2188: Real Estate Strategies: Leveraging Inflation-Induced Debt Destruction

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So I closed out last month on the real.

Estate side, sold three houses, got two more under contract. It's been a long time coming, but all that stuff that Jason and the.

Rest of the team and I have been working on since Jacksonville, all coming through. So all good stuff.

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 multimillionaire who's actually been there and done it. He, 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. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Greetings, empowered investors, and welcome to episode number 2188. And I am coming to you today from Belgrade, Serbia. That is country number 97 for me, 97 countries. You know, there's a website I've heard about called the Century Club where once you get to over 100 countries, you can be a member. So I gotta check that one out and see if I should join it. But you know, in these travels, I, I definitely learn a lot of things, a lot of things about economics, about investing, and most specifically about that big issue that all the world. Well, I don't want to say all the world, but most of the world is facing severe challenges with. And that is none other than the thing I've been talking about for 21 years, that is inflation, of course, the I word. And I was in Turkey just a few days ago and I snapped a picture. If you are watching, watching me on video, I snapped a picture of this menu where I went and had a wonderful Turkish coffee. And look at this menu, they have stickers over all of the prices, but not just one sticker, many stickers. Because inflation has happened so egregiously and so quickly in that country during its worst point, inflation, just in the last two and a half years or so, reported to be 55 to 83% in a year, in a one year period there. Can you imagine living in such awful, awful inflation? And so the menus all had these Changeable prices. Some were written in with a marker, some were stickers, and some you just thought, well, those are the prices for tourists and not the locals. Yes, of course there is that scam we all hopefully know about by. By the way, yesterday here in Serbia, a taxi driver tried to scam me, but I wasn't having it. And I tell you, whenever you go and travel around, or even if you're not traveling around, you're in your own home place. Do not let people scam you. Remember that all of your actions, or inactions, as the case may be, are a license for that business or that person or that. And I'm going to pick on a particular type of business, that property manager. If you let them take advantage of you, you are letting them take advantage of the next person and the next person and the next person. Because if someone doesn't stand up and call them out out, then you're not doing any favors for the next person. You're certainly not doing any favors for yourself. But look at it as a charitable activity, calling these weasels and ripoff artists and con artists and scumbags. You gotta call them out. You gotta do your part to end the cycle. And by the way, maybe we'll touch on a few political things in this show today because, wow, what an environment we are living in nowadays. We are just witnessing the decay of the west and it is happening. The Western world, that was the greatness of the human race over the past couple thousand years, or at least since the Renaissance. Past few hundred years. Right. The Western world is just in decline. It's so sad to see it, it really is. But anyway, we'll get to that in a moment. But here is a chart from Statista and it says inflation has come down. Now they're talking about the United States here. Infl has come down, but high prices are here to stay. Cumulative versus year over year change in consumer prices in the US since January of 2020. So we're seeing Covid era stuff here mostly. And the cumulative change in prices represented by the dark line. Is that a blue line? I think it is by the dark blue line versus inflation year over year, represented by the red line. Well, now they're getting to claim at least partial victory over the battle with inflation, saying it is only only about 3%. And in reality, we all know it's massively understated in three major ways. Weighting, substitution and hedonic indexing. I've taught you about that many times over the years, so we don't have to go into it now, but it's understated. Everyone would have to agree that the CPI is nothing more than a CPI lie. It is a scam. It's understated. There are many reasons the government wants to understate that and make us believe inflation is lower than it really is. So let's just make the assumption that when they tell us the inflation rate is 3%, we're going to assume it's at a minimum 50% higher than what they tell us. That would bring it to 4.5%. And if we think it's worse than that, if we think it's maybe double, then we would be facing a real inflation rate of 6%. Many people, by the way, think those two statements I just made would be considered very conservative versus reality. And look, everybody's got a different personal inflation rate. Because if you're paying rent, if you're paying mortgage rate based on owner's equivalent rent the way the CPI calculates it, or just increased mortgage rates, I mean, that's inflation, right? You know, yes, they say they're raising the rates to battle inflation, and that is true. But the increased rates, if you're buying a house or financing anything for that matter, those increased rates, the cost of money virtually tripling depending on what you're looking at, that's inflation, right? You're really living with that real inflation. Not to mention health care. I was reading another article that we posted actually many years ago during the Obamacare debate. You know, of course, Nancy Pelosi, we've got to pass the bill to see what's in it, right? So think about how much worse health care has gotten since Obamacare. I mean, it is absolutely pathetic how awful it is now in terms of the price you're paying. Right? So if I look at my health insurance premiums, they are easily up by nearly 100% since Obamacare. Almost double right