We have orders stacked to the moon we can't fill, because we can't get product. I'm one of the gen exers who got one of the big raises Peter has talked about though, so it's getting good for me.
We need higher interest rates to make government bonds crash and governments going bankrupt. that may be great for the people to free them from big government harassement. lets hope that most bureaucrats lose their job
So, I get that higher interest rates will make previously low paying interest rate bonds lower in value, and that the demand for dollar will increase as people try to buy these higher interest rate bonds. I also see how debt issued in the U.S currency by foreign governments will make it harder for them to service those debts. What does this all have to do with government harrassment though and people being freed from governments? I don't get your line of thinking.
@@Hoppensagen Dont you see government over reach ? When government tries to find buyers for new bonds, the new buyers may ask a bonus cos government may not be able to pay back.
I am a millenial living in California and I honestly stopped worrying about it. I adjusted (lowered) my expectations to life, try to eat healthy, work out and let it go.
live below your means and you've mastered life.
pro tip, move out of California things become much more affordable
You apathy is the death of our society.
@@gregyoungman
Fiscal responsibility as he's describing is great. Apathy isn't.
I never wanted to leave CA, but leaving CA was one of the better decisions I've ever made. Find a job in WA, leave and don't look back, you'll thank me later.
The rate on my first mortgage in 2000 was nearly 8%. The low rates we've had for the last 15 years are the anomaly.
It is not that they are anomaly it is the fact that crazy policies were put in place with low interest rates. It is like having a sale were gold is 50% the market rate and there is only so long that can continue until the seller realizes that they cannot source any more gold or they run out of funds.
if you bought a house before 2 years ago with a ridiculously low interest rate, you're sitting pretty now. well, at least as long as you still have a job. in hindsight I should have bought a massive home on an acreage, then sold my modest little home at the peak of the boom. oh well, I'm happy where I'm at so there's that 😂 in comparison my Dad bought his first house at 18% 😱 yeah, things are reverting to the mean after years of manipulation to paper over the 2008 crash
@@RealJohnnyDingo As long as you stay, you’re in good shape. But there are a lot of people who now won’t move to take the better job because they will not be able to afford the house they have at a higher rate or they’ll be forced to take a lifestyle haircut. It will change things a lot. Remote work will mitigate it somewhat. On a nationwide scale, it changes things. 2008 was fine for us, we were employed, but we did feel stuck in our house for several years. The irony is, we stayed put, which has been good for us in the long run financially. Moving, buying, selling can suck tens of thousands of dollars away really fast.
I don't know about the real estate market in your country, but I bet your house has doubled in value. So today a buyer has to pay double the mortgage you did, even at the same interest rate.
4% interest rates have been standard most of my life. I was born in 2001
This triggers memories of Austrian School Economics, i.e. That recessions are caused by mal-investment which is caused by artificially low-interest rates. Artificially low rates make bad ideas look like good ideas and then at some point reality hits and the industries that overdid it get hit HARD.
The term I keep hearing is Zombie Companies, the walking dead dependent on low-interest rates. The Federal Reserve does not SEE itself as a Zombie Hunting organization, but they are. Or that is the theory anyway. I really don't look forward to finding out the reality, given that 30% of listed companies are described as Zombie Companies by some accounts...
Well, they are looking to change those unemployment numbers so coming after zombie companies would probably fix that problem for them. The great resignation won’t be so great, very soon.
Austrian economics does make good arguments but it also has made people over sensitive to the fact that dirt happens.
Recessions are going to happen no matter who manages the system. The idea that there is some Austrian economic model of free market that will completely eliminate inflation or recession is a very simplistic outlook.
@@bighands69 I don’t think I’ve ever heard someone say that if we follow that model we would not have boom and bust cycles anymore, all they seem to say is that they’ve become more painful because we’re creating bubbles, and higher highs.
Transitory inflation is driven by quantitative easing and massive cash infusions. Persistent inflation (most of what we’re seeing now) is driven by energy costs - period - and these interest rate changes will make it worse, not better, as investment in energy production decreases (but we HAVE to do this), long-term inflation (what we’re also seeing) is driven by MMT (zero percent interest rates) and ALL these zombie companys have to be eliminated before we see what actual supply/demand curves look like when companies have to be profitable to succeed (hasn’t been true for 20 years). We have a decade, at least, of abnormal inflation AND a massive decrease in supply of consumables. Going to be a fun decade.
This is my favorite comment of the year
Peter, great channel, I love that it is not over-edited
It's not edited at all.
This is the way I like pundits. Knowledgeable and delivering information with facts and integrity.
its very easy to fool youtube audience,i guess.
🤣
Astro bro?
Always enjoy these short talks. In 1981 i was newly married and bought a mobile home at 21 3/4%, was tough times but made it thru.
21.75%? I almost fainted.
Glad you made it through. 🙌
Yeah because it probably cost the same as what a bar of soap costs today
My parents did something similar. Then bought their grandparents house.
