The Future of The US Economy... | Jason Hartman Interview

Hey, hey, welcome back to the show. Today we've got Jason Hartman coming on as a guest to the show today. Jason is an incredible real estate investor, also an amazing podcaster and business owner and entrepreneur. Been featured on the Inc. 5000, has owned properties in 17 different states, has done over 6,000 different podcasts and interview shows. He's the founder of the American Monetary Association and other various other podcasts I'm going to link below. This is one of my favorite interviews I've ever done on this show. I'm excited for you guys to see. So let's hop over to the interview right now. All right, welcome onto the show today, Jason Hartman. Excited to have you on. Welcome on. Good to see you today.

Hey, thanks. It's great to be here.

So, uh, as you've heard a little bit earlier with my bio, I kind of went through all the stuff that you've done. Impressive, man. I'm excited to come on and have you talk more in depth about what you see going on monetary policy-wise, what's happening with the US dollar. We have mass migration. So just a little bit of background too, me and Jason actually met in person. What was it? It was last week?

Just last week, yeah.

I was in Miami. So we were at this small conference. Jason got up and spoke, and I was able to hear him ramble on for an hour. It was one of the best talks I've ever heard. And I said, Jason, you've got to come on my show. You've got— my listeners have got to hear this. and hear your thoughts on, on what's going on, how the world looks. And so, Jason, the first thing I want to ask you is, yeah, from your chair, from wherever you're— where you're at, what does it look like right now in regards to the US dollar? We've been printing money like crazy. Um, we have a mass, mass movement. People are moving homes like crazy. Where— what are you seeing? What does kind of your crystal ball look like for the next year, 18 months?

Yeah, you know, that, that's a good question. There are a lot of crosscurrents happening right now, and, uh, some are very negative. I mean, extremely negative. I am extremely concerned about, you know, the censorship issue that is happening. It is maybe the biggest problem humanity faces because you project this out a few years and this could be just really disastrous. So I wanna say that first because that's my biggest concern. It's not the cerveza sickness, okay? We're handling that. And that's what I call it so the video won't be censored, okay? So, but the other thing I think we should be very concerned about is all of the currency that has been created. It is absolutely staggering. It's never been seen before. We've seen nothing like this. There's no historical precedent. We are in totally uncharted territory in terms of money creation, and that could be extremely inflationary for us. We've seen a lot more inflation than most people are reporting already, and we've seen massive asset price inflation. And asset price inflation is a special kind of inflation that people don't pay much attention to. They pay a lot of attention to consumer price inflation. So we should definitely touch on the asset price inflation issue and what that means to people in society.

By that you mean real estate and stocks and bonds, stuff like things like that, basic assets that we all can see the prices of them jumping?

Yeah, they, they have been inflating dramatically. And you know, Bridger, this, uh, this is so profound in terms of its effects on society because, uh, think about it, with the price of real estate, the price of stocks, the price of virtually everything, right? We're in like what some have called the everything bubble. Um, that, uh, makes it impossible, or at least very difficult, for an entire class of people to get into what I call the investor class. And if you don't get into the investor class, uh, as early as possible in your life, you're just, you're just gonna struggle. It's just the way it is, right? And, um, uh, during my talk last week when we met, I talked about something called the Cantillon effect. And this is an economist, Richard Cantillon, about 250 years ago, um, postulated this idea that is, is very much true. And, and we're seeing it happen now that, um, people who are close to the money, uh, as money is being created get the biggest advantage from it. And the people down the line, the people working, uh, manual labor, minimum wage jobs, service industry jobs, they, uh, get that money last when prices have already risen. So they don't get to take advantage of the benefits the people, the Wall Street crooks— uh, you like how I point that out? I call Wall Street the modern version of organized crime. Uh, or, um, uh, You know, the, the wealthy people, the tech oligarchs, um, they get the advantage of this. The central bankers, the politicians, they're close to the money, so they get to take advantage of all these opportunities first, uh, while they're underpriced. And down the line, uh, sadly, other people don't get to take advantage of it. So it, it has huge impact on wealth inequality, and, um, uh, you know, it's, it's problematic for sure.