now. Look, to be fair, I've gotten a little older. So naturally your health insurance gets more expensive as you age and your healthcare costs should be expected to be higher as you age. Now that's not really the case in my case, but in general I think that's a fair thing to way to look at it. But it's not that the cost has almost doubled. It's the fact that the coverage is so much worse than it has ever been in my lifetime. My deductibles used to be a thousand dollars a year in terms of health care deductibles. Now I think it's $8,800. So really, this is not covering healthcare anymore. It's only covering something catastrophic. And in terms of co pay included, doctor visits and all of that kind of stuff, it's just so much worse than it's ever been. It's awful. It's an absolute disaster. If you're paying tuition for college, you know, that's become just a complete ripoff. These universities are called hedge funds. That's what they really are. And so look, the cumulative inflation here, according to this particular survey, is basically 21% since January of 2020. Okay, well what if you had $1 million in mortgage debt, say in 2020 you financed four properties and you thought, Jason, I love your inflation induced debt destruction strategy. That is a fantastic strategy to game the system, to beat the elites at their own game, to beat the banksters, to beat Wall street, to beat the government, to beat the Federal Reserve and all the other central banks in the world. We want to use inflation induced debt, Des, that is the best plan. And so say you bought into that as many of you did. I know, because you're our clients and you got $1 million in mortgage debt in January of 2020. Well, regardless of what's happened to your property since then, now of course we all know they've gone up in value massively. Rents have massively increased. So your income is much higher. Yeah, your expenses got a little higher too, because hey, is property owners, we're not immune from inflation in terms of our cost of repairs and things like that. That gets a little higher. But it's nothing in the overall scheme of things. Right, because you basically got on that $1 million in debt that you control against your maybe four properties. Right. You basically got a $210,000 inflation payoff because that's been the cumulative official rate of inflation since January of 2020. Well, as we talked about a moment ago, what if you believe rightfully so, I mean, you don't even have to like go far out on a limb to believe this, that the CPI understates the inflation rate. Well, what if that inflation rate is 50% higher? Then you've had over 30% inflation. And gosh, that's not hard to believe at all, is it? I mean, look, we all experience these inflation rates in our own life. If you've had over 30%, let's just call it 32% inflation since January of 2020. Well, your property's gone up in value, your income has gone way up in rents, your tax breaks have been fantastic, but inflation has paid off 3,120,000 of your mortgage debt if you started at 1 million in nominal dollars, well, they were real dollars when you borrowed them, but they're now called nominal dollars. Right, but the real debt, you nominally might still owe a million dollars. Right. Assuming you've hardly paid any principal down on that mortgage. Or I should say your tenants have hardly paid any principal down, but inflation has paid off $320,000. Okay, what if you believe, as I was talking about a moment ago, that the real inflation rate, whatever the CP lie tells you, the CPI, the consumer price index, if it tells you it's 3%, then it's really double. So say the cumulative inflation rate has been, let's just call it 40%. That means inflation paid off, inflation induced debt destruction. $400,000. Okay, that's a little over four years. That's a hundred grand a year increase in your return on investment. I mean, imagine the difference that makes in your life. Well, all of the doomers and gloomers are sitting here thinking about, well, real estate prices are going to crash. Yeah, well, someday you'll be right. Just like the broken clock. That's right twice a day, sure. But they ain't crashing yet and they haven't so far. And there's still a massive housing shortage. So inflation is benefiting you in huge, huge, wonderful ways. All right, this was a really interesting, well done video that got almost 50 million views on X. Which by the way, I got to tell you, thank you, Elon Musk. I am really liking X more and more. I have never been very active on Twitter. In the old days I had an account for a long time. You know, I had at the peak like over 40,000 followers, which you know, is not that big a deal in that world. And I never paid much attention to it. But more and more nowadays I am using X for reliable information because the mainstream media has just completely lost credibility. And all of the disgusting big tech companies that are just censoring like crazy. Like last week they censored one of my YouTube videos and took it down. I mean, there's no real appeal process. There's no. They don't give any reason. These disgusting criminal scumbags that are running these companies really should be indicted for crimes against humanity. What they are doing is awful. The biggest problem facing the human race, as I've always said, is censorship. That is the most dangerous things. I mean, Fahrenheit 451, Ray Bradbury's book. I mean, look at what the Nazis did. I mean, every tyrant throughout history, what they seek to do first is control the information. And it's pretty scary stuff. Okay, so this video is from Dr. Peter Onge. Is that how you say that? He says 76% of all personal income tax last month went to servicing the $34 trillion national debt. How did we get here? Two men, FDR and Richard Nixon. Well, Nixon's the one who took us off the gold standard, put the final blow on it, right? Together they broke the dollar and put the American people into debt slavery. Now this is terrible news for most people, but for us because we are using inflation induced debt destruction, this benefits us. And I'm going to talk to you about the six ways very specifically it benefits us in just a moment. Let's take a look at what he has to say.

