Is the U.S. on the brink of a solvency crisis? Chris Casey joins Andrew Brill to discuss the nation’s worrying solvency risk posed by rising debt and unchecked deficit spending and the Federal Reserve’s likely response: more money printing. Chris, the Founder and Managing Director of WindRock Wealth Management, unpacks why inflation is likely to persist and how the US elections could turn chaotic and shares key investing strategies to protect your wealth under these scenarios.
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Chris Casey 0:00
Reality is they never caught 50 basis points unless we’re in kind of a so called crisis. And I think that’s the way they’re viewing things right now. They’re, they’re they’re scared. I think it’s bigger than any kind of financial downturn in the equity of bond markets. I think a solvency crisis is because it permeates everything. Is the biggest issue facing any administration and any investor for the next 10 years. That’s really something we gotta be prepared for. The only way to get out of it, and the only way they will get out of it, is to print their way out of it.
Andrew Brill 0:30
The presidential election is about five weeks away, and with a tight race, you’re probably thinking to yourself, Where can I park my money that will be safe if either candidate wins? I’m your host. Andrew brill, we’ll give you some insight into that coming up right now.
Andrew Brill 0:49
I’d like to welcome Chris Casey, our partner, Ria windrock. Back to wealthion. Chris is the Founder and Managing Director of windrock. Chris, welcome back. How are things in Chicago?
Chris Casey 1:00
Well, some decent weather. Things are great, and thanks for having me back.
Andrew Brill 1:03
Absolutely So Cubs fan, White Sox fan, I know baseball’s over for Chicago at the present time. It’s
Chris Casey 1:10
tough to ask someone that when the White Sox just set a record in the modern baseball era for having most losses. I mean, the truth is, I’m not a big baseball guy, but, you know, enjoy going to games, but it’s it’s been a tough, tough season on the south side, that’s for sure, yeah,
Andrew Brill 1:23
but Caleb Williams and the bears, things are looking up. I know there are two and two and in the basement, but two and two is respectable, and he’s learning on the job. This
Chris Casey 1:33
may be outside my area of expertise, but this is the first time I want to jinx it. I’ve seen a quarterback where I thought this guy’s the real deal.
Andrew Brill 1:41
All right, all right. So maybe, maybe we’re on to something here in Chicago for the Chicago Bears. But Chris, let’s get into it. And I know that the presidential election about five weeks away, as we as I said earlier, but we spoke last time about what you would want to invest in, or where you’d want to put your money if either one of these candidates won, I’m interested to know, where are we putting our money with either candidate? Because there’s got to be some safe havens, and we can start with inflation. And I know inflation is not where the Fed wants it just yet, although they just started a rate cutting cycle with the 50 basis point cut. Are there hedges against inflation that we where we can put our money, where it doesn’t matter all that much, up or down? Yeah, I think so.
