- What is the real rate of inflation?
By the end of this video episode,
you will understand that the government
changed the way they calculate the consumer price index,
the CPI, twice back in the 1980s,
because they didn't wanna have to pay
social security recipients
the actual cost of living increase.
So you will understand
that they actually can compare apples to oranges
when they report the cost of living increase.
Get ready,
this is gonna blow you away.
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So I've been around the block for 48 years
as a financial strategist.
I started in 1974,
helping people optimize assets, minimize taxes,
empower their authentic wealth
for goals like retirement.
And so, I've been helping a lot of people
hopefully not outlive their money during retirement,
because most Americans, following the herd,
putting money in IRAs and 401ks,
thinking they're gonna be in a lower tax bracket
when they retire.
They find that there are three big dangers
that causes them to outlive their money,
taxes, inflation, and market volatility.
So this episode is gonna talk about inflation,
because as of the recording of this episode,
the true rate of inflation is over 15% the previous year,
I'm talking about the year 2021.
And yet the government says,
"Oh, no, no, no, no, no.
The rate of inflation was only like 5.8 or 5.9%.
We know 'cause we calculate this stuff."
Now, Americans are smarter.
They go to the gas pump
and they are paying 50 to 100% more for gasoline.
Used cars went up 20%.
There are a lot of commodities
that gone through the roof, and they know better.
So how do we reconcile the difference
between what the government says the inflation rate is
and the true rate of inflation?
That's the subject of this episode.
So in case you weren't aware,
way back the last time
when inflation was sort of horrible,
like it was in the year 2021,
was during Jimmy Carter's years, okay?
And I was working as a financial strategist back then.
And inflation got to double digit, 10% and even 14%.
And because of my favorite instrument back then
which was universal life,
this was pre indexed universal life.
When inflation was 10, I was earning 15.5%,
because I've always been able to outpace inflation
by using property-structured universal life,
and then later on indexed universal life.
But way back then,
the government decided they could not afford
to pay social security recipients, retirees,
the actual cost of living increase.
And so, they decided to change
the way they calculate inflation
or the CPI, consumer price index.
And through a series of changes,
they used to compare a basket of goods
to the same basket of goods,
like apples to apples year to year,
they changed that.
Now it's like apples to oranges,
which means the government can actually compare the price
of an eight ounce filet mignon steak last year
to eight ounces of hamburger this year, if it's red meat.
And you say, "Really?"
Oh yeah, they do this all the time.
So when they did that,
you take the years like from 1981 and you go through 2021.
So this is a period of 40 years.
You can see here the real rate of inflation
is clear up here in the blue.
This is what the government-reported inflation was
down here.
There's this huge difference
between the actual cost of living increase
and what the government says it is,
because this is all they want to pay
social security recipients.
And unfortunately, through the years,
you'll see this difference
between what the government says the CPI is
and what the actual cost of living increase is,
and that's what happened in 2021.
The government, I mean, you know,
I have social security coming in,
and they act like, oh, we're heroes.
Inflation was 5.8, 5.9%, somewhere in that range.
You're gonna get the biggest increase in years.
Well, hello?
The real rate of inflation was over 15%.
So it's ridiculous.
You can almost triple whatever they tell you
to come up with the actual rate of inflation.
So let's talk about what is the real rate of inflation
and how you can calculate it using, you know,
simple math like the rule of 72.
But, you know, for years,
this is a cartoon showing me with a caricature here
where I have this ammunition, this artillery, weaponry
that helps people like you fight the battles of life,
especially with financial assets and accumulation,
the negative impact of taxes, inflation,
and market volatility.
And so I have this ammunition, and so many times
people are so busy living their lives, earning a living.
They go, "I can't be bothered by some crazy salesman.
I've got a battle to fight."
And I'm sitting there with this weaponry,
this ammunition is called max funded indexed universal life
that will help them eliminate the dangers of taxes,
inflation and market volatility.
They'll be able to conquer these financial battles.
And yet I can't get their attention
unless something really bad happens.
Well, I've been getting people's attention
because inflation now is where I told them
it was gonna start being
because they've been printing money.
The government has been printing money like crazy
because of COVID-19 pandemic,
because of these economic stimulus packages
and infrastructure bills and all kinds of things.
And so in a nutshell, because of COVID-19,
from the last year of Trump's administration
and the first year of Biden's,
they basically spent three times as much as they bring in.
I mean, hello?
If you were making $100,000 a year and you spent 300,000,
how long can you keep spending
three times more than you bring in before what?
