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#251 - The Ultimate Hedge Against Inflation! · Money Grows on Trees

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  All the people I know who are wealthy, a lot of my friends who are worth millions of dollars, how
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  did they get there? Did they buy gold? No. Did they buy real estate?
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  No, they didn't. They might say they do now to protect their wealth, but they didn't get
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  there that way. Let me tell you, they all did it through. This is the best
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  hedge against inflation of all time, okay? It's
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  the fastest way to outrun inflation and unlike
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  cash, it can compound very powerfully. All
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  right, so check it out. You're going to be thrilled or
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  you're going to be disappointed, either one. Here we go. The best
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  way to hedge inflation is to actually increase your skills. The best way
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  to hedge inflation is to earn more money. The fastest way to
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  outrun it is to earn more. Unlike cash, skills can
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  compound drastically. You can end up finding skills that you can totally transform
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  your earning power with, and your income is the most important thing you
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  can do to enhance your wealth. It really is. You can't save your
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  way to wealth. You can do it for a period of time, but you can't get it down to nothing. So,
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  there's an example in, I mean, many examples in
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  the past where there's inflations crushed the economy. I
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  know without a doubt that people in that economy with skills, sought after
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  skills, were still getting paid a ton of money in all sorts of different
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  currencies and or gold and or in barter to apply
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  their skills to the economy. Okay, so it doesn't, if you've got skills,
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  people will find a way to give you something of value to get them. So
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  it doesn't really matter if your local currency, like the Australian dollar is completely, you
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  know, getting, It's completely collapsed in the last few years in
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  terms of its value, but... I know that if I've got
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  skills, I can get paid in gold, I can get paid in US dollars,
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  I can get paid in barter. Like if I'm good at what I do and people
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  need it, they will find a way to pay me. Even if the currency is toilet
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  paper, I know during COVID when there's a lot of toilet paper, I could have provided a skill to
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  someone. So Lloyd, I'll pay you in toilet paper, go give me the toilet paper. It doesn't
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  really matter what it is, your skills are inflation proof. And
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  it doesn't matter if the global currency is crypto, USD,
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  gold, barter, whatever, your skills transcend
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  all of the global currencies. All of them. So
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  the most important thing you can do is improve your
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  knowledge and skills because they are inflation proof. They will ride inflation way
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  up because there's people out there with skills. Think about it. Think
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  about Mark Zuckerberg. He's now like the top three or four wealthiest people
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  in the world. He's also the youngest in that group. Think
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  about the skills that he applied. He became worth $100 billion. Do
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  you think that outperformed inflation? Yes. Do you think Jeff Bezos outperformed inflation?
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  Yes. Do you think Warren Buffett outperformed inflation? Yes. All the people
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  I know who are wealthy, a lot of my friends who are worth millions of dollars, how
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  did they get there? Did they buy gold? No. Did they buy real
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  estate? No, they didn't. They might say they do now to protect their
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  wealth, but they didn't get there that way, let me tell you. They all did it through actually
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  improving their skills and starting and building their own businesses. That's
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  how they did it. So don't, and
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  some people have certainly, like there's a story of a lady, she
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  just gave a billion dollars to a charity. Her
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  husband happened to invest with Warren Buffett, that's stocks, that's Berkshire Hathaway, and
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  ride that sucker way up to a billion dollars, and of course,
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  incredibly powerful hedge, because Warren Buffett in
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  the last 60 years created 5.5 million percent return. To
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  put that in perspective, the S&P 500, 30,000 percent return. To
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  put that in perspective, it way outperformed inflation. Inflation hasn't
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  been anywhere close to those two numbers. So stocks and businesses, yes,
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  can also outperform it. But for most part, it's businesses
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  because of skills. So if you want the ultimate hedge, invest
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  in yourself. You are the ultimate hedge. You are the best asset to
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  invest in to overcome inflation. So could hyperinflation happen
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  in Australia? Could we absolutely destroy the power of
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  the Australian dollar? Theoretically, yes. Will
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  it happen? Technically, well, technically yes, but theoretically or
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  I would say no. It's unlikely because we've
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  got a floating exchange rate. We've got an independent reserve bank.
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  We've got global trading partners. We've got a ton of resources here,
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  deep capital markets. And we do have, despite the challenging
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  leadership we have at the minute, that's a whole other episode of what I think about that. But
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  we do have the ability to control money supply. And
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  we do have hard assets backing. We've got land, arable land.