Chris Casey 2:31
And it’s important to remember, especially with all the negative news, if you’re looking at any of the signals about the economy, it’s tough not to be pessimistic, right? So it’s, it’s important to remember that aphorism that indeed, it’s a it’s a market of stocks, more so than a stock market, right? There’s always opportunities, there’s always investments. But having said that, you definitely need to protect yourself. There are a number of things that we would think that would do well regardless as who becomes the the president in January, and I think the easiest one, really, the no brainer, is to load up on inflation hedges. And I’m not talking so much about what’s been done by the Federal Reserve and what will happen. I’m really more concerned about what the Federal Reserve will likely do, and the reason they’re going to have to really intervene, forgetting about any kind of market downturn, forgetting about a recession here coming down the pike, really just look at the debt issue. So right now, to put it in kind of household terms, it’s no different than if you had if your salary was around 125,000 a year, and you had a million dollars in debt, right? Because that’s eight times the salary. And right now we have federal revenue of 4.5 trillion or so, and that’s over 35 trillion. So that’s well over eight times. And so it’s no different than that situation. When you look at it from that perspective, you realize, no matter what people say about us being a superpower, no matter what they say about the economic strength of us long term. The reality is that’s a very, very bad situation, and the only way to get out of it, and the only way they will get out of it, is to print their way out of it. And so I’m more concerned about what Federal Reserve will do next year. I mean, we already had interest for fiscal 2024, running at over a trillion a year. The deficits over 2 trillion for this year. So not only is there no end in sight as far as prolific spending, but it’s I think it’s going to get worse, and when it gets worse, the Fed has to step in. So there’s a number of inflation hedges I think everyone should embrace, regardless as to who’s the candidate or the president, because I don’t think they’re gonna be able to solve this the next four years. So
Andrew Brill 4:42
they started the rate cutting cycle the debt. It is what it is, and it’s not as you you pointed out. It’s not getting any lower, and we’re servicing this tremendous amount of debt. But now bond prices should start coming down. Because the interest rate was lowered, are we worried about inflation going back up? I’m
Chris Casey 5:05
more worried about inflation being sticky for a while here. And it’s really once we maybe get into next year, when I think the Fed really has their gloves off, that’s when they really start embracing kind of a QE type mentality. That’s what I’m really concerned about. That’s when I’m worried about inflation and, you know, and today, by the way, I should digress for a minute and just remind people, especially with President or presidential candidate Harris out there talking about greedy corporations or what have you, I don’t know why she thinks corporations got greedy in the last couple years, right there, as far as I know, everybody, everybody, and every corporation is greedy to some extent, right? So it’s, about making fun of me, isn’t it? Yeah, right. And before we start talking about how the Federal Reserve, you know, did a great job bringing inflation down, we should also remember they’re the ones that brought it up. So it’s, let’s, let’s keep that in mind with their actions here. I think they’re panicked. So they they clearly have started a rate cutting cycle. And the reason I think they’re panic is for a couple reasons. I think over the last couple months, the price action they’ve seen in financial markets, the stock market, with Japan, I think, has really spooked them. I think they’re extremely concerned about the debt situation, because reality is, they never cut 50 basis points unless we’re in kind of a so called crisis. And I think that’s the way they’re viewing things right now. They’re they’re they’re scared.
Andrew Brill 6:19
So let’s get back to our discussion. And look, there’s, I don’t want to call them wars, but there’s wars going on around the world that we’re aiding in. So defense is a big thing. Is defense. And look, the defense budget is what it is. And obviously that’s a deficit spending part of the budget. Are there places we can put some of our own money that is sort of a hedge against all this inflationary stuff? Or whoever is president? Because whoever is President isn’t just going to pull out of everywhere and say, no, no, we’re not helping anymore. We’re still going to need to spend money on defense. That’s
Chris Casey 7:03
true. And it’s not even a matter of what happens down the road, right? It’s not so much to invest in kind of defense stocks or that that whole industry. It’s not a matter of being concerned about what will happen. Meaning, will there be another hot spot? Will there be a flare up with whether it’s North Korea, with China, what have you? It’s really, in my mind, what’s already happened. And I think what I mean by that is most people don’t understand the the stockpile depletion that has taken place from the Ukraine, especially Ukraine, but also the Gaza war, right? This is it. Put some numbers to it, 155 millimeter shells, you know, standard NATO shells that they’re using extensively in Ukraine. A factor in US may put out, let’s call it 10 to 12,000 of these a month. Well, Ukraine alone uses that in two days. So it’s going right there. And this is why you see it’s on the other side too. You see how Russia is getting arms ammunition from North Korea. They’re using Iranian drones. Both sides are depleted, and it’s going to take years to build that back up. So as far as if you’re going to look at just different sectors in the stock market, what should continue to do? Well, what has a long lead time of revenues baked in the cake? And I think defense is a good area to look at.
Andrew Brill 8:18
Any special places in defense. Obviously, there’s defense contractors, there’s defense people who who make the the the ammunition or the munitions. There’s also, I guess, companies that make the vehicles with which in which we use the munitions. So there’s a long range of certain companies that are tied to defense spending.
