Why Cash Is Trash... And What To Do About It

I'm celebrating my 10th episode by doing my first solo episode!

Listen in to what I believe is my most important podcast yet. Have you heard the saying "Cash is King"? Well I now believe that "Cash is Trash".

I describe the huge danger I see in the economy and what you should do about it. Whether its the money you've worked so hard to save, or your parents hard earned savings... it's all at great risk.

You'll want to listen to this one.

Loved this episode and want to treat me to a cup of coffee? You're the best!

Need more in depth help? Book a 1 hour consulting session with me.

Get $30 off your first ButcherBox order. I love and use this service to get high quality steaks delivered to my door (at affordable prices!).

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Find all resources mentioned in this episode at the Bound To Be Rich website. 

Transcript

This transcript was automatically generated using Descript.

Ismail Humet: Welcome to The Bound to Be Rich Podcast, where I attempt to reverse engineer people who seem to be successful, no matter the circumstances, so that you can apply those lessons to your own life. I'm your host, is Mel Hume. In this episode, we are celebrating an important milestone. It's my 10th show and I thought it was a great opportunity to jump on here.

To give some quick updates about the show, do my first solo episode, but what I really wanna dive into is the economy and what I see happening, because I think this is gonna be my most important episode by far. You've heard the phrase, uh, one in a hundred year storm. There are some things that I'm seeing brewing that in my mind, uh, makes it a high probability that something like that's happening in the economy.

And of course, it's always the regular people that get hurt the most. So if you're listening to this, whether you're an entrepreneur or you're an employee or you're retired and you saved up a bunch of cash, the money that you've worked so hard for is. Real danger. So I look forward to diving into why I think that is how we got here and what you can do to protect yourself and your family.

Let's dive in.

All right. It's a little intimidating and weird to be talking by yourself into a microphone. I've not used to this. I haven't done this before, but you know what? Let's roll with it. The great thing about having your own show is that you can do whatever you want, and I always wanted to be open to experimenting and trying different things because you never know what might work.

So for me, the message that I want to get across in this show is really important, and I've been having these conversations a lot recently with family and friends, so I thought. When I broadcast it out to the world at great risk to my reputation, , but I just think it's the right thing to do. So hopefully you find this valuable.

But first, let's dive into some updates. So you may have noticed I haven't published an episode in a while, and there's a good reason for that. I am happy to announce that I just had my second baby. I welcomed a beautiful baby boy on February 16th. So, Totally blew up my routine, shocked my world, and then tore up my schedule.

Having two kids is way harder than having one, way harder than I expected. Uh, because before it was just two parents. One child you can kinda sleep in. The other one watches the kid and now there's no sleeping in and there's no sleeping at all at night either. So it's been rough, but it's great. So that's kind of explaining why.

I haven't been able to stick to a regular schedule. I don't want to commit to doing a weekly episode, uh, because I just don't know what's gonna be happening going forward. But I want to get back in the groove of doing shows regularly and posting them, uh, even if it's not on the same day each week, but posting them regularly.

[00:02:46] Updates on Podcast

Ismail Humet: So, couple updates on the podcast. For people who know me, you may know the story. I just wanted to start this show as an experiment, right? Because I love having conversations with interesting people and I thought, why not record it and put it out there? Uh, maybe other people would get value out of it too.

Like, I listened to other podcasts and I love it. So that was, I didn't really have a goal. It was kind of like, let's just do a few and see what happens. And I, I've been blown away by the response so far. It's amazing. Like people all over the world writing in and, and letting me know that they're getting value outta the show, um, which makes me wanna keep going.

It. It's funny because I took a break cuz of having a baby. The unfortunate thing about that is that I was just getting into this awesome groove, right? I just saw. When I, like a week ago that I hit number 60 in the US entrepreneurship category, which is arguably the most competitive podcast category in the world, and I was ahead of people that I listened to for like the last five.

To 10 years. So that kind of blew me away and showed me like, Hey, this, this is something that might be working. I don't know where it's gonna go, but I enjoy it. People seem to get value out of it, so maybe I should double down on this and, and really make something out of it. So, uh, the other thing is I'm getting now, I guess once I got into that place in the ranking, once you get into the top hundred, you get on a lot of people's radar.

So now, Instead of me going out and, uh, trying to get great guests, I'm having these incredible, like even some celebrity names reach out to me, like their agents are reaching out to me to get them on the show, which is amazing. Like I'm having people send books to me, um, and try to book a session on the show, which is mind boggling.

I was talking to my wife about it and she's like, Uh, cuz we got an email from somebody that we both know, um, hopefully you guys know this person too and we'll get 'em on soon. And she's like, Crazy cuz you just started a couple weeks ago recording this like in your home and now you have all these famous people that wanna come on show.

So that's the power of the internet. Uh, enter people listening. It's the power of just going after an idea and just trying stuff out and seeing what happens. So that was my initial goal, was just to kind of test us out. But now, like I said, I want to double down Now that I see that people are really getting value out.

I'm having a little bit more of a level up and goal, so it's not much. I think with, with the impact on my schedule now with a growing family, I have less time. It's really hard to get things done. The parents in the audience know that, and I'm trying to find ways to do stuff without dropping too many balls.

[00:05:15] Ismail's Goals and Dreams.

Ismail Humet: So my. Goal and dream at this point is to be able to do the show and generate enough revenue to, um, at least pay someone to do the production, the editing, uh, the uploading of the episode, like handle all that so I can just focus on creating great content and interviewing awesome people. I think that's what I'm good at and if that's the only thing that I can focus on and pass on the editing and everything else to someone else, it'll allow me to put out more shows for.

And like a little, a little cool little thing for me is if I can pay for a cup of coffee. Cause I like, I'm drinking a cup of coffee during every recording. So if I can get the editing paid for and get myself a cup of coffee, I'm gonna be a happy guy. It's not much. So with that being said, I think what I'm gonna experiment with next is maybe throwing in some ads here and there.

