In this episode, you’re going to listen to Tom’s story of divorce and business failure to traveling the world with his three young children and ex-wife. Before leaving, Tom sold all of his assets and possessions and bought physical gold.
Tom’s transformational story re-invigorated his passion for writing about finance, investing, and economics. His refined perspective is almost prophetic, given the current state of the world.
Let us talk about the free market as we dive into the insights of Dr. David Collum about the economy, our society, and our future. He is a Betty R. Miller Professor of Chemistry at Cornell University and is a regular and valued presence on the internet commenting on the financial system and the predicaments of our time. Dr. Collum gets philosophical and shares the paradigm and perspective he is using now to look at the markets, the political arena, and the world economy as a whole. Looking into our current situation, Dr. Collum shows how the economy has become about moving money and not goods and services, sharing better ways to distribute.
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Looking At The Markets, The Political Arena, And The World Economy with Dr. David Collum
I have an interesting guest. We’re going to get into his story and what he does for living as well as something that I became intrigued with. His name is David Collum. He’s a professor at Cornell University. However, he writes a yearly economic review and has done for the last several years. You can find it on PeakProsperity.com, Chris Martenson’s and Adam Taggart’s blog. I’m excited to dive into his insight into the economy, into our society and what he sees as our future. David, welcome to the podcast.
I’m glad to be on.
I did a ton of research into what you wrote about in 2018. I happened to be going to a financial conference up in Whistler right after Ray Dalio was speaking, Howard Marks was speaking and there are a number of others. It helped me have a more refined perspective on what occurred in 2018. What I want to do is dive in briefly to your story because your economic review of things and your formal profession are a little bit different. Would you maybe explain how you came to start writing this annual review?
I didn’t pay any attention whatsoever to the stuff. I did chemistry. Around 1995, I started to pay some attention, some natural things start to develop some savings and you realize that it’s starting to matter. My dad and I used to chat about it when I was a kid. It was natural. As a raging bull for a while after that. In the late ‘90s, I started to notice that things are out of whack. In a fateful moment in July of ‘98, I decided to think for totally out of whack and I dumped half of my equities in cash. Almost to the day we went into that Asian crisis, I feel like I’m a half genius, half idiot. Down in the basement, I said, “If this comes back, I’m dumping the rest.” We came back and by mid ‘99 I had exited equities. There’s some phenomenon where once you go bearish, it’s hard to go on bearish again. Bulls get taught lessons much more dramatically than bears. By ‘99 I dumped all the equities right down to the last share and I was buying gold. I wouldn’t tell anyone though. It was embarrassing to buy gold.
Finally, I fessed up to a couple of people and they go, “Gold?” I said, “Yeah.” That paid off well over the next several years. It took a couple of years to not feel like an idiot though. I read more and more. I was at this chat board run by a guy named Doug Noland. We would chat and I wrote some stuff up at the end of the year and said, “Here’s how my year went and here’s what I’m thinking about.” One day I went viral. I left the containment field. I went from 200 clicks because that’s how many of us were there to quite a few thousand. It turns out one of the guys, named Jessie’s Café Américain, he had started the blog and he put it there. The next year I wrote it again and it got bigger. It was in 2008 or 2009, I decided to get serious. It was my 30th year of investing so I called it 30 Years of Investing from the Cheap Seats.
I laid it all out and all of a sudden, I started getting emails from people around the globe. The most shocking of which was the one I got from Iron Horn and he said, “This got passed to me,” and made some comments. From there, every year got bigger and broader. It had a natural growth rate to it. In 2018, it was about 160 pages. It’s hard to write 160 pages, but it’s hard to do it at the end of the year. I go into some lizard brain to do it. It goes to Zero Hedge, which spreads it around the globe. I’ll take on anything that catches my eye. If an antique catches my eye, I’ll write about antiques. If college finance catches my eye, I’ll write about it. There’s always a section on bonds, valuation and stuff like that.
I don’t necessarily count it by the pages because I’m reading it on a browser. I counted by how skinny that little icon is that you have to drag down. It’s quite a bit of work. Let me dive into a few things that you said. The first is you started to see things differently in the late ‘90s, which gave you a certain perspective. You acted on it. Maybe talk about where that philosophical base came from and maybe how it’s evolved into what that paradigm or perspective is you’re using to look at markets, look at the political arena and look at the world economy as a whole. Maybe you can go through that if you would.
I’m not a trader. I go into a position I usually average in slowly. It can take years. I probably make a trade a year even sometimes. I’m 100% about valuations. What happened to me in ‘98 is I concluded the valuations were at a point where historically win from that point. That’s still true to this day. Of all the cycles I’ve been through, I was in all bonds starting in 1980. People would say, “That was stupid.” I go, “I was making about 15%. It wasn’t that stupid.” When the crash in ’87 occurred, I was reading about it. I was not paying attention, but I realized I should be in equities. After the ‘87 crash, I moved into equities. I moved out again in ’99. I moved into gold, a lot of cash. I had a short position, which is a trade thing for me to do. I’ve done it twice. I will probably never do that again. It worked both times, but I know better now.
Winning doesn’t mean you’re not an idiot. I don’t blame myself. Every decision I make goes through the filter of it doesn’t work, will you forgive yourself? I started buying in ‘09 but I failed to buy not out of fear but out of greed. I started buying it. What a lot of people don’t know is we got down to approximately historical fair value in ’09. They think we are in some basement somewhere. We were nowhere near a basement. I document that exhaustedly especially in ‘18. I was positive that we would have to blow out a lot more. I remember Doug Cliggot saying, “I’ll be buying at this level and then it’ll drop. I will be bullish and at this level I wish I had saved my money.” That was the mode I was in.
When it jumped away from me I said, “This is 1931. We’re going back down again.” Nobody saw the levels of intervention coming. I know hundreds of people saw the mortgage crisis, hundreds and hundreds personally. I can’t find a single person that can point me to a single article where they said before this is over there will be trillions of dollars inserted into this. I can’t find that article anywhere. I failed to catch this road rage created by central banks. I’ve been largely not catching it. I was trading a lot of water and gold and I’m waiting for the next downswing. If my worldview is correct, it’s going to be a nasty one because they’ve blown up a gigantic bubble in both bonds and stocks. When those two start to blow up, I don’t want to be in the splash zone.
You had this perspective of things in ‘09 and then you saw the initial intervention mostly and then it gravitated to QE, how markets would respond short-term and the long-term.
First and foremost, I joined the club that turned out to be big and wrong that inflation would take hold. It hasn’t. There are people who say it’s there, but it’s not of the magnitude we thought and gold coming out of that bottom. It wasn’t in 2000. If I remember ‘13 where gold started paying dearly for not being right and that’s the thing I blew. I didn’t listen enough. I was like Lacy Hunt, Mike Shedlock, they were deflationists. I bought the bankers line that determined central banker can create inflation. Hunt and Shedlock are the two that I happen to remember well saying, “We are going to have deflation.” It didn’t sit with me and I think they’re correct.
It’s one of those things in hindsight. Everything makes sense as to this move and what it caused. I was looking at foresight when the move is taking place and seeing what impact it’s going to have. Sometimes it’s impossible because it could go a number of different directions. That was ‘09 and the world has changed quite a bit. How has your perspective changed in regard to your philosophy? Valuations no longer make much sense at all. You’ve had a lot of creative corporate finance going on which has continued to grow certain sectors. Ultimately, there are signs that there could be a correction. There are also signs that there might not, but maybe talk through what your experiences have been since 2009 and how your philosophy and perspective have been refined.
It hasn’t changed too much in the sense that of all the bubbles, this one is the one that seems most nonsensical to me. Every previous bubble, there was a good plot line, there was a good story. Whether it was 1929, 1999 or the 1960s where you can always say, “Here’s this revolutionary moment in history and things are rocking and this is why it’s exciting.” Even the South Sea Bubble, they all have a story. The story of this particular bubble is the Fed won’t let us down. That’s a stupid story because they’re incompetent most of the time. They are able to be competent in the short-term, but not able to stop the tides in the long-term and be a cause of a lot of pain when they don’t. I severely blame the Fed for ’09. They’re at ground zero for ‘09. It wasn’t crazy consumers. It was monetary policy.
How do you address those that are like, “The world would have gone to crap and were crumbled if the Fed didn’t intervene?” I hear that quite a bit.
I can live with that idea as long as those people acknowledge that aid has caused it. This is like Ted Bundy is killing people. The second thing I would want them to acknowledge before we would be on the same page is if they’ve been excessive since ‘09. It went off the cliff during Yellen’s term as Fed Chair. She had opportunities to start getting things back to normal and she failed. All excessive QE’s, it’s possible they can see disasters. They’re afraid of it. We now have a Fed who’s afraid of deflation, afraid of a recession. The Fed used to be the root cause of recessions and now they’re trying to avoid them at all costs. When the next one comes, it’s going to be bleak. We’ll have massive corporate debt. I can’t even fathom. Pension funds are underfunded at the top of a bubble. How do you get an underfunded pension when they’re all underfunded? The next brutal correction’s going to send them far into the basement that they’re going to break. They’re going to break right on schedule for the Boomers trying to retire. It’s going to be unpleasant. If the next recession comes and goes and it was garden variety, it’s wrong. I don’t know what to say, but we’re going to be in fetal position on the next one.
I’ve dedicated this season to the theme of capitalism. When you look at free market capitalism and what that philosophy entails and the principles, I would say a lot of economists have understood it for a while and then what it has become. Looking at how that word is used nowadays, there has never been a truly free market, capitalistic system. That’s where you have intervention particularly by central banks and how that does not allow for certain elements of capitalism, mainly failure to occur. It essentially creates unintended consequences and now it’s been creating unintended consequences for the better part of 100 years. If you look at where we’re at, I would say fundamentally when you look at a free market, we would have crashed. Banks would have been out of business. A lot of other businesses would have folded, but that would have been given rise to a more efficient monetary system potentially. We can’t know. It’s all speculation.
