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What I don't believe in is buying a completely ridiculously overpriced

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property that's got negative cash flow, sending you into a financial spiral. And

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that's currently what is happening because prices are ridiculously out of control. Bitcoin's

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a hedge against inflation. Oh my God. Think

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about Mark Zuckerberg. Think about the skills that he applied. He

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became worth a hundred billion dollars. Do you think that outperformed inflation? Yes.

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Do you think Jeff Bezos outperformed inflation? Yes. Do you think Warren Buffett outperformed inflation?

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Yes, the best way to hedge inflation is to actually... I'm Lloyd James

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Ross, seven-figure investor and entrepreneur, and I've helped thousands of

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business owners and professionals turn financial stress into

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success. If you're stuck in old money habits, overwhelmed by investing,

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or unsure where to start, this is for you. I'll give you the mindset

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and strategies to take control, grow your wealth, and achieve

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financial freedom. It's time to make your money work for you. How

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to protect your wealth in the Australian dollar collapse. Inflation's up, the

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dollar's down, leaving your money in the bank. It's like putting it into a

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leaky bucket or chucking it into the fireplace. But here's the thing, smart

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money people and highly intelligent people financially have beaten inflation before.

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So in this episode, I'm going to break down exactly how you can protect your wealth

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even in uncertain times like now, using proven strategies that

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worked in most of the cases of brutal inflation in

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the past. So some economic history tied into this. So

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if you haven't watched the previous episode yet on why the Australian dollar

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is collapsing, go and watch that now. Go watch that episode, because we'll set up

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and tell you why it is actually falling. Because once you know why

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it's falling, then the how-to of how to get out of it will be in this episode now.

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So every few decades, Inflation

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seems to roar back, which means the value of the currency falls. And

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you have to adapt or you're going to get lost or fall behind. Your

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wealth is going to get hit. And history shows us that inflation can

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be survived and even used to grow your wealth if

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you play the game correctly. So just

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to be clear, in the past there's been some examples

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or real-life experiences where hyperinflation has

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completely decimated the economy. And as I said on the previous episode,

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it has crafted things like World War II from it, right? So hyperinflation, Zimbabwe,

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Wyoming, Germany, it's extremely unlikely in Australia

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we're going to see hyperinflation to that extent, where we're taking

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a wheelbarrow of money down to the shop to buy a loaf of bread. But nonetheless,

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It's inflation's already eating away at your wealth, all right? We are

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a developed economy, thankfully, with institutional safeguards and we've

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got an independent monetary policy and all these sort of fiscal controls in place

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to mean that our money is safe from hyperinflation, but

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An economy or a country and a government can get a bit ahead

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of themselves and they can start pulling too many levers, which seems to

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be happening at the minute. It's causing more inflation than

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normal and it's slowly draining away the value of your wealth every

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single month and every single year. Let's get

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tactical. I'm going to take you through real examples

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of how you protect your wealth in periods like

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hyperinflation or in periods like we're seeing now, which is rising inflation. So

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the very first one, the simplest one, and before I

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explain these, let me just explain one economic concept that you have to understand. To

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prevent inflation wiping away your wealth, what you want to do is

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buy assets, typically hard assets, not

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always, but typically hard assets that you only

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buy once and never have to buy again. Because once

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you bought once with today's currency, no matter how much inflation

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runs away, you never have to worry because the value of that will follow the

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currency. And there's no proven better way to do that than

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with property, okay? Now you would have seen on some of my ads lately and

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some of my content, I'm just like killing property. I'm like, property, you

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don't need it. And what I mean by that is, cause I had a friend of mine asked me

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today, he goes, Lloyd, What's this? What are you doing? You

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don't like property. I'm like, oh yeah, okay, the ads are working pretty well. I've

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had a vendetta against it at the minute because what I

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don't believe in is buying a completely ridiculously overpriced

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property that's got negative cash flow, sending you into a financial spiral,

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and putting you under extreme financial pressure that you feel like killing yourself. I

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don't want property to do that to you, and that's currently what is happening because

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prices are ridiculously out of control. But the reason for it

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is because people are running to it to prevent inflation wiping away their

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wealth. And they know that property is one of the ways to do that. So

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here's, I want to caveat this. I believe in buying property when

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it's appropriately valued for the right reasons to produce passive income over

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time to put you in a better financial position. Without a doubt, I'm a big believer. However,

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we haven't seen property at that price range in this country for

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many years. So right now, I'm against it. And

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I don't own any. Because I don't think it's going to create any wealth in

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the next couple of years. It's extremely overvalued. That's

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why I've started a rebellion against it. Because there's other smarter ways

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to make money and grow your wealth than property. And I became a multi, multimillionaire

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without owning a single house. So there are ways. And I want to give you

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hope that you can do it too without having to clamor into a property you can't afford. I just

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want to caveat that, just so you know. So check it

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out. For an inflation hedge, property is

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good because once you buy it once with specifically with a mortgage to if

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you can afford the mortgage and put a reasonable deposit in there. Because

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the value of the mortgage falls away over time towards the bank. So like the

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bank lends you $800,000, in the next say, I don't know,

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20 years, it's worth $400,000 or less. So

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inflation is working for you if you have a mortgage. And the other thing

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too is you don't have to keep rebuying the house necessarily. You do have to do

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some upkeep. But what you don't want to do is buy a property that requires you

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to continually put money into it because you do get hit by inflation. So here's an

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example. Let's say you bought an apartment and

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the apartment's got high body corporate fees, it's got high maintenance, it's

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got high insurance, it's got high operating costs, that could be

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a problem when it comes to inflation because you're having to put money in all the time. Whereas

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if you buy a house that doesn't have the same running costs, perhaps

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something that's a bit newer or you're buying it undervalued. more

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land attached to it, then you're going to find that it's a better hedge, just so you know.