You would have to file bankruptcy.
But see the government, they spend more than they bring in.
And then how do they solve it?
They raise taxes.
They print money, which causes inflation.
Now, they've been printing money like crazy.
They were supposed to stop printing excess money,
clear back in March of the year 2021
and then they still had some bills to pass
so they extended it to June.
And then it's still going
as of the recording of this episode in 2022.
And then they go, "Well, I don't know.
Inflation is just transitory."
Baloney.
No, it's here to stay
because they've been printing way too much money.
When you have a tremendous supply of money,
then the cost of goods and service, okay, it inflates.
They have to go up.
It's just supply and demand.
It's basic economics 101.
So they're spending trillions of dollars.
The IRS brings in about 4 trillion in tax.
They give about 800 billion back in refunds
and they net 3.2 trillion
and they've been spending over 9 trillion, okay?
A trillion dollars would be $1 bills
lined up end to end from here to the moon
and back 200 times.
You talk about 9 trillion
and they just act like it's nothing.
So folks, you have programs like Social Security,
and clear back in 2009,
for the first time Social Security benefits paid out, okay,
were more than the FICA taxes that were withheld.
And so it's a train wreck waiting to happen
and that's why so many times people say,
"Well, I thought we had another 30 years
before Social Security would run outta money."
Hm, no.
They would be totally bankrupt in about nine months
if they stopped withhold money from workers' paychecks.
Well, this is why years ago I created an ebook called,
"How to Create Your Own Economic Stimulus Plan."
And in this ebook, it still relates to today,
this is like the USS economy, okay,
and it's a sinking ship right now.
And so many times,
we hire or we elect these congressional leaders,
and they're like on the deck of a sinking Titanic
rearranging deck chairs where they're gonna spend
and all this, and on a sinking Titanic.
And so what my goal has always been
is to help you understand
that if your outgo exceeds your income,
your upkeep will become your downfall.
And I love this country too much
to see you get hurt by that.
So I've often wanted to help people understand strategy.
So this channel, 3 Dimensional Wealth
is designed to help you understand
how to combat these negative impact of taxes,
inflation, and market volatility
that's gonna cause this ship to sink.
I want you to stay afloat.
And so with these strategies on this channel,
it's about you, it's about your brighter future,
and I would recommend you align yourself with advisors
that know how to keep you afloat no matter what taxes,
inflation and market volatility does.
Because if your advisor is telling you
to just stay the course and keep your money
in tax-deferred IRAs and 401ks in the market,
the market will come back,
you're headed for trouble, okay?
So sometimes 401ks are not the cats' meow we think they are.
They actually stink in my opinion,
and there's far better alternatives.
Because Uncle Sam
is gonna have to take a bigger and bigger piece
of the American taxpayer's pie,
and that's what's happening right now
with raising taxes, printing money,
and it also causes market volatility
and people will outlive their money.
Mark my word.
You've got to eliminate those dangers.
That's my passion and purpose.
That's why I love max funded IUL.
So here is the economy
and the economy really would like to be scoring touchdowns,
but who's holding us back?
Some of these legislators
that keep wanting to spend and print money
thinking that that doesn't cause inflation.
They haven't even been to economics 101 yet.
Okay.
So this is why I have acronyms,
TIME spells taxes, inflation,
market volatility, economic uncertainty.
Those are the dangers
that I like to help people like you eliminate.
And my favorite vehicle, max funded IUL,
I call the laser fund.
LASER is an acronym that stands for liquid assets
safely earning returns.
And so my purpose here is to help you understand
how to combat inflation.
So how do you calculate the real rate of inflation?
You can use Rule of 72 Math.
If you don't know what that is,
you take whatever interest rate,
let's say you're earning on money
and you divide that number, let's say it's 8% into 72,
your money will double every nine years.
If you're earning 5%, it doubles every 14.4 years.
10% every 7.2 years,
I've been averaging about 10% net cash on cash
on my max funded IUL for years by rebalancing and so forth.
So let's say you started with 125,000 bucks
and you never added a dime in the first year,
and let's say you're earning 7.2.
Now I use this number
because in the worst decade since the great depression,
2000, the year 2000 to 2010
by using indexed universal life without rebalancing.
If you fell asleep like Rip Van Winkle in the year 2000
and you woke up in 2010 and said,
"What happened in America while I was asleep?"
You didn't hear about 9/11 terrorist attacks?
You didn't hear about 2008?
People lost 40% twice in their savings
during the last decade.
