Welcome to the new podcast. In episode 1 we'll answer the question, "What is The Self Directed Life?"
Welcome to the new podcast. In episode 1 we'll answer the question, "What is The Self Directed Life?"
RACHEL (00:00):
Welcome everybody to the Self Directed Life podcast. I'm Rachel Nabers
JEFF (00:09):
And I'm Jeff Nabers. So this is episode number one, the pilot. Yes, we're going to keep doing it. We already decided. So let's start with the top question. That's on everyone's mind for episode number one.
RACHEL (00:28):
Yeah. I think that that is: what is the Self Directed Life?
JEFF (00:33):
Well, the self-directed life is a concept that was kind of born out of a long journey that I've been on. You could call it really the self directed life is that journey, but it's something that I think a lot of people are sharing. For me it started out with investing and for it was really alternative investments. I was investing in real estate starting in the early two thousands and so I was self-directing my life and doing something that was kind of a little bit different than the norm of just investing in stocks and bonds was investing in real estate. Then I discovered this concept of self directed IRAs, got involved in that. You know, we've built one of the most recognizable and companies in the self directed IRA and 401k space. The self-directed life I think really acknowledges that that same need for alternative viewpoints, alternative strategies is needed in all areas of your life.
RACHEL (01:37):
I think it's also-I agree with everything you're saying and I think part of what people are seeking when they're looking into self-directed investing is also reclaiming a semblance of control or power over their own lives when you agree with.
JEFF (01:49):
Yeah, absolutely. And I, you know, it's the control and the power to put your life in a certain direction and you're pulling a lot of the strings rather than just feeling like a puppet and somebody else's, the puppet master and then they're pulling all of the strings. And this is so important right now because we've been talking about doing this podcast for a very long time, but the straw that broke the camel's back is this Corona virus event that we're all living through right now. And, and that's a pretty big deal cause this is, you know, maybe it's not the biggest event to ever happen to humanity, but this is the, it's this, it's unprecedented is the word we hear so much. Everybody's paying attention. This is the first time something really big has happened since this many billions of people where this connected this much of the day internet social media.
RACHEL (02:50):
Yeah. And I think people are also looking for, they're, they're looking for answers, they're looking for information, they're looking for ways that they can be empowered. So before we dive in too much to sort of the economic impact of the Corona virus, which I know is what a lot of people come to you for Jeff, I just was hoping you could touch on sort of the different ways that we self-direct our own lives or you know, you and I maybe personally and just sorta how that expands beyond just investing for us.
JEFF (03:19):
Yes. So I think the, one of the key features of the self directed life is that there are different areas of your life and you can't just make one really great. And expect that to be worthwhile. So the classic example is there is no wealth without health, right? And I saw this myself early on in the mortgage business when I looked back in Myrtle beach, South Carolina, and I had all of these clients that were retired or retiring while I was getting to know them and originating their loans and I would watch people retire and then you know, this was the big payoff, right? The big carrot. They'd been chasing for 40 years. And so many of them would then just, they would lose their sense of meaning and then it would spill over into health. They would gain weight, they would turn into an alcoholic and ultimately end up depressed.
JEFF (04:15):
And so that was a big eyeopener for me, that you can't just do X, Y, Z and live happily ever after. If you look at people when they're getting to that point where they should be living happily ever after and they're not invaded X, Y, Z, then you've got to look at X, Y, Z and ask, does this work? My message for 10 or 15 years is that increasingly all of the main elements of the quote unquote normal way to live a life involve depending on things working when we already know that they don't. So I've known for a long time that you know, just investing in the stock market as the only way of saving or building wealth doesn't work and more people are realizing, I think that now more than ever with the most, the last 30 days in the market. Yeah. I mean the big thing is bubbles.
JEFF (05:17):
Are we in a bubble? How big is the bubble? What's in a bubble? And the real issue right now as it relates to Corona viruses, we're dealing with the Corona virus itself as an issue and that's a tough one. The thing that is going to ultimately have a bigger impact longer term for more people, I think what this period of time is going to be known for is a very severe economic recession or potentially depression. And so the self directed life is really just a message of if you self-direct your life then you get to go off and be on your own path and your own path can be uncorrelated to the mainstream. Now when the everything seems to be going good in the mainstream, that might be bad cause you might feel left out like economically, you might go, Oh I'm not in stocks, but stocks are going up 15% per year.
JEFF (06:20):
Now these kids with a scruffy face and no haircut wearing t-shirts and jeans are making videos on YouTube about how to become a millionaire from investing in the stock market. And it looks like they're going to be more successful than me. Right? So in a bubble, everybody just thinks that they're awesome and every chapel, yeah, they think they're untouchable. It's, look, you can learn a lot about money by going and gambling in a casino because what you learn when you gamble in a casino is you learn about your own self and the emotions and the stories you tell yourself and the story you tell yourself. If you're at a hot table and a casino is, I can't lose. That's the same story you tell yourself. If you're flipping properties and it's 2007 that's the same story that you tell yourself. If you're investing in index funds, then it's 2019 right?