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Here's a historical example. In the 1970s, when there was a

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massive oil embargo and inflation shot up to 13% and interest rates

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shot up to 17%, property owners who already owned a

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property thrived because the rents climbed, but the fixed rate

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mortgage they had, they were able to keep that in today's dollars. They

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were actually able to devalue their mortgage, which is amazing for

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a mortgage holder. The same thing happened in

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Australia during the early 2000s boom, I'd say the late 90s boom, which

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is the last real estate boom we had, which is 25 years ago. And

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real estate outpaced inflation due to rising wages and population growth. The

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same kind of thing has happened over the last few years, but

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now it's a point where not many people

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can even buy a house. So it's not as effective

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right now. So here's how to win when it comes to using

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property as a hedge. One, focus on positive cash flow. Do

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not put yourself in a position just to beat inflation by house when you're putting

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yourself in an absolute financial bond that will cause you to commit suicide to

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get out of it. This is crazy. People are doing that. People

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laugh that it's like, I saw an article with a guy recently,

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he felt like he had nowhere to go financially and he killed himself. This is what we're

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doing to people because we're focusing on, I must own a house to have any social

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status in the country, which is a joke. You can't take it with you when you die.

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Make sure if you're going to do property, have high cash flow.

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wherever possible. I know it's difficult in this interest rate environment and the price of houses, crazy,

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but still possible. Lock in wherever you can fixed interest

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rates. Now in America, you can lock in 30 year fixed interest rates, crazy.

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Anyone in the States who bought a house can lock in a 30 year fixed term at

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two and a half percent, killing it. But we don't have that in Australia. We

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don't have those types of fixed rates because we don't get the same borrowing

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power that you get in America. The same capital is not available

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in Australia. So in Australia, we can have fixed rates for about four to five years.

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So if you're on a fixed rate now, just so you know, that's going to stop in

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the next four or five years if you just fixed it. So fix it wherever you

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can, but be aware that it can come off the fixed rate. Avoid overleveraging

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and speculative property traps. Boom, boom, boom. This is a big warning sign for

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right now because people are overleveraged and there's a massive speculative

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property bubble. Right now, just be aware

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of it. You're buying into the biggest property

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bubble in the history of the country. Last time, A

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friend of mine on X, well, acquaintance on X, appropriately

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sent me to some history, some economic history in Australia. The

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last time we had an immigration-led boom like we're having now,

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boom, was in 1870 to 18, actually it

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was, yeah, it was 1870, 1890, I want to say, late

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1800s. And what happened then was there was a massive gold rush in

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Australia and had huge immigration coming to Australia, and

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of course, a massive property boom. just like what's happening at the

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moment from immigration. But if you look at

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the data, the property market

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didn't recover for like 70 years. 70. Yes.

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You think this is the first time there's been an immigration-led boom in the country? You're wrong. So

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can property go sideways and down for seven years? Yes, it can. Happened

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in Tokyo in 1988. The property market in Japan still hasn't recovered.

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And I know what you're going to say, but Lloyd, they didn't have immigration in Japan. Well,

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they did in Australia in the late 1800s, and it didn't recover for like 70 to 80 years. So

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just be aware that yes, property can be used as a hedge to

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protect your wealth, but buying in an overpriced bubble and buying too

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much leverage and not being able to service it is a problem, it's a worse problem.

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So don't be too pedantic about protecting your wealth when you're gonna put yourself

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in a financial bind for the rest of your life. You don't want to handcuff yourself just to get away from inflation.

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What kind of life is that? Next way to prevent your

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wealth being degraded is high interest savings accounts. I

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know it's not as effective. I get it. But here's where it helps. It

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doesn't build wealth from your money, but it does protect it from inflationary

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wipeout. Meaning, if you put your money in the bank, it's like a

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bond. You're lending money to the bank, and they're paying you accordingly for

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the borrowing of your money. That's kind of what it is. It doesn't sit in a

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vault. Just sit there, and they just pay you money. They

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actually use the money themselves to lend at a higher rate. For example,

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right now, you can I've got some money in the term deposit myself, and

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the term deposit is producing about 4.5%. You can get better. Up

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to 250k, you can get better savings accounts in some

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places like St. George and ING. I think they're like 5 and 5.5%. This is

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in Australia. In America, not so easy. You

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can put your money into treasury bonds, which is probably better than

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a savings account in the States in the bank, and they're paying about 4.5%. So

