All the people I know who are wealthy, a lot of my friends who are worth millions of dollars, how
did they get there? Did they buy gold? No. Did they buy real estate?
No, they didn't. They might say they do now to protect their wealth, but they didn't get
there that way. Let me tell you, they all did it through. This is the best
hedge against inflation of all time, okay? It's
the fastest way to outrun inflation and unlike
cash, it can compound very powerfully. All
right, so check it out. You're going to be thrilled or
you're going to be disappointed, either one. Here we go. The best
way to hedge inflation is to actually increase your skills. The best way
to hedge inflation is to earn more money. The fastest way to
outrun it is to earn more. Unlike cash, skills can
compound drastically. You can end up finding skills that you can totally transform
your earning power with, and your income is the most important thing you
can do to enhance your wealth. It really is. You can't save your
way to wealth. You can do it for a period of time, but you can't get it down to nothing. So,
there's an example in, I mean, many examples in
the past where there's inflations crushed the economy. I
know without a doubt that people in that economy with skills, sought after
skills, were still getting paid a ton of money in all sorts of different
currencies and or gold and or in barter to apply
their skills to the economy. Okay, so it doesn't, if you've got skills,
people will find a way to give you something of value to get them. So
it doesn't really matter if your local currency, like the Australian dollar is completely, you
know, getting, It's completely collapsed in the last few years in
terms of its value, but... I know that if I've got
skills, I can get paid in gold, I can get paid in US dollars,
I can get paid in barter. Like if I'm good at what I do and people
need it, they will find a way to pay me. Even if the currency is toilet
paper, I know during COVID when there's a lot of toilet paper, I could have provided a skill to
someone. So Lloyd, I'll pay you in toilet paper, go give me the toilet paper. It doesn't
really matter what it is, your skills are inflation proof. And
it doesn't matter if the global currency is crypto, USD,
gold, barter, whatever, your skills transcend
all of the global currencies. All of them. So
the most important thing you can do is improve your
knowledge and skills because they are inflation proof. They will ride inflation way
up because there's people out there with skills. Think about it. Think
about Mark Zuckerberg. He's now like the top three or four wealthiest people
in the world. He's also the youngest in that group. Think
about the skills that he applied. He became worth $100 billion. Do
you think that outperformed inflation? Yes. Do you think Jeff Bezos outperformed inflation?
Yes. Do you think Warren Buffett outperformed inflation? Yes. All the people
I know who are wealthy, a lot of my friends who are worth millions of dollars, how
did they get there? Did they buy gold? No. Did they buy real
estate? No, they didn't. They might say they do now to protect their
wealth, but they didn't get there that way, let me tell you. They all did it through actually
improving their skills and starting and building their own businesses. That's
how they did it. So don't, and
some people have certainly, like there's a story of a lady, she
just gave a billion dollars to a charity. Her
husband happened to invest with Warren Buffett, that's stocks, that's Berkshire Hathaway, and
ride that sucker way up to a billion dollars, and of course,
incredibly powerful hedge, because Warren Buffett in
the last 60 years created 5.5 million percent return. To
put that in perspective, the S&P 500, 30,000 percent return. To
put that in perspective, it way outperformed inflation. Inflation hasn't
been anywhere close to those two numbers. So stocks and businesses, yes,
can also outperform it. But for most part, it's businesses
because of skills. So if you want the ultimate hedge, invest
in yourself. You are the ultimate hedge. You are the best asset to
invest in to overcome inflation. So could hyperinflation happen
in Australia? Could we absolutely destroy the power of
the Australian dollar? Theoretically, yes. Will
it happen? Technically, well, technically yes, but theoretically or
I would say no. It's unlikely because we've
got a floating exchange rate. We've got an independent reserve bank.
We've got global trading partners. We've got a ton of resources here,
deep capital markets. And we do have, despite the challenging
leadership we have at the minute, that's a whole other episode of what I think about that. But
we do have the ability to control money supply. And
we do have hard assets backing. We've got land, arable land.
We've got farming, commodities. We've got resources, energy, hydrocarbons.