JEFF (07:12):
You get this sense of what psychologists call normalcy bias, which is how things have been going recently is how things will be going in the future, and so if in 2019 you're going with the last 10 years, the stock market's been ripping and roaring and these monetary policy thing is supposed to get rid of the business cycle so we don't even have to worry about a bust. This is just the new normal and the normal will continue forever. Well, that's probably one of the biggest tricks that our brains play on us and it's when the self directed life, we want to acknowledge that our brain is going to play tricks on us. We need to learn about those tricks, uncover those tricks, and shine a light on those tricks. The earlier that we learn from our mistakes, including cognitive biases, the better off we're going to be.
JEFF (08:05):
And so just to go back and close the loop on, you know, the self directed life in the different areas of your life. What are those areas? Number one, money. Look, money is inert. It's in every area of our lives. Everything that you want to do with yourself is highly likely to involve money. If you want to help a lot of people, that's going to cost some money. If you want to go on a vacation, that's going to cost some money. If you want to eat in any scenario other than going and living off the land, that's gonna take some money. Things cost money. Money is how we communicate value to each other. So you need to master money. Obviously health, you know, when, when someone with all the money in the world is hold up in bed and can't move their body or can't even think of thought because they're so ill with something, then they're obviously not happy with, with their money. Their money can't help them without an ongoing parallel focus. On health.
JEFF (09:10):
You know, this may evolve, but I see it as four areas. Area number three is lifestyle. So lifestyle is so important because if you're living your life like it's the industrial era, like so many people, we've been talking about this for years. This is why we're doing the podcast. So more people can get this stuff and see this vision for the future and get ahead of the trends and live a better life. If you in 2019 expected to be going to an office and working on a computer to do whatever and that that was going to be your yada, yada, yada, year etc into the future. Then this virus came along and just kind of took a trend that was already happening too slowly for most people to notice and it accelerated it by 10 years in a week. The week was, everybody's been talking about Corona virus and then all of a sudden the NBA is shut down.
JEFF (10:13):
Then all of a sudden big events started shutting down, but it was really what was the NBA and there was two or three other things when it got real by Southwest and stuff like that. Giant gatherings of people starting to be canceled. Tom Hanks essentially banned. Yeah. You need to talk closer to your mind. Mike. Tom Hanks gets coronavirus everybody loves Tom Hanks. So now, Oh my gosh, somebody that we all feel like we know and have an affinity for has critical, so it got real really fast. Then all of a sudden it got to, you can't go to your office. So this was probably going to happen anyways. Naturally in a slower economic trend in the 2020s, we were probably going to get there by 2030 of if you can do your work without an office, then why then why? Yeah, exactly.
JEFF (11:08):
Work from home. But it got accelerated really, really fast. So what I mean by that is you go back to your lifestyle as area number three of the self-directed life, and it would be who of you to orient your lifestyle around being able to do things virtually and digitally because the world's going to max out virtual and digital with or without you. So maybe you should be included in, you know, there's all these things that you want to do and that you need to do. The more of them that you can comfortably knowingly do them digitally and virtually the better off are. So we saw it right now, you know, we've been largely running our businesses a very significant portion of, of activity virtually and we've made it so that really everyone in our business can work from home if they need to.
JEFF (12:09):
So for us, we had a very smooth transition into working from home and we're quite busy with work helping people with their investments. But to anybody who had no work from home set up, like a lot of banks, a lot of very, the older and bigger the businesses, the more they probably were not dialing in the lifestyle of work from home and then everybody involved in that is now in a world of pain shock to the system. Cause they were entrenched in that old style. Yeah. A friend of ours who owns a bank, we saw the virus coming, bought a bunch of laptops and then started getting-he has employees that work in a rural area and he started getting internet connections for his employees who didn't already have them at home. And then other banks are worse off where they don't know how to work from home.
JEFF (13:08):
So anyways, lifestyle includes, you know, just taking advantage of the new ways to do things. You know, a lot of people never ordered groceries to their door before this event. A lot of people, you know, have remote meetings or be able to have zoom or WhatsApp or Skype calls and things with family to be able to stay connected. Yeah. Or pre coronavirus. A lot of people still hadn't learned about Airbnb or you know, Airbnb is a wonderful thing where you can get more bang for your buck. You can, you know, in many cases, rent an entire house for the price of less than a hotel room. Or there's basically that equivalent in cars. Like with Touro, you can rent cars that are way better than a rental car. I rented a Porsche, a Porsche Boxster the other month and that was really great. Can't normally get that from a rental car company.
