Intro to Cryptocurrency w/ Bob Burnett (Part 1 of 2)

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Hey, what’s up simple passive cashflow listeners. Now I wanted to announce a new project I got going on. The rich uncle YouTube channel. So those of you guys have been following me for the past several years since we started this podcast back in 2016, simple passive cashflow started off with me buying some turnkey rentals, eventually getting my portfolio to 11 and 2015, and I felt the pinch and I realized these rental properties was not the path to financial freedom.

It was the path there, which I still think non-accredited investors under quarter-million half a million should definitely go on buy a rental property. You get that experience, feel what it is to be or moat landlord, and then move off to bigger and better things as you become more of a credited investor or on the verge of.

So it’s a transition into being more of a passive LP partner, diversifying yourself over multiple deals out there where you’re just an LP partner, little to no liability, no debt in your name. You can still Chavel hack all these credit cards, which we’ll have a feature podcast on that too.

And you can also partake in the value add strategy, right? When you’re buying turnkey rentals, which you’re essentially doing is your. Just buying an asset that has little to no built in equity in there other than your down payment. And there’s no business plan to increase the revenue, therefore increase the price where these a large apartments indications, mobile home parks, et cetera.

There’s usually some business plan to force. Appreciate the asset. And maybe we’ll get lucky with some market appreciation in there too. That’s typically real estate goes up in price, but the big thing is that force appreciation. The only way you can do force appreciation is if you do it on your own, in a burst strategy.

And that is that my first premiere video on the rich uncle YouTube channel. You guys can go and check out, So a simple pass, a castle podcasts and YouTube channel. We’ll continue on this path of, as you guys grow with me to be accredited investors, but lately maybe I’m just getting old, but I see a lot of kids these days between the ages of 18 and even.

Mid to early thirties, they already haven’t gotten it together, right? Their net worth is still under a quarter million, half a million dollars. And maybe for you guys listening, maybe this would be that cool hip fun video version of simple passive cashflow for kids where they can learn about this stuff.

Learn more about those basic financial things. In this first video, which we’ll be talking about is the burst strategy. Which you can give them. A lot of these people like to do this by rent, rehab repair. I frankly think it’s a waste of time and not a really good risk adjusted return when you could just be a passive Opie partner.

But what do you do if your net worth is lower and you’re not having any connections, that’s what this video is talking all about. So share it with your kids and listen to the rich uncle as they start to become old and grumpy. In the future, but for now it’s just rich. Uncle is a YouTube channel and on today’s podcast, I’m going to be quickly going over what is a bridge debt and private equity. And I think a lot of you guys have told me, you’re frustrated about other podcasts out there. Just sustain on lane thing.

And yeah, everybody does podcasts these days. They’re easy to be honest. Now, this is a sort of a sample of what’s you’re going to find in the syndication LPP course. And if you guys haven’t checked that out, please go to simple passive cashflow.com/syndication to check out the free guide the syndication.

And there’s a, be a link in there to the e-course. Now the e-course I think it costs like maybe a few hundred bucks. But it’s really good. It’s not just some lane book that just going to tell you every little thing that everybody other regurgitates over and over again, just runs through spin texts, application to regenerate the same old, a hundred page 200 page book, it’s going to tell you the secrets of what syndicators are doing out there to trick you guys into going into whatever deal. Not saying it’s a bad deal, but I think it’s just good to be aware of these things. And today’s podcast talking about. Private equity and bridge check is going to be a sample of what you’re going to find in the e-course, which I think it would , take most people 10 to 15 hours to go through the entire course.

But with that said, here is the content.

Hey, simple passive cashflow listeners. Today, we are going to be talking to Bob Burnett chairman and co-founder to be systems, but he is going to be catching us up to speed on this Bitcoin crypto craze that has been happening. It’s going to be a little bit of review, but a lot of new concepts and good ideas that when I first saw his presentation.

Really helped the whole thesis around inflation and investing in just real hard assets and maybe Bitcoin might be wonderful, but welcome Bob. Appreciate you coming on and doing this for those of you to sing on the podcast I would encourage you later on to come over to the website and the YouTube channel to catch up.

We’re going to have a full presentation on this. If you guys know PowerPoint slides going to have a lot of good hemorrhages that we’re going to be referring to. You guys can also check out our crypto page. It’s simple, pass a castle.com/crypto and join our community too. We have also a lot of discussions on crypto with the group.

