I’ve spent the last several years of my life talking to entrepreneurs, thought leaders, millionaires, billionaires– the people who understand how the system actually works. They understand how the game is played and play it better than everyone else. They take calculated risks, and enjoy the fruits of their big wins. They do amazing amounts of good in the world, creating a better future.
Others struggle needlessly because of their limiting beliefs about money. They still don’t know the first thing about how it works and are forced to make suboptimal choices, held by chains of their own making. A little bit of knowledge and a few wins could set them free, but they’re stuck in their mental prison.
The saddest part? They hold the key to their freedom.
There is abundant wealth for anyone who seeks it.
Most of those “in the know” would say that the biggest wealth transfer in the history of the world is happening right now. It’s happening insidiously, quickly, with far reaching complications that might not be seen for decades, but will be catastrophic and irreversible.
But with any great crisis comes great opportunity.
Step back in time in your own lives, even 5 or 10 years, and remember what you paid for items then vs now. Perhaps, if you’re diligent, you have records — receipts, household budgets, expense reports, etc. You’ll see across the board that the prices of the things you purchase, including rent, fuel, food and other consumables are increasing at a drastic rate.
Ask an elderly person sometime what things used to cost. It will shock you. My dad always loved to tell the story of how, long before I was born, he could buy a breakfast sandwich, a lunch sandwich, a pack of smokes, a coffee and a newspaper and get change back from his dollar.
But inflation is low, right? The CPI says prices aren’t rising fast at all?
Unfortunately, government reported statistical inflation numbers, such as the consumer price index, don’t really track things as accurately as we would like.
The problem with the CPI is that it’s not really a great indicator of inflation. It relies on consumer surveys like “asking homeowner what they would charge to rent out their home” (?!?) and is fairly arbitrary in its calculations, swapping consumables based on assumptions like “Well, if people can't afford steak, they'll just eat more chicken.” The Fed uses it to allow carte blanche with monetary policy, because as long as “inflation is under 2 percent” they’re doing their job. All while pumping over 2 Billion new dollars a day into the system. They’re not the only one, the ECB, BOJ and several other central banks are following suit, printing currency at an alarming rate.
The money supply isn’t difficult to understand, really. In a closed economy, if there were 1000 dollars total, and you added 100 dollars, the value of those original 1000 dollars would have decreased in their purchasing power by 10%.
It wouldn’t happen right away though, because not every participant would feel the decrease immediately. It might take a little time for those new dollars to circulate and people to understand that their value was lower, increasing the prices of goods and services to compensate, but the effect is a foregone conclusion.
What effect does this have on the marketplace?
In more quickly adjusting markets, the effect of the Federal Reserve’s policy can be readily seen. Look up a volatility chart of the stock market on Fed minutes day to see what I’m talking about. The effect is huge on stock prices. If you care to dig a little deeper, a chart of the whole year return can be seen here, cross referenced with FOMC dates here.
Check out when they keep printing steady at the same rate, like what happened in 2013. Basically every time the Fed said they would keep printing, the market jumped, corrected, then began to climb again. It lead to one of the most predictable (in hindsight) and profitable (if you understood the pattern) years in market history, about a 25% gain year over year.
Then, when the Fed backed off a little bit in 2014, decreasing easing from $85B a month to $65B a month, the market got crushed in February, then slowly started to trickle up again. It’s as if those who manage fiscal policy are dialing in the proper growth curve on the market, and taking steps to make sure it doesn’t appreciate too far too fast. A rising market used to mean a strong economy, but not during this unprecedented deleveraging. As credit dries up and people’s income falls, we have a recipe for disaster. Productivity and GDP is certainly not increasing 25% a year.
For clarity, the amount of money in circulation is about 50 Trillion, when you add up all the actual money ($3T) and credit ($47T and shrinking fast, as our economy de-leverages) So printing around a Trillion a year (as of this writing) in new currency is very significant. What’s worse, is all of the central banks are having a printing party right now, purchasing government bonds out of thin air, creating an artificial marketplace.
So why should you care?
Because you’re having your wealth stolen from you.
Well, if you own these underlying assets: stocks, businesses, real estate etc, then you’re probably okay. These are things that can’t be easily printed into existence and absorb money because they attract value, which is less affected by currency manipulation. People need places to live, so rents and home prices rise to compensate. Gas stations can charge more for gas, grocery stores charge can more for food, and companies are shielded because they can charge more for goods and services. This adds to their bottom line to compensate for rising prices, keeping their share prices in line with the new money coming in.
If you are an asset owner, new money will show up in your bottom line, because the value of your assets will rise to compensate for the new money that didn’t exist before. If you earn a paycheck, however, you’re in for a rude awakening when the market for consumables finally catches up and prices skyrocket.
The point I’m trying to make is simple. With regards to prices (and by extension the market), they will keep going up as a result of more money being added to the system through QE. Until they don’t. Eventually even QE will have no effect on a bloated system, and it will all have to correct. Prices will rise to catch up, probably drastically, and people will feel poorer than ever. The rich will be okay, because they correctly put their cash into assets, both to increase their cash flow and protect against rampant inflation which can cause hyperinflation. We all know how well that worked out for the Germans, and by extension the rest of the world. This is why the number of ultra high net worth individuals has increased drastically in the past few years, hitting an all time high in 2013, despite a downturn in the global economy. It's not that they all of a sudden increased their income drastically (although some did) but that their leverage was greater, which allowed a huge opportunity to capitalize on this global financial crisis, purchasing cheap assets and holding as they appreciated again rapidly.
You can be like them, the uber wealthy, and you can be ahead of the game. But you need to understand how to create wealth, build assets and protect yourself from the big fall. That’s my mission here at MakeMoreMarbles, to teach one million people how to create and manage abundant wealth. Come along with me on my quest to gather strategies from the brightest entrepreneurs as they create lifestyles of abundance. An abundant individual is more likely to help create abundance for the whole human race. Creating freedom of time is only the first step.
Assets are cheaper than ever to create. Building a business isn’t easy, but it’s certainly within the reach of more people than ever before. You’re no longer limited by capital constraints, with new and increasingly staggering crowdfunding successes being logged everyday. The internet allows you to transact with as many people as you can reach, which is an enormous opportunity.
Like every opportunity, it has a window, which will eventually close. There will always be another opportunity as things shift, but you only have a limited amount of time to capitalize. Will you be financially free? Or eaten alive when your purchasing power falls drastically and your income doesn’t rise drastically to compensate?
You have the key. You can learn the rules, find your edge and thrive. It’s a choice, really.
Make More Marbles can help you achieve your goals. We are a community of dedicated entrepreneurs making big waves in the world. A ready built tribe and your greatest asset. We tackle key components, teaching you to anticipate and spot opportunities, trade, invest, build businesses, manage risk, create leverage, embrace failure, better utilize your resources, increase productivity, create freedom and make a huge impact.
That’s just the beginning. We will help you design a life you love to live.
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