Can we blame good old Mr. Morgan for economic turmoil in the United States 90 years later? In a conspiratorial but actually simplistic way we certainly can. What’s all this got to do with the price of rent in your property portfolio? Quite a lot, in fact. There was a confluence of events in 1913, right around the time J.P. Morgan left this mortal earth, that led to the inflationary cycle we find ourselves stuck in and, furthermore, has left real estate standing as the only real investment that makes sense for the average person who wants to get ahead.
Leading up to 1913, Morgan was the lender of last resort. What that means is that when people panicked and created a run on banks, Morgan stepped up to bail them out. Is it a coincidence that the year he died, 1913, also saw the creation of both the Internal Revenue Service and the Federal Reserve Act?
Since Morgan was no longer around to prop up the economy, a new way was needed to respond to peoples’ reservations about the security of the paper currency. With the Federal Reserve sliding into Morgan’s spot as the lender of last resort, they no longer used gold and silver to bail someone out but, instead, simply printed more money.
More money means, all together now, inflation! Inflation refers to inflating the amount of currency in circulation just because they want to but what it actually leads to is a reduction of the value of the dollar. What can you do to make your dollars more valuable? It probably wouldn’t work well to start you own central bank or reserve system. The game is too big to change by yourself. What you need to do is take the rules they give you and play it to win. What is the government doing? Loading up on debt? What should you do? The same thing. Not crazy consumer debt but prudently leveraged investment property loans where the bank takes the lion’s share of the risk and you buy your property on sale in lesser value future dollars.
If this sounds like we’re talking nonsense, call one of the Empowered Investor expert investment counselors and have them explain it. The concepts in this simple article could make you very wealthy if you learn to play the game from the inside.
