Patrick Donohoe

The New Great Depression: What Happens In A Post-Pandemic World With James Rickards

TWS 75 | The New Great Depression

 

2020 will forever live in history books as the COVID-19 year. More than the health crisis, it has brought on an economic crisis that will greatly impact the future. What did people do to survive it? What lessons can we learn from those who did that will help us face the challenges that are to come? Patrick Donohoe has someone with the answers. In this episode, he sits down with none other than James Rickards—an American lawyer, economist, investment banker, speaker, media commentator, and author on matters of finance and precious metals. He brings with him his book, The New Great Depression: Winners and Losers in a Post-Pandemic World, to share what you can do to not only survive but also thrive during these uncertain times. From predicting this economic chaos in his 2019 book, James is now pointing us towards the future, telling us about the things to anticipate this 2021 and what we can do to get through it and prosper.

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The New Great Depression: What Happens In A Post-Pandemic World With James Rickards

Thank you for reading this episode. You are going to enjoy this one. I’m glad you’re here. I’m glad that you had dedicated time to inform yourself, becoming more aware of what’s going on and subsequently prepare yourself for a strategic response as opposed to an insane emotional reaction, which seems to be the rule these days. Hopefully, you find yourself in the group of exceptions. My guest is Jim Rickards. Jim has written a number of books. He’s held some internal roles with the government. He has worked with the CIA, has worked with central banks. He’s worked as a consultant in other areas as well. He’s had a front-row seat for several decades to be able to speak intelligently about monetary policy, fiscal policy and what’s going on, not just in the US economy but also the global economy.

His books include Currency Wars, The Road to Ruin, The Big Drop, The New Case for Gold. Aftermath is his other one. He has a brand new one called The New Great Depression. Not the rosiest of titles but at the same time, sometimes we need to be smacked a little bit in the face in order to become aware of something that was already there. Jim is a great guy. He spoke at our Cashflow Wealth Summit a few years ago, and he has some interesting things to say. We get into a lot of that and give a preview of his new book if you can go to JamesRickardsProject.com. You can also go to Amazon and purchase all of his books. We operate our lives in an economy and environment that is already established and being aware of it allows you to position yourself to respond to circumstances, respond to experiences strategically, as opposed to what has become the rule, which is to emotionally react.

I understand and I can sympathize to an extent. It has been a challenge and that challenge is not going to go away. That’s part of life. It’s a little bit more extreme now but I look at what’s occurred in 2020 and what that has done to create some ripples into what’s going to happen in 2021 and beyond. The world has changed. From a psychological perspective, from an environmental perspective, your awareness is going to allow you to show up. Show up to be successful, show up to make wise investments and overall show up to live a more meaningful life. I hope you enjoy this episode. Jim’s website is JamesRickardsProject.com. You can also go to Amazon where all of his books are available and I believe he has all of them on Audible as well for you, audiobook listeners. Thank you for joining. I appreciate the support. Now, onto my interview with Mr. Jim Rickards.

Jim, thanks for joining me. It’s a pleasure. I have spoken extensively about your books. I went up and found a couple of books that you’ve written in the past. I don’t have all of them here. A couple of them were at home but you have a new book that’s coming out and it is timely because it relates to COVID-19 and what impact that has made on the economy. We’re seeing some impact right now but also there’s a lot more to come. I’m excited to talk to you about your new book. Congratulations.

Thank you, Patrick. It’s great to be with you and thanks for showing the other books. The great thing about having a new book is that a lot of people, if they haven’t read my books before, they like it or they’re interested, they’ll go back and look at the old books and that’s helpful too. Those are all still timely. The book is called The New Great Depression: Winners and Losers in a Post-Pandemic World. It’s available on Amazon, Barnes & Noble and bookstores. It’s doing well. It’s interesting, even in pre-order on Amazon, we’re the number one ranked book on money and monetary policy, the number one ranked hardcover in economic policy and the number one ranked hardcover in wealth management. Those are the three categories or buckets that Amazon puts me in. We’re number one in all of those number one hardcover, number one new release. We’ll see how it goes but we’re off to a good start. The book is generating a lot of interest.

That’s a great tailwind going into a new year. The timeliness of the election and potentially new president and new makeup of Congress. There’s going to be a lot going on. I know you’ve spoken to monetary policy in the past in all of your books but you do it in a way that is understandable. I’m hoping for those new readers, they’ll also go back and look at what you have written in the past. Also, it was your book before this one, Aftermath, where you actually talked a little bit about the potential pandemic and how that could be one of those tipping points to create some chaos in the economy.

Not just the economy but also riots in the streets. You’re right, that was my last book, Aftermath. Thank you for mentioning it. It came out in July 2019 but if the readers have it or you’ll get a copy of it, turn to page 290 and right there it says, “The odds of a pandemic in the next several years are 100%.” The way I put it, the odds of not having a pandemic are close to zero, meaning there’s going to be a pandemic. That will be followed by armed militias and riots in the streets. There’s nothing that’s happened in 2020 that you should have been surprised by if you had read that book in 2019. Now the question with the new book, The New Great Depression, we’re taking it forward, talking about what’s going to happen in 2021 and 2022. We’ll prepare you for what’s coming, which is what I aim for in all my books.

We're not getting back to normal; we'll get through it. Life will go on, but it will not be the same. Click To Tweet

Let’s speak to that. Is this a continuation of some of the previous books that you’ve written or is this something that speaks to what’s going on based on COVID-19?

It’s surely both. Pandemics don’t come along every day, certainly not of this magnitude. It’s interesting. There was one of the studies I cited in the book and I tease people. I say Amazon or Barnes & Noble has a certain price then that’s fine. The more books they sell, they lower the price. You’d think they’d do the opposite but the price gets lower, which is a good sign in terms of sales. One of the things I mentioned to people is that the pandemic didn’t cause the depression. The pandemic is a pandemic. The virus caused the pandemic. It was the policy response that caused the pandemic because you didn’t have to make all the choices we made. There was one study I cited in the book and I tell people it’s worth the price to get the endnotes.

I hope you love the book and I enjoyed writing it. In the end, those are a valuable source of primary material for people who want to look a little bit deeper. There was a paper prepared by the economists of the Federal Reserve Bank of San Francisco. Two academics flew there from the University of California, one of the top schools and some collaborators, and they had a 650-year time series. That’s my time series. A lot of people will do a one-year, two-year time series, do the correlations and regressions. I consider that junk science because 1 or 2 years is not long enough to identify trends. With 650 years, now you’re talking. They went back to the Black Death in 1350 and they look at every pandemic beginning with the Black Death in which 200,000 or more people died.

There were only fifteen. I guess fifteen is a lot but they identified fifteen that met those criteria. The two biggest of course were the Black Death, in which about 75 million people died and the Spanish Flu of 1918 in which about 100 million people died according to the best estimates. After that, there were two with about two million fatalities and then it drops off. They were looking at 100,000 or more, there were fifteen pandemics that made the list. COVID is going to end up being number three. Right now, it’s about 1.8 million fatalities but it’s nowhere near over. It’s going to go past two million. It’s going to be the third greatest, third-most fatal lethal plague pandemic in 650 years. That’s how bad this is and what they show is that, because they were economists but they had the pandemic data, they said, “When did the economy get back to ‘normal?’” We’re not getting back to normal. We’ll get through it.

Life will go on but it will not be the same. When did interest rates, employment rates, output things normalize after the pandemic? The answer is it took 30 to 40 years, not 30 weeks. It’s not 30 months but 30 years. When I hear J Powell say, “We think interest rates are going to be zero until 2023,” I’m like, “Fine, J. Why don’t you try 2043 because that’s more like it?” The effects of this will be intergenerational. As an example, I grew up in the 1950s, early ‘60s, which was a very prosperous time in the US economy. I did not live through The Great Depression but my parents did and my grandparents did.

I was raised with a Depression mentality, even though I didn’t live through the Depression. We used to go out as nine-year-olds with our wagons and go door-to-door and collect tin cans and newspapers. We weren’t doing it for environmental reasons. Maybe it was good for that but we were recycling. There was steel in that tin. You could melt it down and make battleships and airplanes. We had that mentality. That didn’t change until the late 1960s when the Baby Boomers came of age. It was like party, rock and roll, credit card, spend. Things changed but the Depression mentality, the adaptive behavior, lasted through the ‘50s and ‘60s. That lasted for 30 years, which is exactly what these economists have demonstrated using other examples.

I make the same point. I have a number of grandchildren. While they get ready for school in the morning, the mother says, “Put on your hat, your coat and put on your mask.” They put a mask on because they’re very adaptable but that is going to have a lifetime impact. You’re going to remember, “When I was a little kid, I wore masks to school because there were germs in the air.” It affects everything you do for the rest of your life. The effects will be intergenerational. They’ll last for decades, not years. Another example, in 1929, the stock market crash. A lot of people know that was the start of The Great Depression. The stock market went down 89.2%, almost 90% between 1929 to 1932.

You ask me, “When did it get back to normal? When did the stock market get back to where it was before the crash?” The answer is 1954. It took 25 years to get back to where it was. It doesn’t mean you couldn’t make money in the meantime. If you bought the bottom in 1932, you could have made a lot of money in 1933 and some people did, but the point is it didn’t recover. It’s all high for 25 years. A lot of people around 1929 were dead by then. Don’t believe in the V-shape recovery. Don’t believe it when you hear about pent up demand. None of that is true. It’s going to be a long, slow recovery. We’re probably in another recession right now. We’re probably in a double-dip recession. We had a recession from the first and second quarter of 2020. We’re probably in another recession after a partial recovery in the third and fourth quarter. That’s the world we’re living in.

TWS 75 | The New Great Depression

The New Great Depression: Winners and Losers in a Post-Pandemic World

The 650 years of history is incredible. Was there a trend where the recovery sped up because now, arguably, we have a different way in which society operates? From a communication standpoint, from an innovation standpoint, is that going to have an impact on the potential? I agree, we’re not going to recover to where we were, but is there going to be a speedier rebound than there has been in the past?

I doubt it. There’s a good book on the subject by professor and author, Robert Gordon. It’s like a 700-page book. It’s a doorstop but I read the whole thing and a lot of others have as well. He makes the point that the greatest period of productivity in US history, roughly 1870 to 1940 and then the continuation of that as late as 1970 so about 100 years. This was the age of the light bulb, the phonograph movies, airplanes, etc. That transformed things. For 5,000 years of civilization, prior to 1870, what did women do? Women or 50% of the population spent 75% of their time hauling water. We had to get it from a well, a stream, a lake, a pond or someplace and you hold the water in. You used it for cooking, bathing, cleaning, boiling and lots of other things. Half the population spent three-quarters of their time hauling water.

1870 was when indoor plumbing began. It took 70 years to network everything. There’s a network for you. The plumbing network is way more powerful than the internet when it came to the impact in terms of productivity. All of a sudden, half the workforce with a lot of brainpower, women specifically, didn’t have to haul water. They could do a million other things and they did. In the last few years, productivity has been declining. Everyone’s like, “Look at all this technology. We’re going to be more productive than ever.” It’s not true. It doesn’t show up in the numbers. Why is that? I talked to one guy who is a guru of technology and he said, “We have a lot of technology but we’re using it to waste time.”

How much online shopping do we need? How many emails do you answer where you’re being polite but it’s not exactly what I was planning to do? I’m not necessarily talking about playing video games. That’s an even bigger waste of time. There’s some evidence that all the technology that we’re connected and we’re networked, sure but we’re not using it for productive purposes. That may be dragging down productivity. That’s the best case. The worst case is that because of lockdowns and shutdowns and the failure of small businesses and unemployment going up, it’s not the unemployment rate. Remember, it’s the labor force participation.