But yep. Bob let’s let’s educate the folks. All right. Hey, thank you lane. I appreciate the chance to talk to you again and especially to your viewers and listeners today. And frankly, anytime I get a chance to talk about this topic I do so because not only is this for me, one of the greatest financial opportunities for people, but it’s something that.

I believe in passionately from the perspective of freeing people and creating a quality around the world. And I think nothing represses people more than mismanagement of money or corruption of money. And I come from that spot when I speak with people almost from an evangelical perspective, sometimes I like to say, So as you said, for those of you watching on YouTube, you see the title of this as a freedom and money.

And that’s the perspective that I come from as I talked to you today. And one of the first things I like to do when I speak with people and lean on, I’ve already talked a little bit. But I’ll pose this question, to, Julaine for the benefit of the users, which is, if you think about where crypto is having its largest impact, do you have a couple of guesses as to where that is?

And Where is it? Yeah, I’m going to give away the slides here. Cause I know what the answer is. Here’s where it’s happening, guys. Where’s the adoption of the Bitcoin and all these deals where it’s all these jacked up countries there’s turmoil within their currency.

So as a side here, Nigeria, Vietnam, Philippines, Turkey, Ru. The United States is relatively low on this list, right? Bob? Yeah. And I think that’s important from a couple perspectives. The first one is what this tells you is that, people in turbulent areas of the world are recognizing the value of cryptocurrency faster and appreciating it faster than those people.

And first of all, countries, the bottom of the list for those of you who are only listening is Japan, Germany, us. So you have these really stable countries, which actually have very low adoption rates, like four or five, 6%. And you have at the top of the list, you have Nigeria 32%. So that’s very important to remember.

So when we look at, what’s the price of Bitcoin, for instance, which we’ll talk more about later, is it. Is it a bubble? Is it about to burst? Is there no opportunity for upside in it? The answer is absolutely not. We’re just barely getting started and it’s also important. I think when you reflect on this, you might say why do we need money?

Why do we need a new form of money? What’s wrong with the dollar or the Euro? I’m going to talk to you later. I think there are some. Severe things wrong with it, but I’d say the average person doesn’t see them. And so they think, Hey, there’s no need for some new version of money, but I’ll look at these other places.

They understand it. And there’s a stat that over the last three decades, 57 countries have had their currency fail. Some of them multiple times, like Argentina Chili’s and Bob way. It’s a pretty common thing for a currency to fail. And when it fails, it generally means the people that have held their wealth in that currency.

They’re at a total loss. As you look at this if you struggle and we talk about Bitcoin is you struggle a little bit about, what’s its importance. It may be important to change your optics and say, Hey, am I looking at it just through my eyes, maybe sitting in Los Angeles, California, or Birmingham, Alabama, or some place in a first world country, or would I see it differently if I was in a logo’s Nigeria or Manila in the Philippines, maybe you’d have a different perspective.

The other thing is main my background is actually as a technologist, as an engineer. For those of you who are a little older, I used to be the chief technology officer at a company called gateway, which in the nineties, early two thousands was one of the largest PC companies in the world.

And. In that role, my job was to not only develop the products, but create the vision for the company about where we were going. And it made me a history student about technology. And what I realized through that work was that the most important inventions in the history of mankind have all been from the perspective of creating a degree of freedom.

If the invention creates freedom, then it will be revolutionary and massive and almost impossible to define the economic and social implications of that technology. Things like the cell phone, things like electricity would fall or in other words, disruptors within industries. Yeah.

And massively disruptive. You think about the automobile. It wasn’t just. The automobile, but it changed, what roads look like? It changed how people work, where they work, how far they could live from work where they went on vacation, the implications are just so numerous.

And that’s the same with crypto currency. I can sit here today and I will, and I’ll give you some of my thoughts about the future, but. I’m sure I’ll just be scratching the surface of what it really means and what the possibilities are. So just most of the people here if you were born in, let’s say the eighties or the nineties, it means that you saw the beginning of the cell phone and at the beginning of the cell phone it was just a mobile phone.

It, wasn’t the centerpiece of your life and in this thing, driving social media and the centerpiece of your financial world. You’re absolutely right lane. The other thing I’ll say about Bitcoin, because I have a little acronym it’s called privacy, inflation protection and efficiency.

I think that these things are at the fundamental tenants of what Bitcoin is providing privacy, because what’s happening in the world is we are losing even the choice to be anonymous in our financial transactions. I can’t even decide to buy a cup of coffee at Starbucks and have that be a private transaction

that ability is being taken from us. Inflation, we’re going to talk a lot about this in just a second lane and then efficiency. I’ll talk less about this later, so I’ll do it a little bit now, but when you look at things like for instance, remittance. Remittance meaning, sending money overseas.