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whether it's treasury bonds or treasury bills in America, or

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whether it's Australian savings accounts, you can get about 4.5% return

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on your money, and that will prevent at least 4.5% a

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year of inflation biting away at it. Again, not the best,

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but it's certainly a place to store your wealth. And in Australia, we

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have government guarantee of your money in the bank of

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up to $250,000, which means if there's a bank run and the bank

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collapses, the Australian government will give you your money back. And

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the same in America too, by the way. And I don't think it'd even stop at $250,000. I

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think they would just honor it and get it going. Otherwise, we don't have an

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economy. Real use case, here's what happened in countries with high inflation like

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Brazil in the 2010s, smart savers rotated into

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cash high-interest savings accounts and

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short-term bonds. So there's an example of what happened in Brazil and this happens all

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the time. I mean, even looking at Warren Buffett right now, just so you know, he's

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put $370 billion into

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short-term treasury bills, just so you know. So here's an example of how he's

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putting his capital, not into risk assets, he's putting it into risk-free

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assets, getting a 4.5% return on $370 billion.

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So if it's good enough for Warren Buffett to protect himself against inflation, good enough for

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you and I, all right? So that's the other way to do it. All right, the next way to

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hedge your bets to a collapsing Australian

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currency is the global hedge for a weak Australian

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currency, which is actually the US dollar. And you're probably thinking to yourself,

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why would I trade one fiat currency that's getting killed by inflation for

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another one? Well, here's why. The US dollar is the world's reserve currency,

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which means during times of inflation and during times of uncertainty, people

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flood to the USD, not the AUD, not the Australian dollar,

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the US dollar. And so what happens is the value of that dollar

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is more steady against other assets. And so you do have a better hedge

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against inflationary pressures if you own the world's reserve currency. You'll

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notice soon when I explain some examples of what's happened during hyperinflation if

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you have USD it's better. It's the last currency that's

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effectively Disappeared and so you're better

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off to own that than you are to the only Australian currency during risk off

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Experiences like we're seeing now. Okay, so some historical examples

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of what happened in 2008 the global financial crisis when there

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was a massive run on banks and US banks were going bankrupt and Even

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then, the Australian dollar fell from 98 US cents down to

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60 US cents. In a matter of weeks, it just collapsed. Bang. So

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even though the American economy was wobbling, people

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flood to the US currency as a safe haven. It's a safe haven asset,

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just so you know. So it can protect you from a falling Australian

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dollar if you hold USD. And a lot of our wealth is held in

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USD currency, not Australian currency presently. Okay,

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in 2020 in COVID, again, the same thing happened. The Australian dollar was 70 cents, 70 US

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cents, it was buying 70 US cents, and it dropped down to 57 US cents because

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there was uncertainty. People thought the world was gonna end. And when that happens, they

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run to USD denominated currency, okay? It's

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just, it is a quick way to hedge your bets

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against a falling Australian currency. The next way, this is arguably the

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most popular way to hedge inflation. Not

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necessarily the best, but it is timeless. And this has worked time

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and time again for thousands of years. And of course,

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you guessed it, it's gold. Not my favorite asset because it's

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not productive, meaning if you have an ounce of gold today, in the

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next 100 years, you still have an ounce of gold. It's

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like, I've talked about whether you want to own the goose that

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lays golden eggs or whether you want to own the golden egg. Owning gold is like owning one

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golden egg and then hoping it grows in value over time, which it does

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against inflationary pressures, but I prefer to own the goose. However,

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if you want to buy gold, and that's why gold's up like 40% year to date, is because

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it protects purchasing power during crises. And so you'll see gold go

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up in value when there's inflation happening and also when

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there's global uncertainty. And here's why. Because there's limited supply

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and they can only pull out gold over a certain period of time So there's like this

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global demand for an uncertainty limited supply eating a scarcity hedge

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and that's why it's a great example of what you can put your money into

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to protect it against inflation so during the German crazy

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hyperinflation when they're taking wheelbarrows of the the paper mark down

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to the to the to the shop to buy a loaf of bread really happened in 1923 and

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Gold was the go-to there.

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So people that moved their money into gold as that paper currency

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collapsed, they protected all of their wealth. Same

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thing in the 1970s, the oil embargo in the United States, inflation went crazy. Gold

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went from $35 an ounce to $800 an

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ounce in under 10 years because of the massive inflation.

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So you can see very clearly when there's massive inflation, gold is

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a run-to asset for a lot of people, which is why it's had such a tremendous rise in the last

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12 months. but in times of risk on, doesn't do anything. Goes

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sideways, goes nowhere, doesn't produce income. So it's not a great financial freedom vehicle,

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but it's a great currency hedge, right? Gold didn't make people rich, as they say,

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but it sure meant they didn't get their wealth wiped out. Just quickly,

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if you're ready to take control of your finances, but feel stuck on where to

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start, I have a solution. My book, Money Bias Happiness, simplifies

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00:15:51,792 --> 00:15:55,695
investing and wealth building with practical steps to help you achieve financial

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00:15:55,775 --> 00:15:58,937
peace. Get your copy via the link in the show notes, and let's get your

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00:15:58,997 --> 00:16:02,199
money working for you. Now, back to the episode. Next one,

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oil. All right, black gold. I'm reading a book at the moment called Titan.

