Jason Hartman looks at the upcoming financial crisis. He outlines six business plans governments use to ease inflationary pressures. He explains why most of them would result in negative outcomes while two could potentially achieve debt repayment through inflation. He goes into a deeper dive, explaining inflation, how governments report it and provide educational resources for those wanting to learn more.
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the company LEED solution for real estate investors.
Jason Hartman 1:04
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Jason Hartman 1:40
Welcome to the creating wealth show. This is your host Jason Hartman with episode number 887 887. Thank you so much for joining me today. I just returned from Jamaica mon last night and had a quick trip to Jamaica got a little sunshine. saw a few people I know that will networking down there and came back. And I keep wondering why I go to these countries. That was my second trip to Jamaica. And, you know, I just don’t like these primitive places that much. I like modernity, the modern world that humankind has been working toward, for millennia. Why don’t we enjoy it? I don’t know. Anyway, whatever. I’m back home. I just got back from brunch at Tony Shay’s new home today. And Tony Shea, you know, the founder of Zappos, who sold to amazon.com several years ago and he is likely a billionaire, but if not, he’s very close to being a billionaire. And he moved to a much nicer place. He lived in a trailer park. Yes, I’m not kidding a trailer park. Then he moved to a another trailer park now it’s not what you think, Okay. This is a fairly swanky hipster version of a trailer park that he owns. He had an extra hotel. Yes, a spare hotel. He’s basically redeveloping downtown Las Vegas. And a lot of you have followed Tony Shea and the amazing stuff he is doing for downtown Las Vegas, and really some interesting projects and I had brunch at his place. There were a whole bunch of people there, maybe, I don’t know, good 60 people there today that’s that. I’ve been to his place for brunch several times. And that was the largest attendance I have seen. So he has this hotel. And then he put some trailers and some tiny houses. You may be familiar with a tiny house concept into some of the land around the hotel and is kind of redoing that place. And it’s pretty cool, I must say so that was neat. I talked to Tony for a while and heard what his vision was for that. And he’s doing some really cool stuff. But yeah, definitely a different kind of center millionaire Or possibly billionaire, then you would expect from the old days and that just goes to show you you know, Tony Shea and his, his lifestyle just goes to show you how much things are changing, and how much things are miniaturizing and how much things are becoming more portable in the world than they’ve ever been in human history, and how much well, to my old quote, geography is less meaningful than it’s ever been in human history. So, as Bob Dylan said, times, they are a change in times they are changing. Peter Diamandis, also, in his newsletter was out with some new stuff about longevity, and three companies that are doing amazing things in the world of longevity. And, you know, this is going to change everything. There are so many game changers, so many inflection points in technology that have such wide ranging impacts on Real Estate Investing on the economy. And I tell you, you better be paying attention to this stuff, folks. Because the rules are changing. The game is changing in so many ways, from longevity technologies that we profile on the longevity and biohacking show to robotics that we profile a lot on this show. dentists in China have successfully used a robot to perform dental implant surgery without any human intervention. First time ever, it’s just incredible. We have all these amazing things going on.