You look now at what you mentioned, the fundamentals there when you start to manipulate behavior, you’re essentially deferring the problem to the future. Who knows what that’s going to be? I look at some of the same concerns that you have, the unintended consequences are monstrous. Maybe talk about a few of the big ones. You mentioned pensions. You mentioned the corporate bond market which is massive. Maybe get into those few points which you talk about extensively in your review. Maybe talk about those couple of those main unintended consequences that a lot of this monetary theory has created.
I went completely back to the law on valuations. I presented approximately twenty different metrics of market valuations. They all point to the same story. That is regression to historical mean won’t be a 50% correction. I believe this time at 50% correction, things will break. I don’t know what. These are chaotic systems that you can’t predict. You can predict it, but it will be a mess though. What we have is the appearance of politics getting into the game. At least some of your readers have been paying attention to this modern monetary theory. I’ve tried to get my brain around it. It looks like total nonsense to me. In theory, it’s fine. In practice, it looks like a disaster. It emerged in the context of a budget deficit that’s running 7% or 8% a year. We know in the GDP is running at 2.5% over several years and the budget deficit is running at 7% or 8% that you’re in a death spiral unless you turn it around. The market trends 300% while the GDP ran 30% to the extent everyone I know thinks over time they track. That’s not a good situation. That’s the famous Buffett indicator.
What we’re going to see in the 2020 election, politicians always promise free stuff, but you will be breathless with the level of free stuff being offered in 2020. Goofballs like AOC, Alexandra Ocasio-Cortez pulling the Democrats so far left that they’re socialists. I would never have thought there’d be people who were devout socialists in competency for high office. The rallying cry for the Democrats is going to be, “Wall Street got theirs in ‘09. It’s time for us to get ours.” That is going to be a catastrophic spark to cause problems that are almost unimaginable. I don’t know how to go there. If readers are interested, search justice Democrats. Go on an online search. You’ll find out there’s a coup going on within the Democratic Party and its real. I’ve seen videos of Ocasio-Cortez talking about how she got put into power and stuff like that. It’s a strange thing, the new guard of super liberals, super left wings. They are not trying to beat the Republicans. They’re trying to beat the Democrats. There’s a whole bunch of them. This is the real stuff. I wouldn’t have believed it but the first time I saw a presentation of it, there were videos attached showing people talking about it from the past.
What’s happening is there’s a powerful group who’s attempting to find Democrats in districts for which Republicans will never win. There are plenty of those which the people in the district are not happy with their representatives. They’re trying to knock the Democrats out at the primary. Ocasio-Cortez, AOC, is the de facto spokesperson for the Democratic Party. She’s got the microphone. It’s open mic night. She got elected with 15,000 votes in the primary. That’s where she got elected in the primary because she wasn’t going to lose the election. She’s going to lose the primary if she could. This Omar woman, I can’t remember her whole name. There’s about four for these freshman Democrats. This is the surreal part that people have to do a little deep diving. They were recruited by a casting call. They literally put out a call, Ocasio-Cortez said her brothers submitted her name and somehow it’s like they’re putting together a boy band or something. They’re putting together the Bangles and the plan is to start knocking off Democrats. I was wondering why Ocasio-Cortez was hammering the Democrats. She’s done some talks about that because she’s not against the Republicans. She is against the Democrats. This political move has massive implications for free-market economics.
It’s the first that I’ve heard of some of the points that you’re talking about. I look at what has essentially been a huge influx of capital, which I would say created the big bull run from ‘09 until even late 2018. It makes sense that you have a lot of economists at the helm there. You have Wall Street, which for better or for worse, they know how to manage money, they know how to make money and they understand the implications of losing money. You’re essentially saying that now, the influx isn’t going to go into the hands of Wall Street. It’s going to go into the hands of those that don’t understand even the fundamentals of things.
Economy: When you start to manipulate behavior, you’re essentially just deferring the problem to the future.
My tax guy told me I’m going to pay 10,000 more in taxes this year because of the new tax laws. I didn’t see this coming. Maybe I’m unique. I’ve got an expensive house, got big real estate. If that’s true, April 15th is not going to deliver checks to people. All of a sudden there’s going to be a completely unexpected slowdown. That’s not going to help. We mentioned that all the time, student debt’s destroying a generation. Corporate debt’s nuts, corporate debt’s in a massive bubble. If you start toppling corporate debt structures, that goes straight to the economy.
One of the stats in your report that surprised me was the majority of the Russell 2000 was in junk status.
Something like 50% of the debt. It’s even worse then. 50% of the debt in the S&P is right above junk. When you swept the junk, you set up triggers all over the credit markets because there’s plenty of holders that did by statute, by legality which can’t hold junk. Electric’s a piece of garbage. It’s gone around the drain. Deutsche Bank’s going around the drain. There are a lot of companies that are not bringing enough revenue to pay their debt service.
Everything in essence intertwined and connected even other countries. Whatever is going to be that trigger that starts to release the dominos, who knows? Pensions are catastrophic because of the interest that they’re using as part of their actuarial models, which are not realistic. You add the unfunded liabilities. It’s been surprising to me because we’re in Salt Lake. Goldman Sachs’ biggest office in the world is in Salt Lake. You also have a relatively high percentage of startups getting to certain capitalization levels, but they don’t make any money. They operate based on being able to receive different rounds of funding. You look at how business is being created these days. We have to operate on a profit and I have had developers poached for 40%, 50% more than I was paying them.
I can’t afford that because other companies get funding. They bid up the prices of labor. You see signals everywhere. I tended to be in your camp back in ’09 or 2010. I didn’t see what was coming. I look at, “Is there something else on the horizon that we don’t see coming?” It’s the technological innovations that could potentially impact efficiencies and prices in a deflationary manner. I look at what you’ve gone through and that’s why the 160 pages is incredible research. It’s not stating just talking points, but also the actual proof behind it. I definitely recommend anyone who’s reading this who has some level of insight to check out David’s 2018 report definitely. Looking at these concerns that you brought to the table, I haven’t necessarily looked at the impact of Justice Democrats.
Justice Democrats are political. You’ll find articles about this movement. Who knows what they’ll do? That’s why these risks have appeared, but something like 65% of the population is signing off on the ideas of socialism. Back in the ‘20s and ‘30s, society had got through this unbelievable industrial revolution. Society was trying to figure out how an industrial world should be organized. There were central planner types. These were the guys who were at risk of being called Trotsky types. At the time, it was a credible idea that you needed good central control of things in this world that we had entered. There are the free market guys who said, “No, free market capitalism is the way to go.”
One can make the argument that that FDR was about a big compromise where the free market guys basically said, “Let us do our thing and we’ll put safety nets underneath you.” You’d get welfare state beginning. It’s the reason why society does protect weak people at some level. The welfare may be viewed as pejorative, but it gets out of control. It’s not a bad idea. We’re entering a period where we’re going to be looking ahead to a new grand compromise because somehow capitalism hasn’t done itself a service. I’ve been fighting about share buybacks and how corrosive they are and stuff like that. I’ve concluded people don’t even understand what they do and don’t do. The most fundamental level of what a share buyback is, people don’t understand.
Share buyback was illegal, but Glass-Steagall came into place after the Great Depression. It’s down as well. What I’ve discovered in the months I’ve been doing this theme is we’ve never had capitalism. There are capitalistic ideas and principles, but there’s never been a system because the corporate buyback isn’t capitalism. It might be, but at the same time, it should presuppose that every other aspect of the economy is a free market, which is not. Interest rates were manipulated which allowed for the corporate world to capitalize on low-interest rates and finance buybacks. It doesn’t necessarily create productivity in the company. It keeps their valuations at the same level or higher.
One of the ways to look at it is if you have an economy that’s based on goods and services, then all boats rise. This is an economy that develops new ways to do things and people’s boats rise at different rates, but all boats rise. We brought prosperity to ourselves by being fairly free market-oriented. The monetary policy has turned our economy from one of providing goods and services to one of moving money. We turn on CNBC, you don’t hear about capitalism; you hear about finance. As the economy morphs from goods and services to finance, you morph to a zero-sum game economy because no one’s making any. You say, “Yes sir.” What are the biggies? Is Netflix the replacement for US Steel? Is Amazon even the replacement for Standard Oil? Is General Electric being replaced by Facebook? These are stupid ideas.
Now, as the economy becomes about moving money, not goods and services, the little guy’s getting killed. That’s the wealth inequality problem. We will solve the problem not by finding better ways to distribute wealth, we’re going to solve it. I’m not saying it’s a solution is what we’re going to do. We’re going to try to redistribute wealth and redistributing wealth doesn’t work well. An efficient economy has a way of distributing wealth such that it’s fair. It’s not necessarily benign, but it’s fair. The workers get their share. They’re not as skilled as maybe then the upper guys who spent years in college and doing smart things, but they get their share. By pricing capital cheaply, they basically priced labor out of the equation.
Now, it’s cheaper for McDonald’s to get robots than to hire people. I am a little worried that change is always good. People worried about what we are going to do with a buggy whip maker, with cars. They’ll find a way. We’ll figure that out. Change can also be quick that it causes problems. If you add hot water to an ice cube, it cracks. If you’ll let it warm, it slowly melts. Things adjust. If you get too far from equilibrium, you get avalanches, earthquakes and explosions. These are big displacements from equilibrium who are turning the equilibrium.
