Editor's Note: Day 2 of Countdown to Q-Day is out, and it is the money session. Every time the world wakes up to a new threat, a handful of early investors get rich: when it was hackers, early Palo Alto Networks investors made roughly 45 times their money, and Fortinet and CrowdStrike returned over 1,100% and 2,000% since their IPOs. In Day 2, Robert Kiyosaki's team makes the case that the forced spending behind the quantum threat dwarfs that wave, and that they found the doorway company pre-IPO. One click registers you and delivers the briefing from the start, nothing to fill out. Click here to save your spot at the Q-Day event and read today's briefing.
Dear Reader,
The New York Federal Reserve just admitted something the mainstream press buried in paragraph seven.
Americans now expect 3.9% inflation over the next year. That is the highest reading since May 2023. Not the fringe. Not gold bugs. ORDINARY PEOPLE buying groceries and gas are saying: prices are NOT coming down.
Meanwhile, the 10-year Treasury hit 5.36% last week. A 24-year high. The bond market does not lie. It does not hope. It prices in reality. And right now, reality says the Fed is wrong.
Inside today's issue:
- 3.9% and Rising: The NY Fed survey that inflation hawks have been waiting for. The Fed says 2%. The people paying rent and buying food say otherwise.
- The 5% Wall: 10-year yields at 24-year highs, debt at $40.28 trillion. What happens when borrowing costs break the budget math.
- The Escape Hatch: Every empire in history that printed its way out faced the same reckoning. Here is what the survivors owned.
- Larry Benedict: Oil Skimming: Larry Benedict just released a new presentation on a strategy called "Oil Skimming." It's worth a look. (Brownstone Research)
THE SOFT LANDING STORY IS A LIE.
I have been saying this for years. Now the numbers are saying it too.
On October 7, the 10-year Treasury yield hit 5.36%. It pulled back to 5.20% this morning. Still a 24-year high. The last time rates were this high, it was 2002. This was not supposed to happen. The Fed told you they had it under control.
They raised rates to 3.75% to 4.00% on September 16. Unanimous 12 to 0 vote. They said it would squeeze inflation back to 2%.
But look at what people actually believe. The NY Fed surveys 1,300 households every month. September result: median one-year inflation expectation = 3.9%. Up 0.3 points from August. Highest since May 2023. Spending expectations hit 5.5% - also a 3-year high.
This is the survey the Fed is supposed to anchor. It is moving in the WRONG direction.
Here is what Bloomberg called this: "complicated." A tightrope for the Fed. I call it something else. I call it the market calling their bluff.
The numbers do not comfort me:
- US national debt: $40.28 trillion. Record high.
- New debt added every day: approximately $5 billion.
- 10-year Treasury yield: 5.20% and climbing.
- M2 money supply: $23.3 trillion. Bigger than ever.
- CPI (August): up 3.4% year over year. September report drops tomorrow.
The IMF chief said it last week. Governments "urgently need to take steps to get their unprecedented debt under control." That is not a fringe voice. That is the head of the International Monetary Fund warning the world.
My rich dad taught me one thing about inflation: when ordinary people start pricing it in, you are already behind. They are not economists. They are not watching CNBC. They are buying groceries, paying rent, and telling the NY Fed that prices are NOT going to 2%.
Who do you trust? The Fed's 2% forecast? Or 1,300 households who are living the numbers every single day?
I know which one I trust. And I know what that means for anyone holding dollars right now. Let me show you what I mean on the other side of this message.
SPONSORED: PORTER & CO
The bond market is the oldest, most liquid, most honest market in the world. Trillions of dollars clear through it every day. You cannot bluff it. You cannot print your way past it. And right now, it is pricing in a world where inflation does not go to 2%.
Every time in history that an empire tried to borrow and print its way to stability, the bond market eventually said no. Rome debased its denarius. Weimar printed marks. Argentina defaulted seven times. The story always ends the same way.
I am not predicting hyperinflation tomorrow. I am saying: 3.9% inflation expectations with a $40 trillion debt load and a 5% cost to borrow is NOT a soft landing. It is a slow-motion pressure cooker.
So what do survivors do?
They own things that governments cannot print. Gold. Silver. Real estate that produces income. Assets in the B and I quadrant. I bought my first gold coin at $35 an ounce. I bought silver at $4. Not because I was smart. Because I did not trust the dollar then, and I do not trust it now.
The September CPI number drops tomorrow. Whatever it says, the bond market has already voted. And 1,300 American households have too.
They said inflation was dead. The bond market disagrees. I do too.
To your freedom,
Robert Kiyosaki
Author, Rich Dad Poor Dad