And you look at the countries we talked about at the beginning, Nigeria, Vietnam, Philippines one common aspect of all those countries. My wife actually being Filipina and having family back there as a business factor, money is constantly being sent, from the us back to the Philippines.

And when We use the traditional bank wire system, Swift system or Western union, or places like that to send that money. It’s massively inefficient. It’s very slow. It’s very expensive. For instance, sending $200 from here to the Philippines with a service like Western union is likely to end up with the equivalent of $150 in purchasing power landing.

At the end point. Terribly inefficient, but if we use crypto currency, we can see like 98, 99% of that value move. And we can do it instantly instead of over three days or five. And that’s the trouble, right? Like these large companies like PayPal or the credit card companies, they’re all getting their share.

And the buying power that transaction between buyer and seller is being wasted loss. Exactly. And they’re able to do that because in large part it’s an oligopoly, it’s a very small group of companies who. Coordinate and control pricing in those markets. In any market, your viewers are obviously more financially astute than the average risk and reward are generally tied to each other.

If as an example, I’m going to send $200 to the Philippines. And if I show up at a bank or a Western union office and I hand $200 in cash to them, To start that transaction there essentially is no risk in that process for any of the people providing the service throughout. And I’m not denying there is some service being performed, but the risk of taking a 25% cut doesn’t make any sense.

And but that’s what happens when you have monopolies and you have oligopolies and the banking system is, probably no better example of that in the world than the banking system. Okay. We’ll talk for a second now about money and inflation and what’s kinda going on in the world and, the first thing is I’m gonna play just a very short little video clip here.

From a guy named Neel Kashkari who’s president of the federal reserve bank of Minneapolis. This is from a 60 minute interview about a month after the COVID crisis. And I think you’ll find his words. Very interesting. Can you characterize everything that the fed has done this past week as essentially flooding the system with money?

Yes, exactly. And there’s no end to your ability to do that. There is no end to our ability to do that. So very interesting quote, so it basically is saying there’s a certain amount of money out there in the world already, and we’re just going to print. As much as we want without any control, there’s no oversight.

There’s no vote by Congress. There’s no vote of the people. They’re going to print as much as they want and there’s no end to that ability. Very scary. No, what, there’s different theories on this, right? Like my thoughts. And I don’t really care too much. At the end of the day it’s going to become inflation, the reason why I invest in hard assets, but like why can America do that right?

Is it because our military, why doesn’t all the other countries just print a bunch of money too? The truth is lane. They do Canada prints it. The ECB managing the Euro, does it, the bank of Japan, does it. Bank of Japan has been doing it for since 1980, since their financial crisis there.

And as they print this money and they create debt, they create a lot of debt for the governments. Then what they have a tendency to do is repress interest rates. And as they repress those interest rates and the debt grows. They backed themselves into a corner because if they have all this debt, the us has debt somewhere just short of $30 trillion.

Now, if they increase interest rates, they’ll increase the debt burden on their own debt. And they can’t do it right. They back themselves into a corner where the natural thing is at some point, if you repress interest rates, you create certain actions you create inflation. Does, they’re trying to create inflation.

We’ll talk about that later. Their stated goal is to create inflation. At some point, You have to use increase interest rates to dampen the inflation, but they’ve lost that tool because if they increase the interest rates now they’re now their debt burden is ridiculous. It’s a very ugly circle.

And so there’s different schools of economic thought about it. But you talked about like sound money and hard assets. The Austrian school of economics is really founded on that principle. And it would say you don’t do this. If the economy is taking a hit. You have to let it take its hit and you pay the price and it will recover and self balance and everything will be okay if instead, what you do is you just keep printing money.

You’re kicking the can down the road, but the problem at the end gets worse and worse. Theoretically, I’m not actually predicting this, but theoretically you end up with the these embodied way case. Or the Venezuelan case where people are, walking around with wheelbarrows full of cash to buy a loaf of bread.

That classic example it does really happen. It’s even happened in modern days. I think because of, as you said, the U S that won’t happen too, because. At least right now is the global reserve currency that provides some insulation and encounters the hyperinflation forces. But it doesn’t mean there won’t be material inflation forces though.

And again, we’ll talk about that in a little bit. So second thing want to talk about here. This is a little privacy and just a little history lesson. There is an organization, a lot of people probably haven’t heard of it’s called the international bank of settlements.