What’s the central mechanism for that balance? What should it be?
First and foremost, the missed opportunity is for the Fed to quit worrying about recessions and let the downturns go. Let the downturns keep shaking out the losers and leaving room for the winners. When I was a kid, my dad was a contractor. He worked in one area and he went into cement pumping. It was this big monster truck that pumped up seven floors. I said, “Why did you go into cement pumping?” He said, “You mean besides I can make money?” I said, “Why that one?” This must have been 1970 or something. He said, “It’s because the truck costs $350,000,” which back then was a pot of money. He says, “I can compete with any other contractor who has the capital to buy that truck. We can both be on the playing fields at the same time.” He says, “What I can’t compete with are wildcatters who come in, undercut my prices and put us both out of business simultaneously.” Making capital precious keeps the meatballs out of the game. It keeps shaking out the losers and keeps the winners. It keeps the honest businessmen, the efficient businessmen in the game. Right now, we’ve got all these businesses that would not exist if we weren’t giving them credit and that is a problem.
That’s also what they consider as the solution where a lot of these technologies are ultimately to make life cheaper, make life better, make life more efficient and solve the world’s electricity issues and food issues. It’s both sides of the argument. What I’m saying is what’s in the middle balancing it all out? Like you said about water, if you go too cold, something happens. If you go too warm, something happens. Who is there dialing the temperature?
It’s the rate of change. Every once in a while, you have a small earthquake. You never get them anymore. If you go for 100 years in California without a serious earthquake, you’re about to get your rear kicked. This is where I blamed the Fed. They kept trying to avoid the corrective measures that would have kept it from getting too far from equilibrium. You asked me how I got into this. The field I’m in chemistry turns out to be complicated. Few people want to go near it. I was told that I couldn’t get funded and things like that. All sorts of contrarian things drove me into this field. What I discovered is absolutely everything that people thought they knew it was wrong, almost to the letter was wrong. We’ve gone through many projects after projects. Not only were the answers to the questions wrong, but the questions themselves were also wrong.
For 35 years, this has been my life. What it has taught me is experts can be dead wrong. I have a few superpowers, none of which you’d normally think of me. I’m not that smart. I have the ability to figure out what I don’t have to do and not doing it. That’s a superpower. The other thing I have the ability to do is to look at a bunch of experts who all tell me something and say, you’re full of crap. Few people have arrogance or the ability to resist the tractor beam, but I can look at a dozen central bankers who say, “This is what we should do,” and I go, “I don’t think so.” That’s a special crazy. I’m supposed to debate one of the vice presidents of one of the federal reserves. That’s a special crazy. It’s scheduled now I’m told on a podcast.
Is it one of the board members?
It’s a guy in St. Louis and it’ll be on Twitter, I guarantee you. It probably will be less than a debate. We’re going to talk about modern monetary theory. He invited himself to my podcast, curiously enough. He chimed in and said, “What about both of us?” At first, I don’t think he knew who he was. I said, “He’s the vice president; you got to say yes to this one.” We’re going to get on and discuss it. He entertains the idea of the modern monetary theory, which in practice is preposterous. I can explain it in theory, but I can’t explain it in practice. He’s an open-minded guy. I don’t think we’re going to clash. I also know that I can’t let it clash because it’s not fair to him. I could say, “Why did you instead do this?” In public he can’t respond to certain questions. I can say, “Isn’t Greenspan an idiot?” What is he going to say? I am going to have to be aware of the fact that I have to approach this differently.
Going back to like my original question, now I know we’re a lot of your philosophy has come from. You have stated theories. Human beings all have that element of fallibility where we form certain opinions, but it’s based on certain amounts of information, but not all information. I don’t know if anyone has all information, but you look at the world in that capacity and you realize that there’s a tremendous amount of trust for people that are considered so-called experts. You put yourself in a political role. You put yourself as part of the Federal Reserve. Suddenly the layers of power create this God-like mentality, but it also creates this incredible fear of being wrong.
That’s where a lot of the issues start because there could be positive results because of current monetary theory and what they’re trying to do. At the same time, they never addressed the consequences and there’s always going to be consequences. I can’t wait for that debate, but what a platform to try to have a discussion with an insider at the Federal Reserve on MMT, which is excellent. At the same time, it’s a modern monetary theory. Calling the question does monetary theory in general and what it does because right now it doesn’t make sense. Maybe you can explain this briefly, but from what I understand, the difference is it’s a creation of money that’s not monetized. There’s no underlying asset. If the Fed prints money, they buy a mortgage or they buy a bond or they buy a treasury. They buy something. This buys nothing.
The modern monetary theory has one of the premises that deficits don’t matter.
There is no debt. You’re never going to have debt. You could print your way out of a deficit.
Economy: At the time, it was a credible idea that you needed good central control of things in this world that we had entered. Then there’s the free market guys who said free market capitalism is the way to go.
We talked about this many years ago. It is actually about 100 years old. We said, “In theory, the government doesn’t have to tax us at all. They can spend the money created with help from the Central Bank.” What happens is the cost of government shows up as inflation and it erodes your spending power as a tax. There are a lot of problems with this, one of which is that inflation is called a hidden tax. I want the taxes to be in plain sight, so we understand what it is we’re being taxed. The real problem is they make this assertion that taxes are to control the money supply. The claim they make is you spend the money and then you tax to pull that money back. It becomes a chicken and the egg if you’re not careful. Some say, “We’re already doing this, why do you care?” It is also this dismissal of government spending is rampant in that community.
Their idea to curb inflation is up to Congress to curb spending. When was the last time you saw them do that? That in practice goes nuts. When was the last time a guy stood up and said, “We’re going to have an inflation problem? As your senator, I’m proposing a bill that will cut jobs.” That’s not going to happen. It’s a stupid idea. Once in a while, they say something stupendously stupid. For a while it can sound rational. All of sudden they say something that’s mind-bogglingly stupid. I go, “You guys are making it up now.” It’s getting a lot of negative press. In theory, the tax against Larry Summers and Frogman even of all people are fighting it. They’ve shown up at the moment when our deficits look unsustainable. Along comes this theory that’s 100 years old that says, “Deficits don’t matter. Don’t worry about it.”
It’s not a coincidence. This has been fascinating. I wanted to see what your insight is and your philosophy around how you view you view things. Hopefully, the audience got something out of it. In the past, we’ve talked extensively about a lot of the issues we’ve briefly touched on. These are issues that are results. Those results have a cause. The cause is where to start, not trying to change the results by themselves. I look at what the Federal Reserve has done since 1913 and what’s happened since then. You can see a lot of positive things, but also from a fundamental standpoint, you can see a lot of negative things. We’re at unprecedented levels when it comes to the signals of our markets and the levels we’re at whether it’s a debt or otherwise. It’s scary at the same time. It’s always that question in the back of my mind, “What am I not seeing? What do I don’t know that I don’t know?” That’s always been that X variable that’s part of the equation that few people can ever understand until it happens.
When Powell showed up, people who thought they knew Powell as chairman of the FOMC. People said he’s different. He doesn’t care about the markets. He’ll do what’s right and the markets are damned. If they have to correct, they have to correct. Two events occurred that were mind-boggling to the point that those who are likeminded were breathless. It was December 24th when the markets had corrected 16% after a 300% run. They corrected 16% and all of a sudden secretary of the Treasury Mnuchin who’s most famous for his wife. The president’s working group on capital and we go, “That’s not even a blip? What are we doing?”
It’s possible something was going on in the credit markets under the surface. I picked up little murmurs about that. In January, Powell found himself on stage with Yellen and Bernanke. The huge mistake he made was to be on that stage because you do not speak as the Fed jury. You don’t speak extemporaneously onstage. He monitored the idea that the Fed was ready to support the markets. All of a sudden, that was the birth of the Fed, what they call it. The idea the Fed will not let the markets drop. Those two events created this massive January rally that we’ve witnessed. What it did is it showed a lot of serious players that the Fed is weak.
They capitulate. I heard the same thing as far as Powell is concerned but imagine the pressure he’s under. That’s where everybody caves at a certain degree of pressure?
Imagine if the generals in World War II couldn’t imagine dropping guys on Omaha beach. How would that work? If you’re in that position, you can’t be weak. If you can’t make the tough calls, you don’t get to be there, but he is there. He blew it and he looks real. He did a 60 Minutes episode.
I didn’t know he was the one with Yellen and Bernanke. I knew about the 60 Minutes one.
He wasn’t explicitly lying, but it was a massive dose of it. It was a massive dose of highly-engineered statements. When they asked him about wealth inequality, whichever one I know says, “You got the point at the Fed on that.” That’s the whole financing the economy in spades. When they mentioned that to him, he said, “That’s not under our jurisdiction,” which is technically not a lie, but he caused it.
That’s a big thing. That’s one thing that’s scary. At the top levels, there’s little velocity. At the lower levels, that’s where all the velocity is. That’s the main catalyst for higher inflation, but it’s kept at bay because it’s at high levels. It’s interesting Powell’s involvement and what the cause of that is. In the end, if they’re the temperature creator that we’ve been referring to, it’s one of those things where the markets have rebounded because that was not what they were priced for at the end of 2018.
The indicators say we’re close to a recession. We were close in 2015. I said, “A recession is coming.” People laughed. By the end of the year, you can see we were flittering around 0%.
On the yield curve, you are briefly inverted too. There are lots of lots of signs. I’m assuming you don’t sit down and take December off and write 160 pages about things. What are you using during the year to keep a pulse on what’s going on? What feeds are you following, what podcasts? What newsletters? What are you typically paying attention to?
