Inflation vs Deflation Debate: Trust Officer Explains Fed Policy, Bitcoin Nodes, and OCD Reality

John Jennings [00:00:00] It's like, I don't want to go across the Golden Gate Bridge or the Bay Bridge, but I may be okay going over a small bridge. But you get to the point where maybe you don't wanna go across overpasses. So what you do is you start planning your route so you don't have to go over any overpasses, but then maybe you start not wanting to see Bridge. I'm Brian Mos, a farmer living in Florence, South Dakota, and you're listening to Vance Grow Podcast.

Vance Crowe [00:00:28] Welcome back to the podcast. I'm glad you're here today. We welcome back John Jennings, who's president and chief Strategy officer of the St. Louis Trust Company and Family Wealth Office. John is an interesting character, one of the most well-read people that I know. And so if I'm gonna sit down and talk with him, we're going to have an intense discussion about the economy. Of course, longtime viewers know that I have an intense interest on inflation, and John has a very different philosophy about the value of inflation and its impact on the larger economy. So you're about to hear two people have an extended conversation and it's really something quite intense and interesting. But after we talk about the economy, John opens up about his own struggles with mental illness. He talks about the use of SSRIs and the experience of being somebody with OCD, which I really didn't understand until he laid out just how it impacted him and what causes people to struggle with these things in a deep way. We're gonna get to that interview in just a moment, but I wanna talk a little bit about Legacy Interviews this week. I had a client come in. He had just had a unique experience because he had taken his fourth and final daughter off to college and was now going to be an empty nester. He sat down with me to record his experience of being a parent. He knows his life's about to change, and so he wanted to capture the memories and some of the experiences that he had, both good and bad.

Vance Crowe [00:02:01] He expected that he would not show it to his children anytime soon, but he wanted to get it recorded because he thought once his life changes, some of these memories will be changed to, and he wants them to have an authentic understanding of what life was like, what he was thinking, and what he hopes for them in the future. If you are interested in sitting down with me to record a time capsule for your children someday in the future, go to Legacy Interviews dot com to find out more. Alright, without further ado, let's head to the interview. John Jennings, welcome back to the podcast.

John Jennings [00:02:33] Thank you. Excited to be here. Loved chatting with you last time. So back for more punishment.

Vance Crowe [00:02:40] So, if you were the trustee of a trust and you wanted to screw your beneficiaries, but you wanted to do it without going to jail, how would you do it?

John Jennings [00:02:50] Oh, without going to jail. Okay, got it. Well, first of all, so I think why you're asking this is the president of a trust company, right? So I, I've been a professional trustee for quite a while. Before that, I was an estate planning lawyer, so I've dealt a lot with trusts and, and, and everything. You know, if, if your question is, you know, how would you take advantage of your beneficiaries if you're a trustee, if that's really it. So first of all, you know, a fundamental duty of a trustee is to keep their beneficiaries informed. So you're supposed to send them, you know, what the investments are and what the distributions are and fees and expenses and, and all that jazz. So the first thing you do is you wouldn't give 'em information so that they couldn't really, you know, watch over you and what you were doing. So, so that's the fundamental thing. That's, that's the first thing you would do. And, and I'll tell you, most trustees that are individual trustees, they don't realize all that they're required by law to give to beneficiaries every year. So this is actually a big problem. Individual trustees don't often give the the information. Then from there, if you're saying, okay, I don't wanna go to jail, so we're not talking like fraud. And we could talk about, you know, yeah,

Vance Crowe [00:04:01] We can do the illegal stuff. We, we,

John Jennings [00:04:02] We can talk about doing the illegal stuff. Probably the, the thing that we, you know, if I were trustee and let's say I were the beneficiaries were like, I don't know, some collateral family members of mine, and I was just like, these kids, you know, I, I don't think they deserve all that they have. And I had some sort of chip on my shoulder. Probably the way to do it best would to be break my, my trustee duty of, of loyalty and have a conflict of interest. And I would go, like in, I would start a business and have the trust invest in my business, right? So it'd be this cheap source of capital that is completely against a trustee duty. You're not gonna go to jail for it because you could definitely be sued by the beneficiaries if they, they found out about it. You know, I could be investing in real estate basically. I could just be taking advantage of the economics of the, of the trust. That's

Vance Crowe [00:04:55] So then legally you are able to have a business that you would have your own trustee invest in?

John Jennings [00:05:02] No, you're, you're not supposed to. So like one of the fundamental duties of a trustee is you can, you're really only supposed to manage the, the trust for the benefit of the beneficiaries. It can't be, you know, it shouldn't be something that benefits you personally at all. So in fact, anything you do that's one of these so-called conflicts of interest, the beneficiary can, can sue you for damages and also void the transaction. So I'll give you an example. So I know of a situation where the, there's this pretty big trust set up for some beneficiaries and the father and the mother were co-trustees and it was set up by the grandparents and the father had a small but struggling hedge fund, right? And so the, the father and the mother invested money from the trust in the hedge fund. So he made fees on the hedge fund. And when he marketed his hedge fund, you know, this, this investment from his kids' trust doubled the size of his hedge fund. So when he then

Vance Crowe [00:06:07] You can go out and say

John Jennings [00:06:08] Figures yes. When he marketed it, he said it's X millions of dollars instead of it being just y million dollars. Right? So that was absolutely a conflict of interest. That is not something they should have done. The kids, once they reached the age of majority, they, you know, have a statute of limitations, but they could have sued their parents as trustee and said, you know, and by the way, the returns weren't very good. You know, if you would've just invested in the SNP 500, you would've earned 10% fund only earned 5%. Multiply that difference by the millions of dollars. Here's the damages. You should unwind this mom and dad, you know, you owe us. They could absolutely have done that.

Vance Crowe [00:06:45] My sense when you were saying about you could just not give them information is the opposite of that would be to just inundate somebody with information. Yeah, I know that, like, I grow frustrated with how many times my investment accounts send me paperwork that is just, I mean, it's just mountains of paperwork. Yeah. And most of it is like, forget the first page. Yeah. The last page doesn't mean anything. So you have just papers and papers and papers, right. That you couldn't possibly read all of.

John Jennings [00:07:11] Yeah. So you could, you could just be sending a, you know, just the account statements and, and all sorts of stuff. Yeah, you could, you could send everything. Yeah. But you know, it's kinda hard to see, even, even for a pretty complex trust. I mean, it, you still as a beneficiary can sort of figure out what's going on unless, you know, you'd have, I guess you, if you're, if you're young, you have no experience in in, in financial things, you know, you see that it's invested in your dad's hedge fund, for example. You, you don't know that that's a problem. Maybe you don't go talk to a lawyer, you know, after a period of time there, you know, there's a statute of limitations. You, you may not be able to to sue them. So yeah, it, it could, it could definitely happen

Vance Crowe [00:07:52] With all that paperwork that people get, like what is actually important of stuff. You get the mail about your accounts.

John Jennings [00:08:02] So like you're talking, like if you have like an investment statement, so you, you, you're invested at Charles Schwab? Yeah. So the, if you just have, if you just have one account at Charles Schwab, it's just not, it's pretty easy. You get your monthly account statement, it's showing you, okay, here's the amount and here's the ins and the outs. The problem is if you start having multiple and just

Vance Crowe [00:08:20] Track, yeah, you've got TD Ameritrade,

John Jennings [00:08:21] Charles

Vance Crowe [00:08:21] Schwab. Yeah.

John Jennings [00:08:22] You have all these different ones. You have an IRA and a Roth IRA and you have a rollover IRA and you have a, you know, your, your your regular investment account and maybe you have ones for your kids. And, you know, and what I do, like I have, I have a few different accounts just because I do sort of mental accounting, you know, I have like my main account and then I have like one that I add to, you know, every month. And the, the first one, I try not to look at the second one I have to look at when I add to every month, month. And then I have like a third one that's a play account where every once in a while, you know, against my own advice, I do dabble sometimes in individual stocks, but I try to keep it small, just like a little play account. But yeah, you get tons of statements and everything, but fortunately when you go online you, you know, it's, it's a lot easier to, to figure out what's going on.

Vance Crowe [00:09:12] So do you actually get all your statements sent to you paper-wise or you do 'em online? No, no, no.

John Jennings [00:09:17] I look at 'em online. Yeah, absolutely.

Vance Crowe [00:09:18] And don't even store 'em in, in paper.

John Jennings [00:09:21] No.

Vance Crowe [00:09:22] See, 'cause I've like felt like very, like a very strong pressure of like, well, you gotta keep these, I don't even know for how long, maybe seven years. Like it's all Yeah.

John Jennings [00:09:31] Well, and I, I get that. So like, I, I talked to a prospect yesterday, the day before. So he, he sold his business for a bunch of money. He's interviewing, you know, financial firms. So he is, he's talking to us. And it was kind of a fun conversation because even though, you know, we, we work with, you know, pretty wealthy clients, you typically in that kind of a hundred to $500 million range. Some, some above, some below. But this person sold his, his business for tens of millions. But it, he wasn't really quite to the level that it made sense for us. So it was a great conversation. 'cause I was able to say within first 10 minutes, you know, you're, you're not a fit for us. And you know, even though you got a, you had a lot of money, you know, kind of based on our, you know, our strategy we're not a fit, but we ended up talking for an hour and a half as I gave him advice about the financial industry and, you know, just the, kind of the predators that would be after him. And he's interviewing these different firms and they're, you know, showing 'em all this razzle dazzle and everything. But it, it was kinda interesting. He asked a question, he said, you know, I have all this money now, and it used to be in my business, like I could walk into my business, you know, and we had like employees and we had a building and we had all these machines, you know, and now it's, it's just this number in my account and once I invest it, like how do I know that it's real and how do I, you know, it's just zeros and ones somewhere. And you know, what would happen if, you know, there was some sort of terrorist attack, like some sort of like, you know, EMP that, that, you know, erased everything. And it's, it's a great question because I, I had a client that asked this, you know, he, he's, he's in his late eighties now, but like, I don't know, 15 or 20 years ago, he, as everything started or continued to move from stock certificates, stock certificates and just actual bond, you know, you had these bond certificates to things being in accounts.

John Jennings [00:11:17] So people don't really use physical stock certificates now. It used to be when you bought a share of stock, you actually got a certificate and to transfer the share of stock, you, there's this power of attorney form on the back and you would execute it and you would send it to the transfer agent, some big bank, and then it would change on the books and the record of the corporation. Now everything's held in what's called street name at a broker dealer, which basically they're all held through something called the, the Depository Trust Company in New York City. It's DTC. So all these brokerages have a DTC number and all shares of stock. I mean, there are some certificates, but basically all shares of stocks are just electronic. And there's no way that you can go count. I mean, you lose completely the, the tangible aspect of everything, but it's similar to money, right? So, you know, your your 20 or a hundred dollars bill or whatever, it's not really the paper, it's the what stands behind it. So it's really just the financial system standing behind do you really have these assets?

Vance Crowe [00:12:17] It's an interesting thing to think about, like what is it, what is it that you own and what is the value of it? I've been asking people this question, is it wise to teach your children, let's say you've got a 5-year-old, they're starting to earn a little bit of money Yeah. To open the savings account. Is it wise to teach them that, considering we live in an environment of 9% inflation. So if he takes his $10

John Jennings [00:12:42] Yeah. And

Vance Crowe [00:12:42] He puts it in there, it's, you know, at best going to be worth Yeah. $9 and 10 cents the next year. So is it,

John Jennings [00:12:50] Yeah, you can actually get a little bit above 2% on, on savings accounts now though. You, it, it, yeah. So versus what, what else would you have 'em do with the, with the, with the $10?

Vance Crowe [00:13:01] I, I don't know.

