Fed Rate Cuts Signal Hidden Crisis: Ag Economist Warns Something's Coming

Vance Crowe [00:00:00] The Ag Tribes report is brought to you by Farm Test, a field trial design, execution, and analysis service that makes it easy to ask your fields which management practices perform best to start your field trials. Visit farm test, ag and Legacy Interviews, a service that video records individuals and couples telling their life stories so that future generations have the opportunity to know their family history. Here's Legacy Interviews customer John Duckworth on preserving his parents' stories for the next generation. I wanted a, a legacy interview for my parents. I think the primary reason is for the grandkids. One of the most important people in my life is my grandfather who died when I was 21. And I don't get to share who he was with my wife, my kids, to say, look at this guy. This is a big part of the reason I am who I am. And that's something I wanted to give all of the grandkids of my parents, they were a little hesitant, but after they went through it, they loved it. They loved meeting you. Your questions were great. I was really impressed. Everybody was quite impressed in including them. We decided to watch the interview with, I wanted everybody to be together. So we watched it together and it was, it was fun. And the older grandkids stayed in there. The younger ones lasted for 10 or 15 minutes before they disappeared into the playroom. The older grandkids really enjoyed it and, and I, and learned stuff about their grandparents. You know, I've thought about how the kids will look at this interview. Will they keep it? Will they maintain it?

Vance Crowe [00:01:30] And I'd like to think they will. The youngest grandchild is four now, and my parents are 73. When that child hits adulthood and and goes through marriage, it's my hope that, that he'll want to sit down and watch it again with his family. This is a small investment that gives your family a treasured piece of history that allows future generations to experience who somebody was and to really see someone's personality. When you see it directly, it's just more powerful. Welcome to the Ag Tribe's report, a breakdown of the top stories affecting the culture of agriculture with your host, Vance Crowe. The report begins in 3, 2, 1. Let's begin. Welcome to the Ag Tribes report. I'm your host, Vance Crowe. Each week I bring a guest co-host to represent the perspectives of a different tribe in agriculture because there's so many that make up us and Canadian agriculture. This week I'm joined by the one and only Tommy gfi, the founder and host of Ag Bull Media, a member of the Chicago Board of Trade, the owner of the Indiana Grain Company, and is a commodity risk management advisor at Advanced Trading. Tommy, welcome to the Ag Tribes report. Thanks for having me, Vance. Always fun to do live media. Yeah, we try and keep it as exciting as we can. And today is a pretty exciting day because it has been a wild week.

Vance Crowe [00:03:02] We are going to cover the headlines being followed by traders like Tommy, including the interest rate cuts made by the wizards from Federal Reserve Mountain, the proposed new tax credit designed to prop up the price of corn even better than all the other tax credits. And the 77% raise that longshoreman controlling most of our food export docks are threatening to strike over. We're gonna do that of course, and do the Bitcoin land price report, Tommy's Peter Thiel paradox and hear about his worthy adversary. And we're gonna do all of this in just 30 minutes. If you enjoy the show, be sure to retweet this episode, comment and give us a five star review on Apple and Spotify. This show has been exploding and that has been because audience members like you are sharing it with other people. This has really been a fun ride. So if you also, if you comment while we're on the air, we'll try and bring your comments into the conversation. But without further ado, let's jump into the headlines. The first one we're gonna talk about today, Tommy, the US Federal Reserve drops the interest rates by 50 bips or otherwise, one half of 1%. The wizards of the US monetary system came down from Federal Reserve Mountain and they did their spell casting to try and change the price of money. Bringing it down by just a little bit, I heard you on R-F-D-T-V say that you believe the move in interest rates is the biggest thing to happen to the financial world outside of the oh eight crash in the last 30 years.

Vance Crowe [00:04:33] So 50 bips is just a little itty bitty number. Why is this such a big deal?