There are over ten million able-bodied Americans between the ages of 25 and 54 who are not working but they’re not counted as unemployed because they’re not looking for a job. They’re not in the labor force. That was always a good reason for some people not to be in the labor force. You could be a student, you could be a spouse with three kids at home and that’s your job so to speak but not to that extent, not that number. If you add that group, able-bodied, working-age Americans not looking for a job, add them to the unemployed, the unemployment rate is more like 15%, not 7% or 8%. That’s the reality.

Look at the impact. You’re alluding a lot to the psychological impact of previous pandemics where lots of people died and it was a big scare. Even in 1929 with stock market fallout and very tough economic times, it impacts psychology long-term and it takes a while to get out of that. As I reflect on 2020, we were, in essence, forced into behaving a certain way whether it was staying home, wearing masks, not being near people, not being in an office. Fear sometimes solidifies in people an understanding of how things are. It’s not going to go away anytime soon. You’re right. From collective psychology, you’ve had so much distraction where even though there was a lot of fear and people were home, they were distracted by entertainment, Netflix, games, etc.

That does not lead to productivity and solutions. It’s interesting. What are some of the primary ways in which our global society has been impacted in this psychological way that won’t necessarily come back? You and I were talking before we started about the commercial real estate market. That people aren’t going to go back to work and be willing to work in an office the same way they’ve done in the past, which is going to impact prices. Where do you see some of those primary areas that are going to be impacted long-term?

First of all, you’re right about the mental health and behavioral aspects of this. I have an entire chapter on that in my book, The New Great Depression. Chapter Five talks about the mental health aspects. Normally, when you start writing a book, you start with your research and then you build your outline and then you write the book but this is the first book that connects the pandemic and the Depression. There weren’t any other books I can pick up. Here’s another book on this. This is the first book that tackles the subject. To form a baseline, I went back to the Spanish Flu of 1918, which there were five or more excellent books on that.

Lockdowns don't work. They do not stop the spread of the virus, and they kill more people than they save. Click To Tweet

Interestingly, they’ve mostly been written in the last twenty years. You would think that people in the 1930s and 1940s would have been writing about this, they weren’t. It was almost as if there was general amnesia about it or people didn’t want to talk about it. It was probably too horrific with 100 million dead. Now scholars and journalists have tackled this and there were some good books on that. In looking at that, I realized that one of the great under-reported, underestimated aspects of it were the mental health aspects of this. I make the point that the lockdowns, first of all, lockdowns don’t work. They do not stop the spread of the virus and they kill more people than they save. In theory, you could find some people who were saved arguably but they kill a lot more people.

Here’s why. Suicide rates have tripled, drug abuse, alcohol abuse, domestic abuse. The mental effects, the psychological effects of the lockdown are anger, depression, anxiety. Sometimes it manifests itself in violence. When I look at the summer of 2020, Antifa and other groups burning down US cities, Kenosha, Seattle, we all know the stories. We saw it on the news and supposedly all that related to George Floyd. George Floyd might have been a catalyst. At least some of it was this pent-up depression and anxiety that came out and manifested itself in this violence. We’re saying it now that violence has broken out on Capitol Hill, the demonstration, turned into an assault. I see breaking news and I see somebody was shot.

They got the vice president out of there and took him to another location. Violence is bad. Property destruction is bad. I’m not condoning any of it, period. The fact that it’s happening comes as no surprise because it is one of the effects of everything we’re talking about. That’ll stay with us. That was the point I was making, which is we won’t get back to normal. It will be a new normal. As far as investment decisions are concerned, one of the anecdotes I tell in the book and this is in chapter five going into chapter six. A lot of the readers will be familiar with the Weimar Republic Hyperinflation in Germany in the early 1920s. That story is well-known but there was an individual, his name was Hugo Stinnes, and he saw it coming and he took out massive loans.

He borrowed a ton of Reichsmarks, which was the currency and invested in hard assets. He bought coals, steel, railroads, shipping lines, transportation, etc. Hyperinflation came. He paid back his loans, I would say pennies on the dollar but it was like thousands of a penny on the dollar. Basically, it was worthless but technically he paid back the loans in worthless Reichsmarks and he kept the assets. He became the richest man in Germany. I don’t speak German but his name in German was the Inflationskonig, which means the Inflation King. I tell that story to make a point, which is that even in the most horrific hyperinflation devaluation in the history of developed industrial economies, one guy became the richest man in Germany because he saw it coming and made the right moves.

Joseph P. Kennedy was another one. Joseph P. Kennedy, what did he do in the 1920s? They got together in a gang with big Mike Meehan and a few others. They ramped the stocks. They bid them up and then all the suckers came in and bought them. They dumped them on the suckers and walked away with all the profits until October 1929. He could see the crash coming and he’s short of the stock market and made another fortune in the early ‘30s. He was one of the richest people in America. One guy becomes the richest guy in Germany in horrific hyperinflation and Kennedy becomes one of the richest people in America during the greatest stock market crash in history. My point is that even in adverse markets, even in disaster scenarios, if you have the right analysis and you can anticipate the move, then you can at a minimum, preserve wealth and possibly even prosper enormously.

I look into 2020 being one of the highest retail sales in history, yet you had a lot of those in-person retailers go bankrupt. There have been entrepreneurs who have bought those and bought branding and use the internet and have crushed it. There’s always an opportunity. The environment is always going to change, maybe not to these extremes but now we’re in it where there’s no going back. Now it’s having the right mindset and mentality to look for those opportunities. Where else do you see things changing? I heard a statistic too, which is one of those unintended consequences because when you locked down these Western countries, even Europe and Asia, you inhibit travel, you inhibit tourism, which economies around the world rely on. Those aren’t probably going to come back for a long time and people are dying of starvation, let alone mental illness-wise. Where else do you see these cloggings of the economy that you write about in your book that is going to have an impact eventually? They may not seem that dire but the wheels were in motion so that there are going to be some dire end results.

That’s why the subtitle of the book, The New Great Depression: Winners and Losers in a Post-Pandemic World. We have both. We know who a lot of the losers are, air transportation, cruise ships, resorts, gambling casinos and a lot of others. We moved and bought a new TV set for our new apartment. I was in Best Buy. I was talking up to the salesman. I said, “How’s business?” He goes, “Never better because everyone’s staying homes. They’re buying TVs, stereos, DVD players, whatever.” I said, “That makes sense.” They’re one of the winners. The airline industry is a good example because it was originally down 80% to 90%. It’s come back a little bit but nowhere near all the way.

TWS 75 | The New Great Depression

The New Great Depression: In 2020, we were, in essence, forced into behaving a certain way.

 

It’s still down over 50% from where it was this time in 2020. The bigger question is will it ever come back? This is where the doubt of behavior comes in. Once people get used to working from home using Zoom or maybe the airlines say, “We’ve got plans. We’re back to our normal schedule,” nobody wants to go anywhere because they’re still worried about the virus. The pandemic is far from done, by the way. We’re not even out of the pandemic stage. In fact, it’s getting worse. The caseload and the fatalities and the hospital utilization right now are worse than they were last March and April 2020. Obviously, things were pretty bad but some of these things may never come back. Even if restaurants reopened, they made it this far or people racing to go out to dinner.

I like going out, I’m not sure most people are. A lot of people are afraid. They’ve been scared. They’d been lied to by government officials and others who don’t know what they’re talking about. By the way, I tell people, whenever anyone wags a finger at you and says, “Follow the science or the science is settled,” they don’t know anything about science. If you know anything about science, you know that science has never settled. Einstein didn’t think Newton had the last word, and Neils Bohr didn’t think Einstein had the last word and they’re still debating it. That’s okay. That’s what good science is. The idea that there’s some science standard out there and can pull it off the shelf and wave it at somebody and tell them what to do, it’s not true.

The politicians go through the motions and it does have, as I say, very disastrous consequences. Commercial real estate is a disaster. It will stay that way for a while. I wouldn’t touch it until maybe 2022, maybe later at the earliest. We’re depopulating the cities. The cities are the greatest wealth-creating mechanisms in the history of civilization. What is the city? You bring together all this diverse talent. You’ve got bankers, lawyers, accountants, engineers, artists, writers, dancers and everyday people with all different backgrounds. You bring them all together and then the ideas start flowing. As I say, they’re these incredible wealth creation machines. The cities are depopulating. We’re seeing an exodus as we’d never seen before. Where are they leaving? They’re leaving New York, Los Angeles, San Francisco, Portland, Seattle, Chicago, Baltimore, Philadelphia and a few other cities.

Where are they going? They’re going to Miami, Austin, Boise, Nashville, Phoenix, Scottsdale, etc. We know where the flow is. Talk a little bit more about residential real estate instead of commercial real estate. Residential real estate is collapsing in places like New York and Los Angeles but it’s booming in Miami and Nashville. I’m up here in New Hampshire. We have no income tax, no sales tax. That’s a little bit hard to beat but people like the weather. I like cold weather but if I feel like warm weather, I go to Florida, Texas. The fastest-growing city in the United States is Nashville because Tennessee has no income tax. You could do well in residential real estate in the places people are moving to. Commercial real estate is bad across the board. Let’s say, for example, you had ten floors, you’re a big company.

You have ten floors in a prime office building in Midtown Manhattan or any other major city. Companies would never have voluntarily adopted the work-from-home model but they had to do it. They had no choice because of the pandemic. What they discovered is that it works, and it works well. I like socializing with people but everyone did what they had to do. It’s not that the company is necessarily going to pull out but they’ll go from 10 floors to 2 floors and they’ll say, “We’ll have a locker room. It will be a nice one. It won’t be like a high school locker room but every employee will have a locker to keep your laptop, sport coat and tie or scarf or whatever you’ve got in there. It will be nice offices that you’ll reserve in advance like a hotel room.

You’ll say, “I need two days next week because I have some out-of-town clients coming in.” You’ll show up, go to your locker, grab your laptop, your sport coat, sit down, have the meetings and then go back and work from home. You go from 10 floors to 2 floors in my example. The landlord takes it on the chin, but what about the maintenance people, the cleaning people, reception, the food trucks, the restaurants, the bars, the shopping, the lunchtime shopping, public transportation, that whole ancillary cloud around the fact that you’ve cut your office space capacity by 80%? That all goes down 80%. The ripple effects of this are huge.

It impacts all those derivatives.

I like residential real estate in places people are moving to. I don’t like commercial real estate at all for the reasons we mentioned. I always recommend gold for about 10% of your portfolio. People want to put words in your mouth like, “Jim Rickards sells everything and buy gold.” I’ve never said that. I don’t believe that. A 10% allocation is about right. I recommend a big allocation to cash, about 30%. That surprises people like, “Why would I want cash? It has no yield.” A couple of things. Number one, deflation is a greater danger than inflation right now. In deflation, cash could be your best performing asset because it has no yield. If you have 2% deflation, the real value of your cash went up 2% because your purchasing power is greater. Number two, cash is the opposite of leverage. Leverage increases volatility. That’s good if you’re making money but it’s horrible if you’re losing money.

Leverage increases volatility. Click To Tweet

Cash is the opposite. You can have volatile assets over here, gold or fine art or whatever and volatile assets over here, stocks and bonds. That’s crazy enough. If you have cash, it reduces the overall portfolio. Volatility helps you to sleep at night but this is the third benefit to cash. It has embedded optionality. You can be nimble. Right now, visibility is not great but it will improve over time. You could throw your money into a private equity fund or venture capital hedge fund or something right now. I’m not saying that’s a horrible decision but what you can’t do is get it out. Try getting your money back from Henry Kravis before seven years, you can’t do it. You’ve got to cross the bit off or pay extra fees or maybe you can’t do it at all.