You go over and you look at your IUL policy,
and if you had a million in the year 2000,
it was worth 2 million because the average return was 7.23%
even though you had five lost years.
Most 10 year periods you'll only have three lost years
compared to seven up.
That decade, there were five loss years.
So in IUL, you didn't make anything those five years,
but you didn't lose.
The other five years you made what the economy did
and you only capped out twice,
if you know what capped are on IUL,
but people earned 7.23%, your money doubled,
a million over two million.
See 125,000, if it is earning 7.2,
will double to 250,000 in 10 years,
500,000 in the 20th year, a million in year 30.
I've had many people do this.
If you stock away 500 bucks a month for 30 years
and you earn this, you will have a million dollar nested.
There's several ways to stack up a million.
I have a lot of videos about this.
Okay, let's say you're gonna retire,
and you have a million dollar nested,
and it's earning 7.2%.
Well, theoretically,
you ought to be able to pull out 72,000,
7.2% of a million, 72,000 a year in annual income
without depleting principle.
But if this is a tax-deferred IRA of 401k in a 33% bracket
between federal and state tax,
you're gonna pay 24,000 in tax,
you're only netting 48,000 or 4,000 a month
to buy gas, groceries, prescriptions, and golf green fees,
and so that's four grand a month.
Well, what does inflation due to this?
If you have a million dollar nested at 5% inflation, okay,
then the 4,000 a month that you started with,
at 5%, five into 72 means, the cost of living
will double in about 14.4,
let's just run it to 15 years.
That will only buy what 2,000 a month buys today.
And you're gonna need 8,000 a month in 15 years
to buy what 4,000 a month buys today,
the same gallons of gas and loaves or bread.
Are you getting it?
Because I divided 5% into 72,
the cost of living doubles every 15 years
or the purchasing power is cut in half.
Okay.
Whoa! Now we've been way higher than 5%.
So, if inflation is 3%,
it doubles every 24 years.
If it's five, it doubles in 15 years.
Well, the real rate of inflation
has been more like 7.2% for quite a while,
the cost of living doubles in 10 years.
Well at 9.6%, it doubles in seven and a half years.
At 12%, it doubles in six years,
but inflation has been over 15% in the year 2021.
15% into 72 means the cost of living
will double in less than five years.
Hello?
It means if you could get by
on a hundred thousand dollars a year today,
in five years you're gonna need 200,000
to buy the same gallons of gas and loaves of bread
that a hundred thousand buys today.
Now people may say, "Well, I don't need a hundred.
I only need 50."
Well then you're gonna need a hundred.
But see, it keeps doubling.
In 10 years, you'll need 400,000
to buy what a hundred thousand buys today.
People are going to outlive their money.
Now, all I'm gonna say here at the end is this,
our clients, because they use max funded IUL,
in the year 2021 when inflation was 15%,
and in less than five years
it'll cost twice as much to live,
many of our clients locked in gains of 25% tax free
on their IUL policies,
a million worth over 250,000 of the end of the year,
but we had some clients that locked in gains of 61.33%.
So inflation might be at 15, but they earned 61.33%.
We had one client that started out in March of 2020
with a little over 800,000 in their IUL policy.
They didn't add a dime.
And it had over a half a million of growth
in one single year,
it was worth 1,382,000 in March of 2021.
It also means in the next year, if the market crashed,
they would not lose one dime
of the half million that made the year before.
Those are locked in gains.
That's the beauty of max funded IUL,
it helps you outpace inflation
because you're linking your returns
to the things that inflate.
So be sure and study on this channel,
and I want you to read my book,
it's called "The Laser Fund."
Here's how you can claim your free copy of my 11th book,
"The Laser Fund."
It's 300 pages of charts, graphs, explanations,
and 62 actual client stories
of how people have utilized max funded IUL
for all kinds of goals, retirement, emergency funds,
working capital for business, real estate management,
a college funding for the kids and grandkids,
all kinds of uses.
This is how to diversify
and create the foundation for a tax free retirement.
Now here's how you claim your free copy.
You simply go to laserfund.com, L-A-S-E-R fund.com,
or click on the link below.
You contribute a nominal amount
towards the shipping and handling,
I'll cover the rest of that cost.
I'll pay for the book and I'll fire out a copy to you.
If you like to listen and learn, watch and learn,
you can also do that.
There's an 18 hour masterclass.
There's information there on educational webinars.
And I can also point you to the advisors
who understand how to implement these strategies correctly.
But I want you to take ownership
of your brighter future today.
Claim your copy, and here's to your brighter future.
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