What Assets Hold Value in a Currency Reset and Why

What assets hold value in a currency reset and why? See, this might be a hot take. If your entire financial plan depends on the dollar behaving forever, you don't have a plan. You have a hope strategy. And today I'm going to show you how currency changes actually work and how to evaluate the assets using my 5 filters of resilience. And at the same time, how do you eliminate or stop chasing shiny objects so you can start building a money machine that gives you real control? Real freedom. This is Building Your Money Machine, where we help you master your money, eliminate financial stress, so you can live a life of choice. Because earning more doesn't make you free, a money machine does. And I'm your host, Mel Abraham, and after 30+ years inside money as a CPA, as an entrepreneur, as a money mentor, and someone who's walked the financial freedom journey himself, I realized, oh, it's not about bigger numbers, it's about bigger and better choices. So if you're ready for the straight talk and the real solutions, let's do this. All right. Most of us were taught that money is a thing. You save it, you spend it, you invest it, you use it. Okay. But money, it's just a measuring tape. See, assets are the house. And if the measuring tape changes length, The house didn't move, but your perception did. Okay. And money currencies, if you will, they change, they always have, but assets tend to outlive currencies. And that's really actually lesson number 1, but we need to understand what happens with currencies. How does this work? Because we just assume that the currency will always be there. But I did another episode on fiat currency that talks about the fiat currency system, But our currency is built on the belief and the acceptance by the government. It's no longer backed by gold. We'll talk more about that here. But what happens now is that that currency can go up and down for a lot of different reasons. One of the biggest reasons is you can look at them printing more money, which they did during the pandemic, or how the currency's purchasing power is affected by inflation. This is Both of these, the printing and the inflation, it's like having this pickpocket that's walking along and just taking the dollars out of your pocket. So let's talk about this for a moment. Let's talk about inflation. Inflation isn't necessarily prices going up. It is. I mean, we see that things cost more, but really the impact to us, inflation means that our money is buying less. Same groceries. Same gas, same insurance, but more dollars. That's what inflation is. I mean, we talk about the prices going up, but if the prices went up and our wages went up at the same time, the relative connection is similar and it won't— it wouldn't matter. But when we have the inability to buy the same amount with the same dollars, that's what the impact is. Okay. If your money is standing still, it's really moving backwards. Because of this thing called inflation. Now, now, when we add to that this idea of printing money, because the government can print money— printing money doesn't create wealth, it redistributes the purchasing power. It dilutes it, if you will. See, the new money shows up in the financial markets first, okay? And regular humans feel it later at the checkout. Here's, here's the truth bomb. Printing money doesn't make society richer. It dilutes existing value because now the same— there's, there's so many more dollars, if you will, to go around. And, and now all of a sudden the dollars are worthless. Okay. Which means that if your entire strategy is earn more and hope, that's not freedom. That's just broke with benefits. It's high income is a shinier leash. If your money stops when you do, you're not free, you're rented. And this is where I think we need to start to talk about, are we using the currency to invest in assets that have the resilience as things shift? We talk about portfolios and a portfolio structure. I build it out in my book, Building Your Money Machine, and my courses, The Money Machine Blueprint, and all the things that I do with my clients and students. But most financial advice is primarily focused on optimization. Maximize your returns, minimize taxes, beat the market. Okay? And I— and that is absolutely something we want to do. And it's something I do with— for my clients, with my clients in my own world. And it works beautifully in stable systems. But when systems wobble, the game changes. So now the questions become, can I access my money? Now, let me be really clear. I'm not trying to spur up fear, conspiracy theories, or anything like that. I'm just trying to get you to have a level set understanding of currencies and what happens if there is a shift, if there's a devaluation, if there's more printing, or, or maybe we go to a digital currency. I don't know if that's going to happen. Okay. But you're going to ask, can I access my money? Can I actually use it? Does my currency, does my money adapt, or do I need permission? From someone to use it. It could be the government agency to touch my own cash. See, in normal times we optimize. In uncertain times, we survive. Returns matter in stable systems. Resilience matters in changing systems. And so let's just talk about the idea of what a reset could look like. And this is history. This is not hysteria. Let's just ground this because resets don't look like the movies. It's no Mad Max and countdown clocks and all this stuff. They, they literally look like policy changes, rule changes, restricted access, staged conversions, new incentives, new penalties. Wealth doesn't necessarily vanish. It gets reshaped. So we've already lived through this. In the 1930s, the Americans pushed off gold domestically and the dollar was devalued. Post-World War II, the global financial system got reorganized. And in 1971, the US disconnected the dollar from gold, reshaping inflation and markets for 50 years. Okay. More recently, countries have redenominated their currencies. They've wiped zeros, literally zeros off of bills. They've replaced systems entirely. Now, I'm not saying that's fun, and I'm not saying that it's good, and I'm not saying, you know, that it destroys people, but it can. But daily life continued. At the same time, purchasing power shifted. And so when I say reset, I don't mean collapse. I just mean that structurally