Obviously it's only gonna be products or services that I personally. And like, so it's not gonna be like these canned ads that you hear anywhere else. I'll explain to you how I use it, why I use it, why I like it. And if you wanna try it out, you can use my link. And usually there's a benefit to using my link to you and me.

So they give me a little bonus and you get a little bonus. So it's a win-win. Let me see if that turns into anything. Again, my goals are just pay for a lot of the work that goes into editing the show and whatnot. So that's the update there. And with that being said, let's take a look at the first ad.

[00:06:36] Check out - Butcher Box.

Ismail Humet: Check this.

What's something that you started using during the quarantine that you will keep using after it's over for me? I started using this thing called Butcher Box. I love steak. Sorry to fend you vegans out there, including my wife, . But I, I remember when the quarantine first started, you're locked at home. Uh, you wanted to find ways to get food delivered to you, but I didn't want to pay crazy amounts of money for steak that you can buy the grocery store.

For a lot cheaper. So I tried all these different ones. Maybe I should name them, but I tried a lot of different ones and I ended up trying Butcher Box. And to me that was by far my favorite, highest quality. It's grass fed, beef, organic, antibiotic free, all that good stuff. Yeah, they deliver it straight to your door.

In this like freezer box and I found personally that the, the price of these steaks are, or at least comparable to what us paying in the grocery stores, the Costcos or whatever, and much better quality. I don't really buy chicken or seafood from them, even though they have that stuff. They also have pork.

I stick to most of the state cuz I find. The price is great and the quality is great, so I strongly suggest you check it out. You basically, you pick the kind of meats that you want into a box, and then every few week you can set it up to be a schedule or you can delay. To whenever you want, but whenever you want a delivery, uh, you pick the meats that you want, uh, that deliver to your house.

What I really like about them is that they have deals all the time. So to sign up, you, you have to commit to like a box of meat. But then they also periodically offer these crazy deals where you get New York strips, eggs, or robotic eggs for half price. So I. Like to add a lot of those deals and my box gets bigger and bigger and bigger, but it's a good excuse that they're on the grill and have a barbecue.

So I strongly suggest you check it out. I've been very happy with them and, and the few times that I've had issues with my order, uh, I just chat with them, you know, online and they take care of it. Amazing customer service. So if you do wanna try it out, there's a link to it in my show notes. And by using my link, you get $30 off your first order.

I think that's a pretty generous thing. So I thought I'd share it with you guys, if anyone does try it or if anyone already use it. Let me know how you like it. Show me some photos of your skills. Cause I've been working on my, my grilling steak skills during quarantine, so I, I can throw it down with.

All right, so hopefully that's not too much of an inconvenience to anybody out there. Uh, again, there's no obligation, but if you do wanna try something out that I talk about and you use any of my links, um, you're helping support the show. 

[00:09:12] Planning for Q&A session.

Ismail Humet: The other thing that I wanted to mention is that I think it'd be cool to do a q and a episode where, People can submit audio questions and I'll take them, I'll put 'em in the show and I'll answer them live.

So, uh, it's like free consulting to anybody out there. So if you have any questions that you want to ask me about anything, um, there's a link in the show notes that you can click. Where you can record your question. I'll get it and then I'll take care of it from there. I'll put it in the show. I'll answer your question and it sounds like something fun to do, so let's try that out.

Otherwise, one other thing that I wanna mention is you can actually now book a session with me. You can schedule an appointment on the website. This is a paid consulting arrangement where you can book. Half an hour, an hour of my time, and I can dive in deep with you one on one and help you solve anything that you're working on or struggling with.

So if that's of any interest to you guys, check that out. But otherwise, I just want to jump into the, the topic at hand here. And I've been thinking about this for a while actually, and I, I kind of regret not doing this a lot earlier because, So far I've been right. And the people that I speak to in my personal life will vouch for me on that.

I've been the weirdo yelling about this stuff for like the last year, and everyone thought I was crazy. And then slowly but surely start coming around and saying, Hey, you know, it's, what you're saying makes 

sense 

Ismail Humet: and I see it. So what do I do? And I've had this happen enough times where I'm like, my, my, my friends actually told me, Why don't you do a show on this?

I think people really need to hear this. No one really talks about this stuff. So that's what I'm trying to do. So before I really jump into it, I just want to caveat that, and again, I'm just trying to do this off the cuff in, in one take. So please forgive me and bear with me. Uh, and for people who are economists out there or historians out there, I am not trying to be like a textbook.

Here, I'm just trying to talk, um, in layman's terms, uh, very casually off the cuff because I. The average person, at least what I see for people that I talk to, they need someone to break it down in a very simplistic faction to get the point, right? So I'll leave the, you know, the economist out there debating things like the terminology and then the dollar numbers and all that stuff.

For me, I'm just trying to talk to people like I talk to my friends, right? So imagine we're at the bar having a drink and I'm just chitchatting with you. So here's basically, The gist of what I,

[00:11:39] What is Inflation & History of Inflation?

Ismail Humet: what I see happening. I think that, and you might start hearing this a lot more now, there's a great danger of huge inflation.

Happening. And in my opinion, it's already happening. Like, I, I, like I said, I wish I did this earlier because I think it's pretty far along. Uh, the problem is that most people don't realize this and it has a huge impact to people. It's called the invisible tax on like the middle class or the lower class, uh, because it's kind of a sneaky way of, uh, like sapping people's.

And I don't really like to bash the wealthy people because I aspire to be wealthy, right? That's the whole point of the show. But they benefit from inflation. So if you're in the upper class, you actually benefit from inflation and everyone else kind of suffers from it. So if I'm, if you're not understanding what I'm saying so far, please stick with me.

I'm gonna try to break it down for you in, in more simplistic fashion. So, how did we get here? I think a very brief history. After World War ii, um, the United States emerge as a huge superpower, right? And like the, the number one superpower in the world. And. Usually after a major event like that, like a World War, after it's over, the countries get together, the world gets together and kind of like rewrites the rules going forward, right?

