297: Tariffs, Inflation & Control | How Policy Impacts Your Wealth

Foreign.

Welcome to wealth on Main street, where conversations about growing your wealth are fun and entertaining. Wealth isn't just about money. It's the skills and the knowledge that we develop to pass on to future generations. Tune in each week to grow your mindset and your net worth at the same time.

Welcome back to wealth on Main street, where we don't just talk about money. We talk about what really happens when Main street meets Wall street and Bay street and sometimes like today, when Canada meets America at the border. And so that's what our show is about. It's, it's, it's going to be a hot one. We're talking tariffs, those magical little fees that somehow make your toaster, your truck, and your favorite brand of peanut butter all cost more. And so here's the fun part. You've got a triple threat today. You've got Richard, you got Henry, one of our repeat guest commentators. Three guys who are just trying to make sense of why absolutely everything is suddenly more patriotic when it costs 30%, 40%, 50%, 100% more. So we're going to break down what tariffs really mean. Henry is going to do a great job of steering that conversation and what it really means for the folks who actually work by and build wealth on Main Street. Zero politics on this episode. No fluff, just facts. A lot of laughter and maybe a few jabs at who's winning the trade war, the U.S. canada or customs office officers. And so whether you're sipping Tim Hortons like Rich is or you're sipping a Dunkin Donuts cup of coffee, this episode is going to prove one thing. Common sense is definitely duty free. All right, guys, let's, let's dive in.

That's awesome. Really glad to be back, Jason and Richard, and thanks for having me. I just want to start this off by sharing with you a really quick headline that, of course, Jason, you opened with. And what I just wanted to share with that is, well, it's because of that anti tariff ad by the Ontario government and because every tariff headline, the one thing I just wanted to share is the way that I see it is actually specific to Canadians and U.S. citizens. It's really who own businesses. It's a valuation headline now. It's not seen that way. So when Parliament Hill or Capitol Hill policies, what they do is what they do, their decisions that they make can move prices, it can move profits. And when those moves happen, they can have an impact to the value of your business as well as your family's wealth. So that moves with it, too. It's just silent and maybe you may not know of it. So today I kind of wanted to use this time to kind of make that connection for listeners. And most owners don't see this relationship until it shows up in their cash flow or when they decide to do an external valuation.

Well, and while you've got this headline up for our viewers on YouTube, we're talking about President Trump increasing tariffs essentially on Canadians. Good. Because he saw the fantastic anti tariff ad. I think they budgeted $70 million in the province of Ontario to run ads on American television about why tariffs are not good for Americans. And the result is he punished a lot of Canadians in the process of doing it and felt great about it, which is the part that I don't understand. Coincidentally, though, it sounds like that ad campaign is stopped after Trump decided to increase the tariff pain. And then where I'm currently located in British Columbia, some people say bc, which stands for Bring cash. We're gonna have to bring more cash to B.C. because the B.C. government and the premier has decided to take out his own fantastic ad campaign. I'm sure it'll be wonderful. And I have no doubt that it won't cause any blowback to the Canadian population at all. Certainly not the people in British Columbia.

I would add to what you guys both shared that, you know, there might be some listeners who may not really fully understand what a tariff is.

Right.

Because people typically hear about tariffs when politicians are arguing back and forth or posturing back and forth in the media about it. And it's really in simplicity. It's a tax. It's a tax that's placed on imports and that's goods that are coming in, you know, to the country. And the whole idea is to protect local industries by making foreign products more expensive. And in theory, you know, the logic that supports that is that it's supposed to encourage people to buy local. And reality is much different. What ends up happening is prices go up for everybody. And then the, the, you know, middle class, the, the entrepreneurs, the, the small business, medium sized business owners, they end up. The consumer ends up footing the bill for all of it. And so it's, I think probably.

It kind of feels like.

An invisible weight on growth. Like it seems really good in the moment. And it just, to me, that's the best way that I could kind of articulate it. It doesn't kill innovation, but just kind of makes it tired.

Yeah, absolutely. It's really. And you guys have the perfect show for this. It's a Main street problem. It's a Wealth on Main street problem.

Yeah.

And the real volatility to this fear is this policies create that volatility. And so if, if your business is on a public market, you can see those reactions on a public market, but everything that you're not seeing is actually impacting your business. And today we can dive in to that because it lands on the small business owner first. Don't just hit imports, they hit confidence, they hit cash flows, they hit credit lines. So these are the things that we'll start to unpack today to kind of talk about the, the circumstances.

I'll give a perfect example of that. When there was the first, you know, first round of discussions around tariff, as we, we shoot back about, I think it was maybe five, six months ago at the time of this recording, where there was a D day for when tariffs were going to kick in for Canada and it got pushed out a little bit further. But so every time that, that got pushed out. Well, if you were a contractor, let's say, and you were bidding on larger jobs and that jobs required, you know, inventory for installation, like an electrical contractor as an example, or instrumentation, you have to bid the job based on not just the work and the labor, but on all the materials. And so it became, it, it became virtually impossible to bid. And then depending on the contract, the company looking for bids to get the work done is asking for, well, can you price out and isolate what the tariff cost is on everything? So they, they would change what they're looking for. So then the workload went up and I know, I know a specific contractor who's actually been on our program before. Shout out to Shane, who he walked me through the, the experience he was having in his electrical contracting business during that kind of tariff war situation. So the lack of stability before, before the tariffs even went on, before the terrorists even hit a product, and then, and then the pricing impact at the business level that needs to be passed on to a consumer, there was a whole element precursor to that that hasn't even been factored in here. And we probably wouldn't get to it in our discussion. So I really wanted to make sure that people understand there's a lot of buildup to the entrepreneur in the fervor of activity that happens before the tariff even hits. And it's a real, it's a reality.