Twitter is a gold mine. It’s big mind sync. If you can manage your Twitter feed better than me, you’re a better person. I happen to like Zero Hedge. You got to have a filter. Zero Hedge is great. I’ve had people tell me I’m an idiot for following Zero Hedge. 700 of my followers follow Zero Hedge. Everyone I know who I think is a big-brained Wall Street genius type, they all follow Zero Hedge. I would say Zero Hedge is indispensable. You can’t believe everything because they get stuff wrong, but they’re way ahead of people. Between those two, the stuff I can pick up on, the fly off Twitter is exciting.
Who are you following on Twitter specifically?
I’ve got a list of about 170 people who are on a list. I’ve got a much larger follower list, but I use my cold list and the guys I watch all the time. I watch it for Hussmann, Felder. My favorite person is Rudy Havenstein. He is a hoot-and-a-half. He’s the comic of Twitter. There are certain journalists I keep track of. Lisa Abramovich is good. Kate Long knows the bond market. Chris Whalen, there’s people coming across the feed all the time. Josh Crumb, Luke Roman. These are all people who are the junkies of financial Twitter, everyone knows their names. We’re all following the same people. They’re all entertaining guys. They don’t all agree, but they’re out there battling and posting. If you’re on Twitter and you’re there to share cooking recipes, it’s a colossal waste of time. I bang on the politics a lot.
When the Mueller report got summarized, I was having a field day for about a day where I was pointing out that 500,000 articles were written on Russian collusion, that is the number in a couple of years. There were people who are completely and utterly clueless and the media is completely and utterly clueless. Who knows about obstruction? The fact of the matter is they blew it. The Democrats blew it. They played their cuts. They believe their own press. It was hysterical to me. It’s like the Covington MAGA hat boy, they completely screwed that up. Every couple of months, they completely screw up a story. You got on Twitter and you’ll see their stupid stuff and you go, “I can’t believe those journalists are missing that.” It’s like a huge cocktail party where everyone’s drunk as a pig in Wall Street.
When’s the debate? What’s the date and time for that?
It’s sometime in April.
Do you have nothing definitive?
If you pay attention to my feed, I can guarantee you it’s going to be posted a few times. I don’t think it would be that exciting. It’d be archaic. I’m playing the straight man through this other guy. I don’t want to name because it hasn’t happened yet, but I think I’ll be poking. He’ll be explaining, I’ll be going, “What about this?” That’ll likely be the tenor. There’s the podcast himself. I like the guy.
Who’s the podcaster? Are you not allowed to say that either?
It’s Mac Abraham. We’ll see what happens. It shouldn’t be combative in my opinion. It should be a nice discussion.
Economy: There’s a tremendous amount of trust for people who are considered so-called experts.
When you have that type of contention, that never leads to a productive dialogue. I’m excited for you to do that. That should be an incredible experience. We will let our audience know that they can chime in or at least listen in. David, this has been an awesome discussion. Thanks for taking the time. Is the best way for people to follow you Twitter or are there other ways?
If you search my name, the top links are no longer chemistry. @DavidBCollum is my Twitter feed. You can find me there. Anyone who passes the minimum IQ test could find me because I’m in the Department of Chemistry at Cornell. If armed with Google, that is not enough information. You need help. I get emails from people, some rather stunning ones sometimes where I go, “I didn’t expect that one.” I am the Paris Hilton of finance now.
I thoroughly enjoyed reading through your material. Thank you for the research that you do. I know it’s making a difference. Hopefully, with the combined efforts of others that when things start to get a little haywire, there’s enough influence to make sure the decision at the bottom is a good one.
I’ve never been on Twitter through a downturn. That’s going to be fun because my Twitter experience has all been during this big tenure.
You have been bearing one of the biggest runs.
He’s calling you an idiot in public. I’ve been chastised. One guy said semi-complimentary. He said, “People listen to you. You should be more careful.” I said, “If they’re listening to me, they’re in trouble already.”
There are a lot of freedom fighters out there that understand a lot of fundamental principles and basics and see the nonsense in what’s going on. I see why. Typically, that theory isn’t valued. Correction ensues because hindsight is one of the best teachers.
I’ll throw out a lab pitch for your readers. Of the many things I’ve focused on and said, “That doesn’t make sense.” The Roth IRA is a bad idea and is relative to a regular IRA. It has got a mathematical hole in it that’s a monster. I’m looking at this and I figured out and then I go, “Why haven’t people figured this out?” I don’t know.
What is the hole specifically?
The hole is if you get taxed the same at the beginning or at the end, which is the Roth versus the regular. The results are the same. It’s 4th-grade math. Timing’s irrelevant. You are taxed 20% in front of 20% at the end. You’re getting to the penny the same amount. The problem is the Roth IRA, you voluntarily put in money, pay the tax on money at the marginal tax rate. You’re taking the top sliver off like a 35% tax rate for some people. You’re voluntarily paying the high tax rate, whereas in the regular, when you pull it out it comes out over the effective tax rate. It comes out over all the brackets. The effective tax rate uses around 12% to 15% lower.
It could be higher but that’s about no one knows. All I know is you’re giving up 12% to 15% upfront based on that logic. I want to ask him, “Why do they market the Roth?” He said, “You’re selling Corvettes, you sell the red one.”
It’s the bet of what you pay now versus the bet of what you pay in the future. The math gets the same rate. You’re paying the same. You can make a bet of not paying now, but then if taxes go up in the future, AOC says 70%.
Against the 70% but you’re still paying the effective tax rate at the end.
How do they calculate the effective tax rate in that regard?
There are actually calculators online that do it.
You put all the margins and it creates the effect.
It comes out starting at 0% and then 5% and goes up to 35%. No one’s effective tax rate is ever higher than their marginal by definition. They would have to drive the tax rate so high that the effective tax rate would soar and that’s almost impossible.
Change the tax code to tax withdrawals.
Even when the margin range was up 80%, 90%. Back in the early ‘60s, the effective rate was way lower.
There are trillions and trillions of dollars in qualified money. It comes down to at what rate you pull it out in the future. That’s the determining factor. David, thanks. This has been insightful. I appreciate your work. We’ll make sure that we get the word out, increase your listeners a little bit. Hopefully, as things start to manifest and a lot of the stuff that’s been deferred for a good part several years, that there’s enough influence out there. The culprits or those that created the whole thing are held accountable.
The system will break and then they’ll blame something else.
Economy: The fact of the matter is the Democrats blew it. They played their cuts. They believe their own press that itches.
Those guys will be long retired. Alan Greenspan, he’s on his last leg.
His reputation as has dropped. His legacy finally got uncovered.
Have you seen that new documentary? It’s relative to the bailouts and what’s occurred since then as far as what Greenspan’s reputation. It also has some interviews with Bernanke too supposedly. I can’t remember the name. Where we’re at as far as social media, as far as information and how quickly it transfers, accountability is a lot more probable these days, especially at those levels.
If the next recession we get through it without a big deal, then I would say that I called her on. I’d be doing me a call if we get through another one.
It’s one of those things where it’s an artificial manipulation. If it was a free market, there’s going to be a correction. There has to be. If you have a manipulation, then it papers over the problem.
You’re out of manipulation. At some point, you get to the end of the rope and the next one is going to do it. Has it started? I’m on record saying I think it started in December.
With that little correction?
When the NBER announces when the recession started, I’m on record saying, “I think it started in December.” Watching auto sales and stuff like that. When they start, they start ever in perceivably. You don’t notice it. There was a poll done in 1991. They asked 51 economists whether there would be a recession that year and all 51 said no. Not only there was there but when the poll was done we were in it. That shows you how hard it is to detect when it started. When did the avalanche start? You noticed when it finished.
There are many fundamental issues and if it goes, it’s going to go. The talks by Howard Marks are interesting and I’m not sure if you’ve read his book. He hits upon the emotional state of things, the feeling state of things collectively. There’s this fundamental variable, fear, greed or passiveness and what that has to do with market cycles. The book is Mastering the Market Cycle. That’s interesting because Twitter is probably given you a good pulse of what the sentiment is out there.
It is bi-modal. You got the Yahoo saying everything’s wonderful. You got the bear saying, “I think it started.”
I’m excited to see what happens. For those that are in the know, for those that are prepared to make certain decisions, it’s going to be a great opportunity. There’s going to be a lot of people that pay a dear price for it.
David Collum is the Betty R. Miller Professor of Chemistry at Cornell University and is a regular and valued presence on the internet commenting on the financial system and the predicaments of our time. David has contributed many Year in Review articles and podcasts to the Peak Prosperity community, all of which are available online at www.peakprosperity.com.
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“America’s Money Answers Man” and a nationally-recognized expert on personal finance, Jordan Goodman talks about all things finance—from the personal aspects to the market and economy. He gives some great insights about how inflation is affecting not only the US but the rest of the world as well. He urges everyone to invest instead of keeping their money in a bank account where it’s losing value. Teaching some sustainable manners to grow wealth, he taps into the topic of crowd space fund and housing while sharing the benefits of paying the mortgage right. Learn the economics that have changed the tax laws, the six financial personalities, and the future of lending. All of this and more as he also adds a personal touch, sharing his mentors and financial philosophy and his “The Money Answers Show”.
Listen to the podcast here:
Jordan Goodman: Finance, The Economy, Markets, And Growing Wealth
Ayn Rand, founder of the philosophy of objectivism and author of best-selling novels like Atlas Shrugged and The Fountainheadclaims that humankind’s greatest virtue is rationality, our ability to think. It’s the primary variable that sets us apart from the other animals in the animal kingdom. As challenges and inefficiencies of the passive manifested, we rise up and figure it out. The world has always had its challenges. The list is endless in our day and age, have faith that someone is working on them. My question to you is, “What are you working on? What are you trying to solve?” As you may have concluded, that is the topic of our show today, solutions and answers to challenges. My guest is America’s Money Answers Man. Welcome to The Wealth Standard Podcast. This is episode twelve of season three and my guest is Jordan Goodman.