So you divide up land, you divide up resources, and you kind of rewrite the rule book. And there's this thing called the Bretton Woods Agreement where. After World War ii, um, United States was the most powerful, the richest, They had the most gold like they were on top, and no one could argue against it, right?

So they basically wrote the rule book and the, the way the world worked before that was everyone had their own currency. They all had their own gold. Um, I'm trying to simplify this, but. Afterwards. What happened was that basically the United States became the reserve currency. The dollar became the reserve currency of the world, and every other country tied their currency to the dollar.

So China, Russia, the European countries, they all tied their all their own currencies to the US dollar. Now, why would they do that? you might ask pretty much because at that time, part of this agreement was that the US dollar was not only backed by the go. It was backed by the gold in the central bank's vaults, right?

So all the gold that America had in their vault, um, that was used as a way to back the dollar. It wasn't just a piece of paper. That piece of paper was like a portion of the gold in the, in the vault. Right. So that's how it started. And that makes sense. You know, they have a $500 billion of gold. There's 500 billion in the world, and everyone felt comfortable and they tied their currency to the US dollar, and everything was great.

It worked out for a while. The problem is that we are operating in inflationary economic system. So what started happening is that, let's say there was $500 billion worth of gold in the vault, right? And there was $500 billion in the world printed. The, there are benefits to inflating, right? And, and when I say inflation, I'm talking about having more dollars in the world.

So like printing more dollars. Um, there are numerous benefits to having more dollars, so, The essential bankers, the American economists said, Hey, you know what? Instead of having $500 billion out there, even though we only have $500 billion worth of gold, again, I'm really simplifying this. Why don't we, you know, why don't we print another a hundred billion dollars?

So we'll have $600 billion in the world, but still have the same amount of gold? And this is kind of, I think this is called a multiplier, where instead of it being one for one, now it's like one for 1.1. And people were like, Hey, it's not a big deal. Uh, what are the odds that everyone brings their dollars into the vault and asks for their gold?

Cuz at that time you could actually take your money to the bank and say, Hey, I have this a hundred dollars. You know what? I wanna exchange it for gold. Like that's how well backed the dollar was. With gold, you can exchange it for gold. And, okay, so now it's one to 1.1. Um, why having more money out there encourages people to invest it, um, and, and get that money to work.

So th this is like the 

big 

Ismail Humet: benefit of real estate, right? Where you're buying an asset now at the current price of $300,000 for a home. You're locking in that mortgage and in 20 years, If you rent that property out right at the current rental rate, let's say you get a thousand dollars a month, Um, in 20 years, you'll get a lot more, right?

You'll get a lot more than a thousand dollars a month because of inflation. Everything costs more, people make more because there's more money in the system, and then it becomes so much easier to pay that thousand dollars mortgage because now you're charging $2,000 rent and 30 years later you're charging $3,000 rent.

Again, just simplistic examples, So the real secret to like real estate investing is, A lot of the home is paid through inflation. And it takes a while for people to really grasp that concept. Um, you're locking in something at current prices. You're paying it over 30 years, but over those 30 years, you're benefiting from inflation.

You're charging more rent, right? People are making more money. So that's the reason why like these politicians, And economists all over the world, not just in America, they like inflation, right? It, it's a popular thing. Let's print out, Let's get more money to the system. Let's get more things happening.

Everybody wins. Eventually you start running into trouble, right? Because you can only go so long without having some negative impact and. We're, we're at that point now, so there's constantly, you know, it was one to one, then it was one to 1.1, 1.2, 1.3, and it got to a point where there was, there was a fear in the people that, hey, they're, they're printing a lot of money out there, and I'd rather have the gold.

So a lot of people were exchanging their money for gold and it was taking money outta the outta the vaults and it became a problem. So there was actually a point in American's history where they outlawed gold. It was illegal. To own gold. And then there was this famous moment where the United States came off the gold standard.

It was a major like historical event where they basically said, You know, that agreement that we had, too bad, we're gonna get off the gold standard. And we're just gonna have a dollar just backed by, you know, backed by our word, backed by our military, backed by our tax receipts. Um, so it shift as a, that's a major shift that I want everyone to understand.

It was backed by gold. You can exchange it for gold, and now it's really just a piece of paper that's worth something because the government says this word. So. Right. That's a huge shift. So that's, that's kind of the brief history lesson. And obviously since then, um, there's inflation every year. There's more money being printed every year, and it's just kind of, Keeps going.

Imagine a bubble that's kind of keeps getting bigger. You keep inflating the bubble, you keep inflating the bubble. Um, and that's happening over decades, year after year. And people understand this if you explain it to them in, in different ways. So for example, I'm, I'm not an old guy, right? I'm, I'm not old, but when I was a kid, uh, my parents would give me 50 cents.

I'd go to the. I'd buy a drink for a quarter and a bag of chips for a quarter. It's not like that anymore. Now it's $5 for a cup of coffee. It's Starbucks now it's, it's just more expensive for everything. When you explain it like that, everyone's like, Yeah, you know, groceries are more expensive. I need more.

Yeah. I used to spend a hundred dollars on a trip to the grocery store and I spent 300. So that kind of explanation gets people to say, Yeah, I get it. I understand inflation homes are more expensive. Like if your parents bought a home, uh, however many years ago and you're trying to buy a home now it's way more money.

Um, another example I like to use to explain this to people, it's imagine that you have a Michael Jordan basketball card, right? And there's only 10 of them in the world, and you have one. That's a pretty valuable card, right? It's one outta 10 copies in the world and it's valuable. Now, let me ask you, what would happen if the company that made that card, you know, they said, Hey, this last dance documentary came out.

Everyone's talking about Michael Jordan. Why don't we do a special print and do another a hundred cards? Let's just print another a hundred cards. You know, just to honor the event. What happens to you if you owned one of 10? What happens to the value of your card? Obviously it goes down drastically cuz now there's not 10, there's 110, right?