And I think a good way to think about it is the bank of banks. So if you have the central bank of Peru and the central bank of Austria, and they want to move money between them, they need a bank in the middle of them to make that transaction. And that’s the international bank of settlements. It’s run by a fellow named Gustin Karstens.

He’s a former finance minister of Mexico. And I found this quote which was from January 1st of this year, speaking at a conference about the future of digital money, basically central bank controlled digital money which is called CBDC central bank digital currency. So I’m going to play this short quote for you here.

 

We don’t know. For example, who’s using a $100 bill today. We don’t know who is using the 1000 to date. It gives you friends with the CBDC is the central bank will have absolute control. On the rules and regulations that will determine the use of that expression of central . And also we will have the technology to enforce that those two issues are extremely important.

And that makes a huge difference with respect to what? So hopefully you were able to catch that those of you listening. He does have a little bit of an accent, but what he’s really saying is we’re at the central bank level, there’s an attempt to redefine what cash is and to do so in a way that essentially leaves no room for privacy and financial transactions anymore.

And I think that. Understanding that, a lot of critics of this will say things like don’t do anything wrong. Why should you be worried about people knowing what your financial transactions are? If you don’t do anything or you shouldn’t worry about it. And the big concern is the sex traffickers, the money launderers the drug dealers, we have to protect against those people.

And, my comment is first that. I believe, and this is a us thing that, I have a right to my privacy. And that if, unless I’m suspected of doing something, I shouldn’t be surveilled is essentially saying we are going to surveil everything and not just at the U S level, but he’s talking, this is the international bank of settlements, not the fed.

This is not even a us agency, but talking about a global oversight over this whole thing. Number one, number two, one of the. Powerful things about blockchain, but also the negative things about blockchain is that every transaction is theoretically preserved forever. So what it means is there can be a revisionist interpretation of transactions.

So today I don’t think anybody would dispute that. Filling your car with gasoline is in any way an offense and that something that you should pay a fine for, or be in prison for, but in kind of a potential dystopian future. And I’m doing this for illustrative purposes, not to scare people, but to say, what if 20 years from now global warming does take hold and that environmental concerns get bigger.

What’s to stop them at that point from going back and looking at the blockchain and saying, Hey lane, over the course of the last three decades, you’ve purchased a hundred thousand dollars worth of gasoline and you therefore created this carbon footprint. So here is a tax or a fine for having done that.

Or maybe in a real dystopian view you’ve personally ruined the environment, therefore I’m putting you in prison. So again, I’m using extreme examples for illustrative purposes, but that we never know. But things to think about yeah. Yeah. And I, again, I think what you have to do is you have to say, where is your line?

What is reasonable? And I think for a bank or a federal agency to say, Hey, we want regulations that financial transactions over a certain size or repeated at a certain level with a certain volume maybe those need to be disclosed. Fine. Okay. I understand. I’m not so libertarian or so extreme to say that should be the case.

But I think this line of saying it’s the beginning of this quote, we don’t know who’s using a hundred dollars bill today. I’m like Hey, if I want to use a hundred dollars bill, I believe that’s my right. And if I do something wrong with it, let’s say I buy cocaine with it.

Fine, arrest me for buying cocaine, but don’t use the a hundred dollar bill as the tool and upon which to do that. And these are like, this is why I don’t like politics, right? It’s like the big government spokes against this crypto currency are using this as their argument.

When in actuality, they just want to make sure they can tax people at the end of the day, or maybe there’s a few other things that I’m missing that they want, but they’re using this as the scapegoat. Yeah, I would agree with that. And again, there’s always unintended consequences, so how big is the reach?

So anyway it’s a point in time where I think we have to be very careful. Yeah. That was my big thing against the script though stuff. Yeah. I think it’s great. And I’d sure to not have to send wires off and all this type of stuff and. All these estro companies would go away and all these title companies, cause they would be tracked.

Yeah, Bitcoin, but these are some of the unintended consequences and the governments don’t want this to happen. They lose their power as the central banks and Oh yeah. May not be good to be betting against the big guys. But I don’t know. I think you’re going to get into it later, right?

There’s becoming more mainstream adoption of the big banks by the stuff that it’s hit that tipping point where it’s hit that adoption point. Yeah, absolutely. Absolutely. And I will tell you lane again, this is just one person’s opinion, but I would say the number one reason that governments want to con then you control money.