So right now, I've heard reports we've, we've printed or created anywhere from 20%. I've heard all the way up to about 35%. Do you know where we're at?

Um, there, there are conflicting reports, but if we look at 2020, you know, I'd go with about, uh, about 30% of all the money that has ever been created in the country was created last year, basically. It's absolutely staggering. I mean, I mean, it's It's so staggering. It's just— you can't even fathom it.

It's crazy. So I want to ask you, though— so we're talking about the Fed here, and this is theoretically the smartest people in the world that manage the most— that have the most control in the world over money, right? They have access to every economist and everything in the world. 12 largest banks sitting on the Fed. You have Jeremy Powell last year.

Why?

Why would they do this? And if you were in that same seat, what would you do?

Well, they don't care. I mean, they don't care about us. They don't care about anybody. They just care about themselves. Um, you know, these people are— they, they are greedy beyond comprehension. I mean, it's, it's just absolutely staggering, uh, how greedy these people are and how power-hungry they are. Uh, so, you know, they're, they're just doing what is going to, uh, provide the people with, uh, what the Romans called bread and circuses, right? So they'll be able to get by and they won't rise up and they, they, you know, well, they do riot, but at least they'll keep rioting to a minimum, right? And civil unrest to a minimum. And, um, uh, you know, they're, they're going to benefit from this because they take advantage of that money first, like the Cantillon effect. So it's, it's great for them. All of these programs, all of this stimulus, all of this money creation is, is fantastic for all of the people close to the money. They get it first. They get to borrow at negative interest rates, so they're basically being paid to borrow. And they get to buy assets that inflate dramatically because of this asset price inflation. The money needs somewhere to go, and so people just start buying assets. They, you know, they buy cryptocurrencies, they buy real estate, they buy stocks, they buy everything. And, um, and, and so they borrow money to buy these assets, and those assets inflate, and they get fabulously wealthy. And, uh, the people at the bottom of the pyramid, uh, struggle and, um, and, and their jobs are automated out of existence. And, uh, it's, uh, it's a very imbalanced, uh, very uneven scenario we have right now.

So right now, I mean, this is the situation, this is the cards we've been dealt, is just, you know, right, pretty regular Americans, I'd say. You know, we're not— I don't know about you, but I'm not in these high finance meetings on the top tier, 0.1%. So what do we do going forward? Understanding the Cantillon effect, understanding that the people closest to the money benefit the most, what do regular people listen to this show, what can we anticipate for the next year, 18 months, maybe 36 months? How do we prepare ourselves? Is it doom and gloom? Is this wealth gap going to just get bigger and bigger? What, what do we do? What, how does this help us?

It's a great question. And, um, you know, my job and your job is to help as many people as possible not be the victim of the wealth gap. Okay, you know, uh, you can either curse, curse the darkness, or you can light a candle, right? Uh, the old saying, the best way to help the poor is not be one of them, right? And, you know, that's a snarky comment, but there is definitely some truth to it. So, uh, whoever's listening can benefit from what is happening, and they can become, uh, cantillionaires in their own way. Okay, and I'll share my screen and just, uh, share some thoughts on what is, uh, likely to happen and what people can do about it. So, um, let me just get this kind of organized here. So hopefully you can see my screen now, and I've identified 6 ways that the government can get out of the mess they're in. Uh, the government has overpromised. The government cannot afford to keep its promises. Can you see the screen okay?

Yeah.