Jason Hartman 5:41
And, uhm this is negative, but also positive because every problem is an opportunity. Like the Chinese symbol for crisis that is the same as the symbol for opportunity, literally translated means crisis is an opportunity, writing the dangerous wind. So one of those As the pension, tsunami, we’ve got that going on. We’ve got this crazy radicalized Islamic world that wants to bring us back to the seventh century AB yet we’ve got some hopeful signs on the other side of that Saudi Arabia, there is some real movement to see some modernization he has letting women drive. Oh, so modern and so cutting edge. Yes. Can you believe it? Imagine that. And then you’ve got the Fed, you’ve got Janet Yellen talks about how recently is is showing some signs about how the Fed is changing things in the in, in signaling that the economy is improving, and they are shrinking their portfolio of bonds. Now remember, during the Great Recession, the Fed was a huge buyer of bonds, and they were just buying up all these bonds to shore up the financial markets and we talked About that many times on past shows, so amazing stuff going on in the world. Again, we will talk about all of this stuff more deeply on future episodes. But I want to take you to a clip of me talking live about some of this stuff, and how you’ve heard me say this before, but talking about the impacts of what the government will probably do. And really governments I shouldn’t say that plural, not just the US government, but governments around the world will do in reaction to various inflationary and deflationary pressures. We’ve got them both playing out at the same time, in a much different dynamic than we’ve ever had before at any time, really, in human history, at least in any major shift toward these things. And we’ve got all of this stuff going on with the cryptocurrencies, Bitcoin, the other cryptocurrencies and I’m telling you folks do not bet against the Fed do not bet on anything that would be against the Fed, especially these cryptocurrencies, I think you are playing a dangerous game. And as I said many more many times before, I would love nothing more than to be wrong about my advice on cryptocurrencies like Bitcoin, but I don’t think I’m wrong. So just heed my warning. I met someone in Jamaica. She has an app, a startup, kind of a social app, and very, very smart person who has basically her entire net worth in Bitcoin and I said, Boy, you better sell some of that Bitcoin off and get out of that. And you know, it’s very appealing, especially if you’re a techie and a tech minded person to think that this is the answer and we’re going to decentralize the monetary system, but you look at the reaction of China to that Just recently, never bet against the most powerful forces in human history. And that’s why this live clip is important because I’ve identified most people have identified, you know, one, two, maybe three ways governments will deal with this massive debt load and the inflationary pressures that will cause but I’ve identified not one, not two, not three, most people stop at three.
Jason Hartman 9:25
But I’ve identified six Yes, six ways that governments around the world but especially the US government, because the US government is in a very unique and very special, in very enviable position to deal with inflationary pressures as they come about. So yeah, the times they are changing it not every way though. That’s the dangerous thing. It’s easy to think that this is happening every way that the rules are just changing in every way and they’re not Some things will stay the same. Maybe it’s like, you know, there are some sort of basic things, the fundamentals, that will always be the underpinnings of the economy of the real estate market. But then some other things that are really changing. So it’s, yeah, it’s kind of an amazing time to be alive. But it’s a complicated time for sure. It’s a time when there’s more options, and more information than ever before in human history. And so that’s all the stuff we continue to talk about on upcoming episodes of the show. And so we’ll dive into that more deeply, but I don’t want to take too much time in the intro portion here. I want to get to this live clip. Again, whenever there’s a live clip, you got to bear with us a little bit on sound quality, the sound quality isn’t too bad. And maybe in the future I’ll tell you how basic that this recording this recording was done in such a Sort of a basic format with basic basic equipment that you probably use every day. But uh, you know what, I’ll keep that for later. And I’ll, I’ll tell you later how I did that. So we’ll get to that. But first couple of housekeeping items number one, tickets are still selling quick to our meet the masters of income property event coming up in La Jolla, California in January. This is our next live event we will not have another live event until our annual meet the masters of income property event. JOHN burns, john Byrne’s real estate consulting and confirmed speaker and many more great confirm many more speakers to be announced for that event. And it’s a three day event this year, not a two day event. So that’ll be Friday, Saturday and Sunday in January. Go to Jason Hartman calm click on events for details and registration. Get your tickets for that before prices go up again. Also, property tracker Real Estate tools at the front page of Jason Hartman calm you can find out more great information on the revised newly updated version of property tracker and a great tool for your real estate investment. We are going to close the contest and announce the winner. I think we’ll do that probably on Wednesday. So enter right away. I get your finals entries in for the Amazon Echo at Jason hartman.com slash contest. And then lastly, many of you have filled out the application to be on the short term rental Council. If you own and have experience with short term rental properties, go to Jason hartman.com slash STR and kind of Raise your hand. Let us know a little bit about your experience with short term rentals and you can take advantage of some good VIP perks for helping us in our research and Our survey about the short term rental market and we appreciate so many of you who have come forth and filled out the application there. So please do that. Again. This is free. This is a perk for you. It’s not anything we’re asking you to buy or, or do anything except just be involved and share your experience. That’s it. So Jason hartman.com slash str for that. Okay, let’s get to this live clip. And here we go.