As an Australian, I think this will be the needle that pops the housing bubble here. And probably in Canada as well.
Come on, all you Australians know property values only ever go up.
It's probably gonna be all over the world some places more some places less.
The trouble in Canada we do not have enough housing for buyers🇨🇦
and the chinese real estate bubble as well i guess
@@captainalex157 they have a special problem with people paying on new apartments that are not built yet. Xi tried to do a western style massive build to house people. He did not understand how to do this and Evergrand is failing . Xi doesnt want to bail them out. Hence his retreat back to the old ways . But all his rich citizens want out. We are but pawns to our countries leaders🇨🇦
I'm an older millennial and want to point out these interest rate increases are also painful from a student loan standpoint. I have an adjustable rate private loan. As Peter said I have been lucky with low rates since graduation but it has gone from 3% to 6% and now looks like it will almost be 7%. I am going to pay it off soon but folks with a higher balance are going to feel pain from their interest payment more than doubling.
before the pandemic I was paying $8% interest rate for my student loan, now I can't imagine how high it's gonna be....
I don’t have the stomach for adjustable rate anything. Especially mortgages.
It just ensures that the payments sharply increase exactly when the economy sharply decreases.
bail out banks, forgive ppp loans to corps, fractional interest loans to investor firms, corporate tax cuts
you students with loans.... go suck rocks
Don't worry, Biden will save you.
older millennial? does that mean you've been paying down student loan debt for >15 years already? wtf...
Love your videos (and your latest audiobook -- was great that you narrated it yourself). Appreciate you taking the time to keep us updated.
Peter Zeihan said, “When money is free all sorts of weird shit happens.” It can be painful to correct all that “weird shit.”
We bought our first house in 1980, when mortgage rates were 18%. We were THRILLED to be able to assume a VA mortgage at 8.75% but our down payment was over 25%. That was a painful time.
As a millennial, I joined the workforce when the job market was absolute trash. The job market finally improved during the pandemic. No realistic way to buy a home or have kids. Thanks!
hahahahahahaha you and me both
Have kids anyway. You don't actually need money to raise them, it's just harder. You'll be happier with a family you build over your lifetime. Done right, It's worth it.
Well I think a person can have kids but buying a house is out for a lot of people at the moment.
Hi Peter. I love your videos!. Thank you for keeping us informed. Would you please do a video on the oil / diesel situation in the USA?
And Europe too.
Pricing of petroleum is set in the international market. If global supply is cut, prices go up. If demand is high, prices go up. The U.S. has plenty of petroleum and refining capacity, but unless you 1) create a separate controlled domestic market, OR 2) increase global supply by exporting enough to compensate for undersupply, your(our) gas and diesel prices are going to reflect the global market and remain high.
The problem with 2) is it will take investment to export more petroleum, and it’s very difficult to determine when prices will reach a new equilibrium. That makes the investments in increased export capacity very risky.
The problem with 1) is obvious, I hope.
@@MarcosElMalo2 Why are some prepper videos saying diesel is running out real soon?
@@annking1576 Because they rely on doom and gloom for views. They have been saying the same things since the dawn of TH-cam.
It takes a LOT of people to let things crumble like they predict. Diesel is being processed as I type this.
The hysteria those videos create bothers me.
@@jeremyhanson8411 I agree! I've had to stop watching them - just their titles want to strike fear in the viewers. The problem is when they all jump on the same bandwagon, then you question the subject being discussed & need verification. Thank God for Peter's videos!
There are going to be 2 kinds of Millienials going forward.
- Those that bought a home before interest rates hikes
and
- Those that can't buy a home due to interest rate hikes
Also the ones with rich parents and those with poor parents!
@@donatoferioli7426
What has rich and poor got to do with anything?
@@bighands69 The 'Bank of Mom and Dad' often doesn't have to charge market interest rates. Millennials whose parents are able and willing to loan might have family money available at affordable rates, even if their real world credit rating is less than 650.
This is likely accurate
@@bighands69 Gap gets bigger. If you're buying a house with cash and you're competing with people who struggle to get a mortgage. The rich need to invest their wealth. Asset prices could stay high or go down less.
I remember the 80s everyone was broke. High interest rates crippled the average working family paying off a home.
this time it's going to be like the 80s but 10x worse because wages have completely decoupled from productivity thanks to automation and globalization. Even if globalization decreases, automation is exponentially increasing. We're heading for a crisis unlike anything in human history and I don't think anybody, even Peter, can fully appreciate just how devastating this is about to be for the average middle class and lower class person / family. It's fucking brutal.
We will see if ppl having bought homes at high prices with low ir did well or not
Except bus drivers. They were making around $20/hour back then, living like kings. Edit: In Tacoma.
I actually remember the exact opposite. Maybe it just depended on where you lived. The people I know made bank in the 80's and it crashed in the early 90's.