Such a good point. And Henry, before we dive into all the great slides and things that you put together, which is, again, it's always a great benefit for our audience to have you as a guest, you can't. The Thing that I've been explaining and sharing with people who, who bring this, this topic up is that you can't control what politicians do with tariffs or taxes, but you can absolutely control how you finance the things that you need in your own life and business. And that's what the wealth on Main street philosophy is all about, the process of becoming your own banker, the infinite banking concept. That's what we're teaching people to do. And the topic of the day that Henry's, you know, he's, he's very focused on, let's discuss things that are current and we can tie in to how clients of ours that we have and the clients that we want to have, who want to implement this process, how they can, they can build capital and be capitalized so that even when, you know, trade winds shift, they're not stuck waiting, you're not stuck waiting on someone else's policy to determine your prosperity. Isn't that good?

Absolutely. I want to share my screen on just some of the ripple effects that happen when a policy announcement is initiated. You can see that the tariff comes and then the downstream implications as it relates to costs will go up, your margins decline because the business owner is going to decide, you know, should I transfer some of these price increases to my customers, but that there's going to be impacts related to that. Now, as it relates to the value of their business or a component of their wealth portfolio, there's an EBITDA erosion because from sales to costs and likely expenses that you're going through, your earnings before interest, taxes, depreciation, amortization, that value is going to be impacted. And this value is a very common benchmark that is used to evaluate businesses valuation, which is also part of how, when you think about taxes and you want to think about tax and estate planning, this element is also a very important part to the valuation of what your business is worth. So that can result in value destruction. And then, you know, that trickle effect ultimately gets pushed down to you, your wealth diminishment. So if I were to just use an example here, where from a tariff, the revenue can decline after, let's say, from that 10 million down to 8.5 million. So you're seeing a 15 erosion just from that.

And Henry, just, just for the viewers who are or the folks listening in their car, we're talking about an impact on a 25 tariff here. That's the example that Henry's going through. So if you have a 25 tariff, you've got a business with 10 million in revenue. See a revenue decrease to 8.5 million. You've got a 15% decrease in revenue after the tariff hits in the exam.

And most business owners are so in the business at times and then they just see, oh my goodness, business is not, I'm not getting the volume or I'm not getting the, my, my, my month by month is not actually really working. Something, something's happening. So you, you will start, you know, doing things like increase marketing efforts or however, to try to go back to what you're, you're scrambling to go back to that 10 million because you're not on track. Right. Like you can feel it because you're just so in the business. But now if you see that reduction in your revenue and that results in a trickle effect. And you know, in this example here, the, your, the business owner's EBITDA went down from 2 million to 1 million. So that's halved. And in the valuation context now what was normally a 12x multiple ends up becoming a 4.5x multiple. And a multiple is usually used in the reference of an industry. And it's set up related to how to value this business that's comparable against others and that also reflects risk inside of this particular asset class that you are looking to transfer either if it's to your, your family as well as to a third party. Either way, this is still a very valuable piece or component in your wealth portfolio.

Yeah, I think at the end of the day.

Especially speaking as business owners, as we all are.

I think the greatest tariff that.

We or anyone listening will ever pay is the cost of not thinking for yourself about money.

And it's not a spreadsheet problem. It's someone's retirement plan melting in real time.

In this example you have on the screen, Henry, you know, you basically isolated that the trickle down effect of the 25% tariff in your given example of a $10 million revenue business, 15% drop in revenue revenue impact because the revenue's down. The end result is profits are drastically down. And that, that changes the valuation mechanics of that might potentially in that industry. So you, so you might change the multiple that you could get for exiting the business. And I think you summarized it with a wealth adjustment of a potential loss of over 750 grand for that particular business owner. So 7.5 million, 7.5 million. So you've got, you've got a really substantial impact on something that you didn't control. And like here we have an opportunity to. Again, Jason's talking about mindset. The impact of the tariff in Your mind, what is the elements of your business structure, of your general financial life that you have a measure of control over? There's always going to be levers that are getting pulled around you that you can't control. There's market factors every business owner is going to face, market factors that are outside of your control, government factors outside of your control. So what are the ones that are. And if you put things in place and a lot of focus and energy on establishing proper foundational elements to enhance your measurement of control over what you know you can, it gives you much more stability and decision making prowess when the lever gets pulled that you can't control.

Yeah. And you know, the world, understandably so is throwing a tariff tantrum. And you know our clients are not waiting for the next government memo to tell them, you know how it's going to affect their wallets. They've got liquidity, they've got an ever increasing pool of capital. They've got certainty and they recognize that it's not about beating the system, it's about stepping outside of it. And so whether you live in Alberta or Alabama, whether you live in Ottawa or Ohio, the rules might change, but the principles of wealth never do. They just don't control capital. Keep money moving, control how you finance opportunities that track you down and the things that you need instead of letting anyone else decide what you can afford. And that that's what wealth on Main street looks like. It's not loud or flashy. None of us are loud or flashy. It's just steady and dependable. And dependable is what compounds the wealth building capabilities of implementing the infinite banking concept.

I am actually a little loud, so.

I'm sometimes after a few Red Bulls.

But I might be a little obnoxiously loud from time to time.

Yeah, I mean this goes to say most traditional wisdom that gets shared is always about the returns. And today we're going to talk about the str. Why having the right structure, the tools has to exist before the storm and not after. Because if Parliament Hill or Capitol Hill policy can move your wealth and your fortune, you never really owned it. So that's, that's the key thing that I wanted to kind of share before we move to talking a lot more of the details.

Have you guys ever heard why buffalo.

Like a herd of buffalo, when there's a storm coming, they run straight toward it. Do you want to know why?

No.

Why is because they, they're going to spend less time in it. And so if you're in a position, like you said where you should be preparing before the storm. When the storm comes, you can run right into it because you know you're going to spend less time in it just like the herd of buffalo do you nice versus just standing there waiting for it to happen.

And you're, you're stagnant. You're standing still because you don't know what to do.

We're going to dub this Buffalo Business Advice segment.

We'll have to have some kind of a recurring element of Buffalo. Another, another in a section of Buffalo Business advice by Jason Lowe.

I like that you got to develop.

A thick hide when you're in business. Just like a buffalo. Anyway.