And that's basically what is happening when there's a lot of money constantly being printed, right? The money that you have in your pocket, the money that you have in your bank account is not worth as much as it was last year. Every year it's going down in value. The reason this is so hard for people to understand is because they don't see their bank account go down.

Right. If you saved up a hundred thousand dollars in your bank account, it still says a hundred thousand. As a matter of fact, they gave you $2 of interest, so your account is even higher, but it's not as valuable. That's what you have to like really grasp. You're, you're the number is staying the same or even going up slightly, but it's not as valuable because of inflation.

So the bank gives you, now they give you like 0.1% interest. Inflation is 2% according to the government. So you, you lost 1.9% a year every year. Um, so like the old days, a lot of us have listened to our parents where they say, Hey, save a penny. Saves a penny earned. Save your money. Save your money. There was a period back then where the interest rates were so high, you could put your money to bank and get like 15% interest.

So they're coming at it from a different world. We're in a world where you don't get any interest like it, it's really zero. Basically you're losing money by keeping your money in the bank because of inflation. So, all right, so that, that kind of tells you a little bit about inflation, a little history lesson of how it began and where we are now, but what, where, what we're seeing happen now.

And I think everyone listening has seen this obvious. I'm talking from the United States perspective, but really what I'm saying applies all over the world, which makes this so much worse, um, than any period before Because of Covid, and this, again,

[00:22:27] Pandemic effect on Inflation.

Ismail Humet: I don't wanna blame this on Covid because the seeds were being planted for this over many, many, many years.

Covid just kind of accelerated it and put like the few on the fire. So, because, because of this, this pandemic global pandemic, We needed all the stimulus, right? People couldn't work. Everything was shut down. You know the drill. The governments, and I don't blame the governments. I think there was really no choice at this point, but they started printing tons of money to help the businesses, to help people that can't work.

And you see this, there's unemployment, people making more money on unemployment than they did at their job. Uh, there's money being given to businesses that those don't have to be paid back. Um, and this is happening all over the world. So we had the first stimulus bill, the CARES Act. We had the second one where there was 600 checks.

Um, we just had another one with Joe Biden, where it's 1.9 trillion. I'm hearing like that he's gonna do another stimulus package in April. Uh, and on top of that, I think. As I'm speaking in a couple days, he's supposed to release his plan for a 3 trillion infrastructure package. Um, I don't know. I'm not that good in math, but that's a lot of trillions of dollars right there, right?

If you add that all up, that's a lot of trillions of dollars. Like, we're just throwing out the word trillion, like it's no big deal. So I, I said, Let me check the Federal Reserve website. So I went on. This is the official federal reserve.org website. I'll put a link to it in show notes, and I said, How many dollars are there in the world?

Like how many printed dollars are there globally? And I think it said as of February, 2021, there was approximately $2 trillion in the world. So just, you know, you don't have to be a rocket scientist here. There's 2 trillion printed dollars in the world and they just printed 2 trillion for Joe Biden's bill.

He's doing another 3 trillion for the infrastructure. There's another stimulus package coming. There was trillions last year. So what happens there when you like triple or quadruple the money in the world? What happens to the money that you have? , Right? That's what I want you to think about. And I think there's even talk of things like they're gonna wipe out suit loan debt up to $50,000.

Like so now you know, hey, you owe money, don't worry about it. Don't worry about it. So like the example I said earlier about the debt you have on buying a home, that mortgage that you have a lot of, it's kind of paid. by inflation. Right? So I, I hope that makes sense. Now they're saying, you know what, You know we're gonna wave student loan debt.

Why not? So that, that's like unreal inflation. Who would've thought that we would come to this point? Right? And. What is this causing? And, and by the way, before I get into that, the Fed is now, this is something that I have never seen in my lifetime. The Fed is now basically saying they want inflation. They, they're saying that they're targeting to go over 2% inflation, and that's what they want, and they also want to keep interest rates low.

So I don't ever remember. A period in time where they want high inflation and low interest rates. So this is very unique. And I guess, how do you explain the impact of this? So basically open your eyes and look around. Right. And I, I had a lot of my friends asking me this, where in the midst of Covid, extremely high unemployment, people couldn't work.

Businesses got shut down. 

[00:26:11] Why Stock market & Real estate boom during the pandemic?

Ismail Humet: Stock market was at record high. And everyone was asking me, How does this make sense, man? How is the stock market at record high? And there's the economies in the worst shape it's ever been in our lifetime inflation. So there's something called that can't till in effect, which is kind of a little bit more advanced.

So I'll just link to it in the show notes for anybody who's interested. But the point of it is this, that when you're printing money, that money basically flows the most. Most of that money basically flows to the wealthy. and it ends up in assets, right? Like in the stock market, in real estate, stuff like that.

And you know, not to be surprised what happened to the stock market, what happened to real estate? I've been trying to buy a home for the last year. I have never seen anything like this, and I've flipped homes before. I've been in real estate for many years. I have never seen anything like this. I see homes that are listed for, you know, $600,000 around me that sell for 900,000, like in a day, $300,000 above asking price in a day inflation.

I see. And I'm, I'm sure you see headlines about this too. And now they're selling digital. NFTs, 69 million for digital art painting. Um, I see Pokemon cards booming now. I see collectible sports cards. I see all this stuff booming, and I'm sure you see a lot of this stuff too. Why inflation? So we're at a point now.

We're basically cash is trash. You know, you, you've always heard the Cassius King. We're at a point now where cash is trash and everyone kind of knows it without really saying it or knowing it. It's become a joke. People get stimulus money, they just throw in the market, they throw it in cryptos, uh, they, they throw it in and play with it because it's pretty much become like monopoly money at this point.

So, The other thing that I wanna touch on is why do interest rates matter? And why is the the so here, let get into this. First, the Fed is saying that the inflation rate is under 2%. They want to target 2%, but it's okay if it goes a little bit over 2%. Now, after I just explain everything to you 

[00:28:33] Why is CPI controversial?