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It's a John D. Rockefeller story, the richest man in history. He would

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be worth in today's dollars about $600 billion if we wind it forward with

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inflation. And he owns Standard Oil. And so if you look

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at one of the greatest hedges against inflation is oil. Oil,

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the reason why it's a hedge is because oil is in everything. It's

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in transport, it's in food production, it's in goods

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and services. Oil is in fuel, it's in everything. It's

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in food production because of fuel and farming equipment.

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Oil passes the inflation test because it keeps profits flowing. It's

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an inflation-proof product because we need it in everything. It

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actually forms the basis of most inflation, price inflation,

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because it is in everything. If you have a world without

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oil, goodbye iPhone, you don't have one. In fact, almost all

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goods in the world, if you don't have oil, they disappear. If we don't

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have oil, one of the key hydrocarbon, the

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food bowl of the world disappears and you and I starve to death. I

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just don't think people really grasp how important oil is to

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your well-being. You probably have no idea. It's

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such a great hedge because if inflation goes

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up, guess what? You just increase the price of oil. It's like gold. It

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will ebb and flow with inflation itself. And so the value of

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oil becomes more and more valuable over time because it's a scarce resource.

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There might only be enough for the next 200 years. Here's

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what has happened recently to hedge against inflation. If you take a

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look at Warren Buffett's share portfolio, the top five positions, guess

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what's there? Chevron. And Chevron's one of the world's largest oil

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producers. And you look at Occidental, it's now up the top five as

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well. So two of the top five positions in his portfolio are

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oil companies, Occidental Petroleum. So the reason he's positioning

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his portfolio into oil companies is because he knows that oil

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has pricing power, that he knows when inflation goes up, you can just simply

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increase the price of oil. It's an inflation hedge,

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right? But he doesn't just buy the actual commodity, he buys the

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businesses that produce. So he's still buying stocks

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in companies to hedge inflation, which we'll come to in a second. So

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during the 1970s, oil shocks, inflation went out of control again,

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as an example. Oil stocks went way up. Now, if

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you're looking in the last couple of days, when Iran was attacked

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by Israel, Iran's like

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00:18:28,935 --> 00:18:32,316
it produces I think Iran sends 15% of China's

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oil comes from Iran So Iran's a big oil producer you look at

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when this conflict bang oils Oil supplies

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contained a bit and bang the price of oil has gone up to now. It's like it

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was $45 a barrel and now it's gone up to 75 and like a

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number of days and So oil can

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surge when there's high inflation and global

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unrest. So you look at what happened in the 70s, oil went

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drastically high. And people made a ton of money out of

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energy. Energy, oil. Oil is the foundation of

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all energy. So currently, most energy I should say.

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So 2021-2022 inflation, it

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went up to $120 a barrel. So you can see real world examples

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00:19:15,991 --> 00:19:19,813
during COVID went up to $120 a barrel, or certainly after COVID, went

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down to negative. What's interesting about COVID is that when the global economy stopped,

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oil went drastically down, and it went down to negative $37 a

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barrel. So let me explain what that means. you

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were being paid to house oil

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back then. It was like the ultimate oil boom. So if you had to bought

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oil companies back then, you killed it. But it went up to $120 a barrel,

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because it is a good hedge against inflation, right? So there you go. Great

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way to beat the inflation pressures is oil. Now,

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what's next? We have gold, oil.

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Buffett's moves on oil. Here we go. Stocks.

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This is interesting because you're like, well, how do paper assets protect against

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inflation? Here's how. With real businesses, real

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00:20:05,237 --> 00:20:08,619
businesses beat fake money. So people are like, Lloyd, how come you're not

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buying gold? You're not buying this? I'm like, I'm already hedged in

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00:20:12,322 --> 00:20:15,424
inflation because I have businesses. So one business we have is

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a laundromat, and we know if inflation goes way up and the dollar loses its

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value and collapses, we just increase prices. Why? Because people need to

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clean their clothes. Fact. It's a very recessionary proof business

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model. People need clean clothes. They don't want to walk around in smelly clothes

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and filthy clothes, so they need to wash. They need to dry. So if inflation

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inflates the value of the local currency, we just increase prices. So

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00:20:36,406 --> 00:20:39,809
businesses that do well in inflationary times are

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ones that can raise their prices. It means they've got what's called high

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or good quality pricing power. So they can increase

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their prices during inflation. They can increase dividends. They

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can effectively outperform inflation. So for example, one

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of the most powerful companies in the world when it comes to pricing power

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is, you guessed it, Apple. Because people would

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trade their second car in to get their hands on one of these like the pricing This

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00:21:04,187 --> 00:21:07,709
is probably worth $30,000 to people not 1500 bucks It's

351
00:21:07,730 --> 00:21:10,932
got so much pricing power in it And I know that because I

352
00:21:10,992 --> 00:21:14,234
know that people would literally trade their cars to get this and I know cars