So now we've kind of gotten a little bit more contextual reference and now let's kind of dive into the business and where it bleeds first. It's obviously sales and cash flow. So you know the suppliers can raise prices on you and you have two bad choices. You're raising your own prices or you risk losing and you risk losing customers or you hold your prices and let your margins collapse. So we kind of, I kind of touched upon that earlier. You're. Your equilibrium is pretty much gone at that point. You've got to really reevaluate things. Now the part that is kind of important to see is it's not just accounting theory. It's real inventory that gets stuck on shelves and it starts getting harder to move. And your, your margins and how you calculate your ratios start changing. And maybe you don't have this level of planning or forecasting in your business at the moment. However, you are experiencing this in real time when these type of things start happening. And the key thing that I just want to highlight is the, these policy shocks don't just steal margin, they steal trust. Because when your business is getting impacted by this volatility, your banker sees it in your financial statements. So if you have financial statements that, that are getting audited and reviewed or some form of a compilation, the reason why a banker looks at it is to determine your ability to service the debt. They have things like debt covenant ratios and this is when tightening or things around the lending that they've extended to can actually start changing too. So now suddenly, if you're not able to access capital like from credit, most business owners will find themselves funding that working capital from personal savings, re remortgaging their home or some form of capital so that they can inject into their business and use. And these are not just numbers. These are. And when, when that event happens, when you're spilling personal Capital into corporate capital that's delaying your retirement.

I gotta, I gotta chime in on this one. Henry's again, you know, he's always just. He's got a really great way of making the complex simple. But business owners who are listening.

They.

Feel like all these things are coming at them. That's my experience when I talk to business owners, when the topic of tariffs or taxes or.

Access to capital, interest rates, inflation, all of that.

And when you're operating a business to expand on what Henry shared.

There's only two kinds of money for a business owner. The money that you earn and the money that you control. And.

My experience is that most of these business owners, they spend their entire lives.

Focusing on the first, not the second. Would you guys agree with that?

Yeah.

And so they build cash flow.

They.

Right, they pay their expenses, they pay the bills, but the moment that that cash leaves their business.

They'Ve lost control of it. Whereas when they implement the infinite banking concept, the three of us know what happens in terms of how they. They gain control. And.

In other words, Ottawa or Washington.

Can'T regulate your cash value, they can't slap a tariff on control.

And they can't inflate away your guaranteed daily growth of cash value.

And so if you're a business owner listening right now, the message is really, really simple. Stop trying to predict what's next. And as Henry said, start preparing for whatever's next. And the best way to do that is to own the function of banking, to control that as it relates to your needs. Because the best hedge against the chaos isn't a new government policy, it's your own banking system. And that's how you turn those tariffs and taxes and turbulence, you turn it into a competitive advantage. Because Nelson said, the late R. Nelson Nash, he said everything that you're doing financially is compared to what everyone else is doing financially. And so if you're in a position of total and absolute control and other business owners in your line of business are not, that puts you in an. In an advantageous situation when chaos erupts.

Credit and courtesy of the federal governments. And so the wealth on Main street approach is remarkably simple. Putting people in a position of total and absolute control, especially business owners who are the backbone of our economies in both the United States and Canada.

Absolutely. And when, when a business owner is taken.

Away from these policy decisions that are not in their control and they're bleeding personal capital into their business because they've invested blood, sweat and tears to building up their business, and they've worked very Very hard. And they are. And these, and there's all these decisions that happen that are not in their control. So how do we restore the control.

In their own business? And these policy risks aren't just on the company balance sheet. It's actually bringing it to the kitchen table.

Very good point.

That's why keeping structure isn't just paperwork, it's actual protection. And I just kind of want to share just implementing a powerful tool like and the concept of using it in your business, the infinite banking concept. I'm not specifically sharing the example here, but to show how important it is when you're structuring something and designing it tailored to you versus someone who's just kind of flying by the seat of their pants. So just as a quick example here, again, I'm just sharing my screen with a business owner, one that is structured and one that is not structured. Owner A is unstructured. Owner B is structured. So the EBITDA before tariffs is 2 million. Both are the same. Valuation before tariff is 12 million. But now when the tariff happens, one can absorb the tariff very, very differently. One would come from the unstructured. Their ebitda would be 1 million. That owner that is structured would be 1.6 million. So you can see there's still an erosion from their ebitda, but one has absorbed a lesser of an impact. The valuation multiple is different. The valuation after the tariff, of course, has a different value. So the percentage loss, when you are prepared rather than reactive to the situation, is to just highlight the key difference that, you know, I'm showing you a 63% versus a 27%. But the key highlight of what I'm just sharing visually is one has reserves, has the position for all of this stuff to buffer these type of circumstances, and then one does not because they're just focused on cash flow, trying to make ends meet at the current moment. Almost basically like a paycheck to paycheck.

Very good points. Yeah, very good points. And our experience in dealing with business owners and helping guide them in the implementation of this process, what you're unveiling is how you either minimize valuation.

From declining or how you preserve. And even again, put yourself in a position where your business is undeniably unique, especially in.

Scenarios where the, the marketplace is, is really hot for that type of business. Like I was sharing with.

Some entrepreneurs here two days ago, I was just chatting with a small group of entrepreneurs and I said, because a lot of their kids are enrolling in trades, they're going to basically post secondary education, college and enrolling in trades. And that's where the overwhelming majority of millionaires are going to be created, is in the trades. But if you can.

Add your. All that you're doing is you're adding a tool and a process to your existing business that's going to radically amplify what your business is already doing, but it's going to make you undeniably unique in the valuation of the business as well.

Isn't that good?

Further, that, like I would agree with you, you're going to see an increase in, you know, wealth in that category because there's going to be higher demand for opportunities there. But, you know, the person that's going to generate that million minus the inflation will take that part out of the equation. It's not going to be the person that just goes ahead and completes their journeyman certificate and continues to work for the next 40 years for a company. It's going to be. As an example, the welder who gets started, does his first one or two years. He goes and saves up. He buys a used welding truck, and then he goes and buys a second one by the end of that year with his earnings. And then he's, he's, he's using himself as an operator plus his truck. And then he hires another guy just like him to run a truck. And then every couple of years he loads up on another truck, and pretty soon he has an army of welders, you know, doing B pressure work. And he's charging out 200 bucks an hour for a guy in a truck, and he's paying 60 bucks an hour for that guy to work the truck. That's going to be the person that's going to make the difference. And so I want to make sure it's clear. I think what you're, I think we're saying the same thing, Jay, but I think people need to recognize that you have the, you have the skill and you have the demand to use that skill. But you can't stop there. You have to continually build new and additional skills to learn how to take what you now know and turn it into something much greater for more people.