Ismail Humet: where there's $2 trillion in the world and they just printed, I don't know, $10 trillion, how in the world does it make sense to you that there's 2% inflation?

It doesn't make sense to me. And if you really dig into it, the cpi, the Consumer Price Index, the actual like official inflation number that the Fed uses, I, I feel is manipulated and it's not the real gauge of inflation. Um, so till for me, if you wanna look at inflation, they're measuring it by a basket of goods.

And if you really dive into the granular details of how they're measuring, what they're measuring, To me, it's really like easily manipulated. And why would they wanna manipulate that? Because a lot of things are tied to the cpi. So if you've had a job, you get a raise, you get a cost of living adjustment, they gave you like a 2% raise.

Where does that 2% come from? The Fed. So if they, uh, start to say, Hey, you know what, inflation, the real inflation's actually, you know, 15%, a lot of things would, it would be a domino effect. Like people can't give you raises that quick. Um, the mortgage mark, like it would affect so many different things that they have a huge incentive to keep it low.

Or say it's lower or make it seem low all the while, while the middle income workers and the lower income workers are being told, Hey, it's 2%, here's a 2% raise. Um, the wealth, you're constantly benefiting because like I just said, with inflation, assets go up in value. The stock market, real estate, anything basically goes up in value cause there's more money in the.

The regular people out there that are working paycheck to paycheck and you know, don't have a huge savings, saved up and don't own anything, don't own any investments, rent, and don't own a home. They're getting crushed. They're getting crushed. So I guess. The other thing that I wanted to touch on is that 

[00:30:27] BlockFi interest vs bank interest

Ismail Humet: I'm seeing this weird dynamic at play where, you know, at my bank account, at Citibank, at Chase Capital One, whatever, any of these major banks, um, I'm sure you see the same thing.

You're getting 0.01% interest or 0.1% interest. You're getting nothing. Right. But I'm seeing this really interesting dynamic at play where if you go to like these new banks of the future that are in cryptocurrency, like. Block Fi is one that I use. Um, you can put your money in block fi and basically get 8.6% interest.

So, um, very quickly, the way you do that is you put your dollars into block five and you convert it into a stable coin. Um, I don't wanna get too fancy. It's basically the same thing as a dollar. It's not risky. It's, it's just a cryptocurrency that's pegged to the dollar. Um, so it's equivalent to having a dollar.

So you put, you put your dollars into block five and you get 8.6% interest. How does that make sense? How does that make sense? That I can get 8% interest here, but the bank gives easier to 0.1%. So there's some weird things going on that I can do a whole other podcasts on that don't make sense. And to me is a warning sign.

Now if you follow a stock market, you're seeing just now, finally there's a fear of inflation. So even though the Fed is constantly coming out and saying, you know, don't worry, we're gonna keep it at 2%. Maybe it's gonna go a little bit over, but it's gonna be temporary. Don't worry. People don't really believe them anymore because they're seeing what I'm telling you.

I'm seeing it, I think what you're all seeing. Um, so 

[00:32:02] Fear of high interest rates.

Ismail Humet: why would people get afraid of higher interest rates? What's the big deal? The way stocks are valued? The way any investment really is valued, um, is through discounted featured cash flows. So basically, um, how do I explain this very simply? You look at a business and you say, Hey, you know what?

For the next hundred years, this business is gonna make, you know, a hundred million dollars, a million dollars a year. Keep it simple. So over the next a hundred years, it'll make a hundred million. How do I value that right now? Right. So if I wanna buy that business, what would I pay for it right now? And the analysis that people do is that they see all the future cash flow that they would make in that business, the a hundred million, and they discount it at a risk free interest rate, right?

This risk free interest rate is usually the treasuries that the government issues. Uh, but you know, we don't need to get into that. It's basically like around one two. and then they add in the inflation on top of that. So it's 4%. So basically what I'm saying is that, hey, I could put my money. Into at a risk free investment, risk free and make three, 4% a year.

So for me to buy this business, um, I have to at least make that much money, at least, right? Cuz this business is not risk free. There's risk. So they discount all those cash flows by that interest rate that they could get through their risk for investment. So hopefully that makes sense. So as their rate goes up, As the interest rates go up, the discount that you're making on future cash flows, uh, goes up.

So it makes the value of the business lower. Right now, it makes the, the stock lower right now because you're. You're using a bigger discount rate. I hope that makes sense. It's a little bit easier to see if you do it with a formula. Um, so maybe I'll find something online and put it that show us for you.

So there's a fear right now of this inflation affecting, um, stocks and whatnot, but I'm gonna explain to you later why I personally wouldn't be that concerned. So I explained to you kind of the history, what's happening right now. Um, 

[00:34:22] Devaluation of Cash.

Ismail Humet: The only thing that I would add on top of that is what I think is gonna happen is that cash is gonna continue to get really devalued.

And on top of that, the other thing that people don't think about is that if you dig into the financials of the government, um, even these individual states or uh, counties in America, these municipalities around America, you would see that they're in real trouble. And it's not that hard to understand why.

So they're giving out record unemployment, right? All these states around America, and again, this applies to all the countries in the world. They're giving out record amounts of unemployment On top of that, uh, because there's no business, people aren't working, they're collecting less in taxes. The sales tax, the income tax, any tax that you have out there, they're getting way less now cuz people aren't working.

They're giving out more money. They're making less money. On top of that, they're spending more money because of covid um, testing. There's a whole bunch of things. They're spending money, they're spending more, they're making less and they're giving out more. . Now, I'm not a rocket scientist, but what I had been telling all my friends and family is I think that there's no way around it that taxes are gonna go up.

Uh, and this is not meant to be a political thing about Democrats or Republicans. I think it doesn't, it doesn't really matter at this point. Whoever is in charge at whatever state you're in, they're gonna have no choice but to increase taxe. The only other thing that they can do, which is what I think, uh, they prefer to do, is keep printing more money, keep printing more money, um, that way they don't have to raise their taxes that much because they're gonna just flood the system with more money.

