Speaker 1 (00:00):
Hey everyone. This is John Detton with a local conservative coming at you with another exclusive video. So let’s go ahead and get right to it. I know a lot of you have been sending me questions about the potential for more lockdowns as the government continues to worry about unvaccinated people and the new Delta area. Many of you are small business owners, and you’re really worried about surviving the economic fallout of another shutdown. Well, today I have my friend, Tim, Melvin, joining me to talk about the possibility of another lockdown and what it means for us financially. Tim is one of the top financial experts in the country. So if anyone knows what to do in this kind of situation, it’s TM, Tim. Thanks for joining me today. How are you doing, man? I’m
Speaker 2 (00:39):
Doing fantastic down here, John. Thanks for having me on this morning. Looking forward to talking with you and your audience about the, the possibilities and what happens if we have another lock,
Speaker 1 (00:48):
Right? That’s what everyone’s talking about right now. And it’s got a lot of people worried, so let’s go ahead and cut to the chase lockdown 2.0, what could that potentially mean for our economy? And do you actually see it happening?
Speaker 2 (00:58):
All right. Let’s, let’s start with, do I see it happening? You know, Joe Biden said last month that he absolutely would implement a national lockdown. If the virus continued to spread now, I’m not sure he has the authority to do that. I’m not sure that’s illegal executive order, but, but as a newly elected democratic president, he has enormous influence where they do a lot of governors as in all of the democratic governors and even some of the Republican ones. So he could get some lockdowns going in some of the blue states and in some of the biggest cities across the nation. So if the variant keeps spreading, it’s the probability of it goes up. What does that look like for our economy? Well, we can go back to the last March. It’s a disaster. Okay. It’s you know, if you have a quote unquote essential job, you’re okay.
Speaker 2 (01:53):
Sure. you’ll still be able to collect a paycheck and go on. Or if you’re in one of those occupations that allows you to work from home. Now, if you’re a small business person whose business happens to be retail restaurant, or just, you know, not essential you and your employees, your workforce, you’re in trouble, big trouble, right? Because you know, once you’re locked down, you’re not selling anything. You can’t make payroll. Now last time. And we were all very concerned about what was going on initially. Now, then the fed came in, they borrowed or spent $5 trillion and that they hold off disaster. And let’s be honest and admit, we danced on the edge of disaster there for a little while. Okay. I talked to a lot of small bankers just because I happen to love investing in small banks and the metal loans that they had on deferral back then, John were as, you know, 25 and even 50% of the banks, equity, smaller banks with less equity would be gone. Just, this would be much worse than 2009. You’re talking a 1930s style event. Wow. Now here’s the problem. That $5 trillion we borrowed it at all. It was short-term borrowings. We have right now.
Speaker 1 (03:13):
Well, I was about to say, I was about to bring that up. Why short term? Right? What in the world? Yeah. They should
Speaker 2 (03:17):
Have done a a hundred year bond, right. Instead with typical government efficiency, they borrowed at all on 30 day bills. I mean, when your bills into your notes. So that’s all gonna roll over. It’s going to have to be, you know, resold basically into the marketplace this year. Last year, the fed took it all as part of the bond bond program. Right? Okay. So we basically, we kind of Ponzi that thing. Okay. The fed sold it to the treasury. I’m not sure we could do that with another 5 trillion to do this all again, without harming our currency. Now here’s what this starts to look like. The small businesses go out of business, or they’re at least closed. They can’t open. People are working for home. Companies are going to have to lay people off that they just rehired. The travel industry is just blown up because remember, without a bail out, most of the American airlines would have gone
Speaker 3 (04:12):
Bankrupt. Absolutely. That’s right. Gone bankrupt
Speaker 2 (04:15):
Again would be the right phrase. All major airlines have been bankrupt at least once. So we’ve got all those job gains are now reversed. So you’ve got a bunch of people sitting at home. There’s no longer a way to borrow enough money to pay them extended unemployment benefits. So they can’t pay their rent. If they can’t pay their rent, the landlord can’t pay the mortgage. If the landlord can’t pay the mortgage the bank has a problem. Okay? So the big re the big REITs owned buildings and apartment buildings and all that, they probably survive because most of their tenants have six-figure jobs. Okay. They’re young folks with good jobs that can work from home. It’s the mom and pop landlords renting to blue collar individuals and families. They have a massive problem because they’re going to, if this happens, John, they will extend the no eviction rules, right?
