The Fed is a Fraud: How to Survive the Coming Financial Reset

0:00It's supposed to be having things like a smartphone that has a computer, you know, basically in your pocket, a supercomputer in your pocket, and nice shoes and access to, you know, an abundance of choices. That's supposed to be luxuries. That's supposed to make you feel like you don't have to worry about money. But the necessities of our life have become so expensive that if you are in the middle and working class, that you are very likely on that downward slope of the K. You're having a very different experience.

0:41Ryan Hanley:What the is a K-shaped economy? Why is this such a problem? and why are all the smart people that I listen to, like this is like the number one thing that's coming out of their mouth? Because I don't know any regular people that know what a K-shaped economy is, but seemingly the really smart people are talking about it a lot. So can you maybe start with just the layman's version of what a K-shaped economy is, and then we can get into why this is something that seemingly is so important right now? Yeah, I think everybody knows what a K-shaped economy is. They just may not know the term for it, but they're definitely living through it.

1:17And if you think about the letter K, right, you've got this divergence. One part of the K is going up and to the right, the other one is sloping down. And so it depends on who you are. That's sort of your economic experience. If you are an asset holder and you have a portfolio and you have a house, you've got a high-paying job, you've actually done very well over the last several years. We keep seeing that inflation in assets taking hold. And so at least on a nominal basis, not adjusted for inflation, but just the number that you see in front of you, it appears like things are going very, very well.

2:00If you are somebody who is not an asset holder or maybe just has a small amount of assets, but primarily you're dealing with the day-to-day cost of living. You're dealing with rent and mortgage. You're dealing with maybe the cost of education, food, travel, whatever else. You're having a very different experience in this economy. Things are not going well. They're just seeming more expensive to you and you're not participating in the inflation of assets piece to offset your feelings about that. And so it's really a struggle and it's kind of a bit of a difficult thing to get our heads wrapped around because it's supposed to be having things like a smartphone that has a computer basically in your pocket, a supercomputer in your pocket and nice shoes and access to an abundance of choices.

2:53That's supposed to be luxuries and that's supposed to make you feel like you don't have to worry about money. But the necessities of our life have become so expensive that if you are in the middle and working class, that you are very likely on that downward slope of the K. You're having a very different experience. And it's been a struggle. And that has sort of reverberated through political choices, the overall environment, personal balance sheets in terms of the amount of debt that individuals are taking on. And so, you know, you can say things are great or this or that from a very macro standpoint, but you really do have to look at those numbers and realize the experiences of individuals are very different in the economy.

3:42Ryan Hanley:Yeah, it's felt to me like there's a disconnect between the market and real life. Yeah. And this seems to be the disconnect that I find when I'm listening to different individuals who are talking about the economy or whatever. They'll be like, the market's better than it's ever been. It's gone up. There's 15 different stats that you can quote that make it sound like everything's going great. And then as a single dad with two kids, I go to the grocery store and it used to be$110 a week in groceries and now it's$250 in groceries for the same number of bags. And you come home and you're like, well, I'm blessed in that that doesn't break the bank for me, but it's noticeable.

4:24Ryan Hanley:And now I look back and I'm like, how does the single mom, single dad making$65 ,000 a year, that person, they don't get to do work on their car or they're putting off a health bill they have or they're not paying for medicine they need because they have to pay groceries to get it in their home. And it's that I think that's what I see a big struggle with or I personally struggle with. I look at my investments, but then I look at my cash flow and I'm like, these two things don't seem to be mashing up together. Yeah, I comment every time we go out to dinner to my husband, you know, you sit down, you order, you know, at a nicer restaurant, a couple of burgers.

5:03He has some beers. Maybe you have an appetizer. I get a Caesar salad and all of a sudden the bill comes and it's$170 before tip. And you say to yourself, how does the average person who's working in this country go out and enjoy not even an extravagant meal, just, you know, what a few years ago would have been a basic meal and has now just absolutely become unaffordable for many people? Or if they do want to take part in it, that they're putting it on credit cards or, you know, in the case of shopping, buy now, pay later, things like that, and ruining their credit. They're not building wealth.

5:43They're accumulating debt. And they feel like they can't get ahead. I mean, one of the things about money and prosperity is it's supposed to take away the financial stress that we feel. In today's reality, for most people, even if you do have enough money for some of these everyday luxuries, you're still feeling the crush of the cost of living. And it is permeating through everything you do. And by the way, not to get, you know, sort of woo-woo and psychological, but it does cause real issues. You know, it causes more divorces. It causes stress that leads to health care issues. Money and worrying about money is a real issue, given sort of how people used to be able to run their lives just a short time ago.

6:29It really is a stark wake up call.