If you’re the person with cash, visibility improves, you can pivot into whatever might be a lot more attractive based on some later information. That’s valuable in and of itself. Gold, cash, residential real estate, ten-year treasury notes will do well. Trade yield to maturity is probably going negative. That has nothing to do with the fed funds policy rate. I don’t think the Fed will go negative on the policy rate but ten-year notes, the yield to maturity is set in secondary market training. You get principal and interest back. You know what that is but if I’m selling a ten-year note, the minute somebody buys it from me and pays a premium that’s greater than the coupon and the principal, they have a negative yield to maturity. They’re not going to get all their money back. They’re going to get the principal and interest but they paid more than that. They’re not going to get all their money back.

Why would you do that? Two reasons. One, you might think you could sell it to somebody else. Maybe you can. Two, if you’re a European investor, you could lose money on the other maturity but make it on the currency because the dollar could get stronger against the Euro. In Euros, you would have more profit that way. It’s not as crazy as it sounds. Ten-year German government bonds and Japanese government bonds have negative yields. The US isn’t there yet. Now we’re about 95 basis points on a ten-year note, take down to negative 50, it’s going to produce huge capital gains on your ten-year note.

Do you think that’s where we’re going?

I do.

The monetary policy, that was a question that I had because it seems that’s going to be the general response as the economy sputters along into this post-COVID world. Now you have Janet Yellen most likely go in as Treasury Secretary. Do you see monetary policy changing? Where do you see it going? Do you speak to that in the book?

I do. In chapter four, I talked about what monetary policy will be, what fiscal policy will be and why neither one of them will work. Don’t call us stimulus. You can print money and you can have deficit spending but it will not stimulate the economy. It won’t work. There’s a reason for that. Let me be very specific. The Fed’s balance sheet was about $3.6 trillion at the start of the pandemic. Now it’s around $7.5 trillion. They’ve printed $3 trillion of money. That’s real money. They did print it. They did give it to the banks but money does not cause inflation. Money does not stimulate the economy. Milton Friedman was wrong about that. The Austrians, the Neo-Keynesians, they were all incorrect. It’s spending. It’s the turnover.

TWS 75 | The New Great Depression

The New Great Depression: If you have the right analysis and you can anticipate the move, then you can, at a minimum, preserve wealth and possibly even prosper enormously.

 

Velocity is the technical term. The Fed prints the money by buying treasury notes from dealers. They take the treasury notes, put them on the balance sheet and give the money to the dealers. What do the dealers do with the money? They give it back to the fed as excess reserves. It sits down on the balance sheet. I tell people, “Nominal GDP equals money supply times velocity.” What’re $7 trillion times zero? It’s zero. Meaning if you don’t have velocity, you don’t have an economy. That’s the problem. Velocity has been declining for many years, by the way. It started in 1998. Money printing can be done.

My friend, Stephanie Kelton, she’s the big brain behind Modern Monetary Theory. She was Bernie Sander’s economic advisor. She’s a big voice in the Biden administration. They may take their balance sheet to $10 trillion. I wouldn’t rule that out but it won’t work because there’s no turnover. When you get to fiscal policy, the same problem. The Keynesian multiplier. I borrow $1, I spend $1 and I get $1.25 of GDP because of turnover. That’s the Keynesian multiplier but the evidence is now in. This is Ken Rogoff, a professor at Harvard and Carmen Reinhart, who was at Harvard, now chief economist of the World Bank and their collaborators. They’ve shown very convincingly that Keynesian multiplier does exist in different measures up until around a 90% debt to GDP ratio. Take the total debt divided by GDP. That’s your debt to GDP ratio. Up to 90%. Beyond 90%, you’re through the looking glass. Now what happens is you borrow $1, you spend $1 and you get $0.90 of GDP, not $1.25.

You don’t even get your buck back. It goes $0.80, $0.70, etc. Why is that? It’s because people see the debt to GDP ratio. They know that’s not sustainable. They start doing what’s called precautionary savings. People are saying, “I don’t know what’s going to happen. I don’t have a PhD in Economics but it’s going to be bad. They’re either going to raise my taxes or to fall on the debt, there’s going to be inflation or something. I better save more or invest in inflation hedges like gold and real estate.”

When you do that, you’re not consuming. It’s a consumer economy. Where are we? If 90% is through the looking glass, where are we now? The answer is 130%. You’ve got about $24 trillion, $25 trillion of debt. This is federal government debt. I’m not talking about total debt. $24 trillion of debt in a $22 trillion economy. That comes out to about 130%. It’s about $25 trillion of debt at this point, so you’re way through the looking glass. What other countries in the world had that debt to GDP ratio? I can tell you. Japan is one but the other three are Lebanon, Greece and Italy. You’re in the super debtor’s club.

What makes Japan different?

There are a couple of things. Number one, they’re free-riding on the dollar because the dollar does stabilize the entire global financial system. The Japanese can piggyback on that. Number two, the Japanese are a homogeneous society. They generally buy their own debt. The Japanese hold Japanese debt. I would say that’s not true. About 17%, 18% of our debt is held by the Chinese, the Japanese and the Taiwanese and some others. We’re much more vulnerable to foreigners basically dumping the US debt. Now the US banks can buy it up. I’m not saying that interest rates are going to go sky-high. They’re going to go lower actually. The point being, Japan is a special case. They’re all in it together.

I had an interesting conversation with Sakakibara who was the assistant finance minister of Japan in the 1980s. He was known as Mr. Yen if you ever heard the phrase “Mr. Yen” back in the day. We were talking in Korea and I said, “Sakakibara-san, we’re worried about the lost decade in the ‘90s. You’re starting your fourth last decade. What’s going on? What are you missing?” He said, “All your gross statistics are correct but the population is declining. When you calculate it on a per capita basis, instead of an aggregate basis, we’re actually doing okay.” I said, “You’re right. That’s true.” Japan is performing better on a per capita basis than on an aggregate basis because of fewer people. The philosopher in me came out. There was due ad absurdum. Sakakibara said, “Japan ends up with one person who owns the whole country and she’s the richest woman in the world.”

If you don't have velocity, you don't have an economy. Click To Tweet

He laughed but it wasn’t that funny. That’s not going to work in the United States. We’re not going to have 30 years of no growth. We’re not going to have a declining population. If we will, people are not going to be very happy about it. I put Japan to one side, but the debt is not sustainable and is now a headwind to go. To summarize, you will have money printing and you will have deficit spending. You can print money and you can spend money but don’t call it a stimulus because it’s not going to stimulate anything.

Where’s it going to go? You look at this next administration and Janet Yellen going in there. I’m not sure what impact she’s going to have but looking at the fiscal policy especially if there’s control of House and Senate, where do you see things going? To me, it seems like the writings on the wall but where will that lead? Additional printing and programs to try to stimulate, which won’t but will try. Do you see that same thing?

I talked about this in Chapter Six and also the conclusion of the book. I had this debate with my editor when we started writing. She goes, “Jim, you can’t write a book about a pandemic and a depression and not have a happy ending. You’ve got to give the reader something.” I said, “I agree with that. I don’t like that. I like being accurate and realistic. I don’t consider myself a mean person. I’m an optimistic person but I get this doom and gloom reputation. When I write, I don’t consider myself an optimist or pessimist, I consider myself a realist analyst.” We go through the pandemic and go to the depression but you have to give people something concrete. I do talk about that.

I talk about how to solve a problem in the conclusion. I tell people, “Central banks don’t understand this. They can buy my book if they want to figure it out. I doubt they’ll do it. Here’s the answer. Here’s the blueprint. I doubt they’ll do it but you can do it yourself. You don’t have to wait for central banks.” The answer primarily is to buy gold. I recommend 10% allocation. The only way out of the debt crisis is inflation. I’m not saying inflation is a good thing. I am saying that it’s the only way out if you’re not going default. There’s no reason for the US to default because we can print the money and taxes will too. If you think you can tax your way out of slow growth, good luck with that. Inflation works.

I talked about two cases in the twentieth century when that’s exactly what we did. Two different presidents, one Democrat, one Republican who did it. That’s my policy recommendation for the government in a way to be constructive. I say to individuals, “If the government doesn’t do it, you can. You can go out and buy your gold right now. It is going to go to $10,000 to $15,000 announced in a couple of years.” I tell people like, “We’re going to go to $15,000 now.” It will but it’s got to go to $3,000 before it gets to $15,000. You can be along for that ride. The sooner you buy, the better.

There’s a logic there similar to what it’s been in your previous books where there’s that price increase because people no longer trust what’s going on with monetary policy and fiscal policy.

In Chapter Four, I talk about Modern Monetary Theory. By the way, Janet Yellen is the bridge there. It’s the Fed, it’s owned by the banks. It’s got a board of governors appointed by the president. Here’s the treasury, it’s a cabinet-level executive department, separate institutions, separate functions, etc. Modern Monetary Theory says nonsense, mash them up. The way you stimulate the economy is to have the treasury spend money, borrow the money by issuing notes and people won’t buy the notes. The Fed can buy the notes, put them on the balance sheet and hold them for twenty years. What’s the problem? I actually had a hard time answering that question. I’m like, “That’s all true. What is the problem?” The answer is there’s no legal prohibition on what I said.

TWS 75 | The New Great Depression

The New Great Depression: If you’re losing money, cash is the opposite.

 

The Feds could take the balance sheets of $10 trillion. There’s no legal limit but there is a psychological limit. There comes a time when people wake up every day and say, “I’m not a PhD. I don’t get it but get me out of here. Get me out of the dollar. Get me into gold and silver land, real estate, fine art, natural resources, water, ag, something, anything other than the dollar where I know I can preserve wealth and possibly make money.” When that happens, the whole house of cards collapses but you want to be in like Hugo Stinnes. You don’t want to wait for hyperinflation. You want to do it first, be ahead of the curve, and the way to do it is now.

I have one more question for you and then I know you have to go because you’re on this blitz of interviews. Did anything surprise you? What were maybe 1 or 2 things that stand out that surprised you in 2020 based on what happened?

I would say that nothing happened that I didn’t anticipate, but it happened faster than I thought. It’s the tempo of things. Even my wife, we talk about things over dinner or whatever. I told her a couple of years ago, “Do you know what this is going to come to? I know what the left-wing is doing. You’ve got to see the right-wing with open carry, which is legal, except in DC. Surround the Capitol.” I didn’t say storm the Capitol but I said, “What if one million people from Pennsylvania, Wisconsin or whatever showed up with shotguns and ARs over their shoulders, which could be illegal assembly and they looked like they were going to storm the Capitol?” They did storm the Capitol. I always hope I’m wrong but my track record is pretty good at getting these things right. If you asked me what surprised me, I would say the tempo was faster than I thought.

Jim, it has been awesome. We could probably keep going but I know a lot of this is in your book. Any final words before we sign off?

I hope people buy the book and I hope you enjoyed it. I’ll let people enjoy it. I love the feedback but again, it’s a lot of grit in terms of bad news but there is some very concrete, optimistic investment advice at the end. Even in tough circumstances, you can at least preserve wealth, if not make money. Hopefully, the book will show you. I always tell people, “Maybe you can’t solve all the problems in the world but if you can shine a light on it, it’s a source of comfort for people.” I hope that’s the case.

I think that there still remains a significant amount of ignorance out there as it relates to some of the underlying activities of government and central banks. People aren’t taught those principles and it’s evident. Hopefully, there is enough contingency to make an impact. Anyway, thank you for what you do because I know you’re trying to get the word out there and shine that light. Best of luck with your book launch. We’re going to do our best to get the word out.

Thanks.

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About Jim Rickards

TWS 75 | The New Great DepressionJim Rickards is Editor of the Strategic Intelligence newsletter, bestselling author of Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos, Currency Wars: The Making of the Next Global Crisis, The Death of Money: The Coming Collapse of the International Monetary System, The New Case for Gold, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis, and the new books The New Great Depression: Winners and Losers in a Post-Pandemic World and The Ravens: How to prepare for and profit from the turbulent times ahead, which was co-authored with Robert Kiyosaki.