@@jchase8223 where did you live at the time? In Holland the 80's were horrible but after the fall of the wall and one eastern country joining the EU after the other in the early 90's export was booming. Happy Hardcore originated in the Netherlands in the 90's ascent for a reason.
"Now it's going to be hard with 9% interest". Pure gold.
Isn’t aging well is it.
Thank you very much for your updates point of view. Just finished your book Disunited Nations and it was lots of learning for me.
Very much appreciate your work!
I love your videos, straight to the point without all the fluff, thank you Peter!
Excellent commentary, and completely correct, too.
I ask again, how could American business interests _not_ have seen nearly all this coming at least a decade ago. I guess ignorance and greed always go together.
Bold call on the fed going past 6%. Something we can easily hold you to.
If you go back and review his specific calls from earlier this year you'll see he's often wrong (wheat, energy, Russian military...). Marco economics and technology are not his strong points, saying fed wants a minimum of 6% is nuts
@@ajc3e he's giving, and possibly believing, the rationals being used by those seeking to do it. The UK looks on that path too. Imo in reality it's more of a pretext to do exactly what they're saying on the business channels and continue to suppress wages purely for the rich to stay pain free at everyone else's expense both literally and figuratively. Because this is not a recession, most of this inflation not stemming from the war in Ukraine or Trump's trade war is all price gouging and simply redressing half the inequality that's piled up over the last 40 years would nearly make up for all the rest of this that they'd rather drop on the poor and vanishing middle class.
I'm not so sure Zeihan is in favor of all that but his personal position and lifestyle does seem to hinge more on him auguring trends for upper middle to just below hedge fund managing classes. Probably why he seems almost disdainful of the very different circumstances faced by later GenX and Millennials compared to his key audience.
The only alternative to pushing rates sky high is taxing the rich, breaking the monopolies and redistributing all that capital in Scrooge McDuck vaults.
Also saying Germany will implement capital controls. The EU is there for free flow of labour and capital. No EU country can stop capital or close their borders.
And they did. Rates got as high as 8%
Insightful as always!
To be even more precise, a mortgage rate of 6.5% already results in a monthly payment of 50% more than a 3% mortgage. A mortgage rate of 9% vs. 3% is actually 91% higher.
Under Paul Volckers’ Fed, in the early 80s, interest rates got up to 21%. But it was a different time, different demographics, economics.
I had to live through that period, running a group of businesses in the UK. Volcker's rapid rise in rates helped kill inflation but caused carnage around the globe. Some called it the Latin American debt crisis but it was much wider than that. Many non oil producing countries in the Middle East, Africa and elsewhere had borrowed in petrodollars. The rise in interest rates meant they ran out of cash; no less than 15 countries we exported to stopped buying products, even spare parts as they were forced to focus on buying food and energy. In the UK a subsequent investigation by a parliamentary select committee reckoned that about one third of UK manufacturing businesses folded under the pressures. Economic structures have changed since then but the pressures remain and rising interest rates will cause more grief and pain.
@@davidandrews1715
It was a period of hard choices that had to be made. the 1980s economics of the US was a response to the sloppy 1970s policies that encouraged expansion.
If the UK had of followed the US lead in cutting taxes at the same time and deregulating they would have expanded their market base but instead the UK media and the unions along with members of parliament decided cutting taxes was not a good thing so only limited amounts of tax cuts happened.
What happens when:
- US debt to GDP is at 120%
- you spike fed funds rate from 0% to 5%
- most of US debt is short term 1 to 2 years and needs to be rolled over
- 20% of the S&P 500 are zombie companies (they can’t survive without issuing cheap debt)
- tax receipts collapse because companies fail.
This video reminds me of a Bitcoin style argument only looking at one side of the issue and ignoring the other side. Yes the your mortgage would be 50% higher, but servicing the government debt would be 50% higher too. While the US is in a strong demographic position and military position we are in a weak position in regards to our debt.
Thanks Peter Ziehan. Your videos are so educational, and often I have seen that your predictions and forecasts are on point, even though I have just recently found out about you. The things you say makes me take HUGE financial precautions. Right now after this video, having to seriously look at 3 things: My soon coming electric car, my career in tech, our small ski town apartment.
Look at in what way? Seems those are three fairly secure things to have. We're in a similar boat.
@@larsfaye292 The Tesla might become a value loser if interest rates hits 9%, then it will become too expensive to finance for a larger proportion of the demographic, as Peter would say. Also our ski appt has a 25% rent hike, interest rates on loans going up. But as long I have a job it all works out.
Get rid of all three (10 year time horizon)....electric cars make no sense anywhere in or near big cities and considering ALL the tech companies are instituting HUGE layoffs that means NO MORE work at home! In point of fact, working from office (or service job in the city and environs is more likely). I'm pretty certain small ski town apartments are gonna be pretty tough investments to get rid of; also w/10 year horizon. Good luck friend.
@@marcob.7801 That’s pretty bleak.