Jordan, thank you so much for spending some time with me. I’m excited to have you on. Welcome.
It’s great to be with you, Patrick. I appreciate it.
You have one of the most impressive resumerésumés in relation to personal finance, investing and so forth. It spanned in multiple decades, multiple market corrections and rebounds. I’m assuming you’ve probably heard and seen it all. Why don’t you maybe give the audience an idea of your background, how you got this personal finance and investing bug and how you’ve kept the bug going? Because going through 1987, then dot-com and then 2008 and 2009, what was the bug initially and what keeps you going?
I went to Amherst College undergraduate and the Columbia School of Journalism, where I majored in economic reporting there. Soon after that, I went to Money Magazine, where I was for eighteen years. That was on the glorious ‘80s. It was all about mutual funds, everybody was trying to make lots of money there. I saw the boom. I saw the bust. The night of the 1987 crash, I was on Nightline with Ted Koppel saying, “We’re not going into depression tomorrow.” I said, “This is a market event, not an economic event.” Then I saw the boom again in the ‘90s and the dot-com crash and the boom again in the mid-2000s and then the 2008 crash and now in the last few years, we’ve had an incredible boom as well. My mission is to help people navigate these very difficult waters in the investment world, but everything else as well. I help people with mortgages, credit card debt, insurance and all kinds of things. I’ve been doing that for about 40 years. I’ve gone through a lot of different cycles, up and down. I love to help people and to answer their questions and do podcasts like this. I’ve got my own show called The Money Answers Show.” I’m on lots of regular radio shows all the time. It’s been my mission and passion from the beginning.
As I mentioned, you’ve probably heard of every product, strategy and idea in the books. How have you come to conclusions personally? Especially the conclusions you talk about that are viable. They have a good degree of certainty and it would help to sustain your level of credibility.
When I was at Money magazine, there are all kinds of things being pushed at us all the time. We have to get through these things and see what works and what doesn’t. There are things that do work. A lot of people are so overwhelmed by so many choices that they end up doing nothing. That’s not going to get your head. If you keep your money in a savings account, checking account or CDs, you pretty much earn zero. That’s not keeping you up with the cost of living. Your purchasing power is being lost silently by having your money earn nothing. A lot of people don’t realize that. Officially, inflation is maybe 2%. In the real world, it’s much higher than that. You see what’s happening to tuitions. They are going up 6% to 7%. Healthcare costs are going up dramatically. Healthcare premiums are going up dramatically. Property taxes are going up. Now, the after-tax cost of housing is going up because the tax deduction has been limited to $10,000 for both property taxes and state income taxes. On high tax states, the after-tax cost of housing is soaring dramatically. Gasoline oil is up. There are a lot more inflation out here than most people are officially recognized. Therefore, you have to have your money earning something to be able to at least keep your purchasing power if not gain some of that.
Isn’t it interesting the conversation around inflation can be a show by itself because you have a lot of things that are going down in price, whether it’s TVs or automobiles and then you have computers. Then you have things that are offsetting that and typically, they’re the things most controlled and influenced by government.
The things you talked about, you buy them once every five years or every ten years, a computer or a car, but your everyday things like tuition or gasoline or food or healthcare, those are the ones going up. There is a lot more inflation in the system than people talk about.
My wife showed me something. She’s from Mexico originally. They are in the process of their elections and the prices have more than doubled in the last six years. We often don’t pay attention to other markets, but inflation is rampant everywhere, not just the US.
In the emerging markets like Mexico. In Venezuela, money is completely worthless. In Turkey, South Africa and Argentina, their currencies have plummeted against the US dollar, which means that everything is more expensive for them. Inflation is way up there in all those emerging countries and it’s painful because their dollars, their debt is denominated in dollars. As the dollar has been rising, it’s getting more and more expensive for them. There is much more inflation in the world than the official numbers will tell you.
Your point was to invest instead of keeping your money in a bank account where it’s losing value. Figure out ways to grow that wealth, but do it in a sustainable manner.
I’ll give an example. Something I’m involved in is called the Secured Real Estate Fund. The website for it is SecuredRealEstateFunds.com. It’s a way of getting an 8% yield over a one-year timeframe and the net asset value stays at $10 a share. It doesn’t go up or down. As interest rates have been rising, people are losing money in bonds. In something like this, as interest rates rise, it doesn’t affect you because it stays at $10 a share in net asset value. They lend money short-term to commercial real estate projects on the country. It’s a new concept, which is called crowdfunding. This is like a crowdfunding fund. The SEC started approving these things in 2016. It’s technically called a Regulation A-Plus Fund. What it means is the average person can get into something, in this case a minimum $5,000. In the past, it would have been like $100 million for a big pension fund and they can get an 8% yield paid monthly. They can either take it or reinvest it inside an IRA, outside an IRA. They have a good track record. One of the things that’s unusual about it is they get a profit-sharing distribution as well. The projects that they fund when the projects sell, the developer shares some of the profit with the fund and gives 8% to the shareholder. In 2017, the actual return was 8.7%. So far this year, it’s been about 8.4%. There is a way without having the volatility of bonds, you can get an 8% yield as opposed to zero in the savings account or a checking account these days.
Maybe you can expand on some things that I try to talk about often when you come to an opportunity that’s worth sharing with your audience. I too have seen lots of opportunity in that crowd space fund. We had a good company on here a couple of years ago, Fundrise and they spoke at an online event that we did. They were in DC where some of the pioneers were getting that reggae done. They have a tremendous platform. I see tons of opportunity there, but looking at an idea. In this case, it’s secured real estate funds. It’s also getting a specific return and so forth. How do you about looking at an opportunity and realizing that an idea and a product is one thing, the execution is another? You have great ideas out there all the time, but the people behind it, the systems behind it, the business behind it jack it all up. How do you go about looking at an opportunity like that and determine, “This is a company that has history, has reliability. They have a mission. They’ve proven things historically.” How do you go about doing that?
You’ve got to look at the track record. In the case of the Secured Real Estate Funds, the fund managers who make the real estate decisions have been doing this for 30 years have a long track record before they ever did this specific plan fund. It’s $150 million in projects they’ve done. I’ve talked to him. He has an 1,100-point checklist before he’ll do a deal. He’s seen every mistake everybody has ever made and he makes sure they don’t make it again. They check out the underwriters of the project very carefully and make sure the project makes sense. They also hand the money out in draws. They don’t get to give them all the money upfront and say, “Come back in a year.” They say, “Put the foundation and we have to inspect it and then make the next one.” There’s a lot of safekeeping and also to diversify across the country both geographically and by different types and not putting it on one thing. They’ll some apartment buildings. They’ll do medical offices. They’ll do student housing. They’ll do assisted living. It’s diversified both geographically and by types. The Fundrise, my understanding of that it was like individual deals that you can do.
They have portfolios now too. They started out with individual deals and that’s where they got in the door with the SEC and they spent tremendous time and energy, but they were right on the corner in DC. They leveraged their parents’ big development company that’s been around forever. It started individually, but then got to the point where they were linking up with different markets and portfolios.
That makes sense. You want to do a diversified portfolio. If something goes wrong with a particular deal, it doesn’t hurt you. It’s part of a bigger portfolio, so that diversification makes sense. There are definitely options out there, but the point we’re making is you don’t have to be sitting there in the bank earning nothing while your cost of living is going up. Those are two examples that can hopefully help some of your folks.
Maybe go back to something I was curious about. As you’ve received probably tens of thousands or maybe millions of questions, what are the more common ones that you get? That is agnostic to the market or the period of time whether it was ‘80s, ‘90s, 2000s or now?
Master Your Debt: Slash Your Monthly Payments and Become Debt Free
Getting out of debt, that’s a big one. We are in a debt bubble right now. The big four, mortgages, credit cards, student loans and car loan debt are all soaring dramatically. People don’t know how to get out of debt. That’s an area that I’ve specialized in. The book I did is called Master Your Debt where I go into all this in some detail. That’s an area where I could help people and I’ll start off with mortgages, which is the biggest debt that people have. They don’t realize that if they do it right, they can pay off a 30-year mortgage in about five to seven years or so on their existing level of income. This is generically called mortgage equity optimization. It’s transformative to people. What a difference in their life? You have a couple who is 35, whose mortgage is paid off by 40 instead of 65. Isn’t that going to be so much better for them? Even more so now, with the new tax law means that there are limitations on mortgages. You don’t get that deduction you get in the past. You want to pay those mortgages off as fast as you possibly can. I’ll do a brief explainer of how mortgage equity optimization works. It’s not something most people have heard about.
What you do with a traditional system, you have a 30-year mortgage. You make the same payment for 30 years and you keep your money in the checking account earning zero. The system works well for the banks. You give them your money for free and you pay them the terms of interest with all the interest being upfront loaded in the first ten to fifteen years. You make very little progress on the principal. That’s the existing system. The mortgage optimization system reverses everything. Your money is working for you instead of the bank. You use a home equity line of credit, HELOC, is what they’re called, which is a liquid line against your house. You put money in, you can take it out whenever you like. You keep your income in the HELOC pushing down your principal every day. HELOCs are based on what’s called average daily balance, how much do owe now?