Chris Casey 8:43
That’s true. On the other hand, it is fairly concentrated. And you see that with any what I would call parastatal organ industry, meaning that when your government’s largest buyer, right, that’s what you tend to happen. So yes, in America, arms manufacturing is for small arms is highly diversified when you get the big ticket items, when you get to the production of, you know, workhorses like the 155 millimeter shell, that is a little more concentrated,
Andrew Brill 9:11
it’s almost tied to defense now, because AI is a tremendous part of intelligence and helping to fight some of these conflicts. So how big can artificial intelligence play a role in some of these hedges against, you know, either, either candidate becoming president? Yeah, I think
Chris Casey 9:36
the AI trend is here to stay. I don’t think people, despite all the news, despite all the hype, despite what you’ve seen when the video stopped going through the roof, I don’t think it’s actually been embraced, fully embraced or appreciated by the investing marketplace. And part of it’s just because people don’t see the changes right away. They may see it in their Google search, right but they’re not seeing a lot of the behind the scenes. Work, and a lot of it has been done yet, right? So for instance, let’s just look at a couple different industries. Look at the law industry, right? If you’re going to have an estate plan and you have a non taxable estate, meaning it’s less than 27 million for a household a couple, it’s pretty bread and butter. What you need, right? You just need a few documents drafted those type of areas, those business service areas, whether it’s tax, accounting, legal, what have you, are clearly can be done better, more efficiently and far more cheaper with AIs. And we haven’t really seen that yet really take place. So there’s a lot of possibilities. Just haven’t produced themselves or manifested themselves as far as interaction with people, but it’s I compare it, for instance, it’s like an Excel spreadsheet, right? How much productivity did Excel spreadsheets bring to the world? I mean, I remember because it came out of college in 93 literally having, like, big 12 column pieces of paper. You’re adding stuff you got to add at the bottom of the page, and, God forbid there’s a mathematical error, and you got to search through, you know, countless paid dozens of pages to find out where it is. Well, Excel took care of that, right? It made everything far more efficient. The same thing is going to happen with AI, and we may just not see it right now, because a lot of it’s going to be behind the scenes. But that’s a trend, I think, is here to stay. It’s just a matter of investing it the right way. There’s got to be a lot of industries are disrupted, but there’s a lot that will have a lot of opportunity. How
Andrew Brill 11:26
do we play that long term, the AI trend?
Chris Casey 11:31
Well, it’s kind of the pick and shovels mentality, which I think makes a lot of sense, right? You could buy, go out and buy a video right now, I don’t it’s, you know, by any measure, it’s fairly expensive. You could do that. But I think maybe a better play is looking at some of the ancillary effects that you’re going to see from AI. And one of those big ones is energy consumption, right? It’s, if you look at the projections of AI’s impact on the US electricity grid, as far as its consumption, it could be, right now it’s probably one to 2% but some people are predicting that could be up by tenfold, could be up by twentyfold, by say, 2030 I mean, there’s predictions out there like that. So that is another way to play it. And there’s other factors that introduce energy, but I think energy is a great kind of stealth AI plays the way I’d look at it.
