The NEW BAILOUT For ALL Investors | What you MUST Know

What's up you guys, it's Graham here. So today we're going to be covering some really important information that the Federal Reserve just released. It'll pretty much affect everybody watching; that includes people who want to invest, people who've been investing for years, employees, employers, and even this Texas attorney who is charged with egging a judge's car in response to the stay-at-home orders. Yeah, that was actually a thing.

Anyway, here's just how significant this information is. See, twice a year, the Federal Reserve releases what's called the monetary policy reports, which tells us about the current state of the economy, where it sees their markets moving, and warns us about the potential outcomes that we're likely to see. Well, that report was just released, and several of its points are honestly not so good for us and are absolutely worth discussing further.

So here's everything you need to know about their entire 66-page report, which I, by the way, have read twice so you don't have to. Which is weird, by the way, because in school, I couldn't stand to read anything, but now you give me the Federal Reserve monetary policy report, I'll excitedly read it word for word. That’s strange.

So anyway, if you guys appreciate the several hours it took me to pick this apart and read it through and then condense it and summarize everything you need to know in a neatly packaged 15-minute YouTube video, if you wouldn't mind just making the like printer go burn, it would greatly help me out a lot. It only takes one smash for it to go burn, so it really helps me a lot. So if you wouldn't mind doing that, thank you very much. And with that said, let's begin the video.

Okay, so let's talk about the good news first, and then I'll talk about the bad news, because no one likes getting bad news first, right? They've got to build up to that. According to the Federal Reserve, here's what we have to expect. One, they've said it before, but they're saying it again in their latest report that they are committed to using their full range of tools to support the US economy in this challenging time, thereby promoting its maximum employment and price stability goals.

In other words, they've made it very clear that if anything were to ever get too bad, they would do everything they can to bring us back to normal and keep us afloat. So far, that's included lowering interest rates down to zero, which means money becomes cheaper to borrow. When money is cheaper, businesses and people are more likely to borrow and spend.

They've also bought and guaranteed mortgages, allowing banks to lend more money. They've also lowered regulatory requirements so banks won't have to maintain a minimum reserve, among quite a few other things. Their goal has really always been to make it as easy as possible for people to get access to cheap money. When they do that, they're more likely to spend it.

However, repeating that they'll continue to do whatever it takes to keep the economy afloat really gives the impression that they will bail us out should we ever get ourselves in too much trouble. It's become a little bit like the too-big-to-fail mentality, where certain businesses just become indestructible only because they're so ingrained in our economy, like with airlines and banks.

See, if an airline or a bank fails, that could have a ripple effect throughout our entire economy that relies on those to function. So in a way, it actually becomes cheaper to prop up these companies and bail them out from time to time than it is just to let them fail and then all of us are left picking up the pieces. Now, whether or not you agree or disagree with that, the reality is that the Federal Reserve is looking out for all of us and making sure the economy runs smoothly.

Next in our good news for the day, a lot of people have been worried and concerned about inflation with all of this extra money being printed into the economy. So far, inflation has actually gone down. According to the report, weaker demand and significantly lower oil prices are holding down consumer price inflation. Inflation fell from 1.8 percent in February to 1 percent in April.

So if you're confused why this is, despite three trillion dollars being pumped into the markets, well, be confused no more. Because here's how that works: even though a ton of money has been printed into the economy, not a lot of people are spending it. In fact, in another note of good news, the personal savings rate had an all-time high the other month of 33%. That is incredible.

Now, yes, this is largely due to the fact that most places are shut down, you can't really go and do much, you can't travel anywhere, and besides spending your money on Netflix, Carnival Cruise stock at an 80% discount, and buying a whole bunch of stuff from Amazon you don't really need, you can't really do much with your money other than save it. So a lot of this savings rate right now is a bit more forced than it is voluntary.

Not to mention, people do have a history of saving more money during a recession and during times of high unemployment. So even though people are saving higher than normal and this could be a good thing, the lack of spending is keeping inflation artificially low. That's really because of the fact that in order for there to be inflation, there needs to be spending.

And anytime people are not spending their money, there's less risk of inflation because people are not putting that money back into circulation. Imagine it kind of like if the Fed goes in prints five trillion dollars but then Jerome Powell just puts all five trillion dollars under a really big mattress. Even though there's an extra five trillion dollars of cash printed, it doesn't affect inflation because it's not circulated back into the economy.

The truth is, our money very much works the exact same way. Like if everyone just saves their money and doesn't spend it, there's unlikely to be any sort of significant inflation to be concerned about. Part of the reason the Fed could print so much money right now and not be concerned about inflation is because people don't have a place to spend it because businesses are shut down.

It's unlikely to enter back into circulation anytime soon. Even if you don't believe me, here's what they said: social distancing has led to a dramatic plunge in household spending and earnings. Household concerns about their economic situation, as reflected in consumer sentiment, may be leading them to save more for precautionary reasons. That's why they project inflation to be just under 1 percent in 2020, 1.6 percent in 2021, and 1.7 percent in 2022.

Those numbers are all under the recommended 2% of inflation that they aim for every year. Now, as far as my thoughts on this, for whatever that is worth, I have a feeling that as soon as our economy recovers, at that point, inflation is something we should absolutely be concerned about. There is no way the trillions of dollars of extra money being printed into our economy is not going to devalue the dollar at some point in the long run.

But I also have a feeling that's gonna be a problem we'll deal with three to five years from now and not so much today. And lastly for the good news, let's talk interest rates. As I'm sure most of us are aware and constantly reminded every single time you look at your savings account and see it paying almost nothing in interest, the Federal Reserve has lowered their interest rates down to almost nothing.