things might change. That's history. It's happened in a lot of different countries around the world, a lot of them developing countries. But, but can it happen here? It's possible. Do I think it's going to be as dramatic? Likely not. So it's history. It's not hysteria. But I think it begs the question for us to start to look at things through the eyes of, okay, I'm building a portfolio to optimize. Am I building a portfolio that's resilient if there's a shift in the systems, a shift in the structure? Okay. And so I don't want people doom-scrolling at midnight and everything. I want people to look at it through a preparation eye. So when I look at it, I say every asset goes through what I call the 5 filters of resilience. And the first filter is scarcity. Can more of it be created easily? Okay. Printing money, we can print easily. Gold, we can't, we can't print gold. Okay. Utility. Okay. Does it help you live, earn, or function in real life? Okay. Is there something that I can utilize it for? So the third is control. Do you actually own it or does someone else decide when you have access to it? Okay. Do you have control of it? The fourth is convertibility. How easy is it to turn it into something usable? You can't carry a bunch of gold bars around and then say, well, I need to shave a piece off to buy a dozen eggs. Okay. It's not as easily convertible. And then the last element is, does it have liquidity under stress? Not normal liquidity, but crisis liquidity. When the markets tank or, or something like that, can I still get at it? Or all of a sudden there isn't enough to go around. Okay. So if you understand these 5 headlines, stop controlling your emotions. No asset actually though passes all 5. And that's why we build systems and the systems that matter. Now, before I go deeper into this, I think that it's important for each of us to understand what does it cost us to live? Because if we're trying to support that lifestyle and we wanna make sure it's resilient and it filters through the 5 filters of resilience as at the same time we're trying to optimize it, then I need to know how much my life costs. Well, that's where I have my lifestyle cost calculator in here where you can go in and actually put some numbers in, 'cause a lot of people don't know what their life actually costs, you know? And so once you put the information in, it will spit out what your life costs. You can get this, we'll hook it up for you here. You can go to melabraham.com/lifestyle, grab it, 'cause it shows you what your lifestyle costs today. And it shows you what it'll likely cost in the future, which gives you a real target for your money machine. Because retirement isn't a number, it's a choice. And the choices require clarity. So do that first and then, and then we can go in. Now, let's jump in and let's look at the assets themselves through the eyes of the 5 filters of resilience. And let's start with this idea of cash. Cash. We say to have liquidity and that's the oxygen. Cash exists for one reason, breathing. It handles the flat tires, it handles the medical bills, it handles the broken water heaters, the surprise life moments. Cash gives you speed. Cash gives you flexibility, but cash has no scarcity. Okay, I get it. You might be saying, you ain't seen my bank account. It's scarce in my bank account. I get it. Here's what I mean by no scarcity. Governments can create more whenever they want. They can decide to print it, which means that while cash feels safe, it quietly loses purchasing power over time. And that's why I say cash is oxygen, not nutrition. You need it to breathe. You cannot live without it forever, and you can't live on it forever. It's great for emergencies. It's terrible for preserving wealth. It's there to protect it. It has a different job. Okay, so cash, cash flows through that filter. Now let's go to the other side of it, gold and silver, because that's a big deal these, these days. Because this— if cash is oxygen, gold and silver is like a seat belt. Gold and silver exist for preservation. They are scarce. They don't depend on banks. They don't require Wi-Fi. They don't care who's in the office. If you hold them physically and they sit outside the financial system, that's powerful. But they don't produce income. They don't necessarily grow. The value might grow as more demand for it grows. They just sit there quietly doing their jobs. And that's exactly the point. Gold and silver, they don't make you rich. It helps keep you from getting poor though, when there's uncertainty. And that's why you see in uncertain times, there's a rush into, into these kinds of assets. But think of gold like a seatbelt. It doesn't make the car go faster. It just helps protect you when things get bumpy. Okay. Which then leads me to this idea of digital assets, Bitcoin, things like that. That's like the jet ski, okay? Bitcoin is fascinating because it combines scarcity with portability, okay? It's fun, it's crazy, it's volatile, it goes fast. If you self-custody it, you control it. You can move value across borders in minutes. It's transportable. It's remarkable when, when it comes down to it. But here's the, the human version of it. Bitcoin can go up a lot and it can also go down a lot. People that have held on Bitcoin recently have experienced it. It's lost over 50% of its value. Now, what's driving the value? I did in another episode, but what's driving the value is just supply and demand. More people are selling it than buying it. It's not because it's got a business model behind it. It's not because it has cash flow behind it. It's not because it's got growth behind it. It only grows because it has demand behind it. Okay, that means that a relatively small amount of money can turn into big gains because it goes up a lot, it goes down a lot, which means that it can also be a painful loss. And that's what people mean when we say high upside and high risk. So I think that Bitcoin is that exhilaration jet ski for the portfolio. It may be fun, it may be fast, it may be powerful, but if you're crossing the ocean, you probably don't want that as your ship. Okay, this is not your whole plan. If you're going to hold it, it's a slice of it to counteract some of the things, to, to give you resilience when other things can't be movable and everything. It's totally optional. It's not foundational. Okay, then we move to real