Bought my house during the housing market crash at $109k with a 3.1% interest rate. 3 bedroom, a pool, next to a mountain, 15 min from downtown, great view of the city, and nice sized back yard. My brother just bought a house a little larger, on the edge of the city (not by choice), almost no back yard, a block from a highway, for $485k at 7%. It's ridiculous right now.
4:20 I was born in 1980. I feel like i was born in that sweet spot knowing what came before me with clarity. I also know that the rates we have seen in my life are not normal. Many of us have deemed it so due to our short memories. I find it difficult to accept many of you tend to do this. Its a human trate. In any event I'm "used to" mortgage rates being in the 5-10% I grew up in the mortgage industry doing processing, sales, origination, uw, lately building. Ive done it all. I never said to myself this 0% thing is here to stay. Ive always had in the back of my mind rates coming back up. And here they are. Good for me. lol
Always enjoy my coffee with Zeihan in the morning!
I'm so glad, as a gen x'er, I was already expecting to not do as good as my folks. I spent my time doing things that cant be taken away by economic crashes. Knowledge, relationships, finding contentment with less. In 2008 I didnt even notice the crash. It will be that way this time too because I have never been invested.
As far as buying a home.... no thanks. I like being mobile. I have two jobs that I can do in any city and get the job in days. That gives me amazing flexibility that having a home that ties me to a location doesn't afford. When you never thought the "American dream" was that appealing anyways, it's easy to find a path that works for you.
Not everyone likes sleeping next to a composting toilet. Enjoy the road my friend.
I’ve always lived lean. I have my own business but I drive a 1995 truck. And we have a farm so I can grow hamburgers and corn
As long as we keep ketchup and mayonnaise I'm set
You should consider roustabouting those big ass RVs for older folks that don't want to drive much and have more money than sense.
So you don't have a pension then? If you do it will affect you, just as 2008 will have affected you.
I loved your book. Looking forward to the next!
As a millennial and being in tech (Financial tech no less) this is all especially poignant. Bad time to move across the country but will just have to change how I allocate money. Many aren’t so lucky sadly.
Greetings from Germany. Thanks for the heads-up on what is about to happen here.
Oh nooo! I'm going to go from not being able to afford a 3% mortgage to not being able afford a 9% mortgage. If you hadn't said something, I literally wouldn't have noticed...The only thing that matters to most people is their salary...Either you make good money or you are barely scraping by...Young people are exceptionally average.
The living standards in America are far higher than anywhere else. When Americans think they have it tough they are still living the high life compared to everywhere else.
The great depression in America was still a far better economic condition than many European countries had at their economic peak.
@@bighands69 Even if everything you said wasn't mostly false, it's all irrelevant anyway...Like....What are you on/about?
@@vagabondcaleb8915
If everything I said was false name another country with higher living standards. It should be easy for you.
@@bighands69 I'm not discussing living standards (whatever that means lmao) in the US or abroad...or various eras...It's not relevant to the conversation...It seems you're just too stupid to have a discussion with. Sorry.
@@creativeslink Who is austin?
Im a hiker myself..im enjoying the conversation while seeing the views..since im working alot cant get out much
I've only found out recently that US home loan rates are fixed for the life of the loan (assume this is true?). Here in Australia most loans are variable, if fixed it's only for 2,3 or maybe 5 yrs. This means each time our reserve increases rates our mortgages go up pretty much straight away (unless we are in a fixed period). I beleive this is the same in parts of Europe too.
In the 80’s a lot of people had what they call an arm loan and some loans by time closing a lot of interest rates would double.. I knew to never buy a house on a ARM loan… Our home loan is at 3% …
Yeah Aussie housing market could do with a reset anyway, average house price in nsw is something like $1m and average wage is like 60k IIRC insane levels of over valued
Thats correct
Yes most loans in the US are fixed when buying a home but you can also buy homes with variable interest rates as well usually the people that buy variable interest rate home loans don't have to credit to get fixed rates
My understanding is that a majority of the mortgages that caused the financial crises in 2008 were fixed for the first 5 to 7 years and then had adjustable rates after that. So, I think most tried to move away from those after the dust settled from the financial crises. It still is an available option but more used by those expecting to move within the first few years or those with just bad enough credit they cant get the fixed but still good enough to get a mortgage. But I very much could be incorrect.
Feeding the TH-cam algorithm. Another informative video. Thanks.
In the US it is already a mortgage crisis: lots of people are backing out of the loan application by 90% because they can't afford the monthy payment that takes more than 50% of their monthly salary. Logically this means that the housing market will crash by next year. What people might do is to cash out their loan equity based on the actual market value and either use that money during hard times and default on their loan in the next few months. Due to the interest rates rising , it's possible we see again those ARMs (Adjustable rate mortage) to get a lower interest rate, it would give about 1 to 2 years of stability on the market before the big mortgage crash. Greetings from France.
They are backing out over fear not the ability to repay. Once that fear has subsided people may start to pile in again.