Is that. If government wants to accomplish something, let’s just say they want to build a bridge somewhere. Okay. There are two ways to pay for the bridge. Federal government let’s say, okay, they can tax people or they can print new money. Okay. So if you tax people there is. No way around it has to be fully disclosed.

People get pissed off, they stop electing their officials, right? So it’s a lot easier to print money because you say we need a hundred billion dollars to build this bridge, okay. If we just print the money and we just dilute the overall several trillion dollar money supply by a tiny bit.

We’re basically stealing the money from the people who already had the money. I use the word it’s insidious. It’s hidden. Yes. It gets the money from people, Roz them in their sleep, but people don’t know. And now the government and everybody’s yeah, inflation happened.

Do you know? It sucks for all of us, it wasn’t our fault. And people buy that storyline. Yeah. I like to call it death by a thousand paper cuts because you take a little piece every day and it’s not enough. To make it hurt. If you don’t, eventually you lose an arm. If you take a big enough paper, if you lock the whole arm off at the beginning, people are going to be pretty upset about it.

But if you take it a slice of skin every day, it’s less upsetting. Yeah. And this is what do you do about it? You buy hard assets. You don’t be a saver. The savers will be the losers. Yeah. Yeah. And see, that’s the, that’s a great point lane because to me, that is the fundamental problem with the world we have today.

That you’re absolutely right. Your community here is ahead of the game because you’re providing yourself by investing in hard assets, investing in cash, flowing assets, you provide yourself. A lot of protection against this inflation, but the sad part of it is that if you look at the wealth distribution, we have a slide on this.

If you look at the wealth distribution of low income people and high-income people, high-income, people have very little cash and a lot of assets and low income people have a lot on a percentage basis. Low-income people have a lot of cash and no assets. So when inflation occurs, it hurts the low-income people way worse than it hurts the high income people.

So it’s this whole thing about taxation. So when the president administration is doing a lot of things to raise taxes on the wealthy, that’s the way they do and to make the poor feel better, not. Fully disclosing that while they are raising taxes, they’re printing the shit out of money and hurting the poor a lot worse than the wealthy.

Yeah. It is what it is. And it’s important to be educated and know how the system works. And I know here’s something funny. We usually get takeout and I eat more than my fair share of for sure. And if my wife’s a safe or weird, yeah. I eat her food and the next coming days, I call it inflation, and I’m being a troll, but I do it because, you only got one time in the world and China’s valuable, blah, blah, blah.

But it’s true. Right? Savers are losers. People who hold onto things and don’t do anything are ultimately going to be for the future. Yeah it’s true. And part of my message here today is in the current financial system, that is absolutely true in the Bitcoin system that can change a little bit.

And in the Austrian school of thought, it can change a little bit where not that investment can’t be rewarded, but that in a true hard money savings is not penalized. They’ll put it that way. You know that, you’re not gonna get obscene wealth through savings, let’s say, but you’re also not going to get robbed.

So this is what I believe an economic system that would have that characteristic would be fair to me because I like to give an example. I have a grandson he’s nine years old and his name’s Arkin. And if I say Arkin, Come over to the house and help me clean the garage.

Okay. And let’s say I give him $20 for cleaning the garage what I want to say as his grandfather is, Hey arch, and put that money in your piggy bank and save it for college. Save it for 10 years. And when you go to college, that’s going to help pay for your college. But I can’t give him that advice today.

That by the way, that advice was given to me by my grandfather, but I can’t give it to my grandson. Why? Because if he puts $20 in a piggy bank or a savings account, he’s going to have about 12 or $14 of purchasing power, 10 years from now when he needs it. It’s ridiculous. So what it does is it forces a nine-year-old into investing.

And one thing about investing is investing always involves risk. So we can do it certainly in a way where he does not taking inordinate risk, but it doesn’t seem fair to me that a couple hours of work that he put in to help me. That labor can’t be preserved and used later in time with equivalent value that, we’re basically robbing from a nine-year-old kid.

That’s what inflation is to me, it’s robbing from a nine-year-old kid and stealing the work that he put in cleaning a garage. And I think when you think about it in that context, and then you extrapolate it and say maybe it’s robbing from somebody who worked for 40 years and put their money in

their savings account and money market funds. And now they’re trying to retire and live off of that. And I think, again your folks listening to this, you probably understand that, it’s a shame that people are taught that, but that’s what our system teaches people because they should get that money instead of in a money market or a savings account.