Speaker 2 (05:14):
Due to expire, I think in October. So you’re going to have tenants not paying rent. They can’t be evicted. Landlords can’t make the payment to the bank. The bank does not. In this instance, they are not going to want to foreclose. Okay. It’s a disaster for them if they foreclose, because it’s going to wipe out the equity that the loan represents on their books. So Congress and the FDAC are going to have to act very quickly to pass new accounting arrangements, which we were allowed this time to just ignore loans on deferral. We counted them as as, as parlance is good lunch. You’re going to have to do that for an extended period of time, which you know, is sort of hiding the wound. But that would absolutely have to happen. Or we have widespread bank failures. So what does a lockdown look like for the economy, John?
Speaker 2 (06:02):
It just doesn’t look good. You’re going to lose all the job gains. I think that the majority, and I mean, 80, 90% of independently owned restaurants will be gone all independently owned hotels will be gone. So yeah, let’s hope we don’t come to that. And, you know, we can get this variant spread slowed down because it’s real bad for the United States economy. And even if they’re able to borrow that 10 trillion, you know, that $10 trillion, it’s going to debase the currency and sure. You know, individual investors, you know, we just, you just made back what you lost in your 401k. Now it’s all gone again. Okay. And if you’re a fixed income investor, you’ve got a big problem. Cause we’re going to go from talking about inflation right back into deflation. We’re going to have these super ultra low interest rates. And so if you need your portfolio to generate income, you’re in a lot of trouble. And by the way, if you’re counting on REITs, yeah, no, not going to happen. They’re all going to cut their dividends.
Speaker 1 (07:03):
Yeah. And that’s exactly what I’m hearing from a lot of small business owners and entrepreneurs in my neck of the woods. They barely made it through 2020. And now here they are, again, just as they’re starting to kind of open things up around here. Now they’re hearing that, oh, well they hear the white house saying we fully support any states that need to go back into lockdown. You know, Hey, if that’s what it takes. So on one hand, they’re hearing about the quote unquote economic recovery we’re going through right now. Right? Apparently we’ve been going through recovery since the beginning of the year. Now they’re also hearing, but wait, we might go back into another lockdown. Let let’s, let’s kind of go down that rabbit hole a little bit. Is it fair to really say we’re in a recovery? And if so, how, w w how do we deal with inflation?
Speaker 1 (07:45):
That’s another word, another buzz word that’s going around that a lot of people worry about people who are dealing with their money. You mentioned it the fed clients is transitory. And for those who don’t know, that means it’s temporary or short term, is it really, there are some of the, some, even some people in the fed are saying, eh, it may not be transitory, maybe dealing with this all the way through 20, 22. So what do you tell people who are trying to prepare for at least the remainder of 2021, what’s going to happen really with inflation? And are we really in an economic recovery? Well,
Speaker 2 (08:16):
We’re in a, we’re in a government assisted economic recovery, right? Okay. had they not taken all the steps, extra unemployment PPP, and I’ll let the historians debate about whether they should or not backed as it was done. It’s given the economy some legs we’re slowly getting back to not where we were, because we’re going to be a couple of years to get back to 2019 levels. We’re not walking on the edge of disaster anymore. Right. You know, the inflation deflation question gets a little interesting because right now, what we’re seeing in inflation is all supply chain. Okay. It’s shortages and getting stuff from point a to point B. The real danger of inflation is wage. We’re not going to have the answer to that until the extended unemployment benefits are God, that will be the 1st of October. So figure in the fourth quarter, we’ll know if inflation is transitory or not.
Speaker 2 (09:07):
Now my biggest fear, the nightmare economic scenario for us, okay. Is the supply chain remains disrupted. We have lockdowns, which further disrupts the supply chain and prices are going up while economic growth growth is reversing and starting to lose ground. Again, that’s called stagflation. I saw it in the 1970s. We really don’t want to see it again, because it’s a disaster for the economy. For you as an individual, your investments are going to go, they’re going south, you know, real quick. You’re not going to be able to get income from any of your investments. Dividends will be cut. Interest rates will be low. Banks will be failing. That’s the nightmare scenario that I could see lockdowns producing if they were to happen all over the country again.