353
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cost 30,000 So this is really a $30,000 product, but

354
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it's not being sold for that. So Apple knows it can incrementally increase

355
00:21:21,178 --> 00:21:24,762
the prices like this and over and over again to

356
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combat inflation because they know that people are still going to buy this because it's such a

357
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valuable commodity to people. The same thing I can see over

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there in the fridge, there's a can of Coke in there. Another example of a company that

359
00:21:34,410 --> 00:21:38,413
can actually outperform inflation is Coca-Cola because Coca-Cola

360
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has the ability to increase each can by one cent. Over

361
00:21:43,637 --> 00:21:47,046
8 billion cans consumed daily. Think

362
00:21:47,066 --> 00:21:50,490
about that. Some huge number of cans consumed daily

363
00:21:50,530 --> 00:21:54,074
can increase it by one cent. It's almost 2 billion cans of Coke consumed

364
00:21:54,094 --> 00:21:58,038
daily. So you think if Coke can increase it by a cent, it's

365
00:21:58,078 --> 00:22:01,822
increasing it by like 2 billion cents a day. Isn't

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that insane? So it's got pricing power, so it can outperform inflation. So

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00:22:05,146 --> 00:22:08,368
check this out. Look at what Warren Buffett's doing right now. Look

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00:22:08,388 --> 00:22:11,929
at this. He knows that the US dollar is inflating. He

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00:22:11,989 --> 00:22:15,590
knows that, and I'm talking about the Australian dollar, but the US dollar is also inflating. He knows this. So

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00:22:15,610 --> 00:22:18,991
he's positioned his portfolio into bonds, which

371
00:22:19,031 --> 00:22:22,192
helps hedge inflation a bit because you're getting 4.5%. He's putting his

372
00:22:22,272 --> 00:22:25,452
money into oil stocks hedge, and

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he also owns Coca-Cola as a company. His highest

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00:22:29,334 --> 00:22:32,551
position is Apple. Think about this. And he's got

375
00:22:32,591 --> 00:22:36,294
Moody's. So all these companies in his top five or six holdings, which

376
00:22:36,334 --> 00:22:39,657
takes over most of his portfolio and other private

377
00:22:39,697 --> 00:22:43,300
companies he owns, he's got pricing power. See his candy. Big,

378
00:22:43,320 --> 00:22:46,583
big powerful company. He bought that for $25 million many years ago. It's worth

379
00:22:46,623 --> 00:22:49,926
billions now. And it can increase its candy prices to

380
00:22:49,966 --> 00:22:53,148
combat inflation because people will still want to buy its product. So he's

381
00:22:53,188 --> 00:22:56,351
got tremendous hedge in inflationary pressures with his

382
00:22:56,411 --> 00:22:59,873
holdings and businesses. So, companies can raise prices in

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00:22:59,953 --> 00:23:04,034
inflationary times. This happened during the GFC, the

384
00:23:04,074 --> 00:23:07,416
S&P 500 soared because of rising money supply. Owning an

385
00:23:07,456 --> 00:23:10,897
index fund, if you've got companies in there like Microsoft, Google,

386
00:23:11,277 --> 00:23:14,959
Apple, etc., Coca-Cola, they can increase their prices. McDonald's,

387
00:23:15,019 --> 00:23:18,400
the Big Mac index. When you went to McDonald's recently,

388
00:23:18,560 --> 00:23:22,121
I bet you were shocked by the price of stuff. Yes, it

389
00:23:22,181 --> 00:23:27,802
hurts. It used to be you could go to McDonald's at $5.95 for a meal. a

390
00:23:27,842 --> 00:23:31,026
house to get a meal at McDonald's. It's the

391
00:23:31,106 --> 00:23:34,470
Big Mac Index. McDonald's is a perfect example of a company and

392
00:23:34,490 --> 00:23:38,002
a business that can increase its prices. Why? Because it has. So

393
00:23:38,662 --> 00:23:41,784
if you want to hedge inflation, businesses are a wonderful way to do it.

394
00:23:41,844 --> 00:23:45,246
That's how I do it. That's how I do it. So I'm excited that

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00:23:45,286 --> 00:23:48,687
I own certain companies that are hedged with oil stocks. I'm

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00:23:48,807 --> 00:23:52,209
excited that we have businesses that are hedged in products

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and services that people need. You know, super, super

398
00:23:55,871 --> 00:23:58,932
effective way to do it, right? So you can either get it through some sort of

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00:23:58,972 --> 00:24:02,054
index, you can get it through ownership of businesses, private or

400
00:24:02,114 --> 00:24:05,363
public. All right, next one. This is the last one. The

401
00:24:05,383 --> 00:24:08,746
best hedge of all time. We said the best to last.