And that's, like I said earlier, a more favorable way because people don't see the impact of that. Everyone's happy that they're getting checks and again, People need checks. I'm not judging that. I'm just saying that there's an impact of all those checks being sent out and that's devaluing the money. So there's people that listen to this show that have followed me over for my other podcast in the event industry, and I see, uh, people so excited right now that hey, events are gonna come back.

I'm getting bookings and kind of out of excitement and desperation. They're just trying to book things up, book things up, even if it's at discounts. Uh, and you have people funnily, funny enough that, uh, they're saying, Hey, can I get the covid discount? Can I get the covid discount? Meanwhile, everyone's got more money than they've ever had.

I'm generalizing here. Obviously there's people that are really suffering, but generally speaking, if you look at the data, um, people have more money saved. People have more cash now than they did. Generally speaking, yet everyone wants a discount and businesses are giving discounts at the same time that the value of money has gone down drastically.

So my opinion on this, what I am doing is I am not rushing. To book events and fill up my calendar because for one, there's gonna be a, a huge boom in demand for these types of things because people weren't able to do events, they weren't able to travel, and now they're all gonna want to and there's not gonna be enough supply.

So there's gonna be a huge demand, uh, and eventually the supply will run out. I'd rather wait until that supply runs out and I'm one of the few people left and I can charge the rates that I think I deserve. If anything, you should be increasing your rates now, not decreasing. Because if you were making a thousand dollars an event before, um, you would need to charge $1,500 an event now to get equal value because of inflation.

I personally believe the inflation is more. Realistically more around like 15, maybe even up to 20%, and it may increase from there. And I'm looking mainly at the, um, the money supply, how much the supply of money has increased. That's how I'm looking at inflation because I think that's what's impacting, uh, the rise stocks and collectibles and crypto and all that 

other 

Ismail Humet: stuff quickly.

[00:38:38] What will happen if the US prints more money?

Ismail Humet: The other thing that I wanted to touch on is I've, I've mentioned other countries around the world. What I've just said about America, you can multiply that by a hundred cuz it's happening in all these different countries around the world. And there are some extreme examples right now where I see headlines of Argentina, they're having like crazy inflation of like 30% a year.

Uh, the interest rates in Turkey are like 16, 20% already. It's for the other countries it's even worse because again, they peg their currency to the. So there's huge power to being, basically, America is the global reserve currency, and they have the keys to the printer, right? They can print their, do, they can print more dollars if America can't pay their debt, right?

People keep talking about the deficit. If they can't pay the deficit, they can just print more dollars. Other countries can't do that. And because the dollar is what they peg their currency to because the dollar was the reserve asset. The reserve currency of the world. A lot of these countries deal in dollars like, and their banks, they hold dollars.

They don't hold their own currency. They do hold their own currency, but they hold a lot of dollars. . So what's gonna happen when, uh, America prints more money? Cuz they have to, to satisfy their debts. The value of all the money in China's, all the dollars in China, all the dollars in Russia, all the dollars in Germany.

That all goes down. And when that goes down, The value of their currency goes down and has this domino effect through the country. Um, hopefully this is painting a picture that this is really, really bad. So, uh, I think I'm gonna stop there again, If people have questions, feel free to submit them. Uh, there's a link in the show notes that can submit your audit questions to, I'd love to dive into detail more on whatever you want to dive into more, or whatever wasn't clear.

But now I wanna talk about 

[00:40:28] Tips to beat Inflation.

Ismail Humet: what should you do? What could you do? And again, um, what's the legal disclaimer that you're supposed to have here? This is not financial advice. This is just my opinion. Use any of this at your own risk, y yada, yada. I'm gonna try to temper what I say here because, I personally have taken some very extreme measures to prepare for this, and so far it's worked out really, really well for me.

But I, I don't wanna recommend extreme measures. I'm gonna just lay out what you could do or what you should be thinking about. So we clearly outlined that cash is trash, it's going down value, and it's gonna keep going down value. So you don't wanna hold cash, obviously. Right. Um, again, if you can understand that concept, then I did my.

Because people have such a hard time understanding that again, cuz the bank account number does not go down. And they're like, What do you mean I still have a hundred grand? Uh, they don't realize that that a hundred grand is worth 50. And, uh, try to buy a house and you'll see, try to buy a Bitcoin and you'll see it's a lot, like everything costs more.

So your dollar goes, doesn't go as far right. So that, that's the main point I want you to take away. So you want to consider limiting. The amount of cash that you're holding, right? So most people have their whole life savings in cash. If you look at the average American, most of their net worth is in their cash and the value of their home, right?

The home is gonna be, it should be fine because as there's more money in the system, the value of real estate goes up, right? So that should be fine, but the cash in the bank, Um, that is, to me, it's a liability. You're losing a lot of value right now, having things in cash. What do you do instead? You acquire assets.

I've mentioned a bunch of these before. Uh, it really almost doesn't matter at this point. Having anything other than cash is better than having cash, in my opinion. Whether you're into and look at what you're into, are you into Pokemon? Get some Pokemon cards that are, are valuable. Are you into antique carves?

Get an antique car? Do you like watches? Why don't you start collecting some watches? You don't have to be a stock crew. You don't have to be like an option straighter, um, to protect your wealth. You don't have to be a crypto investor, right? You can put it in things that you're passionate about that you understand.

So I. In my opinion, anything is better than cash, as long as it's something that's kind of a collectible, has similarity to it, right? So for, for me, when I look across like the, the landscape of 

[00:43:06] What is impacted by inflation?

Ismail Humet: what is impacted by inflation, really like the government, when they measure the cpi, they're looking at things like the cost of bread, the cost of groceries.

But when there's more demand for bread and groceries, They can just make more bread and groceries. Like there's not a limit on how much bread you can make there. There is, but you get my point, right? They can just make more bread. No problem. What I look at is things that has a more limited supply and how do those prices react?