JEFF (14:00):
So many ways that's lifestyle. And then the fourth one is so important. And this one I think is massively exposed with what's going on right now with the coronavirus lockdown. And that is relationships. The quote that all butcher is something from Jim Brown. I can't remember exactly what book it was from, but the late personal development coach Jim Roan was basically how to message about how your happiness literally depends on other people. Like it's actually things that need to happen with your relationships, with other people that are what leads to happiness. So a lot of people, they start a family then, you know, how they relate to their family, is their happiness providing for their kids or their grandkids. So right now in the current of irons, everybody's choking about how many divorces they're going to be when it comes out of this when we're, when we're out of the lockdown. And you know, those are people who didn't spend time, attention and energy on their relationships. So those are the four areas of the self directed life. We're going to talk about them throughout the podcast. That's an introduction.
RACHEL (15:16):
Sure. So to recap, money, health, lifestyle and relationships. And before we continue on with the economic impact of the Corona virus. I think one way to frame all four quadrants and something that we've taught our clients over the years and what we'll probably keep coming back to time and time again on the podcast is our formula for success and happiness. Which I'll tell you-
JEFF (15:44):
Actually, you know what, I don't mean to leave a cliffhanger, but that one deserves, I think its own episode. So we'll, we'll get to that later. So what's the self directed life about? It's about looking around in the real world and seeing when certain norms don't work anymore and when you need to go on the alternative path. How many people have had amazing lifesaving results because of alternative medicine? How many people have been able to not lose any money in this crash because of alternative investments? How many people have you know, like the alternative way of running a business? If you were doing things more lean and virtually before this, then you were so much better prepared for this on the lifestyle front. You know, there's a whole like say van life movement for example, a lot of young people, their dream isn't to have the white picket fence and the house and, and whatnot.
JEFF (16:48):
The travel lifestyle has exploded. There's all kinds of blogs and vlogs and writers and just travel around the world and write about it. And I think that's going to be one of the great things about when the lockdown is over is the resuming on some level of travel because I think that's a really great element of lifestyle and and relationships. Just think about the relationships within a company and a lot of companies that are doing really amazing things are having an alternative way for the company to relate to each other. Maybe not doing such a hierarchy or a lot of people with how they relate to their children's and their children's education is homeschooling is on the rise. A lot of people not happy with the government. So these are all just kind of areas that we see and we've done a lot to develop our life, our self directed life. And we simply made this podcast because we want to help other people learn from what we've found that works really well in this new world that we find ourselves accelerated. Lee in. Yeah. Thrown into.
RACHEL (17:53):
Yeah. So, so yeah, so that, that's sort of a bit of background on that and welcome to everybody and I think really what we want to dig into. Jeff, you have been sort of ahead of the curve from economics for a long, long time. You saw the 2008 bubble coming starting in 2006, you were long on gold and Bitcoin teaching people how to hold those alternative assets in their retirement accounts, in their personal portfolios long before other people. So I think really there's so much to unpack with the economic impact of the Corona virus. We see the stock market going down, then it magically starts going up. I think first a question that I just, I have and I know a lot of people have, is it's going down, unemployment is crazy high. Things seem to be falling apart at the seams. How on earth can the stock market be going back up already?
JEFF (18:49):
Great question. So I just want to acknowledge something that people could have misinterpreted what you said as like I got into Bitcoin before the 2008 crisis. And just to be clear, you know, Bitcoin was the white paper was released in 2008. The Genesis block happened in 2009. I thought it would never work. In 2013 I realized I need to take a closer look. I started, I bought Bitcoin at $70 and that's when we started helping our clients get into it. And I founded my company Nabers Group in 2006 for two reasons. And that is to help people use self directed IRA and 401k accounts and to help people prepare for what became the 2008 financial crisis. So lots of my time, attention and energy are dedicated to my mission of being ahead of the curve. A, you know, it's like surfing. If you've ever surfed before and you're too late, no matter how hard you paddle, you're not going to catch the wave. And similarly, a really good surfer has to exert hardly any energy to catch the wave. And a bad surfer has to exert tons of energy to catch the wave. So being ahead of trends means that you're catching waves instead of being blasted by them, or what did you call it? Thrown into? Yeah. It's instead of a wave kind of thrown you for a loop. You're surfing them instead. Okay. So your question is the stock market's going up. What does that mean?
RACHEL (20:18):
Right. Well, it went down, understandably, cause everyone's like, Oh no, what's going on with this? Corona virus and unemployment is super high and we see unemployment statistics are rising every week. So how is the stock market going up right now?
JEFF (20:35):
The stock market doesn't exist in the real world. Okay. The stock market exists not as a market, but essentially as a manipulated game. Now we can clearly clearly say that, you know, we had three over 3 million unemployment claims last week. The minute it happened, what was the first thing that I said? It was a, it was a, a record. Not that many unemployment claims I've ever been made in a week, I'll break the record. The record's going to be broken again next week. This week, 7 million unemployed. So just in the last two weeks, 10 million unemployment claims. So so the first thing to understand about the stock market is it has nothing to do with reality, or at least it, it's not a direct correlation to reality. And the real issue here is that when a bubble starts getting inflated, then everybody thinks that the, the thing that's in a bubble is going really good and they should invest in it.