This was to promote more borrowing, make the cost of borrowing cheaper, and therefore people are going to be more likely to spend. This also disincentivizes people from saving too much money because if you have all of your money sitting in a savings account, it's no longer earning you any interest and you're better off investing it instead.

However, one of the very real concerns a lot of people have is what happens when interest rates go back up. Like we all saw what happened when the Federal Reserve increased interest rates back in late 2018. Shortly afterward, the stock market just dropped off. That led a lot of people to believe that these valuations are propped up by artificially low interest rates and as soon as interest rates go back up, then all of the prices will have to fall accordingly.

Well, kind of good news here; according to the report, they expect to maintain this target interest rate range until it is confident that the economy has weathered defense and is on track to achieve its maximum employment and price stability goals. Or in other words, they pretty much flat out said they're gonna be keeping interest rates close to zero for as long as it takes to recover, which they think is going to be a few years.

So if you're thinking about buying a house over the next 12 to 18 months, well, congratulations, you're in luck! These are historically low interest rates. The same thing also applies for anyone who wants to refinance their house. Go ahead and do it now and lock in some of that sweet, sweet, nearly free money.

But now we have some of the bad news, unfortunately, and here are a few of the gloomy points we have to discuss. First, it was found that the most severe job losses have been sustained by those with lower earnings and by these socio-economic groups that are disproportionately represented among low-wage jobs. Once you begin looking into this further, you'll realize two things: one, low-wage workers are more likely to lose their jobs altogether, and even though high earners are more likely to keep their job, they're also just as likely to see a pay cut.

When it comes to that, here's what they found: lower paid workers are disproportionately employed by small businesses, which typically have fewer financial resources than larger firms. They may be at heightened risk of seeing their former employers shut down and hence experience the scarring effects of permanent separations. One of the words they're really just saying is that small businesses are going to be more likely to go out of business, and then all of those employees have nowhere to return back to.

But even though lower wage jobs are being affected the most by this, everybody as a whole is likely to see lower wages. By them saying economic downturn is putting downward pressure on wages, and even anecdotally, I've seen quite a few stories of people with six-figure jobs that were furloughed and then asked to come back to work, but they have to agree to a pay cut. Many of those employees might be best just to go and take the same job as before but with a lower pay cut than risk being unemployed and trying to find a job alongside a lot of other people.

The report also suggests that the job market could take years until it returns back to normal. So until that happens, I have a feeling we'll start to see a higher-than-normal savings rate, higher unemployment, and low inflation until things begin to normalize. Now, the other bad news, depending on how you look at it, is that they found that borrowing conditions are tight for individuals with low credit ratings, but credit remains available to those with strong credit profiles.

So here's just what that means: if you're someone who already has money, you have a good credit score, and you don't need to borrow money, then you're more likely to get credit because you're seen as less of a risk to banks. On the other end, if you don't have money and you don't have a good credit score, then sorry, it's gonna be really difficult. Many banks have already become more strict and started tightening up who they end up giving loans to.

They've increased the minimum credit score required, they've increased the minimum income you need to be making, and they don't want you to have a lot of debt to begin with. This all means less risk to the banks who lend money because they're concerned about issuing loans to people who are then gonna stop making payments should something happen. So if you already have money and good credit to begin with, then you're fine. But if you don't, you should really be working to build up your credit score as soon as you possibly can.

Get on that today! I already have so many videos that show you exactly how to do this, or even if you have a bad credit score, how do we increase it? So I'm just going to be linking to those videos down below in the description, and you could feel free to go through those videos and just watch them at the very end.

So anyway, here are the main takeaways you should really focus on, and from all of this, this is the most important to realize. One, the Federal Reserve has made it very clear that they're going to be watching over the economy and doing everything they possibly can to keep it going, including keeping interest rates at record low levels. Two, they do not foresee any issues with inflation because people are just not spending money, and the savings rate has skyrocketed to 33 percent.

With fewer people spending money, there's less upward pressure for prices to increase, hence no inflation for now. Three, the worst job losses occurred among low-wage employees, especially in service industries that were forced to shut down. Even higher paying jobs are seeing pay cuts, although they're not as severe, because small businesses employ the majority of low-income workers. The Fed says that keeping small businesses afloat is going to have the greatest benefit to our economy.

Now number four: getting a loan is going to be significantly more difficult if you have a bad credit score, but if you have a good credit score, then congratulations, you're on easy mode. So if you have a bad credit score, take some time right now to learn how to improve it. It's very easy; it doesn't take a lot of time, and I have a few videos to detail exactly what you need to do down below in the description.

Number five: it's estimated it's likely going to take several years for us to return back to normal. They don't anticipate jobs and demand coming back immediately, and only time is going to tell how all of this plays out. And of course, as soon as this report came out, the stock market had a rather mixed reaction to this.

Very much whatever the Fed says can influence where the market goes and the best thing you could do right now is do your best to stay employed, keep your expenses low, save as much money as you can, invest as much money back into the markets, and of course, destroy the like button for the YouTube algorithm! How could I forget? Also, getting your two free stocks down below in the description when you deposit $100 on Webull, because one of those stocks is valued all the way up to $1400.

So with that said, you guys, thank you so much for watching! I really appreciate it. If you have not already subscribed, make sure to subscribe and hit the notification bell. Also, feel free to add me on Instagram; I post here pretty much daily. So if you want to be a part of it there, feel free to add me there as well.

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For those who are not aware, Webull is a free stock trading app, so all you gotta do is deposit on Webull, you get two free stocks; one of them could be worth a lot of money. It takes under 10 minutes, very simple to do. You get two free stocks, so let me know what you get. Thank you again for watching and until next time!