imagine if last year may 12 2020 i knocked on your door standing seven feet apart because i'm
an overachiever and i asked you if you accepted jesus christ as your personal lord and savior no
i'm just kidding but imagine if i did knock on your door and i tried selling you this bottle
of soda for one dollar now imagine if today i asked you knocking on your door if you wanted
to buy this can of soda for one dollar and four cents now chances are that four cents
probably won't be that big of an issue in terms of your financial decision and well i personally
can't think of the last time i allowed four cents to be a deciding factor in my financial
decision on anything it's not like americans are saying oh man i love to purchase that season four
dvd of the voice but it costs 4 cents more than what i can get on amazon now where am i getting
these 4 cents from well it just so happens that this morning the wall street journal released an
article stating that the consumer price index rose 4.2 percent the last 12 months
now 4.2 percent doesn't seem like much but if we zoom in for a second huh
Hey what's going on guys Daniel here one half of the Kwak Brothers and in this video we're gonna
talk about inflation specifically in this year of 2021 what caused it and also how we can invest
based on how inflation fluctuates and by the way guys i hope you're still with me by the end of the
video because i'm going to be sharing something that i'm hearing nobody else talk about in terms
of what's actually causing inflation in the year of 2021 and of course guys don't forget to like
this video and subscribe to our youtube channel as we try to make videos that help as many people out
as possible when it comes to financial literacy and exposing financial truth all right back to
inflation so it's no secret that the cost of goods and services has gone up rather significantly this
year and well even the master yoda of investing himself warren buffett has made numerous comments
sharing his concerns about inflation now whether you agree with the goat of investing or you
disagree with him and you think warren buffett is like that crazy old guy in the corner talking
about new world order you have to admit either way that a lot of prices of goods and services has
gone up for example prices of used and certified pre-owned cars have shot up to new record highs
in terms of their prices lumber has hit record highs as well and even the price of chicken no not
that chicken though the chicken that we actually yes that chicken has even seen spikes in prices
recently as well but even with all this inflation going on there are still some of us especially
those who try to showcase their advanced economic knowledge via arguments in the facebook comment
section who still truly don't know what inflation actually is so please allow this 20 second cutaway
to explain thanks daniel from another room now guys to make things really simple inflation is
simply the decline of purchasing power of a given currency over time another great way of putting it
is that the rate at which the value of a currency is falling and consequently the general level of
prices for goods and services rises and generally speaking as it increases the price of goods and
services it also tends to increase the value of certain investment vehicles such as stocks
real estate bonds etc etc so inflation is indeed happening in the year 2021 but of course
what caused it well i happen to have two theories in terms of why that may be so theory number one
is a little bit more obvious and which is the amount of stimulus and government intervention
that has been happening pretty much the last 18 months aka fiscal policy now hear these numbers
out between all three rounds of stimulus the federal government issued out about 850
billion dollars to the taxpayers if we break it down even further the first round known as the
cares act issued 292 billion dollars the second round known as the consolidated appropriations
act you got to stick your picky out as you say it issued out 164 billion dollars and the most recent
round known as the american rescue plan issued out 411 billion dollars but of course that's not all
the money the government spent there's way more in 2020 as a matter of fact according to forbes the
u.s government spent 6.5 over 6.5 trillion dollars in the fiscal year of 2020 that ended in september
30th making it the record year for the most the u.s government has ever spent in one fiscal year
the increased government spending combined with declining revenue resulted in more than
3.1 trillion dollars added to the national debt now here's what's also crazy as well and on top
of all that government revenue went down one percent with revenue being 3.42 trillion dollars
for the year of 2020. so let's think about this guys practically for a second imagine you have
a household right you have a husband a wife and let's say you have their two kids now let's say
their household income is approximately 343 000 in one year between both of the main income earners
income now let's say they spent 655 000 and they also have a household debt of 2.8 million dollars
practically speaking so to summarize they have an annual household income of 343 000
they spend 655 000 on god knows what and they also have a debt of 2.8 million dollars am i the only
person that thinks that there needs to be a change in terms of the family spending habits am i the
only person that thinks that they should probably hire a financial planner or somebody who's very
good with money to start rethinking what their income and expenses and their spending patterns
needs to be i don't know let me know your guys thoughts in the comment section below am i alone
in this the second theory is actually something i've heard nobody else say but i think this is
actually a pretty good theory as to why inflation occurred so much in 2021 and that my friends is
the rise of cryptocurrency i mean let's think about this for a second imagine if i bring back