That's how you see inflation. So for example, and you're gonna see this now if you haven't already. Right now, people are trying to buy homes. They're trying to move away from the city. They're trying to get bigger land. They're stuck at home. What happened to real estate? Shot up like crazy cuz there's only so much right.

What's gonna happen when everyone starts to feel comfortable about traveling? What's gonna happen to the hotel rates? The airplane ticket prices, I think they're gonna go way up because there's only so many seats in the airplane. There's only so many rooms in the hotel, right? There's only so many Airbnbs and dates available.

There's only so many venues available to have your wedding at, right? So all those weddings that were delayed, um, it, you're gonna have to pay a much higher price to get a date. Anything that's kind of have has a limitation like that. Colleges, they can only have so many students. Right tuition goes up.

Healthcare, they can only take so many patients. It goes up. So those things that have somewhat of a limit or it's harder to increase the supply quickly, that's where you really see the impact of inflation. Um, for me, the best example is Bitcoin. The Bitcoin is like the only thing in the world where it's a totally fixed supply.

Um, people compare it to. You can, there's more gold in the ground that you can dig up. Obviously there's a limited number, but there's constantly more gold being digged out and, and Bitcoin doesn't matter what happens, there's only 21 million coins available. Uh, that's it. That's if even if we get to the year 3000, There's only 21 million.

There's never gonna be another coin that it's a, it's a fixed supply. It's kind of like a, a, you know, work of art, a painting like a Vincent Vango, Mona Lisa, there's only one, right? That's very valuable. So those things go up in price throughout time. So you limit cash. Acquire assets. And I don't think that you should, I'm not saying that you go crazy and you get rid of all your cash, although maybe I, I may have gone to some extremes like that.

Um, you do need to have an emergency fund. Obviously, you do need to pay your bills, like you can't pay your bills in a collectible. Pokemon cards, right? You have to pay it in dollars. So you have to have some cash set aside to pay your bills to live, to buy food, to pay your mortgage, et cetera, et cetera.

But after that emergency savings, in my opinion, I would strongly urge you to reconsider having any anything other than in cash. So now, 

[00:46:11] Borrowing to Invest. 

Ismail Humet: if you wanna go to an extreme level, which I do not, I'm not saying that I recommend, but there are people out there in the world that. Really believers of hyperinflation coming and.

Like there's, there's this guy that I really follow, Ray Dao, who I learned a lot of this from actually. He's the, he runs the biggest hedge fund in the world. Like he manages the most money in the world and he's the first person that I saw say Caius trash. And everyone laughed at him. Uh, but he wrote this incredible analysis where he looked at like the last.

I don't even, I was like 600 years and saw other examples of inflation, how it happened, why it happened, what happened, how do you protect yourself, et cetera, et cetera. And ultimately, uh, people like that, that are wealthy, that have more resources of what they're doing, some of them is that they're saying, Hey, if cash is trash, And I'm losing money, holding cash.

I don't wanna hold it, so let me invest it. Okay? They're seeing, as I'm sure some of you have seen, that you can make crazy money investing your money in stocks and crypto and whatever. Um, even if you don't go crazy, even if you do a safe investment, for example, at and t Stock. It's a favorite of retired people for its reliable dividend.

So if you own at and t stock, you get roughly about a 7% dividend and it's considered a very safe dividend cuz they've increased it and paid it year after year for like 35, 40 years. I don't remember the exact number. Um, throughout all sorts of different economy, uh, different times, you know, through wards, through uh, recessions, whatever, they've consistently paid that amount.

They're giving you 7%. Meanwhile, you can borrow money at 3%, right? If, if you're wealthy and you have more resources, you can borrow money even cheaper. Um, if you get a mortgage record, low rates, it's like 3%, right? So the, the borrowing cost of cash is very low, cuz rates are low. Meanwhile, you don't have to take a huge risk to make.

Money, then you're paying an interest, right? I just told you about the the block five example where you make 8.6%. So some people are taking it to the extreme of borrowing as much money as they can and investing it into things because they'll, they'll make that difference. Right? Even if, even if they're wrong about inflation, right?

They'll still make that difference in the, in the rates. They're borrowing for 3%. They're investing, they're making 8%. They just made five. Um, relatively risk free. Again, depends, but I think you get the point. Personally, um, from my research, uh, from my opinion, what I've done, I,

[00:48:55] Biggest protection against inflation.

Ismail Humet: I found to be the biggest protection against inflation is, uh, three things that I've really zeroed in on personally.

Um, equities which are stocks, precious metals like gold and silver. Uh, gold has historically been a good hedge against, I. But what really has stolen the show is the third one, which I think is Bitcoin. And again, this has gone on for, for quite a bit of time already. I don't wanna, that can be a whole episode of itself talking about Bitcoin and cryptocurrency, but I kind of alluded to why.

Um, it's a hedge. A great hedged gets inflation because it's a fixed supply. Nobody, there's no Federal reserve board in Bitcoin that says, Hey, let's make some more Bitcoin. Nobody can do that. So it's a totally fixed number. Uh, and as more dollars get printed, you'll see as there's more stimulus packages that are sent out, the value, the price of Bitcoin goes up and a lot of people are starting to get into it now.

Because they see what's happening and they view it as a real protector of their wealth. There's this guy, to me, it's a great example. He's the CEO of a public company, um, in the Fortune 500 called Micro Strategy. His name's Michael Sailor and. He put pretty much all the money that they had, the bank, which was hundreds of millions of dollars into Bitcoin because he's like, If I keep my money, uh, and don't do anything, I'm gonna lose half my value in a couple years.

So you work hard to build up that cash, and then in a few years, half of it's gone. Because of inflation. So he put it all into Bitcoin. Bitcoin, it was like 12,000 at that point. Uh, it tripled, it doubled, it tripled, quadrupled, and he just kept buying more and he kept buying more and then he kept going up more.

