They made a huge miscalculation on the low interest rate for homes argument (circa 20min), unless your house has added a room the increased value of your home doesn’t make you richer. It is just a function of inflation of money supply. It actually makes you poorer because if it cost 2 years gross wage a decade ago and now it cost 5. You might pay 3% to buy it but you will slave longer for essentially the same thing. It is zero sum and only the person creating the credit is winning.
Oh men! Where I'm from, debt is really low. Debt is unheard of. We were taught through generations to live frugally, and Save Save Save! The way of the "Wise man" Then MMT came and fucked us all in the ass
Increasing the price of something doesn’t increase its value. A four bedroom house that cost twice as much is not twice as big. It is purely inflation. The fact that you can finance it is not a good thing for you because over 30 years you actually pay more....
All of my friend make FAR more money than me, we are in our late 20's. Almost none of them have bought a house, one has a condo that him and his wife bought together and another moved out of state and bought a cheap house that he's going to have to fix up slowly. There's also people I've met who rather rent than buy because they don't want to deal with repairs etc. Another BIG problem imo is that states are just pushing property taxes too high in order to try to fill the budget gaps they have. I live in NYC and the property tax rate has doubled since we bought the house in 2006
Great interview and guest. I will definitely be checking out Ben Hunt. Why aren’t people like him on CNBC. Instead we get Joe and Becky asking softball questions.
nice interview -- what I always wonder is why nobody mentions how interest rates are inversely correlated to the price of real estate and assets. so yes your interest rate may be low, but the price you pay is higher and the loan duration is longer. So you have the debt burden longer which ties up your cash flow as you age. Those who owned prior to the reduction in rates paid a lower price with a higher rate, then refi to a lower rate thus getting the benefit of both extremes, low price and then a low rate. With added benefit of massive equity as rates are reduced and assets increase in price. So your parents may have wealth in a property but the next generation will pay for that wealth transfer. If you buy now you are generally looking at NEVER being able to refi lower as the duration goes on. So is that really a good investment for a young person to make? I believe this is part of a phenomenon that Ben is referring to. Josh am I wrong about that?
Yes, Mike you are accurate....a guy like my father who took out a $150,000 mortgage at 11% APR in the early 1980s, has the same exact monthly payment (not adjusted for inflation) as the guy who takes out a $300,000 mortgage today with a 3.8% APR. So the monthly carrying cost of home ownership has not changed, even though the prices have increase dramatically. The problem is, the guy who spent $150,000 on a home in the 1980s got to enjoy asset value appreciation over the last 30 years, while the person spending $300,000 on a home today probably will not, because the massive tailwind from ever decreasing interest rates that we have seen over the last 30 years will not be there this time around. The only way buyers today will see long-term price appreciation, is if mortgage rates go to 0 or if salaries increase dramatically (which will lead to lower purchasing power). This is why people say things like "The Fed is trapped, interest rates will never be able to move meaningfully higher as it will collapse asset prices, and the rest of the economy with it."
This was fantastic and probably could have been a lot longer. Wish he also talked about the costs in the longer term of those buybacks in terms of how companies finance them (borrowing).
Something that isn’t discussed in this video, but is also important consider - the Federal Reserve always says “the persistence of low inflation in a mystery and is concerning.” Well, US corporations spent about $800 billion on stock buybacks in 2018 (around 4% of the entire US GDP). I ask you dear reader - if US corporations are selling goods and services to society, and then taking that cash from society and spending hundreds of billions on buybacks (essentially the equivalent of when banks destroy old currency), how can that possibly NOT be a massive deflationary force within he broader economy? My belief: buybacks are causing the very deflation that the Fed says it does not want.
The Gov could require a rigorous filing by the company and a lockup period for Executive Stock to discourage buy backs and address some of the self dealing.
What's better? Rates so low that people who don't earn enough to properly own a house can get a loan that they'll struggle with for thirty years, or higher wages so that these people can properly afford the houses?