@@bighands69 with what money? When same house will cost you 50% more on mortgage repayments compared to a year ago lol
Another really really Goode one..thank you..!
The rise of interest rates will probably kill property values.
What effect would you say monetary deflation will have on those values?
@@indigocolossus rhetorical question?
@@ultraderek honestly curious, as we came to the same conclusion on interest…but can’t see how monetary deflation wouldn’t bring those values right up, if not surpass them.
@@indigocolossus Monetary devaluation will merely make property prices seem to be going up.
The Boomers downsizing and then dieing will reduce property values over the next decade or so too.
Pete, San Jose is not in Silicon Valley. Count the high tech there, then count in Santa Clara, Sunnyvale, Mountain View, and Palo Alto and compare the numbers. San Jose is the bedroom of Silicon Valley service workers.
You described Brent Johnson's Dollar Milkshake Theory
Except Mr. Zeihan was writing the exact same thing in his first book, in 2014, way before Mr. Johnson started claiming "his" theory. And then there's the Triffin Dilemma, aka, "The OG dollar milkshake theory" first created back in the 1960s by a Belgian economist. So...nothing new under the sun, hey?
@@junkscience6397 what page does he say that?
@@junkscience6397 Ah ok. That seems to be the running theme lately
0:55 Millennials don't have a lot of peers around the world. So sad. Even if True. So sad. We were sold too many population growth, when in fact low birth rates will be the biggest problem of the next 100 years.
Boomers sold anything to enrich themselves
Using Demand side tools for a supply chain problem is going to be interesting!
When money is free all sorts of weird shit happens.” Like corporations/companies buying up any and all real estate and driving up the price of rentals and for sale properties?
Low interest rates were very bad too... if everybody can afford it on credit that means the prices are always going up... good for the few bad for the many
They were only bad when viewed in context of the overall policies that government the market.
@@bighands69 no they were bad in general because fomo became a massive factor
Great video. German has many headwinds to deal with but their exporters have the mother of all tail winds: of a really weak Euro. They also have high productivity, which is key when input costs are rising. When the global economy rebounds, they will come back hard and fast.
Out of interest I had a look at the population pyramids for various countries. As Peter says Germany has a problem as do many other central and southern European countries as well as countries like Japan. However if you look at France, UK and the Scandinavian countries they are very similar to the US.
As usual he completely ignores that Germany has and is receiving large influx of immigrants from all over the EU and abroad. I don't know why he is so fixated on Germany anyway. The ECB isn't going to raise interest as high as the Fed does, and inflation isn't as bad in most of eurozone as in the US.
@@ffffuchs Todays gimmigrants are often more of a drain than a gain.
@@ffffuchs Even with migration, Germany's population is barely growing. Without migration, Germany's population would be shrinking.
@@SirCutRy yes so? What's your point here.
edbop you disregard the immigrants in the story. As Peter outlines in his latest book, these are not the ambitious immigrants easily absorbed and on to the American Dream but immigrants with an average IQ of 85 who go to Europe for free housing, money, food and abuse women.
Thanks for this Peter. Truly
My daily dose of pessimism. Thank You, Peter, and greetings from Czechia.
So hard for Millennials, Really, My parents went thru the Great Depression, and WW2. My father did not own a pair of shoes until he went into the Military at age 17. Mother worked in a ammo plant for 10 cents an hour 7 days a week 16 hours a day. Vast majority of millianials I know are have never seen a hard day of work . They are the softest people I know.
As a German born on the ass-end of 1979... yeah, this tracks with my perception of my personal situation and my expectations for my future.
Germany just needs more kids.
@@kellychuba in that regard its too late for nations like Germany, S Korea and China. I predict that in about 10-15 years that there will be a massive immigration from Europe to the America's and Australia as a result of wars and economic collapse.
@@kellychuba That it won't make...
Hey Peter, your beard is awesome man...
Thank you for another amazing vid - cool insights!
Bri from Oz
Thank you for another great analysis Peter
I like how Peter Laughs every time he says things "get worse"
Me, a millennial, in my first home, at 2.99% fixed: Well, guess I'll never sell.
who could you sell to? Hedge fund?
Yes, once rates are high enough they will start the labor market destruction leading to mass real estate liquidation, since no one can buy with high rates and no jobs, prices will plummet and they can scoop up all the property cheap. Enjoy the pod.
Our first mortgage in '86 was 13.5% and we were lucky to get it. Not that many years earlier, we had friends who were paying 20%.. And then our interest rates began to slowly fall until our mortgage was paid. Guess what, kids? You'll survive.
Jokes on them, I could never afford a mortgage to begin with.
Every average worker in America can afford a mortgage somewhere in America.
@@bighands69 Understandable, but not American. It is also not particularly helpful unless you can afford a mortgage specifically in the area that you work in.