Guest [00:04:38] Well, it's actually all the energy that went up into building into this. So we kept interest rates so artificially low for so long to spur the economy. This goes back to all the way back to oh 7, 0 8 when we had the housing debacle. And so everything that went into propping markets up for 12, 13 years, it, it finally caught up to the world. And we had rampant inflation for a while up in the eight, 9% level. And the Fed really raised rates to get it under control. Now, what's interesting about them lowering rates is you lower rates when you need to add liquidity to the markets, when you're starting to get worried about something. United States stock markets and world stock markets for that are all really close to all time highs. And so to lower rates, 50 bips right into stock market all time highs and then brag, you got another 50 coming, it doesn't make sense. And the, the, the, we're still, there's still people who are gonna be affected from the higher interest rates. So farmers, we work with the store and ignore doesn't work like it used to. The cost of money went up for everyone and it's really a big tax on everyday working people like ourselves.

Vance Crowe [00:05:46] So when you say it doesn't make sense, you're right, stock market just continues to soar prices on things going up. Why, why do you think they raise those interest rates or I mean, I'm sorry, drop those interest rates? Yeah,

Guest [00:05:58] I think there's some political motivation. I also think they're behind the curve. There could be some bad things coming down the pipe. They may see something that we don't know, unemployment's a little bit on the rise, but there could be some slowing. We're seeing credit card debt just absolutely explode. Interesting enough, I know we don't have enough time, but the, the Chinese government twice in the last three days just dropped an absolute nuclear explosion on just making monetary policy easier in China. And as you know, gold, the last five, six days hit new record highs five days in a row. Gold's going up as fast as the White Sox are losing games. They're definitely trading against each other. So for, to have gold at all time highs, have the stock market at all time highs and have world banks like what's happening there in China and America, lower interest rates as much as they do, something's coming here and it probably won't be good.

Vance Crowe [00:06:55] Yeah, I mean, it's absolutely clear that the Chinese government is trying to make their stock market do something. They, people woke up in China, I think just this morning and found out that their mortgages had a half an interest, half a half a point of interest off of their mortgages just taken off. And the re reserve requirements for their banks now have been released by a half a point and a half a percentage. And this is going to allow so much more liquidity into China's market, presumably because they don't like how strong their yuan is coming to the dollar. It's gonna make their exports harder and our imports easier.

Guest [00:07:34] Yeah, who knows, maybe they're getting ready to invade Taiwan now. It'd be a good time. We're very vulnerable as a nation 30, 40 days out to this election. We have a president who hasn't been doing a lot of leading and we have a, a electoral race that's just up for grabs. So very interesting vulnerable time for America. Not wishing anything bad, just smart enough to know, you know, people strike you when you're weak.

Vance Crowe [00:08:00] Well, let's hope not, but let's continue. Moving on. Speaking of propping up the economy from AG Newsday, there is still no guidance on the 45 Z tax credit program. Now this is something I didn't know anything at all about, but every single eight media outlet that's out there is talking about 45 Z credit. So I did a little digging, and this is known as the Clean Fuel Production credit. It's a tax incentive introduced as a part of the Inflation reduction Act, which is an oxymoron at best aimed at promoting the production of clean transportation fuels. So this is going to replace several of the existing biofuel credits from 2025, but there's not a lot of guidance right now. It is just a two page document basically saying we are going to give up to a dollar 75 per gallon for sustainable aviation fuel or a dollar per gallon of other fuels, which is potentially higher than a lot of other tax credit. This is also presumably going to have an impact on biodiesel and renewable diesel. But tell me why is everybody coming out and saying we don't have any guidance from the government on this?

Guest [00:09:07] Well, they, it's a fancy term. I mean, they, you probably asked 10 people what 45 Z is, and you get 10 different responses. I mean, just like yourself, I have to Google and say, okay, what is this? How's it affecting soybean oil? How's it affecting canola, the trade? And obviously canola's grown up in Canada, so there's some, are we gonna import canola? Will we be able to use Canadian canola, extract that oil and turn it into fuel? Lots of lots of ins and outs on this. The American farmer, we, we still use one third of our corn goes into ethanol. So corn is fuel, soybean oil can be fuel used, cooking oil can be fuel. These are all new things. There was a lot of hopes and dreams. Remember just a, a few years ago they said we're gonna have plant 13 million more acres of soybeans just to keep up with this demand. And now some of these already crushing plants got a little ahead of themselves and are already filing bankruptcy. Kinda reminds me of when ethanol started, the first group of people spent a lot of money on it. The second group got to buy it for pennies on the dollar. And then the second third group actually made a profit doing it. There's a lot of risk in building your whole business plan around a two page document, sir.