The answer is on the fiscal side of things. Monetary policy is important, but not as much as fiscal policy in this matter. Reconfiguring policy where the fiscal burden falls more on corporate entities who earn above small or mid size revenue amounts, needs to have a higher statutory tax rate. With a higher statutory tax rate there is a ton of room for deep deductions and high credits for investments. When an incentive structure like that is in play, a company avoids taxes at the same time they are increasing the amount of human capital in the market place. If they are investing into physical/intellectual capital, they are hiring someone new to work on said investment or paying an existing employee more to manage the investment. Corporations are efficient they will invest a dollar for a potential ROI before it will pay a tax dollar. If taxes are low, then the amount to investments where they earn a deduction/credit is reduced, which then leads to less investment. This framework (higher corporate rates on the bigs) it is better than the current trickledown framework, and the proposed New Green Deal structure. Way better. There is more to be said here and a much more specification that needs to be included. It would be my pleasure to discuss it further through conversation if it raises questions.
Small addendum: This framework quas-i existed in the 50's, or the most prosperous time for middle class. We also quasi- use it in the energy space. And lastly, it creates an environment for executives to make more investment decisions before starting a buyback program.
@@ronallan8680 Why can't it be people buying a second cheap home to rent out with the inflated rent prices? Or older families who can finally afford a home?
Great interview guys, wealth inequality does seem to be one of the root causes of what we are seeing all across the world, trump/brexit/socialism although they are opposites they are all coming from the same thing, people want change but they are not sure what they want and are wildly lurching from extreme to extreme and wealth inequality (Especially for millennials) is one of the biggest causes imo.
How did our parents and grandparents afford to buy houses with higher interest rates? Because the wealth gap wasn’t so big and CEOs didn’t make 200 times the median employee. We wouldn’t need cheap money if they paid people well. I’m disappointed in Josh for saying something so silly.
Not so fast. Back then wages were much higher. Why? Supply and demand. Women entering the workforce in the 60s and 70s effectively doubled the pool of available labor and wages have stagnated since.
@@realjoedee wages still continued to rise albeit unevenly until around the Reagan era then it slowed dramatically. CEO wealth skyrocketed. anti union legislation started making rounds....trickle down economics was a big catalyst for the downturn
What nobody wants to say is eventually the poor rise up and cut off some heads. There is always more poor than rich. The rolling of heads is just part of the cycle.
The situation cries out for mature BoD members who aren't sociopaths and care about looking out for the shareholder's interests. Problem is, all of these C-Suite pirates are on each other's Boards. You heard Jamie Dimon Sunday - "The compensation I receive is the Board's decision, I have nothing to do with that." Utter self-serving bullshit.
1. Please DO NOT interrupt the guest. Let him lay down his theory step-by-step instead of rushing him. 2. Inequality is when 5% of ordinary people can afford a house yet 100% of the Upper classes can afford a house. That's not "equal opportunities". 3. Crony capitalism is when elected governments/representatives enable this masquerade to gain special privileges for themselves and their circles. God bless America.
Outsmart??? Has more to do with morality Buybacks should be illegal. Companies always trade with inside information. Now these companies are doing buybacks with debt. Highly manipulative.
These folks are too concerned about the little issues. America is focused on the two most important issues of the last 150 years, "inequality" and "climate change". So instead of listening to this "wonky" stuff, head over to CNN and or MSNBC and learn about how you can help solve the aforementioned issues of the day. Thank you.
Not impressed. "I'm not against buybacks" but we should burn it down.. His beef seems to be squarely against excessive comp but he piles in other populist flavors of the week as a headline seeking rabble rouser. Lot of various claims with little data to back it up.
This guy is spot on. I voted for Trump to end QE, and to raise interests and normalize the economy. QE is Socialism for the rich. QE is UBI for the rich. I voted for Trump to end the Obama/Bernanke Fascism and Communism. I am done with Trump. He has made everything worse by blowing the artificial bubble bigger. Elizabeth Warren will be the next POTUS. Socialism will be an improvement over what we have now. I'm sick of what Trump has done to save the banks and Wall Street, SICK.
Trumps own actions will elect Elizabeth Warren as the next POTUS. Why are conservatives acting like liberals when it comes to monetary policy? Where is the balanced budget? Why does the insane spending continue? Elizabeth Warrens Socialism will be better than what we have now..