6:31Ryan Hanley:Yeah, I called it the other day and I hadn't really thought about this. It just came out of my face. I was talking to someone. I was called it the YOLO economy, right? Like buy now, pay later. This is something that's boggled my mind is these prediction market, the prediction market stuff. how there is, how we had a decade of conversation around gambling online and these states limped into it. And it's just like, oh, you want to do the same exact thing, but now it's a contract or, you know, and now it's just, oh, go right ahead. Bet as much as you want on random things that happen in life. And we're not even going to have a debate over this.

7:08Ryan Hanley:We're not even going to, and look, I'm, I'm not trying to curb capitalism or whatever, but the fact that there's, we've just gotten to a point now where there is an entire seemingly multiple generations now and the millennials i really struggle with them but gen z to me seems like my impression of them has been that they're actually hard working and a little more grounded individuals except they have walked into an absolute shit storm of what it means to like mature into life and now they're you know i was just talking to a guy a couple weeks ago on the show where this is this is kind of where I want to get your perspective on is like, there's almost this desperation that if they don't hit these big bets, a big poly market, a meme coin that blasts off or something like this, right?

7:51Ryan Hanley:If they don't build some AI app that goes to the moon, that they're screwed. They have no chance. And they're just, they're just living in destitution until one of these moments hits. It's such an interesting observation and very different from, you know, what we've always been taught, right? Delayed gratification is the way that people historically have been successful and the way they have earned wealth. People who are quote-unquote overnight successes often took 10, 20, 30 plus years to become an overnight success. Warren Buffett didn't really start accelerating and leaning into that big money status until he was in his sixth.

8:31But we have these young people, first of all, who are paying just an absolute insane amount of money for education. I call the U.S. government the largest predatory lender on the planet because they're taking people who are teenagers and they are giving them five and six figure loans with no underwriting. There's no underwriting attached. And by the way, there's no ability to use a bankruptcy court to discharge that debt in every other loan. So they're walking into making these decisions. They can't even buy cough syrup, but they can go and they can make these decisions. And basically, it's been a wholesale wealth transfer from the younger generation to college administrators.

9:16It's not even going to teachers. It's not going to things that improve the education. It's just going to administrative bloats. So you get people who are coming out of school. And right Right as we're discussing this, I saw stats that college graduates earnings on average are down something like eight or nine percent year over year for something where the price keeps going up and up. So they're not getting, in some cases, any meaningful return on their investment. It's saddling them with tons of debt right out of the gate. And so it becomes very difficult, you know, not only to address that debt, but to then start investing in those assets, the things that continue to inflate based on monetary policy and government policy.

10:00So no wonder the young people feel like they're so far behind. And then that desperation kicks in. Well, I'm seeing all these other people on Instagram living fake lives. It looks like everybody is, you know, doing these wealthy things because, you know, it's not about delayed gratification anymore. It's about, you know, faking a lifestyle and pretending that I'm living large, even though I've done nothing to earn it. And so there's this pressure to try to make these huge bets. And instead of building wealth slowly, they feel like they have to lay it all on the line, make the huge bets. You go all in on crypto and meme coins and prediction markets and things to try to not earn money productively, but to gamble.

10:50And that is not a winning strategy to be financially secure, although I completely understand where the pressure for that is coming from. And I do think it's something that we need to address on all fronts.

11:04Ryan Hanley:It got all of your answer and then for some reason it dropped while I was asking my question. Maybe it thought I was going to – the universe knew I was going to ask a stupid question. Maybe that's what it was. I get – if I were 22 or 23, like I understand it because you're looking at the world and you're going, okay, I can't trust any institution that my parents could have trusted. I can't trust the executive branch. I can't trust Congress. I can't trust any type of business institution, large corporate. It just feels like they're all trying to F me in the A and I have no shot and I have no idea who to trust.

11:39Ryan Hanley:And then if I try to play it straight like my parents did, I'm screwed. I have no way of getting ahead. I'm going to be saddled with debt. Life is way too expensive. So if I'm going to be screwed anyway, why not just while out and try to place all these bets? It's because, hey, maybe one of them hits and my life turns around and I can actually hit that escape velocity and catch the part of the K curve that's pointed up. I mean, it's sad. Like, it really makes me sad. But I 100 % understand the mentality and actually is a part of me that's like I, you know, considering where I came from, which was literally nothing, like, that's probably the game that I would have played at their same age if I was growing up right now.

12:22Yeah, it's funny. I also came from very little. You know, I paid for my own college. I came out of school with$40 ,000 of college debt, which was obscene. At the time that I came out of college, you know, now it's, you know, sort of par for the course. So I understand the mentality, too. Fortunately, I had a father who was very financially savvy. He didn't go to college. He was an electrician. But he, you know, very much instilled the, you know, you don't take on debt. You know, you do everything very conservatively. And that's generally served me quite well. But I do understand, you know, that housing is so expensive.

