E120: Is Insidious Inflation on its Way and How to Protect Yourself

Podcast transcript for episode 120: Protect Yourself from Inflation

Nate: In this episode, we discuss how the current political environment is flashing warning signals that inflation is on its way and also how the infinite banking concept can protect you from the negative effects of inflation. She’s Holly, and she helps people find financial freedom.

Holly: He’s Nate, he makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Nate: Well, if there’s one subject that seems to get brought up all the time by most of our listeners, our clients, even ourselves in the current environment is inflation seems like it’s on its way. Or we can’t imagine that if the current political environment with Biden proposing huge spending plans, finance through government debt and flushing the economy with money, we can’t really imagine how that would not cause some inflation, which is rising prices in the marketplace. In fact, I think we can see that in certain ways. So that’s certainly got us worried, got our clients worried, and we’re here just to give some of our opinion on what’s coming up, how to position yourself. What we thought we could shine some light on, particularly as we go forward, is how the infinite banking concept and your policies can actually improve your situation when it comes to inflation and at least reduce the negative effects that inflation can have on money. So Holly, inflation’s coming, we think.

Holly: Or it might be already here, Nate.

Nate: Probably is. I mean, we spent a lot of money last year, a lot of money this year. So here we are, we’ve got clients worried, we’ve got people listening worried about what to do when inflation hits. We’re here to try to give some ideas. As I said, I think most of these most people already know, but we definitely felt the need to at least have a podcast discussing IBCs effect, because that’s also a big question.

Holly: When you look around at what is taking place right now, not just in the US but in the world, the cost of stuff is starting to rise and it’s not because that stuff is worth more than it was last year really, I think it has a lot to do with that dollar is not worth as much as it was. And you can see the concern for having to buy something now, because who knows how much it’s going to be six months from now, let alone three months from now. And the reality is even with inflation, when you have a policy, it actually benefits you in regards to the inflation.

I mean, I sat down with clients yesterday who were so concerned with the money that they’re going to have to spend and the rising costs of everything and saying, “We’re not going to have any money.” And we looked at their policy and they’re like, “Oh wait, wait, wait. We’re okay.” Because what they’re putting in today is growing by more than what they’re putting in. So in some regard it doesn’t really mean that they won’t have money, it just means that as inflation rises, their policies are growing so they have the money to use it in the future, as well as today.

Nate: This also goes back to almost confirming some things that we’ve discussed about retirement. So if you’re new to the podcast, you know that while we certainly do help people with retirement, I personally think the conventional concept of retirement is destructive and should not be, for most people, a primary goal of building wealth. It should be maybe a result and effect from somebody who has built wealth, but I don’t think that should be your only goal for building wealth.

I think there’s far superior options, but the effect of inflation seems to bother and worry and fill anxiety with people who are retired or who will soon retire because of that very thing you said, Holly, which is how can I plan for a retirement income when I don’t even know what the dollars are going to be worth? It’s a worry for everybody. But once you get closer and closer to your quote-unquote retirement, it becomes even a bigger worry because you’ve planned for a certain amount of income that you think your lifestyle can support and then suddenly you have to keep on spending way more money just to keep the same dog food or something like that.

Holly: But Nate, that’s true. I’ve had clients and individuals, I’ve even read articles where people that are living on their retirement or their pension, what they honestly can afford is dog food. And that is very sad if that’s the case it is, but if a client saved $200,000 and they thought that’s going to last me for the next 10, 15 years, and they retire at 65 and they live to 88, it’s gone before they know it. And then they don’t know what to do because that was their only backup. And that question is, “What will I have in retirement? If I do this, what can I see myself having? Versus I know that the money I put in today if I just leave it there in a traditional retirement program.” Literally my client said to me yesterday, “It won’t be there when I get to retire, I have 20 more years,” and the belief is that money won’t be there, it’ll be gone. And they will outlive that money in retirement if they don’t do something else.

