The MSB Blog: A Transfer of Wealth
Disclaimer: This blog is not meant to act as a substitute for professional advice. It is the opinions and point of view of the author and all readers are encouraged to seek professional advice before making any investments, implementing tax strategies or making any business decisions.
So we are living in very interesting times and I'm so grateful that I found my passion for snakes and started Ozzy Boids back in the day. Back then I had no knowledge of how money worked and knew very little about investing or wealth creation. Like most people I came out of the NY public school system deaf, dumb and blind to the reality of how our financial world actually works. I still have a lot to learn, but I'm studying hard everyday and constantly looking for ways to protect my family in what appears to a very unpredictable future. I'm relieved that I started educating myself in 2016 and started investing in Real Estate and the Stock Market as I watch Global Economics transform overnight!
A Transfer of Wealth from the Poor to the Wealthy
So today's blog is about wealth transfer from the poor to the rich... this is occurring and the highest rate in 40 years and the media, Fed and Politicians call it Inflation. We are experiencing some serious inflation right now and it doesn't seem that it will slow down anytime soon. Essentially what happens during inflation is a rise in prices for everything from rent, real estate, fuel, food, gold, etc. So if you own any of these assets (Usually the wealthy or financially wise) your net worth and sometimes your income increases with inflation which usually offsets the damage that can be caused by an inflationary environment. Now if you're just a W2 wage earner with no assets that will appreciate, you become poorer as your pay check stays the same while all of your monthly expenses increase... gas, insurance, food, rent, insurance, etc. This is why it's so important to acquire assets that appreciate over time and generate passive income as a hedge against inflation. Understand that the Feds mission is to drive inflation higher, but they claim in a controlled manner. Well they failed and its now out of control. Wether this was deliberate or not, I won't speculate.
Whose to Blame
Now of course the political machine will look to lay blame on the other side. The Dems will blame the rich and businesses for raising prices, the Republicans will blame the Dems for overspending. All of this is a distraction and regardless of who wins the next election it will continue and the dollar will continue to be devalued but at a much quicker rate if the socialist democrats manage to gain power. Lets look at the facts though... since the pandemic in 2020 the Federal reserve along with the political machine decided to print a ton of money and flood it into the system to help offset potential impact to the economy. This was done by governments all over the Globe. Since 2020 roughly 40% of all US currency in circulation was printed... that's right, 40% of all US Tender! This money was created out of thin air and everyone was so excited to get extra unemployment, stimulus checks, PPP Loans, etc. It was one big party and make no mistake it was BOTH Parties that went along willingly. People were getting more money on unemployment than they were getting for an honest days work. Business owners were being offered grants and PPP loans. I know people that didn't even apply until someone called them and offered them money. When money is pumped into the system like this there will definitely be some serious inflation as the supply of money exceeds the supply of goods. Prices naturally go higher as the value of the dollar is depleted. The working class is tricked into thinking these politicians are looking out for them and the happily accept the "free" money as a blessing when it really is a curse. This money enters the system and slowly finds its way into the hands of those who own assets and businesses because the average American was trained to be a consumer. This money is quickly spent by most, stimulating the economy and finding its way into the hands of those who know how money works. Now we are experiencing the after party hangover. Inflation reduces the average persons discretionary spending as people start to cut back on non-essentials. This reduced spending then hurts businesses which could lead to a recession and slowing economy. This worst case scenario of inflation and a recession... is called stagflation. So just imagine, first you get hit with inflation and then you get laid off or your business fails. Tax collections slow while programs like unemployment are overstrained. Poor people end up even more poor and the Government is forced to do what? You guessed it, print more money and create more stimulus to get us out the recession that they orchestrated in the first place. The cycle then repeats until the day no one wants to buy US Treasuries anymore... aka lend the US Government money. The bottom line is, there is no such thing as free money and many of the so called programs to help out really do more harm to most. National debt is growing more each year as the Government over spends recklessly. As things get tighter and the rich get richer, the anger will be directed at the rich. Everyone will be so desperate that wealth redistribution will start to sound good. Tax the rich and give that money to very same Government that created the mess in the first place. Socialism is great until you run out of other peoples money and eventually you will. Socialism is demotivating to the very people that are going out and putting everything on the line to start a business and grow the economy. Hopefully we never become a socialist country, because the very people that can turn things around will slowly take their wealth and hustle elsewhere. Don't rely on the Government to take care of you, they won't. Irregardless of what political party you favor, educate and protect yourself. Take advantage of inflation and dollar devaluation so you can survive the coming storm and not be a victim.
Making Lemonade from these Inflationary Lemons Every situation provides opportunity and especially bad situations like recessions and inflation. Not to sound callous or cold, but some of the best opportunities come during crashes and turmoil. It's imperative that you are ready when the time comes. If you are a snake breeder, you have a unique side hustle or full time business that has been growing exponentially for the past 25-30 years. Be sure to take advantage of this income generating vehicle to acquire assets like Real Estate, Stock, Gold, Crypto, etc. Stocks have been beaten down a lot and provide a great opportunity to buy the dip. If you buy cash flowing real estate as inflation rises, so will your net worth and passive income. If you are patient and diligent in your approach, you can grow your wealth steadily overtime while having a blast doing what you love. I will continue to share my knowledge on these topics, because I know a good number are listening. The stronger we are individually, the stronger we will be collectively.
Here are a couple audio book recommendations you can listen to while cleaning snakes! The first one is by Ray Dalio and discusses the rise and fall of Empires. It takes a good look at where we are as a leading Nation and how we may be impacted with the inevitable rise of China. The second book discusses the Federal Reserve Bank and how it was designed to protect the interests of the largest Banks at the American tax payers expense. Both scary topics, but I prefer to be informed and have a plan to navigate in these crazy times. The more I learn, the more motivated I am grow my wealth and I'm hoping this will be the same for you all.
I'm listening to Principles for Dealing with the Changing World… on Scribd. Check it out: https://www.scribd.com/audiobook/459268055
I’m listening to The Creature from Jekyll Island by G. Edward Griffin, narrated by Mark Bramhall on my Audible app. Try Audible and get it here: https://www.audible.com/pd?asin=B00DZUGWX6&source_code=ASSORAP0511160006&share_location=player_overflow