Trump is not consistent. Candidate Trump: "The stock market is one big fat ugly bubble" (This is when the DOW was at 18,000 and now at 27,000). Now Trump is demanding lower interest rates and more QE to blow the bubble bigger. QE is welfare for the rich. Candidate Trump: "Real unemployment is 25%, some say 40%." Now Trump says we have the lowest unemployment in the history of our Nation.
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Why wasnt this two hours long.
H. Brown 🙌 glad you enjoyed. Thank you!
They made a huge miscalculation on the low interest rate for homes argument (circa 20min), unless your house has added a room the increased value of your home doesn’t make you richer. It is just a function of inflation of money supply. It actually makes you poorer because if it cost 2 years gross wage a decade ago and now it cost 5. You might pay 3% to buy it but you will slave longer for essentially the same thing. It is zero sum and only the person creating the credit is winning.
At ~20 min - not EVERYONE is better off with lower rates. Those retirees who save but don't invest have been crushed. My father was one of those.
Oh men! Where I'm from, debt is really low. Debt is unheard of. We were taught through generations to live frugally, and Save Save Save! The way of the "Wise man"
Then MMT came and fucked us all in the ass
the rich are not savers they invest in the stockmarket and businesses
Indeed. I think that's the point he's trying to make there.
Increasing the price of something doesn’t increase its value. A four bedroom house that cost twice as much is not twice as big. It is purely inflation. The fact that you can finance it is not a good thing for you because over 30 years you actually pay more....
All of my friend make FAR more money than me, we are in our late 20's. Almost none of them have bought a house, one has a condo that him and his wife bought together and another moved out of state and bought a cheap house that he's going to have to fix up slowly. There's also people I've met who rather rent than buy because they don't want to deal with repairs etc.
Another BIG problem imo is that states are just pushing property taxes too high in order to try to fill the budget gaps they have. I live in NYC and the property tax rate has doubled since we bought the house in 2006
Great interview. Love these. Nitpicking here, but my previous time in TV is asking, can you add a third camera for a wide shot?
Buy back have had been illegal until the early 80. The buybacks are being used with debt, that is the problem.
Great interview and guest. I will definitely be checking out Ben Hunt. Why aren’t people like him on CNBC. Instead we get Joe and Becky asking softball questions.
Dude CNBC is toxic
CNBC has one job: To keep you from knowing this. Ofc they aren't gonna bring on honest people.
nice interview -- what I always wonder is why nobody mentions how interest rates are inversely correlated to the price of real estate and assets. so yes your interest rate may be low, but the price you pay is higher and the loan duration is longer. So you have the debt burden longer which ties up your cash flow as you age. Those who owned prior to the reduction in rates paid a lower price with a higher rate, then refi to a lower rate thus getting the benefit of both extremes, low price and then a low rate. With added benefit of massive equity as rates are reduced and assets increase in price. So your parents may have wealth in a property but the next generation will pay for that wealth transfer. If you buy now you are generally looking at NEVER being able to refi lower as the duration goes on. So is that really a good investment for a young person to make? I believe this is part of a phenomenon that Ben is referring to. Josh am I wrong about that?
Fascinating how nobody mentions that. I guess 20 years of listening to "Get your F-150 for only 199 bi-weekly" message has done some long term damage.
Yes, Mike you are accurate....a guy like my father who took out a $150,000 mortgage at 11% APR in the early 1980s, has the same exact monthly payment (not adjusted for inflation) as the guy who takes out a $300,000 mortgage today with a 3.8% APR. So the monthly carrying cost of home ownership has not changed, even though the prices have increase dramatically. The problem is, the guy who spent $150,000 on a home in the 1980s got to enjoy asset value appreciation over the last 30 years, while the person spending $300,000 on a home today probably will not, because the massive tailwind from ever decreasing interest rates that we have seen over the last 30 years will not be there this time around. The only way buyers today will see long-term price appreciation, is if mortgage rates go to 0 or if salaries increase dramatically (which will lead to lower purchasing power). This is why people say things like "The Fed is trapped, interest rates will never be able to move meaningfully higher as it will collapse asset prices, and the rest of the economy with it."