‘Jason Hartman – Live clip’ 13:31
Okay, so as we have talked about, it is an amazing time to be alive. And during the break. You know what we just did? Stefan Adam and I just recorded the podcast intro for tomorrow’s episode, uploaded to Dropbox or editor can grab it and publish it tomorrow. isn’t that easy? You know, difficult that used to be used to be much more difficult. In the old days. I had to walk to school. And it was uphill both ways. In the southern California snow. Yeah. That’s what they always say, right? It’s like, older people always say younger people are always so spoiled. We’re saying that now about the millennial generation. This time, I actually think it’s true. They are some spoiled. So inflation. There’s a lot of inflation fear with Mr. Trump in office inflation, fear or inflation opportunity. I don’t know which it might be opportunity, certainly for real estate investors. And basically, we as a country are in a mess. Okay. We are in a mess. We have spent way too much money. Ronald Reagan used to say, to say that the government spends money like a drunken sailor is an insult to drunken sailors. And that’s a great quote. I love that one. Reagan had a lot of great quotes. So the question is, what do we do now? Right? What can we do as a country as a nation To get out of the mess we’re in, what do we do? Well, there are six ways out of the mess that I’ve identified. You’re welcome to add a seventh or disagree with one of my six, I don’t know. But these are the six that I’ve identified. They basically go like this. Number one, we have all this debt, we could just default and say to the, to Japan and China, and all of the countries that we owe money to, and all of the people and companies that we have obligations to in terms of repayment of debt, and then also entitlement obligations, which are much, much bigger than the debt. Okay, that’s the what Laurence Kotlikoff, the economist, was on my show a couple times, he talked about the 220 trillion dollar time bomb, okay, of entitlement obligations that simply cannot be paid. Now, to put this in perspective, just know that the country’s gross domestic product annually is somewhere around about $18 trillion. And if we have to pay 220 trillion dollars over the next 1520 years, obviously this math doesn’t work, right? The tax revenue is dramatically lower than all of this. So the idea of taxing our way out of it is very, very unlikely. Okay? Even if you taxed everybody at 150%
‘Jason Hartman – Live clip’ 16:28
there wouldn’t be enough money. This is just math, okay. It’s just math. That’s all it is. There simply isn’t enough money. So the first two options default on our obligations, that would be very politically unpopular. It would probably create multiple wars, okay. And it would not be good. The other option is tax our way out of it. That’s impossible. The third option, have a yard sale. We could sell stuff off, right, we could sell off assets that the guy rehabs. Many of our roads now are owned by businesses or governments in foreign countries, literally. Okay. remember a few years ago, they wanted to sell the ports to Dubai. Right? That was a big thing in the news didn’t happen. But you know, it was it was talking about, remember several years ago when he was alive. It’s just funny how we go back and forth with these little tin pot dictators around the world. We’re really stupid and ridiculous. You know, Ron Paul, he’s the man, you know, too bad. He’s not gonna be president. Maybe his son will be he’s not quite as good. But you know, his dad really got it, like George Washington said when he was leaving office. You know, do you remember when Washington said this? I don’t remember. But I heard that he said it. He said avoid foreign entanglements. You know, try to stay out of everybody’s business as much as possible in a, in a connected world. It is impossible to do that. But as philosophy as much as possible, let’s just stay out of all these dumb wars and all that, you know, it’s just not worth it right. Now the old saying you got to pick your battles. So have a yard sale, sell something off. We were selling military equipment to our arch enemy for so many years when he was alive. We just had started this selling military hardware to qaddafi archenemy, and he’s blamed for the Lockerbie, Scotland bombing of that 747 where everybody died, you know? So this is crazy how how the world works, right? So we could have a yard sale, we could sell assets. The other thing we could do is we could steal, we could just pillage right? We could rob other countries of their assets. And so you heard a lot about this during the second while the first and the second Gulf War, you know, we’re in Iraq to just steal their oil, right? Well, if everybody’s gonna blame us for it, I wish we would have actually done it. We might as well If they’re going to blame us for it, that’s what we could do. I mean, if you look at the history of the world, and all these different military conflicts, what you realize at some level is all of these great military leaders like Napoleon. He’s a great example. Okay. Napoleon was really just a burglar with an army. Right? You know, he’s to invade countries to steal their wealth. That’s what he did, right? And so, you know, militaries are used to steal. That’s one thing they do, right? But there’s a softer version of it. And I interviewed him on the show, john Perkins. He wrote a great book called confessions of an Economic Hitman. And he talked about how he worked for this consulting firm that was hired by the US government to go in and negotiate with foreign leaders about you know, making deals with them. Saudi Arabia when it was just a desert wasteland, we basically made that country