Vance Crowe [00:10:16] Yeah, that's absolutely true. How do you know what, what's gonna go on? How much demand? The other part of risk that I don't hear anybody talking about is how consumers may turn against this. Right? Right now you are seeing a huge push with RFK getting involved in the Trump administration. You see this doctor from Stanford, her and her brother out there talking about the, the, the terribleness of the ag system being set up to produce really unhealthy foods like seed oils. And while that may not necessarily be the one-to-one comparison with the subsidies that are going to corn, I think there's going to be a a, a cultural push against giving the American farmer large incentives to continue to grow corn, soy, canola. And with this, you know, being something that could just transform, really increase the amount of demand. There's some downsides to this. What do you think is the American consumer gonna go for the farmer getting more money to stimulate demand?

Guest [00:11:19] Well, I don't think the American consumer really quite understands this. I think if you ask most people about, you know, where their food comes from or even, I mean, they'll say the store or whatever, but they'll say a farm. But when you really look at ingredients, and if you look at something and it has 20 ingredients, and then backtrack to where all those ingredients came from and see who had their handout on that ingredient, you know, there's a lot of big corporations that benefit by all this stuff too. So we got the alphabet soup people, you know, all the brands and names, you speak for 'em sometimes. So there's all types of people who are very dialed into DC and they have their agenda, right? They, everyone wants to, whatever they're producing, produce more of. If you're Coca-Cola, you don't think someone should have one coca day, you should have three or four. I mean, the, it's that way. If you're in the, the chicken business, you think everyone should eating chicken. Anyone who has turkeys doesn't think it's just something you have at Thanksgiving. You should have Turkey every day. So, you know, I've listened to some of the RFK stuff and it, it's interesting and the, the American public has not gotten healthier the last 10, 20 years. The, you can't turn on TV without seeing five ads from five different companies. That'll give you a shot to help you get skinny, right? Maybe the best way to get in shape is to not gain the weight in the first place. So now we have, you know, the ag side of what we eat and what it does to our bodies. And then we have, don't worry, whatever the heck you want, we got a shot for you. It, it is a little confusing. I think if you were someone, you know, maybe a time traveler and you, you went away 50 years ago and came back, you'd be like, what in the world's going on?

Guest [00:12:52] What happened to these people?

Vance Crowe [00:12:54] I mean, and to me the, the answer that these people are all trying to push towards is, hey, it's, it's, it's not personal responsibility. The government is set up to, to stimulate demand for farmers to grow things that either we don't want or we don't want it as cheap as it is. And this is what's causing things like the obesity crisis. And while the sustainable fuels are completely different than this, I think there is going to be a lot sharper look at all of this going forward because I think the, the public pressure on why is it that farmers are getting these advantages when me, the regular consumer is drowning in consumer credit card debt.

Guest [00:13:35] That's, that's a lot of things that's happening there. Anyone who goes shopping, anyone knows that when they go to the store, it, the price of everything went up. They we're just not sure where is it coming from? And then the price of everyone who runs a business has went up tremendously. It's a huge tax. We've been taxed so much when you watch the political rhetoric out there, you know, I guess I'll ask you before the election and all the viewers and listeners, are you better off than you were three, four years ago? Vance?

Vance Crowe [00:14:03] Absolutely not. No. Well, with one exception, Bitcoin has done very well. And so for that it's been good. But Bitcoin responds to irresponsibility of government. So, and only in that has there been any saving grace.

Guest [00:14:17] Yeah, same thing with gold. You know, gold's performing a lot better and Bitcoin recently gold's up about 40% in the year s and P's up 20% on the year. I'm not sure where Bitcoin is in on all that crude oil's going down, but things have went up that are never going to come down. It it, it's not going to get cheaper for some items that have doubled in price.

