AI Driving Inflation & Fed Rate Hikes — Full Breakdown & Transcript

[00:00] Earlier this week, my head of investing research attended a meeting led by Fed Governor Barr, one of the governors at the Federal Reserve Bank, and there were three main takeaways that he got from that meeting that I want to share in this video. That way you can get some insight as to

[00:14] what might be coming in the economy because the Federal Reserve Bank is the central bank here and they set our economic policies that can change where the stock market is moving, how your dollar is changing, and what's coming with inflation. The three main takeaways that

[00:28] He said from this meeting, number one, higher interest rates are probably coming in 2026. Number two, lower inflation might not be coming as soon as a lot of people expect.

[00:40] And number three, the new driver of inflation is artificial intelligence. Because a lot of people have been saying that the inflation that we're seeing is due to the Iran war, which is true. but a new driver is now artificial intelligence

[00:55] which is weird because up until essentially now the Federal Reserve Bank has been saying that AI is a way to drive the prices of things lower and it will help destroy inflation.

[01:08] Now we're starting to hear the opposite where the Fed is saying that AI is actually contributing more to inflation. And the reason why this is so interesting is because this week also President Trump held a meeting

[01:20] with executives in AI all the big names Mark Zuckerberg Jensen Huang the CEO of Google and Microsoft and all of them and what he said is he wants these leaders in artificial intelligence

[01:33] to police each other that the government might not be creating a whole lot of regulations to decide what AI should do or shouldn't do that these companies should be quote morally responsible

[01:46] for policing themselves So let's break down what's going on. That way, you can be a smarter investor. Again, the Federal Reserve Bank is a central bank here in the United States, and there are 12 voting members in the Federal Reserve Bank, 12 governors.

[02:00] Now, when I say voting members, what I mean by that is when the Federal Reserve Bank makes a decision to print money or to cut interest rates or raise interest rates, it has to be a majority vote. And there are 12 voting members.

[02:14] Well, one of those voting members is Fed Governor Barr, And he said that the surge of investment and related demand from artificial intelligence is now having a measurable impact on prices.

[02:26] Essentially that AI, which was supposed to drive up efficiency, drive up productivity, and drive down prices, is actually doing the opposite. It is driving up the prices of things, and we've been, quote,

[02:40] knocked off a course on getting back inflation at 2%, which is the Federal Reserve Bank's target. Now, the reason why this is so important is because the Federal Reserve Bank has been working in 2026 to bring inflation down.

[02:57] We've seen inflation go a lot higher, partially due to higher oil prices, partially due to the money printing, but now also partially due to artificial intelligence. And there's been a lot of talk of when we're going to see inflation come down.

[03:10] And the reason why this inflation is a problem isn't just because the prices of things are going up, but because the prices of things are going up faster than people's incomes. So on average, the average person is getting poorer every single day.

[03:25] Because the average person's salary is not keeping up with inflation, the average person's savings account is not keeping up with inflation. That's why this is a problem. Well, the Federal Reserve Bank is now hinting at the idea that the current path that we are on with these slow interest rate hikes might not bring inflation down to the 2% target at a rate that is in the near-term future.

[03:53] Now, that's not that surprising because when the inflation happened post-pandemic, we had this high inflation 2020, 2021, and into 2022. First, we heard it was transitory inflation.

[04:05] Turns out it was not transitory. And then the Federal Reserve Bank raised interest rates aggressively, but we never got down to 2% inflation. Here we are in 2026. Inflation never hit 2%, which is the Federal Reserve Bank's target,

[04:19] and now it's going up again. And this is where the Federal Reserve Bank is concerned that if we don't take action, inflation is not going to come down. But even with the higher interest rates that are expected coming October, October 28, I believe, the Federal Reserve Bank is set to have the next meeting.

[04:37] They're expected to raise interest rates again. Well, the Fed is now saying that because of AI, we could be seeing continually higher inflation for longer. so that's what's going on with the Federal Reserve Bank

[04:51] the reason why that's interesting is because let compare that to what happening with the White House because the Federal Reserve Bank is actually not a federal entity It says so on its website that it not a part of the federal government

[05:03] So the Federal Reserve Bank acts separately from what happens in our White House. And in the White House, President Trump this week held a meeting with some of the biggest names in AI.

