Richard Canfield and Henry explain how inflation erodes purchasing power: a $100 bill from 2015 is worth about $70 today, far worse than the official 2% target. The real hit to your wallet is 4 to 6% yearly when you factor in food, housing, and imports. Savers lose while asset owners gain.
Chapters
Each year the erosion of your purchasing power is actually going down.
You've got a triple threat today. You've got Richard, you got Henry, 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.
The most expensive misunderstanding as it relates to finance inflation.
It steals from savers and it rewards owners of capital.
So that's like a 22% pay cut. You actually don't see paper.
When you see that and you catch that, you can't unsee it.
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 expensive 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.
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You know what I refer to inflation as?
Henry, what do you. What is it?
A pickpocket.
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.
Go ahead, check out the next video down below. And if you want to make sure you get a copy of Don't Spread the Wealth so you can have family banking meetings that actually matter, go to don'tspreadwealth. Com Don'tspreadwealth. Com.
