Inflation, Opportunity, and Maintaining Control

In addition to redistributing wealth from lenders to borrowers, inflation redistributes wealth from old to young. Older folks are typically on a fixed income, so purchasing power is destroyed as prices increase. Younger people generally have more debt, which is less susceptible than assets to attack.

It isn’t fair, but people who have saved money are often the ones to get burned. We’re operating by a set of new rules now. But what happened, exactly? Nixon took us off the Gold Standard and we saw a fluctuation in value.

Inflation is measured by the Consumer Price Index, which is highly manipulated. One way it is manipulated is by looking at the pleasure afforded by different items. For example—how much more pleasure would I get out of a new computer than one I would have purchased five years ago? The two aren’t the same because technology is ever-evolving. It’s also manipulated by the offer of substitutions, the idea that if the price of beef goes up, people will eat more chicken. The point is that things come in and out of the price index, causing constant manipulation in an effort by the government to make inflation seem lower than it is.

Right now, we have a rare and special opportunity to get more out of our dollars, by purchasing packaged commodities that you can label as real estate. When you buy, look for small amounts of land (just enough so you can call it real estate) with houses on them so that you can claim all of the great benefits that go along with real estate investment. Invest in packaged commodities disguised as a house!

So, despite a burgeoning middle class in other countries and an increase in poverty within the United States, you can game the system and actually build wealth. Accepting that the game has changed is essential, and we have to be proactive with our financial self-defense. Jason Hartman has said that he’s an opportunist and not an optimist—this is key to financial success.

Real estate is special because it is always in demand. We have a universal need for housing, and that doesn’t change when the economy fails. In fact, as people are forced out of nicer homes, they’re going to need a place to rent. Standards of living are going to decline, but if you own real estate, this works in your favor.

The most important thing you can do to act in your financial best interest is to keep your money within your control. Although you’ll still have to do a little work, income properties allow you to do this in the easiest way possible.

(photo credit: Great Beyond via photopin cc)

* Read more from JasonHartman.com

Going Green: Sustainable Investing

Understanding Inflation

The Jason Hartman Team

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