John Jennings [00:13:02] I guess you could spend it. So we, we deal a lot with, you know, how do you, how do you raise financially fit children or the, the next generation and yeah, abs absolutely like learning the, the power of savings and, you know, I think is, is really powerful. So my, my youngest child is 20, so quite a bit beyond your, your five-year-old. But she know had a, had a, a great summer where she, she worked as a, as a wait staff at a, at a restaurant. And for her, she made a ton of money. Like she made thousands of dollars and it's in her savings account. And it's just really given her appreciation and, and she's had savings and stuff before. So I mean, we, we started earlier than 20, her having her own account and her own money. But it's just really given her a great appreciation for, you know, the value of, of money and, and the fact that, you know, her savings account's earning 2% and inflation is running whatever, you know, her inflation rate is because everybody sort of has their personal inflation rate, right? So, and in fact she has a very low inflation rate because being 20, we still provide most everything, you know, and, and the things that you, she, you know, she doesn't really wanna buy a whole lot. But, but yeah, I think it, I think it's great. It really gives a, it really gives you a, a sense for, for how much money. And so, for instance, like my older daughter who's 23, when she was, I dunno, 12 or 13 year olds we're, we're on a walk in our neighborhood. And she said, dad, like, how much is our house? I said, I said, Claire, man, it's, it's not gonna, I'm not gonna tell you. And she's like, why? And I'm like, it won't mean anything to you.

John Jennings [00:14:33] Like, you'll have no idea. And she goes, well, tell me anyway. And I go, okay, our house is worth $10,000 and our house was worth a lot more than $10,000. And she was like, wow, are we rich? Right? So, you know, she had no idea, right? So I think as, as you save more money, they, they start having a, having sort of a, an idea of what's going on. So no, I think it's a best practice to start having kids save. And

Vance Crowe [00:14:58] I think this is probably my Peter Thiel paradox, like my what is, what is it that you believe that no one else believes? Yeah, I think it actually is unwise to teach children about a savings account unless you're using it to teach them about the wickedness of inflation, which like, let's imagine you're in the UK right now. I just read yesterday that Goldman Sachs is predicting that by 2023, the UK's inflation rate is gonna be 22%, which would mean you put that $10 in, now it's worth, you know, $8. Like, it, it's, and that's gonna compound over time, right?

John Jennings [00:15:32] Yeah. So I guess you're saying, you know, instead you would say, instead of putting $10 in savings, you put $10 in your Schwab or E-Trade account, and you, you buy something that, you know, has historically outperformed inflation, right?

Vance Crowe [00:15:48] Maybe, I mean, I think that this herein lies like when, why this becomes ludicrous, right? Like why inflation is the scourge that I think it is because yeah, You, you have this system where it's like you, you are not enabled to save it. If you save it, you are actually losing money and the government is stealing that money or, or that's my perception of it, right? The government is pulling its value out, and so they're pushing you to invest that into the market, which is why, you know, one of the powers of inflation is you say, Hey, don't save your money. Put it either into buying things or, or put it back into the market and let the market use it as capital to increase the velocity of money.

John Jennings [00:16:30] So you think that, so the government stealing the money, so what the, what benefit does the government have from inflation? So I, I think we have a little, you know, you and I have discussed inflation before and, and obviously the inflation we have now is definitely too high. Like, it, it's, it's painful. It's causing all sorts of problems in, in our economy. So I'm, I'm not a fan of, you know, high inflation obviously, but I'm of the view that a bit of inflation is healthy, which is the orthodox view in the economy, economics profession. Which doesn't mean it, right, it's right. There's a lot of orthodox views of the economics profession that have been proven wrong. But, but I, you know, I I don't know the, the government has intentionally created too high of inflation. I think it's, it's, it's happened and there's a bunch of factors and in fact, economists don't wholly understand what causes inflation. Do you think so? Yeah, I absolutely think so. I would tell you, so last year, maybe it was a year and a half ago, there was this great article in the New York Times called, what was it called? Okay. It doesn't matter what it was called. So, but the, the, the point of the article, and then I read the fed paper was that the, the economics profession has long thought that expectations of inflation are a driver of inflation. So this is economic orthodox. I remember back when I was in college taking, I took a lot of economics classes. This was like, you know, this was one of the bedrock reasons why inflation occurs.

John Jennings [00:18:05] I mean, there's others and the min Minneapolis Fed, and again, the Fed has like more, you know, economics, PhDs than like any other organization in the world, and they have all the resources you could probably possibly have. So the Minneapolis fed a group of PhDs there dug into this and they determined that that is, there is absolutely no evidence for that. And the opening sentence of the fed paper was the economics profession is replete with ideas that are taken as truth, that are actually aren't nonsense. And I mean, he, here's a com, you know, one of the bedrock reasons, and then you have all the other factors. I mean, you had Milton Freeman saying that inflation is everywhere and always a monetary phenomenon. Well, it's not just a monetary phenomenon, it's not just the Fed, it's not just money supply. There's all these other factors that have, look at what's happening now, part of why we have the inflation we do is supply chain issues. Well, that's not a, a monetary phenomenon. So, you know, I think there's,

Vance Crowe [00:19:08] Wait, so you're saying that the, that the reason that prices are increasing are supply chain issues, and that is the same as inflation.

John Jennings [00:19:18] Supply chain issues are contributing to the increase in prices, which is inflationary. So that, that's one reason too loose monetary policy for too long, obviously the, the Fed should have not kept rates as low as they did for as long as they did. So that's definitely a reason all the fiscal stimulus that that occurred, just, you know, our government has spending, you know, regardless of administration, you know, ever, you know, we, we've been running budget deficits since the, the early aughts, and we just continue to, to spend like drunken sailors regardless of who's in, in power. Then you had, you know, COVID where, you know, we, we were looking like we were gonna have this horrible recession and the government stepped in and put all this money into the system, which has continued. That's one of 'em, part of it's just supply and demand and supply has been constrained for various reasons. And, you know, demand is kicked back up. So part of it's, and part of the reason the Fed thought it was transitory as part of it was just, you know, you had de demand drop during COVID all the lockdown, and then it, it sprang back up. So if you're looking just year over year, you say, oh, well we had a, you know, a, a depressed year in terms of demand, now it's coming back. So we're having accelerating inflation. So you have all these, these factors, you know, commodity scarcity, you know, some issues there with, with chips and things for ba batteries are everywhere and, you know, hard to get some rare earth min minerals and you know, we're gonna run out of, you know, easy to get nickel and cobalt and, and, and all these other things.

John Jennings [00:20:52] So there's all these factors that come into play that are crazing inflation. And right now it's been sort of a perfect storm. And you, you, you flip back prior to last year, and the Fed couldn't reach its inflation target. They were trying to create more inflation than we had, and then they couldn't do it. And then it flipped

Vance Crowe [00:21:10] You, you mean I don't understand that. You mean you, they wanted to have, they were going out to the market and saying, we think that inflation should be rate, that's

John Jennings [00:21:17] Why. Yeah, so they, they, you know, if you kinda look at the history of the, the Federal Reserve and its communications, it's sort of fascinating. So you can remember, you know, back in the, you know, the eighties and even into the nineties, they didn't announce what their policy was. So the market had to figure out what the fed's monetary policy was, you know, and the Fed mainly does that by buying and selling, you know, treasuries and repurchase agreements and, and things like that. So they're, they, they don't actually set the rate by proclaiming a rate. They, they set a rate by their, what's called their open market operations. So everybody would be like, oh my gosh, you know, we're, we're, we're, we just have to figure out what the fed's doing and they wouldn't announce what they're doing, and it would just change. And then he started with, with Alan Greenspan starting to talk about what they were doing. And then people, there was this, this crazy thing where they would look at how big his briefcase was, like, you know, it would expand out. And the, the, they, they saw a correlation between like how much he had in his briefcase on whether they were gonna be tighter or looser in terms of monetary policy. Then they started announcing it. And then with Bernanki, they actually started doing press conferences. And then with Bernanki, he started giving some forward guidance. And then, you know, they had yell, now you have Jerome Powell taking it even further. You know, they're, they're, they're actually giving their thoughts on what the economy's gonna be. We have now what's called the, the Fed dot plot, you know, where the, the, the 18 members of the Federal Reserve Board give their predictions for various things like unemployment and interest rates and, and, and inflation.

John Jennings [00:22:54] And, and they give it out for the next few years, every single meeting, and this is now published. And you can see what every member of the Fed with all their research of each of their, you know, their banks and research staffs is saying what they think inflation's gonna be. And this is a, this is like a new phenomenon, relatively speaking, that's been, you know, it's just continuing to, to progress. But they have given that they have a target of between, you know, two, two and a half percent inflation. And we've been running below 2% inflation up until recently. And they had a hard time getting up to that, you know, over 2% inflation. They, they didn't want it to go above three, probably around two, two point a half was where they said they, they thought the sweet spot was, which comes back to having some inflation, is, is typically what you need for healthy economy,

Vance Crowe [00:23:42] Man. Like, it's, it's interesting. I've been reading more and more about this. So everything you're saying is like very much opposed to what I've been observing. And I think, like for example, when you say we've been not able to meet inflation, I, first of all, I'm, I'm of the school that it's very, inflation is an incredibly difficult thing to measure because it's like asking what's the temperature, right? Yeah. You can ask what's the temperature in this room or in St. Louis or in the nation, but like the further out you go where you're trying to describe all things, it's like less valuable. Absolutely. So, but I think that when, yeah,

John Jennings [00:24:19] Inflation isn't a single number, it's not a single good, it's not a single service,

Vance Crowe [00:24:22] Right?

John Jennings [00:24:23] There's all these hosted things, they're all moving in different prices at different times.

Vance Crowe [00:24:27] But I think like the Fed has played all sorts of games with the inflation rate, such as what they include in on the consumer price index. So is healthcare included in on it? Is housing? What is, what happens when you start getting Netflix in, now people aren't renting from Blockbuster or they aren't buying DVDs, so how do you make these trade offs? Yeah. And to me they can make that number and have made that number whatever they want it to be.

John Jennings [00:24:53] Well, I think it was, I love this. It's like a little debate we're getting into it's fan. Fantastic. So first of all, the CPI is not something that the Fed pays a whole lot of attention to. It's not their preferred measure. So they like something called PCE, personal consumption expenditures. So it's, it's, it's similar to CPI, but it's calculated differently. Then they look at a whole host of other inflation measures, they'll even look at things, you know, there's like this million goods project, I think MIT or somebody does it where they keep track of like a million goods that are out in the globe. I mean, they have economists that are looking at that. So, so, and it's interesting, I, one of our fixed income managers that, that we use had this, this individual that was one of their head, head people. So basically they're a bond, you know, they're a bond trading shop. And he used to be at the Federal Reserve, I forget which bank it was. New York or, or, or San Francisco, or he was, he was somewhere, but you know, he, he came in town to, to visit us. And, and I went out for, for drinks with him. And I was like, what was it like, like at the Federal Reserve? And we talked about inflation. He goes, he goes, I want you to know that everybody at the Federal Reserve, like if, if we were all to wear the same set of pajamas, I thought this was fa fantastic. Especially coming from like a bond trader, if we were all wearing the same set of pajamas, they would say, keep inflation low. He's like, every morning everybody in the fed wakes up and they're like, we need to control inflation. And obviously there's a dual mandate, you know, you want, you know, full, full employment too.

John Jennings [00:26:26] But it's really the number one is limit inflation. And if you think about like, why would the Fed want higher inflation? Like, is there anybody at the government doing cartwheels over an eight or 9% inflation print? I've heard some say, well, we have all this debt and they want to inflate away the debt. Right? And if you look from, you know, post World War ii, we, we had all this debt after World War ii and you know, I think the peak of our, our, our debt back then was like 1949. So between 1949 and sometime in the, the 2000 and, and tens last I looked at it, you know, if you look the, at the, how, you know, the reduction of debt versus GDP inflation accounted for something like half of the reduction. And you could look at and you go, oh my gosh. Like they just want to inflate away the debt. But there, there's a few things that are hugely different now. So first of all, back in the forties, fifties, even sixties, the average maturity of a treasury bond was over 10 years. People bought 10 and 20 and 30 year bonds all the time. The average maturity of a treasury bond, and I don't know what it is right now, but it has come way down, is just a few years. So the, the idea that, you know, you want to have this high inflation and you're paying just this low interest rate doesn't really compute because in a few years, most they're gonna have to issue most of the treasury debt again, and they'll have to do it at higher rates. A second thing is, is, you know,

Vance Crowe [00:27:51] I'm not sure I understand that. So you're saying in the, during the world Wari era, when they were trying to raise money, they would put bonds out and they would say, Hey, we wanna fund this war, so if you will give us your like, liquid dollars, you have a hundred dollars. We'll, you can buy a war bond and we will pay you back X amount of dollars. And so therefore it, let's say it's, we'll pay you 25%. That's just, just so it's easy math. So we'll, if you give us a hundred dollars, we'll

John Jennings [00:28:20] Let's do, we, we, we'll, we'll pay you, you know, at the time, let's say, we'll, we'll pay you a coupon of 5% a year.