Super good point.

Level up.

Yeah, exactly. And Henry, you know, maybe you could or you're planning to expand on a little bit about this too. Is that like when a valuator looks at a business, any business, doesn't matter what the business is. They're not just looking at revenue. They're looking at how stable are the earnings of the business, how predictable is cash flow, how efficient is the business at Working with that cash flow, how reliant is the company on external debt or financing? And what happens if operations operationally, if credit dries up? Well, most companies, even great companies, are dependent on outside lenders and so that dependency shows up as risk and risk reduces valuation.

So if you put your business in a position where you've been operating for so long in the implementation of this process and your business has become less and less dependent on outside financing, and then yes, when you go to transfer the business, what makes you undeniably unique is that you're not only transferring the business, you're transferring all the knowledge of how the new owners can take advantage of implementing the very same process that makes you undeniably unique. I, I haven't met a single business owner or a single chartered business valuator who has said yeah, you know, I'm, I'm, I'm, I'm absolutely, at first conversation, I'm absolutely 100% familiar with the infinite banking concept and how it actually reduces my dependency on outside lending, increases the valuation of my business and it's all part of my plan for when I choose to sell it at transaction time to transfer all the knowledge of how to carry that process forward and keep the new owner in a position of ever increasing prosperity, it's never happened.

And if they need access to some capital during the early phases when they take over the business, I'm prepared because I know the inner workings of the business to help fund whatever gap is necessary while they build up their own private operating credit facility so that we can shift the control over and in both scenarios we can keep it outside of the third party banking system.

I just did that with a client who sold their H Vac business and they kept the client on for I think it's two or three year salary. And there's a few, actually a couple of clients that have gone through this experience almost simultaneously. And the one said, yeah, I'm actually for that entire duration of time Because I had said, look, have you thought about being a source of financing for the business? He's like no, I didn't give that any thought. I said, well in addition to that, have you thought about transferring the knowledge and awareness of the concept to that new ownership group? No, I haven't thought about that. Well, let me help you do that.

And now I'm meeting with this ownership group because it's like, hey, we've acquired a number of these H Vac companies. Not one company has offered to be an ongoing source of financing. Like what, what are you even talking about. And so this opens up just a whole new gateway to thinking, to thinking about capital and control.

We have, I know I, I'm sure you have many of them, Jason. I know I have a couple of clients who, whether they've completed the process or they're, they're making drastic headway on replacing their operating line of credit with a third party. Now the gentleman right now, awesome guy and he's, you know, in the aerospace business and so he's dealing with large orders, large inventory in order to provide supply for airplane parts, etc, and you know, he said, hey, I want to be able to replace my operating line of credit. Good. We're, we're, we're, we're making some pretty good headway in that. Maybe not all the way there, but he's getting pretty close. Another gentleman who, amazing guy, Mike, and he's got an incredible family, you know, generational family business that's in line locating and you know, that was a big target for them because they went through lean times. Oil price up, oil price down, a lot of challenges. And being dependent on that third party credit line during those rough patches was frustrating and difficult. And now there's just like a huge weight off of their shoulders because they are truly the master of their own destiny for their business. And it's allowed them to buy and now own to their holding corporation, the shop that everyone goes to, the build the office building, a number of other buildings. All of that is completely owned, renovated and financed from, you know, OPCO to Holdco. Holdco owns these policies. So it really becomes pretty tremendous when you, and it can also be a lot of fun when you get to have these conversations with people like Henry. You just, like you just lit up like a Christmas tree when I said that because you've experienced that engagement of like all these ideas that you can see for someone when they come to you and they don't know what's possible.

Well, he was lit up like a Christmas tree before we started recording the episode. Literally.

I guess the key thing is when you're in a position where you're structured properly and tailored to you, options are so much more open. And again, you're not scrambling in all of that haphazard mess that you just recovered from one thing and then you get knocked again so you're not wound, dizzy. And what I wanted to share was just a really quick visual on looking at it. So I'm just going to try whiteboarding it for, for the viewers to see and the listeners. If you kind of take A look at one side of things, which is if you imagine you have two ladders and each of the ladders. So this side, I would call it the unstructured.

And when somebody's unstructured, we'll have these rungs on your ladder here. So step one, step two, step three. So let's call the step one your sales. The second is your margin.

The next is your liquidity.

And we look at the next six.

Which is your credit.

And then your EBITDA and then your multiple. So kind of to wrap up the teaching point together here is when these policy shocks happen, what most owners will experience.

Is each of these rungs start breaking down.

So when, so how many, how far does it fall into your business? That's going to be based on how your ladder is structured as opposed to if we were to look at it from a vantage point of when someone is structured. So I'm just going to remove all of that and just copy this over.

This whiteboard feature on the zoomers is pretty neat.

Those of you also draw on it. And I'm resisting the urge to draw a great happy face when the structured ladder.

Once Henry's done well on the structured ladder, then comes I'm going to use a little nice color here. When you start adding all these bolsters around so you can protect your multiple, you can protect your ebitda, you can start protecting needing to go to credit, you'll have readily access to liquidity. And that's when you're installing a really good tool inside your business to withstand some of these shocks so that when you're climbing this ladder, you don't face the challenges of potentially one of these rungs breaking under your feet.

So structures and paperwork, it's shock absorption.

Love that.

Absolutely love that. And how does a business owner move from the unstructured ladder over to the structured ladder?