JEFF (21:42):
And then they become suckers because they invest in it and then it pops. And so the, the bubble in 2008, when it started popping, they didn't let it pop and it got reflated. And then over the past 10 years, as we saw these numbers soaring, the stock Mark was already diverging from reality because in reality, the average person was getting worse off the average person's net worth was going down. The average person's consumer debt was going up. The average renter got to where their rents were going up and up without their incomes going up. So even before the coronavirus pin pricked the economy bubble already, we knew that the stock market lived in a reality where it was fueled by debt fueled by stock buy backs, fueled by an explosion of triple B bonds. All of these things that cannot continue, all of these things that cannot continue. And then the Corona virus popped the bubble and it made the pop more dramatic and more spectacular. But it was a bubble that was already popping. It was a bubble that was already going to pop quite a fantastically in 2020 and then now this physical real world thing of the virus made it pop.
RACHEL (23:10):
But I'm still confused because I mean it just, I, I get it. You said that, you know, the S the stock market is sort of divorced from reality because what I don't understand is you know, companies trade stocks on the stock market that's supposed to, you know, quote unquote reflect their value, their valuation, what this company is worth. So if, if all these companies are, they're not making money right now, how could, I mean, not all of them, maybe you know, Sharman or Cottonelle with the toilet paper companies in Clorox or whatever. But most companies are not making money so and, and they're laying off. We know that more and more people are losing their jobs. So if people are losing their jobs, that means they probably have less to invest. So that if they're losing their job, they're not dumping a bunch of money in the stock market and going on an investing spree. And if companies are laying people off and they're not making as much money, how can their stocks continue value continue to go up
JEFF (24:04):
New printed money? So the, the, the thing to understand in a bubble is that right now we have this thing called monetary policy and monetary policy is what the central banks do. It's what the federal reserve does. Monetary policy is presented as a way to have stable a stable economy, stable employment, low unemployment, and a stable dollar where prices and expenses aren't dramatically moving around at the dollar. So if you take it at face value, then monetary policy is clearly failing because we don't have stable unemployment and we don't have stable prices. Take a look at health care, take a look at college tuition, take a look at real estate rental prices. So it may not be widespread inflation everywhere across the board, prices are going up, prices are going up where the fed sends money and where the government bureaucracy stifles markets. So it's not an accident that college tuition and healthcare were basically two of the fastest growing areas of inflation.
JEFF (25:20):
That's where the government got more and more involved. Oh, free money with student loans or and healthcare with just more and more involvement of the government, Medicare, Medicaid promises that they can't pay for anyways. So we haven't had widespread inflation all across the economy, but if you ever need health care baby boomers or if you ever need education, millennials and gen Z years, then to the extent that those are in the basket of goods and services that you spend money on, you've experienced a lot of inflation. But then people get distracted because the other area that money has ended up is in financial assets. So that's why the stock market's going up right now because the federal reserve is announcing new bailouts, you know, faster than we've ever seen it. We can't even, can't have not even seen a single source that can even just put up on a dashboard.
JEFF (26:18):
All of the bailouts, the latest bail apps that were just announced included another couple of trillion dollar. We're just throwing around a couple of trillion here, a couple trillion there. And the latest announcements, the fed doesn't even have to keep track of where the money goes. The latest announcements include, you know, we normally have this way of reporting and having meetings about and keeping records. This 2 trillion doesn't even really need those records. It's nutty. And so the thing that I want to point out here is what monetary policy really is, is wealth redistribution. Because when money is printed, where does it get its value? It gets its value from all of the dollarized assets in the world. And so when, when money is printed to pump up stocks and bonds, which they have to do indirectly, right? There's various ways they can do it. One of the favorites of the past decade was they print money get it into the hands of corporations one way or another, often through just low interest rates and, and borrowing through bonds. And then those companies take that and buy back their stocks. So I dunno if it's been officially,
RACHEL (27:39):
Which reduces the amount, the number of stocks that are on the market. So it pushes up the value of the stocks for that company is the idea.
JEFF (27:46):
Yeah. Backs, right? Yeah. And when earnings per share goes up, then usually the stock price will go up and stock buybacks change the earnings per share without having to do anything in the real world, like sell more products or make more money. Right? So the company's not necessarily more valuable, but it's appear like it's more valuable. Right? So it's financial engineering, right. And the biggest financial engineering is monetary policy and monetary policy. Redistributes wealth in a way that most people can't follow or track or understand. So this is why in the last bailout era of 2008, 2009 2010 in addition to the 2 trillion of bailouts that they accounted for, there was 16 trillion behind the scenes that was only uncovered later, but nobody was freaking out later. So most people don't even know about the 16 trillion at this point. Bailouts, I am quite sure are North of 10 trillion. I've been saying the entire time that it's going to end up North of 30 trillion. And at this rate, what we really need to be worried about is inflation or hyperinflation.