Let’s say you had a $50,000 HELOC, you’ve got a paycheck for a $1,000. You put it in, you now owe $49,000 instead of $50,000. You’re paying interest on a lower and lower balance all the time. You pay your bills out of the HELOC and the point is your money every day is pushing that principal down. You combine the HELOC with the first mortgage, what I call the blended strategy and you pay the first off. Let me do a very oversimplified example of how this might work. Let’s say you have a $300,000 home and you had a first mortgage of $200,000 on it. You would go say a 4% rate or something like that. You would go get a HELOC for maybe $50,000 would be an example. You open it. It’s free and clear. You write a check on the HELOC $50,000 towards the first. Now, instead of owing $200,000 in the first, you owe $150,000 on the first and $50,000 on the HELOC. You get your money in there. You pay that HELOC off over a year or so, $50,000 down to zero. You then do it again. Instead of $150,000, you owe a $100,000. You pay it off. Do it twice more and after four years, your first is paid off. You pay off the HELOC. In the fifth year, you are now mortgage free.
That’s a dramatic oversimplification, but that’s the idea is every day your money is working for you instead of the bank. There’s a free website. You can model it for yourself to see if this would be appropriate for you, which is TruthInEquity.com. You go on there and they do what’s called a personal profile. You put in your income, your expenses, your home value and your mortgage. It’s going to say, “Based on what you’re doing now, it’s going to take you 28.5 years to pay off your mortgage. Based on the numbers you gave us, it’s going to be 5.3 years,” or whatever comes out to be. Then they show you step-by-step how to do it. There are three things you need to make that work. You’ve got to have a positive cashflow, more money coming in than going out. You’ve got to have equity in your house and you’ve got to have a decent credit score of 680 or higher to qualify for the HELOC. I bet the vast majority of your people are going to have those three things. They can save tens of thousands of dollars in needless interest and 25 years or so off their mortgage. That’s a very powerful strategy. Probably a lot of people have not heard about it because the banks are certainly not going to tell you about that one.
Banks offer product, rarely do they offer a strategy. If you look at the primary expense people have in life and it’s their housing. It’s interesting especially now because there are some ways in which you can analyze whether a home is worth buying or is it better renting. It’s all based on the circumstance. Right now in most markets based on finding a place to live, it’s arguably less expensive to rent than to buy. When you buy, you have to come up with the down payment, which means that money can’t be invested, so you have a cost there. You also have maintenance and upkeep, insurance and taxes that you’re responsible for. Sometimes those payments can end up being more than what a rent payment would be. It’s interesting where people look at their housing. Housing to me, you want to optimize the economics of it, but economics shouldn’t always determine or be the leading influence. Because I did that and I got my wife mad at me for several years. I did it twice. The idea is like there’s an emotional decision and there’s a financial decision. An emotional decision often drives that, but when it comes to the economics, that’s still vital. The way in which you acquire is important, but the way in which you manage your mortgage and how you manage your cashflow is also vital.
The economics have changed because of the tax law particularly in the higher tax states. Not always but in many cases, renting does make sense particularly if you want to move, which so many people go from one job to another. You don’t want to be tied down to a particular place and have to sell your house into a bad market. A lot of people get stuck that way. There are some people in 2008, 2009 that have been able to sell in bad market. There are good markets, Seattle, San Francisco, Austin and other places where the market is doing well. The prices are so high if you sell and you have no place to go. Housing is a big issue. A lot of people don’t deal with it correctly.
I want to go back to a few things. Your housing that’s a strategy. Money in the bank is another strategy. Debt is something to be to be conscious of. Talk about mindset when it comes to money and finance as opposed to strategy because I’ve seen a lot of the things that you’re talking about right now. I’ve heard about it before and seen certain programs. I’ve seen some succeed and some fail, but it’s rarely the results of the actual product or service. It’s typically the results of the actual person executing properly. Talk about how you address those concerns and questions that people have or maybe they don’t even know or they don’t even recognize that they’re the problem. How do you typically approach that idea or that situation?
Master Your Money Type: Using Your Financial Personality to Create a Life of Wealth and Freedom
I did a whole book on this topic called Master Your Money Type, where I divide people into six financial personalities. Understanding what your personality is going to help you make the right decision or at least understand the decision you’re making. I’m not going to go into all the details, but the six types are strivers, high rollers, ostriches, squirrels, coasters and debt desperados. It came out of how your upbringing was or what your parents were. You might be the same or you might be the opposite of your parents. If our parents grew up in the depression, they’re going to be squirrels. They are going to be very fear-oriented, penny pinching, worried about everything and not wanting to take any risk. In general, the Baby Boomers have grown up in prosperity, so they tend to be coasters or high rollers even. That’s part of the mindset is to understand the way you look at money. When you’re dating somebody or going to marry them, understand what their money type is. You don’t have to be the same money type, but at least it can avoid a lot of conflict if you know where you’re coming from and the way you look at money.
Aside from your book, there are ways in which you can determine what that mindset is. If you’re happy with your finances, then there’s no real need to change your mindset. If you’re unhappy, if things are unhappy, if things are not working, what typically is the basis of shifting from maybe the ostrich to the striver or is money mindset static and you have to deal with that the rest of your life?
You’re going to have a predominant one based on your upbringing, but be the best you can, be the best squirrel you can be. If you’re going to be a squirrel, you don’t have to be an uber squirrel and get out of your risk tolerance a little bit. If you keep your money in the bank earning nothing, you may feel safe as a squirrel, but you’re losing purchasing power. Push the envelope maybe not in your normal level of comfort, so you can do better in these things. The debt desperado is too comfortable with getting into debt. You go to a casino in Las Vegas and there are ATM machines. People are taking money out of 18% to put up on the tables. It drives me crazy. That’s the desperado mentality. You’ve got to have a counterweight to your normal money type.
What are some books that you’ve read or mentors that you’ve had that have formed your original financial philosophy and then talk to us about how it’s evolved over the years and who you are influenced or pay attention to now to get an idea of where things are, what opportunities are and where things are going in the future?
The Truth About Your Future: The Money Guide You Need Now, Later, and Much Later
Peter Lynch was a very informative one back in the ‘70s and ‘80s and picking stocks of companies you know very well. He did so well with that. That was certainly of influence to them. I like Ric Edelman. He has a book out called The Truth About Your Future: The Money Guide You Need where he talks about all the new trends that are happening whether you like them or not. You can have them work for you or you can have them work against you. Robotics, cloud computing, 3D printing, artificial intelligence, biotechnology and there’s a whole bunch of different things. They are happening. You can get run over by them or you can have them work on your behalf. That’s been an influential thing. He has got an exchange traded fund called The Exponential Technologies Fund with the symbol is XT, which has about 200 companies that benefit from all those exponential technologies. That’s an example of how you can have it work for you because a lot of people don’t know these things are coming. Their jobs are going to be disappeared out of robotics or artificial intelligence. They don’t know what hit them. That’s an influence that has been very helpful.
What are some of the topics you’ve been discussing consistently on your show, The Money Answers Show?
Other ways of getting out of debt. We talked about paying the mortgage off faster. Some of the other ones, car loans. A lot of people have big car loans, bigger than they can afford. They don’t realize they can refinance those car loans to a much lower interest rates or change the maturity to a level that’s going to bring their car loans down. There’s a free website MyLoanGem.com. You go in there and put in how much you owe on the car, how many more months you have to go, what your monthly payment is and the interest rate. Then it gives you a little dial that you can choose what your payments are going to be. Basically, the interest rate or the maturity. Let’s say you’re paying $500 a month. In the next three years, you’re finding that too much to handle, so you moved it up to six years, maybe it goes down to $250. It makes it more affordable. The new thing now is that these car lenders are putting a device in your car, which can disable your car while you’re driving along the highway if you don’t make your payment. That’s given them the courage to make a lot of subprime car loans that in the past they wouldn’t have made. Now they disable the car. They know where GPS. They can send the repo man and take your car right away. That means a lot of people have gotten car loans that they wouldn’t have gotten in the past, particularly a subprime car loan. There’s a resource that can help you do better with your car loans instead of typically what you’re going to get from the dealer.
I want to ask about what you see as the future of lending and finance from a from a lending standpoint. I look at some of the trends especially in insurance where you have these startups that are placing sensors in phones or in cars that determine how fast you go, determine if you break hard, determine if you go over certain speed limits based on the area and that’s how they determine your insurance rates. Going into lending, subprime was hurt because of a number of factors both housing as well as cars. Looking at some of the technology and optimization in which they’re keeping people disciplined in making their payment, what are you seeing there? Because there are still business loans that I analyzed that people don’t know how to calculate what an interest rate is. They think they’re getting a good deal on a 20% business line of credit or a 15% car loan. What do you see as the future as far as lending is concerned, but also consumer awareness when it comes to knowing that they got a good deal on a car or a good deal on a loan or a credit card or whatever?
The Credit Card Act of 2010 supposedly made for more disclosure, so people know what they’re getting into. You’re paying a credit card and you pay the minimum amount, it will stay around in your statement it’s going to take you 32 years to pay it off at this APR. Hopefully, that’s made it a little bit better. Let’s talk about small business loans because I know you have some small business owners as part of your followers there. That’s an area where there are some good things going on and some bad things going on. I’m talking about the bad things first. There are what are called merchant cash advances, MCAs, which they take over your credit card receivables and they take fees out every day. The interest rates can be like 400%. They don’t call it an interest rate, they call it a fee. The last I heard was there’s about $600 billion worth of merchant cash advances out there. It’s the payday lending of small businesses.