Vance Crowe [00:14:37] Yeah. And certainly when we head to this third and final headline, we're gonna see that there is potential for even higher prices because from Agri Polle, the potential strike at US ports could disrupt agricultural exports. So as a result of a dispute between the International Longshoreman's Association in the United States Maritime Alliance, a strike could begin as soon as October 1st affecting between 25 to 40,000 dock workers in ports on both the east and Gulf Coast. This is presuming that the Gulf Coast survive the hurricane that's actually ravaging the coast right now as we speak. But if this strike happens, it's going to potentially disrupt supply chains and even agricultural shipments. So the ILA has demanded significant wage increases initially asking for a 77% wage hike over the over six years, and a push for job security against automation. Things like banning automated cranes, gates, and container movements. And so this is not going to directly impact bulk exports of grain because that's done by another longshoreman agreement. It does have the potential to stop things like waterborne pet pork exports, frozen beef exports, these kinds of things come out of ports. And if they can't leave, then eventually that rolls back to the American grain farmer and the, and the producer. So Tommy, is this gonna be something that just gets settled out in a week or are we gonna see this longshoreman strike hit us and now watch prices go up because we can't get stuff off the, off the docks.

Guest [00:16:14] I, I think they will strike and I think this is a perfect time for them to strike. It'll create total disruption and chaos. They'll be 25 days away from election when they go do this allegedly. And you're seeing other people strike. We've had a strike with some workers in Canada. We're seeing Boeing right now. You just talked the teamsters are thinking about doing a movement. What a great time to say, you know what, let's just make a massive disruption, right, for the election. Now who's gonna step in? Is it, is it gonna be the secretary Pete Hick? Is it gonna be President Biden? I don't, I just speaking in general is a problem for him, let alone settling a trade dispute like this internally, the, the reason people are stressed out is that average every day folks, whether it be police officers, port workers, nurses, there's nothing left over. We do live a good life, life is good, but there's not a lot of us who are going without. And we all have nice iPhones and look at all the fancy cameras you and I have. But with that, you know, are we able to pay if we put on a credit card, are we able to pay it off at the end of the month? And it looks like the American consumer and even the world consumer is just absolutely getting buried in debt. And as you know, interest rates have tripled from where they were a few years ago. And so there's just that overall tax of paying more on your, more interest on your mortgage, more interest or more money on your health insurance and everything else. So you tie this in the everyday working man and woman needs a raise and they're demanding it.

Guest [00:17:46] We're gonna see who wins, who loses it could take a government intervention here just to stop it.

Vance Crowe [00:17:52] Yeah. And right now the the White House is saying that they will not step in. I think they're trying to generate support from those dock workers saying that if you need to strike to get what you want, but man, this is a very dangerous game we're playing. Once strikes start happening and goods start freezing on the docks, you just never know what that will do to an economy. So let's hope this gets sewn up quickly. But I'm, I agree. I mean like I can see why they're afraid of automation and I can see why they only get to renegotiate their contracts every so often. So do it when people are vulnerable. I don't want that to happen, but I can certainly understand where they're coming from. Any last

Guest [00:18:31] Words on this? Well, the teamsters didn't back either presidential candidate and that's only happened a few times in the last 40, 50 years. So unions are starting to get vocal sometimes saying the loudest thing is just saying nothing at all. That's what the teamsters did. A lot of unions are flexing their muscles and hats off to them. I hope they get what they want.

Vance Crowe [00:18:50] Yeah, and I mean to have the union show up at the Republican National Convention, that's, that is a first. So you know, everything is up in the air. So much is changing. All right, that's it for the headlines. Now we're gonna head to the Bitcoin land price report. Before I ask Tommy about the price of high quality farmland in his area, I wanna address a concern a listener had about the Bitcoin land price report. So a listener called me up and told me, Vance, nobody wants to trade their land for Bitcoin. And its offensive that you even asked this question. And I wanna respond by saying, I think the truly offensive thing is the act of printing money and how it tricks people into thinking that their land is more valuable than it really is. Rather than what's really happening, your dollars are buying less. So I think personally that Bitcoin is a pressure relief valve and it's a way to store the value of your work. It'll give money managers an alternative to buying the only other truly scarce asset in the world, which is land, which is is going on right now. If you wanna park your money somewhere where you can hold its value, you buy land which ends up bringing up the price of land way beyond its utility value. So I believe that Bitcoin has the ability to save the American farm and keep the land in the hands of the people that are working it over the long term. It is better for land to be priced at its utility value because as a store of value, it'll be purchased by people that don't tend the land and don't understand how to take care of it. So that's why every week I'm gonna report on the price of an acre of land compared to the price of a single Bitcoin and then show how many acres of land you can buy with a Bitcoin.

