Eighth Edition - Harsh Reality Newsletter

Today is the eighth edition of the "Harsh Reality" newsletter! If you're new here, welcome to the fight. If you want to see previous editions of the newsletter they'll be available at the link below. And if you want to join us on our Discord server or view our YouTube shorts click on those links below. Our intent is to always provide more value than we extract so thank you for being here and enjoy the show.

Weekly Dose of "Harsh Reality"

Today in America, 56% of the population would be unable cover a $1,000.00 emergency using their savings alone. In fact, 34% of the population would have to borrow money, whether from a credit card, personal loan, etc., to cover the emergency. The remaining 15% say that they could cover the emergency by making cuts elsewhere in their budget.

Harsh Reality - The culture and even the system in the United States is set up to keep you financially illiterate. In harsher terms, it's set up to keep you poor. This is evident based on the fact that the extreme vast majority of adults can't explain the most basic of financial terms or principles. As one of our recent YouTube shorts stated, "If you can name all of the Kardashians, but can't explain loan amortization, you're a product of the system." Fortunately, nothing is stopping us from improving. The culture and the system may not be good at teaching financial literacy; but it definitely doesn't stop you from learning for yourself.

Today we're going to go over some basic financial terms and their practical application. Don't click/swipe away on us (or whatever the hell people do these days), we'll keep it very short and digestible so we don't trigger flashbacks from your classroom indoctrination days.

• Asset - Things that make you money.

• Liability - Things that cost you money.

• Appreciation - Things that go up in value over time.

• Depreciation - Things that lose value over time.

These four financial terms can change your entire life if you understand and can apply them to your everyday life. Here are some examples of each:

• Asset - Real estate, businesses, stocks, mutual funds/ETFs, retirement accounts, etc. (Shit that makes you rich.)

• Liability - Consumer debt (credit cards & personal loans), cars, boats, ATVs, TVs, computers, gaming systems, etc. (Shit that makes you feel or look rich, while making you poor.)

There are a couple of nuances in both of these categories that the finance nerds of the world have never-ending debates about (personal home, kids, etc.); but we're keeping this simple.

More often then not, assets appreciate in value, and liabilities depreciate in value. Finance people will combine the terms to sound smart and confuse you, but it boils down to this:

• Appreciating Asset - Things that make you money and increase in value over time.

• Depreciating Liability - Things that cost you money and lose value over time.

Now comes the important part. "Why does this matter and how does it help me financially?" Simple.. Stop spending all of your money on depreciating liabilities and start buying appreciating assets.

And now you know why.. This is a process. There's not a single move you can make and declare victory. So start taking action to fix your finances today. Financial freedom is not the most important thing in life; but it is the foundation for all of the other freedoms we desire.

Don't worry, it's not nearly as hard to buy appreciating assets as most people think. We're going to cover this in future editions so stick with us. We promise it will all be worth it!

Shit That Matters

Federal Funds Rate Increase - This week Jerome Powell announced a 25 basis point (0.25%) increase in the federal funds rate.

Harsh Reality - It probably should've been a 50 basis point (0.5%) increase and you can expect more to come. The Fed has stated that they think at least one more increase is likely in 2023; and that rates will likely remain at that level until 2024. Their target rate projection remains at 5.25%.

Unfortunately, inflation in nowhere near where they hoped it would be. As they have slowed the rate of increase, inflation has barely budged. Keep your eyes on April & May because if inflation doesn't move, it will become more obvious that more rate hikes are coming. Given that the market is projecting a rate cut in May, it'll likely cause significant tubulence in the markets. You can track market sentiment and the probability of the rate increases using the CME FedWatch Tool.

Bank Collapse and Nepotism - This week Janet Yellen testified in front of congress that the Federal Deposit Insurance Corporation (FDIC) will not insure all depositors in the U.S. banking system.

Harsh Reality - Well no shit. The FDIC didn't have the cash reserves to bailout SVB and Signature, let alone every depositor in the U.S. The problem is that she already used the FDIC insurance cash reserves to bail out her tech homies in Silicon Valley. It appears that she intends to unilaterally pick the winners and losers through nepotism & favoritism. See the quote below from last week's edition.