Been there done that. I entered the work force in 1972. A huge surge in the work forces from boomers reduced wages that forced mom to go to work just to barely survive. Interest rates for houses got closed to 20%. Had large unemployment with high inflation. The myth that boomers had it so good is nonsense. Maybe richer upper class ones did but the majority of us were working class. I had a better relationship with my grandparents because you had to go back to the Great Depression to find as bad a economic situation . Which they enter during their early working years. I was smart cut my cost to the bone and was creative to find housing and other goods I needed. Delay gratification could of been my slogan. The young right now have one thing going for them I did not. Labor is scarce and getting scarcer. They will be able to demand wages to compensate , something I did not have.
You had it good compared to today generations who have not had a good economic ride.
@@bighands69 Nope! I entered the work force in late 80s. It was much worse back then, than today. Manufacturing was leaving the US for China. Today more manufacturing is coming back. Easy credit was unheard of. All major credit cards charged annual fees on top of high interests. Get into the trades and you'll never have to worry. But don't forget to thank a Democrat for the high inflation and the mess that's coming.
You forgot to mention that low interest rates during the past decade facilitated the fracking boom, which has now flatlined and may be going into decline, which has implications for worldwide energy.
That's a really interesting point. So energy costs are likely to increase then.
Many, many wells are simply capped. Infrastructure is mostly in place - it only needs to make economic sense to turn the fields back on. The reason this hasn't happened already not corporate greed, it's market uncertainty.
Luv the halo above your head😇
(from the picture on the wall)
Hello Peter. I've been listening to you for a while now. I appreciate your perspective, I find it really helpful to understand the world, counterbalance others opinions and try to form opinions of my own. Being french, I'd be very insterested in a breakdown of France weaknesses and strengths for the forseeable future. What are our unexploited ressources ? What shifts should be made in our strategies ? etc, etc. I'm just adding my small weight towards you making such content. I appreciate and value you and your work. TYVM.
As a non french citizen (I am Swedish). If you're pro EU, you should allow gas pipes to be built between Spain and Germany through France. It would help the Germans and the union a lot :)
@@nils123007 US citizen here and I agree about the pipelines. Spain is an energy island, more or less cut off from the rest of the EU due to the lack of pipelines. If France was willing to allow them to be built across their territory, Germany's position would at least downgrade in severity from 'catastrophic' to 'extremely bad'. As for how France could benefit; demand the pipelines be built with french labor, then tax the gas as it travels through your country.
France expects to see slightly lower baguette exports in 2023, however due to global instability, the need for humour will increase and the unemployment rate for mimes will drop. There may be opportunities awaiting you as a professional street performing mime. Have you considered that?
Circa 2017 - 18, Peter Ziehan saw France as the nation in Europe most likely to be 21st century power. I too would love an update and analysis of the current French positioning towards Germany per Russian aggression and defense of Ukraine!??
@@jameswelsh7789 yeah, I heard him say something along this line. He put Sweden there aswell (with its nuclear/water dam energy) if I remeber correctly. But with the last five years, we could use an in-depth update
If people can't afford current home prices at 9% interest, then sellers will have to either lower their asking price or not sell.
Of course there's more to it than higher rates force down prices, those who already own might not be able to afford to sell at a lower price, or might simply not be willing. But I think the effects of the interest rate hike might not be all bad.
Great video! Can you please give your opinion on the whole BRICS thing with their supposed anti-dollar currency? It sounds ridiculous to me (The BRICS concept itself AND their currency idea), but I'd love to hear your points.
He's done a fair amount of discussion on BRICS in some of his older (pre-covid) presentations. The long and short of it is that the dollar isn't going anywhere since the US is the only country with a large enough stable economy that has proven it won't interfere with monetary supply to rig the game in it's favor.
I guess my take on this is that whenever undemocratic entities (of which some of BRICS are to a lesser or greater degree) try to achieve anything like that which requires some degree of honesty or cooperation, it is generally doomed, because there is so much rot and dishonesty throughout such systems thanks to awful tyrannical characters at their peak who, as Peter often points out, don't tolerate any bad news, so they end up getting little to no accurate information from their subordinates who are often in fear for their lives if they don't tell despots what they want to hear.
He’s going to give a pro-U.S view and dismiss it as irrelevant. Actually this new reserve currency backed by gold will allow countries to trade without the U.S. dollar.
They're all screwed except, _maybe,_ India which has it's own problems. India has a large sex imbalance like China, most women get a raw deal, Hindutva is baloney, climate change will wreak the same problems on India that it does on China and Bangladesh. India may wind up facing the middle income trap like China is right now. I'm rooting for India right now, because it's a democratic country, if _that_ changes . . .
Brilliant Analysis!!!
What makes you think Germany or any Euro denominated country will implement capital controls? Hasnt happened in decades. Highly doubtful this would start.
They will do it as there will be a capital flight out of Europe. The UK market has the tools to enable it to dampen the outward flow of capital without doing anything to drastic.