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New Year Thoughts, Realizations, And Reflections

TWS 74 | New Year Thoughts

 

The year 2020 was certainly difficult, but the lessons it left must be reflected upon and put to good use. Patrick Donohoe shares his New Year thoughts focused on the toughest moments of last year that challenged the competency of leaders, the changes in the environment, the worth of success, and our ability to deal with the most depressing times. Patrick also underlines the importance of starting new and positive habits this 2021 to gain a fresh outlook in life, especially in morning routines.

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New Year Thoughts, Realizations, And Reflections

Thank you for tuning in the first episode for the year 2021. I took a bit of time off and I’m excited to share some thoughts I’ve had as this interesting year kicks off, especially in light of what’s occurred. I look at 2020 and I look at what’s to come in 2021. I realized that the world never changes, but everything about the environment within the world is always ever-changing. The reason why I say the world isn’t changing because there’s rules and principles associated with the world and with life, whether it’s physical principles like gravity, math, psychology, business, health, relationships, even money, but the environment is always changing.

The world never changes, but everything about the environment within the world is always ever-changing. Click To Tweet

Sometimes there are extremes, hence 2020 and some of the chaos that we’ve experienced in the early part of 2021, but it’s always changing regardless of the degree. We can’t change much about the environment. The only thing we can do is educate ourselves on what the principles are, what the rules of life or of the world are so that when we show up to life, when we experience the environment, we can align with that age old saying that life and our meaning is 10% what happens and 90% how we respond to it. I believe in that simple process is where true wealth is.

TWS 74 | New Year Thoughts

New Year Thoughts: People can’t change much about the environment. The only thing everyone can do is educate themselves on what the principles are and what the rules of life or the world are.

 

We have some challenges in the environment in which we are showing up every single day. Many of you, I include myself in this, had some good experiences in 2020, but also some negative experiences. As I looked at the statistics, I had to stop. It’s frightening, the number of suicides that have gone up, the domestic violence cases, weight gain, pornography consumption, derailed education, depression, substance abuse and the list goes on. 2020 was a year that’s challenged much of the world and it’s still challenging. It’s clear based on these statistics that most people were in reactionary mode and weren’t prepared. They didn’t understand principles, rules and laws. I include myself in some of the experiences I had, but I believe that if we look back at 2020 and we say, “I’m glad that’s done.” In a negative perspective, I think we missed a huge opportunity. I look at 2020 and it was one of the most pivotal years for me.

It was one of those times when you do a hard workout, you reflect back on sports that you participated in. It was one of those challenging times where you were pushed to your limits. In those experiences lies some incredible realizations about yourself, what you’re made of and the degree of fortitude that’s within you. 2020 was an amazing year. Now, we have 2021. I don’t think much of what happened in 2020 is done. It’s going to continue in 2021. What options do we have? What options do you have?

The world needs leaders and those who understand the principles of life, business, charity, gratitude, and leadership. Click To Tweet

You can sit back and hope that the environment conforms to what you want or you can sit back and let things happen or you can take the bull by the horns. You can understand the principles of relationship, the rules of money, the principles of business and the fundamentals of leadership. Those aren’t going to change, the environment is in order to capitalize on the tremendous opportunity that exists, because most people are not responding, they are reacting.

TWS 74 | New Year Thoughts

Tao Te Ching

The world needs leaders and those that understand the principles of life, business, charity, gratitude and leadership. I hope that for those, especially who have read the blog are in a position to step up. 2020 was challenging for me in many ways. I’m assuming most of you can empathize with this, my family’s social, educational, religious and the normalcy was completely disrupted. I include myself in that. I count these moments when I had to dig deep, coming to an empty office where my entire team went home.

I was used to coming to a vibrant, positive energy that motivated me. I came to essentially nothingness. I had moments of breakdown. I checked out there were days that I didn’t want to work, to leave my family and to lead a company but then I was able to have those moments where I was tested. I faced that adversity and I used it as fuel to get to different heights. I don’t think life is about figuring out how to show up 100% of the time. I don’t know if that’s possible. That’s not the point of what I’m saying. The point is, it’s to think about life as a challenge, a test happening for you, not to you, being aware of that, then taking responsibility, getting back up and then moving your feet.

I want you to consider something. I want you to consider that wealth, success and achievement isn’t about making some wildly successful investment. It’s not about praying the gold goes to $10,000 an ounce or Bitcoin goes to $100,000 a coin or getting into the next Tesla or Amazon. I don’t know if you’re like me, but in my experience, realizing successful opportunities in investment, business and life on a consistent basis has to do with you. It’s developed by the more insignificant things that you do.

If we look at the nature of the unconscious world and how we operate as human beings, we're doing 95% of the same things we've been doing. Click To Tweet

In 2020, I spoke a lot about asymmetry. I talked about asymmetric investments, asymmetric risk reward, meaning little risks, but massive upside. There’s also asymmetric allocation of time and energy. This 2021, we were gifted more time, more energy, but the majority of us and I include myself in this, we had moments where we didn’t use that time and energy for productive purposes. The reason why? It’s our habits. I talked about habits, but the quote that continues to repeat through my mind is by Lao Tzu. He’s the Chinese Philosopher. He was the author of the Tao Te Ching. He said, “Watch your thoughts, they become your words. Watch your words, they become your actions. Watch your actions, they become your habits. Watch your habits, they become your character. Watch your character, it becomes your destiny.” We are what we repeatedly do.

If we look at the nature of the unconscious world and how we operate as human beings, we’re doing 95% of the same things we’ve been doing. When those things are no longer available, for example, 2020, we don’t know what to do because we’re used habitually used to doing things a certain way. As you create your goals for 2021, you set your targets, your aim and you define what you want, consider adopting the habits. The simple things that you consistently do, adopting some new ones.

TWS 74 | New Year Thoughts

New Year Thoughts: As you create your goals for 2021, set your targets, and you define what you want, consider adopting consistent and even new habits.

 

One of the things I failed to do because of the disruption of 2020, was my morning routine. Consistently working out, meditating, gratitude statements and my priming exercise, I stopped. When I stopped that, my days were derailed. As you set your sales for 2021, be prepared for some storms, wind and curve balls, but let’s figure out how to welcome those. Let’s establish our habits so that as we face those during the day, we use them as fuel to live an amazing life.

I’m excited to interview some guests this 2021 that inspire me. Talk about some things financially that will be huge opportunities for entrepreneurs, for business owners and for professionals. Things are going to change. There is always opportunity. Thank you for the support in 2020. I’m excited for this new year, for you and for those leaders who have the opportunity to step up and to dig within themselves what creates a meaningful life. It’s in all of us. Sometimes we get to dig deeper to find it. I know it’s in you. I hope you step up this 2021. We got a good guest coming, Mr. Jim Rickards. He is an amazing man. He has a new book that is out. You’re going to enjoy it. It has to do with a lot of the things I’m talking about because of the pandemic of COVID-19 in 2020. There’s a lot coming down the line. If you’re prepared, there are tremendous opportunities. If not, it’s going to be painful. Are you ready to do this? Let’s go.

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The Rich Doctor: Creating Financial Freedom To Design The Life That You Want With Tom Burns, MD

TWS 73 | Rich Doctor

 

Why don’t doctors get rich? It’s a baffling question considering how much hard work and service these individuals are putting in every day. And it’s not all about the money, even. Doctors do have a comfortable salary, but most fail to develop and design the life that they want simply because they have no time. Tired of being trapped by his own profession, sports doctor and orthopedic surgeon, Dr. Tom Burns started to look somewhere else to find a way to create that financial freedom he was looking for. After reading Robert Kiyosaki’s iconic, “Rich Dad, Poor Dad” (the very first copy, no less), he knew that the answer to his question is in real estate. Through a combination of hard work, luck and the right people to support him, Tom developed his own real estate portfolio that now provides him the financial means to do what he wants with his life. In his book, “Why Doctors Don’t Get Rich,” Tom shares his story and message with other doctors, creating the beginnings of a community of physicians who are passionate about creating wealth and freedom for themselves. Listen in as he joins Patrick Donohoe in this eye-opening discussion.

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The Rich Doctor: Creating Financial Freedom To Design The Life That You Want With Tom Burns, MD

I have a guest that I’ve been looking forward to interviewing for quite some time. He wrote a book, which is called Why Doctors Don’t Get Rich: How YOU Can Create Freedom with Passive Income Investing. His name is Tom Burns. The first time I met Tom Burns, he was telling the story of how he purchased the very first copy of Rich Dad Poor Dad from a carwash owned by Keith Cunningham in Austin, Texas. He looked at the number on the back of the book when he was finished reading it. He called the number and lo and behold, Robert Kiyosaki himself picked up the phone. From there, they developed a relationship and it was awesome hearing that experience.

The next story I heard from Tom was when he was down in Southern Chile on a cruise. It was an icebreaker ship going toward Antarctica. This guy is an amazing guy and has incredible stories. You are going to love him. Tom is a physician. He started his adult life as a doctor. He’s trained in sports medicine as an orthopedic surgeon. He began his career in Austin, Texas and he continues to practice to this day. Along the way, Tom decided that he wanted an exceptional life and didn’t believe that a career as a doctor would check all of the boxes.

He wanted choice, freedom and time with his family. Through a series of events that included hard work, luck, loyal friends, great partners, patient educators and giving mentors, he developed a real estate portfolio that gave him the financial means to determine his ultimate future. Tom gets to live a pretty extraordinary life and he wanted to give back. He wrote this book. He is specifically focusing his attention on doctors, those in the medical career, which in 2020, they have had some challenging times.

It speaks to his experiences and what he did in order to achieve even more freedom. I hope you guys love the interview. Go pick up his book. You can go to RichDoctor.com in order to learn more about Tom. He has a newsletter and a blog. You can also go to Amazon and purchase his book. The audiobook will be coming out soon. It’s a great interview. I love talking to Tom. He’s such a good guy. I hope you enjoy it. We’ll see you in the next episode, until then.

It’s great to have an honored guest, a revered guest. His name is Tom Burns. As I mentioned, Tom, correct me if I’m wrong, but you purchased the first Rich Dad Poor Dad book ever.

I got lucky and picked up a good book. It happened to be the first one.

That fact alone says a lot about you. First off, how long ago that was, but also what you’ve done with your career and outside of your career. You have these dual careers in a sense as an entrepreneur investor and medical professional. It’s going to be awesome to interview you. When we first met, I don’t know but there’s something special about you. It’s something that I believe others could have benefited from. You took the plunge into the writing a book world. What was the experience like writing that book?

It was something. A friend of mine, the author of that book you mentioned, suggested that I write a book. I never wanted to shy away from a challenge. I said, “Okay.” I didn’t know what was going to happen. I started the process. People would ask me, “Who’s going to be your ghostwriter?” I didn’t have one. I’m a physician and sometimes a doctor’s disease is to do it yourself, but I had a specific reason I wanted to write every word in the book. I was writing to everybody, but directing the book at physicians, using them as an avatar for anybody that makes any kind of a paycheck.

I knew that my words would get through in one of the processes. What happened was I ended up growing because I wrote every word. I found out how to do it. I got editors to help. I learned a lot of terms and things that I hope to never have to remember now. It was a real blessing. It was because I learned a lot about myself and I was at first started writing a book. Somebody suggested to write a book. I’d never done it before. It sounded like a cool challenge.

Life is not all about money, but it’s a great tool to use to get the life that you want. Click To Tweet

What happened was I grew, changed and found out that the problem. I discovered a mission because in my world, in the physician world, there are a lot of unhappy, sad and trapped feeling physicians. Although the books written for anybody to learn about freedom, it was written to the doctors to try to help them because over 50% of them are unhappy. You and I, Patrick, when we get older, we would prefer to have a happy doctor taking care of us. It was a selfish reason I wrote the book.

As I did the research, I developed a website and developed some tools to help them. It has been a process. I’m still a tadpole in the evolutionary world trying to learn how to do this, but it was, it was great. I learned a lot about myself. I learned a lot about the world and learned a little bit about book writing. It was fun. It was a growth process and it was a blast.