We're good. But if hyperinflation does happen,
Like what happened in Germany, what happened in Venezuela, what happened in Zimbabwe. In
those scenarios, you know what happened? People fled back. They just
dropped the currency. They went back to other currencies. They went back to the US dollar. They
went back to gold. That's what happened. The
economy doesn't die. The paper money is just forgotten. All trust is
broken and we stop using it. So it's not like you'll just have
nothing. You will have figured out by then if there's hyperinflation, what
does work and you'll have already gone there. But I can almost guarantee you that
if you have business skills and you have the ability to pivot and
you buy businesses and build businesses, there's no amount
of inflation that can hurt you because you are indestructible because
you invested in yourself. And of course, one of the other hedges
that's happening that I haven't really covered here because I don't want to is cryptocurrencies, especially
Bitcoin. They're like, oh, Bitcoin's a hedge against inflation. Oh,
my God. Do I have to talk about Bitcoin? It's a code. It's a
piece of code. And people are like, read the Bitcoin standard. How
much research you have to do to realize something's valueless? Look,
people are using crypto and specifically Bitcoin as an inflation hedge.
But the fact of the matter is this, gold has got thousands of
years of measurable data against inflation than
crypto does. It's tangible. Remember, the inflation hedge
is against tangible assets, right? Things that
can produce value for the world. Crypto doesn't produce any
value. How do I know that? Because I went down to the supermarket, With
my wife, we were doing a checkout and I said to the lady, ìHey, do you take
cryptocurrency for my groceries?î She went, ìNo.î I was like, ìPfft.î Then
I went to my landlord the other day, my property manager and he called up and said, ìHey, you
owe rent.î And I'm like, ìOh, do you take Bitcoin?î He goes, ìPfft.î So
I'm like, ìOkay.î And so I rang up my American Express. I
got an American Express card, platinum card. It's a wonderful card, lots of points. And
I rang him up the other day and I had like $100,000 to repound that. And
I said, ìHey, do you take cryptocurrency? Do you take Bitcoin?î They went, ìPfft.î How
is crypto or Bitcoin a hedge when it's not even valuable?
I can't use it for anything. At least I
can sell gold on the open market. I can sell it.
You can touch it. You feel it. Even though I hate gold, I can at
least see it's there. You can't see anything with crypto. It's
just code. Right? There's
certainly value in the technology of a blockchain. There's certainly value in
the technology of internet. There's certainly value in technology of AI, LLM
models. There's value in those for sure, because they speed up things. Yes? But
I can't see it in crypto. And so it might feel
like it's a hedge against inflation. By all accounts, if you haven't bought it, it looks
like it's hedged. But how they measure it? is
in USD, right? And so if the USD disappeared overnight, so
would the value of cryptocurrency, right? Because it's really got to be
valuable in the real world. And that's why I don't think it's the best hedge. So
I don't hold any of it. I never will hold it. Even if the world adopted
it as a currency, which I cannot see happening, I would
still own businesses. I would still, for that matter, if it
was the right price, own a piece of property. I would still own things
that are valuable. And I just can't see how it's valuable. This is why I
don't personally own gold. I don't personally own crypto. I personally own
things that are valuable to the world. Because I know if push
came to shove and shit hit the fan, like it did in COVID, did
people go to crypto? No. Did they go to gold? No. They went to toilet
paper. So I'm thinking to myself, wouldn't I
want to own companies that produce toilet paper? That's a better hedge, right? This
is where my mind's at. This is how I think. So I know that people got wealthy by
not owning those assets. I know they got wealthy by building businesses and investing
in themselves. So I'm all about playing wealth games. What are the wealthy
doing? What did the wealthy do to build wealth? because it's much
better than just preserving it. Thanks for listening to Money Grows on Trees. If
you enjoyed the episode, leave a five-star review on Apple Podcasts and
Spotify and subscribe to us on YouTube so you never
miss an episode. And if you're serious about building wealth, make sure to
check out the links in the show notes and follow me on all social media
platforms at LloydJamesRoss for more. See