Vance Crowe [00:20:25] It's not to say that Bitcoin is more valuable than land, it's to say, Hey, maybe if right now you can't buy acreage right where you're at, maybe consider buying Bitcoin because the chance that you can use that Bitcoin in the future to buy a lot more land is very real to me. So Tommy, after that long diatribe, I want to jump into you. Where is, where is it that you're coming in from Porter County? Yeah, how much does a cost, how much does an acre of really good high quality farmland run in? In Porter County

Guest [00:20:55] We've seen some run for 12, 13, 14,000. Now we are in that area where the house is pushed against the land. So as they need more subdivisions, as people leave the not so great of state of Illinois and move to the great state of Indiana and become a Hoosier, we're building a lot of homes in Valparaiso and that's pushing in to our great agricultural ground. So you're seeing land that I think people buy and they see, you know what, in 10 years it's gonna be a subdivision.

Vance Crowe [00:21:22] Yeah. And that's, I mean, that's another big pressure that's just not gonna relent. People wanna move outta the city. They want to get themselves a lakeridge. The only place to do it is in the American farmland. So when we were talking, we kind of, before the show, we said about $14,500 would be, you know, somewhere around that. So if Bitcoin's price before the showtime was $65,117, that means 0.22 Bitcoins per acre. And in other words, if you had one Bitcoin today, you could buy four and a half acres of farmland in Porter County. How does that strike you Tommy?

Guest [00:21:56] It makes you realize how much, how valuable land is. You know, I have several clients who, oh yeah, I own a thousand acres, I own a thousand acres. And they just casually, I, I don't think they could fathom the wealth effect that land has brought in here. And I just don't know how the younger generations ever going to be involved in farming when so much of the wealth is held in concentration by wealthy people. Right. I'm worried for the next generation in agriculture.

Vance Crowe [00:22:26] Absolutely. And, and as the price of that land keeps going up, it makes it harder and harder to keep that land in your family. You go to pass it on and people have to sell acreage in order to be able to just pay the inheritance tax and you break up these, these farms that people have spent generations bringing together. Okay, well I wanna make sure that we have time for your Peter Teel paradox because Tommy, you are an unorthodox thinker. So every week during the Peter Teel paradox, I ask somebody like, Tommy, what is one thing that you believe that almost no one you know in your tribe agrees with you on?

Guest [00:23:00] And that is, I believe, you know, folks in ag are kinda keeping people in the dark, that they're making simple things complex and that they're really not taking time to educate farmers think a lot of people, whether it be commodity brokers or ag lenders or everyone else, really tries to make everything complicated. Instead of just sitting someone down and saying, listen, this is easy. I think the information given to farmers is very calculated by just a few companies. They say, this is what you're supposed to know. Trust us. We know what's best for you.

Vance Crowe [00:23:35] What would you, could you give an example of that? Something that would help me understand this?

Guest [00:23:40] Well, when it comes to like Ag lenders, I love ag lenders. They send me clients, but I also see ag lenders pretend they're marketing people and they pretend they're this. I see marketing people pretend they're ag lenders and I think everyone's trying to add value. And I, I, I really don't know that I can look right in the camera and say, if you're out there, you do not need a commodity broker. You could do this on your own. So why aren't people like me teaching farmers and ranchers how to hedge commodities and do this on their own at a competitive rate? Why are we pretending like we have some wizardly type of talents when we don't? I think there's still a whole group of people who make their money. Farm and farmers.

Vance Crowe [00:24:16] Well this is an interesting one, it's one I haven't heard before, but I think there'd probably be a lot of people that would agree with you on this. So I'm gonna actually give you a five one on this one, Tommy, which which is, I know you have more controversial opinions stuck away in, in your mind. 'cause I listen to your show all the time.

