Buy Things You Can't Afford, And Inflation Will Literally Make You Wealthy

In the early 1920s, Germany's currency was completely collapsing. Millions of people, they watched their savings, their salaries, their purchasing power all just disappeared. But there was one businessman, and he became so wealthy during the crisis that people called him the Inflation King. Now, his name was Hugo Stinnes. He borrowed money in German marks and used it to buy coal mines, factories, shipping companies, utilities, and other productive assets. Now, as the currency lost lost its value, the real burden of his debt started to collapse. But the assets that he continued to hold continued to produce goods and revenue. Now, it may sound like a strategy from another era, but the same underlying principle can still be used today. So in this video, I want to break it down. I want to show you how Stinnes turned inflation into arbitrage, why copying him could blindly destroy you if you do it wrong, and how to apply the strategy without putting your wealth at unnecessary risk. All right, now before I give you the strategy and show you the mechanism that he used to benefit from inflation and how you can do the exact same thing, you have to understand inflation. We're talking about inflation, we're talking about money debasement or money creation. So we're talking about every single time a central bank anywhere in the world creates one more unit of currency, it diminishes the value of all the other currency. All right, so inflation is typically measured through CPI, and it measures how much a basket of good goes up. Forget that for a second. We're talking about every time a dollar is created, it diminishes the value. And in Germany, they printed So much money to pay for war reparations, et cetera, that the value of their money lost so fast that they eventually burned money in the fireplace. It was worth less than the wood was. So it was hyperinflation there, but we're living in inflation right now today. And you see this in housing, you see it in gas, you see it in steak and things like that. You see it in things that aren't easy to replace. So sure, electronics, TVs, computers have come down in value, but everything else, your healthcare, your insurance, keeps going up. Okay, so we're seeing inflation. And the 2 things in life that are certain, they say, are death and taxes. And I would give it a 3rd. And the 3rd is money printing. And so they will continue to print money. And there's multiple factors I talk about on my other channel, my macro channel. We talk about why that's going to continue and not just continue, but continue to accelerate. So the rate of inflation will only continue to get faster and faster and faster for reasons I'm not going to go into. But if you understand that, then you can understand why this mechanism is so powerful. So how do we benefit from something like this? Now that we know this, how do we set up a system? Now, I said Hugo Stinnes became the richest man in Germany, but there's lots of other people that deploy this same strategy. It's an arbitrage strategy. It's a positive carry strategy. You might've heard that. It's the same strategy that Warren Buffett used to build his wealth, the same strategy that Michael Saylor is using to build their wealth. And it starts with number one, using debt. We're borrowing money in the failing currency. Okay? So for example, We saw in Turkey, the Turkish lira lost 95% of its value to the US dollar in about 5 years. Okay. Now, if you knew that, if you had a time machine, you can go back, you could borrow in Turkish lira, and then just buy the US dollar and let it do its work. All right. So that's what we're talking about. You want to borrow money in a failing currency. He borrowed in German marks, you can borrow in dollars today. So I'm borrowing money, and that may be a fixed amount that's losing value. So every year that money is worth less and less. But what I do with it is not go on vacation. I don't buy new cars. I don't go out to eat and I don't buy liabilities. I buy assets, things that produce or things that go up in value. Now, a lot of times people hear this strategy right off the bat and they're like, wait a minute, you're talking about borrowing money and buying assets? That sounds risky. You're buying the asset. You're not using debt to go buy a depreciating asset like a car or go on vacation. You're literally buying assets. And so we're borrowing money, we're buying assets. So things that go up. So, the value of the money is going down, but the value of the things I went— I bought go up. Then the beauty is that inflation does its thing. So, when prices start to go up, because the currency units, they are buying less and less and less, then the revenue rises with them. So, what that means is if I have a rental property and it's bringing in $2,000 a month, over time, I raise the rents because inflation. And over time, my rents go up, $2,000, $3,000, $4,000. but my payment over here stayed fixed. So, let's say, you know, I started at $1,500 a month and I was making a $500 spread, but over time, I'm still paying $1,500 a month, but now I'm making $4,000. Inflation destroyed debt. I love that. Okay. Then prices rise, my revenue rises, or my assets go up in value. And then what I can do is I can repay the same loan, but with cheaper money. So, if I borrowed, you know, $250,000 to buy this property and my payment again is, you know, whatever, a couple thousand dollars a month, in 20 years from now, in 30 years from now, That money is not the same value. And so what's happening is the government has to continue to print more and more and more because the debt keeps getting higher, which means the interest on the debt keeps getting higher. They're running $2 trillion deficits. So they have to keep printing more and more and more. When they print more and more and more, they need the interest rates to come down, down, down so they can afford the interest payments on it. So the amount of debt is going up, the interest rates come down, which causes inflation, which means asset prices go up. So They're pushing the rates down, the cost of money, which means my borrowing costs are cheaper. And they push the assets that I bought with the cheap money up at the same time, destroying my debt. It's a, it's a flywheel. It's a macroeconomic flywheel. All right. Now real quick, there's a QR code on the screen right now. I'll put a link down in the description down below. But if you want to see how these strategies actually apply to your own specific situation, then my team would love to walk through your numbers with you and help you build what we call a personalized wealth operating system. So go ahead, click on the link down below or scan this QR code that's on the screen right now. And then come right back because we've still got more important parts ahead. Now, Now, Hugo Stenius, he did it. He became the richest guy in the world. Warren Buffett, he did it. Michael Saylor, he's doing it. But I know for a lot of people, this sounds extremely risky. So let's think about a couple of things and some rules that we could use to make it safe. Now, before I give you the 5 rules, let me just explain something real quick. Let's think about mindset. And I know you don't want to hear this