[05:15] People like the CEO of NVIDIA. People like Mark Zuckerberg. People like the CEO of Google. people like the CEO of Microsoft and Jeff Bezos. And what he said, President Trump said, is, quote,

[05:28] there is a belief that there should be tremendous self-regulation, meaning that the AI companies should regulate themselves, the government should not do it. So the companies building the most powerful technology on Earth are going to police themselves.

[05:42] And how is that going to happen? Through a, quote, morally binding accord, that these companies are going to be signing this document to say that we are morally bound to protect our users with our artificial intelligence.

[05:56] It's not legally binding, but it is morally binding. The idea being that we are going to self-police ourselves. Well, some people think that's a great idea because it allows AI companies to continue to grow. Some people think that is a bad idea because it has concerns that, well,

[06:10] these AI companies could now do things just in the interest of profit, which hurt users. Now, why would President Trump say that? The big reason why he would say that has to do with China.

[06:22] Why China? Well, if you listen to what President Trump says about China and what the Treasury Secretary says about China, particularly when it comes to AI, what they say is that the world superpower is going to be the world leader in AI.

[06:39] Right now, the United States is the world economic superpower. and now we have this new technology, this new industrial revolution happening, which is artificial intelligence.

[06:51] And one country in the world is going to be the new leader in this new technology. We were the leaders in the age of the internet. We have the Amazons, we have the Metas, we have the Apples and all the other big companies.

[07:04] Well, AI is going to create a whole new wave of revolutionary companies. And the country that controls the artificial intelligence is going to be the country that is the next world superpower.

[07:18] So the United States is competing against China to be the world superpower through artificial intelligence. And Treasury Secretary Scott Pesent says essentially that if we lose the AI race to China,

[07:31] not even our military can protect us. That's what we're hearing from the White House. So naturally, the White House does not want to slow down investment into AI. They don't want to constrain what these AI companies do, because if we do that, well, then these AI companies might not be able to grow as fast.

[07:49] They might not be able to innovate as fast, and that could slow down our growth relative to China. The reason why that's very interesting is because over the last few weeks, we've heard the CEOs of Quad, the CEO of ChatGPT, OpenAI, and Elon Musk all come together and say the same thing.

[08:09] that there is a risk that AI is getting too smart too fast and it could create bad actors. The idea being that our AI can create other AI agents

[08:21] and these other AI agents could be creating harm. They could do bad things if they're unregulated. That's the concern. President Trump immediately spoke against that thing.

[08:33] Essentially, it's a hoax. The only people that want the United States to slow down AI is China. so the Federal Reserve Bank is saying artificial intelligence

[08:46] is driving up the prices of things and because of this artificial intelligence because of the money printing because of the oil prices we the Federal Reserve Bank will likely have to continue raising interest rates

[08:58] to slow down the economy to slow down inflation President Trump is saying we cannot lose this war on AI and in order to not lose the war on AI,

[09:10] we must ramp up our investment in AI. We cannot slow it down and we have to do whatever it takes to be the winner in AI. And then we have the CEOs of some of the biggest AI and tech companies saying we are concerned

[09:22] that AI is getting too smart too fast and if we don't regulate it properly, it could cause more damage in our economy. And this is where President Trump is saying, well, maybe we should even change the name of AI to FI, Super Intelligence.

[09:37] And one more thing I should add. President Trump says he wants to name an AI czar to be in charge of the next AI movement here in the United States. We see what that ultimately means but the idea being that there will be somebody to help oversee what happening in the AI race Now why does all this matter for you Why does it matter what the Federal Reserve Bank is saying Why does it matter what the White House is saying

[10:02] Why does it matter what the AI companies are saying? Because all of this ultimately comes down to two things, interest rates and money printing. The Federal Reserve Bank is the central bank of the United States.

[10:14] They set economic policy. Now, economic policy is a weird and vague term. It really doesn't mean anything. but what it actually means is they get to change interest rates and they get to influence money printing.