Since you have pointed out that it has not happened in decades that answer your question any small amount of control will look like the sky is falling.
Peter is as much of a generalist as any or us. I too can accurately talk about my field of expertise, and then be wrong about nearly everything else outside of my area of competence. In the last month he has said 'putin has one week left' (wrong), Wagner group will collapse when the current troops are killed (wrong - they will just recruit from anywhere in the world that being paid to potentially die is still worth it). He's now saying that established economies are 'done' because of mild rising interest rates. Go look at a graph of historical interest rates for Germany, the US, japan, ect - there have been DECADES of giant interest rated and guess what - these countries are still around - their governments change policies that stink, but are just that: policy. Peter acts like when bad things happen everyone sits on their hands and does nothing. He uses the economic standard of 'all factors otherwise remain the same' and then extrapolates to the worst case scenerio. In real life governments and people are dynamic and they solve problems. This is why none of his predictions turn out to be true - just go look at his headlines over the years. There is no current world wide famine, nuclear bombs are not being used, russia continues to gain ground in ukraine, russian oil did not freeze, europe did not freeze. I still watch bc its hilarious, but it took a long time to figure out why he is always wrong and i like spreading the word now.
Increasing interest rate from 3 to 9 percent increases the mortgage payment 90% on a 30 year mortgage.
He is talking on a base level what the bank does in the market to charge the customer is a different matter and could be much higher unless there are measures in place to stop the bank from doing it.
@@bighands69 Huh? It’s simple math and he misspoke. I was attempting to point out the impact is worse than he suggested.
Thanks for keeping me updated! +1
Another US Millenial here. Honestly, I (and likely no few number of my peers) gave up on buying a home years ago. As it is, I've been saving up for an RV, and that's where me and the cat will stay; on the open road.
Invest in the means of production. I.e. tool and die companies etc.
You sound like an itinerant in the great depression. If you can save for an RV why can you not save for a house?
Good work Buddy.
Hair's absolutely fine.
Thank you
🙏🇦🇺🕯️
Thank you Peter, can you help us explaining how this capital flight into the US will affect the dollar and hence our standard of living ? Much appreciated 😊
" Past periods of low rates gave us Subprime". Subprime Mortgage Crisis was 14 years ago, before " low rates decade". Mortgage in 2007 was around 7-8%...
Debt servicing costs (in USD) will crash world governments. Sovereign debt collapse.
Please explain. I haven’t heard this angle before.
@@hansgullickson4080 Due to extremely low interest rates most third world countries have had USD denominated debt. Now that USD interest rates are going up while also the USD rising in valuation compared to their own currencies it becomes harder and harder to pay this debt back. It's going to result in sovereign debt defaults and a crash of third world governments globally.
You know the massive progress the third world made since the 1990s mass starvation? Well yeah... That was built upon cheap capital from baby boomers. Now that baby boomers are starting to retire and there is a capital crunch as capital is moving back to the US their entire systems built since then are going to collapse. With a lot of famine, warfare and general instability as a result.
@@joey199412
Most of those developing nations that rely on that cheap capital from the US are very corrupt and are not market economies. No matter what happens they were always going to fail.
Many of them used that capital to fund their military forces so as to stay in power.
Spot On!
But won't the raising of interest rates just cause the recession they are preparing for? Especially since they are raising the rates so rapidly.
They are not raising interest rates to stave off a recession. They expect that recession to happen as a certainty.
They are raising interest rates to stop inflation. And their primary reason for doing that is because once inflation starts it can be very difficult to stop and can play out of decades. In 1970 the US inflation rate was about 6% and by 1980 it was at 14%. With there being periods during that of peak inflation hitting 24%.
Define rapidly. Can you show this time is somehow historically anomalous?
@@paulflocken2730 go. to. a. library.
Very informative - thanks
Well done, so why does the FED never publically talk about the democraphic effect our economy? We had very similar inflation when the world war 2 generation was retiring in the 1980s and the Boomers (or mid-centurians as I like to call myself) came of age and started buying homes. The first I became aware the link of demographics to economics was from Harry Dent and later on from you.
The job of the Fed is money supply only.
That's a good question, I'm wondering the same thing.
Stone-cold brilliant - I love your videos. Thank you for what you do - I majored in political science, worked for Google for many years. I consider myself a thoughtful person and you truly opened my eyes on so many things: Germany, Chine, US. I need to teach you how to pronounce those Ukrainian cities (eg Kherson) though.
You really are a fountain of joy 🤣
As someone considering immigrating to the US to study, and hopefully work in the tech scene, this just confuses me more lol. Not complaining though, this is definitely food for thought!
I am still waiting for my $1mil NFT stone to be delivered.
It´s painful but the FED as well as ECB needs to pull the money out of the market. Interest rates are not high enough yet, they need to be as high as current inflation and reduced once the money blown into the bubble / baloon, during last 3-5 years is back out of the system.