13:00Education is so expensive. As you said, it's a lack of trust. And the other thing that's going on in the zeitgeist that we haven't really touched on is that it seems like the people who do the right thing keep getting slapped in the face and the people who skirt the system keep getting rewarded. We see all of these frauds and these NGOs and these people who are basically taking advantage of the system. We see criminals who are getting let out on the street. You know, if I step into the street the wrong way, I'm going to get a ticket for jaywalking. But somebody who's punched people out in downtown Chicago 74 times, well, we should just let them off the hook.

13:45So the incentive to play by the rules has kind of that social contract has been broken because you keep seeing time and time again. And, oh, you can open up, you know, daycares in Minnesota and make millions of dollars, even though you don't have any kids. Or, you know, you can watch your friends' kids and they can watch yours. And everything's a scam. Everything is a fraud, which is something that happens during bubbles when there's a lot of money in the system. And so people aren't being rewarded for doing the right thing. And so it becomes more difficult to go down that path. You don't have enough people saying, hey, yes, you should do it.

14:24You should get rich slowly. You should do these things and it is going to work out for you. And so I completely understand the mentality as well.

14:33Ryan Hanley:Do you think that there was a time when people basically played it straight and now we're just there's more nefarious activity? Or do you think now we're just seeing the nefarious activity that has always existed in the system forever? We're just able to see it more because of citizen journalism and the Internet and, you know, just, you know, getting getting someone like Trump in who, for better or for worse, you know, good decisions, bad decisions has kind of shaken the system. And there's been some rotten apples that have fallen out. So I think the larger the system and the more money in the system, the easier it is to hide things like fraud and waste and abuse.

15:18And so, of course, it's always been there's always somebody trying to get around the rules. But given the size and the scope of government, of these various institutions in our lives and the amount of money that is running through them, I think it's easier to get away with. Going back to something like the prediction markets, I mean, the incentive there to make a bet on something that you can control the outcome of is insane. I mean, it's basically like legalized insider trading. It's basically what Congress does, right? Like, oh, I'm going to influence the outcome and I'm going to make a bet on that.

15:58And so we're saying, hey, here's a legalized way for you to manipulate the system, for you to participate in the fraud. And then everyone goes, it's great. You know, and every telecast and football game and TV show is now sponsored by one of these entities that wants you to come in the system and do it. Oh, and by the way, if you're super successful, they're going to find a way to kick you out of it because they don't want you to actually be successful. But that is the lure, the draw. And we see it time and time again, where somebody has placed a big bet on something. And then you find out later that there's been some level of shenanigans.

16:40That person knew what was going on or they could actually influence the outcome. And they're the ones making the big bets to get the big paydays. So is the lesson here, don't play it straight?

16:53Ryan Hanley:Like, is the lesson like, screw it? Like, let's all just kind of try to hose each other as much as possible, get ours and survive. Like, are we back? Like, there's part of me, and again, you said you didn't, earlier you said you didn't mean to get all, like, woo-woo-y. You can go there if you want. It's okay on this show. You know, there's part of me that's like, this feels very much like Wild West. Like, you know, when I think of, like, the Dark Ages or Ancient Rome, like, you kind of know, like, if anyone was ever looking out for you, today it feels like nobody is looking out for you and you kind of i mean obviously you have to have your relationship with you know with god or whatever if you have something spiritual but like outside of that you kind of have to like go get yours or someone else is gonna find a way to screw you i mean that that is a sentiment that i have heard from people like you know i'm 45 i hear i've heard that from some of my friends who i would have never thought would even toss that out as a joke.

17:53Ryan Hanley:And they're like, I don't know, man. Like, I don't know how to get ahead. I'm making $200 ,000 a year with three kids. And I have literally no, like, I'm, I'm, I run out of money every month. He's like, I don't know what to do. He's like, how do I, like, how much more can I make that's going to get me over the edge where I'm not at zero at the, you know, I thought I was ahead of the game here. And it's kind of a wild thought when you think about it. Yeah, it's a horrible thought that people have to resort to it. And again, I'm not judging it. I completely understand it. I think it's a bad path to go down for several reasons.

18:29One is because there's always a flip side. And so if you go after it, and it doesn't work, the downside is going to put you so far behind that it's going to be a hole that's very difficult to climb out of. I also just think that like in a time where everybody's kind of going crazy and there is all of this fraud and corruption, like there's never a better time to connect with your core principles and to be a good person. and, you know, when you are getting ready to leave this earth, whenever that may be, you're not going to say to yourself, oh, I wish I would have gamed the system and had, you know, an extra sack of cash lying here next to me that I'm going to, you know, die holding.

19:19Like, that's not going to do anything for you. But you are going to think about your relationships and your family and being a good person. And are you leaving that legacy behind, which, you know, arguably is way more valuable than our currency that continues to depreciate in value. So, you know, I'm somebody, one of the things that I think is, I've always appreciated is that like, by the time I had kind of gotten to my early 30s, I really knew myself well, I knew what my core principles were, and I have not deviated from them. I'm somebody who tries to stick to those principles and to be a good person and to be a good friend and a good wife and a good family member and try to be helpful in all of those things.