Andrew Brill 12:18
It’s funny. We put out a community poll on our YouTube page and asked where people are, are most bullish and energy took the cake by 37% crypto came in at 23% tech came came in at 24% so the tech is on the AI side, and energy, Obviously, because we’re using AI, is is a concern. How are we going to meet the demand for energy? For AI, I know that uranium and nuclear, like many, many reactors, have been talked about. I don’t know if you’ve you’ve researched that at all, but how do we how does the country combat this energy need right now? Well,
Chris Casey 13:03
it’s a real issue. And if we had a free market in this industry, it would not be an issue, right? Because that’s what markets do. That’s what industries do. They’re able to adjust very quickly to do developments, etc. But the reality is, is that energy production is a very controversial area, obviously, in this country for a couple different reasons. And by the way, AI is not the only, the only reason you would expect electricity consumption to go up. Obviously, there’s electric vehicles. That trend will continue, maybe not with the rates that people initially predicted, but that certainly will continue. There’s you mentioned cryptocurrencies earlier. Cryptocurrency mining already takes up around 2% of your US electricity consumption. So that’s These may seem like small numbers right now, but the margin, they have a very, very big impact. And then combining all these other ones together, are data centers, right? Data centers eat up about the same amount of energy. And if anything, you know, there’s you could look at that and say, with AI, the data center, creation and usage will go up on a similar scale, so normally would not be an issue. However, let’s look at the reality of where things sit today. And I think it’s very telling that we had the Three Mile Island deal recently with Microsoft. Right? That’s the first time you’ve had a decommissioned nuclear power station in the works to be recommissioned, and it’s the first time you had a whole plant for nuclear power with one customer. Now you could say that all plants have one customer, and they put these reality is their their middleman, right? They sell it to a bunch of households, what have you. No, this is for Microsoft and their data centers. This is primarily for their usage. So that’s very telling. Right now, nuclear energy accounts for less than 20% of US production. That could increase, but that’s obviously a very long term trend. But the short way to do it, and the most environmentally friendly way to expand energy production is through natural gas. Yes, and each candidate, as we’ve seen, has very different views on that. But I think the reality will dictate policy more so than the candidate dictating policy going forward.
Andrew Brill 15:09
It’s a big you’re absolutely right. It’s a big discussion on both sides. You know, one wants the drill like crazy, and one is not, although softening on that view because of the energy demand, I think your point is very, very well taken, is that the demand is going to dictate policy for sure, in in that respect. And I grew up not far from Three Mile Island, and maybe that explains some of my quirks. But it’s interesting that nuclear power, which was, like you said, decommit. We decommissioned that, that power plant all of a sudden. Now it’s like, okay, you know what? How can we do this? And the question is, how can we do it a lot safer? And I think that might be another area of investing is, you know, places and ways to keep this, these particular nuclear power plants, safe. Probably,
Chris Casey 15:58
I mean, there’s, there’s definitely like, for instance, there’s consulting firms on, you know, fire protection, all that kind of stuff related to big plants like that. The good news is that nuclear power United States is inherently safe relative to, for instance, Russia, and it all has to do with the feedstock, where they’re using different isotopes of uranium. And so the So, the very fact is, is that technical about it? But the modulator, the thing that regulates the actual nuclear reaction, is actually the same as the coolant water. So that’s not true in Russia, where they use, you know, maybe graphite versus, you know, water for a modulator. So it’s it’s inherently safer, but, but I think this is a long term trend. We’re probably not going to see new plants online for years. There’s a new one, I believe it’s been approved for licensing in Georgia, but that probably doesn’t take effect till next decade. So it’s a very long term trend. That’s why natural gas, which already accounts for over 40% US energy production should continue and should grow as far as its share.
Andrew Brill 17:06
It’s funny because here, here in New York City, they’re trying to get away from natural gas because of, I guess old pipelines play a part in that, and explosions and buildings crumbling that play a part in that. But natural gas seems to be the easiest and most accessible commodity, if you will. And let’s talk about commodities a little bit, because there’s a lot of with AI and the development of chips with racks and power that we need. There’s a lot of commodities that have to go into those things. So is that a place to park some money?