ECB is not like the Fed and has nowhere near the powers that the Fed has. The ECB is a collection of different countries that have pooled their banking resources together and as such the ECB has a series of limitations placed on them.
Anything that the ECB has to implement has to be ratified through the commission which in effect is the leadership of every european country. They can do minor interest rate changes but if they do anything that causes an individual country to start crying it could cause the whole house to come crashing down.
Interesting take, just about everyone in the investing space isn't expect 6% or higher it seems.
In the 1980s, interest rates on mortgages were as high as 15%, and this was a GOOD THING for most people because such high interest rates meant that the principal couldn't be very high to begin with or else nobody would be able to afford to pay off the interest, let alone the capital. High interest rates keep housing prices affordable.
Boom or bust, just don't get left with the bill.
I love these daily rays of sunshine!! ☀️
Going to push back on Peter this time. The USA inflation is supply driven and raising rates extends the time it takes to re shore industry's to provide supply. The inflation would top out and come down without a massive recession as supply comes back up. But the fed will destroy demand and leave us with high interest restriction of capitol dragging the mess out.
The federal reserve does not care about supply side trading and economics because they cannot control that. All they can do is deal with the monetary side of money supply. They have to slow down the rate of money creation and the best way to do that is to increase interest rates slow so that there is a slow down on that side.
At this point a recession is the least of the federal reserve's worries and what concerns them the most is runaway inflation that once it starts can be very difficult to stop.
Great video. Thank you.
Thank God I was born in 1978 and am therefore immune to all these issues 🙌
"Lost the word there for a second" - okay Ultron!
You'll owe nothing and love it.
I could be happy with that as long as I can afford a family.
What you are describing is ‘the dollar milkshake theory.’
Problem is, The Fed can’t tighten that high. The US debt is something like 130% of GDP.
Soon, the Fed can’t raise and then the dollar goes kaput. Kaput means it loses value when the Fed reverses course and quits raising, lowers rates, and prints again.
Although the stock market ‘goes up’ it does so with shrunken dollars. This, my friend, is the effect of the ‘hidden tax’ or how we pay for the overspending of the US.
It’s in the plan by the Fed.
US debt is not real debt and is something else entirely. There is real debt built into it but not as much as people think.
People that don't know history are doomed. People that don't remember about the past are doomed.
Lol spot on. I learned about interest rates when I was like 5 or 6. We grew up in an economically depressed part of Canada. Thankfully I'm a doomer and always always prepared for high interest rates. I have no debt and no plan to take any on.
“Exciting” hotel room. Lather, rinse, repeat.
Any recommendations for german millenials how to ride through this? Buying a house here has become unaffordable for the average family, so what can we do with the savings that are in our bank accounts besides buying stocks of low debt high value companies?
Accept that middle class was an anomaly of the past. Make some more bank OR move out.
As crazy as it might sound to you, start to check South America specially Mexico and Colombia and bring your skills to those countries and prosper there with those young thriving populations during the next decades. People don't understand why I'm saying that now but everything will be more clear in a decade.
th-cam.com/video/bEh0Q94Gjss/w-d-xo.html&ab_channel=CNBC
Get out of Germany.
I would suggest you first read the book Intelligent Investor by Benjamin Graham that was written in 1949. It is based on his older book Security Analysis that was written during the great depression.
It can become your investment bible that you use to develop your knowledge and act as a reference.
If you are a young german with no family dependents look at emigrating to the US.
A millennial I lived my childhood at the tail end of positive interest rate
I remember TV adverts of bank offering saving accounts of 5% rate
How many of you like me have changed their world outlook by listening and learning from Peter?
Yep
I stumbled across Peter on TH-cam, then bought his first book to see if he was as prophetic as he seemed. I thought it held up well - not "perfect", but better than most - so I bought the rest and have been paying attention to (not blindly following) him ever since.
Higher interest rates will lead to lower prices. Upside down in a house will be a problem for owners that did get in a house with artificially low rates.
Freeeee birdddddd!
*guitar solo*
🖕Cop this bird.
Eh, I work for one of the big Silicon Valley tech manufacturers. Our problems are physical supply chain. We have orders stacked to the moon we can't fill, because we can't get product. I'm one of the gen exers who got one of the big raises Peter has talked about though, so it's getting good for me.
We need higher interest rates to make government bonds crash and governments going bankrupt.
that may be great for the people to free them from big government harassement.
lets hope that most bureaucrats lose their job
So, I get that higher interest rates will make previously low paying interest rate bonds lower in value, and that the demand for dollar will increase as people try to buy these higher interest rate bonds. I also see how debt issued in the U.S currency by foreign governments will make it harder for them to service those debts. What does this all have to do with government harrassment though and people being freed from governments? I don't get your line of thinking.
@@Hoppensagen Dont you see government over reach ?
When government tries to find buyers for new bonds, the new buyers may ask a bonus cos government may not be able to pay back.
"Exciting hotel room" :D I love your sarcasm Peter, always make me laugh