incredibly rich by the Economic Hitman deal we made okay. And this is very complicated and nuanced. And there’s lots of opinions back and forth. My mom listened to his audio book and said, Oh, he’s such a hypocrite, you know, he’s just a guy who went in and profited from all this. And then years later is saying it’s so bad, but he kept the money, you know, whatever you think, you know, I’m not sure. But it’s interesting to say the least. Right? Okay. So a positive way. Those are four negative things that we just talked about. But a positive way that we could get ourselves out of the mess is through technological innovation, energy, biotech, nanotechnology, you know, all these great technologies like 3d printing, etc. Maybe there will be some America centric, big innovation or many big American centric innovations that will create tons of wealth for the country, and in so doing, create a lot of tax revenue for the government. And if that happens, possibly, I guess we could just Essentially grow our way out of our mess. But it’s super unlikely because the numbers are so big and ominous with when you’re looking at 220 trillion plus, plus plus, right? It’s pretty hard to imagine that but I don’t know could happen, and it would be great if it does. Who knows? I believe the most likely way, we will work ourselves out of the masses, we will inflate our way out of the mess. Using inflation as a tool to avoid repaying debts, and avoid paying obligations is really a fantastic business plan for governments and central banks around the world. And certainly many, many governments throughout history have done this and many are doing it today. One huge difference, though, is that the United States has the reserve currency of the world and it also has the largest economy in the world and it also Has and don’t underestimate this, no one really talks about this that I know but me, it also has the biggest brand in the world. Okay, a brand that stands for freedom and opportunity. And we can certainly argue that that brand has been tarnished and diminished. And I would agree right now, especially with the government spying on us and so forth, right. But still, in comparison, America’s pretty good place. And a lot of people around the world still want to come here. They may talk on one side of their mouth and say they hate America and Americans throwing its weight around around the world. And on the other side, they’ll say, but I’d love to come there. Right? The same time. So America has a big asset in its brand name. And that’s very powerful. I don’t think that should be underestimated. Okay. But it certainly has the largest military, the reserve currency and the largest economy. And one way or another. America can get away with a lot of stuff with all those assets. Okay. It also has obviously very good geography, the American geography has really allowed it to be very safe. It’s got a very secure geography with oceans between it right, you know, poor poor King Kim Jong Hoon in North Korea, you know, he’s really struggling to get a missile to come all the way here, right? To those evil American oppressors. But you’ll probably one day, you know, pull it off, right? Hopefully you won’t. And, and so the geography is a big American asset to you know, if you if you’re in Europe, you know, you’re just susceptible to all kinds of problems because of your geography. And we’ve seen that throughout history. So with all these assets America has, it can get away with a lot of stuff. And it can spend like crazy and it can go into debt like crazy, and it can just create more fake money to repay the debt in dollars that become cheaper and cheaper and cheaper over time. And that is basically the definition of inflation. Okay, so inflation is our friend as a real estate investor, it is the homerun for real estate investors. And there’s really only one opposing force to this inflation. This is gonna happen, except for one wild card, which is a significant wildcard. And that’s technology like we were talking about when we started this morning. Okay? So technology is deflationary. Everything else is inflationary. Okay, so these two will be opposing forces, and we’ll see which one wins out. None of us really know. Okay. So getting excited about the government’s mismanagement of our money is is a pretty big thing to be excited about. Okay. It’s It’s pretty good. And we got a question here.
‘Jason Hartman – Live clip’ 24:52
First Name and city
around in New Orleans, that a new
guy Go ahead.
‘Jason Hartman – Live clip’ 25:12
Oh, that would be bad. Paper money is a real asset. It’s actually a big part of our freedom as people. And we’ve seen attacks on higher value currencies like what happened in India fairly recently, where they de monetize the largest bill they have. And in Sweden is almost a cashless country now, it’s pretty much everybody just uses credit cards or wireless payment systems like Apple Pay. So, believe me, you do not want cash to go away because cash is a very private thing. You can spend it without people knowing how you spend it. If it’s all electronic, the government can track every move and that is very bad. You know, I mean, part of our privacy is how we spend our money. Right? Okay, so yeah, I think technology of electronic currency unless they’re not controlled by the big powers that be like Bitcoin or these other cryptocurrencies, those would be great. But I wouldn’t bet on you know, I wouldn’t hold out a lot hope for Bitcoin because the likelihood is that, you know, the fight between huge governments and central banks all around the world, not just the US and the standing armies they control and an idea like Bitcoin, I think Bitcoin is likely to lose, okay. Really good.