I know that it has been months and months in the making, but what an iconic or serendipitous year to release a book like that. The medical world has been stretched in 2020, more so than probably any other year in memorable history. In 2020, I would say this statistic most likely has worsened as far as the medical world asking that internal question, is this worth all the decades of school and hundreds, millions of dollars in opportunity costs, but also tuition, school fees? You coming out with a book, Why Doctors Don’t Get Rich, it is somewhat of a wake-up call to them. You started down this path, but how would you characterize the theme of the book? What you want the medical world specifically to walk away from reading it? What do you want them to understand based on reading it?

I’ve had quotes from people. I felt trapped being a doctor. I didn’t know anything else was possible. I want it to be an instrument of guidance and hope to people that bring them a paycheck and feel like they’re trapped, particularly doctors. We know life’s not all money, but it’s a great tool to use to get what we want. There are certain ways to buy back your time, which is our most precious resource. A lot of physicians, a lot of people in the world don’t have time.

With some extra time, you can start to develop and design your own life. I want people to know that there is an option. It’s not for a special group of people. It’s not that difficult. Once you know the steps to buy back your time, create a little bit of even partial freedom. You take a little pressure off, life gets good and you start to smile a little bit more. The book is designed to give people guidance, hope and a bigger smile.

I know you speak to this in the book. The idea of freedom is it’s in your mind. It’s feeling, a sense of freedom because I know a lot out of people that have a financial amount of money that I would say anybody could consider being free if they had that sum of money, but they don’t feel like they’re free. When you felt that sense of freedom knowing that you didn’t have to perform surgeries, you didn’t have to work in the field that you were trained in, what was that like and how did it impact your work?

On the one hand, it was exhilarating and happened slowly. I wasn’t looking for it. I was doing my thing. All of a sudden, I realized one day, the money coming in from my passive vehicles has eclipsed my doctor’s income so that was exciting at first then it got confusing because what do you do? I wanted to make sure that I had a purpose. Freedom, money, it’s not everything you do. You do somewhat need to have a purpose. We all want to have some worth and a mission in life. It gave me the chance to sit back and see what I wanted to do with it. Selfishly, I traveled some, but then I started realizing that a little contribution to the world might be nice as well. I started looking for a mission and a purpose. It came like that. You can have the money to be free, but if you’ve got a bad home life or you’re unhealthy or your spirituality is compromised, it’s not freedom. It’s somebody with a lot of money.

Robert is the one that inspired this several years ago. He did a private education for a bunch of investors and talked about Maslow’s Hierarchy of Needs. There are these levels of Hierarchy of Needs, and most people get stuck in the self-esteem level where they achieve a lot. They go travel, they buy nice cars, they wear nice clothes. They eat at nice restaurants. It’s a Law of Diminishing Returns. The more that you pursue that, the less fulfilled you are. That’s where Maslow has his self-actualization level where it switches from satisfaction based on pleasing oneself to satisfaction coming from serving a purpose or a mission. Looking at this book, I imagine that was part of being able to offer and create value for those that you have empathy with. What has been your experience along the way, being able to give this gift to those that are in a similar situation as yourself?

It’s been a blast and that was part of that growth. I wanted to write the book to get the information out, then the mission developed. What you give, you get back ten folds. Now, I’m getting the opportunity to talk to people from all over the world and it’s been a blast. That mission has gotten deeper, broader and more focused in my life. It’s given me a great purpose. I’ve got a twenty-year plan to keep going. I hope to be doing something until I fall over and go to the next level. It’s been a pleasant surprise and it gives me a lot of fulfillment. I get to do things like this. I get to talk to good friends like this on Zoom. I’d rather do it live though.

Let me ask you a question around, I would say the information that medical professionals are exposed to with regards to finances because it’s a profession where there’s very little time. There are strenuous hours, plus there’s a lifestyle on top of that. The medical world in my experience at least has been the target of a lot of financial advertising. They’re pulled in all these different directions. When you look at the message you’re wanting to send, knowing that, how did you want to separate what you were trying to get across to this world that’s different than the typical advice that the medical world has given financially?

TWS 73 | Rich Doctor

Why Doctors Don’t Get Rich: How YOU Can Create Freedom with Passive Income Investing

One, you mentioned the education. We rarely get any financial education although a lot of younger physicians now are taking some business courses. They’re doing combined MBA and medical programs. People are becoming more aware or medical professionals are becoming more aware. In my instance, I was a biology major and I took zero financial classes. That’s the one thing. They will get targeted for lack of a better word. Nobody feels sorry for physicians and you shouldn’t. We make a great income and it’s a great profession. It’s a fulfilling, wonderful profession. Everything’s perspective, but they get targeted by people. I’ve been in the meetings when nobody knew I was a physician and I’ve heard the person in the front of the room say, “If you don’t have a client list yet, go for the doctors. They’ve got money and they don’t understand what you’re talking about.” That’s a true story.

There’s a section in the book that talks about all the traditional ways to create investments or create money or passive income outside your profession. They’re not bad. There’s nothing wrong with them. Sometimes they are proposed or advertised as the only way. I want them to know there’s a lot of ways for them to create a lifestyle, to create the money and the funds to create their lifestyle. It’s not so much about money, but it’s about buying back that time. If you’re a physician, you have to go provide a service in order to get paid. That’s the way it works. When you have some funds come in that you slept to make or that you were on vacation, or you didn’t do anything to do, and that check shows up, it becomes a little bit addicting.

I want them to experience that feeling and have the time to do what they want to do in life. It can be research to cure cancer or it can be to quit medicine. It can be either end of the spectrum or spend a little extra time with your kids or get off a couple of hours early so that maybe you can pick your kids up from the bus when they come home from school. It’s things like that and the list is endless. That’s what I want them to know is that there are other options and that there is a life out there that is not the one that has been prescribed and advertised to you. We’re only here once and I want the journey to be magnificent.

I had seen this study where this year 2020 specifically has inspired a number of youths that are in school right now to want to pursue a medical career as a physician. I look at where most of that drive and motivation is coming from. It seems to be coming from wanting to make a difference, having a purpose wanting. In the medical world, a physician is so revered because they work on one of the most precious things that exist, which is that human life. They are remunerated highly because of that. There’s a lot of dedication, work and investment of time, energy, money that goes into developing that skillset. What have you seen as time goes on in the medical career where in the beginning, there’s that passion and drive? Does it stay the same? Does it diminish over the course of time? What is your experience collectively? Following up on that question, when you sensed that feeling of independence, how did that change the way in which you serve your clients or patients?

The answer to part one is like everything, it depends. I have partners. I’m still practicing medicine. I have seven partners and they all love what they do. They’re great at it. They’ve been in it a long time. It’s not that everybody’s unhappy. There are people that enjoy the service. If somebody gets in to serve, that may be mission and purpose enough, and they may or may not need anything extra. On the other hand, a Medscape survey shows that roughly 50% of the physicians in the United States have at one time or another been burned out. Burnout means at one time or another, they didn’t want to be a doctor. We don’t want that. That means to you and I, that at one point, every other doctor you see, wanted to not be in medicine at one point. It’s a balance like anything in life. Everybody has different opinions, different things that motivate them. What is exciting to me is there are still a lot of physicians out that are happy with what they do.

Question number two, I continue to enjoy it because it’s been a decade since I haven’t required the income for medicine. Your question is that I was able to enjoy it more on a base level. I could eliminate the things I didn’t like. We, doctors, sometimes we take call calls when you stay up all night and the operator answered the phone. I decided that was infringing on my family time. I stopped doing that. If the hospital has too many rules or whatever, I won’t go into details, but you can stop going there. You’re not there for the money.

I was able to lower the volumes I was seeing. I can spend five minutes with somebody or 45 minutes with somebody. It doesn’t affect my income. It doesn’t affect my life. I’ve developed friends by walking and saying, “I’m Tom Burns. I hear you have a sore knee.” Years later, we’re going on trips together or we’re friends. That’s a blessing. I get to meet twenty new people several times a week. It’s been a blast. It’s been fun. That’s what I wanted every physician to have that, to wake up and realize I get to go in and see patients, not I have to go in and see patients. It doesn’t happen for everybody, but it was life-changing. If it hadn’t been like that, I would have been out of medicine several years ago.

It’s the professional world that has a very similar challenge. At the same time the medical world, the amount of time, effort, energy and money that it takes to develop those skills and be in practice is extensive. It magnifies that principle of being able to educate yourself financially and then develop a strategy to get to the point where you are free. You are independent and you don’t have to do these things. You have a choice now. You didn’t have the choice before, but now the choice is, do I practice because I want to or do I practice because I have to? It’s a very interesting question that most people don’t get to ask themselves. At the same time, those in the medical field, because of the amount of money they’re able to make have that option more so than other professions.

When you have a choice in life, you’ve got freedom. It gives you the choice to decide what’s most important to you. What’s most important might be serving your clients or your patients or whatever your profession or your job is. Your most important thing in life might be to travel and see the world or to be the best parent in the world or the best spouse or the best sibling. Choice does give you the potential to have and design the life that fits you best and that gives you the most meaning and self-actualization, as Maslow would say.

Let’s do this as we conclude. You have an extension to your book, which is a website and some tools that you’ve mentioned. Would you take a moment to speak about the website that you’ve developed and the tools that are there and how those that are listening could take advantage of those?

Choice gives you the potential to design the life that fits you best. Click To Tweet

For everybody out there, I’m transparent. I’m still learning how to do this stuff. I put a knee together but running a website’s been interesting. I wanted something to be useful. I wanted the book to be combined with a website that was a living, breathing organism. I have a blog that I put out and I find myself better on video. As time goes on, I’ll be having videos that have little lessons. They might be mindset lessons. They might be real estate lessons or money lessons. If you look at the book, the first half of the book is all about mindset.

Some of the how to do things is in the second half of the book. The website’s going to be the same type of thing. I’ll put out a blog that either deals with mindset or something concrete with action steps. I’ll put out some videos. I have a little section that will grow, that has some tools, things that I’ve used over time, that I developed to underwrite projects or to do some things like that. There are some spreadsheets and some resources. I encourage people to sign up and get the newsletter. It’s non-spammy. It comes about once or twice a month now. It’s usually got some helpful information. You can look at it or hit the delete button and it’s all there for help. It’s all there for you to grow and develop your own freedom.

Is the URL, the website just RichDoctor.com?

Yes. I’m the world’s worst marketer. You can go there and there’s a little sign-up sheet. It’s for everybody. I come from the doctor world and have maybe some credibility with them. You replace the word doctor in the book with your job, whatever it is, the principles are all the same. They’re all wealth and freedom-building principles.

Tom, thank you for sharing your wisdom. Thank you for writing the book. I saw how much it took and the number of revisions that you had to do. Did you end up doing the audiobook?

I haven’t yet. I’ve had a lot of requests for that so that’s step number next once I get the other mechanics of the website going and that’s about done. That’s probably the next project.

You had eyes on this book of some of the most reputable authors that are out there. It reads well. The information is compelling. It’s clear. I’d encourage anyone, regardless of whether you’re in the medical field to pick it up. Tom, any final words of wisdom or anything you’d like to leave the readers with?

I tell everybody, if you’re not growing, you’re stagnating and you’re going to wither away and die. I tell people that the $15 book is not going to change my life. I didn’t write this book to make money, but it might change your life. Whether it’s my book or your book, which is fabulous, anything. There’s always a little bit of information. You could learn something and then try to combine your education with a little bit of action. You’ll be surprised where it takes you. Life’s got a whole lot to offer and there’s a big world out there that is a lot of fun. I encourage everybody to use a little perspective and realize how much fun you can have and try not to be trapped. I don’t want people to be trapped and unhappy.

