If you understand this, inflation won't hurt you, it will help you. In this episode, I'm going to address,
Biden caused inflation will double the cost of living in less than five years
but how you can outpace that.
So, I'm Doug Andrew and I've been a financial strategist now for north of 48 years. Yeah,
I'm an old geezer and I've seen all kinds of periods of time even hyperinflation or
14% inflation during the Jimmy Carter years. But we're back to that type of inflation again the
true rate of inflation as of the recording of this episode which is in 2022. In the year 2021, the real
rate of inflation was over 15% average. So, in this episode get ready, put on your seat belt because
I'm going to talk about how inflation is here to stay. It's not going to go away anytime soon.
I'm going to talk about why did this happen and the spiral effect that is happening because of this.
I'm going to talk about the rule of 72 so you can calculate the cost of living increase and why you
can use that to your advantage. How to outpace inflation and link your returns to it because
a lot of financial advisors do not even understand what I'm about to teach you here and how to use
a financial instrument that will help you earn a rate of return of usually about five percent
or more than the rate of inflation at any given time that's what I've experienced. So, get ready,
I'm going to give you insights into opportunities maybe you didn't know existed before. Feel free to
post a comment, click like, or share, with somebody else that you think would benefit from this and
if you haven't subscribed, I would recommend you subscribe to this three-dimensional wealth channel
to get insights into opportunities like you're gonna hear right now. So, let's first address why
inflation is here to stay for the foreseeable future? In the year 2021, you know the treasury
secretary Janet Yellen said, "Oh, this is transitory inflation", it's just being a transition coming out
of the Covid 19 pandemic. No, it's not. I rolled my eyes when she said that. Why? So, let's talk about
why it's not transitory. It's not just for a little while why it's here to stay for the next maybe two,
three, four, five, years maybe longer. I think it will be longer and what caused this to happen?
So, when we talk about the environment that started to happen at the end of Trump's term
remember the last year of his term was when Covid 19 happened and he was doing things to stimulate
the economy and what have you and then Biden took over and you know, there's a lot of Americans
that I think voted for Joe Biden not so much in favor of him but it was a vote against Trump and
so forth. So, this is not a political agenda here but now we're seeing the true colors of President
Joe Biden and the people that surround him. So, let's talk about what caused this inflation to
take place and start going through the roof. When the pandemic happened what did congress do? They
began to offer stimulus packages and they passed legislation to extend unemployment benefits for
extended periods of time and to give all kinds of incentives and so forth so that people could
make it. So, they spent a lot of money. Long story short how much did the federal government spend
that they didn't have? They spent double what they bring in. Now, if you're not aware of this the IRS
during the year 2020 you know brought in about four trillion dollars in taxes. They refund about
800 billion of that in tax refunds and so they net after-tax refunds about 3.2 trillion. They spent
double that because of these economic stimulus packages and what have you. So, they spent twice
as much as they bring in. Now, when you do that government is usually left with two options.
They have to print more money and or they have to raise taxes and they've been attempting to do both
raising taxes takes a little while to take effect but they can print money
instantly. They can just start printing more money and I'm talking about printing way more money
than the dollar bills are wearing out and so that's what they did. They printed money like crazy
more than the federal government has ever ever done in order to make up for this twice as much.
I mean, if you spent twice as much as you earned. If you earned a hundred thousand a year and you
spent two hundred thousand where are you going to come up with the dough? Well, you either have
to borrow it from the American public or you have to take it from them in taxes or you have to
print money. The short term sort of solution is hey let's just print money and we'll figure it out
down the road. So, that's what they did. So, at the end of the pandemic you know they passed some
legislation early in Biden's first year that they called you know the stimulus package, the relief
package, and truth be known there was less than 10 percent of that that actually went towards
you know covid19 relief the other 90% they were just slipping into that legislation. All kinds
of incentives of spending that they wanted to push through and they just put it inside of that bill
and so they ended up spending or they will spend another you know 3 trillion twice as much as they
bring in in revenue and then they continue and so, as of the recording of this episode Biden's
been very frustrated because he's been trying to push through what he calls build back better. Now,
it's not going to build back better in my opinion but nonetheless, he is trying to get that through
while they're still in control. Because as of the recording of this episode, it's looking like the
midterm elections are not going to be in favor of his administration or the Democrat-controlled
senate with Vice President Harris breaking any ties okay and so they're scrambling to get some
things passed that they've been trying to do. So, if they do that they want to keep printing
money to be able to pay it off. But there's also other motives I think. If they get that passed
in one degree or another and they carve it down to 1 trillion instead of 3 trillion but if you
really read the legislation phase 1 is a trillion but it automatically kicks into spending two and
then three trillion. It's just smoke and mirrors. In essence with everything they have up their sleeve
they will be spending about three and a half to four times what they bring in in revenue. I mean,
initiatives they haven't even addressed yet like medicare for all or free college tuition. Those
are estimated by the congressional budget office to cost over a hundred trillion each in the next
10 years. You divide that by 10 years and that's over 10 trillion a year. Where they going to come
up with the money? This is what they were going to do they were going to stop printing money
in February of the year 2021 because of the stimulus package even though they thought
"Hey, let's push through some of this legislation. So, let's keep printing money", they've been printing
money like crazy anywhere from 100 billion but it's looking like more like a trillion
extra dollars a month. So, some estimates feel like we have maybe 15 or 20 trillion
in circulation instead of four or five trillion under President Trump. So, what does that do to the
value of the dollar? I'll explain it simply here in just a moment. So, they were going to stop printing
in February, they decided not. They were going to stop in June, they decided not because they hadn't
passed the bill back better and so they're just still printing the money. Well, when you infuse
the American economy with a bunch of dollar bills those become worth less until they're worth less.