RACHEL (28:52):
I want to just pause for a moment because I think it's important to dig into why strong inflation or hyperinflation or even money printing, excuse me, why that's even a big deal. But first, just as a statement of summation, I think that
JEFF (29:06):
Most
RACHEL (29:08):
Americans certainly and even global investors, look to stock market's performance as an indicator of how the economy's doing. If the stock market is up than the economy is doing. Okay. So what it seems like is happening here is the government, the federal reserve, whoever is pulling the strings or in control is doing whatever they can to make the stock market numbers go up to have those green days on the ticker charts so that people don't freak out. So that everyone's doesn't look at maybe the horrific unemployment
JEFF (29:42):
Stats and things like that. They're trying to keep the peace in a way, right? Yes. And this is why the self directed life is so important right now because we are being lied to. The stock market's numbers are not connected to economic wellbeing of the United States. And we have to remember that the, like if you look at the S and P 500 I can't remember, I saw this chart earlier today. We'll, we'll follow up maybe in the show notes or something with the source. But when you look at publicly traded stocks, they're, they're less than 20% of the employers of the United States. Over seven years. Employers are small businesses employ 47%. I found a study that shows that small businesses in play something like 47% of the working force, the 70% so 70% are non-public. You may be saying small businesses as the cutoff is 500 but the issue here is publicly traded or not, right?
JEFF (30:47):
Because the money is very quickly magically ending up into publicly traded companies coffers and not very quickly ending up into the real engine of economic growth. So there's a disproportionate amount of attention paid to a stock market that actually has very little to do with the economy, not just because of the financial engineering, but just because of the numbers in the first place. 70% of the business activity in our economy is not from publicly traded companies. The real economy is privately owned companies. Most people work for a privately owned company. Most of the GDP is from privately owned companies. So it's the stock market is a distraction from the real world. But if you get enough people to repeat enough and act like it's important, if you run enough 24 hour news cycles, paying attention to the stock market, all of a sudden people will believe it's important.
JEFF (31:48):
And then if you make the stock market go up, then you can deceive people into not understanding the severity of the situation. So I becomes big enough. It becomes the truth. Right, exactly. You know that, that's what a Hitler's propaganda guy basically said is if you make a lie big enough and repeat it often enough, it will become believed. So there's a big lie that the stock market is a really big part of the economy and an indicator of how the our, our economy is doing. Right. And, and you know, and there are more lies we've been lied to. Even after we knew that was human to human transmission of the virus. The who said there wasn't even after the CDC and who knew from multiple scientific studies, like literally dozens of scientific studies that masks help prevent the transmission. They lied about it.
JEFF (32:49):
And in every instance what's happening is a lot of people want to see conspiracy everywhere. I think conspiracies obviously happened cause many of them have been proven like the fixing of the gold market, the LIBOR rate scandal. Bernie Madoff had a little conspiracy. There's conspiracies happen all the time, but then we've been lied to so much that people see conspiracies everywhere. And at this point, I think most of these lies are just happening because our leaders think that they're so stupid that we're also stupid. They think we're also stupid, that we can't handle the truth. They think that if they don't lie to us and say that masks don't help prevent the spread of virus that comes from droplets out of your mouth and nose, that would be covered in a freaking mask. They think that if, if we knew that were true, that we wouldn't have compassion for our fellow health care workers and that we would categorically as a species hoard all the masks.
JEFF (33:54):
And you know, this basically just means that the whole world is caught up in this situation where the big lie is how does the world work? And their big truth is the, the big question is how does the world work? The big lie is it works top-down. Our leaders repeat that. The big, the big question is how does the world work? The big lie is, Oh, it works top down. And we have leaders like congressmen, presidents, chancellors, prime ministers who CDC sees fist got three to four letters and it's probably our leaders, right? In reality, our leaders are the people who get their message through the internet and influence behaviors. So if you're worried about people hoarding masks and keeping them out of the, out of the realm of healthcare workers, then that just means you suck at persuasion. And persuasion is involved in a massive amount of how the world really, really works.
JEFF (35:10):
You know, Steve jobs did it need to persuade people through the force of the government to buy iPhones. He just made the phones good enough that we want to actually buy them of our own volition, what we should be worried about. So meanwhile, while the government was lying about masks business, people were repurposing clothing factories to make masks business. People were pulling out their checkbook and buying masks, ventilators, respirators from China, and then donating them to hospitals. So literally the free market from the bottom up was, has been distributing masks and test kits despite the lockup and deception from the government. And that's the self directed life. The government is not going to save you if you think the government is going to save you. You're going to wait for them to direct your life. History shows. They may March you right into a concentration camp if you believe that hook, line and sinker reality shows that the more that people self-direct their lives, the better off everyone is.