Chris Casey 17:46
It? I think it’s so I like commodities for a couple reasons. Number one, just in general, they’re cheap relative to equities. You know, historically they’ve they’ve been cheap. One could look at commodities and be concerned about, for instance, a deteriorating Chinese economic situation, which should put some pressure on commodity prices. But I think long term, when you look at electric vehicles, you look at EVs, look at AI, those are significant long term structural changes that should have a big impact on commodity prices for the foreseeable future. And the question is, then becomes, which ones do you want? I’m not an expert on it, but there’s probably an area where people want active management. I would argue that you probably want to look to certain commodities that are less abundant and like so. For instance, nickel. There’s probably five major nickel sites entire world. And I think the last major one was Boise Bay discovered, like in the early 90s in Canada, right? So there’s stuff like that that’s chunky, right? It comes online, it takes years to develop, and then you’ve got a whole bunch of it that would be different from, say, lithium, which is a large part in a lot of different places, and could be brought online fairly quickly. So I like commodities, but you just have to kind of navigate that minefield, because some should do very well. Others may not. I would also focus on ones that have more than one purpose. So for instance, copper is very important for batteries. And when I talk about batteries, I’m not just talking about stuff that, you know, car batteries, but also, you know, down the road, we’re clearly going to have large scale storage farms, batteries for renewable energy sources. And so copper is one to look at. It also is in all the wires, right that that have to be used to get electricity to where it’s needed. So long looking at certain commodities, I would use that kind of criteria as far as looking at which ones may be the winners and losers. This
Andrew Brill 19:40
show is sponsored by BetterHelp. It’s finally happened, and was only four years in the making. The Fed has cut rates by 50 basis points. Yes, it was a little surprising, but maybe they see bumps in the economic road going forward, and maybe there are bumps in your personal economic road that are weighing on you, or maybe there are other. Things that are on your mind, keeping you from thinking about all the good things in your life. It happens to all of us. We walk around with the weight of the world on our shoulders. Look at others thinking their lives are perfect with no worries or cares in the world. Everyone has worries and things they think about all the time. You can’t let those things get in the way of the fun things you want to do and explore, or the things you’re curious about and want to tackle. It’s why I speak to someone. It helps to ease some of the negative thoughts and gain a new perspective on some of the things that are floating around in my head. And believe me, there’s plenty if you need to talk to a professional or thinking about giving therapy a try, give better help a try. It’s easy, online, convenient and flexible. To fit your schedule, just fill out the questionnaire. Get matched to a licensed therapist anytime, rediscover your curiosity with better help. Visit betterhelp.com/wealthion. To get 10% off your first month. That’s better help, H, E, l, p.com/wealthion, you mentioned China, and they’re just pumping, I wouldn’t, hundreds of billions of dollars into their own economy. Could that help commodities? Obviously, their their real estate building is is going to wane. Has waned. They built way too much. But there’s going to be other areas where they’re going to want to increase so that could help commodities as well. It could.
Chris Casey 21:29
It’s a little bit more difficult to say. And you’re right. They whenever you have government intervention, you have economic misallocation. We clearly see that in China. I just saw read somewhere that there’s like 65 million dwellings which are just unoccupied, right? Just empty, like no one. There’s no demand for them, right? It
Andrew Brill 21:47
really depends on commercial real estate. Here in the States, it’s
Chris Casey 21:51
very similar, yeah. So it really depends on how China introduces their stimulus, like they they already introduced a number of interest rate cuts. They’ve already introduced some bond buying initiatives. But what’s kind of the next steps? And because there’s such a strategically focused industrial command type economy, in a lot of ways, for all I know they may dictate increasing the supply of copper, right? And that may, that may change everything, as far as the dynamics. But in general, if China is able to stave off kind of a economic weakening or any kind of recession, debt should be good for commodity prices
Andrew Brill 22:31
on the whole. What about high yield dividend stocks? Now, when I was a younger person, just starting out, I took a little bit of money, and I put it into five different stocks, decent paying dividends, and just reinvested the dividends, and now those stocks are worth a considerable bit more money. Is that? I don’t want to call it a safe haven, but is that a place where doesn’t matter which present, obviously, the stock price could fluctuate, but if the dividend remains constant, you should be able to build your wealth that way.