this soda can yes the return of the soda can let's say that this sort of can right here is worth one
dollar so let's say i sell you this soda can for let's say a hundred thousand dollars right so you
have a hundred thousand dollars i have this soda can and you give me that hundred thousand dollars
for this sprite so congratulations you now own this soda can now imagine if stores uh
amazon and all these different businesses started accepting soda cans as form of currency for the
exchange of goods and services that would actually increase inflation and increase the price of goods
and services because well beforehand right all we had between you and i the purchasing power
was 100 000 because well you gave me a hundred thousand dollars for this soda can
but obviously if soda can is now worth a hundred thousand dollars and other people stores and you
know commerce and merchants are accepting soda can as a form of payment well our purchasing
price has now doubled because well guess what i have a hundred thousand dollars in actual cash and
you have a hundred thousand dollars in the form of this soda can and if we go down to the store
they're gonna accept the soda can and the dollar equally so now our purchasing power is two hundred
thousand dollars between the cash and the soda can that my friends is what allowed more competition
more currency circulating in our market because well now that currency is not just green pieces
of paper anymore it's also cryptocurrency so that right there gives purchasing power more
expendable more exposed into the general masses and well the reason why i bring up this point
is because well guess who are the individuals who predominantly invested in cryptocurrency
well it wasn't the big institutions a lot of the big institutions actually shut it
down because they didn't see it as a legitimate currency well it was a lot of people like me and
you a lot of other youtubers who bought into dogecoin who bought into bitcoin into cardano
ethereum you name it and well considering that cryptocurrency especially bitcoin is starting
to become a little bit more accepted in terms of exchange for goods and services for example
elon musk saying that you can now officially use bitcoin for tesla to purchase tesla products and
tesla cars well that's going to create more purchasing power thus giving us inflation and
increase of prices of goods and services and to give you guys even a further look in terms of how
cryptocurrencies affecting inflation i mean check out the recent market cap changes for some of the
cryptocurrencies out there bitcoin officially now over one trillion dollars in terms of their
market cap ethereum is at 464 billion dollars in market cap uh dogecoin is at 59 billion dollars
and even tether is at 58 billion dollars in terms of their market cap and well there's
tens and tens more cryptocurrency assets out there with market cap rates exceeding 50 billion dollars
so if you add all that up and you consider how fast a lot of these different cryptocurrencies
may be accepted in terms of exchangement for goods and services well you can see kind of how
inflation can get out of control the next two to three years now guys if you have any other ideas
and theories as to why inflation has gone up in 2021 and really ultimately why prices of goods and
services has increased so significantly in the last 12 to 18 months please let me know in the
comment section below i would love to hear your thoughts but with all these things said of course
this leads us to ask well how do we invest and protect our finances during inflationary time so
let's go ahead and use real estate investing as an example because at the end of the day i consider
myself to be a real estate investing expert my thoughts for investing during inflationary periods
is to focus on dividend cash flow investing meaning that you don't buy properties unless
they cash flow within the first 30 days now having said that a lot of critics will say but daniel
uh if i'm overpaying for the property doesn't that cut into my cash flow and to that i would respond
by saying yes but why would you want to pay a higher price than what it's actually worth i mean
isn't that how thousands and thousands of real estate investors lost their shirt 13 years ago
in 2008 so to conclude my thought i would say if and that is a big if if you're going to buy real
estate as an investment during inflationary times for one do not buy based on how much you think
that property will go up in value that's one of the golden rules in real estate investing is you
never buy based on appreciation secondly i would say establish long-term financing now guys i
get it right now it's super tough to establish long-term financing with the banks because well
right now we have very low record low interest rates and banks really aren't interested in giving
you that rate for the next 20 25 30 years which is why i'm a big advocate especially right now
for seller financing now for those of you guys that don't know what seller financing is
what was that what was that book you can you can tell the people watching this video what seller
financing is and also how to invest in real estate oh man you guys should totally get this
book at zero to 75 units dot com and last but not least number three make sure that your investments
are providing cash flow for you starting day one now guys let me know your thoughts in terms of
how to invest in inflationary periods and also let me know your thoughts in the comment section below
with everything that we talked about in this video do you think we're about to see hyperinflation do
you think that we'll see an increase in inflation do you think the price of chicken will continue
to go up let me know your thoughts in the comment section below and of course guys as
always don't forget to like this video subscribe and also share this video to your friends so
we can all have discussions about it thank you guys i'll see you guys in the next one