JEFF (36:23):
The more that there are people educating themselves and choosing their own decisions and behaviors, the better everyone is under capitalism. Poverty went way down. But now we have this period of time where in the 2010s we basically had it better than any people who've ever had it on the planet. But because people weren't self-directing their mindset, the relationships in their lifestyle, they went, what can we complain about? And they found plenty to complain about during the best humans I've ever had it on the planet, which was probably the 2010s people were complaining like it was the worst time. Now we have a real problem, a virus, an economic recession or depression. Now it's time to put all the bullshit aside of fake problems. Like who can we sell a cake to? Or I don't like the way this guy did this. Or you know, should gay people be able to marry each other? These are not real issues that affect the real world. We have real. So now we have this reality of Oh, pandemics are a thing. Millions of people can die if we screw this up. Like our entire way of life has ground to a hall. We've got a real problem here. And then so all of a sudden petty things all of a sudden just drift right back to the background where they should have been in the first place. We have to think about important things.
RACHEL (37:50):
So when you're talking about thinking about important things,
JEFF (37:53):
One
RACHEL (37:55):
Important thing that's it's layered and it's nuanced is this stimulus program and money printing. And how's that for a segue? Pretty awesome. If I do say so myself, episode one on the podcast where she's referring to, you can't see us, but we're just riding around on segways right now, but mobile podcast. Okay. So, well, the question is look, people need money, especially if they've lost their jobs. Or they're experiencing economic hardship due to the Corona virus. People need money. They got to get money from somewhere. So the government is stepping in and going, we'll print up some money, we'll send you $1,200
JEFF (38:35):
Check. You know, sometime we'll try to do these loans for small businesses. Why is money printing detrimental or potentially dangerous? What is the big deal with inflation? Hyperinflation? Just kind of take us through an illogical or illogical conclusion. What, what's happening with this? Why is this money printing a big deal? What's going to happen? Well, so the, our system is based on debt and leverage. When you go deposit money in a bank, the fact that we have fractional reserve banks means that the majority of the money you deposit is lint out to somebody else, lands another bank account. The majority of that is lent out to somebody else, lands into another bank account. And if you follow it all the way down the line, your thousand dollars deposit results in $10,000 in loans out there and your thousand dollars is actually only yours to the extent that the bank can get all those other people to pay off all those other loans.
JEFF (39:36):
Well now we're in a recession, maybe heading for a depression and people aren't able to pay back loans. So in normal boom times, fractional reserve banking is a lever to get more money out there, add to the bubble. And in a situation like this where people can't go to work and they can't get paid and they can't pay their loans, then that means you know, so you've got essentially money and credit and if you track things, you know, most of what we consider money in the world is actually credit. It actually only difference between the do well like, so if you think that you can go withdraw your money from the bank and then all of a sudden some people don't pay the bank their loans, their loan payment, then your money might cease to exist. So actually because of the fraction reserve banking system, when you have a lot of defaults on debts, that can be deflationary, which means that the money supply is going down and that access to money is being inhibited.
JEFF (40:41):
And that's what we have right now. We have massive deflation and if this is allowed to add, why? Because there's no money that the end game for massive deflation is the money supply literally eats itself. Because if most money that exists is Lindt into existence and must be paid back with interest, where's the interest money going to come from? So this is the sort of, some people say Ponzi scheme element to our financial system. Why isn't the national debt being paid off? Why are debt levels going in one direction? We all know that if that levels go only up in a household, it will end in financial ruin. We all know that if debt levels only go up and you know, net worth only goes down on a company's books, it will lead to financial ruin. Why doesn't it lead to financial ruin with the entire system? Well, the answer is historically it does.
JEFF (41:45):
So we have a kind of the fact that the federal reserve can do stimulus print money, handout checks and all of that. That's only possible with Fiat money. And Fiat money is something that over thousands of years has it been tried every time it's been tried, it's failed. And it usually fails in hyper inflation when a crisis happens and a money printer prints a lot of money to pay for dealing with the crisis and they avoid deflation. But where they get instead is strong inflation or hyperinflation. So if there's not enough money, you have deflation and you don't have money to buy anything and your customers don't have any money to buy anything from you in a hyper inflation, there's plenty of money. In fact, there's too much money and so you have to adjust the prices. So you go to buy a gallon of milk one day it's a dollar later, it's $5 close to $100 goes to $1 million, goes to $1 trillion, which sounds crazy.
JEFF (42:48):
It sounds crazy because you have to understand and inflation, the milk isn't becoming more valuable. The money is becoming less valuable. I had the money has less purchasing power, so deflation is bad because that means that you're not, you're going to have a real tough time getting your hands on any money. Nobody's going to, you know, an employer's not going to have money to pay you. A customer is not going to have money to buy your goods or services. You're not going to have money as a customer to buy other people's goods and services. That's terrible. Hyperinflation is bad because the prices of everything goes up and the prices of your assets and your income doesn't keep up.