We've talked a lot about that. I think the biggest component, this is a little bit biased, of course to all of us is definitely if you're working with a coach or someone who's trained as a professional to go through this process to evaluate where are all the vulnerabilities as it relates to your business and thinking of. And so because sometimes, you know, you're in it so much, when you have someone who's independent from being inside of the business, they can give you a, a pretty fair objective point of view, depending again on their philosophies and things. But you know, we at sending financial, we focus on helping our clients, looking at things and giving them that clarity and you know, sometimes those conversations aren't easy. However, it's a very good opportunity just to give you the clarity and then you can go do your research. You can see if that's, you know, suitable to what you're looking for.

Yeah, definitely. And business owners grasp this very quickly because they're, they're remarkably good at whatever their line of business is. They've been there, done that, got the T shirt on financial advice. They just haven't acted on it because they're busy being a business owner.

And where I think we. And again, this is just evidence by. You don't have to go very far on Onko Google to, to read all of the reviews from business owners that are guided by us is that we take control of the time frame in the process. We're not going to let the business owner fall off the ledge and land on procrastination and likely injure themselves really badly in the process. We're hanging on to them and we're saying you're not going anywhere until these next best steps are implemented because you don't have to spend your life inside the infinite banking concept. You've got to tip the domino over with the right guide. And then every now and then the guide is saying things are looking great, your implementation is on pace, you're doing well, or we just need to nudge you right back into the right lane so that you keep going and you keep achieving your objectives and making all those goals that you have in your business, actual engineered outcomes. And so that's what I think kind of sets us apart, is that when we take on that role as being a guide and a coach, that there's, there's a very great degree of accountability so that the business owner feels relieved to say, God, you know, any, any other time I've gotten financial advice I didn't do anything with it because I got right back to being a busy business owner. So we take them out of the busyness and put them into the implementation of this concept. And what do we hear guys, over and over again? I wish I had figured this out earlier, right. I wish I'd known about it. Insert whatever time frame five years ago. Well, you can't say that five years from now.

So the next segment I kind of want to take us through is another exposure that is a. Is a bit controversial, maybe the way that I'm going to bring it up. But I think it is really for great conversational purpose because it is a true exposure that has different interpretations depending on how you want to interpret it. And so the first, this one, I'm going to use gold to tell the truth, that currency particularly hides. And this is the one thing that it's the reason why I'm using gold is it hasn't changed its definition while everything else has. And I kind of want to also share from this vantage point that recently Ray Dalio, who someone I follow and listen to at times, just recently released an article. So today we're kind of recording on the 31st, it's the 30th, 2025, and here, you know, when Ray Dalio speaks, I'll just say I will listen when he has something to say. He's one of the top hedge fund managers. So I would pay attention to it. And so where I'm going with this is in 1971, the average Canadian home costs about $22,000. So if we were to convert that denomination in gold, that would be 537 ounces on the price of gold at that time. Now today, that same home, not, not probably not Vancouver or Toronto, but you know, that same home is $676,000, where now you only need 121 ounces. The house didn't really get better. But if you actually see it from this vantage point, you actually need fewer ounces to buy this same home. So this vantage point here is most people see the price of homes going up. However, to me, I look at it from a different lens. It's not price growth. I actually look at, look at it from this vantage point. The currency has decayed and it's more of an illusion. And if I were just to compare that difference there, that's a 77% drop in real terms, if this home was denominated in gold. And when, when people think of price growth again, that's why I think of it as currency decay and the house didn't appreciate the dollar depreciated. And if you kind of visually imagine every year your measuring stick starts shrinking, but nobody's telling you the rulers changing. Gold doesn't grow, it just stands still. What's actually really changing is the dollars shrinking.

I would add to that, Henry, it because you said something that really piqued my interest at the top of the segment where something to the effect of you're going to share, you know, the, the truth that.

That gold tells, that currency hides. And using your very same example, if you held that one ounce of gold in 1971, that's the year that as it was mentioned, that the US dollar was detached from gold it was worth what, 35 bucks back then? Yeah, give or take. And.

The ounce of gold didn't change. It didn't earn interest. It didn't need a quantitative stimulus package. Right. The only thing that really changed was the purchasing power of the currency. That's what's changed. And gold, the truth that gold is revealing is how much value has leaked out of the dollar over time. It's like a. It's like a truth serum for money. And that can be uncomfortable for people because we're taught to measure everything in currency. We measure success in dollars, not value. We measure your savings account in balance, not its buying power. We measure our worth.

In what the number says, not what it actually means. Which is what you were saying around kind of that, the ruler analogy. And currency.

It hides that erosion right through inflation. And that's that silent tax that kind of eats away at your purchasing power while everybody says those big bad corporations are responsible for it.

You guys will love this. I'm so happy with this example, Henry, because literally had this awesome conversation with my kids yesterday morning. They were watching a YouTube video about Lego sets and rare Legos, and this guy was chasing down rare Legos and showing the ebay prices. And there's a figure that's a limited supply that was worth $201 that was worth $800, etc. And I had them pause and we had this conversation. And then eventually they got to this point where there was a golden brick. Apparently certain, certain employees, they get, literally it's a like a 24 karat gold golden Lego brick. And I didn't know when the video was created, and so I just researched it now. Apparently this brick sold in 2020 for, for $15,000 U.S. okay, well, and I had this conversation with my kids about the value of gold and how, well, you could buy a car for that brick and you could have bought a car for that brick probably 50, 40, 50 years ago. And, and then I. What I didn't realize is again, what the timing of when that video was created, but I just did a quick research. And so if you think about how gold has. Gold has risen. By the way, I'm using air quotes for those of you not watching. Gold hasn't risen. It's the value of your dollar has gone down. And I went and grabbed a bunch of five dollar bills and some, some cheap Canadian coin money that's barely got any metal in it. And we had a conversation about how cheap all that stuff is. And I said, so it's not that the Gold has gone up in value. In fact, the gold has stayed here. It's that this has gone down and our money is worth less. And you know, I just looked at it here. Well, the price of gold is, you know, it's, it's almost double what it was in, you know, at that point in time. So now that gold brick would sell for about $30,000 U.S. which is about 40 to $43,000 Canadian. Well, that's about what a car's worth, isn't it? Today if you wanted to go buy a new car with no bells and whistles and it's not a fancy one, like you want to get the base model, really kind of crappy car, maybe you have electric windows because they don't put rollers in them anymore, but you're just not getting anything fancy. But it could still get you a new car or it could get you a decent used car. That's about what it'll run you today.

