Earlier this week, Americans celebrated Independence Day, America’s most meaningful federal holiday.
Of all dates in human history, July 4, 1776, stands out as the most fateful.
That day, the Second Continental Congress adopted the Declaration of Independence, in which the Founding Fathers decisively broke ties with the British Empire.
Watch the video HERE.
The United States is unique for its constitutional form of government, divided powers, and federalism. These features of the American Republican have played a major role in diffusing political power, thereby making it easier for productive individuals to thrive both economically and in terms of political freedoms.
Unsurprisingly, this has allowed the US to become the most prosperous society in human history. While Americans have every reason to celebrate this occasion, the country has largely deviated from the foundational principles that made it great.
This is most apparent when looking at the country’s current inflationary crisis.
This is the product of the US’s bloated administrative state and reckless monetary regime
The administrative state is one of the most pernicious facets of modern-day American politics. It functions as the fourth branch of government.
These agencies aren’t accountable to the voters. Just think about it, when is the last time that bureaucrats get fired for screwing things up in politics. Politicians, on paper at least, can still be voted out of office for their bad behavior.
Similar logic applies to America’s central bank, the Federal Reserve. It’s filled with unelected technocrats who micromanage the economy. At times, their economic tinkering can result in mass inflation.
Suffice to say, Inflation is one of the biggest scams foisted on the American people. We see and feel it everywhere.
Just think about the BBQ you attended during the 4th of July. You probably noticed the significant hike in meat prices. For example, ground beef has almost doubled in price over the past year. Many other consumer items that we take for granted are becoming much more expensive.
Also, beware of “experts” who talk about the consumer price index (CPI). This index that allegedly measures inflation is as misleading as it gets. For example, the way the CPI is calculated should make people skeptical of the way it measures inflation.
There’s a general assumption that when the price of a given good goes up, say beef in this case, people will just switch to buying another food item such as chicken.
Here’s the problem, some people don’t like chicken irrespective of the price. So they won’t substitute beef eating by switching over to chicken when the price of beef rises. This is where these indices can get very misleading.
You’ll often hear about core inflation or headline inflation. The thing about core inflation is that it gets rid of food and energy for its measurements. These kinds of omissions are a big deal. We need food and energy just to function on a daily basis.
This is where inflation is most felt. Inflation is a deadly beast. It destroys the value of savings, stock bonds and even the equity in real estate.
But guess what? There’s a positive side to inflation if you’re in real estate investing. Namely, inflation erodes the value of the debt you hold.
This is a process that I’ve dubbed inflation induced debt destruction. It’s the hidden wealth building strategy that’s made many income property investors wealthy.
The process is actually quite simple.
First, you head on over to your local bank and take out a loan on a property. In the most optimal of cases, you acquire this property in a linear market.
After buying the property, you rent it out to a tenant or two. From there, the tenant(s) assumes the carrying costs of the property.
Over time, you pay the debt off in depreciated dollars because of inflation. Meanwhile, your income property appreciates much faster than the rate of inflation.
The home is at the center of the universe, which is why housing will always be in demand, thereby making it the most historically proven asset class.
On top of that, income properties are the most tax-favored asset class in America. Taxes are usually the largest expense for most people so it makes sense to become an income property investor.
We’re living in inflationary times, so it only makes sense that you prepare yourself for the economic turbulence that lies ahead.
Make sure to channel the spirit of 1776 by turning in to one of my latest videos where I explain how you can sign your very own financial Declaration of Independence.
Your journey to financial freedom starts here.