Nate: Well, that’s very true. And as I mentioned, one of the big things why I feel like retirement is a scam or it certainly brings fear and anxiety automatically, when in reality, the alternative, and we’ve actually had a guy, Rabbi Daniel Lapin, who embedded this in us, we’ve had him on our podcast before. Quite a while ago, we should probably get him back on. Essentially retirement itself is a flawed idea. Nelson Nash talks about it, rabbi Lapin talks about it, and I believe it causes more angst than anything, especially when it deals with inflation. Your alternative should be to continue to produce value for as long as you can doing, something that you can get on board with. It’s just not worth living in a job that you don’t enjoy for 40 years just for your ability to retire and then be afraid about money for the rest of your life.

That’s a pretty lame life. So I guess what I’m trying to get at is inflation is a bigger fear for individuals who are planning on retirement than those who are not because I would be afraid if I was going to retire, but since I’m not planning on retiring, I know I’m going to continue to produce value. So I would just encourage you with that when it comes to inflation. But I do feel, and Holly, you feel, that inflation is most likely coming. It would be hard pressed for us to believe it’s not. The Federal Reserve is announcing that they want more inflation because it’s been lower than their 2% goal for a while. And they say, “Instead of us trying to keep it at 2% all the time, we need to make up for all the time that it wasn’t at 2% for the last 10 years or so.”

So we’re going to ramp up inflation and we need buy-in to print money, we need us to keep interest rates low longer than they need to be. All these signs are pointing to inflation. It will worry you if you’re putting your goal in the dollars value, as opposed to putting your trust in your ability to produce value. But how can we protect ourselves from inflation? It’s still a thing. Whether or not you’re planning on retirement or not, if you feel inflation is coming like we feel, what can we do to protect ourselves? What you want in an inflationary environment is assets that will improve in value, increase in value during that inflationary timeframe. What you don’t want is money in the bank, which is what we’ve been teaching forever because money in the bank does not really increase in value.

In fact, due to inflation, if you don’t have a 2% interest rate on your savings, it’s actually costing you money to leave your money in the bank. So, the fact that you have money in the bank, they may have no fee checking account or no fee savings accounts, but it legitimately in real terms costing you money if you’re in an inflationary environment, which we are all the time, and you have money in the savings account. Which is why we say get rid of banks, but nonetheless, so whether it’s Bitcoin or gold and silver or real estate, all the things that you’ve probably heard us talk about before and push forward that you should be investing in, these are things that typically do pretty well in inflation. So I’d say continue to do that.

Holly: And I would say, for some reason, Nate, we really believe there’s safety and security, most of us, if our money’s in the bank, it’s protected, it’s insured to an extent, yet what we don’t realize is that money sitting in the bank really isn’t growing, like you said, at all. It’s not earning you anything sitting in the bank.

Nate: It’s losing you money. Absolutely. So essentially this is actually pushing us towards infinite banking. So if you listen to us very long, you know that we actually are not treating infinite banking as an alternative to making investments. And that’s never been the goal of infinite banking. Banking is just a natural thing that’s going to occur. It’s going to be money exchanging hands in some form or another. And it doesn’t matter if it’s inflationary period or deflationary period or anything, my goal is just to have more money, make decisions and do strategies that put more money in my pocket than otherwise. So with infinite banking, what we’re saying is that you can practice banking from these policies, the same things you were already going to do with the bank account, just do with these policies, and it will actually produce for you more and more money than you would have had during the conventional banking sense.

So even if the dollars do start to lose value, we’re able to create more money through our use of these policies in order to offset the effect of inflation. My policies this year are going to grow by over $20,000 more than my premiums. So I’m going to pay a certain amount of premiums, pretty big premium, but I’m going to pay a certain amount of premium, I write checks to the insurance company to pay premiums on my policy. I’ve got nine of them, I believe. And I could then pull out, this year, $20,000 with no tax more than I was able to put in.

So I just increased my money supply through having this system. But the fact that I’m putting money into the policy does not actually limit my ability to then pull out that 20,000 of profit if I want to. And I can go use it to do things that I think are going to increase in value during inflationary periods, whether that’s Bitcoin, whether that’s gold and silver, or whether that’s raw land or real estate, things that will typically increase with inflation. The fact that I own these policies has allowed me to buy more of those other assets than if I was doing typical banking. I can’t write a check to a bank account and get 20 grand of profit to go do something else with. And if someone else knows how to do that, let me know.