‘Jason Hartman – Live clip’ 26:48
They all find every possible way to crack down and squash it, you know, yeah. And we got to not do a lot of questions because of time. Okay, but what’s your question?
point to that is to look at the last couple of years. Yeah.
‘Jason Hartman – Live clip’ 27:19
Yeah, the US government can basically force other countries to buy our treasuries. And, you know, we knew that to some extent, if you read the Economic Hitman book, you’ll, you’ll see how this works. It’s a really interesting, you know, peek behind the scenes of this world that most of us don’t even know exist. I didn’t know it existed until I found a comic book, okay. Okay. So, understand that in to understand inflation, we need to distinguish between real and nominal and price and value. Okay, real and nominal and price and value. So I have in my wallet, exactly. $1 that’s all I have. Okay, in cash because I mostly don’t use cash, right? So I got this dollar. And this dollar has been around for a long time, not this particular one. But the thing called the dollar has been around for a long time. So, for example, the Federal Reserve was created just over 100 years ago and one of our venture Alliance trips was to the place of its creation, Jekyll Island, Georgia, where they created the Federal Reserve just over 100 years ago. And when the Federal Reserve came out, it’s the United States. I believe it’s the US is third central bank, they had two other failed attempts and Federal Reserve has stuck around for a while. But when the Federal Reserve was created, does anyone have any idea what this was called? reserve Reserve Note? Yeah. I agree. It was you could exchange it for silver right? But I’m not getting that technical. I’m just getting really simple. Yeah, greenback. Yeah. Okay. I owe you wasn’t an I was an IOU for silver, I guess, right. I don’t know if it was called that. But I’m just being really simple here. It was called the dollar. Okay, it was still called $1. That’s the point I’m making, right? It’s called $1. It was called $1, over 100 years ago, and it’s called $1. Today, yet the value of this dollar is only about four pennies versus what it was back then. So you’d have to just rip a little tiny piece off. To illustrate the real value of it. The value has changed significantly, even though the name is the same. Nominal means in name only. Okay, that’s what that word means in name only. So the dollar is called the dollar in name only. All right. So we need to distinguish the difference between the name of something and the actual value of the value is a fluctuating thing, even if the name stays the same. Inflation is the insidious hidden tax That is a pickpocket. It literally takes money out of our wallet out of our savings account out of our stock brokerage account out of our bond account, okay? You know, it is a pickpocket, it’s a thief, it’s a liar and a thief. And why is it that way? because it keeps calling the thing, the same name, yet diminishing the value of it. Okay, so it’s, it’s something very few people really understand. It’s really hard to truly like wrap your head around it. And I would say that I still haven’t wrapped my head around it. And I’ve been studying this stuff for, like, I got really into it in about maybe 2003. Okay. I mean, it’s interesting that I took an econ class in college, and I didn’t get back into it then. But when I self studied and became interested for personal reasons, I didn’t get interested Keith quickly
‘Keith – Audience’ 31:00
because money is printed in central places that money actually goes to somebody first. If that’s the tax, right, because typically in my basement, thousand dollars, I get the most benefit from that. But let’s say I go buy a car, the guy that gets the money for the car gets his next. He gets the money to install the entire money supply recognizes that it’s out there. So the poorest people get punished the most.
‘Jason Hartman – Live clip’ 31:27
Yes, very good point.
It’s just it’s not like the prices just move up in lockstep apart. circulates out.