402
00:24:09,227 --> 00:24:14,271
This is the best hedge against inflation of all time. It's

403
00:24:14,311 --> 00:24:17,775
the fastest way to outrun inflation. And unlike

404
00:24:17,855 --> 00:24:21,518
cash, it can compound very powerfully. So

405
00:24:21,678 --> 00:24:24,741
check it out. You're going to be thrilled or you're going to be

406
00:24:24,761 --> 00:24:27,863
disappointed, be the one. Here we go. The best way to

407
00:24:27,903 --> 00:24:31,605
hedge inflation is to actually increase your skills. The best way to

408
00:24:31,745 --> 00:24:35,027
hedge inflation is to earn more money. The fastest way to outrun it

409
00:24:35,107 --> 00:24:38,710
is to earn more. Unlike cash, skills can compound drastically.

410
00:24:38,750 --> 00:24:42,152
You can end up finding skills that you can totally transform your earning power

411
00:24:42,172 --> 00:24:45,754
with and your income is the most important thing you can do to enhance

412
00:24:45,774 --> 00:24:48,896
your wealth. It really is. You can't save your way to wealth. You can do it for a

413
00:24:48,936 --> 00:24:53,218
period of time but you can't get it down to nothing. There's

414
00:24:53,258 --> 00:24:57,059
an example in, I mean, many examples in the past where there's inflations

415
00:24:57,659 --> 00:25:01,139
crushed the economy. I know without a doubt that people in that economy with

416
00:25:01,259 --> 00:25:04,960
skills, sought after skills, were still getting paid a ton of money in

417
00:25:05,140 --> 00:25:08,601
all sorts of different currencies and or gold and or in barter to

418
00:25:09,181 --> 00:25:12,401
apply their skills to the economy. If you've

419
00:25:12,441 --> 00:25:15,742
got skills, people will find a way to give you something of value to

420
00:25:15,782 --> 00:25:19,143
get them. It doesn't really matter if your local currency like the Australian dollar

421
00:25:19,163 --> 00:25:22,710
is completely getting It's completely collapsed

422
00:25:22,730 --> 00:25:26,397
in the last few years in terms of its value, but... I

423
00:25:26,417 --> 00:25:29,540
know that if I've got skills, I can get paid in gold, I can get

424
00:25:29,580 --> 00:25:32,803
paid in US dollars, I can get paid in barter. Like if I'm

425
00:25:32,843 --> 00:25:36,045
good at what I do and people need it, they will find a way to pay me.

426
00:25:36,386 --> 00:25:39,648
Even if the currency is toilet paper, I know during COVID when there's a lot of toilet paper,

427
00:25:39,769 --> 00:25:42,911
I could have provided a skill to someone. So Lloyd, I'll pay you in toilet paper. Go,

428
00:25:42,931 --> 00:25:46,174
give me the toilet paper. It doesn't really matter what it is, your skills are

429
00:25:46,234 --> 00:25:49,917
inflation proof. And it doesn't matter if the global currency

430
00:25:49,957 --> 00:25:53,760
is crypto, USD, gold, Barter,

431
00:25:53,880 --> 00:25:57,603
whatever. Your skills transcend all

432
00:25:58,103 --> 00:26:01,245
of the global currencies. All of them. So the

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00:26:01,345 --> 00:26:04,787
most important thing you can do is improve your

434
00:26:04,847 --> 00:26:08,349
knowledge and skills because they are inflation proof. They will ride inflation way

435
00:26:08,429 --> 00:26:11,791
up because there's people out there with skills. Think about

436
00:26:11,831 --> 00:26:14,893
it. Think about Mark Zuckerberg. He's now like the

437
00:26:14,953 --> 00:26:18,796
top three or four wealthiest people in the world. He's also the youngest in

438
00:26:18,836 --> 00:26:22,476
that group. Think about the skills that he applied. He

439
00:26:22,516 --> 00:26:26,738
became a multi, he became worth $100 billion. Do

440
00:26:26,758 --> 00:26:30,421
you think that outperformed inflation? Yes. Do you think Jeff Bezos outperformed inflation?

441
00:26:30,561 --> 00:26:33,804
Yes. Do you think Warren Buffett outperformed inflation? Yes. All

442
00:26:33,844 --> 00:26:37,367
the people I know who are wealthy, a lot of my friends who are worth millions of dollars, how

443
00:26:37,407 --> 00:26:40,850
did they get there? Did they buy gold? No. Did they buy real

444
00:26:40,891 --> 00:26:44,093
estate? No, they didn't. They might say they do now to protect their

445
00:26:44,113 --> 00:26:48,037
wealth, but they didn't get there that way, let me tell you. They all did it through actually

446
00:26:48,137 --> 00:26:52,140
improving their skills and starting and building their own businesses. That's how

447
00:26:52,601 --> 00:26:55,903
they did it. So don't, and some people

448
00:26:55,943 --> 00:26:59,265
have certainly, there's a story of a lady, she just gave

449
00:26:59,285 --> 00:27:02,547
a billion dollars to a charity. Her husband

450
00:27:02,567 --> 00:27:05,809
happened to invest with Warren Buffett, that's stocks, that's Berkshire Hathaway, and

451
00:27:05,909 --> 00:27:09,311
ride that sucker way up to a billion dollars, and of course,

452
00:27:09,851 --> 00:27:13,213
incredibly powerful hedge, because Warren Buffett in

453
00:27:13,233 --> 00:27:16,975
the last 60 years created 5.5 million percent return. To