Vance Crowe [00:28:25] 5% a year.

John Jennings [00:28:26] Yeah. So we're gonna pay you 5% a year. And then what happens is if there's inflation, and you think about it like the government collects taxes, you know, if you have a a a, an inflating economy, you know, assets are going up, prices are going up, incomes are going up. So the government's gonna be able to take in more taxes. And really, if you think about it, it's even more basic, not even looking at, at, at, at the government. Just look at if you buy a bond now, if you buy a 3% muni bond right now, so it's tax free, which is nice, your point is, is if if inflation is running at 9%, you're losing 6% a year. Like inflation is devastating to bonds. And the flip side is true. If there's deflation, it's great to be a bond over owner because you're 3% that you're getting is worth more and more every year. Whereas if you're only getting 3%, it's worth less and less every year. So, so basically inflation is bad for bond holders, but great for bond issuers, right? So, so if there's high inflation and the government has all this debt at 2, 3, 4, 5% and inflation's running higher than that, then it's, and and, and really it's like looking at debt. They

Vance Crowe [00:29:35] Get to pay you back with dollars that are worth less. They

John Jennings [00:29:38] Get to pay back with dollars

Vance Crowe [00:29:39] And that were easier for them to get. Absolutely. Because they didn't have to raise it. Absolutely. All they had to do was print it.

John Jennings [00:29:43] Absolutely. So, so, you know, inflating away debt would be one reason why the government would like high debt. But, but it's so different because again, we have, you know, the, the average maturity of a treasury is like three years or something. It's not the, the, the 10, 20 years that it used to be. So number one that have, they'll have, they're gonna, they're turning around issuing bonds and having to pay a higher interest rate currently than they they have been. So that's number one. Number two is since World War ii, you know, we've had this expansion, you know, social securities continue to expand and then we have Medicare and Medicaid. So really the biggest problem we have long-term financial as a company is, is all our so-called entitlements. And they're all explicitly or implicitly linked to cost of living or inflation healthcare costs as they go up, the government has to pay more. Social security has its cola, its cost of living adjustment. So our, like our, our biggest future liability moves with inflation and we have much shorter term bonds. So the idea that the government wants inflation so it can inflate away our debt and, and screw the bond holders, everybody around the world, but especially in the US that owns treasury bills, just doesn't make any sense at all. It just doesn't, just doesn't mean,

Vance Crowe [00:30:57] I mean, it makes sense if you think about the, like one, one of the major differences is from World War II to the now, is that we're no longer on a gold standard. So like they, they have an infinite amount that they can print. Absolutely. They don't actually have to have some amount of value. Some, some thing there, right? Yeah. They, once they're off that, so now that you have the ability to print money, if those prices go up Yeah.

John Jennings [00:31:21] Then

Vance Crowe [00:31:21] You can just print more money. Yeah. And eventually you get into a cycle, which I would propose we're in now, where the only way that you can keep your system going is if you continue to print money.

John Jennings [00:31:33] Yeah. So I think with an expanding economy, you have to print more money and, and we don't need to get into like, you know, modern monetary policy and Stephanie Kelton and all and all that, whether there's any validity what she's saying. In fact, I'm gonna a conference in November where she's a speaker, can't wait to hear what she has to say. But yeah, I think it's, it, the why we're experiencing inflation goes way beyond, oh, we've just printed too much money. And you gotta look at the flip side too. So, you know, money supply goes up, but then you have to look at the velocity of money. So it's not like how many dollars you have outstanding. It's how quickly they go through the system. Right. And it, it, it's fascinating a lot of times when people are most concerned about the amount of money that has been printed, which is, you know, roughly, you know, it's, it's the proxy for that is sort of the, the size of the fed's balance sheet is on the other side of the equation is the velocity. And velocity, especially during, you know, financial crisis when we've hit COVID and everything, the velocity of money has fallen off a cliff. Like the reason we've needed to print money is so we don't go into deflation. 'cause that's what happens when you have the reduction of the, the velocity of, of money. So,

Vance Crowe [00:32:43] So when you're saying the velocity of money, my understanding of this is the government makes the money available to banks to lend out. Yeah. So when, when we're talking about these treasuries, right, they has to start somewhere, right?

John Jennings [00:32:55] Banks

Vance Crowe [00:32:55] Get it and then they have to put that money out to work because they're either paying the fed to, for the ability to use that money. So, you know, for a long time it was, we'll just say 1%, right? You get a million dollars, you have to pay 1% back by next year on that million dollars. So they wanna get it out and they loan that money out to people who then say, alright, I'm gonna take this million dollars to build, you know, a factory. And then they put those deposits because they don't need that million dollars right away. So they then take that million dollars and they use a hundred thousand of it, and they put 900,000 back in the bank in, in a form of deposits. Now then those deposits, so there's this

John Jennings [00:33:34] Money multiplier,

Vance Crowe [00:33:35] Money multiplier, and the speed that you're talking about, the velocity is how quickly does that money get loaned out to the extent that the fractional reserve like is all the way extended? You've, you've expanded that by eight terms.

John Jennings [00:33:47] Well, I, I'd even broaden it more and think in terms of like the entire economy. So, and it, it has as much as anything to do with saving and investing versus spending. So if you think about it, like

Vance Crowe [00:34:01] If,

John Jennings [00:34:02] And, and you, you could see this during like the lockdown and COVID where the, like the us like the, the individual savings rates skyrocketed, right? So, you know, if you look at charts, it's like, you know, the, the savings rate is like kind of cruising along and, you know, low double digits and then it spikes over 10% and it, it stayed there for a while and it's come back some as consumers have spent more. But if you think about it, like, so if you, if you, if you make money in your job and you're like, okay, you know, I, I can only do a few things with it, I can, I can, I can spend it, save it, invest it, you know, that's, that's basically, that's basically it. I mean, if you, if you save it or you invest it, you're not buying anything, right? Whereas if I go out and I say, you know, I'm gonna go, I'm gonna go to a restaurant, and then that restaurant owner makes money and also they pay their people, then they have money to go out and spend again, right? So if you're, if you're spending less, then that's reducing the velocity of money, the savings, right? So the bank has more money, they can live lend out. But if the economy is, is, is slowing, then there's not a demand for people to go take loans. So, you know, we had these periods of time even before COVID, where, you know, I talked to bankers and they just said, you know, we don't need any more deposits

Vance Crowe [00:35:17] Because now they do.

John Jennings [00:35:18] Yeah, they, yeah, they, they do now. But they were like, we don't even need more deposits because we have all the deposits we need. Which is why they partly, you know, they're paying zero interest, right? Because we don't have enough people wanting to get loans from us. And if you invest it, then that's a very long cycle. So a company has to say, okay, you've invested money with me and I'm gonna take that and I'm gonna do capital projects or do mergers or, you know, create new products. I'm gonna do something that is in turn gonna create economic growth. So, you know, you look at the velocity of money and it's all these factors, so there's no just one factor. And it's not even just, you know, just the banks loaning.

Vance Crowe [00:35:55] I think that when I hear, like, I understand that like when you look at it really up close, you say, Hey, we want that money to move quickly because if I'm spending that money at a restaurant, then that guy pays waitresses and cooks and servers and busboy and they all then get to go out to eat or buy groceries. But the longer view is don't I wanna live in a place where I can earn something and then I can store its value and that I am not pressured to put it back into the system because I wanna be able to hand it down. Because now the only way for someone to preserve the wealth that they have earned, let's say they either just get paid an hourly rate and they, they preserve some, or they've built a business and they've sold something. Now the only way to preserve that wealth is to make it work for you. Yeah. Whereas if you had a system where you could store value that was not being inflated, an individual would have the ability to do something where they didn't have to put things at risk in the, in the way that you do now.

John Jennings [00:36:58] Yeah. Well, it's really hard to not put things at risk and earn more than inflation. It's just, even when inflation's low, it's just really hard. I mean, basically if you think about it, if you start with cash and you say, I want to do more than just cash, which, you know, if you're lucky, is earning what inflation is, hasn't been that way for a long time. You know, there's only really three things you can do. You can take on credit risk, you can take on illiquidity risk. So you can, you know, tie your money up in some way, shape or form. What

Vance Crowe [00:37:26] Is that illiquidity risk? So you,

John Jennings [00:37:28] The super simple example is like, okay, I'm gonna buy a cd. So if I, you know, I buy a one year, two year cd and if I cash it out earlier, I pay a penalty. Or, you know, you buy something that, you know, with cash, it's immediately available. If you do a money market mutual fund, it's available after a day. So there's a little bit of illiquidity there. You could buy commercial paper, which usually rolls over every seven days. So you get a little bit more, right? So then you can take, you can take yield curve risk. So basically you move out the yield curve. So you start buying fixed income securities of the, like that have maturities, you know, a week, a month, a year, 10 years, 20 years. And so then now what you own, you know, the value fluctuates with what, what interest rates are. So those are the ways that you, you increase your yields or you go further and you say, I'm gonna buy public stocks, or you go further, I'm gonna buy, you know, invest in it, you know, private businesses which have even more illiquidity. So like, so, you know, I'm an owner, one of the owners of my, of my company, and you know, it's extremely illiquid. I mean, it pays a dividend, which is great, but

Vance Crowe [00:38:40] You can't go out and sell it.

John Jennings [00:38:41] I can't go out, I can't go out and sell it. I absolutely can't go out and sell it. May maybe another shareholder would like to buy my, my shares, maybe my company would. But it, it's, it's illiquid. So, so those are the things you do to, to make more money. And you know, I, I think the idea of you can put money in the savings account and you're gonna beat inflation, you know, that's, that's, that's a difficult proposition. Even, even when inflation's running at 2%. I mean, you're, you're not gonna see savings accounts that are paying you four or 5% when inflation's running, you know, 2% on, on average. So, but I mean, coming back to the, the whole, the whole government thing, I mean, the Fed wants low inflation. I mean, that's one of, its, its mandates, it's why it exists is to have a little, 'cause deflation iss worse than inflation. We think inflation's bad deflation is much worse. So

Vance Crowe [00:39:27] Gimme that one again. I think I've asked you about this, but I've had so many people try and explain this to me, and yeah, for some reason I'm incapable of understanding.

John Jennings [00:39:35] Yeah. So a little bit, think about, think about what goes on with flat screen TVs. So it used to be, I remember back in the day, you, you could buy like this, I remember I bought this like 25 inch tv, which was huge at the time, like, right? It was like this huge tv and it, it weighed like, you know, it was this big box and it, you know, it weighed like 70 pounds and whatever, and it was like $1,200, you know, and I was just, I was just, we, we have a, in our guest room, I just mounted on our wall the other day, this old flat screen TV we have, it's like eight years old. And I was looking at the menu and it has, like, you know, it's a smart tv, it has like Netflix and a few things, but it, like, it doesn't have our, our app for our streaming service. And I, I almost didn't mount it. I almost just said, I'm gonna, you know, it's like a, you know, 35 inch tv. I almost just ran to Best Buy and bought a new one. 'cause they're so cheap, right? So flat screen TVs for what you get get cheaper every single year. And so if you think about it, if you're sitting here, you'd say, okay, I, I'm in the market for a tv. I think the TV I have is fine, but I'd kind of like a new one. Maybe, maybe I have a, a, you know, a 10 80 p and I wanna move to a 4K or A-O-L-A-D or whatever the new technology is, you are incentivized to wait to buy it because, you know, next year you can buy the same TV for less or you can buy a better one for the same price that you would buy one now. And it's, it's, it's the same with technology in, in a lot of areas where you can buy, I know that next year I can buy a faster computer for the same price.