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  We've got farming, commodities. We've got resources, energy, hydrocarbons.
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  We're good. But if hyperinflation does happen,
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  Like what happened in Germany, what happened in Venezuela, what happened in Zimbabwe. In
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  those scenarios, you know what happened? People fled back. They just
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  dropped the currency. They went back to other currencies. They went back to the US dollar. They
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  went back to gold. That's what happened. The
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  economy doesn't die. The paper money is just forgotten. All trust is
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  broken and we stop using it. So it's not like you'll just have
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  nothing. You will have figured out by then if there's hyperinflation, what
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  does work and you'll have already gone there. But I can almost guarantee you that
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  if you have business skills and you have the ability to pivot and
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  you buy businesses and build businesses, there's no amount
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  of inflation that can hurt you because you are indestructible because
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  you invested in yourself. And of course, one of the other hedges
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  that's happening that I haven't really covered here because I don't want to is cryptocurrencies, especially
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  Bitcoin. They're like, oh, Bitcoin's a hedge against inflation. Oh,
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  my God. Do I have to talk about Bitcoin? It's a code. It's a
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  piece of code. And people are like, read the Bitcoin standard. How
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  much research you have to do to realize something's valueless? Look,
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  people are using crypto and specifically Bitcoin as an inflation hedge.
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  But the fact of the matter is this, gold has got thousands of
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  years of measurable data against inflation than
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  crypto does. It's tangible. Remember, the inflation hedge
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  is against tangible assets, right? Things that
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  can produce value for the world. Crypto doesn't produce any
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  value. How do I know that? Because I went down to the supermarket, With
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  my wife, we were doing a checkout and I said to the lady, ìHey, do you take
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  cryptocurrency for my groceries?î She went, ìNo.î I was like, ìPfft.î Then
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  I went to my landlord the other day, my property manager and he called up and said, ìHey, you
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  owe rent.î And I'm like, ìOh, do you take Bitcoin?î He goes, ìPfft.î So
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  I'm like, ìOkay.î And so I rang up my American Express. I
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  got an American Express card, platinum card. It's a wonderful card, lots of points. And
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  I rang him up the other day and I had like $100,000 to repound that. And
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  I said, ìHey, do you take cryptocurrency? Do you take Bitcoin?î They went, ìPfft.î How
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  is crypto or Bitcoin a hedge when it's not even valuable?
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  I can't use it for anything. At least I
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  can sell gold on the open market. I can sell it.
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  You can touch it. You feel it. Even though I hate gold, I can at
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  least see it's there. You can't see anything with crypto. It's
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  just code. Right? There's
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  certainly value in the technology of a blockchain. There's certainly value in
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  the technology of internet. There's certainly value in technology of AI, LLM
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  models. There's value in those for sure, because they speed up things. Yes? But
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  I can't see it in crypto. And so it might feel
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  like it's a hedge against inflation. By all accounts, if you haven't bought it, it looks
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  like it's hedged. But how they measure it? is
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  in USD, right? And so if the USD disappeared overnight, so
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  would the value of cryptocurrency, right? Because it's really got to be
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  valuable in the real world. And that's why I don't think it's the best hedge. So
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  I don't hold any of it. I never will hold it. Even if the world adopted
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  it as a currency, which I cannot see happening, I would
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  still own businesses. I would still, for that matter, if it
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  was the right price, own a piece of property. I would still own things
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  that are valuable. And I just can't see how it's valuable. This is why I
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  don't personally own gold. I don't personally own crypto. I personally own
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  things that are valuable to the world. Because I know if push
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  came to shove and shit hit the fan, like it did in COVID, did
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  people go to crypto? No. Did they go to gold? No. They went to toilet
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  paper. So I'm thinking to myself, wouldn't I
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  want to own companies that produce toilet paper? That's a better hedge, right? This
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  is where my mind's at. This is how I think. So I know that people got wealthy by
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  not owning those assets. I know they got wealthy by building businesses and investing
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  in themselves. So I'm all about playing wealth games. What are the wealthy
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  doing? What did the wealthy do to build wealth? because it's much
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  better than just preserving it. Thanks for listening to Money Grows on Trees. If
• 8:18
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• 8:28
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