454
00:27:16,995 --> 00:27:21,138
put that in perspective, the S&P 500, 30,000 percent return. To

455
00:27:21,178 --> 00:27:24,741
put that in perspective, it way outperformed inflation. Inflation hasn't

456
00:27:24,761 --> 00:27:28,405
been anywhere close to those two numbers. So stocks and businesses, yes,

457
00:27:28,565 --> 00:27:32,048
can also outperform it. But for most part, it's businesses

458
00:27:32,128 --> 00:27:35,491
because of skills. So if you want the ultimate hedge, invest

459
00:27:35,511 --> 00:27:38,834
in yourself. You are the ultimate hedge. You are the best asset to

460
00:27:38,874 --> 00:27:42,858
invest in to overcome inflation. So could hyperinflation happen

461
00:27:42,878 --> 00:27:46,121
in Australia? Could we absolutely destroy the power of

462
00:27:46,161 --> 00:27:49,644
the Australian dollar? Theoretically, yes. Will

463
00:27:49,684 --> 00:27:52,927
it happen? Technically, well, technically yes, but theoretically or

464
00:27:53,767 --> 00:27:57,250
I would say no. It's unlikely because we've

465
00:27:57,270 --> 00:28:00,768
got a floating exchange rate. We've got an independent reserve bank.

466
00:28:00,788 --> 00:28:04,249
We've got global trading partners. We've got a ton of resources here,

467
00:28:04,549 --> 00:28:07,970
deep capital markets. And we do have, despite the challenging

468
00:28:07,990 --> 00:28:11,511
leadership we have at the minute, that's a whole other episode of what I think about that. But

469
00:28:11,571 --> 00:28:15,192
we do have the ability to control money supply. And

470
00:28:15,832 --> 00:28:19,273
we do have hard assets backing. We've got land, arable land.

471
00:28:19,353 --> 00:28:23,634
We've got farming, commodities. We've got resources, energy, hydrocarbons.

472
00:28:24,014 --> 00:28:27,495
We're good. But if hyperinflation does happen,

473
00:28:27,935 --> 00:28:31,361
like what happened in Germany, what happened in Venezuela, what happened in Zimbabwe. In

474
00:28:31,382 --> 00:28:34,507
those scenarios, you know what happened? People fled back. They

475
00:28:34,527 --> 00:28:37,874
just dropped the currency. They went back to other currencies. They went back to the US dollar.

476
00:28:38,094 --> 00:28:41,765
They went back to gold. That's what happened. The

477
00:28:41,805 --> 00:28:44,968
economy doesn't die. The paper money is just forgotten. All trust is

478
00:28:45,008 --> 00:28:48,110
broken and we stop using it. So it's not like you'll just have

479
00:28:48,170 --> 00:28:51,333
nothing. You will have figured out by then if there's hyperinflation, what

480
00:28:51,373 --> 00:28:54,875
does work and you'll have already gone there. But I can almost guarantee you that

481
00:28:54,895 --> 00:28:57,998
if you have business skills and you have the ability to pivot and

482
00:28:58,038 --> 00:29:01,601
you buy businesses and build businesses, there's no amount

483
00:29:01,641 --> 00:29:04,863
of inflation that can hurt you because you are indestructible because

484
00:29:04,883 --> 00:29:08,287
you invested in yourself. And of course, one of the other hedges

485
00:29:08,307 --> 00:29:12,673
that's happening that I haven't really covered here because I don't want to is cryptocurrencies, especially

486
00:29:12,793 --> 00:29:17,018
Bitcoin. They're like, oh, Bitcoin's a hedge against inflation. Oh,

487
00:29:17,059 --> 00:29:20,203
my God. Do I have to talk about Bitcoin? It's a code. It's a

488
00:29:20,243 --> 00:29:24,750
piece of code. And people are like, read the Bitcoin standard. How

489
00:29:24,790 --> 00:29:28,493
much research you have to do to realize something's valueless? Look,

490
00:29:29,073 --> 00:29:32,655
people are using crypto and specifically Bitcoin as an inflation hedge.

491
00:29:33,336 --> 00:29:36,878
But the fact of the matter is this, gold has got thousands of

492
00:29:36,978 --> 00:29:41,141
years of measurable data against inflation than

493
00:29:41,361 --> 00:29:44,883
crypto does. It's tangible. Remember, the inflation hedges

494
00:29:44,924 --> 00:29:48,046
against tangible assets, right? Things that can

495
00:29:48,086 --> 00:29:51,668
produce value for the world. Crypto doesn't produce any value.