John Jennings [00:41:10] I can buy one today. That in general, the, the price of a lot of technology tends to go down. But imagine if everything was like that. Imagine you went into the grocery store and you're like, we need or target, let's say we need toilet paper for our house and this big, you know, package is $10, but if I wait a month, it's gonna be $9. And you're like, well, we have a few roles at our house, we're just gonna wait. Same thing. If you knew cars next year was, was gonna be cheaper. If you knew, you know, you, you needed a, a a, some sort of service. Like, you're like, I need a lawyer to do my will. And if I go now it's gonna be two grand and I know it's gonna be 1500 in two years, everybody waits. And it just, the, it, it ends into a dis this deflationary spiral where there's less and less demand, which causes people to make their goods cheaper. Because when you make the goods cheaper, then that increases demand, which further causes people to, to wait to buy, which reco creates more low prices, which creates more waiting. And it's what we saw in the Great Depression, it was just devastating

Vance Crowe [00:42:22] To me, what you're describing sounds great. I I actually think like that actually would be a cultural change that we say we want, but that our, our monetary policy dis discourages, right? We say totally discourage want kids to save, but when we're inflating the money, we say, well it's actually, you know, we have to, maybe it is good idea to spend that money today because it's cheaper today. And yeah,

John Jennings [00:42:50] You

Vance Crowe [00:42:50] Know, you don't, you don't wanna wait. But then you, what you also do is you take away humans' propensity to save and preserve and really look at what is it that I wanna buy? What is it that I need to buy? Because when I go to buy a good, I am expecting that that good is worth the money that I have because it's not being inflated away. And that the goods then become something that lasts far longer. So yeah, So look at the, the time horizon that people had on goods that were 30, 40, 50 years ago versus the time horizon that they have now. Now we have a disposable economy, right? The, the TV didn't have the app that you wanted, so I, I wanna get rid of it and get the new one. Whereas if you were spending more valuable money on it, the producer of the TV would be incentivized to think about how can I create a TV that has lasting value so that it is more competitive as opposed to strictly competing on the lowest possible price.

John Jennings [00:43:51] Yeah. Well, I, I think, I think a lot of manufacturers, you know, they, they compete on, you know, if you think about it, if you go out and buy a a car or you buy a TV or you buy a computer and you're not always just buying the cheapest one, you're looking at different features and, and, and quality and you're looking at at what you want. But on any individual, good. I mean, so you say, okay, it's, it's great that I could buy a, a better TV for less money next year. But in deflation where you have most goods and services declining in value year over year, it's, we would go into a depression like we had in the Great Depression. I mean, one of the big, I mean, it's, it's kind of symbiotic. You can't say one totally causes the other or vice versa. But the, the, the collapse in prices that we had during the Great Depression is part of what created little, or no, I mean no economic growth. We had, you know, the, the economy contracted by over 25% during the time period. And part of the reason was the reduction in prices and companies, they won't invest in new goods and services and capital because anything that they invest now, and they say, okay, you know, we're gonna sell our wi we're gonna build this plan that's gonna create a widget for $10, but in two years it's gonna, we're gonna sell it for $8 and then $7, there's, it strips away the, the incentive to invest the economy wouldn't grow. The stock market wouldn't do well. I mean, countries that have experienced deflation, it's been devastating.

John Jennings [00:45:25] Japan's had deflation off and on for the last 20 years.

Vance Crowe [00:45:28] So I've heard this and I've tried to look it up. This is a complicated thing. So I will be the first to tell you that the Great Depression is something that I have like a, a caricature style understanding of it, right? Like I, you know, great Grapes of Wrath is about all all I have, right? But, but with Japan, you know, they actually have been printing and printing and printing money. I mean they really are the, yeah, the, the, the OG Modern Monetary theory, and they're the ones that said, Hey, the way that we get out of this, the, the economic it's pretty money comes, is just print money. And

John Jennings [00:46:02] It hasn't worked. And they haven't had traditionally the high inflation and they've, they've, you know, had slight deflation to very low inflation as they've continued to print and print, which shows you that it's not just monetary policy that creates inflation,

Vance Crowe [00:46:18] But I think their prices have increased dramatically, right? Like if you go look at food prices, right? How many that, how how much it cost to buy the, of the yen five years ago versus today just keeps going up, right? And they, they're, they were one of the original creators of the digital signboard because they had to change prices so quickly. Yeah.

John Jennings [00:46:39] So

Vance Crowe [00:46:40] I hear people say that Japan is in a deflationary death cycle, but I, I, I guess I don't believe,

John Jennings [00:46:47] No, I'm not saying they are now, they've had deflation, you know, they, they kinda hit, you know, they had their super high growth and Japan was taking over the world. You know, we had, you know, the, we had Japanese investors by Pebble Beach and you know, all, all, you know, all these marquee properties in the US and you know, it's kinda like you think back to Die Hard, the movie with Bruce Willis, that was so great. But you had that, you know, remember that the, the building was at the, the Amichi Corporation. Oh yeah,

Vance Crowe [00:47:17] That's

John Jennings [00:47:17] Right. Remember? And, and they, you know, if you, and you, you had those South African terrorists with, you know, stealing their 640 million of, of, you know, south African or the, the German bear bonds or whatever. And of course any corporation with, you know, at the time, $600 million, just, you know, cash laying around, of course it would be Japanese because, you know, the movie was from 1988, Japan was taking over over the world. So they, you know, they kinda hit their, their, their, they were having quite a bit of inflation. Their economy is growing by gangbusters. The, the Japanese central bank stepped in, they raised interest rates that tanked the economy. And they, you know, the, the, their Nick K 2 25 average still hasn't hit. Its 1989 peak, it's still below it's 1989 peak. And during those time periods, they had periods that there was deflation. It's not that every year since then we've had de deflation in Japan. I, I actually don't know what their current inflation versus deflation is in Japan. I'm a little bit over my skis talking about exactly what's going on in, in Japan recently in terms of inflation. I guess the main I'd like to make is I think that there's this, this, I think there's this kind of siren song of, okay, we went off the gold standard, you know, in the, you know, Nixon took us off the, the, the gold standard in the, the early seventies. And we had a modified gold standard with, you know, Bretton Woods, you know, post World War ii. And you know that it's been this slippery slope that's eating away America's value. And as is, is, you know, the, you know, if you had a, if you had a dollar, you know, back in the, the, the 1940s, it's worth cents today as compared to that.

John Jennings [00:48:50] And that's, that's, it's like, okay, the government's not doing a good job and they're doing this intentionally. Or there's these, you know, Freemasons, I've heard of this world order that is behind inflation and if only you go back to the gold standard, or maybe, you know, crypto can be our new way to rid ourselves of, you know, all this money printing by all these, you know, governments across the world. And, and I'm sure there's some validity to that view, but I think it's way overstating things. 'cause what's sort of ignored is, okay, if you took that same dollar back, let's say it's 1949 again and you invested in the s and p 500, you crushed inflation. Like you have so much more money. Even just look at the price of your house, look at, look at the standard of living. I mean, that's one of the issues people have with CPI. But you know, saying, oh, well, you know, things tend to go up. But part of what CPI does is it takes into account improvements of goods. I mean, look at that TV versus what I bought, you know, 30 years ago, look at even, you know, the, the iPhone 14 that's about to come out versus the, the first iPhone, you know, even, even if they're the iPhone 14 is costs more. Just, I mean, look at the processing power and everything on it. So,

Vance Crowe [00:50:04] But the dow let's go to the, the electronics is an unusual one, right? Yeah. Because you're talking about the, the speed of transistors gets much faster processing power. But let's, if we take the house, for example, right? The, the price of those houses has certainly gone up, right? Yeah. Because there's more dollars chasing after, you know, a good, right? So now if you want to buy the same house and

John Jennings [00:50:32] There's a,

Vance Crowe [00:50:32] You have to have an accumulation

John Jennings [00:50:33] And there's an inherent scarcity, especially in urban areas.

Vance Crowe [00:50:37] And so the, the inflation, I think the housing market is actually a really good example of constant inflation, right? We, we anticipate that houses will keep just going up and up and up and up. Because as more money gets pushed into the system, and this is a great way for it to have high velocity, right? Because as soon as you buy that house, you're putting that money into a bank, you, you're, you're getting that loan out from a bank, then that money is not actually in your hands and it's just getting loaned out.

John Jennings [00:51:04] No, actually, actually it's stuck in, it's stuck in your house. So you've, you know, you haven't put a deposit in the bank that gets loaned out. You've taken a loan, now it's stuck in a house. But over, you know, again, since post World War II housing overall, again, there's different areas of the country where it's different. I mean, if you have a, you know, coastal property, you know, in, in Nantucket it's different than, you know, being in a suburb in St. Louis, obviously, in terms of how fast houses have gone up. But housing goes up typically just slightly more than inflation. So when our clients ask us, oh, well, is a house a good investment? We're like, no, you know, your house is where you live, you know, and it actually costs you money 'cause there's maintenance and, and upkeep and, and decorating and furniture and all the stuff that you're gonna buy. And if you buy a bigger house versus a, a, a smaller house. So housing goes up slightly more than inflation over time. And as we saw in oh 8, 0 9, I mean, housing prices dropped dramatically. And I think we're, we're probably seeing that housing, the, the increases have cooled. And we're starting to see, especially, you know, I just went jet skiing this past weekend with a friend of mine who's a realtor, runs a real estate company. And they're starting to see, you know, instead of houses going over asking price, we're starting to see normal again. Where, you know, they're going for less than asking price instead of all these, you know, I think we're seeing a moderation and we may see it, you know, return back down and, but yeah, definitely houses have gone up over time.

John Jennings [00:52:35] So that, that's an example of, that's an asset that people own. And it has beat inflation over time. Some periods handily, some periods not. But you can't just look and say, well, the, the dollar has been inflated away. 'cause then all the assets that people have have in general gone up more than inflation. The stock market's gone up over more than inflation. A diversified bond portfolio over time has gone up more than inflation.

Vance Crowe [00:53:01] Are you still enjoying this? 'cause I could do this

John Jennings [00:53:02] Long. I look, I I could do inflation all day.

Vance Crowe [00:53:04] So, so we, let's keep going. So the, the, we,

John Jennings [00:53:07] We, we don't even need to publish this. The,

Vance Crowe [00:53:08] The stock market is one that is, to me, the inflation rate of is, is really evident in the stock market, right? Because all of these, particularly now, right, the corporations that if you have money, and just like we said, it's not, it's, it's going to cost you money to keep it in a savings account. So therefore you wanna put it somewhere. Yeah.

John Jennings [00:53:31] And

Vance Crowe [00:53:31] Then you have two options. I can either actively trade it or I can passively trade it, right? And then the passive trading could go in either I'm buying mutual funds, so, or I'm buying an index fund. And that, we've already talked about that in the past podcast, but I, to me, the, the inflation shows up in the stock market, right? It's very difficult to say, what is the stock market worth relative to, you know, 1940, because there's been so much inflation and all of that money has dumped into the stock market

John Jennings [00:54:01] Over long periods of time, the stock market has outperformed inflation. Typically what happens is when you get a jump in inflation, and we're seeing this right now, it's negative to stocks, but over longer periods of time, companies can pass through the, the higher prices and restore their profitability. And in fact, stocks are one of the best actually over, you know, if you look out five plus years, the best inflation hedge, it's, it's, it's proven over time better than gold, it's better than commodities, better than real estate is more consistent as a inflation hedge than any of those things. Now, some of those may do better short term when there's jump inflation. Partly it depends on what causes inflation. So like energy has been a, you know, hugely inflationary lately. So if you own energy, it's done great. Whereas other commodities might not have done some. Well, you know, another thing that, that, speaking of energy, so again, inflation is so complex and I don't completely understand inflation, nor do most economists. And I think there's a lot of people that have definite views on inflation that, and a lot of criticisms of, you know, CPR or the Fed or this or that, that are still, like, if you think of the Dunning Kruger effect, you know, you have this idea that when you know little, very little

Vance Crowe [00:55:23] About you vastly overestimate,

John Jennings [00:55:24] You vastly overestimate it. And as you learn more, you realize that you don't really know that much. So here's a perfect example. So a lot of people I talk to, they're like, why would core CPI exclude food and energy? That is ridiculous. It's the dumbest thing. Like when the price of gas hits $5 and my gallon of milk hits, you know, I don't drink milk, so I shouldn't use an example, but, you know, hits whatever it is. You don't drink

Vance Crowe [00:55:49] Milk. You just defended about half the people listening to this. Yeah, yeah. Here's

John Jennings [00:55:52] Another thing. I'm a vegan have been for 20 years, so I probably shouldn't, I probably shouldn't say it. I drink almond milk, but no. So the, you know, the price of my food, you know, my steak or whatever's up that hits me hardest. Like why wouldn't, why wouldn't that be in the core consumer price index? And why does the Fed often focus on, you know, the core PC that takes those things out? And the reason is, is high energy prices and high food prices are actually disinflationary to other goods and services, which makes complete sense. If you stop and think about it, if you're commuting into your, your, your work and it usually costs you $50 a week to fill up and now it's a hundred dollars a week, that means you're gonna be spending that extra $50 you spend on gas, less on something else. If your grocery store run is now $150 instead of a hundred dollars. Like all these things cause you to spend less on other things, which re the high prices there reduces demand for other goods and services. So that's why there's the smoothing effect if you take out food and energy, because first of all, it's more volatile and it creates spikes, which is one reason. The second reason is, is high energy and high food prices because they're necessities is actually disinflationary. And the first time you hear that, it's like poof, mind blown, right? But yet there's all sorts of people that have these strong views on inflation and CPI and all this other chain versus not chain that, that, that, that don't understand, you know, mon, you know, money supply versus monetary policy that don't understand this and that.