This was fantastic and probably could have been a lot longer. Wish he also talked about the costs in the longer term of those buybacks in terms of how companies finance them (borrowing).
Upper-class owning the vast majority of securities, moderate-low taxation & high returns are causing the wealth gap.
I like how you are steelmanning his argument! Great job guys! Honestly
Something that isn’t discussed in this video, but is also important consider - the Federal Reserve always says “the persistence of low inflation in a mystery and is concerning.” Well, US corporations spent about $800 billion on stock buybacks in 2018 (around 4% of the entire US GDP).
I ask you dear reader - if US corporations are selling goods and services to society, and then taking that cash from society and spending hundreds of billions on buybacks (essentially the equivalent of when banks destroy old currency), how can that possibly NOT be a massive deflationary force within he broader economy? My belief: buybacks are causing the very deflation that the Fed says it does not want.
Please, for a dummy like me, give your definition of "inflation" and what you look at to measure its existence or, in this case, absence. Thanks.
This screams for someone to make an Etf with companies that don't take more than 25% of the pot
The Gov could require a rigorous filing by the company and a lockup period for Executive Stock to discourage buy backs and address some of the self dealing.
What's better? Rates so low that people who don't earn enough to properly own a house can get a loan that they'll struggle with for thirty years, or higher wages so that these people can properly afford the houses?
This needs to elaborated both in a short infographical version and longer interview. Great content.
"I'm not a fan of theese flamethrower ideas." Editor: "ok lets name this one burn it all down"
Would love to hear from this gentleman on today's current conditions.
Should I be worried?
Apple has reduced shares outstanding by more than 33% since 2012-2013.
Apple is not as bad as some of these other companies.
The answer is on the fiscal side of things. Monetary policy is important, but not as much as fiscal policy in this matter. Reconfiguring policy where the fiscal burden falls more on corporate entities who earn above small or mid size revenue amounts, needs to have a higher statutory tax rate. With a higher statutory tax rate there is a ton of room for deep deductions and high credits for investments. When an incentive structure like that is in play, a company avoids taxes at the same time they are increasing the amount of human capital in the market place. If they are investing into physical/intellectual capital, they are hiring someone new to work on said investment or paying an existing employee more to manage the investment. Corporations are efficient they will invest a dollar for a potential ROI before it will pay a tax dollar. If taxes are low, then the amount to investments where they earn a deduction/credit is reduced, which then leads to less investment. This framework (higher corporate rates on the bigs) it is better than the current trickledown framework, and the proposed New Green Deal structure. Way better. There is more to be said here and a much more specification that needs to be included. It would be my pleasure to discuss it further through conversation if it raises questions.
Small addendum: This framework quas-i existed in the 50's, or the most prosperous time for middle class. We also quasi- use it in the energy space. And lastly, it creates an environment for executives to make more investment decisions before starting a buyback program.
Absolutely agree
Not saying that he hasn't, but it sounds like Josh might benefit from digging into who is actually purchasing those "starter" homes.
Doubt it can be anyone other than young families
@@ronallan8680 What makes you say that?
@@ronallan8680 Why can't it be people buying a second cheap home to rent out with the inflated rent prices? Or older families who can finally afford a home?
Great talk, guys. Thank you, so much for this. Ben's blogs are really informative!!
Why not "use" profits to pay FRONTLINE employees more? Perhaps pay more towards healthcare of frontline workers
Brilliant guys.
Mario M thanks for the support Mario.
Interesting guy. Great interview.
Jaime Dimon - $30 mm compensation, board sets his pay, he is chairman of the board lol! Bitcoin is rat poison, sqaured!
Josh, can you just make videos and give up your CNBC gig? By the way, is there anything you can do to get Joe Kernan to retire?
lmao everyone hates kernan.
Great interview guys, wealth inequality does seem to be one of the root causes of what we are seeing all across the world, trump/brexit/socialism although they are opposites they are all coming from the same thing, people want change but they are not sure what they want and are wildly lurching from extreme to extreme and wealth inequality (Especially for millennials) is one of the biggest causes imo.