They get on this treadmill and they can get cash in a day unsecured. Then they take fees and they need another loan to be able to pay off the past one. The same thing is happening to small businesses that was happening before with payday lending and consumers. That’s would be the bad way of doing small business lending. There is a better way. There are these clearing houses that will help small businesses get legitimate loans from new kinds of sources, not traditional banks. Hedge funds are willing to invest in small businesses. There’s a website that can help people, which is called CorporateLendingSolutions.com. At that site, they have accounts receivable financing, payroll financing and equipment financing. There are lots of different ways of getting financing and they will vet you as a business owner, as a potential borrower. Then present you to the place whether it be a hedge fund or some alternative organization. We can get decent interest rate 6,% 7%, 8% or a revolving lines of credit if you are decent business. That’s a website that can help people and I would avoid these merchant cash advances, which are killing a lot of small businesses.
People are not aware of it because they use factoring rates of 1% or 2%, but they don’t disclose timeframe and frequency in which that percent is charged.
There is a loophole in the Dodd-Frank law, the Consumer Financial Protection Bureau, the CFPB, has jurisdiction over consumers but not small businesses. That’s how these MCAs are getting away with murder as far as I’m concerned because CFPB doesn’t have jurisdiction over these MCAs.
Some car loan programs fall into that too because you see some very similar ways in which those are structured as you do with merchant lending.
On the positive side, I know you deal out with insurance, life insurance and so on. One thing a lot of people are not aware of, is being able to sell your life insurance policy into what’s called the life settlement market and get hundreds of thousands of dollars that otherwise you’re going to get nothing if you let the policy lapse. That’s as we talked about mortgage optimization, the bank will never tell you about that. In this case, the life insurance company will never tell you, you can sell your life insurance policy for potentially hundreds of thousand dollars.They would much rather you let it lapse. You pay them premiums for many years. You take whatever cash value is left and they’re off the hook. This is what’s called life settlements. A simple example, say you have a policy worth $1 million death benefit and say you’re 70. Maybe you’ve got a heart condition or some medical condition, you could potentially sell that $1 million policy for like 300,000 or something like that. You sell it to the hedge fund or various other institutions. They pay the premiums and when you die, they get the million. They’re going to get a big payoff, they just don’t know when. The older you are and the sicker you are, the more you’re going to get that policy. That can be enough to fund people’s retirements and make a huge difference in their lives that the insurance companies are never going to tell them about. There’s a website for that too, which is FundingLife.com. What they do is they put together buyers and sellers. You would be the seller of a life insurance policy.
I want to talk about the economy and what you fall as far as economics, whether it’s life settlements. Even reverse mortgages fall into a certain category that may not be applicable to the audience, but I would argue that. I look at where the demographics are and we’re on the cusp of having a very old population incapable of working, but also very ill-prepared when it comes to their future and potentially a longer life expectancy than they anticipated. Most states have enacted what’s called a Filial Law, which essentially the children or parents on the hook legally for their expenses.
If you have assets that are exhausted before maybe they use state funds or even Medicare, the kids are on the line as far as taking care of them, even if it’s an estranged child. As kids are seeing their parents age and recognizing that there is going to have to be some help associated with them. Whether it’s in financial matters or whether it’s care facilities or the long-term care because of that incapacitation. That’s where a lot of the life settlements if it’s an expiring or a term policy or an expiring universal life policy, those are ideal for settlements. Reverse mortgages had a stigma in the past, but fees are coming down. Reverse mortgages are adopting now, which is making it a little bit more affordable.
They are and those are the two main assets a lot of people have, their homes and their life insurance policies. They don’t realize they can get cash out of both of them on the reverse mortgages. They’ve made it stricter now, which is a good thing. Meaning you have to prove that you can pay property taxes and insurance. Whereas in the past, it was like people’s last desperate effort and then would default anyway. Once you can show you can pay the proper tax and insurance, you can get a reverse mortgage and then you take that assets and you’re going to pay off your forward mortgage. Hopefully, whatever you’ve got left, you can either pay off credit card debt or other debts or invest it to produce income for you.
That’s how I look at kids. There may be a paid off house and there might be a policy that they could pay out in the future to them or the house can be transferred to them through a will or passing away, but that means they have to come up with all the money right now to care for their parents. Whether it’s a care facility, whether it’s in-home care or whether it’s transportation. Kids are on the hook for that.That expense is growing.
There is a website called ReverseLoanChoices.com, which is an objective site to look at all the different possibilities with reverse mortgage. In the right circumstance, you have to be at least 62 years or older, the older you are, the more money you’re going to get. You’ll be able to get roughly 50% of the value of the home or something like that. You don’t have to make payments. If you do make payments, it’s good, but if you don’t have to, the interest is accruing. Down the road when you need to sell the house or the person dies, they would collect what they paid out in the first place plus the accrued interest. The two things we talked about, reverse mortgages and life settlements can help a lot of people. A lot of people have gotten to retirement without having saved almost anything is what it comes down to. The latest numbers I saw is 40% of the people receiving Social Security retirement benefits, it’s their only source of income. Those are two aspects.
Even those that have saved some, over 60 years old, the average retirement account is like almost $200,000, which seems a lot, but then if you look at Monte Carlo simulations, it’s nothing as you stretch distributions out over a long period of time. There’s a dilemma and it’s concerning to me. I don’t know how it’s all going to play out. In the end, kids that who are preparing for themselves and trying to gain financial education and be more responsible with their finances, it could be totally disrupted by the lack of preparation on the part of their parents.
The middle generation are being hurt by that, the parents needing their money and so on. The kids because of the student loan debt is huge that something over 50% of the kids graduating each year are going back and living at home again. You thought you had an empty nest. That was a four-year empty nest and now what I call the boomerang generation keeps coming back at you loaded down with student loan debt. The average person is graduating with about $39,000 in student loan debt. The people in the middle, they’ve given money to their kids. They don’t have time to save for themselves. Now, the parents are coming back. You’ve got the boomerangers and what I call the parents, the reverse boomerangers, the parents moving back with the kids. Let’s talk about student loan debt because it’s a big issue for a lot of people.
I want to segue into the economy too. I want to use the context as student loans are not sustainable. Credit card balance is not sustainable. Car loan balances is not sustainable and you have this big glut in the sense of debt and what’s the way out? Maybe you can talk about that when it comes to student loans because that is a very touchy subject.
Finance: There is much more inflation in the world than the official numbers will tell you.
There are about $1.5 trillion in student loan debt outstanding. The average person is about $39,000 in debt. Every graduation season, we add about $100 billion in new student loan debt. It’s staggering. What can they do? If they’ve got a whole bunch of different federal loans at different interest rates, they can consolidate into one. There’s a website for that, ConsolidateCollege.com. The other thing they can do, a lot of people don’t realize, you can refinance your student loans to typically in the 2% to 3% area instead of 5% or 10% or much higher rates if you have private loans. You would combine private loans and federal loans into one in the typically 2% to 3% area. A place I recommend there is Credible, their website Credible.com/moneyanswers, they know it’s me that way. You get $200 off your first payment. There are about ten different lenders who will offer you different kinds of deals, some of them fixed, some of the variable with different interest rates. The point is you have one loan instead of money that can help you get that student loan at least under control a little bit. You can’t make it disappear. Because of the bankruptcy laws, you cannot discharge student loan debt in bankruptcy, that’s an IRS debt.
Do you see that changing?
No, I don’t. If that changed, nobody would ever make a student loan again because people would skip out of their student loans a lot. It’s unfortunate, but it hangs over you. The delinquency and default rates have soared on student loans. It’s up to about 20% these days because people can’t handle the amount of student debt. They can’t pay it, but it doesn’t go away the way credit card debt would if you go bankrupt.
Let’s talk about the economy because you have a lingering generation that is coming to the realization that they haven’t necessarily prepared for retirement adequately. They are staying in the workforce longer than they have anticipated. As you grow older especially in our economy, there’s less efficiency associated with working and providing value and so forth. You’re also having the opportunity cost because younger people are not getting into the workforce that could potentially make the business more efficient. There are variables that you can argue against that, but ideally that would be the case. You have people working two, three, four jobs and you still have the levels of debt going up.
Going back to 2007, 2008 or for you going back to 2000, what are you seeing right now that you saw then? What are some things that didn’t occur then that you’re seeing? The economy banks, lenders, Wall Street, they learned lessons about derivatives. They learned lessons about lending. They learned lessons through all the different booms and busts of the last couple of decades. You always have that funny thing about human beings, it’s like the gambling mentality. You make a bet and you win and now you’re like, “I’m going to take even more risks. I’m going to make another bet,” and you win and you keep making another bet. In the process, you get sloppy and sooner or later the house collapses. What are you seeing right now within the context of that statement?
I don’t think people learned, maybe they learned, but they’ve forgotten the message from 2008. That was people getting way over their heads in mortgage debt. The mortgage that they should never have taken on or should have qualified. That’s better now because the Dodd-Frank rules have made it harder for people to get mortgages and get themselves into trouble. Still you see a lot of fix and flips and people doing speculative real estate now. That’s a game that could come to an end if interest rates keep rising. Credit card debt is over $1 trillion at very high interest rates. People are way in over their heads on credit card debt. We talked about student loans and car loans. All four of them are going up dramatically. When times are good as they are relatively now, people forget the times they were bad. The banks are willing to extend them the rope to hang themselves when that comes down to. If we talk about credit card debt, if you’re in that circumstance and you’ve got a lot of credit card debt at high interest rates, there two things you’re going to do.
Get lower interest rate credit cards, a free website is GuideToCreditCard.com. All the best deals you can get there and nonprofit credit counseling. They will combine all your debt into one payment at a lower interest rate typically 6% to 7% or something like that. My favorite place that’s called Cambridge Credit Counseling, CambridgeCredit.org is their website. They’ve already got deals with Bank of America, Citibank and Chase to get your rates you couldn’t get around and it’s a discipline. It’s what’s called a debt management plan, a DMP. You make one payment a month. They pay the creditors and you can get out of debt. You need the discipline to do that, but that’s what happened to a lot of people, they spend too much. Particularly what drives me crazy, is on consumable items. A cruise or a nice dinner or something that’s gone and you’re paying interest on it a month later. You don’t even remember what you ate. That’s not a good use of your money.