Chris Casey 23:07
Yeah, high dividend or, let’s say high doesn’t have to be high, like 10% but high on a relative basis, maybe four or 5% right, right? High dividend yielding stocks, I do think are a great place on a relative basis to be protected, and is in with the caveat that that dividend has to be sound and stable. There’s a number of different things to look at for that. But, um, you know, our profit margins increasing. Is there operating cash flow? You know, more than cover their dividend, uh, payouts are they? Do they require a lot of CapEx or working capital because they’re growing, right? You’d actually paradoxically want the opposite, where they could use that it’s free cash flow. They could use it for dividends. So dividend stocks, you’re right, as long as the dividends stable, then they offer some downside protection. Because just put an example to it. If you have a stock that’s worth $10 and it’s yielding, you know, 5% Well, if that’s cut in half, it goes to $5 now you’re yielding, you know, far higher. So it’s worth looking at from that perspective, that will attract a higher yield, even if it’s just temporary. When a stock goes down, price goes down, will attract more capital to it. So in some ways, I do think it’s a very increases or heightens your floor. And the other thing is, people always forget, because dividends aren’t sexy, but it’s nice to be paid while you’re waiting for something to happen. So even if it’s a stock, they think we’ll appreciate in price, it’s nice to be get get paid while you wait for that to happen. We’ve seen that recently with a number of areas in the stock market. I think tobacco stocks are pretty good example. They’ve had a nice run here during 2024 but that meets kind of all the criteria. As far as dividends, right? They cash flow extremely cash flow positive. They can meet their dividend yields. It’s a slow growth industry, and frankly, there’s some opportunity down the road with with cannabis plays and
Andrew Brill 24:55
look, I don’t want you to give investment advice, but as for. Young people starting out, and I know you can’t give investment advice, but for young people starting out, is this a way to start building a little bit of a nest egg? Just look, if you’ve got 500 bucks, buy a stock, reinvest the dividends, and you know, 510 years, you’ll be sitting on something a lot bigger than what you originally invested. I
Chris Casey 25:19
think works especially well for that fact pattern, right? Because that’s with the caveat that you have to have it in retirement account. So that’s what’s nice. You put that in an IRA, well, your real return is far higher than if it’s, you know, in your taxable brokerage account. So that is a great place to store kind of high dividend yielding stocks or other instruments like that, definitely, especially being young. Look at it in your retirement accounts. Great, great area. So
Andrew Brill 25:45
and again, we’re parking money in these stocks, and not as young people. We’ll start talking about people my age again, as as a hedge against election chaos. If you can’t deal with the volatility of the market right now, maybe a dividend yielding stock is a place to go to just step back and say, Look, you know what? Let them bang their heads against the wall with the volatility, and I can still make a make some money, you know, with the dividend, yeah.
Chris Casey 26:13
And I am concerned about some election chaos here. I’m concerned about social unrest, no matter who is elected. I’m considering about, you know, concerned about no one being elected. Theoretically, you could have a tie, right? Theoretically, we may not know for some time. You could have a bunch of lawsuits, so it could be very messy. So I do think, in general, forgetting about the election, everyone should be defensive, just based on what economic indicators are, are are are predicting. But on top of that, with the election, and what’s even worse, some of the policies that have been banted about, depending on who wins, could be very nasty. So I do think people should be very defensive going forward. So we talk about areas that should be okay regardless as to who wins, regardless as to the economy. We mean that more in a long term perspective, right? Anything could take a dip. When there’s a recession, anything could take a big hit. We’ve seen that with gold. We’ve seen Bitcoin. We’ve seen it with a lot of safe assets. Whenever there’s a liquidity crunch, they all get hit, they just happen to come back a little bit faster. What
Andrew Brill 27:16
are we staying away from? Chris, I know that we’re trying to talk about places where we can put our money that that’s kind of doesn’t matter who wins the election, but what are we absolutely staying away from with either candidate? I
Chris Casey 27:31
guess, yeah, it was. It’s a lot easier to say if you’re talking about particular candidate, because they they do have areas that they favor and potential tax implications of different tax legislation too. I mean, I think in general, I’d be very nervous just about the broad market. So when I’m talking about what’s an attractive area, it needs to be specific area, like we talked about, maybe it’s AI, depending on how you play that, et cetera. But just being in, like, a broadly diversified S, p5, 100 type thing, I do think there’s a lot of risk in that. I do think there’s a lot of risk in bonds once you go out six months, right? Like I could see bonds weakening with continued cuts by the Federal Reserve, meaning bond yields go down over next six months or so, but then eventually, I think they’re going to tick higher. And so bonds, you may have to be a little bit more nimble, but I would, I would still look at short term bonds primarily so not hurt, you know, going out with like, 10 years or what have you.