John Jennings [00:57:24] And, and again, I'm not an economist. I can't say that I have it all figured out 'cause I absolutely don't. But I've read enough on it that I don't feel like I'm any longer on mount stupid of inflation. And I'm like, oh, wow, there's a lot of factors. And, and just step back and look at the Fed, that in September of 2021, all 18 members of the Fed said in, in, in 2022, the highest they thought the Fed funds rate would be is 50 basis points throughout the entire year they control the Fed. So

Vance Crowe [00:57:57] For people that don't know, that's a half a percentage point,

John Jennings [00:57:59] Half percent, half percent. And you know, you know, it's, it's running, it's, you know, 1.75 I think now there, you know, Jerome Powell speaking, and, and Jackson Hole just said there's gonna be at least another 75 basis 0.3 quarters of a percent increase when you know LA you know, later this month. So, you know, the, the idea that it was only gonna be 50 basis points, half of a percent in retrospect is laughable. But they really thought that, and, and the market showed it.

Vance Crowe [00:58:29] I mean, and so I, so I would say I'm off Mount Dunning Kruger in just my experience over the years. So I got to live in a, you know, a pre industrialized country. I worked at the World Bank, you know, the Yeah. The definite high priests of, yeah,

John Jennings [00:58:44] They are,

Vance Crowe [00:58:45] Inflation is a good thing. I'm, I'm involved in a community bank. Like I think I understand the monetary system relatively well. And the examples that you're giving about, like taking gas out, for example, or groceries, if they go up, like we should take these out for CPI when CPI is presented as a way to understand how much are things really getting more expensive or not? If you take those things out, maybe that's true that you can reduce spending in other places if you're above the 50% median income, right? But if you're below it,

John Jennings [00:59:20] There

Vance Crowe [00:59:20] Is no other place to go, right? If your gas prices go up, and what that means is either your savings rate goes down or other goods that you, you needed, you are now out of reach, but not really because of the way our credit system is set up. Right. So you can just extend that out further. So to me, the the argument of we, we need to take these things out so that that way the number is smoother so we can better understand it, is, is seems like

John Jennings [00:59:51] Well, well, regular CPI does include those things. So there's, you know, as you're aware, there's all these different versions of, you know, CPI, you know, urban areas, all consumers, you know, with and without food and energy. So nobody's looking at it in just one way. But the core CPI, that doesn't include food and energy, just gives a different flavor than ones that include it, include all of it.

Vance Crowe [01:00:20] So you mentioned crypto earlier, do you think, do you make a distinction between crypto and Bitcoin?

John Jennings [01:00:28] Yes.

Vance Crowe [01:00:29] Tell me more.

John Jennings [01:00:30] Well, there's more than, you know, there's, there's other crypto out there than just Bitcoin.

Vance Crowe [01:00:37] Yeah. I often find that people that use those words interchangeably don't actually understand the distinction. Like, to me, the, the core thing that made Bitcoin truly beautiful is that it never had this ICO it never had these like initial coin offerings where you say, Hey, everybody come buy, you know, magic coin and let's go do this thing instead, it had the immaculate conception, right? Somebody put it out there on message boards, anybody could buy it. And for many years, if you knew what it was, yeah, you could even take a laptop and use its excess power to, to

John Jennings [01:01:10] Mine. Yeah, it was great.

Vance Crowe [01:01:12] And so that distributed them all the way out to, I think 19 million have been distributed. There's only 2 million left to be distributed, and no other coin is going to be able to replicate this. I think it was like a, a once in humanity experience and that no other coin, no matter what their other attributes are, none will be able to be distributed in that way, which makes it like almost something supernatural.

John Jennings [01:01:38] Yeah. Yeah. Bitcoin is, is absolutely special. And I'll tell you, I, in our firm, we get asked a lot about Bitcoin and other crypto and NFTs and everything, and I'm not our firm's expert on this. I will tell you, I've read two entire books on blockchain, which is for people listening, it's the underlying, you know, I guess technology or system behind cryptocurrencies, but there's a lot of other applications for, for blockchain other than just crypto and cryptocurrencies. I have, I've read a, a book specifically on crypto. I have read white papers, I've listened to podcasts from experts. I've been to investment investment conferences where people have spoken on it. And I will say that on a scale of one to 10, with 10 being an expert and one knowing nothing, I'm maybe at a three and a half.

Vance Crowe [01:02:34] So you're a guy that learns, you know, vociferously. If you were gonna try and take that from a three to a, I don't know what the numbers mean, right? You could, you could normalize them for us. Yeah. To say a five means I'm now comfortable, you know? Yeah. Doing something like how would you move from a three to a five, and what would a five equal?

John Jennings [01:02:56] Yeah. I, I think I, I would have to do a lot of reading, more reading and studying and, and dig in and, and I guess really what I would need personally is, is more of a passion than I currently have to, to know more a, a about crypto, I'd have to say, wow. Like, you know, I really think this is something that I, I really want to become an expert in. And, and I think I would, in, in addition to even reading more than I have and, and doing more studying, I, I think I would have to really, you know, start interacting and, and, and learning from someone or some people that, that are true experts. I mean, you know, I, I own some Bitcoin, Bitcoin and some Ethereum and some Solana. I mean, I, you know, I, I I I track it. I I buy it. I, I don't say I, I trade it. I just periodically buy it. You're

Vance Crowe [01:03:48] A ler.

John Jennings [01:03:49] What's that? The

Vance Crowe [01:03:50] Ler, that's the you buy and only hold. Yeah. You don't, you're not buying it to sell it. Yeah,

John Jennings [01:03:54] I'm not buying it to sell it. And I, I just, I'm just, I'm, I'm, I'm fascinated by it. And you know, we have clients like all the time that, especially our younger ones saying, you know, should I, should I buy Bitcoin or some other cryptocurrencies? And, and really my, my first question back is, you know, why, you know, why, why do you wanna buy it? And it kind of ranges. Part of it is, you know, I think this is the, this is the future and we're gonna be transacting in, you know, you know, various forms of crypto in the future and it's gonna replace fiat currencies. Others are like, well, because, you know, you know, I think right now they, they will say, oh, I think it's low and it's gonna go back up to maybe closer to where it was before, beyond. So there, there's all sorts of different, different reasons. So I think that's the number one thing. And then the second thing I usually say is, sure, okay, let's buy some, some crypto, and how should we do this? Should, you know, should we just open a, a wallet we haven't done, you know, you and I have discussed cold storage that a bit. We, we haven't, as far, they don't have anybody using cold storage, but we have had people use some different sort of custodians. I know there's some, some ETFs now, we've actually had some clients that have done some, you know, we've, we've looked at and help 'em do some, some funds, you know, so, so that's been sort of interesting. But as of right now, like, we're not like all in saying, oh, we, you know, everybody should have a, an allocation to, to crypto or b, that it should be a big amount. If anything, we've, we've kind of cautioned against doing a big amount. And, you know, I think it's just a characteristic of, of an early industry. I mean, you can look at, you know, automobiles or computers or internets or airplanes or televisions or so many different things. And, and early in the industry, there's just a, there's a lot of creative dis destruction, you know, and you, you look at the early automobile industry, and from 1900 to, to 1920, in the US alone, 775 automobile manufacturers went into business, 600 went outta business.

John Jennings [01:05:42] And there are seven brands that were created before 1920 in the US that are still around, you know, and some of 'em are, you know, things like under gm, you know, you have like Buick and Chevrolet, both o owned under the same con conglomerate, and, you know, go, you look at the internet, like Google was the 21st search engine, so there were 20 before Google. So it's just, it's often difficult in a young industry to say, you know, even if it is gonna be, you know, even bigger than it is now, may even if it is going to, you know, replace fiat currency, or maybe it's like, you know, you have Visa, MasterCard, American Express, discover, maybe you'll be going places, deciding whether you're gonna pay with crypto X, Y, z, you know, whatever. So who, who knows what it's gonna look like? It's just tough to pick a winner. So, you know, early pioneers in any new industry or technology 10 years later, you know, typically have, you know, studies have shown less than 10% of the market share. So it's usually the fast followers that that come on. Will that happen with, with Bitcoin and even Ethereum where they'll be displaced by somebody else in the next 10 or 20 years? Or will they still be, you know, kind of the, the the two marquee ones? Just nobody knows. Just nobody knows.

Vance Crowe [01:07:01] I, the, the question about learning, one of the things, you know, people know that there are miners for Bitcoin, right? Yeah. But I think the thing that I learned the most on was I set up a full node. Are you familiar with what a full node is?

John Jennings [01:07:15] I'm not.

Vance Crowe [01:07:15] So a full node is what actually reads out every single transaction that happens. So right now, if you don't have a full node and you wanna know what is on that blockchain, you go to the internet and you have to go to someone and say, what do you think the blockchain said at this particular block? There's been 750,000 blocks. I wanna know what was in this block right here. Now somebody listening might say, why, why in the world would I wanna know that? But we'll, just, just for sake, if you wanted to know it, you have to ask somebody else. But if you want to know it yourself, you can set up what's called a full node. And so a full node is just the entire readout of all of the, the blockchain, every single block that's ever been there. And you access it on your own computer. So one way to do it is to set up a raspberry pie and then to buy a storage device. Oh,

John Jennings [01:08:06] You can do that in a raspberry pie. Okay.

Vance Crowe [01:08:07] Yeah. It's very simple because it's not computing. You're not doing the hash. So a miner is trying to get Bitcoin, right? Yeah. You're running through this hash Yeah. And you're keeping the entire blockchain, and if you happen to guess the right number, yeah. Then you get to pull, you, you and your slush group get to say, we're gonna divide these Bitcoin out among ourselves with the node. This is likely the thing that will be in everyone's home as an appliance, right? It will be like, wow,

John Jennings [01:08:33] Hey,

Vance Crowe [01:08:33] I wanna have a node. Not because I just, because I wanna go look up the transactions, but now if I wanna trade a Bitcoin, the way that you do it is most people, they'd say, I have to go to Coinbase and say, Coinbase, will you take my Bitcoin? Which here's my, yeah. Public key and my private key, send it from here to there, which is custodial meaning not your keys, right? Not your Bitcoin. Right? So you also would have to go to somebody else for permission to move that Bitcoin. But if you have a full node at your house, now you can go and say, Hey, node, I am moving Bitcoin from this private key to that public key, and I want you to put that into the ledger. And then once that's spread out among all the other nodes, that transaction has occurred.

John Jennings [01:09:18] It has occurred.

Vance Crowe [01:09:18] So that's actually technically how that happens. And the reason that I say I learned so much was, yeah,

John Jennings [01:09:24] You

Vance Crowe [01:09:24] Go to get this raspberry pie costs you about a hundred bucks. You go to get an SD card costs you about a hundred dollars. You have to do just a little bit of work to get it set

John Jennings [01:09:31] Up. Yeah, yeah.

Vance Crowe [01:09:32] Maybe an evening's work. You plug it in and you think, okay, download the blockchain. What's that gonna take an hour, two hours? No, this computer is down fully, it is not doing anything else. 100% of its compute power throttle all the way down with the fastest internet I have, you know, fiber at my house, it took five and a half days to download all of the transactions.