That’s one of the secrets of life is constant growth and improvement. I can’t remember what you called it. I call it the infinite horizon. What did you call it again?

It’s the second mountain.

TWS 73 | Rich Doctor

Rich Doctor: Doctors need to educate themselves financially and develop a strategy to get to the point where they are free and they don’t have to do the things they don’t want to do.

 

It’s the infinite second mountain because the second mountain will lead to the third mountain, the fourth mountain. Once you have something that you’ve achieved, in order to have that fulfillment and that enjoyment of life, you have to continue to achieve these milestones.

That first mountain might be about acquisition. There’s a book called The Second Mountain by David Brooks. The first mountain is about acquisition, which we all get into when we start, but the second mountain is more about contribution. The third mountain, the fourth mountain, we always find more mountains to climb, more to contribute and more growth to achieve. That’s what keeps you young. It gives you purpose and makes life fun. It gives you a chance to do things like this.

I’m going to ask one more question. There’s a quote that I think about quite often. It’s, “The quality of life is in proportion to the quality of relationships.” I know that you have valued relationships more than anything else. You mentioned it with regards to some of your patients. You in the book, it’s very evident of all the different seminars, all the different meetup groups and associations that you’ve attended over the years. Speak maybe to the importance and value of relationships and how they’ve helped you develop over the course of time.

We’re pack animals. We love people. I love doing this with you right now. I’d rather be face-to-face. I’d rather we be in a group of 300 people as well. You and I go on a cruise together frequently. That’s fun for me. Often, I’ll go to seminars where maybe I could be teaching some of what’s going on, but I’m going there to see the people. Relationships, when you meet other people, everybody’s so diverse. Everybody has a talent and you can learn from other people or you can live through their experiences. That’s what life all about. It’s a giant world. It is a giant passion for mine. I have my core values and they are adventure, growth and connection. We talked about all that.

The connection is so important to me that I put it as my top three of my core values. I want to be with people. This is fun what we’re doing now. It’s fun to go connect with people. You will learn and grow, and your life will be better for it. Your life will be enriched by the experiences of others. I can’t encourage people more to keep up with connections and start with your family. Family connection is most important. Those are the people that count. Broaden your circle, it will make your life a beautiful thing.

I’ll end with this comment where our society is evolving to this place where relationships are the true value of life. We have been blessed with technology such as this video conference software whether it’s energy or transportation. This is a year of disruption, but it’s going to pass. The way in which society is evolving, it’s going to, in my opinion, decrease the efforts and what we’re going to have to do in order to maintain our lifestyle expenses. That’s where, again, going to the value that people seek sometimes is right in front of us, which is our relationships starting with our intimate relationships, going to kids and going to friends. It’s no longer going to be a choice where we’re going to have a lot more time on our hands as a society. The principle of satisfaction and fulfillment is right in front of us. It’s meeting new people. It’s enjoying time with the ones we love. You don’t have to wait until someday. That day could be now.

The best time to start is always yesterday and now is the next best time. Don’t let technology run your life. It’s great that we have this, but there are 7.5 billion of us. Let’s go out and meet some of them.

I can’t wait until we meet up face-to-face again. It’s been a few years. It was in Austin. It was summer of 2018. This is a year that has made us value those personal interactions even more so. I’m sure the next time will even be sweeter. Tom, thanks again.

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A Daily Legacy: Creating And Passing On Generational Wealth To Your Descendants

TWS 72 | Generational Wealth

What is the greatest obstacle that is preventing you from living a life at the next level? For many people, it’s creating and passing on generational wealth. There are many ways to be financially free, but how do you enable your children and their children after them to have the same freedom? What does wealth mean for you in the first place anyway? Patrick Donohoe unpacks this for us in this special episode of The Wealth Standard.

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A Daily Legacy: Creating And Passing On Generational Wealth To Your Descendants

I hope you are in a festive mood despite the shutdown circumstances. I hope you have an amazing holiday and enjoy yourselves and enjoy the season. Welcome to this episode. I’m going to be speaking about generational wealth. Many of I sent out a survey in order to get feedback, insights and ideas about how to create a digital course that would be meaningful to you. I have completed that. If you go to Go.TheWealthStandard.com/freedom, you can purchase that. It is version one, I’m going to be doing some live Q and A sessions and getting direct feedback about some of the things I came up with in order to refine and improve, iterate and so forth. It’s exciting.

In the responses that I got, there are some common themes. That’s what I have been addressing in the episodes. I’m going to be doing that. The question I’m mostly getting into, which was in the survey, is what’s standing in the way? What’s the greatest obstacle that is preventing you from living a life at the next level? It’s obviously very broad but it’s been cool to read through the responses. This is one that I felt was important to address given the season but also given some things that I know that are on my client’s mind, my mind specifically. I hope they’re on your mind as well, especially if you have children even if you don’t, it doesn’t matter. It could be grandchildren, it could be nieces and nephews. It could be people in general, frankly. Let’s unpack the idea of generational wealth. Thanks for joining me.

The specific response was as follows. This is to what is the biggest obstacle that is standing in the way. It’s creating and passing on generational wealth. I’m looking to be financially free, but once I have achieved that, how do I enable my kids to have similar responsibility and freedom for their children? I’m assuming for them and for their children. There are a couple of parts here. Creating and passing on generational wealth, I’m looking to be financially free, but once I have achieved that, how do I enable my kids to have similar responsibility and freedom for themselves and their children? As I thought through this there are a few things that come to mind.

Be, do, have. Click To Tweet

Daily Journey

The first is, again, parts to this obstacle. It’s creating then passing it on. It’s the idea of financial freedom. It’s enabling kids to have similar responsibilities and freedom. Let’s address the first one, creating then passing it on. We should first talk about wealth in general. What I’ve come to understand as wealth isn’t merely financial wealth, even though that’s a part of it. There’s a cool book that I’m listening to. I have five days left on my 75 Hard challenge, which is an intense challenge. I listen to lots of audiobooks. I’ve been listening to Greenlights by Matthew McConaughey. It’s a fascinating book. I definitely recommended it. One of the things he said is, I’m paraphrasing, “Happiness is not contingent on certain things.”

He identified people that he had met in Central America and South America in the Middle Eastern regions. They essentially live like paupers but they’re the happiest, friendly and abundant people he’s ever met. Sometimes actual financial wealth makes it more difficult to understand the true nature of wealth because there are a lot of things that can mask it. When you don’t have as many distractions, it tends to be a little bit easier. Financial wealth allows more distraction that prevents the true essence of wealth. I would say wealth, again, I’ve defined in the past as being able to extract happiness, joy and fulfillment out of any moment, the good, the bad, and the ugly. Financial wealth, in the end, will only magnify who a person already is.

TWS 72 | Generational Wealth

Generational Wealth: There isn’t an end to passing generational wealth. It’s a journey and the journey is every day.

 

Creating the generational wealth and then passing it on first has to do with us, the individuals that do have this desire. I include myself in that. It’s understanding that there isn’t an end to passing generational wealth. I believe it’s a journey and the journey is every day. Our legacy is literally a daily achievement that we make because we don’t know how many days we have. We do know that they are numbered. It matters when and how. We look at life from that perspective. If we took a life, I would say, as more fragile, which in 2020 is a great opportunity to do that, regardless of how you feel about COVID-19, there’s been a scare. There’s been a health scare and it’s allowed us to evaluate our lives.

As we’ve been able to adjust, adapt and find happiness, joy and fulfillment within what has happened and how it’s disrupted our lives, that is a true test of wealth, regardless of how much money you have. I’m going, to be honest, and frank with you as I always am. In 2020, I had a great year financially so far. However, it was a very challenging year. I had nobody in my office. I came here by myself day in and day out with 1 or 2 people in here but little interaction where I’m used to interacting with lots of people physically. I didn’t know how dependent on that I was. I also have two teenage girls who’ve been prevented from visiting with their friends and going out and doing fun things.

We haven’t traveled anywhere. I haven’t seen my parents in over a year. It’s been a trying time and it’s been a great test. It’s been a great challenge because it’s allowed me to find the joy and figure out ways to be appreciative, to be grateful because when everything’s going great, it’s easy to be happy. The true test is when things don’t go the way in which you anticipate. This is a whole idea behind have, do, be versus be, do, have. One of the things I picked up in this response to the survey question was the idea of once. “Once I do this, once I do that,” and I try to eliminate that from my vocabulary. I believe we’re all habitually conditioned to think that once we have this car, job, title, girl, boy, spouse, children, that we’re going to be happy. It’s like when we achieve this, then we will be this.

I believe it’s the other way around. At least, I believe that we can experience the other way around. When we experience that, what we want in the end will come quicker. That is the be first, then do and then have. That idea of being, which is experiencing, embodying the idea of extracting joy, fulfillment, and happiness out of any given moment or experience, life is happening to me versus life is happening for me. A lot of this, I picked up from my exposure and experience with the Tony Robbins organization, where it’s our perspective of life that determines our happiness and that is a daily occurrence. Developing generational wealth starts with how you show up for your family, for your kids, for your loved ones.

Daily Legacy

That right there isn’t a one-time event. It’s a consistent event because when you’re speaking about children, the first 10, 15 years of their life is where a lot of their perspective of who they are, what life is about, what school is about, what money is about, what friends are about. Who they are, how they understand themselves, what they believe in themselves. That’s developed in the first 10 to 15 years of life. It’s not like someday you pass on a bunch of money and suddenly your kids are going to figure their life out. I believe that a lot of what we’re doing to influence our children is often looked over and it’s not seen as making that much of a difference. I have something that I love to say to myself as like an empowering statement which is what my legacy is today.

It’s challenging because children are getting used to life. They are pushing on you. They are pushing on one another, they are testing boundaries and they’re always going to do that. I look at sometimes how we, as parents and adults, show up to children’s lives. It allows us to influence in one way or another. I believe that that is the greatest set of gifts that you can bring to a child. It’s being able to influence their experience of life so that they can discover who they are. They can discover what life is about. They can understand virtues and principles and how to live by them because, in essence, they’re laws. Those are some of the greatest lessons because here’s the thing. Technology is following Maslow’s hierarchy of needs where technology is making the physiological needs of life almost zero cost eventually. Whether it’s transportation, energy, food, housing, communication, entertainment, the costs there are being driven down significantly.

When we cross this barrier, to a large extent, of having to work in order to live where we have to work. We have to earn money. We have to do those things that are becoming less and less of a truth. I believe that in the very near future, technology is pushing towards this working less and less but being able to live a decent lifestyle. Up until 2020, poverty rates around the world were coming down at a staggering rate because of the spread of technology, the spread of efficiencies that are being developed.

I believe our children and grandchildren will live a very different lifestyle from physiological and safety needs, which is the next step in Maslow’s hierarchy of needs, then we have. A lot of what makes us afraid of those that are currently in the X generation, the Baby Boomer generation, is that we still have on our mind this idea that if we don’t have a job, if we don’t earn money, then we’re not going to be able to survive. If we can’t pay our bills, we’re going to be homeless and we’re going to be on the streets. We go to these worst-case scenarios, those fears are going to be non-existent because of technology. That’s an opinion.

I have some evidence to back that up but hopefully, you know where I’m going with this, which is from a financial standpoint, is going to be different for our generation than it has been in the past, especially with regards to our kids and their generation. Wealth is very qualitative. It’s not quantitative as far as measuring in terms of money or cash flow or income. It is qualitative based on the quality of our experience in life, not yesterday, not tomorrow, not a month or a year or twenty years from now but now.

The first two hierarchies of wealth are the first two levels in the hierarchy of needs. The two levels above physiological and safety needs in the hierarchy of needs, these two levels. Technology, I believe, is rapidly solving. Now you get to relationships. Right now this is being expressed. Social media is incredible as far as how we develop relationships. You may not define them as relationships, connections, friends, whatever you want to call them. It’s this need of seeking community. This need for seeking relationships. This need of seeking partners, intimate partners, wanting that desire that happens to want to have children. These innate needs that Maslow talks about, are now being met with technology. You get into self-esteem. These are very important. This is where we, as influencers of our children, of other people, can focus attention on what a healthy relationship is. It is not necessarily by us directly teaching, but I would say indirectly showing through our actions, as well as self-esteem.