Should have been going into hard assets and preferably cash flowing hard assets and but that’s not what most people do. And that’s what certainly what not most people are taught. Yeah. And that’s unfortunate. But maybe you should just join your kid, steal his money. Let’s call it inflation either.

He’s going to be really smart in the future, or he’s going to be an email child and. Go down a wrong path. One of the two risks. Yeah. So anyway we will, we should probably keep this thing, moving it not not bogged down too much. What happened with Bitcoin in the last year has been.

Just unbelievable. And certainly several other cryptocurrencies have followed along, but I like to focus on Bitcoin because it’s the granddaddy, it’s a trillion dollar market cap. And I’ve been preaching about it for several years now. And, but a lot of things happened in the last year because of.

COVID and the resulting actions by central banks around the world. And as I said, in a previous slide there, basically a decade happened in a year. And so all of these things the level of quantitative easing concerns over stability of a lot of governments.

It accelerated a whole bunch of things and made the case for the Bitcoin at an unbelievable level. And one of the things we saw and you talked about this earlier lane was this dramatic change and rapid maturation of the market where Big banks, big financial institutions, JP Morgan Stanley, Deutsche bank, et cetera.

They’ve all jumped in. They all have a presence. They’re all providing services, often custodial services being the number one thing that they provide. So this concern like about, Oh, it’s a for instance, Janet Yellen us treasury secretary. Who has as pissed me off, frankly, frequently, lately, because she’s been saying things like Bitcoin, doesn’t have a function other than to help.

Money launderers and criminals. That’s really not true. And we can, because of the blockchain take a reasonable estimation of how much illegal activities going on. Most of the estimates are about one or 2% of the money in the Bitcoin world is being attributed to some sort of criminal, which is less than the U S dollar.

By the way, which is probably more like four or 5%. But nobody blames the dollar, for, to pay no attention to the man behind the curtain. Yes. Yeah. Trust us. Trust us. And we’ve had wants is always wants the best and will always want the tech. Yeah. Yeah. Yeah. Unfortunately a lot of people believe that and, but I don’t think the facts supported very well.

And just on that list, just to expand on it a little bit, not only has. Some of those big companies, but all the big payment processors, visa, MasterCard, PayPal, Venmo, just the other day. They’re all in big life insurance companies, Massachusetts mutual, New York life. They both put several hundred million dollars into Bitcoin.

We’ve got funds like Guggenheim Tesla put a billion and a half dollars in, so this is rapid acceptance across the institutional and corporate. Structures around the world and we’ll dig in a little deeper on that in a minute. I had given a speech in February of 2020 and right before COVID and at that point in time, Bitcoin was trading at about $9,500.

And. We saw a dip. It had it had a big blip on black Thursday, March 12th, recovered very quickly. And has been as high as 65,000 and now sits at 55,000. And a lot of people when they looked at this situation for instance, the gold bugs and maybe there’s some of the on here today, they’ve been dreaming about this day when the world return into this chaotic situation, whether that was a pandemic, a world war, something like that, what happened in gold would suddenly become this massively appealing asset.

Didn’t happen. That same period of time I talked about Bitcoin being up about 300% gold, only up about 20%. And this year it’s only up about 3%. It’s just kinda been middling. It really hasn’t done anything. And it’s my belief. I don’t think I can prove it nor can I think anybody disprove it.

But I think basically what has happened is. I think Bitcoin has stole all that thunder. So the trillion dollars, Bitcoin Rose almost a trillion dollars in market cap between early 20, 20, and today. And I think it stole all that from gold. And that gold is probably be in the 2020 100 range, at least if Bitcoin wasn’t there.

And I think what’s happening is that.

People are realizing that Bitcoin is superior to gold in every metric, except for history. So it’s merely a comfort factor that, gold has thousands of years of history as money, or at least as a store of value. And I’m not saying it’s bad. I don’t think it’s going to crash necessarily overnight or anything like that.

But most of the attributes that have made it appealing as money I believe are diluting. And we’re going to see it kinda middle along and probably float down to more its natural rate of what its value is as jewelry and as an industrial usage, what the gold people like to say, it’s intrinsic value. And I think we’ll find that most of its current value is in the speculative component.

Not in the intrinsic value. And this is happened with silver. For instance, silver is lost it’s positioned as money and this is where a lot of like the gold bugs. And we don’t want to mention names up there, but if you break down, love their thesises on why gold is the thing, other than the fact that they get compensated and get commissions every time you buy and you click on their link Same could be said for crypto.