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Holly: The reality is there’s never been a system or program like this that you can put money in to it, take money out of it and make a profit by putting the money in and buying those assets. I mean, really what we’re saying is if you own an infinite banking life insurance policy, it will allow you to go buy those assets that will hold their value in that inflationary environment, and still allow you to create more money.

Nate: I don’t think we’re going to have no dollars soon. I mean, maybe at some point in the horizon, but I don’t think all of the world currencies are going to completely go to zero in the next 20 years. Now don’t ask me what’s going on beyond that. We’ll have to experience large amounts of inflation before that occurs, which talk to me one-on-one if you want to know more about my thoughts, but all that to say, the fact of the matter is it still costs dollars to buy things. So people might want to buy Bitcoin and gold and silver, and that’s great, but you can barely buy anything with Bitcoin. And certainly, it’s really hard to buy things with golden and silver right now. You have to trade in your Bitcoin’s and trade in your gold and silver for US dollars, so then you can go buy the cheeseburger.

You can’t just walk to McDonald’s with your Bitcoin. It just happens to be that those assets are going to increase in value as the dollar is devalued. Inflation is just a comparatory term. In other words, the value of the dollar is decreasing compared to the value of a cheeseburger. That’s why the cheeseburger price goes up because the value of the cheeseburger is the cheeseburger. The value of the dollar is just relative to the value of the cheeseburger. The same thing goes with Bitcoin and gold and things like that. As the dollar is devalued in comparison to these assets, then we can buy Bitcoin today and sell it a year from now and get far more dollars than what we bought for it. That’s great, but nonetheless, you still need to practice banking and banking is still going to occur in the form of US dollars for quite some time, if not for forever, but all that to say, my policies are an automatic hedge against inflation.

The fact that they’re going to grow guaranteed this entire time at a very high rate with no taxation on the growth means I automatically have a guaranteed inflation hedge inside of them. But then my ability to leverage the policies to buy other assets that I feel are going to increase in value or produce cashflow, that in of itself is banking. And that’s what, hopefully, we’re trying to teach is that sure, the policies are good, but if you’re just going to let all the money sit in there, you’re doing banking wrong.

Holly: No bank in the world lets dollar sit there. Whatever the currency is, any bank in the world continues to move that money and keep it in motion. So your policy is the bank. It’s not the investment, it’s the bank and it’s supposed to be used. So if you have a policy and you’re not using it, I’m going to say start using it because you’re not being a banker. And it’s not really a bank. It’s just a savings account sitting there.

Nate: Exactly right. And I mean, the savings account is nice, I guess, but if you’re not going to bank with it, you’re not practicing IBC. And banking would then require us to put the money in motion. And that’s another thing that inflation occurs mainly on assets that sit still. That’s the one thing are most negatively affected. That’s why we always talk about good dollars today and weaker dollars in the future. And what banking allows us to do as opposed to retirement programs and these other types of vehicles that require money to sit, it allows us to use dollars today while they’re still valuable and while we can still buy stuff with these dollars while it’s actually worth something to buy something with, as opposed to hoping 30 years down the road when we can finally retire that the dollars inside of the account are worth something in that time.

So, the fact that you’re practicing IBC as opposed to stationary money, retirement program style systems can actually help you overcome inflation simply by getting your hands on the dollars. So the question of, “Well, Nate, what happens to the policies in inflation?” I’d say, “Well, it’s the same thing that happens to anything during inflation. If you’re telling me that you’re planning on having all of your money sitting in policies doing nothing, I think it’s your fault. Not the system’s fault. You just haven’t been using it. You haven’t been working with them.”

Holly: It goes back to exactly what he said a few minutes ago when if your money’s sitting in the bank, you’re losing profit on that. You’re losing money because it’s not going to be worth the same dollar. $1 today, even a month from now in my viewpoint, will not be worth the same, you’re losing money on it. And in a policy in the same way if you just park that money, the system does not have a way to create or generate additional money. I mean, yes, it’s compounding and it’s just sitting there, but you have the ability, like he said, to take out that money and buy assets that will hold their value and you didn’t have to go and take your gold or silver and turn it into dollars to go buy the asset that you want or to go buy the car or the food, all you had to do was use your policy to do it.