‘Jason Hartman – Live clip’ 31:37
Yeah, absolutely. That it gets spread around. It’s slow and insidious. And it hurts the poorest people the most. That’s the thing. And this is why, by the way, I can’t be a liberal because they say they want to help the poor, yet their policies hurt poor people, the Marxist and remember, I grew up poor, so I know what it’s like to be poor. Now I wasn’t destitute poor, I still ate, okay. Although not much, okay, but I eat a little bit. If being poor is no fun, right, but the inflation hits the poor the hardest, because when gas prices go up, for example, a fairly large part of their income goes to gas, especially because a lot of the poor people have to commute the longest to have a job. I’ll just give you a great example in Southern California, Riverside, they if you don’t have as much money you live in Riverside, but you likely work in LA or Orange County. So you’ve got this long commute when gas prices bump up a buck. That’s like hugely significant to them. Okay, richer people. Well, first of all, the dollar increase in gas prices doesn’t matter that much. But second, they don’t have a long commute because they can afford to buy more expensive home near near their work, right. So anyway, yeah, it’s it’s really a bad deal. Okay, so it’s this insidious, hidden tax inflation destroys the value of saving stocks, bonds, and actually equity and real estate. equity in real estate is denominated in dollars. Anything denominated in dollars loses value, proportionally so even equity in real estate, but thankfully it also destroys the value of debt. That’s why it’s a home run for us, because we love debt. Debt is our favorite four letter word. Okay, raise your right hand and say I love that. Yeah, I know it’s counterintuitive, right? It’s totally counterintuitive, but it really does make sense as long as the debt follows rules. It’s not consumer debt, its debt against assets that produce income or produce wealth in some way at least. Okay. And it’s long term, low interest rate, fixed rate, debt, investment grade debt. That’s the kind of debt we love. Okay. Inflation is the most powerful method of wealth redistribution. Most people Who will think taxes redistribute wealth? I had joe the plumber on my podcast before Remember him? Yeah, he was on the creating wealth show a few years back. And he became famous for walking up to candidate Obama and really surprising him and saying, hey, you’re gonna redistribute my wealth. And you know, Obama is accused of being a socialist and communist and all this stuff, right? So most people think that the powerful method of wealth redistribution is through taxation. That’s an amateur method. The powerful method is inflation. Because inflation redistributes wealth, from lenders to borrowers, from lenders to borrowers, and by the way, this is you can fill this in in your workbook, okay? If you want to, and from old to young. So why does it distribute wealth from lenders to borrowers? Well, if you loan money, and when you loan the money, you loan it in today’s dollar that has a certain value. We know what a million dollars today means. We know what that means, right? But in the future, we don’t know what a million dollars means that’s up for grabs. So as you go through time, and you’re, say 10 years in the future, okay? And now it’s 2027. I mean, what do you want to bet that that million dollars is going to be worth less than it is today. And you are really not even you but your tenants pay it back in cheaper dollars. on your behalf. Your tenant is like your representative that pays your loan back for you. Okay. So that’s a pretty great deal for a borrower. Why would it distribute wealth from old to young, more specifically, you kind of got it. But old people have assets usually, hopefully, and young people have debts.
‘Jason Hartman – Live clip’ 35:48
And so that’s how it’s just distributed through the generation. You know, it’s redistributed from old to young, and it’s totally unfair. Old people that did the right thing, delayed gratification, save money invested. They did all The Right Stuff, they got totally screwed by the system. And here’s the thing that’s hard for a lot of people to come to grips with. Look, we all have parents and grandparents that we heard say things to us about money throughout life. And a lot of our beliefs were formed by this. And one of those beliefs at least I heard all the time was don’t have debt. That is bad, right? And my mother, and my grandmother who told me that and my grandfather that told me that kind of stuff. Basically, they played that game. That was the right game. That all change the rules of that game changed in 1971. When we went off the gold standard. Why did it change in 1971? Because when the when Nixon closed the gold window, and the government was allowed to spend without being tied to any intrinsically valuable thing like gold, and I’m not a gold bug at all, but you know, it is a measuring stick when the government was allowed to just spend like drunken sailors insulted drunken sailors. Okay, then inflation we saw in the 70s. It went crazy, right? And inflation really has been going crazy. Even since then, most of the time, the government just figured out ways to manipulate the numbers really well to hide it from us. And technology, which is a positive thing also hid it from us. Okay. All right. The example is that million dollar mortgage, if over whatever amount of time you want to pick one year, six months, 10 