Americans Killed and Wounded in Syria - One U.S. contractor was killed and five service members were wounded in an Iranian backed drone strike in Syria. The U.S. responded in kind.

Harsh Reality - We continue to play "just the tip" with the Iranians while Biden presses to reconstitute the disastrous nuclear deal from the Obama era. Unfortunately, the U.S. will not learn from its mistakes and will continue its failed policy in the region.

*Keep an eye on the BRICs nations in the upcoming years.* They're on a path to replace the UN on the global stage. Currently, 82% of the world's population is part of the BRICs alliance.

Russo-Ukrainian War - Russia is continuing its campaign for Bakhmut. The Ukrainians have reinforced the area with additional combat brigades and are trying to hold out for the next infusion of NATO support.

Harsh Reality - The Ukrainians remain in a very precarious position and are in a losing position. As reported last week the Russians are pushing for the mass capitulation of almost 5,000 Ukrainian military personnel in Bakhmut. What no one is really reporting are the newly mobilized units to the north/north east of Siversk. It appears a new (and large) double envelopment pocket has opened up and the Russians are staging equipment and personnel, over two divisions, to take advantage of it. If successful, the Russians' direction(s) of travel will envelope Siversk causing another mass capitulation (See blue arrows).

Add to that the new reports that the Ukrainians are running out of artillery ammunition. Estimates released this week show that the Russian military is firing approximately 22,000 rounds of artillery per day, compared to only 7,000 rounds and falling from the Ukrainians. For some perspective, the Ukrainians are firing more artillery every day than most NATO countries have on hand at any given point. Their throughput rates are currently exceeding the production capability of their NATO allies leaving them (NATO) in danger of being undersupplied if this conflict expands into NATO areas or Taiwan.

Biden Vetos ESG Legislation - In his first veto, Biden has struck down legislation that bars Environmental and Social Governance (ESG) regulations from taking effect.

Harsh Reality - Whether you're woke, a greenie, or the staunchest of conservatives, this is going to turn out horribly. The number one issue with these regulations is the removal of the fiduciary responsibility. They have literally removed the conflict of interests clause for ultra-rich fund managers, enabling political operatives to push their green/woke agenda with impunity. Trust me when I tell you that ole Hunter Biden will be sitting on the board of a few ESG companies very soon.

Weekly Market Recap

Shit That Doesn't Matter

Trump's Possible Arrest - The former President announced that he would likely be arrested on Tuesday (21 March). This did not occur; but questions still remain as to why given the district attorney's very publicized intent.

Harsh Reality - This is nothing more than a progressive district attorney in New York trying to cause issues. The incident in question, a misdemeanor, occurred thirteen years ago and is well outside of the statute of limitations. Also, several district attorneys have declined to attempt to prosecute this over the years knowing that it was a losing battle.

Xi Jinping Meets With Vladimir Putin - The General Secretary of the Chinese Communist Party met with the President of Russia this week. Several political operatives are calling it a slap in the face to the Biden administration after their warnings to the Chinese over the last month.

Harsh Reality - This is just more posturing & bullshit. We all know that China is going to support Russia, whether we have proof of it or not. It's occurring whether they are buying oil or sending weapons; and the U.S., and its allies, will do nothing about it while Biden is in charge.

French Riots Continue - Riots continue over the shift in retirement age from 62 to 64.

Harsh Reality - Very little has changed since last week's edition on this matter. The French Parliament did hold two votes of "No Confidence" to force the French President to resign, but both failed.

Insolvency in their pension fund, or raising the retirement age.. Sounds a little familiar doesn't it..?

That's A Wrap!

Thank you for taking the time to read this edition of "Harsh Reality." Each edition will only get better going forward so if you got value from this content please consider inviting your friends and family to subscribe using the link below. Once we make it to 10,000 subscribers this will transition from a weekly to a daily newsletter and we need your help to get there! Also, hit us on our Facebook page, Twitter, YouTube channel or Discord server to keep the conversation going! We welcome your feedback and discussion!