This was way too short. But alright we got 3 suggestions.
i totally enjoy the charlie rose music - miss those days, you've replaced him as my lunchtime break
Great Conversation!! 👍⚡
How did our parents and grandparents afford to buy houses with higher interest rates? Because the wealth gap wasn’t so big and CEOs didn’t make 200 times the median employee. We wouldn’t need cheap money if they paid people well. I’m disappointed in Josh for saying something so silly.
Not so fast. Back then wages were much higher. Why? Supply and demand. Women entering the workforce in the 60s and 70s effectively doubled the pool of available labor and wages have stagnated since.
@@realjoedee wages still continued to rise albeit unevenly until around the Reagan era then it slowed dramatically. CEO wealth skyrocketed. anti union legislation started making rounds....trickle down economics was a big catalyst for the downturn
I prefer buybacks to dividends
Not when you want to live from dividends.
@@Felicidade101 live off stock appreciation. It's better imo
My first thought was I wondered if Ben envied Josh & Michael's big microphones? (Perhaps the Long Island boys need to compensate?)
In a low interest environment do not put money in banks for zero interest. Invest in the stockmarket
10:45 someone's phone is blowing up
this is not done with Tesla stock
What nobody wants to say is eventually the poor rise up and cut off some heads. There is always more poor than rich. The rolling of heads is just part of the cycle.
Nothing new. Warren Buffet has been saying this for many decades.
The situation cries out for mature BoD members who aren't sociopaths and care about looking out for the shareholder's interests. Problem is, all of these C-Suite pirates are on each other's Boards. You heard Jamie Dimon Sunday - "The compensation I receive is the Board's decision, I have nothing to do with that." Utter self-serving bullshit.
1. Please DO NOT interrupt the guest. Let him lay down his theory step-by-step instead of rushing him.
2. Inequality is when 5% of ordinary people can afford a house yet 100% of the Upper classes can afford a house. That's not "equal opportunities".
3. Crony capitalism is when elected governments/representatives enable this masquerade to gain special privileges for themselves and their circles.
God bless America.
👑
I see the same mendacity in the monomania of the climate change narrative...
Outsmart??? Has more to do with morality
Buybacks should be illegal. Companies always trade with inside information. Now these companies are doing buybacks with debt. Highly manipulative.
I haven't seen anyone use mendacity in a sentence before.. 😐
These folks are too concerned about the little issues. America is focused on the two most important issues of the last 150 years, "inequality" and "climate change". So instead of listening to this "wonky" stuff, head over to CNN and or MSNBC and learn about how you can help solve the aforementioned issues of the day. Thank you.
Not impressed. "I'm not against buybacks" but we should burn it down.. His beef seems to be squarely against excessive comp but he piles in other populist flavors of the week as a headline seeking rabble rouser. Lot of various claims with little data to back it up.
Not “literal socialism” Ask a Socialist (not Bernie Sanders)
This guy is spot on. I voted for Trump to end QE, and to raise interests and normalize the economy. QE is Socialism for the rich. QE is UBI for the rich. I voted for Trump to end the Obama/Bernanke Fascism and Communism. I am done with Trump. He has made everything worse by blowing the artificial bubble bigger. Elizabeth Warren will be the next POTUS. Socialism will be an improvement over what we have now. I'm sick of what Trump has done to save the banks and Wall Street, SICK.
Are you saying that you'll be voting for Warren should she become the Dem. nominee?
Trumps own actions will elect Elizabeth Warren as the next POTUS. Why are conservatives acting like liberals when it comes to monetary policy? Where is the balanced budget? Why does the insane spending continue? Elizabeth Warrens Socialism will be better than what we have now..
@@jackjohnson9449 Interesting perspective. Thanks for replying!
Trump is not consistent. Candidate Trump: "The stock market is one
big fat ugly bubble" (This is when the DOW was at 18,000 and now at
27,000). Now Trump is demanding lower interest rates and more QE to blow the bubble bigger. QE is welfare for the rich. Candidate Trump: "Real unemployment is 25%, some say 40%." Now Trump says we have the lowest unemployment in the history of our Nation.