years doesn’t matter. If you have 10% inflation in that given period, that real value of that mortgage is $900,000. That’s what you’re really paying back in real dollars, not nominal dollars. In nominal dollars, you’re still paying a million, but in real dollars, 900,000. Okay, so that’s a very Swank deal. Okay. Here Oh, now here’s a good video. From CNBC. Now this video is several years old, but it is very, very telling. It’s got Peter Schiff arguing with a guy named Harvey Hirshhorn from Bank of America, Peter Schiff. Although I would never invest with him, actually, I did and I lost a bunch of money, so I would not recommend investing with him. And, you know, it’s like, they couldn’t care less how much money I lost there. They were so arrogant and terrible. They didn’t even return a phone call half the time. awful experience, but I invested with Peter Schiff many years ago because he sounded so good. You know, he Peter Schiff is a very intelligent person. He’s like, quick witted. He’s a master of a soundbite. He’s just got these zingers. And he’s in here and he’s right. Okay. You’ll love this video. It’s great because Peter Schiff is right. He just nails it. Harvey Hirshhorn this guy from Bank of America, just a total idiot. Okay. And the host. It’s interesting how the hosts it seems bc just, you know, rails on Peter Schiff like he’s, you know, they try to totally marginalize him and make him sound like an idiot, because they’re part of the big wall street central bank government’s scam. Okay, that’s really like that. And you know, you hear this stuff about like the people in the media, well, they’ll say things like this hope it’s not like we had a meeting to decide which candidate to support, like the media will defend themselves they know they’re constantly accused of being left wing right wing media, we’ve all heard this this is not a surprise. Right. And you know, journalists usually are left leaning people, right. So, you know, they’ll defend themselves sometimes and they’ll say, Well, you know, we never had any meeting saying we’re going to support Obama or Hillary or anything. I believe them. I don’t believe they had a meeting. It’s just the general site guys the thought, you know, it’s just their their world that they’re talking about that they believe that right? So this is their world. CNBC is like a mouthpiece for the vast Wall Street conspiracy. See, and you just hear all the time. It’s just a constant theme. It’s not like it’s not like they got together and had a collusion to you know, probably, I mean, maybe they did. It’s just like part of the way they think, okay, it’s just the way they think. And so this video really illustrates it. Now, the three basic ways that the government manipulates. The inflation statistics when they publish them in the consumer price index is through three basic things weighting, substitution and hypnotics. Okay, weighting just means, you know, in this basket of goods that makes up the consumer price index, the government will say, Well, you know, we’re going to give more weight to this item, this widget and less weight to that widget. And if that widget widget a goes way up in price, they’ll just wait it less as though people buy less of widget a Okay, and more of which would be which didn’t go up and so it makes the index look better like it Inflation is lower than it really is. Okay? And then substitution is kind of similar with substitution. They’ll say, Well, hey, the price of beef went up. So everybody will just buy chicken. And we’ll just put chicken in the index and take beef out. Okay? And you know, maybe you don’t like chicken, maybe you think chickens a dirty bird. And you don’t want to eat chicken, right? You want to be right. And anyway, so you know, that’s substitution, right? The third way is hedonic. And hedonic basically says, It’s from the word hedonism, right? And hedonism is pleasure seeking the amount of pleasure you get out of something, right? So if I take this laptop computer here, basically, every time Apple comes out with a new laptop that’s got enough of an upgrade, I buy it, okay. And I always buy the most powerful, best thing they sell. And every time I buy it, it pretty much cost the same amount of money. It’s 20 $800 for the best laptop they make in any given time. That’s about the price. It’s always the same price for years, it’s been the same price. Now 20 $800 the value that’s obviously a moving target, right? But the technology keeps getting so much better. And that’s why what incentivizes me to buy a new one. So hedonic will say that even though Jason bought his new computer and paid 20 $800, in actual dollars, the computer is twice as good as the last model. So we’re going to assume he only really paid 1400 dollars.
‘Jason Hartman – Live clip’ 42:31
That’s hedonic indexing. And that is addressed in this video quite dramatically. So you’re gonna like that. When Harvey hirschorn talks about he’s gonna say, well, the power of a processor has gotten faster. Well, yeah. So yeah, I mean, Peter Schiff just kills them. But understand that the concept of hedonic indexing is logical. It’s true, like what they’re saying is true. That happens. technology gets better products get better, right? But You know what they’re saying? When they hedonic Li index, they’re saying that we are not entitled to progress. That doesn’t belong to us. It belongs to the misstated index of inflation.
Jason Hartman 43:15
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