estate. This is the anchor. Real estate works because humans need shelter. Rents tend to rise with inflation, property can generate income, so you have cash flow. That's real utility. There's a use to it, there's an income stream to it, okay? But here's the thing, it's not transportable. It doesn't move. It's there and that's it. It's taxable. It's got a lot of friction to selling, liquidating, and getting access to the value. You don't wake up one day and liquidate your kitchen. You can't carve it off. It's all or nothing. So when I look at real estate, Real estate survives because it's useful, not because it's sovereign. It's resilient through utility because we need it, because we use it. It's not mobile, it's the anchor to it. Now you're starting to see how your portfolio needs to be made up of all these different things to make it work, which leads me to the thing that I invest in most, and that's stocks and businesses. This truly is the engine. See, stocks represent ownership in productive companies. Good businesses will innovate, they'll adapt. When people say, well, the economy, you know, what do you think? I said, I truly believe in the innovative spirit of entrepreneurs to figure things out. And good companies will innovate and create new ways of doing things. Apathetic, complacent companies will not. They will go by, they'll go by the, by way of Blockbuster Video. Okay. And as they adapt to changes, they raise prices, they solve problems, they solve bigger problems. Some of the businesses will continue to grow, they'll flourish. And you're investing in that growth. You're investing in that innovation. You're investing in that cash flow. And when you invest properly, you're buying economic engines. But markets can freeze, prices can swing, liquidity can disappear temporarily. Stocks give you growth. They don't give you guarantees. They do, over the long term, have proven to grow. 8 out of 10 years the stock market goes up. Okay? So having a diversified portfolio in good companies, the probability of growth is, is much greater. And stocks, investing in equities as well as real estate, has a historical record of bypassing or surpassing inflation, outrunning inflation. Okay. Then we look at some of the other assets like retirement accounts or pensions. These are conditional assets. These are things that aren't bad, but they're conditional. They come with rules, they come with age limits, they come with penalties, they come with required distributions, which is really the government's way of saying, we want our tax now. They don't allow you to defer the tax forever. They work beautifully in stable systems, but access to them is restricted. You're deferring the promises in the future. Now, they're still valuable because you're investing them, these Retirement accounts could be invested in a lot of those assets we just talked about, whether it's crypto, whether it's real estate, whether it's stocks, but they're constrained. And if you need permission to get access or there is a tax or tariff, if you will, to get access, it's not fully yours. That's not fear. That's just structure. So let's bring this all together. And what does this all mean? Hopefully you see the pattern here. No asset does everything. And that's why the money machine needs multiple roles to work together. They need liquidity so you can breathe. They need growth so you can expand. It needs income so you can— you're not dependent on paychecks. It needs preservation so purchasing power survives. Optionality so you can adapt. Okay? Not diversification by symbol or a ticker symbol. Diversification by purpose. Every dollar should have a job. Every job should serve your life. And so when you're building your path, when you're building your portfolio, gotta ask yourself, is the portfolio mix make sense from a diversification standpoint on the assets that you're investing in, but also the kind of purpose each asset serves? Because now you see that the different assets serve different purposes along the economic journey. So here's your path forward. Map where your money actually lives. 1, 2, identify which assets require permission. 3, know your true liquidity. 4, own assets with real world utility. 5, build systems, not reactions. 6, when you think about all of this, you don't need another job. You need a system that works when you don't. Okay, listen, currency systems change, rules change. Don't get caught in the fear-mongering. Don't get caught in the conspiracy theory and, and all of that. Understand that assets, different assets work differently from a resilience standpoint, from an optimization standpoint. It is why we have a diversified portfolio done the way we do it. But people who understand ownership utility, adaptability. They don't panic, they just reposition. That's the real wealth skill that, that works. And remember, earning more isn't going to just make you free. A properly built money machine does, and that's the game I want you to play. So rather than fear some sort of reset in the currency or not understand it, understand the assets and how they play in the game of wealth and how they should play in your life on your journey to wealth and financial freedom. I hope that this helps. I hope this has just gave you an inkling. We can go deeper on a lot of these things, but I just wanted to touch on them in a way that hopefully opens your eyes, keeps you away from the fear-mongering, doesn't get you going down the black hole of despair, but gives you a promise for tomorrow by doing the right things in the right way. At the right time. All right. I hope that this helps. And I'd love to hear your comments, your thoughts. If you have any questions, reach out to me. I love having conversations with my audience. It's awesome. And while you're there, make sure you subscribe to the channel and give me a thumbs up. It makes YouTube happy and it makes me happy too. All right. Till I get a chance to see you on the road as I'm out there speaking or on your path to financial freedom, as I always say, Always, always strive to live a life that outlives you. Cheers for now. And that's it for this episode of Building Your Money Machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you'd do me a favor, go to Apple Podcasts or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people, because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.