Okay, great. And, uh, so the first way that the government could get out of the mess it's in is to simply default and say, look, sorry, we can't keep the promises. We can't provide Social Security. We can't provide Medicare. We can't provide Obamacare. We can't provide disability insurance. We can't do anything, right? Uh, we can't provide police and fire protection. Um, you know, the government could default. That's very politically unpopular. It's very unlikely. It's, um, it's, it's not the way to go. Okay, the next way is to raise taxes, but the problem is the problem is so big that they can't raise taxes enough to pay for the problem. Uh, you know, I interviewed the economist Lawrence Kotlikoff on my show several times, and he has done, uh, in-depth studies on what some call the $60 trillion time bomb, which is the unfunded mandates and promises the government has made over the next 10 to 15 years that it cannot keep. But he says it's a $220 trillion problem. That's with a T. Now, just to give some reference, because I always like to say, compared to what, right? Compared to what is the ultimate life question. And my listeners call it the Jason Hartman question. Okay, so, uh, the GDP of the United States is in the ballpark of $20 trillion a year. So if we have a $220 trillion unfunded mandate, unfunded entitlement problem, Now we understand how big the problem is. We can't tax our way out of this. It just won't work. The math will not support it. Uh, the other thing we could do is we could have a yard sale. The U.S. could start selling off its assets to foreign countries. And, um, you know, this is very risky, uh, because these are assets we need. We don't want to sell the ports to Dubai. We shouldn't be selling military equipment to countries we don't trust and have good relationships with. So that's a dangerous path. We could use the U.S. military, as has done throughout history. Napoleon was maybe the most famous military leader for this. We could simply steal assets from other countries with our military. That's not a very nice thing to do, but it is the way of the world, and it's going to be part of it. On the good side, we could have a technological innovation, or many of them, that were U.S.-centric. And I know I'm talking to a worldwide audience right now, but, you know, the US is the biggest economy in the world so far. And, um, and so it's, it's an important thing to discuss even if you don't live in the US. Uh, so, you know, maybe this will be US-centric, or maybe it'll be centric to whatever country you're in that has all these problems— biotechnology, energy, nanotechnology, whatever. Um, but the most likely, uh, almost for sure way out is to simply inflate our way out of the problem. And what I mean by this is that if we owe $1 trillion to China, for example, okay, and we have 10% inflation, uh, so we, we devalue our dollar by inflating it away, by printing more of it. You know, there's 2 basic drivers of value in any economic equation. The first driver is scarcity. When something is more scarce, it's more valuable. Sand on the beach is less valuable than diamonds or gold, right? Because diamonds and gold are more scarce than sand. But it also has to have utility, not just scarcity. Something can be scarce, but it may not be useful, and so it doesn't have value. It's got to have both things, utility and scarcity, to have value. Well, the dollar is not scarce anymore as they keep printing more of it. So the, the value of it declines. So a trillion dollars owed to China, 10% inflation means we wipe out $100 billion, poof, just like that. Okay, uh, and it's a great business plan for governments and central banks. So this is the plan we should follow. You know, you asked, what should we do?

Yeah.

Well, we should align our interest with the 2 most powerful forces the human race has ever known. governments and central banks. And that's what I'm here to help people do. And hopefully, I know you with, with what you do helping investors, that's what you're here to do too. And so I, I can dive into this a little more, but yeah.

So on, on that, so because the debt is owed in dollars, correct? It's not owned in yen or in German marks. It's owed in dollars. So we can inflate our currency and inflate our way out of a debt crisis, and that pretty much out of every problem we have. And so what we— and we were talking about this last week. So yeah, how do we follow that then? Walk us through your ideas of how do we— you know, we can't change the game. This is the game that's being played. It looks— they're already showing us there, this is the plan. So how do we prepare ourselves to follow this plan?