Yeah, so, so the illustration of the goal was just to not to say go invest and go buy into. We're not giving any investment advice, but it's just to reveal what's been happening beneath the surface. It's like an X ray for purchasing power that you can't really see that your currency has been eroding in value. And when people start the conversation about building wealth, we've got to look at what's real.

Instead of what's actually nominal. Because you can't really build strategy on a shrinking ruler. You've got to really look at the lens with X ray vision. What are we looking at in real? And so when people talk about inflation, the next part I want to dive into is separating inflation and purchasing power.

What I would add, Henry, if, if it would be valuable to this part of the segment is that here's where it connects to.

Everything that we teach around the process. The infinite banking concept. It's.

When you build capital inside of a dividend paying whole life insurance contract or ideally a system of contracts, you're building real value, not speculative value. And, and the connection to gold is that gold protects value and the infinite banking concept multiplies it. There's a very clear distinction. But together I think they kind of tell the same truth. Right. Like wealth is not. You've heard this shared a million times, I'm sure from a lot of people on social media is that it's not how much money you have, it's, it's really about how much capital you have control over in terms of what that capital does and how much of what it can do. And that's what comes up for me. And it just, I think it reminds us that.

Wealth is measured in value, not volume.

Well, I want to add this and I know Henry, you want an amazing point you want to make, but the multiple of death benefit that you can create with a single decision and a single payment, a premium payment into a contract could be pretty drastic. It depends on where you are in the span of life. What you know, what are you, are you 10 years old? 30, 40, 50, 60. You're going to get a time relevant amount to that. But as an example, there's at least one or one policy that I could put about $100,000 in this year or next year in a premium and I'm going to get approximately five times that in instantaneous death benefit protecting my family if Richard were to die early. So that's immediately available should something happen to me. But what's also happened is I've traded today's money 20, 25, 20 $26, 100,000 of it and I've guaranteed an output of $500,000. So I've 5x the value of that money. That's a pretty good inflation hedge. Might not be perfect, but it's pretty damn good. And even if it was only 4, it's still much better than the average bear. Now if I took some of that and I borrowed against it using the insurance company's money and maybe I bought a little bit of gold. Well now I've got a policy loan, but I also have another asset and I can double dip on my ability to do that because I can control my decision process. But the key thing is now that I've locked in five times the amount of capital potential and a constant increase, I have a lot of peace of mind because while the dollar is being eroded by crappy political and economic decisions, I have at least established some measure of protection in the world that's happening around me that I control because I had the right intention and I knew what to do. And it won't matter what the market does because it's a contract and the insurance company must perform to meet the obligation of that contract.

And then if you understand that gold preserves value and the tool to implement infinite banking is dividend paying whole life insurance contracts. If gold preserves value, the process, the infinite banking concept mobilizes it.

That's the way I see it.

Absolutely. And well, the last part I would add too is most people overlook or dismiss the death benefit. And just on the initiation of the premium and the signing of the contract. And when it's in force, you've already set aside a legally binding agreement that that money is already set aside for your wealth, for your next generation. And as opposed to kind of earning it there step by step, you've already kind of locked that in. And that's peace of mind that I don't think. Well again, people completely dismiss instead of actually really valuing.

Super good point. And we share with people all the time.

Everybody has a best before date. We just don't know what that is. And when you have that tax free replenishment showing up exactly when it's needed the most, and you can literally engineer it particularly for a business owner as well to say, look, whatever it is that you plan to spend.

The system can be engineered to return all of it plus more on a tax free basis when you die.

Absolutely.

Is there anything stupid about moving money intelligently in such a way that creates controlling how you finance the things that you need? Money's flowing back versus away and then that windfall that shows up exactly when it's needed the most. That is all a result of moving money intelligently, not parking it. And that's what a lot of people do. They park it. They park the money. The retained earnings, where are they? Well, they're in my corporate checking account. No, they're not. What you think is there is just an illusion. It's not there. So you think you're parking the money, the bank is moving it intelligently. We're just putting the business owner in that seat. You own the business, you make the decisions, you're in control. And now you're the one moving the retained earnings around intelligently.

And boom, the business owner gets it. The light bulb goes on.

Well, a big part to support them on moving the capital intelligently against most conventional, probably a little bit controversial against conventional advice, keep it in cash. But what I'm going to share with you is showing keeping it in cash is not a good idea, especially when you want to talk about inflation or purchasing power. But good coaching will help them retain their purchasing power, put their business and raising the value in their business. But that comes with good coaching and people with experience around doing that love it. So now I want to talk about the most, what I think the most expensive misunderstanding as it relates to finance. People use inflation very, at least this is what my feeling is very softly around it. But to me I actually see it more of purchasing power. So sometimes they use inflation in purchasing power in the same way. Now the bank of Canada's mandate is to keep inflation at 2%. You know, we always hear the same headlines. We're getting closer and closer to the 2%. Now if I were to backtrack since 2015, I'm sure everyone listening knows that your real cost when you step into the grocery store has gone up. And I'm going to show you that it's gone up about 28% percent. And that's not market cycle. That's a monetary. These are monetary policy decisions that happen. And just as a quick screen share we can see how many times in the posted rate of inflation and how CPI from the bank of Canada, how they were trying to manage that inflation, their CPI rate. And you can see it kind of balloon post COVID lockdowns and everything and then afterwards kind of go back to settling. But that what I really want to highlight related to it is the CPI that you see here is Ottawa. And you know, US has their own CPI posted rates too. But it's their basket that they've put together and it's not specifically yours. Your basket includes food, it includes your mortgage, it includes payroll, includes imports. All of those costs are rising faster than what it is here. The next part is this CPI that you see annually is actually like a compounding effect. So each year it's not like your price is still stagnant at 2.8%, but each year the erosion of your purchasing power is actually going down. And I'm just using their posted rate, but it's not really the same thing. So every $100 in 2015 now, 10 years later buys about $78 worth of goods. I would roughly put the real is probably close to $70. So that's like a 22% pay cut you actually don't see on paper. And these are things that on the next episode I like to share more about diving in on the impact on the personal aspect. But if you think of it from the business, you've got a profit. And that profit may show $100, but the real purchasing power from that $100 is actually $78.