JEFF (43:34):
So it's a confusing abstract way to lose your wealth. So what's happening right now is the stock market is going up at the same time that we're sowing the seeds of our cost of living to go up at a higher rate, in which case, if you honestly and accurately adjust for inflation, the stock market took go up during the 2020s while in terms of real value go down, what your dollars can buy, you goes down. Yeah. If you just look at your stock portfolio and say, how many gallons of milk does this buy? Well, if your stock portfolio goes up in dollars, but it just continues to go down and the number of gallons of milk it can buy, then you're experiencing strong inflation. And your wealth is being redistributed from you without necessarily your knowledge or awareness or approval from you to over get us a new money. So look at this. Everybody's about to get, what is it, a $1,200 check or a $1,500 check? Well, as of 10 days ago, it's obviously higher now, but as of 10 days ago, the best estimates were for every American adult, every American adults share of the bailout money that's being printed was $58,000 it's a covered wagon ended up being over $100,000 so a hundred thousand dollars per American adult is being printed and then maybe 1200 goes to the IRS.
RACHEL (44:59):
Yeah. So you're not actually getting the 100,000 right?
JEFF (45:02):
It's coming into existence. You get 1200 and the other 50,000 the rest of the 50,000 or a hundred thousand goes to Boeing. Goldman Sachs, BlackRock was brought in to believe it was either BlackRock or Goldman Sachs. Those brought into the fed to basically decide who gets 500 billion of the bailout money. And then now the latest bailout program, they don't even have to keep records of where the money went. So this is [inaudible]
RACHEL (45:33):
But it's so it makes it appear so it's, it's tricky, right? Because when we know when we see press conferences from the white house and it says every American's going to get a check, you need money, we're going to help you. It makes it appear like the powers that be are really trying to, you know, help the average American and give them cash to make it through a tough economic time. But I think when you put the numbers just like you did, the amount of money that's being printed into existence and what's actually going to each individual person to pay their bills is
JEFF (46:09):
Way off. Yeah. I mean 90 plus percent of the bailout money is going to go to insiders just like it did last time. There was no check that was sent out to the American people in 2008 2009 2010 every household didn't get a check. Now every household might get a check, but then you just have to go, well, how much did I get and how much did Boeing get? And then you can see the newly printed money went to Boeing. So what that means is that when inflation comes, the fact that Boeing's check was bigger than yours meant that wealth was transferred from you to Boeing. But without you being able to account for it. Because we're not taught the most important elements of economics being monetary policy and inflation, monetary policy, policy, and inflation is a magic trick whereby money is taken from some people and given to other people without the awareness of the some people.
JEFF (47:17):
So what can you do about it? Well, you need hard assets. You need gold, you need silver, you need Bitcoin. This is a big, the these, these are something that every investor should take a close look at of how to get it in your portfolio. Well, and it doesn't seem like there's any immediate end insight either as far as this money printing and potential strong inflation or even hyper inflation. I mean, we've talked about before, as soon as people get that first check for 1200, what's going to happen next month? They're going to need another check or they're going to need, you're going to do, we already saw, caused a calls on Twitter from Andrew Yang. The presidential candidate who dropped up at his whole platform was UBI, which is universal basic income, which is everybody should get a check from the government every month forever. And you know, obviously if that worked then, you know, the Soviet, the Soviet union would be the place to live that that'd be where everybody wanted to move for a good economic situation, but instead it collapsed cause that doesn't work.
JEFF (48:27):
But now we're in a scenario where people are going to get a check. So this morning Andrew Yang on Twitter said people already need their second check and they haven't gotten their first one yet. So there are going to be calls for, you know, that second check to come in for that third check to come. And if the government doesn't want riots and social unrest, those checks will be written in. Those checks will come, which means more money printing by the way, cause they have to come up with a place, right? This is what happens. You have to come up with a way to give people money, which means printing money, right? So like when social security was launched, it was really presented as something you could retire off of. But through monetary policy, social security checks became something that were insufficient to retire off of.
JEFF (49:17):
And that just shows you what inflation does. The government can promise you a check for $1,200 a month or $2,000 a month or any amount per month. But if you measure how much stuff that can buy, how much housing, how much groceries, how much car payment can that buy? If they're printing the money to pay for the check, then the amount of stuff that it can buy, it's going to go down. It's going to go down and down and down and down until $2,000 is what it costs just to have lunch of a can of tuna. And that's how monetary policy works and it's so abstract that people have a really hard time following it. The other issue I think that we see is that the government, so you have the president and Congress deciding things like a wizard would like let there be $1,200 checks.