We, like you said, you know, exactly, we can complain about it all day long. We can philosophize, say it's not right. I don't believe it's right. Okay, it's just the way it is. We're not going to change it. It's way too big for us, right? So what can we do? We need to align our interests with governments and, and central banks so we benefit like they do and we're on the same business plan that they're on. Okay, that's what we want to do as investors. So, um, number one, let's just talk about inflation and what it really means for a moment. Okay, to understand inflation, we need to understand the difference between real and nominal. Okay, nominal is the name of something, real is the value of something. So, uh, let me show you what I've got here. Uh, one of my podcast listeners sent these to me. These are Zimbabwe dollars, okay? And let me just show you what I've got in my hand. I have got a, uh, a $10 trillion bill from Zimbabwe, okay? Here is a $100 trillion Zimbabwe bill, okay? Now These used to have value. The Zimbabwe dollar, just one Zimbabwe dollar, had value back in the past at one time. And then Zimbabwe's government printed so many of these that they just made them meaningless. What I'm holding in my hand is worth about maybe $12 now. You can buy these online on eBay, for example. Okay, and, uh, and so You know, you could buy a few cups of coffee with it and that's about it, with trillions of Zimbabwe dollars. So the, the real versus nominal is the first thing we need to understand. And, um, we also need to understand that inflation is a hidden tax. It is a wealth destroyer. It destroys the value of our savings, our stocks, our bonds, even our equity in real estate. But thankfully, Bridger, It destroys the value of our debt too. And this is the wonderful magic thing that I want to share with your, your listeners and viewers. It is the most powerful method of wealth redistribution, and it redistributes wealth from lenders to borrowers and from old people to young people. Now, lenders to borrowers— how does it do that? If you borrow money and you get the money at today's value and you pay it back at tomorrow's lower value, then you've won the inflation game because you paid it back in cheaper dollars. That is a winning equation right there. But how does it redistribute wealth from old people to young people? Well, in most cases, at least hopefully, old people have assets. They have savings, stocks, bonds, and equity in real estate. Great, that's— they did the right thing. They prepared for their future, for their retirement. That's great, but inflation is eating away at those assets. Young people, on the other hand, since they're just starting out in life, they usually carry a lot of debt. So inflation is an intergenerational wealth transfer from old people to young people. Young people don't even need to inherit any money to take advantage of this. Inflation's doing it for them. Now, it won't solve all their problems because the debts are too big in terms of student loans And, uh, you know, there's a million other problems that are too complicated to discuss, but just understand inflation is helping eat away at their debt.

Wow, that's, that's huge. I mean, it's because, I mean, America, we're known for everyone, especially my younger generation, of carrying a lot of debt. And so you're saying this is destroying debt. The more inflation, the more money printing, it destroys our debt because the debt won't catch up as fast as inflation is, is being inflated?

Um, it depends. You know, if inflation is low and the interest rate on the debt is high, the debt can kill you, okay? But if the interest rate on the debt is real cheap and the inflation rate is higher than that, then the debt is benefiting you, okay? That's negative interest rates. And so, um, you know, I'm not advising people to go out and take out credit card debt or high-cost stupid debt. This is bad debt. Good debt is debt against commodities that are indexed to inflation. So I'm I'm in my house, right? Look behind me. What is that called? It's a wall and that's a ceiling. Guess what it's made of? It's made of lumber. It's got copper wire in it. It's got petroleum products like insulation. Uh, it's got, um, you know, uh, there's concrete below me. There's glass in front of me. There's steel all over the place, right? All these materials are commodities that have universal value intrinsically. You, you know, it doesn't matter what currency you denominate them in. You can denominate them in euros, yen, gold, Bitcoin, dollars, uh, pesos, Brazilian reais. It doesn't matter. They have their own value. They're intrinsically needed by every human on Earth. Everybody needs a place to live.

Well, let me, let me ask you a question too, though. So with this, and I love what you're saying, just, and you told us in the talk last week, and I loved it, right? Inflation destroys debt. However, inflation also makes everything, you know, your, your day-to-day consumer products go up. Now, I want to ask you, why does Jeremy Powell get up in December and tell us that inflation is at 1.8%, and they every year they tell us it's 2%? Are they just— are they lying to us? Are they like— I mean, you have President Obama print trillions of dollars, inflation's been at 2%. What, what are your thoughts on—

