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How Decades of Inflation Destroyed Our Dollar, Today’s Rent Trends
• 41 minWe’ve already had more inflation in this young 2020s decade than the entire 2010s. If the next forty years have as much inflation as the last forty, gas will cost $13.38 per gallon, the average home $1.88 million, and the average rent $59,000 annually. Inflation impoverishes most people. You can profit from it 3 ways at the same time. Watch the free 3-part video series: GetRichEducation.com/TripleCrown. The 30-year fixed rate mortgage is a uniquely American construct. It virtually exists nowhere else in the world. I compare this to mortgage terms in Europe, Canada and Australia. In much of the world, homeowners have had their mortgage payments double overnight! Trends that won’t soon be disrupted: more inflation, people need to live somewhere, there aren’t enough places to live. That’s so simple! Invest in it. Rents are increasing the most where little new supply has been added. There’s a myth that gigantic institutional investors are gobbling up all the single-family rental homes. But they only own 3% of the market. Mom & pops own 80%. Single-family rents are up 3.4% per CoreLogic. Detached SFHs are up more than attached types. Property prices and rents are positively correlated. Some people falsely think that they move inversely. Resources mentioned: Profit from inflation 3 ways: GetRichEducation.com/TripleCrown For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Invest with Freedom Family Investments. You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold Complete episode transcript: Welcome to GRE! I’m your host, Keith Weinhold. Learn how the misery of INFLATION is altering BOTH your quality of life and the return on ALL of your investments… … also, many people are now having their mortgage payments DOUBLE overnight and IT’S creating pain, then, what are the factors affecting the future direction of RENTS - all that, and more, today on Get Rich Education! ______________ Welcome to GRE! You’re listening to one of the longest-running and most listened-to shows on real estate investing. This is Get Rich Education. I’m your host, Keith Weinhold - the voice of RE since 2014. I don’t know if you fully realize how much inflation is steering all of your investments - and it’s emphatic at a time like this when the dollar is down 25% cumulatively just in the last four years. Gosh! And I’ve got some jaw-dropping inflation fact to share with you soon. We’ll get to inflation’s RE affects shortly. But here’s what I mean. In stocks, they keep riding up on a wave of optimism, anticipating a Fed interest rate cut - largely due to future INFLATION expectations. Yes, there’s jobs & GDP and some other factors. But the stock market - which is a FORWARD-looking market - it moves based on what’s expected to happen 6 to 12 months from now. STOCK investors know that rate cuts open the floodgates to get us closer to the “easy money” days again. That’s why - as backwards as it is, the worse the economy looks, the lower that inflation tends to be, and then, in turn, the lower that interest rates can go, which the stock market likes. So a worsening economy often pumps up the stock market. Soooo backwards. Just look at what happens historically. Recessions sound bad. Yet what happens is that rates get cut in a recession - because the economy needs the help. But nearer-term, it’s this ongoing expectation of the rate cut - that’s been looming out there for months but hasn’t happened - which CAN keep propelling the stock market to higher highs. It’s already hit all-time highs here recently. You can make the CASE that stocks should keep floating higher from here… based on that premise. Before we look at real estate & inflation. Understand this. Inflation has already widened the divide between the affluent and the deprived. That divide has gone from a gully to a canyon. But... my gosh! Here’s the stat that I want to share with you. And you’re really going to get a sense for the gravity of what you’re living through this decade. We've already seen more inflation in the first 51 months of the 2020s decade than in the ENTIRE decade of the 2010s. Already. This gets really interesting. Let’s look at about the last four decades here. Alright, in the 1990s decade, America had 34% cumulative inflation. Let’s go ahead and… we’ll associate this decade with President Bill Clinton. We won’t tie any President to the inflation number because there are lag effects and other factors. A President really can’t take the credit or blame, in most cases. Just marking the era here. So, 34% inflation in the 1990s. The 2000s decade saw the GFC and… 29% inflation. Most of those were George W. Bush years. The 2010s decade saw lower inflation → Just 19%. So that’s under 2% a year. These were mostly the Obama years here in the 2010s. Little flex there from the former Commander in Chief. Then the 2020s decade → have seen, like I alluded to, and under Joseph Robinette Biden, Jr. - yes, as the oldest sitting president ever, it’s easy to forget that he’s a “junior. In this young 2020s decade, we have, 21% cumulative inflation. Already. So this figure is after just the first 51 months of this decade, if we’re counting from 2020… and this is largely due to supply shortages from the COVID pandemic. So 21% ALREADY this decade… and just 19% ALLLL of last decade which was a full decade. That’s the impact. That’s reflective of what you see in home prices and rent prices and utilities, transportation, labor, and almost every facet of your life.… and what you see in your weekly Costco bill and Trader Joe’s bill. Who have we left out here? A one-term president, so far? Does somebody feel left out. Yes, that is the actual person of one Donald John Trump. Psssshhh! All of those figures I cited are from the BLS, and I’ve been rounding to nearest whole percent. But get this! Inflation over the next forty years could make the LAST 40 years seem like a picnic. That's partly because we're $35T in debt and that figure now grows by $1T every single quarter… every 90 to 100 days. So we MUST keep dollar-printing to help pay it back. But just, if the last forty years repeats itself, by the year 2064, which is the next forty years, we'll see these prices. Prepare for a future that looks like this: Gas at $13.38 per gallon The home price at $1.88 million Average rent at $59,000 per year And the average salary at $104,000 That is if inflation over the next 40 years, looks like that last 40 years. Also, note how salaries don't keep pace with prices. That $104K average salary in the year 2064 doesn’t sound as high-flying as those other figures. Well, this is all really frustrating for consumers… and even debilitating to one’s standard of living. Remember, this latest wave of inflation brought us the biggest YOY increase in homelessness - based on HUD figures. and why you need to invest in something that reliably BENEFITS from inflation and pays you an income at the same time. Look, here’s really, the deal. Dollars are abundant. So then isn’t it a paradox that a major spike in the supply of dollars would create more homelessness? Well, you know that dollars are there for your taking - because so many more have been brought into existence. Dollars are abundant. So as they cycle through the economy, rather than going through the consumer motions, you can build your diverter. That’s where the world of abundance exists, so get into that flow. Ultimately, REAL capital is scarce. Your time and energy are scarce. Natural resources are scarce. Labor is scarce. What’s frustrating is that money ought to reflect that scarcity if it is going to accurately convey the value that enables people to make capital accumulation decisions. And alas, we’re doing our measuring in dollars and the dollar is not remotely scarce. The middle class and poor often have wages that don't track inflation, yet they disproportionately suffer the higher consumer prices. The investor class owns assets that float up with inflation. And GRE listeners will do even better than that. As income property owners with mortgages, we're winning three ways at the same time with the Inflation Triple Crown. That’s your dollar diverter. Alright, so that’s longer-term inflation. I’ve been talking in terms of decades - both the past and with an extrapolation into the future to 2064 there - and it’s really rather sobering. Well, what's the more CURRENT inflation situation? The situationship? Ha! What’s the situationship now? In trying to quiet it down to their 2% target, the Fed has run into so many hurdles that you'd think they were training for this summer's Olympics in Paris. After it peaked over 9% two full years ago now, inflation’s been bouncing near 3-and-a-half-percent for a year and they just keep having trouble getting it lower than that. Hmmm... would we say that this could turn into Jerome Powe
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