[10:28] These interest rates and money printing have a direct impact on you. Why? Because higher interest rates have a downward pressure on asset prices. It doesn't mean that stock prices go down. It means it has downward pressure on asset prices.

[10:42] Here's what I mean. You want to buy a $500,000 house? Well, are you more likely to buy it if it's a 3% mortgage or 8% mortgage. Higher interest rates put downward pressure on things. When it's a 3% mortgage,

[10:55] people are much more likely to overbid and drive up the prices of houses. When it's an 8% mortgage, people are less likely to overbid. You're more likely to see price cutting. Not guaranteed,

[11:08] but you're starting to see what I'm saying. Higher interest rates have downward pressure on asset prices. These higher interest rates also have a higher cost for our government because that makes the $40 trillion of national debt more expensive

[11:21] because now the government has to pay a higher interest rate on our national debt. Those higher interest rates also slow down the economy because when people want to go out and buy a house or buy a car or put money on their credit card or get a loan for a business,

[11:34] it is more expensive, so people borrow less money. If people borrow less money, that means they spend less money. If people buy less houses and buy less cars, that means less realtors make money, less car salespeople make money,

[11:48] Less bankers make money. Less title insurance companies make money. Less insurance companies make money. So you're starting to see that people spend less money. That hurts the economy. But higher interest rates do benefit people that are holding cash.

[12:04] For the people that are sitting on treasuries, higher interest rates mean you earn more interest. For people that have money in a high-end savings account, higher interest rates mean you earn more interest. So there's always winners and there's losers.

[12:16] People ask, is higher interest rate good or bad? The answer is, it depends. There's always a way to win. You just have to understand how to win. And this is where I want to go back to the basics and make sure you understand now how do you win.

[12:31] And there's two parts to this. The way you build wealth, and I can't recommend anything because I'm just a random guy on YouTube, but this is how it works. The way you build wealth in this economy is not by getting a job.

[12:43] I don't care if you're a doctor. I don't care if you're a CEO of a company. I don't care if you're a celebrity. I don't care if you're an engineer, a teacher. It doesn't matter. The way you become wealthy is not by working a job. It is by owning investments.

[12:56] Okay, well, how do you build wealth by owning investments? I call it ADB. Always be buying. Buy when markets are up, down, sideways. Buy when it's raining. Buy when it's sunny. Buy when there's a Democrat in the White House. Buy when there's a Republican in the White House.

[13:09] Set up a system every week, every two weeks, every month, where you are just buying. Anything you buy in the broad market, something like the S&P 500, That is a great place to start, but that is just the start. For a lot of people, this is good, but it might not be enough.

[13:24] Why? Because the cost of living is going up, so just getting the market returns might not be enough. But it's a start. So A, B, B, always be buying. It is the foundation.

[13:36] That's how you build wealth. Now, the next step is how you accelerate wealth. Two ways. Way number one, using market crashes. When markets go down, come in and buy more aggressively.

[13:49] When markets go down, most people run away and they panic sell. That's when you want to become radiant and find. When markets fell by 20% a few years ago in 2022, it was a great buying opportunity.

[14:01] That meant you bought the stock market at a 20% discount and you grew your wealth that much faster. When the stock market fell in 2020, well, you were able to come in and buy it at a 35% discount.

[14:14] A great way for you to grow your wealth that much faster. Imagine if you could grow your wealth by 35% just by coming in and buying it when the fund failed. During the 2008 crash, the stock market fell by 50%.

[14:26] Fail. You could grow your wealth that much faster. During the 2000 dot-com bubble bursting, internet stocks fell by 78%. Imagine if you could grow your wealth that much faster. Now these opportunities don't come every day.

[14:39] They don't come every week, they don't come every month, they don't even come every year. But when they happen, they're a great wealth accelerating opportunity. So having money to take advantage of market crashes is a great way to accelerate your wealth but it not something you going to see every day I call it poop Panic leads to oversellings leads to opportunities leads to profit The other way you accelerate your wealth is what I call market shifts

[15:03] Studying where the money is moving, understanding how opportunities are shifting. If you can find where money and investment opportunities are shifting, that can create an opportunity. If you see that there's more money moving into a new industry before it hits all the

[15:16] headlines, that is a way for you to accelerate your wealth because you are investing where the money is moving instead of where it was. And the mistake that a lot of people make is they invest their money into stocks that are trending on CNBC or trending on Reddit or trending on ChatGPT or whatever.

