So, let’s first get past the denial. I am still hearing people tell me there won’t be inflation when we have just printed 2 trillion in cash to distribute and by the end of this, it will most likely be closer to 5 trillion. The amount of money in our current money supply was 2.5 trillion. If we double or even quadruple our money supply, there will be inflation. Since we are doing that,
there is going to be inflation. Now, I don’t think our government will allow hyperinflation, so it will be gradual, but very real.
First, let me explain what inflation is. The definition of inflation is a general increase in prices and fall in the purchasing power of money. Remember your grandfather telling you how bread used to cost a nickel and it is now $2. That’s inflation. Now as inflation goes up, so do wages. You no longer will have a $10 minimum wage. Maybe it’ll be $20. Your salary will most likely go up as well.
Here is the problem with inflation. For one, goods will be more expensive from overseas because the dollar is worthless. A perfect relevant example is Mexico. When vacationing in Mexico food and purchases are inexpensive because one US dollar is worth almost 25 Pesos, well that is because the US dollar is strong compared to the Peso. So, getting goods in other countries with a stronger currency could be very expensive if our currency is worthless.
The second issue with inflation is your savings will change to the new dollar amount. So the 100k sitting in your bank account won’t have the same buying power as it did at the beginning of 2020. In fact, it may be worth half.
So let’s start with, ”Savers are losers.” Robert Kiyosaki always says that and he is right. I know that stirs emotions in some of you who have a large savings account but please look past that emotion and look at the facts. We are more than doubling our money supply. That is the fact.
Yet, you shouldn’t freak out about inflation because like anything if you understand the rules of the game you can still win.
If money is losing its value then the debt is losing its value as well. Really wrap your head around that one. You know houses that were bought 60 years ago for 40k and now selling for 800k, that was inflation. So, if you have good debt that is at a FIXED RATE then inflation is good for you. Using the same principles we did before it makes your 500k loan 250k to pay off.
So to recap, if you are a saver you need to bring on debt. Refinancing your house so you have cash for when the market corrects would be a great first step. Don’t worry about the 3% interest rate you are paying. The additional debt inflation will be much more than that.
I really want to help you guys navigate through the next 12-24 months. This could be the opportunity you have been waiting to either get started in real estate or to blow up your portfolio. I can’t privately coach, as I get requests for that everyday but for $19.99 a month you have access to my private Facebook forum where I personally answer your questions and do a live every Monday specifically addressed to what the members want to know. If interested please click here.
Talk to you tomorrow,