And so I think we both agree with a lot of these guys’ arguments, but why not crypto? And they can’t answer it other than the fact that their website cannot get commissions off Bitcoin. Yeah. Yeah, it’s very true. And he said, I can tell you laying in that, tell your audience, I’m not here selling anything.

I’m doing it from an, like I said, purely evangelical perspective because I want the world to be a better place for my kids, for my grandkids. And I think this is not to be overly dramatic. There is a one-time chance in the history of mankind left to take control of money from governments. This is it.

I don’t believe they will ever let a Bitcoin sneak up on them again, that they were blindsided by this. They ignored it for a long period of time. And now that it’s it got really big, really fast. They didn’t see that coming. They didn’t see the adoption. Infiltrating, fortune 500 companies and major funds and big financial institutions.

And now they’re trapped. They really can’t ban it legally. There’s no way that’s going to happen, they can’t shut it off. Technically it’s too big and too widespread. They can make it maybe a little difficult, but they can’t stop it. And this is it folks, this is our chance. So if you like your fee out money, then you know, God bless you and, go for it.

But if you want the world to have a hope of having a true free, transparent non-inflationary money supply, this is it. Jump on board. Now w one of the things I’ll say here is I think people often have a hard time figuring out what Bitcoin is. So they like to compare it to things that they already see.

Is it like this stock? Is it like gold? Is it, but the problem is. It’s so many things. I think you have to really say it’s something unique in and of itself. It’s a monetary network, a decentralized monitoring and work. It’s a protocol like the internet court has a money characteristics, very strong as a store of value, some value as a medium of exchange.

It has the ability to be a unit of account. Although right now it’s, doesn’t really have a lot of that. And I think when people think about, should I put some of my net worth into it? How do I think about it? How do I evaluate it? It gets really difficult. And I think people get stuck on that.

I say that you have to think about it completely differently if you’re a trader type person, which I am not, but if you are. It’s going to be very tricky because I think a lot of the things you think you may know about what a certain trading pattern looks like, or a certain shape of a curve or a certain pattern you may see that in Bitcoin and say, Oh if this was happening in a stock, it would mean I buy or I sell, or I do this.

But don’t think that you can apply those same curves to Bitcoin. It might work one time and then be an absolute dumpster fire the next time. Bitcoin doesn’t follow those patterns and again, it’s not a company, there’s no leader, it has no head. It isn’t beholden to anybody. That’s a big thing, but the last thing I’ll say about it here is.

This is the way I look at it. I don’t measure it in dollars. So I view Bitcoin as in the merging parallel financial universe. Okay. And if I move some part of my wealth from the existing, see out universe, primarily dollar base, and I move it over into the Bitcoin universe. I don’t intend on it ever going back.

Okay. That I am not in fact I don’t like to use the expression I bought to Bitcoin. I’m more likely to say I sold my dollars and acquired Bitcoin. And that’s one thing I think people often kind of mistake when they think about money is they forget. That it’s always a two-sided transaction, whether you’re buying a house or a pack of gum, you are selling your dollars and you’re getting this other thing, whether it’s a commodity or an asset.

So if you bring that, let’s say it was an asset. When you bring that asset back to dollars you’re bringing it back into this. Scary thing. We’ve talked about inflation a little bit already. You bringing it back to this thing that is not working for you. So if you do that, you better get it somewhere else quickly because it’s a horrible store of value.

It may be, one of the worst stores of value of all time. And so anyway, this is a important part of, I think about trying to get the right mindset, to think about how Bitcoin works and and how it might fit in your world. Okay. Since I know you’ve seen most of this already lane.

There’s a predominant feeling. If I go out and I spoke last week at at Florida Gulf coast university, and I had a classroom, I had about 80 kids in the classroom and I asked all economics and business students and I asked them what’s the current rate of inflation. And every single answer I got from the audience.

Referred back to this chart for back to consumer price index or PCE. And the numbers that they came back with were 1.5, 2.1 those kinds of numbers. And then I said to them, I said in your life does the last year, does inflation feel like one and a half or 2%? And basically nobody felt that their world felt that way.

And so you have to peel back the onion a little bit and say what are they actually measuring? When the fed measures consumer price index, they’re really measuring the cost of the base and necessities of life. At best, by the way, I’ll even be kind to them. And just say, let’s say they’re just looking at the base standard of living.

They’re not looking at asset inflation, they’re not looking at luxury items. They’re not looking at aspirational items and you start looking at those things and you see a whole different picture and you realize that real inflation. Is way, way higher. My personal belief, if you blend it, it’s probably more like 10 or 12% right now.