Andrew Brill 28:25
Is cryptocurrency something that you know, I know that Donald Trump was, you know, pro cryptocurrency and but Harris seems to be softening too. Is, is with either candidate, you think cryptocurrency is going to become or continue to grow higher.
Chris Casey 28:41
I do primarily because what you’re referring to is more the regulatory framework, right? They may be a little more open or less open, depending on the candidate to really having a concrete framework for cryptocurrencies. Yeah, I do think that, from that aspect, it’s each of them acknowledging a reality. It’s not one being pro Bitcoin versus this is a multi trillion dollar, you know, asset class, and this is, it’s been around for a long time now, over a dozen years. So this is a real asset class. It’s about time you had some real good regulatory frameworks around it. But on top of that, and this is, I think, the biggest thing, if anyone’s gonna take one thing away from this podcast, really, any podcast I may talk about, it’s, I think it always comes down to a solvency crisis for the US, and I think that’s going to be the biggest issue over the next 10 years, regardless as to who’s in office. Is a solvency crisis. I think it’s bigger than any kind of economic downturn or recession we have, no matter how severe. I think it’s bigger than any kind of financial downturn in the equity of bond markets, I think a solvency crisis is because it permeates everything. Is the biggest issue facing any administration and any investor for the next 10 years. That’s really something we got to be prepared for. And like we alluded to early on, I think the best way to do that is through inflation hedges, because. It’s really the only way out of the crisis. Some
Andrew Brill 30:02
defense stocks are hedges against these things, AI and and the tentacles of AI. It’s not just okay, you know what, I’m gonna buy Nvidia stock. But, like we talked about, there’s there’s energy, there’s, you know, commodities that are tied to, you know, the way we make AI, peripheral stuff, whether it be chips, racks, cooling towers or what, you know, to keep this stuff cool, energy, all this stuff. These are hedges against inflation. Are all these things if, if we end up in a solvency crisis, and that’s that’s kind of scary. Are these things places to have your money parked? Or is there someplace else that we want to think about in a solvency crisis? Because look, you know, solvency crisis would mean that the dollar has really, really dropped and not and it probably isn’t the world currency any
Chris Casey 30:57
longer. Yeah, it means people who own bonds have a real concern that they’re gonna there’s real creditor risk right now, because bonds are priced on the large number of different factors, one of them is creditor risk. That’s never a concern for us. Treasuries, I think will be a concern down the road. The things you mentioned, you know they I think they should do well over the long term, regardless of what happens. But like I said, a solvency crisis permeates everything, as far as kind of, like a category one or priority, kind of inflation hedges. What’s really going to protect you when they try to inflate their way out of this solvency crisis. I think you got to go to the old kind of, the old playbook, and you look at precious metals, you know, gold and silver right now are both up, let’s say over 60% of their lows over the last five years, they’re reaching, you know, all time highs on a relative basis, last 20 years. What have you I think they’re great places. I could see gold going quite a bit higher, and silver, that’s one area. Look at any other classic inflation hedges. I think cryptocurrencies, Bitcoin, any kind of monetary substitutes, like a Bitcoin, are something to look at for what’s coming down the pike. I would look at any great exporter. So we saw this in 1970s when you had us, dollar inflated quite a bit. It becomes our products become cheaper for foreigners to buy. Farmland took off. We had farmland exports went through the roofs. Went through roof in 1970s so I think farmland could really benefit from that. Or any exporter on the international market with a commodity, real estate is a classic inflation hedge, in part because it’s uses a lot of leverage. Anything that uses a lot of leverage, if you’re able to structure it correctly, if you have inflation, you’re making money on that debt effectively, right? It’s decreasing in value from the inflation. So real estate’s always been a great place in inflationary times. I would just caution that you definitely want something that would be protected from an economic downturn, meaning you have to worry about tenants. Well, you want tenants, but you don’t have to worry about, you know, low occupancy rates, what have you. So I would look at things that have a proven track record that could withstand some other real estate trends, like you mentioned, office space, you know, it’s obviously a very negative trend that’s been going on for some time, but those are kind of your classic inflation hedges, which I think everyone should look at, and everything else we kind of talked about, I think are areas of opportunity. It just depends on how things play out.