496
00:29:51,988 --> 00:29:55,270
How do I know that? Because I went down to the supermarket, With my wife,

497
00:29:55,310 --> 00:29:58,951
we were doing a checkout and I said to the lady, ìHey, do you take cryptocurrency for

498
00:29:58,971 --> 00:30:02,252
my groceries?î She went, ìNo.î I was like, ìPfft.î Then I went to my landlord the

499
00:30:02,272 --> 00:30:05,393
other day, my property manager and he called up and said, ìHey, you owe rent.î And I'm like, ìOh, do

500
00:30:05,413 --> 00:30:09,314
you take Bitcoin?î He goes, ìPfft.î So I'm like, ìOkay.î And

501
00:30:09,374 --> 00:30:12,415
so I rang up my American Express. I got an American Express card, platinum card. It's a

502
00:30:12,435 --> 00:30:15,616
wonderful card, lots of points. And I rang him up the other

503
00:30:15,636 --> 00:30:18,817
day and I had like $100,000 to repound that. And

504
00:30:18,857 --> 00:30:25,451
I said, ìHey, do you take cryptocurrency? Do you take Bitcoin?î They went, ìPfft.î How

505
00:30:25,791 --> 00:30:29,573
is crypto or Bitcoin a hedge when it's not even valuable?

506
00:30:30,333 --> 00:30:33,434
I can't use it for anything. At least I

507
00:30:34,274 --> 00:30:37,616
can sell gold on the open market. I can sell it.

508
00:30:38,076 --> 00:30:41,197
You can touch it. You feel it. Even though I hate gold, I can at

509
00:30:41,217 --> 00:30:44,959
least see it's there. You can't see anything with crypto. It's

510
00:30:44,999 --> 00:30:49,520
just code. There's

511
00:30:49,560 --> 00:30:52,803
certainly value in the technology of a blockchain. There's certainly value in

512
00:30:52,823 --> 00:30:56,645
the technology of internet. There's certainly value in technology of AI, LLM

513
00:30:56,665 --> 00:31:00,668
models. There's value in those for sure, because they speed up things, yes? But

514
00:31:02,469 --> 00:31:06,071
I can't see it in crypto. And so it might feel

515
00:31:06,091 --> 00:31:09,773
like it's a hedge against inflation. By all accounts, if you haven't bought it, it looks

516
00:31:09,793 --> 00:31:13,084
like it's hedged. But how they measure it is

517
00:31:13,124 --> 00:31:16,546
in USD, right? And so if the USD disappeared overnight, so

518
00:31:16,566 --> 00:31:19,827
would the value of cryptocurrency, right? Because it's really got to be

519
00:31:19,867 --> 00:31:23,749
valuable in the real world. And that's why I don't think it's the best hedge. So

520
00:31:23,809 --> 00:31:27,290
I don't hold any of it. I never will hold it. Even if the world adopted

521
00:31:27,310 --> 00:31:30,451
it as a currency, which I cannot see happening, I would

522
00:31:30,471 --> 00:31:33,514
still own businesses. I would still, for that matter, if it

523
00:31:33,554 --> 00:31:37,638
was the right price, own a piece of property. I would still own things

524
00:31:37,678 --> 00:31:40,781
that are valuable. And I just can't see how it's valuable. This is why I

525
00:31:40,841 --> 00:31:44,163
don't personally own gold. I don't personally own crypto. I personally own

526
00:31:44,203 --> 00:31:47,727
things that are valuable to the world. Because I know if push

527
00:31:47,747 --> 00:31:51,129
came to shove and shit hit the fan, like it did in COVID, did

528
00:31:51,149 --> 00:31:54,632
people go to crypto? No. Did they go to gold? No. They went to toilet

529
00:31:54,653 --> 00:31:57,830
paper. So I'm thinking to myself, wouldn't I want

530
00:31:57,850 --> 00:32:00,971
to own companies that produce toilet paper? That's a better hedge, right? This

531
00:32:01,011 --> 00:32:04,372
is where my mind's at. This is how I think. So I know that people got wealthy

532
00:32:04,432 --> 00:32:07,753
by not owning those assets. I know they got wealthy by building businesses and

533
00:32:07,793 --> 00:32:11,014
investing in themselves. So I'm all about playing wealth games. What are

534
00:32:11,034 --> 00:32:14,294
the wealthy doing? What did the wealthy do to build wealth? Because

535
00:32:14,314 --> 00:32:17,795
it's much better than just preserving it. So I hope this makes sense to you and

536
00:32:17,835 --> 00:32:21,376
you've enjoyed the episode. And if you have, hit the subscribe button,

537
00:32:21,656 --> 00:32:25,217
leave us a comment. What do you think is happening to the Australian dollar? Do

538
00:32:25,237 --> 00:32:28,479
you think it's going to be hyperinflated? Let me ask you this. What is

539
00:32:28,539 --> 00:32:32,061
your hedge against inflation below? Leave it in the comment section,

540
00:32:32,581 --> 00:32:35,783
share this with a friend, and I'll see you on the next episode of the Money Grows

541
00:32:35,823 --> 00:32:39,345
on Trees podcast. Thanks for listening to Money Grows on Trees. If you enjoyed

542
00:32:39,365 --> 00:32:43,027
the episode, leave a five-star review on Apple Podcasts and Spotify

543
00:32:43,347 --> 00:32:46,789
and subscribe to us on YouTube so you never miss an episode. And

544
00:32:46,809 --> 00:32:50,031
if you're serious about building wealth, make sure to check out the links in the show

545
00:32:50,091 --> 00:32:53,253
notes and follow me on all social media platforms at