This Inflation War is Far from Over

[Intelligent Income Daily]( Welcome to Intelligent Income Daily, the brand-new free daily newsletter from wealth and income expert Brad Thomas. Brad’s experience spans three decades of real estate and stock market booms and busts. Today, he and his team focus exclusively on the safest and most predictable ways to earn sustainable and growing income in any market condition. You can find all past issues [here](. And if you have any questions, please contact Brad and his team [here](mailto:memberservices@widemoatresearch.com). This Inflation War is Far from Over By Brad Thomas, Editor, Intelligent Income Daily Now I am not advocating for anyone to send Jerome Powell to the woodshed… But I find it perplexing that he has not received the same amount of criticism that Paul Volcker faced in the 1980s. Remember that both Powell and Volcker share the same fate of being Federal Reserve Chairman during a period of high inflation. In 1979, Volcker held his first-ever press conference as chairman of the Federal Reserve and declared war on inflation. He went on to increase interest rates by 20% over the course of his time as chairman from 1979-1987. Millions of Americans lost their jobs as a result… And at one point, the U.S. Postal service was flooded with chunks of wooden two-by-fours that were sent to the Federal Reserve by angry American builders out of work. Volcker’s fastest interest rate hike was 4.75% from 1979 to 1980 over the course of 17 months. This month, Jerome Powell blew his record out of the water, raising rates by 5% over the course of 12 months, from March 2022 to March 2023… And we’re starting to see the results: banks are collapsing, and layoffs are just getting started. And it’s only going to get worse before it gets better.  Here at Intelligent Income Daily, we don’t shy away from the hard truths. We will give you the facts so that you can make the best-informed decisions to protect your portfolio and ensure you remain on the path to financial freedom. So today, I am briefly going to touch on how we got here, contrast these two approaches, and share a little prediction. Recommended Link [The Truth About This Crypto Winter]( [image]( Over the last 7 years, Teeka Tiwari has become one of the biggest authorities in crypto… - In 2016, he recommended Bitcoin at $428. - In 2017, he recommended Neo, and it shot up 151,000% (turning $1,000 into $1.5 million). - And because of his track record, he was voted the #1 “most trusted man in crypto” by a panel of 130,000 worldwide analysts. That’s why what Teeka plans to reveal this Wednesday morning is so stunning… He’s set to go on record to make his “final crypto call.” And as a reader of this letter, you’ve been granted free access to this event. Simply [click here]( to instantly confirm your free spot. The event gets underway this Wednesday (the 29th) at 11 a.m. ET. If you own crypto but have been worried about the recent “crypto bank” failures… Or if you’ve been sitting on the sidelines thinking maybe now is a good time to buy now that crypto is starting to move… [Don’t Do Anything Before You Hear Big T’s Final Call.]( [Reserve Your Spot for Big T’s “Final Call” (No email required – just click here)]( -- How Did We Get Here Now, in 1971 I was way too young to know much about inflation and its effect on commercial real estate. I do know that times were tough for my single mother who bought a house when mortgage rates were over 8% (and rates got up over 16% in the early 1980s). For most of my career (over three decades) as a real estate investor, interest rates have fallen steadily… But increased government spending over the years, coupled with two major Black SWAN events in the last two years, have sent us back to the late 1970s and early 80s. The COVID-19 pandemic shut down businesses worldwide and stalled economies… And right as we were picking ourselves back up, Russia invaded Ukraine and oil and gas prices went through the roof. [“Thousands a month ain’t bad...” – Brad Thomas]( These events’ consequences triggered 40-year high inflation, prompting the Federal Reserve to begin hiking interest rates to cool rising costs. Now we have been here before and know what we need to do to come out the other side. But there are some cold, hard reality checks we need to face as a society in order to move forward. We have to face our national debt crises, and we have to realize that we are once again at war with inflation. A Declaration of War Paul Volcker laid the groundwork and showed us that this fight can be won. Unlike Jerome Powell, he was straightforward with the American people and told them the hard truth. The first Federal Reserve chairman to hold a press conference, Volcker addressed the American people with the hard facts. He famously told a reporter who was planning to cover the Pope’s visit that he should forget the Pope and come instead to his press conference to break what would be a front-page story.  And what was this front-page story? The U.S. government and specifically the Federal Reserve were declaring war on inflation.  He did not try to pretend things were fine. He prepared the American people for the pain ahead. In war there are casualties – but the cause is worth fighting for. In this case, that cause was protecting the future of the U.S. economy. Today we are in similar circumstances, but our leadership is giving us mixed messages. As recently as February, Powell stated that there will be “some softening in the labor market but not a recession, not a recession. And we have inflation moving down, you know, somewhere in the mid-threes or maybe lower than that this year.” But if that is the case and we are winning the fight against inflation, why are we raising interest rates as banks are collapsing? While I haven’t yet seen two-by-fours sent to the Federal Reserve, there is concern that Powell is taking a baseball bat to a very fragile U.S. economy in need of a proper hammer. All the while telling us everything is fine as he delivers blow after blow with the only tool he has in the toolkit. Jay Hatfield, CIO of ICAP ETF held back no punches this week after the Fed’s announcement last Wednesday. He told me that “despite being warned it would break something by Wall Street and congress, the Fed pursued a rapid, unprecedented increase in rates. It is now public consensus, including Wall Street, academia and congress, that the Fed is incompetent.” Hatfield is right, Powell’s hikes are unprecedented. As I mentioned, this month Powell set the record for the highest interest rate increase over the shortest amount of time in U.S. history. If millions of Americans were laid off in the early 1980s after Volcker’s interest rate hikes and a series of recessions ensured, it would be naïve to think that hiking interest rates at an even faster clip would bear less negative consequences. It would also be unwise to tell Americans there will be no consequences to such drastic actions. Generally, there is a 12-18 month lag between fed interest rate hikes and the resulting effect in the economy. Well, as if on cue, March 10, 2023 Silicon Valley Bank (SVB) collapsed almost exactly one year after the first rate hike on March 17, 2022. And instead of waiting to see what else was affected, we’re moving full steam ahead. As my colleague Adam Galas highlighted on [Thursday of last week]( the collapsing of banks is a clear indicator that a recession is happening. Hope in the Midst of the Doom and Gloom But for all the doom and gloom, I truly believe this is going to be a mild recession because of the checks and balances put in place after the Great Recession of 2008. The recession (based on white-collar jobs) has commenced. My prediction is the Fed will likely raise rates two more times, both modest bumps of 25 basis points. I believe rates will begin to creep back down in 2024. Over the next few months, I anticipate incredible opportunities for dividend stock investors. I will be writing about this in more detail in a future essay. So get ready for a wild ride, but know that there is an opportunity to both protect and grow your portfolio in this market. If you have not yet checked out our Intelligent Income Investor service, [click here](. You won’t be disappointed, and you will receive a free pick at the end just for watching. For those who are already subscribed to Intelligent Income Investor, stay tuned… The next issue is about to come out and you won’t want to miss it. Happy sleep well at night (SWAN) investing, Brad Thomas Editor, Intelligent Income Daily IN CASE YOU MISSED IT… [We’ve got what you need to profit through this latest financial crisis]( From 1990 to 2010 – when he was actively running hedge funds – this market wizard [never had a single losing year.]( And not only did he manage to turn a profit during the 2008 global financial crisis… 2008 was his fund’s best year. It made $95 million for its clients. So, if you’re looking for a new strategy to make big gains this year… after we’ve seen more banks collapse and volatility shoot up… Larry Benedict has come forward to share his secret to making millions. And how you can use it too. 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