And for those of you who can see the chart, this is a growth of the expansion of the money supply, which is up by about 30% year over year. So from a technical basis, that’s what inflation is. Inflation is expansion of the money supply. You don’t feel it’s symmetrically. It’s not like the price of apples and bread and toilet paper all went up 30% directly.

In fact, it usually inflates through hard assets. First, the things that you know, that lane talks about all the time, those are the things that see at first. So when you’re investing your money in those things, That’s great because you’re ahead of the inflation curve and you’re buying those assets with pre inflated dollars, and it might take two, three, four years for all these effects to filter through.

But some of it’s immediate in this world. I just so happen. I have a chart here just current from yesterday, lumbers up 265% gasolines up 182%. Corn is up 84%. Sugar’s up 59. Cotton’s up 54 coffees up 13. You start looking at those numbers and then, for a lot of the folks here, you look at real estate.

I know I live in Florida. Real estate prices are up 16% in Florida this year. One year and it’s, and if you’re looking at things like Miami beach properties or Naples, Florida properties are up way more, in the higher, more desirable areas. I got a direct antidote for that.

So we’re building a 200 unit apartment complex in Huntsville right now getting kick their butts with the lumber prices going on. As I said that’s inflation. It’s not the fact that the Lumber’s more expensive it’s inflation. Yeah, we’ve got contingency to cover. Cool. But how great is it going to be in the future when we finish building this thing and sell it?

Because already, just in the past, I would say a year we bought out another hundred unit out there. The cap rates have come down at least a quarter percent. We have a couple million dollars of equity in that property. And part of that is rehabbing units. I’d like to say it’s our hard work and dedication.

I would say a million out of $2 million of it. Just that one property is inflation. Yup. Rates coming down. Yup. The right side of the curve. I’m glad you’re blessed with that lane and those people doing similar projects that may be watching, God bless you.

There’s an actual name and economics for it. It’s called the effect. And the cancion effect basically says that as new money comes into the system, those closest to the money. Benefit most. And I think you would know it as those people that see new money come into the system, they have access to cheap money.

Like people you land, you have access through the banking system and you have credibility, so you can get access to money at very discounted rates that allows you to get into these assets before the effects of the inflation have rippled all the way through the system. And so you’re going to buy those assets with pre inflated dollars.

And you’re going to ride that whole thing up. You’re gonna ride that whole inflation curve and do really well. But again, the guy that unfortunately is making $12 an hour and, barely covers his rent and food every month. He’ll never get out from that.

And if what I like to say too, is the best measurement of inflation is not what it costs you to live today, but are what will it cost you to live in your dream? So if your dream is a penthouse, condo in Miami beach and a Lamborghini, and you’re 20 years old, let’s say and say how much money is it going to take for me starting at zero to get to that?

You’re gonna have to not only earn all the money, but you’re gonna have to beat inflation the whole time. Let’s say to try to get there by the time you’re 35. If that’s your goal, you’re gonna have to do something really extraordinary in high inflation times. So again, that’s partly why when I started this about.

How did the poor get repressed and oppressed it’s because of this. And another thing to remember is the dollar is the global reserve currency. So all the other currencies in the world are pegged to the dollar. So if you’re a poor person in Manila, like we talked about earlier that the gap to affluence has just gotten so massive.

Like how do you ever close it? It’s almost unattainable. Here’s just a couple other things, just to show, how inflation has changed. No. This is since 2000, average home price, up 5% price of a car up for college, up over six. We have all of those sorts of things collectible whisky and homes in the Hamptons.

We have all those things. All so we’re nearing the midway point here, folks. We’re really gonna, we’d like to, we’re going to have Bob back to finish up the conclusion, but we’re going to make this a wrap up part one here for you guys, because I got to go get my COVID shot so I can save other people’s lives in the process.

And we’ll record this in a future podcast, but thanks for coming by Bob we’ll connect next week and wrap this up and I guess for you guys listening we talked a lot about inflation, right? This is the insidious way that the government devalues your money. If you just had it where everybody else has it in their bank accounts and their assets that don’t really appreciate with the pace of inflation.

So another good reading would be going to simple passive cashflow.com/debt. I wrote an article in Forbes regarding this topic and yeah, this isn’t the stuff that our parents taught us. But certainly, hopefully it’s not the stuff that myself and Bob were going to teach our kids and hopefully you’re going to follow suit, but we’ll catch you guys next week.

 

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