You know what I refer to inflation as?

Henry, what do you. What is it?

A pickpocket.

That's a good one because you don't notice it.

Exactly. It doesn't kick down your door. It doesn't corner you on the subway. It just quietly strolls in and picks your pocket and inflation. And you might be getting to this inflation. It steals from savers and it rewards owners of capital.

It shouldn't surprise anybody why the Rich get richer when inflation rises because the inflation is stealing from savers and rewarding owners of capital. And.

When you become your own banker and you create that, that system and you're doing it obviously using the right tool, you become.

An owner of capital.

And you get rewarded regardless of whether inflation is up, down, sideways, spinning in circles.

And so.

When you see that and you catch that, you can't unsee it.

And this is why, in case you can't see it, I just want to share, here's how you can see it visually with the $100 down to 78. Because the basket isn't the basket that they use isn't your basket, it's their basket. When we look at the real data that even that they've published, I've showed the sources here below that you know, the weighting, they decide that weighting but the implications to you, even though they're publishing the 2.8, 2.5, it doesn't really matter what it's actually impacting you is roughly 4 to 6% just per year. So if we're compounding that 4 further, that impact actually weights in your pockets much more. And if you're kind of on a, let's say a fixed income or a salary, very unlikely. Most people don't get that, you know, raise that is matching the erosion of their purchasing power.

So again, more, more of that to be talked about when we go into the personal aspect of things in our next discussion. But you know, the, the key takeaway is when we look about building freedom and not being attached to the system free on, you can't build it on a currency that's shrinking faster than your income. So it's a pretty big wake up call that I want to set for listeners.

I think we'd be remiss if we didn't also identify with our inflation conversation.

That.

The fractional reserve central banking system, the cartel as some may call it, banking cartel and the commercial banking sector, while they're necessary and everyone uses them to some degree, the degree to which you must use them and you're required to go and borrow. Well, when you sign the document for a loan arrangement, whether it's a car loan, a home repair piece of equipment or a mortgage, that's when the fake money comes into being because you've created a promise to pay on some future event and you're, you're, they're, they're manufacturing money essentially doesn't exist at that point. I mean that, that's the creation of money often happens at the signing of a loan arrangement. We like to think that it's this giant printing press that's printing more dollars. Well, everything is digitally done these days. And so it's actually you have to go work for those real dollars or those physical currency elements, have them deposited into your bank over a really long period of time to go and pay off a loan structure that doesn't fundamentally exist, if you think of it that way. And if we start taking our business, our depository business and we redirect it now as a premium and then we redirect our borrowing business which is typically with this third party entity that's essentially inflating the money supply and we go and do our business with a company that we co own with other amazing people just like, just like us, where we cannot inflate the money supply, we're choosing to vote with our dollars that we don't want to participate in a system that's designed to keep you oppressed and erode the value of your money. If you truly cared about inflation and that was the thing that bothered you, you wouldn't, you would need to take a serious look at becoming your own banker and implement that process. Because the proper way to really solve the problem is a bottom up solution, not a top down solution. You can't fix a top down problem when, when it was the top down people that created it.

Yeah, it's really good point it.

Inflation. So when people right now who are watching or listening, the vast majority are dependent upon someone else's system, right? It's like Nelson taught us. Isn't it true that at present all of your money is flowing onto the books of someone else's bank and then when you need access to capital, you're doing it on someone else's terms, not yours. And inflation, what, what inflation does is that it punishes that dependency. The, the infinite banking concept rewards control. And so when you control that banking function in your life, you're already insulating yourself from the very system that creates inflation to begin with because the insurance company cannot inflate its money supply. And, and then you, you're stepping off that treadmill and you're moving away from chasing returns to creating results. And, and the, the best part of that.

As you, Henry, did a great job explaining, when, as inflation is sort of shrinking the value of that paper, that's all that money is, it's belief in a piece of paper. Your system of dividend paying whole life insurance contracts continue compounding.

The value of capital.

And men.

So infinite banking doesn't just beat the pants off of inflation. It shows up to the fight with guaranteed growth, with tax exemption with the compounding factor that we described, ready access to capital on demand, on your terms, without interrupting the assets value or reducing it and without triggering a taxable event. And if inflation is left standing there going who picked my pockets?

Right?

That's awesome. Jason. The main thing when people look at the tools that we use and we support people. So we talked about structure at the beginning. Now we went a little bit deeper on the tool like the dividend paying whole life insurance policy. It's a tax exempt appreciating asset that when you are working with it properly, it's going to support you as what you're doing with it, what you do with it and when you're using it properly. The, the next component that why I'm going to talk about is if it's. If you're looking at the systems and you're dependent on other people's systems, when you're starting to create your own system and you're separating away from it, you need all of the ammunition you can get to help you in the circumstances. And with inflation, most people are working harder. And the part that you, I loved what you were sharing. I'm just going to add to it is you're not working any harder once your capital is residing in your own family banking function. And this part is now a great connection because there's all these other systems. But I think most people are missing the component related to the relationship of the systems. So as it relates to the banking system, the currency devaluation or purchasing power erosion, well how does that play a part to you working harder to earn more income to cover that gap. But most people now forget about this component which is taxes. I think most people understand the more income you make, the more they take. But the part that is missed here is how much additional punishment gets enhanced because of that. So what I want to share is going back to the example here. So the purchasing power from $100 in 2015 dropped 28,000 in 2025. And so to get back to the true amount that you had $100,000 post tax and with the 43% marginal rate, you have to earn roughly $50,000 more. So instead of $100,000 in 2025, your income should be about 150 just to maintain the same 100,000 purchasing power that you had 10 years ago. So the key point is not just the structure you have to change from. Sorry. It's not just about working harder. You have to change how you are getting impacted. And these include changing the structure, changing the way you do something, taking more control in what you do. You can't. You can't out earn the leak. The system isn't designed for effort. This is. The systems out there aren't designed for effort. I work harder doesn't mean I'm going to get, you know, pay less taxes. It just doesn't work that way.