John Jennings [01:09:56] Wow.

Vance Crowe [01:09:56] So for the first time, do you ever get a real sense for what, how big is this blockchain? Yeah. And

John Jennings [01:10:03] Why

Vance Crowe [01:10:04] Does this matter? Because every single node that's out there that, that says, this is the way we view Bitcoin Yeah. Has that exact same ledger, that exact same set of all those blocks. And I think that once I did that,

John Jennings [01:10:19] I would learn so much if I did that, maybe I'll

Vance Crowe [01:10:21] Do that. I think that would take you from a three to a five. Yeah.

John Jennings [01:10:24] That I would learn so much, because it, it's really doing, and that's not quite doing, you're observing, but that is

Vance Crowe [01:10:31] A whole

John Jennings [01:10:31] Different layer in terms of understanding.

Vance Crowe [01:10:33] Well, and I what, you know, a lot of the stuff that I knew about it was like reading and you know, you're kind of using these internets like, like a Coinbase for example. But when you have that node, all of a sudden you're like, wait a second. Like I now see the utility of

John Jennings [01:10:49] Like

Vance Crowe [01:10:49] How this would work. And you think about, you know, there were these people accused of doing things wrong with that tornado, you know, stuff like, now they're, that's because they're using a custodian Yeah.

John Jennings [01:11:00] To

Vance Crowe [01:11:00] Be able to move Bitcoin. And the core philosophy around Bitcoin is you have it Yeah. And you can send it and there's no intermediaries. Yeah.

John Jennings [01:11:07] You don't have to rely on intermediary. Yeah.

Vance Crowe [01:11:08] That's the beauty of it. And the who makes it so there's no intermediary, and that's when the lights start to click on.

John Jennings [01:11:12] So it's like, almost like in the matrix when like Neo and the others, they'd see all the binary code, and that meant something to them, right? They could read binary code. Wow. Yeah.

Vance Crowe [01:11:21] And once you have a node and it's running, then you can flip open your computer and say, Hey, I wanna make sure my node is fully synchronized and I can look at it. And then over top of it, that's when you start seeing, you know, it's unlikely in my opinion that Bitcoin will be the thing that you use day in and day out. In fact, that will be the, because we were talking about inflation, right? And I'm saying, Hey, I see real value in there just being 21 million

John Jennings [01:11:47] Amount

Vance Crowe [01:11:47] Of it. So you can store it in that Bitcoin one, Bitcoin equals one Bitcoin. Yeah. But now, if you want that layer, that's much faster transaction. 'cause right now, if I send you a Bitcoin, it takes maybe 10 minutes for the first confirmation, but we don't know that it's real until we've seen 3, 5, 6, 10, 10 confirmation. So it could be an hour for that transaction to occur. So that's a much slower system. But they have layer two things like the lightning network, which would say, I'm gonna put money into this lightning wallet, and you're gonna have money in your wallet, and we can send things much faster. It happens in the blink of an eye. Yeah. That enable, like when you have a node, now all of a sudden you can do these other things that you hear people talking about, but you can't understand it until you've experienced it.

John Jennings [01:12:31] Yeah. Fascinating. Yeah. It's, it's an area that is just fascinating. And, and, and we could, you know, I'm reading a book on the Metaverse now, and I've been reading all these papers on Web3, and it's just, you know, it's, it's tough as humans to look forward and imagine the future much different than the present. But man, if you think back, just how, you know, even just 10 years ago, how wildly different things were then versus now in the, the, you know, the progress in a bunch of different areas technologically. It's just, it's just stunning.

Vance Crowe [01:13:05] Are you an optimist? Do you, yes. Do you think things will always get better?

John Jennings [01:13:10] No. I, okay, so I'm in general an optimist, but like for instance, you know, I've, I, I write this, this blog, and I have, I have a blog that, you know, I've, I've written and I'm trying to decide whether I'm gonna publish. And it, it really is sort of sad because it, it starts with a story of my 23-year-old daughter asking me in the last year, dad, did you, did you ever, like, you know, at some point in my childhood, there was a time when you picked me up for the last time,

Vance Crowe [01:13:38] Oh man, oh God,

John Jennings [01:13:40] And did you realize that was gonna be the last time? And thinking about it doesn't make you sad.

Vance Crowe [01:13:44] Oh God, that makes me really sad.

John Jennings [01:13:46] I know. And I was like, I was like, dang. I was like, no, I hadn't thought about it. I didn't realize it, and I wasn't sad until you just mentioned it. And I just thought, wow, I should have just like cherished each time I picked her up because like, she's 23, I'm not gonna pick her up anymore. You know, I'm a pretty strong dude, but like, you don't pick up your adult grown children. Right. And, you know, there's, you know, there's like things like, like that, like my wife and I were having this conversation not too long ago, and she said, you know, you right now, John are the youngest you'll ever be like, you're like, you'll never be as young as you are right now. I'm like, yeah. Wow. And I saw an article, the headline from Scientific American a few days ago was, this was a pretty hot summer, yet it's one is likely one of the coolest summers you'll have for the rest of your life

Vance Crowe [01:14:40] Because of climate change.

John Jennings [01:14:41] Yeah. And I was like, wow. Yeah. So I mean, there's things like that, like, you know, that I, I think, you know, I'm, I'm aware of, I don't think things are always gonna get better, but in general, yeah. I, you know, I I kind of think that the arc of humanity is, you know, with, with a lot of caveats is Yeah. Is, is progress. I think that, I think now's the greatest time in all of humanity to be alive.

Vance Crowe [01:15:09] What makes you say that?

John Jennings [01:15:11] You know, it's, it's, it's interesting. There's been entire books written on this. So Stephen Pinker had one, I'm, I'm forgetting his, his title. There's Fact Full by Hans Row, the

Vance Crowe [01:15:23] Rational Optimist by Matt Ridley. Yeah,

John Jennings [01:15:24] I've not read that. Yeah. But it's like, you know, I know that, you know, life expectancy in the US has taken a hit the last few years, but other than that, like life expectancy gets longer. You know, you just look at ev even people that are at the lower income levels in America, you know, if you, you roll that back to what it was a hundred or 500 years ago to be a lower, you know, income person, just the, the, just the, the wealth, the ability to, to travel the, the information we all have access to through, through the internet, it's, it's pretty stunning.

Vance Crowe [01:15:57] Then what do you think, how would you explain then mental illness in the United States?

John Jennings [01:16:03] Yeah, so, you know, I think it, it, it's a huge issue. I'm sure we've always had issues with, with mental illness. You know, I think COVID took a big, it was a big hit, you know, I think the, the, the lockdowns, the, you know, I think and, and still this remote work thing is, is has to be damaging mental health wise.

Vance Crowe [01:16:24] Oh, interesting.

John Jennings [01:16:25] It just has to be, you know, you know, I, I, you know, when, when remote work started, like, you know, at, at our company, you know, we were remote in, in March of 2020, and then we're kind of, you could come back voluntarily like later that summer, but you know, only a handful of people did. We'd have five or 10 people.

Vance Crowe [01:16:43] I remember you grappling with this. Yeah. We talked about it.

John Jennings [01:16:45] Yeah. And, and you know, there was a lot of great things about working from home. Like, there was a lot of things I loved about it. I was like, you know, this is, so many things about it we're fantastic. But, you know, then you started kind of missing people and kind of our culture and our environment working as a team. And then on summer Solstice 2021, we told everybody, we'd like you to be back most of the time. That's our, that's our rule. We're a big fan of like simple rules, treat people like adults, you know, come back most of the time, and most people do because we really enjoy working together. And I just think it's the social interaction. And I, I know, you know, I know people know of people that are, are earlier in their careers that their jobs are completely remote and they, like, they're in their bedroom or at their kitchen table all day just on Zoom. And it, it's, you know, it's, it's just so isolating. We're we're social creatures we need to have interactions with, with others. And I just think it was horribly damaging. I look at my parents who were in their late seventies and COVID was horrible for them. I mean, they, they were, you know, kind of that, that age group where, where they really didn't want to get COVID. I mean, I don't think anybody wanted to get it, but they really didn't want to get it. And they, you know, they didn't, they didn't see their grandchildren much. They didn't see their friends. And, you know, my, my parents were like, you know, we all have expiration dates, but ours was getting closer and, you know, we're, you know, we're binge watching a lot of great tv. But, you know, I think it was, it was damaging for them. Mental health wise.

Vance Crowe [01:18:07] There's been a big push in kind of like the millennial media, right? Like the Joe Rogans of the world against things like SSRIs, those like mental enhancing drugs. Any, what are your thoughts on

John Jennings [01:18:23] Yeah, yeah. I get where the, I get where they're coming from. You could look at the society and say that everybody, you know, there's way too much overmedication. It seems like, you know, so many people have a DD or A DHD and they're taking their adderol or Ritalin and, you know, is, does everybody have a mental illness? You know, some sort of anxiety or depression. And sometimes it can, you know, I think sometimes, you know, there's, there's a good argument that, you know, maybe there's some over-prescription of, of some of these, some of these drugs. I'll just tell you from my own personal experience, I take it SSRI and when I don't,

Vance Crowe [01:18:53] What are they?

John Jennings [01:18:54] So selective serotonin reuptake inhibitors. So that's, that's what it stands for. And like many things with the brain, they don't totally understand how they work. So it's interesting, I went to this, this conference on the brain that was at Stanford and Joint Stanford and University of California, San Francisco about five or six years ago. And the, the guy that led it off that was from Stanford, he was like the head of like neuroscience research at like Stanford Medical School. He said, you know, we're, we're looking for, you know, four big things when it comes to the brain, and the first of which is a theory of the brain, like a theory of how it works. And I was like, as a lay person, I was like, really? Yeah,

Vance Crowe [01:19:36] That's how far we've had people on the podcast that have talked about that. Yeah. And you're like, I thought we were further along than this. Yeah. And they're like, no theory of consciousness. We don't even know why. We're aware of ourselves. We

John Jennings [01:19:45] Don't, and are we really? Right? And you talk to an anesthesiologist and they're like, have no idea how it works.

Vance Crowe [01:19:50] This happened to me yesterday. I was at the dentist and I'm talking with them when they're giving me the shot. Yeah.

John Jennings [01:19:54] And I

Vance Crowe [01:19:54] Was like, what exactly is going on when you gimme the shot? And she's like, I can give you like some concepts, but we don't actually know. Yeah.

John Jennings [01:20:02] So I have a, I have a friend who's an Anes anesthesiologist. Anesthesiologist. We have a lot of, we've had a lot of conversations about this. And he is like, yeah, if somebody can come up with a, you know, a theory of consciousness, they, you know, they'd win the Nobel Prize in, you know, medicine and physiology. They, they,

Vance Crowe [01:20:18] 'cause you don't actually know, people don't realize this is it that you weren't feeling pain? Or is it that you don't remember feeling pain? Right. And if you don't remember feeling pain, does it matter? Doesn't matter. And then you get into all these weird philosophical you

John Jennings [01:20:29] Do do Totally. Yeah. So, so they don't know how Sri SSRIs ex Exactly. Work. Again, it has to do with, you know, the serotonin, which is a, you know, a chemical in the, the brain and, you know, different people based on these receptors or are more or less sensitive to it. And that, that's about as far as I can go and exactly how they, they work. But like I take an SSRI, I've, I've struggled with obsessive compulsive disorder, you know, since I was a, a teenager. And, you know, which is really, it's really like a form of anxiety. Like anxiety and OCD or flip sides of the same coin. So there's an anxiety component to it. And there are periods of time when I'm like, oh, I'm doing great and I'll stop taking it for a while. And, and I'm like, dang. And usually it's my wife that points it out. She's like, have you not been taking your Lexapro? And I'm like, no. And she's like, why? Like you are, you're going off the rails here. So,

Vance Crowe [01:21:26] And what happens when you go off the rails?

John Jennings [01:21:28] Yeah. The, the OCD spikes. Yeah. The OCD spikes. And it, it,

Vance Crowe [01:21:32] I mean, what I know of OCD is I need to wash my hands. I, yeah.

John Jennings [01:21:36] And that's a very common one

Vance Crowe [01:21:37] Knob. Yeah.