part. You just want the rules. I'm going to give them to you. But think about the mindset for a second. You see, because the way that a poor or middle-class mentality, not the amount of money they make, but the mentality is that I work to pay for my living expenses. And the more that I work and make, the more my living expenses could go up. And I use credit to buy things that I can afford. That's the key piece. I buy things I can afford. So when they hear things like, oh, you're saying to use debt, they automatically get scared because they're thinking about buying things they can't afford. But have you ever known somebody that's like pretty wealthy, really wealthy, and you see them get a loan to buy a car or something like that? And you're like, but wait a minute, they have so much money. Why would they get a loan to buy a car? Because the wealthy mentality is that I use credit Because it's cheaper than using my own money. It's cheaper to use someone else's money than my own. And so when I have a wealthy mentality, I don't worry about, but what if I can't afford it? Because I have the money. I can afford it. I have the assets. And so we're talking about using liquidity to buy assets. Okay? You need to put yourself in that different mindset. Now, if you have that right mindset, let's go into 5 rules that make it safe. So number 1, long-term fixed debt. Okay? Fixed rate. So what does that mean? What is long-term? Well, long-term is relative. But typically, I want to have the debt for longer than the cycle duration. So for example, Bitcoin has like a 4-year cycle. And so there's never been a point in Bitcoin's history that you could have bought it at any point and been down 4 years later. And so I'd want to make sure I have longer-term debt than that. If I can get a 30-year fixed-rate mortgage, amazing. But I wouldn't want to have debt that would be marked to market on a daily or monthly basis with a revolving or a changing credit line, because now I can't plan long-term if I don't know what the interest rate is going to be. And I don't know what the duration is going to be. It gives what I call duration mismatch. Number 2, I want to borrow modestly. Like no one's saying to back up the truck here and take, you know, crazy undue risk. You want to make sure that you're leaving room for the cycles. You want to make sure that you have room for the asset to fall in value because no asset has ever gone up in a straight line. Assets go like this, and they never go down in a straight line. They go like this. So we want to make sure that we make room for these cycles. So we want duration, right? And we also want to make sure that we leave room there. And then we want to make sure that the asset Pays for itself. So one of the questions I hear all the time is like, but how do I make the payment? Well, you buy something that pays for itself. If I put it into a rental property, the tenants pay the debt for me. It's amazing. They're paying off the debt for me. So not you, not out of my pocket. Now they pay itself. Okay, then I want to make sure that I have cash reserves first. So I want to make sure that I have the money to pay the debt, and it's in reserves. For example, when I was building real estate, sort of as my full-time job, my career, I was doing hard money loans. And so I'd get, you know, a million, couple million bucks to build a spec home or condo unit or whatever it was. And that would typically be like a 1 to 2 year duration loan, really high interest rate, typically about 10% at the time. And they would want me to set up an interest reserve account. So they'd give me the money, I'd have the money for the jobs, it'd come to me in draws, obviously, as I built it. But then I'd set up an interest reserve account that was there to make the payments. So they knew the payments would get made. And so we can set up cash reserves, some sort of interest reserve account, what Michael Saylor has been doing by raising $3.6 billion right now. And then finally, I want to make sure that I'm never a forced seller. Because again, assets go up and down like this, never in a straight line. And I want to make sure that I'm not forced or liquidated to sell at the worst possible time. So for example, if the asset's going like this, I don't want to be forced to sell right here. If I could just wait through, it's going to be higher later. So I never want to be a forced seller. I want to sell when I want to sell, which is if I have the right asset, probably never. But I never want to be stuck or dependent on refinancing or concentration on a lender Or something like that. So I've already sort of drawn this out. So I won't spend a lot of time, but just take a look and see what it would look like just on one single property. So for example, let's say that I want to put 30% down onto a commercial piece of property. So it's a million-dollar property, I put 30% down, and I have a fixed 30-year loan. So now I know the interest rate. And I know the term is locked long term. That's great. Okay, now, the rents, if I buy this right, you make your money when you buy, not when you sell. So if I do it right, then the payments that come in cover the monthly payment. So again, I put some initial money in, but then the tenants are making the payment for every month. That's amazing. The rent also is going to cover any costs or repairs that come up. So I'm putting a little bit aside for maintenance all the time. I have a reserve built up for unexpected expenses that come up, vacancies, things like that. And I make sure it's covered. So I put the money in, I make sure that the property is covering itself. Now, there's other things that we also get like tax depreciation. That's amazing. I'm not going to get into all that. But let's just zoom out. Let's think about 10 years on. Over time, the rent keeps going up. I was charging $2,000. Now it's $3,000. Right now it's $4,000, etc. But the loan stays exactly the same. So here I'm making $500. But here I'm making $1,500. And here I'm making $2,500. So the amount of my profit is going up every single month. I have fixed debt, rising cash flows, And time does the heavy work. Now you can apply this to many other things. Let's just say for example, I took on a loan, let's say an SBA loan to buy a 7-Eleven or a dry cleaners or a laundromat to produce cash flow. Same thing, a little bit of debt, I buy the cash flowing asset, the cash flow pays for the debt, and it goes up in time. Now this is the lesson that Hugo Stinnes understood, that when money loses purchasing power, you want to own the productive assets. When you own those, It matters way more than just holding a large cash balance. But again, his story also proves that assets and debt, they're not enough on their own. You need rules for liquidity, you need leverage, rules for leverage, cash flow, taxes, and for how capital moves through this entire system. Now, in the next video, I want to show you the complete wealth operating system that connects all of those pieces together so you can use assets and debt strategically, but without putting yourself in a position where the market can force you out. So if you want to see that, go ahead and click on this video right now. I'm gonna walk you through the complete system step by step, and I'll see you over there.