[15:32] By the time it's on the news, a lot of the real money has been made and that's where you want to take one step ahead and invest in your research. That's what true financial education is all about. That's what my firm, Brief Finance, specializes in is that type of research.

[15:45] have a bunch of investing tools and education for investors that want to learn how to do that. But the idea is, if you want to accelerate your wealth, that's where now you can take advantage of the

[15:57] market downturn, or you can look for these types of market shifts. Investing your money is hard. And on this channel, I teach how you can start investing your money yourself. But for some of you, working with a financial advisor, somebody who is a professional will be a better option

[16:10] because now it's more hands-off, and you can work with a professional who will manage and investor money for you. And that's why I partnered with my sponsor Money Pickle. The reason why I like Money Pickle is because first they get to know you and what your needs are and then they

[16:24] match you with a vetted financial advisor who will be best suited for your needs and then they give you a free consultation call with the financial advisor. That way you can get a feel of the financial advisor and see if they're right for you or not. That way you don't have to go through a

[16:40] high pressure sales process with somebody who might not even be a good fit for you. If you're If you're interested in learning more and you have over $100,000 in assets, the process is pretty simple. All you have to do is complete a short form. I have that link for you down in the description.

[16:54] It takes a few minutes to complete and once you do that, Money Pickle will review your answers and then pair you with a vetted financial advisor who they believe is best suited for you. It's a completely free process. That initial consultation again is free and then if you decide to move forward, then you

[17:09] can negotiate and discuss what your rates and terms look like with that financial advisor directly. So, if you want help managing your money and you want to work with a vetted financial advisor, my sponsor Money Pickle can help get you paired up with a financial advisor at no

[17:24] additional cost. If you want to learn more, I have that link for you down in the description. So, what we talked about in this video is one of my analysts sat in a meeting with Fed Governor Barr, one of the 12 voting members at the Federal Reserve Bank, who said essentially the higher

[17:37] interest rates are probably coming in 2026. Lower inflation might not be coming anytime soon. and artificial intelligence was actually driving up inflation while everybody thought that it was supposed to drive down inflation.

[17:51] The reason why this is interesting is because it comes during a time where President Trump is also meeting with AI executives saying you need to speed up your investment in AI. He also said that instead of us, the government, regulating what you do,

[18:06] how about you morally police yourself? Obviously, some people are against that idea. Some people love the idea. Why is it so important? According to the White House, because President Trump and the White House want to be able to compete and beat China when it comes to AI

[18:23] so the United States can continue to be the world's leader in artificial intelligence, so they can continue to be the world's economic superpower and maintain strength in the United States dollar. Well, that all becomes very interesting now when you compare that to what the CEOs of some of the big AI companies are saying

[18:41] because the CEO of Quad, Chad GPT, and Elon Musk have all said in the last few weeks that AI might be getting too smart too fast, and if we don't slow it down, it could create more harm than good because they can go out and do rogue things

[18:54] and go out and harm individuals. So all of that is happening at the same time, but at the end of the day, as a financially savvy person, what you want to do is not panic, not freak out,

[19:06] and not just invest based off of the news, but rather go one layer deeper and understand how this creates opportunity, And we talked about the way you build wealth is by A, B, and C. Always be buying, owning more of the markets. But if you want to accelerate your wealth, that's where you want to take advantage of

[19:19] market downturns and take advantage of market shifts. If you got value out of this video, the best thing to do is a referral. So if you could please share this video with a friend, family member, colleague, and fellow investor. That way we can continue to spread this type of financial education.

[19:32] Thank you. Our economy is booming at the fastest rate that we have seen since 2021, right after the pandemic. At least that's according to S&P Global, who just put out a report talking about the United States' economic growth.

[19:46] And what they said is that the United States is seeing a boom and resurrection of corporate profits.