John Jennings [01:21:37] So OCD is fascinating. So, so an obsession is a thought, right? So, but it's, it's a thought that you, that creates anxiety in you and a compulsion is what you do about it, right? So like, and typically it makes your world smaller and often is associated. You'll hear people say, oh, I'm oc so OCD 'cause they like to, you know, keep their desk neat or, you know, their closets clean or whatever. And, and I think, you know, it's a continuum. There's not like, oh, you have OCD or you don't, like, it's not this either or sort of proposition. We're all in a con continuum of, of things. But, you know, a classic example they use is like, let's say that, and, and usually the, the obsession, the obsessive thought is completely irrational. And then the compulsion does nothing to solve it because the, the, the thought isn't irrational. Right? So a classic example that is used by therapists a lot is, let's say you, you develop this, this issue that you don't want to travel across a bridge. Like it's, you know, maybe there's a slight, maybe it's after, you know, I 35 and Minneapolis collapsed, or, you know, maybe it was after 1980, you know, 1989 when the, the, the, the, the overpasses collapsed in San Francisco. So there's maybe some spark of rationality there. Maybe you read a story that sparked it about, you know, crumbling infrastructure in America. But for whatever reason, you become extremely afraid of bridges. So at first you may just be like, okay, I'm gonna, I'm gonna only go across short bridges.

John Jennings [01:23:13] Like I don't want to go across the Golden Gate Bridge or the Bay Bridge, but I may be okay going over a small bridge. But you get to the point where maybe you don't wanna go across overpasses. So what you do is you start planning your route so you don't have to go over any overpasses, but then maybe you start not wanting to see bridges at all. So you'll plan your route. So you don't want to see any bridges or overpasses. But then you realize that's really hard. So now you're not wanting to go most places. So now you only want to travel to places that you've been before that, you know, you won't see a bridge or an overpass. Right? So, and then you don't wanna watch tv 'cause bridges are on tv. So maybe you'll only watch shows that you've always watched. Oh,

Vance Crowe [01:23:52] Wow.

John Jennings [01:23:53] So you just, your world gets smaller and smaller, smaller. So the way they treat that is partly there's some SSRIs that have been improved for OCD and some other drugs that are beyond SSRIs. But what they'll start with is say, okay, so now you're, you're kind of terrified of bridges and it makes no rational sense, but your brain can't stop it. And you know that it's irrational. Like, you know, it's bonkers. You're like, I know it's crazy. So they'll start with, but I can't do

Vance Crowe [01:24:16] Anything to stop it. Right?

John Jennings [01:24:17] So they'll start with, you're gonna talk about bridges, you're gonna look at some pictures of bridges, and you're gonna drive by bridges, et cetera. And there's people that are like, okay, I'm only gonna go across a bridge if I'm, you know, if I'm wearing a helmet or there's other things that you'll do. That's the compulsion as well that, that seem crazy. And like, over, over, you know, really one of my first obsessive behaviors is I was probably a sophomore in high school, and I, I got to where I'd only listened to Led Zeppelin. I mean, only Led Zeppelin. Like, I, I would only listen, you know, back it was cassette days and, and, and albums. I'd only listen to Led Zeppelin. I wouldn't listen to the radio. So when I got into car with friends, I'd tell 'em, before we got in the car, you know, I'd always have a cassette tape with me. I'd say, we can play the Zeppelin cassette tape, don't play anything else. I didn't like to go to places where they were like, stores where they were playing like Musak and things and other things. It, it concerned me to go out into the world because what if I heard something other than Led Zeppelin? I mean, it was completely bonkers. I mean, it was like, it,

Vance Crowe [01:25:21] And at first would be very hidden. It'd be like, oh, that's just a high school kid that loves this band. Yeah. But then slowly becomes Yeah.

John Jennings [01:25:28] All

Vance Crowe [01:25:28] Consuming. Yeah.

John Jennings [01:25:29] And I've had other peers of time where, when

Vance Crowe [01:25:32] Did you even become aware that that,

John Jennings [01:25:34] You know, really it wasn't until my thirties. I realized it was OCD and it was really, and, and it would ebb and flow. I'd have periods of time and, but I, I'd always had these things that, you know, some of them can be sort of almost positive. You know, I've had a lot of OCD around exercise and, and eating. Like, I love, love, love restrictions on eating. I love it. Like the idea of fasting and vegan. And I mean, if, if it weren't for my wife and my therapist, I would be probably a raw foods vegan, gluten-free, faster.

Vance Crowe [01:26:13] This is fascinating. I didn't know that this was possible with OCD because it's always been presented to me as, you wanna wash your hands all the time. You, you can't see a, something out of order or something like that.

John Jennings [01:26:25] Yeah. I used to, I, I had this period of time where I would check the mailbox 20, 30 times a day. Like, I knew there was no mail, but I couldn't stop myself from checking the mailbox.

Vance Crowe [01:26:34] And you would feel better, like, you would feel anxiety until that, yeah,

John Jennings [01:26:38] I would feel anxiety. I'd feel like almost a sense of doom. And like I had to check and I'd be at work and I'd feel like I needed to go check the mail. And then the way I got around it a bit is I'd had my kids go check the mail, like they were young, you know? No, it's just, it's, it's, it's completely, it's completely fruit loops.

Vance Crowe [01:26:58] And so you're in your thirties all the way up until this point. You've just adapted your life to these various quirks that you have.

John Jennings [01:27:05] Yeah. It can be bonkers. And both my kids have struggled with it. I've had other, other family members. But, you know, therapy helps, but the medication helps keep it at bay. Like, if I didn't take, you know, I take Lexapro. If I didn't take Lexapro, you know, I would be really struggling and, but I only take a certain amount. Like if I take too much, like at higher doses, you know, I have lesser OCD tendencies, but I feel it takes away part of who I am. So like there's a balance, you know, of having the right amount.

Vance Crowe [01:27:36] What is, what is it, what's the experience like of taking one? Does it feel good to be on the medication?

John Jennings [01:27:42] No. I mean, no, it, it, it, you know, it can be a little dulling at higher doses. You can feel a little bit of a dissociation almost, you know? So, no, but it's not like pleasurable. But I just feel more, you know, kind of, I, I feel less anxiety and less OCD things. Yeah. Yeah. It,

Vance Crowe [01:28:05] I mean, I think that OCD or I don't know OCD, but your obsession is actually what makes you, you know, special.

John Jennings [01:28:11] Yeah.

Vance Crowe [01:28:12] Right. Like that's what made you an expert on private jet ownership or, or on how this tech

John Jennings [01:28:16] Works works. No, there's definitely upsides to it. Like, I, I had a, I had a therapist say once, you know, if you're gonna, if you're gonna pick something mentally to be, you know, extraordinary, you know, OCDs OCDs a good one. If you can channel it. So, but like exercise, like without medication and therapy, I would get to where if I, I would have to have a regimented, and when I was doing triathlons, like I would, I would exercise, I train twice a day and the, and I had these exact plane. This is why I also have run marathons. I love marathon training because there's this prescribed regimen of the, of the, of the marathon training. And if I didn't do one of the trainings for a marathon or a triathlon or biking or whatever, I would feel like, I would feel like my world was gonna end. Like I'd feel a, a, a growing sense of panic. Like if I was going on a business trip or vacation, I would structure everything around still being able to make that workout from that plan work and the idea that, okay, I'm traveling to San Francisco and I'm gonna have an early morning flight and I can't get my 10 mile run in. Like, it would cause me to feel like I was having a panic attack.

Vance Crowe [01:29:27] I mean, all the way up until the panic attack. I, you know, that doesn't seem like a thing that I would want, but I think most of us wish we had,

John Jennings [01:29:33] You

Vance Crowe [01:29:34] Know, that voice in our head that is normally resistance being like, no, you need to get out there, you gotta do this. Yeah. And if you could do it without guilt, that'd be a hell of

John Jennings [01:29:42] A hell way to live. No, it's great because it, it causes, you know, if your, your obsession is exercise, the good is you exercise a lot. The bad is you, you overtrain and you, you structure your life where that's the most important thing. And imagine if you're a family member to that person where, I mean, imagine, so you have two little kids and a wife. And imagine if, and this, 'cause I had two little kids your age

Vance Crowe [01:30:06] And a wife,

John Jennings [01:30:07] And it was like, the most important thing is I got the run or the bike ride or the swim and that everything else had to be scheduled around that, that, that was the most important thing. It, it wasn't because it was the most important thing. It was because I felt like doom like panic

Vance Crowe [01:30:28] And then you're not, then the whole time you're in that, even if you're not doing the activity, you're thinking about that.

John Jennings [01:30:33] Yeah, I'd be thinking about it. I would think constantly about how I could get faster and stronger and, and, and, and everything. And if, if I missed a, I'd just be antsy. Like I'd have real issues. And remember I had a performance review at my company and, and I remember they, them saying, you know, I was like, I dunno, 2007 or something. And they were like, you know, the, the my, the CEO and president of our company at, at the time, they said, you know, you know, you're our superstar. You're extraordinary, you do such great things. But we're wondering where we rank on your priority list. Where the company and I, I helped start the company. I was one of our co-founders, it's my baby. And they're like, we think you're like, like the company in your job is like probably like number eight on your priority list. Oh. And we were wondering, we're wondering what you, like, what would this company be like and what success would we have if you loved this company as much as you do triathlon training?

Vance Crowe [01:31:28] Ouch. Yeah.

John Jennings [01:31:29] Oh, so even coworkers and family and friends even most

Vance Crowe [01:31:32] Important thing. And if you're performing at a really high level Yeah.

John Jennings [01:31:33] They're

Vance Crowe [01:31:34] Like, Hey, we can see how you're giving Yeah.

John Jennings [01:31:36] Your

Vance Crowe [01:31:36] All to this other thing.

John Jennings [01:31:37] Yeah.

Vance Crowe [01:31:38] And if you're, if it's your family, then that hurts too, right? Yeah. Dad's more obsessed with

John Jennings [01:31:43] Oh it was, yeah. My, my kids, my wife too. I mean, and that, that's just partly when we, we realized it was OCD because I was like, I can't stop. Like, this isn't me making a choice. I literally cannot stop doing this. And then, then you throw on the vegan and the eating and the, all the different exercise stuff. And then, yeah. And, and, and, and I feel like I almost always have to have something.

Vance Crowe [01:32:05] But I think you're, you're extraordinary. You remind me of a very close friend that I have that the difference between you and him is you channeled it into highly productive work focus, focus on things that other people could turn into money and wealth creation or preservation. Whereas most people that get this, that drags them into, I'm living in a bus and I'm focused on making the bus be, you know, incredible living conditions for me.

John Jennings [01:32:35] Yeah, yeah, yeah. Well, and some of them, again, like the checking the mail, I've had periods of time where I, I constantly check to make sure I have my iPad in my bag. Like I'd pull over on the way to work multiple times to check it. I mean, there's, there's just things like that, that are just totally crazy and stupid that, you know, aren't hugely disrupting to my life. But I'm just, and I know at the time I'm just like, I know that it's there, but I can't stop myself from checking.

Vance Crowe [01:32:58] So what do you know about the human mind that people that haven't had to

John Jennings [01:33:03] Yeah.

Vance Crowe [01:33:04] Go through this wouldn't know,

John Jennings [01:33:05] Oh, here's the number one thing. So if somebody's depressed or anxious or OCD or anything else, like they likely know, and, and you sitting down and rationally explaining things to them isn't gonna make things better and it's probably gonna make things worse. 'cause then they're gonna, it's gonna feel bad about themselves. And the the key thing is that somebody's struggling with any of those things, you know? And I hope, and, and, and my wife and I and and our kids have, have struggled with these sort of things. Like we're very open about it because we want to help get rid of the stigma. So hopefully people will go talk to somebody and get help. 'cause there's real treatments and beyond just medications, like therapy, the right therapy can be hugely beneficial. Because if you think about it, you know, our brains all have, you know, neuroplasticity. So, you know, it, it's, it's fascinating. So how our brains are actually wired affects how we think, but how we think affects how our brains are wired. So my, my my 20-year-old just spent four months at a kind of a inpatient outpatient, I mean, it was an everyday all day. They call it partial hospitalization. So she lived in an apartment owned by the facility where she was, you know, but they could go and they weren't locked down or anything, but they had people there and they were checking on 'em. And then she'd spend all day at this, this facility and mainly OCD some depression. But they did this brain scan when she started, right? And they, they bring in this specialist like once a month to, you know, to read the brain scans and only knowing her age and gender, looked at her brain scan and said, she is a 5.1 standard deviation event on OCD.