Andrew Brill 33:25
I was talking to somebody earlier this week about cryptocurrency being a store of value, kind of like gold. Do you see that changing, where it becomes more of an equity,
Chris Casey 33:40
an equity in the in the sense of having, um, greater upside,
Andrew Brill 33:45
yeah, where? And maybe we’re using it more than just your gold. You’re you’re buying it, and you’re holding it onto it, and there really isn’t, you’re not walking to the store with a bar of gold and saying, hey, you know what? Give me a quart of milk, or a half gallon of milk. Do you see a use for it down the road, other than it being a store of value for
Chris Casey 34:06
actually transactional, like actually being used as money? Absolutely, and I think we’ve seen that in areas that have what I would call financial repression, right? So whether you look at at Zimbabwe or China, you saw this in China with people trying to get money out of the country, and that’s why, with Bitcoin, you could chart disparity in prices between something that’s local, right in Zimbabwe, versus how it’s traded. Here you’re going to see a very big difference. Nigeria had the same thing. I don’t know what that time period is, but I do know that people, because we’ve seen in the past, will view Bitcoin as an inflation hedge, I think will be kind of a safe haven in a solvency crisis issue. As far as its adoption as a monetary usage, I don’t know things could change very quickly. I mean, it’s already being used. Theoretically, you could use it in El Salvador, right, which people may laugh at because they consider it like a. Know the backwater country, it’s milled nowhere, but it doesn’t take long for adoption to spread.
Andrew Brill 35:06
So those are a bunch of places to hedge against inflation and, I guess deflation as well. But we’ll continue to monitor the presidential election as we get closer. I guess it’s only 60 something days away at this point. So we’ll, we’ll keep leaning on you to tell us where to put our money and to be safe. Chris, where can we find you guys? I know windrockwealth.com is the website. There’s a bunch of research for our viewers. If you want to go, there anything new coming in terms of research soon? Oh, we’re always
Chris Casey 35:43
trying to put out some materials, so it’s always worth visiting our site. It’s a research tab under windrockwealth.com and everything that we do, whether it’s speaking or writing, we always push out via Twitter or x as well. So feel free to find us on there as well, at Winrock wealth,
Andrew Brill 36:01
yeah, I still call it Twitter. To me, it’ll always be Twitter. It’s hard to say, Oh, we put it out on x. It’s like, okay, you know, X was always a variable when I was in math class, but it, yeah, I still call it Twitter as well. Chris, thanks so much for joining me. I really appreciate your time.
Chris Casey 36:15
Thank you very much, Andrew, appreciate it.
Andrew Brill 36:17
Thanks so much for watching our discussion here on wealth. Yeah, I’m with Chris. If you need help being financially resilient and would like to speak with Chris or one of our other RIA partners, please head over to wealthion.com/free for a free no obligation, financial review. And of course, if you could like and subscribe to the channel, we greatly appreciate it. Don’t forget to turn on notifications. So you know when we post new videos on the wealthion channel, and please do the social media thing with us all. The links are right below in the description. If you like this content and are looking for more ways to achieve long term wealth, watch this video next. Thanks again for watching until next time. Stay informed. Be empowered and may your investments flourish.