Guest [00:24:34] Is this like a pizza review? I only get a five one.

Vance Crowe [00:24:36] It is, it's a pretty rough, it's like a,

Guest [00:24:38] That's not a

Vance Crowe [00:24:39] Good score, but it is what it is. And the next time you come on, you'll be able to hit me with something harder. This week we are going to talk about Tommy's worthy adversary. We, we spotlight worthy adversaries because it's a chance to find those people out in social media that you respect but you don't agree with. And this helps us get out of our echo chambers. So Tommy, you had a little bit of a chance to think about this. Who is somebody on social media that you respect but you deeply disagree with?

Guest [00:25:09] Yeah, I used to love the Scaramucci there over there. And then he, if you don't know who he is, he became secretary for President Trump for 10 days. Anthony s Scaramucci. I met him personally. I liked him. I've watched him my whole life on CNBC and social media. He was the biggest Republican ever. He literally just went in the White House, became the, what do you call, where he was doing the briefings and everything else. The press secretary blew up, imploded, switched, everything, became the biggest Democrat. And he went from just absolutely in love with Trump to, he spends his whole day on social media just saying, Republicans are bad, Trump's bad, you know, trust me, my name's Anthony and I have my hair slicked back. So still like him know, he is intelligent, but just think the guy's a turd. That's all.

Vance Crowe [00:26:00] Wow. I I like it. That's interesting. I too met Scaramucci at a talk I was giving

Guest [00:26:06] The mooch

Vance Crowe [00:26:07] And he is incredibly intelligent. I mean far, far more intelligent than you would be able to tell watching him on tv, but I'm totally with you. He, he jumped from one camp to another and that seems like the, the behavior of somebody that's difficult to know if he's only gonna tell you things because it benefits him. So bravo on that. I'm gonna bring up mine. I think it's only fair for me to put stuff out on there. There's somebody out on social media named Joe Norman. He used to study under Nasim Tale who people know as very against things like GMOs hates Bitcoin is just a vitriolic person. And Joe Norman was one of his acolytes. And what I've discovered is there's a lot of things that Joe talks about that I, that I don't agree with. He doesn't think very highly of me. He's talked about poorly about me in the past. However, I have to say this guy has his finger on the pulse of what I think is going on in large cultural movements. And I have to say that I check out his stuff from time to time to see what he thinks is coming down the pipe. So I, I'm gonna go ahead and put Joe Norman or Monic on the, on the list as a worthy adversary out there. If you are somebody that wants to check out people that me and the guests on this show have said, ah, I don't agree with them, but they're worth checking out, you can find that list on my ex and I will include a link to the Worthy Adversaries in the show notes. Well Tommy, this was a lot of fun. If people are interested in catching more from you, your shows, what you have going on, where would they go to find that?

Guest [00:27:43] Yeah, just Google Ag Bull, ag Bull Media, those are all the social medias we stream every day for advanced trading. That's called a TI Pro Media and just have an absolute great time every day at nine o'clock, myself and a group of others stream. And then keep an eye on the Ag Bull social medias. We got some really neat things coming down the pipe. I wish I could tell you Vance, but I'd get in big trouble. So with that, stay tuned.

Vance Crowe [00:28:08] Yeah, you have really come so far. I remember your very, very early days when we were first doing podcast together and I mean, it is really incredible to see how your media empire has bloomed.

Guest [00:28:19] Well now we have to figure out how to do money with all that. Thank you so much. I'm learning a lot. And it's from people like you, you, you have to get out there and be incredibly uncomfortable and then one day you're just comfortable doing this and then you gotta go to that next level of uncomfortable. So we gotta constantly be pushing ourself to get better in media, in distributing both the vocal and written word. Word.

Vance Crowe [00:28:43] Well thank you for coming on. I also want to thank our sponsor Legacy Interviews. This is where individuals and couples can record their life stories so that future generations can know their family history. If you are thinking about doing a legacy interview, go to Legacy Interviews dot com to find out more. Alright, we're going to end it for now. We'll be back next week with another Ag Tribes report. And remember, feel free to disagree. Ah.