High Interest Rates Usher In New Normal For Young People
Today’s letter is brought to you by Sidebar!Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A trusted peer group, with battle-tested perspective, and proven playbooks, to have real, tactical discussions with to propel you forward. With Sidebar, senior leaders are matched with a small group of highly-vetted, private, and supportive peers to lean on for unbiased opinions, diverse perspectives, and raw feedback. Everyone has their own zone of genius. Together, we’re better prepared to navigate professional pitfalls and push each other to do more, do it better, and do it faster.
Why spend a decade finding your people – join Sidebar today. Join the growing waitlist of over 5,000 top senior leaders, and apply to become a founding member. To investors, Federal Reserve officials are now saying the quiet part out loud—they intend to keep interest rates high for an extended period of time. This strategy is in-line with the central bank’s commitment to get inflation in the US economy under control. After manipulating the cost of money to 0% for years, the Fed had to reverse course at a record pace. The rise in interest rates from 0% to 5.25% happened at a pace that was never seen before, yet the estimated damage to GDP growth and the labor market never materialized. The economy is still growing and unemployment is under 4%. But consumers are now realizing that a long-term shift has happened in the economy. Originally, many citizens planned to wait out the Fed’s interest rate hikes. They thought they could buy a home or car next year. They could use their savings built up during the pandemic to outlast any negative wage growth. And they saw increased interest rates as a way to drive a little extra income from holding bonds. The problem is that the Fed has been in demand destruction mode for almost two years now and yesterday’s press conference signaled a long-term commitment to keeping rates high. This means the American consumer has a choice. They can continue to put their life on hold for a few more years or they can throw their hands up and subject themselves to more expensive capital. As Gina Heeb pointed out in the Wall Street Journal this morning, consumers are spending more of their income to cover housing costs, being forced to pay more on their car loans, and their credit card debt is exploding higher. Based on this data, it appears that consumers are finally starting to live their lives and deal with the cost of capital increase. This makes sense from a psychology standpoint. It wouldn’t be too difficult to convince someone to put off the purchase of a home or car for a few months, but once you begin to talk about years, people don’t have the patience. The average cost of a home, a mortgage payment, a car loan payment, and other ordinary living expenses will continue to rise nationally as rates remain persistently higher than they have been for the last decade. The interesting part is that current interest rates are not necessarily higher than the historical average, but there is an entire generation of millennials who have spent their adult lives in a low interest rate environment. It had become the new normal. Every investment decision was based on an assumption of low interest rates. So was every purchase decision. Now that rates are higher, and the Fed is signaling a commitment to long-term higher rates, this generation of consumers and investors will have to recalibrate. The irony of the situation is that boomers were slow to acclimate to low interest rates because it was foreign to their lived experience, but now millennials are likely going to be the ones who are slow to acclimate to high interest rates. There is no specific cure to the problem. The pain will continue until young people realize the world has changed and they now live in a new regime. Their investment decisions now have to account for 5% interest rates. Their car and mortgage payments are going to be higher than they anticipated. But that is the price for living today. It may not seem fair, but the worst mistake would be sitting around complaining rather than living life. Time is the most finite resource we get. Letting the central bank steal it from you because they made capital expensive sounds like a bad plan. It won’t be easy for many people to figure it out, especially because we are talking about income and rising expenses, but it is possible. And all we can ask for is a chance to live an extraordinary life that makes us happy. Hope you all have a great day. I’ll talk to everyone tomorrow. -Pomp Paolo Ardoino is the CTO of Tether. In this conversation, we talk about the rise of stablecoins, whether the market is winner-take-all or not, treasury management, how they ensure the peg stays actually backed by dollars, regulation & audits, accumulating bitcoin, banks, FDIC insurance, and more. Listen on iTunes: Click here Listen on Spotify: Click here Earn Bitcoin by listening on Fountain: Click here Tether Co-Founder Explains Reserve StrategyPodcast Sponsors
You are receiving The Pomp Letter because you either signed up or you attended one of the events that I spoke at. Feel free to unsubscribe if you aren’t finding this valuable. Nothing in this email is intended to serve as financial advice. Do your own research. You're currently a free subscriber to The Pomp Letter. For the full experience, upgrade your subscription. |
Older messages
"When The Facts Change, I Change My Mind"
Monday, September 11, 2023
Listen now (4 mins) | To investors, John Maynard Keynes once said, “When the facts change, I change my mind.” This classic investment advice is equally true in our personal lives, so Keynes' words
American Companies Must Manufacture Advanced Semiconductors and Systems for Bitcoin Mining
Thursday, September 7, 2023
It is critical for the United States to invest in designing and manufacturing advanced semiconductors for Bitcoin mining. This will help ensure a resilient supply chain, promote economic vitality, and
Podcast app setup
Saturday, September 2, 2023
Open this on your phone and click the button below: Add to podcast app
The US Economy Is Drunk & Confused
Thursday, August 17, 2023
Listen now (5 mins) | Today's letter is brought to you by Sidebar! Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A
The Greatest Business Deal of the Last Decade
Monday, August 14, 2023
Listen now (5 mins) | Today's letter is brought to you by Sidebar! Ready to take your career to the next level? Make your transition successful by leveraging a Personal Board of Directors. A
You Might Also Like
A selling club
Friday, September 20, 2024
Playtech's top team incentivized to sell more assets ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Want to Save Time & Boost Sales?
Friday, September 20, 2024
Have we got the tool for you! View in browser ClickBank Meet The Secret Weapon That Could Provide Consistent Sales While Saving You Time A human hand shaking a robot hand At ClickBank, we've seen
Simplest trick to gain prospects from Twitter
Friday, September 20, 2024
Every business - big or small - needs an e-sign tool in their stack. But they cost so much. Get this lifetime deal on the best Docusign / PandaDoc Alternative (https://www.rockethub.com/deal/flexisign/
🔍 How To Build An Organic Content Flywheel
Friday, September 20, 2024
September 19, 2024 | Read Online All Case Studies 🔍 Learn About Sponsorships Nearly every brand makes this mistake: their organic content team operates in a silo. Huge mistake. Organic is the testing
Your Invite To BUILD Summit 2024
Thursday, September 19, 2024
Hey everyone, ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
GPT o1 vs. 4o 🥊, Accelerator List 🚀, AI Coming To Your Ads 🤖, and Game-Changing AI Guides 🧭
Thursday, September 19, 2024
Plus: CRO Hacks 📋, B2B Gems 💎, UX Mockup Tutorial Using AI 🎨, Elevator Pitch Tips 🎤, and more!
FREE AI training for marketers…
Thursday, September 19, 2024
Hi Reader, Do you know you need to do more with AI? If so, I've got some high-quality video training for you. It's designed by me. And for a limited time, it's free. GET ACCESS TODAY I can
Exciting announcement
Thursday, September 19, 2024
I've got an announcement just for you: Our master class series last year had a 99% satisfaction rate. Several people have emailed me asking for a repeat of the experience this year... So, we're
📣 Now open: free registration for Litmus Live, SEO for email, and more
Thursday, September 19, 2024
The latest email resources from the Litmus blog and a few of our favorite things from around the web last week. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Discover the new Digiday Streaming and Video Awards categories
Thursday, September 19, 2024
Showcase how your company is modernizing streaming and video