Money, Inflation, and the “Great Reset”

Release date: November 9, 2020
Duration: 46min
Guest(s): George Gammon
George Gammon

Today, The Rich Dad Radio Show has a special guest, who is the most popular guy in macroeconomics over at YouTube. He produces the Rebel Capitalist podcast, George Gammon.

He claims permanent residence in Puerto Rico but spends a lot of time wherever he is to enjoy his time. His friend Andrew Henderson says, “You go where you're treated best.” Being flexible with your residency is important because there is a lot of stuff that's going on in the developed world, and he thinks that if people aren’t cognizant of that - they could be a victim.

George has always been an entrepreneur, and some of the things he did worked out and some of them didn't. He has always had a little bit too much confidence in his own decision making ability. The sales and marketing businesses he started helped him retire in 2012, at the age of 38, to explore the world and maybe have a little more freedom.

Once he retired he needed to figure out how to invest his own money. He eventually found Milton Friendman and Thomas Sowell, his favorite economists. He also studied Jim Rogers, Marc Faber, and Jim Rickards who led him into real estate.

He has invested in real estate all over initially starting in the Midwest in the United States, specifically Kansas City. He has since expanded into South America. He claims that he is a real estate guy at the core. If he sees stocks or bonds around the world that are cheap, he is happy to go in there and start kicking tires.

He goes onto explain how many “experts” like Dubai as a real estate play which could be a great place. But he feels their real estate market peaked out in 2015 and has since only continued to go down. Not only is this specific market in a downtrend, but they had oil go to a negative $40 a barrel.

The Cantillon Effect

The main topic on George’s mind is Cantillon effect. He explains it as “when governments or central banks print money, it doesn’t go to everyone in the population equally. First, it goes to the insiders, the political insiders (the Clintons), individuals at the World Economic Forum.”

They, as well as Jane Fonda, claim that COVID is an “opportunity” because the left can get in and blow out the capitalists. These insiders are buddy-buddy with the people who are printing money. They get it before it gets out into the economy to create inflation in either consumer prices or assets. They get the maximum benefit of purchasing power.

Some like to call it crony capitalism and George likes to call it corporatism. The CEOs get the money and eventually buy back shares of their stock. Asset prices go up, and Mom and Pop are now homeless because their consumer price index goes up.

The insensitive structure for these insiders is basically created to benefit them. If they promote things like negative interest rates - this will destroy the banking system or the economy. The more the economy is destroyed, the more money printing the central banks will do - therefore, the richer the insiders get. Which is why the stock market continues to drive upwards, even though people have lost jobs.

George explains a chart called the Buffet Indicator, which is the market cap of the stock market compared to the GDP. The only time that the GDP has ticked down was back in 2008, the GFC in the chart indicated that it went down just slightly. Of course the stock market plummeted 50%. This is the only time that he has ever seen in history where GDP has collapsed, but the stock market has skyrocketed. There is no relationship whatsoever between the stock market and the real economy right now.

He believes that Warren Buffet is buying gold and selling his bank shares because he knows the global elites are trying to destroy the banking system, in regards to the Cantillon effect, by pushing negative interest rates. If this is actually accomplished, then eventually cash will be banned and we will all have accounts with the Federal Reserve. If the people all have accounts with the Fed, then there is no real reason for the banking system. Only one bank, and that would be a central bank for us all.

The Cantillon Effect can really alter how loans would be done. The Fed can take an “infinite haircut”. They can loan you money and if you don’t pay it back, it doesn’t matter. They don’t have a profit and loss. They can start to distribute money not to whomever they want, but how they want. Instead of giving you a mortgage based on your credit score, they can do it based on your social score.

The Crypto Dollar

A crypto dollar is a digital dollar. He explains it this way, you have a bank account, like at Wells Fargo. You get your bank statements every single month and then you reconcile with QuickBooks. Now, if we had a bank account with the Fed, then they would see every single one of your transactions. This would give unlimited power to the government.

This isn’t happening so don’t lose sleep over it. But as humans, we have to start thinking about these things and how it will impact all of our lives. You can either be prepared or be a victim.

The Red Pill Expo

Today, George, Kim and Robert are going to Jekyll Island, where the US Federal Reserve was “started” in 1913 on Christmas Eve. The reason George is attending the Red Pill Expo is for him to speak about the “Great Reset” that he discussed with the World Economic Forums. Also, how everyone can understand what they’re doing and leverage that into your own investment portfolio to actually profit from it.

Robert knows people who have a Winnebago mobile home ready to go in their driveway just in case they need to move quickly. They can get out of dodge quick now if they have this ability.

The vibe has changed from when George grew up in the 70s and 80s. Countries around Russia might not be as free now. People have to start looking at the trajectory of where countries are going in the future. All the people want socialism in the US, but the people that are coming into the US are running from socialism.