They are absolutely lying to us. So, Jerome Powell our Federal Reserve Chair, he wants everybody to think inflation is lower than it really is. Janet Yellen, former Fed Chair, now Treasury Secretary, same thing. The government in general, they all want us to think inflation is lower than it really is. And they do this by manipulating the Consumer Price Index, the CPI. And there's 3 basic ways they manipulate it: weighting, Substitution and hedonic indexing. Let me just explain those briefly. Okay, so weighting— look at the Consumer Price Index, or the CPI, is a basket of goods, and they, they keep changing the weight they apply to things in this basket of goods. So, um, you know, if there's one thing in the basket that gets out of control, uh, in, in, and experiences a lot of inflation, they'll just weight it less than the other item that doesn't experience as much inflation. So that's weighting. Okay, substitution. If one thing gets too expensive, they, they just assume everyone will, uh, switch. They'll, they'll substitute it for something else. So for example, if beef gets too expensive, they just assume everyone will get chicken instead. And maybe they don't like chicken. Maybe they think chicken is a dirty bird. Okay, and they want beef, right? Uh, so, so substitution. The third form is called hedonic indexing, and what that means is it's the root word of hedonism, right? Pleasure seeking. How much pleasure do I get out of something? So a good example would be, uh, this, this phone, right? And look at that cute dog on my phone, right? You met my dog at the— uh, so on this phone, you know, uh, how much pleasure do we get out of this? Well, it's a lot better than the first version of this phone back in 2007 when smartphones came out. And, um, and, you know, yes, it's more expensive, but when you consider how much the processing power of this phone has increased, how much better the camera is, and just how much better it is, this phone's probably, you know, at least 5 times better than that old phone. So what they'll assume is that it only costs 1/5 of what it really did. But the fact is it didn't cost 1/5. It cost $1,500, okay, which was more than the old phone even when you adjust for inflation. So hedonic indexing is another way for them to lie about inflation.

Why, why would they lie to us though? Why— what's the, what's the, I guess, the benefit for them telling us that it's, you know, less than it is?

2 main reasons. Number one, Uh, government entitlement programs and government salaries. And because the government is like more than 20% of the economy now, the government is so big, it employs so many people that they want to give them smaller cost of living increases, uh, than, than they'd have to if they told the truth about inflation. Okay, so, uh, government entitlement programs, uh, Social Security, Medicare, uh, you know, disability insurance, uh, you know, whatever, right? All of these programs and all of these government employees are indexed to inflation. So government wants to keep their expenses low. So that's number one. Number 2 is just the general idea that they don't want the population to rise up and, and get their pitchforks, okay, as the saying were, right? Uh, you know, they just want— they don't want civil unrest. So, uh, they want to convince us that inflation is lower than it really is.

Now, you mentioned earlier asset inflation versus just consumer products inflation is much different. Do you think we're going to continue to see that? Because I actually— I was listening to one of your podcasts podcast episodes, you had a gentleman on that talked about inflation is caused by the velocity of money. Because printing money, a lot of times, at least when people are fearful, they just put it in their bank accounts. They don't spend anything. And so you don't actually see consumer prices go up. What are your thoughts between— do you think we actually are going to see a hyperinflation type in consumer products, or is it more going to be in assets, like you mentioned earlier?

Well, can you know, look at this whole velocity argument is true, but it's, it's not the whole thing, okay? It's, it's, it's not the complete argument. Um, there's an old saying, money never sleeps, okay? You, you can't really put money to sleep, okay? There it is, it's always doing something. So for example, uh, well, I mean, if you put it under your mattress, you can put it to sleep. Okay, but if money is in the system and it's in someone's bank account, then the bank can lend against the money. And the way the bank lends against money is through this ridiculous concept called fractional reserve lending, where they can lend a multiple of the money that's on deposit, and that makes the system that much more imbalanced. Okay, but, um, uh, you know, money is invested Uh, if there— there's no hoarding money, okay? That doesn't really exist in any significant way. It's, it's always doing something, even if you don't spend it. You don't have to spend it to have it do something. You know, the money in my bank account is doing something. It's not doing as much as it could, but, uh, it'd be better if it was invested, uh, in something besides a bank account. Uh, and I, you know, I've got money in real estate and money in all sorts of things, uh, but But money does not really sleep. Now, the more people trade money through the system, which is the velocity discussion, the velocity of money, the more it inflates. Okay, so the faster the velocity, the more inflation, uh, can occur, and that is true. So the velocity is something to look at, but it's not the end-all be-all. It's not everything. Okay, so. I hope that helps. Good.