Oftentimes, I look at how completely different my kids are from one another. A big part of me has always wanted and tried to show them through the example of how to appreciate their uniqueness, how to understand that they are different than one another. I believe sometimes they want to be like one another in order to get love from their parents. Celebrating the uniqueness and difference of our children is a powerful way in which we create in themselves the seeds to enjoy life at a high level, not one time but consistently over time. I’ll end with maybe a few points around doing this and doing it strategically.

Daily Challenge

The reason I’m getting into this is I believe wealth is going to amplify who your kids, who your grandkids already are when they get money. It’s going to amplify whatever results they’re already getting. You hand them a bunch of money, it’s not going to improve their life from a qualitative standpoint. Long-term, there may be a house, a car, some cool things that they can do to entertain themselves. I do believe that that is also something that is drastically coming down at price. More people are going to be able to experience it. It goes to this idea of being, does, have versus have, do, be. If kids believe that they have to have a job in order to feel successful, if they believe that they have to get straight A’s in subjects that they may not be that great at, they have to do that in order to be successful and feel good about themselves.

TWS 72 | Generational Wealth

Generational Wealth: The bottom line with passing on generational wealth is you have to define what wealth is for you first. You also have to realize that what you are doing on a daily basis is your legacy.

 

I believe that instilling in children this idea that everybody is different and also demonstrating that through how we treat them and then carrying out, I would say, experiences that allow them to have challenges associated with who they are in order to develop self-esteem relative to what they’re capable of by overcoming challenges. It could be as simple as in the summer of 2020, we had some travel plans to visit my parents back East and some other things. All of those were disrupted. We were restricted to where we could drive, so we did a trip up to Northern Montana and it was cold during the summer. We hiked in the snow. We hiked in rain. We hiked some challenging things. For my six-year-old, it was definitely a challenge. He was on my shoulders half the time.

These challenges we may not believe or they may not seem like they are that impactful but they truly are where kids face challenges and they overcome them. They face difficult things and they overcome them. I wouldn’t say this is more physical than anything else but it’s also the lesson around it that you can demonstrate whether it’s directly or how you face your own challenges. Do you show up and battle and push through or do you tuck tail and run? Do you analyze it, celebrate it, realize how beneficial it is to your circumstances because it’s an opportunity to grow, or do we complain? Do we blame somebody else? Do we blame circumstances, COVID, the president, a boss, or the economy? Those are the things that our kids pick up on and it’s developed into how they view the world.

We have a place an hour up in the mountains and it’s right on this river. The river is cold all year round. One of the things that I do is jump in the river. I jumped in it and it was freezing. It was incredibly cold. My kids did it a lot up until it got a little too cold but it was this idea of facing something that you are afraid of, facing something that it’s like, “That’s going to be painful,” but you do it anyway and experience it. It’s not life-threatening. At the same time, it’s that experience that wires us to understand fear at a different level. Understand the anxiety of looking over at that water. I know that that is cold but you push through that and do it anyway.

I’ve always said that one of the decisions I made many years ago that made a drastic difference in my life, especially in my business life but also personal life, you can carry it into all aspects of life, was picking up CrossFit, which is a workout philosophy routine. I still do it almost every day. It’s not necessarily for the workout but it’s because you face physical failure daily and you figure out a way to push through what your brain is telling you one another, shouldn’t be doing. “This is too much. You can’t do it. Stop,” but there’s all the environment of CrossFit allows you to face that over and over again. That builds in a lot of physical mastery, as far as how we show up to the other challenges in our life. The other things where it’s like, “That’s impossible, I’m going to run. I’m not going to do that. That’s somebody else’s fault,” it allows you the fortitude. It allows you the strength to push through and overcome whatever that challenge is.

I’ve gone all over the place with this. The bottom line with passing on generational wealth is you have to define what wealth is for you first. You also have to realize that what you are doing on a daily basis is your legacy. If you currently have kids, you are influencing them. It’s stepping back and it’s analyzing, what am I doing now? What lessons am I teaching my kids indirectly? You want to do some direct stuff obviously but indirectly through my behavior, through my response, how I behave. By no means am I perfect at this. This is a very sobering episode for me because there are many things that I could do better for my kids. I try my best and I continue to try. I realize that I fail. Even when I’m doing something and I know that I’m failing, sometimes I keep doing it. It’s being able to step back when you’re in a neutral mindset and analyze the situation and go to your kids and talk to them about your shortcomings.

Talk to them about what you’re trying to do. Talk to them about their uniqueness, you wanted them to live a meaningful, beneficial life. Having those direct conversations, especially after you fail. I think that’s the worst thing when parents try to hide their faults. I’ve hidden mine in the past and it does not jive with my principles. I’ve had to go back and be penitent to my kids on more than one occasion. In the end, this demonstrates that making mistakes is okay as long as you learn and grow from them.

The last thing I would say is there are ways in which you can structure your finances so that your children benefit from that when you pass on. This is not what I usually start with. What I explained and went through was what I believe the true generational wealth is, which is basically the strategic design of having your kids experience the principles and virtues of life and come to understand their uniqueness. How they, based on the current circumstances that they experience as well as future ones, how to extract the lesson, how to extract the joy and the beauty. How to understand that life is happening for you as opposed to, to you, which is the case with most people, unfortunately, and your kids see that. My kids see that.

Your legacy is today. Creating generational wealth is an everyday responsibility. Click To Tweet

If we want to turn the tide, that is the greatest way to pass on generational wealth. Not from a financial standpoint. There are estate planning techniques. There are ways in which you can position your assets so that you don’t have a check written to your kids upon your passing, whether that’s later in life or prematurely. There are ways in which you can structure that so that it’s not a blank check so that it goes for specific purposes.

I would caution you here to find someone who is very astute at this in the digital course that I created, I have a financial directory in there. My personal attorney is in there. His firm does a wonderful job at helping to structure an estate plan strategy so that you can pass on your values, your virtues, what you want to pass onto your kids but you do it in a responsible and intelligent way. Andrew is great at this. Thank you for reading. I hope you have an amazing and eventful holiday season. Even though they’re not going to be the typical events, you can still create some cool things. I know you have some creativity inside of you to create those lasting memories for you and your family. Best wishes and we’ll see you in the next episode. Take care.

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How To Properly Optimize Your Energy And Time

TWS 71 | Optimizing Energy And Time

 

Experiencing failures in family relationships and business is what everyone wants to steer clear of. Although ultimately inevitable, minimizing them is still possible through proper optimization of energy and time. Patrick Donohoe shares some useful tips on how inner energy can be repurposed according to our goals, helping us gain a better mindset and a healthier body. He also presents the three levels of time optimization, underlining how this powerful aspect in life can be maximized and utilized to its full potential despite its limited and seemingly scarce nature.

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How To Properly Optimize Your Energy And Time

Thank you for tuning in to this episode. I’m grateful for your time, energy, and focus to invest in yourself and take your life to a new level. That’s what it’s all about. I want to express my gratitude for the support that I’ve received on this new course that has been launched. You guys can go check that out if you haven’t had a chance. It’s Go.TheWealthStandard.com/freedom. This is version one of the course. It’s five modules long. It’s quite an investment of time and focus. There are several exercises in there but it’s something I’m excited about and I can’t wait for you guys to check out, so go head over to that webpage.

If you try to steer clear of negative emotions, you are also steering clear of being a failure. Click To Tweet

In preparation for that, I had an overwhelming amount of feedback with the surveys that were sent out to specific segments of the audience to find out what were the most meaningful educational pieces, lessons, points, or exercises that would allow you guys to essentially benefit the most from the course. There were hundreds of responses and the responses had to do with certain questions and mainly those questions were the anxieties, obstacles, and what you believe is holding you back. In the last episode, I talked about one of them.

Obstacles In

In this episode, I’m going to talk about another. The topic is in response to the question around obstacles. What are the obstacles that stand in the way of you living your life at the next level? This one says, “Mindset and confidence to commit the time and money to build my business, as well as taking the time away from my wife and three children.” What I believe is being said in this response is there’s this quandary where there’s an opportunity in business and to make an investment in that business. However, there seems to be a trade-off where if I do that, then I’m going to be taking time away from my wife and three young children.

I can empathize with this. I’ve been in this situation. I had this belief a lot and I’m going to get into that. I’ve had lots of other clients and experiences with something similar. At the same time, if you don’t have kids or if you don’t have a family yet, this is still relevant because these are simply obstacles that we place in our path psychologically based on the things that are most important to us, as well as how they correspond with the roles we are currently playing in our life. Throughout our life, we play multiple roles. We’re a leader, son, mentee or mentor, husband or wife, parents, friends, colleagues, peers, or even strangers. Nonetheless, our roles have certain things that are important to us that we believe that if we do not fulfill those specific roles, that somehow that’s bad.

TWS 71 | Optimizing Energy And Time

Optimizing Energy And Time: A state is a function of physiology, focus, language, and how you show up.

 

If we fall short of those responsibilities, then there must be something wrong with us. If that happens, then we’re going to have the consequence. In this case, our family not loving us. We’re not a worthy husband or wife because we haven’t been able to provide for those that we have stewardship over. There’s lots of stuff that goes through our heads psychologically and subconsciously. That’s what we’re going to address. Psychologically, I understand and empathize because I’ve been in that situation. At the same time, I don’t believe there’s a choice. I believe you can have both and more of both. That’s what we’re going to get into.

First off, I’ll go through maybe some of the deductive reasoning associated with this specific obstacle. I talked about general obstacles that we have but the deductive logic is when you commit time and money to build the business, it takes away time and money from family. In this case, it seems to be that family is more important than business. The role of father or husband seems to be more important than being a business owner and investing and growing that business. What that segues into is I’m a bad husband and father if I do that, because I’m essentially making the business more important than my family. If I do that, then they’re going to notice and they’re going to spite me for it. They’re going to hold me accountable or make me feel guilty. If I dedicate time and money to my business and not to them, then my life is going to have less meaning because my kids are important to me.

If they don’t love me or if my wife doesn’t love me, what good am I? What good is the business? Why has it in the first place? That’s maybe not specifically articulated like that, but that’s what goes through our minds sometimes subconsciously. It could be right or wrong. I’m not here to place any type of judgment. I feel that when there is an obstacle, there’s oftentimes this brick wall that you can’t jump over or get beyond. Let’s try to figure out how to break down that brick wall. I’m going to do something I did last time because there are many options and solutions out there. I don’t think it’s a lack of those that keep us back from living the life that is our destiny.

It’s psychological to begin with and that’s what I’ll start with. If this person and if I were speaking to them, maybe even speaking to myself because this was a big concern for mine and still is to a degree. Let me get into an interview and I’ll address it as if it was somebody that was right in front of me. I would ask them the question, “When you believe that if you dedicate more time and money to your business, it’s going to take away from what your family and de-value your role as a father, how does that make you feel inside? What are the emotions that you experience?”

I would imagine they would say, “I feel like I’m falling short. I feel that I’m a failure to my kids and my wife. I’m afraid that I’m not going to be as influential as I could be if I dedicated more time and money to them.” Those are probably some of the feelings. I would then ask, “If you feel that way, how do you think about your business when you’re feeling that way?” “It’s such stress. It’s time-consuming. It’s hard to get things done. I have ideas and it’s frustrating because if I execute on those ideas and put money and time into them, then I’m taking away from my family.” This is the quandary. It’s challenging to work through but this is where you open up some possibility and you would make the statement or start asking questions, consider something for a moment.