And he is an example. The reason I bring him up is that he's now borrowing money and using the money that he borrowed to buy Bitcoin, which is wild. So this is the power of of Bitcoin. He's borrowing money, he's issu, he's getting debt from people and he's throwing it into Bitcoin. So I think I saw recently he borrowed a billion dollars.

He put it into Bitcoin. Bitcoin went up. So now he's a billion dollars is worth 2 billion and. He's, he can pay off his debt so easily because it went up and then he borrow even more debt and he keeps doing it. And it's like this cycle where he's a, he's accumulating more Bitcoin for free, pretty much. And it's gotten to the point where he's making, And you can invest your Bitcoin into block five and get interest on your Bitcoin as well.

I think it's like 

6% 

Ismail Humet: interest. He's making more money on his Bitcoin interest. Then his entire company of 20,000 employees working makes the company that he built over decades and decades. He's making more money in Bitcoin interest. Wild, crazy. So, I I, if you 

[00:51:56] Bitcoin is a good investment.

Ismail Humet: follow me on Instagram or if, if you follow me on social media, if you just know me personally, you know that I've been a big believer in Bitcoin for a while.

I, I, I fortunately got some friends and family into it a while ago. And I was always thinking about becoming more public about it. Uh, but to be honest with you, you're, it's always scary. Uh, telling people what to do with their money cuz he could be wrong, right? So a lot of my friends, I was telling 'em to buy Bitcoin at 9,000.

I'm like, Guys, I'm convinced I'm the weirdo at the, at the party yelling at people about inflation and, and buying Bitcoin, blah, blah, blah. And some people listened, most didn't. And I remember walking, I remember leaving. One of these events and I was talking to my wife and I'm like, Man, I'm a weirdo. Like I couldn't control myself.

I, I did it again. I started ranting about Bitcoin and I hope people don't think I'm crazy and. You know, a few months go by Bitcoin's 35,000. And some people did extremely well and they, they told me, You know, you should be more vocal about this. You should. You shouldn't be afraid to share your opinion.

And then of course, I have some people that come up to me and say, Hey, can I buy it now? Should I buy it now? Should I buy it now? It's 40,000. What do you think? It's too late. It's too late. And I'm like, Man, with my luck, I'm gonna tell you to buy it now and it's gonna drop in half and you're gonna blame me even though I told you to buy it when it was 9,000.

You didn't listen, but it's gonna be. . However I feel comfortable now. Um, if you think you missed the boat on Bitcoin, um, I, I think we're really in the early stages. Yes. You missed a lot of the ride, right? You missed a lot of it, but there's a lot more to go. It's still starting, uh, in my opinion. I think I'll go, I'll go public with this on the podcast as I'm recording.

This is about 50. 53,000 in the, in the low 50,000 range right now. Um, I think by the end of 2021. I, I'm almost, I don't wanna, I don't wanna sound too optimistic, but I feel very confident that Bitcoin will be over a hundred thousand. Um, in my opinion, it may, it may touch, uh, between 250 to 300,000 this year.

I don't know if it'll end it there. I don't know if it'll end envy your there, but I think it'll end the year above a hundred thousand. Uh, I'll, I'll leave it there. I think, uh, I covered a lot of stuff in here. I hope you guys, you know, found. Helpful, valuable, useful. Um, please interact with me. Let me know, um, whether it's on Twitter, Instagram, send me a dm, send me an email.

Go on the website, bound to be rich.com. However you can please let me know,

[00:54:37] Like, share, subscribe and comment on the podcast.

Ismail Humet: leave a review. I wanna get more interaction and engagement for people so that I know what kind of content that you want to hear, what kind of, you know, information helps you like. I, I really wanna talk about this cause I think it really impacts people.

Whether you're listening and you are being impacted or your parents are being impacted, uh, you need to know this to take action. So hopefully this little fire under you, um, even if you're not convinced, hopefully you're, you're, you'll look into it more. You'll research it more, you'll think about it more.

And maybe if your eyes are open to it now, you'll see it more. You'll see it around you more. But yeah, let me know, um, if you found it valuable. Um, people ask me what can they do to help me? There's not, uh, there's not much I ask for. I think sharing the show, um, on social media to get other people listening helps, really helps.

The show doesn't really help me, helps the show cause it allows me to get more people. I told you at the beginning, um, because I got to number 60, all of a sudden everyone to come on the shelf. So getting more people to listen, getting more people to leave, reviews that. The show get better and get more people and maybe, um, get people to do some editing and stuff like that.

So, to me, that is all I ask for. If you want to go above and beyond, uh, just consider using any of the links of stuff I mentioned. Uh, there's something in it for you. There's something in it for me. Otherwise, wanna buy me a coffee? There's a link in the show notes. Buy makeup, cup of coffee. I'll give you a shout out.

Uh, I, I sip. A cup of coffee during every show, and I, I don't discriminate. I love all kinds of coffee. You know, it doesn't have to be Starbucks. I love Dunking seven 11, even McDonald's, you know, has underrated coffee. And don't knock it until you try it. Uh, I'd really like to do a q and a episode, so if you've.

You know, if, if this episode or this conversation sparked any questions in your mind, um, if you want me to get into detail on anything more, um, if you, if you're trying to think about what you should be doing on something, um, based on what you heard, please submit your question. Uh, there's a link in the show notes.

There are no stupid questions. Trust me. If you have a question, odds are many other people have the same question. I look forward to doing that q and a. Um, if you have any people that you'd recommend for as a guest on the podcast, Please let me know. I'm looking for interesting people. They don't have to be entrepreneurs or CEOs, right?

They can just be interesting people doing interesting things. And with that, I will sign off and let you guys go. 

[00:57:00] Wrap up!

Ismail Humet: Thank you so much. I'll talk to you soon. And there you have it. If you enjoy this episode, please remember to leave our review. I may even give you a shoutout and read yours out on the show.

For any and all resources that we discussed, check out the show notes or head on over to Bound to be rich.com. Until next time.