Yeah, I like that. And, well, fractional bank— I mean, yeah, your money in the bank account, it's a great— that's a great point of banks are lending 10 times the amount of your—

yeah, fractional reserve lending.

Yeah, they'll lend out $10 million, right, with fractional banking, which is, which is, uh—

Right, right. And, and so the thing you've got to understand about what you said is just really important because that shows us how money is lent into existence. Okay, so when the government creates a trillion dollars out of thin air to do whatever it does, right, all these stimulus programs and all this silly stuff it does, um, it creates a trillion, but then some of that trillion hits the bank. Okay, so let's say half a trillion hits the bank, and through fractional reserve lending, that's multiplied by 10 and it goes into the economy. So, I mean, these numbers are absolutely staggering. You can't even comprehend it.

So back to— at the beginning, we were talking about— you mentioned the everything bubble. Is it actually a bubble? Is it going to pop, or are we going to have stagflation? And I want to— back to the original question of, how can we position ourselves as regular people understanding these— that's going on? How do we position ourselves going forward? And I know I cut off your— we can get back to your presentation too if you want to share your screen again, but, uh, where do we go from here?

Yeah, good question. So what do we do? That's the— let's get to the action item of what we do. So I'm going to share the screen again, and I'm going to— this screen has an awful lot of numbers, and when I presented, you saw this too. I'm just going to direct people to a few numbers. Don't freak out about all the numbers on the screen right now, okay? Um, you know, I do long, detailed discussions of this stuff that, you know, can go on for hours, uh, but I'll just sum it up here really simply, okay? Um, if this idea of using, uh, debt in a positive way to create wealth— it's the hidden wealth creator when it comes to income property or real estate in general. Uh, it's not some esoteric theory. This is a fact. It happened to millions and millions, maybe tens of millions of people. Okay, it's an absolute fact. It already happened. It's historical. Okay, it's, it's not a theory. And so, uh, I'll just show you an example of someone who bought an owner-occupied house to live in, right? Owner-occupied back in 1972, one year after we went off the gold standard. Okay, so back in 1972, $1 was worth $1 because no time had passed yet and no inflation had happened. So So here's what they bought, and I'll just point this out with my mouse. In 1972, the median house price was $18,000 and change. Okay, the, uh, if they got an 80% loan, they put 20% down, they borrowed just over $14,000, and the mortgage rate back then was 7.37%, and they got a 30-year loan. Okay, so that's what happened in 1972. Now let's fast forward 12 years and go to the bottom of the chart, and let's look at 1984. You see each of these rows is a year, and we go to the bottom. 1972, the start, a dollar is worth a dollar. You see inflation eating away at the value of the dollar over the years. 12 years later, $1 is only worth 40 cents. Okay. Now, um, the mortgage payment on this house back in 1972 was $101. If you just do the math at $14,614 borrowed, 7.37%, there's the mortgage payment. And 12 years later, in 1984, they're still writing a monthly check that says $101 on the check. But guess what? The value of that check is only $41 12 years later. So it feels much less expensive to make the monthly mortgage payment by 1984. Let's go to the end now. Let's go and let's look at what happened at the end of this 30-year loan. Okay, at the end of 30 years, how did this look for our people? Well, um, the average inflation rate was 5.1%. It was high in the late '70s and the early '80s. Then Paul Volcker, our late Federal Reserve chair at the time, Uh, he broke the back of inflation by raising interest rates to enormous levels. And, you know, I give him a lot of credit for that because he, um, he did something that was very unpopular at the time, okay? And a lot of people didn't like it, but it worked. It broke the back of inflation, it stopped it from happening, and it moved us into a boom time of the '80s, okay? And, um, you know, nowadays, unfortunately, policymakers will not do the hard thing anymore. They just, they just want things to look good for their time, their short tenure in office, and, um, they just won't do the hard thing. So they keep kicking the can down the road and really making the problem worse, okay, as they do that. But that's, that's as it were, right? So, um, these total payments, they paid about $36,000 on a $14,000 loan, okay? Uh, so to sum it up, they borrowed $14,614, they paid back $36,318, but after inflation hit, in real dollars they only repaid $16,393. Just a little more than they borrowed, not much more. And they thought they were paying 7.37% interest rate But in reality, they were paying 1.06% interest rate after inflation. Now, this interest on your primary residence is tax deductible. So not only do we get the benefit of inflation lowering the cost of this mortgage, we also get a tax deduction lowering the cost of the mortgage even more. So After inflation and after tax benefits, they only repaid $12,655. But guess what? Look, look back. They borrowed $14,614. They repaid less than they borrowed. You can't be serious, right? That's fuzzy math. Well, it's wonderful math because they thought they were paying 7.37% interest After inflation, they were paying 1.06%, but after inflation and tax deductions, they were paying a negative interest rate of 1.16%. They literally got paid to borrow the money. And this is the hidden wealth creator of, of real estate. Okay, now I want to make a point here. Real estate is different than income property. Okay, real estate in this example was just a homeowner that lived in their house for 30 years. Okay, but income property gets a lot better than this.