Nate: Inflation is coming, whether we like it or not. The fact that retirement is such a big goal creates more anxiety for inflation than otherwise would be warranted. That’s why I encourage people to think beyond retirement. That should not be the ultimate goal of building wealth. That’s just a by-product of someone who has built wealth, is they can retire if they want to. But I would try to get my mentality to change from that. There are certain things that we all are aware of that we can do to produce better results, which would mainly be buying gold, buying silver, things that increase in value, whether it’s Bitcoin or real estate, real assets that increase in value compared to a devaluing dollar. The fact that banking is going to occur no matter what is important because during an inflation, you actually want as much money as you possibly can rolling through policies and back out more than ever, because you need to turn bad dollars into more dollars to go buy the good stuff.

So, that’s what we’re doing with policies, paying premiums and every single year, the cash flow is going to grow by more and more than it did the year before. So I can put 10 grand into one policy and get 12 grand this year to go play with, and then I can put 10 grand in next year and get 13 grand to play with and so forth. So actually, I have a natural hedge against inflation through the use of the policies, but then it also empowers us to use them to buy these other assets that grow faster and faster against the devaluing dollar. And so the common question is, “Well, Nate, what’s going to happen to policies when inflation hits.”

First off, you’re going to get a good hedge against it due to the growth of policy, but nonetheless don’t think of the policy as the investment. It’s not the storage tank just to sit money on, it’s the banking tool and banking is going to occur in inflationary periods or not, and I just want to have more dollars than the next guy does, and I can do that by creating a profitable banking system.

Holly: And the key there is that no matter what, banking is going to occur. Doesn’t matter. Banking is so going to occur, the question to ask yourself is are you going to be the one controlling your bank or is somebody else going to be controlling your banking experience, really?

Nate: And especially who’s making the profit from it. So no matter what we do, IBC is a concept, not a product. The concept is going to work in high interest rate timeframes, low interest rate timeframes, inflationary timeframes, deflationary timeframes. The simple truth is we can make more money as an owner of the bank than as a depositor of a bank. That’s going to be the case this whole entire time. I would encourage you though, to be wise, knowing inflation is coming and to set aside some of your money that you’re building up in your policies, or if you haven’t started a policy, that’d be step number one, start a policy to get money rolling in there so we can create money by movement as opposed to just by investing. That’s what banking is.

But I would say, for those of us who are already doing IBC, to be wise about what’s coming and make sure there are some real assets in your portfolio, whether that’s gold, silver, maybe even Bitcoin now, that will increase in value as inflation hits. There are certainly assets that do great in inflationary timeframes. I think it’s a good time to buy some of those before inflation really strikes and use your policies to fund it, then you get to win on both sides.

Holly: If you don’t do infinite banking as a concept, it doesn’t matter what happens with an inflation, the profits are all going to go to somebody else but you, and you’re just going to lose money on your dollar. And I think it’s really important that if you do have policies, you guys do have to be aware, you have to start putting your money in there and through it. Not just leaving it sitting in somebody else’s bank account to earn them money.

Nate: As inflation starts to strike, you want more money flowing in out of policies, not less. In other words, we all do banking. Most of the time, it’s pretty much all through a bank account. We’re trying to change that. Let’s do as many transactions as we can through a policy, roll as much money in and out of policies through the premium that we possibly can. That way we can create more and more profit that will help us automatically hedge against inflation. And we can utilize the cash values that we’re creating to help buy other assets that would also do well in inflation.

And I think you’ll have a winning recipe to overcome inflation and profit from inflation so that you don’t get the negative side effects, which is, “Hey, I got these dollars and they’re buying less and less stuff.” Well, let’s get more dollars and let’s buy some things with those dollars that increase faster than the devaluation of the dollar. If we can do that, we’ll be in good shape.

Holly: I agree.

Nate: All right. Well, thanks for being with us again. This has been Dollars and Nonsense. If you follow the herd, you will get slaughtered.

Holly: For free transcripts and resources, please visit livingwealth.com/e120

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