Cathie Wood: Feds NEED To Cut Interest Rates To Prevent An Economic Crisis

"we do believe uh that inflation will go much lower than people expect right now wouldn't be surprised to see it go negative"

"the reason why she says that is because she's looking at the M2 monetary Supply M2 is a fancy way of saying the amount of money in our economic system that's in circulation right now and she did a report on her podcast the ark podcast where she took a look at the M2 monetary Supply and compared it to inflation take a look the purple line is money supply growth uh over the last 10 years let me explain what that means in plain English we can all pretty much agree that when you increase the amount of dollars out there that makes the value of each individual dollar go down causing then the prices of things to go up so as you print more money that creates more inflation and when you take a look at this M2 versus CPI chart what you can see is that the rate at which M2 has been increasing the rate at which more dollars have been increasing has been going down in fact it even went negative when you compare that to CPI as CPI is going down this is where now Kathy Wood is saying deflation becomes a concern"

"if you keep decreasing the amount of dollars out there that makes spending more difficult it spending becomes more difficult that means the businesses would have to keep cutting their prices and if businesses have to keep cutting their prices that could lead into a deeper economic recession and this is where Kathy Woods says that we need to start stimulating by cutting interest rates"

"because remember Kathy Wood's funds invest in startups and if these startup valuations go up her fund benefits as well now think about this from the perspective of an Institutional Investor if you're an Institutional Investor and you can borrow money from the bank at 2 or 3% then you can lend it to a company and now this company the startup really needs to only return you five or 6% for you to get a great rate of return on your money but if now the bank says that you have to borrow money at 7 or8 8 or 9% now you need a 15 or 16 or 177% return from a startup in order to justify an investment to make that money that means number one you're going to be borrowing less dollars and number two you're going to be much pickier when you invest your money and you're going to require lower valuation so you get a higher rate of return on your money and this is where Kathy Wood is advocating for the lower interest rates to stimulate and spur more investment into these startups"