Speaker 1 (09:54):
Yeah. That makes perfect sense to me. And for those, some, some folks might have been around back then. I’m not that old, but I’ve heard, I’ve heard stories from, Hey, what can I say? That’s why I have this beard. I have such a baby face when it’s gone. So I got to grow it and make people take me seriously, but no, you’re right there. Those are nightmare scenarios that we really don’t don’t want to go through again. And I guess the biggest thing is, is a lot of the people I’ll talk to, they’re hardworking Americans, right? They’ve worked hard for what they have and they just want to protect it and they want to grow it. And a lot of them are new to investing. They finally have enough cash set aside where they can really get into the market. And it just so happens.
Speaker 1 (10:37):
It’s in the middle of all this stuff we’ve been dealing with in the last year, year and a half. And what would you say to people like that? What’s, what’s their path forward and how can better way to wealth really help them protect what they have and potentially grow it while dealing with the potential for lockdown worrying about worried about inflation, all these buzzwords floating around, how can they help for the individual? What about my portfolio? How is this going to impact them? And what can they do to keep it growing? Or at least keep it safe?
Speaker 2 (11:10):
Well, there, there are some strategies, and of course, we’re eventually going to run out of time here, but we’ll come back and talk. And there’s one specific strategy that individuals can implement. That will pretty much make sure that no matter what happens, you come out of this. Okay. And it’s going to be kind of a confusing time is as we go through, that’s why I’m glad that they have people up you to turn to, because, you know, when you turn on the TV, it kind of matters, which flavor you turn on. Right? Exactly. You know, you’ve got one set that’s slanted this way, politically and other channels that are slanted this way politically. And everybody’s just talking, talking points, right. And things that they want you to think, because they’re trying to influence your vote. You know, the days of Walter Cronkite are just so far behind now that you can’t really trust what the media is going to tell you. So you need to have a strategy in place that no matter what happens, no matter what your version of the media is, right. Your protected, we have that available.
Speaker 1 (12:09):
Yeah, absolutely. And it’s so hard to really get good financial information from the financial media industry. Let’s be honest talking heads. I mean, they’re there to sell stuff. They’re not necessarily there to really give you the information to help you grow your wealth. Right. So that’s where you come in. It’s
Speaker 2 (12:23):
Most of the media that you see, they they’re, they’re pushing some sort of product, whether it be what’s the people that are advertising on the network and in that paper or things that they have to sell. Well, you know, I don’t really have much to sell. I have some things that I can share with you that 30 years of experience and just a real deep research orientation that you can use to protect yourself. Because remember I started before the crash of 87. So I saw the crash of 87. I saw the Clinton healthcare disaster of the nineties, the up of the internet bubble, the great financial crisis, the coronavirus crash, and folks I’m still here. So I must’ve learned something along the way. And I’m happy to share that with
Speaker 1 (13:04):
You. Well, we’ll go ahead and stop right there because I could talk about this for hours with you, a TM, but we want to make sure that our viewers have plenty of time to kind of digest what we’ve talked about today. Let it marinate. But I think tomorrow we’re gonna do another video and keep talking about this and jump into some more details, but Tim, again, thank you always a pleasure. Really appreciate you taking the time out of your busy day to speak with me. It’s been awesome. Thank you, Tim. Thanks, Jeff. Awesome. Awesome. Thanks everybody for watching this really appreciate you taking time out of your busy day to join me and my friend, Tim and listen. I’ve been trading and investing since my college days and I thought I knew enough to really get by, but then I met Tim and he’s completely blown me away. He’s got reports on inflation. He can give you reports on toxic stocks. He can give you the inside scoop of what’s really going down with the electric vehicle industry. I mean, you name it. He’s got it. So if you really want that information, be sure to click the link that we’re going to provide to go get more information from TM to get those reports and be sure to stay tuned for our next video. Again, this is John Ditton with a local conservative. See you next time.
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