Last month interest on the national debt ate up 76% of income tax. Meaning three out of every four dollars you currently give. The IRS are actually going to China or Wall Street.

So why are they going to China or Wall Street? Well, Wall street, because basically they fund the debt and make money off all the debt. And you know, such a complex concept, right? Wall street, obviously the banksters are always making the money, but China, because China is the holder of about $1 trillion of her debt.

Colleague E.J. antoni, who sources directly from the Office of Management and Budget. They report that for the month of June, the US government collected $185 billion in individual income taxes and it spent 140 billion on debt interest. So three out of every $4 straight out the back door, three of every.

$4 just to service the debt. Can you imagine? This is where the whole system, we are on the verge of where the whole system just goes upside down. Like you, you'd call it a pyramid scheme, but it's like an inverted pyramid scheme. It's just unbelievable.

Us noticed, adding, quote, I'm glad 76% of the income tax I pay goes directly to important things like interest on past government incompetence. On an annual basis that's up 8% points in a single year. And if it keeps up, the federal government will be paying more in debt interest than it collects an income tax in, oh, about six years and nine months. What's driving all this is that income taxes are actually down, which normally only happens in a recession. While the cost to service the national debt has exploded by 33% in a single year thanks to trillion dollar deficits and rising debt costs. Put them together. In the past 12 months, Washington paid 868 million billion in interest alone, on track to hit 1,140,000,000 in the coming year. For perspective, in George W's first year the entire federal deficit was 158 billion. Now we're paying five times that in debt interest alone. And next year we'll be paying seven times.

I mean empowered investors. The math is truly shocking here. We can be assured that it leads to one thing. More and more inflationary pressure. And you know how to benefit from that.

For even worse perspective, federal government actually tried to live within its means. It would have to cut nearly 2 trillion in annual spending which would mean a 50% cut to everything outside Social Security and Medicare, Medicaid, yes, even the military and those top men at homeland security. Sadly, 50% cuts are not on the table. Meaning it will get worse. For perspective, it took precisely 192 years for Washington to accumulate its first trillion in national debt. It took us just 100 days to add the last trillion.

Did you hear that? So I've talked to you about this before that we are adding that trillion dollars every hundred days. So at the current burn rate, and it is a burn rate if there ever was 1, 3.65 trillion with a T dollars per year just in interest, that's what we're adding to the debt. I mean this, this is absolutely shocking how quickly we are now adding to the debt.

Here two men, FDR and Richard Nixon. Followed by 50 years of politicians with less willpower than a Wall street banker at a strip Club. So FDR broke the gold backing of the dollar back in 1933 and Nixon finished it off by banning foreign countries exchanging dollars for gold. This meant the Fed could print unlimited amounts of money, meaning it could finance unlimited federal deficits. Which is what it did. To illustrate when FDR took office, the accumulated federal debt since 1789 was just 22 billion after FDR. That exploded 20 fold by Nixon and then it exploded nearly 100 times to today's 35 trillion. So what's next? Brought to you by Unchained.com we are not getting 50 spending cuts absent a civilization ending crisis. Meaning the only realistic solution is to go back the way we came. Limit the money printing. In theory of course Washington could just do this using say Milton Friedman so called K percent rule. But given the incentives to buy elections and reward donors, Washington needs the physical constraint of hard money backing. This could mean backing with gold as is traditional. It could mean Bitcoin someday. It could even mean a basket of commodities like oil or grain, which would be an improvement. Alas, given hard backing is not remotely on the political Radar, we are in for a lot more debt and a lot more inflation. Okay, we'll be watching.