20:08And so, yes, I understand the desperation of looking around and going, you know, how I'm being left behind. But that's your own perception. That's your own keeping up with the Joneses. And as I said, I'm not judging. I understand that, but that is not going to bring you peace and life because when you get that money, then you're just going to then compare yourself to the Joneses, the next level up. It's, you know, a rat race. And I forget the quote, maybe it was Lily Tomlin who says, you know, the problem with competing as a rat in a rat race is even if you win, you're still a rat. So you have to keep that in mind.

20:47You don't, you don't want to be the rat. You want to say, okay, you know, what are the things I can do to lessen the stress and the pressure of these money issues in my life. But at the end of the day, does it change my life if I don't go on this vacation or if we do a staycation or a close to home thing instead of going to Disney or whatever it is, the tradeoffs you make, you know, focus on the memories and the relationships and the things that you can control and don't be so, you know, kind of pushed by the outside world. I'm not saying to not continue to work hard and hustle and make the smart investments, but also don't drive yourself crazy in the process.

21:29Ryan Hanley:Yeah, I think that's wonderful advice. And just to be clear for the audience, I am not advocating for a demonic lifestyle of cheating your way through. I don't think anyone. Well, there are probably three people who took it that way, but they were going to take it that way. No matter what we said, they were just going to be like, they told me. They said, just go for it. I heard Carol and Ryan. They're like, you know what? Just screw it. we're just going for it that's right that's right and I I um I just it's very interesting it just I find these things as data points right and when you you hear sometimes when certain individuals say things that feel very out of context for them it like rattles you a little you know because you're like I wouldn't have expected that person even even if they're not serious to voice that kind of concern but what it does is it starts throwing alarm bells up and um it's one of the reasons in 2026, I very much dedicated this show more towards economic related marketplace, these types of topics, because, you know, going through 2025 and coming in, you know, when we talked about the economy, when we talked about business, investing, these types of things, kind of pulling your way out of this desperation, if that's where you find yourself, even, you know, I think we all kind of live that quiet desperation to a certain extent.

22:43But, you know, if you're

22:44Ryan Hanley:above the threshold of what is natural or normal, you know, there's just so much information out there and so much of it is absolute garbage. And sifting through it is very difficult. And one of the places that I find so many people either have this skewed view or just a really hazy view is the Federal Reserve, right? And we have all this, you know, there's tons of news, obviously Trump just nominated. I'm going to I know his last name is Warsh. What's his first name? Kevin Warsh. Kevin Warsh. Kevin Warsh. Yes. And, you know, now Powell's on the outs. And is it, you know, independent? Is it not independent?

23:27Ryan Hanley:And then most people don't even think that it's just a building down in Washington. Like they don't even realize that it's a completely independent body. So can you kind of lay out what is going on with the Federal Reserve? Why is why is this transition from Jerome Powell to Kevin Warsh or whoever ends up getting brought in if he's not, he's Trump's nominee, obviously. Why is this such an important time? And why is the role the Federal Reserve play so important to everyday life? I think people think it only impacts big business or investments, but it really comes all the way down to everyday individuals.

24:09Oh boy, I thought we were going to make people feel better and now I'm going to make them feel worse again. Okay, so stick with us for a second. So let me just kind of give a little bit of perspective. So I'm somebody who started on Wall Street out of college 30 some odd years ago. And so I've seen a lot of shifts and changes in terms of what drives things. And when I started out as an investment banker, as somebody who helped companies raise capital, as somebody who did mergers and acquisitions, who focused on the markets 24-7. When I tell you that we never talked about the Federal Reserve, they were not that important.

24:50They would pop up every once in a while when there was a crisis, like in October of, you know, 87 and whatnot. They pop up every once in a while to kind of, you know, right the ship or Volcker, you know, after we went off the gold standard, raise rate, like just once in a while. But it wasn't like now a spectator sport where everyone's like, what are they going to do at the next meeting? Are they going to raise their target interest rate or lower their target interest rate a quarter of a percentage point? Like nobody cared. It wasn't something that we focused on. The problem is that they really changed the game in terms of their interventionist policy during the Great Recession financial crisis.

25:32And this is where they started doing the printing money out of nowhere, literally, you know, taking a digital ledger that they have and just adding money to it and using that money to go out into the market and buy things like treasury and mortgage securities to help loosen up the economy and to get it going after the crisis. And when you create money out of nowhere, it's a problem because you have to remember that money, in addition to being a store of value and a unit of account and a medium of exchange, that it's a proxy for productivity, right? That it's something that they give you as a certificate, an IOU, a claim.