The it's. Yeah. The average person just. You said works harder. I'm thinking my brain goes to. The average person is running faster or trying to run faster. And the process of becoming your own banker is just changing the terrain.

Can't play the game anymore.

That's how I see it. And.

When, when prices go up. Right. The average person on Main street feels. Feels squeezed. But when you're controlling the banking function as it relates to your needs.

You see opportunity because you've got liquidity and you've got access to capital. So again it's a scenario where inflation hurts the dependent and the infinite banking concept rewards the prepared. And you're doing what banks do, not what their customers do.

Big difference.

And how are the bankers making out?

And the industry is just based. Built on growth charts and not control charts. Right? Right.

100%. We're slamming these analogies today. Like we gotta transcribe this. I'm serious. Like this is good. I've gotten like 15 book titles already that I'm going to run past Richard. He's going to have a migraine before he goes into his weekend. But when, when the inspiration strikes. Like I've got some book titles we're going to. Yeah, we're just letting the audience know right now we're putting out another book.

I just see Jason feverishly writing all of these down. He was just like going crazy. And you know the part just to kind of separate the noise that you may hear. Again, this is us trying to provide better signals for you. Is advisors mostly are trained just to look at a return projection. Things like 5% return ejection projection. But what's actually happening could be something like 7% erosion to your purchasing power. And most advisors are managing portfolios. What I want to impress for the listener is we're helping you manage your system because we don't have a crystal ball. But if you have the. We can provide the guidance and the compass for your specific structure and your system and you can out earn the policies drag. You have to out design it. You can engineer yourself out of these circumstances. The key is are you willing to do that. Love that. So we can go towards, I guess, wrapping it up from here. Break here, wrap up here. So the key kind of takeaway, just wanted to highlight on what we've discussed was the importance of how policy seemingly feels very innocent. But these ripple effects go down to the you and me level, down to the kitchen table. And for the business, it can impact your valuation which is the most valuable asset. Just from that you can see someone's business can go down 62% or the amount that you know, you, it's not like you could even control that circumstance if you were not properly planned or structured around it. So how do you weather the storm? Not using a paper umbrella. And then the second component was just kind of setting the stage for when we talk about the personal aspects of things as it relates to purchasing power and not confusing with inflation, which is a government basket derived number, not a you and me purchasing power discussion. And then lastly we were talking about taxes because the relationship of the systems, you've got to out earn, you've got to earn 150,000 after taxes, after erosion of purchasing power just to get back to the 100,000 that was there 10 years ago. So how can you think differently instead of working just harder, you've also got to, you know, I'm sure it's very cliche to say work smarter and actually work differently and change the game so that it's in your favor. Most, most owners feel they're carrying everything and I know all of us as entrepreneurs can really relate to that staff, clients and family. But they're not even aware that their foundation is fragile. So I just kind of want to share, you know, when policy can move your fortune, I just would say you never really owned it and just, yeah, just share from, from that vantage point.

That's very good. When you mentioned financial, you know, like a typical financial advisor and, and how they, I guess how they addressed someone's financial, you know, structure and how they conduct their financial lives. It's.

People may hear in, in America and Canada, they may hear a financial advisor and an ascendant advisor using some of the same words, but we're not doing the same job.

The, if you, if you think of a typical financial advisor, they, they look at your money. Our infinite banking practitioners look through it to see what it's actually doing for you. There's, there's a big difference there. And the, the advisor's mindset is typically transactional. Would you agree? Right. They help you choose right. The right Roth IRA 401k RSP.

Pick whatever financial product you know comes to mind. It's, it's typically to optimize the function of investing.

But they're working inside the same system that we've been talking about this entire time. One that makes sure that the government and the banks get rich first. They're trained to think in terms of rate of return, not rate of control.

And measuring success in percentages. But like, what does that even mean versus possibilities? And our coaches flip that on its head entirely. We never start with product. We always start with process. And we're asking really, really good questions. Where's your money flowing to? Who controls the banking function as it relates to your needs? And how much of your hard earned after tax cash is leaving you and everyone that comes after you in the way of lost opportunity cost permanently.

The traditional advisor says, okay, well, how much, how much can we earn?

Our advisor team is saying, how much can we help you keep?

Again, advisors help people invest. Nothing wrong with that. Our coaches help people think about their thinking. And it's that thinking that changes everything. Because once you really understand the infinite banking concept, you, you, you see that the financial system isn't broken. It's just not designed for you.

It just isn't. And so when the typical financial advisor's goal is to beat the market.

Our.

Coach'S goal is to help you beat dependency.

And then you win.

I'm not going to drop this mic, but that.

That'S a real wealth difference, right, guys?

The only reason you want to drop it though is because you have to replace it. And that same microphone with the inflation that we've had since you bought it is, it's, it's pretty nasty, actually.

Well, I. So rich, let me. Yeah, I would agree with that, by the way. So Nelson would say, and I've been thinking about him this whole time. Nelson would say, you just don't have to play their game. And when I had shared with Nelson years ago that they should have another golden rule, which is to rethink your thinking, he, you know, Nelson, he was like.

He loved it. And then boom, immediately at the next think tank, it was revealed that that was the, you know, the next golden rule. Here's what I would have said to Nelson today if he would have expressed to all of us, you just don't have to play their game. I would say, Nelson, you're right. You just have to play yours.

I gotta share that with David. See if the, see if the institute wants to take that on.

He would also say simply secede seed from their way of thinking. And he would also, probably somewhere along the way. So you know what caused all that stinking thinking?

Oh, so true. So true. Man, I miss him.

Well, for Everybody watching on YouTube, of course, you'll see another video that just popped up. It'll probably be as good as this one. This one was a lot of fun, though. Henry, thanks for being with us. We'll have you back on again real soon. And keep that incredible journey of learning top of mind. Tired of having your farm under the control of someone else, like a bank? Well, the only way to stop that.