Let me explain this if you don't understand. If there's a whole bunch of dollars
people who have money, this is why the rich get richer and the poor get poorer.
People who have money when the price of cars, maybe used cars, houses, prescription drugs, whatever. When
prices are such that when there is more demand for houses or used cars then there is supply
who do the sellers sell to? The ones who bid the highest who will pay the highest prices. So, there's
so much money the people with the money can afford to pay it because the dollars are worth less and
so prices go up 5, 10, 15, 20% gasoline goes up to you know 50% or more in several areas. So, that's why
you know we pay more for diamonds because they're scarce versus dirt because it's plentiful. So, if
you don't understand that you ought to watch some other episodes on this channel. In fact, click like
or subscribe, post a comment. But when you subscribe to this channel it's free and I post an in-depth
answer to a financial question almost on a daily basis. So, please do that but stay with me to the
end because I want to gift you a copy of my most recent best-selling 300-page book the laser fund
which retails for 20 bucks. I want you to claim your free copy. So, let's connect the dots here.
When we're talking about inflation there's a simple way to calculate the negative impact of inflation
and it's the rule of 72. Most people think of the rule of 72 is how you calculate how fast
your money will grow. Yeah, you divide the interest rate you're earning into the number 72 and it will
tell you how fast your money doubles that's on a lump sum. So, if you started out with 125,000
how long will it take to double to 250,000 if you're earning five percent five into 72
it'll take about 14.4 years. If you're earning 7.2 percent it'll take 10 years to double. If you're
earning eight percent nine years if you're only nine percent eight years ten percent seven point
two years. You can use the reciprocal of that equation to determine if you bought a piece
of real estate for a million bucks and you sold it for double that okay two million you may think
that's great. Well, not until you find out how long you held on to it. If you paid cash and you bought
it for a million or sold it for double that if you had to do that after 10 years of waiting for it
to appreciate 10 years into 72 means you got the equivalent of 7.2 appreciation. Not bad but nothing
to brag about. Are you understanding this? If not, be sure and watch other videos on this channel.
Inflation, if inflation is 5% the cost of living will double every 14.4 years.
Well, back in the 1980s the government could not afford to pay social security recipients.
The actual CPI consumer price index increase on social security so they changed the way they
report inflation or the CPI. They compare apples to oranges now they can actually compare the price of
steak last year to hamburger this year because it's still red meat and they do that. So, when the
CPI in the year 2021 was reported between five and six percent and the government thumped themselves
on the chest and said, "Oh, we're increasing your social security benefits by 5.9 percent",
the real cost of living increase was about triple that 15%. But it's because used cars, homes,
food, went up 15-20%, gasoline went up 50%. This hurts the people that are on fixed incomes
even if you haven't raised the minimum wage to 15 bucks an hour that's gobbled up at the gas pump
or the hamburger stand. Are you understanding this? So, you can calculate the rate of return
or the impact of inflation by dividing into 72. Well that means if you could get by on 5,000 bucks
a month today you're going to need 10,000 a month in less than five years to buy the same gallons of
gas and loaves of bread 5,000 buys today. In 10 years you're going to need double 10,000. You're
going to need 20,000 to buy what five thousand buys today. This is why most retirees outlive
their money. They can't afford to do that because their investments are not linked to inflation.
What do I mean by that? Now, one of my favorite financial instruments is called the laser fund and
in just a moment I'm going to show you how you can learn more about this. The reason why I love this
for probably 40 to 60 of your income at retirement is not only because it's tax-free but you can link
your returns to inflation. Basically, it means that if inflation goes at five I've always earned at
least 10. When inflation goes to 10 I earn 15, 15 and a half when it goes to 15 I earn 20.
Yep, in the year 2021 inflation was 15%. Do you know what many people earned on their laser funds
25%, 61.33% 153% on their max funded indexed insurance contracts. Yes, I have statements
to prove it to you. We had clients that in March of 2020 had 830, 40, 50, thousand a year later.
Their value in their IUL policies without adding a dime was a million three hundred
and eighty-two thousand. They made over a half a million bucks tax-free. Not only that,
but if the next year the market crashed 40% they would not lose one dime of that 1,382,000
including the half-million they just made. You lock in your gains and reset that's why I love
max funded IULor laser funds. But the key here is you're investing your money and you're linking it
to the things that inflate. I don't like inflation any more than probably you do but it doesn't hurt
me it helps me. If this is arousing curiosity how does this work? Here's how you can learn
more. You can claim a free copy of the laser fund book by going to laserfund.com or clicking on the
link below. You contribute a nominal amount towards the shipping and handling. I'll cover the rest of
that cost. I will pay for the book. I'll fire out a copy to you, it's actually two books in one.
This side is 200 pages 14 chapters with all the charts and graphs if you're a left-brain thinker.
If you're a right-brain thinker you learn by stories and examples you flip it over to this one
a hundred pages 12 chapters with 62 actual stories of how the laser fund is the dream solution for
many financial goals. I actually have episodes on this channel that talk about how it is the dream
solution for college savings, working capital for business, real estate management, emergency funds,
pension maximization, all kinds of financial goals to accumulate access and transfer your money
tax-free. So, claim your free copy of the laser fund and when you're there there's options to
listen and learn watch and learn. There's even an 18-hour master class and if you get on the list
you'll be notified when we teach webinars and live seminars may be coming to where you live.