When you think about that belief, are you 100% positive, absolutely certain that you have all of the information, knowledge, wisdom, and business acumen to know that there is no possible way to build and grow your business while at the same time growing in your role and being more influential in your role as a father and husband? Do you have all of the information, knowledge, and wisdom to know that it’s not possible? The answer is going to be no. I would follow up with, “If it were true that you could grow your business, invest time, your personal life, and be even more influential in both areas, how would that make you feel?” “I would feel relieved, grateful, optimistic, and excited.”

A follow up to that final part of it, “If you felt that way, how does that change the way in how you look at your business?” “I’m excited to figure out how to do it.” This is the idea is that you want to open up the psychological possibility first. I did an episode on the two fears we all have, including myself. We don’t want to be wrong and to change. As you look at it this way in which you open up possibilities, psychologically now it’s, “That’s possible. I can do that.” That’s at least what’s going on psychologically. As you bring in solutions, it has a whole different level of meaning to the person in question.

If you're not getting exercise and pushing your body, you have it all wrong. Click To Tweet

Energy: The Easy One

Let’s go through some of the possibilities with regards to this obstacle. The most valuable finite resources to me or where you can optimize and then get into a lot of the other details depending on the type of business but I would first start with what I believe are two universal finite resources. They’re applicable to everyone reading right now. It’s energy and time. Let’s talk conceptually about the easy one, energy. All of us are looking for emotion as the end result. We achieved that and then we make the process to feel it again more complicated.

When a person commits to being successful, they want to be successful because of how it will make them feel. Once they’re successful, they want to achieve a level in their career because of how it will make them feel. It all boils down to that. I’m not going to get into how to experience that but that’s the emotion. In the end, it’s energy. Motion is energy in motion. That’s what we’re all looking for. As we’re looking for those positive emotions, we’re also trying to steer clear of negative emotions.

In this case, we are trying to steer clear of being a failure, “I don’t want to fail my kids. If I’m not there for them, they’re going to be influenced by the iPad, phone, social media, or their peers. I want to be there and be the influence.” All these fears, we want to steer clear of those negative emotions, but also steer toward those positive emotions. If you think about, “I want more money because I don’t want to worry,” that’s against steering clear of negative emotions. “I want to achieve in my profession because it’ll make me feel successful and make me feel alive and energized.” That’s a positive one. Those are all end results of emotions.

Let’s talk about what has the biggest impact on your energy. This energy that’s important because the energy in motion is emotion and it is what you want to feel. A lot of this stuff is cool because I talk about this in detail in the course and there are some exercises as well that are enlightening. They’ve at least enlightened me in my life on many occasions and that’s why I’m trying to pass those experiences along to you, so you can leverage me and that experience.

The first is understanding how to influence your state. A state is a function of physiology, focus, language, and the way in which you show up. Oftentimes, it’s not strategic. It’s more happenstance and random. We wake up in the morning, go through our routine, and show up the way we always show up. There are ways in which you can influence your state. First, your physiology, your focus, and your language. Physiology is highly influenced by the food you eat and how much water you consume, especially here in the Mountain West. The High Desert is what it’s referred to.

We’re 5,000 feet above sea level. You go higher into the mountains, 6,000, 7,000, 8,000 and it’s dry. Dehydration, where your organs, body, and your limb system isn’t able to operate at the level that it’s capable of. It’s draining. You become lethargic. It’s just water, what you put in your body, and exercise. It’s interesting where we as a human race up until many years ago, our bodies were used. They were strained daily to survive. Now, we have to work for it. Many years ago, you didn’t see people running around in the street, riding their bikes, or this huge health and wellness industry to keep people active because we don’t have to work and toil the way our ancestors did. If you’re not doing that, not getting exercise, and not pushing your body, it’s meant to be pushed. It’s meant to have strain.

TWS 71 | Optimizing Energy And Time

Optimizing Energy And Time: Discover what you are good at and figure out ways to dedicate and focus your time on those.

 

Doing that gets your body or physiology to a point where you have more energy. You show up differently. You have the endurance to last 12, 13, 14, 15, 16 hours so you can optimally perform in your business and your profession. You can take that energy and state home and have the endurance to have meaningful time and experiences with your kids. Motion during the day, keeping active or standing up. I’m at my standup desk sitting on a stool. It’s a stool where it moves around and stuff. There’s a ball at the bottom and balances your core. I stand up a lot of times. My desk goes up and down. Having motion during the day, taking a walk, and having a rebounder trampoline. There are trampolines you can get for $50, $75 on Amazon where you jump up and down, shaking up your limb system and getting your body in motion. That creates energy. That’s the first thing is energy.

There are ways when you can control that energy. These are a few of the hacks. Going back to the original point, it’s dedicating time and money to a business and having the fear that you’re somehow taking away from your family. If you can improve your energy, that improves everything. It improves your business. It improves how you show up as a leader, the ideas that you have, and your efficiency. When you go home, you have that energy to take to your family, friends, extracurricular activities, and the fun that you have in life. Energy is a big thing. You want to optimize the way in which you show up for the different roles in your life and you’re going to get even better results. Your business is going to grow. You’ll have better ideas. You’re going to attract more clients. You’re going to have ways in which you can figure things out. That magician inside of you and that archetype will be more in tune because of the energy that you have.

Let’s get into time and then we can wrap up. There are many solutions to all the different ways in which you can get your body in shape and how you can get more energy and eat better. Try stuff. There are a million different eating plans, ways in which you can hack your sleep and get better sleep, and ways in which you can hydrate and stay hydrated. These are all solutions that we have in abundance and I’m not going to get into those. Let’s talk about time. Time is the great arbiter of all of us. We all have the same amount. We’re all, in a sense, either empowered and free or constrained and enslaved because of it.

It has to do with time, the leverage of what’s done inside of that time. Energy is a huge piece of that. I’m going to use a buddy of mine. He’s a little bit younger than I am. He owns a successful construction company. He had even harder times than I did during 2008 and 2009. He lost hundreds of units of apartments and millions of dollars. We weren’t in touch during those years but got back in touch because we were friends before that. I’m proud of the way he rebounded and how he figured things out. He has an incredible magician in him, but also a big warrior that pushed him through and got him through those difficult times.

3 Levels Of Time Optimization

We had a conversation in 2012, 2013 when I was strained by time and I was trying to figure it out. I described to him and showed him what I was doing and he took it to a different level. How I would explain it is there are three levels of time optimization. First is single-dimensional, where it’s you do everything. You do the marketing, sales, leadership, pay the bills, balance the books, and submit everything for taxes. It’s self-employed. Self-employed is inefficient because you are doing everything. There’s no leverage there and then you get it multidimensional. Multidimensional and the gap between is when you start to identify the best things you could be doing. What you’re good at, your talents are, your unique abilities are and figure out ways in which you can dedicate and focus your time on that and have others that have talents, abilities, etc. to do the things that you don’t like to do and aren’t necessarily good at either but others are.

I’ll use my buddy as an example. In the beginning, he was doing everything. The first thing I taught him, which I have been doing for many years is using tutorials. I would teach once, record a screen, record a video and it could be watched an infinite number of times. He found himself using them to train workers and employees. The onboarding process went down by 100% in time, which allowed him more time to do other stuff. He used simple tutorials. This was awesome and he’s such a go-getter. Another thing is he was trying to figure out a lot of stuff in his business. It was a new business in the construction world and I said, “Who else is doing it that you can learn from?”

He essentially learned about this business through someone he was working for and he made them successful. They did some things in an unprincipled way, so he left and started his own thing. They were the only competitor he had. He was like, “They’re my competitor. I can’t learn what they’re doing.” What he did is he started calling up other groups around the country and he would fly and spend 1 or 2 weeks shadowing, asking questions, and figuring out from them how they were doing things. He came back and started to incorporate those into what was doing, where he shortened the learning curve. He circumvented a lot of the obstacles they went through in order for him to benefit and leverage from their experience. Learning from others is the lesson.

People are driven to grow and maximize their talents and abilities. Click To Tweet

Another aspect of multidimensional is to find systems and processes. I use a lot of the systems and processes of Strategic Coach and Tony Robbins from a business operations standpoint, as well as a coach. I learned some of the ways in which the tech world does its operations and project management, and so forth. I turned my buddy onto a book called Traction by Gino Wickman. He consumed it multiple times. Within a short period of time, he also consumed some sales information from The Sandler Sales System, which is magnificent. He started to use tutorials, leverage training, and optimization but then he hired some operators. He hired some individuals to integrate and utilize the methodology, Traction by Gino Wickman. What he started doing is having a lot of his operations and this is over the course of a couple of years. His operations became more leveraged where he was doing less and less of those daily tasks and operational duties.

He started to put others in that place doing what he would have done because of his way in which he started training. He did his tutorial training and so forth. He integrated a communication system using Voxer. He uses something else now. It’s integrating a CRM. The multidimensional is when you take yourself and you get more focused. Getting to this function of leadership where you’re inspiring, motivating, coaching, making people will feel important, working on comp plans and incentives so that they are doing good work and are rewarded for it. You start to build a culture that way and it’s profound. This is a way in which you leverage time from a multidimensional standpoint.

Finally, exponential. I’m not going to get a ton into exponential but I’ll use my buddy as an example. He went from working 70, 80 hours a week to not having to work much at all in the business. He started to license some of the processes he figured out and then create intellectual property. In the space he was in from a construction standpoint, there were many outdated pieces, parts, and ways of doing things. He started to create intellectual property around certain parts and figure out how to get them manufactured in China. It was fascinating. Another piece of the exponential is a technology where you can take certain tasks and leverage technology. You build it once and it works infinitely. It’s a one-time investment and then from there on out, it has a massive impact going forward because it does all of the work 24/7.

Also, exponential is figuring out better ways to improve processes and then licensing the intellectual property as a new revenue stream. He’s selling leads as well. He’s using the marketing acumen that he gained here in Utah, Idaho, and Nevada. He is generating leads for others around the country and selling essentially the same type of services, but they are being fulfilled by other groups. That’s exponential. Those are two ways in which you can leverage yourself and live an incredibly meaningful life because my buddy has two homes. He has one in Salt Lake and one in Southern Utah. He gets to go on some cool vacations all the time. It wasn’t that way in the beginning, but what this does is it allows you to grow.

TWS 71 | Optimizing Energy And Time

Traction: Get a Grip on Your Business – https://www.amazon.com/Traction-Get-Grip-Your-Business/dp/1936661837

Anyone that’s in business or isn’t a profession where they can influence and control their income, we’re driven to grow and that is a natural instinct inside of us. It’s not something that we’re going to get rid of one day or it’s going to suddenly like, “We’ve grown enough and we don’t have to grow anymore.” There’s going to be this insatiable desire inside of us to continue growing. If we’re not growing, then we don’t feel as alive and driven. That impacts. Even if we have more time with our kids and our family, it impacts how we show up. It’s this balance between trying to manage the success of family but manage the success of the business. You can have both. It’s not a trade-off. We’re driven to grow. We’re driven to maximize our talents and abilities. This is something that I believe will ever stop. Trying to figure out a balance is a futile effort. It’s figuring out the optimal mix, optimizing that mix, and then maximizing that mix.

Optimizing is figuring out from an energy standpoint, how can you tweak it so you show up with more energy? You have the endurance to last more than 8, 10 hour-day and show up as a man, an influential high spirited father, leader, husband, son, daughter, friend, and stranger. Talk about a way to instantly improve the quality of your life and how you feel is to go out find and help a stranger. What a cool experience that is. The idea is that when we have these different important roles in our life, it’s not a trade-off. That’s what I’m trying to communicate to you guys and these are two ways in which you can optimize what’s going on. Once you’ve optimized it, that’s single-dimensional and multidimensional, and then you can start getting into the exponential, which is maximizing. Guys, you’re amazing. Thanks for reading and learning. I hope to see you back on the next episode. Until then.

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