And you're in your example, just to cut you off, you're not assuming the, the property appreciated at all and taking that. You're just saying they lived in it.

The property did appreciate, but who cares? That's just icing on the cake. Uh, what happened is the property appreciated but the debt depreciated. So that's a— it's what I call the double inflation arbitrage, okay? That's a term I coined many years ago to explain what's happening. Now, in reality though, we got to be fair in this example, okay? We don't want to make it seem better than it is, okay? The property appreciation seems great, but it's not as good as people think because largely that's just inflation indexing. It's keeping up with inflation. The property usually beats inflation by a small margin, but it's not astronomical. Where it gets incredible though is with what I talked about now that I call inflation-induced debt destruction, which is a term I trademarked many years ago. Um, and I know it's a mouthful— inflation-induced debt destruction. It describes it perfectly. But see, when they borrow money against that mortgage or against that house and the house appreciates— say it just keeps up with inflation, say inflation is 5% and the house appreciates at 5%— nothing happened until you leverage the borrowing on the house. So say, for example, you put 10% down and now you've made that house increase by 10 times. Okay, that's a 10 times return. Okay, so it's, it's fantastically better, okay, than, um, than inflation. You've outpaced inflation dramatically by simply using good, prudent, investment-grade debt or leverage.

Wow, that's huge. Um, I, uh, I love that, and it's— I have not heard anybody else talk about that besides you, and that's why I— this is like the big reason I wanted you to come on the show was to talk about the, the infla— how inflation destroys debt.

Yeah.

And it's, it's, it's amazing. And so, so you would say— now this is not financial investing advice, whatever, but, but what I'm getting from here is real estate with, especially right now, low fixed debt. You can fix for 15 or 30 years will be—

And, and you should do it for 30, not 15. You want the longest mortgage you can get at the lowest rate, and you want a fixed-rate mortgage at historically low interest rates. Do you realize they've done interest rate studies that date back— you ready for this one? 5,000 years. Wow, 5,000 years. Okay, and do you realize at this time in history we have the lowest interest rates in 5,000 years? Not in 30 years, not in 50 years— 5,000 years. Okay, yeah, I mean, we could go back to ancient Egypt and it was more expensive to borrow then than it is now.

And then that compounds as well if you have rentals, right? You were— I cut you off earlier, but you're talking about getting into not just your home but having rental property as well, correct? Yeah, yeah.

So I teach, uh, many concepts, and, you know, on my podcast and on my YouTube channel, people can dive into this as deep as they want, okay? But, um, one of the concepts— and maybe we'll come back and do it again on your show, and I'll talk about something I call the ultimate investing equation, which is how to, uh, put what I just told you on, on steroids. It like go into hyperspace with it, which just makes it so much more powerful, although it's extremely powerful already. But you can, you can actually ramp it up quite a bit with the ultimate investing equation.

Wow. Now I know we're getting to the end here a little bit. I know you got to go in a few minutes. Um, like, I got a few more questions for you if you're okay. Quickfire questions here. So number 1, uh, Bitcoin or gold?