A lot more debt and a lot more inflation, ladies and gentlemen. That is the future and you've got to defend yourself against it. And the best way to defend yourself against that is with income, property, using inflation induced debt destruction. Because remember, it's the most debt favored asset class in America. And there are six ways that the government could try, and it is trying, kind of all of these at once to get out of the mess. They could default on the promises, right? Just lessen the promises to save money. Again, politically unpopular. We saw what happens when austerity measures are instituted. We saw what happened years ago in Greece. We see what's happening in France, which, well, let's not even get into the Paris thing yet.

Unbelievable. They could raise taxes. There's just not enough tax to get. I mean, the government takes in just over $4 trillion a year in tax. The problem is way too big for tax increases. It just won't even make a dent in it. A yard sale. We could sell off assets. Years ago we all heard about them talking about selling ports to Dubai. Our country has sadly sol our very unique, very powerful military technologies to many countries and despots that it shouldn't have sold them to. But hey, it needs the money, right? Well, they could steal, they could steal resources from other countries. I just watched the Napoleon. Well, I wouldn't call it documentary, but movie. The other night in I don't know where I was, oh, I think it was on the cruise ship in Greece when I watched it. And you know, Napoleon was basically a fantastic general, I mean fantastic thief. He was a robber, okay. And he had a military that he used to do the robberies, right? To accumulate assets. That's the way the world map was written, okay, is through wars and you know, AKA theft. Right. It's nothing new. Technological innovation, this is the positive side and this is happening. These are all happening concurrently really. And then the most likely scenario, the best business plan for governments and central banks to simply inflate their way out of the debt. So how do you benefit by all this? Well, you use inflation induced debt destruction with your income properties and that is how you have a big benefit. Well, since I'm traveling and going to all of these different places around Europe, it would really be remiss not to talk about the absolute craziness of our world right now, the Olympics. I mean, this is truly unbelievable, right in the ceremony. Besides all the stuff everybody's talking about right which, by the way, is not necessarily a depiction of the Last Supper. Just so you know, look up Dionysus festival. Look that up on Wikipedia. And I think that depiction, that, you know, offensive depiction, was really a blending of the two. It wasn't really the Last Supper exactly. Okay, so just look that up. So you're not just believing what everybody says at first blush. Right? So there's a little more to it than that. But nonetheless, it's just absolute craziness. I mean, the elites are out in front. They have become so emboldened with their, I don't know, their Satan worship, their radicalism, you know, this sort of George Soros esque plan to change the world. It's. There are so many cross currents and so many factors and so many things kind of blended together in this amalgam of just absolute nuttiness. Okay, but look at this. The golden calf at the Olympic ceremony. I mean, this is just unbelievable. Just look up the significance, if you don't know that, of the golden calf. Right. The worship of the golden calf. It's absolutely crazy. We are witnessing the massive intentional attack and decline of the Western world on so many fronts. I mean, think about what happened in just the past couple of weeks. We had an attempted assassination on a former president and now again, presidential candidate who shouldn't even have to be running because the whole last erection was just a complete scam. We all know that. Okay? I mean, anybody with any ounce of truth thinking knows that things just don't add up. I mean, there's the 2000 Mules documentary. Be sure you watch that, if you haven't already. Of course, that was censored. Of course. So many things about C19 were censored and J6 were censored. It's absolutely ridiculous. And you know, they love to say, oh, you're a conspiracy theorist. Well, again, this meme, I want to show it to you again. Conspiracy theorists. Nothing but a derogatory term for a person who researches a subject, then uses logic and critical thinking to form an educated opinion instead of just blindly believing whatever they saw on their television. Shouldn't you say that the people that just believe whatever's in the media, they're the conspiracy theorists, right? It's just become beyond the beyond, folks. It really has. Hey, before we wrap it up, be sure to join us for our next Wednesday zoom meeting. You're going to like this one. We have got a totally new person to the network, JJ Childers, who is going to talk about asset protection and tax planning. And I think you're really going to enjoy this next one coming up on August 14th. So go register Jason Hartman.com Wednesday for our next upcoming masterclass. These are free Jason Hartman.com.

And Empowered Investor Pro members. I want to remind you of our new time for our monthly meetings. We meet the first Tuesday of every month, the pro members, and we've got a new time for that. It's now 12 noon Pacific. You've requested this 12 noon Pacific 3pm Eastern for Empowered Investor Pro on the first Tuesday and then the second Wednesday is our masterclass open to all our listeners and viewers of the Empowered Investor Network, and you can register for that one@jasonhartman.com Wednesday until next show. I'll see you in two days where I will probably be in a different country. Reach out if you need us. Our investment counselors are available through jasonhartman.com or at 1-800-hartman and happy investing.

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