The first job I had gotten when I was a senior in college is at a center like that where there’s a nonprofit arm up and there was a sales arm. This was back in 2003, 2004 and I realized that people have big issues when it comes to money and it hasn’t changed me. We’re years later and it’s still the same. That’s where it’s a combination of using strategy, but it’s also the human behavior side of things. Where if you’re in the situation, it’s not necessarily a debt consolidation or a refinance that’s going to do the trick. It’s one of the variables. The other variable is to obtain some level of financial education, so you don’t make the same mistake twice. The reason why we’re in this issue is because banks got away with murder in 2008, 2009.
They propagated a lot of the derivative markets and propagated a lot of the different loan programs. They took advantage of people in a sense and they got a bail out. I was part of that. I personally guaranteed some stuff with a partnership that I formed this company with and I got hammered. I realized how much power they have to get a judgment on you and tarnish your bank accounts. These guys have it dialed in where they can make your life miserable and force people into bankruptcy. Right now, it’s evidence of that. Wells Fargo is one of staring us in the face examples. It’s one to recognize and understand what your options are, but it’s another to essentially have a mindset and a level of education that helps you to make the right decisions going forward after you make the most of the situation as it exists presently.
Education is a big part of it and people go through school and they learn all about Greek philosophy and German music and Etruscan pottery and all kinds of wonderful things. How to do a budget and how to pay your mortgage off and invest, all the things that we’ve talked about is like a foreign idea to them. In my money types, those are the ostriches. “I don’t deal with money, it will take care of itself somehow.”
That’s the unfortunate part. There’s no perfect system. There are always these ideal systems. In politics, there’s nothing that it’s ideal regardless of what the political parties says. In the end, we have enough experience based on what’s occurred in the past to recognize where the pitfalls are with our financial behavior, our investing habits, our savings habits, our purchasing and consumer habits. There are ways to live a pretty amazing life these days. One of the things I always love to talk about and do is question everything. Even if it’s something that’s so mainstream, it seems like it makes so much sense The actual questioning of it and the understanding of it opens a person’s mind to engage their senses. People know intuitively what to ask when it comes to what they do here or what they do there. That’s where a starting place is but I look at where we’re at as an economy, as a society and there are a lot of red flags for me. At the same time, it could keep going in another ten years.
It’s making good habits is where it comes to and that’s what you do and that’s what I do. We help people get into good habits. Getting out of debt and not getting into it in the first place, having investments and savings that are working for them and making the most of their assets. We’ve talked about real estate. We’ve talked about life insurance. You make relatively small moves that can have a big positive impact. In general, I like to live a positive compounding life instead of a negative compounding. The positive, it’s producing more money and you’re getting a compounding impact. Negative compounding is you pay the minimum on your credit card and the amount of interest you owe is rising all the time. What a difference in your life if you can get the right habits to do positive compounding instead of negative compounding.
Finance: You always have the gambling mentality that is funny about human beings where once they make a bet and win, they are going to take even more risks.
Jordan, thanks so much for your time. This has been an awesome conversation.
There’s a landing page I’ve created specifically for your people, which is Go.MoneyAnswers.com/WealthStandard. You can follow up on some of things we talked about. I’ve got a free monthly newsletter they can get and see all the different resources I have at MoneyAnswers.com and videos. I’ve got a YouTube channel. I’ve got a blog. I’ve got a newsletter. All kinds of things, we’ve touched the surface and some of the ways I try to help people do better with their money.
Jordan, thanks again. This has been a very valuable conversation. Thanks for all the resources that you provided. We’ll have to do this another time.
Jordan Goodman is “America’s Money Answers Man” and a nationally-recognized expert on personal finance. He is a regular guest on numerous radio and television call-in shows across the country, answering questions on personal financial topics. He appears frequently on The View, Fox News Network, Fox Business Network, CNN, CNBC and CBS evening news.
For 18 years, Jordan was on the editorial staff of Money magazine, where he served as Wall Street correspondent. While at Money, he reported and wrote on virtually every aspect of personal finance. In addition, he served as weekly financial analyst on NBC News at Sunrise for 9 years and the daily business news commentator on Mutual Broadcasting System’s America in the Morning show for 8 years.
He is the author / co-author of 13 best-selling books on personal finance including Master Your Debt, Fast Profits in Hard Times, Everyone’s Money Book, Master Your Money Type, Barron’s Dictionary of Finance and Investment Terms and Barron’s Finance and Investment Handbook.
He has also written 6 special focus editions of Everyone’s Money Book on College, Credit, Financial Planning, Real Estate, Retirement Planning and Stocks, Bonds and Mutual Funds, and hosts the Money Answers Show podcast.
Jordan is also a speaker and seminar leader on personal finance topics for business executives, students, associations, investment clubs, employees and others.
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Patrick Donohoe welcomes Micheal Blank as his special guest for Property, Episode-4!
Michael is an entrepreneur, investor and personal development coach. Originally, Michael made a large amount of money developing software during the dot com boom, and after diversifying is career, he found a passion for investing in multi-family properties. His company Nighthawk Equity currently controls over $65 million in performing multi-family assets all over the United States and he dedicates tons of his time helping others become financially free in 3 to 5 years by investing in apartments buildings with a special focus on raising money.
Patrick Donohoe talks about entrepreneurship and Real Estate with Nick Vertucci!
Nick is and educator and the founder of NV Real Estate. He came from a very humble background. His life is “that” story. The “rags to riches”, American underdog type story that many of us love to hear about, but wouldn’t wish on their worst enemy!
Nick hailed from a humble family, which could hardly make ends meet. His situation got much worse and more difficult when his father died when he was only 10-years old. He’s been running his own businesses since we was 18 and he’s been through pretty much everything an entrepreneur can go through!
Fast forward several years and his company NV Real Estate is doing fantastic and it’s for this reason and so many more that we’re honored to have Nick on this episode of The Wealth Standard.
Patrick is the President and CEO and started Paradigm Life in 2007 after learning from his mentor Kim Butler about financial strategies outside of Wall Street.
With a background in economics and marketing, Patrick immediately realized the opportunity to teach investors, business owners, professionals and families on a large scale using modern digital media and communication technology. Since 2007 Paradigm Life has worked with thousands of individuals in all 50 states.
Run-of-the-mill advice is everywhere. But in order to achieve different results, your strategy has to be different.
In this book, you're going to learn about a hundred year old strategy that's tried and proven to give results. Are you ready to
shift the way you think about investing?
WHAT THE PROS ARE SAYING...
Once in a great while, a person comes along who can explain financial concepts so clearlu that all of a sudden,
what had been a mystery becomes obvious. For many people, Robert Kiyosaki was that person when he wrote Rich Dad Poor Dad. For me,
that person was Patrick Donohoe when he first explained what you're about to learn in this book.
Tom Wheelright, CPA
Author of Tax-Free Wealth, of the Rich Dad Advisor Series
"Patrick's book explains why every American is experiencing worry, fear, and uncertainty with thier finances.
'Heads I Win, Tails You Lose' outlines a better way to take back control and live a life you love."
"Storyteller, man of honor, humble seeker of truth - these are the words I think about when Patrick comes to mind.
I've been looking forward to this book for quite a while and am pleased to tell you, the reader, it is worth the wait."
CEO, Partners for Prosperity
"Patrick is someone that I call upon to learn the strategies of the world's richest people. 'Heads I Win, Tails You Lose' provides
a creative approach for managing wealth outside of the old and tired methods used by everyone else."
Founder of Capitalism.com
Book Nailed it
A should-read for anyone looking to be smart with thier money, and smart enough not to just follow the herd.
Robert K. Cunningham
Very enlightening and actionable!!
If you want a real path to Economic Independance and not a theory this book is for you.
Wise if I read this years ago.
Great book, made me change my thinking on my investment situation.
Take back control of your money
The truth about money. You will be surprised with the information. WOW!
A must read
Outstanding book. Details information most people are not aware of in creating a sound financial programs.
...a critical financial strategy
I simply couldn't put this book down, I read it cover to cover in 1.5 days! #VeryEngagingRead
ABOUT THE AUTHOR
Patrick Donohoe is the Founder and CEO of Paradigm Life and PL Wealth Advisors. Patrick and his team teach thousands how
to build wealth, create lifetime cash flow, and leave a meaningful legacy.
Patrick was recently honored by Investopedia as one of the Nation's Top 100 Most Financial Advisors. He is a highly sought
after presenter and speaker at financial-based events around the country and is the host of The Wealth Standard podcast.
Patrick grew up in West Hartford, Connecticut, and attended the University of Utah, where he received his bachelor's degree in economics.
He lives in Salt Lake city with his wife and three children.
WHAT'S INSIDE THE BOOK?
THE CHAPTER LIST:
1. ORIGINS OF THE AMERICAN DREAM
2. THE PERPETUAL WEALTH STRATEGY™
3. QUESTION EVERYTHING
4. BREAK AWAY FROM WALL STREET
5. AVOIDING THE INVESTING AND LENDING TRAP
6. THINK FOR YOURSELF
7. A SOLID FOUNDATION
8. B ELIKE THE WEALTHY
9. MYTHS AND TRUTHS OF INSURANCE
10. SAVE, BORROW, INVEST, AND BUILD WEALTH
11. START, BUILD, AND PROSPER YOUR BUSINESS
12. YOUR FINANCIAL FUTURE
13. MAKE THE SHIFT
14. TAKE BACK CONTROL