Um, well, I, I don't know. I think maybe both, uh, but, but I also think maybe neither, right? Because, um, neither gold nor Bitcoin— and they, they both are interesting in different ways— they are not investments. They are insurance policies. That's different, okay? Um, you know, Bitcoin has been extraordinary, the growth in it. Gold Gold did have some times where it was pretty extraordinary, too. But listen, it is very volatile. And look, I own some of each through various companies and entities I have. But you can lose everything with Bitcoin. It's a very, very risky investment. And you should think of it like gambling and speculating. You might win, and you might win big. But you might lose it all. So be extremely careful. Gold and Bitcoin, neither of them pays any yield. Neither of them has favorable tax treatment. Neither of them has the great leverage opportunity that income property or real— or just real estate that you live in has. So the most historically proven asset class in the entire world is income property. And it's also the most tax-favored asset class in America. And taxes Taxes are the single largest expense pretty much anybody has in their life. So income property helps with all of that. Um, gold and Bitcoin, speculative. And now, by the way, I'll share my definition of an investment, and this is important, so make sure you get this, everybody. Okay, an investment according to Jason Hartman— here's what an investment is. Here's how you know if you're an investor or not. An investment produces income, period. That's it. If it does not produce income, it is not an investment. It is a speculation or a gamble. And I'm not saying that you can't win gambling and speculating sometimes. You certainly can. Many people have. I have. Okay, I'm not totally against gambling and speculating, but you You only do that with a small portion of your net worth that you are absolutely prepared to lose, but you might win. Okay, it could go either way. Nobody knows. It's, you know, it's speculative. So an investment has to produce income to be called an investment.

I love it. From, from the, the Doctrine According to Jason Hartman. I like it.

That's, that's the Hartman Doctrine right there.

If people want to learn more about you, hear your I know you got a lot of content out online. Um, you— I mean, yeah, I've listened to your content. I fought for a while. My dad, myself, we love what you put out. Where can we go to find you? Where can people reach out?

Yeah, my website is jasonhartman.com. That's my main website. I have a bunch of websites, but just go to jasonhartman.com. Of course, my podcast is available on all the podcast platforms. Hopefully it will not be censored. Uh, and, um, and I'm on YouTube as well, and YouTube YouTube is definitely engaging in some very ugly censorship, but, you know, while it lasts, that's where I am.

I know we couldn't even dive into that today on censorship and changes with politicians getting involved with markets. I think it's a very interesting area. I know you got to go right now, but Jason, I want to thank you again. I'll give you the mic though for the last maybe minute, minute and a half right here. What's something you'd like to leave with this audience as you go? And this is, you know, to entrepreneurs, just people getting started in business. The mic is yours. You got a minute and a half.

Yeah, well, you know, I just want to say, uh, thanks for having me on. And I, I want to, uh, just say to everybody, look, the, the most powerful forces in the world are likely to create inflation. It is a great business plan for them. So this whole talk about speculating whether or not we're going to have inflation or how much we're going to have, you know, Who cares? Don't fall for that too much. If you take out a mortgage today against a rental property, you're not going to make the last payment on it, or should I say your tenant is not going to make the last payment on it until 2051. 3 decades. Think of how the world will change in the next 3 decades. We've got massive unfunded entitlements coming at us that total maybe $220 trillion. Every government on planet Earth and every central bank on planet Earth— not just the U.S. government, not just the U.S. Federal Reserve, the European Central Bank, the Bank of Japan, all of them— inflation is their best business plan. And they are so powerful that you simply want to ride on their coattails. You want to, you want to align your interests with theirs, and I'm teaching you the way to do it. That's what we've talked about today. There are more, there's more to it, but this is kind of a basic outline of it. And, you know, you can find out more on my podcast or YouTube channel or at jasonhartman.com. So thanks for having me, and happy investing, everyone. Appreciate, uh, appreciate you listening.

Thank you, Jason. Again, jasonhartman.com, go check them out. We'll probably have show links links below where you guys can find that as well. Jason, thank you again.

Great talking to you. Happy investing.