George has a great firsthand experience with this. He says that there are a lot of people that work for him in Colombia with his real estate business, many of whom are native Venezuelans who fled their own country. These workers absolutely love his videos, but as soon as they see some of the comments that are promoting Socialist and Marxist ideas - it pisses them off. They get so angry because of what they experienced in Venezuela. They had to leave everything that they owned behind to get to a better life.

Kim asked George what could somebody do today to prepare versus become a victim. He answered with this, “If we’re talking about from a financial standpoint, I think you have to look at commodities, (gold, silver, oil, uranium, and copper) because they’re extremely cheap right now, historically speaking.”

Anyone can buy commodities by just buying the producers. George likes coal, and this is why. He tweeted this trivia question, “What do you think is the best performing stock in the entire stock market since 1968?” The answer is tobacco. If everyone looks at the attitude that everyone’s had towards tobacco since the mid 1990s, it’s the exact same thing with coal now. Coal may be the new tobacco.

The future is paved with gold… and cryptocurrency

Preparing for the future is key with how everything is going right now. It is smart to be prepared with gold, and also Bitcoin. Bitcoin can be considered a completely separate asset class with a different purpose.

Gold can be used as a great insurance policy. It can be used to protect your purchasing pay. Gold will not create wealth, but maintain wealth. Bitcoin is more of a speculation. It can only help more than it will not help. These are unique assets in that they don’t have any counterparty risk.

Anyone can essentially create their own cryptocurrency. They have the network effect so a new crypto may not be as sophisticated as Bitcoin, but then again there is just as much to be excited about with the technology behind it and blockchain. Gold and Bitcoin are similar to comparing apples to oranges.

There must be a way to limit the central planners to create more currency. If anyone takes a look at the gold guys and the Bitcoin guys, everyone is on the same team. That team is trying to limit the central planners from creating all of those currency units that trickle down and play into the Cantillon effect.

George gives us this example, “...with Bitcoin, there's only 21 million of them. If we went onto, let's say, a Bitcoin standard, I'm not saying this is what we're doing, let's go through a thought experiment. Well, that would prevent Jerome Powell from coming in and taking his balance sheet from $4 trillion to $7 trillion. That would prevent ... Not only that, but, see, a lot of people on the left say, ‘Oh, yeah, that's terrible because we can't do these social programs.’ What they forget is it would also make it harder for the governments to go to war.”

This is something that we should be in favor of because normal citizens can’t print the money. They wouldn’t be able to afford the war unless they taxed the citizens first. Then, if the citizens aren’t on board with them going to war then citizens won’t pay for that.

Plan for the Worst

Fun fact: Just before 2020 started, the estimated death rate for cancer was 606,000 Americans. So far, coronavirus has only killed 200,000.

Humans are irrational by nature. This in turn makes poor investors. He says that emotion must be eliminated and focus must be turned to the statistics and investments within a framework. People can go outside of investing and look at other methods of investing, such as looking at different states to see if any state has ideas that are more aligned with what they think is right.

George quotes Simon Black, “What's your downside to having a plan B?” He talks about if you are someone in California and you have an RV and a diesel truck in your driveway with some food. One day, riots start going through you can easily take your family, your RV, and your truck and head up to Tahoe for a few days. Then you can return whenever you feel like it.

A lot of people were driving anywhere from Idaho, Utah to Sedona to get out of all of the craziness. 90% of the people that were in St. Bart’s with George were also from America, not wanting anything to do with it. A lot of them were actually from California.

The Future of Social Security

In George’s opinion, Social Security will always be there. There will still be a $2,000 - $3,000 check, but instead of helping pay for a car or vacations it will pay for a loaf of bread. The Fed will create so much money to make them whole, that it goes into inflation. It will increase consumer prices on everything. Especially, if the US moves towards Socialism, Marxism, or even Anti-Capitalism.

Yes, there will be money to pay out in Social Security or pensions, but it will not go far at all.

He also believes that a lot of people in the United States wouldn’t consider themselves a socialist or a communist but they are “Anti-free Market Capitalism”. They are big for the government. They are a top down type of approach.

Early Retirement

As stated above, George retired when he was 38. Kim was 37 and Robert was 47. They all have something that drives them, and they are all different.

George loves the challenge. He grew up as an athlete, which propelled his competitive nature to business. He would never openly admit that he wanted to make it the biggest YouTube channel when he first started. In the back of his mind he knows that he is a very competitive person. He would always ask himself questions like, “What do we do to get more views”, or “What do we do to do this”.

The main driver for his success is “more personal freedom and always being challenged”. He has found that the more that he does, the more he shares, the more he learns, the more freedom he has. If he didn’t make a “fool” of himself on YouTube videos, he probably would not be attending the Red Pill Expo. He probably would not be meeting fantastic people every day.

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