JEFF (50:14):
Okay, thank you. And then they walk off and then when it's time for the implementation to occur, we have that reality check. The world doesn't work top-down. Even if the government decides to give you a $12 check, they literally don't know how to do it. The government decided for this paycheck protection program where the SBA was going to lend $350 billion, no problem passing the law. But then all of a sudden the SBA can't even answer the phone because there are millions of phone calls a day, millions of emails a day. SBA essentially completely in gridlock just to try from banks trying to talk to them. So this PPP money, it's gotta be issued by banks, which means banks have to have the money to lend it in the first place. Then they have to know how to destroy. The whole thing is just bungled up in locked down to where even when the government says we're going to do this thing that you want us to do, it doesn't mean that they can actually even do it.
JEFF (51:17):
So the question is, when will the money hit the bank accounts? You know, for example, what about people who don't have an electronic connection of their bank account to the treasury? Well, they're going to have to wait longer. What about people who you know, and when, when it comes to the businesses they wanted some of that $350 billion paycheck protection program money. But what was it? Wells Fargo or bank of America? One of them, like Wells Fargo hit their cap of what they could lend. Let's say on Friday they said, don't send an applications yet. We're not ready. And then on Monday, on Monday they said, Oh, we've already hit our cap. Right? So same thing. Don't, don't buy masks and then later, and so it's just nothing but lies. And it's people that are in positions of power are forced to lie to us because it's a pattern.
JEFF (52:13):
We've been lied to so much for the last 20 years that they're all afraid that coming out and telling the truth, which is real strength and real leadership, they're all afraid of that would be such a shock to the system that it would lead to panic and social unrest in and of itself. So we basically have a leading class of people who lie to us like it's their job to, because it has become that. And then you basically have people who are just suckers to this whole thing and people who live the self-directed life. And so I think it's just important to understand the government is not going to save you if you want to go get a piece of the bailout money because you're eligible for a program. Sure, go get it. But don't stop learning how to take more control over your life.
JEFF (53:00):
Everybody should be every day going, what new thing can I learn to integrate into my life to make my life better? And if you do that, you'll find yourself doing all sorts of things that makes your life better. So some of the things we'll talk about on the economic front, which we'll talk beyond the economic front but right now you know, gold and silver are essentially out. The ability to buy gold and silver from dealers is diminished. It's tough if you can get your hands on some physical, gold and silver, and we can do a later podcast to focus in on that. But you should be looking at getting your hands on physical gold and silver. You should be looking at adding Bitcoin to your portfolio. You should be looking at having larger amounts of cash in your portfolio. You know, these are things that we've been helping people do leading up to this crisis to prepare for the crisis.
JEFF (53:54):
Well, now the crisis is here. There's no more preparing for it to happen now. It's responding to what's already happened. So there's no question that you should have Bitcoin and gold in your portfolio and they should reduce your exposure to the manipulated assets of which nobody knows the true value, which is the publicly traded securities markets. There's no question as to these things that I've been harping on for 15 plus years are what makes your life better in a consistent way that sticks. The question now is basically, are you going to take this window of opportunity before any more trillions of dollars of wealth are transferred? Are you going to get yourself on the receiving end? And the thing about Bitcoin and golden silver is they can put you on the receiving end where if you're not at Boeing, if you are not getting a big piece of the bailout rather than a little peanuts check, then you can actually bail out, bail out yourself.
JEFF (54:58):
You can choose an alternative monetary policy as dollars are printing up, the company become more scarce and less valuable. Gold and Bitcoin aren't being printed up. They aren't becoming less scarce and less valuable. Golden Bitcoin are have supply constraints where they capture value that's on the supply side, on the demand side, the demand for golden Bitcoin, when they don't earn an interest rate and stocks look like they're going to go up 15% every year, the demand is very low, right? So you have to be a real visionary to hold gold and Bitcoin and silver, you know, five years ago, right now holding gold and silver in Bitcoin is just a matter of exiting a burning theater.
JEFF (55:48):
So yeah, go to a self directed life.com. Make sure you're on our email list as well. One thing that you may have noticed is big platforms left and right are starting to play an alarmingly active role in censoring information. People are losing YouTube channels when they have billions of views. People are losing their Twitter accounts when they have millions of followers. People are, you know, losing access to all kinds of things. So it's very important that when you find a good source of information and our goal is to be a good source of information for you. Here, you should subscribe on all of the platforms and by email because sometimes people are coming out there and saying important things and then they're getting shut down on certain platforms due to certain interests. And we're just here wanting to help you out and if you want to make sure we maintain that connection, go to self directed life and subscribe by email.
JEFF (56:42):
Also wherever you find us and you have that line of communication, send us any questions you have. Any ideas or requests for future podcast episodes. This is our first episode and we're all ears. We have a lot of value to share here. We can help you be ahead of the trend. We can help you cut through the noise and get to the signal, but we need to know, you know, what you're after. And I want to hear from you as well. What are you already doing to live the self directed life? How's that working out? And what do you feel you need to do next that we might be able to help you with to live the self directed life? All right. That's it. A little bit rough around the edges for our first episode, but thank you so much for joining us. Thanks everybody. Have a great day.