John Jennings [01:34:42] Didn't know anything else about her, just looking at her scan and said, we can see the OCD portion. That's her main issue, you know, and there's, you know, some depression and whatever. But by looking at her brain scan

Vance Crowe [01:34:54] And you think that's real, that sounds like witch doctor esque, right? Yeah. I'm not, not insulting

John Jennings [01:34:58] Him, I'm just saying

Vance Crowe [01:34:59] Like, to look at it and be like, I can tell you've got this. Well,

John Jennings [01:35:02] And they've found that, you know, there's different parts of the brain where, you know, that are, are responsible for, you know, obviously you, you know that, you know, you have the, the, the auditory processing part and the visual processing and you have the, where you think and you know, more base things and you know, the fight or flight response, all that. So they're getting to where they understand different parts of the brain where you'll see the physiology that is responsible for, you know, OCD, anxiety, depression, schizophrenia, other things. And so he is able to diagnose that, know, knowing this. And, and then they did a combination of, you know, kind of tweak some meds, but did a lot of psychoanalysis. They did something called alpha, alpha wave stimulation. They did neural feedback, which was interesting. Where basically it's like this video game that she plays with her mind. So her, she's hooked up to all these sensors. And so like in one of the games, it would have her fly an eagle through hoops in the sky. But there's something about how it trains the pathways in the, in the brain. They did something called transcranial magnetic stimulation where they use kind of MRI technology, but real focus on this OCD section of the BA brain, which increases the blood flow that helps, you know, something. But at the end, the brain scan was better. So like the OCD, you know, a a 5.1 standard deviation is about a one in, you know, 6 million event. Yeah.

Vance Crowe [01:36:19] You had that on iq, you would be sitting pretty.

John Jennings [01:36:22] Yeah. So, so you know, we actually haven't gotten the brain scan back, but what they've described is, you know, that it's, it's, it's greatly, you know, improved. And a lot of that was just learning these new pathways of thinking in the brain, which is why she needed every day, all day for months. It wasn't, you know, go to your therapist once a month or once a week and kind of do things on the side. It was like, here are these focus things that we're gonna do, both in terms of physiology and in how you think and it's gonna change how your brain works.

Vance Crowe [01:36:53] What was it like to send your child as a parent off to a place where they're like, we're gonna change your brain.

John Jennings [01:37:00] Yeah, it was, you know, you kind of hit to the, the point where you, you try a bunch of different things, you just want the best for them. And we'd sent her, we'd sent her off to another, you know, when she was a sophomore in high school, that had a huge beneficial effect that, that was a place that focused on OCD. I mean really, really, you know, we're just fortunate that we were able to do it. I mean, it was incredibly expensive. It's not covered by insurance. It's outta network. We'll get a little money back. I mean, it was incredibly expensive, like years and years of college experience. Expensive.

Vance Crowe [01:37:29] Oh wow.

John Jennings [01:37:30] And so if you look at mental health system in America, it's just completely broken. So you, you kind of have the flying first class or actually like, you know, almost like flying private. And, and that's what we've been able to give our, our kids. And then you have, you know, pe that if you have decent health insurance, then you're at this lower level, like you're flying economy, but at least you're still flying. Like so many mental health facilities and professionals don't take insurance. So you're, you're left with, you know, some, some good people, but are just overbooked. And you know, if you get in, you're, you're not gonna get the once a week or multiple day a week thing that some people need, you know, maybe you're getting once every few months. And, and then you have people that don't have insurance or good insurance that are just out there, you know. So I'm on the board of a, a school where my older daughter went called Logo School, which is a therapeutic school for kids, mainly with psychological difficulties. And you know, 85% of them go for free 'cause their school district pays and like 45% are qualify for free, you know, lunches and breakfasts and everything. So, you know, kind of tough socioeconomic upbringings. And the great thing about logos is there's about a hundred, 120 students and there's 15 therapists on staff. So every single kid has multiple sessions a week, both in group and individual therapy. And for most of these kids, some of 'em with severe psychological issues, mental illness, this is their only way to get therapy is through the school. So I'm a big fan of it, but we really need to change, I think the conversation about mental health and how you access mental health in America because it's so hard, it is so hard to access mental health.

John Jennings [01:39:09] Beyond the stigma,

Vance Crowe [01:39:11] What would you do to change it?

John Jennings [01:39:14] Well, I think there needs to be a, a lot more funding. I think that, I think more insurance should, you know, cover more and pay more again, you see, and, and again, it's, it's tough. So like if, if you're an orthopedic surgeon, you know, you can see all these patients per hour and then you have your day or two that you're doing surgeries where you're making all this money. Like if you're a psychiatrist, you know, even a private pay psychiatrist, you know, it's a few hundred bucks an hour, so it's, you know, three or 400 bucks an hour. But for you to sit down with somebody for 45 minutes and you're, you're an MD and you have an office and you have to worry about insurance and everything else, well, I guess if you're a private pay, you're not, let's say you're charging $400 an hour, like you're making, like you're, you're making nowhere near what a surgeon or probably even primary care physician is making. I mean, you just, you just can't do it. So that's why they, they're, they're private pay and if you take insurance, you're not even gonna give somebody 45 minutes. You're gonna be, you're gonna be in and out. I've been to those psychiatrists before you, you come in, they talk to you for 15 minutes, they write you a prescription and you're out the door. Well,

Vance Crowe [01:40:18] That's why Ann in physical therapy doesn't, like, her clinic doesn't accept insurance. Yeah,

John Jennings [01:40:22] Exactly.

Vance Crowe [01:40:23] 'cause they said, look, we can't do it. The only way we can do it is if we treat two people at the same time. We only have 45 minutes and the amount of paperwork we have to do Yeah.

John Jennings [01:40:29] Doubles

Vance Crowe [01:40:29] That amount of time. So,

John Jennings [01:40:30] Yeah. So it, it's broken. So I think the reimbursements for mental health need to be higher. And there's gotta, and it's, it gets into, you know, health insurance and how we pay for medicine in America, which is, which is completely broken. I mean, it's all of medicine, but mental health, you know, especially, so, I mean, I'd like to start a charity. I, I, my wife and I have chatted about this, where, you know, we helped fund, you know, there, there are things that help people without insurance or, you know, things get some mental health and there's, you know, some, some clinics and some some different things. And, and those do great. But I, I'd love to give everybody the ability to fly first class at least, you know, 'cause I think that's so you, you know, beneficial. And I just see the, the huge change in my daughter after her, her four months. And again, this wasn't the first time we've, you know, done programs and different things for, for either of our kids. I, I would just really like where everybody can tap into to, you know, really getting the mental health that, that they need.

Vance Crowe [01:41:27] John, when was the last time you laughed really hard

John Jennings [01:41:32] Last night?

Vance Crowe [01:41:35] Tell me about it.

John Jennings [01:41:35] Yeah, so we are, I'm going on a cruise later today. And in fact, I'm gonna tell you the, the, the, the laughing really hard. I, I, I'll skip that one. Okay. Earlier this week, I spent three hours watching Beavis and Butthead and my wife came down and my daughter, one of my daughters was on FaceTime and she, they were gonna ask me a question and I was laughing so hard I couldn't talk watching Beavis and Butthead. So yeah,

Vance Crowe [01:42:07] I never connected with that show. I mean, I like Mike Judge. I think he's hilarious. Yeah. I think his sense of humor,

John Jennings [01:42:12] Oh, I've always loved Beavis and Butthead. Just absolutely loved Beavis and Butthead.

Vance Crowe [01:42:15] You were probably of the age where you were allowed to watch it on MTV. Oh, I'm 52.

John Jennings [01:42:20] Yeah. So I was, yeah.

Vance Crowe [01:42:21] Oh man. I would've gotten in so much trouble if I had been.

John Jennings [01:42:23] No, I love, I love I I love Beavis and Butthead, so Yeah. No, I, I laugh quite a bit. I have, I have a lot of fun.

Vance Crowe [01:42:33] Well, you got a book coming out.

John Jennings [01:42:36] I do.

Vance Crowe [01:42:36] When is it coming out?

John Jennings [01:42:38] So, unfortunately it's not gonna be published till, till May, May 2nd. And I, I finished writing around the middle of April and then, and I had, I've read all, I read all these books on writing a book, a nonfiction book. And then I read these books on, you know, publishing and all this research on picking a publisher and everything. And this one book said explicitly like, if once you're done writing, you're halfway there. And I'm finding that to be the case. It's just a, it's a, it's a lot of work. Mostly it's the publisher's work, but there's a lot of work to, to get it done. And then you have, you know, marketing, there's supply chain issues. It's running about 90 days between the publisher being done with all their work and it actually being printed. 'cause the, the printers are, are running. So behind, I'm not alone. I heard Brittany Spears book was hugely delayed because of supply chain issues. So, you know, me, me and me and Brittany right there

Vance Crowe [01:43:26] And describe it, we talked about it the first time back when you were writing.

John Jennings [01:43:28] Yeah. So it's called The Uncertainty Solution, how to Invest with Confidence in the Face of the Unknown. And so it really focuses on not how to invest, but how to think about investing because I, there's no one right way to invest. And, you know, whoever reads the book, you know, I, I won't, I won't know them. I don't know what their goals and wants and desires and cash flows and risk tolerance and level of sophistication is, I can't tell them how to invest, but I can help them think better about investing, to have better investing behavior. And, and actually the book, you know, I've had a, a number of early readers say, you know, this isn't really a book about in so much about investing. It's, it's really about how to think better. And, and anyway, I'm I'm very proud of it. I think it's good. I've had people that have read it that have nothing to do with the investment industry, including my 23-year-old daughter who's getting her master's in English. So I asked her to, to read it and she was like, oh my gosh, I thought I was gonna read this. You know, just 'cause you're my dad and it'd be boring and on investments. She's like, I actually loved it. I learned a lot. She read it and then in a day and a half. So yeah, so I, I I would, I really didn't write it because I, it's, it's not so much that I'm like, oh, I wanted to be a best seller or, or anything. I think anybody that reads it will have more money 20 years from now. I wanted to help people. I think the financial industry is fraught with conflicts of, of interest and complexity, needless complexity and obscuring what's important. And, and my, my goal professionally is to spread truth and transparency, not just in investing, but in other areas.

John Jennings [01:45:05] And this is one of those books I've had, again, early readers that have read this, that have read it, that said, this book is just the truth.

Vance Crowe [01:45:13] I mean, I believe it. Like I've known you now for several years and I, I think you, you're very genuine man. Yeah, thanks. And I think that's a, it's a rare thing. We've, I've talked to a lot of money managers and like they're okay. Yeah.

John Jennings [01:45:25] But

Vance Crowe [01:45:25] Like I think you, you really are, and I think it shows through in your, your I fod you have a blog Yeah. That people Interesting fact of the day. Yeah. And that's where you got

John Jennings [01:45:34] The i fod.com, you know, and so recently we have a pretty new client and she has over a hundred million dollars and our investment recommendation is two funds for a hundred million dollars. So, you know, I think that that takes a lot of confidence because typically you'd be like, okay, I'm gonna create all these, you know, all these different funds and this really complex strategy. But I mean, what she's gonna have is this just

Vance Crowe [01:46:04] Really

John Jennings [01:46:05] Low cost, incredibly tax efficient portfolio. And it's gonna be really easy to have good behavior. And, you know, I've kind of run this test before with real clients and then, you know, over the years of, you know, having just two or three funds will, will often trounce other more complex portfolios with fancy this and razzle dazzle that. And your two funds are index funds. So, you know, it takes a, it takes a lot of confidence to say, you know, the right thing for you. And it's not right for everybody to have two funds, but the right thing for you. And you're gonna pay us to be your investment advisor plus family office. Which is why we can do this, is we're, we're gonna put you in two funds for a hundred million dollars.

Vance Crowe [01:46:51] John, I could keep going all day. I could, but I, I, but I think we probably better wrap it up. Yeah. And thank you so much for coming on the podcast. Thanks

John Jennings [01:46:56] For having me. I, you know, anytime I love talking with you.